Ride It to the Sky

Our current financial system is an absolute miracle. We often take it for granted, but it’s a modern marvel that hasn’t existed for all too long. It does incredible things and creates opportunities for people across the globe. But it’s also a big fucking mess. There are so many things wrong with it, and so much opportunity for improvement. Too many people are left out, it’s controlled by slow institutions, there’s little innovation (outside of fintech), and the banking system isn’t even open 24/7. Money never sleeps. How is this excusable?

So I’m long DeFi. It’s a system that’s accessible by everyone, everywhere, all the time. That in and of itself is enormously powerful. However, in its current state the primary utility of DeFi is speculation. There’s a preposterously large amount of money sloshing around the system speculating, searching for yield. But that’s about it. I haven’t seen a lot of utility beyond that. As Matt Levine said, “The crypto boom is a wild gold rush for money,” and no place exemplifies that more than DeFi. But this will change over time.

Lending is one of the most obvious places for DeFi to move beyond speculation and to other utility. Right now, almost all lending that takes place is over-collateralized, which enables people to borrow primarily for the purposes of…further speculation. If you want to know more about OCL, Frank Rotman has a great thread about it. I’m really excited about DeFi lending moving from OCL to under-collateralized lending and had some ideas as to how this could work.

One company tackling this is Goldfinch. They are essentially a fund of funds, aggregating assets in DeFi from people searching for yield and deploying it into a series of offline/off-chain lenders like PayJoy. For digital asset holders they provide an avenue to get yield outside of being a degen and for analog world lenders they are a capital source. They are effectively acting as a bridge between the DeFi crypto wealth that has accumulated as of late and off-chain lenders.

This is a neat concept because more and more assets will be held in crypto over time, and if those assets can be deployed off-chain, they can achieve yield that’s more consistent than speculating on token appreciation or investing in the next DeFi X.0 scheme. Imagine a fintech lender being able to tap into crypto wealth, or a DeFi participant being able to lend their crypto to Stripe, Shopify, Affirm or GS. Lenders sell capital, and there’s no reason the capital they sell can’t be the assets held in DeFi. It could, in theory, provide everyone across the globe access to every single asset class, and that changes the game.

Last year I made my New Year resolutions in April. I wasn’t going to do them but I was inspired by a conversation I had with Strauss Zelnick who told me that every year he writes down his short-term goals (annual) and updates his long-term ones (a decade or so) for both personal and professional. I think Strauss has figured out a lot of stuff in life, so I have no problem trying to shamelessly copy him. Looking back I never wrote down my professional goals. I don’t remember why, but it’s probably because I’m in a bit of a transition period and wasn’t ready to really commit time to it.

I started with a regret minimization framework. I wrote:

_{By the time I’m 80 years old, I won’t regret spending as much time with my family as possible, having read a bunch of books and being knowledgeable about the world, knowing myself and what makes me truly happy, and living a happy life, having traveled and explored the world many times over, spending a ton of time in nature, overinvesting in relationships with friends and family.}

That’s a lot of stuff, but I stand by it. Kind of generic, but people have been at this figuring out happiness thing for a long while and this reads like happiness to me.

Here are my long term goals:

I guess I couldn’t figure out the travel bit.

And my short-term goals with commentary:

Two things stand out to me here. First, there are just way too many goals. Second, I never revisited them since jotting them down (until now). I’m going to try to whittle them down to what’s most important for the short term based on where I am today.

I like these a lot more. Narrower, more focused, and everything feels very achievable by the middle of the year. I also like incorporating how I “feel” about something instead of just objective number-oriented goals.

And my long-term ones:

I’m going to revisit these here twice a year. Or at least that will be my goal 🙂 I hope this is a good way to hold myself accountable.

New year, continuation of me.

Last year I downloaded TikTok for the first time. Over the course of one week, I spent more time on the app and my phone than I ever had before. It was wildly addictive. So much so that after that week I deleted the app and never looked back. I’m trying to spend less time using services that try to suck up and monetize all my attention (although Twitter is my vice).

I forget where but someone recommended TikTok Boom. The book was just okay, but interesting if you want to learn more about TikTok, which I did. I had several takeaways. First and foremost, the work ethic at Chinese tech startups is second to none. They are and will continue to wipe the floor with US companies. 9-9-6 is commonplace (that’s 9am-9pm, 6 days a week). That simply no longer flies with larger companies in the US. I’m not saying it’s a good thing, it comes with its set of very obvious downsides, but it’s definitely a competitive advantage.

The most fascinating thing to me though is that TikTok is the first global AI media company, and it doesn’t produce any of its own original content. It’s not really a social network. Sure you can follow people and like videos, but it’s primary utility is to entertain you with videos its algorithms think you will like. TikTok is arguably the best in the world at understanding what hooks its users and using AI to curate and individualize your feed. It’s a substitute for Netflix, television, video gaming, etc. Reed Hastings once said anywhere else you spend your attention is a Netflix competitor. TikTok has seemingly cornered the market on Gen Z and millennial attention, and they’ve done it brilliantly.

It’s not all bleeding edge AI and technology. They use hyper-aggressive blitzscaling techniques to enter and takeover markets, spending millions of dollars on marketing and creator grants to seed new geographies with content. They’ll woo influencers from Instagram and YouTube to the platform and double and triple down on the strategy. Those expenses are essentially their “programming” expenses. And then it’s rinse and repeat. Spend the money to get the content. Acquire users/viewers. Use AI to curate the feed. Sell advertising as the service scales. Rinse and repeat.

I really didn’t understand TikTok until I viewed it through that lens. It’s a global media company that uses AI to capture your attention so you continue watching the content created by everyone else but TikTok. The world has never seen anything like it before and it’s a wakeup call to the West that the future of media and software can easily come from elsewhere. It already is.

When I talk about crypto with some of the smartest people I know, the most common critique I hear is that blockchain is a solution in search of a problem. It has taken me years to come around to this, but I couldn’t disagree more. Blockchain computers are not a solution in search of a problem, they are a brand new foundation that enables builders to create new business models, protocols, and applications that could have never existed on the internet before. They aren’t solving a problem, they are unlocking a new era of creativity and innovation.

I am so disenchanted with the state of software. We peaked and now almost all of the innovation is on the margin in areas that are either boring or don’t pass my “who gives a shit?” test. There are still remarkably good businesses to be built, the TAMs continue to grow as the secular trends strengthen in favor of software eats the world, but my head will explode if I hear about another CRM for blah blah industry or some smart person helping Fortune 1000 retail companies text message potential customers better.

Blockchain computers have sparked a new wave of awesomeness on the internet. Things are really fucking weird, and I love it. Between DeFi, NFTs, and web3 business models, I haven’t seen so many new cool things emerge on the internet over such a short period of time in my entire career. And none of these things would have existed were it not for blockchain. The other thing that’s so exciting is that these new protocols and applications are growing insanely quickly. Sure, there are a lot of ponzi and pyramid schemes, speculative garbage, opportunistic players, and a high likelihood a lot of tokens / projects go to zero. But there is way more good than bad, and so much open space to yet be discovered.

While it may seem like crypto is super mature and if you’re just going down the rabbit hole now you’re late to the party, this couldn’t be more wrong. We are so early. The creativity is boundless. There will be more breakthroughs similar to DeFi, NFTs, and gaming. Not everything will work and cross the chasm, but a lot of important things will. The only limitation is our collective imaginations and holy shit that is exciting.

So now when people tell me all of this is a solution in search of a problem, I say the problem for me has been discovered: software was really boring and we found a way to unlock an entirely new frontier on the internet to make things fun and interesting again.

I’ve been on a journey to learn more about the problems we face due to the climate crisis and how technology (and by extension hopefully me in some small part one day) can help avoid what usually feels like impending doom. One of the things I’ve been doing is reading a climate related book every other month or so. So I recently picked up The Star Builders: Nuclear Fusion and the Race to Power the Planet.

It’s rather dense and good for people truly interested in the details of nuclear fusion. If you’re looking for something high-level, I’d start somewhere else. That said, nuclear fusion is exciting. We’re literally trying to reproduce the chemical reactions and physics that take places inside the stars on Planet Earth. In machines, usually tokamaks, that can magnetically contain plasma to the point it reaches one hundred million degrees (hotter than our sun).

People are enchanted by this concept because: 1) theoretical physics says it can be accomplished, 2) the problem is largely an engineering one now, 3) harnessing energy from nuclear fusion paints a path to energy independence, and 4) we can produce clean energy pretty much forever, or at least for billions of years, once we figure this out. So we’re obligated to pursue it. As Stephen Hawking said, “It would provide an inexhaustible supply of energy without pollution or global warming.”

Sadly, we’ve always been several decades away from achieving net energy gain (ability to generate more energy than is put it to initiate fusion). The challenges are quite extreme in every sense of the word. As one Nobel laureate in physics puts it, “We say that we will put the Sun into a box. The idea is pretty. The problem is, we don’t know how to make the box.” And then after the box is made, we need to confine plasma which is “…like trying to confine jelly with rubber bands.” And then you need to figure out how to harness and distribute the energy to the grid. Not easy challenges. Oh and every step of the process is subject to Murphy’s Law.

That said, it will happen. Largely because humans are resilient and tenacious and a critical mass of insanely brilliant people are focused on the problem. And capitalists are plowing billions into the space because it’s the right thing to do (and the returns will be astounding when it works).

My general takeaway is nuclear fusion is incredibly compelling and humanity needs to pursue it until it’s no longer decades away. But while people are plugging away at it, we need to invest deeply in nuclear fission. It works, we already have it, it’s scalable, and we just need to do it. Yes there are risks, but the benefits far outweigh them. And there are currently companies that are working on mitigating the nuclear waste problem that occurs from fission and making the process even safer than it already is. So while I’m terrifically excited about fusion, the book made me very perplexed and to a degree angry that we aren’t more aggressively rapidly expanding our ability to generate clean energy via fission.