Arduino, 3D Printers, Kickstarter, and BitCoin

AVC regular Dan Ramsden posted a thougtful essay on GigaOM yesterday. After I read it, I sent Dan an email and I said "do you think big beats little in this phase we are in?" Dan replied that he did and asked me what I thought.

I think David beats Goliath all day long if you are focused on the right sectors. Clay Christensen has shaped my thinking on this. You just need to look for sectors where the incumbents can't and won't adapt to new emerging models and where the innovators look like and are being derided as "toys".

I told Dan that Arduino, 3D printers, Kickstarter, and Bitcoin are four "toys" that I think will radically reshape some big industries in this decade. Of course it may not be Arduino as we know it. Or it may not be Bitcoin as we know it. I will avoid commenting on Kickstarter since we are investors there.

The leaders in 3D printing today may not be the leaders in 3D printing tomorrow. All you have to do is look at the big guys suing the little guys to know that there is a lot of innovation and change afoot in 3D printing right now.

I have said this before. The more I hear people laughing at, deriding, and dismissing something the more I think it is likely to be a big deal. I remember when the common refrain about Twitter was that nobody wants to know what someone had for lunch. Well maybe they do. And maybe Bitcoin will be accepted in Starbucks someday. And maybe your phone will be made from Arduino components and the cover will be 3D printed. And maybe the movie you are going to see in the theater today will have been funded on Kickstarter.

Maybe is a powerful word. If maybe represents something big and powerful then it is worth chasing that maybe. And it is worth funding it too.

#VC & Technology

Comments (Archived):

    1. fredwilson

      bitcoin is a global phenomenon

      1. BillMcNeely

        I wish I had bought some Bitcoin back in Feb 2011 when first heard about it on TWIST. Was unsure if it had staying power.

        1. Erik Voorhees

          By the time people are sure of its staying power, the profits will already have been made.

  1. Dan Ramsden

    Thanks for the nice mention, Fred, I really appreciate it. I remember going to see a presentation by Arduino about a year ago at some obscure location in Queens, and I remember Bitcoin when it first came out and only a handful of hackers were busy optimizing their machines to download a currency that had no use then. I’m certainly rooting for the little guy, absolutely.

  2. John Revay

    Vs the power of Incumbents

  3. takingpitches

    Yes! This holiday season, let’s celebrate what is being dismissed as a “toy”

  4. CliffElam

    I find bitcoin very interesting – my actual degree is in economics from back when we studied actual monetary systems rather than consumer behavior. (Not that the latter isn’t darn interesting and important.)But the issue I have with bitcoin is that it’ll instantly become illegal if it becomes important – it threatens too much, and one thing that will always get bipartisan support is a threat to the funding mechanism of government.Not if bitcoin is just an analogy for the secure transfer of payment between individuals, then it’s great people are working on stuff like that.-XC

    1. fredwilson

      i think regulated is more likely than made illegal

      1. kidmercury

        same difference. the more it gets regulated, the more its disruptive elements will be what is regulated against. just like the more airbnb gets regulated, the more the hotel industry has nothing to worry about because the regulation will be designed to remove its disruptive elements and make it just like another hotel — at which point incumbents with sustaining innovations will outperform.

        1. Erik Voorhees

          Again, AirBNB can be regulated because it’s a company. Bitcoin is not a company. It is impossible to “regulate bitcoin”. You can regulate companies involved with Bitcoin, but never the peer-to-peer system itself. Failing to understand this dynamic means failing to understand the entire power and potential of Bitcoin.

    2. ShanaC

      how would the currency scale to replace deyy?

    3. Erik Voorhees

      Remember that Bitcoin is not a US phenomenon, but a global one. Governments will treat it differently, and outright banning in one country will likely spur interest elsewhere. Already Finland’s central bank has said Bitcoin is perfectly fine. An internationally coordinated assault on Bitcoin would only occur once Bitcoin got so big that it had already won the battle.

      1. CliffElam

        So, “regulating” bitcoin would just turn it into, er, paypal. So not very interesting.I think it’s great that Finland (about naught point naught of the global GDP) is willing to hand away sovereign power (the power to regulate internal currency) but if it were ever to get very big the major economies would squash it.I’d like you to imagine, for a second, China tolerating a bitcoin assault on the yuan.Yep, like that.-XC

        1. kidmercury

          100% agree. to your point, china has already outlawed certain virtual currencies:…bitcoin’s anarchic nature is its weakness: with no driving force it will lack a marketing punch and be susceptible to powerful forces that can buy up/control the whole market.

        2. Erik Voorhees

          Regulating bitcoin is nothing like regulating paypal. In the former, there is no single entity upon which to regulate. If the Gov tells paypal to do or not do something, they must comply. If the Gov tells Bitcoin to do or not do something… no response will be heard.And certainy major governments won’t “tolerate” an assault on their currency. The question is… what can they do about it? China can outlaw other “virtual currencies” because those are all based on single companies which issue them.Bitcoin is based on nothing more than mathematical principles… and mathematics cannot be outlawed (though I wouldn’t put it past the governments to try 🙂

  5. Abdallah Al-Hakim

    “You just need to look for sectors where the incumbents can’t and won’t adapt to new emerging models and where the innovators look like and are being derided as “toys”” I think this is a terribly important piece of advice

  6. Richard

    Maybe it’s because the Davids can walk the “Random Walk” while the Goliaths can only walk the “Deterministic Stroll”.

    1. jason wright

      goliath resists making the necessary investment in a sustainable future, or rather has its hands tied by shareholders and wall street . they just want to see max performance…now.

  7. takingpitches

    These examples and many things that are great follow the arc of the Internet as seen from the vantage point of the early 1990s.Something that we played with, many dismissed as a not polished toy, but that gave power back to individuals over what was incumbent.The rest is a reflection of this arc.

  8. whitneymcn

    Seems to be a December sort of topic for you:…I riffed a little on the topic for a while after reading last year’s post, and a year later the conclusion I came to still seems to hold up: any tool or service — particularly consumer oriented — that’s more focused on people *doing* things than on people *paying for* things is going to get mocked and misunderstood, but those are often (not always) the places that are doing something huge. […]

    1. fredwilson

      hmm. what is it about december?

      1. takingpitches

        December — with the holidays is a time of reflection and renewal — and when you cut the noise and opinion and echo chamber out, it comes down to the basics of innovation: new things are not recognized early by the community and require faith by bullheaded people (and more times than not, as people always say including in this discussion, there will be a lot of rubble left behind).

        1. Stevec77

          Thank you. I needed this. I am a bullheaded inventor. Its very lonely being me. Especially after reading all of the previous posts.

      2. falicon

        Your starting to get ready for the end of year lists…that is equal parts reflection on this year, and forward-thinking for next…

      3. Rob Hunter

        December is a time to take toys seriously!

        1. Dave Pinsen

          Well played.

    2. Dave Pinsen

      Thanks for posting that. I was going to respond to Fred’s comment about Twitter getting derided for all the tweets about what people had for lunch, and note that if that’s all Twitter offered, it wouldn’t have grown so popular, but you reminded me that Fred acknowledged that last year.

      1. andyidsinga

        I get all pissed off when I see people tweeting about what their eating …idiots . They should be tweeting what beer they drink 😉

        1. Dave Pinsen

          If nothing else, I find the names of the beers you tweet about always interesting.

        2. ShanaC

          how about wines? cc: @awaldstein:disqus

          1. andyidsinga

            absolutely – wines qualify 🙂

          2. Dave Pinsen

            Microbrewed beers usually have crazier names.

          3. Wavelengths

            Arrogant Bastard … Ale! 🙂

  9. Rob Hunter

    I was afraid that it was MakerBot getting sue-y before I clicked that link; I’m not sure that I knew that there were “big guys” in 3D printing yet. I think that Raspberry Pi needs to be in that list too (though I guess they’re similar enough to Arduino).Your “toys” argument is one of my favorites, but I feel like there must be a wealth of counter-arguments of toys that just stay toys. I’ll need to think some more about what distinguishes those two.

    1. Maria Thomas

      The two “biggies” in 3D printing are 3DSystems (NYSE: DDD) and Stratasys (SSYS). 3DSystems, the company that is suing Kickstarter and FormLabs, has been around since 1986 and is a leader in enterprise level 3DPrinting. Here’s a recent Seeking Alpha piece you may want to look at:

      1. fredwilson

        it would be a horrible thing if the big incumbents in 3D printing were able to use their IP to stunt the important and rapid innovation that is happening in the sector right now

        1. Maria Thomas

          Wasn’t suggesting or supporting that. Just pointing out the “biggies” because Rob Hunter indicated uncertainty about who they are.

          1. fredwilson

            i pretty much knew that maria. i was just using your comment as an opportunity to get on my soap box and rant a bit 🙂

        2. takingpitches

          This post has some information on how the incumbents in 3D printing have a long history of using their patents to stifle innovation in the industry.…Someone should start a kickstarter campaign to fund a campaign to get the DOJ Antitrust Division or the FTC to take a look at this given their present focus around the effect of certain patent practices on innovation.

          1. Rob Hunter

            I’m trying to think about what the stretch goals would be for that…I’ve yet to see anything [reasonable] on what it’d take to get patent reform on the table. And while I’m definitely in the “hooray innovation!” camp, I’m a little worried that my position is biased (I don’t have patents, so “down with patents” benefits me).

          2. andyidsinga

            thanks for sharing that link ..looks like a really interesting read.

          3. ShanaC

            is that allowed on kickstarter according to their terms?

          4. takingpitches

            doubt it. it sounds like something that would have fit on andrew mason’s before he pivoted to groupon

        3. SamuelHavelock

          3d printing / additive manufacturing isnt new. It is 25 year old technology, the child of Darpa work at univ of Texas in the mid 80s. Mass adoption of retail grade 3d printers is unlikely to unseat industrial incumbents in a meaningfull way. Offered as an example: GE aviation bought morris technologies ( of ohio i think) last week. Morris was one of the only U.S. firms doing leading edge work on printed metals. They were using european machines, mainly. Over the past quarter, 3d systems has done about 8 international aquisitions, all from the comfort of Rock Hill, South Carolina….places were Silicon Valley isnt watching.People are confusing new and innovative value creation and distribution platforms (like shapeways and quirky) with industrial disruption…and its a mirage.Among us folks with one foot in the technology crowd and the other in industrial manufacturing: it is easy for us to see: The new industrial incumbents with globally relevant 3d printing capabilities, will be the people who know what a “Mazak” actually is.

        4. andyidsinga

          but arguably, these patents are for machines ..not like software or music. So I’m a little more sympathetic ( …says the guy who works for intel )edit: I guess the real question is : can you built a better machine on expired patents ..without being stifled by newer patents for similar machines.

          1. ShanaC

            we’re at that tipping point with the law….

          2. andyidsinga

            yeah – this is a really fascinating and important area. Nobody comes to sue you if you do sand casting in your back yard, or glass blowing. Hmm.. but I wonder if you made a really cool glass blowing machine if Corning would come after you?

          3. ShanaC

            i was actually talking about this with a friend: we might need to do some legal stuff to 3d printing to allow for mass adoption. Like making all manufactures of the printers sold to consumers have programs in them preventing the printing of guns….

          4. andyidsinga

            I heard that exact gun discussion on the radio a few months back.. scary both on the guns side and the big brother side.

          5. kidmercury

            #upvoted. i don’t really like patents in general, but i thnk there is a distinction worth noting between patents for software vs patents for machines. if this is a machine patent, i’m more sympathetic all around.

        5. jason wright

          print bitcoins, buy incumbentsdelicious irony

          1. Wavelengths

            You mean kinda like the gubment?

          2. jason wright


    2. andyidsinga

      although I like Raspberry Pi .. I’m not sure they are in the same list as Arduino – especially from an open source hardware perspective – see their FAQ – search for BroadCom

      1. ShanaC

        it is being used similarly I have a friendly who want to cohack one with me, potnetially. we’re thinking sculpture.Also in terms of random: all these newish out there ideas about stuff seem to be coming from of all places, queens, as the artists leave brooklyn because of cost….

        1. andyidsinga

          thats awesome! ..I need to catch up on your blog – are you sharing it up there?

          1. ShanaC

            nope. I’m actually overdue for a reinstall of wordpress. And to write more, and to do some patent filing, and working more.I seem to be busy all the time now 🙂

          2. andyidsinga

            I know how that is 🙂 better to be busy than not I guess

          3. ShanaC

            now if only it all led to cash :/ (still freelancing, things are getting better in that regard, but still…at a tipping point I think over the next few months)

        2. Luke Chamberlin

          Lots of cool stuff happening in Long Island City and Sunnyside.

  10. Gianfranco Chicco

    Well, it’s been happening for the last few years (bought my first commercial 3d printed iPhone cover back in 2009 in Amsterdam ; Fairphone s aiming to make an open source/open design mobile phone with components similar to Arduino, etc). It’s just a matter of time till many of these will become mainstream… as you said though, the players we say today might not be the ones that rule the market in the next few years.

  11. Iggy Fanlo

    The big don’t necessarily eat the small butter fast always eat the slow.

  12. Humberto

    There’s a big difference in those: bitcoin and arduino are truly open platforms:anyone can build, costumize, produce, retail, market. 3d printers will eventually be built by a handful makers – there’s a lot of IP involved which costs money and will have to be monetized by the winning production standard. Those winners will control the platform, which will be good for 80% of the users, but not all of them. Kick starter is the same – it’s not open (far from it).Either platforms are completely open and distributed, or they become very very narrow in time and start being a barrier against consumers and developers best interests. Look at twitter..At least that’s my perspective. We discussed this briefly at an HBS class in 2011 about foursquare

    1. fredwilson

      crowdfunding is open. who knows who will rule the roost in that sector in 10 years.i agree about 3D printing. the IP issues are concerning.

      1. William Mougayar

        Do you think that crowdfunding is a winner/major player takes all market (like Google in search), or will it be made-up of several Kickstarters in various sectors and places?

        1. fredwilson

          it might be “winner takes most” in verticals but i doubt it will be winner take all across all verticals

          1. falicon

            It will depend deeply on the discovery features…if one system nails the ability to connect buyers with creators across verticals, they will likely be the ‘winner to take most’.Right now all these systems (rightly) seem to be focused on the creators…leaving the promotion and discovery up to the creators to mostly figure out on their own…but we are already starting to hit the ‘bigger’ problem of buyers being able to have the proper projects-to-fund find them, at the right time…

      2. Humberto

        Crowd funding is open, I agree! I wish kick starter would open up, letting in more users countries and ideas. One way could be to use users to screen ideas, kind of in a Wikipedia/ Quora fashion

  13. mikenolan99

    “The revolutionaries become the establishment” – I’m always fascinated on companies that can create a culture to keep the “little” spirit alive. Apple did this for a long time… Gore Technologies has some interesting ways of keeping this culture alive. Any others come to mind?

  14. William Mougayar

    Turning maybes into something lasting is the dream that all startups have.Small beating big is part of it, but it’s hardly ever a head-on win. Small goes into white spaces that Big can’t even get into.The startup (and the VC) see things that others haven’t, and that allows them to turn the toy story into a real story. Actually, it’s the entrepreneur role to take the VC by the hand and show them the vision they haven’t seen before. Then they have to stick with it, until the insanity and craziness of the toy becomes a habit we can’t let go of.

    1. awaldstein

      Square is as heads on as a plan can be.

  15. takingpitches

    Most people in this community have already seen this but nice stuff in Paul Graham’s recent (Kid Mercury: admittedly too long) essay:…”Which means you have to compromise on one dimension: you can either build something a large number of people want a small amount, or something a small number of people want a large amount. Choose the latter. Not all ideas of that type are good startup ideas, but nearly all good startup ideas are of that type.….Nearly all good startup ideas are of the second type. Microsoft was a well when they made Altair Basic. There were only a couple thousand Altair owners, but without this software they were programming in machine language. Thirty years later Facebook had the same shape. Their first site was exclusively for Harvard students, of which there are only a few thousand, but those few thousand users wanted it a lot.….But while demand shaped like a well is almost a necessary condition for a good startup idea, it’s not a sufficient one. If Mark Zuckerberg had built something that could only ever have appealed to Harvard students, it would not have been a good startup idea. Facebook was a good idea because it started with a small market there was a fast path out of. Colleges are similar enough that if you build a facebook that works at Harvard, it will work at any college. So you spread rapidly through all the colleges. Once you have all the college students, you get everyone else simply by letting them in.Similarly for Microsoft: Basic for the Altair; Basic for other machines; other languages besides Basic; operating systems; applications; IPO.….Just as trying to think up startup ideas tends to produce bad ones, working on things that could be dismissed as “toys” often produces good ones. When something is described as a toy, that means it has everything an idea needs except being important. It’s cool; users love it; it just doesn’t matter. But if you’re living in the future and you build something cool that users love, it may matter more than outsiders think. Microcomputers seemed like toys when Apple and Microsoft started working on them. I’m old enough to remember that era; the usual term for people with their own microcomputers was “hobbyists.” BackRub seemed like an inconsequential science project. The Facebook was just a way for undergrads to stalk one another.At YC we’re excited when we meet startups working on things that we could imagine know-it-alls on forums dismissing as toys. To us that’s positive evidence an idea is good.”

    1. LE

      “At YC we’re excited when we meet startups working on things that we could imagine know-it-alls on forums dismissing as toys. To us that’s positive evidence an idea is good.”Of course because he is gaining on the backs of all the people that are loosing (time, energy, opportunity, money, relationships, health) by following this strategy. Not to mention the people who apply and don’t even get into YC by following this strategy.In the funnel of people following all these startup strategies espoused by people who are benefiting from people attempting startups, how many people actually end up with a positive outcome? Almost a guarantee that this has never been quantified. This is like the Hollywood system or the sports or music industrial machine. A total pyramid (as espoused in one of Gladwell’s books as why most drug dealers still live with their parents).

    2. kidmercury

      i appreciate the effort you put into summarizing graham’s verbose text. you’ve righted a wrong here. thank you for being an honorable netizen!

      1. Abdallah Al-Hakim

        I have not read Graham’s version yet but I feel that @takingpitches:disqus summary is an excellent substitute. Still, I will be reading Paul’s piece as well.

      2. takingpitches

        haha. just call me cliffs notes!

  16. LE

    I have said this before. The more I hear people laughing at, deriding, and dismissing something the more I think it is likely to be a big deal. I remember when the common refrain about Twitter was that nobody wants to know what someone had for lunch.Over a short period of time there are always going to be aberrations. Over a long period of time (and many data points) I don’t agree that this is correct. Not from my observation of many years and different business ideas. (I am old enough to remember when Fedex offered faxing and quickly had to kill it because of the price drop in machines made that a non-viable business.)…I remember in the 80’s trying to use my UPS account to offer a shipping service for customers who didn’t have UPS accounts. UPS wouldn’t allow it. Later of course it became a viable business model for them. (My point is not that I had this idea as many people probably did. My point is that it seemed a non-starter to them until they worked out the details and made it a real business with their UPS center.) Same with advertising on gas pumps and same with magazines listing all the apartments in a region (two of many other ideas that were shot down that came to be later on). I was laughed at for an idea for a cookbook. Then that cookbook got national publicity in the WSJ. For me it was a publicity stunt. Others looked at it from a different angle and in a sense they were correct.One of the reasons people deride these ideas is that they are not fully fleshed yet or there is something about them that the deriders don’t know (transparency issue all cards are not on the table). While you may be able to meet a 10 year old and decide he could be the perfect husband for your daughter most likely he won’t seem to be cut from the right cloth until he gets older and more mature. Maybe if you get to know him over time you might change your mind. But if I see him only once I’m going to think he’s a 10 year old.It was natural for twitter to be derided (and I remember very clearly those comments about it) but at that point it hadn’t hit the tipping point and there was no guarantee that it would (Oprah, celebrities, world issues). Not to mention being able to monetize that as well.

  17. kenberger

    “nobody wants to know what someone had for lunch. Well maybe they do.”– or maybe they don’t, but maybe the world will stumble upon other uses never imagined until the service is used widely for a bit. maybe.

    1. fredwilson


  18. Tom Labus

    “Buy when there is blood in the street, even if it’s your own” Baron Rothschild.

    1. Erik Voorhees

      All the people who were buying Bitcoin when it fell back to $2 last November did exactly this, and in one year Bitcoin went from $2 -> $13 today.

  19. kenberger

    onsip is a David. I was thinking about that in the private chat we were just having re their ancillary services vs Google Voice.

  20. rudyc

    I’ll throw my 2 cents into the ring although I’m a bit hungover this morning.1. 3D printing has HUGE potential. Imagine needing a certain wrench size not having it, downloading a design from a website and having it in your hands, faster than you can pickup the keys to the car. That is something I would love to be a part in.The trick is going to be much like the hybrid auto. You have the make the product cheaper than the cost. I’ve always felt that hybrids would/could be so much more if only the costs were somewhere close to the gasoline powered + gas. Any idiot can figure out that the initial costs just don’t make up for the difference.Which brings me to Twitter again? We just about ready to design our company Twitter page and I was looking for a designer. I put an ad out and you know what? Nothing, no bites. If I put an add out for a graphic designer or even a graphics person for FaceBook it takes me all of about 5 min to fill that person. Which leads me again, to who uses Twitter? It is NOT a mainstream product. Just a mainstream marketing product. I feel it’s the product everyone knows but no one uses. #this has even become mainstream conversation, yet no one I know uses this product.Yesterday we had about 30 people over for dinner, not one person used Twitter with any regularity. Yet the conversation did go to FaceBookand Instagram. Again, I feel as if this is the most over funded over hyped company EVER!

    1. fredwilson

      over 250mm users worldwide on web and mobile a month according to comscore who most often undercounts these sorts of things. 250mm people around the world is a fairly large user base. there might be ten or twelve other web/mobile services that have user bases larger than that. if that is not mainstream then i certainly have no idea what is.

      1. Jake McGraw

        I think what @rudyc is referring to is that most users don’t (yet) grok the one-to-many/many-to-one communication model of Twitter. Facebook represents a relationship model that matches most users real life experience: many one-to-one relationships. Here is how I explain the difference between Twitter and Facebook to those who don’t understand Twitter: Facebook is for people I know through the circumstances of my birth, Twitter is for people I wish I knew. To understand Twitter is to understand the internet, that you can seamlessly communicate with thousands of people without the baggage of a real world relationship.@fredwilson:disqus I wouldn’t be so quick to whip out the 250mm users worldwide quite yet. Check out the local tweets sometime to see that the majority of tweets from “engaged” users often end in “I don’t know” or “lol” or “#yolo.” I believe that those outside of the tech/news community still don’t quite understand the power of self publishing.

    2. rudyc

      All I’m sayin is that Twitter is a very unusual company altogether. I really don’t know of another company that has had this kind of history. From a marketing perspective they have been absolutely brilliant. The word ‘tweet’ has now become linked with them. # is another term forever linked with them. Twitter is from my backyard and yet again I point out that I don’t ANYONE using this system of communication outside of people on this website.They do upwards of $140M so it’s not a company to be taken lightly. But again, mainstream of which the topic was centered around, again I don’t think so. As Twitter is today, I don’t think it will ever hit ‘mainstream’. Mainly for this reason, people already know about this product, they may sign up for it and establish an account, but they are not using it, which is what the point is and should be. Isn’t it?Charlie Crystle,,,thanks I’ll look into it..

      1. fredwilson

        Try closer to 3x that amount of revenue

        1. kidmercury

          fredwilson 1, rudyc 0

  21. Farshad Nayeri

    @fredwilson:disqus David can beat Goliath if (a) the basis of competition changes and (b) David notices this change (c) Goliath doesn’t notice change.David vs. Goliath is a common theme in Asymco’s presentation of the Disruptive Innovation… (to no surprise since Horace was Clay’s student.) Note that the disruptor need not be small, it’s just that smaller entrants are likely to risk being “not good enough” (and they don’t mind being made fun, as you point out, since they have little to lose.)In many ways, Christesen’s Disruptive Innovation is reminiscent of Darwin’s Evolutionary Biology. Both present theories for large-scale and previously-unexplained phenomenon for which only faith-based explanations had existed. And both theories are confused for the colloquial meanings of their names, see http://monkeysuncle.stanfor…. One day Christesen’s theory will “evolve” enough to “disrupt” the way we explain business as we do with Darwin to explain biology.It would be interesting to put Arduino, 3D Printers, Kickstarter, and BitCoin under the Disruptive Innovation microscope to see if they are truly Disruptive Innovations.

  22. falicon

    I’ve been on the fence about Bitcoin for awhile now…but as of late I’ve finally landed on the side of ‘in favor’ and have become a believer.Why?Well there isn’t one single thing that has put me over the top, but it’s a collection of a bunch of little things…not limited to, but including:1. They haven’t gone away. There are plenty of haters, and it certainly hasn’t hit mainstream yet, but it hasn’t died or even dropped near dead yet either…it’s still early, but they have weathered the early storms well enough that I think they’ll be around for awhile now.2. It’s getting easier to understand and use. I think the biggest hurdle with Bitcoin has always been in getting the average Joe to first understand the concept, second buy into the need, and then third have trust in the system…we are still on step one but the message is getting clearer (and even some really early progress on step two and step three is being made).3. The beauty of the system is that it’s actually got a core that is a throw back to how currency started in the early days of society itself (decentralized trade). As long as there are people (just regular people) that believe in the value of BitCoin, then there is value in BitCoin…and those people are the ones that set the true value. People will eventually learn how to game and gamble on the system (ie. stocks) but for now, it’s actually a very pure and simple system and I think a lot of people will be drawn to that as it gets easier and easier…Of course all that being said, I don’t (yet) own any BitCoins…and I don’t think the mainstream adoption will occur in the VC 3-5yr window from today either…there is much work to be done.But it’s now officially a *very* promising and interesting start. 😉

    1. awaldstein

      Intellectually Bitcoin is a stimulant. Catnip when imagining a different world.I believe it, in some way will happen.Does this really need to be understood by the mass market in order to show footholds of success? I haven’t thought it through from a a market strategy. If it does, this is a huge challenge. Educating the world is a daunting task and if that is the only strategy, it’s daunting…

      1. falicon

        Without the mass market, it just falls into a ‘credits’ for the internet system…interesting on some level, but not the future I think it could have for the vision of a true global economy.Without a high-demand, buy with BitCoin only, product/service…it will be very long journey to mass adoption…but a journey I think we *are* currently on…

        1. awaldstein

          All or nothing is a hard road.All as the end game, value in pockets that connect as they inch towards the de facto standard is much more attractive. And realistic. And approachable.

          1. falicon

            Good chance it ends in the middle…but when it comes to ideas and emerging markets, I’m more interested in the ends of the spectrum where the results are HUGE (in either success or failure)

          2. awaldstein

            I like change the world results as well.But whether your goal is change the world or capture a global niche, from a start up perspective your strategy and daily tactics are mostly the same.I love a big vision as much as the next person. I believe in big visions a whole lot more when they come with an idea of how they are targeting those next 100 users. Even if they are wrong, intent is in the right place.

    2. Erik Voorhees

      Bitcoin adoption may be inevitable when you consider that a company like Amazon could nearly double its profit by using this system over visa/MC. How? Because Amazon’s profit margin is in the low single digits (…. They’re paying a couple percent on each purchase to visa/MC, plus chargeback/fraud risk which Bitcoin removes,… so remove these and a profit margin of 5% becomes 7-8%. AMZN could additionally sell to all the high-risk countries, because a Bitcoin payment is instantly “money good” no matter where it comes from.When Amazon realizes it could then use part of its new savings to reduce prices for the consumer if they pay in Bitcoin, then all the incentives align. Of course Amazon won’t touch Bitcoin until legal precedent is set, but it will be set eventually.

      1. falicon

        That would be a *very* exciting development…

  23. Neal Gorenflo

    Well, there’s another option. The little guys do great, then are bought, copied, or co-opted by big guys, and all the social value is destroyed by them for short-term profits.That is unless the little guys understand the battle lines, and band together for what I think they really want – mastery of their craft and autonomy so that their creative potential can be fully realized.I posted about this a couple weeks back:

    1. Luke Chamberlin

      “Die and be a hero / Or live long enough to see yourself become a villain”—Jay-Z

      1. Tom Labus

        Or live long enough for the world to catch up with you!

  24. kidmercury

    it is nice to see virtual currency like bitcoin gain some traction, though it is very far from what will actually emerge as viable. i would love to see all the bitcoin fanboys in this thread conclude their fanboy comments with a declaration of how many bitcoin they own, and how many they plan on buying. the good news is that as people start to hear more about bitcoin, learn more about it, and see its flaws, they will be getting an education in monetary science in the process. this will help move the world forward towards a real stable currency and a corresponding political money in africa is far more significant. the monetary revolution will occur in the US only if it occurs illegally/under the table; the land of the free is simply too regulated, all financial innovation occurs elsewhere. the only financial innovation that occurs in the land of the free is innovation in white collar crime. this is unlikely to change until sufficient political will emerges. outside of the US, there is the mobile money/microfinance revolution growing in parts of africa and india, as well signficant financial lawlessness (i.e. free of stringent regulation) in places like the british virgin islands or panama.

    1. Erik Voorhees

      Mobile money is likely to be one of Bitcoin’s killer apps. Compare a system like M-PESA which has been hugely successful, to the potential of a bitcoin-based system like… <— this enables SMS-based money transfer (no smartphone or web access needed), without the fees of M-PESA, and without the restrictions. A Kenyan using this would have access to a global economy, unlike M-PESA which is restricted to the region.

      1. kidmercury

        local as a starting point works better for the monetary revolution. if a powerful entity wants to take down bitcoin, they will find it extraordinarily easy to do so — this is the biggest problem, even if we disregard the myriad of other problems pertaining to how it is marketed and its dependence upon electricity. because there is no bitcoin central bank, anyone can buy up all the bitcoin. the market cap of all the bitcoin in the world is $102 million. chump change for anyone who wants to mess with the market, and no one can stop them.

        1. Erik Voorhees

          Please explain how an entity would find it easy to take down bitcoin?And yes, Bitcoin is dependent on electricity, but so is 99% of the things we use and value. In fact you typed that criticism on a computer 🙂 And to clarify, if all power goes out, it doesn’t mean the transaction records are lost, it just means the system is stuck until power resumes (I’m also not aware of a single time that power in the entire world went out simultaneously).If you believe anyone can “buy up all the bitcoin” then you do not understand how prices work. Try to buy even 100,000 btc and see what happens. The question to ask yourself… at what price would the market sell its last bitcoin? The world’s richest man could never buy it.Further, I fail to see how an individual who drives the btc price up to astronomical levels would harm the system? You’d instantly make all its most zealous advocates multi-millionaires. Imagine what they’d be able to coordinate after becoming absurdly wealthy…And you say nobody can stop bitcoin manipulation? Tell me, who can stop the manipulation of dollars? At least one of them is limited in supply.

          1. kidmercury

            why couldn’t the richest person buy it? there are no “strong hands” in bitcoin; people with lots of money go to fine art or precious metals as their currency hedge — a painting by raphael recently fetched a record amount — and so it’s not a top down disruption. it’s not packaged as a solution for those without banking accounts, so it’s not a bottom up disruption.driving the price up harms the system because there are no strong hands in it. at some point, satoshi nakamoto and the other first movers will cash in his bitcoin and go to vegas, and the market will come down. if something is to displace the dollar, it either needs to be (1) managed by an astute central banking system or (2) capable of attracting the capital that currently goes into US treasury bonds.manipulation of the dollar is not the question, i am not an advocate for the US dollar. replacing one faulty currency with another is not the solution, though.

          2. Prokofy

            I have one name for you: Anshe Chung (and it turned out those German invester brothers were behind her). I’m not kidding when I saw Second Life prototyped all this before and you can see, sadly, how it plays out. Study how Anshe bought up the snow land, crashed the market, bought up the prime coast land, crashed the market, moved to the islands, crashed the market, etc. etc.

          3. kidmercury

            yes. there is a solution to prevent all this, and it is called central banking, but the bitcoin people don’t want that because central banking is associated with “the man holding them down.” i am all about hating on government but i don’t think the anarchist utopia is an achieveable dream. slowly but surely though bitcoin, like second life, will push us in the right direction.

          4. Erik Voorhees

            Market prices tend to self-correct. You can only “crash a market” with manipulation so many times before the market crashes you. Prices don’t need central planning – they tend to fix themselves through voluntary, progressive actions taken by market participants.

          5. Erik Voorhees

            The richest person can’t buy all the bitcoins because the marginal cost of each bitcoin will go higher exponentially. Say this rich guy bought five million coins, the btc price will have moved up toward $100 at that point. Say he buys another five million coins. The price could be at $1000 then… see the problem? The marginal cost increases with each additional purchase of a coin, such that the last coin on the market would never be sold for all the money in the universe. This is true of any commodity, btw, not just bitcoin.Regarding early adopters “cashing out” – this is a self-correcting problem. Such a person can cash out once, and yes drive the price down in doing so… but then that person has no more ability to effect the price. Also, your assumption that people all want to cash out is flawed… consider that many see Bitcoin as a superior money entirely, and thus they already “cashed out” from dollars into BTC. They will use BTC as their currency as the system grows. The day that gas stations and grocery stores are accepting BTC, why would anyone want dollars at all?

          6. Ramon

            There are several ways of conducting offline transactions without power…

        2. Prokofy

          Yeah, you know, like credit card companies. In the end, credit card companies threatening Linden Lab with removal of their services were able to concentrate their geeky minds wonderfully about the advisability of pretending that the US law on online casinos wasn’t going to apply to them.

        3. James Ferguson @kWIQly

          @kidmercury:disqus I think there is a logical fallacy here.Assume £102m is correct. This is as priced on the marginal trading value (most prepared to sell and most prepared to buy), applied to all bitcoin. Suppose somewhere there is a bitcoin enthusiast who wants to hang on to one for perhaps emotional reasons.As value tends to infinitiy he can trade ever increasingly small sub coinage amounts to achieve his transactions. The only loser is he / she who imputes intrinsic value in wanting to buy them all. Anyone else can just say no.This infinite subdivisibility is a feature of bitcoin that many fail to appreciate and though I am no enthusiast I do like the elegance of the model.

      2. jason wright

        a global currency? no exchange rates, less volatility. i like it.

    2. Prokofy

      Say, when Fred said above that BitCoin is a “bottoms up” operation, I think he didn’t realize just how well he is describing what will happen to the customers at the end of this chain…

  25. howardlindzon

    sold the remainder of my $DDD into the lawsuit at kickstarter. management obviously is foucused on the stock and not much else these days

    1. fredwilson


  26. andyidsinga

    One thing that made a huge impact on me from Christensen is the idea that “small companies cannot meet the growth needs of large organizations”.There are a lot of people at GoliathCos who see the potential of the “toys” (I’m one of them) but are constantly asked to “show a path to a billion $ business” ..or even just a 100 million business. This burden of proof is incredibly high and time consuming. Eventually, David, who is out there building fantastically cool toys makes a business (or 10) out of them…

  27. Wavelengths

    Bitcoin will be much more interesting to a lot of people when they can buy in with their Farmville money. 🙂

    1. ShanaC

      Then you have gambling issues with the US government?

  28. ShanaC

    While I see distributed commerce (kickstarter), arduino/raspberry pi (I can’t believe you forgot about that!?), and 3d printing as toys that will change things (and change them in a big way), bitcoin seems to ignore the history of money. Money wants to be looser in terms of format, not tighter. And bitcoin is tight in terms of there only being a limited amount of bitcoin out there ever, and the fact that it is a matter of time before it is definitely traceable.Cash is king otherwise

    1. Guesty McGuesterson

      This just suggests to me that you might have a digital wallet with a mix of different kinds of digital money inside it. You might have 10 BTC and also a similar amount of some other as-yet-uninvented digital currency that works in a completely different way. Not terribly unlike the united states in the 19th century, when people juggled banknotes from thousands of different banks.

  29. matthughes

    Always worth noting: God was on David’s side.

  30. ShanaC

    Also, on 3d printing:I think we’re about to see three factors, one technological, one cultural, and one legal, that will reshape 3d printing1) technology -in order to make 3d printing work for reals, we need to start investing in reverse 3d printing (aka recycling). The material of everyday stuff needs to be reused otherwise we will have even more of a landfill problem2) Cultural – people will need to want to own more disposable stuff in a lightweight way. When they need something, they will print it, and then they will junk it back to recycling for a form of lightweight ownership (see mary meeker from yesterday3) legal – the regulatory enviroment is about to get a lot stricter. Because you can print a working ak-47 with no wait. That has got to change

  31. ShanaC

    Also before I forget: Homemade genetics labs…

    1. andyidsinga

      those are what all the secret flying drones will be monitoring [yikes]

    2. William Wagner

      Pee in a cup -> transplantable baby organs and graftable tissue

  32. Guesty McGuesterson

    I would like to know how BitCoin is supposed/expected to scale.As I understand it, the idea is that a network of peers collaborates to produce a shared, verifiable transaction log. That is to say, a log of every bitcoin transaction ever processed back to the start of the scheme.If a billion people are going to use something like this to process their financial transactions, how many processing nodes will the system have? A hundred million? Are these nodes actually verifying the integrity of the entire block chain? Can a system at that scale actually process transactions in a reasonable amount of time?Finally, can a system like Bitcoin, once scaled to this degree, still be said to be “distributed”, “decentralized”, or “peer to peer”?

    1. Erik Voorhees

      Bitcoin scales in two ways:1) Upgrading/improving the protocol to make it more efficient over time. This is happening in a big way with v0.8 which will “prune” the blockchain and make it far more digestible. Since it’s opensource software, upgrades will happen in perpetuity.2) Not every Bitcoin transaction needs to be recorded in the blockchain. This sounds strange at first, but consider that ewallets can transfer btc internally between accounts without the blockchain knowing. User A sends to User B, and it’s just a notation in the ewallet’s database, not the blockchain database. As Bitcoin grows, many trusted ewallets will emerge, and many transactions will thus never appear on the blockchain.Bitcoin retains decentralization in that no single party has any special privilege or control. Yet, it’s inevitable that there will be numerous points of voluntary centralization where it makes market sense (such as in the case of exchanges and ewallets, etc). Bitcoin is flexible in that the market will ultimately decide how much decentralization is most efficient, but it will never be the case that a single party governs the system because the option to hold bitcoins on your own computer, and transfer them directly peer to peer will always exist.

  33. William Wagner

    Chuck Hulls’ patents on what form one labs is doing with DLP printing are pretty interesting; of course DLP projectors weren’t around in 1985 so they assumed CRTs would do the trick. I’m having a hard time figuring out why they would go to Kickstarter for this though, can’t even think of an appropriate metaphor for how ridiculous that is.

  34. scott crawford

    “Maybe is a powerful world.” <– Love that.

  35. Ciaran

    Just regarding the 3D printing piece, I really like this piece which challenges some of the hype surrounding it.…I don’t think this falls victim to Fred’s point about being dismissive. It’s more a case that it highlights the need to take a cold, clear look at the facts that often surround the things that get hyped, and what the realistic outcome is likely to be.

  36. bill_michels

    Gandhi summed it up well – “First they ignore you, then they laugh at you, then they fight you, then you win.”

  37. aarondelcohen

    I’m spending so much time thinking about what will happen to research universities. Would very much like to know what this community thinks when you apply the Christensen framework to higher education. I’m asking the question about places that focus on research from the Ivies, to State schools such as Michigan, Maryland, or Washington, and even private universities such as USC, Rice, or NYU where I teach.

    1. fredwilson

      Adapt or slowly die. The higher they are in the rankings the longer it will take for them to be affected. But all of them will be affected over time. Adapt doesn’t mean turning into a MOOC. But it does mean leveraging all this new stuff to dramatically lower the cost of higher end. I think Rick has the right ideas at NYU.

  38. Carl Rahn Griffith

    It’d be great if sustainability and increased autonomy from corporates was more inclined to respect past skills and traditions – whilst 3D printing is interesting it just seems like industry once again being in control. True empowerment doesn’t require expensive gadgets.

    1. Wavelengths

      I’ll just bet you can whittle yourself a new axe handle if you broke the old one chopping wood for your cookstove. 🙂

  39. Mark Essel


  40. Beck Kuchkorov

    Fred’s line “The more I hear people laughing at, deriding, and dismissing something the more I think it is likely to be a big deal.” reminded me of great quote — “First they ignore you. Then they laugh at you. Then they fight you. Then you win.”

  41. fredwilson

    huge difference between bitcoin and HD Radio. in fact they couldn’t be more different from each other. one was top down and the other is bottoms up.

  42. LE

    “some minor community excited about something”If 10 minor communities are excited about 10 different things 1 has a chance of hitting though. That’s the VC model and why corporations (and individuals) can’t play this game gamble.

  43. Dave Pinsen

    Another AVC commenter has made a similar point about how he’s wary about services that are primarily patronized by / enthused about by other tech start-up types, such as Uber.

  44. Wavelengths

    Example of a pointless techie invention: the TV remote control. What a silly concept! … At the time. No one cared, until they realized what it would do for them: mute commercials, channel surf, switch from TV to DVD, etc., etc. Revolutionary — not because of the technology but because of all the liberation and behavior change that it enabled.Do any of us actually know where the On button is on the TV setup anymore? Once the remote has been programmed?

  45. Prokofy

    BitCoin will never succeed because it enables fraud and undermines institutions. The Internet does not transform human nature. For an understanding of what happens to virtual currencies, virtual stock markets, etc. see Second Life, where hundreds of thousands of dollars have been lifted from consumers via various schemes.…Finally, the company had to crack down on the “banks” and “stock markets” in order to keep its virtual currency, the Linden, viable, and had to introduce controls, breaks, a reg api, etc. I know a currency exchange that exchanges Lindens into dollars and euros and vica versa (VirWox) and they had to stop exchanging bitcoins.The red flags go off not only because of the small community, but because the small community becomes so rabid about trying to deflect criticism, so zealous and fanatical about claiming that no outsider can every understand it “enough”. If something is viable, it takes off, it serves people, they use it, and you don’t have to persuade them, and positive experience builds up. When that is missing, and the fanboyz have to keep hyping it and explaining all the time how wrong you are about it, that’s when you know it’s a failure.

  46. BitcoinStarter

    ^^ exhibit A.

  47. Rob Hunter

    Thanks! Enterprise is usually where big incumbents hide.

  48. LE

    “HDRadio was hyped by audiophiles””one was top down and the other is bottoms up”HD Radio may well have been championed at the top by the audiophiles that @proales:disqus speaks of (that worked for those corporations).

  49. Rob Hunter

    This is what I meant when I said that the toys argument must have counter points – toys that ended up nothing. And I’m sure that there are differences between HDRadio and other, more successful toys. I just know that I couldn’t be trusted to spot those differences yet.

  50. LE

    I know but the other meme that goes about is that VC’s care more about the team than the actual idea.

  51. awaldstein

    Agree!Wish they would tackle the consumer to POS system online opportunity.

  52. ShanaC

    kind of funny, one of the uber guys was a regular here for a while….

  53. Hrishi Mittal

    How is that a bad thing? Tech people are early adopters of new tech, and then it spreads out to others. It’s almost always like that.I found out about Dropbox when Drew Houston first posted it on Hacker News. There was no way my non-tech journalist friend would have found it or be excited about it. Now he uses it more than me.

  54. ShanaC

    ) I’m obsessed with littlebits. they are the new lego (and I loved lego growing up).2) I think there is a viable business in gardening via the web…

  55. andyidsinga

    Dude – my kid has littlebits in her 4th grade class (charter school here in Portland) ! …she actually turned me on to them when I was fiddling with arduino in my home office …then I felt really really old for a minute 😉 …then very excited!

  56. raycote

    No one cared, until they realized what it would do for them:Good point!I think it is very hard for most of us to get our heads around the foundational mechanics of money and credit and the centralized looting that goes unnoticed by most of us.I’ve tried to penetrate this but largely failed. I’m at the stage where I thing we are being looted by leveraged paper plays by insiders at all levels. But I cannot transparently visualize all the underlying mechanisms in ways that are definitive enough to motivate digging out my pitchfork.I think this reality undermines any real ground swell around an abstract experiment like bitcoin.I do sense great opportunity for all of us if someone could get this operating effectively?

  57. Wavelengths

    See my comment about trading Farmville money for bitcoins. 🙂

  58. Wavelengths

    Foundational aspects of money …I know you’ll find many people here who have a religious fervor about their own concepts of money.I saw money from a curious angle when I worked in the mortgage business for awhile. I saw the leveraging and “looting” that you describe. I also saw people who had been trained like lemmings to believe in utter lies, who — thinking they knew what they were talking about — would argue terms without any knowledge of how a new and different mortgage could change their lives.I know Kid Mercury (and many others) is/are all about “debt-free,” but I look at the reality that if the cost of the rent is greater than the cost of a mortgage for a house in the same neighborhood, then maybe a mortgage makes sense. (And add in the benefits of current mortgage interest deductions.) The person who is saving up to buy the house “free and clear” is still paying rent to a landlord over all that time of “saving” (while the landlord is gaining by appreciation, likely) and at a premium over what used to be available as a mortgage payment before the end of the so-called mortgage bubble.The guy who is paying his mortgage is playing the same game of gaining by appreciation of his (typically) biggest single asset, just like people who have lots of money to pay cash for those assets, and the extra cost to him is a bit of interest that is — presently — tax deductible. To me that is a deduction that helps level the playing field for those who didn’t inherit or get some other windfall. When the guy with the mortgage sees his $200,000 house appreciate to $300,000, that’s a real increase in value of his big asset, just like an increase in stock values. (Also consider that the mortgage interest deduction is something that encourages people to buy rather than rent, and once a renter becomes a property owner they have a vested interest in the property value and are less likely to let the house fall down around their ears, and more likely to care about keeping up the roof, lawn and neighborhood values.)Back to the issue of “leveraged paper plays.” Yep. You’re right I was just “inside” enough to have some idea of what that money looked like. An interesting thing happened at the time a real estate closing happened — the mortgage became a “property:” separate from the physical property. The mortgage was sold, sold again, and sold again. It had a “certified value” based on a bunch of factors that represented that this mortgage was just like a bunch of other mortgages that were all then put into a bundle and sold again, at yet another fractional profit (on a much larger sum of money) to some end-buyer like Fanny Mae. (For example.)Curiously, when the government — first under G.W. Bush in October 2008, gave a bunch of money to the banks holding mortgages, they were being compensated for mortgages that were worth less than the properties, but it appears that they continued to hold onto the properties that were held as collateral.They were “paid” for the mortgages, but the kept the collateral.To me this is the great hidden crime of the last few years: people who had their homes foreclosed who were then on the street, while the banks had already been paid, with additional benefits, for the “bad” mortgages.I could go into this further, but it might be the book I haven’t written yet.Glad you pointed out the voodoo in financial real life.

  59. awaldstein

    Square lets me buy something from anyone one to one in person.Square does not let me have an account (think Amazon or Itunes) that will let me purchased from a multiplicity of vendors (think different POS systems) online.

  60. Dave Pinsen

    I could be wrong, but it might have been Phil Sugar who made the point about being wary about start-ups that mainly sell to other start-ups.

  61. awaldstein

    I’ll check this out. Thanks!

  62. jason wright

    umm, but aren’t some of these institutions fraud?

  63. Ramon

    That argument fails completely. Bitcoin is not Linden dollars, and the US dollar facilitates fraud and undermines institutions (when accompanied by military force).It isn’t necessary to understand Bitcoin to use it. Ease of use is more important, and that is rapidly improving. For those who do understand it, the incentives are overwhelming.

  64. Dave Pinsen

    It’s not a bad thing per se, but if the product or service isn’t less expensive or more convenient than existing alternatives, it raises the question of whether its appeal might be limited to techies.

  65. ShanaC

    maybe…if you could figure out how to do this, sure.

  66. kidmercury

    i do like mortgages if the math checks out in comparison to rent. but, you have to factor in1. property taxes (and potential for increase in them)2. interest on debt3. repair costs4. landscaping/assessments5. risk cost, in that what if you need to sell but have to do so at a loss?

  67. Wavelengths

    Always calculate the PITI (principal, interest, taxes and insurance) and assume that the whole amount is the “mortgage payment” even if you make the choice to pay your property taxes just once or twice a year. (Mortgage companies generally prefer that the yearly taxes are divided into twelve monthly payments and included in the PITI payment.)Remember that the interest portion of the payment is deductible — this argues in favor of a larger mortgage rather than a smaller one. But before you get your hackles up, consider that a mortgage is probably the cheapest loan you can possibly get. Can you get $200,000 from a business investor at 3.5%, paid over thirty years? I believe that the knee-jerk reaction people have to that HUGE COST IN INTEREST is engrained by the prevailing education that overlooks the HUGE COST of lost opportunity if, for example, property appreciates, or the costs if you rush to pay down the mortgage but take out a more expensive loan to buy a car or operate a small business.The factors you list are all legitimate, but those pertain to any property. If you are renting, then all those costs are also built into your rent payment, along with a profit for the landlord.One advantage to a large mortgage that I hate to mention, but it’s worth noting, is that if you end up in an economic hell like Detroit where your $125,000 house is suddenly worth just about zero, then if you choose to walk away (sometimes the only way to save yourself) then you aren’t losing real cash money that you yourself saved to put down a big down payment. Regardless of whether you owe $60,000 on that zero-value house or $100,000, if your only chance for financial survival is to move to where jobs exist, you will be just as “damned” in the financial world for either mortgage amount, but you will “lose less” if you walk from a bigger mortgage. (Personal note: I hate to suggest this action, but if the economy turns upside down, jobs vanish and houses become worthless, we shouldn’t expect that people continue to feel obligated to remain enslaved to the economic paradigm of five years ago. There is also dignity in knowing when to cut your losses and start over.)A final point: If you have a mortgage, the mortgage company will insist that you maintain insurance on the property. Tragically, I heard of people in the path of Hurricane Sandy who had just paid off their mortgage and were “saving money” by canceling their property insurance. Total loss.