A Changing Of The Guard?
The world has all-but stopped making new tech unicorns. pic.twitter.com/rppXVg5hWX
— Jim Edwards (@Jim_Edwards) May 29, 2018
21 new ones on this list here https://t.co/eZRoyNfACZ WSJ may not know where to look these days
— Fred Wilson (@fredwilson) May 29, 2018
Comments (Archived):
Let’s call them Unicorns on steroids…for now. Many of them will be flash Unicorns. Now they are, now they aren’t.And new ones coming soon…monthly. Guaranteed.
They are Unicorns that blow bubbles out of their horns perhaps?
Amphibious unicorns. They walk on water too, and can fly like elephants.
Beware the methane filled bubbles!
#burn
That is a crazy miss……
https://www.youtube.com/wat…
Whoa – takes me back 😉
Even allowing the equivalence of coin market cap and startup value, 21 used to be the quarterly rate of unicorn creation so something still going on unless crypto starts accelerating.
https://uploads.disquscdn.c…
Bummer!!! Downer!!!! Naysayer!!!! Party pooper!!!!! Hurry up, we need to add more soap to the giant bubble machine!!!! Hire a band!!! March down Wall Street!!! Get interviewed by Lou Dobbs!!!Bubbles we will blow.Bubbles we will blow.High ho the dairy oh,Bubbles we will blow.
.Bit of cold water in the face, no?JLMwww.themusingsofthebigredca…
Cold water is when I show the tech industry the reason it’s got a “damage to democracy” problem is because language is the parent whilst logic is a child. Yet data scientists and AI researchers are taking the child’s primitive {0 or 1, %} logic and parameterizing the more advanced parent with that.Voilà how we ended up with “mindless AI”. https://uploads.disquscdn.c…@sigmaalgebra:disqus — I believe in common sense and doing coherent art+science. Hype doesn’t move humankind+technology forward.There’s utility in crypto but if it doesn’t solve the problem of getting the machines to understand human language, culture and values then it’s not that interesting as an “innovation”.
First things first !Before”solve the problem of getting the machines to understand human language, culture and values”We might want to work a little more on the prerequisite optimization of an Organic-Process-Literacy based set of “language memes” capable of facilitating the core mandatory functions inherent in collaborate epistemology (collective intelligence) at the human to human level.Language is everything when it comes to complex interdependent systems. It is functional language(signalling) at every level of the reality layer cake that make synchronized complexity sustainable.For far too long we have been focused on teaching better language use skills with little to no effort invested in improving the mechanics of language/metaphor-knowledge itself. That to me seems key to acceleration of “moving humankind+technology forward”.
> Hype doesn’t move humankind+technology forward.SURE it does!!!!! :-)!!! The situation is similar to how in the plains of Africa the lions make the herds of Wildebeest more healthy!!! Uh, don’t see any slow, sickly, clumsy Wildebeest dumb enough to leave the herd! Similarly for all the grazing animals on the plains of Africa — all those animals look nice and bright, healthy, alert, really, really fast on their feet!Hype teaches important lessons in rational thinking to people who need such lessons and are willing to pay “full tuition” as in “experience is the great teacher and some will learn from no other”.In the US, the big gang up, pile on, fake news, mainstream media (NYT, WaPo, ABC, CBS, CNN, MSNBC, NBC, HuffPost, Politico, etc.), i.e., MSM, Goebbles-like (“repeat a lie often enough and people will believe it”) propaganda campaign against Trump is showing, as Trump actually does well and the Obama Administration dirt is coming out, that the MSM has been shoveling dirt based on nothing but nonsense. For nearly 3 years the MSM has shoveled the worst they could find or make up, and so far all they have that has any credibility is something about Trump having a second scoop of ice cream. So, in effect, the MSM has given Trump a very clean bill of health, counter to the clear intentions of the MSM.Uh, the voters need to understand the Mueller campaign: The Hillary cabal biggies at DOJ and FBI unleashed Mueller just to keep headlines going about Trump-Russia. Their goals were (A) maybe find something real and proceed with that, (B) create FUD (fear, uncertainty, and doubt) to hurt Trump’s poll numbers, (C) distract the Trump Administration from the work of the country as a way to lower the Administration’s accomplishments and, thus, lower their poll numbers (here Pelosi, Schumer, MSM, etc. are perfectly willing to hurt the US), (D) with lower poll Trump numbers, win Democrat seats in the 2018 election, (E) pump out a report that the House can use for a Bill of Impeachment, (F) if the Democrats can win a majority in the House in 2018, bring a bill of impeachment, if only to hurt the Trump Administration some more and increase Democrat chances in 2020, and (G), most of all, and may I have the envelope, please [drum roll], to have the topic of dirt in politics dominated by Mueller so that Sessions won’t go after Hillary and Obama and their cabal in US national security, the DOJ, and the FBI.Net, the Mueller investigation is not about anything about Russia or anything Trump or the Trump campaign did but JUST about dirty politics to sway gullible voters and get power for the Democrats. So, our gullible voters, however many there are, are getting a good education in dirty politics. So, lots of people in Hollywood, viewers of The View, devoted readers of the NYT, eyeballs on the MSM are all getting a crash course in democracy.E.g., the MSM, Democrat propaganda yapping attack dogs really HATED the recenthttps://peopledotcom.files….As a result I conclude that for such people who hate beautiful cases of motherhood, we really do need to keep Roe v Wade.In a true democracy, the voters very much need to be critical, rational thinkers immune to fake news, sloppy reporting, claims with no solid evidence, propaganda lies, etc. Well, the MSM is busy both going out of business and creating educated voters!Your parent/child analogy of language/AI is obscure but basically okay.But, again, language is like what is on the communications channel, e.g., the HTML, HTTP, TCP/IP, Ethernet, etc. What is much more important is what is at both ends of the communications channel. The problems with computers understanding language have nothing important to do with text to speech, speech to text, parsing, syntax, semantics, etc. It’s like the Internet has nothing to do with Ethernet since Token Ring or just asynchronous point to point dial-up could be used instead.The problems with computers understanding language are due to the fact that the computers at both ends of the communications channel have nothing like real intelligence to understand the message to send it or to receive it. Really, natural language can communicate the results of real intelligence so that a machine that can understand natural language needs real machine intelligence, and apparently so far there is not even zip, zilch, or zero start on that.Computer based word processing has been terrific for my writing and meager typing and spelling skills, but that word processing soft/hardware has nothing to do with intelligence. I have lot of tools in my garage, but it took some intelligence for me to use those tools to replace the broken left side rear view mirror.What’s being done now in essentially all of ML/AI is basically just applications software not fundamentally different in 50+ years and has nothing, nichts, nil, nada to do with natural intelligence. The idea that AI has anything to do with intelligence is hype for gullible people in need of an education.
Is this really a blog post? I think this is a retweet or a share. Just sayin’
Now you are getting all existential on me Jim. What is a blog post, after all?
Hahaha. I need deep thoughts. Prose to ponder.
.You created this monster, and, now, you have to feed it.When you dispense wisdom, the masses expect wisdom. They scream for it. They are dependent upon it.JLMwww.themusingsofthebigredca…
They want wisdom? But will they pass the real, one true test of wanting wisdom, being willing to crawl on their bellies and eat dirt?
There was more wisdom in this post than 99.9% of what I’ve ever written here. Nobody saw it sadly. Oh well. There is always tomorrow
.Wisdom is in the ear of the beholder.JLMwww.themusingsofthebigredca…
I believe I saw the “wisdom”. But I just remarked on the poor low level technique of the graph drawing.The reason the bad graph drawing irritated me was the importance of the data being graphed.I didn’t remark on the data. But the data, if valid, and I suspect at least roughly so, has a good message, your “wisdom”.But more should have been done with the data: E.g., just first cut we should have had a statistical hypothesis test, as in some of Herr Doktor Professor Geheimrat Albrecht’s posts!!!, likely with a new and suitable hypothesis test (might get a paper out of that) that rejected that there had been no change. Then, for more, have the data fit well, as in an hypothesis tests, a model for bubble blowing, viral fad growth, etc. E.g., a simple model is my old lazy S-curve model of viral growth y(t) wherey'(t) = k y(t) (b – y(t))So, as the S approaches the asymptote, the rate of growth slows enormously, really collapses, and that is part of what the GS graph showed. Build a model with some discreteness included and should be able to do still better showing the growth and collapse of the bubble, fad, virality, etc. And more could be done.For the hypothesis testing, we’re talking statistics of sample paths of stochastic processes, and that field used to be wide open for new results and likely still is. But, GS has trouble just in Graph Drawing 101!!!Here might use some work in stopping times (growth stopped due no doubt to people using their favorite stopping times), the martingale convergence theorem (martingales are quite general things about which we have some very strong results — a good model might have some martingales in there somewhere), impulse response of a linear system (first cut, assume a linear system, and the stopping was an impulse to that system — as you no doubt know from engineering, typically such a system will oscillate), and an M. Talagrand result on a new look at independence (independence assumptions are the pillars of applied probability theory, and Talagrand has some nice, new views of this very old topic that should be useful), just for starters. Then add in some things that are new from, e.g., discrete (Poisson processes or at least arrival process based?) models of such growth, some of the models based on insight from what finger tip feel of the market suggests (uh, call that “market theory” to be tested) and collapse. Likely that field is wide open. Applying such things to the stock, etc.. markets might give valuable sell signals and make big bucks. I’m not going to pursue such now — I have much better, easier, more valuable ideas!!!!
tweet tennis
My dad explained me lots of useful things with bees.This is a case of cross pollination. 🙂
My fave subject will open the stable door for small machine / quantum inimitably that will enable international front of till IoT agreements that is the key to progress including ultimately continents that compete financially (crypto coin) not individual nation states (belt & road) working for the Yankee dollar was never sustainable but what is ?https://blog.ycombinator.co…
I work for one of those 21 (Dash), I’m bullish as hell and I’m guilty of checking coinmarketcap everyday… several times. But equating coinmarketcap to startups is way off.To start with, coinmarketcap mixes mineable and non mineable tokens, which makes it inconsistent internally.Then, when talking market cap in a startup, it is capital that is available for the company to invest and grow its value proposition. In tokens that is not the case, it depends on each project, but teams have only a fraction of that available. Buying a token is not the same as investing in a company, even if many times it feels similar.
Why do you check it several times per day? (I’m still learning)
Because I’m weak and need to know what prices are doing all the time, no need for that at all 🙂
.Instant gratification is not a bad thing, but it is a thing.I love to hit “ENTER” and see what everything I own is worth.Hope you are well, my friend.JLMwww.themusingsofthebigredca…
Yeap, totally a thing. Portfolio management apps are a drug!All good here, hope you’re well too! In fact, I know you are 🙂 I don’t engage much lately, but I still lurk in the shadows or binge read when I can.
being human is not the same as being weak my friend.
Ha! Always good to face one’s demons.
Clever response by Fred, but clever does not make it right.I know have said this here before, but Market value of cryptoassets/currencies is not equivalent to the Market capitalization of a business. Not even close. Calling it so does not make it so.That the market value of cryptocurrencies/assets is being to equated to tech unicorns is a little concerning.
As an investor looking only for a return, who cares what the underlying asset is? After all, a profitable investment is a profitable investment.But to your point, the assets are so fundamentally different. And I’m not sure anyone has figured out how to properly value to cryptocurrency.
.Your own words provide the answer — you are not an investor in the context of crypto.You are a speculator. Nothing wrong with that and I am guilty of doing the exact same.If cryptocurrency is the alternative gateway to venture style capital, then we need to await the massive failures just like VC.If VC admits to 50-75% failure rate, what is reasonable for crypto? I don’t know the answer, but I am tempted to believe it is either similar or higher. Why would it not be?JLMwww.themusingsofthebigredca…
I see crypto and the ICO’s more like a ‘tax on stupid’. Which is not the same as saying that anyone who buys in is stupid either. In the same vein as those who buy lottery tickets, gamble at casinos, or play bingo. Of course (as you well know in particular) that is also a form of entertainment (and hope). Creates positive emotions. With crypto investing, stock investing (gambling) the odds are all different. Seat of the pants it seems to me that crypto gambling seems to have better odds because there is no house and here are a steady stream of greater fools.Why is it a tax though? Because money is coming primary in small amounts from a wide range of people. And that money is then spent on other goods and services that actually do help the economy. [1] So in that sense it’s a good thing. I like it for that reason. Same way I like the Christmas holiday (but obviously don’t celebrate it). People spending money (‘the tax’) lowers the costs of goods for me (‘buy things they don’t need and gifts for others’). Good for the economy. A tax but one that I don’t have to pay. What could be better than that? Christmas the holiday is great.The real question though for economists is this: The money that is being gambled on crypto where would it be spent and invested if not in crypto?[1] Assumes that it ends up in our backyard. If people in our country buy an ICO and the money goes overseas then it’s a big negative. And in reverse if people overseas pump money into an ICO in this country that is as good as it gets. This is like when I sell to the Chinese (which I do). All that money from China gets put into the local US economy where I am located. As it happens I did a really large sale to a blockchain company in China and their money is now in my backyard.
I see it as a transfer of wealth. See my comment above. Again today I get a contractor (getting blue pearl granite installed) ask me about bitcoin. There is somebody buying and selling. Do I feel sorry?? Not really but let’s call it what it is. When he buys and takes the wealth that he has earned by literally breaking his back (two guys put in a 750lb island) somebody else is selling. If/when it loses money the person selling won and he lost.
I get a contractor (getting blue pearl granite installed) ask me about bitcoinSo if his wife asks him tonight what you said, will he have a clear answer for her? What I mean is was your reply able to be boiled down to an actionable decision as to whether he should gamble or not? Or was it so long that he will hear what he wants to hear (and disregard the rest ie ‘the boxer’ Simon and Garfunkle) [1]Note also that when someone like that ‘breaks his back’ asks you about bitcoin it’s my example of people in medicine putting scientific like accuracy on answers where there is really none. So if you asked him about an installation method he would give you a concrete reply based on his years of experience and knowledge. But your reply about bitcoin (whatever it was) is totally speculative. Plus if you gave him your thoughts when it was $4k and now it’s $8k you have lost all credibility.[1] Great video cover here btw for that song.https://www.youtube.com/wat…
I give my standard answer.You know how you can go into a home where the homeowner is clueless and just work them because they are a sucker?Unless you know exactly how it works you are the sucker, and there are a lot of really smart people that do.You know how granite counter-tops used to be really expensive? Now you run a special for $1,499.My advice worth what you paid for it, but working in the gaming industry, I know all people talk about is their wins, and could of wins. They don’t talk about when they got slapped in the face, their shirt torn off their back, kicked in the groin, underpants pulled over their head, and then tazed.
You know how you can go into a home where the homeowner is clueless and just work them because they are a sucker?I think we have to define what it means to ‘take advantage of someone’ ie ‘a sucker’.I would argue that it in many cases is the exact opposite. It’s the fact that the stupid public is willing to be duped by low price that has completely removed and shifted the burden on people to be taken advantage of by shoddy services and products priced cheaply. The mass market. And actually the person who charges more and gives good service is at a disadvantage.The price that bunch of businesses charges (a race to the bottom) in no way represents the value of what someone is paying.What I mean is this.If I call someone to my house to do a repair or provide a service the ‘non ripoff price’ is not the price quoted by 10 people at roughly the same level. It’s the price that will provide a good quality repair or service and solve my problem. Now granted I am not a little old lady on fixed income. (But that’s her problem for not having money not the problem of the person providing the service). Also who is to say that if one counter guy charges $3500 for what someone else will do for $1500 that the $3500 is a rip off? I say that is not the case. Maybe the $1500 guys should be charging more. Maybe that is why they cut corners and don’t return phone calls. I just had a guy do a renovation for me (small job). I paid exactly what he asked. And I know he padded the bill. And I am totally cool with that. Why? Because next time I will get the work I need and the other cheap customers will wait. Call it a tip. Why my Dad overtipped the snow guy. Come to my house first. So it’s not ‘a rip off’. Different way of thinking.My wife was ‘hocking me’ (yiddish for whining let’s say) that we needed to get our roof redone. I didn’t think we needed to. She called a roofer or two or three that were recommended by her friends. Guess they had good bedside manner because have no clue how a housewife (sorry she is not an engineer I mean) knows what makes someone know their shit with roofing (if you told me ‘he’s good’ then I believe that). So anyway several roofers come and quote a price for a new roof. Then the last roofer says ‘oh these are 40 year tiles on your roof and they don’t even make these anymore honestly you don’t need a new roof’. Last person who said that? The shiester going around after some storm two years ago making insurance claims. I flagged him down and asked him to go up on our roof and tell us what he thought. He said ‘you don’t need a new roof and there is no damage’ (so much for ‘shiester’ eh?). So here we have a case of people providing value whereby the people who quoted low prices were not. They were willing to just do a new roof when one wasn’t needed. My wife said ‘you were right we didn’t need a new roof, we can just powerwash it’. By the way the fact that the shiester wouldn’t put a new roof on the house told me we definitely didn’t need a new roof. Because he was going crazy in our neighborhood after the storm and had all these hopped up expensive painted trucks.And do you know what one of the roofers said (had a good reputation by the way). He wanted us to remove the expensive gutter guards that we have and ‘just clean out the gutters once a year’. Know why he said that? Because it’s easier for him to rip them out then to work around them. What stupid fucking advice is that? The gutter guards? They are serviced for free by the company that put them on for the people we bought the home from.So my point is someone charging more and providing value comes in many shapes or forms. But generally people are to stupid and they simply pay a low price and think they are saving money.So my summary is: “Don’t assume the low price is the realistic price and anything higher (even 2 to 4x) is a rip off”. It all depends.
We have different but similar negotiation styles. Brothers of the same Mother. When somebody says: $1k, I say what can you give me for $1.5k puts them so off guard I get $3k of value. When I get pulled over I say: Yup I did that sorry, get off literally every time, knock on wood.But the key to this is what Mark Suster and I talked about during his posts: Knowledge and Swagger. If you don’t have both you lose. Swagger means you don’t care if you hear a no. Don’t care.
and Swagger. If you don’t have bothThis is at least one of the reasons that women will often not be able to do what men can do. Men respond favorably to certain types of swagger as displayed by other men. The same behavior from a woman is taken differently. Now given some other superior advantage it’s possible to defy gravity and get beyond that. But it is an uphill battle no less. People have to recognize this as a normal human reaction to stimuli.There is a reason that many men in corporate America (or who are VC’s) look a certain way. People have more of an emotional reaction to visual things than they think they do.Even with kids. A cute baby that becomes a cut toddler gets treated differently than a less attractive baby. And they learn and grow by that. Not always but to a very large extent. I might say something to a cute baby but will ignore an non cute (or even ugly) child. The cute baby responds usually they are used to it. The ugly baby does not (over simplication). And that leads to other things as well.
A kitchen island, special, for $1499? It used to be really expensive!!!Once I was in a hurry to get a kitchen island: I had too much “stuff” in the kitchen so “needed” more room!!The first step was to do again what I’d done four times before to get more room for tools and supplies in the garage — at Sam’s Club, get an 18 x 48 x 72″ steel wire shelf unit! $100 each. Right, got four of them! Got a LOT of “stuff” the heck UP off the garage floor! Engine oil, transmission fluid, radiator anti-freeze, windshield washer fluid, spare bulbs and headlights, air compressor, battery charger, tools, lots of tools, extension cords, gasoline for the emergency electric generator, lots of stuff for yard work, …. Lota stuff up off the garage floor!Then in the basement, on the way from the garage to the stairs to the kitchen, put in four more of these for kitchen supplies — flour, sugar, rice, canned tomatoes, lemon juice, Grey Poupon Dijon mustard, anchovies, …!!!Those four were in addition to the five basement shelf units I had already built — 24 x 48 x 72 out of 2 x 4s and plywood for light bulbs, Christmas decorations, woodworking tools from my grandfather, wines, HCl to clean the CaCO3 from the hot water heating coils, …! Just the 2 x 4s, plywood, and associated hardware and glue cost more than the $100 for the steel units, and the steel units are a lot nicer.So, put in one of these $100 steel wire shelf units in the kitchen — that helped a lot, for cat food, flash lights, flash light batteries, canned clams, extra plastic ice cube trays, …!Then I noticed: From the same manufacturer, there was a good looking kitchen island, about 24 x 48 x 36″ with a really nicely done stainless steel top and a nice steel wire shelf unit underneath. GOT IT! Uh, carried it home in the back of my SUV — light truck with the back covered over! Installed it myself.Total installed price: $99. Uh, IMHO, the stainless steel top is more durable than granite which is vulnerable to kitchen acids! And, granite can scratch ceramics and break glass. And granite can be slightly radioactive. And the granite weighs, what, 750 pounds! When I need to replace the tub boot seal in my top loading Maytag clothes washer, I slide the kitchen island out of the way — tough to do that with a 750 pound counter top!
… echoes coming back from the millennium and youth.Mom turned 40 and she transformed herself into something like a bourgeois hippie. I have never seen again someone so full of love and enjoying life so much. The tower of books crumbling down from her bedside, her dogs, her old people that she took care so well for, her music..She loved this song.
.Haha, a “tax on stupid”? Funny stuff. Too true.JLMwww.themusingsofthebigredca…
But, but, but, but, Crypto is NEW, NEW, NEW, nothing like it since before the Dutch Tulips!!!!!! “It’s not a bubble. It’s a boom.”!!! It’s not tulips!!! Do you see any tulips??? I’m not seeing any tulips!!! This time it’s all different!!! Only people stuck in the mud of the past will fail to see the brave and powerful new world!!!! No guts, no blue chips?? Did I mention NEW???? All different?? Not tulips???
Great point Girish. I’m hearing now “token-based valuations” as if it was a totally different world. So, if a regular valuation might be $5M-10M, the token-based one could be $50-100M. The multiples are 10-20X…which gives you a sense of the distorted reality.
.I agree more with you than you do with yourself.JLMwww.themusingsofthebigredca…
As always you make a great point. With your awesome memory is there a term for what I am going to describe?I worry that many of these currencies have a huge variance in cost basis…..just example lets just say 25% have a cost basis of $1, 25% $10, 25% $100, 25% $1,000 with founders being in the first tranche.We have seen the problems with this in the housing bubble, the internet bubble, as far back as the tulip bulb bubble.I know in my gut that if you have extreme variances in cost basis you can have extreme swings in price. This isn’t economics just common sense. If almost everybody is in for the same value you don’t get wild exits for the door. But if you are in for $1 and the price falls from $1,200 to $800 you still make tons of money.
Blockchain the great wealth unequalizer marketed as the income equalizer. Tai Lopez couldn’t have done it better.
Bubbles you say? Bubbles was, what, a fan dancer in Vegas? If not, then:IIRC, yesterday, in the context of Memorial Day and the 70 million deaths of WWII, I discussed the dangers of financial market bubble blowing.For Bubbles, better we stick to fan dancing or, at least, bottles of soapy WonderBubble, each bottle with a little ring on a stick can use to make strings of soap bubbles.
The cost basis changes wildly because of the lack of clarity on intrinsic value and the speculative trading driving the volatility.Human nature is to overreach in search of fortunes and then seek to recover after the fall.As you said, it is really not different from other bubbles.But that does not mean underlying tech is all sizzle and no steak. I am convinced there is significant transformational value underneath the hype that will likely unfold on its own timeline even if there is significant carnage and confusion along the way.Predicting killer apps and adoption at scale is a tricky business and truth is none of us really know. But the “underlying jobs to be done” – more security, privacy, and ability to monetize personal data and engage at scale with the world. are very real needs for individuals/customers.
I am not debating at all the idea of decentralizing computing, creating a unique security mechanism, and disrupting financial services is not transformative.I think these have been tried before, but we have people around the world networked via high speed connections to the internet, massive computer power, and a really interesting technology.When people say things are different you have to point to actual real changes. So many technologies are now possible due to networking and the power of computing. Yes this time it is different because I have a high speed networked, mobile, super computer in my pocket.Now what has not changed? The nature of humans to look at other’s wins and act accordingly. If you turned a dollar into a hundred, and then Jane turned a hundred into a thousand, and Joe turned a thousand into ten thousand. I need to get in on this!!!
yeah. core attributes of the human mind – pride, greed, fear, and envy – stay the same across generations. As true today as during the time of Kings and Pharaohs. The need for social approval and to be perceived as “better” than peers is likely even a bigger deal today than in the past.The human mind (separate and distinct from the intellect which is more like a CPU and free of identity) is the basis of each of our lives and experiences. We are still struggling to deal with what it does to us individually and collectively.Irrespective of what tech does to our material lives, the true quality of our life is a function of how we deal with our minds. A billionaire can lead a wretched life of misery or a beggar can be in bliss depending on the state of their minds.
An All Time balanced statement on potential of Blockchain.
>Human nature is to overreach in search of fortunes and then seek to recover after the fall.Had read a quote something like (I’m not good like Girish at perfect quote recall 🙂 “fear and greed move (stock) markets”.
>But that does not mean underlying tech is all sizzle and no steak. I am convinced there is significant transformational value underneath the hype that will likely unfold on its own timeline even if there is significant carnage and confusion along the way.Are you saying that w.r.t. crypto / bloclchain or about tech generally?
Crypto/Blockchain. Yes, it is hyped-up, early, and complicated. But there is significant transformative potential related to digital money, personal data, and multi-party business processes transcending multiple organizations.
Great point.
To be sustainable all networks need to equilibrate the value captured at the core with the costs borne more or less uniformly at the edge. This is true everywhere in the universe: our bodies, nature around us, the cosmos… And it’s even more important for inter-networking (big vs small networks).Mankind’s socio-political and economic institutions have yet to embrace this way of thinking. The Greeks would have 2400 years ago if they had only known about network theory. Even today few really understand it. http://bit.ly/2iLAHlG
But what if the cryptocurrency is a proxy for the business itself?From Fred’s list:Ripple. Market cap: $23bn. “The world’s only enterprise blockchain solution for global payments” https://coinmarketcap.com/c…Cardano. Market cap: $5bn. “Cardano is developing a smart contract platform which seeks to deliver more advanced features than any protocol previously developed.” https://coinmarketcap.com/c…Qtum. Market cap: $1bn. “The blockchain made ready for business. Build decentralized applications that simply work.” https://coinmarketcap.com/c…Those sound more like businesses than “currencies” to me. But I don’t pretend to be a crypto expert, so maybe I’m wrong.Either way, interesting thread. Sometimes one forgets the point of AVC is the comments.
And those businesses behind those currencies have a value, but it is not the one in coinmarketcap.I believe Ripple Labs has taken close to 100 milll usd in direct investment in the company. I don’t know at which valuations, but I’m pretty sure it is not in the tens of billions.
That may be right.That said, the valuation of a private company is determined by the value of its shares, which are only accessible to a closed group of investors. However, a cryptocurrency can be bought and traded by anyone — specifically, people who cannot own shares. And those people are putting up real cash in exchange for a cryptocurrency. That’s real value that sits outside of a private company’s investor-determined “valuation.”I doubt anyone would say that there’s zero value in that. Some might say it’s not equal to the crypto market cap, but then how does one explain the discount? By what methodology do you take the value that real people place in the cryptocurrencies they buy, to support their underlying businesses, and devalue it compared to the stocks that investors buy in the same company?I wouldn’t even know where to begin answering that question. But I think it’s an important question to ask.
I don’t have those answers either. I just want to stress that they are not the same. Someone will eventually find a good method to value crypto (or not!) and I understand why people use coinmarketcap, but we should not use it blindly.
.Where you been, BB?JLMwww.themusingsofthebigredca…
Still reading most days. Just usually above the comments. I’ll try to scroll down and say hi a bit more often 😉
.If you have an idle second, drop me a note and update me on the Adventures of Brandon Burns.JLMwww.themusingsofthebigredca…
Good to “see” you, Brandon. I hope you are well.
Coin Market Crap?
IIRC, yesterday, in the context of Memorial Day and the 70 million deaths of WWII, I discussed the dangers of financial market bubble blowing.
came here to make exactly the same point. the idea that an ICO in any way equates to a $1B market cap is just laughable.
when they’re denominated in the reserve currency of BTC they are worth what BTC is worth. one could argue that the total cap of BTC is a reflection of the total utility value (perceived) of all other tokens combined. i’m not necessarily making that argument, just putting it out there as a way of seeing 🙂
I agree but the equivalence is not completely without merit.We have always had tech unicorns with outrageous revenue multiples because of growth expectations or hype.While pre-revenue crypto projects valued at multiple billion dollars seems crazy, it is essentially the market’s prediction of potential future usage if the platform is adopted at scale.Is it fueled by speculation? Yes. Is it out of character with previous bubbles? No.A few of these crypto unicorns will become even larger and most others will collapse. But that is the nature of creative destruction.
Some days it feels like I am in an alternate universe where up is down. Ford for instance is worth $44B in market cap. Ripple is being “valued” at $22B. To claim these valuations should be treated equivalently is scary. One is well understood, socialized, regulated, liquid and extremely vetted. The other is barely spelled correctly by your average consumer much less understood.The irony here of course is that the crypto crowd is to some extent being hoisted on their own petard. The zeitgeist powering this social change was a desire for complete deregulation and a deep distrust with centralized authority but those very aspirations are what make it hard to compare market caps against companies values by these centralized authorities.
This is all a natural progression as the crypto crowd grew up in a trustless and permissionless internet. But it was needed to disrupt the telecom and broadcast/1-way content stacks. However, they know nothing of network theory. Otherwise they would not insist on decentralization, which is neither sustainable nor has every truly scaled. To wit the monopolization of the “settlement-free” internet by 5-6 firms.
Broadly I agree with the points you are trying to make.But for Lesson 2 in Blog Writing 101:(1) Fred spelled all the words correctly, but that does not make the ideas correct. (2) Fred is really nice to GG, but that doesn’t make his ideas correct. (3) Fred runs AVC.com with diligence, but that doesn’t make his ideas correct. (4) Fred’s post is clever, but …, as you said.But (1)-(4) also don’t make Fred’s ideas wrong.Really, each of (1)-(4) is close to irrelevant.What’s relevant is, are Fred’s ideas correct? Answering that is more difficult than mentioning cleverness.End of Lesson 2 in Blog Writing 101!!!I still agree broadly with your main point — :-)!!
Kudos to you for your comment. Fred is, well, um… he’s AVC. He wants to believe his work is not disappearing. But it is. The Wild Wild West Days of the internet are rapidly coming to an end.Consolidation means fewer, larger, and more stable companies. Financial gunslingers (cowboys) like Fred don’t like that. They want it to be 1950 in Vegas baby!Fred will probably retire, but small players like Union Square Ventures will soon disappear. Their partners and employees might join larger VC firms but most of them will likely be pushed out of the business.
There’s more to do: Microprocessor based digital computing and laser based long distance digital communications are by wide margins the biggest steps up on technology, economic productivity, and culture and civilization in all of earth’s history.The Wall Street, MBA, institutional investor, limited partner, VC investment, academic computer science, IBM, AT&T Baby Bell, GE, HP business, Silicon Valley hacker, Buffett cultures, etc. are 99+% unable to take available good advantage of these steps up. We’re talking mind-bending, outrageous, grotesque, unbelievable, brain-dead stuck in the past, oblivious, uninterested incompetence. Like M. Planck observed, can’t expect to change their minds and, instead, just have to wait for them to die off. Parts of US research academics and the US DoD and NSF cultures, although not focused on entrepreneurship, are VERY and MUCH more able.The astounding opportunities will not all go neglected for too long!And the opportunities have next to NOTHING to do with 99+% of current data science, machine learning, artificial intelligence! In particular the academic computer science community is woefully short on academic prerequisites, research methodology, effective culture, and research directions.We have fantastic work — COBE, LIGO, LHC, CRISPR, 7nm microprocessor lithography, and much more. In comparison, the business community is … too far down to describe in words.Uh, let’s take Wall Street and their MBAs (disclosure: I was a prof in a major MBA program): What the heck has Wall Street ever accomplished in progress even in their own work? H. Markowitz? W. Sharpe? Those two weren’t from Wall Street. The Brownian motion solution to the Dirichlet problem? J. Simons? He was first a good pure mathematician and now is funding a project to tell the difference between a big bang and a big bounce.There really IS good work, and eventually more of it will move into business.
They said the same thing about Pets.com and online shopping turned out to be a real thing.I think that is Fred’s point.
It is, and Theranos was a unicorn. The CEO got a ten year ban. Imagine what will happen to the space after regulation comes in.
And many of them are paper unicorns…as in “white paper” based 🙂
.It is very difficult to embrace the notion that a cryptocurrency market capitalization is even remotely related to the value of a startup.There is the obvious gigantic difference between what they both do as well as the lack of exits to prove up real value.Crypto is still very much “inside baseball” even if the underlying assets were comparable.This is an enormous “error of composition” — comparing two things which are simply not comparable.A startup has some “killer app” in its value proposition.JLMwww.themusingsofthebigredca…
The crypto token valuation is supposed to be based on expected future usage, the economy it enables, and the velocity of the tokens. (how often they change hands). Equations like MV=PQ provide some guidance, but these are based on the fiat world and it is not clear if/how well they will translate to crypto.Value of equity is based on discounted value of future cash flows and on that basis, most of these companies that are pre-product and pre-revenue will be valued at close to zero.Nevertheless, it is one of those things that is hard to embrace, but we will also be foolish to entirely dismiss out of hand. The story is still being shaped and written.
.Efficient markets are “auctions” in which the auction element is a critical stepping stone on the path to price discovery. Particularly true of public markets which fluctuate every minute.There is no single “value” for anything though we painstakingly try to create that frame of reference.What you are describing is an analytical technique.When I was buying and selling businesses, I would turn the analysts loose to prove up past cash flows (due diligence) and to project future cash flows with an eye toward hitting some mythical, self-imposed hurdle rate of return.Then, I would see what I could negotiate.”In life, one doesn’t get what they deserve; one gets what they negotiate.”Then, there is the financing. I would wildly overpay — based on the analysis — if I could immediately dip my beak into the cash flow as it materialized.Then, no sooner did I have the right price, the right financing, intimate operating knowledge, than I would offer to pay a discounted principal amount in cash to retire the debt.There is no single data point which is a true value.JLMwww.themusingsofthebigredca…
Our economy could use more Zebras https://www.linkedin.com/pu…
Mr. Benjamin Graham’s Three Timeless Principles of Investing.https://www.forbes.com/2009…
At one time each of Bill Gates, Page and Brin, and Zuck had a nice investment portfolio worth several hundred million dollars all in just one investment. Then they should have followed the Ben Graham thinking? The Harry Markowitz thinking? The W. Sharpe thinking? The James Simons thinking? Well, they didn’t, and now each is worth tens of billions.So, read it here if only for the first time: The Fourth Timeless Principle of Investing is to (A) see a way to build one of the most valuable companies in the world and, then, (B) do that.A problem with the first three principles is that the investor builds nothing and, instead, is depending on, and severely limited by, other people to do the building and various mostly statistical properties of the prices in the stock market. With the fourth principle, the investor actually builds the company himself based on some fundamentals they can see and, thus, has no such dependencies or limitations.E.g., for Gates, use microprocessors and the Xerox PARC graphical user interface to replace the huge labor waste of the typewriters, and that’s fundamental and not at all about depending on, e.g., IBM’s Selectric designers or statistics in the stock market.E.g., my older brother got his Ph.D. dissertation typed by a professional really good with a typewriter. I got my Ph.D. dissertation typed by doing the typing myself using a computer, a text editor, a simple text formatting program, and a carbon ribbon on a daisy wheel printer — HUGE difference. Using cheap computing to replace the typewriters was one of the biggest steps up in productivity in all of history. Then Ben Graham rules of investing miss such opportunities.
.Haha, you freakin’ dinosaur, Tommy.I have a well-used and dog-eared copy of all of Graham’s books.JLMwww.themusingsofthebigredca…
I like that these companies are, most likely, overvalued. It may be an indicator for health or lack of for the post 08 Crash world economy. Something else at play here. Italy…….
21 new ones on this list here https://coinmarketcap.com/ WSJ may not know where to look these daysIronic because news media is actually big on comparisons that don’t matter in order to simplify things for the everyday man. So in that sense hats off to the WSJ for not making this one. And that wasn’t the purpose of what they were showing you took it out context w/o researching the underlying data.Here is the link to the actual WSJ index. If you look at the source you will see why it wouldn’t make sense to include ICO’s on this list. It would be like putting Nasdaq stocks on a chart of NYSE ipo’s. You can toggle the dates to go from 2014 to 2018 I’ve attached two screenshots.https://www.wsj.com/graphic….. https://uploads.disquscdn.c… https://uploads.disquscdn.c…
Apparently someone at Goldman Sachs got a Gentleman D- in Data Presentation and Graph Drawing 101:First, what’s with the itsy bitsy, teeny tiny, itty bitty font size? Sure, the font size would be okay if viewed from less than six inches with a magnifying glass with the image expanded to the size of a bill board. The 101 level course needs to point out that for some reason with some graph drawing software for each graph a user needs to spend about 30 minutes going around all the options in the software, clicking, clicking, clicking, over and over, making fonts and lines solid black and much bigger, must fight off the tiny default fonts, gray lines, narrow lines like fighting ants after falling on an ant hill in the Amazon River Valley.Second, what’s with the JPG compression? That compression file type is good for landscapes and people and not for line drawings. For line drawings such as graphs, use, say, GIF.Third, what the heck is meant by an “exit”? Does that mean that the company was (A) sold or went out of business or (B) is still in business but is no longer regarded as a “unicorn”? So, in the 101 level course we learn to be clear on definitions of terms: Here the meaning of “exit” is not clear.Fourth, to take any such graph at all seriously we MUST have clear references to primary sources where we can look up and confirm the data. This graph has no such references.What a shovel full. I can’t beat back against all the insects, vermin, sewage out there and, instead, have my own work to do. So, here I’ll just say: Goldman Sachs, raise your grade.Gee, the newsies are touting data science, machine learning, artificial intelligence, and big growth in information technology when too much of the worker population is getting D- in Graphs 101. WHAT a MESS.
How do companies generally distribute tokens to its equity holders and employees? Is it generally offering some percentage of a token offering pro-rata to those stakeholders?Guessing no true rule of thumb, but would be interested to learn of other examples and best practices.
Where can one read an in-depth (for dummies) defence of cryptocurrencies/assets being sustainable at serious scale ? That would seem to be a foundational requirement for truly tangible unicorns ?
Any recommendations for books / articles to get up to speed on crypto? Have been casual follower for years but time to dig in
The source that WSJ is quoting is Goldman Sachs. So the question is really for them, no? (The question being whether and how they value in crypto currency platforms.)
Right, wrong, or indifferent, seems that one group has found an efficient way to secure funding, while the other group…