Jump is an electric bike that is being distributed by Uber, and it just happened to be launching 350 of them in the London borough of Islington. You can rent a bike for 5 minutes at £1, and pay £0.12 per minute thereafter. That's generally cheaper than a taxi, on average more expensive than a public bike subscription. So why am I going on an on about these bikes? Two things come to mind as jumping off points for deeper discussion: (1) the incentives and tactics of economic organisms under capitalism to gather and retain attention, and (2) the monopoly powers of Uber and Facebook, leading to the impact of Libra's cryptocurrency on open competition, as well as the public responsibilities of supra national corporations.
You work. You get money. You take money and invest it. If you are lucky, it becomes larger. Otherwise, it becomes smaller. If you have a lot of money, you can either start a company or not. If you start a company, you invest in your own ability to influence outcomes and in your own transformation function. There are other, personal utility functions also being satisfied in executing the transformation function. Alternately, you focus on the work of getting capital into other companies. For this allocation and selection work, you are rewarded. To this, you can add the capital of others, until you are doing selection on their behalf.
This week, we get philosophical and look at:
Embedded finance and how it will be woven into the fabric of the Internet
Applying the philosophies of existentialism, nihilism, and absurdism to Finance
Parsing symptoms in decentralized finance (Based Protocol) as artistic protest
Finding Dadaist beauty in chaos
The question of consciousness goes to the root of why we build, what we create, and how we decide what is valuable and what is not. And if we can control our self-conception and the modeling we do of the world, the texture of life becomes better. A recurrent theme in our writing is that systems don’t care about their agents per se. There are many game theoretical equilibria where agents suffer, but systems perpetuate. So figuring out how an agent within a system reflects on happiness is paramount.
This week, we look at what positive innovations could arise from the pressure cooker of the pandemic. I touch on health care data and privacy, molecular technology, digital work- and play-spaces, and their financial implications. Channeled productively, the next decade could see advances in these fields that we can't yet imagine.
Capital One recently suffered a data breach resulting from poor security practices that exposed 100 million credit card applications and accounts. They expect the breach to cost the company $150 million. Two years back, Equifax lost 140 million identities, again from poor security practices. At the time, I said that according to GDPR this should cost them $150 million. They have since settled for about $600 million -- though some of that seems to be in-kind services coverage like free credit monitoring (lol!). Separately, Facebook has settled for a $5 billion fine associated with the Cambridge Analytica privacy "breach".
Despite its best efforts to the contrary, Robinhood did end up stealing from the rich and giving to the poor.
Melvin Capital, the $8 billion hedge fund that didn’t find GameStop funny, lost 53% of its portfolio in January ($7 billion) trying to short against the rallying cries of the Reddit Capitalist Union. Gabe Plotkin also faces the embarrassment of having to get bailed out by your old boss.
Speaking of, New York Mets owner and former name-on-the-door of SAC Capital, known most recently for its insider trading fine of $1.8 billion, Steven A. Cohen, put $2.8 billion of capital into Melvin’s fund.
Ken Griffin, owner of the Citadel hedge fund (an investor in Melvin), and Citadel Securities (a massive market maker and buyer-of-order-flow for Robinhood), is seeing capital losses in the former and Washington cries for scrutiny into market structure in regards to the latter.
Robinhood itself — which for goodness sake is *not Wall Street*, but as *Silicon Valley* as it possibly gets — raised $1 billion immediately to protect itself from class action lawsuits, DTCC capital calls, and a now-rapidly-closing IPO window. That means Yuri Milner of DST Global chipping in yet again.
That’s at least 4 people that have had a very bad, no good day.
This week, we cover these ideas:
The difference between building a Fintech company, and building an empire to transform the world
How Warren Buffett is the best in the world at getting leverage through third party capital to grow
How Elon Musk is the best in the world at re-investing capital into his own judgment and view of the future
The $1.2B BitGo acquisition by Galaxy Digital, and the growing footprint of Alameda Research
DAOs as a way for all of us to participate
central bank / CBDCdigital transformationgenerational changemega banksnarrative zeitgeistphilosophyvisual art
·This week, we look at:
The nature of innovation hubs, and how close groups of actors within a particular environment can be massively, fundamentally productive. Take for example the 30 million years of the Cambrian explosion.
The difficulty of experimenting with banking and money frameworks, the limits of traditional econometrics, and an overview of “free banking” in the 1840s.
How evolutionary theory can help us think about selection of economic models, and the hyper-competition and hyper-mutation that we see in crypto. DeFi protocols, like BadgerDAO and ArcX among hundreds of others, are experiments in designing different monetary policies and banking regime experiments in real time.
We have never before had such acceleration in the design space of the economic machine, subject to evolutionary pressures, built by a closely-wound nexus of developers. It is a fortune for the curious.
I look at the boundaries that Telegram and EOS have crashed into in the US with recent SEC actions and lawsuits, and the melting of Facebook Libra. There have been a number of interesting regulatory moves recently, and the positive headlines of 2017 have become the negative headlines of 2019. How does SEC jurisdiction reach foreign institutional investors? We also touch on the $1.5 billion NBA distribution deal now on the fence in China, and how US companies are under the speech jurisdiction of a foreign nation. How does China reach American protected speech? Through pressure, boycott, and economics.