Permissionless IV, Day 3 takeaways
Conferences are pop-up innovation clusters—and filters for the riff-raff
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“Great things in business are never done by one person, they’re done by a team of people.” — Steve Jobs
Steve Jobs liked to tell a story of a “slightly scary” old man from whom he did odd jobs as a kid, including, one time, gathering some rocks out of the yard.
The man put the rocks into a tumbler in his garage, added some liquid and grit, and told Jobs to come back the next day to see the result.
Jobs says he was amazed as the rocks emerged from the tumbler as smooth, shiny objects of desire.
Later in life, he found this works with people, too.
“A group of talented people, bumping up against each other, having arguments, having fights sometimes, making some noise. By working together they polish each other and they polish the ideas.”
In other words, put a group of people in a room together and they’re all likely to look smarter when they come out.
Unlike rocks, however, they do have to be the right kind of people.
As individually visionary as Steve Jobs was, he attributed his success at least in part to the people he chose to be around: “I think I consistently figured out who the really smart people were to hang around with. You must find extraordinary people.”
One place to find extraordinary people is at conferences.
The magic of an innovation cluster like Silicon Valley is the critical mass of tech people constantly bumping into each other.
Conferences create temporary innovation clusters, like a pop-up version of Silicon Valley.
“One way to think about an industry conference,” Byrne Hobart explains, is that it “synthesizes high real estate prices by charging an entry fee (and plane tickets plus hotels are also going to have the same economic effect); they make time more expensive, so they raise the relative value of the highest-utility interactions.”
Translation: the high cost of attending conferences weeds out the riff-raff.
If you’re still wondering why people incur the cost of attending a conference in person that they could watch for free at home, I think that’s pretty much it.
You get to meet the kind of people you’d want to be tossed into a rock tumbler with.
A panel on crypto’s current meta: Treasury Asset Companies
I’m a skeptic of crypto treasury companies (to put it mildly), simply because I think companies should be in the business of making things, not just holding them.
I still feel that way after listening to this morning’s panel with three enthusiasts for companies that mostly just hold crypto, but there was more nuance to the story than I had expected.
Dan Kang notes that DeFi Development Corp also runs validators, which allows it to grow its Solana stake independently of the NAV multiple that investors assign to its stock (DFDV).
Could they earn enough Solana by running validators to service their dollar-denominated debt if their stock fell below 1x NAV? I expect we’ll find out, eventually.
In the meantime, DeFi Development Corp “gives you the ability to accumulate crypto even faster than you could on your own.”
I’d like to see the math on that for people paying 3.1x NAV for DFDV today, but that’s the service they provide to investors.
Thomas Lee rationalized the seemingly inexplicable valuations that crypto companies command by saying it’s “similar to how oil companies trade on a premium to its proven reserves.”
“MicroStrategy will probably become the biggest stock in the US,” he predicts. “And it’s not valued on earnings, it’s valued at a premium to its bitcoin reserves.”
Call me old-fashioned, but I’d prefer the biggest stocks in the US be valued on earnings — because earnings are a measure of how valuable a company’s product or service is to their customers.
Lee says the crypto treasury companies with the highest NAV multiples have effectively turned their investors into customers.
That’s true, but I’d bet that most of these “customers” still think they’re investing, which could cause problems.
David Grider injected a welcome note of caution, predicting that “several of these will go bankrupt.”
He didn’t sound particularly concerned about it, but I think people should be, because how is this meant to end?
Treasury Asset Companies “equitized tokens,” as Thomas Lee phrased it, and earlier this week, DeFi Development Corp announced that its stock will soon be tradable as a token on Solana.
Tokenizing a Crypto Treasury Company is the equivalent of tokenizing equitized tokens.
If that’s worth doing, it’s only a matter of time until someone starts a Crypto Treasury Company that will equitize the tokenized equity that equitized tokens.
This, I fear, risks a Ghostbusters moment in which the streams will be crossed and the crypto world comes to an end — and maybe take the rest of the world with it.
I see no other logical end point because, as Joe Lubin said on another panel, there’s a “race to acquire the highest-power money” (bitcoin and ether, in his view).
Whatever the risks, Crypto Treasury Companies are one way to run it.
One newsy panel
Speaking this morning, Joe Lubin casually filled in some recent crypto history — from his well-informed vantage point, at least.
Explaining why Ethereum seemed to have fallen behind over the last couple of years, Lubin shared his suspicion that “Gary Gensler was given a mandate, probably from Elizabeth Warren, to kill or slow Ethereum.”
In particular, “It appears they had secretly decided to reclassify ether as a commodity.
“They were trying to pin it on people who were responsible for The Merge,” he explained. “When we saw a bunch of researchers were getting subpoenas, we decided to sue the SEC.”
I imagine few Permissionless attendees would find any of that surprising, but it hasn’t been part of the official record, so I think we got to hear it first.
Day III Quotes
“It’s the ultimate meme.” — Santiago Santos on the bull case for bitcoin
“The highest-power money is bitcoin and ether, because they’re permissionless.” — Joe Lubin
“Ethereum got their shit together. The Ethereum Foundation is firing on all cylinders now.” — Joe Lubin
“MSTR is so big it has a sovereign put.” — Thomas Lee
“The meta-narrative is: Tokens need to make money.” — Michael Anderson, Framework Ventures
Overheard: “The product is how to get rich quick.” — Anonymous, on crypto’s true product-market fit
Permissionless IV Newsletter Awards:
Best elevator pitch: zeoapp.com — WeChat + Pinduoduo with crypto rewards. (IFKYK.)
Best merch: personalized coin purses, Aptos
Wackiest moment: Jason Yanowitz interviews Dennis Rodman (I hear he had alpha)
Best guerilla marketing: Uniswap posters on construction walls blocks from the venue
The color-coordinated bicycle appeared to be serendipitous, unlocked, and there all week. Who says New York City has a crime problem?
Most mind-bending experience: The magician/mentalist in the Aptos lounge who made me question the laws of physics.
Most degen branding: “One App. 150x Leverage. 113% APR” — Merkle Trade.
Final Permissionless takeaway: It’s good to get off the sofa and see people for real.
And that’s a wrap for Permissionless IV.
Thanks for following along this week and I’ll see you at the next one.
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