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By Keith Teare • Issue #336
Masayoshi San, Cathy Woods, Elon Musk, and Sam Bankman-Fried have all been in the spotlight I want to take a step back, and a deep breath and ask. Would we be better without risk-takers? Even risk-takers that take too much risk and lose? Content from @elonmusk, @CathyDWood, @GSands, @masason, @SBF_FTX, @HarryStebbings, @mwseibel
In Defense of Risk-Takers
Masayoshi Son owes $4.7bn to SoftBank following tech rout
20VC: ARK Invest’s Cathie Wood - Harry Stebbings
Musk Warns Twitter May Lose Billions Next Year
Elon Musk gives Twitter staff deadline to commit to being ‘hardcore’
Twitter Employees Have Reportedly Had Their Building Access Suspended and Musk is Being Suspiciously Quiet
Costanoa’s First 10 Years: What a Long (and Short) Strange Trip It’s Been
What to Watch in AI
In My Newsletter I Trust
Binance role in FTX collapse under congressional scrutiny
Binance’s CZ is considering purchasing Genesis’ loan book
Crypto Lending Seizes Up as FTX Contagion Spreads
Narratives – Stratechery by Ben Thompson
Endowments quickly slide from record-breaking returns to losses
Want to Invest Like a VC? These New Indexes Can Help You Do It
Meet The Companies That Joined The Emerging Unicorn Board In October 2022
Sam Bankman-Fried Tries to Explain Himself
Protocol - RIP
Mother Duck
Mastodon
Michael Seibel - @mwseibel
Any amount of time spent reading technology or venture news would have left some strong sentiments this week. The emphasis is definitely on “crazy” and “consequences”. Former icons seem to be lined up at a fairground where everybody and anybody, independently of their standing, is allowed to take potshots.
These people are self-evidently somewhere on a spectrum from nuts to psychopaths.
Then I remembered Steve Jobs and Apple’s famous ad…
Farnham Street articles capture the essence of that missive very well. First, by a transcript:
Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.
— Steve Jobs, 1997
Then in a more educational way:
To what extent does attitude play a role in creativity?
The most creative people are often the ones who have a hell-raiser trait in them, regardless of whether this comes from nature or nurture. These are the people who think different, feel different, behave different. These are the people who can’t easily fit into the square corporate box. They are rebels.
Organizations both value and despise them. Rebels non-rebels uncomfortable because they challenge thoughts, processes, and the status quo. They disrupt and dismiss. They push. They raise the bar for everyone else and they call people out. They’re not being difficult on purpose — they’re being themselves. They see things differently. And that comes with both opportunities and challenges.
Rebels create organizations and then the organizations they created reject them. You need a rebel to start something but after you reach escape velocity, complacency sets in. Rebels are ignored, dismissed, or put into a positions of failure.
Many people — especially those who are less secure about themselves — have a hard time working with people that push boundaries and challenge the way things are done. These people insulate themselves from the rebels, physically and mentally.
As complacency is eroded by competition and the relative position of the organization falls, the rebels once again rise.
Embrace the rebels. Hear them out. Not all of their ideas will be good but their perspective will be different. They will push you, challenge you, and if handled properly, ensure complacency is never the reason for failure.
So this week I want to challenge the mood of the times that calls into question successful innovators - simply because of their flaws. I cover many of the modern variants below. They are the John Lennon and Angela Davis of our times. They take huge personal risks to pursue a vision. And they often fail. Some of their flaws flow over into outright illegality - smoking weed and taking LSD. Some go further and perform acts others suffer from, possibly illegal, and will be held accountable.
But when bad things happen, we need to remember the good things driving the goal and the extraordinariness required to take on the challenge. To see the opportunity, to cohere the resources, and to execute every day, To win, and yes to lose. And sometimes to lose at the expense of others.
Risk-taking includes the word risk. The most likely outcome is bad.
Greg Sands of Costanoa celebrated the firm’s tenth anniversary this year, and today he wrote a list of lessons. Two really stand out:
Founders are awe-inspiring. They jump off a cliff with nothing more than an idea and a dream. They think “maybe I can recruit some people, solve a customer’s problem, raise some capital … and maybe it will work.” It’s worth stepping back to see how crazy that is by conventional standards – and how absolutely incredible it is that it works as often as it does.
and
I’m the hen. To quote Jim Barksdale, “when it comes to breakfast, the hen is interested. The pig is committed.” As much as I care and am deeply invested in the success of each company I invest in, no one owns it like a founder.
Today’s critics of Musk, Wood, Masayoshi San, and yes, even SBF_FTX are not even hens. They are point-scoring judges with no skin in the game. Michael Seibel has it right in this week’s Tweet of the Week.
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Masayoshi Son owes $4.7bn to SoftBank following tech rout
Masayoshi Son personally owes SoftBank close to $5bn because of growing losses on the Japanese conglomerate’s technology bets, which have also rendered the value of his stake in the group’s second Vision Fund worthless. The billionaire’s ballooning personal liabilities, discovered through a Financial Times analysis of SoftBank’s recent filings, comes as the world’s biggest tech investor was hammered by plunging tech stocks and valuations in private companies over the past year.
The 65-year-old chief executive and founder of SoftBank last week said he would step back from running day-to-day operations at the group. His main focus, he said, would be on the company’s British chip subsidiary Arm, after the technology conglomerate posted quarterly investment losses of $10bn.
The widening losses in SoftBank’s various investment vehicles have also added billions of dollars to the tab that Son owes the group in relation to its technology bets. This is because SoftBank fronted him the money to invest in its technology-related funds, which he is under no obligation to repay for many years.
The value of Son’s 17.25 per cent stake in SoftBank’s $56bn second Vision Fund was also wiped out entirely by the end of September, having been valued at $682mn during the previous quarter. His stake in the investment vehicle climbed as high as $2.8bn at the end of 2021, when heady valuations for start-ups enabled SoftBank to sell shares in public listings of portfolio companies such as WeWork and AutoStore.
SoftBank has not yet collected $2.8bn that Son owes in relation to his stake in the fund. Previously, SoftBank netted off the value of his equity from the amount he owed the group, meaning at the end of 2021 this stood at just $4mn.
Son also owes SoftBank $669mn under a similar arrangement on its Latin American fund, which has backed start-ups across the continent, although this is reduced to $252mn when his equity value in the fund is taken into account…..
20VC: ARK Invest's Cathie Wood
In Today’s Episode with Cathie Wood We Discuss:
1.) Entry into Hedge Funds at 20:
How did Cathie get her first role in the world of finance at the tender age of 20?
What is Cathie running from? What is Cathie running towards?
What are some of Cathie’s biggest lessons from seeing the dot com bust at Tupelo?
What does Cathie know now that she wishes she had known when she started investing?
2.) Why Benchmarks and Passive Investing are Bad:
Why does Cathie believe that benchmarks and indexes have become dangerous for consumers?
Why does Cathie not believe what everyone else does regarding inflation?
How much of the performance of large-cap tech stocks is tied to the growth of passive investing?
Why does Cathie think the Fed is making a huge mistake?
3.) Time to Pick Companies:
Why does Cathie believe that Facebook is emerging as an attractive value stock?
How does Cathie believe Elon Musk and Jack Dorsey could build the largest universal wallet?
If Cathie were to put all her money into one of their companies, what would it be?
Why does Cathie believe Zoom is one of the most misunderstood companies?
4.) Why Venture: Why Now:
Why did Cathie decide to do a venture fund with ARK now?
Why did Cathie decide to do a no-carry structure with a higher management fee? How does that align incentives with investors?
In venture, the asset chooses the capital, how does Cathie analyze why the best founders in the world will pick and work with ARK over other amazing VCs?
What is the single biggest risk you are underwriting when investing in ARK’s venture fund?
thetwentyminutevc.libsyn.com • Share
Musk Warns Twitter May Lose Billions Next Year
Elon Musk told Twitter employees on Thursday the company may have a “net negative cash flow of several billion dollars” next year, adding that “bankruptcy is not out of the question” if the company can’t “bring in more cash than we spend.“
“We can’t scale to a billion users and take massive losses along the way, that’s not feasible,” Musk said, speaking at an all-hands meeting for Twitter’s product team. But “if you have a compelling product, people will buy it. That has been my experience at SpaceX and Tesla,” he said, adding that making Twitter more compelling involves adding video content and making Twitter more of a home for content creators by improving how they’re compensated.
THE TAKEAWAY
Elon Musk told Twitter employees on Thursday the company could lose several billion dollars in 2023 and said bankruptcy is not out of the question if the company can’t generate more cash.
Musk told employees at the meeting that it was “impossible to predict the actual severity of a recession or the length of it.” He said he didn’t want to bet on a short and shallow recession if that didn’t end up being the case. “We want to make sure we can survive even a deep recession that is long,” Musk said.
Musk’s comments follow his layoff of half of Twitter’s staff last week, part of a series of steps he has taken to overhaul the company since he took it over. In addition to slashing costs, Musk has also tried to jumpstart efforts to build a subscription business, in part by raising the price of Twitter Blue to $7.99 a month from $4.99 a month, including access to verification badges usually reserved for public figures, such as celebrities, brands and journalists. In the past, Twitter Blue has offered additional features, such as early access to an edit button for tweets.
On Wednesday night, Musk sent his first all-staff email since taking over the company, a copy of which was seen by The Information, in which he said “the economic picture ahead is dire, especially for a company like ours that is so dependent on advertising in a challenging economic climate.” In that note, he said he wanted half of Twitter’s revenue to come from subscriptions.
In the meeting, he emphasized how important he views the subscriber push. “The reason we’re going hardcore on subscribers is to keep Twitter alive,” he said.
www.theinformation.com • Share
Elon Musk gives Twitter staff deadline to commit to being ‘hardcore’
Remaining staff given until Thursday to confirm they will work ‘long hours at high intensity’ as part of ‘the new Twitter’
Elon Musk has given Twitter’s remaining staff a Thursday deadline to commit to working “long hours at high intensity” and being “extremely hardcore” or else leave with three months’ severance pay.
In an email to the social media platform’s employees, seen by the Guardian, its new owner said building the next iteration of Twitter would require “exceptional performance”.
Reports have this morning emerged that all Twitter employees have been locked out of the company’s buildings and had badges suspended by Musk.
Costanoa’s First 10 Years: What a Long (and Short) Strange Trip It’s Been
I’ve gotta say, the last ten years have been more than I bargained for. More difficult and more bumps, for sure. But also more fun, more inspiring and more energizing than I ever could have anticipated. I guess that’s true for just about every founder. What an amazing journey the last ten years have been! I thought I’d take a minute to look back over the last decade, before we turn our attention to the next one. Here are a few things I’ve learned:
Founders are awe-inspiring. They jump off a cliff with nothing more than an idea and a dream. They think “maybe I can recruit some people, solve a customer’s problem, raise some capital … and maybe it will work.” It’s worth stepping back to see how crazy that is by conventional standards – and how absolutely incredible it is that it works as often as it does.
My most important job: picking people I want to work with. For a long time. Yes, I look for people with deep knowledge/empathy/curiosity for their customers/problem, people with incredible drive, tenacity and resilience, people who can recruit the first best talent in the world’s worst hiring environment. But I also look for people I’ll enjoy working with. Many VC’s – and founders – don’t select for this. I didn’t always either, earlier in my venture career. But, for me now, life’s too short. We’re going on this journey together, figuring out the business as we go and bringing others (employees, execs, other investors) into the business, which is often built around the strengths (and weaknesses) of the founders. To do that, we have to have trust and good, direct communication. We’re going to log some hours in tough situations and have some difficult conversations. I’m happy to do it – win, lose or draw – as long as I’m working with quality people. And there are more than enough great founders who are also great humans I want to work with that I don’t need to do anything else.
I’m the hen. To quote Jim Barksdale, “when it comes to breakfast, the hen is interested. The pig is committed.” As much as I care and am deeply invested in the success of each company I invest in, no one owns it like a founder.
Starting Costanoa made me more empathetic to founders. I now know what it’s like to have it all on the line and be ghosted by investors, something I’m embarrassed to say I didn’t really understand before. So I’m now much quicker to decline a meeting than I used to be. While it’s not what founders want to hear, for sure a quick no is better than a long and tortured one. And I hereby apologize to past founders where I worked too hard trying to force fit something that wasn’t going to work. You’d have been better off if I’d said no faster.
Reid Hoffman, Saam Motamedi, Sarah Guo, Lan Xuezhao, Matt Turck, Leigh Marie Braswell, Nathan Benaich, Rob Toews, Cat Wu, and Michael Dempsey highlight the AI trends to keep an eye on.
thegeneralist.substack.com • Share
No matter how often this happens, we don’t learn our lessons — we continue to till other people’s proverbial land and keep using their social spaces. Whether it is Facebook, Instagram, LinkedIn, or Medium, we get trapped in the big platforms because they dangle the one big carrot in front of our eyes: the reach, …
Binance role in FTX collapse under congressional scrutiny
“This is serious. I think that this is a major event,” said Rep. Patrick McHenry, R-N.C., told The Block while acknowledging that Binance’s role in the sudden meltdown will be one of the focuses of a December hearing announced this morning.
Binance’s CZ is considering purchasing Genesis’ loan book
According to sources, the creator of Binance, the biggest crypto exchange in the world, is considering buying Genesis’ loan book. What are the chances of CZ acquiring the loan book? Changpeng ‘CZ’ Zhao has contacted people to learn more about…
Crypto Lending Seizes Up as FTX Contagion Spreads
FTX’s bankruptcy is causing the financing plumbing of the crypto industry to seize up, and the fallout is quickly spreading to other high-profile companies, including Genesis and Gemini.
At the center of the meltdown is a business known as crypto lending, where firms lure customer deposits of crypto by offering high yields and lend money out to big traders looking to make highly leveraged bets.
When times were good, this system helped supercharge crypto markets. And lenders thought they were safe because in theory they could quickly seize crypto assets borrowers used as collateral. But with the implosion of FTX, a major borrower from these lenders via its Alameda Research trading arm, faith in the system is quickly unraveling.
www.theinformation.com • Share
Narratives – Stratechery by Ben Thompson
What Elon Musk got wrong about Twitter, journalists and VCs got wrong about FTX, and Peter Thiel got wrong about crypto and AI — and why I made many of the same mistakes along the way.
Endowments quickly slide from record-breaking returns to losses
University endowments experienced a harsh wake-up call during the fiscal year ended June 30 after the previous year saw record-smashing returns.
However, the pain was less among institutions with more mature private investment programs and higher allocations to those associated asset classes, primarily because they limited their exposure to public markets, according to industry experts.
The larger the endowment, the more likely they would benefit since they typically allocate more to private investments.
Among the largest of all endowments, for example, Yale University and Harvard University returned 0.8% and -1.8%, respect- ively, finishing well above the median return of -4.1% among the 39 university endowments with $1 billion or more in assets whose fiscal year returns were tracked by Pensions & Investments through Nov. 4.
For the year ended June 30, the Russell 3000 index and Bloom-berg U.S. Aggregate Bond index returned -13.9% and -10.3%, respectively.
While endowments did post returns well above the public market benchmarks, the negative returns reflected a challenging public markets environment for the period that brought investment offices down to sober reality from the highs of the previous fiscal year, said Margaret Chen, global head of Cambridge Associates LLC‘s endowment and foundation practice in Boston.
Endowments quickly slide from record-breaking returns to losses Pensions & Investments
Want to Invest Like a VC? These New Indexes Can Help You Do It
A new series of indexes aims to measure the performance of the billion-dollar venture-capital backed companies that Wall Street calls “unicorns.”
Shares of “unicorns” – companies such as Instacart, Stripe and ByteDance – and other VC-backed companies valued at $1 billion or more have become available to some investors through pension plans and “crossover” mutual funds, which invest in both public and privately owned companies.
The indexes are being published by ratings leader and index provider Morningstar and include leading VC data, analytics and insights from PitchBook, an independent subsidiary of Morningstar.
To determine whether you should invest like a VC by putting your money into indexes exposed to unicorns, consider matching with a financial advisor.
“In today’s market, investors are increasingly looking to nontraditional asset classes like private markets for portfolio diversification and investment opportunity,” said Ron Bundy, president, Morningstar Indexes. “Our new global unicorn indexes combine the deep data and insight of PitchBook with the best practices of Morningstar Indexes to deliver a new series of benchmarks for the late-stage venture capital market.”
One example of the new indexes is the Morningstar PitchBook US Unicorn 100 Index, which includes SpaceX, Stripe, Juul, Waymo, Chime and Instacart among its top 10 holdings. The index tracks its holdings back to June 2014. As of Nov. 9, the index stood at 8,407, with a one-year range of 8,244 to 9,087, reflecting holdings with a constituent market capitalization of $8.7 billion.
The index’s five-year performance puts it up by 286% and down 0.05% for one year. As of Nov. 9, the index is down 4.34% year-to-date, versus a loss of 21.35% for the Standard & Poor’s 500 index.
The 11 new indexes will track global, regional and single-country companies. They include:
Morningstar PitchBook Global Unicorn Index
Morningstar PitchBook Global Unicorn 500 Index
Morningstar PitchBook US Unicorn Index
Morningstar PitchBook US Unicorn 100 Index
Morningstar PitchBook Europe Unicorn Index
Morningstar PitchBook Europe Unicorn 50 Index
Morningstar PitchBook UK Unicorn 20 Index
Morningstar PitchBook Asia Unicorn Index
Morningstar PitchBook Asia Unicorn 100 Index
Morningstar PitchBook China Unicorn 50 Index
Morningstar PitchBook India Unicorn 25 Index
Want to Invest Like a VC? These New Indexes Can Help You Do It Yahoo Finance
Meet The Companies That Joined The Emerging Unicorn Board In October 2022
In October, only four companies with disclosed valuations above $500 million but less than $1 billion joined the Crunchbase Emerging Unicorn Board. The board currently hosts 355 companies valued collectively at over $242 billion.
As late-stage funding plummeted more than 60% year over year in the third quarter of 2022, far fewer companies were raising late-stage fundings at high valuations. Here we look at companies that were able to raise, despite the slower funding environment.
Fintech companies made up two of the newly minted emerging unicorns in October. A further nine companies already on the board raised funding this past month.
Fintech
San Francisco-based Tally, a service that helps users pay off credit card debt, raised an $80 million Series D led by Sway Ventures, an earlier investor. The company seeks to alleviate the $900 billion in credit card debt that impacts 30% of Americans. Tally has more than doubled its valuation since its last funding in 2019 led by Andreessen Horowitz. Kleiner Perkins and Shasta Ventures led prior funding rounds.
U.K.-based NatWest Group invested $57 million in Warsaw-based Vodeno, a builder of embedded financial solutions for businesses. It also created a U.K. subsidiary majority owned by NatWest to offer banking as a service to NatWest business customers.
Creator tools
OpenAI led a $50 million Series C funding in San Francisco-based Descript, valuing the company above $500 million. Descript provides simple audio and video editing tools for creators, making it as simple as editing text. Descript was founded by Groupon co-founder Andrew Mason. The company boasts a huge roster of angel investors. Spark Capital, Andreessen Horowitz and Redpoint led earlier funding rounds.
Agriculture
India-based DeHaat, a marketplace for farmers in India, raised a $46 million Series D led by Sofina, an existing investor. The company claims more than 1 million farmers in its network. Prior investors Lightrock India and Prosus Ventures also invested in the funding.
A new addition to the board from earlier this year is Paris-based BeReal, a photo-sharing app gaining traction with Gen Z users and said to have 20 million daily active users. TechCrunch recently disclosed BeReal’s Series B of $60 million. Announced in May 2022, the round was raised at a $587 million valuation (600 million euros).
And Barcelona-based human resources automation service Factorial graduated from the emerging board to The Crunchbase Unicorn Board in October at a $1 billion valuation close to double its Series B value of $530 million in September 2021.
Sam Bankman-Fried tries to explain himself
At the time, of course, I thought the ethical dilemma where Bankman-Fried had perhaps crossed a line was whether it was acceptable to run a cryptocurrency exchange in the first place — and whether the good he claimed he meant to do made it okay. I’d spoken to Bankman-Fried via Zoom earlier in the summer when I was working on a profile of him, so I reached out to him via DM on November 13, after news broke that his cryptocurrency exchange had collapsed, with billions in customer deposits apparently gone.
We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.
As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.
Building this publication has not been easy; as with any small startup organization, it has often been chaotic. But it has also been hugely fulfilling for those involved. We could not be prouder of, or more grateful to, the team we have assembled here over the last three years to build the publication. They are an inspirational group of people who have gone above and beyond, week after week. Today, we thank them deeply for all the work they have done.
We also thank you, our readers, for subscribing to our newsletters and reading our stories. We hope you have enjoyed our work.
Investing in MotherDuck | Andreessen Horowitz
MotherDuck is a hosted cloud-service built around DuckDB, which combines speed and ease-of-use to make data analytics frictionless and ubiquitous.
My Laptop is Faster than Your Cloud : Announcing MotherDuck
My laptop is faster than your cloud.
For the last ten years, the data ecosystem has focused on big data - the bigger the data set, the more exciting.
But most workloads aren’t massive. Instead of requiring a scale-out database in the sky, most analyses are faster with an optimized database on your computer that can leverage the cloud when needed.
This is why I’m thrilled to announce our partnership with MotherDuck. Motherduck raised a $12.5M Seed led by Redpoint and a $35M Series A led by a16z.
Some of the brightest minds in data founded MotherDuckincluding BigQuery founding engineer Jordan Tigani & a broader team from Snowflake, Databricks, AWS, Meta, Elastic & Firebolt, among others. MotherDuck commercializes DuckDB, an open-source project co-founded by Dr. Hannes Mühleisen & Dr. Mark Raasveldt.
How to Get Started on Mastodon
LET’S BE HONEST: Twitter was a hell site long before Elon Musk bought it. It has tremendous power to elevate voices, but it also plays on some of our worst social tendencies. We can talk a lot about why that is, but I think it comes down to design choices. Twitter, like most social media, is built to drive as much engagement as possible.
But what if Twitter were optimized differently? What would that look like?
This is what makes Mastodon, and the ActivityPub protocol that powers it, so liberating. This isn’t another startup. It’s not a company at all. It’s a community. There are no ads, no tracking, and no monetization whatsoever. This is a place shaped—at the cultural, design, and code level—by members of marginalized communities who wanted to escape the rage-driven onslaught of trolls and doomscrolling that define social media. A place built around connection and conversation instead of engagement.
If that sounds like bullshit to you, I’m not surprised. There’s a lot of similar-sounding bullshit in the air right now (see: crypto). We all reflexively think every online service is some kind of play for attention and monetization because that’s the world we’ve adapted to. But the network built around the ActivityPub, known by longtime users as the “Fediverse,” isn’t that.
By Keith Teare • Issue #336
Masayoshi San, Cathy Woods, Elon Musk, and Sam Bankman-Fried have all been in the spotlight I want to take a step back, and a deep breath and ask. Would we be better without risk-takers? Even risk-takers that take too much risk and lose? Content from @elonmusk, @CathyDWood, @GSands, @masason, @SBF_FTX, @HarryStebbings, @mwseibel
In Defense of Risk-Takers
Masayoshi Son owes $4.7bn to SoftBank following tech rout
20VC: ARK Invest’s Cathie Wood - Harry Stebbings
Musk Warns Twitter May Lose Billions Next Year
Elon Musk gives Twitter staff deadline to commit to being ‘hardcore’
Twitter Employees Have Reportedly Had Their Building Access Suspended and Musk is Being Suspiciously Quiet
Costanoa’s First 10 Years: What a Long (and Short) Strange Trip It’s Been
What to Watch in AI
In My Newsletter I Trust
Binance role in FTX collapse under congressional scrutiny
Binance’s CZ is considering purchasing Genesis’ loan book
Crypto Lending Seizes Up as FTX Contagion Spreads
Narratives – Stratechery by Ben Thompson
Endowments quickly slide from record-breaking returns to losses
Want to Invest Like a VC? These New Indexes Can Help You Do It
Meet The Companies That Joined The Emerging Unicorn Board In October 2022
Sam Bankman-Fried Tries to Explain Himself
Protocol - RIP
Mother Duck
Mastodon
Michael Seibel - @mwseibel
Any amount of time spent reading technology or venture news would have left some strong sentiments this week. The emphasis is definitely on “crazy” and “consequences”. Former icons seem to be lined up at a fairground where everybody and anybody, independently of their standing, is allowed to take potshots.
These people are self-evidently somewhere on a spectrum from nuts to psychopaths.
Then I remembered Steve Jobs and Apple’s famous ad…
Farnham Street articles capture the essence of that missive very well. First, by a transcript:
Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.
— Steve Jobs, 1997
Then in a more educational way:
To what extent does attitude play a role in creativity?
The most creative people are often the ones who have a hell-raiser trait in them, regardless of whether this comes from nature or nurture. These are the people who think different, feel different, behave different. These are the people who can’t easily fit into the square corporate box. They are rebels.
Organizations both value and despise them. Rebels non-rebels uncomfortable because they challenge thoughts, processes, and the status quo. They disrupt and dismiss. They push. They raise the bar for everyone else and they call people out. They’re not being difficult on purpose — they’re being themselves. They see things differently. And that comes with both opportunities and challenges.
Rebels create organizations and then the organizations they created reject them. You need a rebel to start something but after you reach escape velocity, complacency sets in. Rebels are ignored, dismissed, or put into a positions of failure.
Many people — especially those who are less secure about themselves — have a hard time working with people that push boundaries and challenge the way things are done. These people insulate themselves from the rebels, physically and mentally.
As complacency is eroded by competition and the relative position of the organization falls, the rebels once again rise.
Embrace the rebels. Hear them out. Not all of their ideas will be good but their perspective will be different. They will push you, challenge you, and if handled properly, ensure complacency is never the reason for failure.
So this week I want to challenge the mood of the times that calls into question successful innovators - simply because of their flaws. I cover many of the modern variants below. They are the John Lennon and Angela Davis of our times. They take huge personal risks to pursue a vision. And they often fail. Some of their flaws flow over into outright illegality - smoking weed and taking LSD. Some go further and perform acts others suffer from, possibly illegal, and will be held accountable.
But when bad things happen, we need to remember the good things driving the goal and the extraordinariness required to take on the challenge. To see the opportunity, to cohere the resources, and to execute every day, To win, and yes to lose. And sometimes to lose at the expense of others.
Risk-taking includes the word risk. The most likely outcome is bad.
Greg Sands of Costanoa celebrated the firm’s tenth anniversary this year, and today he wrote a list of lessons. Two really stand out:
Founders are awe-inspiring. They jump off a cliff with nothing more than an idea and a dream. They think “maybe I can recruit some people, solve a customer’s problem, raise some capital … and maybe it will work.” It’s worth stepping back to see how crazy that is by conventional standards – and how absolutely incredible it is that it works as often as it does.
and
I’m the hen. To quote Jim Barksdale, “when it comes to breakfast, the hen is interested. The pig is committed.” As much as I care and am deeply invested in the success of each company I invest in, no one owns it like a founder.
Today’s critics of Musk, Wood, Masayoshi San, and yes, even SBF_FTX are not even hens. They are point-scoring judges with no skin in the game. Michael Seibel has it right in this week’s Tweet of the Week.
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Masayoshi Son owes $4.7bn to SoftBank following tech rout
Masayoshi Son personally owes SoftBank close to $5bn because of growing losses on the Japanese conglomerate’s technology bets, which have also rendered the value of his stake in the group’s second Vision Fund worthless. The billionaire’s ballooning personal liabilities, discovered through a Financial Times analysis of SoftBank’s recent filings, comes as the world’s biggest tech investor was hammered by plunging tech stocks and valuations in private companies over the past year.
The 65-year-old chief executive and founder of SoftBank last week said he would step back from running day-to-day operations at the group. His main focus, he said, would be on the company’s British chip subsidiary Arm, after the technology conglomerate posted quarterly investment losses of $10bn.
The widening losses in SoftBank’s various investment vehicles have also added billions of dollars to the tab that Son owes the group in relation to its technology bets. This is because SoftBank fronted him the money to invest in its technology-related funds, which he is under no obligation to repay for many years.
The value of Son’s 17.25 per cent stake in SoftBank’s $56bn second Vision Fund was also wiped out entirely by the end of September, having been valued at $682mn during the previous quarter. His stake in the investment vehicle climbed as high as $2.8bn at the end of 2021, when heady valuations for start-ups enabled SoftBank to sell shares in public listings of portfolio companies such as WeWork and AutoStore.
SoftBank has not yet collected $2.8bn that Son owes in relation to his stake in the fund. Previously, SoftBank netted off the value of his equity from the amount he owed the group, meaning at the end of 2021 this stood at just $4mn.
Son also owes SoftBank $669mn under a similar arrangement on its Latin American fund, which has backed start-ups across the continent, although this is reduced to $252mn when his equity value in the fund is taken into account…..
20VC: ARK Invest's Cathie Wood
In Today’s Episode with Cathie Wood We Discuss:
1.) Entry into Hedge Funds at 20:
How did Cathie get her first role in the world of finance at the tender age of 20?
What is Cathie running from? What is Cathie running towards?
What are some of Cathie’s biggest lessons from seeing the dot com bust at Tupelo?
What does Cathie know now that she wishes she had known when she started investing?
2.) Why Benchmarks and Passive Investing are Bad:
Why does Cathie believe that benchmarks and indexes have become dangerous for consumers?
Why does Cathie not believe what everyone else does regarding inflation?
How much of the performance of large-cap tech stocks is tied to the growth of passive investing?
Why does Cathie think the Fed is making a huge mistake?
3.) Time to Pick Companies:
Why does Cathie believe that Facebook is emerging as an attractive value stock?
How does Cathie believe Elon Musk and Jack Dorsey could build the largest universal wallet?
If Cathie were to put all her money into one of their companies, what would it be?
Why does Cathie believe Zoom is one of the most misunderstood companies?
4.) Why Venture: Why Now:
Why did Cathie decide to do a venture fund with ARK now?
Why did Cathie decide to do a no-carry structure with a higher management fee? How does that align incentives with investors?
In venture, the asset chooses the capital, how does Cathie analyze why the best founders in the world will pick and work with ARK over other amazing VCs?
What is the single biggest risk you are underwriting when investing in ARK’s venture fund?
thetwentyminutevc.libsyn.com • Share
Musk Warns Twitter May Lose Billions Next Year
Elon Musk told Twitter employees on Thursday the company may have a “net negative cash flow of several billion dollars” next year, adding that “bankruptcy is not out of the question” if the company can’t “bring in more cash than we spend.“
“We can’t scale to a billion users and take massive losses along the way, that’s not feasible,” Musk said, speaking at an all-hands meeting for Twitter’s product team. But “if you have a compelling product, people will buy it. That has been my experience at SpaceX and Tesla,” he said, adding that making Twitter more compelling involves adding video content and making Twitter more of a home for content creators by improving how they’re compensated.
THE TAKEAWAY
Elon Musk told Twitter employees on Thursday the company could lose several billion dollars in 2023 and said bankruptcy is not out of the question if the company can’t generate more cash.
Musk told employees at the meeting that it was “impossible to predict the actual severity of a recession or the length of it.” He said he didn’t want to bet on a short and shallow recession if that didn’t end up being the case. “We want to make sure we can survive even a deep recession that is long,” Musk said.
Musk’s comments follow his layoff of half of Twitter’s staff last week, part of a series of steps he has taken to overhaul the company since he took it over. In addition to slashing costs, Musk has also tried to jumpstart efforts to build a subscription business, in part by raising the price of Twitter Blue to $7.99 a month from $4.99 a month, including access to verification badges usually reserved for public figures, such as celebrities, brands and journalists. In the past, Twitter Blue has offered additional features, such as early access to an edit button for tweets.
On Wednesday night, Musk sent his first all-staff email since taking over the company, a copy of which was seen by The Information, in which he said “the economic picture ahead is dire, especially for a company like ours that is so dependent on advertising in a challenging economic climate.” In that note, he said he wanted half of Twitter’s revenue to come from subscriptions.
In the meeting, he emphasized how important he views the subscriber push. “The reason we’re going hardcore on subscribers is to keep Twitter alive,” he said.
www.theinformation.com • Share
Elon Musk gives Twitter staff deadline to commit to being ‘hardcore’
Remaining staff given until Thursday to confirm they will work ‘long hours at high intensity’ as part of ‘the new Twitter’
Elon Musk has given Twitter’s remaining staff a Thursday deadline to commit to working “long hours at high intensity” and being “extremely hardcore” or else leave with three months’ severance pay.
In an email to the social media platform’s employees, seen by the Guardian, its new owner said building the next iteration of Twitter would require “exceptional performance”.
Reports have this morning emerged that all Twitter employees have been locked out of the company’s buildings and had badges suspended by Musk.
Costanoa’s First 10 Years: What a Long (and Short) Strange Trip It’s Been
I’ve gotta say, the last ten years have been more than I bargained for. More difficult and more bumps, for sure. But also more fun, more inspiring and more energizing than I ever could have anticipated. I guess that’s true for just about every founder. What an amazing journey the last ten years have been! I thought I’d take a minute to look back over the last decade, before we turn our attention to the next one. Here are a few things I’ve learned:
Founders are awe-inspiring. They jump off a cliff with nothing more than an idea and a dream. They think “maybe I can recruit some people, solve a customer’s problem, raise some capital … and maybe it will work.” It’s worth stepping back to see how crazy that is by conventional standards – and how absolutely incredible it is that it works as often as it does.
My most important job: picking people I want to work with. For a long time. Yes, I look for people with deep knowledge/empathy/curiosity for their customers/problem, people with incredible drive, tenacity and resilience, people who can recruit the first best talent in the world’s worst hiring environment. But I also look for people I’ll enjoy working with. Many VC’s – and founders – don’t select for this. I didn’t always either, earlier in my venture career. But, for me now, life’s too short. We’re going on this journey together, figuring out the business as we go and bringing others (employees, execs, other investors) into the business, which is often built around the strengths (and weaknesses) of the founders. To do that, we have to have trust and good, direct communication. We’re going to log some hours in tough situations and have some difficult conversations. I’m happy to do it – win, lose or draw – as long as I’m working with quality people. And there are more than enough great founders who are also great humans I want to work with that I don’t need to do anything else.
I’m the hen. To quote Jim Barksdale, “when it comes to breakfast, the hen is interested. The pig is committed.” As much as I care and am deeply invested in the success of each company I invest in, no one owns it like a founder.
Starting Costanoa made me more empathetic to founders. I now know what it’s like to have it all on the line and be ghosted by investors, something I’m embarrassed to say I didn’t really understand before. So I’m now much quicker to decline a meeting than I used to be. While it’s not what founders want to hear, for sure a quick no is better than a long and tortured one. And I hereby apologize to past founders where I worked too hard trying to force fit something that wasn’t going to work. You’d have been better off if I’d said no faster.
Reid Hoffman, Saam Motamedi, Sarah Guo, Lan Xuezhao, Matt Turck, Leigh Marie Braswell, Nathan Benaich, Rob Toews, Cat Wu, and Michael Dempsey highlight the AI trends to keep an eye on.
thegeneralist.substack.com • Share
No matter how often this happens, we don’t learn our lessons — we continue to till other people’s proverbial land and keep using their social spaces. Whether it is Facebook, Instagram, LinkedIn, or Medium, we get trapped in the big platforms because they dangle the one big carrot in front of our eyes: the reach, …
Binance role in FTX collapse under congressional scrutiny
“This is serious. I think that this is a major event,” said Rep. Patrick McHenry, R-N.C., told The Block while acknowledging that Binance’s role in the sudden meltdown will be one of the focuses of a December hearing announced this morning.
Binance’s CZ is considering purchasing Genesis’ loan book
According to sources, the creator of Binance, the biggest crypto exchange in the world, is considering buying Genesis’ loan book. What are the chances of CZ acquiring the loan book? Changpeng ‘CZ’ Zhao has contacted people to learn more about…
Crypto Lending Seizes Up as FTX Contagion Spreads
FTX’s bankruptcy is causing the financing plumbing of the crypto industry to seize up, and the fallout is quickly spreading to other high-profile companies, including Genesis and Gemini.
At the center of the meltdown is a business known as crypto lending, where firms lure customer deposits of crypto by offering high yields and lend money out to big traders looking to make highly leveraged bets.
When times were good, this system helped supercharge crypto markets. And lenders thought they were safe because in theory they could quickly seize crypto assets borrowers used as collateral. But with the implosion of FTX, a major borrower from these lenders via its Alameda Research trading arm, faith in the system is quickly unraveling.
www.theinformation.com • Share
Narratives – Stratechery by Ben Thompson
What Elon Musk got wrong about Twitter, journalists and VCs got wrong about FTX, and Peter Thiel got wrong about crypto and AI — and why I made many of the same mistakes along the way.
Endowments quickly slide from record-breaking returns to losses
University endowments experienced a harsh wake-up call during the fiscal year ended June 30 after the previous year saw record-smashing returns.
However, the pain was less among institutions with more mature private investment programs and higher allocations to those associated asset classes, primarily because they limited their exposure to public markets, according to industry experts.
The larger the endowment, the more likely they would benefit since they typically allocate more to private investments.
Among the largest of all endowments, for example, Yale University and Harvard University returned 0.8% and -1.8%, respect- ively, finishing well above the median return of -4.1% among the 39 university endowments with $1 billion or more in assets whose fiscal year returns were tracked by Pensions & Investments through Nov. 4.
For the year ended June 30, the Russell 3000 index and Bloom-berg U.S. Aggregate Bond index returned -13.9% and -10.3%, respectively.
While endowments did post returns well above the public market benchmarks, the negative returns reflected a challenging public markets environment for the period that brought investment offices down to sober reality from the highs of the previous fiscal year, said Margaret Chen, global head of Cambridge Associates LLC‘s endowment and foundation practice in Boston.
Endowments quickly slide from record-breaking returns to losses Pensions & Investments
Want to Invest Like a VC? These New Indexes Can Help You Do It
A new series of indexes aims to measure the performance of the billion-dollar venture-capital backed companies that Wall Street calls “unicorns.”
Shares of “unicorns” – companies such as Instacart, Stripe and ByteDance – and other VC-backed companies valued at $1 billion or more have become available to some investors through pension plans and “crossover” mutual funds, which invest in both public and privately owned companies.
The indexes are being published by ratings leader and index provider Morningstar and include leading VC data, analytics and insights from PitchBook, an independent subsidiary of Morningstar.
To determine whether you should invest like a VC by putting your money into indexes exposed to unicorns, consider matching with a financial advisor.
“In today’s market, investors are increasingly looking to nontraditional asset classes like private markets for portfolio diversification and investment opportunity,” said Ron Bundy, president, Morningstar Indexes. “Our new global unicorn indexes combine the deep data and insight of PitchBook with the best practices of Morningstar Indexes to deliver a new series of benchmarks for the late-stage venture capital market.”
One example of the new indexes is the Morningstar PitchBook US Unicorn 100 Index, which includes SpaceX, Stripe, Juul, Waymo, Chime and Instacart among its top 10 holdings. The index tracks its holdings back to June 2014. As of Nov. 9, the index stood at 8,407, with a one-year range of 8,244 to 9,087, reflecting holdings with a constituent market capitalization of $8.7 billion.
The index’s five-year performance puts it up by 286% and down 0.05% for one year. As of Nov. 9, the index is down 4.34% year-to-date, versus a loss of 21.35% for the Standard & Poor’s 500 index.
The 11 new indexes will track global, regional and single-country companies. They include:
Morningstar PitchBook Global Unicorn Index
Morningstar PitchBook Global Unicorn 500 Index
Morningstar PitchBook US Unicorn Index
Morningstar PitchBook US Unicorn 100 Index
Morningstar PitchBook Europe Unicorn Index
Morningstar PitchBook Europe Unicorn 50 Index
Morningstar PitchBook UK Unicorn 20 Index
Morningstar PitchBook Asia Unicorn Index
Morningstar PitchBook Asia Unicorn 100 Index
Morningstar PitchBook China Unicorn 50 Index
Morningstar PitchBook India Unicorn 25 Index
Want to Invest Like a VC? These New Indexes Can Help You Do It Yahoo Finance
Meet The Companies That Joined The Emerging Unicorn Board In October 2022
In October, only four companies with disclosed valuations above $500 million but less than $1 billion joined the Crunchbase Emerging Unicorn Board. The board currently hosts 355 companies valued collectively at over $242 billion.
As late-stage funding plummeted more than 60% year over year in the third quarter of 2022, far fewer companies were raising late-stage fundings at high valuations. Here we look at companies that were able to raise, despite the slower funding environment.
Fintech companies made up two of the newly minted emerging unicorns in October. A further nine companies already on the board raised funding this past month.
Fintech
San Francisco-based Tally, a service that helps users pay off credit card debt, raised an $80 million Series D led by Sway Ventures, an earlier investor. The company seeks to alleviate the $900 billion in credit card debt that impacts 30% of Americans. Tally has more than doubled its valuation since its last funding in 2019 led by Andreessen Horowitz. Kleiner Perkins and Shasta Ventures led prior funding rounds.
U.K.-based NatWest Group invested $57 million in Warsaw-based Vodeno, a builder of embedded financial solutions for businesses. It also created a U.K. subsidiary majority owned by NatWest to offer banking as a service to NatWest business customers.
Creator tools
OpenAI led a $50 million Series C funding in San Francisco-based Descript, valuing the company above $500 million. Descript provides simple audio and video editing tools for creators, making it as simple as editing text. Descript was founded by Groupon co-founder Andrew Mason. The company boasts a huge roster of angel investors. Spark Capital, Andreessen Horowitz and Redpoint led earlier funding rounds.
Agriculture
India-based DeHaat, a marketplace for farmers in India, raised a $46 million Series D led by Sofina, an existing investor. The company claims more than 1 million farmers in its network. Prior investors Lightrock India and Prosus Ventures also invested in the funding.
A new addition to the board from earlier this year is Paris-based BeReal, a photo-sharing app gaining traction with Gen Z users and said to have 20 million daily active users. TechCrunch recently disclosed BeReal’s Series B of $60 million. Announced in May 2022, the round was raised at a $587 million valuation (600 million euros).
And Barcelona-based human resources automation service Factorial graduated from the emerging board to The Crunchbase Unicorn Board in October at a $1 billion valuation close to double its Series B value of $530 million in September 2021.
Sam Bankman-Fried tries to explain himself
At the time, of course, I thought the ethical dilemma where Bankman-Fried had perhaps crossed a line was whether it was acceptable to run a cryptocurrency exchange in the first place — and whether the good he claimed he meant to do made it okay. I’d spoken to Bankman-Fried via Zoom earlier in the summer when I was working on a profile of him, so I reached out to him via DM on November 13, after news broke that his cryptocurrency exchange had collapsed, with billions in customer deposits apparently gone.
We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.
As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.
Building this publication has not been easy; as with any small startup organization, it has often been chaotic. But it has also been hugely fulfilling for those involved. We could not be prouder of, or more grateful to, the team we have assembled here over the last three years to build the publication. They are an inspirational group of people who have gone above and beyond, week after week. Today, we thank them deeply for all the work they have done.
We also thank you, our readers, for subscribing to our newsletters and reading our stories. We hope you have enjoyed our work.
Investing in MotherDuck | Andreessen Horowitz
MotherDuck is a hosted cloud-service built around DuckDB, which combines speed and ease-of-use to make data analytics frictionless and ubiquitous.
My Laptop is Faster than Your Cloud : Announcing MotherDuck
My laptop is faster than your cloud.
For the last ten years, the data ecosystem has focused on big data - the bigger the data set, the more exciting.
But most workloads aren’t massive. Instead of requiring a scale-out database in the sky, most analyses are faster with an optimized database on your computer that can leverage the cloud when needed.
This is why I’m thrilled to announce our partnership with MotherDuck. Motherduck raised a $12.5M Seed led by Redpoint and a $35M Series A led by a16z.
Some of the brightest minds in data founded MotherDuckincluding BigQuery founding engineer Jordan Tigani & a broader team from Snowflake, Databricks, AWS, Meta, Elastic & Firebolt, among others. MotherDuck commercializes DuckDB, an open-source project co-founded by Dr. Hannes Mühleisen & Dr. Mark Raasveldt.
How to Get Started on Mastodon
LET’S BE HONEST: Twitter was a hell site long before Elon Musk bought it. It has tremendous power to elevate voices, but it also plays on some of our worst social tendencies. We can talk a lot about why that is, but I think it comes down to design choices. Twitter, like most social media, is built to drive as much engagement as possible.
But what if Twitter were optimized differently? What would that look like?
This is what makes Mastodon, and the ActivityPub protocol that powers it, so liberating. This isn’t another startup. It’s not a company at all. It’s a community. There are no ads, no tracking, and no monetization whatsoever. This is a place shaped—at the cultural, design, and code level—by members of marginalized communities who wanted to escape the rage-driven onslaught of trolls and doomscrolling that define social media. A place built around connection and conversation instead of engagement.
If that sounds like bullshit to you, I’m not surprised. There’s a lot of similar-sounding bullshit in the air right now (see: crypto). We all reflexively think every online service is some kind of play for attention and monetization because that’s the world we’ve adapted to. But the network built around the ActivityPub, known by longtime users as the “Fediverse,” isn’t that.
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