Sunday Special Newsletter

Hey guys,

I’m taking a break from article writing this week, but I do have a new podcast for you all to check out. I sat down with my friend Elliott and we discussed Fortnite’s business model. He dropped a lot of great insights and it’s definitely worth a listen.

Anyway, I know I’ve been talking about Epic Games a lot. I promise I’ll have something for you next week that isn’t Fortnite-related. Happy Sunday y’all.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

A beginner-friendly conversation about what’s going on in the cryptocurrency space.

Sorry for the minor audio issues throughout (Comcast sucks).

If you liked this conversation, check out our full article about the cryptocurrency crash. Also, subscribe to our weekly newsletter on business and tech.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

Nothing in this post should be considered financial advice and I am not telling you to buy any specific cryptocurrency. 

If you hate the idea of cryptocurrency, the last few weeks have probably been great for you. The price of Bitcoin, Ethereum, and joke currencies like Dogecoin have all tanked. You might feel like you have the right to laugh at your friends who fell for the hype and tell them that the whole concept of crypto is stupid and it’s all just a Ponzi scheme by Internet nerds. 

Of course, it’s important to take a long-term view of the cryptocurrency space. Just last year, the price of Bitcoin was around $9000. Even with the recent price crash, it’s still worth around $35000. If you invested last May, you should be seeing 4x returns.

Back then, the price of Ethereum was just around $200. Now it’s worth around $2350. If you invested last May, you should be seeing 12x returns. 

So if you hate the idea of cryptocurrency, please recognize the fact that you’ve been repeatedly wrong before and that this “price crash” really doesn’t prove your point. Because I’m a petty person, I’m writing this article to discuss why even if this crash in prices lasts several months, you people are going to be wrong again. 

The price of Bitcoin is a leading indicator 

The first time that I bought Bitcoin was back in May 2020. However, I’m embarrassed to admit that I didn’t really start getting into crypto until the end of last year when Bitcoin’s price started rising again. That made me do more research on Bitcoin and other cryptocurrencies like Ethereum and Chainlink. 

I’m definitely not the only person who became obsessed with crypto in the past few months. It’s undeniable that the recent crypto boom has brought tons of new people into the ecosystem. As you can see the Bitcoin, Ethereum, and Cryptocurrency communities have all seen huge gains in subreddit members in the last few months, as the crypto market has become more and valuable. 

Notice the last time that these subreddits saw an exponential increase in new users? It’s right around the end of 2017, which was the last time that Bitcoin saw a huge increase in price. 

There’s a reason why this is important. Chris Dixon, who leads the venture capital firm Andreesen Horowitz’s cryptocurrency fund, has said that the price of Bitcoin is a leading indicator in the cryptocurrency world. A rise in the price of Bitcoin means that smart people get sucked into the crypto rabbit hole and start building cool projects. Of course, it usually takes a few years for these projects to be up and running and attracting new users. 

Even though Bitcoin crashed in 2018, Andreesen Horowitz had faith that the crypto projects getting built would eventually revive the entire space. In 2019, the firm doubled down on their bet by buying more shares in a company in their portfolio, Coinbase. Meanwhile, other venture capitalists were desperate to get out of the investment because many of them believed the narrative that crypto was a fad and that its time had passed. As a result, Andreesen Horowitz was able to buy shares in the company for just $23 apiece. 

Now, Coinbase is a publicly traded company, and its shares are worth $236 each. 

In just two years, Andreesen Horowitz managed to make a more than 10x return on their investment. It all happened because while the media was saying that crypto was dead, the firm stuck to its thesis and recognized that it would take multiple years for cool projects to emerge from the 2018 price crash. They turned out to be right. Last year, we saw multiple projects in decentralized finance and NFTs finally came to fruition. 

We will see this same dynamic play out again. This time, even more people fell into the crypto rabbit hole and many of them have already started to build new projects. 

Why saying there’s a crypto bubble isn’t necessarily a bad thing...

Cryptocurrency might be a new technology with no precedent in human history. Still, it’s important to remember that we human beings are just as stupid as ever. Every time there’s a new technology — we get overexcited and end up screwing ourselves over. It happened with canals in the 1700s and railroads in the 1800s, and it’s happening with cryptocurrency today. 

If we look at bubbles in new technologies throughout history, we can see a pattern. 

Each time, there’s a huge bubble followed by a huge crash followed by slow and steady growth. 

The bubble phase happens because people get excited by new technologies and start speculating. Eventually, the bubble pops and investors end up losing a ton of money. 

We’ve definitely seen this play out in the cryptocurrency space. It’s been estimated that $12 billion worth of leveraged positions in Bitcoin got wiped out last week. People were essentially borrowing money to buy Bitcoin, and they were forced to sell just to limit their losses. 

Of course, this bubble phase can serve an important purpose — infrastructure gets built that ends up enabling sustainable growth later on. For example, during the dot-com bubble, telecom companies raised $1.6 trillion dollars to lay more than 80 million miles of fiber optic cable in the United States. Even though many of those telecom companies ended up going bankrupt when the bubble popped, their work became very important later on. This investment gave millions of Americans access to fast, reliable Internet. That set the scene for companies like Facebook and Google to thrive a few years later.

Better infrastructure is coming… 

Just like the dot-com bubble set the scene for the tech companies of today, better infrastructure is coming for cryptocurrency as well. Let’s take at two interesting subsections of the cryptocurrency space: decentralized finance and NFTs. 

Better infrastructure for decentralized finance 

I’ve written about decentralized finance in the past — these protocols give users the ability to take loans, earn interest, and make trades without having any traditional financial institution in the middle taking excessive fees from users. 

The biggest problem with these DeFi protocols is that they’re hard for any normal person to use. Right now, they’re only being used by hardcore crypto nerds. 

This might be changing in the near future. A couple of weeks ago, Coinbase announced a Chrome browser extension that will make it easier for Coinbase Wallet owners to connect to decentralized finance protocols. This is a big step towards making projects like Uniswap and Compound more accessible to normal people, especially when you consider that Coinbase has 56 million users. 

Better infrastructure for NFTs… 

Right now, NFTs have a big problem. There’s not really a place that you can show them off to your friends once you buy them. That means that for many people, it’s hard to justify an NFT purchase. It’s kind of ridiculous to pay $69 million for a piece of digital art if you don’t even have the opportunity to flex on your social media followers. 

Of course, the NFT boom has led to the creation of new startups that can help to solve this problem. Companies like Gallery and Mark Cuban’s Lazy.com are building social media platforms that also serve as NFT galleries. 

If just one or two of these companies are successful, they’ll provide sustainable infrastructure that will benefit the NFT ecosystem. If people have a way to show NFTs to their friends and family, they’ll be more likely to buy them. That means artists can more reliably use NFTs to supplement their existing income. 

Why I’m still bullish on cryptocurrency 

The crypto haters might be rejoicing right now and calling the whole space a fraud for dorks who worship Elon Musk. Still, it’s amazing to see how far crypto has come from the very beginning. Back in 2008, some unknown person who went by the name Satoshi Nakamoto emailed a small cryptography email list about a new digital currency he created called Bitcoin. It seemed pretty unlikely that the project would amount to anything useful or valuable. 

Now, Bitcoin is worth $659 billion in total, while blockchains like Ethereum attract thousands of developers who are interested in building decentralized projects. Crypto has been on a wild ride in the past thirteen years — but it’s nothing compared to what’s coming next.

Anyway, if you liked this article, please sign up for our weekly newsletter. We send one article on business and tech every week, written for normal people and not Boomers who subscribe to Bloomberg.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

This is my conversation between me and my friend, Ben. He works in a front office for a professional sports team and he’s an incredibly smart dude. He breaks down the data revolution in sports and why Tobias Harris gets paid almost as much as Lebron James.

If you like what you hear, subscribe to our weekly newsletter on tech and business. We write so that it’s actually something you’ll want to read, not some boring Boomer shit like Bloomberg.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

The day the NBA’s season was suspended because of COVID-19, my company’s CEO sent an email saying that all employees were to work from home indefinitely. It was a really sudden transition — one moment America felt completely normal. Next thing you know, we were in the biggest global crisis since World War II. 

Back then, people were still deluding themselves into thinking this pandemic thing was going to blow over in a month or two. My boss called me the next day to let me know that belief was bullshit, and that COVID wasn’t going away anytime soon. She also told me that by the time all of this was over, we would be living in a different world. At the time, I had no idea what she was talking about. 

Now it’s been more than a year, and the end of the pandemic is in sight. More than 30% of Americans are fully vaccinated against COVID-19. Soon enough, we’ll be having concerts and festivals again.

It’s easy to picture the world going back to normal, just the way we remembered it before the lockdowns started. Still, the more I think about it, the more I realize that my boss was right. As Peter Thiel said, 2021 might go down in history as the first year of the 21st century. 

We’re not going back to 2019 

Studies show that when human beings try to imagine the future, we’re often biased to imagine it being very similar to the past. So it makes sense that when we imagine what the world will look like after the pandemic’s over, we often imagine it as the way things were in 2019, except with a little bit more work-from-home. 

Of course, work-from-home policies can have a bigger impact on our world than we might realize. But before we go into that, we should talk about why it took so long for remote work to be commonplace. 

Why were we still in the past for the last 20 years? 

Back in the 90s, the Internet was mostly used by normal people only for email. Still, there were true believers that thought that the Internet could one day change the way people worked. At the time, they were mostly mocked. Here’s an article from Newsweek back in 1995. 

As you can see, the writer mentioned how believers in the Internet talked about how “commerce and business will shift… to networks and modems”. However, broadband speeds at the time were so incredibly slow that the idea seemed ridiculous to the writer. 

Broadband speeds got faster and faster every year and the smartphone made the Internet a constant presence in people’s lives. Of course, it didn’t happen right away. The original iPhone was released in 2007 but it dropped calls all the time, usually didn’t have reliable access to the Internet, and the original camera was so bad that it required Instagram filters to be invented just for pictures to be passable. 

Eventually, the technology got better. Over time, smartphones got better chips, better cameras, and better access to the Internet. As a result, the average person started spending significantly more time on the Internet. 

The Internet wasn’t just for nerds anymore — it was something that literally everyone used constantly. That means if employees needed to get on the Internet for work, there was no learning curve they had to go through. At the same time, companies like Zoom and Slack built the tools that were needed to make work from home a viable option. 

Of course, even when Internet infrastructure was fully developed, the vast majority of companies still required their employees to go into the office. After all, that’s the way human beings worked since basically the dawn of time. A CEO would have to be incredibly open-minded to let a large portion of the workforce not be in the office. 

Then, COVID-19 came around and changed everything. Almost every business in the country was forced to accept work-from-home, and many of them found that everything worked out just fine. Now, businesses have to ask themselves whether paying rent for an office is actually worth it. After all, a study by McKinsey found that 20% of American workers could work just as efficiently if they were working remotely 3-5 days in a workweek. 

The restructuring of American society 

Improvements in technology and the COVID-19 lockdowns have made the dreams of Internet nerds in the 90s finally come true. We’re at a place where the Internet can enable people to work the way they want to. The promise of the 21st century has finally arrived. That means we might start seeing digital driving new settlement patterns all across the country. 

In the mid-20th century, air conditioning led to one of the biggest mass migrations in American history. As Steven Johnson wrote in the book How We Got to Now, AC got Americans to start moving to cities like Phoenix, which saw a 300% increase in population in just 10 years. The rise of work-from-home policies is already having similar effects. 

Since the beginning of the pandemic, we’ve seen huge increases in home prices in places like Lake Tahoe, where many rich tech workers from Silicon Valley have decided to settle. In the past year, home prices in the area have gone up by 54%. 

Lake Tahoe has always been a really nice place to live. It’s a great ski destination and has tons of hikes to explore during the summer. Still, the city’s population growth never took off because the area never really had any sort of industry other than tourism. While wealthy tech CEOs may have had 2nd homes in Tahoe, they needed to show up back in their office once their vacation was over. 

Now, the fact that there aren’t tech companies headquartered in Lake Tahoe doesn’t matter as much. If a tech worker has the option to work remotely, they can stay in the city as long as they want and spend their weekends skiing. 

Not every company is going to embrace work from home… 

Let’s be real: working in the office isn’t going to disappear completely. While companies like Slack and Twitter have given employees the option to work from home permanently, Facebook and Google are requiring that employees go back to work. 

Still, even having a portion of companies supporting remote work can have big consequences. As Peter Thiel pointed out in that video I linked to earlier, if just one partner in a married couple has the option to work from home, the whole family has more flexibility. Some couples were discouraged from moving because it’s really hard for two people to find new jobs in a new city. The whole process becomes a lot simpler when only one partner is working from home and only one person needs to find a new job. 

We still have work to do… 

While Internet infrastructure is significantly better than it was back in 1999, there’s still more work that needs to be done. It’s been estimated that 65% of Americans don’t have access to reliable Internet that can support video conferencing. Of course, help is on the way. Companies like SpaceX have already started to sell dishes that give access to high-speed satellite Internet even in rural areas. 

Where might the future take us? 

If the work-from-home really does change the way we live, it’s going to have consequences beyond people choosing to live in new cities. Here are three trends that we might start seeing after we’ve reached herd immunity through vaccination. 

A new type of office 

 I always liked working in an office more than I did working from home. After all, I like being around other people and having the opportunity to socialize during breaks. But maybe I need to rethink my idea of what work can be. Maybe instead of just working with people from my office, I can be in a city hundreds of miles away from my company’s headquarters, working in an office with people from hundreds of other companies. 

This sort of arrangement might be commonplace in the near future. WeWork offers monthly subscriptions that give workers access to hundreds of office locations around the world. It’s a great way for remote workers to get the benefits of the office while also having the option to travel without having to take days off and meet interesting people from multiple different industries. 

Increased wealth inequality 

In the past 10 years, we’ve heard a lot about income inequality. It was one of the biggest themes behind Occupy Wall Street and Bernie Sanders’s presidential run. 

In the past year, the discussion around inequality has only intensified. During the COVID-19 pandemic, we saw what some economists called a “K-shaped recovery”. People who had white-collar jobs in industries like tech, finance, and real estate generally did well, while blue-collar workers in industries like restaurants and hospitality saw unreal levels of unemployment. 

Even after the pandemic is over, it’s likely that work-from-home policies will only increase inequality. Most blue-collar jobs cannot be done remotely. Plus, when wealthy tech workers move to cities like Lake Tahoe, workers in the tourism industry may end up getting priced out of the neighborhood. 

Big Tech’s domination 

The conversation around the power of big tech companies like Facebook, Amazon, Apple, and Google has already started. Last year, the CEOs of all 4 of those companies got dragged in front of Congress and grilled on whether their companies were monopolies. 

 This issue isn’t going away anytime soon. As our lives become reliant on digital, the power of Big Tech is only going to grow greater and greater. That means we need to ask ourselves if we want to have these companies to have so much power and influence over our lives. In the next few years, there’s going to be more discussion of possible antitrust action against these companies. We’ll also probably see more exploration of alternative platforms based on decentralized blockchain networks that won’t be controlled by a few dudes in Silicon Valley. 

In conclusion 

I really can’t wait for the day when Dr. Fauci gets on TV and tells everyone that there’s no need for anyone to wear masks anymore and we can all start going back to concerts. I’m sure it’s going to be a great time. Still, I don’t know how I’ll be doing my job when it’s time for me to go back to work. 

Anyway, if you liked this article on the future of work, you should subscribe to our weekly newsletter. We send one article on business & tech every Sunday.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

A couple of months ago, I wrote an article about non-fungible tokens, or NFTs for short. It got a lot of traction right off the bat. It’s one of the most-viewed articles in the history of this newsletter. 

Since then, NFTs have really moved into the mainstream, especially after the artist Beeple sold one of his artworks as an NFT for $69 million. Still, outside of the crypto community, most people seem to really hate the concept of NFTs. Here’s a Tweet that I saw the other day. 

It’s not just Twitter. I’ve had friends and family reach out to me and tell me that they don’t really understand the point of NFTs either. They also don’t really understand why I’m so excited about them. 

So today, I’m going to do my best to explain why NFTs are revolutionary and why my friends and family should stop being concerned about me. 

A super-simplified explanation of NFTs 

Most NFTs are blockchain versions of art you can easily find online (that’s the joke in the Tweet above). They might be jpegs, mp3s, or gifs. 

The blockchain does provide one benefit that normal jpegs, mp3s, or gifs don’t have: It shows proof of scarcity and authenticity. Blockchain can show the full transaction history of where the NFT came from and provides evidence that the owner of an NFT holds one of the few “verified” copies of the piece of art.  

NFTs are often compared to physical collectibles like trading cards, and they do share some similar characteristics. Recently, a holographic Charizard card from 1999 sold for more than $300,000. While anyone can get on their computer and print out a picture of a Charizard, it’s been estimated that there are only 122 authentic copies of that specific card in the world. Personally, I’d never drop that much money on a Pokemon card, but scarcity and authenticity mean that there’s some fanboy out there who would. 

What’s interesting about NFTs is 95% of them are minted on the Ethereum blockchain. Ethereum is a completely decentralized crypto network, which means that there’s no one person or one organization that’s in charge of it. It’s open-source and “owned” by the Ethereum community as a whole. 

That’s a big deal: getting rid of the middleman can be a game-changer for creators. 

Why NFTs are great for creators 

During the weekdays, I work full-time as a marketer for a tech company. I can tell you that the biggest struggle for any marketing department in the world is figuring out how to build a direct relationship with your audience without having a platform like Google or Facebook in the middle. Relying on the kindness and compassion of the tech giants is dangerous — one small algorithm change might mean that nobody in your audience sees your content anymore and your entire business is destroyed. 

For years, creators have gone through a similar struggle. Artists, comedians, and actors needed to go to record labels, television networks, and movie studios just to make a living. Then, they’d be at the mercy of a few people who held absolute power over their hopes and dreams. Most of the time, these gatekeepers would end up taking most of the profits of the artists’ labor. 

Nowadays, it’s easier than ever for creators to get their work directly to fans. But they still aren’t seeing the rewards for their art — middlemen and gatekeepers are. After Spotify and record labels take their cut, it’s estimated that musicians typically get to keep just 10% of the revenue from the art they create.  

What about Patreon? 

Right now, the best way for creators to get around Facebook, Google, and the other middlemen of the world and directly monetize their fanbase is through platforms like Patreon. The platform offers low fees in exchange for allowing creators to deliver exclusive content to their subscribers. It sounds like a great deal, but there are a few problems. 

Problem #1: No direct relationship 

Because Patreon is a centralized platform and a for-profit company, the same “middleman” problem that we discussed earlier still exists. At the end of the day, Patreon’s biggest goal isn’t to serve artists, it’s to deliver returns for its investors. As a creator, you never know if Patreon will make a small change to Terms & Conditions that will increase its profitability but end up hurting your business. 

Problem #2: Pumping out content doesn’t work for everyone 

Some artists do really well on Patreon. For example, the comedy podcast Cum Town, which features stand-up comedians Nick Mullen, Adam Friedland, and Stavros Halkias makes $81,610 a month. Every week, they release an exclusive podcast just for their subscribers. 

Obviously, what these guys do is incredibly hard — very few people are able to have hour-long conversations and make it hilarious on a consistent basis. Still, if you have the kind of talent that those guys have, releasing comedy podcasts doesn’t take a ton of time. You sit down, you have a conversation, and you say funny stuff. 

Not every artistic medium works the same way. For example, musicians often spend months just working on a single song. That doesn’t translate well to a platform like Patreon, where creators are expected to put out content regularly to their subscribers. 

One of my favorite musicians, Frank Ocean, took a 4-year gap between his debut album Channel Orange and his sophomore album Blonde. As a fan, I’m happy he took his time to deliver a great product. But if I was a subscriber to his Patreon, I’d be disappointed that I paid 4 years worth of fees for nothing.  

It’s kind of hard to find musicians who are doing as well as Cum Town on Patreon. Let’s look at the house musician Yaeji, who currently has more than 1 million monthly listeners on Spotify. 

I do like Yaeji’s music, but honestly I probably wouldn’t pay for this. It’s not that I wouldn’t want to support her — I’m just not really interested in getting a new phone wallpaper or getting audio sample packs. Unfortunately, these are really the only benefits she can offer, because releasing exclusive songs for fans on a monthly basis just isn’t viable. That means that her Patreon isn’t getting the kind of traction that it should have given her fanbase — right now, it only has 53 subscribers.  

Problem #3: Gated content means less reach 

If you’re an artist who decides to get started with a subscription model, you are making a trade-off. When you release exclusive content only for your subscribers, you might end up making more money. However, your work will end up reaching fewer people, which may limit the growth of your audience. 

For an example, let’s take a look at one of the biggest podcasters in the world: Joe Rogan. Before September of last year, his podcast was available on most podcast players and YouTube. Then, he signed an exclusive deal with Spotify, and his interviews were taken off every other platform. Google Trends data shows that searches for Joe Rogan declined sharply after this happened.  

Look, I doubt Joe Rogan is too concerned about this since he got a check for $100 million — but it’s undeniable that gating his content has reduced the size of his audience and given him less cultural influence. If you’re a creator who doesn’t have his fanbase, this can be a big problem. 

How NFTs can solve these problems 

What makes NFTs so exciting is that they can solve all three of these problems. 

Solution #1: No middleman 

Again, Ethereum is fully decentralized. There’s no middleman in the Ethereum network who can snap their fingers and decide to kick you off the platform or change the algorithm to hurt you. If you’re an artist, you have a connection with your fanbase that you can actually rely on. 

Solution #2: Artists don’t need to pump out content 

If an artist is selling NFTs, there’s no expectation for them to release content on a monthly or even yearly basis. Artists like Frank Ocean can take their time to release their work. They’ll be able to monetize their biggest fans without having to worry about their subscribers begging them for more. 

Solution #3: NFTs can give artists reach & money

Right now, artists have to ask themselves this question: Should I gate my content and limit my audience, or should I put it all out there and lose out on revenue? NFTs can eliminate the need for artists to make this choice. Let’s think about this in the context of music: while Spotify exposes musicians to wider audiences, they get less than a penny every time one of their songs is played. Blockchain offers an opportunity: Artists can continue to keep their music on streaming platforms, but also sell their most popular songs as NFTs. This gives them the opportunity to monetize their biggest fans without compromising the size of their audience. 

The biggest benefit of NFTs: An ownership stake in your favorite artists

We haven’t even gotten to the biggest benefit NFTs have over Patreon: the ability for creators to give dedicated fans a financial stake in their success. 

Maybe in the future, musicians who need to get more money to buy more equipment and studio time don’t need to only rely on working a day job. Instead, they can sell their works as NFTs to their early supporters. 

There’s a reason why fans would want to get in on this action as well. If you buy an NFT from a musician you find on SoundCloud who later blows up, you’ll be able to sell that NFT for a significant gain. You get rewarded for supporting the creator from the very beginning. 

There’s also a huge marketing benefit for creators. Fans who own NFTs have a financial motivation to tell friends and family members about that artist. That can be a big deal for an artist struggling to get recognition. 

For an example of how this could work, let’s look at Bitcoin. Bitcoin’s total value is now worth more than $1 trillion, despite the fact that the cryptocurrency didn’t have any marketing team behind it. It all happened organically. The original Bitcoiners were passionate about the network and evangelized it on the Internet and in real life. The fact that they had an ownership stake meant they actually had a real incentive to talk about it instead of just letting it sit on their hard drive and eventually forgetting about it (why do you think people who own Bitcoin never shut up about Bitcoin?) 

Side note: I own Bitcoin. 

If early supporters decide to sell their NFTs later on, the artist can share in that reward. NFTs can be set up so the original artist gets a percentage of every secondary sale. 

Overall, the entire relationship is a win-win for both fans and creators — without some middleman taking the majority of the revenue. 

Why pay so much for a JPEG?

Alright, now it’s time to answer the biggest objection people typically have towards NFTs. 

“Haha what’s the point of paying so much for a JPEG, anyway?” 

We talked a little bit about how NFTs can be an investment asset, but that’s not the only way that NFTs can be valuable. To understand how this can work, we need to understand why things have value in the first place. Let me give a simple real-life example. 

I own a Kanye West t-shirt that I bought at one of his concerts in 2016. I think it cost somewhere around $45. 

Do I really value the physical Kanye West picture on the back of the shirt $40 more than I would a regular $7 black t-shirt that I could buy at H&M? No, honestly I think it looks kind of ugly. Still, I do value the memory of me and my friends driving down to Los Angeles to watch the concert, I do value the connections I’ve made with fellow Kanye fans who started conversations with me over the years when I wore the shirt, and I do enjoy telling the story of how Kanye randomly decided he wasn’t feeling it in the middle of the concert and left. 

All in all, I think it was a good purchase. If I can get all of those same benefits with an NFT badge that I could display on my social profiles, I’d be willing to pay for it. 

We’ve got to remember, fandom is part of our identities as human beings. The musicians, YouTube channels, and podcasts you like tell the world a lot about what type of person you are. It’s also an opportunity to connect with others — there've been countless times when I’ve bonded with strangers about bands or rappers that we both liked. NFTs can make sure that you can display fandom in the digital space as well. 

Will NFTs go social? 

Right now, if you buy a piece of art, you can hang it up in your living room to show it off to any guests that stop by. You can’t exactly do the same thing with NFTs. So then, we have to ask an obvious question: what’s the point of dropping money on a work of art if you can’t show it to anyone?

Luckily, there is a solution to this problem: already, there are sites that allow fans to display NFTs that they own. In the future, we might see platforms like Instagram and Twitter pick up the same option if NFTs gain in popularity and social networks see it as a way to increase engagement. 

While the $69 million NFT purchases are what make the headlines, they aren’t representative of how most people will use the technology. In a few years, maybe you’ll see fans display NFTs from recent concerts, festivals, and events they’ve been to on their social profiles. If you’re one of the first people to see a concert for a hot new artist, you can show that off on your Instagram to tell the world that you’re an authentic fan.

In conclusion 

Right now, the vast majority of the world thinks NFTs are a stupid distraction. But hey, they said the same thing about Bitcoin, and now that network is worth more than $1 trillion. Only time will tell whether NFTs are really the future or whether they’re just digital tulip bulbs. Still, they represent the potential for artists to create stronger relationships with their fanbase than ever before.

Anyway, if you liked this article on NFTs, you should subscribe to our weekly mailing list. We send one article like this on business & tech every Sunday.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

Summary

* One time in college, I told my housemate he should drop $10 on a Mario mobile game because “You’ve made stupider purchases than that.”

* He used this same reasoning to make progressively stupider purchases until he realized that he needed to change his ways.

* Smart people often make bad financial decisions when everyone around them is acting irrational.

* The best example of this is the dotcom bubble, where investors stopped caring about fundamentals and started pouring money into pretty much every Internet company.

* To avoid losing money in a bubble, be self-aware and try writing down the reasoning for your investment decisions.

“You’ve made stupider purchases than that.”

One time in college, my housemate walked into our living room and told me that he was thinking about buying some new Mario mobile game for $10. He thought it looked cool, but he wasn’t sure that it was really worth $10. 

“I don’t think it’s a big deal man, it’s just $10,” I told him. I was looking at my laptop and I wasn’t really paying attention to what he was saying. “You’ve probably spent $10 on stupider things than that.”  

“Huh, that makes a lot of sense,” he said. He ended up buying the app, but he didn’t stop there. For some reason, “You’ve probably spent $10 on stupider things than that,” really resonated with him. He used that same framework to buy a bunch of other things on Amazon that he didn’t really need. He ended up buying progressively stupider and stupider things until he found himself in his room, surrounded by a bunch of useless shit. He looked around, shook his head in shame, and wondered where his life had gone wrong. Apparently, he never even played that original Mario game that much. 

All of that happened because of my terrible advice. Anyway, I’m going to try to make up for what I did by giving you guys some good advice on how you can avoid letting bad influences (like the college version of me) convince you to make bad financial decisions. 

Why do smart people make bad decisions? 

There’s a reason why the advice I gave my housemate was so terrible. Every purchase decision seems okay if you’re comparing it to the stupidest purchases you’ve ever made. My advice can easily be used to justify purchases that give you a quick hit of instant gratification before you recognize that you made a terrible mistake. Next thing you know, you’re dropping $175 on an Adventure Time Christmas sweater, not realizing that none of the fifty-year-olds at your office holiday party even know the show until you open the package. 

Now look, I’m not telling you this story to make fun of my housemate. All of us have held incredibly stupid beliefs at some point in our lives. Usually, we rely on other people to talk us out of whatever ridiculousness we currently have in our heads. 

Most of the time, relying on friends and family to stop us from being morons works pretty well. Of course, it doesn’t work when everyone is being stupid. Sometimes, the entire market gets hit with an epidemic of people who are making really bad excuses to chase instant gratification. That’s how bubbles happen. 

The dotcom bubble 

To get a better idea of how this works, we can take a look at the dotcom bubble of the late 90s and early 2000s. 

Back in 1999, the Internet was still relatively new and user numbers were going up exponentially. From 1995 to 1999, it’s estimated that the number of global Internet users went from 16 million to 248 million. 

Those numbers made investors very excited. They started pouring huge amounts of money into any Internet company they could find. 

The demand for dotcom stocks reached unreal levels. During 1999, the average IPO closed 90% over its offering price on the first day of trading. It didn’t matter how unprofitable or nonsensical your business was, the public markets were still happy to buy your stock. 

For example, Webvan, a company that promised to deliver customers groceries in 30 minutes, raised $375 million in a 1999 IPO. Let’s be real — there’s no way any company in the 90s could have delivered on that promise. Even today, Amazon doesn’t offer 30-minute grocery delivery despite the fact they have the most sophisticated delivery operation in the world and own more than 500 Whole Foods stores in North America. 

Eventually, reality hit. The tech sector started crashing in the year 2000 when interest rates rose and Wall Street guys started actually looking at the balance sheets of the tech companies they were investing in. They quickly realized that companies like Webvan were unprofitable and didn’t have any viable path to actually start making money. The NASDAQ index, which contains most tech stocks, lost 39% of its value that year. It wouldn’t get back to pre-crash levels until 2015. 

As we can all know now, the Internet was a game-changer, and there have been many billion-dollar companies built on top of it. The problem wasn’t that the Internet was all hype — investors who poured money into dotcom companies were just getting way ahead of themselves. While there were a few big winners in that era like Amazon and eBay, lots of other successful Internet companies were still years away. The infrastructure that was needed to actually make the Internet a great place for users and businesses wasn’t there yet — broadband speeds were still incredibly slow in the 90s. Plus, the one innovation that made the Internet a constant presence in people’s lives — the smartphone — wouldn’t become popular until 2007 with the release of the iPhone. 

What can we learn from all this? 

Even though I was just a kid when the dotcom bubble happened, I can totally imagine what was going through the heads of investors at that time. It’s not easy to stay rational and try to make reasonable decisions when you see all your friends becoming insanely wealthy in just a few months. You get jealous and then you want to jump in. Soon enough, the whole market is driven by the emotions of people who don’t want to be the only person in their friend group who didn’t get rich. 

Plus, it’s important to remember that there have been bubbles around exciting new pieces of technology since the dawn of time. Just like the dotcom bubble, there was a bubble in canals in the 1700s and a bubble in railroads in the 1800s. All of these technologies turned out to be a big deal for humanity’s progress as a species. Still, human beings got too excited each time and ended up losing tons of money. 

So how do you avoid losing money in a bubble? Here’s a quote from William Bernstein, where he talks about what he would tell someone who’s afraid of getting caught up in a bubble. 

I would ask them how empathetic they are. When they see someone around them happy, do they get happy? When they see someone around who is very sad, do they get sad along with them? And if you answer those two questions yes, then you really have to be on your guard, because that tells you that you’re the kind of person who is going to feed off other people’s investing emotions, which is death in investing.

The trick is having as much self-awareness as possible. Personally, I’ve been trying to do that by writing down my investment decisions. Honestly, I could be better about it — I don’t do it as much as I should. Still, it’s the best way to force yourself to look at the reasons why you’re making certain decisions. If you end up losing money, you can always come back to what you wrote to figure out where you went wrong. 

In conclusion 

My housemate wasn’t the first person who got sucked into really bad financial decisions by the stupidity of the people surrounding him. He’s definitely not going to be the last one either. We all get sucked into bubbles — it’s just human nature. The only way out is through self-awareness.

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I am not a financial advisor and I am not recommending you buy any specific stocks or cryptocurrencies. Here’s a summary in case you’re too lazy to read. 

Summary 

* Back in 2013, most “smart” people were dismissing Bitcoin as stupid. 

* Peter Thiel pointed out that successful startups are built on assumptions that sound stupid to most people. 

* Cryptocurrency is a great modern-day example of this. Even now, there a lot of people who think the whole thing’s a scam. 

* A great way to figure out whether a “stupid” technology actually is stupid is by looking at how it’s progressing over time. 

* Lots of people thought the Internet was stupid in the 90s, but it got faster and faster over time until it was really easy for anyone to use. 

Missing out on tendies 

The first time I remember hearing about Bitcoin was back in 2013, when I heard one of my high school friends talking about it. I didn’t really have a strong opinion on it, but all the articles that I read online about it seemed to think it was stupid, so I didn’t investigate it any further. That was definitely a mistake. Back then, I could’ve bought one Bitcoin for $100. That would be worth more than $57,000 now.

I’m sure most of you reading this had similar experiences with Bitcoin. The lesson we should all learn from missing on those returns is that we shouldn’t just be ignoring new technologies when most people are dismissing them as stupid. In fact, that’s exactly when we should be paying close attention.

What I learned from Peter Thiel 

One of my favorite books ever is Zero to One by Peter Thiel, who co-founded PayPal and Palantir. It’s a great look into how his mind works and how he thinks about companies to invest in. The first chapter starts with a question that he asks anyone that he interviews. 

“What important truth do very few people agree with you on?” 

Thiel goes on to talk about how most people don’t really have good answers to this question. They’ll usually say something about how American education is broken or share some other opinion that isn’t really that controversial. Those answers aren’t really what he’s looking for — the best answers are those that actually have a definitive view of what the future is going to look like and sound really stupid to most people.

Those are the kinds of answers that great companies are built on. 

There’s a reason why startups need to be built on ideas that sound stupid. If an idea is too obvious, there’s a good chance that at least one of Facebook, Amazon, Apple, Microsoft, or Google is already pouring money into it. In addition, there are probably a ton of other startups who are trying to do the same thing. The odds of actually building a successful company when there’s this much competition are pretty low. 

For an example of a startup that was built on an idea that sounds stupid to most people, we can look at Airbnb. The founders made the assumption that homeowners would be okay with random people staying at their house if they wanted to make some extra money. It seems obvious now, but back in 2008, most people didn’t understand why hosts would run the risk of having a serial killer murdering them in their sleep. Now, there are more than 7 million Airbnb listings and the company is worth $112 billion.

Is cryptocurrency colossally stupid? 

So what does any of this have to do with you? Well, if you’re making investments, you can “beat the market” if you find a company or technology that most people think is stupid but actually has a lot of potential. After all, the fact that most people are dismissing it means it’s underpriced relative to its true value. 

That’s why I’m so interested in cryptocurrency right now. Crypto is built on one important truth that most people probably don’t agree with, “A better financial system can be built through code and decentralization.” 

That idea was a lot more controversial 5 years ago, but it still seems ridiculous to most people over the age of 40. Even though Bitcoin is worth more than $1 trillion, many people still think crypto is a giant scam.

Take a look at this guy right here. 

This guy is a total douche who’s trying really hard to look like the smartest guy in the room. It’s really not that hard to see why cryptocurrency-enabled services like decentralized finance are so exciting. After all, many of these decentralized finance protocols give savers significantly higher interest rates than they can find in any traditional bank. 

That being said, I do understand where this guy is coming from. Right now, the cryptocurrency landscape is really hard to navigate for anyone who isn’t a nerd. As I wrote last week, these usability issues mean it’s going to take a long time for cryptocurrency to reach the point where it’s going to start replacing the traditional financial infrastructure.  

Finding evidence for your stupid idea 

So maybe you came up with your answer to Peter Thiel’s question and you have a view of the future that’s different than most people’s. Then, there’s another question you should probably try to answer: Am I actually on to something or am I just a moron?

To figure out how to answer that question, we can look to history. Here’s how Jeff Bezos decided to make a decision that most people at the time probably thought was incredibly stupid, quitting his job as VP of a prominent hedge fund to start Amazon back in 1994. 

"I came across the fact that Web usage was growing at 2,300 percent per year. I'd never seen or heard of anything that grew that fast, and the idea of building an online bookstore with millions of titles--was very exciting to me.” 

Back in the 90s, most normal people only used the Internet to send email. Broadband speeds were so slow that loading an image took forever, and loading a video was basically impossible. That’s why back then, lots of smart people thought the Internet was a joke. Nobel Prize-winning economist Paul Krugman said the Internet’s impact on the economy would be no bigger than that of the fax machine. 

Bezos clearly saw things differently, and he was 100% right. The fact that the Internet was growing this fast when broadband speeds were still slow is incredible. The numbers showed that the concept wasn’t all hype —the Internet was an exciting new technology. Jeff Bezos recognized this and decided he needed to make his move and build his company while the Internet was still young and the opportunity was still there. 

So what can we learn from this story? As venture capitalist Chris Dixon pointed out, there is a way to determine whether the stupid thing everybody is dismissing is actually going to turn out to be a big deal: paying attention to how the technology is progressing over time. 

While the Internet was incredibly hard to use in 1994, things got better pretty rapidly. It’s been estimated that Internet speeds have gone up 10x every 5 years since 1990. It wasn’t possible for most people to watch videos online in 1995, but by 2005 we had YouTube. 

Just like the Internet, cryptocurrency has become significantly less annoying to use over time. A few years ago, it was really hard for any normal person to buy Bitcoin and send it to other people. Nowadays, Cash App allows you to do both of those things really easily. With this rate of improvement, it’s possible that within a few years, putting your money in decentralized finance will be easier than setting up a bank account. 

In conclusion 

It’d be nice if I could go back to 2013 and buy some Bitcoin. It would also be nice if I told myself to get better at basketball so I could actually score some points in some of the pick-up games I played with my friends during my freshman year of college. But hey, you can’t redo the past — you just got to learn from your mistakes. I’m still trash at basketball, but next time I hear one of my friends talk about some new technology, I’m not ignoring it just because I read some negative article online. 

Anyway, if you liked what you read, sign up for our weekly newsletter. If you enjoyed hearing about me missing out on Bitcoin, you’ll definitely enjoy other stories of me trying to make other money moves and failing really hard (with notes on what you can learn from those stupid decisions).

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

The dopamine hit of seeing a stimulus check hit your bank account hits almost as hard as the stress when you see it all disappear a day later. Anyway, here’s a summary of the article in case you don’t want to read. 

Summary 

* Banks have screwed over their customers many times in the past, but nobody really has another option to store their savings and borrow money. 

* Decentralized finance has the potential to be a great alternative because it cuts out the middleman with the help of blockchain-based networks. 

* I tried getting started with decentralized finance and I was freaking out because I thought I lost $1200. 

* Because of how hard it is to get started and how scary blockchain is to the average person, it’s going to take a while for decentralized finance to go mainstream. 

A rollercoaster of emotions 

Today, we’re going to sit down and hear the story of how $1200 of my money vanished in thin air. But don’t worry, this article’s not going to just be about me and my stupidity. We’re also going to talk about an exciting new space called decentralized finance and the advantages that it can offer over traditional banks. 

Why everyone hates the banks 

It’s hard to believe that anyone trusts the banking system. Going through every shady thing that banks have done in the past twenty years is kind of like trying to go through every crime that Jeffrey Epstein committed — so let’s just focus on one recent case with Wells Fargo. Last year, the company had to pay a $3 billion fine to the Justice Department. From 2002 to 2016, Wells Fargo employees who realized they couldn’t hit their quotas decided it was easier to just screw over existing customers. The employees opened up millions of accounts behind customers’ backs and even transferred money out of their accounts. 

Plus, taking out a loan from a bank isn’t exactly a fun process for anyone. To get a loan, you need a good credit score, but it’s often calculated in a way that completely goes against any conception of fairness and common sense.

The loan process is especially bad for Blacks and Latinos, who are less likely to get loans than their white counterparts. When they’re trying to buy a home or start a business, they’re often at the mercy of some Karen underwriter who spends her free time sharing Kamala Harris conspiracies to her 58 Facebook friends. 

The way out: decentralized finance 

No matter how much people hated the banks, they kept using them. It wouldn’t matter if Wells Fargo employees were kidnapping the firstborn child of every customer  — banks still offered the easiest and most secure way to deposit money. But recently, a new alternative has emerged: decentralized finance. 

Decentralized finance protocols like Compound have the potential to provide better financial services to both savers and lenders. What makes these services so interesting is that they aren’t controlled by any one company — instead, they run on smart contracts built on blockchain networks like Ethereum. 

That means there are no Wells Fargo employees standing in the middle who can manipulate your savings. The flow of money is determined by code. Savers can put cryptocurrency into the protocol so they can earn interest. Borrowers can put some of their crypto in as collateral and take out a loan if they’re in need of some capital. The code does all the hard work of matching these two groups together. 

Because protocols like Compound have effectively cut out the middleman, they can leverage their capital far more efficiently than traditional banks. Right now, Compound offers a 6% interest rate for DAI, a stablecoin that’s designed to match the price of the U.S. dollar. On the other hand, Wells Fargo offers an interest rate of just 0.01%. 

No middleman also means less potential for unfair discrimination. Instead of having your financial future controlled by some Karen underwriter, the underlying code and algorithms determine what interest rates you’ll get based on supply and demand.

Why I thought I lost $1200 

I decided I was sick of the 0.01% interest that Wells Fargo gives me on my savings account. So I decided to give decentralized finance a shot. I found a mobile app called Dharma which would make it easy for me to put money on protocols like Compound and start earning interest on the crypto I already owned. 

I started things off by moving about $1200 worth of assets from my Coinbase Pro account to my Dharma account. I waited a few minutes for the transaction to process. I saw the money leave my Coinbase Pro account. But then it didn’t arrive in my Dharma account. It looked like the money that I transferred just disappeared. 

I’ve read stories online of people accidentally transferring crypto to the wrong address. I wondered if that was what happened. It didn’t make any sense — all I did was copy and paste the address from my Dharma app into Coinbase. I wondered if I somehow accidentally put in a stray letter and ended up sending my crypto to some random dude in Nigeria.  

I don’t really gamble or trade options, so I’ve never lost that much money in a few minutes. Honestly, I felt kind of embarrassed. I imagined my dad shaking his head when I told him how I lost my stimulus money, then telling me that crypto is for South American drug cartels. I imagined the voice of a thousand Boomers speaking in unison telling me to sell all my crypto and buy some government-backed bonds that will give me a 1.5% return over 10 years. I imagined some kid who bullied me in 8th grade telling me my newsletter sucks and that nobody actually reads it (not sure where that last one came from). 

I was freaking out for about an hour until I got in contact with Dharma’s customer support team. They let me know that the money was there, it just wasn’t showing up on my app because of some kind of technical error. Within a few hours, the problem was fixed and I had my money. 

Is decentralized finance the future? 

I’m not writing this because I wanted to hate on Dharma. Their Support team did a great job staying on top of the issue and I will continue to use the app in the future. I work in tech and I know that young companies have bugs — as long as I still have my money, I’m happy. 

I am writing this because I wanted to highlight that even though decentralized finance is an exciting field with a ton of potential, it’s pretty hard to use at this point. I had to do a ton of research just to figure out how to get started and obviously, freaking out for an hour because you lost $1200 is not an ideal way to kick things off.

Even though decentralized finance has a ton of potential, usability issues are preventing it from reaching the same scale as banks. Right now, Compound has $11 billion worth of assets locked up in its protocol. On the other hand, Wells Fargo has $1.97 trillion in assets.

That being said, every new technology starts out being incredibly hard to use. Downloading music on the Internet used to require downloading some pirating app like Limewire. After that, you’d have a 50-50 chance of either finding the song you wanted or just getting a virus that made your whole computer unusable. Spotify and music streaming didn’t come around until years later. 

Of course, usability might not be the biggest issue with decentralized finance. The #1 thing that’s stopping mainstream adoption is probably public perception. Even though the total value of Bitcoin is now more than $1 trillion, there are tons of people who still hear the word “blockchain” and automatically assume it’s just for drug dealers and scammers. It’s going to take years for the average man on the street to trust services like Compound with their money. 

In conclusion 

Maybe one day I won’t need to give my money to Wells Fargo because I’ll be able to get better interest rates using Compound. Maybe one day, the average person can easily get a crypto loan. Decentralization has the potential to make capital work more efficiently than ever. Still, we’ve got to wait a few years before it actually becomes a threat to the banks. 

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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sundayspecial.substack.com

Apple’s M1X chips are coming soon. Here’s what that means for the world.

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