On The Tranching of Government and Currency
Louisiana has just passed a in response to copper thieves (who steal public copper lines and sell the metal to salvage yard wholesalers) that effectively makes it illegal for cash to be used in second-hand transactions. Only currencyflow with an electronic footprint can be used.
Any such regulatory capture or abuse encourages a gradient of gray/shadow/illicit or alternative markets. Indeed, some of the most robust and thriving global markets were sparked by short-sighted, mousetrap laws that only served to drive talented entrepreneurial talent towards a HUGE untaxable exits (unless you accidently took the bullet-in-the-head).
In our steadily declining regulatory environment (carefree bailouts, enforcement of consumer crushing behavior etc), we are unlikely to see a single holistic alternative regulatory/market entity emerge. There’s no Blackwater market-state lurking in the wings. There’s no coherent alternative monopoly on violence.
Instead, we’ll see regulatory tranching. That is, the layering of multiple tiers of government – local, familial, state, national, market, and even technological. And perhaps the first step will be currency tranching. One medium of exchange for each potential tier, tied to the activity or storage that matters for that relationship. (In other words, value as defined by productivity, and not longevity.)
For example, if I were an OWS participant, I may use bitcoin to conduct my business internally. US dollars to exchange with organizations that operate on that platform. Thousands of US dollars to form one unit that matters on the international governance platform (147 mostly finance companies that control the world). A personalized currency stack, or a portfolio in classic terms. Most interestingly, it’s put together by you.
You’re already experiencing the currency (albeit in a minuscule way) if you keep some money in a a virtual medium like your Paypal/Google Checkout/etc account. You’re already experiencing this if you live pretty much anywhere outside of the United States.
Note: I’ve been extremely skeptical of alternative currencies, and have more often than not dismissed them as utopian fantasy. Had to redefine value and the goal per the above to really get what the industry will look like.
If I Were a Venture Capitalist…
If I were an average sized V.C. ($150m or so), was watching the funding overhang end (what funds raised vs. what the industry spent), and the uncertainty in the economy in general, here’s what my portfolio would look like (based on several years of research in a variety of fields for a diverse set of clients). Assume a standard 7 year investment horizon.
First, the standard answer of growing segments today: education, consumer healthcare, and consumer technology. Say this is between 25-50% of your existing portfolio (heavier if your exit events are projected to be earlier than later).
- Education. Software and hardware for the (virtual and meatspace) classroom, college, loans and payment processing.
- Consumer Healthcare. Payment processing is huge. Insurance products. Info management and point-of-care tools.
- Consumer Technology. Going to see a shift away from features to social networks/graphs with purpose. Reputation systems that transcend a particular business.
Next, take into account three major trends:
- The gutting of the middle class. It’s happening (measured by a decline in median income levels, 1/3 being one paycheck away from losing their homes)Won’t be stopped, the system is too far off the rails.
- The rise of distributed manufacturing capacity + tinkering networks. Or work in general really.
- As in the first depression, the elite get by. They may lose half their net worth, but half of a lot is still pretty good. They’ll keep buying with some modifications.
Of course, as an investor, you don’t just want businesses that can rapidly gain market share, but also businesses in a space where the market itself is growing MASSIVELY. For example, 3d fabrication alone is predicted to double in the next 5 years. The following would comprise 50%-75% of my portfolio. (Of course, assume the executive teams, value props, and execution are solid.)
- Bankruptcy. Digitally accelerating or delaying the information flows. Transforming nonproductive assets. Helping families/communities cope. Repossessing. Not really dealing in debt (default will be more likely).
- Fractional Employment. Despite not having jobs, they will remain productive. Platforms that enable distributed work (atomize every task) will take off. Tasks will progressively grow in complexity.
- Decentralized Production. Everything from energy, food, water, consumer products, healthcare products (courtesy of biohackers). This includes tools (design software, hardware, etc) and methodologies they’ll need to generate each.
- Upmarket Services. Simply, bifurcating society. Those who can afford today’s standard of living, and those who are in the 3’rd world category. So vacations, security, building walls, dampening exposure to shocks, preserving asset value. Wine, art, diamonds, etc.
- Private Security. No longer a public good, market is poised to explode. Neighborhood rent-a-cops, bodyguards, protecting schools/malls/tent cities/infrastructure. The nonlethal weapons and tools and information management they’ll need.
Thoughts on New Orleans Social Entrepreneurship
I’ve had the opportunity over the last couple weeks to spend some time with the nascent NOLA social entrepreneurship ecosystem. It’s been pretty cool. For example, I met an amazing couple that’s growing a backyard garden that has transformed into a community garden, and they’re looking to expand to a lot across the street from where the husband grew up.
So they went through an accelerator/incubator program. They applied to PitchNOLA, where if their pitch was successful, they would have earned $3500. That would have been a Big Deal to them. The judges were more interested in funding something innovative at an earlier stage. And whatever, it’s their money to spend.
But because the capital architecture here is so young, funding for social entrepreneurship hasn’t yet had the opportunity to segment the way it has in other places (not unlike tech, in California and the North East). The result is that all projects, charities, and platforms are shoveled into the same pipe. And that means my new favorite couple in town is stuck in an awkward place.
They’re already successful, and looking to execute on a larger, but not LARGE scale, but they’re abandoned to the old crowd-sourcing money approach – begging. Of course, they’re going to keep going, and hopefully they’ll get the money, but its a lot harder than it should be.
There are some steps being taken to shake out the pipeline. For those who can scale (with a big S), there’s an incubator in the works and a VC fund for those executing at that level (or just high margin enough). There’s stuff like PitchNOLA for seed rounds (as ever, not enough). But there’s a giant hole at the $3k-$50k level, which is goofy, because that’s what’s going to have immediate impact.
Review: The Postmortal
“But don’t you miss home?”
“Home? Nah, mate. Why would I miss home? It’s always there. Frankly, home is a bit of a crutch. It’s just so easy to stick around and keep doing all the same shit, isn’t it? What’s the point of that, especially now? I can go back home a hundred years from today, and it’ll all be the same. My friends will be the same. My wife will be the same.”
“Your wife? You’re doing this entire trip without your wife?”
“Sure, why not? She’ll be around. If I’m going to live 1,000 years, I’m not gonna spend 999 of them in Wahroonga. Anchor yourself to one spot, my friend, and you’ll eventually grow contemptuous of it. I’m doing North America and Central America first. Then South America. Then Africa. Then Europe. Then Asia.”
The Postmortal plays with the premise that humanity solves aging. You get a cure, and you can still die (cancer, a bullet), but you stop aging, forever looking your current age. The ideapack includes resource scarcity, city-states, nuclear warfare, and human augmentation.
The author does a good job with pacing (actually, the more I think about it, excellent), and it’s nice that he mixes up the narrative with press releases, presidential speeches, and other kind of ‘first hand evidence.’
But the book suffers from unevenness. It has a little bit of everything- like doodads an agent thought could be added to land a movie deal. Some sentences are poignant, some sentences are hilarious in a lighthearted way, others are dark humor funny. The writing is best when it’s about the protagonist and his thinking, or even just the author’s thoughts on a post-aging future (like the quote above), but things come off the rails when the writing expands to a societal level. It’s an incoherent worldview -Joker-esque bad guys and preppers and religion- that could have been fixed with some disciplined editing.
That said, it is an interesting read, but not one I’m really recommending to anyone. Like much of the first half, the book doesn’t stand out. I don’t really feel strongly about it either way – read it if you have time and it sounds interesting. Don’t if it doesn’t. I will, however, keep an eye on the author, and hope future efforts are more in tune with his strengths (the second half) and less muddled.
Fiction: Hard Drive
I break for the door. Grit my teeth and shoulder it open. It slams. Silence interrupts the carnage.
Our lives have been spent pursuing her through server jungles deep within urban carcasses. This is the last. Missiles are inbound, so I work quickly to isolate her flesh. Slice every wire. Pulse every machine.
As I rip her out of her bed, the sky explodes. I burn into her tender skin. The final hard drive melts, and Siri dies.
Submitted to the Esquire 78 word short short contest.