YouSaid · the spoken record

John Pfeffer

lines on the record: 113
first: 2022-02-01
most recent: 2022-02-01
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Speculative positions in all these different crypto assets. One is a thing to do, but also as part of getting whatever it is that they want to get done done. And that doesn't seem, first of all, very attractive. That'd be like a huge ask on users. It doesn't seem very likely. It seems much more likely that what will happen is a couple of things. One is everything that sort of makes all this work is probably going to fade into some kind of background of bots where we'll have tools that we use to manage our whatever it is that we're trying to get done. And we'll say, I don't know, I need to do X. I need to whatever it is, I've got my collection of whatever's and I want to do X and Y, or I need to store some files or whatever and just kind of ask the bot to do it.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Internet, we still don't talk about them as internet businesses. We talk about social media business or a search business or maps business or payments business or e-commerce business or whatever. And then there's the reality, which is the internet is a part of every business to differing degrees, not because that happened. Do I think that's going to happen here, but I think that there are lots of reasons to believe that a similar thing is going to happen where crypto today is seen as a destination. There's a shift underway that I think will ultimately go as far, if not further, of crypto being the background. It's hard to believe, let's assume this tech has all this tremendous success, which I believe it will have, and that we're going to have billions of users, the billions of users of Web3 or whatever we want to call it, spending their days effectively day trading some huge number of crypto assets and taking”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Whenever we make an analogy to say the dot com bubble and all of that, you got to be careful that you don't overweight analogies because things are different. Nevertheless, I think here there is an interesting reference, which is, remember back in the 90s and late 90s, we talked about literally like we talked about dot-coms. We talked about are you investing in dot-coms, dot-com stocks, or whatever. And even that term references the fact that the common characteristic of these businesses or whatever was that they had a domain name and it ended in dot com that was like the foreground. The destination was dot-com. Today, when's the last time you heard somebody talk about do you invest in the internet? Are you investing in internet businesses? Well, we don't because it's everywhere. It's embedded in everything. And okay, there are businesses which live completely on the”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“And again, when you say most valuable within not Bitcoin, I mean, I want to be careful because I'm talking about a bunch of stuff, but always want to come back to the fact that I think that the native money of the internet is the no-brainer bedrock underlying all of this. But I'm talking about all the other stuff”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Web3 being there's going to be things that will replace a Web2 equivalent. My guess is that they'll be additive. And also I think the most interesting things are things that we can even yet really imagine. And in the late 90s, even if you quote, got the internet atom, except I'm sure, for some very smart people, most smart-ish people like me would have said, well, okay, great, I can read a newspaper online, I can maybe order a book if I keep trying to check out until finally they take my credit card number and all of that. And I would have said those things would get better. I don't know that I could have imagined Uber because we didn't have mobile yet. We didn't have the bandwidth yet. We didn't have mapping all these different prior innovations that were required. And the same is going to happen here where we need scalable blockchains. We need to figure out some economic questions and so forth that will suddenly lead to things that are going to be non-schemorphic innovations, which will probably be the most”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Bigger and greater, but it's still, in my mind, too early to tell. I'd be bullish, I'd be optimistic it'll be bigger and better, but that's going to depend on somebody figuring it out. Social media impact is also kind of unclear. I think it's kind of first order destructive for equity, but maybe new economic models that are created, which are net additive. Maybe this one is a little bit tougher to guess. But then I want to come back to something you alluded to a minute ago, which is the Chris Dixon schemorphic or non-schemorphic point, which is excellent in the same way that Twitter didn't replace other forms of news. Maybe it took market share, maybe whatever, but it grew the market. Uber didn't completely exterminate hail taxis or even driving your own.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Equity, perhaps some tokens which will capture value for some of the mechanisms I've talked about earlier, fee capture or whatever, and investing early enough that you're going to make money notwithstanding the relatively poor value capture. A given analogy there. It's like, I suspect that the seed round investors in pets.com did pretty well, provided that they sold timely, the fact that that was like a terrible long-term value capture, they were early enough. They probably did pretty well and I think there's a lot of that. Maybe I'll be more generous, things that just go bust, things that maybe were overvalued and never fully recovered. But if you were a seed-round investor, that was still okay. If you talk about media, let's put that maybe into gaming and other media. Gaming, I think it's unclear. It really kind of depends on how compelling it is as a gaming experience in the end and what economic model develops. I think it's just too early to tell. Certainly potential for it to be”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Whatever seven hours a day, whatever it is, 4.6 days a week taking out holidays or whatever to markets which are 24-7, 365. That actually is not trivial in terms of what it means to macro efficiency. And so I think that there's going to expand the pie insanely and will have huge macro benefits for economies globally, but it's going to be really bad for the shares of traditional finance businesses. And there'll be some equity value capture by, like, say, a Coinbase, but I don't think it'll come anywhere close to the equity value destroyed. It'll be overall a huge net win, but you're going to really struggle to be not a net loser expressing yourself through public equity. First of all, you really want to just be a user. You just want to kind of be a member of the economy. And as an investor, you're going to have to invest in venture level.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's go through each one. And this is like 3 a.m. dorm room level of massively speculating. But I think that we talked about DeFi and how excited I was about what it could mean in terms of just capital efficiency in the economy and so forth. So what that means for just economic growth is potentially tremendous. Gains in capital efficiency will just have cascading effects across the entire economy. Let's differentiate here when we talk about where there's going to be the biggest impact is kind of markets, lending, brokerage, investment services. It'll be massively expansionary because it will be hugely beneficial in terms at the macro level through the capital efficiency. It's very expansion in terms of the financialization of everything. I was talking earlier saying if you have a, again, if you collect watches, it's just a dead asset. If you collect crypto punks, you can stake them and fractionalize them and financialize them. And also the fact that we're shifting from markets that are open”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a newsletter. I've been thinking about this for a while within his intention. I saw a newsletter from hedge fund at Bishop's Gate that has been historically quite skeptical in crypto. And they basically making the point this is really, really bad for equity as a whole. And I would nuance that by saying that I think it's bad for like public equity, perhaps in the aggregate, because the way we sort of express ourselves is a bunch of Bitcoin and then we do a lot of crypto VC. So I think that there will be pre-orders of magnitude tiering that I said less resource to create a lot of value even if you capture less. I think crypto VC is a great way to capture that. But the public market investor is going to be in the wrong side of a lot of that potentially. And it'll vary by sector.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“To 100 is rather obviously going to be giving a lot more value to users than legacy tech did, probably more value to developers. They're obviously investors as well. And then investors probably less at some level. That would make sense. Now, maybe that's not been quite what's happened to date, but you would think that that would be the outcome of something where it's open source and it's interoperable and it's forkable and all this kind of stuff. So point one is again that maybe captures less but returns are higher because resource is less than point two is distribution across those three constituencies I think is going to be different and much more towards users than legacy. I think another interesting observation is that let's say as a public markets investor you're going to really struggle to benefit from this. In fact you're going to be on the receiving end of a heck of a lot of disruption.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, because of this composability and the compounding of open source, the amount of developer hours it takes to create Uniswap versus what it took to create some of the big web two, it's insane because they're building on so many different open source components and so forth. So interestingly, that would imply that returns are to order of magnitude higher, notwithstanding the worst value capture. But I think it's directionally useful to think about. Now, that's just in terms of aggregate value, thinking about value, creation and capture and returns, but another question is, there's going to be a massive shift in who it accrues to. So if you kind of think about who are the constituents you've got investors and you've got employees, developers, entrepreneurs, and you've got users, this tech is, if you kind of just”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll start by saying, I think this tech, in terms of value creation potential, is the same order of magnitude as the internet itself. And maybe it's even more, maybe it happens faster because it's even more composable and the bedrock of the internet is open source, but a lot of what's built on it isn't this will be maybe much more universally open source and as a consequence will compound faster and even better. Maybe it's even creating more value. But let's say order of magnitude similar. Again, because of all the characteristics I've talked about, maybe by value creation, I'm talking about all surplus in microeconomic terms, including consumer producer surplus, this is all surplus. Maybe for the reasons I've cited, it's an order of magnitude worse than the internet and capturing value. I think there's an argument for that. But then an interesting thing, again, the third leg of this little framework is it perhaps takes an order of magnitude yet less resource to create that value.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've got some capital, and I was like worried about that literally, you know, it's like funny things to worry about. And then I realized, no, you know what, we will always come up with new applications for whatever capital stock we have. And that will be the thing that will set the return on capital. There's no end to that, I think. This is, by the way, another interesting topic we might want to touch on is speculating a little bit on if all this stuff plays out, what does it mean for like value and like equity markets and other stuff So there'll be value shifts massive value shifts and what's one thing is worth is another thing, but also who owns what stuff and who captures value there's going to be huge massive shifts and that's going to be pretty wow but we'll always have uses for capital”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Profound. So, why is capital efficiency good? Well, what are we going to do with this capital? Well, we're going to make stuff. We're going to invent stuff. Humanity will progress. We're going to be able to invest more in research and development and in capital stocks and infrastructure and doing things that today we can't even, and obviously I'm getting way ahead of myself, but I'm taking it to kind of an extreme because it's useful sometimes to frame things in an extreme and you see it already in terms of the amount of capital it took for the first moonshot versus what it takes Elon Musk today to get the person into space. But I do think that there was a while I was kind of worried and I came out of the singularity universe kind of thinking well gee this abundance thesis plays out then capital is suddenly capital is only valuable because it's scarce so if we have abundance then there's no more scarcity capital is worthless that's kind of bad for me because”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Capital efficiency is good simply because assuming the stock of capital is finite, using it more efficient is good. And of course capital grows over time. But again, an instant, there's X capital and therefore you want to be using it efficiently. Flip it around. You don't want to be using it inefficiently. And we do. Traditional finance markets are egregiously inefficient with settlement periods and the way it deals with risk and margin calls and loan to value and all these different things, which in a programmable environment you can push the limits so massively. And these things are become at some point kind of logarithmic. So the benefit from going from 98 to 99% efficiency can be similar to going from 80 to 90. So back to these Karloffs, even as the incremental efficiency gains, I think will be quite”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Securities tokens to me, I think that the controversy may just be well, you always have to be a little bit skeptical when you're dealing with, you're putting something in a blockchain that is actually in the physical world at the same time because you're going through a lot of hoops to be in this decentralized digital world, but then you've got to go back through a court system or something to enforce in the real world and going back into the need for an intermediary. And so I think that it's always something to keep in the back of your mind. Having said that, Again, you know, you could see not only some back office improvements, which I think is of all of the stuff we've talked about, not that interesting, but still there, of using this tech for whatever trading shares in a company or in a piece of real estate or whatever. But I think it may be more interesting is, again, back to what about putting some of these new market mechanisms that have only existed in academia to work.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“You may invest in specific DAOs because what they're doing is interesting. I know there's that you won't. But there's an interesting point there, which is, in my mind, in the same way we haven't yet figured out in my mind what's compelling about blockchain gaming from the gamers perspective, I don't know that we've really figured out what's uniquely compelling about DAOs, what they're really good for. And so that'd be interesting to see what it is. And you want to be on top of all of that. That's a ramble on the different things that I personally think are super interesting, including Bitcoin, which is the bedrock of a portfolio, my view, and then Bitcoin becoming more and more of a means of exchange through layer two. But then a bunch of other things that I think are hugely interesting in where there will be value capture.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Had that you know, more particularly than I could explain here about whether scaling will come from just lots of layer ones that may or may not be that centralized versus layer two scaling through things like ZKER rollups. Regardless, it's going to happen and it's very interesting and there'll be some things to do and investing in Ginure Capital in those space is interesting. We alluded to the joint stock company and limited partnerships and so forth. forms of organization. Well, there's a new one, which is a DAO, right? The centralized autonomous organization. And it's a little bit like saying, oh, we've just invented the Joint Stock Company, you can't just invest in that. It's going to enable a bunch of stuff, some of which will be interesting in investing and some of it won't. There'll maybe be a whole industry of support for that new economic organizational structure, which is interesting. So you can invest in companies or ventures or protocols that will provide that support.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“On-chain architecture in a way that increases capital efficiency, but the potential for Is hugely potentially powerful. And so my gut feeling is we can't even kind of anticipate how all of that will create value and that there will be things within that where there'll be some value capture that will be perhaps compromised to some extent by the open source software nature, but there'll be some that will just be real value capture. Another thing I think is super interesting, and obviously the thing that I'm mostly focused on is they do think Bitcoin owns the stuff and the store of value space, but there's also a lot happening in terms of becoming a better means of exchange through the lightning network. And that will have more and more uses and applications. I think that's an interesting area to focus on. And that's not just buying Bitcoin, that's investing in venture capital and stuff like that. I've talked a little bit about blockchain scaling and that's super exciting, compromising on centralization and other things. And there's a good debate out there that others.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Can actually just project forward a set of fees based on your assumptions and then discount those back and have a view on value. And it's not zero. Now you might say yes, but maybe it's not that strong and I'm going to ding my projections because of vampire forks. Maybe my discounted value of Uniswap is somehow affected by the fact that sushi swap is possible and then use that as just an example of something could happen. But it's not controversial. And so there should be valuable things in this space seems obviously, but it may go beyond that. I'm going to come back to some of the stuff I said about financialization of NFTs here. The build out of these primitives in DeFi and composing these things into new things over time, I think, is going to massively increase chemical efficiency in the economy. Sam Bankman Fried had a blog post about how already in the centralized finance world of FTX they used sort of”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Was super engaging for gamers and then exploiting that and then creating a new economic model for gaming, which wasn't just here, go spend 40 euro or whatever to buy this cartridge or this game or this download credit, but rather you download it free and then you're going to pay extras in the market, freemium models and all of that. And it was hugely powerful. None of that's been figured out yet, I think. So you've got huge successes, but still, I think we haven't yet figured out what is the uniquely compelling from a gamer perspective, from a player perspective thing about this. I made this the economic incentives of ownership and all of that, but who knows, maybe there's something else. But then also kind of what are the economic models that will really stick sort of seems to be obvious that's going to be huge. I talked about why things that function as a circulating script, I don't think are great at value capture. But if you have a token that is actually a claim on a fee stream, that is both obviously valuable and able to be valued.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Why that's kind of hard to get away from, but once you're dealing with fractionalized assets, you can implement market structures which may only existed in academia before, which changed things in a very fundamental way. And we haven't even begun to see those things manifest. And then, of course, from there, you can bridge into things like gaming, where it's kind of obvious that unique digital assets are linked to that. I'm not a gamer, so I'm always at a big disadvantage in some senses. I think in another podcast with someone on sort of gaming economics and so forth, it would be a good listen to this reference here. But we've had these successive gaming platforms or whatever, and I can't remember the order, but it's like the stuff in the arcade, the big things in the arcades, and then you had those PCs and then consoles or consoles and PCs and then mobile came about. And really it was something like Angry Birds that suddenly made everyone get what was unique about that new platform, which was the touchscreen and how that really...”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you can, and more and more, will be able to stake that asset to borrow against it. You'll be able to fractionalize it. And you can do it in ways where because of all this is programmable, wouldn't have been practical before. Because before, okay, you know, you could have on paper said, I'm going to sell one one hundredth shares of my Basquia and people may or may not buy it and you're going to have paper moving around to do that. And what does that really mean? In this environment, I mean, there's a really great paper or series of papers that Dave White, a paradigm wrote about Martingale shares. where he describes a market mechanism where effectively, and I'll put it in my terms, you can fractionalize an asset where the price at which minority stakes should trade won't necessarily include a minority discount. And it's actually something that would be incredibly problematic to implement in traditional financial markets. We know that the price of one apple share is very different from 51% of Apple shares. There's a control premium. There are all kinds of reasons.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Discrete digital objects should have value or might have value, subjective or objective. I think it's obvious that they can and should. One thing might be Picasso, another thing might be a collectible spoon, but fine. It's not a philosophical thing. Now, that's a little bit like we were sitting here talking about investing in equities. And I said, by the way, I'm really into Basquiat. Well, okay, that's like a totally different pursuit being an art collector. There are platforms like companies and business like Dapper and OpenSea and so forth. But there's a lot more than that. Again, yes, we're going to, I was called this optimism, be living more and more in our lives in a digital realm. The whole notion of unique digital objects is going to be more and more important in terms of all kinds of things and how we present ourselves and status and all kinds of other things. Right now, let's say you collect watches. Okay, well, you got your watch collection. It kind of sits there and you got to wind them, but otherwise it's a dead asset. Whatever the NFT equivalent.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“That don't capture value. I talked about Linux where it's a little bit, but not much. And so it is useful to therefore think about, well, is there a mechanism here for value capture? And I would just caveat, because I know there'll be a lot of commentary. I said in my paper, I thought that layer one, smart contract protocol native crypto assets could be worth tens or hundreds of billions. And I still think that's true. So by no means is that zero. The only problem is they're already worth hundreds of billions. the return is maybe not great and frankly even if it's worth low single digit trillions question is it really worth the risk that's my main question but moving on from that there's so many other things that are interesting so i'll touch on a few i don't get the controversy around non-fungible tokens to be honest i mean discrete physical objects have value subjective and objective value why is it therefore that troubling for many that”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Rather than me try to explain all of that, go to those podcasts. And I would say that from a technology perspective, again, I agree with the vast majority of the views that they express and 100% excited about all of that. Maybe it's worth, therefore, move the conversation forward a bit rather than just repeat what other people are probably going to be able to express better. I do think it's interesting as an investor. As an investor, you can't just stop at the general thought of Web3 is inevitable. Yes, okay. Fine. You only have to be making discrete investment decisions. And so you have to do something with that. And making a discrete investment decision requires some thought as to is this a good business or a bad business? If this thing is successful as a tech, will I make money? And you can donate all the money you want to Wikipedia. We all should if you're not, do it, but you're not going to get a financial return on that no matter what happens. So there's a lot of things that have network effects.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“I've literally My base currency is Bitcoin in terms of how I think about how to measure wealth, and that I see is tough because that means that the rest of our portfolio is kind of losing value. But I think it's a good thing to keep us honest. Think in terms of Bitcoin as a cost of capital. I think it's right. And that makes us selective in terms of what we do. I also think that what's changed about the world since 2017. In 2017, I think the universal question was, is it too risky to own Bitcoin? And I think now is it too risky not to own Bitcoin, at least some. That's Bitcoin. Regarding other stuff, let me start by saying, so there's this term that's being used, Web3. There's a lot of really articulate smart people out there to listen to or to read about on this. Matt Huang and Fred Ersom and Chris Dixon and Lalashi Shibanafsen and Naval Rabikin, I think you've interviewed some of them and there's all great resources to talk about all of that.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Think principle wrongly perceived me as a Bitcoin maximalist, which is not at all the case. Because I think, by the way, maximalism is different as maximum. One is both, first of all, in tech and the other one is in terms of your investment portfolio, which I separate. I'll repeat the fact that I think, for example, theory scaling roadmap is super exciting with ZK roll-ups and these kinds of things are just super interesting phenomenal things. I think, by the way, they're rather obviously bad for the value of ETH. They're tremendous for the adoption of Ethereum. And by the way, just to be clear to everyone, when I say Ethereum, I'm talking about the protocol, when I say ETH, I'm talking about the asset. These are two different things. So it's unfortunate that it's a very tribal space. So I'm going to basically manage to piss off everybody by saying, not only do I think that it's not just Bitcoin, but also I question whether the ETH or Solar is going to be long-term a great investment.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“For them to kind of fail it both, which would be a shame. So I know that was probably fairly dense, but on that issue of what I was talking about in 2017, I think it's all the more true today. And I think what's fascinating is that as an investor, Bitcoin has got this unique hole on this uniquely good business. And I think some other things that people are a little bit enamored with right now, I've thought and continue to think aren't really great businesses. And by the way, Bitcoin is going to scale in terms of means of exchange through lightning network and other things later too. And frankly, I think it was a good chance that stablecoins will be a big part of the means of exchange market, and that's fine. I think that's a relatively low value market.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Does it extraordinarily well? There's a tremendous consensus around that fact. And no one is really competing with that. Rather, ironically, subsequent to my paper, it's kind of funny that the Ethereum community, I think, must have internalized my paper quite deeply because they came up with EIP 1559. And now they're trying to shift this, which is great and interesting and certainly an improvement in many respects. But now they're sort of trying to shift the narrative from world computer to ultrasound money. That creates this tension by the way that they talk about Hasu and Sushu in their podcast about this. What you end up with is this tension between, well, we're trying to be this world computer that everybody's going to use, which means we've got to be onboarding lots and lots of new users, but we're going to structure it in a way where there's a lot of rent capture by the old gangsters who owned it before. And we're going to call it ultrasound money. There's inherent conflict there that I think is actually risking.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“It's logical that people would choose something that wins on store of value terms, which is maybe it's really hard to seize or to censor. It's maybe super secure and all of that. And what's intriguing there is what I just described in terms of these L1 assets, I think is describing a bad business. Bad business not in the sense of the technology. I actually am hugely bullish about Ethereum. I'm hugely bullish about all of these things. I think they're going to scale. I'm a huge bull from a technology perspective. Question is, as an investor, am I a bull in owning those assets? And I think they're not great businesses to own as assets. There is, however, this great business, which is store of value money. It's not only a great business that it's going to capture a lot of value, but also it's actually quite simple. The tech risk isn't that high. And so it's a good business in many respects. And Bitcoin is laser focused on that.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Says people own right from one to the other, and with that value will move, that asset will move from one to the other. It's going to be quite easy. You can understand why we would all be working in that direction. And so that further undermines moats. We've got the velocity problem that we always had. We've got actual examples of vampire forks. And all of those things together, I think I was talking about happening at the time and now are very much talked about. There's a really great podcast between Hasu and Suchu uncommon core that talked about this late last year. And they talk about this issue, amongst other things. And I think that just means that, as I thought at the time, this whole FAT protocol utility token as the great value capture thing thesis is really poor. And I think that it's going to be not great at value capture. There'll be a bunch of other stuff that's just great. And then I said, well, store value is great.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Doing this operations research equation of optimal inventory size in our heads. And so either it's going to change the store value or it's going to be treated as working capital is treated as working capital, the ability for velocity to go very, very high is incredible. This is my point in 2017. And therefore, you could have very successful protocol in terms of the amount of economic activity being conducted on it, but very, very poor value capture through the native cryptoasset for Ethereum. We're very much seeing this today, this combination of, first of all, moats are shallow and narrow. We've got a lot of competitions, a big buzz in 2021. It was about all these alternative L1s taking market share and competing with Ethereum. And it's interesting how easy it is to do that, combined with interoperability in terms of value and state, meaning that we'll be able to update state across state being just what the ledger.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“What happens is the velocity increases, then assuming a fixed money supply, then for a given amount of actual economic real activity, then in order for the equation to still balance, you basically have to increase prices. If the denominator V is increasing, P has to increase commensurately, which means that you sort of have hyperinflation. Rising velocity is effectively, if it has nowhere else to escape, it's going to increase inflation, which of course is going to devalue that asset relative to other currencies. It'd have less inflation. And I pointed that out and said, look, that means that unless people really hold this as a store of value, this asset, it's going to be pretty effectively as working capital because we do that. Companies, of course, do it consciously, individuals do it subconsciously. We don't just arbitrarily accumulate inventories of groceries and petrol and”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Two friends sitting in wherever the world, and we say, Oh, we're bullish in the US tech sector. And you say, well, I'm going to go buy a portfolio of fang stocks. And I say, I'm going to go buy some US dollars. You know, some kind of very, very weird, loose way that's not completely disconnected. It's a US tech sector early booms, you know, somehow, maybe the doll. But it's extraordinary.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Deal. And so it's not obvious a giant open source software movement is going to be great at value capture, but it's not just sort of a given. And so one of the things that I should mention because it's actually the biggest one is the other issue that I identified at the time or talked about. I shouldn't say I was the one who identified it, but was that, and I'm using ETH as an example, but it's the most well-known, is a circulating currency. And what does that mean? Well, one of the things that really, really most annoys me is when people think of ETH like share, like equity, you own a share of the network. Listen, if you own ETH, that gives you no more ownership over the Ethereum network than owning US dollars gives you over the US economy. It's a circulating currency. It's not a share in the thing. Imagine that you and I were bullish about the US tech sector.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“And now we actually have a term for vampire forks, and is what Sushi Swap did to Uniswap. And so these things have kind of not come to pass. Now we're seeing, oh, we have this increasing interoperability. We have vampire forks. We have all these kinds of things happening. We have competition between all layer ones in Ethereum where the alt layer ones are making different choices in terms of the trade-offs between decentralization, security, and performance, some of which may not really scale, but right now they're useful. And I think it all shows the conclusion that I had at the time, which is what ETH and SOL and these things are, which is the circulating script on their protocols and the problem that that represents. But that broader thing means that it's actually obvious how great the value capture is going to be. So Linux is like 99% of the world's software runs on Linux. I'm sure someone out there will correct me in the internet, but to my knowledge, I think really the value capture was like the Red Hat deal, which like a $5 billion.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Open source software is the good news that open source software is, you can build primitives, you can solve something, and then it's out there in the public domain for everyone and anyone to build on, to compose and to compound innovation on extremely fast. And that's a really big deal and hugely exciting. And then you think about how that world will look and you think, well, we're going to make great progress. We're going to have this open source software, very likely there's a lot of interoperability. You're going to have very fast innovation waves and new things being done building on the last thing. But also there are some specific characteristics of all this stuff, which is you can fork it. And if you, for example, if there's too much rent capture can say, well, I actually want to fork it and then have less rent capture. And at the time, I sort of described this. And a lot of people were like, ah, that's not.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“I remember resulting around that time that we made an early investment in, say, Dapper Labs. NFTs, of course, that's a thing. But it's like a different thing. Let's set that aside in the paper. And we can talk about it some more today. But those are the two key issues. And basically my thesis on the former was to say, well, the really key breakthrough, the Bitcoin mate is obviously that you had built upon many, many prior attempts at creating digital money and it managed for the first time to solve this problem of how do we create additional money without a trusted intermediary and it did it through the Nakamoto consensus, which sort of solved this Byzantine general problem of coordination under uncertainty, but also when you can't trust all the participants in the network. And it did in this incredible way. And all of a sudden we have digital money without an intermediary. And that's really, really profound and remains today. I think the most interesting and pro-Kong thing about the space. But the characteristic of something that is”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Where's value going to be captured? And there were two big central debates in 2017 that I focused a paper on, which were, number one, this fat protocol thesis on the one hand, which is saying that, well, value will accrue to these utility tokens that are circulating a script in the protocols to do X, whether it's run smart contracts or store files or whatever on the one hand. And in the other hand, there was this big debate about in terms of the money side of things, means of exchange, sort of store value, three functions of money, store value, means of exchange, and unit of account and kind of debate about how the importance of means of exchange. And that led to this block-size war at Bitcoin and the forks and whatnot. And so a lot of my paper focuses on that, I said, let's take a technologically optimistic view, think about those two issues from an investor perspective, and acknowledge the fact there's other stuff.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“There was an agenda that remains a constant issue, which is that anything but especially in crypto, I would always say whenever you read something, first filter is, what does this person have to sell me? And then the answer is there's almost no content that isn't produced by someone who has something to sell, whether it's a fund or a token or their own equity or whatever. And so I went back to like, I said, well, I'm going to read white papers and documentation and homestead documentation of Ethereum and all this kind of stuff. And really, so, okay, thinking about it from first principles, from an economics perspective and coming at it from the view of when you're investing in technology and venture, because of the convexity, of course, you're thinking as an optimist. You've got to be thinking in terms of this tech is going to work. Am I going to make money? If I do this thing? If it works. Of course, think a little bit about maybe why it might not work, but you don't want to be stuck there. You're not a bond investor. And so came at it from the perspective of saying, let's assume all this works.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I actually was reintroduced to Bitcoin in 2016 by my friend Vincent Casares. He explained to me in a few minutes, then I kind of got it. I immediately said, great, this is a venture bet, I get it. We'll make this investment. And funnily, I remember at the time, because when I called the office, I said, look, we're going to put X amount into Bitcoin. They were like, what? Look, this is a ready fire aim investment. We can always sell it. We can always sell half. We can always buy more. Let's just do it and we'll see what happens. And what happened started going up. And this was in early 2017, a lot more buzz, of course, it was already two years after he launched, but about Ethereum and smart contracts. And then he started having ICOs and all of that. I said, wow, that's great. I bought some ETH and did a bunch of other stuff. And this was all going up. And I said, okay, well, now I really need to understand it. I realized that I really couldn't just read the stuff that was being published on the internet and I couldn't take it at face value, either was poor quality or rank.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“There was a fashion which I totally didn't ever understand, I still don't understand in like the mid 2000s in the private equity industry, they were buying yellow pages businesses. We knew it was there. It was kind of like really? And so I think that the cases were just so blatantly obvious that there's real disruption risk. And I think you just, you want to knock those out. Once you're in the world of saying, well, we have now competing technologies and maybe how long will this technology be superior technology? At least you're in the right ballpark to begin with. And then, okay, you've got to take views and there's risk. But I think in the absolute, at least it lends filters out a lot of things you clearly don't want to invest in.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Are things where you don't know, especially in early tech and all of that, where you don't know yet? There's like two things one is it or not this and this and where does it kind of score on these different dimensions. The other one is how confident I am over time of where it will score.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Investing in good businesses better than investing in bad businesses. You can try to say, well, I'm going to invest in bad businesses, but buy them so cheaply. I've learned that that's a really hard way to make money and maybe an easy way to not make money.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Typically, a good business has characteristics where it's growing. It benefits from sustainable barriers to entry. It probably not in a highly fragmented market, some degree of market concentration. It's not exposed to frequent technological disruption. It has comfortable margins. It's typically not very capital intensive and as a consequence has very good yields, returns on capital. And pricing power in whatever it's doing. The bad business would be the naught of all of that. It would be, well, it's not growing. There's technological disruption, quite thin margins, especially gross margins. I should have mentioned the good businesses. Maybe there's some kind of self-reinforcing effects like economies of scale or whatnot. And then again, bad businesses typically capital intensive and those kinds of things. And so generally speaking,”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's put it this way adaptability does tend to be a good feature of people that we trust in terms of managers of funds. And the reason I hesitate a little bit is there will be some cases where you'll naturally, especially in this space, need and want real domain specialists, like especially life sciences. You need somebody who's got a PhD because it's hard for that person to be, oh, and yes, I do this and oh yes, I do that. And then it's my job to say, okay. at a portfolio level i've got some people who i need to not be multi-tool in their approach and their expertise is essential i'm going to have to be the person who says well how do we wait to that and so forth”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“That is saying to investors, we're going to do X. I'm sort of deliberately diversifying because it's our money. I want to be doing things that maybe I can't be an expert in and so forth. They're sort of picking and saying, well, where do I want to be an expert and where do I want to rely on others? And then how do I figure out the right people to rely on? And that of itself is a power law”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source
“It just gets harder and harder. I think I'll link that back to my comment earlier about I think that a lot of that in terms of my ability to update my probabilities faster. When I look back at the last decade, I look back and say, well, good thing I focused in this way, but then I can also say, damn, that opportunity was sitting in front of me and I didn't take it or I was a bit slow or I should have been more focused on this or I should have gone even longer on this and that. And of course, that's a bit of hindsight and careful beating yourself up over that stuff. But I can identify that where I feel I've left opportunities on the table, it was because I just didn't update fast enough. And that's to me like the key thing for me to get a little bit higher up the curve is just training the muscle of updating faster. And then there's also just the fact that it's a lot to learn. You can't be an expert at anything. So you have to pick your shots. And I think what that means is that for me, given that I'm not investing, say, a fund.”
2022-02-01 · Invest Like the Best · John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262] · IDENTIFIED FROM THE TRANSCRIPT · source