/terminal corp evolution 2020 annual
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2020 annual

"Those who grasp the sense of times, correctly interpret the potential and the direction of change and deeply understand the characteristics of the relevant paradigm, are more likely to be able to pursue their goals with viable and realistc proposals."
Carlota Perez (2003)


Nature is Brutal

Mental Models:
  • Learning Fast
  • Lexicographers
  • Volatility is Truth
  • Contrarians vs Common Sense
  • Certainty is hard
  • Independent Conviction
  • Modern and Opportunistic
  • Financial Engineering
  • Inflation
  • Fanatical Founders
  • Unique Courage
  • Timing
  • Gatekeepers
  • Velocity of Propagation
  • Beliefs from Narratives
  • Human Progress

  • Pirque’s Operational Learnings

    Darwin’s Dangerous Idea

    Standing on the Shoulders of Giants



    “There are no times when the future is more or less visible; it is always invisible.”
    Jason Zweig (2015)

    The table below summarizes how we currently think about investments.

    It is a simplified version which blends bits and pieces of the many overlapping mental models we use.

    Mental models are how we understand the world. Based on a small set of fundamental assumptions. They affect the way that people work with information, and how they determine the final decision.

    Our takeaway: learning fast is the only competitive advantage. But learning fast is not a simple thing. It is very hard. But in the realm of the possible.

    Past Present Future
    Time period t > 18 months 18 months < t < 0 t = 0
    Professional investors Most know everything Some know everything
    (very hard, but possible)
    Nobody knows anything
    Information asymmetry LOW HIGH ZERO
    Price arbitrage LOW HIGH Unknown
    Expected return LOW HIGH Unknown
    Strategy Passive w/ low cost Active w/ small bets Run away


    “When you strike at a king, you must kill him.”
    Ralph Waldo Emerson (1843)

    Nature is a no waste ecosystem. It always finds a “price” to clear.

    Any metric unchecked by nature or free markets eventually gets gamed. That is why predators are necessary to nature’s plan. Without such a natural check, a species is doomed to overpopulate its range until it eats itself out of its natural home.

    Every species in the history of biology that outgrows its resource base suffers a population crash –a crash sometimes fatal to the entire species. Today, either we reduce the world’s population voluntarily, or nature will do this for us, but brutally.

    All predator/prey relationship showcases this wild truth. Nature is brutal because it must keep stability has a whole. It is an environment of complete information, which no single species understand in its entirety.

    Some species see in infrared, others in ultraviolet. Humans see in between. Think twice when calling someone a visionary. Each species has its own paradigm. Normal is an illusion. What is normal for the spider is chaos for the fly.

    Hence, the more differentiated a society, the more stable it is.

    The interactions of human activity (the economy) are constantly disrupting nature’s real dance between waste, saturation, efficiency, and storage of resources.

    A human narrative can project stability for a long time. An illusion of thousands of years even. At the end, reality is that which, when you stop believing in it, does not go away. Avoid reality if you want, but you cannot avoid the consequences of avoiding reality.

    Autarky violates nature’s stability. Avoid it at all costs.

    Think of a lion in a zoo. It has security, free food, free shelter, and free medical care. The wild lion has no guarantees as to quality of life or security. But the wild lion ends with a mate.

    In the art of survival, the ultimate prize is survival. The only safe haven is your health. A rich man will always envy a fit man.

    In the following pages we will expand on mental models that allow us to understand the following cycle of human activity:

    waste → volatility → founders → technology → beliefs → autarky → inflation → waste

    Therapist to climate: “You don’t have to keep letting people abuse you.” Climate to therapist: “You’re right I can change.”


    “In the beginner's mind there are many possibilities, in the expert's mind there are few.”
    Shunryu Suzuki (1970)

    Our main guiding principle is that good investments are fundamentally a byproduct of learning.

    Based on the following logic:
    Returns can only exist if there is price arbitrage.
    Price arbitrage can only exist if there is information asymmetry.
    Information asymmetry can only exist if there are different learning rates.

    Therefore, learning fast is the only competitive advantage.

    How to learn fast? Improve your feedback loops.

    How to improve your feedback loops? Share your ideas.
    The best feedback loops are fast, honest, independent.

    Machines learn by reading, and so that is our starting point.

    And if we want to learn faster than our competitors, then our approach must be via research and network. Potentially build new tools to make the information between the research and the network recursively self-improving.

    Not via capital. Ever. Might sound innocent, but in the investment world, a lot of capital is not the advantage. It is a huge structural advantage not to have a lot of money.

    The house of Morgan is under fire primarily because it's CEO has completely lost the habit of learning fast. If you respect their opinion because of their logo on the top of the page, from the bottom of our hearts, good fucking luck.


    “The discovery phase is the first 1000%. Great microcaps are first discovered by smart retail, then by small institutions, then by other institutions, and then finally by dumb retail.”
    Ian Cassel (2019)

    An analogy to the investment world (learning about assets) is how words end up in dictionaries.

    In general, the criteria for entering a word in the dictionary is the following:

    Widespread use: used in all sorts of places both tonally and geographically.
    Sustained use: be around for a long enough time that we know it’s not just a blip.
    Meaningful use: actually have a lexical meaning, people would use it in a sentence.

    How do lexicographers find new words? Reading!

    Citations are the raw material that they use when defining a word in a dictionary.

    And once a word is added to a dictionary, people tend to use it more. The information asymmetry of that word decreases.

    Conclusion: an investor needs to find new “words” [assets] before they get into the “dictionary” [low information asymmetry].

    Another word for information asymmetry is illiquidity.

    Finding great companies early will never gone out of style.


    “When change isn’t allowed to be a process, it becomes an event.”
    Thibaut @kpaxs (2019)

    The biggest problem investors have is things change and they don’t change.

    You need courage to leave your sweet spot: you can't do the same strategy all the time, constantly.

    It’s a disservice to Graham that many of his devotees refuse to do anything but emulate his investing style, when they should be emulating his creativity instead. You never innovate without a little egg on your face.

    You should be totally opened to embarrassing yourself as an investor, and if you can, come to enjoy the process. If you can laugh off being wrong, you can try out more investing styles as a form of R&D to keep improving.

    Investing is artistic so be artistic and try new things. Don’t be afraid to invent your own investing concepts.

    Venture capital is reducible to being interested in managing change. Recognizing that change is necessary. Today’s solution is wrong for tomorrow.

    Change happens everywhere, only the rate of change differs. The basic energy creating and recognizing change comes from the entrepreneurs exploiting base technology.

    People that say “Bitcoin is too volatile”, look as stupid as people that in the dawns of time probably said “Fire is too hot.” Learn to use new technology.

    This are the same people that try to quantify “intrinsic value”. Nothing has intrinsic value. All values are inseparable from the subjective valuations of economic actors. Value is always only in the eyes of the valuer.

    Knowledge is the compound interest of curiosity. This is the main reason why venture capital has by far the biggest dispersion of returns for active managers. In every other asset class just pick the cheapest manager.

    Price is the greatest tool for misdirection. Lazy people don't have the time or the patience to understand, so they are easily influenced by "price".

    Returns come from price volatility which comes from information asymmetry. Every past market crash looks like an opportunity, but every future market crash looks like a risk.

    Things change, and each of us must run as fast as we can, just to stay in the same place.
    Also, always remember when you change, everything changes.


    “The things that I think I’m right about, other people are in some sense not even wrong about, because they’re not thinking about them.” Peter Thiel (2018)

    A lot of people in the investment world like to call themselves contrarians. This is a bullshit concept that just sounds nice like you have an edge.

    A contrarian is only right if his opinion becomes popular. So, a contrarian is just someone that learned and understood something before all the rest. Again, the only competitive advantage is learning fast.

    Often the way you learn about something is because somebody tells you about. So, the first thing is to be alive and alert in every interaction.

    And then somebody gives you big things/new areas: “things from the future”. Something is happening in the world. It’s only happening in one place. But…wow, it’s something that might end up ultimately happening everywhere. Ask those people who else to talk to or what else to read.

    Contrarians are just fast learners.

    A great advantage can be found in accepting hard truths faster than others. Hard truths are not popular.

    This is very similar to the way things are considered common sense. Common sense is the least common of all senses. Because what used to be common sense decades ago, does no longer make sense, and what will be common sense decades from now is not common today.

    It is only with hindsight that these events can be singled out, not only because at the time they are obvious only to a narrow community of entrepreneurs and technical people, but also because whether they flourish or not in a particular country will depend on a complex set of circumstances.

    However similar or varied, the process of social assimilation of a technological revolution shapes and adapts the environment and the economy so that, when it is done, there is near complete coherence between all spheres of society. It becomes the reign of a particular paradigm to the point where it is believed to be universal common sense and becomes unconscious and invisible.

    The full assimilation of a technological revolution and its techno-economic paradigm occurs when society has accepted its common sense, put in place the appropriate regulatory framework and other institutions, and learned to gear the new potential to its ends.

    Today common sense is knowing how to use the internet. Most people in the world don’t really know how to use it.


    “I have approximate answers, and possible beliefs, and different degrees of certainty about different things. But I’m not absolutely sure of anything, and there are many things I don’t know anything about. I don’t feel frightened by not knowing things.”
    Richard Feynman (1981)

    Don’t ask: Are you sure?
    This is a yes or no question. It demands unreasonable certainty.

    Instead ask: How sure are you?
    This allows for shades of gray. It says uncertainty is okay.

    Most decisions should be made with around 70% of the information you wish you had. If you wait for 90%, you’re being too slow.

    Mental models allow you to make fast decisions under uncertainty.

    As the world polarizes, make sure to always remain skeptical of your own ideas. Recognize you are likely wrong about many things that you believe. It is ok to belief in contradictory ideas.

    Only a man who loves to prove himself wrong is the true seeker of knowledge.

    Certainty should be asymptotic, and you should always concede the chance that you may be wrong on any topic, no matter how dear.

    The fundamental law of investing is the uncertainty of the present and the ignorance on the future.


    “Decisions in venture capital cannot and should not be made by a committee.”
    Tom Perkins (2012)

    You can borrow someone else’s ideas, but you can’t borrow their conviction. True conviction can only be obtained by trusting your own research over that of others.

    Do the work so you know when to sell. Do the work so you can hold. Do the work so you can stand alone.

    When you’re an early believer in a transformational idea it can be difficult to endure the derision of the masses who are comfortable with the status quo and want nothing to do with your disruptive idea.

    The hallmark of independent thinking is disbelief in the fashionable religions of the day. Bless the haters, because when they disappear, so do the fans. The truth will never be popular, because the majority likes hope and comfort.

    The pain is worth it. Don’t bother finding the next multi-bagger if you aren’t going to develop the conviction to hold it.

    Believing in an idea that violates the popular narrative is lonely. Building a company around that idea is doubly lonely for entrepreneurs. It entails all the challenges of building something new from scratch, but offers none of the status game advancement bestowed upon entrepreneurs pursuing popular opportunities.

    As a result, these companies are granted immunity from clone wars by narrative shade that can last for years. They also remain systematically underestimated by investors. By the time the popular narrative catches up to begin resembling truth, these companies have grown beyond their fragile early days.

    It can be a competitive advantage to make people think you’re a nutcase.

    Knowledge is abundant and by itself is only rarely a competitive advantage. But you can create an edge by synthesizing knowledge to create an understanding that is unique to you.

    It shouldn't be surprising that the thing most investors are fearful —illiquidity— is a powerful driver of returns. The best time to invest in a company is when it’s most in violation of a popular narrative.

    Liquidity dominates size as a return predictor. The smaller the better. The more illiquid the better. The least institutionally owned the better. The more misunderstood the better. The less talked about the better.

    All great companies started as small companies.

    Praise conviction, bet on transcendent founders, and invests in the kind of companies you would want to work for.


    “Trafficking in intelligence and ideas, the lubricant of the investment business, has become a global undertaking and cannot be confined to furtive conversations in Palo Alto coffee-shops.”
    Sequoia Capital (2010)

    Usually, luck is defined as when opportunity meets preparation. The market takes care of the opportunities, so we simply focus on having a prepared mind by learning fast.

    For this we avoid having fund-structure constraints, a pre-defined focus, or fiduciary promises on returns. We like cut-throat opportunism.

    Sometimes the best investment is to walk away. So better not be charging a fee for deploying capital.

    If you want something close to our “investment thesis”, just look at our portfolio (our output).

    Railway promotion [in the 1840s] was originally a matter for routes where the need was evident and the engineering practicable, then it spread to routes where the demand was doubtful and the engineering full of problems. Finally, with the public clamoring for railway shares, companies were being formed so that promoters might in due course unload their shares at a premium.

    Soon, for both production and financial capital, it was emigration time again -often together- in search of new outlets abroad, or outside the established paradigm, in unusual innovations.

    Investing in companies is like investing in movies, music bands or any other creative art. It’s always evolving. There is no plan. Artists don’t have time to be humanly involved in everything, but capital does have infinite time. To make money while you sleep, invest in things that don’t need sleep.

    How do we prioritize then? Access is better than capital. And discipline is the best hedge.

    On breakthrough ideas, you still have to run the experiment: we make active and small bets.

    On propagation waves, you need to arrive before institutional understand them: we make passive and low-cost bets.

    Sometimes we will build/incubate if necessary.

    And of course, always retain an element of naivete, a child-like innocence, a willingness to dream and imagine as you look to new opportunities. Some of the best investment opportunities are found just by stumbling into them in your personal life. A big reason why emotion and empathy can be advantageous.


    "There are not sufficient scientific statements in economics saying that this has always followed from this, from this. The underlying vagueness and ignorance have not been dispelled by the inadequate and inappropriate use of a powerful instrument [mathematics] that is very difficult to handle."
    John Von Neumann (1945)

    Most banks and finance houses have a group of highly paid rocket scientists.

    Trying to beat the market with complex, computer-aided trading strategies. Proprietary trading they call it.
    They want to be able to say that they have the forecasting model that prove most correct.

    The problem with the models is that they adorn with certitude, events that are inherently uncertain. Natural events.

    Nonetheless, the belief that tomorrow's risk can be inferred from yesterday's prices and volatilities prevails.
    When the models fail, the "solution" is to design ever-more elaborated and sophisticated models. That fail again.
    The notion that relying on any formulaic model poses inescapable risks, eludes them.

    We are enemies of all financial engineering. There is no such thing as an equilibrium price, nor prices can be modeled. Prices are just a way to register past human willingness to pay. They are entirely the actions of humans. Those are the “oracles”.

    Good luck building models than can forecast the limits of human behavior. So, prophecy as much as you like, but always hedge. Randomness dominates the universe.

    There are no patents in the investment world.

    The best way not to fall in financial engineer is to study new markets. To exploit markets early. This requires less elaboration (less financial engineering). It is also too expensive to create a market.

    What markets? Must be a very big market, where some advance know-how (technology) is capable of producing high margins. All the other financial metrics you can forget. The accountants can get the numbers into the boxes eventually. Only invested where the return prospects do not require candles and prayers (aka financial engineering).


    “In the whole course of history, no dog has ever run after its own tail with the speed of the Reichsbank”
    Lord D’Abernon (1922)

    The lazy don’t want to study. So they bet on inertia, which produces inflation. Which is bad for progress.

    Inflation is a form of failure. Inflation is theft. Deflation is a gift.
    Price inflation is artificial, a consequence of wealth confiscation.
    Price deflation is natural, a benefit of improved productivity from higher intensity trade and innovation.

    Why do human rights advocates never care or comment on inflation?!

    Value investors probably love inflation. They don’t want innovation or change.

    Very dangerous labeling yourself a value investor. It makes you stay consistent with those ideals. Keeps you out of learning new fields.

    There is only one moat. The rate of learning inside an organization. Be careful of other moats, you may drown in them. All of a sudden, the sure thing becomes a sure loser.

    As one’s financial and social position slid away, patriotism, social obligations and morals slid away with it. The ethic cracked. Want and loss of status leads to the fall of ethical standards.

    There were few in any class of society who were not infected by, or prey to, the pervasive, soul-destroying influence of the constant erosion of capital or earnings and uncertainty about the future.

    There was communal hatred, which was new. There was social resentment, which was new. There was bribery and corruption: that’s was new. It was the same in Austria and Poland. If you get the same fever, you get the same symptoms.

    Whereas the lower classes with the further goad of unemployment might turn to theft and similar crimes or to prostitution, the middle and upper classes under a different kind of strain would resort to graft and fraud, both bribing and bribable. Once bribery was the norm, by definition normal people resorted to it, the more so in the months of abject scarcity.


    “Here's to the crazy ones. The misfits… Because the people who are crazy enough to think they can change the world, are the ones who do.”
    Apple Inc (1998)

    The major breakthroughs in the advance of human knowledge, those that constituted the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations.

    The nature of these innovations is that they are not that predictable.

    Most of the big breakthrough technologies, or products, or protocols, or business models seemed crazy at first: computers, the internet, bitcoin, airbnb, etc.

    When people look at it, at first, they say: “I don’t get it, I don’t understand it. I think it’s too weird, I think it’s too unusual.”

    You have to believe before you understand.

    Investing in companies doing things that are breathtakingly new and ambitious is provocative.
    There is no way to assure a positive return – but at least it has a chance of working. Simply doing what everyone else does is not enough.

    When investing in a startup, you invest in people who have the vision and the flexibility to create a success. It therefore makes no sense to destroy the asset you’ve just bought (by firing the founders).

    One trait shared by many founders is that they are not afraid of failure, but are deadly afraid of mediocrity.

    It’s a matter of looking at a fantasy that the entrepreneur is trying to persuade you is the future. You listen to the man’s vision of what the future is going to be, knowing that most new businesses fail, that he’s very optimistic or he wouldn’t be starting a business.

    Fanatical founders like Elon Musk are the only ones who can remove the gatekeepers from their positions of power. As CEO of Tesla, he put the entire German car making industry on its knees and accelerated the world's transition to sustainable energy by at least a decade.

    SpaceX shifted the curve. Government’s used to pay $1b to ULA to launch a satellite. Then SpaceX comes in and says they can launch it for $100m. SpaceX went through many lawsuits to get to that point.

    For these founders the law is not a moral compass. In fact the law has never been a moral compass. The people who hide Anna Frank were breaking the law. The people who killed Anna Frank were following the law.


    “A ship in port is safe, but that is not what ships are for. Sail out to sea and do new things.”
    John A. Shedd (1928)

    Behind the whole monumental enterprise of human endeavor lies the power of seeing what is not there. A human can hear a note and compose a symphony. Survey a landscape and envision a city. Endure frustration and conceive perfection. Look at his chains and fancy himself free.

    We doubt the potential of grand plans. Instead, we put our faith in small tweaks and A/B tests, implying that millions of small actions are a better way of improving the world and creating a desired future.

    A sense of mission is preferable than a trend. That you are working on a unique problem that people are not solving elsewhere.

    Superstars are mission focused. Almost Asperger. They are not attracted to teamwork. And they get rid of people who don't fit the mission anymore.

    We lack courage, not genius. We’re swimming in money but starving for ambition.

    You are not a lottery ticket. You can either dispassionately accept the universe for what it is, or put your dent in it, but not both. A life without conviction is a life controlled by the futile winds of fashion. Or worse, the hollow echoes of the crowd.

    If you want to be rewarded, you must be irreplaceable. If you want to be irreplaceable, you must be unique. If you want to be unique, you must be authentic. If you want to be authentic, stop listening to everyone and everything else.

    Strong businesses aim to be unique, not the best. Trying to outcompete rivals leads to mediocre performance. When you compete to be the best, you imitate. When you compete to be unique, you innovate.

    You don't win the game by playing fair. You win it by designing a new game in which you own all the pieces, then convincing the world to play.

    The mission not always materializes. The tech bubble at the turn of the century wasn’t wrong, just early. Same with the railroads. Just took until the industry consolidated to work.

    There’s often a big kernel of truth in mass delusions that makes them believable.
    Survivors of wash outs are worth looking at.

    You imitate before you create.


    “I wanted to discuss your marks, make sure they're fair! Yeah, I think you mean that you've secured a net-short position yourselves, so you're free to mark my swaps accurately for once because it's now in your interest to do so.”
    The Big Short (2015)

    “Good ideas beat bad ideas” is false. The correct formulation is “fit ideas, beat unfit ideas”.
    An idea will flourish when the circumstances are exactly ripe for it.
    In other words, often circumstances are such that a highly potent idea just doesn't make into popular adoption.

    As with all innovations, the date of introduction is less significant than the time of intense diffusion.

    When each technological revolution irrupts, the logic and the effects of its predecessor are still fully dominant and exert powerful resistance.

    Everything the internet did to media, is happening to retail. But it took time for the internet to be able to attack retail. What bitcoin is doing to banks will eventually do to governments, but it will take time.

    The techno-economic sphere is spurred by competitive pressures, but the socio-institutional framework has greater inertia and resistance to change.

    Darwin started his research on evolution around 1830. But did not publish “The Origin of the Species” until 1859. One year after Wallace had written him saying he arrived independently to the same conclusion.

    That technical change should evolve by revolutions has only little to do with scientific and technological reasons. It is the mode of absorption and assimilation of innovations in the economic and social spheres that requires technical change to occur in coherent and interrelated constellations. Once a technological revolution irrupts and begins to propagate, its techno-economic paradigm emerges and guides the trajectories of further technological change.


    “Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.”
    Nassim Taleb (2018)

    Social hierarchies come natural to humans, so entities that sell perceived access to higher tiers of those hierarchies will always be in demand. Social signaling never dies and neither will luxury goods and services.

    Not every company is trying to become more competitive over time. Many exist only to provide sinecures to their agent operators. There’s money to be made in companies that bother to care.

    Vatican archives reveal that around 1512, wealthy banking families, such as the German Fuggers, became papal agents for the collection of indulgence receipts and other form of taxes.

    Never engage with agents. Agency creates rent seeking, rent seeking creates inflation.

    Most people have no idea what they want, or what they value, so are drawn to what other people want.
    They don’t have any real preferences and desires of their own, they are always looking at others. People want an authority to tell them how to value things. But they chose this authority not based on facts or results. They chose it because it seems authoritative and familiar.

    Hospital owner are not doctors. Asset managers are not investors. And wisdom doesn't come with age, fools can live a long time.

    The rich are lazy. They have a lot of money; they want to make more. But they’re not interested in building companies. Company building is craft work. It is not mass production work. There are no precise formulas.

    You can invest money to build a capability, or to acquire a stake in a formal capability. The latter means you have no interest in how black boxes work. All knowledge risk lies with the investee. Few investors who pay for controlling stakes actually desire control.

    In a way, money *wants* to be stupid, because the wealthy don’t want to understand the underlying investment.

    Failure comes from failure to imagine failure. Only the paranoid survive. Lazy people don’t want to imagine failure or be paranoid. Nothing ever changes in human nature. Arbitraging human nature is the last sustainable edge.

    Today’s shift from concentrated institutional investors, back to individual retail investors is an underappreciated structural phenom of capital flows. Master Limited Partnerships have “Master” in the name because that’s what you’re going to have to address them as when you get on your knees and beg for your money back.

    Gatekeepers have a political motivation to avoid change: remain in power.

    Give a man a mask, and he will show you his true face. Corruption cannot be monopolized.


    “It takes brilliance to change the world. It takes something else entirely to wait patiently for people to notice.”
    Morgan Housel (2016)

    Direction is usually underrated.

    While the future has already been created/imagined, progress is never evenly distributed. Many things are widely discussed, not generally accepted. They are not yet common sense.

    To understand the directional arrows of progress one must not expect the phenomenon to coincide in time worldwide.

    Each technological revolution originally develops in a core country, which acts as the world economic leader for the duration of that stage. There, it is fully deployed; from there, it propagates to other countries.

    Concentrating on the dynamics of the core societies does not cover the whole life cycle of each surge as it spreads across the world. From a wider perspective, the long surges span a whole century, with each successive one covering a larger portion of the globe. Closer peripheries would also differ from that of the further ones (understanding distance as economic and not merely geographic).

    We believe understanding the velocity (speed and direction) of propagation is key. One must not invest where the institutions are investing but invest where they are going to. Being early is being ahead of the institutions.

    The process of propagation of the new technologies is called the 'installation period'.

    A great surge of development is defined here as the process by which a technological revolution and its paradigm propagate across the economy, leading to structural changes in production, distribution, communication, and consumption as well as to profound and qualitative changes in society. The process evolves from small beginnings, in restricted sectors and geographic regions, and ends up encompassing the bulk of activities in the core country or countries and diffusing out towards further and further peripheries, depending on the capacity of the transport and communications infrastructure.


    “A country is a group of people who've chosen to forget the same set of things."
    Ernest Renan (1882)

    Reality is always only kind of “real” and can be altered, for example, with the strength of belief.

    After a founder has set in motion a new technology, narratives are necessary so the propagation can beat the inertia of the gatekeepers. A narrative helps the new truth become real.

    Popular narratives are often accepted as truths. Yet we forget that narratives are not synonymous with truth. They can reflect what people wish were true, or what would make people rich if they were true.

    Narratives inspire us, makes us to stand for something, feel connected to others. It is commonplace that crimes threating the survival of a society (a narrative) are found more odious by that society than those which threaten, or actually end, the survival of one of its members; and that in many societies, treason has remained a capital offence where murder has not.

    Narratives can push people to the limit. In war, the narrative of nationalism shows that in a time of need: output per men can be made to increase.

    One of the oldest narratives of mankind is the story of the dying and resurrecting god. ie Easter Sunday.

    The idea that the savior is the figure who dies and resurrect is a representation in dramatic or narrative form of the brute fact that psychological progress – indeed, learning itself – requires continual death and rebirth.

    It is very rare to learn something profound without suffering the unbearable catastrophe of dashed dreams and the soul-shaking terror of uncertainty and doubt.

    It is not sufficient, either, to abandon tradition and structure entirely in a headlong rush towards the revolutionary. Structure is insufficient, but it is still necessary.

    The future then is not independent of the past. It is dependent on it. By altering the narrative, we alter the current “reality,” which in turn alters the future. History is written by the victors. Science is written by the funded.

    The art of storytelling is that money flows as a function of the story. Which give startups two currencies: cash and belief. Short of one, you better have a lot of the other one.

    The internet fundamentally disrupted the process of narrative formation and dissemination. It enabled popular narratives to form and spread at hyper speed. So while narratives are an extraordinary force that helps us make sense of the world, when the pendulum swings too far, narratives become a shortcut for independent thinking.

    That is why honest individual confrontation with the unknown catalyzes cultural revitalization.

    It is clear that the burgeoning knowledge economy will require a very wide range of new instruments and even the overturning of some “eternal truths” about the tangible nature of assets.

    Narrative violations are highly idiosyncratic, so unearthing them is admittedly more art than science.


    “Innovation is the child of freedom and the parent of prosperity.”
    Matt Ridley (2020)

    Progress is neither automatic nor mechanistic; it is rare. It requires to eternally let go of old certainties.

    Once fanatical founders take the keys from the gatekeepers, and accelerate the velocity of propagation, the great clusters of talent come forth. After the revolution is visible and because it is visible.

    During the 16th and 17th centuries, as a result of increased trade, technological innovation, and intense specialization, overall wealth increased and the relative contribution of agriculture to the economy diminished, which weakened the wealth of landlords and churches in favor of the new merchant class.

    People with something to fight for become the new economic class.

    We increasingly believe that progress is inevitable. Progress, though, is not guaranteed. We must work for it. Otherwise, our living standards will not improve, and may get worse.

    The unique history of the West proves the exception to the rule that most human beings through the millennia have existed in a naturally brutal, unchanging, and impoverished state. But there is no law that the exceptional rise of the West must continue.

    In the year 1000 the Middle East was doing science, while Europe was too busy with religion. Baghdad was the largest city in the world, with the highest number of polymaths per capita. A vibrant multireligious intellectual hub.

    In the year 2000 the Middle East is too busy with religion, while Europe is doing science.

    One reason why we some do not see progress is that they are unaware of how bad the past was.

    Economic development is based not on the ability of a pocket of the economy to consume but on the ability of people to turn their dreams into reality. Economic development is not the ability to buy but the ability to make.

    Even the hardcore in the green movement use the washing machines.

    The women in the favela in Rio, they want a washing machine. If you have democracy, people will vote for washing machines. Once loaded with the laundry, the machine will do the work. So now you can go to the library.

    In a metaphorical sense, the world is populated by ghosts. Faraday, Tesla and many others live in electrical products. They unleashed the talent around the globe.

    New technologies are the fuel of the engine of progress. And capital is a lubricant of speed of propagation.

    To learn fast, we need to behave like lexicographers. Lexicographers on the evolution and volatility of assets, deal flow, and market forces. Learning fast will allow us to have a modern version of common sense. This beats all financial engineering.

    As information becomes abundant, it becomes increasingly indistinguishable from entertainment. Our effort with our own in-house research unit is to curate it. Building the sufficient independent conviction. Because making modern and opportunistic investments requires moving fast under uncertainty.

    Once we have the conviction, regardless of the lifecycle of the asset (early-stage to late-stage, illiquid or liquid) there is only one way to support fanatical founders with unique courage: be an A-type investor, give the money, sign the paperwork, and shut the fuck up.

    We accelerate the velocity of propagation; we remain close to the core hubs (e.g. Silicon Valley). Understanding change. But we are constantly building a network in the peripheries, especially with bold entrepreneurial families, who can quickly change from gatekeepers to gate openers.

    The most important narrative is that setting the stage for the new clusters of talent is the best we can do in supporting of progress.

  • Intermediaries: Use modern platforms and bypass all agents. Is not that complicated to actively operate a portfolio yourself. Learn how to use software in your favor. If there are no tools, built them.
    "There is a difference between an intentional scam and an accidental scam, but if you are the investor, you were scammed in both instances.” -Fred Wilson

  • Humans: Bullshit is a consequential aspect of human condition. Verify then trust.
    “We are biased towards accepting bullshit as true. It therefore requires additional processing to overcome this bias.” -Harry Frankfurt

  • KYC: Demand transparency from companies and people. Locals know better. Liquidity is a continuum (an IPO is not a liquidity event). It’s not money until you can buy beer with it.
    “Fraud is not a trade secret.” -Tyler Shultz

  • Pioneers: They get arrows in their backs. But you only have one chance to get in at the beginning. Dating is a zero-sum game.
    “There must be high risk -in fact, very high risk. It’s the key to success. If there is no risk, you have already missed the boat. Your competitors will already be there.” -Tom Perkins

  • Kosher: No derivatives, no leverage, no shorting, no financial engineering, no commissions. There are no patents. Never pay people to gamble with your money.
    "No school can teach someone how to be a great investor. If it were true, it'd be the most popular school in the world, with an impossibly high tuition.” -Michael Burry

  • Power Law: Winner takes all/most. Search for de facto monopolies.
    "Monopoly is the condition of every successful company." -Peter Thiel

  • Compounding: Most powerful force of nature. Never interrupt it unnecessarily. Buy and hold.
    “Income may be taxed, but wealth compounds.” -Naval Ravikant

  • Market: It is not awed by reputation. It does not pause for sleep. It waits for no man.
    “The market can remain irrational longer than you can remain solvent.” -John Keynes

  • Curiosity: Convexity is most often found in places where others are not looking or where they are not seeing what is actually happening. Look everywhere.
    “You cannot predict, but you can prepare.”-Howard Marks

  • Owners: Talk directly with the source. Double down on your relations with the Bloomberg’s and the Kirk Christiansen’s of this world.
    “Knowing whose advice to take and on what topic is the single most important decision an entrepreneur can make.” -Vinod Khosla


    “If I were to give an award for the single best idea anyone has ever had, I'd give it to Darwin, ahead of Newton and Einstein and everyone else.”
    Daniel Dennett (1995)

    The only thing more important than having a great investment approach is knowing what will kill it and having the decisiveness to act.

    We admit we are extremely biased by the evolutionary theory. It is more than a mental model. It is an unbounded admiration.

    If we are only looking at a problem one way, then we’ve got a blind spot. And blind spots can kill us.

    Great entrepreneurs are risk-killers. And we don’t know how to kill this risk (that evolution might be wrong). We remain awake and vulnerable to that possibility.

    The second biggest risk is how will social incentives and dynamics change, once (if?) we transition to economies with negative population growth. Most of the current systems are based on positive population growth.


    We have copied (word by word in many cases) the ideas we like. Mainly because they were written in a better way than we possible could. We are just curating them.

    Among many others, thanks:

    “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages”
    Carlota Perez

    “The Conviction to Hold”
    Ian Cassel

    “The Bitcoin Reformation”
    Adamant Capital

    “What happened to the future?”
    Founders Fund (written by Bruce Gibney)

    “The Digital Provide: Information (Technology), Market Performance, and Welfare in the South Indian Fisheries Sector”
    Robert Jensen

    “Peter Thiel’s religion”
    David Perell

    Money Wants to be Stupid
    Venkatesh Rao

    In Search of Narrative Violations


    What we understand when we use the following words:

  • Risk: The intentional interaction with quantifiable randomness. Risk does not mean downside. Risk exists when we don’t know what future outcome will occur, but we understand what the outcomes and the probability distribution of those outcomes are (upside-downside).
    Example: the roll of a dice.

  • Uncertain: the states of outcomes are known, but the probabilities are not.
    Example: the weather ten days from now.

  • Ignorance: We don’t know what is going to happen next, and we do not know what the possible distribution looks like. The probability distribution is unknown or so extremely large as to functionally be the same as unknown. Example: a meteor in the future.

  • Disruption: Companies don’t disrupt. Customer adoption disrupts by voting with their money, time, etc.
    Example: people prefer to pay Netflix to stream movies, not pay Blockbuster to rent DVDs.

  • Technology: Properly understood, any new and better way of doing things is technology. It is the process by which an organization transforms labor, capital, materials, and information into products and services of greater value. All firms have technologies. Technology is not limited to computers. New technology tends to come from new ventures–startups.
    Example: the mp3, a way to compress audio files

  • Innovation: Technology extends beyond engineering and manufacturing to encompass a range of marketing, investment, and managerial processes. Innovation refers to a change in one these technologies.
    Example: the iPhone (by combining an iPod, a phone and an Internet browser).

  • Startup: An organization formed to search for a repeatable and scalable business model. The goal of your early business model can be revenue, or profits, or users, or click-throughs –whatever you and your investors have agreed upon.
    Example: Google until 2001 (founded in Sep-1998, profitable by 2001 after launching AdSense).

  • Company: A company is a permanent organization designed to execute a repeatable and scalable business model.
    Example: Ford Motor Company.

  • Monopolies: Not illegal bullies or government favorites: by “monopoly,” we mean the kind of company that’s so good at what it does that no other firm can offer a close substitute. Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.
    Example: Amazon