/terminal corp evolution 2021 Q4

2021 Q4

Some mental models reviewed this quarter.

Collecting unique assets, of Anglo origin preferably, musical in nature ideal
  • “The day you publish a song it’s not yours anymore. It’s living its own life.” -Mark Knopfler #MoneyForNothing
  • Lady Lara Croft owned by Square Equinox, David Bowie’s songbook owned by Warner Music, Bruce Springsteen’s entire music catalogue acquired by Sony
  • Hipgnosis already owns key songs from Journey, Blondie, Neil Young, Fleetwood Mac, others, now partners with Blackstone. https://qz.com/2073263/why-blackstone-gave-hipgnosis-1-billion-to-invest-in-music/
  • And naming rights of sports venue too, not everything has to be streamed. https://www.sportsbusinessjournal.com/Journal/Issues/2021/08/02/Portfolio/Sports-marketing.aspx

  • This note is legal tender for all debts, public and private… if you say so
  • Nothing has fundamental value, all value lies in the eyes of the beholder. And everything is correlated, assets have no self-determination. https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf
  • Fed’s debt in 2008 was $10 trillion (USA GDP was $15 trillion), now debt is at $30 trillion (GDP at $23 trillion) according to the record. https://jpkoning.blogspot.com/2021/09/a-decentralized-version-of-mits-billion.html
  • “…until for example the entire stock ownership of the great Mercedes-Benz automobile manufacturer was valued by the market at no more than 327 cars. Investors were extremely slow to grasp that stocks were poles apart from fixed obligations like bonds, quite wrongly thinking that if bonds were worthless stocks must be too…but when it was all over, stocks of sound businesses turned out to have kept all but their peak boom values notably well…” https://www.amazon.com/Dying-Money-Lessons-American-Inflations/dp/B08X63DZ13
  • “…the railway bubble witnessed the democratisation of speculation, with many middle-class individuals buying shares for the first time. The spark which set the bubble fire alight was the Railway Act. This Act signalled that railways had the potential to be very remunerative investments. It also created the Railway Board, which was a means of coordinating applications to build railways so that a national rail network was constructed…” https://www.amazon.com/Boom-Bust-History-Financial-Bubbles/dp/1108421253

  • Crypto Federalist Papers…time for America to start playing to win again
  • The USA is a federation, something not fully understood outside the USA, with a massive number of states’ rights…the USA can handle open systems, its strategic competitors can’t.
  • There is no more natural home for crypto than the United States of America. There is no more natural strategic weapon for the USA than crypto. The USA has never gone wrong betting on freedom and things are no different this time. If the USA leads on this topic, the EU will follow. https://twitter.com/punk6529/status/1457278102405623811
  • It is extremely difficult to coerce an individual when their capital is held outside central-bank-controlled monetary networks. https://breedlove22.substack.com/p/software-is-eating-the-state

  • The financial capital continuum, rebranding of the capital markets
  • Seems we are entering the synergy process, so the opportunity is orders of magnitude larger now, as are the sources of capital. That changes the investing model, and private equity is about to explote. https://www.royalacademy.org.uk/exhibition/david-hockney
  • a16z has been preparing for this (investors in LTSE and Carta), registered as an investment bank, 300 people team, etc. While JPMorgan and Goldman Sachs are asleep at the wheel, and no relevant brand value in the space. Given capital is and has always been a commodity, brand is the only moat.
  • Tiger Global reacted second, understanding the commodity role of financial capital and played the Yuri Milner’s playbook: shut up and take my money. https://twitter.com/sarthakgh/status/1456247510025097223
  • Sequoia, realizing its brand value is strong, is reacting (not leading) to a16z and Tiger. Structuring their Sequoia Fund as an open-ended liquid portfolio made up of public positions in a selection of “enduring” companies. https://medium.com/sequoia-capital/the-sequoia-fund-patient-capital-for-building-enduring-companies-9ed7bcd6c7da And catching up in other areas of the capital spectrum too. https://www.ft.com/content/188afc27-5c08-4b06-b066-d79522ed787e?shareType=nongift
  • Expect the venture capitalist return power curve to grow even steeper. So good luck if you are stuck paying management fees to a fund trying to build a brand, and good luck thinking your JPMorgan executive has any access. https://stratechery.com/2021/sequoia-productive-capital/
  • Important note: the future almost always gets build during bear markets. The only necessary and sufficient ingredient are courageous founders. Angel capital always has the upper information arbitrage hand.