Patrick O'Shaughnessy's Blog, page 12
October 16, 2018
Team CoVenture – Esoteric Credit – [Invest Like the Best, EP.108]
This week we tried something new: our guests prepared blog posts to correspond with the major topics we discussed here. check it out: an Introduction to Online Lending,
My guests this week are Ali Hamed, Brian Harwitt and Marc Porzecanski who work together at CoVenture Credit. When I first had Ali on as a podcast guest, we discussed the many aspects of what his firm does, ranging from venture, to crypto, to credit. We glossed over the lending side of the business, but having since learned a lot from them on the topic, I was excited to get the chance to talk with members of their credit team for today’s longer exploration of esoteric high yield lending.
I am always proselytizing the value of investor education, s this week we have a podcast first. The CoVenture team has prepared a long series of posts that correspond to our conversation and go even deeper into the topic of credit investing. You can find them in the shownotes at investorfieldguide.com/credit
This is entirely differently from any conversation I’ve shared before, so I hope you learn as much as I did. Please enjoy my discussion with team CoVenture Credit.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
0:00 – (First Question) – The formation of their unique credit business
5:27 – Their advantage in seeing both the equity and credit side of their investments
8:41 – Looking at the Returnly deal as an example
12:25 – How they view these deals and are able to sustain them as long-term investments
16:27 – Their interest in payroll deduction lending
18:26 – Finding unique types of default risk
19:49 – What stands out in a platform that makes CoVenture want to take a deeper look
25:01 – Most interesting types of problem they have come across that they have yet to do a deal in
29:53 – What is going to change to make for more thoughtful underwriting of subprime lending
34:09 – Major structures of asset backed lending
38:07 – Whether the home serves as an interesting playground for credit opportunities and whether people will own anything again
41:02 – Mark’s experience working at a huge firm vs his experience at CoVenture
42:49 – How does the current credit cycle impact their view
45:22 – Lending against bitcoin
48:24 – Who is interested in these loans against bitcoin
49:15 – How to set interest rates against a weird asset like this
51:18 – What are the key determents of success in this business
1:00:45 – Kindest thing anyone has team for the team
1:02:10 – How to treat people that you pass on
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
October 9, 2018
Saifedean Ammous – The Bitcoin Standard – [Invest Like the Best, EP.107]
My guest this week is Saifedean Ammous, author of the book the Bitcoin Standard. This was one of the more interesting conversations I’ve had in the world of cryptocurrency, primarily because we don’t talk about Bitcoin or Crypto until 25 minutes into the talk. Instead, we focus on history, economics, sound money, low time preference, and gold—all interesting topics.
Saif’s thinking on cryptocurrencies other than bitcoin—which is that they are worthless—is unique and thought provoking. His reasoning around why gold shouldn’t be compared to the returns generated by assets like equities was also compelling. If you’ve followed my Hash Power episodes, this is a new a differentiated interpretation of Bitcoin as a technology for the store of value use case. Please enjoy our conversation.
Show Notes
0:00 – (First Question) – Explain Sound Money
2:15 – Examples of hard vs easy money
5:26 – the even money trap
7:26 – The benefits of hard money vs today’s standards
11:55 – Why this interests him
12:06 – Gold Wars: The Battle Against Sound Money As Seen From A Swiss Perspective
12:46 – Democracy – The God That Failed: The Economics and Politics of Monarchy, Democracy and Natural Order
14:07 – Correlation between time preference and people’s ability to succeed in life
17:49 – How money markets worked in the late 18th century vs today
25:47 – How he came across Bitcoin and how he thinks of it as a digital gold
33:32 – How will the world transition to a sound money standard
40:05 – The impacts of hyperinflation on crypto currencies
42:54 – The idea of a orderly upgrade of the world currency
46:10 – His thinking on alternative coins
51:55 – What it takes to compete with bitcoin
59:33 – How he diversifies
1:02:25 – Stalling bitcoins demand
1:04:01 – Does he apply his thinking of lower time preference elsewhere in his life
1:04:59 – Kindest thing anyone has done for him
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
September 25, 2018
Machine Learning in Investing, with Jeremiah Lowin – Invest Like the Best, EP.105]
My guest this week is one of my best and oldest friends, Jeremiah Lowin. Jeremiah has had a fascinating career, starting with advanced work in statistics before moving into the risk management field in the hedge fund world. Through his career he has studied data, risk, statistics, and machine learning—the last of which is the topic of our conversation today.
He has now left the world of finance to found a company called Prefect, which is a framework for building data infrastructure. Prefect was inspired by observing frictions between data scientists and data engineers, and solves these problems with a functional API for defining and executing data workflows. These problems, while wonky, are ones I can relate to working in quantitative investing—and others that suffer from them out there will be nodding their heads. In full and fair disclosure, both me and my family are investors in Jeremiah’s business.
You won’t have to worry about that potential conflict of interest in today’s conversation, though, because our focus is on the deployment of machine learning technologies in the realm of investing. What I love about talking to Jeremiah is that he is an optimist and a skeptic. He loves working with new statistical learning technologies, but often thinks they are overhyped or entirely unsuited to the tasks they are being used for. We get into some deep detail on how tests are set up, the importance of data, and how the minimization of error is a guiding light in machine learning and perhaps all of human learning, too. Let’s dive in.
Show Notes
2:06 – (First Question) – What do people need to think about when considering using machine learning tools
3:19 – Types of problems that AI is perfect for
6:09 – Walking through an actual test and understanding the terminology
11:52 – Data in training: training set, test set, validation set
13:55 – The difference between machine learning and classical academic finance modelling
16:09 – What will the future of investing look like using these technologies
19:53 – The concept of stationarity
21:31 – Why you shouldn’t take for granted label formation in tests
24:12 – Ability for a model to shrug
26:13 – Hyper parameter tuning
28:16 – Categories of types of models
30:49 – Idea of a nearest neighbor or K-Means Algorithm
34:48 – Trees as the ultimate utility player in this landscape
38:00 – Features and data sets as the driver of edge in Machine Learning
40:12 – Key considerations when working through time series
42:05 – Pitfalls he has seen when folks try to build predictive market investing models
44:36 – Getting started
46:29 – Looking back at his career, what are some of the frontier vs settled applications of machine learning he has implemented
49:49 – Does intereptability matter in all of this
52:31 – How gradient decent fits into this whole picture
September 18, 2018
Trail Magic – Lessons From Two Years on Invest Like the Best
This week, to mark the two-year anniversary of the podcast, I offer a quick summary looking back and forward.
Yesterday I heard about an Appalachian Trail thru-hiker named Croatoan, or Crow for short. Crow was his trail name, which all A.T. thru-hikers carry. Importantly, you can’t give yourself a trail name. Someone else has to name you along the way. Crow’s girlfriend was named Porridge. Another hiker he encountered along the way was named Bear Wrestler…more on him in a few minutes.
Crow was a Sobo, a southbound hiker heading from Maine to Georgia. This is a far more unique route, as most thru-hikers are Nobos, hiking north. These hikers maintain a rich culture. Each wears their own trail flare and has their own trail style. They are obsessed with their gear and food. They develop their own improved walking method to cover ground efficiently. Hikers typically won’t veer far off course, no more than a tenth of a mile, for almost any reason. Crow once left a meaningful gift he had received by a river bed, realized it two-tenths of a mile later, and just kept moving. Two exceptions to this rule are to visit a brewery or find some homemade ice cream.
There are different types of thru-hikers. White blazers are hikers who follow the main trail, lit by the famous white blazes marking the way. Blue blazers often go a step further, exploring side trails in addition to the main trail. Green blazers smoke weed the whole time. There are other colorful ones I’ll stay away from here as they aren’t safe for work.
Apparently, you can spot an imposter in a number of ways. My favorite was that anyone wearing big, sturdy hiking books should be questioned because most thru-hikers realize quickly that they are way too heavy and opt instead for lightweight shoes. Crow had a nice pair of Altras.
This brings us back to Bear Wrestler. Around a campfire, Bear Wrestler was telling Crow and his girlfriend all about his long trail adventures and feats, but Crow noticed that Bear Wrestler was still chubby, carrying 40 pounds of fat. This is a second way to spot a potential imposter. When hiking intensely for months on end, it is impossible to keep any weight on, so Bear Wrestler was clearly a yellow blazer, a type of hiker who drives between trail heads instead of hiking the entire way like the purists.
As I heard about Crow and his adventure, I was thinking about what to say in this short episode about what I’ve learned across two years running this podcast. What I quickly realized is how many yellow blazers there are in the world, and that at many times in my life, I too have been a yellow blazer—opting for easier but less authentic, and less interesting, routes. The podcast is part of a portfolio of things that I’ve put in place in my life to try to avoid being a yellow blazer, to instead push myself to be more like a blue blazer, exploring anywhere I can.
Looking back on the incredible guests I’ve had, I realize now the common mindset that unites them, and I’d like to highlight that mindset here. Even though my guests have come from just about every conceivable background, investing and otherwise, they are all in persistent and consistent pursuit of original experience. Now, that might sound obvious, but it’s rare to meet people whose default is to chase original experience. These people stand out quickly now to me because I can recognize freshness in them, patterns I haven’t already seen 10 other times elsewhere. I now think often: am I doing this because its conventional, and/or because I’m watching what other people do? I think if you do the same exercise, you’ll be alarmed by how often the answer is “yes.”
Diving a bit deeper into these people and what unites so many of my past guests, there are four elements that I see over and over again.
The first common trait is deep curiosity. My take on curiosity after meeting all these people is that it works best in two ways: through building units of exploration, and through embracing strange intersections.
When people ask me what I do, I’ll sometimes just list the actual things I do, instead of a job title. So I say, I read books, papers, and articles. I run tests on data, using many of the same scripts and tools. I have tons of individual conversations with people in nooks and crannies of the investing world. I talk to clients and prospects. I write letters and white papers. These are my units of exploration, and I expect that I’ll keep repeating each of them forever. I have no clue where that might lead, but I’m confident that through curiosity fueled repetition, I’ll find good things. My close friend and most frequent podcast guest Brent Beshore has looked through 12,000 business deals. Talk about repetitions. I think curiosity, and the interesting investing opportunities it creates, is just a set of habits. Finding the right habits, the right units is a great start.
I also often see what I call strange intersections. Picture a Venn diagram with tiny, but interesting, overlap. Some of the most intriguing things I’ve learned about live in these strange intersections. Ali Hamed and Savneet Singh, who are partners at a firm called CoVenture, have found interesting overlap between the worlds of lending, technology, and old world business. Whether it be shoe returns online or watermelons, they’ve found unique ways to lend at high rates on unique platforms enabled by technology. I often see people using seemingly unrelated interested, ideas, or strategies together to produce something different. I encourage everyone to think about strange ways of combining their areas of expertise and interest.
The second common trait is persistence through randomness. Sometimes when I talk with people about the importance of curiosity, they say it sounds too easy and fun. The good news for the skeptics is that more often than not, it’s not fun, it is a total slog. When I looked back recently, I found that I only finish about 1 in 7 books that I start. Even most that I finish aren’t great. Put differently, I read an incredible amount of mediocre books to find just one book that makes a difference. This happens everywhere. The vast majority of data and ideas that we investigate at O’Shaughnessy Asset Management go nowhere at all.
I think most people will agree that the journey of discovery is often tedious, filled with dead ends, and above all random. My favorite example of this persistence through randomness was my conversation with Josh Wolfe, which I recommend in its entirety.
One of my favorite phrases picked up in the past two years is the Shangaan phrase Hi Ta Xi Uma, which I learned from Renias Mhlongo, one of the top trackers in Africa. It means “we will find it,” and Renias will keep muttering it when he loses a track and struggles to find the next one. Everything is hard, and usually much harder than we can fathom. All the best people I’ve met through the podcast just don’t let that stop them. They also seem to develop an awareness of this constant difficulty and just become used to it.
This second trait, persistence through randomness, is perhaps my favorite way to test for yellow blazers. There are many people in the world of business and investing who can talk extremely well. But if you keep peeling back the onion, asking more and more specific questions of a yellow blazer, you’ll find nothing original. But when you do hit on something, several layers down, that you’ve never heard before, that to me is a mark of persistent inquiry. That’s the kind of people I’m after.
The third common trait is risk management. It is tempting to view uncertainty as a sort of risk, but I think that is a large mistake. All the good stuff is found in places that haven’t been mapped already. In fact, to take the idea of original experience a step further, what is common across the best people I’ve met is not just having the experiences, but then bringing some sort of order to the chaos they found in uncertainty. This isn’t risk, in my opinion. If anything, not seeking out chaos is what’s risky.
But then there are the conceivable risks: things that could go wrong that we can list ahead of time. On this front, guests were often very thoughtful: developing plans to be deployed when specific risk scenarios play out. I loved Mike Zapata’s story about the darkest night. He and his SEAL team would prepare and practice every tiny detail of a mission, creating plans for all risks, then wait to attack on the darkest night they could, because even though the conditions were hardest in the dark, their preparation and risk mitigation would shine in that difficult environment.
More specific to investing, many of my guests have a clear focus on downside risk protection. Several people have told me that there are common ways that things go wrong, but many more unknowable reasons things go right. So instead of trying to predict what will work, focus on avoiding the common pitfalls. My favorite example again came in Africa, being told 100 times to not run when lions charged us. It is a common and known risk factor (each of our guides had been charged more than 50 times), but one that was easily mitigated. If you don’t run, the lion will stop short. If you run, it will maul and eat you. You just have to have that lesson beat into your brain a hundred times ahead of time because the basic instinct, as is so often the case with investing, is to run.
For the fourth common trait, we return to our thru-hiker Crow one last time. I heard Crow’s story from my friend Bill, who picked up Crow hitchhiking to give him a quick ride into town. Bill offered to buy Crow dinner. He accepted with a huge smile, telling Bill “wow, that is some real trail magic right there.” Trail magic is my favorite piece of lingo in the thru-hiking culture. Hikers tell endless stories about trail magic, which is what they call the acts of kindness and goodwill bestowed upon them by strangers along their journey. Food, shelter, a quick lift, a homemade cookie. Consider how incredibly positive sum trail magic is. The givers and the receivers of the magic both come out ahead. Despite all I’ve learned about business and investing over these two years, my favorite question to ask is still my final one in each episode, about acts of kindness. Getting to hear more than 100 stories of kindness from these people has been the highlight for me, and the best lesson.
Summed up, what I’ve learned from these people is to follow your own way, always. Figure out the right units of exploration, embrace strange intersections, and carefully consider what could go wrong. Rest when you need it, be dogged and aggressive when the situation calls for it, but just keep going. Do it all with respect for others and as much trail magic as you can muster.
Thanks to all the great people I’ve had on the show, and thanks to you for listening for these two years, I promise to keep this discovery process going in some way, shape, or form forever.
September 4, 2018
Richard Craib – Crowdsourcing Predictive Models – [Invest Like the Best, EP.102]
I intentionally avoid the world of quantitative investing on this podcast. The whole point of this format is to learn about many different fields, and the vast majority of my time is already spent in quant world.
Occasionally I’ve broken this rule because of something unique, including this week’s conversation with Richard Craib, the founder and CEO of Numerai. If you listen to the podcast often you’ll have heard me reference Numerai, a hedge fund which blends quant investing, cryptocurrencies, crowdsourcing, and machine learning — talk about a PR company’s dream.
One important note: Numerai is both incredibly open and very secretive. You may sense a bit of frustration on my part, but that is only because, as a fellow quant who loves details about data and modeling, we couldn’t go deeper into the details on the record.
We discuss how Numerai has created an incentive structure to work with data scientists around the world in an attempt to build better investing models. The idea of having data scientists stake cryptocurrency in support of the quality of their models is fascinating. Like many hedge funds, Numerai doesn’t share its track record, so we don’t know if this works—but I hope you, like me, use this conversation as inspiration for how different technologies can intersect.
Hash Power is presented by Fidelity Investments
Please enjoy my conversation with Richard Craib.
Show Notes
2:32 – (First Question) – How he came up with Numerai and how its related to his background
4:08 – How he works with and models the data for his system
5:24 – Describing machine learning as it relates to his work, and specifically linear regression
7:11 – The important stages in his sequence
8:46 – How the scale in the number of data scientists they use is different from other areas
11:30 – Which is the most important aspect of creating alpha; their data, algorithm work, proprietary ensembling of those algorithms.
14:30 – The idea of staking in blockchain
17:30 – Does the magnitude of the stake matter in blockchain
19:10 – Understanding the full incentive structure for both staked and unstaked work
21:07 – How is the prize pool determined
22:29 – Philosophy on how to source interesting data
26:11 – His thoughts on the crowd model and the wisdom of crowds
27:12 – The size of stakers for Numerai
27:51 – Interpreting the models and knowing when something is broken
30:03 – How they think about people not submitting their models
31:48 – Their model building
32:39 – Most interesting set of things they are working on to improve the overall process
35:38 – The Market for “Lemons”: Quality Uncertainty and the Market Mechanism
37:11 – How people can come along with their own data
39:00 – His thoughts on the quantitative investment community
40:44 – What else is interesting him in the hedge fund world
44:03 – Building a marketplace and staving off competition
46:16 – Kindest thing anyone has done for him
August 28, 2018
Elad Gil – How to Identify Interesting Markets – [Invest Like the Best, EP.101]
My guest this week has a fascinating background. He has a PhD in biology but has split his time as both an investor and an operator. As an investor, he’s involved in companies like Airbnb, Coinbase, Instacart, Opendoor, Stripe, Square, and Pinterest—not too shabby. As an operator, he helped both Google and Twitter scale their businesses, in the case of Twitter from 100 employees to 1500 over two years. He’s just written a book about these experiences called the High Growth Handbook.
Our talk centered on what makes for a good investment and more specifically how Elad identifies an interesting market. Operators and early-stage investors will find lots of nuggets in this fun conversation. Please enjoy.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
1:31 – (First Question) – Process for evaluating a young business
2:43 – Andy Rachleff Podcast Episode
3:09 – Data factors for evaluating a business
5:08 – Reference checks
6:42 – Advice for companies that are reliant on product cyclicality
7:01 – Where to Go After Product-Market Fit: An Interview with Marc Andreessen
7:31 – High Growth Handbook
9:30 – Lessons learned from marketing and growing companies
12:09 – How do you hire the best people to improve your distribution
13:16 – How does he think about lifetime customer value vs customer acquisition cost
15:57 – Should companies just focus on the high margin power users
16:35 – Best ways to organize a company hierarchy
19:16 – His interest and background in the area of longevity research
21:52 – Changes he has made in his own life as a result of this longevity research
22:56 – Most effective use of a CEO’s time
24:58 – How he evaluates or identifies interesting markets for potential businesses
28:03 – Any markets that fit his criteria that are underappreciated by investors
30:02 – Worst practices for businesses
32:19 – Kindest thing anyone has done for him
33:20 – What would be the topic of his next book
34:40 – Biggest lessons he’s learned about markets
August 21, 2018
What You Learn About Business After 12,000 Deals Reviewed, 1,500 Deep Dives, 125 Site Visits, and 7 Portfolio Companies, w/ Brent Beshore [Invest Like the Best, EP.100]
Show Notes
0:00 – (First Question) – How does he think about optimizing risk in terms of the capital stack when looking at deals
3:25 – What conditions would they add debt down the road after investing in a company
4:50 – What business sectors are most intriguing for Morgan to invest in right now
4:55 – Trent Griffin Podcast
7:32 – Why no HVAC businesses if it’s such an attractive sector
11:54 – thoughts on rolling up similar businesses and horizontal scale
14:02 – Another industry Brent would focus on
16:00 – Difference between property management in larger cities vs smaller metro areas
16:49 – What role does profit margin play when Brent is evaluating a business
20:44 – The appeal of a hyper cyclical business
20:50 – Brent Beshore Podcast Episode
25:25 – Favorite counter cyclical business
26:12 – How they judge assets, tangible vs intangible assets
31:56 – How does he think about wage inflation when considering the cost of a business
35:19 – His fascination with pet crematoriums
36:55 – History of the permanent equity fund and the changes by having a larger pool of capital
41:46 – Pitching investors on a new structure for the business
44:12 – How will this business model scale
August 14, 2018
Boyd Varty – Track Your Life – [Invest Like the Best, EP.99a and EP.99b]
An interesting question that I think about a lot: how do you balance exploring the new with savoring what you already know and love? Most of the time I prefer to explore, but the best part of this podcast experience for me has been meeting people who become close friends. For episodes 99 and 100, I’m bringing back two of the most popular past guest who are both now dear friends.
This week’s episode is split into two parts, today and tomorrow. Today’s episode is with Boyd Varty and tomorrow is with both Boyd and his sister Bronwyn. The incredible Varty family hosted me in South Africa, so you’ll hear birds and elephants in the background as we talk.
This conversation with Boyd is about our shared experience called “track your life” which I couldn’t recommend more highly. We tracked animals on foot for five days, and learned a lot from the environment itself. While we discuss our time together, this is much more about how to live. My original conversation with Boyd had a huge impact on me, and this continues the exploration of Boyd’s idea that we should all be going our own way, in the right way, instead of simply following well-trodden paths.
I hope you enjoy this conversation with Boyd and check back tomorrow for another conversation with the Vartys.
Show Notes
1:55 – (First Question) – Encounter with five wild dogs
10:19 – The idea of a perfect day on the track
15:59 – The importance of silence
19:42 – Why we could all benefit from the power of silence
21:37 – Side effects of being on the track
23:49 – Following the smaller paths
25:20 – How culture can keep us from forging our own path
29:34 – The stress he puts on the watch at night
33:34 – The power of going from alert to rest and back again
35:11 – Why Zebras Don’t Get Ulcers
38:25 – Disconnecting from the modern world and reconnecting with your life’s purpose
41:42 – How much does skill play into finding your life’s calling
43:23 – Common objections to what they do
49:58 – Importance of end of day on the track
52:33 – Silence and feeling of thousands of years of time passing through hallucinogenic
56:22 – His experience with bees
Boyd Varty – Track Your Life – [Invest Like the Best, EP.99a]
An interesting question that I think about a lot: how do you balance exploring the new with savoring what you already know and love? Most of the time I prefer to explore, but the best part of this podcast experience for me has been meeting people who become close friends. For episodes 99 and 100, I’m bringing back two of the most popular past guest who are both now dear friends.
This week’s episode is split into two parts, today and tomorrow. Today’s episode is with Boyd Varty and tomorrow is with both Boyd and his sister Bronwyn. The incredible Varty family hosted me in South Africa, so you’ll hear birds and elephants in the background as we talk.
This conversation with Boyd is about our shared experience called “track your life” which I couldn’t recommend more highly. We tracked animals on foot for five days, and learned a lot from the environment itself. While we discuss our time together, this is much more about how to live. My original conversation with Boyd had a huge impact on me, and this continues the exploration of Boyd’s idea that we should all be going our own way, in the right way, instead of simply following well-trodden paths.
I hope you enjoy this conversation with Boyd and check back tomorrow for another conversation with the Vartys.
Show Notes
1:55 – (First Question) – Encounter with five wild dogs
10:19 – The idea of a perfect day on the track
15:59 – The importance of silence
19:42 – Why we could all benefit from the power of silence
21:37 – Side effects of being on the track
23:49 – Following the smaller paths
25:20 – How culture can keep us from forging our own path
29:34 – The stress he puts on the watch at night
33:34 – The power of going from alert to rest and back again
35:11 – Why Zebras Don’t Get Ulcers
38:25 – Disconnecting from the modern world and reconnecting with your life’s purpose
41:42 – How much does skill play into finding your life’s calling
43:23 – Common objections to what they do
49:58 – Importance of end of day on the track
52:33 – Silence and feeling of thousands of years of time passing through hallucinogenic
56:22 – His experience with bees
August 7, 2018
Ryan Selkis – The Crypto Barbell and Token Curated Registries – [Invest Like the Best, EP.98]
This week’s conversation is for those interested in the nitty gritty of cryptocurrencies and for those who, like me, are fascinated by that world but more than a bit skeptical of the investing prospects for the many cryptocurrencies now in existence.
My guest is Ryan Selkis, who I met at an event hosted by Union Square Ventures and Blocktower Capital. At that event, in a crowd of many brilliant people, Ryan was consistently asking hard questions and raising counterpoints.
I love his perspective because he is both passionate, but realistic, excited about crypto, but worried about many aspects of the ecosystem.
We discuss many new topics like his barbell analogy for thinking about different kinds of coins, token curated registries, and the need for better transparency around decentralized projects.
Hash Power is presented by Fidelity Investments
Please enjoy our conversation.
March for the Fallen
Want to meet other curious investors, get in good shape, and support a fantastic cause? Consider joining a great group to hike 28 miles in honor of those who have fallen in defense of our nation.
Learn more and sign up at alphaarchitect.com/mftf.
Show Notes
2:55 – (First Question) – how he best explains blockchain technology
4:12 – How does he categorize each cryptocurrency
9:11 – How Numeraii is valued
10:04 – Explaining token curated registries (TCR)
12:58 – How Token Curated Registries are being applied
15:05 – Innovations that will protect against nefarious actors in the crypto space
16:37 – How do you convince investors to commit to TCR’s
18:40 – Biggest headwinds to this industry
22:12 – What are the quality filters to root out the bad actors
25:42 – Thoughts on the ICO market as an alternative to capital raising
29:23 – Litmus test for who should use an ICO to raise capital
34:28 – What is unique about creation of a token vs the normal exchange of cash to determine if a company needs a token
36:21 – How many ICO projects are really necessary
38:28 – How should people form an investment opinion about this space
41:35 – Core mission of his company
44:28 – What are some of the reasons his goals won’t happen
49:30 – Lessons learned while working at Coindesk
49:58 – What is he most excited about for the future of this space
52:56 – Kindest thing anyone has done for Ryan
