You, Inc – Getting Into Business

Wake up every day, consumed by “You, Inc”.

If your goal is to make the leap from labor to capital, from selling time to making money with your assets, then get into business for yourself as soon as you can. 

Don’t get into the perfect business, don’t get into your life’s work, just get into business.

Wake up every day, consumed by “You, Inc”. Have every thought process working towards your north star, building your little empire.

This journey is not about achieving your professional potential or even being happy – it is the singular goal to gain independence over your time and money. 

You can build your snowball from the smallest flake, but there needs to be something to grow from.

The biggest threat to the dream of independence isn’t picking the wrong type of business, it is procrastinating. It is never starting at all.

The earlier you start, the more time is on your side. The less money you need to live on, the more capital you deploy into opportunities with bigger upside. 

You just have to start. A business you own that is boring and unglamorous is better than no business at all. You have to start owning things, owning your time, and growing as a businessperson.

When you work at a job and you’re young, you make very few real decisions. When you own a business, you make real decisions every day and suffer/reap real consequences. 

Those reps compound rapidly, and over time you build earned, hardened judgment. You make better decisions over You, Inc, and the value builds.

People recognize that you’re “in the game”, taking risk and building. New opportunities come your way.

Over time, you leverage your labor less, and your judgment more. You allocate your time less, and your capital more. The snowball will build if you tend for it every day, but you have to start with something.

How Crypto Tokens Will Enable the Disruption of Businesses like Uber and Airbnb

Businesses that are two-sided marketplaces, built around network effects and transaction fees (Uber, Lyft, eBay, Airbnb), will be especially vulnerable to disruption from businesses built around crypto tokens.

I have spent much of the past six months trying to understand the world of Bitcoin, Ethereum, alt-coins, crypto currencies, crypto commodities, and crypto tokens.

If history teaches us one lesson, it is those who adapt will survive, and those who fight tooth and nail for the status quo will flounder when the world invariably changes. If many smart people say that something “is the future”, it is generally worthwhile to try to figure out why.

If you are brand new to all this,  A Letter to Jamie Dimon, by Adam Ludwin, is a great primer blog post. There are countless other blogs, podcasts, and books, but Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond is an extremely well written book that I thoroughly enjoyed.

Broadly, crypto currencies (like Bitcoin) function as digital money, crypto commodities (like Ethereum) provision scarce digital resources (like distributed computing power), and crypto tokens (99% chance you’ve never heard of one) are more of a flexible combination of a currency and a commodity. Altogether, we call these crypto assets.

Within the world of crypto assets, most of the attention is paid to the biggest crypto currency, Bitcoin, and the biggest crypto commodity, Ethereum.

Often overlooked and in their nascency, crypto tokens could be the most exciting crypto asset.

Crypto tokens have potential far beyond being the “internet of money” – they can reshape how businesses form and operate.

As a means to help individuals band together to create and capture value—crypto tokens could be the greatest innovation since the joint-stock corporation.

I will attempt to illustrate this potential below.

Disrupting the Two-Sided Marketplace of Web 2.0

Businesses that are two-sided marketplaces, built around network effects and transaction fees (Uber, Lyft, eBay, Airbnb), will be especially vulnerable to disruption from businesses built around crypto tokens.

Continue reading “How Crypto Tokens Will Enable the Disruption of Businesses like Uber and Airbnb”

Two Major Ways We Can Help Small Businesses Grow

I thought long and hard about what would most help a Bootstrapped Service Business (“BSB”) like ours grow faster and create more jobs, and it all comes down to improving access to meaningful investment capital – not small changes to tax rates, increasing deductions, payroll tax holidays, or tweaking regulations

‘Tis the season for tax reform, and in tax reform season, politicians talk about how changing the tax code will help small businesses grow and create more jobs.

I thought long and hard about what would most help a Bootstrapped Service Business (“BSB”) like ours grow faster and create more jobs, and it all comes down to improving access to meaningful investment capital – not small changes to tax rates, increasing deductions, payroll tax holidays, or tweaking regulations (which doesn’t even help if you happen to be a vassal with a feudal lord like the state of CA or NY…side gripe for another time).

Continue reading “Two Major Ways We Can Help Small Businesses Grow”

Liquid Net Worth may be a Better Basis than Income for Income Tax Rates

America does not have an income inequality problem so much as it has a wealth inequality problem. The top 1% make about the same total income as the bottom 40% combined, which is significant, but it is nothing compared to the wealth gap.

The top 1% have 139x as much wealth as the bottom 40%.

So, why are income and capital gains tax rates based on income, not wealth? This is an outdated and oversimplistic way to ballpark wealth, and modern technology makes it much easier for track wealth now than in the past. 

If we want to devise a more sensible tax system, we should strongly consider basing income and capital tax rates on a metric I will call Liquid Net Worth, instead of the traditional “taxable income”. This ensures that tax rates are assessed on a more full picture of someone’s financial situation, not just their year-to-year income.

Continue reading “Liquid Net Worth may be a Better Basis than Income for Income Tax Rates”

Government to Business – “Robots, Not Humans, are the Workers You Want”

 

Ever since sharing economy companies burst on to the scene, there have been disputes between governments, like the State of California, and companies, like Uber, about the employee/contractor classification of its workers.

Some companies surrendered (Instacart), a few are still fighting (Uber), and some had to shut their doors because of the changes (Homejoy).

None of these policies are good for the long-term of labor in America. They massively discourage entrepreneurs from building business that revolve around human workers, and they accelerate the transition to a job-lite world that is built on robot, not human, labor.

Continue reading “Government to Business – “Robots, Not Humans, are the Workers You Want””

Does “Cleverness” Lead to Superior Cash Returns? Venture Capital Cash Returns v Stocks and Bonds

Analysis of actual cash distributed to limited partners versus stock and bond performance from 1981-2006

There are a few people in the world who are lucky enough to be clever for their job – a job that pairs an excellent salary with extremely high upside.

Well-funded entrepreneurs, venture capitalists, private equity investors, and hedge fund managers are all put to work in the hopes that their cleverness will deliver outsized returns for limited partners (or investors in the case of entrepreneurs).

Continue reading “Does “Cleverness” Lead to Superior Cash Returns? Venture Capital Cash Returns v Stocks and Bonds”

Confession: I Don’t Think Uber is Actually a Great Business (Yet)

Additional Background If You Stumbled on this Post Randomly

Uber is everywhere – especially in the startup/technology world that I follow closely, mostly through podcasts. It is the source of deliciously spirited debate because it is a wonderful blend of ubiquitous consumer product and highly publicized startup juggernaut. And whenever I get in too many debates with people about one topic and get stuck on a plane with no wi-fi, I write out my arguments, which I occasionally publish and commit to the public record. 

Continue reading “Confession: I Don’t Think Uber is Actually a Great Business (Yet)”