For two reasons, I really like Fred Wilson's recent blog post on hypothetical value to real value. Firstly, it is structured in the way that I think good blog posts are structured. He starts with a personal story (about this son) and then uses that to take a position and impart some knowledge about the venture capital industry. It makes for a more engaging read. Secondly, I like how he describes the journey and spread between hypothetical value and real value:

Venture capitalists and seed funds and angel investors make or lose money on the journey from hypothetical value to real value. And when the spread between the two narrows, the money we make is less. When the spread increases, the money we make is more. It is easier to drink your own Kool Aid in the world of hypothetical values. You handicap the odds of winning more aggressively. You trade ownership for capital at work. You accept the new normal. Real value doesn’t move so fast. Because it is right in front of you. You can see it. So it is not prone to flights of fancy. I try to keep this framework front and center in my brain as we meet with founders and work to find transactions that work for everyone. I find it to be a stabilizing force in an unstable market.

All of this is related to the notion that you make real money when you're right about something that most people think is wrong. Because that would be hypothetical value. If it were real value, then everyone would simply believe it. It would be "right in front of you." And this is pretty much true of all competitive marketplaces, including the real estate industry. Risk and uncertainty create opportunity.

Photo by James Sullivan on Unsplash

Today's Seth Godin post on innovation, guts, and generosity is Seth Godin at his best. One of the reasons why I like it is that I keep thinking that "innovative" has become too much of a buzzword. It's similar to walking around and telling everybody you're a cool person. If you have to explain it to everyone, then you're probably not cool. At the same time, I also find his generosity angle to be a clever one. Here is Seth's post in its entirety (short and sweet, as usual):

Innovation is guts plus generosity

Guts, because it might not work.

And generosity, because guts without seeking to make things better is merely hustle.

The innovator shows up with something she knows might not work (pause for a second, and contrast that with everyone else, who has been trained to show up with a proven, verified, approved, deniable answer that will get them an A on the test).

If failure is not an option, then, most of the time, neither is success.

It’s pretty common for someone to claim that they’re innovative when actually, all they are is popular, profitable or successful. Nothing wrong with that. But it’s not innovative.

Allow generosity to take the lead and you’ll probably discover that it’s easier to find the guts.

Here are a couple of cut-up snippets from a recent post by Seth Godin titled: “Waste and the new luxury.”

Luxury goods are built on a foundation of waste.

The front lawn is a luxury good, a sign that you don’t need to graze your cows on every square inch, and that you’re willing to waste the lawn.

There’s a new luxury that’s occurring, though, one that’s based on efficiency.

A luxury that’s based on investing in renewables, in resources that might be seen as endless, in smart design, in the satisfaction of knowing that others are benefitting, not paying, for the experience or the object you’re buying.

Waste vs. efficiency.

(Above is a photo I took this week in Dundas Square.)