Tag: fred wilson

• Stubborn flexibility

  I’ve been having more coffee meetings over the last few weeks. And one of the things they are doing — besides making me jittery — is reminding me that at least two things happen during bear markets:

  1. Conviction gets tested.
  2. People get really creative.

  Let’s start with number one. It’s easy to have conviction in something when it’s obviously working and lots of other people are doing it. But what about when that is no longer the case?

  Take the example of Amazon. In this 2018 post by Fred Wilson, he reminds us that at the peak of the internet bubble in 1999, Amazing was trading at around $90 per share. Two years later it was somewhere around $6 per share. And it was not until 2007 that Amazon would start trading above its peak again.

  In hindsight, holding on was very obviously the right thing to do. But to do that from 1999 to 2007, you would have needed patience. And to have patience, you would have needed a high degree of conviction in Amazon as a company and in the internet as the harbinger of an important societal shift. That wouldn’t have been easy — just like many things today are not easy.

  At the same time, bear markets force people to get really creative — we’re now onto thing number two. In this case, it’s not a question of patience. It’s, “the thing I was doing before no longer works and I don’t know if/when it will work again, so I’m going to get creative and try something new.” Bear markets give you this wonderful opportunity because the opportunity cost of not doing the status quo disappears (or greatly reduces).

  On some level, though, these are two contradictory things: are we sticking to our guns or are we trying something new? But in my mind, you want both. This is not about saying, “lots of people used to want to buy cryptocurrencies and condominiums, but now a lot of people don’t, so I’m going to move onto the next hot thing.” It’s something more calculated than this.

  To return to Amazon, I think it’s akin to Jeff Bezos’ old mantra that you want to be stubborn on vision, but flexible on the details. Right now, lots of people are being forced to be flexible. But the vision part is what you still need conviction around. Otherwise, how will you get to where you want to go?

  2024.07.31

• Be your own bitch

  I just joined Warpcast. You can find my profile, here.

  At first glance, Warpcast is going to look a lot like X. But instead of tweets, you cast. There are also various topic channels, similar to how Reddit works. But the most important difference is that Warpcast is a client for the Farcaster protocol, which is a social network built on Ethereum. This means that it is a decentralized social network.

  You won’t see of any this if you decide to sign up. All of the esoteric crypto things are hidden in the background. But it’s there. And it ultimately means that, as a user, you get to own your online identity and whatever content and following you create. Meaning, you can take it with you if you decide you no longer want to use Warpcast and instead want to access the network through another client.

  It also means that software developers now have a real incentive to build things on top of the protocol, because unlike with a centralized service like X, they can be confident that they won’t get the rug pulled out from underneath them. And herein lies the feature that will ultimately lead to an enormous amount of new ideas and innovation.

  In real estate terms, you can think of developing on top of a centralized service like building within a theme park owned by a single company. The theme park might want you to build on their land, right now, but if at some point it no longer suits their business needs, they can always change the game on you.

  On the other hand, building in a city on land you own outright is a lot like developing on top of a decentralized service. Sure, you need roads and municipal infrastructure to service your land (think of these like the above protocol), but you generally don’t need to worry that the city might wake up one day and remove all of this important infrastructure. It’s a given. And that’s a fundamental difference, even if the buildings might look the same in the end.

  Venture capitalist Fred Wilson once explained it in this way, “don’t be a Google bitch, don’t be a Facebook bitch, and don’t be a Twitter bitch. Be your own bitch.” What he meant by this is that if you build on someone else’s land, then you’re opening yourself up to being their bitch. What you want to be is your own bitch. And similar to how our cities work, this is the potential of decentralized services.

  As I write this post, I currently have 6 followers on Warpcast. If you’d like to be number 7, you can follow me here.

  2024.05.22

• How I’m displaying my NFT art

  

  

  I recently got a Samsung Frame TV to use as an NFT display at home. I had been looking for one for a while and I finally pulled the trigger last week. The way the Frame works is that it’s a TV when it’s on, and it’s an art display when it’s off. But I really don’t care about the TV part. I just wanted a good looking art display.

  There are a lots of purpose-built NFT displays on the market right now, including Tokenframe, Blackdove, Muse, and others. And I was very close to getting a Muse Frame.

  But ultimately I decided on the Samsung Frame because it was (1) cheaper for its size (50″), (2) it looks cool, and (3) I was fine with just a simple high-quality display. I think there will be lots more software and dongles created in the future for people who want to showcase their NFTs on whatever they happen to have at home.

  However, if you’re a crypto and NFT purist, this maybe isn’t the display for you — at least right now. Out of the box, it doesn’t connect with any crypto wallets. And so you’re not going to automatically see the provenance of each art piece (more on this below). Instead, the default method is to just upload JPEGs to the TV from Samsung’s SmartThings app (insert right-click-save-as jokes here).

  Overall, I’m really happy with the display. Here are my initial thoughts:

  • I have it set to randomly rotate through my art every 3 minutes. There’s also a motion detection feature that works reasonably well. If it doesn’t detect any motion, the display will go completely to sleep. But for some reason, it occasionally gets possessed and the TV will randomly turn on. Last week it kept turning on old Baywatch episodes. Possibly user error.
  • Samsung’s SmartThings app is bad. It’s buggy and a pain to use. For example, even though I’ve given it complete access to my phone’s photos, they never seem to show up. I have to limit access and then go and select the ones I want to use in my gallery.
  • I have found that I prefer when the art is full bleed versus within the Frame’s skeuomorphic picture mat. This is a new form of art and so I like the idea of breaking past traditions. But unless your images are 16×9 and a high enough resolution (I have generally found > 3000px wide to work), then you’re going to get prompted to insert and select a mat design.
  • I have solved this problem by manually cropping and editing the individual pieces. Some NFT collections, such as CyberBrokers, also give you vector files which allows you to play around as you see fit. Again, if you’re an NFT and/or art purist, you’re probably not going to like this. But I think of it as curating the pieces.
  • Most of my art is on Ethereum, Solana, and Tezos. Being able to upload whatever I want is helpful, because not all NFT displays support all of the chains. The Muse Frame, for instance, only supports Ethereum and Polygon right now.
  • PNG files and video files aren’t supported natively. This is a significant drawback and so eventually I know I’m going to have to change up the software that powers this display. And there are options. Bright Moments offers display software for holders of its NFTs. Fred Wilson’s venture firm USV created this setup. And I’m sure there are countless others. These can solve the provenance issue mentioned above by pulling directly from the various blockchains.

  In the end, I knew what I was getting into with the Frame. I knew it wasn’t a purpose-built NFT display and I was fine with that. It’s still early days in this space. But it sure is nice to finally see my NFT art in large format.

  2024.01.13

• What might happen in 2024

  Yesterday we looked in the rear-view mirror. Today we’re looking forward:

  • The market consensus right now is that this cycle of interest rate increases has come to an end, and that we should see rates start to come down next year. Having confidence that rates won’t go any higher in the near future is what markets need in order to start making more decisions. So this is, of course, positive. At the same time, I don’t think anyone should expect a return to ultra-low rates. Rates today are still low when viewed historically.
  • Lower rates are good for levered assets such as real estate, but I don’t think that our industry has fully felt and processed the impacts of higher rates. Unfortunately, I think that things will get worse (in 2024) before they get better (maybe toward the end of 2024 or perhaps in 2025). This is when a “risk-on” approach will return in commercial real estate. A year ago today, I thought 2023 would be the year for this, but as I said yesterday, I was overly optimistic in terms of my timing.
  • On the residential resale side, I think we will see greater optimism sooner, certainly for the most in-demand cities and areas. There is pent up demand waiting on the sidelines and, once we can get past the current bid-ask spreads and deadlock, I believe we’ll return to a more balanced market in 2024. To be clear, I’m not expecting bidding wars and the like. And because of our housing affordability crisis, I also think the Bank of Canada will be more resistant to lowering rates compared to other central banks. This will help the Canadian dollar.
  • If you’re a buyer of real estate, I generally believe that 2024 will turn out to be a pivotal year for you. Roughly speaking, you win acquisitions in one of two ways: either (1) you pay the most or (2) you believe in something that most other people in the market don’t. This second approach is harder to achieve in bull markets. But in slower markets, the door is open and history has taught us that it can be the foundation in which great fortunes are made.
  • As I mentioned yesterday, I agree with the prognostications that hard costs will soften further next year (perhaps even more than 5% on average). Obviously every market is different. But here in Toronto, I just don’t see us returning to the level of construction starts that we have seen over the last number of years.
  • Since 2021, I have used my hyper scientific Jimmy the Greek Reopening Index to keep tabs on office utilization and the overall return to office. And based on this, 2023 was a positive year. Initially, souvlaki consumption appeared dramatically lower on days like Monday. But I noticed discernible increases as the year went on. However, if you look at actual data, such as what we have from swipe cards, the great return to office seems to have stalled out at around 50%. I don’t think this will hold, though. I continue to believe that of the people who work in offices, most will spend > 50% of each week there. And we will see that in 2024.
  • 2023 was the year of AI. But Fred Wilson makes an excellent point, here. AI is 40+ years in the making. Last year only became the year of AI because a consumer-facing app — ChatGPT — was revealed that captured everyone’s attention. Crypto will eventually have this moment, but it will likely need to marinate a bit longer. Instead, I think 2024 will be the year of augmented reality (AR) and a further blurring of our offline and online worlds. Think digital art, fashion, and other collectibles (such as NFTs).
  • Right now, autonomous vehicles feel like they’re in the trough of disillusionment (within the hype cycle). There were moments last year where it felt like we were finally moving beyond this phase. But then some very suboptimal things happened. I think AVs are our reality in the next 5+ years, which means that for next year we likely want to be focused on the inputs: vision/LIDAR, battery tech, etc.
  • Zooming out, we should be thinking about the above two trends in the context of a broader shift toward greater automation. I think it will feel more insidious than immediate (certainly in 2024), but the longer-term impacts are going to be profound for our society. The so-called gig economy is likely to be impacted first. Eventually the overall economy will create new jobs, but we are still going to need to manage this transition toward more automation.
  • TikTok Shop is where to look for the future of shopping. I think the platform will continue to see strong adoption and ultimately prove to be a dominant e-commerce platform throughout 2024. Amazon, Meta, and others will see this, and try their best to catch up and copy it.
  • At the time of writing this post, the total crypto market capitalization is about $1.74 trillion. This is down from nearly $3 trillion at the peak of the market in 2021. The recent gains suggest that the so-called “crypto winter” might be over, and so combined with lower interest rates and more real-world use cases, I think that 2024 will be another strong year for crypto. Total crypto market cap at the end of the year will exceed its 2021 peak.

  And there you have it. My current thoughts for this upcoming year. I should note that I’m not an economist, analyst, or an expert on souvlaki demand for that matter. But I enjoy writing this post as an annual discipline. It forces me to think critically about the topics that interest me. And in the paraphrased words of Howard Lindzon, it gives me an archive that I can go back to and either cringe at or think to myself, “hey, I could have been a somebody!”

  And with that, a big thanks to everyone who has read this daily blog over the last year. This year marked its 10th anniversary. I wish you much success and happiness in 2024. Happy new year!

  2023.12.31

• There’s something to be said about hard assets

  Here is a recent post by Scott Galloway comparing Uber and WeWork. In it, he praises the virtues of asset-light business models:

  For most of business history, having assets was good, and having more was even better. However, one of technology’s tectonic unlocks has been elevating information (bits) over objects (atoms). In the information age, owning assets is one business, while operating them is another, and each demands distinct capital structures, management approaches, and operational skills. Businesses offering the greatest return on invested capital don’t have much capital (assets) and can scale up faster, as they don’t bind themselves to cars, apartments, or even inventory.

  We know this. Uber doesn’t own cars. Airbnb doesn’t own rental properties. And most hotels, as Galloway mentions, also don’t own their real estate. Generally speaking, hotels are brands that enter into fee-earning management contracts with people who own real estate.

  However, WeWork is not this. According to Galloway, WeWork had $47 billion of pre-IPO lease obligations. These ran/run through to 2038. In this regard, WeWork is more bank-like: they have a similar mismatch of short-term assets and long-term liabilities.

  Galloway also argues that asset-light businesses offer the greatest ROI because they can scale up faster. And this is certainly one of the virtues of tech businesses. In more asset-heavy businesses like real estate development, each project/asset is largely a discrete effort.

  But there are significant advantages to owning real estate; one of them being that, at the end of the day, you own a hard asset.

  Venture capitalist Fred Wilson once wrote on his blog that one of his big lessons from the dot-com bubble was that he learned to take his tech wealth and funnel portions of it into hard assets — namely real estate in New York City.

  This, of course, comes with its own set of risks. But clearly there is something to be said about owning real estate.

  2023.11.18

• First cross-laminated timber apartment building in NYC

  At the end of 2020, I wrote about a cross-laminated timber apartment building that Joanne and Fred Wilson were building in Brooklyn at 383 Greene Street.

  Well, that project is now complete and stabilized, and it turns out that it was the first CLT apartment building ever built in NYC, which is quite an accomplishment.

  On her blog, Joanne describes the project as being a “labor of love”, and that certainly sounds right. But they are now also onto their next CLT apartment building at 122 Waverly Avenue (called Frame 122).

  This would suggest that whatever their development model is, it is working for them. My assumption is that they want to both make our cities more sustainable and own high-quality rental assets for the long-term (possibly forever).

  If you’d like to see how 122 Waverly was assembled, here’s a short video that Joanne recently posted on her blog:

  2023.10.03

• Cold, warm, hot

  Sadly, this can very easily happen in the world of crypto. If you connect your wallet to a bad actor and sign a malicious transaction, it is possible for someone to drain all of your assets (coins, NFTs, and so on). It’s pretty terrifying. And I’m sure that a lot of people will see this and say to themselves, “that’s why I don’t like crypto! It’s too risky. Too many scammers. Bunch of rat poison.”

  There is no question that crypto is risky. It’s also not very user friendly. Clearly even sophisticated users can get tricked into signing the wrong kind of blockchain transaction. It happens all the time. But this is also a nascent space. And maybe this will become less common in the future as things mature.

  Either way, there are things you can absolutely do today to protect yourself if you’re planning to own and do crypto things. One of the most important rules to follow is this one here: you should have at least 3 crypto wallets. Let’s call them cold, warm, and hot wallets (which is often how they are described in web3 land).

  A hot wallet is the one you use to connect to sites, mint things, and do whatever else. Because of this, you want to keep almost nothing in it. If you want to mint an NFT, transfer in only whatever crypto is required to complete that transaction. That way if something bad happens, it’s not devastating. Once your mint is complete, transfer out the NFT to a colder wallet.

  A cold wallet is essentially your vault. This is where you store your Mona Lisas. These are the NFTs (or whatever else) that you plan to own for the long-term. The only transactions with this wallet should be to move things in and out of it. You should never connect it to any sites/services, even if they’re reputable ones. Once you do that, it’s no longer a cold wallet. It’s now a warmer wallet.

  A warm wallet lives somewhere in between. You connect it to sites/services that you trust, and you use it to hold NFTs that you might be looking to sell in the short-term (to give just one use-case example). In my case, brandondonnelly.eth is my warm wallet. It’s where I mint the NFT photography that nobody ever buys.

  I realize that all of this probably sounds convoluted, especially to those who are unfamiliar with this space. But in today’s world, if you want to be crypto literate, you need to take things like this into consideration. My NFTs might be finally totally worthless, but I love my growing art collection and I like it being on ice in a vault.

  2023.09.26

• Nobody wants to collect NFTs anymore

  

  Back when everyone wanted to buy and trade crypto, my friend Evgeny started a marketplace for NFT photography called Sloika. This, to me, felt like an obviously good idea, both in general and for him specifically. Evgeny had previously cofounded the photo company 500px, and so Sloika was initially conceived of as 500px, but for web3. This is a good story.

  I have collected a number of photos via Sloika and, in general, I continue to regularly collect NFTs. Of course today, relatively few people want to trade and collect NFTs. The market is largely dead. What is obvious is that there was a giant NFT bubble and it popped in 2022, along with some other asset bubbles.

  But does this necessarily mean that NFTs and NFT art are bad ideas?

  When I think of bubbles I often think of something that Fred Wilson wrote on his blog. His argument was that bubbles tend to be directionally right; it’s the magnitude that we get wrong. A good example of this is the dot com bubble. Yes, it was a massive bubble. But it was directionally right. The internet was going to matter — a lot it turns out.

  Even if we go back to “tulip mania” during the Dutch Golden Age — which is often brought up as the pinnacle of dumb bubbles — one could argue that it was still directionally right. Today, tulips remain the most sold flower in the US. So we still love them; we just got a little too excited back in the 17the century.

  When it comes to NFT art, I like to think in terms of these questions:

  • Will humans continue to appreciate art? (Seems obvious.)
  • Will humans continue to want to collect things? (This is arguably a fundamental human instinct.)
  • Will provenance and authenticity continue to matter in art? (Blockchain technologies are really good at this.)

  Perhaps the only question that remains is whether people will want to collect digital art. But even this feels fairly obvious to me. The challenge, I think, is that the display side of the market needs to be more built out. Because alongside the instinct to collect things is the instinct to display them. That’s why NFTs initially took off as profile pics on social media.

  So as a start, I think more, better, and cheaper displays would be a big help. There’s something very different about projecting an NFT in your living room versus having it live in a crypto wallet on your phone or computer. You need to really experience it, just as you would a conventional piece of art. And like all art, context matters.

  I haven’t yet invested in a dedicated NFT display, but I plan to do that in the near future. And I’m looking forward to displaying my collection of NFTs, including the one at the top of this post. It’s a drone shot of the west side of Toronto in the middle of winter, and it was gifted to me by Evgeny. Thank you for that. It’s an honor to have it as part of my art collection.

  Photo: Six Bling (via SuperRare)

  2023.09.07

• Self-driving cars, plugs, and electrical grids

  This is going to be old news to many of you, but this past week I experienced Tesla’s self-driving capabilities for the first time. And I must say that I was very impressed. It did everything from navigate stop-and-go city traffic to navigate lane changes on the highway. Overall, it makes my five-year old car feel pretty quaint. The software is that much more sophisticated and one has to assume that all of this autonomy stuff will only get significantly better as LIDAR becomes common place in production vehicles.

  In other car news, North America appears to be narrowing in on an EV charging plug standard. It is Tesla’s plug, but it is now appropriately called the North American Charging Standard (NACS) plug. And last week, Electrify America — which is the largest non-Tesla, fast-charging network in the US — announced that it would be adding the plug to its network. The company also happens to be owned by Volkswagen. So big and important companies seem to be coalescing around this plug type.

  Lastly for today, here’s a post by Fred Wilson talking about (1) bi-directional EV charging, (2) the apartment buildings he and his wife are developing, and (3) our ongoing transformation away from a centralized electrical grid to a decentralized one. What he talks about in his post is something that we are actually piloting in a few of Slate’s office buildings right now. It’s still early days, but I think it’s really exciting. Tech seems to be enabling a broader shift toward decentralization. And in the case of our electrical grid, it’s going to lead to a more resilient one.

  2023.07.03

• Bikes and property in Paris

  I have been reading Fred Wilson’s blog for over a decade now (and he has been blogging for almost two decades). A lot of the time it is about venture capital and tech, but similar to what I do here, it can be about almost anything. Today he wrote about the two weeks that he just spent in Paris with his wife (the Gotham Gal). And the post covers everything from real estate to relationship advice. But here are two points that will be particularly relevant to what we usually talk about around here:

  • Paris has done an excellent job of prioritizing cycling and building a ton of new lanes over the last number of years. We know this. But another good point that Fred makes is that Paris has allowed competition in their micro-mobility ecosystem. It started with Velib, but now you can also use Dott and Lime. The last time I was in Paris I used Lime bikes and scooters, mostly because I already had the app and because they were everywhere. Competition is good and Toronto should probably allow the same. Our bike share system — specifically the mobile app — is incredibly cumbersome to use, and the last time I checked most of the e-bikes were consistently out of service. Let’s see if someone else can do a better job. We should, of course, also add scooters to the mix while we’re at it.
  • Next, Fred describes Paris’ real estate market as being more “stable.” And by this he means that, for whatever reason, values and rents seem to be more moderated. This has some benefits. Restaurants and other retail businesses seem to stick around for decades, whereas according to Fred, “it’s hard to find a shopping street in Manhattan that doesn’t have multiple vacant stores”. I’m not exactly sure why this is the case in Paris (assuming it is). I don’t believe that they have any sort of vacant store tax. Though they do have a tax on unoccupied homes. Maybe this is just what happens when you’re a little less capitalistic. (This is me deliberately avoiding the term socialism.)

  If any of you have more insight into the real estate market in Paris, I would love to hear from you in the comment section below.

  2022.11.13