Secondary Thoughts #29

If You Build (an Exchange), They Will Come

“…the line between public and private markets continues to blur.”

“Blurring of Lines”

// In discussing the relationship between the private and public markets you’ll often hear the phrase “the blurring of lines” (which I’ve tried to commandeer for this newsletter.) When did people start saying this? I have no idea, but Fred Wilson (who I hold as the gold standard) has been talking about this for a while. If I recall, he’s written about the concept from around 2013(ish), but here’s what he wrote in 2015. However, he actually attributes the idea to his partner Albert Wegner.

So what does Wegner mean by the “blurring of lines?” Wilson quoting Wegner writes:

  • “‘there is no reason why there is such a bright line between public and private markets, we should have one market where the more a company discloses, the more liquid their security becomes’”…“His point was that the only thing that really matters is how much information a company is willing to disclose.”

Another question you could ask is, what does this look like?

Right now you see a before and after picture of a company’s stock price. Pre-IPO and then Post-IPO.

To demonstrate, here’s Lemonade Insurance Pre-IPO. (data from public sources and TradingView.)

Here’s LMND Post-IPO.

And here’s what they look like side-by-side, which you never see. But still, there remains a distinct delineation between these two graphs.

If/when this new market comes to fruition. And, if/when this type of trading becomes more “liquid and transparent,” perhaps the stock charts start to look like this. As more investors come downstream and the floodgates of retail open up, the time between trades will decrease while the frequency of trading will increase. It could be a while until it reaches this point, but we’re definitely trending in this direction.

 (Side question: what technical analysis can you extract from looking at this way?)

If You Build It, They Will Come…You Would Hope

// The Long Term Stock Exchange (LTSE) makes sense in theory, but having companies join the game is going to be a challenge. It could be argued they need just one big-time company to list on the exchange and then others will appear out of the cornfield. With that said, the LTSE might have just bagged Shoeless Joe Jackson.

Airbnb To Weigh 2021 Listing on Silicon Valley Exchange (Bloomberg)

  • “In addition to its traditional IPO, the home rental startup is weighing a dual listing on the Long-Term Stock Exchange, founded by “The Lean Startup” author Eric Ries, the people said. A final decision hasn’t been made and a move would come next year at the earliest.”

Content to Know

// If you like to follow the markets, the “up and coming” media platform that is starting to become a go-to news source is Real Vision. Their perspective comes mostly from a macro investor point of view but runs the gamut across all trading, economics, and market news. They are constantly pushing out good content and have started to get a lot of well-known investors to appear on the site. As an example, here is a rare interview with Dmitry Balyasny, CEO and founder of Balyasny Asset Management.

Currently, their trial is only $1 for the first three months if you want to try it out (this is not an add.) Now might be a good time because this past week they teased their upcoming interviews titled “Paradigm Shift: Investment Ideas for a World in Flux” featuring Jim Chanos, Mike Green, Chamath Palihapitiya, Hugh Hendry, Kyle Bass, Jeremy Grantham, Jim Grant, William White, and many other legends of the investment world.

Private & Public News From the Week

// Private

  • Forge Completes Merger with SharesPost (BusinessWire)

  • Spearhead Launches $100M Fourth Fund to Transform Founders Into Top-Notch VC Investors (TechCrunch)

  • DoorDash, Roblox, Wish and Airbnb All Expected to Go Public Before Year’s End (CNBC)

  • DoorDash Releases Filing to Go Public, Reports $149 Million in Losses on Revenue of $1.9 Billion Through September (CNBC)

  • Instacart Taps Goldman Sachs to Lead IPO at $30 Billion Valuation (CNBC)

// Public

  • JPMorgan Asset Cuts 60/40 Outlook, Backs Hunt for Alternatives (Bloomberg)

  • Ackman Places New Bet Against Corporate Credit (FT)

  • SoftBank Racks Up $3.7 Billion in Losses at Tech Stock Trading Unit (FT)

  • Masayoshi Son Again Pulled SoftBank From the Brink. This Time He Had Help (WSJ)

  • Ray Dalio talks his book, he’s bullish on China, not so much on Bitcoin.

More stories from the week on Pipeline.

People Creating Cool Things

// As I’ve mentioned before, I’m a big fan of brevity and the people and products that save you time.

Podcast Notes just partnered with Bitcast. Bitcast is a way to clip and then share segments from podcasts that you find interesting. After fumbling around the app I was able to create and share this 0:40 sec snippet from Brad Gerstner’s quote I mentioned last week.

// Along the same lines, Shane Parrish of Farnam Street writes about “unique and timeless ideas and insight to help you in life and business.” In his newsletter he breaks out topics from his interviews into short quotes and videos.

Here’s a 3:13 video of Chamath Palihapitiya talking about “gaining a personal edge.”


// Answering my question from a couple of weeks ago…looks like Vol was a sell.

  • VIX’s Decline Triggers a How-Low-Can-It-Go Debate (Bloomberg)

// Thanks.

This newsletter is created and authored by Bryce Tolman and is published and provided for informational purposes only. The information in the newsletter constitutes the Author’s own opinions. None of the information contained in the newsletter constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Author is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the newsletter may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.