“…the line between public and private markets continues to blur.”
The Tao of Fred Wilson
// In writing this newsletter, my affinity for Fred Wilson is pretty transparent as I’ve commandeered some of his ideas (and also my tag line). Coming from an industry that has an oversupply of bravado and ego, Wilson always maintains an even keel along with a pragmatic disposition. Going into 2021 one of my goals is to try to emulate his philosophy, or rather, replicate his Tao. Not that he’s stated this, but from what I gather, it’s the principle of having your head in the clouds with your feet on the ground.
Just like I’ve stolen from him, perhaps Wilson has started to steal from me. (I kid, I can’t a hold candle). However, in his blog this week he wrote about the Innovation in Capital Markets, and similar to the bizarro world I wrote about a couple of weeks ago, he also talks of new markets operating in a “parallel universe.” His commentary revolves around blockchain and crypto technologies and how they could apply to traditional markets. Wilson states…
‘Right now these markets are operating as parallel universes, but I don’t think that will be the case forever. It is fairly simple to tokenize equity securities and trade the tokenized version in the crypto markets. That is not really happening just yet, but I expect that it will in the not too distant future.’
When people talk about “liquid” private markets, maybe it is blockchain technology that brings this to fruition. I don’t know. But, what I do know, is, I’m going to continue to follow Wilson’s lead as I believe ‘this is the way.’
Related…Germany Paves Way for Electronic Securities to Reap Blockchain Fruits (Reuters)
Platform to Know
// Along the same lines as above, a company I have started to pay more attention to is tZERO.
According to tZERO, they are a technology firm with the goal of democratizing access to private capital markets. The company offers institutional-grade solutions for issuers looking to digitize their cap table and investors who are seeking to invest and trade private securities on an SEC-regulated platform, the tZERO alternative trading system. Their differentiator is that they’re currently the only platform that brings ongoing liquidity to private markets, which is typically only seen in public markets. The platform operates an order management system with associated tickers and bid/ask prices, as opposed to most of its competitors who offer one-off liquidity through a bulletin-board approach.
tZERO is starting to gain some momentum so it will be interesting to watch if they are able to capitalize on the innovation in capital markets that Wilson alludes to.
Trend to Keep An Eye On
// As the private markets evolve, you’re starting to see a stronger push for employees to have more control of their equity. The CEO’s of both EquityZen and Forge have talked about how shareholder liquidity could become more of a ‘benefit’ for employees. To me, this should be a layup. There’s no reason it can’t happen in a structured and ordered fashion that placates all parties.
With that said, Axios wrote an article on Pipe, a marketplace for revenue-based lending, which has started to let its employees sell some of their equity each year through company-managed secondary sales on the AngelList platform. Since publicly debuting its services for startup secondary sales in September, AngelList is now adding features that let companies automate these on a recurring basis.
“‘I actually think that at a growth stage, companies need to start thinking like public companies,’ Pipe co-founder and CEO Harry Hurst tells Axios of the need to provide more employee liquidity opportunities.”
// On his podcast, Panic With Friends, Howard Lindzon talks with Rick Heitzmann of FirstMark Capital where they discuss ‘public & private markets, VC investing and the anti-portfolio.’
SPACs pulling VC’s into the public markets.
When to get out…early-stage, late-stage, SPAC.
Bullish on open-source.
Two sectors Heitzmann is excited about.
So. Damn. Smart.
// I’ve written before about snippets of information and the value of brevity so I was excited to see the release of Colossus from Patrick O’Shaughnessy. It’s a “destination to learn about business building and investing” where you can find all of his podcasts (and other content), but more importantly, it enables the user to search for certain words or concepts.
Right now I read way too many newsletters and have a backlog of podcasts I most likely won’t get to. With something like this, I don’t necessarily have to listen to an hour podcast to find what I’m looking for, but now can go directly to the topic I might be researching. Data from voice conversations, and then also transcriptions, is a business model that is going to start to become very valuable.
Private & Public News From the Week
Bitcoin Exchange Coinbase Files for Initial Public Offering (WSJ)
StockX Valued at $2.8 Billion in Latest Funding Round (WSJ)
Public Raises $65M Series C For Social Investment Network (Crunchbase)
Tribe Capital, Founded by Social Capital Alum, Plan SPAC (YahooFinance)
Bitcoin Whale Emerges With $1 Billion, Alan Howard’s Backing (Bloomberg)
UiPath Files For IPO, Could Become One of NYC’s Biggest Tech Companies (CNBC)
JPMorgan Offers ‘You Only Live Once’ Trade to Bet on Ark ETFs (Bloomberg)
Wish slides after opening below IPO price in market debut (CNBC)
Sizzling Tech IPO Market Leaves Investors Befuddled (WSJ)
High-Frequency Traders Push Closer to Light Speed With Cutting-Edge Cables (WSJ)
// Longer Reads / Videos
Investors Predict Which Markets Will Boom in 2021 (Fortune)
What Comes After Smartphones? (Benedict Evans)
The New Consumer and Coefficient Capital released Consumer Trends 2021
Charlie Munger: CalTech interview (Compounding Knowledge)
Making Sense of Sky-High Stock Prices (Project Syndicate)
Semiconductors: The Ultimate Bargaining Chip (TheKnowledgeProject)
The Tao of Chris Farley
// Like Fred Wilson, I view Chris Farley as another sage. Looking back on his career he spewed a lot of knowledge.
There are a plethora of “teachings” from Farley, like Matt Foley’s motivational speech for instance, but it’s specifically the punchline from this skit that I hope to employ. It highlights Farley’s unique interview skills where he eventually pries Sir Paul McCartney to explain how “the more you give, the more you get”… “Awesome!”
Similar to what I said about copying Wilson, I’m going to use the same tact with Farley. For me, going into 2021, Wilson will be the yin to Farley’s yang.
// Happy Holidays, see you in a few weeks.
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.