Letters to a Young VC: Letter Four
January 13th, 2022

A collection of letters encompassing simple insights and recognition of foundational shifts that any bright minds trapped within the old norms of a VC mindset can use to break free, whether they are just starting their journey or reflecting back on what they wish someone had told them in their early days.

From scavengers to prospectors, is web2 rehab possible?

TLDR; probably not. You can go home now.

But, for those still here, let’s see what the prospects are.

One of the biggest points of contention from web3 to web2, from NFTs to traditional real estate bubbles like the one that led directly into the GFC, is whether there’s anything of real value beyond speculation on matrioshka ponzis gift wrapped for the next greater fool until it all comes tumbling down.

What the killer was in 2008 was not that the real estate market was plagued with the subprime dodgy loans, the whole crisis was actually fueled not even by crazy trader speculation (Most were already majority short the madness of the market since 2006). No, the crisis was sparked and entertained by the regulators, and beyond that by the US government. The statement from Chuck Prince in July 2007 speaks more truth to this, where actually, they all already knew that the AAA tranches would be junk in 6 months time and they saw the certainty of the snowballing losses from subprime loans and others. It was all realised and spoken over a lunch between the Wall Street CEO convene, the FED chairman, the OCC chairman and the SEC chairman. And then, Chuck Prince went on to say that they warned that the markets could not go on like this, but were told that as long as those in power remain in power, then those below have to dance. So the ponzi continued. No questions asked.

Weirdly enough, not a single movie, documentary or other widely distributed account mentions these key fundamentals of the crisis.

So, when we look at the Chinese real estate market today and the imploding collapse of this bubble, and recognise the complete level of collusion in all global markets, is it really the case that the Chinese property bubble bursting will fuel another global economic collapse without consent from the government/s?

Well, yes, and no, and, it’s not even the right question.

A better question is what are we failing to see?

At a time when the broad outlines and basic concept of black swans has been generally digested and understood by a relatively mainstream and conventional audience, real systemic risks and completely invisible unknowns with catastrophic asymmetric potential must be very different from what we currently expect.

Ultimately, anything within the scope of conceptualisation disqualifies the event or action from being classified as a black swan. And, we should be very concerned about that, because we are almost certainly missing something really important.

To find a way forward, let’s take a look at the most obvious devil’s bargain bin thinking and a palate cleansing Kobayashi Maru.

  1. Are the predominant prognosticators, regulators, and capital accumulators of the global economic mainline really in the driver’s seat of the mechanisms they believe they’ve built? Is it even possible for there to be such a thing? Or is the tightly managed and controlled machine model economy a Victorian religious fantasy with dangerous consequences?
  2. Do we understand the meaning, indicators, behaviors, and impact of China correctly enough? Are we looking at the right things in the right way?
  3. Is the rise of decentralised fabrication and direct self-sovereign exchange far bigger than we anticipate?

The conflict between primary and secondary, and real versus fake, economic activity is causing a significant asymmetric drift. A disconnect between what models predict should be happening and what is actually happening. A race to concentrate inflationary and fantasy gains spreads through secondary markets chasing speculative bets made more for status and tribal affiliation signals than for any belief in the creation and circulation of primary sources of wealth.

With the behavior of small networks of people mostly much more predictable than markets at large, it’s not very surprising when the signs start to flash red yet again and the race to the exits picks up faster than steam or the latest meme coins.

Miming thought leadership and serious entrepreneurship just for stockpiling debt with eyes on the exits, bribing the gatekeepers to close the door after the next greater fool gets through, and a flight to safety all seem like the main codependent drivers of this economic theatre.

A real flight to safety would be smarter about where to invest funds while the music is still playing, literally where on the globe to support the build out of decentralised infrastructure, and all of the rest, in order to facilitate more emergent primary wealth generation and circulation activity from the massively multiplayer, self-sovereign edges of every network.

It takes a deeply naive yet smug and solipsistic view –– a fixed mindset view or even a religious millenarian, messianic, end of times kind of view –– to believe in the machine model economy and its downstream implications.

With that in mind, why even mention China here?

It is a symbol, with dramatic real world impact.

It is a clear example that defines so many governments and organizations which wish they could operate more like them –– of the impulse to control every corner of social, economic, and cultural activity in the name of pride, of ego, of protection from the evil “other” of the day, of historic complaints, of in group vs out group zero sum races to annihilate one another, of fear of a people being free to think, speak, live, and trade freely. And it is the most extreme sample we have today from among the largest of global economies of what might happen when systemic shocks and stresses pile up to the point where they are actively ignored alongside the nothing being done in response to increasingly brazen militant aggression.

We all believe the myths we tell about ourselves, particularly when they are delivered by increasingly sloppy hyperspeed digital injection devices and shared social content. It’s an information immune system war of attrition, and we’re all losing badly. Step away from the fragile glass model of the managed machine economy and the excessive need to believe we know enough for systems of top down control to do anything other than trigger yet again a smash the emergency glass crisis. There’s an alternative to the devil’s bargain choice between becoming ever more numb to humanity or simping ever greater degrees of corporate state control.

Decentralised fabrication, social coordination, and self-sovereign incentives.

Free from control or capture by bad actors of all sizes, the new means of production makes the fake old debates outdated at best. No one cares anymore about which closed system of central control you rep with team spirit and tacky uniforms. The new factory creates keys for every pocket, and we can each own every step of the fabrication process. Why compete over your leftover scraps when we can create the primary sources of capital ourselves, and scale up through direct token governed social coordination?

Moving from scavenger to prospector.

As secondary markets are remodeled in service to newly decentralised primary sources of economic activity, those who relied on the greater fool must now find new means to entertain themselves and provide value.

Time for a re-entry strategy.

From Wall St. to VC to Chinese real estate, and everything in between, the days of nested ponzi debt traps and exit oriented yacht clubs are numbered. Impossible to maintain the central control con when falling to zero in the face of competition for capital, attention, and retention of the people you depend on to do your work for you.

Staking is the new striking.

It was once so illegal to strike they would beat our ancestors bloody –– half, fully, and double dead in the streets.

Now, some descendants of the strikers that have become the new wannabe “they” want to make staking more illegal still –– because it threatens their undeserved total control over our personal economic decisions and ability to create wealth from primary methods of production and free exchange.

If it walks like a duck, quacks like a duck, floats like a duck, is it a witch?

As far as Wall Street, the SEC under the current Chairman, and some really confused web2 tech bro vcs are concerned, everyone who isn't them is a witch. And, everything is a security if it protects their incumbency, it protects their racket.

But we know better than to take anyone who looks rare and happens to have opinions of their own and throw them into the water to see if they float or drown. In case you don't already know this story, the trick of what happened when people were accused of being witches was often being put to the drowning test— if they floated they were a witch and put to death, if they drowned they were not a witch but died anyway. Oops.

It’s only right in the present day to update the Howie Test with lessons from the Monty Python Witch Test. If it floats… is it a security?

All of the secondary market activity in the world is fantastic but it isn't ultimately what matters.

Mechanisms that encode open access to decentralized production for primary economic activity are the new gold standard for staking –– with full recognition of its radical roots in the right to strike so many fought and died for generations ago.

It’s only right that we call out the farce and threats from those who would pretend otherwise.

Any value brought in from sales of NFTs minted through this article will be used for building out the F₃M Realm treasury, which will eventually be governed and coordinated by the DAO, furthering to decentralise the web3 fashion capital stack.

F₃Manifesto (F₃M) is a rally flag for the entire web3 fashion movement. It’s a label and realm that is built for so much than just the digital and physical threads and collections that it will spin up and release.

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