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.
…You seem to have confused the value of liquidity in an artificially scarce market with the work founders, creators, engineers and others who take on the majority of the risk do to actually create wealth at its source.
It’s great that a handful of VCs provide life support during the years when cold start capital was tight and scarce in high risk crypto markets in the broader context of continuous debasing of traditional markets, even while most VCs take credit for the work of a very few. But we have to ask ourselves why the industry needed life support in the first place.
Some VCs have sometimes played an important role when capital has been choked off by a lack of primary production in the market and other artificial factors, but don’t confuse the luck of a bull market when everyone looks like a genius with you taking personal credit for creating the industry by lending money.
Money lending isn’t evil, but it doesn’t build anything. How people use money does.
Almost everyone has missed the biggest story of the last five years. The breakaway from dependence on money lending and speculative bets to self sovereign networks building wealth at its source through primary production.
The ungarnished truth is that VCs aren’t capitalists.
They don’t deal in capital, but rather in “paper” that’s meant to represent increasingly obtuse abstractions far away from the capital. They don’t make investments either. Roll that one around in your mind for a bit.
They counterfeit Collateralized Debt Obligations under a variety of flavors, instruments, and names, stack them in complex squares and the like, and swap them as if they were the same as real capital. But really –– almost exactly in the same way as neural net bot swarms and high frequency automation algorithms are near total black boxes –– they aren’t real capital at all.
In fact, this is what has built the entire US and global economy for the past seven decades or more. Financial instruments like CDOs, CDO2, other debt swaps and perpetual financing mechanisms remain stuck within infinite loops, abstracting away from principal capital as they squeeze just enough positional asymmetry from the gaps between space-time-interest and light speed delay to keep systemic collapse at bay.
The problem with these unchecked financial contraptions is that they are being used by co-opted institutions and regulators to run might as well be translucent mass counterfeiting operations that then are over leveraged as false collateral to a scale where they make up the majority of financial assets in the market and underpin the goldilocks illusion that their flimsy fine tuning will always keep conditions just right to avoid catastrophe. And of course, only they are fit to balance the bears.
As tensions build in these braided strands and the market continues to debase from any fundamentals, decay rates accelerate frayed agreements until carrying capacity snaps.
Halting errors and local buffer overflows breed rampant, long detached from any memory of original value.
They continue to excuse and get away with these theatrics, pretending the open secret of fake capital placed in ever more complicated three card monte buckets is simply the only realistic option. They claim that fake capital simply has no choice but to be the closest thing to real capital that we have, fake investment that just stretches out multilateral debt agreements over time, chips placed on a number or colour for a roulette wheel are the only kind of investment that pays out in the paper money of this macroeconomic model. They insist that they are not going to be the only one left holding the bag, naive enough to walk out on the insincere debauchery that all of their buddies and bros continue to burn paper on.
But, as real capital, real investment and real liquidity are unleashed into a long thirsty market they need to ask themselves who the fuck is going to believe them anymore. We all have better options, not at some future point, but now, and have for a while.
If you are young VC looking for the real exits from these distorted markets you don’t need to find a 12 step program, just take the leverage and reputation that you have built up over the years, whether from the fictional economy or not, and get busy buying and selling and making genuine capital infrastructure investments into the new economic model of web3 where primary sources of wealth are finally accessible to all.
This primary capital is produced from direct peer 2 peer increases in innovation between creators, outproducing any secondary market hype. Token records of interaction make liquidity abundant at every point of production.
Side note: to any VCs out there, the nature of the deals have changed and this is the alpha on where to source the most liquid, groundbreaking and abundant deal flow in primary markets— seek out the places, happenings, communities and projects that are being sought after by other totally genuine primary creators, engineers, artists, models, fashion designers, musicians and more. If you think of it like exquisite culinary experiences, you want to go to the places where the chef’s eat. It might not look anything like what you expect from the usual no reservations theatrics.
As for a good a place to start as any, there is always demand for the most robust drivers of culture.
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.