Surf Report: Castles in the air

Issue 20: 02.07.2021 (Free Version)

INTRODUCTION
February 7, 2021

“If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.” —Henry David Thoreau

It’s tough to know ahead of time what the right order of operations is.

With any ambitious undertaking it’s easy to be swept up in a grand vision so much that it becomes discouraging and eventually feels unattainable. On the other hand, aiming low and chipping away at reasonable milestones is discouragement of another sort, making progress feel slow and the realistic goal not worthy of the grind.

So which is it? Build up reasonably or build down from a moonshot?

Like most either/or situations I suspect this is a false dichotomy, and that the answer is: neither.

I was reminded of this in light of this week’s news that Amazon founder and CEO (and for awhile there richest man in the world) Jeff Bezos is stepping down from his post after 25 years. Do you think he set out to build The Everything Store right from the start, or did he choose to build a bookstore and only revised his ambitions over time? Bezos already had a successful career on Wall Street when he founded the company, so why would he walk away from it to sell books on the internet?

A clip of Bezos from 1997 gives us the answer:

“Three years ago I was in New York City working for a quantitative hedge fund when I came across the startling statistic the web usage was growing at 2,300% a year, so I decided I would try and find a business plan that made sense in the context of that growth, and I picked books as the first best product to sell online.

Books were great as the first best, because books are incredibly unusual in one respect: and that is that there are more items in the book category than there are items in any other category by far.”

The revealing word here is ‘first.’ He never set out to create a bookstore. He set out to create the store of the internet, and the first department would be books.

Bezos was no dummy. He recognized that the internet was uniquely suited to service the long tail of unmet consumer demands and hard-to-find niche interests, and that books had the longest tail of all. No single traditional store could ever have all the books in the world for sale, but the internet could. So rather than trying to be 10x better than the competition, he instead opted to begin with no competition at all.

If Bezos is any indication: you invent castles in the air with your mind, but you build them up from the ground with your hands. In that order.

Until next time,

Mark


“It is not only what we do, but also what we do not do, for which we are accountable.” —Molière

Breaking 🌊

I’m trying something new with this news section, based on some feedback and to help keep these emails from being overly long. Should also make it easier to skim & save. If you do/don’t like it or have any other feedback you can always let me know by replying to this email 🤙

💸 After a 15-hour session, just before dawn on Friday, VP Kamala Harris cast her first tiebreaking vote in the Senate to advance the pandemic relief package. Totaling $1.9 trillion, it would be one of the largest stimulus packages in American history.

Bank of England has advised banks to begin preparations for negative interest rates if needed. You know, just in case.

👋 Amazon Founder/CEO Jeff Bezos has stepped down to an advisory role after holding the post since 1997. Most agree he’s leaving in his Prime.1

🌐 A draft bill in Nevada to establish “Innovation Zones” would let tech companies with large areas of land form governments with the same authority as counties.

🚀 SpaceX announces first mission to space with all-civilian crew. The four-person expedition is expected to launch into orbit sometime in the fourth quarter of this year.

🥃🚗 Uber agrees to buy alcohol delivery service Drizly for $1.1 billion.

🎮 Epic Games Store users claimed 749 million free games last year
17
, and Epic confirmed it’ll keep giving away games in 20212, and Sony sold 4.5M PlayStation 5 consoles during its November launch, making it the best quarter in PlayStation history.

💱 Ross Stevens, Founder/CEO of Stone Ridge Asset Management & Executive Chairman of the New York Digital Investment Group (NYDIG), estimates $25 billion in institutional bitcoin assets by the end of 2021.


From The Tweetbox 🐦

People HATE being sold to, but LOVE being understood. Remember that.

I've trained myself to actively seek out books and ideas that "The Authorities" (whenever and whoever they were) were so frightened of they banned and often burned their work. Very high ROI.

1/ Yesterday’s closure of Stadia’s internal studios and business realignment shuttered Google’s cloud gaming platform strategy. In this thread I'll explain why.

Today’s young people with some money to invest are interested in so many more things than I was in my 20s… Advisors who just focus on these, and software to track and manage, may do very well.


For The Pros 😎


Worthwhile Reads ☕️

Ads Don't Work That Way,” by Kevin Simler.

It’s a long read but in many ways a master class and a shaking up of what you thought you knew about advertising, focusing on the idea of ‘cultural imprinting.’

“Brands build trust over time, and not just trust in the quality of their product, but trust that they won't change their brand messaging too sharply or too quickly.”


Insights 💡

This is a low-key famous breakdown of famed investor Ray Dalio’s understanding of long-term/short-term debt cycles, narrated by Ray himself. I mentioned it to someone recently who hadn’t heard of it and they said it was an absolute game-changer. And it is! Tony Robbins even plugs it in his book Money: Master the Game. Worth much more than the 30 minutes it takes to watch it. Just click the image below, or head to https://economicprinciples.org/


Check This Out 👀

Zora, a digital marketplace to buy, sell and trade limited-edition goods. Dynamic pricing means that people who buy a popular item early are able to sell it back at a profit before even getting the item—a reward for being ahead of the cultural curve, turning curation into real-world value.


Here’s An Idea 💡

"Distanced Expertise," via the WSJ

Whether to fix cars or apply makeup, companies hamstrung by the pandemic found immediate uses for the distanced expertise AR technology can provide.


PNG 🖼

Markets Are Eating the World.


“The beginnings of all things are small.” —Cicero

Groms 🐣

Tyrone V. Ross Jr. (who I was inspired by and wrote about in Issue 16) has recently launched LearnToMoney.org, with a mission to educate young people on how to play (and win) the money game. I couldn’t love this more.


Don’t tell me what you think, tell me what you have in your portfolio.” —Nassim Nicholas Taleb

Drop Ins 🏄

My latest investments & trades
Buy & Hold Investments (I will hold these forever)

This section is only available for contributing subscribers. If you’d like to trade and invest along with me, consider one of the paid tiers!

Swing Trades (1-3 month time horizon)

This section is only available for contributing subscribers. If you’d like to trade and invest along with me, consider one of the paid tiers!

Barrels 🎯

Portfolio Highlights
  • Winning Trade of the Week: $ZYNE, which was off to the races basically overnight and is still going. Scaled out some profits for a quick 39.5 % return


Pods & Schools 🐬🐠

This episode of Infinite Loops with guest Tim Urban (writer behind Wait But Why) was my favorite pod of the week by far. Topics include The Story of Us, managing and taming our biases, flat earthers and how we’re no different, & overcoming our outdated mental hardware.

Jim O’Shaughnessy: “I started, in my writing, no longer saying, ‘I believe…’ but rather, ‘I have a model that posits this:’ When you make that shift internally what happens is you release the ego from having to cling to that belief.”

Here’s a great discussion with Saifedean Ammous about Gold vs. “The Bitcoin Standard’, now hosted for free on RealVision.com. Even if you’re not interested in Bitcoin it covers a lot of principles around deflation vs. inflation and the history of the evolution of money.

📺 The must-watch stream of the week, with over 1000 corporate treasurers in attendance: Michael Saylor Interviews NYDIG Chair Ross Stevens on Bitcoin -MicroStrategy Conference: Feb 3 2021


Tools of the Trade ⚒

Products I use to make money

Wealthfront. ~25% of my portfolio is in Wealthfront, which since 2016 has netted me a time-weighted return of ~53% (~50% money-weighted) at the time of this writing, all while harvesting tax losses like the pros do.

Use this special link to get your first $5,000 managed for free: https://wlth.fr/2ephpyb

StockCharts. I easily make back the small monthly subscription fee with the superpowers it gives me.

Carrd. Use this link or referral code 892PYX69 to start your own web empire.


Disclaimer

Nothing in this email is intended to serve as financial advice. Do your own research.

1

Sorry, I’m sorry

2

“Barring some totally unpredictable shift in tide in the next 10 years, Steam will always have bigger numbers than the Epic Games Store. But its solid performance in 2020 proves that there’s room in the industry for another competitor to keep growing. And it seems to validate that the ways Epic’s strategy differs from Valve’s (making deals for timed-exclusive games, paying developers more per game purchase)”