Either from grift or gross, gross negligence the core thesis has been shown to be wrong. I don’t even know if there is much to learn from it. When the music is playing you have to dance, so not much improvement on DD (for that stage investor, mostly).

I suppose the most surprising thing is that the underlying thesis—that SBF and co came from high-end TradFi and so would’ve avoided the Finance 101 lessons that many in crypto have had to relearn (e.g., ALMs, hidden leverage, bank runs, etc.)—was wrong.

Had I wanted to place a bet on crypto—I didn’t and still don’t—I would’ve strongly considered FTX. Layer in that at that point in the Capital Cycle, you presumably only had 1-2 days before being left out of the round. I’m not terribly surprised the level of DD looks “dumb” now.

As much as Sequoia had published on EA, the bigger motivation was that he fit the archetype/story of what the high-end of VC/growth was predisposed to believe would “win” crypto. I don’t dunk on them for this. I don’t do privates, thankfully.

SBF said all the “right” things on crypto itself—calling out yield farming as deposit costs > asset yield, never really pushing the low-prob. outcome of a decentralized new fin. system, etc.

I could care less about politics/hot takes on Elon Re TWTR, but I am absolutely *fascinated* to learn just ~how~ lean these companies can be run if you had everyone work as if every employee was from OG TG.

$DLO

🎯

Paradoxically, that Americans don’t have as widespread concern with inflation propagates *the* inflation.

But, you can do *a lot* to limit this damage. Explaining clearly to investors why you believe others are wrong to slow opex and providing incremental data points to your progress goes a *long* way.

2) Your multiple is a function of many things—including alternative sources of investor capital. If you are going to have fwd EPS decline, then investors will increasingly look to fund other players and your multiple will likely fall. Again, that’s fine! This is the bet!

It’s a difference in timing and a difference in expectations on what fwd EPS could be 3-5 years from today. *This is the entire bet*. I can’t stress this enough. The. Entire. Bet. Don’t take it lightly as most will get it wrong. It is not easy. But it is fine to try earnestly!

Your argument is that the dollars even further into the future will be much, much higher than they’d be if you cut opex today, and so when that becomes much more clear as your approach that future point, fwd EPS will be much, much higher than they would otherwise.

then stock price down (all else equal). More dollars of future EPS near-term are mathematically worth more than those in the future.

revenue growth may not be the same and opex growth isn’t being reduced to compensate. That is fine! That is explicitly the bet you are making—that your opex today will put you in position in 3-5 years that will enviable (mkt share, talent density, etc.). If your fwd EPS down,

You running your business for “long-term” and your stock being down doesn’t mean the mkt *isn’t* think long-term. There are two impacts and they often difficult to disaggregate cleanly. 1) mathematically, the mkt is doing the math on your fwd EPS and saying it’s lower because

That being said, if you do intend to invest at the same pace/more, do so with clarity and confidence. Inform shareholders why you believe it is the right bet. Acknowledge that while your fwd EPS *and* multiple may get whacked, you can limit the pain on the multiple being credible

recession will be bad. These are hard decisions; to say otherwise is disrespectful of the wide, wide distribution of outcomes that may come true over the next 12-36 months.

If you are a self-financed (or have raised enough), public, and intend to invest for the “long-term”—that’s fine! It is quite literally your prerogative. As with anything, there is nuance and trade-offs. Not every opex cut will be prudent and not every acceleration into…

Great distillation of what the mkt has been trying to inform corporates over last 6-9 months. An addendum: wish I could put together to prove this true quantitatively, but has definitely felt that corporates with more ownership have been faster to respond prudently.