fintechjunkie
@fintechjunkie
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Fintech specialist. Co-Founder @QEDInvestors . 6X Forbes Midas List. I post A LOT of fintech and VC content. Following me is great. Sharing my content is better!
Virginia
Joined April 2015
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Pinned Tweet
The Three Body Problem on Netflix is amazing (the books are even better)!
Watching it reminded me that I wrote something 2 years ago with the same title about how the VC ecosystem is changing.
FWIW - Everything in the paper is coming true (and accelerating).
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It didn’t take me long in the crypto world to realize that it’s an ecosystem being fueled by the “House Money Effect”.
Having spent countless hours in the world of high stakes poker I recognized it instantly and now can’t stop seeing it everywhere I look. A short 🧵👇
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Six questions you should ask yourself about yourself if you want to accomplish great things in life. 🧵👇
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1/26: It’s hard to produce a 3X+
#VC
fund. It’s much harder to do this consistently. Our first 4 funds are mature enough to know where they’ll end up and all of them will handily beat this benchmark. I reviewed our portfolio this morning and jotted down 12 notes. Shared:
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Last week I took the red pill.
Here are a few of my “week 1 observations” from my early steps into the land of crypto/web3. 🧵👇
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1/30: There’s a supply/demand imbalance in the startup world (too much capital/not enough great companies). This means it’s a great time to be a Founder if you have an epic idea, but how do you know if your idea is any good? I asked some amazing VCs and here’s their advice:
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So while there are a lot of interesting innovations taking place in crypto, I can’t help but hope that we never experience a crypto winter or NFT wipeout that creates tens of thousands of “broken” people. I’ve seen it happen to a few people in my life and it isn’t fun to watch.
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Last night I lost my dad. He was 93 and lived a full life.
I’m not a very emotional person but I am good at writing down my thoughts, so this is a small tribute to my dad and an attempt at sharing how he shaped who I am today. 👇👇👇
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1/25: We’re witnessing one of the most exciting periods in VC history. Funding is flowing freely, valuations are stratospheric and gigantic exits have become the norm. As a VC this should feel great, but does it? Maybe not. What follows is a rant that bears my soul on the topic:
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Being new to crypto means making costly mistakes.
I’m not scared to share 11 of the mistakes I’ve made along the way.
Please cry with me: 🧵👇
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For those of you unfamiliar with the House Money Effect, it’s a theory used to explain the tendency of investors to take on a much greater risk profile when reinvesting profit earned through investing than they would from money earned in other ways (i.e. - wages).
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After spending a few weeks in cryptoland I feel like I’m back in 2005 trying to talk an 18-year old millionaire into opening an IRA.
The House Money Effect is at play but magnified to a never-before-seen level in the history of humanity due to the magnitude of the winnings.
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The estimates I’ve seen imply that there are over 100,000 crypto millionaires. Of this, almost 10,000 are worth at least $10MM. The impact of the House Money Effect on the ecosystem with this much House Money at work is mind boggling but it explains a lot.
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1/19: The most disturbing trend I’m seeing in the early stage fintech ecosystem is the raising of 2-3 back-to-back rounds with minimal progress in-between. Unpacked:
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What I worry about is seeing a repeat of the psychological damage that “riches to rags” can cause. When I was part of the poker scene, I had heartbreaking conversations with poker players who lost everything in their quest to stay on top. It’s damage that some never recover from.
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Yesterday I tweeted an unpopular opinion that deserves unpacking.
Valuations are up. Unicorns are getting birthed faster than ever before. Multiples have hit all-time peaks. New investors are aggressively entering the VC ecosystem.
Who’s to blame? What does it mean? Unpacked:
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It's free to be nice. Being mean can have consequences.
I just told my team to stand down on diligence with a startup because the Founder insulted me unnecessarily in an email.
It wasn't what he said. It was how he said it. It was intended to harm.
Life's too short. Good luck.
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I've been mapping out what it would take to cut the major payments networks out of transactions (Visa, MC, etc) and replace them with DeFi rails. It's very complex due to chargebacks, merchant underwriting, etc. but I have some solid ideas.
Would it be interesting to post?
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It’s been fun learning in public. I could write hundreds of tweets each week about my crypto journey. Instead, I’ll do my best to be topical and synthesize my learnings.
Today’s topics: DAOs, NFTs and Lending
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Second, they became numb to the value of money. A $10,000 watch was “1 buy-in at a $50/$100 table”. A $1000 steak or a $2000 pair of shoes was mere rounding error. They were living lives disassociated from reality unless you started with the belief that money was infinite.
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I took the red pill 8 months ago and I’m no longer a skeptic that something is brewing in web3.
But many of my observations have been critical and quite negative.
It’s time to add one more observation to the list that’s at the heart of many of the problems in the space. 🧵👇
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1/27: We’ve seen a few $10B+ lending companies emerge from the fintech ecosystem in the past few years. We’ve also seen a few fintech lenders meltdown in the public markets.
Are lending companies VC backable? Thoughts plus a framework to answer this question👇
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There’s a lot of mis-information being shared about VC performance and how it translates into LP returns.
There’s also a lack of understanding about how the VC ecosystem broke the LP ecosystem over the past few years and why this matters A LOT.
Here’s what’s going on:🧵👇
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After years of sitting on the sidelines, I finally decided to take the red pill.
“Week 2” put me on the steepest part of any learning curve I’ve experienced in decades.
Here are a few of my simplified observations, early conclusions and emerging frameworks:
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I've had more conversations with VC investors in 2020 than in any year previous (less travel = more time). Guess what the biggest trait is that differentiates the great investors from the rest.
Great investors have ZERO FOMO. They build conviction and live with their decisions.
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Every business has a core function. Some businesses make athletic shoes while others make wide screen televisions.
What’s become clear over the past week is that many people don’t understand what Banks actually do.
A simplified explanation if you're interested:🧵👇
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In the early days of online poker (2003-2006), anyone with a semblance of talent was able to turn hundreds of dollars into hundreds of thousands of dollars playing online. The player pool was deep and 95%+ of the players were really bad. Picking up their money was easy.
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QED Investors has invested in 150+ startups over 14 years and consistently delivered outstanding results. Today, we announced a new $1B+ vehicle to continue on this journey.
In honor of this milestone, here are my 14 biggest insights from 14 years at QED: 👇🧵
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The past week was brutal for anyone holding stocks or crypto. Everything corrected and then corrected more. 💥😵💫💥
Some voices are shouting “buy the dip” while others are predicting the beginning of “a crypto winter”.
My framework for thinking about “corrections”: 🧵👇
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"There are only two ways to make money in business. One is to bundle and the other is to unbundle."
A thread on this powerful but very mis-understood concept:
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1/19: I wish the 50-year old me could go back and give some “tough love” advice to the younger me. I’m not sure I would have listened, but maybe someone out there in the
#startup
ecosystem will.
Here are 8 pieces of hard earned wisdom that might serve you well:
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1/11: I was in a Board meeting not too long ago where the CEO and one of the company’s Board members obviously weren’t seeing eye to eye. It was awkward and avoidable if each person realized how they were behaving. The situation reminded me of a well-known parable:
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Many high stakes players found ways to gamble on everything in life because it became part of their identity. This effect was magnified in an echo chamber because they spent every waking moment together playing poker, studying poker, or partying with their poker fortunes.
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Making decisions when faced with incomplete information is what every Entrepreneur has to contend with on a daily basis. The same is true for Investors.
Curious what role Intuition plays? Curious how Intuition is misunderstood and misused? Read on: 🧵👇
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There were a few hundred players who started with small deposits and quickly amassed high six figure/low seven figure bankrolls. Did they set up nest eggs and save for a rainy day? Did they plan for retirement? Hell no!
Guess what two things happened?
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First, they had to find ways to chase the dragon. Playing at nosebleed stakes was common because the lower stakes couldn’t quickly move the needle on their bankrolls. And playing at stratospheric levels differentiated them from the general poker community which was an ego rush.
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True wisdom comes in many forms and I’ve found that one of the most underrated sources of wisdom is children’s books. The best are pure, simple and true.
What follows are personal learnings based on quotes from one of the greatest prophets of all time --- A. A. Milne
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1/30: Many
#Startup
CEOs struggle to redefine their own role as their company scales. I’ve been asked by startup CEOs many times: “What should my job be?” What follows is a framework I’ve used to guide various CEOs through the evolution from a “Small Team CEO” to a “Proper CEO”:
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1/21: Every early stage startup pitch looks the same at a foundational level. This means that the analysis of every early stage startup also looks similar (especially true in
#venturecapital
and
#fintech
). Unpacked:
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Many people are comparing today’s market correction to the dot-com collapse in 2000.🤯
I’ve talked to numerous Investors, LPs and Founders who successfully navigated the dot-com collapse and are still around today.
Great nuggets of wisdom they shared: 🧵👇
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1/28: VCs hear thousands of pitches in their careers but only say “yes” a few dozen times. Getting their attention in the initial pitch meeting is important because you won’t get a second meeting without the first going well. Here are 10 tips to help your pitch game:
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Turning down an AI pitch as we speak.
Asking for $50MM at a $500MM valuation where year 1 is "research and development".
Get real Founders. Get real.
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VCs didn’t know what fintech was until giants emerged like Stripe, Credit Karma and NuBank. Then every VC wanted fintech exposure.
But these “fintech tourists” have exited the building.
What follows is advice 8 VCs who stayed the course are giving their fintech companies.🧵👇
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1/31: The biggest question coming out of my recent tweet thread about the evaluation of startups is: “How important is the startup’s distribution strategy in your diligence work?” The answer is: “Damn important because the business needs customers to exist!” Unpacked:
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As promised - more red pill insights (Week 4)!
My crypto journey continues with an unpacking of what it would take to replace a network-based transaction (Visa/MC) with DeFi rails.
Spoiler: Moving money is the easy part. Detailed🧵👇
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1/17: In honor of the
@RobinhoodApp
S-1 I thought I’d share a conversation I had a few weeks ago with a friend who used Robinhood as his on-ramp into the trading world.
Brace yourselves. It was a fun conversation but pretty eye opening in lots of ways.
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The most depressing thing about the number of new Billionaires who have been minted in the current bull run is that none of them have decided to become Batman.
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1/19: I asked a number of institutional LPs that invest in VC funds what they thought about the recent rise in exit valuations and if the resulting VC results were going to impact their view of managers and allocations.
You might be surprised about what they said! Unpacked:
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I can already tell it’s going to be that kind of week.
Coffee, you’re on the bench.
Alcohol, suit up.
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What your favorite stock says about you:
$AAPL: I like earnings
$TSLA: I invest in the future
$AMC: I think the stock market is a game
$GME: I eat paste
Fill in the blank:
$HOOD: I .............
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Do you want to know a secret about Board meetings?
The secret: They aren’t unique!
Seasoned Board Members discover that Board meetings fall into very distinct categories.
What follows is a classification framework and a few insightful nuggets (including a soundtrack).
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There’s a major structural flaw in how the VC ecosystem works that we don’t talk about enough.
It’s a flaw that creates confusion and bad advice for Founders.
And it’s a flaw that makes no sense when you dissect it. 🧵👇
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Are you responsible for leading a stressed-out and overworked team?
Do you want to become a better Leader and create some breathing room? 🧵👇
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As a Founder, one of the most important things you do every day is allocate people and capital because they don’t allocate themselves.🤯
Becoming a world class allocator can kink the curve on outcomes so building this skill matters…..a lot!
A few thoughts: 🧵👇
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1/17: When a
#startup
that I’m advising wants to raise money in the near future, I always ask them the question: “Are there any asterisks?” By this I mean, are there any counter-factual results that will have to be explained in diligence. This matters A LOT. A 🧵👇
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4/25: My definition of grit consists of two major components.
Vision: A vision of a future state that one desperately wants to become real.
Control: An unwavering belief that one can take actions that will result in the vision materializing
Vision + Control = Grit
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1/25: It’s been 6-months since I posted a thread about the trend of early stage companies raising of 2-3 back-to-back rounds with minimal progress in-between. I asked some amazing VCs whether or not anything has changed since. They think it’s gotten worse. Their thoughts:
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1/39: The only way to describe the public markets’ appetite for new Logos is “insatiable”. But why? SPACs vs. IPOs? I’m no public markets expert by any stretch of the imagination but I’m not going to let that stop me from weighing in on what I think is going on. Unpacked:
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1/2: There are few jobs as misunderstood as those of the first ten employees at a Startup. Their job descriptions don't match the reality of what they actually do on a day-to-day basis.
Every day something unexpected shows up and they just have to deal with it.
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There has been and always will be two competing Venture Capital investment frameworks. The lexicon I've adopted: Investors are either Fundamentalists or Revolutionaries.
Fundamentalists believe that what’s possible is dictated by the dynamics of an ecosystem. Building in stages…
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Unpopular opinion:
Crazy funding rounds and hyperbolic narratives crafted by Founders have created FOMO everywhere in the VC ecosystem.
FOMO fuels the crazy funding rounds and rewards Founders with hyperbolic narratives.
Pragmatic advice isn't valuable in this virtuous cycle.
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Over 100 startups in our portfolio have refactored their operating plans in the past year.
Some have become profitable with as little as $5MM of revenue while others have found ways to do more with less.
Can you guess the four most common levers they pulled?🧵👇
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OMG. I just got off a call with
@SyntribosStable
and my mind is blown!
Nobody is prepared for what's coming in the near, medium and long term.
Fun is coming to the
@quirkiesnft
's project in ways that the NFT space hasn't seen before. 🤯🤯🤯
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There are a lot of average to poor VC track records out there and bad pattern recognition/not doing the hard work is a common driver of poor performance.
When I first became an "Operator turned Investor" almost 16 years ago, I thought that making good investment decisions…
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1/32: Building a
#StartUp
business has similarities to a spacecraft crashing down on an unknown planet. I talk to Founders about this all the time. Unpacked:
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It used to be common for a startup to de-risk in distinct phases that aligned with capital raises.
Discipline disappeared and the number of rounds a typical startup raised exploded into “alphabet soup”.
The market is returning to “normal”. Here’s what you need to know: 🧵👇
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Hey
@quirkiesnft
family. How did I do with the
#Quirklings
reveal and snipe session? And I'm far from done in case you're wondering.....
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17/26: Insight 8: Investments based on anything other than table pounding conviction sucked. Insider rounds that extended runway sucked. Investments justified based on their deal structures sucked. Investments based on “the price reflects the flaws” sucked.
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I was told by a very wise and trusted advisor that I should focus on doing the things that make me happy and that riches would follow.
So I’m Tweeting and drinking Bourbon.
Now I wait.....
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2/25: Question 1: Can you make a promise to yourself and keep it?
Doing difficult things takes time and rarely is the path to success smooth and easy. A truism in life is that quitting is a learned skill so you should ask yourself how sacrosanct a promise is once you make it.
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Most successful startups find product-market fit by doing a single thing better or cheaper than other available options. But most startups struggle to crack the code on additional products.
Here are 5 common fallacies to avoid if you want to expand beyond a wedge product:
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Many VCs and Founders have canonized bad frameworks for how startups should be built and what traction needs to be achieved to raise downstream capital.
Founders crave tangible milestones around metrics like ARR by stage, growth rates, burn multiples, margin profiles,…
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Unpopular Opinion: Most VC Investors overpay for their early-stage Investments
Framework: Early-stage VC Investments are illiquid, out-of-the-money options that are commonly mispriced
Implication: Most VCs aren’t getting paid for the risk they’re taking on
Curious? 🧵👇
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1/12: I’ve been asked a lot why there’s so much variance on “valuations relative to traction”. Some companies are getting 100X ARR multiples while others are getting 2X. There’s no simple answer but a big driver is if a company can demonstrate “Multiplicative Momentum”.
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Everyone knows the speed at which VC deals are being done has accelerated to a dizzying pace.
While this can be good for some Founders, it’s magnifying a flaw in the VC ecosystem.
A few thoughts on “Bad Pattern Recognition” and how it’s creating have and have-nots: 🧵👇
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1/42: What the heck is going on with the
#fintech
ecosystem’s obsession with Neo-Banks? Do they actually make sense in the US? Traditional Bankers say “absolutely not”. I say “they can”. Unpacked:
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MANY startups are living with bad decisions they made when cheap capital flowed freely.
Massive value destruction was driven by Founders playing Hungry Hungry Hippo, trying to accumulate as much revenue as possible.
A few thoughts on how to learn from their mistakes:🧵👇
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🚨Alert!🚨
There’s a lot of fanfare surrounding the lending volume flowing through DeFi rails.
Something interesting is happening: Almost $50B has been locked in DeFi lending vaults REALLY quickly.
Get your popcorn out...Red Pill "Week 5" thoughts on DeFi lending: 🧵👇
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1/14: I hate to be the bearer of bad news, but in the
#startup
world, if it doesn’t feel like you’re constantly running then your business is probably about to die. The same is true at highly successful bigger companies. Let’s start with an analogy:
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As a VC, I churn through 1000+ emails/week so you'd think I've seen everything.
Today I received a message titled:
"An appreciation, an apology and a secret"
It came after I said "no" to a Founder. It was self-reflective, kind, and made me want to help the Founder succeed.
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Strong suggestion to Founders and VCs:
Take a few hours and study the $Billion+ public companies in whatever space you care about.
You’ll learn to appreciate what it takes to earn and keep a unicorn valuation. And you’ll realize that fundamentals matter while narratives don’t.
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Anyone else experiencing this?
My entire "for you" feed is full of random accounts with viral videos. My feed has collapsed to people doing stupid things, animals doing stupid things, and shock-and-awe videos.
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Another day another meltdown in the crypto space. Smarter minds than mine are unpacking the details of what’s happened and what comes next.
But I thought it would be worth explaining “the issue behind the issue” and when your money might not be safe!!!! 🧵👇
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I'm very proud of what we've accomplished at
@QEDInvestors
over the past 15 years but I'm even more excited about what's to come!
🚨🚨
We are humbled, fortunate and excited to share that we have closed $925 million in new funds - Fund VIII and Growth II - that will allow us to invest in the best
#fintech
companies globally.
Thanks
@business
and
@Katie_Roof
for covering our story.
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A disturbing change to society over the past few decades is the number of people addicted to “unearned dopamine”.
Having spent countless hours with high stakes poker players and professional day-traders, I’ve seen the fallout. It can be ugly!
A few thoughts:🧵👇
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Web2 companies start with product. Web3 companies start with community.
Why building community first is a powerful strategy: 🧵👇
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I encountered a new “ah ha moment” in Week 5 of my Red Pill journey.
Once I internalized it I couldn’t help but look at everything through this new lens. Short🧵👇
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Last week was pretty crazy. I knew what was coming first thing Monday morning and the week didn’t disappoint.
A few thoughts on how the VC ecosystem is quickly evolving:
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I was in a
@loserclubreborn
Spaces and a speaker said something that I've heard over and over in the web3 world:
"As adults, we've been transformed into what we needed to become vs what we wanted to become.
Web3 is allowing us to believe in our dreams again."
Inspirational!
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