Finance Startups

Day 181 and Thesis Trends

As I was putting down scratch notes for Chaotic.Capital’s thesis yesterday on the types of businesses we like I thought I’d do a bit more stream of consciousness writing to discuss some of the mega-trends that I see driving returns over the next decade.

Embedded Functionality

We think more and more businesses will be born of the embedded functionality inside protocol layers or data sets. Many protocols have functionality embedded across different layers of utility and functionality. For instance, the new consumer bank is an API at heart. The protocol layer is the API and the embedded functionality is the financial services layers enabled through the protocol or application layer. Need another example. Retail sales data and demand trends give rise to fashion retailers. Think of StitchFix, the clothing brand is the embedded functionality of its aggregate trend, recommendation and demand data set.

Unbundling Trust

Trust based networks rule businesses like insurance, retail banking, law and financing. But what if trust was unbundled from institutional nexuses of power. What if we built trust from value creation instead of value extraction. DeFi wants to build permission-less trust based on a protocol. Its entirely possible we bundle trust back into the wisdom of crowds and markets. Wall Street Bets is an aggregate source of unbundled trust. Figuring out what layers can be stripped away for more efficiency and what layers we need for safety and peace of mind are unsolved problems.

Data Ingestion Is Value Creation. The more capacity we have for data collection the more demand we will have for data ingestion and processing. While we can say sure businesses rely on the protocol and data and that unbundles trust, that’s not the full picture. We will need people who make sense of the chaos for the muggles. Ordered systems give the impression of serendipity for their users (an introduction on a social network, a recommendation for a loan, an outfit customized for you) but the work required to intake and order the data to create value for users is a big hairy problem. And there is a lot money to be made in those. Centralization may come at this layer especially in user experience.

Flexible Asset Weighting.

We are also interested in businesses that know where they stand with capital needs for their business. If you are executional business you need a thin layer of assets to succeed. To quote Roy Bahat “hot swap” startups are executional businesses. A slim horizontal physical layer to take advantage of low financing costs means return on equity is greater for these asset light businesses. If it’s deep innovation then you can be asset heavy. We like those just fine too. But knowing where you stand and anchoring your business case on your asset weighting can give you an edge. That lets you be capabilities based and find opportunities, particularly as debt as is in a commoditization cycle.

All of this is to say we are thinking across a number of system level problems to unearth startups that will give flexibility to individuals, organizations, industries and hopefully the entire economy. Incumbents won’t see who is coming to beat them because they won’t recognize the new predators. They prioritize value systems that at won’t remain true as systemic chaos erodes inefficient businesses and institutions.

Finance Startups

Day 180 and Thesis

As I see more pitches and work with more entrepreneurs I am finding it helpful to have my thoughts codified on paper. That way if you are interested in working with me you have a chance to vet me. Knowing what I want to see in a deal and what just isn’t a fit saves entrepreneurs time. So I’m going to doodle a bit on what I do and don’t like.

Chaotic.Capital has 4 key investment areas. But they are really just different levels of working with an uncertain future: at the individual level, the organization level, the systems level and the planetary level.

  • Personal Flexibility is critical when it’s harder to make long term lifestyle decisions (housing, health, children) – how do we allow people to make those decisions without anchoring themselves to place or time horizons that limit optionality. Businesses like marketplaces, preparedness, personal safety, service & product exchanges, health tech, longevity, and alternative credentials.
  • Organizational Agility is a differentiator for businesses in rapidly changing landscapes, so we invest in software and tooling that provides leverage for small teams to have a bigger impact or bigger teams to act more discretely and independently. Businesses like software as a service, cloud infrastructure, collaboration & coordination software, DAOS (decentralized autonomous organizations), automation software, and memetic and organizational aids.
  • Systemic Arbitrage opportunities are even greater in chaos. Working through systems level chaos helps individual and organizations protect against cascade and systemic collapse risk, mitigate political chaos, regulatory uncertainty, memetic crowd and mob behaviors, or medical chaos, just to name a few. Businesses like intelligence, decentralized finance tooling and exchanges, cryptocurrencies, bots & analytics.
  • Climate or planetary risk is an existential risk that is already fucking with our world – we like companies mitigate the chaos of climate change while profiting on the risk. Businesses like mobility, insurance, green tech.

What I don’t like to hear are pitches for things that are tangentially related or a forced connection. Sometimes folks will try to get us excited about a problem they’ve already solved and are scaling but we are looking for longer time horizons. There are plenty of amazing startups that have great returns but aren’t a fit for us. We really do want the crazy weird stuff that is going to take a while.

We don’t need you to know where you are going. We want to see ten or twenty year out timelines. What would life look like without school? How about a world where we didn’t pay taxes based on our geographic location. How about a world where we automate how our attention is allocated. Or a world where our financial power isn’t rooted through centralized trusted powers. We want 1000x leverage on change.

I’ll write more later this week about the types of companies I don’t want to invest in. Not because I don’t like them but because they just don’t match what this fund is meant to do.

Emotional Work

Day 179 and Invasion

As a child I felt that I wasn’t always wanted. Whether or not this is true is somewhat beside the point. What we feel as children lingers in our emotional profile for the rest of our lives. The flip side of feeling unwanted for me is feeling invaded when someone wants me. Ironic right? Talk about a “careful what you wish for” situation.

To overcome feeling unwanted as a child I developed the capacity to draw attention. Despite wanting nothing more than to be wanted, now as an adult I can negatively when people do in fact want me. It’s a perverse double edged belief system born out of a child’s logic. Because I so badly wanted to feel wanted for so long the hurt and fear of that experience lingers.

I’ve written in some detail about the complex relationship I have with being wanted and the expectations I feel when I am the center of someone’s attention. It’s not an emotional pattern I’ve cleared yet. But I’m trying to notice how it impacts my life. Because if you get what you want you also need to want what you get. I want to be learn to be comfortable being wanted.

If I don’t break this pattern I’ll he caught in the same cycle of attraction and repulsion for the rest of my life. Because I’m not actually feeling invaded in many cases. I am feeling the memory of the hurt of being unwanted. Rather than accept the closeness I said I wanted it feels safer to push it away. But that’s no way to live. We can all break our childhood trauma. So I’ll keep at it.

Aesthetics Emotional Work

Day 178 and Looking So Normal

On the surface I’m basic. But my aesthetics are lying to you. I’m a fucking weirdo. But I don’t look the part. I think this gives people a bit of cognitive dissonance. I’ve noticed it’s particularly acute in more personal social or familial settings. Because I look like a pretty regular white woman with a pretty regular life, folks assume I have pretty regular social mores. They want me to hew to what normal people do because that’s less cognitive overhead for them. I look normal so I should be normal. No reason their pattern recognition should be failing them so badly.

So when they discover I’m incredibly introverted, very reluctant to socialize, and do not prioritize any traditional social or family structures it’s confusing. “But she looks so normal!” It’s like if I had any of the aesthetics of a social outlier or a recognizable community outside of cultural norms, this would all make sense. Heck even if I had short hair and some tattoos it would all track. Their pattern recognition would work.

“Oh she’s counter cultural” or maybe “she is kind of a hippie” or even “ slutty weirdo” would all make more sense. But I don’t look as weird as I am. Why don’t her aesthetics match her lifestyle? Instead they see a kind of regular brunette who wears Ann Taylor. I kind of like conservative clothing. This doesn’t mean I’m a conservative person. I had a terrific boyfriend who had a thing for women in suits because he liked the idea of a woman who was into power. It was a bit of a letdown to learn that I’m a bit submissive.

The reason this is even a problem is because humans want to be understood. According to Psychology Today we all require a bit of external validation to feel like our reality lines up with others. Feeling like we are understood apparently even makes us happier. I often struggle to feel like I’m understood. I worry I’ll be judged for not living up to other people’s standards because they need to extend more cognitive effort to understand me. I often don’t feel like I have a right to ask for that from people.

The thing is I could make this all a lot easier on myself. If I telegraphed more of my idiosyncrasies visually I wouldn’t get put into the normal bucket. Then I wouldn’t disappoint people when they learn I don’t meet expectations for middle of the bell curve socially. If I talked about my sex life or my preference for alternative family structures I’d need to match that against some leather or kinks or hell even some bright lipstick or it’s just going to seem fucking weird.

Nobody registers me as an outlier no matter how much I say it out loud. But I have to be honest I’m just not that interested in making it easier for folks with my looks. If you want to get to know me I’m an open book. The only catch is you have to get to know me.

Aesthetics Internet Culture

Day 177 and Unaesthetic

Aesthetics are opinions. And opinions are totalizing. I’ve been on some bullshit recently about how taste is totalitarian. Mostly because I care about how aesthetics turn into politics. But aesthetics are almost always personal choices (except our biology which is another discussion entirely) which gives them wide latitude to be all encompassing.

That aesthetics are choices matters. We choose to articulate our aesthetics. If our tools have the capacity to articulate an aesthetic vision with clarity and fidelity it’s often been the choice of artists to render their vision closely to what is in their mind’s eye. Or sometimes we say fuck it, who cares, there is virtue going in the other way. I’d argue that is unaesthetic.

A deliberate decision to eschew aesthetics is literally the definition of unaesthetic. It’s not an insult. It’s just a choice. If we can tell something is a deliberate choice to pursue an aesthetic that is unappealing, unpopular, ugly or otherwise thumbing its nose its nose at beauty that is unaesthetic. Which is its own aesthetic. And it’s fine for that to be your taste but it is a taste.

Normative standards and boundaries are powerful. So rejecting them has become own own artistic and culturally pursuit. It’s become so popular “punk is dead” has become a layered insult.

Modernity has been on about how the search for universals of beauty is both hegemonic and homogenizing for most of the last century. That means everyone has to have the same standard and because we have the same standards we all tend to look alike. Think Stepford Wives or South Korean beauty pageant queens.

Understanding and telegraphing cultural norms of beauty is generally considered crucial for social competence and often for participation in any group. Think of how awkward it is to wear a suit into a startup or not wearing any makeup for sorority rush.

Sometimes I think beauty and aesthetic standards wish they were as totalitarian as technology. Protocols are literally limitations on what can and cannot be done. 8Bit and pixel art were originally protocol standards. What could be rendered wasn’t a limit of imagination but our tool sets. That’s why we obsessed on rendering and fidelity for so much of the history of computing. We’d say shit like “look how crisp” and we’d mean it.

That’s not true anymore. If anything we’ve got issues with too much fidelity. The uncanny valley of hyper reality upsets our mind because it’s hyper real. Aesthetics now has to cope with the ability to render even the most elaborate vision to exact reality. Now that’s a cool problem. But if you want to sell pixel art, call it punk, and tell me it’s actually a cool commentary on protocol limits that’s fine. But I’m going to call it unaesthetic. But it’s not worth being insulted about.

Unpopular take but crypto punks are unaesthetic
Emotional Work Startups

Day 176 and Bias Against Action

There is a phrase popular amongst early stage startups meant to encourage faster problem solving; bias for action. It gained popularity as one of Amazon’s core principles.

Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.

Generally speaking this is a straight forward positive principle that individuals and organizations benefit from. It’s easy to become paralyzed by overthinking. The average person overweight risk and organizations are even more prone to this. Action is good when faced with external friction. And startups in particular can be killed by friction. I think a bias towards action is default good. I regularly use this methodology to make decisions for my life. In the face of uncertainty acting is often better than not.

But I’m learning that my tendency to “just do it” has some downsides. If I’m always trying to fit in more action, more decisions, more outcomes, then I can easily burn myself out. I can waste precious energy by always saying “yes” let’s do it. My enthusiasm can and does get the best of me. In other words, I’ve got a bias towards action that needs to be balanced out.

It’s hard for me to emotionally recognize that I need more of a bias against action. But I’m not saddled with the traditional issues that make a bias towards action necessary. I don’t struggle with willpower. I don’t struggle with meeting my commitments (short of being physically unable to work say 80 hour work weeks). Hell, I just decided on January first I would write something every day no matter what, and here I am almost halfway through my first year. When I commit to taking an action I generally mean it. Sometimes to my detriment given my workaholism.

So I’m reassessing when I personally need a bias towards action. Maybe I need to have a bias towards inaction so I do not let my enthusiasm for getting shit done set me back. I need to have a bias towards rest. I need to have a bias towards naps. I’d encourage you to ask yourself which side of the issue you come down on. Maybe it’s a bias towards action. That’s great! Do more and faster. But it’s also possible you are like me. Less can be more.


Day 175 and Paternalism

Taste is totalitarian. Movements seeking aesthetic dominance hold sway with a paternalistic sneering. Anytime you’ve felt excluded because of dress code or manners you’ve experienced a form of aesthetic exclusion. It can be worse than country club snobbery though. Imagine the indignity of preppy credentialism from supporters of Brett Kavanaugh. How dare you question the character of the graduates of our finest institutions.

It isn’t so different from the pearl clutching of “good taste” of outlets like Anna Wintour’s Vogue. Oh my you are wearing cargo shirts? Heavens! That very tight tube top just isn’t done. You must conform to the standards of good taste.

Divergence from the mean is bad form, the preferred insult of Peter Pan’s nemesis Captain Hook. Sure he was a pirate but the man has good manners and grubby children thumbing their noses at authority is a classic adult frustration.

I suspect that “bad form” underlies much of the criticism of post modernism. I came across an article in The New Statesmen about the paranoia around “pomophobia” amongst post modern academics. The thesis is that the critics are basic bitches missing the point that postmodernism is all aesthetics. It was never about politics. I happen to agree.

It’s entirely possible to recognize it’s critical theory ,and it’s cousin post modernism, are entirely aesthetic movements not a political or social one. And taste, being totalitarian, can and does overwhelm opposition. So the screeching panic mongers at Tucker Carlson may have a point. Just not the one they think. That’s why scandal and hand wringing are so interwoven into criticism of critical theory.

Taste is meant to be inscrutable. We cannot question it. If anyone can question “bad form” or good taste then why do we need our social betters? It would be absolute anarchy! But then again I thought punk was dead. Maybe not!

Emotional Work Startups

Day 174 and Easy for You

I’m not normally the type that reads business books. I’m pretty disinterested in management techniques and organizational structures because I suck at it. And I bring up sucking at MBA style topics because as I was doomscrolling I came across an older article from the Harvard Business Review. The headline was “why do talented people not play to their strengths?” I clicked.

It begins with fairly standard case study chit chat about the NFL and I’ll admit my eyes glazed over. Why had I bothered to click when I’m so not the business school type. And then I spotted a nugget that rang so true I swear I’ve got a little tinnitus from the “ding ding ding” bell that rang in my head.

We often undervalue what we inherently do well.

I’ve written in the past about my struggle to accept things that come easy to me. I have had a self limiting belief about the necessity of struggle and it’s inherent morality. Maybe I’m rationalizing pain and hardship because emotionally I need there to be a “why” for having fought through a chronic illness. Surely suffering through and taming a spinal disease has made me a better person right? Or maybe shit just happens.

And maybe I’ve been downplaying all of the many super power and talents I have. I’ve spent so much time grieving the loss of the hard things like working long hours and always hustling that I’ve been ignoring that i can win doing things that feel easy. Because they might just be easy for me but not easy for everyone. Quoting the article.

Often our “superpowers” are things we do effortlessly, almost reflexively, like breathing. When a boss identifies these talents and asks you to do something that uses your superpower, you may think, “But that’s so easy. It’s too easy.” It may feel that your boss doesn’t trust you to take on a more challenging assignment or otherwise doesn’t value you — because you don’t value your innate talents as much as you do the skills that have been hard-won.

Working long hours were always hard for me. I fought to stay up late because I would find myself fatigued and in pain. I really valued that because it hurt me. It was hard for me. Whereas I never valued being at being ahead on news and trends, or my facility at gaining media coverage, or how easy I found it to spot when the market was going to move. I distrust the skills I can do effortlessly.

But I realize now that those are valuable skills. It makes me a good investor, especially in private markets where seeing where the market is going and alerting people to potential is very well remunerated. So next time you scoff at a compliment from somewhere on you work ask yourself if what you did is easy or just easy for you. You might be surprised to find you have a superpower you never noticed.

Chronic Disease Emotional Work

Day 173 and Waves

Humans crave linear narratives. We do something. It has an effect. We see an improvement. I don’t know where we got this logic of clear cause and effect and simple logic arcs, because it doesn’t seem like it matches reality. Horizontal thinking has a much longer history. In antiquity no one insisted on a 3 act play. We wandered through the Odyssey.

Maybe this is why we impose routines and rhythms on our daily lives. I personally require a lot of external routines to tame my physical body. Most of my days are dedicated to simple repeatable patterns. It gives me strength. Humans look to seasons and the festivals we have labeled on top of changes. We plan our lives according the angle of the sun.

But I’m skeptical that the pattern recognition my mind lays out for me of linearity is real. Life is fully of squiggly lines. Biology resists straight lines like unpredictability is some kind of dogma. We spent all pandemic resisting exponential growth because it just didn’t make sense to our little minds.

I get lost in cause and effect every day. The insistence of my emotions that because I did “good” responsible things (like workout, meditate and therapy) means I should feel good afterwards is part of my linear bias. But it’s not true that because I was good in my activities that I should feel good afterwards. Sometimes I don’t. I can have a perfect day and feel like shit. Because fuck it cause and effect isn’t that clean. And everything is multi-causal anyways.

Life comes in waves. It builds and pulls back and then crests and crashes. I’m sure we can map some of it but I’m getting much more comfortable simply riding the waves of kids as they come in.

Emotional Work

Day 172 and 3 People

I recently heard in my therapy practice that there are three distinct people being juggled inside of you at any given moment. The person you want others to see you as. The person others see you as. And finally the person you actually are. The hope is that you find a way to be at peace with all three.

I am not at all congruent on this matter. I’m not even sure I can articulate the distance between who I am and external reality. In my head, I’m introverted, cerebral and not very interested in other people. In my head I prefer to keep to myself.

That doesn’t match at all with the person who others see as cultivating and thriving on attention. The person who enjoys spending hours on social media doesn’t seem introverted. I think that’s the person others see me as. They see me as an extrovert who intuitively gets attention.

And that sure as shit doesn’t match the person that is smart, hard working and well connected. Thats the person I want to be seen as. That’s the “brand” I think I should have to be respectable in the eyes of others. I want to be seen as the person you turn to who can help you solve a problem. I want to be seen as the person you turn to if you need an introduction. And then I want the people I send introductions to to trust that I will only send them the best people.

Of course, the truth of the matter is I am all these people. I am an introverted cerebral person that likes to spend time alone with her thoughts. I am also the person who thrives on attention and knows how to cultivate it. And I am a hard working person who you can count on to make good introductions and steward your social capital well.

So next time you get worried that the world thinks you are someone completely different from who you see yourself as just remember you are 3 people. You are different. You are the person you want others to see you as. You are the person others see you as. And finally you are also the person you actually are. It’s all you. And it’s wonderful.