Tag: Commodity

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Finance

Day 163 and Favors

Some professional arenas are driven by the favor trading of social capital.

I’ve got a gut sense that this is true on the two poles of commodity products and services. The middle ground has a lot more nuance and is thus less susceptible to favor trading, as it’s clear what drives price and value of service. With complete commodities (identical replacement value) and the non-fungible (not interchangeable or replaceable) there are not simple price or value anchors. This makes it more likely your purchase or choice will be driven by the perception of social capital. We will do favors for those with higher status or by the recommendation of those we trust.

Interchangeable commodity products trade on price, which means favors from across the ecosystem act as the grease in otherwise equivalent deals. Think suppliers of everything from lumber to textiles. If the price is the same maybe you buy from someone you like who took you out to dinner. Or you buy because that person has a good reputation in the community so you use the person your neighbor recommended. This seems intuitively true of commodity services like accounting, plumbing or roofing. Within certain bounds of quality, a 2×4 or a roofing bid should fall into the same bucket so it’s ok to pick whoever feels best. That’s why it’s susceptible to favors and social capital exchange.

On the other end, extremely differentiated non commodity products are equally prone to being tipped by favors. Think professional services like public relations that are very hard to compare. A publicist with favors to trade gets their clients the best coverage. A reporter who has a lot of sources can trade them in to get a quote for a story. Venture capital is one of the least commodified types of capital, a founder will pick one firm over another not just based on the price of a term sheet but whether others recommend them. Reputation matters a lot. Social capital is what gets a deal done, a nudge to consider someone will push you into a cap table.

Not convinced? Think about a product that exists in the middle like clothing from a brand you know but isn’t connected to you in any other way. This is the least susceptible to favor trading or the pressures of social capital.

We can intuit a dress made from quality fabrics and a recognizable brand has a set cost because the brand of the designer is not interchangeable (maybe with others in their category but Prada isn’t the same as Old Navy) and the cost of the fabric is transparent. A silk blouse can’t ever get too cheap on a one off basis. Both the brand and the fabrics set the bounds of the prices.

I didn’t really have a point in writing this other than being curious about what impacts how we pick what to purchase and what sets the bounds of our pricing. We are in a narrative cycle around inflation and work shortages which is having an impact on how willingness to to spend or hire.

So be careful if something seems too expensive but comes highly recommended. Be equally wary if something is particularly cheap even if a friend likes it. Look for the sweet spot of pricing and reputation that is based on market price beyond your in-group.

Categories
Finance Politics

Day 141 and Double Indignity

I’ve always been interested macroeconomics. Even as a child I got very excited about trading and markets eating up movies & books with political themes. Precocious snot that I was I quoted the Economist in my high school year book. So was primed to be interested in Bitcoin from the start. I even had a physical copy of the ur-conspiracy theory of monetary policy “Creature from Jekyll Island” in college. Yes it’s embarrassing. Point being if you are a fiat freak you probably have some opinions about the Fed, a few of which sound utterly wild.

I’d been exposed to questions about money and what drives people to build and create. I was skeptical that we could continue printing currency because I was introduced to economics through the basics. I also had an intuition that this system was making bigger winners of the already advantaged and short term interests, while taking away from long term interests who need their time & money maintain its value on the horizon. Basically I think inflammation sucks for the young. And if you are young and poor it’s a double indignity.

This is why I find Bitcoin so appealing philosophically. The idea that those already in power can inflate their interests over those who come after them offends me. Dynastic societies become ossified. I found Steven Ross’s Stone Ridge investor letter to be a particularly compelling argument for why Bitcoin is a moral good for equity.

Money is, and has always been, technology. Specifically, money is technology for making our wealth today available for consumption tomorrow. Modern Americans with a ‘What’s water?’ mindset about money – virtually all of us – assume there is a sharp line of distinction between what is money and what is not. That’s false. Instead, throughout history, various monies (note: plural) have always existed1 – simultaneously – along a continuum of soundness, subject to competitive monetary network effects. Sound money – along with language – were the first, and have forever been the most important, human networks responsible for human flourishing. Imagine life without them.

I think Americans especially the monied elite interests are simply becoming too entrenched to the detriment of freedom here but most critically around the works. We have no incentive to let the rest of the world compete so we are rigging the game in our favor. I don’t like it morally even if it benefits me personally (though arguably not as much as it does Boomers and the old). I’d rather Earth compete as one as this drives our progress. Anything less is serving a double indignity to the least privileged among us.

Categories
Finance

Day 140 and Gaming The System

I’m extremely envious of people who enjoy explicit rule based games. People who find points structures exciting have a tactical advantage in our current moment. In America financialization, the trend of financial services generating wealth instead of making goods or selling services, dominates our economy. Gamers make the best traders and bankers in post industrial capitalism because they love gaming the rules.

I’ve never been the sort to scour rules looking for exploits in individual levels. I’m a gut player that wraps their head around the basic directions of a system and moves to be aligned for final bosses or big game or infinite play. I’ve never been particularly excited about quirks, loopholes or exploits. As long as I think I have a decent overview I’ll just throw myself into gameplay with an intuition of what looks like enjoyable continuous play. I don’t need to be rewarded with discrete wins I am happy to just play and build.

I’ve got friends who relish the day to day optimization stuff. They run the gamut from professional mathematicians to gamblers and full time gamers. The thing they all have in common is a love for the individual wins. They solve problems. They will rack up wins in short games but are less motivated by building towards dominance in any given system or game over time. They respond positively to the kinds of short loops that makes level play so much fun.

I’m more of a long loop than a distinct arc player. I like mental maps and models that don’t always give an immediate or measurable reward sets but rather engaging me in nested, dependent loops that yield unexpected dynamics. While I love games that have economies that have immediate yields I’m so much more turned on by ones that have distinctive world level macroeconomic game play. Nothing gets me more invested than causality you can’t see or map immediately.

But I’m envious of people that are good gamers because they have the skills and intuition for financial games. I want to be a winner at stuff like like yield farming that mimic the kind of play to win whale games. I can defend all the kinds of games I am good and how they are worth a lot too but for the moment I’ll just let my envy sit and admire the player of games.

Categories
Finance Politics

Day 135 and 4 Quadrants of Crypto

I’m on my own this weekend so I had some time to listen to podcasts on my daily walk. I stupidly decided to listen to a podcast entitled “best crypto debate ever” which was vastly overselling both participants capacity to engage in productive debate. Not because either wasn’t smart but simply because they were both approaching the topic from entirely different vantage points. One had reasonably well founded concerns about about the how existing powers will fight to preserve their interests and the other was too fixated on proving that the market was the only player that matters. I am beginning to think that crypto, and in particular Bitcoin, is having a “blind men and the elephant problem” that makes discourse challenging.

I’m not pretending to have a full understanding of the future of cryptocurrencies or Bitcoin, merely articulating to myself as an exercise (it’s my blog after all but maybe my thinking helps you too) the four expertises required to wrap one’s mind around how cryptocurrency will evolve and what consequences we need to consider. Because there are no “right” answers at the moment merely different vantage points to consider as we stumble into the future.

1. Macroeconomic: understanding central banking, treasuries, monetary policy and macroeconomic actors is a specialized skill set. I studied it at arguably the best university on the planet for the subject and I still find the ins and outs to be heady stuff. Who decides what money is worth? When do we change those valuations? How does one country’s currency impact another’s? You hear a lot of buzzwords tossed around like “rules not rulers” but the practicalities of it are in fact hard problems. Just tossing off that you think “fiat currency” is bad isn’t enough.

2. Geopolitical: governments need money to provide services and security which makes them economic actors in addition to being political ones. America’s political ambitions are distinct from China’s. How we make make our money and how we spend it both at home and abroad will affect how we perceive other currencies. You need to understand things like how the dollar’s reserve currency status operates (ideally it’s history) to even begin to understand the geopolitical implications of cryptocurrency. Much hay was made of Peter Thiel suggesting Bitcoin could be weaponized by China against the US. Clearly any currency, especially one not run by Americans, will have geopolitical consequences. That anyone got hysterical about it suggested to me that our understanding of monetary policy and its political implications is limited in the general population. One needs to understand how the many actors on the political stage intersect their interests, political and economic, to even begin to comprehend how a cryptocurrency, particularly a decentralized one like Bitcoin, might evolve. In other words you have to understand how it works before you can do any predictive work.

3. Technical: concepts like distributed ledgers, hash rates, decentralized computing, and cryptographic keys are all crucial subjects for understanding the mechanics of a cryptocurrency, who owns it, and how it’s transacted. The chances that you understand the above geopolitical and macroeconomic problems and also understand how to code say your own token or have the wherewithal to acquire and set up hardware for a mining rig are slim. Maybe you grok it but being an expert in all is vanishingly slim. Computer science, political science and economics are all separate disciplines. Sure Bitcoin mining basically operates like loot crates in a game and who am I to say whether it’s a better system to have dorks with a lot of hardware run our money instead of Steven Mnuchin.

4. Microeconomics: the final area expertise is how markets and all the different players in them will value a currency and use it both as an asset and as a payment system. The elaborate financial systems that exist to determine what you think something is worth versus what someone else does is elaborate. We’ve got Byzantine financial products that decide everything from your mortgage to your salary to the cost of a sandwich. And while it’s not intuitive the folks that work on currencies, monetary policies and macroeconomic issues are not equipped with the same skill sets at all as the folks who trade on financial markets, cut deals between market participants or work out balance sheets. I’m much more studied in the macroeconomic issues than the financial ones and I wish that weren’t true. It’s a lot more lucrative to work in futures, arbitrage and market making.

When it comes down to it these four quadrants all require distinct skills and very different areas of study. Much of the debate and disagreement may simply come about because we are seeing different possibilities. Wrapping your head around the whole is difficult and no matter how brilliant you are having exposure to all areas is a lifetime of work.

Categories
Aesthetics Finance Internet Culture

Day 128 and Financial Aesthetics

Humans have imbued money with so much significance over the centuries that financial spaces (merchants, traders, banks, trading floors, brokers, hedge funds) show us the style of their times better than almost anywhere else. Even when power centers have shunned money directly (democracies), and sometimes even because of it, money has dictated the soft powers of perception and relevance.

This makes investigating the styles of finance particularly fun as their signifiers tend to hum with unsaid anger, greed and resentment. Sexy stuff generally as we fixate on ever finer granular details to indicate that our taste shows us to be worthy of holding power (and hopefully money).

There is a reason popular culture loves the Hollywood treatment of Wall Street. Even if some of the most iconic touchstones like American Psycho were meant as dark comedies we didn’t perceive them at way. We were supposed to laugh at the business card scene not get turned on. When Gordon Gecko bellowed “Greed is Good” we were supposed to know he was the villain. We didn’t. We don’t particularly like watching these heros get their comeuppance. Giovanni Ribisi in Boiler Room ratting out the pump and dump scheme doesn’t leave a very satisfied audience but oh how we loved the second act when the gambling prodigy finds a way to go “legitimate” and become a millionaire. Just ignore the crash at the end.

Americans in particular love to fetishize our villains. Our media is littered with anti-heroes that over time become our actual heroes. We throw jealous narratives at the preppy alpha males but love it when their power is subsumed by someone who plays their games better than them. We are riveted when a protagonist emerges that knows how to best the alphas at their own game and emerges victorious. Just be careful you don’t overplay your hand and remain a villain (sorry Martin Shkreli you deserved better) as we need you to be seen as the good guy. It’s a delicate tension.

Think poor savant Bobby Axelrod in Billions becoming the titan of industry. Sure you know he didn’t start out as a classic alpha male (that hard knock upbringing) but I doubt you could tell at the end as he styles himself in the cashmere of his former enemies. Sure now it’s a hoodie but that’s a small inversion of the original sweater. The WSJ has an extensive shoppable feature on the style of the show. Now that’s cultural relevance. Turns out we do want cosplay Carl Icahn or Bill Ackman.

I’m particularly excited about the aesthetics of the next phase of financial heroes emerging from the financialization of cryptocurrency. Scrappy upstarts that want to make a more just and free financial system free of cronyism and accessible to the entire world is a beautiful narrative arc. The chaos of outsiders making the system their own has an ending we all know. You might start out in a tee-shirt and hoodie like Axe but beware the creeping encroachment of luxury goods looking to ride on your newfound wealth.

Turning doge gains into jokey NFT art is just a hop skip and a jump away from getting subsumed into the Art Basel scene. Lest you one day turn up and wake up in a new Bugatti. And while right now it may seem funny to buy a Lamborghini remember the narrative the world wants. You may just claim the mantle of a new kind of power. Or the Feds will come for you. Have fun out there!

Categories
Aesthetics Chronicle Finance Internet Culture Media Startups

Day 62 And Who Can Make Art

My ego dislikes debate, but my heart leaps at tension.

Over the weekend, my friend Phil and I decided to make a functional art installation called Illegal.Auction. The premise is simple: we are selling Fungible Tokens (or NFTs) of Culture. 

Unsettled ideas of generation and representations colliding with abstractions like finance are important issues both culturally and practically.

Art is for itself, so who cares either way. A certain dogmatic insistence that “medium is the message” is pervasive in the critiques. Are movies different than books? I don’t think they have anything to do with the price of milk. It reminds me of the classic Annie Hall scene (speaking of artistic intent and harm) where Marshal McLuhan explodes on a chattering group “you know nothing of my work.” Woody Allen’s character concludes the scene if only real life were like this. Well on Twitter you can recreate this scene everyday!

It is funny because commentary is distinct from creation. And a lot of people have takes on McLuhan that he himself doesn’t agree with. But who cares right? Interpretation of art is ostensibly art.

It’s very interesting to see just how angry people get about the worth and value of culture in particular. As if it’s some monstrosity to comment on the abstract financial value of some creation with worth that cannot be extracted.

If it were so easy to make value judgments about art then we would trade it on the Chicago exchange like pork bellies and orange juice. Not that we don’t already sell art and trade it and frankly it has been a massive tension through the history of human creation how we value that work, but now many have decided to insist that art is non-fungible. Not interchangeable on a one to one basis like an apple. And yet we are acting like everything can be valued and traded so easily with NFTs. By making art tradeable on exchanges, we have made some thing inherently non-fungible, fungible.

This is ultimately where Illegal.Auction came from. These conversations are important and transformative. That we choose to represent the tensions with representations of reproductions of jpgs of art is part of the art installation. That it is a functional sale is in inherent to the tension.

There is a part of me that is really worried that because I am not a practicing artist that is paid for work or represented in a gallery, that I don’t have a right to comment on these issues. I am a technologist and I do work in finance and the overlap of disciplines makes this an inter-disciplinary question in my mind. It seems like some people disagree with my right to create art (and certainly the morality of remuneration).

But if we insist that only artists can make art I don’t have any right to make installations remixing software and representations. But I’m not sure anyone reading this is comfortable with that world. I am not.

I think people want there to be simple yes no questions to these things. Is it legal? Did you steal? Is it a transformative remixing of a cultural artifact? Is it worth $1 million? And the truth is is that there is no easy answer to what political system is best or how much some thing is worth. Trillion dollar industries are based around the fact that we don’t have clear answers. Irate commentary doesn’t help any of us understand the infinite questions of worth and creation. It is good to do and helps further understanding but its crucial to remember indignation and moralizing is a function of ego.

Personally I don’t think that wealth has any moral value. I don’t want to have to be wealthy in order to be valuable. Or if a piece of art I make does make money do you have a right to tell me it is objectionable because this isn’t how you make money? I guess you do. Whether you can stop me from doing it is a central questions for the ages and also literally why it is important to create pieces like Illegal.Auction in the first place.

This commentary I think is worth having. Not whether speculative infinite land grabs with financial instruments make you worth more to billionaires. They probably do. That’s fine! I think people are mostly offended by the idea that non-artists can make art. Especially if a transaction takes place. If we had stamped illegal on the jpgs and blocked out NOT ART on them would it have made it better? Conceptually I’m not sure that that’s true and probably reflects the viewer’s own sense of value and worth more than a legal, political or moral reality. Also I personally think it cheapens the point just to make concessions to dogmatic insistence on ownership in a space that isn’t settled because frankly it cannot be.

Much of the narrative and coverage around NFTs is that they delineate ownership, value and origination more cleanly. I’d argue that they are actually having the opposite effect. NFT’s are ripping away edifice and abstractions that we use to assign value and worth. And that makes people uncomfortable.

Categories
Chronic Disease Finance Internet Culture

Day 46 & Time Value

My day went entirely off the rails around 5pm. A doctor with a very particular specialty that my current general practitioner wants me to see didn’t have any availability until mid April. I took the first available appointment and said I will take literally any cancellation you have. Well they had a cancellation for tomorrow at 11:20am and it’s now been 18 minutes since their email was sent as I was, ironically, in another doctor’s appointment (my therapist).

Upon getting out of my appointment, my husband (who is on my healthcare email since being sick in America is basically a part time job) immediately tells me to check my email as he checks how far the drive to Denver will be and if he can drive me as I frantically check calendars. We email another commitment we had saying sorry we have to cancel for a crucial medical appointment. We discuss if this drive is feasible as he has a 10am. Decide that it will be fine. Approximately 23 minutes since the email was sent have elapsed. We email to say yes.

They email back thirty minutes later telling me that someone else took the appointment. I literally scream. I tell them to again let me know if any other cancellations I will take anything available I am a 35 minute drive away.

Meanwhile I get an email from some global consulting firm asking me if I would talk to them about direct to consumer cosmetics companies for $500 an hour. I initially say yes sure why not. And then I see their questions.

Can you discuss the following: Key drivers to expand digital outreach?

I scratch my head. I mean I guess. Key drivers to what? For what purpose. Digital outreach to whom to achieve what ends? This sounds like management consulting drivel. So I look at the next question.

Can you discuss the following: Strategies to effectively utilize online+offline channels?

At this point I lose it. Utilize what channels for what ends! I’m an entrepreneur for fuck’s sake. We either deal in complete pie in the sky or incredibly detailed absolutes. We do not faff about discussing utilizing channels for …strategies. I email the recruiter saying these questions are better suited to a management consultant and I can’t be helpful. Sure $500 is a lot for an hour of my time but an hour of my sanity?

Meanwhile one of my absolute favorite human beings, who is also an investor, has emailed me to ask for help with an opportunity a founder I introduced him to has on the table. I tell him my entire afternoon is available to run the numbers and I’ll pull out my previous actuals for a similar situation so we can figure out a way to help her score this win.

This is all an elaborate way of saying that the time value of your life doesn’t have an easy dollar value attached to it. If it’s your health? Literally will cancel everything to get to a doctor. So will your spouse. Your friends will understand if you prioritize the doctor. If it’s relationships that matter to you then you will go out of your way to help someone succeed. But $500 to bullshit someone? I guess I’d take a pass on that.

Categories
Chronic Disease Chronicle

Day 18 and How Much Money Did My Unborn Child Make You?

I’ve never been much of a privacy nut. I figured I came of age too far into surveillance capitalism to ever truly recapture the dignity of my own body. I thought the classic tag “Your Privacy Is An Illusion” on Gawker was genuinely funny. What was the worst that could happen to me?

I was an early adopter of quantified self. The industry’s rise dovetailed just well enough with the security Obamacare provided. By outlawing insurance companies from discriminating against preexisting conditions I figure it was safe to use my data to improve my health now.

Prior to that I engaged in various bits of dodging having my chronic conditions logged, avoiding telling doctors I took even the most banal of medications like a daily allergy medication. After it passed I joyfully logged everything.

In hindsight, this may have slowly shifted my mindset towards my own commodification. Again, an issue never at the forefront of my mind as I worked in aesthetics. My job has often relied on putting metrics on the physical ephemera of bodies. But the inexorable progression of viewing my body as a commodity led me to a terrible choice: I froze my eggs.

At the time my husband and I were busy with careers. We had the disposable income to “buy an insurance policy” that would allow us to treat a life altering decision like having children with the casual mindset of buying an insurance product or making a moderately sized investment decision.

We were referred to the “La Mer” of fertility clinics by a friend who had successfully conceived through their help. Mind you we didn’t know if we had fertility issues, this was purely about optionality. Indeed genetic testing didn’t reveal anything shocking. We did it because we thought “why not, it’s just some money” as we may regret not having given ourselves the option. God damn we were stupid. We got sucked into the marketing hype.

Freezing my eggs was invasive in a way I simply couldn’t conceive ahead of time. No pun intended. I thought it was some extra time and drugs. At every step of the process our fears and questions were allayed with the utmost professionalism. The risks were low was repeated over and over.

It felt like we were buying a mutual fund. Sure there were some risks in the fine print but really we were investing in our future. It’s only now that I realize if I thought it was such a wise investment why were both sides so clearly invested in the transaction closing? The legalese and paperwork ran was hundreds of pages.

Surely at some point someone would have pointed out it’s not without risks. And it’s also not remotely guaranteed. The cohort of women in my social circle were all sold on the benefits of egg freezing with its potential to finally liberate us (from what who knows) only to find it was just another product that had a high price tag physically and emotionally.

You see pregnant women are worth a lot of money to data brokers and advertisers. So of course the people at the start of that arc are going to cash in on that land grab. The clinic was getting upwards of $30,000 from a few months of care from me. Plus a subscription fee to keep them on ice. No wonder the egg freezing game is quickly becoming a status symbol for the upwardly mobile making it just another purchase for well funded venture backed millennial girl bosses.

I’m honestly astonished no one said a fucking thing. Not a peep. Just a glance at the fine print. No maybe you should talk to a counselor. No here is what could go wrong. No here is how you might feel. No disclosure or discussions of some of the outlier cases of how these hormones might impact me. Where were the angry right to life folks when I needed them? All those abortion laws that tell women the risks might have actually been useful here. Ironic huh?

Because I wasn’t a picture of health. I’d struggled with some inflammatory conditions as a kid along with a never ending parade of “allergies” and aches and pains I mostly ignored with an Advil. But no one ever brought up that being stimulated to produce eggs for harvesting might set off a chain reaction with my latent autoimmune complaints. Highly unlikely anything goes wrong. It’s low risk. It’s just not discussed beyond platitudes.

And so I thought it wouldn’t be a big deal. Except that it was. After two rounds of retrieval (11 eggs of which a portion are fertilized) life was supposed to go back to normal.

Except that it didn’t. Slowly but over time I became quite sick. I developed an autoimmune disorder that leaves me in constant chronic pain. I had to sell my startup and stop working entirely.

Of course, it is still not definitive that the hormone treatments kicked off my illness but the endocrinologist and the rheumatologist tell me it’s the most likely culprit. So what I want to know after having my life completely torpedo by an elective procedure, is who made money off my unborn children? Children I may never have as (updated on 12/10/22) five years later my health has not fully recovered. I am still too vulnerable to carry a pregnancy.

Who profited off my poor health? Who thought this was a consumer product? And why oh why was I dumb enough to believe them. My best guess? The business of birth is simply too lucrative for us to treat it any other way. I’m just another outlier. Maybe someone else will use those eggs and unwittingly trap their kids into the next cycle of commodification of their bodies.