Tag: Entrepreneur

Categories
Finance Startups

Day 1376 and Q3 2024 Investor Update & Market Analysis for Chaotic Capital

Welcome to the Q3 2024 update for chaotic.capital LPs. I’m choosing to post a selection of our reporting publicly so prospective founders and LPs can see our thinking.

You may be invested in chaotic.capital because we invest in ideas that adapt humanity to our new chaotic era.

Enabling resilience in the face of unexpected & rapid change is our lodestar. It’s a simple heuristic that yields a complex thesis: that technology is a tool for increasing leverage. 

In addition to these investor letters, you can always visit jfredrickson.com, where I write every single day about whatever I’m thinking about. You are also welcome to DM me on Twitter @AlmostMedia or text me on Signal any time.

Q3 was another strong quarter for chaotic.capital. Our ability to identify and back founders early remains core to our success and we’re seeing it both with the inbound flow from founders (as seen in the two new deals we did this quarter) as well as the progress from our existing portfolio, with four new markups this quarter and substantial business progress on those and others.

The markets are increasingly focused on power and compute. What was once a contrarian focus on energy, infrastructure, crypto, and artificial intelligence has now become a core narrative among informed investors.

We believe the future of compute—particularly in relation to crypto and AI—will increasingly be viewed as a basic right, not a privilege, as these technologies scale to mass adoption. 

As governments grow more cautious about debt and monetary risk, individuals and organizations will turn to trustless systems to ensure secure transactions and autonomy.

This is why we focus our investments in the space on foundational layers that will power the next generation of applications.

With portfolio companies like Squads providing on-chain economy tooling, Kuzco reducing reliance on intermediaries while creating an open market, SFCompute pricing compute and creating spot markets, and Chroma becoming the go-to choice for open source vector databases, we see the intersection of crypto and AI creating secure, scalable systems for individuals and organizations alike.

Access to compute is quickly becoming synonymous with freedom of speech and, ultimately, the freedom to transact. 

These open trustless systems enable efficient transactions and verification, a crucial development as geopolitical multipolarity continues to rise, and more people need to ensure their interactions are secure without reliance on the state.

While Americans might not yet fully appreciate this, we’re seeing growing demand for these alternative systems and open models from those who are navigating increasing regulatory pressures and instability.

Europeans, whose governments are deploying strict limits on AI models are beginning to understand, those from countries facing geopolitical uncertainty (e.g., Israel, Ukraine), live it already, and those in countries with unreliable currencies and legal systems have been navigating anarcho-tyranny for decades.

But it can be precarious in the US as well, in California it was only the intervention of a veto from Gavin Newsom that prevented SB-1047 from restricting compute and hobbling the development of open source models.

Looking forward, this ability to access compute at scale may well parallel the right to transact. As nations confront their own risks, network state behaviors will become more prevalent, driven by the need for secure, decentralized systems that ensure autonomy in an increasingly unpredictable world.

We’re excited about the future of chaotic.capital and the opportunities ahead. As always, I’d love to talk about any of this with your discussions with you, so feel free to reach out. We’re just getting started, and there’s much more to come.

Categories
Internet Culture Politics

Day 1369 and California SB-1047 Vetoed

Last night I received a push alert and then a flurry of excited text messages and phone calls. California Governor Gavin Newsom vetoed the controversial SB-1047 artificial intelligence bill.

Gavin Newsom vetoes California’s contentious AI “safety” bill SB-1047

Twitter lit up with joyful streams of relief and praise for this decision. Everyone from politicians, economists, researchers, academic luminaries, open source collectives, founders and venture capitalists.

It was a bad bill that lacked the necessary clarity and focus to even begin the task of regulating the nascent field of artificial intelligence.

We can and will do better in finding regulatory frameworks for safety and competitiveness but this bill wasn’t it. It was especially concerning as they say so goes California so goes the world.

I have been banging on about the #FreedomToCompute and math’s crucial role in our constitutional right to free speech in America. This must be considered in all future attempts at regulation in America.

Math and computing power are as essential as speech. In today’s world, they ARE speech. We may speak in natural language, but the way we extend ourselves, build things, and grow as a species is through our tools. Computation is a tool.

These tools are extensions of the human mind. Consider that the first computers were just regular humans counting. We may have started with our fingers and toes as our first tools. And it wasn’t quick progress as the evolution from the abacus to modern computing took us nearly 4,000 years.

We’ve made an astonishing amount of progress in the last hundred years. We’ve gone from thousands of computations per second in the 1940s to 200 quadrillion calculations per second with modern super computers.

Consumer devices are better too. The computer I’m using to write this post has more power than the computers we used to send man to the moon. It’s 100,000 times faster with seven million times more memory.

Alas, as tools get more powerful the powerful get nervous. This isn’t the first bad artificial intelligence bill we’ve seen. We have Europe to thank for that. And it likely won’t be the last.

But defeating SB-1047 is a rare moment of bipartisan cooperation not only in California but across the world as the entire compute space came together to make its voice heard. And Gavin Newsom listened.

We should celebrate this rare consensus as we look towards better policy in our future.

Categories
Aesthetics Startups

Day 1363 and Landfill Apps

Building good software is a topic on which many of my friends and colleagues have extremely strong opinions.

Anything built by humans can become a craft with skilled artisans and building software doesn’t escape this. While there are 27 million software developers in the world and 4.4 million of them are in American, if you pressed the startup community most would agree the number of good software developers is much lower.

I came of age in the blogging era, where we got writing like Joel on Software. I learned to build thanks to other builders sharing their craft and discussing it on forums & personal sites. I had access to the insights of builders like DHH and Alex Payne. Their commitment to publishing accessibility helped onboard millions of normies like me.

In some ways, startups and the software giants of FAANG are a victim of our own success. We onboarded the world to our efficiency.

And now with AI coding software (incidentally trained by Stack Overflow data & GitHub repositories built by my community) we are experiencing a Cambrian explosion level of coding access.

And it’s not Zapier hacks or snide remarks about Rust anymore. Anyone who can think critically about a product feature can build it with clear thinking and natural language.

I recommend “In The Beginning There Was The Command Line” by Neal Stephenson so often because every time we have an abstraction leap that allows more access we move further away from the power of craft.

And that is an unmitigated good in many ways as more people get the benefits of these tools.

But we are also going to get a slot of shit churned out because of that. Soychotic called them landfill apps when Marques Brownlee or MKBDH launched a $12 a month app for phone wallpapers. The app enraged Twitter.

If history is any indication the growth curve in app building is just getting started. Much awful nonsense will be built and sold, but imagine how it enables those with taste and opinions to make new solutions to our problems.

Ironic a critic of software like MKNDH should play such a role in reminding us of just how hard it is to make something good. Making money though can have a much lower bar.

Categories
Politics

Day 1358 and I Must Subsidize Demand

There is a beloved meme in communities like YIMBYism (a movement advocating for building more housing with the slogan “yes in my neighborhood”) in which the protagonist agonizes over subsidizing demand as the cyclical pattern of rising demand giving rise to rising cost carries on.

“I just need to subsidize demand”

America is a strange place where we espouse a lot of free market policies but we tend to favor subsidies as a solution. Which isn’t always a bad thing. Sometimes there are good reasons for providing support for things that aren’t as commercially viable immediately like pure science or education or other public goods.

It is however not the only policy tool available to people. A fun fact about how I have a good time, my participation in civic life was as an appointee on the New York City Community Boards. I was part of a group who approve licenses and permits for things like liquor and parades and the like. I also served on quality of life and transportation boards. I also did monthly meetings for land use.

I was easily the youngest person who volunteered time and I learned a lot about how damn many rules we have at every level from neighborhood to city and state on everything from ventilation and to environmental review. And some of those rules are pretty good things!

But it would be preposterous to say that all rules are good and that every part of the process of starting a business (large or small) is easy. Some problems you can’t through money at and fix. Or if you can it creates a whole unintended set of other problems. Like paying for lawyers and consultants.

Because Twitter is the land of any old idiot getting a say (just like a community board meeting) I’ve got every flavor of opposition and missing the point on this tweet.

We do a lot well in America. It’s relatively much easier to start an LLC and get a license to do business. Complying with everything from the liquor board to FinCEN will take a little more. Anyone who has run a business can tell you about their corner of the universe and the paperwork involved. Just ask my husband who spends most of his time as a businessman keeping up with paperwork.

I think it’s perfectly fine to be skeptical that throwing more money at a problem like how challenging it is as a business owner to contend with government bureaucracy. Demand subsidies can only fix so mich. It’s just a lot more complicated than that. Be smart and don’t let your head spin like our meme gentleman.

Categories
Startups Travel

Day 1342 and SKU Bloat ZIRP Era

I was doing some packaging preparation for fall travel and was pleased to discover that I’d finally appeared to have built out a basics wardrobe that actually mixed and matched well. A decent capsule wardrobe I bought I’d never achieve had come together after literally a decade of failed promises from startups.

There was an era of direct to consumer startups that promised quality and simplicity. A startup would launch with few basic but upscale stock keeping units (or SKUs) that promised they would be all you needed to own at a fair price point. This was alluring proposition for many early entrepreneurs including myself.

The premise was simple. Why would you want to add unnecessary complexity to tee-shirts, glasses, or toiletries when you could get something good without worrying if you were paying a markup for branding or retail margins?

The DTC boom has been largely looked at as failure as a movement for both consumers and businesses. With the benefit of hindsight, many of the businesses relied heavily on growth that couldn’t be achieved without either expanding your retail presence in stores or without giving up on providing simple basics.

As the zero percent interest rate era boomed, brands released constant new and novel SKUs to chase growth in every vertical from sneakers to lipstick. The goal of better prices and simpler products failed under the weight of driving growth at scale. Darlings became pariahs and founders sold to roll up private equity firms.

ZIRP ended as post pandemic era inflation demanded higher interest rates. We all complained bitterly about cost and quality of consumer goods in the aftermath.

And yet maybe we judged things too harshly. A chaotic decade of changing macroeconomic conditions were not easy to navigate. The growth required by venture and private equity were always going to conflict with a simple ethos of shopping.

But here I am with exactly what I wanted from my shopping choices at the start. I’ve got my quality basics merchandised in a simple way from brands I purchased from directly. In other news, the Everlane Barrel Pants are excellent.

Categories
Aesthetics Internet Culture Politics

Day 1328 and Weebs as New Social Elites

Yesterday, Occulus and Anduril co-founder Palmer Luckey, posted a picture of him doing Nyan Neko Sugar Girl cosplay to his Twitter account. It’s a Fanime from 2010.

DragonCon enjoyers

On the heels of a sympathetic long form essay in Tablet Magazine that went viral, Palmer posting friendly cat girl jokes on main was clarion call to the one demographic that really matters in America right now. Nerds are the entry into the elite class.

Every flavor of nerd is flexing their might. Autistic weebs are claiming their power in the American elite class. And our politicians ans generals should be thrilled. It’s not not a moment too soon to put the engineers in on the great game

Showing off your niche knowledge is a favored elite game. Millenials & Zoomers understand their reality is being built upon arcane information and have gone for the deep cuts to keep up.

While on Tablet I came across their coverage of the Democratic National Convention where bizarre communist fervor from identities as inscrutable as Zoomer Hoxhaists are on display. Enver Hoxha being the infamous (and possibly crazy) communist dictator of Albania and not a good guy. But clearly some idiotic online intellectual has to treat history as if it were finding a cool band.

So if you subscribe to hidden knowledge as social capital then it’s time to read up on Gaetano Mosca and the Italian school of elitism. For discourse watchers, they were notable anti-fascist thinkers.

If you made it through the marathon Joe Rogan episode interviewing Peter Thiel you might have caught the memes about Chimp Empire. Well turns out that’s topical and an approachable angle.

every society could be split between two social classes: the one who rules and the one which is ruled

The current elite class of interests has looked beyond our military industrial complex to to Silicon Valley. They have known for sometime if you want to beat the communists (or the fascists or the oligarchy) then partnering with the new nerd elite is now your move.

Don’t worry Douglas MacArthur was a red blooded American military man and a weeb. Autists long a good track record in defense innovation.

If you want an eye to the future then learn the ways of the weeb. Drone warfare and embodied habits? Take it a step further WinterMute. Your transgendered simulated intelligence running that drone was trained on green text and it’s time you learn to speak like a native of the hive mind.

Rise up cat girls! Now is the hour of the weeb. Do it for America. Do it for capitalism. Do it so we get some sick Mecha suits from Uncle Sam.

Categories
Politics Startups

Day 1322 and You Can Just Do Things

The older you are the more you begin to accept the way things “are” in the world. We’ve come to accept layers of professionalism between us and the real work of the world as we go about pursuing our own comparative advantage.

Surely someone is handling the bits we are not as this is an advanced civilization right? I fucking wish.

I don’t wish to disparage our expert managerial class but we are all human. The experts are just operating from past biases and some of them haven’t been updated in quite a while. The people in charge might even be quite wrong.

Sometimes things are much easier than you imagine. I remember being asked when fundraising for a cosmetics business about the relative challenge of sourcing manufacturing.

The bias ten years ago was that there must be exclusive manufacturers who make the nice things they sell at department store. Turns out any idiot who can underwrite a purchase order to buy anything they like for an astonishing array of things.

Now maybe you think ok but not all businesses are like this right many businesses have regulatory challenges and someone responsible must be in charge of all of that.

Surprise those are regular people too. And most of them have LinkedIn profiles now. Everything from the bureaucracy at the Department of Energy to the local zoning board is one like now

I spent a few years on a community board that oversaw liquor licenses in lower Manhattan right after Trump was elected as I wanted to be a more active participant in my own democracy.

Turns out a lot of life goes on at the local level and the levers of democracy go through having your papers in order. American life has a lot of paperwork. If you wanted to serve alcohol at your establishment you went through me and a couple other normal citizens at the liquor board

Most businesses spent small fortunes on laws to manage the paperwork of doing business. It was expensive and time consuming and I looked at a lot of Michelin caliber restaurant business plans.

I did everything I could to make sure a license got through. Most of the board had a similar attitude. We’d redo applications on live at a meeting sometimes which made them go for hours. But generally the goal was to get permits approved and have there be no issues that could trip the business up.

I felt I had a civic obligation to be more involved in helping people just do things. You can get through the paperwork.

I want Zoomers to do their best to convince the older people living in the past to help us update our priors. You can just do things.

You can find a laboratory for a formula or a factory for parts. You can find the regulators and local people on board and convince them of the soundness of your plans. You can just do things. Even if someone says something is hard you can probably do it. Even impossible things might have a chance if you just keep working the problems.

Categories
Community Startups

Day 1321 and Credit Where Credit Is Due

I can’t get into the details but I learned today that there is an internal metric at an institution based around work I was personally responsible for achieving.

Literally none of the credit has accrued to me because ultimately the thing didn’t really work but the downstream effects of the social credibility I brought really benefit someone I am not sure I’d have wanted to benefit. If I’d had a choice which I very much didn’t. Sometimes your social capital accrues to people you don’t even like.

I like having social capital to spare but I didn’t realize that someone was profiting off of it to such an intense degree till today. Power laws rule everything around me and it’s actually good. Just funny how little credit you month get for something and how much it might benefit someone else.

I don’t even know if I can even politely point it out simply because it’s déclassé to do so. I’ll have to enjoy the the little irony on my own. And believe me I am. Maybe it gets shared in a small circle of folks for whom making money for jerks it’s a fact of life. But I’ll take the credit privately.

Categories
Emotional Work Startups

Day 1320 and Being “You-er”

You may recall the old aphorism about marriage. Men and women have very different goals for the institution and how it will or won’t change them.

“Men marry women with the hope they will never change. Women marry men with the hope they will change. Invariably they are both disappointed”

I don’t recall having any ambitions for changing my husband when we got married ten years ago. I thought quite highly of him when we got married. I still do.

The irony is that we have both changed significantly not because of any goal the other has for each other but because of the work we do together. Fast growing startups simply demand so much emotional change from their people.

A recent piece in the New York Times discussed how coaching has become the hack that drove emotional chances

Venture-backed startups simply must scale faster than all but the rarest of human beings can acquire emotional intelligence. As a result, startup founders and chief executives, many of whom are trained not in management but in software engineering, face extraordinary risk of coming unglued in ways that vaporize immense amounts of capital.

How Coaching Became Silicon Valley’s Hack for Therapy

Acquiring emotional intelligence quickly becomes a “do or die” skill in startups. And most of us do die. Ego death in mediation like jhanna are within reach because failure and rebirth are such common experiences for the technologists that build quickly moving companies.

Both my husband Alex and I have done family systems therapy as well as multiple forms of professional and personal coaching. If Alex didn’t want change from me as his wife then he is surely disappointed. As his wife if I wanted change from him I very much did get it.

Neither one of us is disappointed, aphorisms aside. If anything, as we’ve done more work to acquire the emotional intelligence required of us to growth and thrive in our work, we’ve become more ourselves.

There is a real joy in becoming “you-er” as essential personality, skills and ambitions become clearer. It’s well worth investing in therapy and coaching to become yourself. Being “you-er” is quite freeing. It’s hard to be disappointed by that outcome.

Categories
Startups

Day 1318 and Intention

I am experiencing a peace about the future I didn’t fully expect to find. I’ve been lucky enough to have a number of long term efforts start to paint a picture of success.

I began a process of examination of my last several years somewhere in the last half decade as I prepare myself and my work the next stage of growth. I’ve made a number of fairly significant decisions as my idea of where the future is headed and how I myself expect to live in it. A lot of these choices are public and revealed preferences. I don’t make it a secret.

I’ve been considered a doomer only because I think one has to look with calm and clear eyes at the problems in front of you. Only then can you really build optimism about your capacity to improve. Being merely positive isn’t a bad thing, but positivity is only driving you towards success if you are planning realistically. A good attitude is just a starting point.

I’ve taken things slowly. Sometimes it feels painfully so. But the intentions I had to be prepared to live in a more chaotic world means I live a stable life now even as daily uncertainties exist for everyone.

My intention is to approach building the future with optimism. The problems are large but I work with many focused and sober minded people who actually can and do build solutions. Fighting the future won’t do much. But who says it’s got to be a fight? Maybe we can bring on better things.