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
Emotional Work Politics

Day 1372 and Everything Is Happening

The last forty eight hours or so have just been nonstop for me. Of course, that’s been true for the last week, the last month, the last quarter, the last year and the last decade.

Check KnowYourMeme for the full history of /pol and happenings.

The “nothing ever happens” bros might simply have made different life choices as from where I stand everyday is packed with happening.

I’ll grant the meme having originated as a geopolitical joke means it’s a little contextually inappropriate to apply to individuals and their own lives.

But what if “nothing ever happens” is just another way of justifying one’s own lack of agency? “Nothing ever happens” is admitting you are comfortable with being an NPC in the great game of life. Even if you are sure you are a bit player of little consequence you can rewrite your own programming.

Maybe we can look to another 4chan /pol meme “It’s Happening” for inspiration. Believe in your own capacity to have agency even when it’s small.

It’s Happening

Maybe world changing systemic change is beyond reach for most of us. That’s ok. But we can have a lot more happening with a few changes. You can play your own games and decide on your own rewards. I have. And it’s all happening for me and mine.

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
Internet Culture Politics

Day 1368 and Lending Credibility

The dead internet theory (or conspiracy theory if you must) supposes that machine generated content outweighs human contributions.

I don’t think we are there just yet but I am betting that artificial intelligence speeds up the process of replacing human content in areas where it’s unnecessary. Machines can act on their own and it’s good thing potentially too.

Being able to determine what is human intelligence versus machine intelligence may well be mitigated through trust-less cryptographic systems we take for granted. Handshake protocols for humans and machines.

Some content and transactions are just fine coming from artificial intelligence but others have to demonstrate a human identity. This may even require compute on human’s behalf

Looking forward, the ability to access compute at scale will likely parallel the right to transact. Identity will be layered and lending credibility and capital will look different. Who has credit and credibility?

As nations navigate their own risks, network state behaviors on the individual level will become more prevalent, driven by the need for secure, decentralized transactions that ensure autonomy in an increasingly unpredictable world.

The internet isn’t dying. It’s being reborn to serve the next stage of credible actors on our world.

Categories
Emotional Work Politics

Day 1365 and Good News, Bad News

It seems to be an absolutely awful week on Planet Earth. War, natural disasters, and human venality are on full display. It’s hard to even read the news, political or otherwise.

In contrast, I am myself in a good news place. I have a few leftover health issues as I leave behind the bout of respiratory issues (Covid’s legacy) but am otherwise full steam ahead.

Because I am so busy I find myself offline and missing things. It’s all good news in my world. And then I come back online to check feeds and it’s just all bad news.

I feel the privilege of it but I am also proud to have this stability. We made choices so our lives could be this way. We value preparedness and the calm that comes from planning.

I wish more people could live this way. Focus shouldn’t be reserved for a select few who can make good big life choices. That can be luck of the draw.

I do believe however it’s possible for many more of us to narrow focus so we can let small good choices compound. It’s good to appreciate the value of limiting your attention to your own priorities.

There is an argument to be made that only once you have steadied your own life can you look outside. Given how crazy the outside world can be give yourself the chance to have good news in your life. There will always be bad news.

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 recommendIn 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
Culture

Day 1360 and Strange Days

Maybe it’s always been “strange days indeed” and it’s naivety to think otherwise. You’d think the children of American hippies and yuppies would be some of the most cynical people alive and I’m regularly shocked by the sincerity of normies.

And so while my hippie mother made sure I got all of the John Lennon, even the later years, I can’t say nobody told me they’d be days like these. I pretty much came into this skeptical of authority because America’s baby Boom liberals won the culture war.

A lot of propaganda has been slung for and against Uncle Sam. And we let people talk. Mostly. Media filtered a lot for us and now the internet has broken what little trust we had after Nixon. Not as if everyone remembers how we got here.

Americans barely handle the responsibility of our open information environments any better than your average culture. We let it mostly flow. And now it’s all strange days. If you pay attention it’s hard not to feel like it’s all falling apart at the seams. But maybe that’s normal.

Categories
Aesthetics Politics

Day 1359 and Some Dirty Reading

It would appear I have pneumonia. Healthcare being what it is, doctors say there little point in doing clinical testing to find out if it’s bacterial, viral or fungal (unlikely given climate) as the treatment is basically the same. I did a round of antibiotics because why not. Nuke it from orbit.

I’m stuck in bed mostly, my voice comes in and out for the few calls I absolutely must take, and I’m bored and irritated as I would prefer to work though it as it’s exciting times. I’m sleeping like a champion as my Whoop records day after day of long nights of somewhat fractured sleeping are forced by cough medicine into submission.

Having had Covid at the end of May, I now fear being doomed to some degree of respiratory illness risk for the rest of my life though I rarely had so much as a cold in decades of living in a big dirty city. Global calamities leave uneven marks and I consider myself lucky.

The benefit of bed rest is the amount of reading one can get done. My favorite cultural publication Dirt did a Tech Canon overview to get must reads from the slightly more stylish emissaries of the Silicon Diaspora. No offense to Patrick Collison who initiated the discourse with his own list (which is quite good) but it’s good to think outside the empire’s core for the trendy extracurricular bits of the syllabus.

The Tech Syllabus via Dirt

As someone who self labels as a fashion bitch, I was pleased to contribute Neal Stephenson’s bitchy novella on abstraction and the graphical user interface called In The Beginning There Was The Command Line. It’s dated and old and free on GitHub so go read it.

There is quite a range on the list of core texts including a few books and essays that one could easily imagine being put onto banned reading lists. It’s nice that we have Heidegger Zoomers inside the pantheon now.

Schizophrenic philosophy posting is all the rage with the artificial intelligence kiddies. And to think I thought reading Deleuze and Guattari was a waste of time. Do your homework kids so you can discuss rhizomatic thought and large language models at your next conference. Perhaps you can dig into the war machine.

If I’m having a frail Victorian lady kind of week then there is nothing better than attending to the aesthetics of the moment and now you can too! Remember Alex Karp studied under Jürgen Habermas

Categories
Internet Culture Politics

Day 1356 and Sick Sad World

Current ways of knowing are (maybe rightly) under scrutiny. Some of us attempt to source truth by look backwards citing Chesterton’s Fence.

I’ve been skeptical of romanticizing the past as traditional ways of knowing can be bad cultures too. Sick societies are a constant companion of human nature no matter how we long for that Paradise Lost.

Maladaptive cargo cults are everywhere (Silicon Valley has dozens of flavors) and these superstitions ca. reproduce for generations if nutritional gradients are surplus.n

Noble savages are as silly a concept as high minded aristocracy. You probably know a few maladaptive emotionally sick types within your own communities.

Next on Sick Sad World

Remember the long running joke of Comedy Central’s Stephen Colbert? Truthiness. Emotive truthiness reigns supreme as “news-like” content bubbles in the Internet of AI slop battle out the truth of an issue not with verifiable facts but verifiable feelings. Which one is more maladaptive?

We were subjected to a week’s worth of BBQing content which was digested by the American psyche until we switched to the new cycle of a crazed would-be assassin and his failed attempt to kill former president Trump.

If so much of our society is maladaptive copies of civilizational failures, the best any of us can do is pray we are humble enough to see truth and we willing to adapt our ways to it.

Categories
Travel

Day 1353 and Remnants

I am sick. I am unsure how I got it or even what it is but I’ve got an intense dry cough, I lost my voice (I’ve been pitching so it may be strain as it doesn’t hurt) and the pain in my left intercostal muscles and rib cage is so bad it making it hard to rest comfortably. It’s been an overstimulated kind of year.

My hope is that I recover enough by Monday that being ill won’t affect my work but I am throwing a Z pack at it in case it turns out to be bacterial pneumonia. I won’t get into the details but I’ve got reason to suspect staphylococcus infections.

If it’s viral then oh well but if it’s bacterial better safe than sorry when it comes to autoimmune patients. I’ll never turn down a chance to nuke my gut biome. Doxycycline is my preferred antibiotic but a macrolide antibiotic has its place.

Being stuck in bed and too uncomfortable to even move has at least giving me time to pick through my reading list and look over the remnant trends of the month’s cultural detritus. The human body may have autophagy but I’m less sure the body politic does. It’s all history repeating.

This New York Times trend piece covering stylized flat lays of TSA security bins insists on it being a fun new trend gaining prominence in the last six months. I find this “new” framing comical as it’s anything but new. Instagram launched in 2010 my wee Zoomer friends.

One of the experts quoted in the trend piece, Hitha Palepu (who is fantastic) was regularly featured together with me as far back as 2015 when I was something of a travel aesthetics expert myself as the CEO of a travel cosmetics brand.

Everything old is new again. I myself can barely manage the nostalgia riffs of Blackbird Spyplane let alone the regurgitation of a ten year old trend. I’d like us to try something new every once in a while. But I suppose we can’t even get a new presidential candidate so why would I expect Thursday Styles to have anything fresh.