Theory: Why Clubhouse could fail

Also: Rappers are killing it & Gell-Mann Amnesia

I will try a new way of structuring this newsletter.
Reflecting on the content I consume – I realized I barely read long-form newsletters. I rather like to get bits and pieces of interesting topics, that I can further research by myself. Also, I would get to a format, that I see myself continuing after lockdown. Let me know what you think.

Table of Contents:

  1. Something nice to look at: Sol Lewitt
  2. News Corner: Rappers are killing it
  3. Mental Concept: Gell-Mann Amnesia
  4. Tweet of the week: The Clubhouse Failure
  5. Things I read
  6. Media recommendation: Naval interviewing Vitalik Buterin

1. Something nice to look at:

Wall Drawing #1144 by Sol LeWitt, Broken Bands of Color in Four Directions_2004 (The Museum of Modern Art, New York. Given anonymously. © 2020 /Artists Rights Society (ARS), New York)

I love this minimalistic piece by Sol LeWitt, who rose to fame in the 1960s. What is most interesting to me is that he didn’t make these wall drawings himself. He would get other people to make the work and even sad that "each person draws a line differently and each person understands words differently."
This makes me question what being creative actually means. Is it the initial idea, the instructions (Exhibitions who get the artwork are given instructions on how to make the wall drawing), or something completely else? #Creativity

2. News Corner:

Rappers Are Killing It

Kanye West has just reached a net worth of $6.6 billion, becoming the richest black man in US history. With the success of his Yeezy brand, which has solid partnerships with Adidas and Gap in the footwear and apparel business, Kanye West has become a billionaire, and his numbers are steadily increasing.

His colleague Jay-Z now has a seat in the Board of Square, as his streaming service Tidal has been acquired by Square for $300m.
There was a lot of debate about why Square is buying a rather unsuccessful streaming service (at least in direct comparison to Spotify & Apple Music). VC and Analyst Ben Evans suggests, that Square is looking for a pivot into crypto, and acquiring Tidal could be a huge NFT-Play. Jay-Z and Kanye are not the only rappers to be successful outside of the classic entertainment industry. Many have built highly valuable brands and companies.

  • Dr. Dre's headphone company Beats was purchased by Apple for $3 billion in 2014.
  • Rapper Nas is a successful VC investing in companies like Ring (acquired by Amazon in 2018 and subsequently paying $40m to Nas). He is also a co-owner of the cloud-based service LANDR and has continued investing heavily in tech-startups including Dropbox, Lyft, and Robinhood.
  • Snoop Dogg has his own VC as well, called Casa Verde Capital. They have stakes in several Canabusiness companies and just closed a second $100m investment fund.

Mental Concept:

Gell-Mann Amnesia

You open the newspaper to an article on some subject you know well. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward – reversing cause and effect. You read the article with exasperation or maybe even with some amusement towards the multiple errors in the story.

You then turn the page to national or international affairs and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page and forget what you know.

Tweet of the Week:

The Clubhouse Failure?

While many are calling clubhouse the next big social platform, others are predicting its demise. Shaan Puri had a popular post on why clubhouse will fail. Basically, live-content is very hard to do well. Users will want to see something interesting right when they open the app – which is almost impossible to do on a constant basis in live content. Twitch is one of the only platforms to do it profitable and scalable. But gaming content makes it easy as gamers stream up to 8 hours every day and their content is designed to be engaging. 30-minute panel discussions are just not that engaging.

Things I read:

1. Book: The Dark Forest by Cixin Liu

This Science-Fiction book started The Dark Forest Hypothesis, which assumes that communicating with civilizations is harder than destroying them.
A couple of other tidbits to gather here:

  • Survival is the primary need of civilization: As Civilization continuously grows and expands – but the total matter in the universe remains constant.
“Without the fear of heights, there can be no appreciation for the beauty of high places.”

“Ten thousand times the web could be destroyed, and ten thousand times the spider would rebuild it. There was neither annoyance nor despair, nor any delight, just as it had been for a billion years.”

2. Article: Investing as Entertainment

  • Shreyas Hariharan argues in this article, that investing has become a form of entertainment. The increased retail participation in financial markets has been driven by zero interest rates and stimulus checks, but also by sticky and gamified UX on Robinhood or Coinbase.

    This alludes to the Boredom markets hypothesis, i.e. there are many amateur traders sitting at home bored and are looking for a quick buck. Investing is the efficient dopamine snack, these investors are seeking in lockdown. Therefore Robinhood is not even competing with other brokers or Charles Schwab – it is competing with Netflix and TikTok. DeFi has built an even better casino than Robinhood and Wall Street. Besides the profits and the novelty, people are attracted to DeFi because it is entertaining.
    DeFi is an e-sport & Memes have ROI.

Media Recommendation:

Naval Ravikant is interviewing Ethereum Founder Vitalik Buterin on the Tim Ferris Podcast.

Vitalik Buterin is probably of the smartest people I have ever listened to and Naval is the ideal interviewer, making this one of the best podcast episodes.
Some Highlights:

Zero-Knowledge Proof: Very interesting cryptographic method by which one party (the prover) can prove something to another party (the verifier), without actually showing "his/her hand".

E.g. If you would need to prove to someone, that you have sufficient funds to buy something. You could use this protocol to provide this proof without giving access to any of your private information.

  • Endless Composability: Traditionally the size of the firm was dictated by contracting and transaction costs. In cryptoland, everything is extremely well defined.
    Input-output interfaces – Endless lego-blocks – Endless composability.
    It all can grow to global proportions.
  • Crypto wallet = bottomless backpack for a digital world.
    A singular place for not just money, but global login, identity, items, likes, followers, reputation, and things we have not yet dreamed of. The digital fragments of people scattered across multiple platforms will be united into one place that users control.
    Your crypto wallet = the future digital you.

Until next week,
Sam

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