Tag: podcast notes

Podcast notes – Ameen Soleimani on RAI and Maker – Epicenter

Guest: Ameen Soleimani – Reflexer Lab; RAI; Spankchain; MolochDao
Podcast: Epicenter

Got into crypto buying mushrooms on Silk Road
Lost money in Mt Gox
Worked at Consensys
Started Spankchain
Started MolochDao
Started Reflexer / RAI

Moloch gave Tornado its first grant – this issue is personal for him

Big Maker / DAI fan through 2018, 2019 – Spankchain couldn’t get bank accounts; cypherpunk money
Wanted to fork it when Maker added USDC (went multicollateral), more centralized governance (to set stability fees)
-right now it’s 20% ETH collateral, 80% USDC
-governance – vote to set interest rates (stability fee)
-DAI was first stablecoin that Ethereum could use that wasn’t volatile
-Nikolai the cofounder didn’t want to peg it, but lost political battle – pragmatists wanted dollar peg to help growth
-Black Thursday (March 2020) – ETH crashed 2x% in 24 hours, added peg stability module to allow minting of DAI for USDC
-Ameen believes USDC is Trojan horse for Ethereum – now USDC is 80%

Now there’s governance proposals to make DAI free floating

RAI is single collateral, only ETH
RAI allows negative interest rates – just changes peg price to incentivize sellers
Transparent rules based engine to stabilize itself, not dependent on peoples’ votes

RAI peg started as pi dollars ($3.14)
When loses peg, say there’s demand for RAI and it goes up 5%, the peg starts to drop at a specified rate; creates incentive for holders to sell RAI to bring the price back to peg
“Money god always wins”

If you’re trying to manipulate price of RAI, it should be expensive for you
Those who are aligned with stabilizing price of RAI stand to make money

RAI referencing dollar still makes it a dollar-denominated asset, subject to dollar strength / weakness

Big RAI price change happened in first 3 weeks – sponsored attack on own system, offered incentives to LP RAI, pumped up price 10-12%
Took 3 weeks to fix it
Rates got to -70% to adjust the RAI price back

Currently you have to pay 14% to hold RAI – so why hold it?
~$15m RAI outstanding – DxDAO was one of holders but negative rates caused them to sell
If you care about decentralization / not being blacklisted, RAI might be for you

RAI can only ever be backed by ETH – can’t change that anymore
Even stETH depends somewhat on Lido governance

A better opportunity is to make more RAI-like things – stable coins that aren’t pegged to dollar; mechanisms to stabilize themselves

RAI price started at $3.14 (pi), now it’s around $2.92
RAI isn’t mean reverting – doesn’t matter what starting point was
“Stability is in eye of beholder”

In hyperinflation scenario, RAI should be in equilibrium with rates to borrow DAI, etc

RAI’s controller response time is ~a few months

Ungovernance meme – progressively remove governance over aspects of protocol
Want to automate controller – still figuring it out
System has been in production for 1.5 years
Re: price oracles, system depends on Chainlink – which isn’t ideal

FLX – same as Maker – buyback and burn revenue model; protocol makes money from stability fee and liquidations
Stability fee is 2% – may be locked in forever – Maker uses SF as monetary policy tool, but it’s supposed to reflect price of collateral

Tornado cash OFAC sanction – USDC froze all USDC in those contracts
DAI has $6B USDC
Rune realized need to reduce exposure to USDC
Most effective knob is to reduce redemption price over time, make it progressively less attractive to mint DAI for USDC – RAI has already proven negative rates can work
He wants Maker to reclaim monetary sovereignty for DAI – doesn’t need to be pegged to USD

End game isn’t dollar-denom assets – in time crypto will have own price indexes other than fiats
USD reference for now is easy, liquid, stable

Brian — USDC is obvious target to control / regulate crypto

Vitalik article on Terra — if stablecoin can’t unwind in a down market, it’s basically a Ponzi scheme

Friederike – feels like mainly an oracle issue – main reason we don’t have real world assets – no good price feeds

Ameen – When ETH hits $75K, decentralized stable coins can scale – maybe we’re still in experiment stage, it’s a good reason why stable coins should be sub-$100M dollars

Wants to work with devs that can fork RAI and improve / change it

Podcast notes – Peter Thiel on Uncommon Knowledge – “When do we go from wisdom of crowds to madness of crowds?”

Peter Thiel – Stanford + Stanford Law, PayPal cofounder, first Facebook investor

No ticker tape parades in NYC for individuals in 21st century – now it’s for groups like “healthcare professionals”, before it was for individuals like Charles Lindbergh

Prevailing view is heterodox thought no longer allowed, scared of putting individuals on pedestal

Believes in classic libertarian values – but it can be somewhat cowardly way of saying you’re a loser, you wanna be left alone
Acceptable for him to support Ron Paul for president, much more dangerous to support Donald Trump

When do we go from wisdom of crowds to madness of crowds?

If you win 99% of election, you’re in North Korea – you haven’t arrived at absolute truth but you’re in an insane totalitarian place

West has 2 philosophical traditions – Greco Roman and Judeo Christian

Covid – all kinds of things were asserted too dogmatically – and took hairpin turns

Science fights 2 front war against excess skepticism and excess dogmatism
Science thinks of itself as more fighting against dogmatism – “choose your enemies well because you’ll soon be like them” – now “science” can seem like a dogma, post-modern

Case of Jay Bhattacharya – example of sheer insanity – tenured Stanford professor, libertarian and heterodox thinker
He wrote article saying “there’s no high quality studies that prove wearing masks is effective” – triggered people, crazed campus reaction
Nuanced nature made it dangerous – supposed to think in clean bright line ideological terms
If you’re not allowed to say something, he has suspicion that not only should you say it, it’s simply true

Fauci: “When people criticize me, they’re really criticizing science because I represent science”
Science has become quite opposite from the exploration, open-debate that it should be
Real science doesn’t need to be called “science” – real chemistry, physics, etc – but eg “climate science” is like a tell in poker, exaggerating because it’s not quite there
Science with capital S seems like antonym of science lower case S

20 years of telling ourselves lies about Afghanistan – that it’s going wonderful, we’re nation building, form of epistemic closure
Believes Trump had a fundamentally correct view of Afghanistan – Trump said “Afghanistan is a shit country” – not rigorous or nice thing to say, but “when you limit yourselves to saying something that’s very nice, you can’t actually talk about anything at all”

Political correctness as misdirected form of politeness

Saying anything you want to — but remain civil

Fed Reserve
Inflation is common sense and everyone can see it – gas bill, grocery bill
Another case of epistemic closure – Fed seemed like last institution to register that inflation was accelerating
One of our most sacred institutions

MMT – everyone’s gravitated towards it at precise moment it should be questioned and challenged
Economics risks being very politicized – can twist the answers and go in strange direction
Not very precise a science, but when you violate everything, things will eventually go wrong

The hour is late for fiat money – clear signal is Bitcoin / Satoshi Nakamoto
Bitcoin is revolutionary anti-fiat money thing, a late warning like Trump’s warning on Afghanistan

Broken market
Fed buying all the bonds
Inflation showing up in assets, crypto, art, stocks, bonds
If inflation is 6% and rates are 0%, that’s still 6% confiscation of your cash / earnings

Davos – he stopped attending – people are only there as representatives of corporations and governments – it hit him that there are no real individuals in the room
Davos as sense of global government, participate as part of larger structure
Wisdom of crowds – center left politically correct thing
Not a truth seeking place, not maximum surface area of debate
It’s a world with no dissenting views
Doesn’t believe we’re at end of history

China
Ray Dalio says it’s like family with strict parents
He frames China since 2013 as Putin is positive role model (vs when they used to believe Soviet Union was a negative role model)
China works for one individual – Mr. Xi
Doesn’t work for anyone else anymore
Jack Ma as remarkable example
Tech companies have been clobbered
No individuals allowed, no wealthy people allowed
Back to totalitarian playbook
Quite different from China in 70s, 80s
China like much worse version of Japan – for many decades it had great model of copying and catching up, and then hit the wall – China seems like stranger more dysfunctional version of Japan
For most part, China has not overtaken us
2021 – feels like China has gone haywire, more Marxist economy, totalitarian escalation
Friend said “Xi as best thing happening to West”

Why are we in such a collectivist moment (in America)?
Something went wrong, not an idiosyncratic thing, symptomatic of bigger problem
Should have ticker tape parade for Satoshi – so much healthier sign for country – just symbolic but symbols are important

Is renewable possible? Or is it just historic decline
He believes it’s not historicism, inevitable trends – it’s individuals that matter

Advice to new grads:
Can start companies
Shortage of talent in government
Society feels increasingly on auto-pilot — but he would take opposite bet

Podcast notes – Agustin Lebron (Jane Street trader) on Lunar Society

Guest: Agustin Lebron – author of book Laws of Trading

The more you trade the more you realize how hard it is to do well

Studied engineering in college
Former chip designer, online poker player
Went into finance – Jane Street

Recently started a crypto company – building protocol to improve crypto trading

Finance – jobs are more fungible, harder to explain why you work at a specific firm since most jobs are similar and primarily money-driven

If you want to be a trader, implicitly you’re saying you care most about money
But a lot of the job is having inherent curiosity about many things, and about enjoying game for its own sake

Jane Street would select against people with prior retail trading experience

Concept of domain is narrower than people understand it to be – Robinhood trading is even more different than you think of trading at a market maker, or a hedge fund

Takes 6-18 months to train a trader to be net-positive
Jane Street was mostly Socratic method – sit with senior trader and learn at desk
Now there’s more structured training, learning an iterative thinking process

Most common failure mode in tech hiring is hiring too much for skills, instead of for potential
One of best hiring arbitrages is to “go more junior” – hire younger and earlier in careers

Agustin wants to find smartest 0.1% of high school students around world – put them into bootcamps for 6 months, learn useful skills, provide high skill jobs to graduates
This could be a trillion dollar business

SBF @ FTX – Future Fund to scout for this kind of talent

Intelligence (“G” factor) strongly predicts outcomes across jobs, industries
Why brainteasers so common in tech hiring – proxy for IQ (even though explicit IQ testing for hiring is illegal in the US)
Great example – Wonderlic test for football

For job candidates:
One of most important things you can do is select your coworkers
During hiring, get good at evaluating your interviewers too

Sheepskin effect – last semester of college boosts earnings vastly more – because of signaling / certification

San Diego tech cos love to hire Intuit employees with 2-3 years experience, because Intuit does great training – but you don’t see the really good employees that Intuit retained

If Agustin was a regulator – would ban leveraged ETFs, further regulate all the volatility products

// Stopped ~45% of the way thru

Podcast notes – Ujwal Velagapudi (SMB buyer, vending machine biz) – Acquiring Minds podcast

Guest: Ujwal Velagapudi
Podcast: Acquiring Minds

Hometown – suburbs of Detroit (he’s 30-ish)

Bought and sold a dozen cars on CraigsList (CL) while in HS / college
Always made a profit, and learned negotiation and hustling through it

Commercial building for sale on CL – seemed a great deal, 75yo seller owner / occupier
Fire damaged red brick building – 7 Mile in Van Dyke
Was a year out of college
Did entire lease + purchase agreement (PA) himself
Grew this commercial portfolio to 12 units – mixed use, light industrial – at this point was earning ~$5K/mo

Still had day job – supply chain management in aerospace, quit in 2018
But always interested in passive income

Then explored SMBs – pizza, night club – all on CL – spent a lot of time on deals but they all fell through
Finally saw a bar for sale – near Red Wings stadium – rich history, but the arena was being demolished and relocated
Had been bartender in college, even though he didn’t drink
75 seat bar, no kitchen, did some food trucks + temp chefs – $100-200K gross, 1 full-time bartender
Put in LOI, 4 days later had a signed agreement + down payment
Purchasing by himself – knowing it was mostly for his education – “wasn’t for the money”
Hired completely new team eg bartenders – also on CL
Ultimately couldn’t extend the lease, owners wanted him to leave so they could demo the building
Was initially there every day after his 9-5 job – slowed over time
Owned it for 1.5 years, then liquidated everything he could

Also on CL – saw a gym for sale – Snap Fitness, hot gym in area
Personally loved sports, exercise
Bought with cash for $75K – closed deal in 3.5 weeks – was making $50K (so 1.5x multiple), but LA Fitness had just moved in next door
2900 sf, prime downtown location in small Detroit suburb, yoga studio, tanning bed, weight lifting
24/7, keycard
Sold for 2.5x purchase price to his gym manager – had started as a customer, became assistant GM and then GM for him, and eventually bought it over
Always prioritized happiness and efficiency over maximizing profits, outsourced a lot of work, used tech as much as possible (video cams, PoS, DocuSign, etc)
Only spent 10 hours total in that gym – managed it like it didn’t rely on him, relied heavily on financials / reports instead of micro managing

Bought an ecomm business – Amazon FBA selling hats, bags, gloves – negotiated the heck out of it, thought he got a good deal
Offered $180K, $90K down ($500K revenues?) – was a well-known online brokerage
Then he discovered it had a lien, because seller took loan from Amazon which was automatically deducted from earnings
Seller tried to hijack the account, got FBI involved
Seller was a felon with drug issues
Took a big hit, ultimately liquidated it on EmpireFlippers (good experience)

In 2018, multiple income streams, quit full-time job, spent a few months in Thailand, had gone for an entrepreneurship conference
Spent a few months on the beach, 4 hour work week, but “it was so boring”

Increasingly difficult to find good M&A deals on Craigslist – back then there was a lot of misclassified deals, 80 year old sellers
Now brokers are picking off everything, sellers more sophisticated, marketplaces more fragmented (eg, FB marketplace)

After ecomm, purchased minority ownership in consulting business for niche insurance software
Moved to Texas for it, 20 year old company, was acquired by Oracle
Had monopoly in a very niche business as systems integrator
But covid hit and really hurt business
Oracle refused to sell it back to him
Wasn’t able to compete with new startups

HiByron
MicroAcquire – saw a promising target, LOI in a few days, closed sale in 5-6 days
Acquired for 5-figures, $2.6K in MRR, US-based virtual assistants + tooling (geared toward online business
owners), $44K in trailing 12 mo revenue
Like a staffing agency + tech platform
Lot of R&D gone into it, great base, he was excited to own business
Great seller transition – SOP, tutorials – seller was focused on a new project

**Likes to close very quick, helps him w/ sellers – “I’m a cash ready buyer that will close within 2 emails” – has standard set of questions, very attractive to sellers

Living in Mexico now

Let someone take over HiByron (the VA biz) – 60/40 split for any new revenues (“phantom equity”) + 1 year vesting
Has grown considerably with new management
From $2.6K MRR to $45K MRR – specifically one big new customer (a vendor to OnlyFans)

Latest acquisition: Vending business
Talked to a lot of brokers, shared requirements, looked in Mexico & Canada too
Looking for $multi-million deal
3 targets:
1. Chemical distribution (60 yo biz) – lost to strategic acquirer
2. Tech biz (phone systems securitization) – lost to PE / group of investors
3. Vending biz – jukebox, arcade games, ATMs – bars, restaurants – “seemed super weird to me”

Reviewed financials – very stable business – 7-figure cashflow, 50/50 split, labor is biggest OpEx
6 month process to close – all his previous M&A experience really helped, sought financing from 100+ banks and lenders, dealt with a lot of rejection
Main issue: Entirely local – had to be around his base, maybe at most a 2-3 hour radius
End consumer is B2C, but direct customers are B2B (eg, restaurant or theater)
80-90% shutdown during covid

Vending biz primer
Owns and places equipment
Sends own collector + technician for operations
Two critical elements – 1) service + 2) customers
Service – If jukebox goes down at 11pm, you must take care of it asap; if broken, order parts and replace in 1-2 days
Customers – gotta baby ‘em, one of few vendors that actually PAYS the customer – mutually beneficial, perfect alignment
Don’t wanna be 1+ hours away from customers
In vending, LOTS of one-man shows, small route that they do everything for, biz plateaus
A few are vending aggregators – buy multiple routes
Lots of vending sellers came to him after he bought the first one
Bought 3 more since that first purchase
His operation is biggest in the state, but doesn’t compare to national operators
Cash-flow is now multiple 7-figures

Podcast notes – Bjorn Lomborg – TED talk, Global priorities bigger than climate change

If we have $50B to do good, how do we spend it?
Ex: Governance corruption, Sanitation and water, Global warming, Malnutrition, etc

This question was asked at Davos

UN existed for 60 years, but we’ve never made such a list and discussed how to prioritize them
Prioritization is incredibly uncomfortable
But it’s like walking into a pizzeria but not knowing the price of each pizza

3 well-known economists were tasked to come up with such a list
“Bad projects” = invest $1, get <$1 back

Bottom of list was climate change
This offends people
But why is it a bad deal (eg, Kyoto)? It’s very inefficient – can only do very little, at very high cost
Benefits don’t accrue for many decades – and by then most of the affected people will be much richer and more prosperous (even better than 1st world citizens today)

Kyoto agreement estimated to cost $150B/year – 2-3x global development aid to Third World yearly
For half of that amount – $75B/year – we can solve all major basic problems – clean water, sanitation, etc to benefit everyone on the planet

Top priorities – the “best deals”
1. HIV/AIDS – $27B over 8 years, avoid 28M new cases, prevention > treatment
2. Malnutrition – lack of micronutrients, lacking iron zinc vitamin A, $12B
3. Free trade – cut subsidies in US and Europe, enliven global economy, $2.4T improvement in global GDP
4. Malaria – few billion cases each year, invest $13B over 4 years to cut incidence by half

We should do all of them – but we don’t – in fact aid to developing world has been decreasing not increasing

It’s not about making us feel good, about things with the most media attention

Copenhagen Consensus – mapping out right path for world, think about political triage
“Let’s do enormous amount of good at very low cost right now”