Notes from the field - stay hungry and foolish


Eagle, CO

Last updated on Jan 8, 2022

Posted on Jan 8, 2022

OpenSea isn't swimming in blue water
Most in the early days of Web1 couldn't see past Microsoft. They were sure Microsoft was going to rule the tech world, we'd be forever doomed to using computers that blue screened without reason. The United States government was so worried they filed an anti-trust lawsuit against them.

Now look where we are. While Microsoft is still dominant in computing, they're not a behemoth. Far from it. Two kids in Stanford dorm room (Larry and Sergey, Google) changed the world. Don't listen to anyone who says OpenSea's grip on NFTs is forever.

You create your luck
I started in tech circa '89. I saw Amazon go from selling books in Bezos's garage to the world's largest shopping center. I heard everyone saying the Macintosh wasn't good for anything else but desktop publishing. I used Google when the servers were in Larry and Sergey's dorm room.

I didn't buy their stock. The reason why is I didn't have an investors mentality back then. My parents were barely middle class, investing for was for rich people. My Dad never encouraged me, he told me to be a shoemaker. I always told myself I'm investing in my company, which was true. Growing up the way I did, I resented successful people.

Crypto will make a dent. It already has. Unless you're extremely lucky you won't find the next great opportunities casually putting time in. No. You have to be in this space daily. That means spending a few hours a day at it. And making connections. Then you have to understand that most of what we're seeing right now isn't where we're heading. If you're in NFTs, don't define them by their first use case - pfp's and art. See the big picture.

If you don't see the big picture, don't worry. If you're putting in the time the light will come on. If you're buying NFTs you're going to take some losses. Probably, mostly losses. Don't let that dissuade you. Keep working at it, stay positive. It's still so early.

You have to be in position for luck to happen. It's not the opportunity, it's recognizing you're there. If you put time and energy into this space, it'll pay off. One day the light will come on, you'll see a life changing opportunity. I can't tell you when or what it's going to look like. All I can say, is that it's going to happen.

Cash, and good credit, is king
This past week I listened in on the Top Dog Studios AMA (ask me anything). Leadership announced they have enough cash reserves to operate for 13 months with $0 revenue. That's impressive. I had some of their pieces listed for sale, I delisted all of them. I'm long on Top Dog Studios.

I've been an entrepreneur for 32 years and counting. I know how important cash flow is. I've been 2 weeks away from not making payroll at least once. I've been at the edge of a cliff with one foot on a banana peel so many times. What bailed me out every time was cash.

The cash didn't come from VC's (venture capital) - we had a mutual disliking of each other. It came from SBA loans. I was always able to qualify for SBA loans because my business was profitable. And I had excellent credit plus collateral.  

Probably most NFT projects out there right now aren't concerned about being around long term. But for those that are, make sure you're socking away cash for the rainy days ahead. Follow what Top Dog Studios is doing. Have enough cash reserves in the bank to operate for 12 months (ideally more) with $0 revenue without any interruption in your business.

If putting away cash won't work, then make sure you have access to TradFi (traditional financing – bank loans). Here in the USA getting a bank loan is all about two things: good credit and collateral. The bank doesn't care about your business plan or that you're in a space that's changing the world. All they care about is your credit score and what they can take if the loan goes bad. Make sure your credit score is north of 750. Have assets that banks accept for collateral. Cash saved me when all else looked bad. It allowed me to live to see another day, when the sun was shining again.

If you're buying NFTs probably the most important question you need to ask the team is, "How long can you operate at current staffing levels with no revenue"? If they can't answer or they're vague, that's a really bad sign. I've been following Top Dog Studios since they began. While they didn't provide their balance sheet or financial statements to back up their claim, I trust them enough to take them at their word.

Stay hungry. Stay foolish.

Stay hungry, stay foolish is a phrase generally attributed to Steve Jobs. He said it when he gave a commencement speech to Stanford grads.

Not true. It was printed on the last Whole Earth Catalog printed in 1974, which I have a copy of. It means stay curious, don't be afraid to try new things. Take chances. Follow your heart. Don't follow the crowd. Don't let rationality be the enemy of excitement. It's the old school version of ape in.

It's crazy right now in crypto. Almost none of it makes sense. I think apes and for that matter just about all NFTs - are way overvalued. But that doesn't matter to me. Because I see the light. I'm looking way ahead. I have no idea how this is all going to play out. But I want to be there all along the way. I don't want to miss a moment.

I hope you feel the same.

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