Happy Friday everyone,
Have a look at the picture below. It was taken on Easter Morning in the year 1900.
Can you spot the 1 car?
Fast-forward to 1913. This is a picture taken of the exact same place - just 13 years later.
See any horses now?
Yeah - not a single one left.
Back then, there were naturally still arguments about why horses were better.
- don’t catch on fire
- don’t break down like cars do
- are less expensive to maintain - they just eat grass
don’t require new roads to be built
… and have you heard cars need to go to a gas station? what a nightmare.
As you know, history speaks for itself.
You may laugh at this, but in 20, 50, or 100 years, we’ll be looking back at the present moment and find some of our arguments against disruptive innovation to be completely ridiculous.
To continue with cars, the current skeptics of electric vehicles say
- charging is slow
- they don’t have enough range
- batteries are really expensive, etc.
But as you maybe know, a Tesla
- charges in less than 20 minutes
- has a range of up to 400 miles
- and the price of batteries has dropped 87% in the last 10 years.
Here’s my point:
Just because something seems radical, new, or strange today, doesn’t mean it’s not happening.
Innovation is the force driving the world forward. We all have better, more productive lives because of it.
A lot of people right now will tell you to avoid investments in disruptive innovations - like Tesla, or Bitcoin, because they’re “expensive.”
But most of the time, they have no idea how to value innovation.
They look at the balance sheet, EBITDA, dividend, earnings per share, discounted cash flow models, and all the traditional tools to determine a company’s “intrinsic value.”
Then, if the company is a “good deal”, they’ll buy it.
In 1910, you could have spent all day calculating the “intrinsic value” of a horse company - like Warren Buffett would today.
But what happens when cars put horses out of business?
People have been laughing at Tesla for a decade, for being too expensive, “all fluff” or whatever other excuses they could come up with.
I know, because I used to be one of those.
Who’s laughing now?
By the way, if you think Bitcoin is too expensive now…
Think about it like this: Bitcoin is a bank in cyberspace.
Imagine you walk into a bank and deposit $1 billion. Next week, if you come back and deposit another $10 billion - it doesn’t mean the bank is overvalued by a factor of 10.
It just means it’s ten times bigger.
As Bitcoin grows in price, it doesn’t become “overvalued.” It just becomes a more widely-used bank, which makes it less and less likely to be worth 0 at any point in the future.
This means that when the price of Bitcoin rises, it becomes less risky.
So no, you are not too late to the Bitcoin party - on the contrary. Since the price increased, it’s become substantially de-risked.
If you didn’t already have a position, hopefully you bought during the dip this week.
As a break from the usual format, I want to tell you something important:
I know what it’s like not understanding anything about technology.
If you ask any of my friends, I was probably the least tech-savvy of us all. Hell, I first got rid of Facebook in 2013.
I used to love “real” businesses I could understand.
Mining, banks, shipping, insurance, real estate - those all made sense to me.
I brushed off technology businesses and innovations - because they were too expensive, too complicated to understand, and all fluff, “in the cloud".”
Luckily, I eventually realized that the opportunity cost of ignoring innovation far outweighed the pain of learning about it.
That switch has been the most rewarding of my career - both financially and emotionally.
It’s made me richer than ever before, more optimistic about the future, and better equipped to navigate it.
I want the same for you.
We need to embrace the future and lean into it, without agenda. We can’t expect it to conform to our existing view of the world. Instead, when facts change, we must change.
The change won’t come overnight, but it’s worth it.
My goal with these newsletters is to be here along the way to guide you to the best of my abilities.
And I promise you I’ll never compromise the truth to stick to a narrative that confirms what you or I already believe about the world.
As Jeff Bezos would say - every day is Day 1 - an opportunity to approach things with a beginner’s mindset.
So from the bottom of my heart, I want to thank you for your loyal readership.