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Hi friends, 

Happy Juneteenth weekend. Historian Mitch Kachun suggested that celebrations of the end of slavery should have three goals: "to celebrate, to educate, and to agitate." I'll try for a little of all three :)  

I hope everyone can get out and enjoy the longest days of summer and not check (or think) about asset prices too much. And, since it also merits both recognition and celebration, happy Father's Day! 

Today's Contents:

  • Good Reads: Sensible Investing
  • Good Reads: Trends
  • Book Review: Silicon Valley Porn Star
  • Weekly Song: I Believe In You and Me

Good Reads: Sensible Investing

Seth Klarman: Opportunities and Pitfalls for investors in 2022. Harvard Business School Interview here. This is your annual reminder that I have a PDF copy of Margin of Safety on Google Drive here. The interview was recorded on March 12, 2022, which feels like a different world. 

Interview with Cliff Asness of AQR in Bloomberg about value investing. Here.

How to Win When a Bubble Pops? Be Captain Obvious. Fun read here. Below is his parting wisdom:

Do what’s obvious. If something doesn’t sound right, don’t let yourself get talked into it. It’s probably not right.

You may have heard the old phrase “the market can remain irrational longer than you can stay solvent.” Today, the applicable phrase is “if you remain irrational, you will soon find yourself insolvent.

His most important (and under discussed) point however is the following:
  • Credit is the next shoe to drop. The Fed’s main goal the last ten years was to prop up credit. Equities, crypto, and other risk assets worked as a derivative of the credit trade. With the Fed put off the table, the Fed doesn’t have the tools to avoid credit losses. They can hopefully prevent contagion, but they can’t keep credit losses at zero.
Connor Maguire on Impending Credit Issues. Here. He sums it up: In short, there is an enormous amount of high yield debt outstanding that looks increasingly at risk, which should be a major basis for concern for investors.

Money Out Of Nowhere: How Internet Marketplaces Unlock Economic Wealth. Here. I'm re-reading vintage Bill Gurley from this repository.

Burn Multiple for SaaS: Definition & Examples. Here. A couple handy metrics. 

Good Reads: Trends

The impact of rising interest rates is now apparent across the market, but the impact is still in early innings. 

Despite the Fed raising the Fed funds rate by 0.75% this week, when compared to periods in the past, interest rates are still incredibly low.

However, interest rates have a material impact on consumer credit and the costs of mortgages. This impact is just beginning to be felt. 

All crypto currencies have had an abysmal week too, with Bitcoin and Ethereum down roughly 35%: 

The impact of falling crypto prices and the collapse of stable coins like Luna is also in early innings - although we've seen meaningful action with the collapse of Celsius and Three Arrows Capital (~$10B+ AUM unable to make margin calls) this week. 

For what it's worth, I've thought (and continue to believe) that crypto and web3 were more than speculation on token prices, although it's obvious why that appears to dominate the narrative now. Nothing is ever as good or as bad as it seems - and at least a few technologies with lasting applications will come emerge from shakeout.   

Book Review: Silicon Valley Porn Star

Book is available here.

When I met Jason Portnoy in 2016 at Kauffman Fellows, there were many things about him that were highly unusual. First, he was absolutely vague and hand wavy about what was clearly a storied career. "If I were the founding CFO of Palantir and part of the PayPal Mafia, I'd let people know," I thought to myself. Then, he would speak profusely about his wife, Anne-Marie. About how great she was, how she was his partner for life, how she was the most important person in his life. And, lastly, he had this life coach, Shams, that occasionally would come to with him to events. I remember looking up Shams on LinkedIn and wondering 'he doesn't seem to have any investment experience, I don't see his links to capital'.

Hmm, Jason must be on a self-discovery journey, I thought.

It wasn't until a month ago when an early copy of Silicon Valley Porn Star dropped in my inbox that I fully appreciated Jason's reality. 

A Memoir! From Jason! I immediately downloaded the PDF version on my phone and took every opportunity of downtime to read until the end. 

It's honest, real, and raw. Jason brings the reader into the room to experience his reality of porn addiction, sexual hookups, and grappling with his prior traumas. There were several times that I found myself choking up when I could feel the pain and also the long-awaited breakthrough. It made me think deeply about life-partnership and working through the generational trauma that we all carry in a different way and bring to ourselves and our relationships.

I am, also, a big believer in memoir writing. If not to share with the world, at least to process personal learning and past experiences. In 2017, I shared with Jason some writing I did after attending Burning Man. After reading my writing, he wrote back:

For the last 7 years I’ve been on a path of learning how to live in the stillness of my self but still participate in the earth-bound experience. I feel like you are perceiving a similar journey. I believe it is possible, and my recent experiences prove it to me beyond a doubt. I have sunken to much deeper levels of stillness in the last year, and it feels like it is only accelerating in recent months. I have subtracted almost all noise, and the results are incredible. I see so much now that I never saw before. I see through everything everyone is saying to me - like I can see right into their souls. I know they are feeling it too - they tell me with words and frequently through tears. It’s been amazing.

It's amazing to see him sharing his story 5 years later. Thank you for this gift.

I highly recommend the book. It's original and courageous. Jason addresses and works through modern masculinity in way I've never seen written about before. I believe this book will inspire and bring hope to many people to start on their own journey for stillness. 

Silicon Valley Porn Star will be released June 21st, but you can get a sneak peak today on Tim Ferris's podcast where he interviews Jason here

Weekly Song: I Believe In You and Me

Music video here.

After one of the worst performing weeks for equities in years, I was reflecting on Thursday about what it means for my work. My co-founders and I founded Delivery Associates about ten years ago, and I've invested in over 50 early stage companies over the last several years. This song by Whitney Houston best encapsulated my feeling.

These macro pricing conditions don't have a massive impact on the big picture or the long term. Yes, returns might be less, prices will be lower, the cost of capital is going up. But for companies with strong leadership and talented teams that build real value for customers and have unit economics that make sense, now is the time to prioritize and endure.

The past couple of years were the anomaly. This environment is more realistic.

I believe in you and me to get it done. 

"I Believe In You and Me" by Whitney Houston
I will never leave your side
I will never hurt your pride
When all the chips are down
I will always be around
Just to be right where you are
My love, oh, you know I love you, boy
I will never leave you out
I will always let you in
To places no-one's ever been
Deep inside, can't you see?
That I believe in you and me


Thanks for reading, friends. Please always be in touch.

As always,

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Katelyn Donnelly
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