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Hi friend, 

Happy Saturday.  We are racing towards the end of the year, and I hope you are having a lovely holiday season. 

I've been thinking recently about managing my mindset. Be less reactive and driven by simple thinking.

Someone shared this email signature that they received on Twitter: "It is normal for me to take 2 days to read my emails and 2 more days to reflect on the matter and respond calmly. The culture of immediacy and the constant fragmentation of time is not very compatible with the kind of life I lead."

Much respect to that. 
 
Today's Contents:

  • Weekly Song: If You Loved Me
  • Obviously The Future: "The News" Has Got to Change 
  • Market Mania
  • Good Reads
  • Community Corner

Weekly Song: If You Loved Me

Last week, Spotify unveiled for its users' statistics on their most played songs.  I listened to 37,025 minutes this year.  Said another way, that is 25 days or a little less than 2 hours a day.  I can't decide if that's a lot or a little.  Maybe it's just right.  For me. 

My friend on his private Twitter revealed that he refused to abandon his music library in favor of streaming services.  WHY?!  So, logically, he gave answers:

  1. It is far too much work to recreate (I have 6,595 songs).
  2. Many of those do not exist on any streaming service.
  3. If any that do left, or the service went out of business entirely, I’d be fucked.
  4. I’d lose star ratings AND dates added - my main sorting mechanisms

But he didn't know his most played.  He had to take a guess.  What was it?  If You Loved Me.

Now that tune is potentially my most played song of the last week (wish the Spotify overlords gave us better control of our own data). And then I gathered the whole list of his 2020 hits. If you're interested, I've made the Spotify playlist below titled NattyWine after his distinctive love of natural wines

I get the appeal of the song both from the composition and the lyrics.  Am I the only one out there that seeks solace from my own psychology in sorting out relationship songs?  Managing your emotions. 

I'll sum it up: You often know before you want to believe.  You often believe before you act.  Why?  Often it's because we aren't great at handling uncertainty.  But sometimes it's because it feels good to be delusional, and we all want to avoid short-term pain.  If you're in the former category, there's are a range of mental models you can use.  If you find yourself in the latter category, waking up to reality is more efficient and practical.  If you loved me, you would know. 
 

"If You Loved Me" by GRACEY

Can we stop and just get real?
This is messing with my head again
You're not sure of how you feel
If you loved me, you would know if you loved me
Keep tryna convince myself
Maybe you just need a little time
I should know by now that won’t help
If you loved me, you would know if you loved me

[Chorus]
If you loved me, you would know
If you loved me, you would know

NattyWine Playlist

Obviously The Future: Filtering Individual Voices to Curate Your News


Situation: The news is a solution integral to the human condition: Humans are social, tribal creatures. People need to know what's going on in their community. What's new? What's exciting? Who is doing what? What are people thinking? What should I be thinking? How does this impact me?

Print publishing emerged to solve this problem at scale. Leaders, thinkers, and academics could write down their ideas and pitch their appeal to a media company that would filter and edit them for publication in their newspaper product. 

Advertising and subscription revenue followed. Dual revenue sources combined with high, set fixed costs and an entrenched brand made for a business with a moat and attractive margins. 

Over the last 20 years, technology and the Internet have turned the publishing world upside down. The amount of content exploded. The number of mediums of consumption increased. Media organizations that once had a local geographic monopoly now had to compete globally.

In the last ten years, Facebook succeeded in connecting the world. And Google succeeded in organizing the world's information. Facebook and Google became two of the largest companies in the world through advertising revenue offering better targeting. The rise of Facebook and Google often came at the expense of traditional news publishers. 

What's the future?

My view is this: Content exists on a spectrum from entertainment to information and analysis. People have always made choices about what they chose to consume, and now they have many more options. When it comes to 'the news' the output of Internet-enabled consumption will continue to personalize and appeal to the most basics human instincts that results in more negative and sensational media being produced and consumed. 

The media market bifurcates into either (1) large players who bundle content, operate at scale, and target a large, loyal market segment like the New York Times or (2) small, niche groups or people who keep overheads low and distribute on open platforms like Substack, Gumroad, or through email lists. Newsletters like this one fit into this category. 

'News' like press releases and first-person videos will continue to be issued directly and posted online. There will be a direct relationship with primary sources. We already do this - we see a video posted online, we can follow politicians on Twitter, and you can read the press release from a company. Everything else will be seen for what it is: filtered opinion. What will be truly valuable is the insider context of the information. Who really knows what it means?

What does it mean for the consumer?

Jeff Bezos famously said, 'You are your choices. A non-choice is a choice.' Nothing could be more applicable to news and information. 

If you don't make active choices about your information diet, you'll end up a slave to the algorithms and those who have studied the best ways to appeal to human cognitive biases. 

Micro-targeting allows higher dollars per unit of engagement. As people realize that they have limited time, there is a surplus of content. A discerning consumer is willing to pay for their content and curation. 

Some parts of the future aren't so obvious.

I might have bitten off too much with this topic. The investment opportunity for capital is highly uncertain. There's always a place for SaaS products that serve a particular need. But the future business model of the news? Is it much different? I'm not sure. Here is a couple of hypotheses. I'd love to hear from you. 

  1. More writers, researchers, and creatives will go independent and set up paid channels for their work, and many others may remain at the large media companies that offer a strong brand, decent pay, and prestige. 
  2. The fundamental dynamics of media and human cognitive biases are unlikely to change. Media is likely to remain a long-tail, hits business with big winners receiving most of the attention. 
  3. There will be newsletters curated or articles written directly by people. People you know and trust. Some will find massive followings and build business models around them. Others will remain small and niche. 
  4. Some people, enough people, will seek out truth and debate. A newsletter called The Flip Side is curated to present both sides of the politics of the issue. They have hundreds of thousands of subscribers and are growing fast. 
  5. Communities are online, interactive, and interest-based. News will be shared and analyzed in these communities. However, I think this trend is in super early days and online communities have a long way to go to prove enduring value or ability to scale. And maybe that's fine. 


Further Reading (shared previous week):

This is messing with my head again: How to stay sane in an insane world

This year has been a wild ride in financial markets. This week was a bonanza with Airbnb and DoorDash going public.  Hardly 6 months ago, Airbnb executed a down round to raise capital; this week, they are 3x IPO price. But, that's just scratching the surface. The biggest IPO success in the last several weeks is SEER, a life sciences company that engages in developing nanoparticle technology solutions for researchers in the areas of proteomics information, that popped 298%. Note, for context, that SEER had revenue through Q3 2020 of $320,000. The full IPO list for 2020 is here

A few months ago, I asked a friend who was early at one of these if I could interview him for the newsletter. Here's his response.

lol not only would I not comment for obvious reasons but I also view stock prices like the weather. I have absolutely nothing to say about them.

I share because I appreciate the sentiment completely. The news and narrative. You quickly see that success has many fathers and failure is an orphan. But it's easy to get caught up in the hype and filter signal from noise. Here's a couple of the examples I've been following:

Palantir 

Palantir has tripled in price since its IPO in late September. This week, it's up 21%. Why? Cathie Wood of ARK explains below.



So what we are saying is $44.4M contract over 3 years, roughly $15M/year is worth ~$10Bn in market cap for PLTR? We don't even know if it's profitable revenue.  
 

Psychedelics

As you know, I'm a believer and investor in the psychedelic space. There is a real thesis for the market opportunity as I wrote in Psychedelics As Medicine and I called out first in a newsletter in February. Despite this, I don't think there is logic around the market movement in public markets in psychedelics right now. 

 



This week brings up the topic that is often debated but to date has been wrong: Are we in a bubble? Or are we pricing in 10 years, 20 years of growth and performance today, and then expecting less price movement in the future? Below is the classic bubble/mania chart. My investor friend this week texted "I can’t decide where we are as a country with growth stocks now - “delusion” “new paradigm” or “return to normal". Either way, it's up there. 
 

Classic Bubble chart

I don't know. Nobody knows. That's why the best advice for the average investor is to play to the mean and not try to buy into manias and market timing. We all know that. 

The opportunity environments like this provide is to observe one's own psychology to become aware of natural biases. Here's my self-assessment: I understand the trends super early and make a low-conviction bet. Then after it rises some I get paranoid that it’s played out. Classic bear trap in the above. I find watching my emotions while taking in market information is the best way to stay sane. 

Can we stop and just get real?: Good Reads


The not so positive analysis of the Metromile SPAC $INAQ: Here I appreciate the skeptical takes of tech hype. This one delivers. The author leaves us with a parting thought that echos my sentiments above: 

We are in one of those strange periods where dreams move stocks and hindsight bias is all around us. Is this what the tech bubble felt like? Yes, a little, but it ran for a lot longer than anyone expected and by the end, examples of stocks that required a lot of imagination were everywhere. Remember that in these periods the smartest investors can look like the dumbest and vice versa. Beware soothsayers and false prophets pitching SPACs. 


API's All The Way Down published by Packy at Not Boring. 

Value: If not now, when? by GMO. Think they make a strong case.

The hype about ESG investing. American Institute for Economic Research published an analysis that shows: while one in four investment dollars are currently in mutual funds labeled ESG, most investors do not realize that those funds are virtually indistinguishable from non-ESG-labelled funds in terms of portfolio composition or returns. Only fees differ and, unsurprisingly, are considerably higher for ESG-labeled funds — on average almost 0.75 percent vs. less than 0.50 percent for non-ESG-labeled funds.

Between past due rent, late fees, and unpaid utility bills, Americans may collectively owe $70 billion by January, when the current federal eviction moratorium is set to expire. Bloomberg.

Fiscal Effects of Covid-19, a long read by Brookings. “Because low-interest rates create ‘breathing room’ for fiscal policy, we do not see the large short-run debt accumulation … as necessitating any immediate offsetting response,” write Alan J. Auerbach of the University of California-Berkeley, William Gale and Louise Sheiner of the Brookings Institution, and Byron Lutz of the Federal Reserve Board. However, they warn, “long-term projections show that significant fiscal imbalances remain and will eventually require attention.”

Community Corner

I see you, friends. 

UpChoose: DS member and friend Ali El Idrissi just launched an open investment campaign for his startup UpChoose on Republic here.  UpChoose is on a mission to accelerate the transition to a sustainable consumption model. They create smarter, simpler, and less wasteful services for key life moments and start at the beginning: birth. He articulated his vision for UpChoose in this Medium post. 

Hats off to you Ali! I'm an UpChoose investor and a recent customer. No, no, not for me personally. A gift to my brother :)

Thank you for reading. Please always be in touch. 

Best,
Katelyn

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