From Kurt Gebhard Adolf Philipp Freiherr von Hammerstein-Equord’s military officer classification scheme, presented without comment:
I distinguish four types. There are clever, hardworking, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and hardworking; their place is the General Staff. The next ones are stupid and lazy; they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the mental clarity and strength of nerve necessary for difficult decisions. One must beware of anyone who is both stupid and hardworking; he must not be entrusted with any responsibility because he will always only cause damage.
In June 2020, I packed the contents of my Chinatown apartment into a rented minivan.
I parked the minivan on the curb with its flashers blinking. Then I raced back and forth between my 4th floor apartment and the van with all of my earthly possessions. I had to physically stop passerby from stealing my furniture, dodge a drunk man who spat at me and pounded on the door of my building for at least 15 minutes, and triage which items would remain on the curb (as I lack both the prudence to adequately predict how many items from a one-bedroom apartment will fit in a Dodge Caravan and the spatial awareness to efficiently pack said Dodge Caravan), all while wearing a bandanna around my face as a symbolic, if not entirely functional, talisman against COVID.
It was chaos.
But my partner and I made it out of town, arriving late the next day at my parents’ house in Chicago. There, we plotted our next steps: buy a car and take a road trip around the country.
On the Road
Living nomadically at the beginning of the pandemic was a great decision. I was in the sweet spot of life where I had a stable relationship (i.e., a default travel buddy) and a good job where I could work remotely, but no kids or family obligations tying me to a specific location. And with many people afraid to travel in late 2020 and early 2021, long-term Airbnb prices were quite reasonable – little more than what we had spent on rent in New York.
We drove across the country: first south from Chicago through St. Louis and Tulsa to Austin, then west. We snowboarded in Colorado, hiked in Utah, and surfed in California.
Train tracks through Moab
Leaving New York was one of the best things I could have done for my mental and physical health. When your baseline is a one-bedroom apartment quarantine, getting outside in the sun, not following the news, and experiencing the diversity of land and people in the United States is delightful.
That said, life on the road became tedious after a while.
Everything that is nice about a vacation is annoying when you need to work from a new place. The lack of a routine and office setup led to decreased work productivity. At the same time, because we were working, we had limited hours to explore the places that we were visiting.
It took time and mental energy to repeatedly plan where we live in the next month. Once we agreed on where to go and found an Airbnb, we’d spend an entire weekend packing the car, driving to a new city, and unpacking in the next rental. It was essentially the stress of a move, every month.
Then, we’d need to figure out where to go grocery shopping, find a new gym, and see which restaurants in the area that we liked. But just as we were settling into our new routine, we would pack up the car and do it all over again. We found that constantly changing our environment was not the best way to have a good night’s sleep, a healthy diet, or a consistent workout routine.
We also ended up spending a lot of time in our parents’ homes. We had to weigh whether or not to spend $3,000 to rent an Airbnb for the weeks between Thanksgiving and Christmas. Was it really worth the cost when we’d be driving back so soon?
Cows on the open road
Additionally, the trip was at times quite lonely. During the majority of our travels, vaccines weren’t yet available, meaning a lot of in-person events were cancelled. So there were not many opportunities to meet new people. Pandemic aside, it is hard to build a community when you know you’re only in a city for a month. If we were to do this again, we’d get a WeWork membership and head into the coworking space each day to help develop a work routine and have at least a bit of human interaction.
The Town and the City
After traveling around the country, we realized that we had a few priorities for where we wanted to live long-term. We wanted to be somewhere with good weather, where we wouldn’t mind riding out more COVID lockdowns. We also wanted to be near friends and family. It is difficult to move somewhere where you start from scratch — we wanted the beginnings of a social network to build a community.
This narrowed down our options to either Southern California or to Austin. We loved Orange County…who doesn’t? Some of my best friends live there, the weather is perfect, and you can go surfing in the middle of the workweek. But ultimately we chose Austin for a few reasons:
Cost of living. Orange County was significantly more expensive than Austin. Rent is 50% higher. And with a 0% income tax rate, living in Texas gives you an immediate ~10% pay bump vs. living in California.
Good weather. Well, good weather for about nine months of the year. However, see point #1. If we are craving the SoCal lifestyle and want to escape the summer heat and humidity of Austin, the tax savings from my salary alone will pay for a three-month sublet in Orange County.
Job opportunities. Austin has a great tech and startup scene. There are a ton of other people working in crypto and building cool companies. Many companies are moving their headquarters to Austin from the Bay Area (Tesla, Oracle, etc.), or at the very least, opening huge satellite offices here. I only see this trend accelerating in the next few years, and think at this point Austin is just as good as the Bay Area for ambitious people working in technology.
Excellent culture. People are really nice here! Austin feels like a mix of Midwestern friendliness and Southern hospitality. There is also a live and let live attitude and self-reliance mindset that strikes me as very Texan.
Diversity. Austin has true intellectually and political diversity when contrasted with New York. (Let’s hope this holds up with the influx of new residents.) Austin, while a fairly liberal city, is still part of Texas. This leads to an interesting dynamic where you don’t know where people stand politically. I find this refreshing, after being in a work environment in New York where everyone’s politics were assumed and discussions could become a virtue signaling competition. Essentially, the reasons Tim Ferriss had for moving to Austin a few years back hold up.
Tremendous food. I am happy eating tacos and barbecue for every meal.
COVID concerns. If we are to lock down again, we want to be in both a red state (to minimize restrictions) and somewhere with a lot of outdoor space and activities.
Personal network. Both my partner and I have friends in Austin. With her family in New York and mine in Chicago, it’s also close enough to home to go back for a weekend. There is a big difference between a six hour flight and three hour time difference from LA to New York, vs. a three hour flight and one hour time difference coming from Austin.
The downsides…aren’t so bad. People talking about how the rent is too high here have never lived in NYC. People talking about how bad the traffic is have never driven in LA or Chicago.
So, like many who fled San Francisco and New York in the past two years, we’re Texans now. Giddy up. 🤠
I’d never join a country club.
Golf seems like an expensive waste of time, the food isn’t that great, and I’m not trying to network with any of the people there. On top of that, the country club in the town where I grew up has a six-figure initiation fee and still doesn’t accept women as members. Hard pass.
But I will spend thousands of dollars on a cartoon image of a monkey that I could download for free. What gives?
If I owned these apes I wouldn't need to credit this image (via The New Yorker)
A Killer Bundle
“Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.”
– Jim Barksdale
I am a native of the digital realm. I spend 12 hours per day on my laptop – working, coding, writing, hanging out on Twitter, Slack, Discord.
For those of us already living in the Metaverse, NFTs combine several distinct value propositions:
A display of wealth. Premium NFTs are the digital equivalent of driving a Ferrari or wearing a Rolex. If you spend the majority of the day online, you can make an impudent show of your NFTs far more often than your luxury physical goods.
An elite social network. With a CryptoPunk or a Bored Ape as your Twitter avatar, you gain prestige and legitimacy in the crypto world. This unlocks a network of people who otherwise may not interact with you. Contrast this with private art collection – as far as I know, there is no Discord for people who own original Picassos.
A signal of good taste. Picking the right NFT project to back early on gives you tastemaker status. You liked it before it got cool.
A limited collectible. Baseball and Pokémon cards are just printed pieces of paper. Yet people pay thousands of dollars for them. Similarly, Supreme makes a fairly basic T-shirt. But people wait overnight in line for the next drop. NFTs induce the same behavior.
The excitement of roulette. Much like trading options on meme stocks, there is the chance that your your investment will 10-100x in value in a short period of time. This gives NFT collectors the anticipation of art appreciation, on steroids.
In other words, NFTs are one of the best bundles ever created. They vastly expand the traditional bundle of art collection, while layering on the dopamine rushes of social exclusivity and a good wager.
And that’s just on the demand side. On the supply side, NFTs are a no-brainer. An additional revenue stream for creators? A cut of secondary sales? Giddy up.
But This Is Stupid
Yes, it is. So is traditional art. Art is just a delusion we’ve agreed to share.
Is this rabbit worth $91 million?
Matt Levine criticizes NFTs for having almost no consumption value outside of participating in a bubble. Sure. But if that is your bear case, you need to extend that to all markets in 2021. The days of me buying a stock because I think the present value of its future dividends are higher than its current share price are long gone. Reflexivity reigns.
As Byrne Hobart writes,
The strongest bull case for NFTs is that the bear case is boring: you can right-click and “save as” to get access to any NFT’d image you want, and yet people pay for the social status of being able to claim they’re the true owner. This is, of course, quite silly, but it’s obviously silly and people still pay for NFTs. A bear case the bulls are perfectly aware of is no bear case at all.
So what is the true bear case of NFTs? I’m not sure. But people are engaging with NFTs with a fanaticism that rivals a soccer hooligan’s support of his club or the devotion of the Hells Angels to Harley-Davidson.
I won’t bet against that fervor.
Consider how you spend your time. Place each activity into one of two buckets:
Bucket A consists of all of the time you spend online. E.g.,
- Video games
- Peloton classes
Bucket B consists of the time you spend offline. E.g.,
- Face-to-face interactions with friends and family
- Playing a musical instrument
- IRL workouts and sports
- Manual labor
If you’re reading this blog, I’m willing to bet that the entirety of your job and the vast majority of your waking hours fall into Bucket A. Further, with a supercomputer in your pocket sending you dozens of push notifications per hour, you are always online.
Portrait of a Very Online Person
The Metaverse is here – and you already live in it.
A Brief History of the Internet
Much like coffee or feminism, the internet has come in three waves.
Web 1.0 was open, decentralized, and optimistic. People created their own digital worlds to share weird blogs, artwork, code, whatever. But you had to be highly technical to be a creator Web 1.0. And for the most part, creators captured little or none of the value they added.
Web 2.0 solved the openness problem: anyone can create a Facebook page or a Gmail account. And for all of the criticisms, this is incredibly powerful – with minimal budget you can start a company by deploying a site on AWS, marketing on Instagram, and processing payments with Stripe. However, the drawback is that the system is now closed. We operate in walled gardens that are paid for by advertisements.
Web 3.0 aims to be the best of both worlds. Its stated vision is to empower creators and participants by monetizing the protocols themselves, rather than monetizing via advertising in the application layer of the stack.
But is this vision for the internet achievable?
Read Snow Crash. The cyberpunk world Neal Stephenson constructed is cool, no doubt. But it is also a cautionary tale.
Governments have collapsed, leaving society in a state of anarcho-capitalism. Liberty, justice, law and order…these are all principles that are alive and well, they’re just for sale to the highest bidder. You get only what you can pay for, whether in the base reality burbcaves or in the Metaverse.
This is the vision for the Metaverse that Zuckerberg et al. are pitching.
I work in crypto. It’s fucking awesome. We’re building a whole new financial infrastructure, a whole new reality. There is so much potential in the internet – we’ve barely scratched the surface.
But if we’re not careful, Web 3.0 can easily become the worst of Web 1.0 combined with the worst of Web 2.0. A world that is cool if you can pay to play, buy leaves most people on the outside looking in. If you’re living paycheck to paycheck, $100 in gas fees to buy a NFT on OpenSea are not negligible.
We have the challenge and responsibility to build a Metaverse that is great for all people – not only for Meta (née Facebook), the crypto projects funded by A16Z, or the people with the bankroll to trade NFTs full-time.
This is the opportunity. And if we don’t get it right?
We may see a decline of the internet that mirrors the decline of America writ large – a place where justice, property rights, and morality are determined by wealth and power, rather than by shared fundamental principles. The Disney World-ification of the web, where the internet becomes “an online theme park where everything costs a ticket.”
I’ve tried to learn a new language half a dozen times. I start a daily practice in Duolingo, buy a textbook online, listen to podcasts, and watch TV only in my target language. A few weeks later, I haven’t kept up with my routine and have learned next to nothing. What gives?
Conversely, the one time that I became fluent in a foreign language was when I studied abroad for a semester in Argentina. For the first few weeks, I was constantly frustrated. I was speaking only in Spanish in both my classes and in my homestay, so I wasn’t able to express the complexity of my thoughts. I felt like my brain was melting – each day I was exhausted from the cognitive load. But about a month in, something clicked. While I was still nowhere near the level of a native speaker, I found that I could communicate at a high level and succeed in college classes taught in Spanish.
Tango in Buenos Aires
True learning took immersion – throwing myself into the deep end of the pool and finding out if I would sink or swim.
Moderation is Overrated
This concept extends beyond language learning to many – perhaps all – areas of life. Paradoxically, when trying to establish a new habit, I’ve found that success comes when I am extreme, as opposed to moderate. Why might this be?
Firstly, it decreases cognitive load. It’s hard to “cut back on drinking”. What does that mean? Is another beer tonight acceptable if you don’t have any drinks tomorrow? You end up having to think hard about each and every situation.
It’s much easier to just have a rule: “I don’t drink.” Why aren’t you drinking tonight? “I don’t drink.” Is another beer acceptable? “No, I don’t drink.”
By establishing a rule up front, you remove all of the gray areas and challenges that you’re likely to encounter as you try to build a new habit.
Or say that you’re trying to exercise more. Just signing up for the gym and trying to fit it into your schedule isn’t going to cut it. There are only 24 hours in a day, so you’ll need to remove something from your life to make time to train. You need to schedule your workouts: mark them on the calendar and commit to being a person that always goes to LA Fitness at 6 p.m. on Tuesdays and Thursdays. Then, you’re on autopilot; you don’t need to think about training.
Secondly, with extremism comes stakes. Being extreme necessarily means taking a public stance that you’ll do something and creates a real cost to not succeeding. If you’re building your startup on nights and weekends, you’re not going to have much time to spend with your friends. You’ll be far more motivated knowing all of the fun that you’re missing out on. Contrast this with the wantrepreneur who goes out with their friends and talks about starting a business, but never “has the time” to actually put in the work.
In the previous example regarding exercise, you might have a friend meet you at the gym to train with you. This external accountability creates the higher stakes necessary for success. It’s harder to let down a friend than it is to cheat yourself.
Thirdly, the high level of intensity creates an activation energy that leads to habit formation. Activation energy is the minimum amount of energy required to start a chemical reaction. Interestingly, a lesser amount of energy is required to maintain the reaction. This concept extends to habit formation in our daily lives: it’s hard to get going, but things become much easier once in maintenance mode.
Putting It Together
I recently signed up to participate in a marathon. This presented a small problem, since I haven’t run more than two miles since I was in high school. As previously mentioned, I have the ideal physique for lucha libre.
So I hired a coach to give me a training regimen. This decreases the cognitive load – all I have to do is show up and complete the workouts. There are also stakes present. I need to log my sleep, diet, and training for my coach. Knowing that another person’s eyes will be on these numbers causes me to make better decisions when it comes to my health. And because I signed up for the marathon in a group, I know that I’ll be letting other people down if I’m not able to compete.
Ultimately, all of this gives me the activation energy required to establish a positive habit. I’m spiraling upwards – because I’m paying for coaching, I want to make the most of my money and train hard. To train hard, I need to be fresh for workouts. To be fresh for workouts, I need to clean up my diet and sleep hygiene.
One final consideration – outlier results come from outlier behavior. It is impossible to do it all; being extreme is part of the cost of greatness.
Building a successful company requires a rare intensity and work ethic. At TRM Labs, our cofounders are maniacally focused on building a best-in-class product and company. I saw the same thing when I was working at DoorDash – the CEO set a culture of working long hours, obsessing over the small details necessary to build the best customer experience, and holding employees to an incredibly high standard.
Similarly, pushing the bounds of athletic performance necessitates outlier behavior. One of my best friends is training with the USA National Bobsled Team. He’s perhaps the most naturally athletic person I’ve ever met. He also has a degree in Computer Science and could be working for a FAANG company. But in order to pursue the Olympic dream, he put his career on hold. He is away from his fiancée for most of the year, living in a dorm room in Lake Placid and training.
The societal default is mediocrity. To break away from mediocrity, you have to be extreme – to do what others refuse to do. If you’re not willing to be extreme in the pursuit of excellence, that’s completely fine. Often the sacrifices aren’t worth it. But don’t delude yourself into thinking you can have a two sigma outcome without two sigma behavior.