11/26/2021

None of the following is investment advice. This memo was written over the course of 2 months of intense thought and research.

“Does it add to the bottom line?”

Around the middle of the 19th century, drinking water made its debut. Around the middle of the 20th century, Hitler rose to power. These seemingly unrelated events prove the magic of human beings – that we constantly are moving forward.

In this memo, I detail thoughts on the Metaverse, philanthropy, and human nature. There was a time that banks were seen by society as evil and bankers vilified; could big tech today be analogous? And if so, what are the ramifications in terms of interactions? Will human nature change or will we simply adapt to a new device of both promise for some and destruction of many? Big picture ideas demonstrate much more constancy and fairness than the day to day observations; answering these questions is crucial to our ability to evolve further, which we have always done.

The Metaverse must happen and it will happen, right or wrong. If wrong, we will evolve even more than if right, but it will take longer and will be more painful. This is the ultimate goal of the Metaverse, not to gain power or freedom, but to add to the bottom line. Can it be a net positive to humanity and can we learn from it? Can life become easier by internalizing its concepts?

The questions posed by antitrust regulators seem fair, and the responses from the likes of Mark Zuckerberg are snarky. Indeed, the largest tech companies have become difficult to regulate since the device they use to dominate consumers is not a need but a want. Not paid for with money, but human nature. Money is no longer important – to regulate big tech nowadays is to regulate human behavior. The best argument continues to be that there are no alternatives to Facebook, there are no alternatives to Google, there are no alternatives to Apple’s app store, but these apps aren’t needs, they are wants. And as long as people want these apps, how can the government regulate them in any way? So when most get the feeling immediately that regulation needs to happen purely to teach Zuck a lesson, to reign in the control these applications have over their users, the question is yet again, do they add to the bottom line? Despite the absence of tangible proof, I think the answer is a resounding yes.

Modern monetary theory is only twenty years old, and it has worked wonders for the world so far and will continue to. Recently, inflation has been a buzzword, but inflation is a misnomer for a growing wealth gap. The rich get richer and the poor get poorer with every new dollar printed. But does it add to the bottom line? My thought is yes, because the world is continuing to move away from a commune and toward a meritocracy. People seem to be rewarded more for contributions to society, no matter where they come from. The obvious benefit of that – those with the most power are those that have contribute most to mankind’s evolution. While dynastic wealth still holds power, money is backing tech entrepreneurs at a faster clip than ever before, and we haven’t seen anything yet.

In my opinion, a decentralized management style has proven time and again to be most efficient for all forms of organization. Why do the intelligent among us need to either be told what to do or tell others what to do? It’s best for the bottom line of us all to let them make rain. The ultimate meritocracy borders on nihilism, demanding that those contributing nothing to society are rewarded nothing.

People contribute in different ways. Those of the highest merit need the most help to lead mankind. The help they need are end users of tech applications and the Metaverse. As stated above, these users want to use these applications and they provide feedback by using one app over another.

Banking in the 16th century was nearly an identical situation. Look how much banks have helped mankind evolve over 500 years. Those in power at that time were religious heads, mostly that didn’t want to lose power. So Zuck’s snarky behavior at Congress betrays all of these ideas. From a leadership standpoint, only Elon Musk is above Zuckerberg to me, and I’ll be the first to say I/we own Facebook shares – he has changed the world in a very short period of time. Right or wrong, Zuck will advance mankind by pushing users into the Metaverse.

Why not allow our smartest people the ability to use their genius? If Zuck fails, someone else will take his throne, after all. Those leaders that have given in to overt corruption have always themselves been ruled by fear. Fear that those they corrupt will rise against them. What I have observed is that those corrupt leaders have become corrupt only because they don’t deserve to be leaders in the first place. They make underhanded deals to sustain power. Meritocracy means that they must get to be leaders because they are smart enough. They are smart enough to advance mankind in a thoughtful way. Since the Metaverse will probably take decades to develop, the pioneers today must be in it for the long haul. They will be in the spotlight for many decades. The stress would kill anyone else. I’m a big fan of Zuck.

The Metaverse:

The Metaverse is defined by both Ernest Cline in 2011’s Ready Player One and Neal Stephenson in 1992’s Snow Crash. For my money, Snow Crash, which coined the terms ‘Metaverse’ and ‘Avatar’, affords a smarter vision, one without the idealism seen in Ready Player One. A few takeaways I had from Snow Crash:

• There was only one Metaverse and not many of them
• The stock market still existed, and anyone who held stock in the Metaverse’s creator made untold fortunes.
• Everything in the Metaverse costed money and became very expensive over time
• Everything in the real world became prohibitively expensive, with a pizza costing upwards of thousands of dollars (And yes, that same pizza in 1992 when written might have costed $5).
• People that were wealthy in real life (notably Mr. Ng, who was detrimentally crippled in reality, but very rich) could live any life they wanted to live in the Metaverse, every second of every day.
• Money from the real world could be spent in the Metaverse instantly on anything.
• The Metaverse had one currency
• The real world was a ruinous place and controlled by the founder of the Metaverse
• The people existing in the real world (i.e. not living full time in the Metaverse) were very unsavory characters

The chatroom prognosticators of the Metaverse today have not picked up Snow Crash; they have been entranced by Steven Spielberg’s depiction of Ready Player One. The movie, debuted in 2018, introduces a world where an impoverished kid living in a grimy van can live an action packed, colorful, fun life in the Metaverse. In real life, the kid never made a difference, but in the Metaverse, he finds he can rise above his grimy existence and ultimately changes the entire Metaverse.

The ultimate meritocracy. Much of Ready Player One parallels the Metaverse of Snow Crash, but with a plot that takes place within the Metaverse instead of in the real world a la Snow Crash. Both of these get one element wrong – that the rulers of the Metaverse have goals to enslave the world. The argument in Congress is exactly the same and just isn’t correct. At what point in human history has an entire population of the world’s smartest and wealthiest people backed an idea with such fervor only to relinquish control to one person with masochistic tendencies? Likely in the 16th century, the Pope accused the Medici family of the same thing – that they would have the entire world indebted to them and enslave us all for the rest of time.

The probable scenario – Many Metaverses are created over the course of the next decade and only one eventually becomes “The” Metaverse. Within that Metaverse, a single currency will be used for the majority of transactions. It won’t be Bitcoin. The currency will probably be created and regulated by the creator of the Metaverse, as this would lead to significantly more power, which of course isn’t necessarily a bad thing. If the Metaverse does explode in popularity, that currency will become as valuable as any other currency, and its purchasing power will likewise explode upward.

However, the Metaverse is an alternative to reality but we are all afforded simple freedoms in both places. Large companies rule both the real world (which is obviously already the case) and the Metaverse, and we are all better because of it. Money is used interchangeably in the real world and Metaverse, but the Metaverse will be much more expensive, since the money has a much higher degree of utility (i.e. you can use it to buy anything at anytime). The majority of lower society will not be able to afford anything in the Metaverse, and so the real world will have more demand than ever as people try to make money to live in the Metaverse. The Metaverse will also introduce new ways for the rich to get richer, ranging from digital storefronts that cater to Metaverse users to networking opportunities that do not or cannot exist in the real world. I see the Metaverse as being a country club for the top 1% of society – they can spend money in ways that are impossible otherwise. Billionaires can’t spend all their money in reality, after all, and with so much more money being spent in the Metaverse, businesses will register revenues that today cannot even be fathomed. I expect The FAANG stocks to clock trillions in revenue each year through the Metaverse.

Make no mistake, the Metaverse is the ultimate meritocracy, which means that the wealth divide will grow infinitely larger upon its successful formation. Will it be easier to move up if you are a brilliant genius? Yes. Will it be easier to move up if you are a brilliant genius but born into an impoverished situation? No. This situation does not add to our bottom line.

Fairness is what people want and think they have a right to have, but I feel they have misunderstood the word. “Fairness” is defined as ‘impartial and just treatment or behavior without favoritism or discrimination.’ This general definition is ambiguous to me, since in my early career I thought it meant that I should be granted an easy road if I did all the things I was told to do. What I learned is that fairness only exists in the constancy of human nature. That humans constantly repeat behaviors and yet evolve over time. So the Metaverse today is Banking 500 years ago and is the Bible 2000 years ago. You can’t expect the world to give you what you want simply because you work hard. If you only do what you’re told, you will wind up being someone else’s ticket to success. And that’s the lesson and also how life is ultimately fair – that virtually all humans have always and will always treat each other unfairly.

The difference over time becomes the devices used to treat each other unfairly. For centuries, this has been money. I’ve always been appalled by what people will do for money, from the lowest levels of wealth to the highest levels alike. The smartest among us understand that the best way to live is by obeying the law and creating situations where people want to pay us for a service they can’t get anywhere else. Very few people have this ability, and many that claim such things are frauds. To me, it always seemed smarter to spend years creating something that people want rather than turn a quick profit at someone else’s expense. Zero sum gains have never added to our bottom line.

Is it all fair? No. Have human beings ever been fair? No. The only fairness is that humans act consistently unfair. If you know that, the world is fair in that it is consistent, which is probably the closest definition to fairness. Debating about the growing wealth inequality and the asininity of politics is garrulous. It doesn’t cut to the heart of the matter, which is that while some people have always wanted power, others have a completely different goal in life and don’t care about power. This is also referred to as philanthropy.

The wealth divide continues to enrich some and impoverish most. This trend will continue, leading us to the responsibilities and duties of those enriched, especially because they were enriched at the detriment of others. Everyone plays a role in society, so from a conservative standpoint, the return on investment of philanthropy is twofold. First, the resources provide means for integral core blue collar type workers. Those workers have special talents in that they have the capacity to do the most physically demanding jobs that few others want to do or are capable of doing. Second, the need is felt by a majority of the global population. With a growing wealth divide, more people will be in need every year and given limited resources, global financial emergencies are theoretically much more common. Times get harder more often for the majority of the planet.

Growing up in an area with very few resources, I found my fecundity for rational decision making was largely ignored by my family and friends. However, these were conservative ideas in an environment with few resources. When people have no money for food, the odds of them conserving resources and moving up are stacked against them in so many ways. Money management teaches you that those with resources conserve, and those without resources are more likely to take risks. This isn’t necessarily rational behavior.

The leaders in philanthropy are those that can affect the most change for the better. The leaders in conservative business are those that can affect the most change for the bottom line. For the reasons listed above, both are increasingly necessary and also not mutually exclusive. The new leaders will only lead if they are able to do both altogether, meaning that regulation will only get in their way. Let them be brilliant genius and let’s celebrate how they can make rain when nobody else can, whether it leads to success or failure.

50 years ago, African Americans and women were still publicly disenfranchised. 200 years ago, half the world was publicly a slave. Look at how far we’ve come from then! What a fantastic world we live in today! Can anyone say that humans have not evolved and made the best choices consistently since the beginning of our time? We need to embrace the changes, embrace tech, and embrace the Metaverse. We need leaders that are visionaries not just in technologies, but in mankind’s evolution. They can only add to our bottom line.