This is a segment from The Breakdown newsletter. To read full editions, subscribe<\/a>.<\/em><\/em><\/p>\n \u201cGreat things in business are never done by one person, they\u2019re done by a team of people.\u201d \u2014 Steve Jobs<\/p>\n<\/blockquote>\n<\/figure>\n <\/span><\/span><\/p>\n Steve Jobs liked to tell a story<\/a> of a \u201cslightly scary\u201d old man from whom he did odd jobs as a kid, including, one time, gathering some rocks out of the yard.<\/p>\n The man put the rocks into a tumbler in his garage, added some liquid and grit, and told Jobs to come back the next day to see the result.<\/p>\n Jobs says he was amazed as the rocks emerged from the tumbler as smooth, shiny objects of desire.<\/p>\n Later in life, he found this works with people, too.<\/p>\n \u201cA group of talented people, bumping up against each other, having arguments, having fights sometimes, making some noise. By working together they polish each other and they polish the ideas.\u201d<\/p>\n In other words, put a group of people in a room together and they\u2019re all likely to look smarter when they come out.<\/p>\n Unlike rocks, however, they do have to be the right kind of people.<\/p>\n As individually visionary as Steve Jobs was, he attributed his success<\/a> at least in part to the people he chose to be around:\u00a0 \u201cI think I consistently figured out who the really smart people were to hang around with. You must find extraordinary people.\u201d<\/p>\n One place to find extraordinary people is at conferences.<\/p>\n The magic of an innovation cluster like Silicon Valley is the critical mass of tech people constantly bumping into each other.<\/p>\n Conferences create temporary innovation clusters, like a pop-up version of Silicon Valley.<\/p>\n \u201cOne way to think about an industry conference,\u201d Byrne Hobart explains<\/a>, is that it \u201csynthesizes high real estate prices by charging an entry fee (and plane tickets plus hotels are also going to have the same economic effect); they make time more expensive, so they raise the relative value of the highest-utility interactions.\u201d<\/p>\n Translation: the high cost of attending conferences weeds out the riff-raff.<\/p>\n If you\u2019re still wondering why people incur the cost of attending a conference in person that they could watch for free at home, I think that\u2019s pretty much it.<\/p>\n You get to meet the kind of people you\u2019d want to be tossed into a rock tumbler with.<\/p>\n I\u2019m a skeptic of crypto treasury companies (to put it mildly), simply because I think companies should be in the business of making things, not just holding them.\u00a0<\/p>\n I still feel that way after listening to this morning\u2019s panel with three enthusiasts for companies that mostly just hold crypto, but there was more nuance to the story than I had expected.<\/p>\n Dan Kang notes that DeFi Development Corp also runs validators, which allows it to grow its Solana stake independently of the NAV multiple that investors assign to its stock (DFDV).<\/p>\n Could they earn enough Solana by running validators to service their dollar-denominated debt if their stock fell below 1x NAV? I expect we\u2019ll find out, eventually.<\/p>\n In the meantime, DeFi Development Corp \u201cgives you the ability to accumulate crypto even faster than you could on your own.\u201d<\/p>\n I\u2019d like to see the math on that for people paying 3.1x NAV<\/a> for DFDV today, but that\u2019s the service they provide to investors.<\/p>\n Thomas Lee rationalized the seemingly inexplicable valuations that crypto companies command by saying it\u2019s \u201csimilar to how oil companies trade on a premium to its proven reserves.\u201d<\/p>\n \u201cMicroStrategy will probably become the biggest stock in the US,\u201d he predicts. \u201cAnd it\u2019s not valued on earnings, it\u2019s valued at a premium to its bitcoin reserves.\u201d<\/p>\n Call me old-fashioned, but I\u2019d prefer the biggest stocks in the US be valued on earnings \u2014 because earnings are a measure of how valuable a company\u2019s product or service is to their customers.<\/p>\n Lee says the crypto treasury companies with the highest NAV multiples have effectively turned their investors<\/em> into customers.<\/p>\n That\u2019s true, but I\u2019d bet that most of these \u201ccustomers\u201d still think they\u2019re investing, which could cause problems.<\/p>\n David Grider injected a welcome note of caution, predicting that \u201cseveral of these will go bankrupt.\u201d\u00a0<\/p>\n He didn\u2019t sound particularly concerned about it, but I think people should be, because how is this meant to end?<\/p>\n Treasury Asset Companies \u201cequitized tokens,\u201d as Thomas Lee phrased it, and earlier this week, DeFi Development Corp announced<\/a> that its stock will soon be tradable as a token on Solana.<\/p>\n Tokenizing a Crypto Treasury Company is the equivalent of tokenizing equitized tokens<\/em>.<\/p>\n If that\u2019s worth doing, it\u2019s only a matter of time until someone starts a Crypto Treasury Company that will equitize the tokenized equity that equitized tokens<\/em>.<\/p>\n This, I fear, risks a Ghostbusters <\/em>moment<\/a> in which the streams will be crossed and the crypto world comes to an end \u2014 and maybe take the rest of the world with it.<\/p>\n I see no other logical end point because, as Joe Lubin said on another panel, there\u2019s a \u201crace to acquire the highest-power money\u201d (bitcoin and ether, in his view).\u00a0<\/p>\n Whatever the risks, Crypto Treasury Companies are one way to run it.\u00a0<\/p>\n Speaking this morning, Joe Lubin casually filled in some recent crypto history \u2014 from his well-informed vantage point, at least.<\/p>\n Explaining why Ethereum seemed to have fallen behind over the last couple of years, Lubin shared his suspicion that \u201cGary Gensler was given a mandate, probably from Elizabeth Warren, to kill or slow Ethereum.\u201d<\/p>\n In particular, \u201cIt appears they had secretly decided to reclassify ether as a commodity.<\/p>\n \u201cThey were trying to pin it on people who were responsible for The Merge,\u201d he explained. \u201cWhen we saw a bunch of researchers were getting subpoenas, we decided to sue the SEC.\u201d<\/p>\n I imagine few Permissionless attendees would find any of that surprising, but it hasn\u2019t been part of the official record, so I think we got to hear it first.<\/p>\n \u201cIt\u2019s the ultimate meme.\u201d \u2014 Santiago Santos on the bull case for bitcoin<\/p>\n \u201cThe highest-power money is bitcoin and ether, because they\u2019re permissionless.\u201d \u2014 Joe Lubin\u00a0<\/p>\n \u201cEthereum got their shit together. The Ethereum Foundation is firing on all cylinders now.\u201d \u2014 Joe Lubin<\/p>\n \u201cMSTR is so big it has a sovereign put.\u201d \u2014 Thomas Lee<\/p>\n \u201cThe meta-narrative is: Tokens need to make money.\u201d \u2014 Michael Anderson, Framework Ventures<\/p>\n Overheard<\/strong>: \u201cThe product is how to get rich quick.\u201d \u2014 Anonymous, on crypto\u2019s true product-market fit<\/p>\n\n
A panel on crypto\u2019s current meta: Treasury Asset Companies<\/strong><\/h2>\n
One newsy panel<\/strong><\/h2>\n
Day III Quotes<\/strong><\/h2>\n
Permissionless IV Newsletter Awards<\/strong>:<\/h2>\n
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