Bitcoin Birthing Pains

February 25, 2014 / / No Comments

photo credit: zcopley - cc

photo credit: zcopley – cc

The market price of BTC (Bitcoin) dropped going into the MtGox shutdown, and then has risen since. This is exactly what one would predict for a normally functioning financial market without systemic risk.

MtGox had to die for Bitcoin to thrive. Its former role from early Bitcoin days has been supplanted by better, stronger entities. People learning about or trading Bitcoin should deal with reputable, well-run, well-backed companies such as Coinbase (our choice).

It’s important to know that Bitcoin protocol and transaction network doing just fine in wake of MtGox shutdown; there are no substantive technical issues. Every important new technology has birthing pains. PC did, Web did, Bitcoin does. Our enthusiasm and commitment remains unchanged.

Source: Andreessen’s tweets on Bitcoin and Mt. Gox shutdown: 1, 2, 3, 4, 5, 6

Responses:

Government Regulation

February 23, 2014 / / No Comments

Government regulation that purports to protect ordinary consumers generally ends up protecting large incumbents because government regulation establishes high stickiness for incumbents, vs new entrants that are unequipped to handle regulatory load. Large incumbents in any industry are well aware of this, so they play a 2-sided game: simultaneously complaining about and embracing regulation which ultimately leads to regulatory capture–intertwined regulators and incumbents. Crazy high barriers to entry.

Therefore Dodd Frank equals Big Banks Protection Act of 2010. Raised barriers to new banks. Result: Big banks more powerful than ever. Sarbanes Oxley = Big Companies Protection Act of 2002. Raised barriers to new public companies. Result: Number of public companies fell off a cliff.

Later, everyone wonders why there’s no new competition, incumbents are more powerful than ever, then calls for yet more protective regulation. Then total surprise that regulated sectors of economy languish while more competitive sectors race ahead. Regular consumers are the victims. It’s utterly predictable, yet surprise every single time. Triumph of hope over experience–brought to you by the Good Intentions Paving Co.

Conclusions:

  1. To be pro-consumer is generally to be pro-competition, pro-innovation, anti-monopoly/oligopoly, and anti-regulation.1
  2. The best answer to markets that seem to need regulation is generally to instead create more competition.2
  3. A one time government antitrust strike will generally be far more pro-consumer than an ongoing regulatory regime.3

Source:
Marc Andreessen’s tweet regarding government regulation and his 11 tweets that followed:

Red Queen Hypothesis

February 22, 2014 / / No Comments

Organisms adapt/evolve not only to gain advantage, also to survive vs evolving opposing organisms in changing context. – Red Queen Hypothesis

In many populations, the probability of extinction does not depend on the lifetime of the population. In addition, the probability of extinction is constant over millions of years for a given population. An adaptation of one species may change the selection pressure on another species, giving rise to an antagonistic co-evolution.

https://twitter.com/jonathanglick/status/437386419435474944
Rough Skinned Newt

Rough Skinned Newt

The metaphor of an evolutionary arms race — the description of biological processes with dynamics similar to arms races. The ability of a family of organisms to survive does not improve over time — surprising lack of correlation between age and extinction.

Citation for biological extinction is Leigh Van Valen, 1973.

The Allee Effect On Startups

February 22, 2014 / / No Comments

photo credit: Simon Blackley - cc

photo credit: Simon Blackley – cc

The Allee effect is a biological phenomenon that shows a positive correlation between population size/density and mean individual fitness within population.

Allee’s experiments demonstrated that goldfish grow more rapidly when there are more individuals within the tank.
Classical view: Due to competition for resources, population has a lower growth rate at a higher density and a higher growth rate at lower density.

The Allee effect indicates positive density dependence as well as a positive correlation between population density and individual fitness, resulting in “undercrowding.”

Is there a corollary in startups? Does the number of tech startups targeting an established industry mean higher odds of success for each? Even if they are competing for scarce capital/talent, will they make each other more competitive by sharing a playbook against a common enemy?

It would seem that the Allee effect for startups is deeply counterintuitive and directly opposed to Thiel/Musk theory of “one startup can monopolize the talent.”

Source: Andreessen’s tweets on the Allee effect and startups: 1, 2, 3, 4, 5, 6, 7, 8

The Value of Wikipedia

February 21, 2014 / / No Comments

wikipediaThought experiment: 1. Wikipedia is available to approximately 5 billion people globally (or will be soon). 2. The Print version of Encyclopedia Britannica costs $1,400 per copy. So does the existence of Wikipedia, (economic GDP value = ~zero), add 5B * $1,400 = $7 trillion of new wealth to the world?

Corollary: Are Jimmy Wales (@jimmy_wales) and colleagues the biggest monetary impact philanthropists ever? Does this leave JDRockefeller and WHGates in dust?

Source: Andreessen’s Wikipedia thought experiment tweets – 1, 2, 3

PM Erdogan of Turkey Calls Twitter a Menace to Society

February 21, 2014 / / No Comments

Marc Andreessen references the New York Times’ summary of remarks from Prime Minister Recep Tayyip Erdogan of Turkey, which were passed over by the Turkish news media:

Now we have a menace that is called Twitter,” he said. “The best examples of lies can be found there. To me, social media is the worst menace to society.

He was delighted to hear PM Erdogan’s reaffirmation of Twitter as an important medium for communicating the people’s dissent:

Ukraine and Venezuela

February 20, 2014 / / No Comments

My heart goes out to the people of Ukraine and Venezuela. Everyone in the U.S. hopes the result of your struggles is peace and freedom.

I think it’s becoming increasingly clear: citizens of every country are no longer willing to tolerate oppressive regimes, bad governments. Contrary to cynicism in some quarters: Internet + smartphone + many other info-tech innovations ramping up power of citizens versus bad governments.

Prediction: Every country with a bad government will have as many protests and revolutions as needed to get to peaceful, prosperous democracy.

The world has changed. No going back. There will be difficulties and setbacks, but the direction is crystal clear and will not reverse.

https://twitter.com/IvanTheK/status/436653043892109312

Post created via the following tweets: 1, 2, 3, 4, 5

Notes From “World Protests 2006-2013”

February 20, 2014 / / No Comments

Notes From “World Protests 2006-2013”

“There have been periods in history when large numbers of people rebelled about the way things were, demanding change, such as in 1848, 1917 or 1968; today we are experiencing another period of rising outrage and discontent, and some of the largest protests in world history.”1,2

A quick summary:

  • A steady increase in the overall number of protests every year: from 2006 (59 protests) to mid-2013 (112 protests events in only 1/2 yr).3
  • Main causes of outrage are: Economic Justice, Failure of Political Representation and Political Systems, Global Justice, Rights of People.4
  • Most sobering finding is overwhelming demand, not for economic justice per se, but for what prevents economic issues from being addressed:5
  • Lack of ‘real democracy’, result of peoples’ growing awareness that policy-making has not prioritized them, even when it has claimed to.6
  • Not only traditional protesters (activists, unions) demonstrating; middle classes, youth, older people are protesting in most countries.7
  • # of protests + # of protestors increasing. 37 events had 1M+ protesters; some may be largest protests ever (100M India ’13, 17M ’13).8

Source: Marc Andreessen’s tweets referencing “World Protests 2006-2013”: