Truth is Overrated

Truth is Overrated


By Keith Teare • Issue #318 

A @bgurley tweet pointed to an essay written by Isaac Saul (@Ike_Saul), founder of Tangle. His essay challenges the idea that misinformation is a problem. He argues that nothing we humans think we know is actually true. Rather it is our provisional understanding. Of course, he is right. Truth is overrated


Contents


Truth is Overrated

Essays of the Week

  • Network States and Nation States
    • Balaji Srinivasan
    • Vitalik Buterin
  • VC Due Diligence Returns—With a Vengeance
  • Forecasting a Return to Venture Normalcy
  • Why It’s Time To Invest In Early-Stage VC 
  • Every Year You Should Double Your “TTAM”. Your True TAM
  • Medium Length
  • Hopin cuts 29% of its staff, just months after its last layoffs

Startup of the Week

  • Apple

Tweet of the Week

  • Elon

Editorial

This week has been busy. Signalrank is about four weeks into raising capital for its first institutional financing round, and I am talking to four or more investors daily. But the stream of news has been so compelling that even fundraising has been unable to prevent me from noticing.

The lead story this week was triggered by a @bgurley tweet. Bill pointed to an essay written by Isaac Saul (@Ike_Saul), founder of Tangle. Tangle is a newsletter that has something in common with That Was The Week in that it brings together ideas from all sides of the spectrum. In the case of Tangle, that is politics.

His essay challenges the idea that misinformation is a problem. In a week where we got the first images from the James Webb Space Telescope, he argues that nothing we humans think we know is actually true. Rather it is our provisional understanding.

He opens with:

Many of the things that you believe right now—in this very moment—are utterly wrong.

I can’t tell you precisely what those things are, of course, but I can say with near certainty that this statement is true. To understand this uncomfortable reality, all you need is some basic knowledge of history.

At various times throughout the history of humankind, our most brilliant scientists and philosophers believed many things most eight-year-olds now know to be false: the earth was flat, the sun revolved around the earth, smoking cigarettes was good for digestion, humans were not related to apes, the planet was 75,000 years old, or left-handed people were unclean.

And of course, we all know he is right. Provisional knowledge is almost always overtaken by new knowledge over time.

Logically he then states:

All of these approaches tend to be built on an assumption that misinformation is something that can and should be censored. On the contrary, misinformation is a troubling but necessary part of our political discourse. Attempts to eliminate it carry far greater risks than attempts to navigate it, and trying to weed out what some committee or authority considers “misinformation” would almost certainly restrict our continued understanding of the world around us.

This is not a new theme for readers of this newsletter. What is new is the clarity of the presentation and the simplicity of his suggestions. Saul goes on to declare that:

we need to encourage social media companies not to censor or deplatform, but to add valuable context. Rather than be referees, these entities should function more like stadium announcers. We don’t want them calling balls or strikes, but do want them to tell us the basics—the media equivalent of name, number, position, and hometown. Is this a real person? Who do they work for? Are they a paid government entity? A former intelligence officer? A former politician? A representative of state media?

and

What we can’t, and shouldn’t do is to operate on the assumption that our understanding of the world today is some almighty “truth.” We can’t subscribe to the idea that burying any contradictions—the so-called misinformation that drowns out that truth—is the route to a better-functioning and more intelligent society. Our history, both ancient and modern, demands a better answer.

That the truth does not exist in a finished form is a powerful idea. Of course, it can be misused as a form of relativism – nothing is proven. And that would be sad. but to acknowledge that thought is an unending process. That there can never be an “end of history.” That is a powerful insight we all need to remember. That is why I lead with it this week. The full essay is worth a read.

I almost led with Balaji Srinivasan’s essay that is first up in this week’s Essay of the Week. He posits the idea of “network states”. Not as a replacement to nations but as a superset/overlay to them. His new book can be downloaded for free as a PDF or bought on Amazon. I don’t agree with much of it. But along with Albert Wengers “The World After Capital“, it is a great effort at big thinking. So good that Ethereum founder Vitalik Buterin has penned a lengthy and thoughtful review and response.

The next stage in human history is a fascinating place to spend a few hours thinking; these two are a great starting point. Andrew Keen and I will discuss this and more on Friday in our video podcast.

Video

The video accompanying That Was The week is published after the newsletter. It is a conversation about the week with Andrew Keen and Keith Teare. it is available in full for paid subscribers.

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Truth is Overrated

Misinformation Is Here To Stay (And That’s OK)

Misinformation Is Here To Stay (And That’s OK)

Many of the things that you believe right now—in this very moment—are utterly wrong.

I can’t tell you precisely what those things are, of course, but I can say with near certainty that this statement is true. To understand this uncomfortable reality, all you need is some basic knowledge of history.

At various times throughout the history of humankind, our most brilliant scientists and philosophers believed many things most eight-year-olds now know to be false: the earth was flat, the sun revolved around the earth, smoking cigarettes was good for digestion, humans were not related to apes, the planet was 75,000 years old, or left-handed people were unclean.

Around 100 years ago, doctors still thought bloodletting (that is, using leeches or a lancet to address infections) was useful in curing a patient. Women were still fighting for the right to vote, deemed too emotional and uneducated to participate in democracy, while people with darker skin were widely considered subhuman. The idea that the universe was bigger than the Milky Way was unfathomable, and the fact the earth had tectonic plates that moved beneath our feet was yet to be discovered.

Even much of what we believed 20 years ago is no longer true. We thought, for instance, that diets low in fat and high in carbs were much preferable to diets high in fat and low in carbs. Scientists still thought that different areas of the tongue tasted different things. As a public, we thought mass prescribing opioids for chronic pain was safe and that switching from paper bags to plastic bags in grocery stores would save trees (and thus, the environment).

It is challenging to accept the fact that much of what we believe right now will, in 20, 100, 500, or 1,000 years, seem as absurd as some of the ideas above. But it would take a great deal of arrogance to believe anything else.

And yet, that arrogance persists. In fact, it is one of the most important elements of a greater struggle we are facing in the modern world: how to fight the plethora of “misinformation” now available to the public. Arrogance in what we believe now is precisely what creates confidence that we can accurately and productively root out misinformation.

To start, it is worth defining “misinformation”: Simply put, misinformation is “incorrect or misleading information.” This is slightly different from “disinformation,”which is “false information deliberately and often covertly spread (by the planting of rumors) in order to influence public opinion or obscure the truth.” The notable difference is that disinformation is always deliberate.

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Essays of the Week

The Network State: How To Start a New Country

The Network State: How To Start a New Country

Technology has enabled us to start new companies, new communities, and new currencies. But can we use it to start new cities, or even new countries? This book explains how to build the successor to the nation state, a concept we call the network state.

In one informal sentence:

A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.

When we think of a nation state, we immediately think of the lands, but when we think of a network state, we should instantly think of the minds. That is, if the nation state system starts with the map of the globe and assigns each patch of land to a single state, the network state system starts with the 7+ billion humans of the world and attracts each mind to one or more networks.

Here’s a more complex definition that extends that concept and pre-emptively covers many edge cases:

A network state is a social network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition.

OK, that’s a mouthful! It’s lengthy because there are many internet phenomena that share some but not all of the properties of a network state. For example, neither Bitcoin nor Facebook nor a DAO is a network state, because each lacks certain qualities – like diplomatic recognition – which are core to anything we’d think of as the next version of the nation state.

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What do I think about network states?

What do I think about network states?

On July 4, Balaji Srinivasan released the first version of his long-awaited new book describing his vision for “network states”: communities organized around a particular vision of how to run their own society that start off as online clubs, but then build up more and more of a presence over time and eventually become large enough to seek political autonomy or even diplomatic recognition.

Network states can be viewed as an attempt at an ideological successor to libertarianism: Balaji repeatedly praises The Sovereign Individual (see my mini-review here) as important reading and inspiration, but also departs from its thinking in key ways, centering in his new work many non-individualistic and non-monetary aspects of social relations like morals and community. Network states can also be viewed as an attempt to sketch out a possible broader political narrative for the crypto space. Rather than staying in their own corner of the internet disconnected from the wider world, blockchains could serve as a centerpiece for a new way of organizing large chunks of human society.

These are high promises. Can network states live up to them? Do network states actually provide enough benefits to be worth getting excited about? Regardless of the merits of network states, does it actually make sense to tie the idea together with blockchains and cryptocurrency? And on the other hand, is there anything crucially important that this vision of the world misses? This post represents my attempt to try to understand these questions.

Table of contents

What is a network state?

Balaji helpfully gives multiple short definitions of what a network state is. First, his definition in one sentence:

A network state is a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.

This so far seems uncontroversial. Create a new internet community online, once it grows big enough materialize it offline, and eventually try to negotiate for some kind of status. Someone of almost any political ideology could find some form of network state under this definition that they could get behind. But now, we get to his definition in a longer sentence:

A network state is a social network with a moral innovation, a sense of national consciousness, a recognized founder, a capacity for collective action, an in-person level of civility, an integrated cryptocurrency, a consensual government limited by a social smart contract, an archipelago of crowdfunded physical territories, a virtual capital, and an on-chain census that proves a large enough population, income, and real-estate footprint to attain a measure of diplomatic recognition.

Here, the concept starts to get opinionated: we’re not just talking about the general concept of online communities that have collective agency and eventually try to materialize on land, we’re talking about a specific Balajian vision of what network states should look like. It’s completely possible to support network states in general, but have disagreements with the Balajian view of what properties network states should have. If you’re not already a “crypto convert”, it’s hard to see why an “integrated cryptocurrency” is such a fundamental part of the network state concept, for example – though Balaji does later on in the book defend his choices.

Finally, Balaji expands on this conception of a Balajian network state in longer-form, first in “a thousand words” (apparently, Balajian network states use base 8, as the actual word count is exactly 512=83) and then an essay, and at the very end of the book a whole chapter.

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The World After Capital

Technological progress has shifted scarcity for humanity. When we were foragers, food was scarce. During the agrarian age, it was land. Following the industrial revolution, capital became scarce. With digital technologies scarcity is shifting once more. We need to figure out how to live in The World After Capital in which the only scarcity is our attention.

VC Due Diligence Returns—With a Vengeance

VC Due Diligence Returns—With a Vengeance

In June, the founders of Duplo, a Nigerian fintech company started last year, received some disappointing news. Insight Partners, a New York–based private equity and venture capital firm, in the spring had signed an offer to lead the company’s seed round, a step that would have cemented Duplo’s relationship with one of the biggest private investing firms in the world. But after Insight did its reference checks, the firm balked—and pulled the term sheet, according to two people familiar with the talks.

Such an outcome, nearly unheard of a year ago, is becoming more common. No longer in a rush to beat out competitors, investors are taking longer to close deals and spending more time vetting a startup’s business. While scrapped or renegotiated deals may leave founders feeling burned, investors say the wariness is healthy, because the deeper research can identify firms with management problems or a product that likely won’t succeed.

“2022 has certainly seen the big return of due diligence,” said Matt Turck, a partner at FirstMark Capital. “Frankly, it’s been really refreshing.”

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Forecasting a Return to Venture Normalcy

Forecasting a Return to Venture Normalcy

The return of pre-pandemic VC performance?

The prospects of every startup change monthly. However, one observed phenomena of early-stage investing is that startups doing well are more likely to give you updates—and startups doing poorly are less likely to give you updates.

This means a month with low activity (i.e., changes in price per share because of financings or exits) but many positive updates, and a month with high activity but fewer positive updates might reflect the same underlying state of startup health. In the former case, we just didn’t hear about the negative activity.

As a practical matter, this means as we observe more activity, we should expect that activity to be less good: we should expect a negative relationship between venture activity and the tenor of that activity. As such, if you plot venture activity (X-axis) against the percent of activity that you observed that is positive (Y-axis), you should expect a band running from upper left to bottom right (northwest-to-southeast).

Up until the pandemic, that’s exactly what we saw at AngelList, with tenor and activity generally running along a northwest-to-southeast band:

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Why It's Time To Invest In Early-Stage VC - Crunchbase News

Why It’s Time To Invest In Early-Stage VC – Crunchbase News

By Marc Schröder

Warren Buffett often says to “buy when there’s blood in the streets and sell when there’s euphoria” and that moniker is as true today as it has ever been.

We are witnessing a global correction in equity prices, driven by macroeconomic factors like inflation and geopolitical instability as well as microeconomic factors like the recent (and dramatic) declines in cryptocurrency prices.

No matter where you look, it’s a scary time to deploy capital, but that’s exactly when generational opportunities are created.

The public markets will likely continue to feel the pressure of inflation and rising interest rates, making equities less attractive until directional clarity is created (or provided by the Federal Reserve). Rising rates will make fixed income securities more attractive, but only marginally until inflation is curbed. Assets like real estate will likely hold their value, but require significant capital expenditures and management resources.

The current landscape leaves institutional LPs with a difficult choice on how to deploy capital. History often repeats itself, and in previous cycles mirroring today’s reality, enormous returns have been generated in early-stage venture capital by LPs who invested deeply at this stage of the cycle.

Crunchbase News

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Every Year You Should Double Your “TTAM”.  Your True TAM.

Every Year You Should Double Your “TTAM”. Your True TAM.

So generally, as an investor, you don’t want to worry too much about TAM — Total Addressable Market. At least, not after a certain point. If a SaaS company can double or even triple at $1m ARR, it’s on to something good. Something big. Even if the initial market sweet spot is small.

But what I’ve learned over the past years is some founders get more ahead of a small-ish TAM than others. And most of us start with small TAMs, even if in theory they can be large.

Let me take a few example of the unicorns and decacorns I’ve been lucky enough to invest in. and how they expanded their True TAM over time:

  • Salesloft, bought out by Vista for $2.2B, started off as a pretty basic prospecting and then email cadence tool at $8m valuation when I was first involved. Today, it’s a full featured revenue management suite, growing 55% at nine-figures in ARR.
  • Talkdesk, last valued at $10B, started off as an SMB Zendesk and Salesforce plug in at a $25m valuation when I first invested. Today, it’s arguably the most advanced and full-featured enterprise contact management application, routinely closing seven-figure deals. That’s a big change from a grab-and-go SMB solution in the early days.
  • Algolia, last valued at $2.2B, started off an search API for ecommerce and B2B companies when I first invested at a $12m valuation — and it still is. But it embraced bigger and bigger deals, including its first seven figure deals, while maintaining its long tail of developers. It had a slowdown around $50m ARR when it didn’t go as upmarket as it could have — and then accelerated after $100m ARR once it did. Algolia arguably changed the least of the 3 on the way to $100m ARR, but it did still need to evolve its core ICP to keep growing as top-tier rates.

Now all 3 are just examples, we can come up with others. What I won’t share is a few that did OK, but didn’t quite get to that level. Those ones didn’t really expand their True TAM.

Because almost always, you’ll exhaust your initial wedge. That initial 10x reason folks will buy you. And if your market itself is growing rapidly, sometimes you can just ride that wave without truly growing your TAM. But almost all of have to do something to expand it.

So I’ve come up with a basic rule, but I think it works well in practice: as founders, you need to find a way to double your true TAM, the real TAM you are selling into, right now — each year.

A few ways to do that, none of which are revolutionary, and only some of which will work for you –but all of which can work in general:

  • Expanding into a new, key second (or third) vertical. This was key to Front’s evolution from a simple email sharing tool to a $1.7B contact center leader. Focusing and winning several key verticals.
  • Going more upmarket when the customers and prospects support it. I see too many startups resist going upmarket because it’s more work. Because they want custom features, compliance, security etc. That’s your call. But more often than note, going upmarket can 2x-10x your True TAM right there.
  • Adding a team / enterprise / collaboration edition. Going from a single-user product to a collaborative, multi-user one can often dramatically expand your customer base.
  • Doubling Your ACV. There are many ways to do it, but if you set it as a goal, you almost always back into doubling your TAM.
  • Asking your customers. Ask your customers what they’d pay you more for. That’s often the quickest path to seeing how your can double your true TAM.
  • Being / becoming the most enterprise vendor. The most enterprise vendor in a space can often charge twice what other do, and tap into customer segments (regulated, government, etc) that others can’t. This isn’t the same as going upmarket. Often, several competitors do this. No, this is about being the #1 most enterprise vendor in a space.
  • Adding a second product that can be bigger than your first. $30B Veeva’s second produt (Vault) is bigger than the one that got them to $1B (their CRM). You usually don’t want to do this too early, but sometimes it can make sense as early as $20m ARR, and almost always makes sense before $100m ARR. Veeva’s CEO Peter Gassner and I did a deep dive on that here:

The post Every Year You Should Double Your “TTAM”. Your True TAM. appeared first on SaaStr.

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Medium Length

Medium Length

It’s easy to forget that Medium, the platform on which I write these words, is nearly ten years old. It will celebrate that milestone next month, in fact. A decade! That’s a long time! And on the internet, it’s nearly an infinite amount of time. In the grand scheme of web things, very few services last this long.

In some ways, Medium feels even older than this. Because it’s one of those things that is ubiquitous enough, with links constantly shared, each day, everywhere, that it seems like its been a part of the internet forever. And part of that is because its DNA is directly linked to both Twitter and Blogger, back in the day.

Both of those services, much like Medium, were co-founded by 

Ev Williams

. And when you take a step back to consider just how much of a hand he has had in allowing people to express themselves on the web over these past 20+ years, it’s really incredible. Hell, my own story is very directly attributed to his creations. Flat out: I would not be where I am right now had Blogger not existedback in 2004when I started writing on the internet. Nor would I be where I am right now had Twitter never existed, which served as an accelerant of sorts for reporters working in that field since the late 2000s.So yeah, I’m a little bit weepy over the news that Ev is stepping back as CEO of Medium today. It has been a long run. And yes, as both a user and an investor in the company, a bumpy one at various points. But I truly believe that Medium remains the best canvas on which to write and publish on the internet. The CMS remains so elegantly spartan and simple. It gets out of the way of the words in a way in which no other content system comes close.¹

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Hopin cuts 29% of its staff, just months after its last layoffs - TechCrunch

Hopin cuts 29% of its staff, just months after its last layoffs – TechCrunch

Virtual events platform Hopin, last valued at a $7.75 billion valuation, has laid off 29% of employees, or 242 people, a spokesperson confirmed to TechCrunch over e-mail. The cuts come just four months after Hopin let 12% of its workforce go, at the time citing a goal of sustainable growth amid the changing market.

In the company’s latest staff reduction, Hopin said that the employees impacted primarily supported its events business. Assuming that most people within the company work to support its events business, it’s unclear which teams were specifically reduced. Hopin said that it has been investing and growing Hopin into a multi-product portfolio, including in-person event management, hybrid events, video hosting and “new products currently in development.”

Senior executives are also departing as part of the layoff, but Hopin did not share specifics. In addition to cutting nearly a third of the company, Hopin confirmed that some contractors and members of a third-party team were laid off but did not provide exact numbers.

TechCrunch

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Startup of the Week

Apple Reportedly 'Most Likely Winner' of NFL Sunday Ticket Rights, Considering Bid for UEFA Champions League Package

Apple Reportedly ‘Most Likely Winner’ of NFL Sunday Ticket Rights, Considering Bid for UEFA Champions League Package

Rumors have been circulating about Apple bidding on the massive NFL Sunday Ticket package for out-of-market games, with a report just a few weeks ago stating that Apple, Amazon, and Disney were all in the running.

According to Dylan Byers at Puck News, Apple is now regarded as the “most likely winner” as Disney has dropped out of the bidding that could approach $3 billion per year.

As I learned at Sun Valley, and in subsequent conversations this week with sources close to the talks, the deal will likely come in significantly higher than $2 billion a year—some sources with insight into the talks believe it could come in close to $3 billion. This has effectively removed the cautious, ever-disciplined Disney from consideration, since its own bid came in under $2 billion. (Disney declined to comment.) Existing media partners, like Fox, Comcast and CBS, are also not in contention, I’m told. The race for the Ticket has therefore come down to Apple and Amazon, and while nothing has been signed or agreed to, I have been given ample reason to believe that Apple is the most likely winner of the sweepstakes—and not merely because I was told that Apple’s Tim Cook and Eddy Cue met with Goodell in Sun Valley.

Byers says that Apple and Amazon are also considering bids for a domestic package of UEFA Champions League games that could cost up to $2.5 billion over six years.Apple has just begun dipping its toes into the live sports market, starting with a limited package of Friday night Major League Baseball games this season, and recently announcing a 10-year deal with Major League Soccer for worldwide broadcast rights to all games, but it’s clear the company has significant ambitions as it seeks to increase its presence in the competitive market.Tag: NFLThis article, “Apple Reportedly ‘Most Likely Winner’ of NFL Sunday Ticket Rights, Considering Bid for UEFA Champions League Package” first appeared on MacRumors.comDiscuss this article in our forums

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Tweet of the Week


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