The "Macroecon," The Deep State, and Your Startup
A few notes on investing and why the Musk deal is doomed
When I assess companies, I go deep — almost DNA deep, certainly genealogically deep.
It’s not (yet) allowed to run a sequence of the founder but I usually ask a few questions about the family of origin. What did your father do? What does your mother do? Who is your brother? That sort of thing. Family matters. If the founder is married, I ask about his or her spouse.
Usually I know most of these answers before we get going. I have an Ancestry.com account and I use it all the time. I also recommend Newspapers.com. Got some family secrets? Better believe I’m going to find them so tell me about them first.
If it’s possible I’ll have the founder over for dinner at my home. A founder I wouldn’t have over at my home isn’t one I’m interested in backing. It’s hard to fake it at 3 am in the hot tub or on a long walk. This is an extreme view but it’s worked so far for me. If I can’t come to your house or you can’t come to mine we’re probably not going to be friends. When you build an empire, you expect to host your tributes. It’s just rude to put them up in a hotel.
Then we move to the Macroecon.
Just as some people are up, some countries are up. Just as some countries are down, some countries are down. Sad to say, the next multibillion dollar company will (probably) not come from Afghanistan or Somalia but it might come from one of the countries that’s expected to succeed as China falls. Look to Turkey, Indonesia, and India.
If you’re from a country on the rise and you’re an elite you’ll probably be on the rise too. If you’re from a country that’s on the wane, you’ll have to find additional sources of capital. It might also help to crew up with a country on the rise.
You can be from a middle manning country. Think Steve Jurvetson from Estonia, Elon Musk from South Africa, Peter Thiel from Germany, etc. Sometimes the U.S. and China use these middle manning countries and types but other times you have to pick a side. We’re in side picking times. That’s ultimately why Musk’s efforts to buy Twitter won’t go well. He’s picking the wrong side.
A billionaire once told me that the secret to becoming a billionaire is to put yourself in between countries and their GDP — and to take a fee. If you get to collect a fee, make sure you pay your taxes—and your dues.
The founder versus the Macroecon always loses to the founder with the Macroecon.
There’s this Ayn Rand view of the solitary genius, doing his thing. It’s quite Romantic but I don’t hew to it. The best things in life are done together, in teams. The founder is the first among equals.
The Macroecon can rescue a bad founder, especially if it’s something the State wants. In the established, business world, it’s Man versus Man in the competitive world. Competition kills profits and humiliates prophets. Man versus nature is the Frontier. You can monopolize everything — but then you’ll have to defend it. The skillset to build the town and run the town are different.
I ask the question: Does the American deep state want this to exist? And so I crack open the CIA world factbook. To find out more you have to get some nerd friends, especially those who have traveled the world. Ask them questions about their travels.
You should ask yourself, “Who will conspire to help this startup for free?” I call this sovereign investing. I take a hundred dollar bill and I look at it and ask “What would Ben Franklin do?” What is it with that all seeing eye? Is the Illuminati real? Who knows? But I’m going to act as if they are.
You also have to keep a watchful eye on other nations’ deep states as well. Some nations want to harm you for working on the thing they thought they had a monopoly on. I’ve never had a company go well that wasn’t a target of Chinese and/or Israeli espionage.
Is your start up a part of the real economy? Or the fake one? Will you help make food and energy and mining cheaper and therefore better? Or will you just increase costs on everyone else?
Does this harm the Mob? Sign me up. I want counter mob technology — and fast! I notice that eBay made auctioneering visible. Uber took on the taxi mob. AirBnb, while raising rents in desirable places, made it legible and visible who owned what.
To be sure I’m not interested in the parasitic economy which is seemingly what most of the tech ecosystem is. No rent seeking here! But I am interested in messing with their hustles.