Episode 79: Investing in Crypto with Tijo of Arcane Bear

Ben Lakoff, CFA
July 18, 2022
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Today's interview is with Tijo of Arcane Bear.

There’s a lot going on in crypto at all times and it’s very difficult - if not impossible these days - to stay on top of it all. Tijo prides himself in living on the fringes and identifying investment opportunities before they’re mainstream.

Right now Tijo is really interested in Web3 / Blockchain Gaming. We go into detail on why this area of Crypto is interesting, some learnings from being in the crypto market for so long and where the space could go going forward.

Enjoy this conversation with Tijo.

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Show Notes

0:00:00  Welcome and context    

0:03:07  What is your background?    

0:06:17  How early are we in Web3 gaming?    

0:14:05  What are good examples of games integrating Web3?    

0:20:30  What trends in Web3 gaming you disagree with?    

0:26:35  What knowledge have you gained of the Web3 realm?    

0:35:05  How do you think through the risks associated with crypto?    

0:43:11  Your thoughts on Altcoins?    

0:48:00  Where can people find out more about you?

Show Links

Arcane Bear

Tijo on Twitter

Arcane Bear Podcast

Helpful other Alt Asset Articles

Episode Transcript

[00:00:00] Ben: Welcome to the alt asset allocationpodcast, exploring alternative investment opportunities available to theeveryday investor. Here's your host Ben Lakoff

Hello and welcome to the alt asset allocation podcast. Today'sinterview is with, Tijo of arcane bear. There's a lot going on in crypto at alltimes, and it's very difficult if not impossible.

These days to stay on top of it. To prides himself in living onthe fringes and identifying investment opportunities before their mainstream.Very helpful in this space, right? Nowt is really interested in web three orblockchain gaming. You'll see this as a theme. I've had many other podcastepisodes discussing this at length, but on this one, we go into detail on whythis area might.

Interesting for, to some learnings from being in the cryptomarket for so long, he's been in for a long time and where the space could gogoing forward. If you enjoy this episode, please share with somebody, you know,who might like it or give it a like review or comment on whatever platformyou're consuming it on.

I really, really appreciate it. Enjoy this conversation with,to all right. Ready to go. Yep. To excited to have you on welcome to the altasset allocation podcast, sir.

[00:01:25] Tijo: Thanks Ben. It's good to be here todayat looking forward to catching up.

[00:01:28] Ben: Yeah, likewise, it's been a, it's been along time since we met early on in the bull market of 2020 as part of Colonelwhich is a web three accelerator, but it was, it was always good to connect topeople.

Living in other countries, I suppose. So you're down in CostaRica. I had recently just moved back to the us after 10 years abroad. So it's,it's always nice kind of reconnect with kind of people living outside theoutside the us, I guess.

[00:01:56] Tijo: Yes. You know, everything's like a, likea mixer, you know, you go to different climates, you get a slight variation ofall these things.

There's not a whole lot of, let's say convenience living in themiddle of the jungle, but it's absolutely stunning. So I appreciate my, myrelationship with nature here, but It's like uncompetitive, I guess, to otherplaces there's just nothing down here.

[00:02:16] Ben: yeah. Well, it gives you gives you plentyof time to like connect with your metaverse friends and, and spend plenty oftime on the internet.

Looking at all of this web three stuff that we end up goingdown .

[00:02:28] Tijo: Yes, I I'm grateful for the fiber opticcable that runs straight to my house here. Otherwise I wouldn't be able to doany of this damn

[00:02:35] Ben: straight damn straight. Well, you have agreat channel. You spend a lot of time looking at the crypto markets, eithertrading or investing like more VC approach, but have this broad kind of fingeron the pulse of the crypto market.

It's ugly right now.This being recorded end of June, you know, I was looking at some, some figures.So E is down 76% from its all time high Bitcoin down 70%. And then like theNASDAQ down nearly 30%. It's not just crypto, but certainly as a risk asset.Swings a little bit more, but wanted to have you on talk about the cryptomarket right now, and from your position spending as much time as you do, whatare you finding most interesting in the space, but before we get there,actually, I totally forgot.

I wanted to start off with your, your background, who you areand what you're doing. That will be a little bit more relevant. Let's startthere.

[00:03:35] Tijo: Well, I have no background that would'verecommend that would've given any hint that this is where we would be in thefuture. I spent most of my younger years studying music and sacred plantmedicines.

So I was really into Indian music. So I guess there's whereyou'd find a similarity here. It's a lot of highly technical and abstractpattern firing. If you know anything about Indian music, it's got a lot of likesevens or so these variations and time signatures that Western. It just usuallydoesn't have it all.

So came very adept at finding advanced patterns very, very longobviscated ideas quite often. And that over the years has kind of blossomedinto a focus into venture capital, which is, you know, if I get, if I couldsynthesize the two between how my, my musical interest ended up in into aninvestment thesis was.

Again, finding these patterns that seem to repeat and kind ofhow we can take advantage of them. Not, not all good ideas are profitable, butoften if you can find that good idea early it's extraordinarily profitable. Soover the years we developed arcane bear, which started off with a bunch ofpodcasts and with.

PhDs in physics and biology. And then me as a kind of a longhaired hippie screaming in the, on the beach that the governments weredestroying the monetary supply through printing. And you know, how effectivelyeverything we were witnessing is a case of inflation. And that inevitably dueto whether it was malfeasance ignorance or total criminal behavior, that thebanks would out print themselves and Bitcoin would end up like at $6 million.

So New York king bear was kind of born off of this abstractpattern finding and early interest in. Crypto and web three technology. Thelast year or two, it's really pivoted towards web three gaming. It's a veryuncon, contentious area. It's not like a scientific discussion. There's nostatistical analysis on which characters like the people like the best, youknow, much like a TV show or cartoon.

You can have these grassroots adoption curves that come reallyjust off culture and identities. So we think this, these are kind of. Powerfulconfounding aspects of, you know, more important like, oh, well, my code does,this kind of thing is, you know, a lot of the times people are adopting throughcultural in, in inference effectively.

So we focused mostly on Webre gaming now. But just as a broadkind of background, my interest was in, in music and studying yeah. Indianmusic. So to how I ended up here, I guess, was through that, that love offinding patterns and signal.

[00:05:55] Ben: Interesting. Interesting. Well, there'scertainly enough noise in the space that finding any sort of patent patternsand eventually a signal is super, super important with web three.

That that's interesting to go from more of a philosophical,like approach with Bitcoin into more of VC and ultimately web three web threegaming. Why? Web three gaming. I mean, how early are we before? This isactually something that like the majority, are you thinking about massadoption? And this is like what winning at web three gaming is like, or, orwhat does kind of the timeline look like for you?

[00:06:37] Tijo: I think the first thing to do with any.Thematic approaches look at the core. So, you know, we were never interested ingames in general. So let's just look at games. Games have been around basicallyforever. People have found a way to play some sort of game with one another. Sowe know that games have.

Because they've got, I've been around for so long. They'reprobably gonna be around for a lot longer. Now, the identity of what gaming isin this, in these new digital cultures, you know, I grew up not reallyunderstanding what YouTube was, but then you turn on YouTube. You find out kidsmaking hundreds of thousands, millions of dollars playing video games, justtalking about the games with no real, not even a real monetary injection fromthe game itself.

And you've got eSports teams. And then you start to stumble onthe idea that the games are like this mult hundred billion dollar plus sector.And in fact, Absolutely dwarf like the NFL, NBA music film, all of thoseindustries combined almost I think are smaller than the gaming sector. So whenyou see that there's something that's already got a huge amount of like lendthe effect, which means that, you know, we're not gonna all of a sudden, like,People are not gonna just do away with games.

We're just gonna continually see advancements of what games areto people and, and how much value they bring into the, I guess, theindividual's life and the community and the social aspects as, as a moreephemeral piece. But what happens when you start to pair IP or early brand anddevelopment that most of the time, the.

I, I guess the participants in the game or in any company we'releft out of. So the blockchain has the potential to take a, a multi hun or likea hundred billion dollar plus sector and actually multiply it instead of takeaway from it. So, because we already have this very. Profitable sector thattranscends language or culture effectively, you know, it's got that stayingpower.

So we can assume that if you, in fact, empower the individualswho make games popular the return on their investment, whether it was throughthe time of the YouTube channel is the way they play. It's just gonna increasealready what it was. So it seems. When you've got a great vehicle, adding asupercharge is not a bad idea and blockchain web three.

However you wanna look at it. You know, I think there's a fewconversations around what nomenclature ends up being, but it would be theownership of the identity of the game. I think more in the hands of theparticipants and in early 2017 we, I first thought that it was gonna comethrough things. Post to earn steam.

It, I thought was a really great idea. We we're seeing peoplein Venezuela who were able to pay for their bills by posting content and we'rewe're crisis investors. We, we think the best opportunity is when people are,are this most scared. So if you have a moment where people are in crisis, likethey're living in Venezuela, able to post content and make.

More money. We, we try to look for those fits early becausethey, they signal to us. We think the transition and adoption is somethingthat's powerful for people who don't have the access to freedom as, as much aswe do in these more, I guess, Western countries effectively. So. You knowthings to me like Bitcoin, they're most valuable when your, your money is themost at risk in central banks and from governments effectively.

And you may not recognize how valuable that is until thatmoment of it being the most risky thing to have come basically comes to bear.So in, in early 27 sorry, early 2013, I think just after 2012, maybe it wasearly 2012 or December, or sorry. 2012, how to double check. But the septicbank collapsed is really what sold me on Bitcoin.

In terms of the concept, you know, that a bank can just comein, frees up all your capital. Now the gaming sector doesn't really have thatoften, you know, people aren't storing hundreds of thousands of dollars ontheir, on their game consoles effectively, but the IP and the brand identityitself it's worth an extraordinary amount.

So. I ponder, you know, what happens if you had seen south parkborn and the idea of like these 10,000 characters and it was a podcast and youhappen to buy a car or something effectively off of this, this list ofcharacters that they were launching their show with and the potential of brandidentity alone.

And the growth of that is, is astounding. You know, we, werecognize that visual brands last a long time for better or for worse, I'll useMickey most example. It's been around for like 80 years or something. Right. Sowe know that the, like a character within a brand can withstand of, of a hugefunction of time.

So it seems like it's the perfect storm for the video game sector.Because it wasn't as Wal gardened as the social media sector. I think this iswhy steam never really won is because, you know, Facebook and Twitter just hassuch a stranglehold on all social media context where the gaming world isn'treally like that you have these weird, one-offs like star due valley where it'sjust one guy makes this entire game and it becomes this kind of overnightsuccess.

Well obviously it took him quite a time to build. There's nomarketing team, no hundreds of millions of dollars poured into the game, justhit a nerve with the community. And, and that never really happens in thesocial media space because it's so big and centralized. Whereas the gamesector, you've got all these different gamers and producers and languages thatit's been somewhat naturally decentralized.

So we think, I think there's a lot of power in, in thepotential for the social aspects, the ownership of IP that ill in built ineconomy. You know, there's I try to make a few comparisons of just companies,you know, if you're like, okay, well, how do we try to compare an oldercompany? Let's let's assume that a company's already revenue positive.

And I like red. Bull's a great example. Red bull spends like 3billion a year on getting people to jump outta planes and from spaceships andshit like this. Well, what happens if they just gave away $3 billion every yearto their customers. And there's a way to keep track of who their customerswere. And they, you know, the NFT world offers us this type of mechanism that youcould potentially build an identity within the NFT sector or this space as wellthat your, your identity is based.

Well, how many red bull did you buy over the year effectively?So this membership or this buy-in becomes your, your place within kind of theearly stages and growth and development of a company that no one ever got, youknow, the idea. You could pay $12 a month for Netflix and have seven years ofenjoyment.

But if you didn't have X amount of dollars in your account, youcouldn't have invested in Netflix. But if there was the option to also invest$12 alongside my $12 a month in, in watching you damn rights, I would've beenmaking that investment. And often the problem is. The average consumer has noway of actually participating in the op side of any, of, of any of the growthof the company itself because they're wall gardened out and the financialsector has done a really good job of that.

So it's to see that where the video game sector is coming fromand the potential for this kind of floodgate to open where. Where it's beenmost adopted we're in the crisis regions like the Phil Philippines, they runout of you know, ways to fi like find new work. You have this brand, thisgrowth, the development there's huge investments coming in and people made,well, I'm not sure how while they're doing from afinity anymore, but we'relooking for those glimpses of what.

What might be able to happen. And we think that gateway webthree gaming effectively becomes that on ramp for a billion people to participate,whether it's with Bitcoin or avalanche or Solana or anything, it acts as thatOnRamp where they didn't need a bank account. They didn't need an identity.They can come here and hopefully build that when and preferably without anygovernment's help.

[00:13:47] Ben: Yeah, well, and that's the potential. AndI think a lot of this is hard because the blockchain within gaming enablesthese new game mechanics and abilities that, that previously were impossibleor, or very difficult to do. But. you mentioned actually infinity. I mean,this, this has been kind of parabolic up and back down kind of chart.

Are, are there, what are good examples of how games areintegrating web three aspects, blockchain aspects into their game that will beiterated on and kind of be used in this future version of what blockchaingaming could be.

[00:14:27] Tijo: Ooh. Yeah. You know, technicals are notreally my strong suit, you know, even, even with Bitcoin for something I wastrying to understand.

Okay, what's the value of decentralization. I try to look atthese hard format versions of the way I understand the world. I was chattingwith some friends earlier. I'll I go off a little Ranier to try to explainthis, but one of the ways I understood Bitcoin's value of decentralization,which was just a storage of knowledge or data.

And there's this old kind. Cliche idea that people thinkthere's no answer to, which is if a tree falls in the floors and no one'saround to hear it as the tree make a soy. It sounds. And the answer is, of coursethat makes a sound, you know, vibration is this very poignant idea that seemsto travel literally through everything.

So the, the recognition of something taking place is actuallythrough this distributed mechanism. It's the ground, it's the soil. It's thebirds in fact is like, Molecule of the universe itself is technically receptiveto that fall within its distance. So to me, I was looking at, okay. I don'tknow. I still don't know how the Bitcoin technically works, like in terms ofcode, but I know how it works, conceptually.

So in the game structures, economies, you know, these things, Idon't know, like the board apes, I didn't see coming, you know, there are a fewme bits world of women. They're kind of like cultural brands to some degree.I've never really been one of the cool kids that knows what the cultural brandlooks like.

Either like the offshoot fringe listen to tool or something,you know, not still really talented, but not like in the, in the mainstreampopularity, like Taylor, swift fans are confused, you know, but because ofthat, I think what's interesting is that, you know, in the gaming world, Havingless of an interest or, or not less of an interest, but less of a knowledge ofsomething is actually made investing a little bit easier.

Cause I'm willing to take more risks on things. I generallydon't understand here. Really. I think what rely we will rely on the most is ifyou have a brand adopted like that and the growth of that brand continuesthat's really the, the most important part, all these in game economies andwhether people can vote and how they were gonna, you're gonna usedecentralization or staking.

These are, I think. Like secondary almost because a lot ofpeople are like me don't understand a whole lot about coding, but we can, weappreciate art or things that we like. So, and I think the NFT sector kind ofbrought a lot of these conversations to life is, you know, what do peoplerecognize is valuable themselves?

So, you know, more than the in-game economies because you, we,we were already witnessing that like with ax, infinity is a great example justcuz they had the most or they had the earliest adoption. First off, you'relooking at a, a thousand X growth in, in something like a year or two. So justas a comparison here, I will show there's this is the AXI infinity chart, butyou know, just, just a sideline.

There's Solana. So there's huge. Parabolic moves are what wesee through almost any gross cycle, but effectively, you know, for everythousand dollars you invested back when you and I were chatting in early 20,20, you walked away like a million dollars. And that's insanity, but it's alsowhat you're looking for in, in venture capital.

So. Again, what I think is the most unique aspect is actuallythis give back function to the community where, where if you take a revenuegenerating business and instead of just spending it all on marketing, you'regiving that marketing budget back to your, your customer. You know, if yourcustomer accidentally ends up with a million dollars one year, cuz they boughtred bull three, like a year, like six months ago, they're ecstatic.

They're gonna post on Instagram for years to come based offthat one moment. And I think that the, because the blockchain allows. Mechanismof identity through your participation with any economy, whether it was the E Stokens or the Ethereum name service, or UNOP these big airdrops that people getfor participating have actually yielded huge results.

And I think that, you know, one of the interesting things hereis more than the conceptual techn technicalities of okay. If there's an economyand there's built in staking and I could own like a ship in this game andsomeone could rent that ship and use that ship to make more money in the game.I, I think it's actually quite a bit.

Simpler than that. I think it's that first off, when thingsgrow, the monetary speculation is gonna grow right alongside it, regardless ofif it's a, a value function or not like price and value are not necessarilyconnected. So early on in the growth of like a games economy, it's, it's hardto determine whether it's gonna be successful because you have these large, oryou have these broader pieces, like.

To people like the art is the gameplay, any fun. And these area lot harder to perfect, I think, than like a scientific experiment. So becauseyou're based off the whimsical nature of people's interest and, and storyline,and anyway, it's the, the, the short part of this is I think the most, the mostvaluable function with the economy is actually really simple.

It's that you can give directly back to your community members.Through your growth. So aside from anything complex that you can do within thegames, like I was saying, like renting ships or renting at your characters,just the fact that a company can grows and you're rewarded for that is, isprobably one of the most important value functions of the blockchain.

Just. Inherently builds in, and it's almost through any chainthat you can do this, but it's that relationship with early participation? Youknow, again, the fact that you couldn't buy Netflix for $12 a month, that microshare is so valuable because Mo most of the time the games are gonna fail. Like90% of the time, you wouldn't have gotten Netflix.

Right. But when you do that $12 a month, whatever it might. Bethat you're putting in, ends up being oars of magnitude higher for people thatwould just never have the possibility to do that. Where you put a thousandbucks in, in ay you're in the Philippines, like it's the most money you've everhad. And it all turns into a million dollars because you were playing a game it'sunheard of, but it's, it's that value relationship.

I think with the community, that's the most like important partof the, the way the ecosystem function.

[00:20:04] Ben: That's a very good point to kind of zoomout and, and focus on that, which is the value creation or the value sharing.I'm. And, and you mentioned earlier, you hang out in the fringe, but like thefringe is where all the potential is, man, who wants to be in the mainstream.

Like eventually all these things will be mainstream, but the,the fringe is where it's at, especially in the beginning. The idea ofblockchain gaming, like what, what do you hear often that you just completelydisagree with? I mean, aside from like getting way into the details about thegame mechanics and not focusing on the big one, what, what other points do youhave?

[00:20:42] Tijo: Mm, you know because I think it's one ofthe fun parts here is that I have, I'm very opinionated about areas where wehave data and we can use that data to make analysis of any kind. And one of thethings I like about the gaming sector is that there's, it almost doesn't exist.A we know there's, we know there's a lot of money here, but the success of thatgame, It's like a story, you know, when you find writers like JK rolling, you,you know, you're looking at these authors who have often been turned down sooften like time and time again.

So one, one of the things that's most exciting is I don't knowwhat's coming next and we're always trying to find that I think that's, what'smost entertaining and I'm not super opinionated about what that looks like. I wouldbe if this were other fields, because we would, we would have data, but wedon't really have that data here because, because that storyline can come fromalmost anywhere.

And the way people, you know, have attached themselves to thosecharacters effectively is I've never been able to pick it. like there's a fewtimes, you know, I think like I'm a, I've been a fan of south park sincebasically day one. So it's like, there's a relationship to brands that we, thatwe like and that we understand, but in terms of the way I think.

About making investments in, in games and where we're kind ofopinionated where it's like, where are we gonna be stubborn? We actually justtry to have a thesis of, okay, how much are we willing to lose here? And, and Ithink this is an important part to investing that a lot of people get caught upin it's it's really easy to have a survivor bias and then assume that you'resmart and that you're getting it right, because you're good at what you, whatyou do.

And, and often people. But not always, right. We we've justgone through a period of where a bunch of companies that you wouldn't haveexpected have solely totally blown up. Right. So it's not the appearance ofsuccess is, is often creates a, like a level of arrogance. So I'm not actuallysuper opinionated about.

Anything in the gaming sector, because I think it's so openstill. I guess I could go back earlier to like how early, well, we're stillearly in, in what this technology and, and what games can do over the nextbunch of years. But more importantly, I think for me being, and, and I thinkjust for anybody out there, if you find something that you think is valuable inthe venture capital space or in the investment world, it's really easy toconsistently build conviction over time.

Right. Cause you're, you know, that you're gonna get it wrongoften. Like when I was screaming about Bitcoin, $6 million and is said like 200bucks. I was the crazy person, right? That wasn't, it wasn't necessarilyglaringly clear that we would get this far in adoption or even this close, butmaking those far out predictions, you, you know, you don't have to.

To spend hundreds of thousands or millions of dollars in yourfirst investment and what we try to share with people along the ways, kind ofall, all the mistakes that that I've made and, and how to circumvent those. Andone of the, one of the aspects, I think that's so important is that, you know,we can only lose this much every time we make an investment.

So we we're like great. I'm willing to lose this much money onthis idea and we'll come back in a year or two and see if we're right. And astime develops the ones that become the winners. The games that we like, andthat we'll develop over the next few years, we'll just keep investing in those.You know, I think this last year we invested in, let's see here, star Atlas,Rainmaker, avocado Guild, Infini force decimated, IIA, soulless, XT, Z zoneheatless Nyan heroes, defi drop.

So there's like a crap ton of games we invested in. And we knowwe're like, if we get one right out of those, like we're super stoked. So it'salways this kind of difficult game of, Hey, we don't know what the fuck's goingon. We know that we're effectively trying to get lucky because even thefounders who are producing these things are getting lucky through so manysequences of event.

The people they know, the capital, just the right kind oftiming, the market waves. So we, I guess to simplify that answer, I, I try to.Be less opinionated about these early investments and just make them and justlimit how much we're investing on the likelihood that it's gonna fail. It waslike, oh, well, you know, we've been so just make, invest less.

Cuz I mean, we saw a thousand dollars, turned to a milliondollars with ay, like why would you not wanna risk a thousand dollars? And wehave the same thesis in early 2020 with doge coin difference like a DOR stupid.You would Doche coin if it's like, but Doche, coin's stupid. It's like, well,People like dogs.

Okay. And the meme culture is fucking high, high up there, realstrong. So, yeah. And in terms of a currency, actually, doge coin is betterthan a Bitcoin is a currency. At least there is, is some type of inflation, youknow, effectively you need inflation and currency because there's more people,there's more businesses, you know, not manipul the inflation's not manipulatedby any, it's a set rate of inflation.

It's like, okay, why not? It's not a badass currency. It's nota bad currency. Right. So. There's arguments for things. I think often ofmaking limited investments, knowing that it's stupid dog coin here, but thatthe risk to reward relationship is asymmetric. So that a thousand dollars couldturn into a million dollars effectively so that we try to look at it from howmuch are we interested in potentially losing to really test this theme over thenext five years.

And then we reassert our investments as, as we go. So you just,I, I guess. To highlight that, try to assume we don't know what's going onhere. Enough are not super opinionated about cuz I know nothing about the videogames. Now, if you were to ask me about things, I think I'm super right onthat. A bunch of people are right wrong on and outside of this sector.

Oh, there's a shit ton. but that's a different conversation andthat's statistical data. We get kicked off YouTube and LinkedIn and Twitter fortalking about any of that stuff.

[00:26:01] Ben: I think that's a good approach. It's likethinking ally, like thinking in bets with all of this and it, like you said,you punt a hundred or whatever.

The number is $10, a hundred dollars thousand dollars, whateverinto a bunch of these, eventually you'll get that thousand X or, and you'llprobably have 95% of them go not a thousand X, but it's that, it's just thatone or two. That work out when, when further reflecting. So you guys you'vebeen in the space for a while.

You've done a lot of investing, thinking further through thelike, oh, I, I, I wanna make sure to take internalize this learning and, andapply it going forward. What else have you noticed just from from learning andreflecting on.

[00:26:48] Tijo: So this one's a, I haven't been able tofully integrate, but I've, I've learned it from experience of the words thatare involved in it.

So I give a few examples of what I mean by the, the outsetbefore I get to, to the, to the core central piece. But often we'll learnsomething very valuable in, in wisdom format, through the words primarilyfirst. And it's not until you get in, have an experience with what those wordsactually mean. It becomes you can, that you can then use it, right?

So I'll give an example first. There's this idea of buy whenthere's blood in the streets. Now, prior to March 12th, 2020, I hadn't reallyexperienced that moment, but on March 12th, 2020, when the world locked downand everyone was rushing out to buy toilet paper, this is a literal moment ofbuy. When there's blood in the streets.

If you see people falling over, dying from unknown disease,This is actually where you put your investment hat on and go, fuck. Yeah. so thisalone is okay. Well, I don't know how many times I'd heard this idea of likebio blood in the streets, people related to candles, but no, it's you, youwant, if bankers are jumping out of their rooftops and committing suicide,these are really good investment signs.

So those are difficult words of of wisdom because you need tooften experience them to make them make them useful. And one of the ideas of.Kind this wisdom behind investment investing that I've been working on is thisthesis of like WWE, which is often doing less rewards, that the has the highestrewards, at least in the investment thesis itself.

Sequoia put out an article of a few months ago that said theyhad lost 8 billion by taking profits. And you know, what's difficult is when wesee these huge growth curves, they also are followed by subsequent collapses.You know, whether it. There's Amazon or Microsoft all in 2000, went up a bunchand then dropped around 80%.

Now, when we're looking at a function of time, A goodinvestment usually takes around five to 10 years and you can quite often get ahundred X it's like a hundred X is actually pretty easy. If, you know, if youfind a good company, they've got a good name for themselves, like you can, youcan figure it out, which means you can invest $10,000.

And within five to 10 years, you've got an extra million andthat's a pretty achievable way, I think for most people to get to success. Sofirst off, like leverage trading over emotional, like trading often in generalcan do less. Now this, you know how people deal. Profit taking and, and goingfrom one risky asset into a less risky asset like buying houses or building,building companies, I think is extremely important.

But just to simplify this idea of doing less in the portfoliohas actually yielded the most results is, is this idea that I'm trying tounderstand better, which is, you know, one good investment over the course offive or 10 years can make tens or hundreds of millions of dollars. If, ifappropriated properly.

That it involves a fuck load, less work than most people wouldthink. You know, I wrote about madic and fetch for almost three years in our,in our newsletter between 2017 and 2020, the subsequent start of the new bullmarket. And, you know, at the first, when we were first looking at madic, itwent up like 80, 90% off of its IEO.

And then it re retraced 80 to 90% of all that growth. And forabout two years stuck around at a penny. You know, and again, this, this ideaof asymmetry through time, you, if had you invested only a hundred dollarsevery month in tomatic over the course of two years, you end up with like$3,000 worth thematic, which then turned into almost quarter million dollarswith within that last, very strip of, of 20, 21 effectively.

So this idea of. How you can make more by doing less is one ofthe ideas. I'm trying to figure out more of cuz often we, especially in thebull market, you end up to try to do more work and you're talking to morepeople and you're building more connections. It's like, wait, hold on a sec.Some of the most successful stuff here comes from when you're doing less.

So that's something I'm still trying to like fully I integrate,whereas I haven't experienced. The wisdom of that one yet, but I know the wordsof it. I know what the words of this wisdom sound like. You know, there arethings like by right, and sit tight or heads that wind tails. I only lose alittle and really understanding that, you know, asymmetry or any type ofexponential growth is, is hard for us to fathom because we don't know that, youknow, a $200 investment or a th like, or sorry, a 200 investment repeated 10times, this is gonna yield us a million dollars in returns.

Two and a half years down the road, like there's no, likethere's very few jobs you can get that will, that will match that input tooutput ratio effectively. And, and it really had nothing else to do with justaccumulate a good idea. And I, and it seems that over time you can justcontinue to do that. So trying to.

Find out that over the next few years, I think is important. Soto try to like highlight it with meditation or ice baths and all the fun thingsin life that slows down and hopefully end up with doing less work, but gettinga lot more result back for ourselves and the people that invest with useffectively as well.

[00:31:32] Ben: Yeah. You said that was woo way.

[00:31:35] Tijo: Yeah. So, well, Blue way is the Chineseterminology for it. It means like a non action, I guess, to some degree whereis or better situat is like the, the universe is doing something through you.You know, there's a very easy example in, in music, you know, much about Indianmusic, then I do not.

Okay. So you know what a Satara is though, right?

[00:31:56] Ben: Probably not, maybe if I heard it

[00:31:59] Tijo: as far as like this big, biginstruments, huge strings on it. And underneath there's like 20 strings. Andwhen the player plays the top strings, all the bottom strings basically come tolife because they're in tunes with the bottom strings.

So this is like a good example of what. Woo way would be, ifyou were one of the bottom strings, what you're looking for is, is like thepresence of, of life itself to come through you and effectively create thenoise that you're making. So you're not doing anything strenuous. It's likethe, the river of, of the universe is taking you for the ride itself andyou're, you're just hap enjoying it.

So there's a few, I mean, People talk about this in, in art.And you can get, you can get to these out body experiences that are verysimilar, but you know, investing is actually not disconnected from, from therest of the world. So part of it is okay, where are we gonna be able to findthese fringe ideas, make an investment and walk away.

And part of the thesis is what's most effective. Like a woo wayis just basically doing less and you end up with a lot more. You know, there'sa bunch of investments I made while I was trading and learning where I exitedway too early. You know, you make an investment takes, it goes up 10 X, you exityour position just to watch it go up another 250 X.

And then if you wait another two or three years, it goes upanother a hundred X you're like, well, shit, 10 X where it's all that stressand emotion. I was thinking like, you know, it's clearly the opposite of whatyou wanna be doing. And, and I think that the market itself has evolved tounderstand that humans are actually really bad at assessing these types ofevents, what exponential growth or asymmetry of any kind.

So it takes advantage of the emotional aspects of humans, whichare very, very easy to manipulate through these kind of blood in the streets oroverly greedy moments. They get overzealous. They buy outside of their velocityaffair outside of their capacity. So this type of human nature has been takenadvantage of and speculation is as old as music.

Right. So, oh yeah. There's certain things like this. Yeah.That you can tell. Okay. Well, If the natural course of events would be to getin, try to trade outsmart the market, forgetting that the market is hunt. Likeit's older than you are, is older than I am gonna outlet. People are gonna betraded and speculated on shit long after I'm fucking dead.

So this is one of the difficult things to contend with is likeit, it actually is taking advantage of something that humans often get wrong.And the best way to deal with that is to basically do, do less. .

[00:34:14] Ben: It's very good to like, think about, butit's also very difficult to do in practice.

And even like talking about blood in the streets, right? Likethe, the psychological barrier for you to pull the trigger and buy things wheneverything appears to be burning down or at the same time, you know, that it'sjust like, Peak euphoria, greed running rampant, and you probably should exit,you know, it's it.

It's very tough, difficult to balance those things. But, so, soon that, that topic is like right now, one could argue that there's a lot ofblood in the streets with three hours, capital blowing up, like all of these,you know, E is down 76%. Like that's, that's pretty bloody. , but there's a lotof macro risks and kind of other risks that this thing could still go down byanother 76% pretty, pretty darn easily.

How do you kind of think through, I mean, is, does it go backto like thinking in bets or, or where do you position yourself right now withthe markets?

[00:35:20] Tijo: Well, this is a very difficult questionbecause ultimately. Where we are right now is in like a zombie market. The federalreserve, since 2008 has propped up in everything effectively.

So a lot of people don't don't recognize it, but the onlyreason the stock market is up is, is due to monetary inflation effectively. Sowe've kept alive. Companies that would never be able to survive through anyregular earnings relationships at all for, for over a D like over a decadebasically.

Now. So there's a, a chart. I think that kind of exemplifiesthis. So this is the S and P 500 in, in yellow. And the orange line is the Mtwo supplies. This is kind of the, an aggregate of the liabilities on the Fed'sbalance sheet. And you can see this pretty in I, I guess, correlate of growth.Now, a lot of people, oh, correlation doesn't equal causation.

It's like, well, the, the statistical significance here wouldactually say that it is, it is actually caused by this. It's not just an, it'snot an artifact of money printing. It is. In fact, the reason why everything isup. So high house price is S and P 500 is all due to monetary printing. So. Oursector falls in this category as well.

It's all been inflated through monetary printing. Now that'sthe first kind of danger and the macro headwind out there. That's confusingbecause when the federal reserve says, Hey, we're gonna raise interest rates totry to combat inflation. While there's a rabbit hole of things wrong with thisparticular idea.

But what it does is it puts a lot of stress on the outer thirdworld economies when they start raising rates, cuz most of these countries haveto try to close their debts or buy oil or, or energy and in us dollars. So nowwhat you see is a kind of a breakdown of this global economic system whereRussia and China are starting to Do more trade with one another becauseapparently Western countries think you can just stop using oil or some shitlike doesn't matter.

No, but so Western countries right now are going through a lotof stupidity. And I think that the woke culture is making decisions. That'sabsolutely gonna be unparalleled devastation in, in the market recession or interms of a recession, but there are a few other really strongly confoundingfactors that come into play here through deflation.

Now. I was just reading a great article about bull whips thatMichael burry had posted this idea that the inflation is actually gonna dropmassively in the next CPI story because of the way storage and facilities andhiring works within these kind of larger box retailers. Anyways, it gets, getskind of convoluted, but the point of this is it's very likely the the federalreserve is gonna come out and start printing again and reduce.

We are at a, a place where there is no good choice. The, theeco, the financial system that we have is broken. It's been corrupted andgutted beyond, I think what people would ever begin to fathom, like it is whoand totally morally corrupt in areas of, of the, the corporate world in thecapitalist world.

Most people, you know, you think it's the oil companies, likeit's way, way worse than I would've ever imagined out there. So we're at a.Devastating turn of events, most likely for society at large. And I don't knowhow we make it out of this. Now, one of the reasons why I'm so stoked about.Technologies like this is because we're looking for an optimistic future.

We're looking for a result of how do, how does this thingthat's clearly dying, collapsed into something better, you know? I mean, Idon't know how many trees I've cut down on my property here, but every time Ido, there's another tree that's growing up in its place. So we know that thefalling of one thing is not necessarily the death of all things.

It's just usually the life of something new. So. Hopefullybeing invested in, in the, the next trees that are coming up. And ultimately Ithink that what's most unique here is that there's the question is, does microprocessing end up in micro governance and it should. I think hopefullyinevitably that what we see is something that's more closely related to amunicipal style governance and monetary structure through the collapse of thesemuch older, archaic, and totally morally corrupt.

Pieces. So we could be in the throes of that right now. So whatthat looks like it, it means very, very, I guess equally is that the UnitedStates dollar is, is equally as a liability, cuz we don't know where this goes.You know, it's us dollar has been around for a long time. It's probably gotsome staying power, you know, you could take it to countries all around theworld and they all know what it looks like generally speaking or what a fakelooks like.

So the us dollar is like a cash reserve may function for a longtime. But the biggest story is that they don't start printing more. And whatthey do is they purposely collapse the economies through raising the interestrates of trying to effectively. We like, Hey, well, we'll offer you 20%. Justlike U S T was doing.

They call all the United States dollars back into the bankingsystem destroying most of the third bullet economies. And then as gas and breadlines, start to take place that people line up for new digital ID. So we'rewe're, I think we're at war right now. I don't, I just don't think most peoplehave fundamentally understood that the war has now gone super national andwe're, and we're dealing with a faceless criminal effectively, because it's not,it's not just off the back of a, a single government.

It's. Through all these policies and organizations of, of howlaw is administered O over so many countries. And it's, you know, I, I have ahuge amount of faith in, in like the human individual, creativity andadaptation because we have that. But I think the the battle that we have toovercome potentially here could be devastating, whether that happens today ortomorrow.

I'm totally unsure of, but wh when, when the. I guess when therooster comes home to roost for this us dollar crisis that we will, we willinevitably have to go through. It's gonna be scary either way you look at itbecause it means we we've mispriced the value of almost everything from life tofood, to air, to water, they're all mispriced.

And, and that's a, that's a big deal for a culture. Soultimately, I don't know, normally I'd be way more optimistic, but again, Ithink what's important is we focus on, on the web three gaming sector on thingslike Bitcoin, because those to me are born in, in the crisis. They're bornwithin the The blood within the streets.

And I think that they're the strongest suited for making it outthe other side as well. Just I guess, a kind of a survival of the fittestmechanism within technology, assume,

[00:41:24] Ben: assuming it doesn't all end withpitchforks and torches, you know, I think these things could, could have quitea bit of value on the other side.

indeed. Yes.

[00:41:33] Tijo: Yeah. Maybe even a. A smooth people,transition, you know, value is kind of a hallucination it's, there's this ideathat the United States dollar is worth. Anything is really just a globalhallucination .

[00:41:47] Ben: Yeah. Yeah. But if enough people believeit, obviously it kind of, it is so I, so you like web three gaming Bitcoin, butthen like in your profile you have Solana E avalanche, are you.

Kind of how, how would you consider yourself? Are you likecrypto's pretty tribal so that you have Bitcoiners, you have E you haveeverything else. Are you Are you more prone to like Solana, avalanche, Ethereumfor gaming or in general? It's web three gaming, regardless of which no, I have

[00:42:20] Tijo: a chain.

We, we have an intuition that Solana gaming and social. Formthis new space together. And that avalanche to theory are much better at the,some of the larger value functions within the system, right? Like if I'm movinga hundred million dollars around, I want the most secure platform there is.Whereas if I'm with Solana, with gaming, where, where you could be dealing withhundreds of billions of dollars over a much, much broader perspective of, of,of people as person having like that a hundred, that a hundred million in thatbillion dollars in just one wallet.

So I think that. Solana ends up kind of winning the race forgames and drives a massive amount of volume and attention through, through thisparticular chain over time. But ultimately, you know, what money is to people,what currencies they want to use where value can be occurred through, throughsomething like a staking, Ethereum or staking avalanche.

I'm not sure where the end result is, but I D my kind ofguesstimate because I'm not a tech person, is I. Theory. I'm like, oh, thislooks like a Honda. It's a really reliable, super safe car. More or less. Gotthis fun little touring function. So a bunch of random people can write on itwhenever they want, but it it's a Honda, no matter how much we stoop up theHonda, I still would be a Honda and so long, it looks more like a Ferrari.

And I've seen countless videos of Ferrari start on fire and,and, and Lamborghini start on fire because they're high performance machines.They go just a little bit. Like just think a little bit outta the whack withhow much exhaust is coming outta the exhaust pipe or some shit it's gonna starton fire, which is ridiculously fast compared to the, compared to the Honda, youknow?

And then you've got a Tesla completely different vehicletogether effectively, but still a car. So I'm, I'm not sure both Ethereum,avalanche and salon are all in the venture capital sector. Any, any one of themin my opinion, could, could go to zero through some sequence of. Although, Ithink it's becoming harder and harder for Ethereum.

There's just so much cultural background built there too. Thatit's unlikely. You know, I think it's got aspects of the early internet too,that were very powerful, which is anybody can kind of make a website. Whereas whenyou get in a Solana, you're dealing with rust developers. It's a very. It's amuch more specialized focus.

You have to have years of development, background and practiceto do it. So not every person can just jump in the salon and start playing. Butthere's a higher quality of developer because they've spent their whole yeargetting to that type. So, you know, we're, we're looking at, I think thedevelopment of different value functions for the people that are using it.

So I think Ethereum. Probably go for, for a, a long time basedoff even just the NFTs, like board apes and crypto punks could probably keepEthereum alive in terms of its value chain. But it's gotta run for its moneywith Alanche, but all three to me are still in, you know, this place hasevolved so quickly.

What comes next in terms of the tech. Technological evolution.Like we went from tape to vinyl, to beta, to CD, to DV D to MP3, to streamingmusic. So fucking fast, like every, like, I couldn't imagine being superinvested in like making CDs or some shit for any, like, it didn't last. Morethan like a few years, you know?

So it's, it's hard to imagine that when we're dealing withtechnology, how long these are going to be be players, but every day, each ofeach one of them exists and kind of proves their, their value function. I thinkit's much more likely that they'll have another day ahead. So all, all three ofthose landed in, in a, in.

Yeah, in the venture capital, like we are prepared to losewhatever we invested in each of those. But we think one of them is gonna be thewinner. And we actually think that multiple will be the winner. I think it'svery likely that Solana takes over gaming and that avalanche and Ethereum kindof have this battle out for more of the primary financial transactions.

And avalanche is a few features in it that may give it theexpedited process to leapfrog Ethereum, if it has to, in terms of theenterprise world. So that's kind of short. Long summation of, of that thought.

[00:46:08] Ben: The space is so broad that it's verydifficult to keep an eye, keep, keep an eye on like all, all of the intricaciesbetween these two, the, these different ones.

That's that's

[00:46:18] Tijo: for sure. Yeah. From the gamingperspective again, because of that rust developer base, that, that more. Let's,I don't know, say culture designer, developer, people that have just spent somuch more time learning how to develop. I think that this is gonna bring the,the better products to the table than the O kind of open Ethereum touringlanguage in terms of gaming and social, you know and the cost to produceresults on, on salon is much, much cheaper already.

So, and again, you know, this idea that it goes down all thetime. I I'm just like, well, a lot of shit does, and people will just get usedto it growing pains, too. Know. Yeah, exactly. So.

[00:46:55] Ben: Nice. Well to I've really, really enjoyedthe conversation. I think there's a lot of good little tidbits here. Where canmy listeners find out more about you?

Where would you like to see them? Any parting, parting

[00:47:07] Tijo: words? Oh yeah. You can [email protected] anywhere you type arcane bear. We. Provide a bunch ofeducational tools and formats research. We've got a private newsletter. We'regonna be opening a, a kind of a front end venture capital that everyone will beable to participate in too, which is really exciting for us, cuz usually it'snormally pretty closed off to make investments like even getting into iOS isquite difficult.

So we're looking at how we can open some of these rails up,but. Definitely took us out to arcane bear. Any of the supporters we're, we'revery grateful for we, we lie on the fringes, so we'll probably scare most of,of the people off .

[00:47:44] Ben: Well, the, like I said, the fringes iswhere it's at. Great to see you, sir.

Great to catch up. And I'll, I'll link up all of these thingsin the show notes.

[00:47:52] Tijo: Yeah, it was, it was a pleasure to catchup today. I appreciate the questions and it's always fun to rego over thethesis and share with other people what I think is going on. So thank you.

[00:48:00] Ben: There you go. First off. Thank you verymuch for listening all the way through. I hope you got a lot of value out ofthat conversation as always. You can find show notes, links, and more. Altasset

Please share this with anyone you think might be interested andderive any value from this conversation. And as always, you can reach out to mefor any feedback or questions.

Please give the video a like, or even better subscribe onYouTube or your podcast player of choice. This really helps others find thepodcast or the video as well. Thanks a lot. Hope everybody has a fantastic dayand stay safe out there and invest wise. cheers.

Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.