Tremendous

An angel investor's take on life and business

  • Where The Sopranos Really Happened

    “Douchebags make that a red zone?”

    I’m a huge fan of The Sopranos. Lately, one of my favorite ways to relax on a weekend night is shutting off the lights and watching a few episodes. So, since I live in northern New Jersey, I decided to see if there were any filming locations nearby.

    I found the location of a classic scene from season 6 episode 10, where Christopher Moltisanti’s Maserati is towed by the US Marshals. Chris bought it from Johnny Sack, and the sale violated a court order freezing Sack’s assets. Chris storms out of a garage and confronts the marshal, to no avail.

    The scene was filmed at Roc Harbour Drive in North Bergen, right along the Hudson River. Christopher comes out of the garage in the back of the apartment complex.

    When I visited yesterday, everything looked essentially the same, except for the big bush that was to Chris’s right. That was gone, evidently replaced by some HVAC equipment. Here’s a view of the whole driveway where it was filmed:

    And here is a closer view of the garage Chris came out of, with me mugging in the foreground:

    It was very exciting to stand in the same spot where this classic scene was filmed! I plan to hit more locations in the area soon!

    For more on entertainment, check out these posts:

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  • From Anticommunist to Navy SEAL: “I Owe Everything to America”

    “I owe everything to America.”

    That’s Thomas ‘Drago’ Dzieran, who left Communist Poland in the 1980’s for freedom in America and became a Navy SEAL. His path to the teams is singular.

    Drago began to oppose Communism at an early age. He refused to learn Russian in school and was promptly hauled to the principal’s office. The principal explained to him that if he refused again, he could be taken from his family and sent to a foster home.

    This did not stop Drago from questioning the Communist system. He listened secretly listened to the BBC on the radio, a highly illegal act. There he learned that the Communist government was killing people in Poland. He covered himself in blankets to dampen the sound as he listened, but his mother scolded him to use even more blankets and pillows lest a neighbor hear. If anyone heard, she could go to prison.

    But Drago didn’t need a radio broadcast to tell him things in Poland weren’t right:

    “I was always cold in Poland because we didn’t have good clothes.”

    Privation was the norm, and he often went to school hungry. He took to assaulting the children of high party members, who were well fed. If you want to eat tomorrow, bring two sandwiches, he told them.

    As a young man, Drago found himself in a Polish prison for printing anti-Communist leaflets. When released, he emigrated to the United States, and found himself resettled in Memphis, Tennessee by a refugee program.

    The luxury of America amazed him. He had never seen air conditioning before, and found himself particularly mesmerized by American grocery stores. The cereal aisle had so many choices, and the packages were so attractive, he decided to try one. And another, and another. Soon, his cart was full of 50 boxes of cereal! But he couldn’t stop his curiosity:

    “I didn’t even know what a cereal was.”

    After a stint as an auto mechanic, Drago was looking for a way to serve his adopted home. He settled on being a Navy SEAL, but at 32, he was at least 4-5 years beyond the typical age limit. No matter. He powered through the qualification tests and insisted on being allowed into BUD/S. Drago later distinguished himself as a SEAL during the Iraq war.

    Drago’s commitment to freedom continues today, as the founder of a censorship-free social network called Connectzing.

    What really struck me in this interview was Drago’s perseverance, along with the stark differences between the United States and where he comes from. On living conditions in Poland under Communism:

    “I would trade my life in Poland for prison here.”

    After all, they get food and medical attention! That’s better than he got much of his life.

    Drago says he owes everything to America, and that’s equally true for those of us who are native born. Let’s seize the opportunity, remembering these words:

    “This is America. You can be whatever you’re able to be.”

    For more on leadership and service, check out these posts:

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    Photo: “Navy SEAL Graduation” by uscgpress is licensed under CC BY 2.0

  • This Is How Vlad Tenev Built Robinhood

    “You can break down Robinhood into a series of small steps, the first one being start Robinhood, and every subsequent one being some variant of don’t stop and keep going, right, and you end up where we are today. “

    In his mid-20’s, Vladimir Tenev lived in New York City. His apartment was tiny and spare. All his time went into his high frequency trading startup. Then mom came to visit.

    When she saw his shabby surroundings, she began to cry. She told him she had a friend who worked at Macy’s. Maybe, she could get him a job there.

    It must’ve taken great fortitude for Tenev to push ahead with his own business, despite few signs of success and the anguish it caused his family. But push ahead he did. Today, the company he built, Robinhood, has over 13 million users and plans to IPO soon at a valuation of around $40 billion. Tenev’s net worth exceeds $1 billion.

    Tenev came to the United States as a child from Bulgaria and attended the elite Thomas Jefferson High School for Science and Technology, which US News ranks the best public high school in the entire country. What would’ve become of Tenev if he had stayed in Bulgaria? He might have had a very normal life. But giving this smart kid a superb education and access to a great entrepreneurial ecosystem turned him into a billionaire executive.

    Tenev didn’t stop learning when he finished school. He taught himself to write iOS apps by watching free Stanford courses online while commuting on the Caltrain. It really shows you what a person can accomplish learning on one’s own for nothing now that knowledge is much more freely available.

    Robinhood faced numerous obstacles along the way, but Tenev and co-founder Baiju Bhatt blasted through them. It took two full years of constant work to build their product. Venture capitalists were highly skeptical of their business. How could they make money without charging commissions? How could they beat giant competitors like Etrade and Charles Schwab? And could a couple of math guys make a beautiful consumer product?

    But they kept pitching, and ultimately raised $250,000 from Google Ventures. Tenev couldn’t even get a job interview at Google 4 years prior. What if he had let that discourage him from ever approaching Google for an investment?

    Just days before a meeting to approve a critical license Robinhood needed to operate, they were still $500,000 short of the required capital. Only the birth of an executive’s baby saved them by providing an excuse to postpone. By the new date, Tenev had raised the money.

    A key lesson for startups: Robinhood didn’t worry about monetization until it achieved a large user base. It was confident that, like Instagram, winning enough users would give them all the opportunities for revenue they’d need. And they couldn’t put the cart before the horse.

    What sticks out to me most about the Robinhood story is Tenev’s perseverance. At first, his business looked laughable. Later, it gained a bit of traction but faced seemingly insurmountable obstacles in fundraising.

    But he just keep pushing, day after day. Now, 11 years after he started his first company, he sits at the helm of one of the hottest startups in the world.

    For more on startups, check out these posts:

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    Photo: “File:TechCrunch Disrupt NY 2016 – Day 2 (26902081436) (2).jpg” by TechCrunch is licensed under CC BY 2.0

  • Palantir Is Growing at a Snail’s Pace

    Despite its lofty valuation, Palantir Technologies Inc. is barely growing:

    In the fourth quarter, he points out, Palantir signed 21 deals worth more than $5 million, and 12 of more than $10 million. But he adds that it isn’t clear how many of those are actually new customers, as opposed to new projects with existing customers.

    He notes that given total customer count went to 139 at year end from 132 one quarter earlier, it would seem that most of the new work is from previous customers. “New customer growth is what will ultimately be required to show the commercial momentum the market wants to see longer term,” he writes. “In this regard, the data is still mixed.”

    Seven new customers, net, in 3 months? Not terribly impressive for a company with a market cap of $43 billion and a forward price/earnings ratio of 169. That ratio implies a company that is growing like crazy, not signing a couple of customers a quarter.

    Other reports have indicated growth in their core government contracting business has slowed to a crawl. On the commercial side, 20% of revenue comes from a single customer. The business in general is concentrated in a handful of large customers, any one of whose departure would sting, big time.

    Until Palantir grows at a rate to justify its buoyant stock price, I’ll be keeping my distance.

    For more on Palantir, check out these posts:

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    Photo: “PandoMonthly – April 2012 – Sarah Lacy Interviews Peter Thiel” by thekenyeung is licensed under CC BY-NC-ND 2.0

  • Jocko on Leadership: “Ownership Is the Most Valuable Compensation”

    What motivates subordinates? A fat paycheck, stock options, maybe a free trip to Hawaii?

    Perhaps. But on Monday’s Debrief podcast, Navy SEAL Commander and author Jocko Willink named another, more powerful inducement:

    “Ownership is the most powerful compensation you can give a human being.”

    People want control over their lives, including at work. So, rather than have subordinates execute your plan, Jocko favors giving them a goal and letting them figure out how they’ll get there on their own.

    When a person gets a chance to come up with a plan themselves, they’ll find increasingly efficient ways to do it. After all, most of us like to think we’re smarter than the boss and should really be running things. This is our chance to prove it, and we’re unlikely to blow that chance.

    What’s more, whether in the military or civilian world, subordinates are a lot more familiar with the nitty gritty of a certain job than the boss is. Leaving the details of a plan to them, with the boss just setting overall goals and then approving the plan to reach them, gives them more latitude to bring that experience to bear.

    Finally, running things is fun! When it’s your little idea, you’re a lot more invested in it. So give your subordinates a chance to come up with plans themselves, rather than just waiting for instructions. You may be surprised how well they do.

    For more on business and leadership, check out these posts:

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  • In GameStop, An Unlikely Community

    I spent some time browsing the GME sub* on Reddit yesterday, curious what some of the stock’s most fervent supporters are saying. What I found surprised me.

    The most striking discussions were intensely personal. One poster described saving up his GameStop winnings for sex reassignment surgery, a lifelong dream (usernames redacted):

    Other posters, who call themselves “apes” in a reference to the movie Planet of the Apes, were extraordinarily supportive. Some even expressed a determination to hold the stock to help the original poster, even though one person selling or holding won’t have a material impact on the price. There were a few salty words for hedge funder Ken Griffin though:

    It struck me that, in a time when people are forced to be apart, humans have managed to create community in the most unlikely of places. It says something about the human spirit than even in a disembodied online world, where the topic is an intangible financial instrument, brotherhood (and sisterhood) flourishes. I find it rather beautiful.

    That said, I encourage the posters to simply support each other as people, rather than tying that to a stock. Take it from a professional investor: a stock doesn’t know you own it and doesn’t care about you. It’s a legal construct that gives you ownership rights in a company. And truth be told, it’s a shaky business. I’d hate to see such nice people get hurt.

    For more on GameStop and the Reddit trade, check out these posts:

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    *A sub, or subreddit, is a thematic category on the discussion website Reddit

    Photo: “Gorilla ‘Kibo’” by to.wi is licensed under CC BY-NC-SA 2.0

  • “Everybody Thought I Was Crazy”: How Brian Armstrong Built Coinbase

    “Everybody thought I was crazy.”

    That’s Brian Armstrong, CEO of Coinbase. When he started the company in 2012, it was a small and quirky startup. Bitcoin had only been in use for three years and remained relatively obscure.

    But now, it’s safe to say not many people think Armstrong is crazy. His company just went public yesterday and its valuation currently sits at $66 billion. Coinbase holds $200 billion in cryptocurrencies, around 11% of all crypto in existence. So how did Armstrong go from lunatic to visionary?

    Armstrong had to build interest in his new product. He settled on a cost effective and attention getting marketing tool: send people free money. But not just any money; bitcoin, of course! He sent tiny amounts of the cryptocurrency to countless people. One of them was angel investor Garry Tan, who became one of Coinbase’s first backers. His $300,000 bet turned into $2.4 billion yesterday.

    In an interview with Jason Calacanis on This Week in Startups, Armstrong emphasized the importance of entrepreneurs being scrappy and doing whatever it takes to get the job done. His original approach to investors, repeated countless times, paid off in a major way and Coinbase was accepted to Y Combinator, the most prestigious startup accelerator in Silicon Valley. Armstrong’s resourcefulness and persistence definitely inspire me.

    To build a major business, Armstrong had to make sure not to run afoul of regulators. Unlike, for example, a social media app, finance is heavily regulated. Armstrong ditched the anonymity most people expect from cryptocurrencies, abiding by “know your customer laws.” In turn, he offered users a much more secure way to store their cryptocurrencies:

    The selling proposition here is security—security conspicuously lacking at some of the exchanges with which Coinbase has competed. The Mt. Gox exchange in Japan went bust in 2014 after hackers spirited away coins worth $480 million. Customers of QuadrigaCX, which was one of Canada’s largest exchanges, have been unable to retrieve $150 million in crypto since the founder supposedly died suddenly in December 2018, holding the only set of keys to unlock their money. They now want the body exhumed.

    Armstrong wasn’t afraid to reimagine the crypto business in a way that could grow big, and he doggedly pursued anyone who he thought could help him do it. I find his extraordinary career quite instructive.

    For more on Coinbase and crytocurrencies, check out these posts:

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  • The Ultimate Score: Turning $300k into $2.4 Billion on Coinbase

    In 2012, investor Garry Tan got an e-mail. A young Airbnb engineer named Brian Armstrong had sent him a tiny fraction of a bitcoin, worth just a few cents. But this message piqued his curiosity. How many people send you money for nothing?

    Tan happened to be one of the few people other than Armstrong paying attention to bitcoin at the time. The digital currency had only been in use since 2009. Tan had actually bought some before, using a janky website called Mount Gox. The process was frustrating. He knew there had to be a better way.

    So Tan tried Armstrong’s new system. He found buying and selling bitcoin a breeze, and happily wrote a $300,000 check to Armstrong’s nascent company, Bitbank. That company became Coinbase, which went public today on the Nasdaq. Its current market cap is nearly $100 billion.

    Tan’s initial investment is now worth $2.4 billion, making him one of the wealthiest men in America. But why did he spot Coinbase when other investors turned them down?

    Tan’s familiarity with cryptocurrencies and the problems in buying and selling them was a major factor. He could see Coinbase’s technology was better than what he and other users had had to put up with, so using it would be a no brainer for others. He had also studied the removal of the gold standard in 1971 and was convinced fiat money was risky.

    What do I take from this experience, as an investor? It tells me to look for products in sectors I’m familiar with, and use the product myself if possible. And if a product solves a problem for me, it’s likely to solve it for others as well.

    It also makes me want to read widely and keep up with current technologies as much as possible. The more familiar I am with the new technologies businesses are using, the more good shots at a great investment I will have.

    I hope to have my own 6,000x bet some day!

    For more on startups, venture capital and crypto, check out these posts:

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  • NBA Top Shot: An Overnight Succcess 8 Years in the Making

    NBA Top Shot’s popularity is exploding. Users pay to own an iconic basketball image or video clip, such as Lebron James dunking on someone (plenty of those choose from!). Their ownership is recorded on the blockchain in what’s called a Non-Fungible Token (NFT).

    NBA Top Shot is a creation of Dapper Labs, a Canadian blockchain company. It started selling NFTs of cats called CryptoKitties. From these humble beginnings, Dapper Labs has grown to a million users on NBA Top Shot alone and recently raised $300 million in venture capital at a $2.4 billion valuation.

    In an interview with CEO Roham Gharegozlou, angel investor Jason Calacanis marveled at how far this company has come:

    Another 8 year overnight success in the making. It’s so funny how, as a founder, you can go from being like a punchline of a joke to the absolute belle of the ball.

    Calacanis noted that video games have already sold digital items for real money for years, so the NFT business model is really not that much of a stretch. What’s more, for the young, owning a digital asset feels much more natural than owning a baseball card.

    Dapper Labs plans to branch out to other sports leagues, and ultimately to recording ownership of items beyond video clips and images. If Dapper controlled the ownership records of, for example, cargo, this could be a truly massive company.

    I was impressed with Gharegozlou’s perseverance over nearly a decade, going from obscurity to a partnership with a top sports league and a unicorn valuation. I was also impressed by how forward thinking the NBA is. If the creator of CryptoKitties came up to most major businesses with a proposition, they wouldn’t even get a reply. In its work in the crypto industry, as well as its highly successful COVID protocols, the NBA is clearly doing something right.

    Give this intriguing interview a listen!

    For more on NFTs and crypto, check out these posts:

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    Photo: “LeBron James New York City More Than a Game 3 by David Shankbone” by david_shankbone is licensed under CC BY 2.0

  • Restaurants’ Newest Struggle: Finding Workers

    Reopened restaurants are finding it increasingly difficult to find workers:

    Capacity restrictions and distancing requirements have drastically cut wages for workers like servers, who rely on tips to make up for an hourly wage at or near the federal tipped minimum of $2.13 in many parts of the country, prompting them to find better-paying work. Others shifted to better-paying jobs in fields that boomed while dining imploded, such as retail fulfillment, especially as companies like Amazon and Target pay or have raised hourly wages to $15.

    The problem doesn’t just affect independent or higher-end establishments. Fast-food mega-chains like McDonald’s and Taco Bell are pushing to hire thousands of workers in an effort to reopen dining rooms, even holding drive-up spot interviews in parking lots.

    More here.

    If restaurants are beset by capacity restrictions and closures, impacting your tips, you may be reluctant to return. Especially if you’ve left for a job at, for example, an Amazon fulfillment center, which is never subject to those restrictions and pays a predictable wage. You’re also far more likely to get benefits working for a major company than a small restaurant, which is particularly relevant in the middle of a health crisis.

    With e-commerce growing rapidly, I see little incentive for restaurant workers to return. Perhaps the industry will wind up permanently smaller, more automated, or both.

    For more on business and the economy, check out these posts:

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    Photo: “waiter” by zoetnet is licensed under CC BY 2.0