Tremendous

An angel investor's take on life and business

  • Talking Follow-On Strategy with JCal

    How do you know if one of your investments is a winner? And when you find one, what’s the best way to double down?

    I dug into some real venture capital inside baseball with top angel Jason Calacanis on the latest This Week in Startups.

    One of the best ways to increase your returns in venture is by using reserves. Reserves let you double down on your best companies, goosing your returns.

    JCal invests in a ton of startups, often beginning at pre-seed.

    He’s planning about 200 for his current fund. Of those 200, he’ll double down on somewhere between 10 and 30 (5 to 15%).

    So which ones does he pick?

    That’s where the “likely winner” vs. “definitive winner” framework comes in. This framework helps identify the best companies coming out of the seed stage.

    Likely vs. Definitive Winners

    1) Definitive winner. Jason had 4 unicorns in his first fund: Robinhood, Calm, Density and Superhuman.

    When it came time for them to raise money again after Seed, it happened the same way for all 4:

    • Series A Priced Round.
    • Known VC firm leading. This firm will usually buy 10% or more of the company in the round.
    • Known VC joining the board. Since VC’s can only take a few board seats each, a top VC deciding to give this company one of his precious board slots means a lot.

    Jason likes to go super pro rata on his definitive winners. That might mean a $1 million investment when the initial investment was $100k or $250k.

    2) Likely winners. These companies aren’t quite as strong as the definitive winners, but they’re still doing great.

    When these companies do their next round after seed, here’s what it tends to look like:

    • SAFE, founder generates terms.
    • No lead.
    • No board.
    • Passing the hat.
    • New investor involved.

    These are still great companies, and Jason likes to re-invest in them. But for these, he’ll do his pro rata or a little less, in most cases.

    The Rest

    So, what about everybody else?

    The weaker companies tend to raise bridge rounds. These are usually SAFEs and they don’t include any new investors. Some may do equity crowdfunding as another avenue to raise capital.

    Jason doesn’t re-invest in these companies.

    What Not to Focus On

    I thought that growth would distinguish the definitive and likely winners. But Jason explained that growth is not a reliable indicator:

    ‘“…let’s put aside growth because in the likely and the definitive winners, there’s always some amount of growth. It could be 2x. It could be 5x.”

    Getting hung up on exact growth rates won’t help us find the best companies at this stage. Round dynamics are a better clue to who the winners are.

    How I’m Applying Jason’s Lessons

    I don’t do as many investments as Jason.

    I don’t have the staff or the capital to pull that off. I also tend to invest a bit later: typically seed.

    So, I’ll probably re-invest in a slightly higher percentage of my companies than he does. For me, it might be 10-25%.

    After all, my investments are already a bit more proven out than most of his. On the other hand, my upside is not as high as JCal’s.

    But I do keep 50% reserves, just like he does. And when it comes time to dispense them, I’ll be following the likely vs. definitive winner framework to the letter.

    Wrap-Up

    Our business changes every day. But year after year, the best companies tend to look the same. They raise a Series A from a good VC firm and one of the partners joins the board.

    When one of my companies pulls off that difficult feat, I’ll be thinking of Jason’s advice:

    “You gotta back up the truck.”

    JCal

    What do you think makes a winning startup? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    I Was On This Week In Startups!

    Reserves Lead to Eye-Popping Returns, New Data Shows

    The Founder Crunchbase Hack

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Three Technologies That Would Change Everything

    Part of my job as an investor is to try to imagine what the future could look like. So today, I spent a little time daydreaming…

    Here are 3 technologies I think could change the world completely — for the better.

    1) Ageless fertility. Women in America are having children later and later. And if a woman has her first child at 35, she may not be able to have as many as she’d like.

    But what if we removed the age issue completely?

    A woman could work hard and enjoy life, settling down only if and when she’s truly ready. She could then have a baby at 50, secure in her career and mature enough to handle the challenges of motherhood.

    More kids would be brought up in stable homes with plenty of financial resources. More women would be able to do what they want with their lives.

    Technology that could make a 50 year old woman as fertile as a 25 year old, that’s a true game changer.

    I’m not sure where the solution lies — hormone treatments, rejuvenation of eggs, something else? But I’m pretty sure that some day, we’ll find it.

    2) Drastically cheaper housing. I bet I can guess what your biggest bill is: rent or mortgage, right?

    It sure is for me! Housing here in the pricey New York area consumes about half my total budget.

    But what if we could make housing so cheap you’d barely notice your mortgage payment? What if the average $3,000 payment became more like $300?

    “That’s nuts, Francis.” I know, it sounds far-fetched.

    But imagine a future with houses rapidly manufactured at scale, like smartphones today. The first smartphone, the original iPhone, cost $733 in today’s dollars.

    Today, my Android phone from Motorola cost a mere $100. And it would dance circles around that 2007 iPhone.

    Perhaps the houses of the future will be made of different materials, like ultrahard plastics or mycelium. What if they were 3D printed, or even grown organically on a substrate?

    But to make this vision of dirt cheap housing real, we also need political change. Restrictive zoning is one of the biggest drivers of housing costs.

    I wonder if tech can help there too…

    3) Humanoid robots. The world population is expected to peak around 2080. So who’s going to do all the work?

    The most likely candidate is a humanoid robot.

    Humans build everything to suit ourselves. From the height of counters to the size of tools, everything is designed at human scale.

    To operate in that world, robots need to look like us.

    The most impressive humanoid robot I’ve seen is the Figure. With human-like dexterity and a brain by OpenAI, Figure might be the helper we need.

    Imagine a world in which every dangerous or boring task is done by a robot. We humans get to do stuff that’s fun and interesting — like write and invest in startups!

    Wrap-Up

    A world with ageless fertility, cheap housing and robot helpers is a much freer world. We can have kids when we want, live where we want, and do the work we want to do.

    I’m excited about meeting companies attacking all of these areas. Let’s make the future awesome!

    What do you think the future could look like? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

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    The Most Amazing Video I’ve Ever Seen

    Autonomous Driving in Central London

    Watch Elon Drive Tesla’s Amazing New Autopilot

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Reserves Lead to Eye-Popping Returns, New Data Shows

    Want to make that 3 or 4x fund an 8x? Then you better have reserves.

    A new report from Primary Venture Partners shows that reserves strategy is one of the biggest drivers of returns in venture capital. Let’s dig in…

    From Good to Great (Funds)

    Partner Jason Shuman analyzed over 150 mature VC funds with strong returns. He segmented them into two groups: good (3.5x average return) and great (18x average).

    One of the biggest differences between good funds and great ones was how they handled reserves.

    Great funds kept around 40% reserves, versus less than 20% for the good funds. To put that in perspective, many funds keep no reserves at all — and their performance probably suffers because of that.

    The impact of those additional reserves was transformative.

    With a different reserve strategy, the good funds could’ve become world beaters! Well, we live and we learn.

    Are Those Reserves In Your Pocket, Or Are You Just Happy to See Me?

    From day one, I’ve kept reserves. I’m actually a bit more aggressive than the average “great fund” — I keep 50% reserves.

    This is one of the reasons I write small first checks — usually $5k. I want to have lots of cash in reserve to pour into the best companies in the Series A and onward.

    I only give follow-on checks to the very best performers. That would generally be the top 15-25% of my investments.

    I invest earlier than most of the funds in this report — typically seed and pre-seed. So, it makes sense for me to take more shots on goal and re-invest in fewer companies.

    The earlier you invest, the more failures you’ll have.

    Why Reserves Make Sense: Information and Access

    I wrote 11 first checks in 2022. At the time, I had a gut feeling which ones would do the best.

    But I was totally wrong!

    I loved all the companies, or I never would’ve invested. But the ones I was certain would crush it actually didn’t.

    Meanwhile, the ones I had more moderate conviction on grew like mushrooms!

    By 2023 and 2024, things looked very different. Two likely winners have emerged from the pack.

    One has scaled to a $7 million a year run rate, another to $11 million. I’ve managed to get a 2nd check into one and hope to re-invest in the other soon.

    After two years of working with all 11 founders, I know these companies well. I see what’s working and what’s not.

    My 2nd bet was far better informed than my first. And since I have unique knowledge and access, I have an advantage over other investors.

    Wrap-Up

    Reserves vs. no reserves is one of the hottest debates in venture capital. Primary’s new report should settle it.

    We make lots of investments. Sadly, most don’t make it.

    But when those winners emerge, we need to double down. Owning more of the most successful companies is our best chance at notching huge returns.

    What do you think about reserves? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The Founder Crunchbase Hack

    New Data Shows NYC May Be the Startup Capital

    I Was On This Week In Startups!

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Autonomous Driving in Central London

    We glide past Big Ben on a picture-perfect sunny day. But there’s no chatty cabbie at the wheel — this car is driving itself.

    Last week, Wayve released an incredible demo. Wavye’s latest Lingo-2 model drives us around central London with ease, and even explains itself along the way!

    Understanding Why the Car Does What It Does

    Whether it’s “increasing speed to match the speed limit,” “reducing speed due to the upcoming turn,” or “stopping due to the red light,” Lingo-2 explains every action it takes. I have not seen this in any other self-driving technology.

    Today, when a self-driving car makes a mistake, we’re left to guess why. We saw that issue when Elon demo-ed FSD 12, which I covered on the blog last August.

    At one point, Elon’s car appeared to turn left when he wanted it to go straight. The solution was to feed it more data of traffic lights.

    But the problem could be corrected even sooner if we knew why the car decided to turn unexpectedly.

    We’d know what exact data it needs. Or, we could simply instruct it not to turn when the route says to go straight.

    Elon’s 50 minute demo had only 1 error. With technology like Wayve’s, Tesla could correct it easily and deliver a perfect experience.

    If It Works in London…

    I’ve never been to London. But the streets Wayve shows in its demo look a lot like New York.

    Tons of cars, countless pedestrians, narrow streets. If Wayve can navigate that, what can’t they do?

    This technology appears to be ready for deployment in most any major city in the developed world.

    I’m not sure if Wayve would work in extreme weather. But if it’s deployed in robotaxis, the taxis could just be kept off the road during that rare blizzard.

    Wrap-Up

    Wayve’s self-driving technology appears to be some of the best ever made. However, it isn’t as widely used as systems from Tesla or Waymo, so it’s hard to say for sure which AI is the best.

    I expect to see companies like Tesla and Waymo add this “self-explanation” function. It’s very helpful with troubleshooting, not to mention building user trust.

    I can’t wait to cruise around in a robotaxi! No distracted drivers, no road rage.

    But when I visit London some day, I just might wish I could have that friendly chat with a cabbie.

    What do you think of self-driving cars? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Watch Elon Drive Tesla’s Amazing New Autopilot

    The Founder Crunchbase Hack

    New Data Shows NYC May Be the Startup Capital

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • My Christian Health Share

    I work for myself. That means no juicy bigco health insurance. But I’ve found another way — a Christian health share.

    Since 2018, I’ve been using a service called Medishare. Medishare is a collective of people that share each other’s medical bills.

    Health shares will usually exempt you from any penalties under the ACA or state laws. Having Medishare has exempted me here in New Jersey.

    For the last 6 years, Medishare has worked great for me! Here’s what I’ve experienced…

    1) Eye infection. I got pink eye a couple of years ago, not long after I signed up for Medishare.

    “Does this thing really work?” I thought. “I guess I’m about to find out.”

    I went on their website and requested a telehealth appointment. A doctor called me within minutes.

    I described what was wrong, and he prescribed some antibiotic eyedrops. I walked a couple of blocks to Walgreens, paid around $30, and the problem was solved.

    Success!

    2) Finger infection. This one hurt.

    I banged my index finger doing dishes one night. I didn’t know it, but that mishap caused a tiny cut.

    The icky water of dirty dishes must’ve gotten in there, and my finger got a bad infection.

    I was visiting my mom in Wisconsin when I hit my limit. So although it was after midnight on Thanksgiving Day, I asked for an appointment via Medishare.

    A very kind doctor called me back within probably 2-3 minutes, despite the time.

    I sent him a picture and described the problem. “My finger definitely hurts,” I told him.

    “Yes, I imagine it does!” he said. “What’s happening is the infected area is pushing your fingernail out of place.”

    Nature had conspired to recreate ancient torture methods on poor Francis. But not to worry — this wonderful doctor was here to help.

    He prescribed an oral antibiotic, and I thanked him profusely for being there for me after midnight on a holiday when he probably wanted to spend time with his family.

    This man was truly a good doctor.

    I picked up the pills for maybe $15 at Walgreens the next day. Almost immediately, the problem disappeared.

    3) COVID. You knew this one was comin’, didn’t ya?

    In late 2020, a friend of mine got COVID and wound up with some nasty symptoms.

    I had been in a car with him shortly before. I felt fine, but I still must have it, right?

    I called Medishare to find out what the heck to do in case I did test positive. How long do I quarantine?

    A nice doctor patiently answered all my questions. I even called back for a 2nd visit later that day to ask more questions, and they answered every single one.

    I got tested, and turns out I didn’t even have it! But Medishare was there to give me peace of mind, and I’m grateful for that.

    All the telehealth visits I’ve described above were absolutely free. I only paid for the prescriptions, which were pretty cheap.

    In the 6 years I’ve used Medishare, I have been very fortunate not to have any serious health issues. So, I cannot tell you what Medishare is like for those with more severe health challenges. I can only tell you about my experience.

    It’s also absolutely critical to note that Medishare is not health insurance. A health share is different and subject to different regulations.

    Medishare is not the only health share out there. I hear a ton of good things about Sedera. Liberty Healthshare is also a popular choice.

    I can’t tell you the right choice for you. But I can tell you that after six years with Medishare, I’m happy as a clam!

    What do you do for medical care? Leave a comment and let us know.

    Have a great weekend everyone!

    If you enjoyed this post, subscribe for more like this!

    More from the blog:

    The Founder Crunchbase Hack

    New Data Shows NYC May Be the Startup Capital

    The Founders I Want to Meet

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • The Founders I Want to Meet

    This morning, I opened LinkedIn and saw 26 new connection requests. Here’s how I decide who I’m actually going to meet.

    My Checklist

    1) Launched product. No matter what kind of company you have, you eventually need to launch a product.

    I invest in software. Most technical founders can pop up a basic product in a few months.

    This high school junior made an EMS dispatch tool on his own in just 200 hours! That gives you an idea of what a skilled builder can do.

    I could meet founders before their product is launched, but I almost never do.

    There are too many pre-launch companies to meet them all. And with nothing in the market touching customers, we wouldn’t have much to talk about anyway!

    2) A couple of paying customers. The moment you can get someone to plunk down their credit card, you know you’re on to something.

    People can tell you all day long that they love your product. But often, they’re just trying to be nice.

    Those who paid are committed.

    3) Delaware C Corp. This one might seem odd. Why is some wonky legal thing so important?

    Tech startups need to do a lot of unusual things: issue different classes of shares, issue stock options, etc. Delaware C Corps are perfectly suited to do all of this.

    If I find out a startup is incorporated any other way, I hold off on meeting the founder. Why should I waste their time if I’m 100% certain I’m not going to invest?

    But if you incorporated the wrong way, don’t worry! You can convert to a DE C Corp. It just takes a little time and some legal fees.

    4) In one of my markets. I invest in the US and countries very similar to the US…the UK, Ireland, Canada, Australia and New Zealand.

    The US is what I know. I don’t know much about Germany or Brazil or Hong Kong.

    Beautiful places, I’m sure! But they’re just too unfamiliar.

    I don’t know what German customers want. I don’t know what challenges they face.

    What’s more, the best startups created in Germany are going to be picked off by German investors. I’m sitting here in New Jersey far, far away. I’m only going to get the scraps.

    I’m better off sticking with teams in a familiar market addressing customers in that same market.

    Wrap-Up

    This checklist is designed to filter the torrent of dealflow I get every day. I’m trying to find viable businesses in areas I understand.

    They don’t need to be fully proven out. I love meeting founders early!

    But I do want to see the basics in place: a team, a product, and someone using the product.

    If you have that, let me hear from you!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The Founder Crunchbase Hack

    Where Did All the Angel Investors Go?

    New Data Shows NYC May Be the Startup Capital

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • The Founder Crunchbase Hack

    Yesterday, I was chatting with a wonderful young founder in New York. I mentioned trolling Crunchbase to find startups.

    “Wow, we need to get on there,” he replied.

    Today I’m going to show you the simplest way to get investors contacting you. It’s free, and it only takes about 15 minutes.

    When you’re done, your company will be on one of the most popular databases among investors. If you show them something interesting, you will have VC’s and angels contacting you.

    The steps:

    1) Go to Crunchbase.com

    2) Click “Create profile” on the left.

    3) Click Company.

    4) Put in details about your company. I invented Fruber, the Francis version of Uber. Fill out as much as you can so investors can easily learn about your company. Be especially sure to enter a founded date — I generally look for new companies since I invest early.

    5) Add headquarters. This is important because investors often search a certain city, state or country where they like to invest.

    6) Enter industry and founders. Industry is important because different investors invest in different areas. Founders is important because we have to know who to contact!

    7) Enter funding rounds. If you’ve raised so much as a cent, definitely put that down. It makes you look all the more appealing to investors. If it’s a very small amount, there’s no need to disclose exact amount.

    8) Fill out any other details that are relevant to you. There’s room for news, events, etc. But these fields are less important than the key ones we covered above.

    9) Click “Save all edits.”

    Now you have your company!

    So Francis, why should I do all this silly stuff when I’m busy running my business?

    Well, how much time are you spending cold messaging investors? Wouldn’t it save you a lot of time if they cold messaged you?

    Taking 15 minutes to create a nice Crunchbase profile can make that happen.

    Investors want to meet great founders like you. But they don’t know you exist!

    This Crunchbase profile is like a landing page. It’s saying “Hello world, I exist!”

    Those 15 minutes just might be the key to closing your fundraise.

    What questions do you have about Crunchbase? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Where Did All the Angel Investors Go?

    New Data Shows NYC May Be the Startup Capital

    GitLab’s YC Demo Day Pitch

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Where Did All the Angel Investors Go?

    I started investing in startups in April of 2021, like a lot of other angels. But looking around 3 years later, many of them seem to be gone.

    I found an interesting data set from Jason Saltzman at Live Data Technologies. It shows a huge slowdown in new angels.

    The data shows how many new people put “Angel Investor” on their LinkedIn profile in a given month.

    Fewer angels are coming into the market. And my guess is that if fewer people are becoming angels, many existing angels have stopped investing.

    Both stem from the same cause: people are scared.

    “If They Won’t Invest In This…”

    I’m definitely seeing a pullback among angels in the deals I do.

    I did a deal last summer in an amazing startup with a couple million in revenue growing fast. The valuation was around $15 million.

    You could have never done this deal in 2021. It might have been priced at $100 million or even $200 million — if you could get an allocation at all.

    But in 2023, the allocation for angels filled only about halfway!

    It didn’t make sense to me. If you don’t want to invest in this, what would you invest in?

    The only explanation I can think of: angels are exiting the market.

    Many syndicates I’ve spoken to have slowed their dealmaking considerably. They know that the appetite just isn’t the same as in 2021.

    Talking to some fellow angels, I’ve heard several say they’re pulling out. On the other hand, a brave soul jumps in every now and then.

    How I Learned to Stop Worrying and Love the Down Market

    People got scared in 2022. Heck, I got scared!

    As markets crumbled around us, I wondered, what did I get myself into? Is this a viable business? Should I be doing it?

    Then I thought, “Well, other people have succeeded investing in startups. Why not me?”

    So I kept at it.

    It turns out, this down market is amazing!

    Companies are building faster than ever before using AI. Many outsource a lot of their staff, saving on costs and getting access to great talent.

    I see more and more startups becoming profitable even at the early stages. And today, you can invest in these great companies at a fraction of 2021 prices.

    The business has gotten a lot better for angels, not worse! And even as the opportunities look better than ever, most of your competition is smoked.

    It’s a good time to be in startupland.

    Wrap-Up

    So, when do angels come back? Whenever there are some big, juicy exits.

    Exits get people excited about investing again. Once Stripe goes public, we’ll all be calculating how much we would’ve made if only we’d invested.

    Exits also give investors and early employees liquid cash. They can use that money to back more startups.

    “And on and on it goes, this thing of ours.” – Paulie Gualtieri

    What are you seeing in early stage tech? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    New Data Shows NYC May Be the Startup Capital

    GitLab’s YC Demo Day Pitch

    Watch Brian Armstrong Practice for YC Demo Day in 2012

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

  • Are We In Another Real Estate Bubble?

    I spent most of last week in Elizabethtown, Kentucky visiting my grandma. It’s a cute little town full of flowering trees — but you wouldn’t believe what it costs to live there!

    Killing some time in the Airbnb one night, I decided to pop onto Zillow. “These numbers can’t be right,” I thought.

    Basic houses are often $300,000 or more. Prices for many of the houses seemed to have gone up by 50-100% since COVID.

    E-town, as the locals call it, is lovely and has a charming downtown. But it’s also quite remote — the nearest city, Louisville, is 45 miles away.

    It’s Not Just E-Town

    There are some local factors affecting prices in the area — Ford is planning to build a big new battery plant nearby. But the giant run-up in real estate prices goes way beyond E-town.

    The median house price is now 5.8x the median household income. Even during the peak of the 2000’s real estate bubble, that ratio peaked at 5.1.

    What’s behind this?

    The economy is strong and unemployment is low. COVID-era policies expanded the money supply significantly, causing inflation. What’s more, America hasn’t built enough housing ever since the 2008 financial crisis.

    Housing Prices Aren’t Adjusting to Higher Rates

    Higher rates usually make prices fall. But so far, that hasn’t happened.

    Constrained supply is a major reason why those prices haven’t fallen. We’re building too few houses, and owners of existing homes don’t want to sell.

    After all, who wants to exchange a 3% mortgage rate for 7% on a new house!

    “If It Can’t Go On Forever, It Will Stop”

    People just can’t pay today’s housing prices.

    A mere 16% of homes are affordable for the typical family. Homelessness is rapidly increasing.

    In time, I expect to see house prices fall.

    Families will reach the limit of what they can pay, if they haven’t already. More supply will be built.

    As economist Herb Stein once said “if it can’t go on forever, it will stop.”

    Wrap-Up

    Today seems like the worst time in many years to buy a house. Both interest rates and prices are sky high.

    I expect that scary price/income ratio to revert to the mean sooner or later. In the mean time, the best solution for America is to pop up houses as fast as we can!

    What are you seeing in the real estate market? Leave a comment and let us know.

    If you enjoyed this post, subscribe for more like this!

    More on housing:

    Why Manufactured Housing Won’t Fix High Housing Costs

    YIMBY Is Working Wonders in New Zealand

    Your Next House Will Be Built By Robots

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  • As Cuba Starves, Elites Funnel Money Out

    On Monday, February 5th, a young Cuban woman landed at Tampa International Airport. She brought with her something rather unusual: $100,000 in cash.

    Mirtza Ocana, 38, was no tourist. Under questioning, she admitted to smuggling cash from Cuba to the United States several times a month. Flight records show 45 trips between Cuba and Tampa in less than a year.

    From Ideologues to Gangsters

    Where was all this money coming from?

    We can’t know for sure, but the likeliest source is the Communist regime itself. Government officials in Cuba are squeezing the population for every cent they can through illegal fuel sales, crooked public works contracts, and a lot more.

    From Discourse magazine:

    Following the outbreak of anti-regime protests in July 2021, the government allowed the establishment of private “micro, small, and medium enterprises,” theoretically as a way to open up the economy to market forces. But most if not all of the 9,000 private enterprises operating in Cuba today are owned by powerful regime figures who then funnel public works contracts to them.

    A Nation in Crisis

    This torrent of dirty money is leaving Cuba just as the nation faces its worst crisis since the revolution.

    The Cuban government recently ask the UN for food aid for the first time since the revolution. Even the “Special Period” after the fall of the Soviet Union wasn’t as bad as this.

    Brave Cubans have begun to protest food shortages and endless blackouts.

    Starving Their Own Country

    Cuba has very little foreign currency available. Lack of hard currency is causing shortages of food and fuel.

    The Ocana case shows us where that foreign currency is probably going: money laundering operations by the Communist bosses.

    What I don’t understand is how the Cuban leaders can starve their own fellow Cubans like this.

    It just doesn’t make sense to me. Don’t they love their country?

    I guess not.

    Wrap-Up

    For the Cuban people, the best solution seems to be emigration.

    I hope the US welcomes them with open arms. Cuban people have worked hard to contribute to this country, and we could use a lot more of them!

    What do you think the future holds for Cuba? Leave a comment and let us know!

    This will be the only post for this week. I’m going to Kentucky to visit my grandma!

    See you on Monday, April 15!

    Subscribe below for more like this!

    More on world events:

    Is a Revolution Brewing in Cuba?

    China’s Jobless, Childless Youth

    China’s Decline Has Begun

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

    Photo: “More Cuba, Dec 2011 – 187” by Ed Yourdon is licensed under CC BY-NC-SA 2.0.