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The Fragrant Curries of Karma Kafe

December 20, 2023

The aroma of cardamom and cloves wafted up at me. I rolled up a piece of bread, dipped it in, and tasted heaven.

This is Karma Kafe in Hoboken, NJ. For 24 years, Karma has produced fragrant curries and spicy biryanis, and today they’re better than ever.

I perused the extensive menu, settling on paneer makhani, a close relative of paneer tikka. This creamy, tomato based curry has always been my favorite.

Alongside my curry, I ordered onion kulcha. This cheese and onion stuffed flatbread is hard to find — Karma is one of the few places where I’ve seen it.

“We’d better make that two orders,” I concluded.

My friend Tim went with the chicken vindaloo. And as ever, for Matt*, it had to be chana saag, a curry of spinach and chickpeas.

I made perfunctory conversation, but in a restaurant this good, my mind is elsewhere. I fantasized about my curry, contemplating its creamy deliciousness.

Suddenly, a torrent of dishes flew out of the kitchen. Chicken, spinach curry, and my beloved paneer.

I dunked the cheesy kulcha into the curry. The combination of gooey cheese, caramelized onion and fragrant curry cannot be beat.

“This chicken is really good, nice and spicy,” Tim exclaimed.

I tried a bite. It was tender and beautifully seasoned.

Karma’s staff does a wonderful job guiding you through menu items that may be unfamiliar. The dishes are spicy without being overpowering, and the portions are generous.

Sitting inside the warm, beautifully furnished restaurant on a chilly winter’s evening, there was nowhere else I’d rather be.

Karma Kafe is open 7 days a week for lunch and dinner. It’s conveniently located on Washington Street in the center of town.

Drop in for a delicious curry in a friendly atmosphere!

What’s your favorite Indian restaurant? Leave a comment and let us know!

This is the last blog for this year. Thanks to all of you for a great year and see you on Tuesday, January 2nd.

Have a very merry Christmas and a happy New Year!

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*Note: names have been changed.

My Favorite Books of 2023

December 19, 2023

“A whole new world is opening up to you.” That was what my grandmother told me when I learned how to read.

This year, I explored worlds including Weimar Germany, Sand Hill Road, and small town Japan.

Here are my favorite books of the year, along with summaries of the others I read. I wrote blog posts about many of them, which I’ve linked here.

If you see something that sparks your interest, pick up a copy!

Best Non-Fiction Book of the Year: Elon Musk by Walter Isaacson. Isaacson tells the incredible story of how an abused child from South Africa became one of the world’s greatest entrepreneurs. Learning about how Elon leads informs how I evaluate founders today.

Honorable Mention: The Power Law by Sebastian Mallaby. A fascinating history of the venture capital industry. For anyone in startupland, this is a must-read.

Best Fiction Book: Ms. Ice Sandwich by Mieko Kawakami. A young boy in Japan is mesmerized by a woman at a supermarket sandwich counter. But when he realizes how others see her, everything changes.

Honorable Mention: The Legend of the Holy Drinker by Joseph Roth. A homeless drunk named Andreas meets a mysterious man who gives him money. Andreas goes to great lengths to repay the debt.

The Rest (in the order I read them):

The Death of Ivan Illyich by Leo Tolstoy. Ivan chases money and social position until he falls ill. That’s when he realizes what’s really important.

The Hard Thing About Hard Things by Ben Horowitz. “As a start-up CEO I slept like a baby. I woke up every 2 hours and cried.” A relatable and deeply personal portrait of entrepreneurship.

Right and Left by Joseph Roth. A rich family falls into poverty in Weimar Germany.

Never Finished by David Goggins. How Goggins went from overweight exterminator to Navy SEAL. Goggins emphasizes that hard work is something to be enjoyed, not avoided. “With discipline as your medium, your life will become a work of art.”

The Lost Bank by Kirsten Grind. How Washington Mutual went from one of America’s largest banks to insolvency during the financial crisis.

Mr. China by Tim Clissold. The fascinating story of a Brit trying to invest in China in the 90’s. Bill Gurley recommended this, and he was spot on!

Chinese Rules by Tim Clissold. Once again, Clissold tries to make it in China, this time in green energy. Yet again, a solid business plan fails in the face of China’s peculiarities. A must read for anyone trying to do business in China.

The Naked Civil Servant by Quentin Crisp. A poignant memoir of what it was like to be a homosexual from the 1930’s to the 1960’s, before society accepted them.

The Secrets of Sand Hill Road by Scott Kupor. Kupor explains how venture capital works and how to get it. Clearly written, engaging, and useful.

Startup: A Silicon Valley Adventure by Jerry Kaplan. Kaplan tells the story of founding GO Corporation, which created a proto-iPad in 1989. Unfortunately, the company went bust. Kaplan’s writing is deeply human, especially the scene in which he says goodbye to his beloved cat as it dies.

The Contrarian by Max Chafkin. How Peter Thiel became one of the top entrepreneurs and investors in Silicon Valley. I would’ve preferred more emphasis on his business career and less on his political views, but still an interesting book.

Heart of Darkness by Joseph Conrad. The narrator sails deep into Africa to find the mysterious Colonel Kurtz. A difficult read, but intriguing.

Living with a SEAL by Jesse Itzler. The hilarious story of how an out-of-shape entrepreneur hires former SEAL David Goggins to train him. Their winter runs make me cold just reading about them!

The Greatest Trade Ever by Gregory Zuckerman. How John Paulson made billions betting against the housing market in the 2000’s.

Super Pumped by Mike Isaac. How Travis Kalanick braved corrupt regulators and entrenched interests to create Uber.

Unreasonable Hospitality by Will Guidara. How Guidara and his team took a middling brasserie and turned it into what may be the greatest restaurant in the world. Even if you don’t run a restaurant, you’ll learn a lot about how to make your customers feel special.

Portugal by Rick Steves. This guide really helped me get the most out of my trip to Porto last month! A great overview of the many attractions of this beautiful country.

Number Go Up by Zeke Faux. A rollicking tour through one crypto scam after another. This book made me extremely skeptical of the industry in general. It seems to have produced little but fraud and speculation.

Wrap-Up

My goal at the beginning of 2023 was to read 20 books this year. I’m at 22 so far (up from 10 last year) and I might knock out a few more during my Christmas vacation!

Holding myself accountable to a number was helpful. It gave me a reason to turn off the TV and get some reading done!

I am making the same goal of 20 books for next year. I wonder what new worlds are waiting for me…

What’s the best book you’ve read in 2023? Leave a comment and let us know!

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Number Go Up (Part 2): Crypto’s Dark Side

December 18, 2023

Many average people lost their life savings in bad crypto investments. But the real victims of the crypto craze lost much more.

Journalist Zeke Faux travelled 9,000 miles to meet some of them. He tells their stories in his excellent new book Number Go Up.

A Mysterious Text Message

The scam started with an unsolicited message, often via SMS. The scammer would pretend to be an attractive member of the opposite sex interested in a relationship.

Over time, the conversation would drift to crypto. The scammer would tell the target she was making a fortune on her trades.

Often, the target would want to learn how to make some easy money too. Then, the scammer would direct the target to a fake crypto trading website.

At first, the target seemed to be making a fortune. But soon, the money would disappear, along with his love interest.

The Fraud Factory

In Cambodia, thousands of migrants were held against their will and forced to perpetrate crypto scams. If they missed their quota, some were beaten or even killed.

Huge compounds filled with trafficked migrants are found all over Cambodia, and doubtless other countries as well.

These are the true victims of the crypto bubble.

At best, authorities are indifferent. At worst, they’re paid employees of the human traffickers.

A Scam of Massive Proportions

“Pig butchering” scams like this have made at least $10 billion, according to one investigator.

The proceeds of these scams are laundered using Tether, a stablecoin. That Tether is swapped for cold, hard cash on crypto exchanges.

This is crypto’s real use case: fraud and brutal slavery.

Don’t Get Scammed

The best way to stop the brutal trafficking of these innocent people is to recognize the scam when you see it. If the scammers aren’t making money, they’ll move on to something else.

Don’t engage with unsolicited texts. Be wary of people on dating apps who will chat with you all day, but never want to meet in person.

There’s no reason that a love interest should be selling you on investments. If you see the signs of a pig butchering scam, run.

Wrap-Up

I recently wrote that crypto has seen few use cases in its 14 year history. A reader chimed in that stablecoins are one common use.

That’s perfectly true. Users perform hundreds of thousands of transactions using Tether every day.

But time and time again, those transactions are linked to fraud. Pig butchering scams alone have laundered many billions using Tether.

Crypto’s impact on society has been mostly negative. If a technology is primarily used for speculation and fraud, it’s not a valuable technology.

What do you think of crypto frauds? Leave a comment and let us know!

More on tech:

Number Go Up (Part 1): The Rise and Fall of SBF

What Is Crypto For?

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Photo: Sihanoukville, Cambodia, home to many pig butchering scams. “School Days – Children playing under a tree in Sihanoukville, Cambodia” by bvi4092 is licensed under CC BY 2.0.

What Is Crypto For?

December 15, 2023

“I have never cheated any honest men, only rascals. They wanted something for nothing. I gave them nothing for something.”
Joseph “The Kid” Weil, early 20th century con artist

The lure of easy riches is hard to resist. In 2021, I had the opportunity to invest in countless crypto projects.

They all claimed to be the next big thing. Sometimes, I wondered if I was missing out.

But I passed on every single one of them. Here’s why…

At My Desk in 2021

“How is a bunch of slides worth $100 million?”
Me, 2021

It wasn’t hard for me to tell these weren’t solid investments.

The “companies” almost never had any customers or even a product. And the coins traded at absurd prices with few, if any, real use cases.

A real business has to have a product. That product has to solve a problem for a real person, who will pay money for it.

A real technology business is something like Uber.

Uber gets me a car when I want to go somewhere. I’m happy to pay for that service.

A few slides filled with cryptobabble isn’t an investible business.

Where Are the Use Cases?

It’s been 14 years since Satoshi Nakamoto wrote the Bitcoin whitepaper, launching the crypto craze. By now, we should all be buying our groceries and paying our mortgages in Bitcoin, right?

Wrong.

Almost no one on earth buys anything using Bitcoin or any other cryptocurrency. Even in El Salvador, where Bitcoin is nominally the official currency, practically no one accepts it for payments.

The user experience is terrible. Sending crypto involves hard-to-use software and long cryptographic keys — one typo, and the money is gone.

One of the few common uses of crypto is stablecoins. However, an enormous amount of stablecoin use is tied to crime and money laundering, not legitimate commerce.

Uber was founded 14 years ago. In that time, it’s made its way to everyone’s phone and into the S&P 500.

In that same period, what has crypto accomplished, other than enabling speculation?

Wrap-Up

As best I can tell, here’s what crypto is for: speculation and money laundering. In a decade and a half, those are the only common uses we’ve seen.

If we want to invest in solid businesses with a long term future, a volatile asset used by speculators and criminals won’t do.

Perhaps someday, someone will invent a great use for crypto. But it hasn’t happened yet.

I keep a laser focus on customers and product. Forget the sizzle — look for the steak.

What do you think is next for crypto? Leave a comment and let us know!

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More on tech:

Number Go Up (Part 1): The Rise and Fall of SBF

They Invented the iPad in 1989 — And Lost it All

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Number Go Up (Part 1): The Rise and Fall of SBF

December 14, 2023

“It’s like the narrative would be way sexier if it was like, ‘Holy s—, this is the world’s biggest Ponzi scheme.’”
Sam Bankman-Fried

As markets ripped in late 2021, the total value of all cryptocurrency approached $3 trillion. Just 12 years prior, crypto didn’t exist.

The boom created a wave of young millionaires and billionaires almost overnight. Crypto promised to replace fiat currencies and put power in the hands of average people.

Journalist Zeke Faux traces the crypto boom and bust in his excellent new book Number Go Up.

The Crypto King

Somewhere near the top of cryptoland stood Sam Bankman-Fried. The young founder of crypto exchange FTX had a peak net worth of $26 billion and the ears of celebrities and government officials across the world.

Despite founding one of the most valuable tech startups in existence, Bankman-Fried couldn’t really code. So he hired engineers like Nishad Singh and Gary Wang to spin up the new crypto exchange in 2019.

In just a couple short years, FTX became the third largest exchange by volume. It was valued at $32 billion by blue chip venture firms including Sequoia Capital.

Unusually, they did not ask for a board seat. Had they been closer to the action, perhaps they could’ve stopped what was about to happen.

A Potemkin Village

FTX presented a slick exterior, with star studded ads and a Miami arena bearing its name. But inside, it was a mess.

FTX employees tracked billions of dollars worth of transactions in primitive spreadsheets. Bankman-Fried and others misappropriated or sometimes simply lost track of massive sums.

The young founder had personal issues as well. He fidgeted endlessly, perhaps overstimulated by Adderall or other ADHD medications.

In his conversations with Faux, Bankman-Fried occasionally dropped hints that everything might not be on the up and up.

He openly pondered the possibility of massive Ponzi schemes throughout the crypto world. Perhaps he wanted to confess.

The Fall of FTX

As the Federal Reserve began to raise interest rates in 2022, problems began to bubble up in cryptoland.

Coin prices fell hard. One project after another, from Terra-Luna to Celsius to BlockFi, imploded.

By late fall, FTX was unable to meet customer redemptions. Their money was gone — sent to related hedge fund Alameda Research and gambled away.

On November 11, FTX filed for bankruptcy. FTX could only withstand a down market for a matter of months.

Soon after, Bankman-Fried was arrested and eventually convicted on numerous counts of fraud and conspiracy.

Wrap-Up

“Only when the tide goes out do you learn who has been swimming naked.”
Warren Buffett

When the price of money is zero and cash is flooding into your company, it’s hard to lose. No matter what mistakes you make, no matter how much you steal, there’s always more.

But when the money starts moving the other way, the problems start.

As one company after another imploded, I was struck by one thing: no real use cases were left.

There were no happy customers using crypto to buy their groceries. There were just gamblers, and now they had packed up and gone home.

Faux’s book traces the collapse of FTX and other exchanges in riveting detail. But there’s a lot more to the crypto crash — we’ll dig into that in part 2.

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

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More on tech:

Phishing Scams Skyrocket, Powered by AI

Super Pumped (Part One)

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Hedge Funds Fight to Keep Short Sales Secret

December 13, 2023

Hedge funds are fighting hard to keep short sales secret. An industry association has sued the SEC to stop new disclosure rules, according to a new report in Barron’s.

Hedge funds sued the Securities and Exchange Commission, alleging that the agency broke the law when it finalized a pair of rules aimed at collecting data on short sales earlier this year.

The lawsuit, filed in the U.S. Court of Appeals for the Fifth Circuit by the Managed Funds Association and other groups on Tuesday, is attacking rules adopted by the SEC this fall that require the reporting of short sales and securities loans. The reports are anonymized, but the funds argue the agency ignored how the rules interact and that they harm investors.

Why the SEC Is Requiring Disclosure

Before the new SEC rule, funds had to disclose what stocks they owned, but not what stocks they shorted.

Long positions must be disclosed under the fund’s own name. Given that longstanding rule, I don’t see why requiring anonymous disclosure of short positions is unlawful.

The new SEC rules are a direct result of the meme stock boom of 2021:

The SEC adopted the short-sale and securities lending rules in the wake of the GameStop fiasco, in which retail traders drove a huge short squeeze in the stock and caused large losses in some hedge funds that had bet against the company. The rules require hedge funds to report their short positions to the SEC and for companies that lend out shares to report those transactions to the Financial Industry Regulatory Authority.

Hedge Funds Fight Back

If short sales are publicly disclosed, it’s easier for retail traders and other hedge funds to attack short sellers. They can buy up shares of heavily shorted stocks, engineering a short squeeze like those in 2021.

Short sellers are doing whatever they can to avoid becoming another Melvin Capital. That now-defunct fund lost nearly $7 billion betting against meme stocks like GameStop and AMC.

A Systemic Risk

However, the public has a right to know about systemic risks to the financial system. Short sales, which can trigger huge losses for hedge funds, could pose such a risk.

In fact, the Dodd-Frank financial reforms required the SEC to collect more information on short selling. That 2010 law was designed to prevent another financial crisis.

Wrap-Up

Hedge funds may have some legitimate interest in keeping their trades confidential. But that is far outweighed by the interest of the public in preventing another 2008.

What do you think of short sellers? Leave a comment and let us know!

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Photo: “Alec – Mr. Money Bags” by aisletwentytwo is licensed under CC BY 2.0.

Major Hedge Fund Falls 50% — Billions Lost

December 12, 2023

The multibillion dollar Haidar Jupiter fund has lost 50% of its assets in 2023. The macro hedge fund made bad bets on bonds and other securities, magnified with borrowed money.

From a new report in Institutional Investor:

Haidar Jupiter Fund all but assured it will finish the year deep in the red when it suffered an 18.11 percent loss in November.

The heavily leveraged macro fund is now down about 50 percent heading into the final month of the year, making it one of the year’s worst-performing hedge funds.

While the exact amount of losses is not publicly disclosed, they likely total around $2 billion. The fund had $4.3 billion in assets as of October 2022, according to Bloomberg.

A Turbulent Macro Environment

Rapid fluctuations in Treasuries and interest rate expectations caught many macro funds by surprise this year. Ten year Treasury yields have fallen from 5% to less than 4.2% in under two months.

Haidar’s fund has been prone to wild swings in the past. It saw huge gains last year, but has lost much of that capital in 2023.

The fund’s heavy use of borrowed money magnifies its gains, but also its losses.

I’m skeptical of leverage. Borrowed money makes your wins and losses bigger — but it doesn’t make you a better investor.

What’s more, it only takes one really terrible year to put you out of the game, for good.

Can Haidar Recover?

Haidar has notched some amazing returns in the past. His only other down year in the last decade was 2015, with a 21% loss.

His highly leveraged bets could lead to another giant gain in 2024. But will his investors wait that long?

When investors see you fall by half, they assume you can go down all the way. And once they start thinking that way, they only care about one thing: getting their money out.

This can cause a spiral of withdrawals, forcing you to sell positions for whatever you can get. Losses deepen, and the withdrawals escalate.

Wrap-Up

Haidar may make another gutsy bet and win back its losses. But as long as the fund continues to pile on leverage, it will be walking a tightrope.

What do you think will happen to Haidar? Leave a comment and let us know!

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Photo: “the Great Hedge Fund Hei$t” by eyewashdesign: A. Golden is licensed under CC BY-NC-ND 2.0.

Elon Musk (Part 3): How Elon Leads

December 11, 2023

“A maniacal sense of urgency is our operating principle.”
Elon Musk

Elon Musk is not your typical CEO.

He doesn’t have a corner office. There’s no executive dining room.

In fact, shortly after taking over Twitter, Elon slept on a couch in the company library. A typical meal: cereal out of a paper cup.

The excellent new book Elon Musk by Walter Isaacson tells us how Musk transformed Twitter, built Tesla and SpaceX, and more.

How Musk Runs Companies

Musk designs companies differently from most other CEO’s. He places engineering, design and production right next to each other, and puts himself in the middle of it all.

Musk designed SpaceX’s factory to get his people to cooperate the way he wanted:

“…Musk followed his philosophy that the design, engineering and manufacturing teams would all be clustered together. The people on the assembly line should be able to immediately collar a designer or engineer and say, ‘Why the f— did you make it this way?’”

Musk picks the people for those teams carefully. He looks more at personality than skills.

“’When hiring, look for people with the right attitude. Skills can be taught. Attitude changes require a brain transplant.’”

Shaking Things Up

Several times a year, Musk orders an all-out burst of activity at one of his companies. Then he camps out there to make sure that an ambitious goal, like getting out the Model 3, happens on time.

Musk also makes decisions quickly, which lets his companies move fast.

”Musk’s method, as it had been since the Falcon 1 rocket, was to iterate fast, take risks, be brutal, accept some flameouts, then try again.”

Musk is not afraid to be wrong. He doesn’t fear losing, and doubles down repeatedly in the face of risk.

Does it Take a Maniac to Build Something Great?

Elon Musk is a maniac. He’s said so himself.

For both his employees and his family, that can be hard to be around. Is this the price of success?

“Could you get the rockets to orbit or the transition to electric vehicles without accepting all aspects of him, hinged and unhinged?” Isaacson asks.

I don’t know. But what I do know is that we don’t have any examples of a relaxed, balanced person creating companies like Tesla.

How Sequoia Missed Tesla

Michael Moritz of Sequoia backed Elon at PayPal and had the opportunity to invest in Tesla early.

Musk took him for a ride in the company’s new roadster. Moritz was impressed, but thought Tesla was too risky.

“‘I really admired that ride, but we’re not going to compete against Toyota,’ he said. ‘It’s mission impossible.’”

Moritz passed.

What he got wrong was that Musk had very rare skills as a leader. Musk sold PayPal for $1.5 billion when he was just 31, netting Sequoia millions.

When you have a founder like that in front of you, you back him, no matter what.

Wrap-Up

Elon Musk drives his companies, and himself, hard. His goals, like reversing climate change and reaching Mars, are all that matter to him.

It’s fanatics like Musk that build great things. After reading this book, I’m looking for entrepreneurs with an audacious goal and the tenacity to get there.

What have you learned from Elon Musk? Leave a comment and let us know!

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More on tech:

Elon Musk (Part 2): Saving Tesla and SpaceX

The Hard Thing About Hard Things

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Photo: “Tesla and SpaceX CEO, and Solar City Chairman, Elon Musk, Sun Valley Idaho, Allen & Company Conference, July 2015” by Thomas Hawk is licensed under CC BY-NC 2.0.

Elon Musk (Part 2): Saving Tesla and SpaceX

December 8, 2023

“As the situation got more desperate in the fall of 2008, Musk pleaded for money from friends and family to meet Tesla’s payroll.”
Elon Musk, by Walter Isaacson

In 2008, Tesla was in the depths of production hell. And with the world on the verge of another Great Depression, a speculative electric car company was just about the last thing anyone wanted to invest in.

But that wasn’t all. SpaceX had repeatedly failed to reach orbit and only had enough cash left for one more attempt.

Elon Musk left PayPal a rich man, pocketing a cool $250 million. But now that money was almost all gone, sucked up by SpaceX and Tesla.

If the companies failed, he faced personal bankruptcy.

Walter Isaacson tells this fascinating story in his new book Elon Musk.

Saving Tesla

Even though Tesla was near death, Musk didn’t give up. Neither did his people.

Bit by bit, they resolved the production problems. Soon, the first Model S’s began to roll off the line.

“Many of the workers waved American flags. Some cried,” Isaacson writes.

I dont think anyone is crying when they build a Chevy Silverado. But Musk had hired people with incredible dedication and knew how to inspire them.

“He has reality-warp powers where people get sucked into his vision,” said Reid Hoffman, who worked with Musk at PayPal. People often described Steve Jobs the same way.

In time, an investment from Daimler would save Tesla. The investment would also prove to be a bonanza for Daimler.

As Tesla grew, it began to dominate the auto industry. Shortly after its release, the Model 3 became the highest grossing automobile in America by revenue.

This was an incredible achievement for a fledgling company producing a brand new model using unproven technology.

SpaceX Hits Orbit

As Tesla found firm footing, SpaceX finally reached orbit.

Its fourth rocket launch had to work. As Musk and his engineers watched nervously, the rocket cleared the tower and the stages separated.

Soon, the rocket reached orbit. “tThat was frigging awesome,” Musk yelled.

Wrap-Up

Give the average person $250 million, and they’ll lay on a beach. But Elon Musk decided to plow his money into electric cars and rockets, ventures with little chance of success.

When they foundered, he could’ve lost everything. But Musk kept his nerve, worked even harder, and led his people to success.

Why did Elon persevere when most people would have given up?

Perhaps it was the hard times he endured as a young man, suffering bullying and abuse. If he could make it through that, he could make it through anything.

What have you learned from Elon Musk? Leave a comment and let us know!

More on tech:

The Hard Thing About Hard Things

The Contrarian

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