Situational Awareness, run by 24 year old former OpenAI researcher Leopold Aschenbrenner was forced to liquidate its public equity portfolio to cover losses after a recent selloff in AI stocks put the fund at risk of insolvency.

The fund which was reportedly up as much as 439% by the end of June, dropped 67% within a few weeks, triggering a margin call, forcing them to sell the majority of its public equity book, to Citadel, the hedge fund led by Ken Griffin. Non-finance folk might recall the firm from the Gamestop saga of 2021.

The public hasn’t been kind to Leopold. Many called him an idiot, ignorant to financial markets, dismissing his prior success as luck etc. This is coming almost exclusively from people who never met him. It’s true he’s new to managing money but he graduated from Columbia at 19, worked at FTX (before it blew up), OpenAI (before he got fired) and is connected with many of the key figures at the AI frontier labs. I doubt his critics can boast a similar track record by the age of 25, or at all.

Leopold is the latest in a long line of fund managers that posted stunning returns for a while before their investment strategy succumbed to the wrath of Mr. Market. Whether it’s Bill Hwang, Cathie Wood, Sam Bankman-Fried or Bernie Madeoff, every few years, the financial press crowns a new Warren Buffett, only for their funds to suffer devastating losses. In some cases blowing up the fund and/or sending the manager to jail. It’s almost a guaranteed kiss of death at this point, like the Forbes 30 Under 30 list.

Nobody has accused Situational Awareness of doing anything shady or illegal but there are a few lessons that can be learned from this episode, some of which were predictable.

Margin Calls & The Situational Awareness Strategy

“Illiquidity, leverage and concentration. Each are a problem but manageable in isolation. If you have two of them, uh oh. If you have all three of them then you are whistling past the graveyard.” — Steve Cohen (sourced from Marc Rubinstein at Net Interest)

Why was the Situational Awareness blow up predictable? They were heavily concentrated into AI Infrastructure names with meaningful leverage. Beyond that, the portfolio was designed to perform well during a looser credit cycle, once money began to tighten, it was inevitable that some of the positions would be negatively impacted. The US-Iran conflict has reduced the supply of energy which has been putting upward pressure on inflation and interest rates which shifts demand for near term cashflows.

The reason Leopold needed to sell his public book as quickly as he did, was because his investment portfolio was trading on margin, which meant he borrowed to place trades. It’s not that different from taking a mortgage.

You purchase a $1 million property with a $200,000 down payment and an $800,000 mortgage. You control a $1 million asset using only $200K of your own capital. If the property rises 20%, you pay back the $800K and your equity is worth $400K. If it falls 20%, the value of your equity is worth zero because the lender is still owed $800K.

The difference is that your bank doesn’t revalue your home daily. Whereas a prime broker continuously monitors the value and volatility of an investment portfolio. When the collateral drops too far, the broker will demand additional capital, reduce the amount it’s willing to extend or begin liquidating positions.

Situational Awareness reportedly borrowed $3 to $4 for every $1 of capital. In that case, a decline of 20% to 25% would wipe out all of the fund’s equity.

Situational Awareness was running a Long-Short (LS) portfolio buying companies exposed to AI infrastructure like Micron, Sandisk and Coreweave and selling short software companies such as Adobe, Salesforce and Microsoft. This strategy was working well throughout 2026, as many piled into the AI trade. However, in July, due to a number of factors, including concerns about higher inflation resulting from the US-Iran conflict, some of these high-flying names started to give back prior gains.

Any stock that can quickly rise, can fall just as fast. It’s normal for stocks trading based on the presumption of large growth relative to current earnings to ping-pong back and forth as market sentiment changes. The AI infrastructure piece of the Situational Awareness portfolio was trading based on the belief of large growth in future earnings, making it highly volatile. Meanwhile, the short side of the portfolio, were mega cap established companies that are comparatively less volatile. They were trading down because of concerns that AI was going to be disruptive to their business models in the medium-long term.

Let that sink in. The fund was long companies whose current earnings could only justify their valuations if the future arrived quickly. At the same time, it was short companies whose current earnings would collapse if the future arrived quickly.

It’s the same bet.

When inflation expectations and interest rates rise, investors become less willing to pay for profits expected far into the future. The infrastructure stocks fell. Meanwhile, software companies continued reporting real revenue, earnings and showing no collapse in their business models. Their prices were rising against the fund as well.

Leopold could not have predicted all the developments of the Iran conflict or the precise moment investors would turn against AI stocks. Though he should have realized that a highly leveraged and correlated portfolio would eventually experience a period when several positions moved against it simultaneously.

His call about the scale of investment required to build artificial intelligence could still prove correct. Unfortunately, when leverage is involved, being right isn’t enough. You have to remain solvent long enough to collect the payoff. Leopold made several unforced errors, which threatened his staying power. Once it was too late, the sharks knew he was ripe for the picking.

Ken Griffin Plays Hardball

Ken Griffin has been a major player in the hedge fund world since before Leopold was born. One of Griffin’s favourite books is Hardball: Are You Playing to Play or Playing to Win? This is telling to the way he sees business.

Most people in tech subscribe to the Peter Thiel view on competition from his book Zero to One: Competition is for losers. Thiel isn’t anti-competition but he observes that competition benefits consumers but is often destructive to shareholder value. The most valuable businesses in history have exercised some form of monopoly therefore, founders should strive to build one ideally by creating such a strong technological and distributive advantage nobody can threaten them.

After reading Hardball, you might wonder if Thiel wrote Zero to One as his response. Hardball accepts competition as an inevitability. It doesn’t discuss monopoly businesses, instead looking at companies that successfully defeated competitors by what the authors call playing Hardball. There are a few ways a company can play Hardball, but they all require being hyper aware of what your competitors are doing, so you can figure out where you can attack them to take market share. These can be larger companies trying to shake off upstarts or smaller companies going after the market leader. Being a Hardball leader and company, means you exploit every legal advantage you have at your disposal. This means hitting the competition, usually with indirect attacks, that put them under pressure, while being ready to fend off any of their retaliations. Citadel was built for the Hardball world.

It’s not clear how personally involved Griffin was in the purchase of Situational Awareness’s equity portfolio. However, the transaction reflects the Hardball culture he created. Leopold had spent the previous two years attracting enormous attention to himself and his strategy. His returns inspired an army of professional and retail copycats to pile into the same AI infrastructure companies. The more crowded the trade became, the easier it was for Citadel and other sophisticated firms to understand what would happen if those stocks began falling.

Situational Awareness had large, highly visible positions, meaningful leverage and a relatively inexperienced manager. Citadel had the size advantage and decades of experience profiting from distressed situations. You could not design a more attractive hardball opportunity. When the margin call came, only a handful of funds could take such a big position on such short notice. In came Citadel buying the book at a 10% discount, instantly printing an easy couple of billion dollars.

This is hardly the first time Citadel has mobilized quickly during a crisis. When Enron collapsed in 2001, Griffin chartered a plane and sent executives to recruit its energy traders. Situational Awareness was merely the latest distressed competitor to discover that Griffin is rarely sentimental when markets become chaotic.

Shortly before Citadel purchased the portfolio, Citadel Securities had publicly predicted that the Federal Reserve might surprise markets with an interest-rate increase. Higher rates would have been particularly damaging to the long-duration AI stocks Situational Awareness owned. Griffin wouldn't purposefully try to hurt an exposed competitor while they were already down would he?

(If you’ve made it this far, please settle a debate for me in the comments: Is a Beef Wellington considered a sandwich? (Yes/No and Why?))

Leopold is a new investor, he might be smart and right in the long term about his AI thesis but he structured his fund in such a way that it didn’t need a Black Swan event for him to get margin called. They claim to have hedges in place but the problem with hedging, is you can almost never perfectly hedge against every risk, if you do, it will come at the expense of returns. You can’t be doing 400% returns in 6 months while being perfectly hedged.

Trading on margin is commonplace, it’s done by most hedge funds and many retail investors, so is getting margin called. Over a million South Koreans got margin called in July alone. What’s notable is Leo flirted with liquidation while the S&P 500 is just off its all-time high. This wasn’t a market panic, this was sloppy fund management.

Situational Awareness was concentrated, leveraged and reliant on loose credit conditions to succeed. A bad month was inevitable. Leopold also overlooked that when you are trying to beat the market, you aren’t just going up against a passive index, you are competing with every other fund manager out there. Situational Awareness was exposed, and a Hardball competitor would not let that slide. The hedge fund world is full of Hardball players.

Despite an embarrassing episode, Leopold Aschenbrenner isn’t finished. While he had to sell off his public book, Situational Awareness still has a $5B stake in Anthropic. Leopold remains connected to many of the key players from the AI labs. Silicon Valley and he’s still at the very start of his career. Ray Dalio and countless other investing legends had trades go south on them early in their career and they were only the better for it.

He might have lost some of the boy wonder aura but people have short memories. Masayoshi Son has lost his fortunate and rebuilt it multiple times. Aschenbrenner might have prematurely claimed to have been gifted with situational awareness, but that does not mean he can’t eventually become one of the best investors of his generation. It just takes more than a coronation from CNBC for it to be true.

Thank you for reading. If you liked this article please Like, Comment and Subscribe below.

Subscribe now

If it were to exist, why couldn’t it be in Budva, Montenegro? The town has a population of 17,000 inhabitants but a seemingly endless supply of coastline and delectable seafood. This seems like the correct ratios for the celestial realm.

Peak season in Budva felt far less crowded compared to San Sebastien, Dubrovnik, the Cyclades or the Amalfi coast. It’s not surprising, flight routes make it arduous to get to Montenegro. I needed 2 connections to travel 1,000 KM.

There were, inevitably, a few loud Italian and French tourists. Those are unavoidable. Fortunately, they were spread across different sections of the beach. This is preferable. When these two groups come into contact, dangerous chemical reactions can occur.

The relative lack of distraction allowed me to advance in my reading, which happened to be about the history of speculation and financial bubbles. I couldn’t help but notice the similarities between the way people overcrowd investments and vacation spots. Both offer value at the start, but as more people partake, it quickly erodes.

Tulips are nice if you buy them for a few dollars and plant them in your garden. At thousands of dollars per bulb, nobody is putting them in the ground. The same logic applies to crowded tourist destinations. Santorini and Capri are beautiful. That is unfortunately why everyone is trying to get there.

If you want to find great investments or vacation spots, you can’t look where everyone else is. Consistently making good investments takes time, effort, and a willingness to look slightly off the beaten path. Finding beautiful, affordable places that have not yet been completely ruined by crowds requires the same thing.

Keep reading to learn the link between vacationing well and beating the market.

The Book I was Reading on the Beach:

1. Devil Takes The Hindmost by Edward Chancellor

Cool Book You Probably Haven’t Read:

1. The Gray Lady Winked by Ashley Rindsberg

*Note: To ensure you don’t miss my emails please star or reply to this message

In case you missed them, here are some other recent articles to check out:

Montenegro is a beautiful Country

Despite being the size of Connecticut, Montenegro is seemingly a non-stop collection of beautiful views. Whether you’re into beach, mountains or forest, they have all in great supply. I was in Budva, along the beach, just a short boat ride away from Dubrovnik. Budva feels like a mini version of Dubrovnik, with some similarities to Santorini. Just many more clubs, casinos and shirtless bald men smoking cigarettes at 9AM. No, they did not actually film Casino Royale in Montenegro, although they certainly could have.

Montenegro is the living embodiment of a place benefitting from the end of The Golden Era of Travel. While cruise ships can dock in Kotor, the port of Budva doesn’t have room for them, which limits how busy the town can get. This coupled with difficulty to reach the country via plane, adds enough friction keeping the worst kind of tourists away. The lazy travellers who want everything pre-packaged and booked by their travel agent/LLM before they arrive. God forbid they encounter anything unfamiliar or a language other than English.

In the case of Montenegro, pretty much everyone I encountered spoke English. Although it helps curry favour with the locals if you can speak Montenegrin or another West Balkan language. I suspect locals charge western tourists higher prices.

At the beach, the waiter quoted me 20 euros for a chair, after I sat down his colleague told me it was 30. The group of young local women nearby were charged 15 while the middle aged British couple were charged 40. They said it was 20 yesterday and 10 the previous day.

Initially I didn't like getting overcharged but it confirmed my hypothesis that Pretty (Male) Privilege does exist. It’s just less effective than being a young local girl.

Beyond widespread English and getting charged tourist price for beach chairs, Montenegro is pretty accessible as a travel destination, the difficult part is getting there. Seemingly few people are willing to deal with this inconvenience. Montenegro gets around 2.5 Million visitors each year, which is 5-10% of what Croatia, Portugal, Italy, Greece or France get.

This is consistent with my experience; even amongst regular travellers, I know few people that have been to Montenegro. Or Albania, Bulgaria, pretty much any country that doesn’t have regular direct routes from major Western European capitals.

This doesn’t mean they can’t enjoy their vacation. It’s just that it will be difficult to have a much better experience compared to the average traveler at these common destinations because of tourists traps, high prices, endless crowds and loud noises. This is not unlike the stock market.

It’s Never Different This Time

“The four most dangerous words in investing are: This time it's different.” — Sir John Templeton

There is nothing wrong with investing but when too many people decide they can get rich by trading instead of building something productive, markets become susceptible to bubbles.

What is a bubble? It’s when the asset you didn’t buy grows rapidly over a short time frame. When something you own experiences similar growth, that’s just the wisdom of the market working its magic.

The more asset prices are driven by the belief that some greater fool will pay more than you did, the more markets behave like a casino.

People are lazy and don’t like uncertainty. Finding good stocks, businesses, or assets with the potential to outperform is hard. It requires work, patience, and the humility to accept you could be wrong. There is no shortage of people seeking above-market returns but few willing to do what it takes.

Instead, people gravitate to assets that have already performed well. If something has gone up recently, it becomes easier to believe it will keep going up. These are momentum trades. They are psychologically comforting not requiring much imagination. Investors can outsource their conviction to the crowd. Everyone else believes in it, so maybe they should too.

(^ The average investor during a bull market)

In Thinking Fast and Slow, Daniel Kahneman describes how our brains are constantly searching for patterns, even when they don’t exist. Once something happens, it becomes easier to imagine it happening again. He gives the example of being less surprised the second time he bumps into a friend in a random place. Even if the chances aren’t any greater than seeing anyone else he knows. His brain has decided that friend has become the guy Kahneman sees in unexpected places.

Investors are no exception. SpaceX’s valuation isn’t based on the companies performance but rather the belief that there will be a lot of demand to buy SpaceX shares. It has gone up a lot recently, therefore it will continue so you should get in before you miss the upside. This self perpetuating belief can be reduced to some other fool will pay a higher price than you did, but of course you’re not the fool.

If you want outsized investment returns, you need to be willing to take a chance on something that isn’t already universally accepted as a sure thing yet. The more certain an investment feels, the more competition there will be to own it. This buying pressure increases the entry price and reduces future returns. The best opportunities are usually found in assets that are priced less certain than they actually are. The market expects X, but you strongly belief it will do Y. This is why by knowing an industry or asset better than most people, you will have an advantage.

The not so big secret in investing is that if you want to beat the market, you need to tolerate more boredom, pain, and uncertainty than the average investor. Warren Buffett when asked by a group of students how to become a better investor responded to read 500 pages of annual reports each day. He knew none would follow his advice.

You need to look where other people are not. Anyone can harvest oil if it’s sitting at ground level. To make real money, you need to drill deeper. So I’m told. The closest I’ve been to an oil field was an olive farm.

Investing and finding great vacation places work the same way. The further you get from the herd, the more potential there is for alpha. This does not mean every decision will be a winner. Some obscure stocks are ignored for good reasons. Some off-the-beaten-path destinations are cheap because they are inconvenient, boring, or mildly cursed. That’s okay. The goal is not to look smart every single time. The goal is to win over the long run.

Would you rather visit 20 different countries/cities or return to the same safe tourist destination each year? Some will disappoint but every so often, you end up sitting in an only midly overpriced beach chair in Montenegro, eating fresh seafood, staring at the Adriatic, glad you aren’t fighting for a reservation in Cannes.

If you want interesting vacations, don’t build your itinerary from Instagram influencers, cruise ship routes, or the first page of a travel guide. By the time a place becomes obvious to everyone, the things that made it worth visiting are overbooked and overcrowded.

The stock market is no different. Any stock tips you hear at the hair salon or auto shop, aren’t worth pursuing. By the time an investment feels obvious, safe, and socially validated, much of the return has already been captured by someone else. Like most things in life, the best returns come before the crowd arrives.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

This is by far the biggest IPO in history, and prices SpaceX comfortably within the 10 largest public companies by market capitalization. Higher than Tesla ( $1.6T) META ( $1.5 T), and Berkshire Hathaway ( $BRK-B $1.1T) or JP Morgan ( $1T).

Looking at financials alone, this doesn’t make much sense. SpaceX generates ~$20B in annualized revenue, but has a ~$5B operating loss and -$20B free cash flow. Other trillion dollar companies generate >$100B revenue while being highly profitable.

Investors know this yet still the stock price soared because in the short term the stock market is a voting machine. There are more people wanting to buy than sell shares. There are many reasons why people would want to be a SpaceX shareholder.

Regardless of what you think of his politics or whether billionaires/trillionaires should exist, you are a delusional hater if you don’t think Elon Musk is one of the greatest entrepreneurs ever. Up there with Jobs, Vanderbilt, Edison, Ford and other titans.

For nearly three decades Musk has made doubters look foolish. Whether it’s online payments, electric cars, or rockets, Musk finds a way to win. This inspires a level of patience and devotion amongst employees, investors and customers that few big company CEOs can enjoy. While this is part of what makes SpaceX and his other companies great, it’s also why it makes his companies terrible stocks to buy today.

If your goal is to generate alpha, buying great companies alone won’t do it. You need great stocks. Right now SpaceX trades at an outrageous multiple, with a limited float and buying shares around the time of the IPO is usually an easy way to get rugged.

Keep reading to find out why you should not buy SpaceX right now.

Book I’m Currently Reading:

1. Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor

Book Most Recently Purchased:

1. Confessions of an Advertising Man by David Ogilvy

*Note: To ensure you don’t miss my emails please star or reply to this message

In case you missed them, here are some other recent articles to check out:

Stocks Go Up Because People Want to Buy and Hold Them

Imagine two identical companies. Company A announces they intend to wind down operations at the end of the year. They will honour any existing performance obligations, but not make any new sales. They will sell off all assets, settle any liabilities and distribute the difference to their shareholders at the end of the year. Meanwhile Company B will continue operations for the foreseeable future.

Would you pay more for a one time $250 payout in 6 months or $100 annually for the next 20 years? What if that $100 increased by 10% each year?

If an investor thinks a company will have more earnings to distribute to them in the future, they will pay a higher price to own it. If many investors share this opinion, the market clearing price, where demand meets supply, will rise.

When you see a stock price oscillating, this is a reflection of buying versus selling pressure. The market can be willing to pay up for a stock one day, then shun it the next. This can be driven by investors changing their outlook on the business, shifting preferences between near vs long term cashflows, available liquidity in the financial system etc.

Great companies can perform poorly in the stock market over extended stretches because it doesn’t fit with what investors are looking for. High growth tech companies with negative earnings were in great demand during the Dotcom Boom and ZIRP eras, but out of favour during high interest rate, low liquidity regimes. The time and price you choose to buy a stock along with your holding horizon will have as much if not more of an influence on your investment return than the companies performance.

This is why being a great company doesn’t on its own guarantee a high share price. Does SpaceX qualify as a great company?

SpaceX Is Not a Rocket Company. It’s an Elon Musk Conglomerate.

SpaceX started as a rocket launch/space company 20 years ago, but today you can think of it as three separate but related businesses:

1. Space - Rockets (Falcon, Starship, Dragon etc.)

2. Connectivity - Starlink

3. AI - Compute Business (Grok, Cursor)

The Space division is responsible for decreasing the launch cost by about 85% down to $2,700 per KG (down from $18,500 historical average). This cost reduction has saved US government agencies such as NASA, DoD, NRO along with commercial satellite operators billions of dollars. Beyond the immediate cost savings, it makes it economically feasible to do new things in space, from building data centres and colonies to enabling low-earth orbit broadband and mobile satellites. This segment does about $4B in revenue and has grown 8% year over year (YoY).

The Connectivity division sells secure and high speed internet connections to consumers, enterprises and governments. Starlink is ideal for underserved rural and remote areas, or areas with compromised internet access like Ukraine or Iran. Starlink began in 2020 and generates >$11B in annual revenue, growing 50% YoY.

The AI division (previously xAI) merged with SpaceX in the past year. xAI was the merger of Grok and Twitter and as of March 31st were doing $3B annually growing 22% YoY. They have since secured >$15B in annualized revenue from deals with Anthropic, Google and others. They recently acquired the right to purchase Cursor.

The Space division is launching more rockets per month than every other player combined. Their competitor Blue Origin doesn’t even have a launch pad right now. Starlink has been in business 6 years but generates nearly as much revenue as Canadian telecom giants Bell Canada and Telus. The AI division is getting paid billions per month from competitors, because they have capacity at a time when people are desperately seeking it.

SpaceX is a great company. That doesn’t mean it’s a good stock.

SpaceX’s Greatest Asset Is Also Its Greatest Risk

Greece’s conquest died with Alexander.

Great-man companies inherit the same problem. When the founder is responsible for a disproportionate share of the vision, talent recruitment and investor confidence, succession is not a normal management transition. It’s an existential valuation event.

This is the biggest risk to SpaceX shareholders today. What happens on the day Elon isn’t there? There is no way to justify the IPO valuation without an unwavering belief in its founder.

Based on Friday’s performance, a lot of people believe in Musk to the tune of 100X revenue. This is great for anyone who owned shares pre-IPO but very expensive for somebody buying the stock today.

Compared to other companies at this scale, SpaceX would need at least $100B in annualized revenue to justify a $2T valuation. That’s 10X where they were 3 months ago. Not only would they need to quickly scale their revenue, they would need to show a path to get operating margins in the 30-40% range. None of the trillion market cap companies with >10X revenue have operating margins below 40%. The only exception to this is Tesla, another Musk company.

Most expect SpaceX and Tesla will merge. Taking Friday’s share prices, the entity would have a combined market cap >$3.5T with ~$110B in annualized revenue and operating profits of -$1B (assuming they can’t find any synergies). That’s a more manageable 35X revenue, but still well above any of the other companies.

Until then, investing in SpaceX at 100X revenue, is effectively taking early stage venture capital uncertainty but paying mega cap IPO prices. You need to believe the company can double revenue for the next 3 years just to catch up to where their peers trade today. That leaves no margin for error, which seems like an unnecessary risk.

SpaceX definitely isn’t the first company to go public at a rich premium, but when you look at short term stock performance from recent IPOs, its rarely beneficial to buy within the first day or even week of trading. It’s common to see a stock drop 50% below its IPO price within its first year of trading.

Last year Figma ( ) reached a peak share price of $122 on its first day of trading (3X the initial offering price) but can be bought for below $20 right now. Figma has grown revenue nearly 50% YoY and beat its latest earnings estimates in a major way, but only trades at 10X revenue for a $10B market cap.

Figma and SpaceX aren’t comparable companies but they are part of the recent wave of IPOs that feature a limited float, which makes the price susceptible to large short term pumps. The float is the number of shares that are available to be bought in the open market. Every company has a certain number of shares held by insiders or part of the company’s treasury, that are restricted from being sold. The higher this ratio, the easier it is to distort the share price.

Assume a company has a million shares, but nine hundred thousand are held by the CEO who won’t sell, it doesn’t take much to pump the stock. One whale can make it surge with the purchase of 10,000 shares. The buying pressure wins, which sends the stock to the moon. This is a common feature in crypto coin offerings, most of which are nothing more than orchestrated rug pulls. If you timed it correctly, you could make anywhere from 50-1,000X your money in an hour. Most participants were unfortunately bag holders. In the case of SpaceX, it’s hard not to feel like one.

Only 4-5% of SpaceX shares are part of the public float. Most mature public companies float 60-90% of their shares. SpaceX’s float is slightly more aggressive than recent tech IPOs between 10-15% (such as Circle, Uber, SoFi) but not unprecedented. Figma, Robinhood, and others were between 5-10%. Robinhood’s trading debut wasn’t as explosive as Figma’s but it opened at $38 and reached a peak of $55 after a few weeks before dropping below $10 per share within its first year.

These limited floats aren’t necessarily designed to fleece public share investors. It’s common for founders at VC backed companies to own more shares in their companies compared to most public company CEOs. In the case of SpaceX, Elon Musk owns ~40% . For reference, Jensen Huang from NVIDIA has less than 4% and Mark Zuckerberg has ~14%. Both companies have been public for a while now.

It’s also normal for pre-IPO shareholders to be subject to an 180 day lockup before they can sell their shares. This temporarily suppresses the float. Once it expires, the share price usually takes a hit as early investors and employees look to cash in.

In the case of SpaceX, the lockup is structured differently. Musk and some early investors are subject to a 366 day lockup, whereas other pre-IPO shareholders are locked up for a maximum of 180 days. Some can be released earlier based on certain milestones. In 6 months, the shares that would be eligible to be sold that could contribute to the float could reach up to 60% (if all these investors choose to sell).

Certainly not all of these shareholders will sell, but a 30-60% post-lockup float is pretty normal for new IPOs. With Musk owning such a large number of shares, it places a ceiling on how big the float will get, but the point remains, the way the stock trades during the early days or weeks post-IPO is not really reflective of where the stock will be in a year.

The way the stock trades before the lockup starts to expire, isn’t really reflective of how the broader market views SpaceX stock. Musk successfully convinced NASDAQ to relax their policies around float percentages which means by default many index funds need to buy SpaceX. Since an increasing portion of the market is held in these passive funds, billions of dollars will be directed towards SpaceX shares, and there won’t be any selling pressure for at least the next few months.

This sets the table for SpaceX’s price to support the current valuation, and potentially climb in the short term, but in the long term, the market is a weighing machine. I suspect people will look at META, Microsoft and Alphabet at 10X revenue and 30-40% operating margins, and wonder if it’s worth paying 100X for a moonshot, no matter how much they believe in Elon Musk. SpaceX might very well one day start space colonies and become the most profitable company ever, but in the short term investors are asked to buy into a completed story, that’s only just begun.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

(Check out this great breakdown on the SpaceX S1, from )

No. I was in an abandoned airport hangar on the outskirts of Berlin about to run 8 kilometers with eight exercise stations mixed in. I was doing this alongside my buddy with whom I could split the stations as we wanted but we both had to run the full distance.

We were about to compete in what’s called HYROX. Some people claim it’s short for Hybrid Rockstar, but thankfully that’s not been sanctioned by the organizers.

The confusion is natural. HYROX is geared towards hybrid athletes, people who can run and lift weights. The type that go to run clubs/Barry’s Bootcamp but also have a gym membership. You can usually spot a HYROX athlete from a distance. They are wearing unnecessarily expensive gear and spend as much time documenting or tracking the workout as they do completing it.

Although to an outsider this might appear cringe, you need to do some combination of this or you’re going to struggle. Although I’m skeptical of the HYROX crowd’s belief that colour coordinated sports bras and short cut 10% off their time.

In any case, there we were: a leading venture capitalist and a burgeoning Substack writer preparing to suffer for the next hour.

This is the story of how our race unfolded, what I learned from the experience, and how HYROX went from relative obscurity to a global fitness phenomenon.

Keep reading to find out.

Book I’m Currently Reading:

1. Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor

Book Worth Re-Reading:

1. So Good They Can’t Ignore You by Calvin Newport

In case you missed them, here are some other recent articles to check out:

How The Race Went

It took us 70 minutes to complete the race, which placed us ~100th out of 300 teams that participated in the Open Doubles Race that day in Berlin. For a first time effort that’s considered good. Experience helps in races like these. We got two time penalties of one minute each, registering our official time at 1:12. The winning team did it in ~53 minutes, another 19 did it in under an hour. The difference between 50th and 100th place was a couple of minutes. Most teams did it somewhere between 1:15-1:20. A bunch couldn’t finish, due to injury or cramping.

We spent 34 minutes on the runs which put is in the middle of the field. We started off strong but I started cramping up after the 3rd station, which slowed us down considerably. My partner was finishing almost a minute faster than me on some runs, but since he had to wait it didn't matter. Our two penalties came because he crossed the run exit sign too far ahead of me. He was waiting for me in front of the entrance to the station, so we didn’t get any advantage. HYROX is full of little rules like these that we weren’t aware of.

Our 34 minutes of run time, only measures the time spent in the run zone. These aren’t actually a kilometer long, but closer to 750-800M. This is the distance between the entrance and exit signs you see as you enter or exit the Roxzone. The Roxzone is considered its own area, between the runs and the stations. The total Roxzone distance is somewhere between 250-350M. We spent 13 minutes there, which is also middle of the pack. Mostly because we stopped for water and walked for parts of it. This is a race so every second adds up fast.

We started strong on the stations. We did the 1000M Ski ERG in 3:51, the 65th best time. 1:44 for the 50M Sled Push (83rd place). Once the cramping started, we began moving slower to the stations which count towards your time. My teammate had to pick up more slack for me from the 4th station onwards, so we fell from the top quartile to closer to an average time. For most stations, the difference between top quartile and the mean is about ten seconds. Far less consequential compared to the runs and Roxzone.

This is why as much as it’s a hybrid athlete race, the key determinant of the finishing time comes down to running.

In my case I didn’t do enough of it. The three week trip to Japan 6 weeks before, was a setback, but it could have been negated. I was running at the pace I wanted on the treadmill with relative ease, but at a HYROX you aren’t just running 1KM then doing a station, before running another KM. You have to sprint an extra 100-200M before the station, then again before starting the next run. This quickly adds up and over the course of the race, you do closer to 9.5KM.

This wasn’t a case of gassing out, I spent almost the entire race in Zone 4 and barely entered Zone 5. This was a different feeling. I was never breathing super hard, this was simply my body refusing to push faster. It was smart enough to slow down to prevent cramping. Not everyone was so lucky. There were several teams collapsed along the track, with medics or teammates trying to rub out hamstring or calf cramps. Fortunately, I was able to avoid those until the very second the race ended.

If I could redo it, I would train to run for an hour straight at a slightly faster pace than what I would want to run for the HYROX. When you factor in the fatigue from the stations, you are going to run a bit slower. If the goal is to do the runs + Roxzone at an average pace of 4 mins per KM, I would train to run for an hour at 3:50.

I’m confident without cramping and better preparation, we could easily shave at least 5 minutes off our time. I’m certain we will do one again, because the HYROX environment is set up in such a way that the second you finish, you can’t wait until your next one. That’s why HYROX has achieved the scale it has so quickly.

A Brief History of HYROX

HYROX was founded in Germany by Christian Toetzke and Moritz Fürste in 2017. Toetzke had experience organizing sporting events such as running, cycling and triathlon races. Fürste was a former German field hockey star who won two Olympic gold medals.

They identified a gap in the fitness market. Millions of people go to the gym as their primary form of exercise, but they didn’t have a good event to compete in. Runners have marathons, cyclists had road races, weightlifters have power lifting competitions. The closest thing to a holistic fitness competition was CrossFit.

CrossFit got pretty big in the early 2010s but as a competition, it’s not accessible for most gym goers. Outside of professionals, few can master all the techniques required for the Olympic lifts and gymnastics to qualify for a CrossFit competition. Even if you are in good shape, if you draw a workout with exercises you aren’t good at, you’ll have a tough time being competitive.

HYROX eliminates the variance and luck of the draw by designing each race in the same format. The movements are comparatively less technical. There are optimizations, but anyone can push a sled or use a rowing machine with minimal instruction. Handstand pushups and backflips are harder to learn.

700 people competed in the first HYROX event in Hamburg 2018. The vision was to create something resembling a marathon. Where elite athletes or first-time amateurs can do the same workout, just in different times. Since the race format is standardized, participants across cities and seasons can compare their times.

The company’s expansion accelerated after a sports marketing group Infront made an initial investment in 2019. They would later become the majority owner in 2022. Infront is owned by China’s Wanda Group, but HYROX’s founders continue to own a stake and operate the business.

Since the ownership change, HYROX’s growth has been spectacular. They had 90K athletes compete during its 22–23 season. In 2024, this grew to 325K across 60 events. There are 100+ events and >1.5 million athletes expected for the current 25-26 season. They offer the race in several formats. You can compete as an individual or as a team, in the Pro or Open format. The difference comes down to the weight on the sled, lunges and farmer carries (we did the Open).

There is no reason to expect this growth will slow down any time soon. No matter how many HYROX events they add, most sell out months in advance. The number of HYROX specific gyms have doubled in the past year but seemingly most people still haven’t heard about it.

At its 2018 peak, somewhere between 2-5 million people participated in CrossFit, across 15,000 affiliated gyms although only ~400,000 registered for the CrossFit Open Championship. There are only around 5,000 HYROX affiliated gyms right now, but unlike CrossFit, most HYROX participants don’t train at one of these affiliates.

We are nowhere near peak HYROX. A greater percentage of participants can compete in HYROX compared to CrossFit and HYROX hasn’t come close to reaching the same culture awareness that Peak CrossFit did.

Final Observations

The fitness and fashion industries have a lot in common. New concepts can come and go quickly, and there is a lot of competition for mindshare. Both industries are massive but there’s plenty of competition. Some brands or sporting events can endure decades to centuries, whether that’s Ralph Lauren, Rolex or running a Marathon.

HYROX has been on a great run these past years, but many fitness concepts got big then ran out of steam. Do you know anyone that has done a Spartan Race or Tough Mudder lately? I’m sure a decent number of readers don’t even know what those are.

HYROX has a lot of momentum but if they want to become a mainstream sporting event staple like a Marathon or Triathlon and not a passing fad, they need to strike the right balance between accessibility and difficulty. Is HYROX trying to cater to everyone or just elite Hybrid athletes?

From a business sense, these are different customer profiles. Professional marathon runners will do multiple every year and probably get sponsored, whereas the majority of participants are amateurs who will only do one or two in their lifetime.

HYROX is appealing to both groups right now but most amateurs will eventually move on to something else. Like most direct to consumer brands, churn rates are high. The number of people fit enough to run 8KM and do 8 stations in under 90 minutes is generously only in the tens of millions. Perhaps GLP-1s and Peptides will increase these numbers.

As they eventually start to saturate their core user base, they will need to decide between providing easier, watered down versions or keeping it as something intense. Many Marathon organizers offer shorter events. Half marathons, 5 or 10KM races. You can do the half Ironman as an alternative to the full, but that still requires months of preparation.

HYROX is cool right now and its participants are pretty fit. It will be fascinating to see 5-10 years from now, if this sport will remain a staple or if it will fizzle out like many concepts before them.

In the meantime, I know I’ll definitely do at least another one, and I hope you consider doing one too.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Business books focus on product, strategy, sales yet none can succeed without money. If the CEO bankrupts the company because they spend all the funds on parties, pet llamas or other unproductive items, none of those other departments matter.

Individuals hire financial planners to serve a similar function. One could question their utility since most just charge 1% of AUM to tell them to spend less money and put their investments into ETFs. I’m sure some are probably fine, just not the ones advising Nick Cage or Wesley Snipes.

Hard transition + trigger warning*

Readers might be shocked to learn there is something more valuable and important than money. Time.

Not everyone agrees but let’s compromise and say they are at least equivalent. This begs the question. Why is everyone so obsessed with watching their finances but afraid to audit how they spend their time?

If time is money, why are there armies of bean counters but no clock watchers?

There is endless content on managing finances but very little on how to effectively audit how you spend your time.

A companies financial health is depicted in the 3 financial statements: The Profit & Loss Statement, The Balance Sheet and The Cashflow statement.

What if we were to apply this framework to time management?

Do you have a busted time balance sheet? Are you incurring crazy losses? Are you bleeding cash?

Keep reading to find out!

If this week’s article does not interest you, please check out some other recent ones:

The Time P&L Statement

How did you spend your time between X-Y Date

The P&L statement shows what happened between certain dates. Usually shown quarterly or annually, but it can be any frequency. Monthly, weekly, daily whatever.

In a financial sense you’ll normally see what revenue has been generated, expenses incurred during that time, the taxes paid, if you believe in that sort of thing and what’s left after you net these out. The profits and/or the losses.

From a time standpoint, you can allocate every second to see how it’s used. People generally spend around a third of their time sleeping, another third working and activities around work such as commuting or going to your companies awkward picnic. That remaining 6-9 hours during the week is where we are supposed to squeeze in everything else. Important things like getting dressed, exercising, personal hygiene, reading Serviceable Insights, crying to The Ride of The Rhohirrim.

People will whine that there isn’t enough time in a day but spend 5 hours a day on their phone. Mostly doom scrolling Instagram. Not to mention wasting time watching crappy Reality TV or other bad shows. Except for Succession, Succession is great (if you are a fan check this and this out).

The way you spend your time will determine your mood and general satisfaction with your life. I am not Sigmund Freud but if you aren’t happy, you should spend more time on things that will make you happy.

To be happy you need some combination of safety, security, companionship and the sense of a great mission/purpose. For some that’s religion, worshiping the God or sports team of their choice. Others will fill that void by going into politics, starting a company or dedicating their life to research. Some research such as the cure for cancer benefits society, other research only exists so people don’t need to admit they are unemployed. Whatever floats your boat, I’m not one to judge.

If on balance you find yourself waking each up morning happy, energized and excited for what’s to come, you are spending your time well. You’re running a profitable life.

This doesn’t mean you need to love every second of your life. Sometimes like an early stage startup, you need to run losses in the short term to be very profitable in the long term. In fact, if you never find yourself doing something you aren’t naturally inclined to do, you will never achieve anything of consequence let alone your life purpose.

The more you can learn to take pleasure in the activities you don’t naturally want to do, the easier it will be to achieve your great purpose. Sisyphus was condemned to roll a stone uphill each day only to watch it fall back down each night. With no way to escape this fate, the only way for Sisyphus to defeat the Gods who condemned him, was to enjoy their punishment.

Kobe Bryant was cursed with the desire to be the greatest basketball player ever. Better than Michael Jordan. Kobe Bryant didn’t enjoy waking up at 4AM and training four times per day, but he loved the separation he was creating between him and his competitors. These were long term investments in his future, creating assets that paid him dividends for decades. These are the things you would see on the balance sheet.

The Time Balance Sheet

A Snapshot of Your Assets and Liabilities At A Point In Time

Unlike the P&L and Cashflow statement, the Balance Sheet only shows an exact moment in time. It shows the assets, liabilities and shareholders equity of an organization or individual. Assets will generate positive cash flow in the future, whereas liabilities will eventually reduce cash.

It’s an oversimplification, but all things equal you want more assets than liabilities. If you care about the future, you want to see more money or time flowing your way. Not all assets are created equal. Some are short term, others are longer term. The only way to create long term assets is through investing time and money. For companies this is machinery, GPUs, intellectual property etc. For people these are skills and experience.

Since assets have finite lifespans, companies and individuals need to constantly invest or their balance sheets will eventually shrink. One good workout won’t make you fit but if you’ve invested thousands of hours exercising across your life, it takes a much longer period of inactivity before you would be weak and frail (we discussed this in Biohacking That Works (and Doesn’t).

To get good at something, you need to invest your time with dedicated practice. The more time you invest, the better you will be and the more separation you will get from everybody else. If you are building this advantage in areas that are economically valuable, you can feel secure financially, as long as you can sustain this edge. You don’t need to exclusively build skills that are financially motivated. If you get really good at activities and hobbies that you enjoy, you can satisfy other necessary conditions of happiness. Making close friends are great assets that will make you happy for years to come. Accomplishments that boost your self esteem and confidence are assets. Spending a high portion of your time doing something you love might be an intagible but there are worse things.

Beyond investing to give yourself economic and spiritual assets, another type of investment you can make is to give yourself more time. Some measures are short term others create more time for yourself indefinitely. If you spent a Sunday meal prepping for the week, that would create a time asset but it would only last until the end of the week. If you trained your dog or built a robotic chef that could prepare and clean your meals for you, that would be a longer term asset.

The more time you can create for yourself to go after your life mission/purpose, or on activities that will give you fulfilment (security, safety, companionship) the better your life will be.

Creating time assets are good but the way you spend your time matters more. Spending all of your time automating tasks just to create more free time for yourself is pointless if that free time doesn’t translate to something that will improve your life.

Imagine an 18 year old with Billions of dollars and no responsibilities but chooses to spend their next 70 years watching trashy reality TV and eating hot pockets instead of doing anything worthwhile. Would they have a better life or be happier than somebody with many friends, a loving family and plenty of fulfilling life experiences?

Money matters, but only if it’s used to help you accomplish your goals. Create long term assets that let you live a good life.

Time Cashflow Statement

It costs money to live. Seemingly every time we step outside (or not) we have expenses flying at us. There are no shortages of ways to spend our money. We’ve previously explored the merits of going into debt to buy a Rolex.

Not all spending creates assets. Nothing wrong splurging on a nice meal or a fancy outfit from time to time if you can afford it, but if this where most of your money is going, your balance sheet is going to look bad and your P&L will eventually suffer.

Just like in a corporate setting, some spending and investments offer a higher return on investment. A $60 Uber Eats order to give your Burrito a private car ride, saves you 20 minutes once. Spending an equal amount on a house keeper or gardener, can save you hours. Spending a bit more money for something that saves you hours on a recurring basis can be a great investment but only if you use this time productively.

Taking on debt only makes sense if it helps finance assets that will at least eventually pay for the debt and associated interest. In the context of time, it only makes sense to take on liabilities if these savings will offset the future commitment. Skipping the gym saves you time in the short term, but the longer you push it off, the harder it will be to get back on track. Not sleeping works the same way. Pulling an all nighter hurts your health and performance, so if you are doing it, you better be getting something worthwhile in exchange. Staying up all night watching re-runs doesn't qualify.

If you are spending money, it better be investments that create long term, high quality assets that will save you time and/or bring in more money. This allows you to make bigger and better re-investments in your time, happiness and financial wellbeing.

Spending money on hobbies is fine, if you get real enjoyment out of these hobbies and it brings you long term happiness. If you’re chasing a new activity every week, and you have equipment gathering dust, these are impaired investments.

You need to strike the right balance between having enough cash saved so you feel financially secure, but be able to invest in things that help you achieve your objectives so you feel fulfilled. Hoarding cash just for the sake of hoarding won’t make you happy. Having no cash is also problematic.

A good time cashflow statement, shows positive cashflows that turns into cash and investments that will get you closer to your goals of feeling safe, secure, with adequate companionship and your great mission/purpose.

When was the last time you properly audited the way you spend your time?

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

The problem is simple. Men like this cast enormous shadows. Their children are not just competing with one another, they are competing with the force of the founder himself. He advises presidents, knows every major tech leader personally, and owns media assets that can be used to advance both personal and business interests.

That description fits Logan Roy, the patriarch of Succession, one of the most iconic characters in modern television.

The Roys were widely understood to be modeled on the Murdochs, the family behind Fox and News Corp, who controlled major parts of the media landscape for decades while publicly fighting over the future of the empire.

The creators and cast have said as much.

But what if the real person closest to Logan Roy is not Rupert Murdoch? What if there is another living billionaire who fits the role even better?

A man who has been divorced many times, owns major media assets, recently fought a proxy battle, and is now trying to hand parts of his empire to his children.

That man is Larry Ellison.

Ellison, the co-founder of Oracle and the self-styled samurai of Silicon Valley, was close with Steve Jobs, has spent years operating like a kingmaker in tech and media, helped finance Elon Musk’s takeover of Twitter, recently acquire a stake in Bytedance US (TikTok) and has recently backed his son David Ellison’s bid to help take control of Paramount through Skydance.

Even some of the public commentary around him feels like it belongs in Succession.

The similarities do not stop at the surface level. In temperament, ego, family dynamics, and the instinct to treat business, media, and power as one seamless game, Ellison may be the closest thing America has to a real Logan Roy.

Don’t believe me? Keep reading.

If this week’s article does not interest you, please check out some other recent ones:

Early life/ Upbringing

Logan Roy was born in Dundee, Scotland, (where Brian Cox is actually from), sometime around 1939. Due to the war, he and his siblings were sent to Quebec to be raised by their aunt and uncle. Logan lost his sister to tuberculosis, which his uncle blamed him for. That same uncle beat him, and the scars were still visible when Logan was in his eighties in Succession. He had a strained relationship with his brother Ewan, and his own children seem to have few happy memories of him.

Larry Ellison was born in New York in 1944. At nine months old, he was given up for adoption to his aunt and uncle, who raised him in Chicago. He did not learn they were not his biological parents until he was a teenager. His adoptive father may not have been physically abusive like Logan’s uncle, but he once told Larry he would never amount to anything. That became fuel Ellison would burn for much of his life.

Like many founders and industrialists, both men seem to have drawn energy from the need to prove a father figure wrong.

Both built vast empires, but neither followed a conventional path. It is unclear whether Roy attended university, but his rise began with an advertising business that he scaled into a conglomerate. By the start of Succession, Waystar Royco spans cable news, newspapers, film studios, theme parks, cruises, and more.

Ellison was a strong student, but dropped out of pre-med and headed to Silicon Valley to work in tech. After stints at several companies, he started a venture with former colleagues selling consulting services. He then came across a relatively obscure IBM research paper on relational databases, which became the basis for what would later become Oracle. Ellison realized IBM did not fully appreciate what it had and was too large and bureaucratic to move quickly. A smaller, leaner company could build the future faster.

IBM had made this mistake before. A few years earlier, it had let a handful of engineers walk away with another software idea it did not care much about. That company became SAP.

It is never entirely clear what motivated Logan when he started Royco. Ellison, by contrast, initially thought he might one day build a company with about $10 million in revenue and 50 employees. He overshot that pretty quickly. Then the ambition changed. The goal was no longer to build a good company. The goal became being number one. Not the number one database company, but the number one technology company in the world.

Competitive Fervor

One of the central themes in Succession is that to succeed at the highest level, you need to be a killer. Logan clearly believes this and tries to hammer the lesson into his children.

In the first episode, while explaining to Kendall why he is delaying retirement, Logan tells him: “I know that you’ve read a lot of books about business management and this and that. But sometimes it is a big dick competition.”

He makes the point even more explicitly in the season two finale. When Kendall asks whether Logan ever thought he could do the job, Logan replies: “You're smart, you're good, but you’re not a killer. You have to be a killer!” It is one of the defining lines of the series and helps set up one of the best season finales in television history.

We only meet Logan after the empire is already built, but by every account, he took no prisoners getting there. He is estranged from his older brother. His rivals fear him as much as they hate him. Even the President of the United States is wary of crossing him. He threatens to grind people’s bones into his soup. He is willing to sacrifice loyal employees when it serves his purposes. There is never much doubt that, once Logan wants something, he does not believe anything should stand in his way.

“I see him as a driving force. He gets what he wants. And when he focuses on something, he gets it.”

That’s not a line from Succession, that’s Marc Benioff talking about Larry Ellison.

“Larry has his foot on the accelerator to the floor trying to drive 150 MPH leaving his competition behind him. He knew eventually he would shoot the car over the cliff but like James Bond, the car will break into 10,000 pieces but he will still be on the other side.”

Ellison was not always like this. One of the things that initially attracted him to technology was that it gave him time to hike and left room for leisure. That changed after Oracle. By his own telling, his first wife left him because he was not ambitious enough. His second wife left him because he was too ambitious. Some would call that growth.

One turning point Ellison often cites was a trip to Japan, where an executive told him Americans were too comfortable with second place. For many of the Japanese businesspeople he met, you were either first or last. Wait, no, that is Ricky Bobby. Still, somewhere along the way, Ellison became obsessed with crushing the competition. It was never really about hitting a revenue target. He wanted Oracle to be number one.

What began as a mission to build the top pure software company, at a time when most firms bundled hardware and software together, evolved into something even bigger. Ellison wanted Oracle to become the largest technology company in the world. Bigger than IBM or Microsoft.

He would openly taunt competitors, put up billboards outside their offices, and run ads that depicted Oracle as superior fighter jets. Ellison had no problem taking direct shots at Bill Gates at the height of his powers. This was the antitrust-era Bill Gates, not the softened, philanthropic version most millennials and Gen Z know.

While Ellison was more of a sprinter Gates was a marathon runner type of psycho. He removed the radio from his car so he wouldn’t be distracted during his commute to and from work. Ellison would sail yachts and stay busy with hobbies outside of work.

Oracle never quite became the number one technology company, but for a long time it was one of the most formidable players in the industry. That is a remarkable achievement for a business-to-business software company competing across decades against Bill Gates, Steve Jobs, Larry and Sergey, Zuckerberg, and pretty much every other titan of modern tech. Despite this, with Ellison’s reluctance to sell Oracle stock, in 2025 he briefly surpassed Elon Musk to become the world's richest man.

Contrarian

Before Peter Thiel, Ellison was Silicon Valley’s contrarian.

Oracle succeeded in large part because Ellison repeatedly saw something others did not and was willing to bet the company on being right. Few people initially believed relational databases would become a major category. Later, Oracle moved aggressively away from client-server applications and toward internet-based systems in the 1990s, before most people thought the internet would matter much for enterprise software.

Ellison’s logic was simple. This was the only path to number one. If Oracle stayed in client-server, SAP would remain ahead. If the internet reshaped enterprise computing the way Ellison thought it would, Oracle would be best positioned to ride the wave. There were many other examples like this. Ellison was rarely afraid to act on his own view of where technology was going, even when the rest of the industry and most analysts disagreed.

Logan made similarly bold calls in media. When others thought home video would kill movie theaters, Logan invested in theaters because he believed people would still want to go to the cinema. While Kendall and others were drawn to flashy websites and trendy digital assets, Logan preferred regional newspapers and local affiliate channels. These were aging businesses, but they still held influence and had sticky audiences, much more so than websites that could come and go with the seasons.

When he faces a proxy fight, Logan entertains two very different ways out: acquiring a politically opposed legacy media rival or buying a newer, buzzier tech-media company. His preference was the legacy media rival because that’s what he understands and value. Logan appreciates technology, but he never mistakes it for power itself. In his worldview, technology can amplify influence, but it cannot replace it. Real power still comes from controlling media assets that can shape opinion and pressure politicians into submission.

Influence

While Logan’s influence on politics is explicit, Ellison’s was more bespoke until recently.

In a fairly short stretch, Ellison went from being a rich political donor with strong connections to becoming a far more direct player in the machinery of information and influence. He helped finance Elon Musk’s takeover of Twitter, Oracle became deeply embedded in TikTok’s U.S. structure, and his son David Ellison now runs Paramount Skydance, which gives the Ellison orbit meaningful control over a major Hollywood studio and a broad set of media assets.

Ellison is the elder statesman of Silicon Valley. He was close with Steve Jobs, is viewed as a mentor by figures like Elon Musk and Marc Benioff, and is probably no more than a second-degree connection away from almost any important person in tech. He has spent decades accumulating not just money, but proximity to power.

It is also quite clear that he has unusual access to President Donald Trump. Ellison hosted a fundraiser for Trump in 2020, joined a post-election call about strategies for contesting Trump’s loss, and appeared beside Trump at the White House for the Stargate AI announcement in January 2025. Oracle was also central to both the earlier TikTok negotiations and the newer TikTok U.S. joint venture. None of this proves that Ellison is writing policy himself, but it does suggest something simpler and probably more important: when Larry Ellison wants something done, he can pressure politicians into making it happen.

That feels very Logan Roy. Logan may be fictional, but one of his defining traits is that he does not need formal office to exercise power. He can call the administration, intimidate rivals, shape narratives, and make politicians behave as though he outranks them. Even decide who the next President will be. This makes him hated by many politicians and the general public alike.

Ellison is not loved by everyone, either. The Paramount-Skydance deal drew heavy scrutiny from Democrats who preferred Netflix acquire Paramount.

This sounds exactly what Gil Eavis says of Logan Roy throughout Succession. It’s quite clear the Eavis character is at least partially based on Bernie Sanders, and although Sanders was not calling out Ellison during Succession’s filming run, he now is.

So this raises the real question. Was Logan Roy always closer to Larry Ellison than Rupert Murdoch, even if the writers did not fully realize it? Was this simply a question of time catching up with the character?

Here you have two men raised by relatives rather than by their biological parents, both marked early by hard and often humiliating father figures. Both built empires through bold, contrarian bets. Both obsessed with winning and treat business as a theatre of dominance rather than a vehicle for profits. Both understood that money alone is not enough. To bend the world to your will, you need power, money and influence.

That is why I submit that Logan Roy may be less a portrait of Rupert Murdoch than an accidental prophecy of Larry Ellison.

Or maybe Ellison saw Logan Roy and decided the resemblance was an aspiration.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

I’ve been travelling for work the past week meeting up with colleagues, investors and friends in San Francisco and New York.

In SF you can’t walk two blocks without hearing someone talk about their Clawbot setup or seeing an ad for autonomous agents. Everyone is building something.

New York has plenty of AI talk too, but the conversations also span geopolitics, financial markets and the difficulty of dating in the city.

One city is obsessed with building the future.

The other is obsessed with navigating the present.

There have been a lot of hot takes about SF and NYC being cooked or becoming irrelevant. With the readership of Serviceable Insights spanning many countries and continents, I thought I would share my own observations from the ground.

These two cities sit at the center of global finance, technology and culture, and spending time in both offers a glimpse of where things are heading.

Keep reading to find out why San Francisco feels like a giant startup workshop, why New Yorkers walk like they’re always late and why a city with millions of people somehow struggles to produce stable relationships.

If this week’s article does not interest you, please check out some other recent ones:

San Francisco is Machine City

Many Europeans and East Coast non-tech people don’t realize that San Francisco and Silicon Valley are different places.

When I told people I was heading to San Francisco, several asked how Silicon Valley was. Silicon Valley is actually about an hour south of the city, centered around Palo Alto and Stanford University. It is a great place for startups and venture capital firms, but from what I hear it is otherwise not the most exciting place to spend time. I would not know. I did not go there.

SF itself is buzzing. People who say San Francisco is cooked hasn’’t been there recently. Sure there are still homeless people and occasional piles of human excrement but not to the extent people will have you believe.

If you think AI is getting a lot of attention online or on television, it is nothing compared to walking around the city. Every co-working space seems full of people building something. For a city of roughly 850,000 people, the concentration of technical talent is extraordinary.

Anyone who has lived there for a few years knows someone who joined a startup early and made life changing money. Building a company doesn’t feel like a pipe dream, just a matter of time until it’s your turn.

This draws people from all over the world. It is common to meet professionals in their thirties sharing apartments with two or three roommates just to make the economics work. Housing is extremely expensive because the city has a severe shortage of supply.

This is completely self inflected because the city is notorious for blocking new developments. In their effort to preserve the historic look and charm of their neighbourhoods, they’ve made it impossible to build.

The irony of SF being one of the most tech advanced cities while also unable to build or change anything is not lost on its residents.

In any case, the charm of the city is very nice for tourists but awful if you’re trying to live there and don’t earn as much as employees of OpenAI or Anthropic. Working at either of these places would likely qualify as being a local celebrity in SF, perhaps on par with a reserve player for the Golden State Warriors.

This is because everywhere you look you see AI agent ads. At every restaurant, you know most discussions are about vibe coding, tech stacks etc. This is not to say there isn’t any culture in SF. They have a great art scene including world class museums, good restaurants, access to outdoor activities and plenty of other cool stuff.

Not everyone who lives in SF works in technology but for the people who are serious about making their startup a success, they probably couldn’t imagine themselves living anywhere else. This is because there’s definitely a premium placed on being an SF based company.

SF and other California based companies raise about as much venture capital as the rest of the States combined. Many investors will ask startup founders to move to the Bay Area if they want a term sheet. It makes sense. You are closer to the biggest VC funds, access to talent and can cross pollinate with other founders and companies.

There was a lot of talk about California losing this edge, due to mismanagement by politicians. Investors like Keith Rabois moved to Miami and expected many others to follow. Some opened offices there or expanded their footprint to New York or elsewhere but there’s so far little evidence that SF is losing its footing as the premier city for early stage technology.

There’s something infectious about the atmosphere. You get inspired just walking around the city, which is super hilly (take it seriously when Google Maps says it will take 20 mins to walk 1KM/0.6Miles). If you’ve never seen photos, the streets don’t look real. They look like something out of an Arthur Cobbs dream from Inception. The closest comparable I can think of is Lisbon, but that’s selling it short.

I’m not sure how much people actually walk around San Francisco. I feel like most people opt for the bus, cable cars or Waymo’s, which you get used to seeing, especially around Union Square (where Salesforce tower is).

On the plane everybody had their laptops out working. Most coding. Some doing it without the help of coding agent. This is because status in SF is determined by how well known your startup is or which investor backed your latest round.

Meanwhile in New York, it’s which social club you belong to, even if it’s a run club.

New York is Still The Empire State

Getting into the city was difficult. With Mandani’s mandatory call to prayer on the minute every minute of each day, traffic was a parking lot from JFK to Manhattan.

In all seriousness, the New York City hustle is alive and well and starts the second you step off the plane. Scammers will try to convince you to ignore the yellow taxi cab line and instead get into an unmarked car, they claim to be a taxi that lacks a cab fare meter, driver identification or anything that would indicate that this wasn’t a random persons private automobile. I’m not ashamed to admit they caught me with that trick once, a decade ago, but now I am older.

For all the talk of people fleeing to Miami or elsewhere, it’s not noticeable. The pace of the city is unmatched. It seems like you’re on the move from the second you wake up. I’ve been to the city many times but this was my first time staying in Chelsea and I regret not doing it sooner. I left my hotel at 8AM went to Equinox, grabbed a coffee at Fellini in the meat packing district, did the whole High Line, went to the Little Island, then the Whitney Museum. At about 4PM I realized I had never strayed more than a mile (1.6KM) from my hotel. I still saw only a small part of Chelsea.

Here’s a little gym hack I learnt. At least in New York, many of the Equinox locations stopped offering guest passes. However, one of the people working there told me I could book a 30 minute robot massage (more on that later), then use the gym and/or do one of their classes for $60. That isn’t an insignificant sum of money but with boutique group classes costing up to $50, this is actually a pretty good deal. This way you might also be able to claim it for insurance (tbd).

Walking around the high line, you exclusively see tourists. You can tell they are tourists because they walk unbelievably slowly. If that doesn’t help they’re also stopping every few steps to snap a photo. New Yorkers on the other hand walk like they’re constantly late for something. The reason being, they probably are. I lived through it when I ran to Central Park. It was great but I made the mistake of only looking at the distance to the bottom, not the middle. That extra 3 KMs each way, meant I had to sprint back between red lights all the way down 9th avenue.

I came back for the robot massage and it’s exactly what it sounds like. You get into a massage room and you see these robot arms looking like they belong to Dr. Octavius from Spiderman. You lie facedown, adjust the settings and hope it doesn’t become sentient and kill you for forgetting to thank Chat GPT.

The massage wasn’t bad. It wasn’t as good as a talented masseur/masseuse but it was far from the worst massage I ever received. In 30 minutes it was able to noticeably iron out some knots, so that was good.

After that I met a friend for dinner in the financial district. I walked from Chelsea which takes about 45 minutes. On the way there I noticed at least two or three chicken chain restaurants I had never heard of. How can they sustain this many chicken based restaurants in America?

Besides the abundance of chicken restaurants, I did notice there appear to be way more woman in New York than men. Part of this might be explained by having arrived from San Francisco, but there have been a few articles circulating claiming as much. Apparently they did a singles event where they charged women $100 to attend, men could come for free and women still outnumbered men 3-1.

When I first saw it I assumed it was clickbait nonsense but literally every conversation I overheard at a restaurant, bar or even in line at the Comedy Cellar featured a woman complaining about the lack of men in New York City or wondering why their situationship won’t text them back? These are of course limited, anecdotal observations, I’m sure nobody has ever struggled with dating in big cities.

Still though, it must suck to be a single New Yorker and feel like these Equinox robot masseurs have a more successful dating live than you do. No wonder people are trying to ban AI.

I previously covered this in Is Pretty (Male) Privilege a Thing? but part of the problem is 50-60% of women covet the same 10% of men who are tall, handsome, make a lot of money etc. A couple of years ago an article claimed half of Gen Z women were in relationships while only about 20% of the men were. The natural conclusions were either Gen Z women are dating older guys or some Gen Z men are dating multiple women. It’s creating a K Shaped dating economy.

This isn’t being helped by finance bro photoshoot a couple weeks ago. Just joking, those guys are definitely getting roasted by everyone at their work and will probably be fired if their company didn’t sign off on this. This is definitely a topic of conversation around the city. That along with the volatility in the private credit space.

Whereas in SF, people are mostly just focused on the financial markets related to tech, New York is exposed to the world economy. The price of oil is wreaking havoc across the real economy, they notice this in NY. Bad timing for Blackstone, Blue Owl and other firms trying to convince markets that Private Credit Isn’t in a Bubble.

Yet for now, so long as finance bros can afford Celine suits and there are lines out the door for every pilates studio, wine bar and four dollar sign restaurant, you know New York is in good shape. Regardless of how hard it is to date, there’s a reason why so many people happily put up with the high rents and overcrowded streets.

From John F Kennedy Jr look alike contests to world class cuisine from almost any country imaginable, New York still has it. There is a reason people tolerate the high rents, overcrowded streets and chaotic dating market. The city has an energy that is hard to replicate anywhere else.

San Francisco and New York both have it, but they channel it differently.

Are they the most liveable cities? Unless you’re a very high earner, no.

Yet still there’s a reason so many flock to these cities.

San Francisco feels like a giant laboratory. Everyone is building something. The conversations revolve around products, startups and the future.

New York is still the command center. Technology is just one small part of a broader conversation revolving around markets, geopolitics and competition. The city runs on ambition and capital.

Spend a few days in both places and the contrast becomes obvious.

If you want to build the future, you’ll likely be drawn to San Francisco. If you’d rather compete for power and influence, there’s still only one New York.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

It’s not surprising. Nobody knew what Mortgage Backed Securities (MBS), CDOs and CLOs were until Bear Stearns, Lehman Brothers, Fannie Mae and others collapsed.

Nobody really cared. The housing market was growing, there were conflicts in the Middle East and it was good couple years for films.

The immediate response to the Great Financial Crises (GFC) 2008, was for the Treasury and Federal Reserve provide massive stimulus and slash interest rates among other measures to stabilize the economy.

Later regulators imposed new guardrails to prevent a similar collapse in the future. In the US, they passed Dodd-Frank (2010), internationally there was Basel III, the net effect was they made it more difficult for banks to lend.

Naturally with near zero interest rates for over a decade, investors were seeking a higher yield and there was no shortage of people looking to borrow. They couldn’t go to banks so they looked elsewhere. Capital market investors filled this void.

These are private equity, credit firms, hedge funds, specialized vehicles including Business Development Corporations (BDCs) (more on those later). The net effect is lending from these institutions grew from $300 billion to $3.5 trillion from 2010 to 2025. This growth has not gone unnoticed.

Private credit has been in the headlines a lot in the past year, but not for good reasons. Many private credit funds or BDCs have come under pressure in recent months, some seeing their share prices plummet >30% since the start of the year.

Drops like this are common in the crypto world, but you rarely it with big names like these. There is a lot of skepticism about the business model, given the rise in interest rates, delinquencies and high exposure to Software companies that have seen their multiples compress dramatically.

This prompts the question: Are we in a private credit bubble?

Keep reading to find out!

If this week’s article does not interest you, please check out some other recent ones:

What’s the Hype With Private Credit?

There isn’t a consensus of what is considered private credit, but if you take the most broad definition, that would be any credit investment that doesn’t trade on a public bond market. That would make the private credit asset class around $40 trillion, but naturally that involves a considerable amount of lending from banks.

What people really mean when they talk about private credit, is the $2-3 trillion dollars of loans, made by non-bank lenders. Much of it is considered sub-investment grade, which carries higher perceived risk but also a higher yield.

The post GFC regulations aimed to make the banking sector more secure, which they did by requiring higher levels of liquidity, reducing banks capacity to lend, especially to riskier borrowers. This created a void that private markets filled.

Most would consider this to be a positive development. Banks lend using customer deposits as their capital base, whereas investors use contributed investment capital. Would you rather a bank take losses on deposits or investment firms lose money for their fund? Almost everyone would say, tough luck for the investors. The few that don’t are those investors and maybe their fund manager.

The GFC bailouts were unpopular but they were deemed necessary, because Bernanke and others, convinced congress the broader economy would implode if banks didn’t receive those funds. The justification were big banks were considered Systemically Important Banks/Financial Institutions (SIB/SIFIs). Other banks and financial actors have since been permitted to fail, because they did not reach this bar.

Regulators didn’t need to pay much attention to private credit because they had not risen to the level of a SIFI. It was a relatively small asset class, holding mostly institutional money which are well diversified and able to sustain losses. That was true then, but now that this asset class is in the trillions, and retail investors are involved it’s a different story. Retail investors can access private credit through BDCs.

A BDC is a publicly traded investment vehicle that operates like Real Estate Investment Trusts (REITs) but for private companies. Shares trade on public markets, and shareholders get dividends derived from any net interest and realized gains. Traditional private credit or private equity funds operate differently. They are closed-end partnerships where investors commit capital for a fixed period, often 10+ years and face more restrictions if they want to redeem early.

(Lloyd Blankfein, former Goldman Sachs CEO)

This distinction is important because close end funds get marked quarterly, whereas BDC share prices can be observed daily. When sentiment turns bearish, you can see it in the share price. This is why the attention is focused on BDCs even if they are only a subset of private credit, (~$500B). Their share prices are taking a beating giving investors cause for concern about the entire asset class.

First Brands Group & Blue Owl

First Brands Group, a private equity backed automotive aftermarket parts company, was financed with many tranches of debt, including from BDCs. They filed for bankruptcy in September. It had billions in outstanding loans, and its collapse, put a lot of selling pressure on BDCs.

The actual exposure of BDCs to First Brands was minor. These loans are syndicated across many firms. Even if they got zero from their First Brands positions, this likely only represented max 1-2% of net asset value (NAV) per lender. The BDC share selloff was driven more by fear and uncertainty about the business model.

Investors have concerns that private credit is highly exposed to middle market private equity backed companies that were financed when interest rates and delinquencies were low. Many of these loans were to SaaS companies that have seen their multiples compress to decade lows. Meanwhile, there are broad market concerns around what AI will do to these type of companies .

Markets are going risk off, and they’ve decided private credit is riskier than GPs claim. Big names in the space, such as Blue Owl, Apollo, Ares, Blackstone and others are down more than 30% since the start of the year.

Blue Owl in particular is drawing scrutiny because unlike these other firms, they aren’t active in private equity and other asset classes. They are effectively a pure play private credit with heavy exposure to BDCs and retail investors. The selling pressure prompted them to limit retail investor redemptions, then sell off ~$1.4 billion in assets to return capital to investors and pay down debt.

Halting redemptions is rarely a positive sign. It worked out for in The Big Short but usually it’s more like Bear Stearns. Their collapse began with trouble in a few of their hedge funds heavily exposed to mortgage bonds. These losses shouldn’t have been problematic but the perception of Bear’s pending insolvency caused a rush of redemptions, ultimately making it so.

With more than $800 billion dollars worth of software equity value evaporating in the last three weeks, that’s a lot of lost collateral. Already stretched companies will need to inject more capital, restructure or default. There’s allegedly hundreds of billions in dry powder available, but will GPs want to throw it at failing companies?

Default rates are already creeping up. Ratings agency Fitch reports US Private Credit Default Rates reached 5.8% in January. This is the highest they’ve seen since they began tracking this in August 2024.

Blue Owl and the other GPs are trying to relieve concerns, but the markets aren’t buying it right now. Is this just a temporary sell off or can this be indicative of a bigger problem for the asset class?

Is it a Bubble?

A bubble is when too much money chases too few assets.

Is there too much money and/or too few assets in private credit? Since 2008 we’ve been living in one of the most expansive monetary regime in history.

The M2 money supply in 2008 was $7.7 trillion. Today it’s north of $22 trillion. The US money supply has historically grown 5-7% annually. It grew >20% from 2020-2021 alone in response to COVID.

This stimulus was felt across asset classes. The stock market reached record highs, crypto was soaring. Private equity, venture capital, infrastructure all saw major inflows. Private credit was also a beneficiary; AUM more than doubled since 2019.

A lot of money entered the system in a short time frame, but it’s not a bubble if there are still good assets to invest in. Are there enough good companies to invest in?

There are more large private companies than ever: 90% of American companies with $100M+ revenue are privately held. There’s half as many publicly traded companies as there were in 1996. Private equity as an asset class has AUM in excess of $10 trillion. There are no shortage of companies to lend to.

This is definitely the pitch private credit GPs are making, but why are so many big companies staying private? Private equity has a distribution problem. The gap between realized and unrealized returns for vintages approaching 10 years keeps growing. They can only recycle investments across funds so many times.

PE firms acquired companies at high multiples, the market currently isn’t paying. If they didn’t feel like they could IPO in 2021 and 2022 during the height of the ZIRP era, what market can they go public in?

Many of the loans were taken out when rates were zero. They aren’t anymore. Some of this debt is fixed and will need to be re-financed, if it hasn’t already and the other part is floating. Companies try to avoid paying higher interest, by restructuring or pushing out payments with Payment In Kind (PIK) loans. Some estimates claim more than half of these private credit loans, contain some sort of PIK conversion. This is good for the borrower, less good for the lender unless the alternative is the borrower defaults. Investors don’t want that, because then they must write down asset values. Lower assets values, means lower returns, management fees and carried interest.

GPs need to constantly raise new funds. If not, the firm will close when their last fund winds down. GPs will do anything to avoid that. They need to always find new investors, which is why firms such as Blue Owl courted retail investors.

The idea of major GPs taking retail capital 5-6 years ago, was considered unthinkable. Top funds were oversubscribed from institutional investors, and each fund got successively bigger. Seemingly too big. This is why suddenly across all private markets, there’s increasingly a push to get retail involved. They wouldn’t be doing this if they had sufficient institutional interest. Considering they haven’t yet returned the previous capital these LPs have given them, they’ve had no choice but to pursue these new investors.

It’s much tougher to raise a new fund if you aren’t one of the top performers. GP are resorting to desperate measures. Stonepeak CEO and chairman Dorrell pledged 50% of his unrealized carry to boost his funds returns. This is not common.

It’s more likely than not that private credit is in a bubble. They aren’t alone though. You can say the same for private equity and most other asset classes. The difference is, that private market firms can ride out these losses, provided they can keep raising successive funds. The Blackstones, Oak Tree’s and Apollo’s will be fine, many of the smaller names can’t survive a bad vintage.

Now that private credit is systemically important, you know that regulators, hedge funds and other market participants will pay much more attention searching for signs this could be a repeat of 2008.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Note to readers: I began writing a more in depth primer on Private Credit then I came across this series of articles by and promptly accepted I couldn’t do better. They go very in-depth for people who want to dig in further. You should also see Private Credit is Lying to You & Private Credit’s Slow-Motion Reckoning by &

Full-blown #REF! errors everywhere. Similar experience to when you ask the MBA associate to update one row of actuals. Just without the tears or over applied cologne. Yet I was still impressed.

Since the release of OpenAI’s ChatGPT in late 2022, we’ve heard endless predictions about AI automating knowledge work. Copywriting. Translation. Coding. Now, with the arrival of Anthropic’s Claude for Excel, the finance function is next.

Don’t worry. Beloved Investment banks, hedge funds and private equity firms won’t go anywhere. So long as long as fees exist, they will too. What will change is the work performed by overworked and underdeodorized juniors.

For decades, junior finance professionals spent countless hours doing grunt work before shipping deliverables to clients. Not without a half dozen pls fixes from seniors first. With Claude, what previously would have taken days and weeks, can be condensed to hours and minutes.

This won’t immediately eliminate jobs but it will shift value from execution to judgment. Building pretty models and slides won’t be enough to keep you employed. Sector expertise, unique insight and intellectual rigor will come at a massive premium. More than it already does.

This is not unprecedented. Before Microsoft Excel analysts had to run DCFs by hand with calculators and paper. Yes paper. Excel did not destroy finance. It compressed time spent on calculations and raised expectations.

Claude for Excel will do the same.

After a week of testing it inside real models, I’ve seen what it can and can’t do. It’s not as good as an experienced finance professional that knows what they are doing, but it’s at least 80-90% of the way there. Will it ever get that final 1%? Only time will tell.

In the meantime, keep reading if you want to learn what Claude for Excel can do and why you shouldn’t hand the keys over to the model completely unsupervised yet.

If this week’s article does not interest you, please check out some other recent ones:

Automation Risk: Computers Changed Finance but Did Not Lead to Mass Unemployment

The introduction of software to finance didn’t reduce employment, it increased it.

If you take a narrow definition of finance, in 1960 there were approximately one million professionals working in commercial banking in the United States. In 2020 there were 1.4M.

Employment has oscillated up and down with the business cycle but that number peaked around 1990. There were around 1.6M then. However, if you expand the definition there are 6-7 million people working in financial services today, millions more than there were 35 years ago.

A similar number will still work in finance 35 years from now. Just the industry and the roles will look very different. For one thing, many back office and compliance tasks, can already be automated. These kinds of roles can represent half the positions within the financial services sector, and many were created since 1990. Largely because of increased reporting and compliance requirements, especially post 2008.

Somebody in 1990 after seeing Microsoft Excel for the first time could not have predicted this. Similarly, most people will point to this capacity to automate as a key driver leading jobs to disappear. People ignore banks fire people and cut divisions all the time, usually for reasons unrelated to technology.

Nonetheless, in the short term, I would expect financial institutions to hire less for existing positions, but over time new roles will be created.

In fact, I predict that within 12 months major financial institutions will begin hiring for teams focused on prediction markets. Given the explosive growth of Polymarket, Kalshi and others, it’s not a stretch to imagine bets might one day get similar coverage to stocks and bonds.

Don’t believe me? Mergers and acquisitions and low grade debt issuances (junk bonds) barely existed before the 1980s. They became bigger fee generators than equity research or public issuances. More recently, private credit has seen its AUM explode from $100B in 2007 to $3.5 Trillion in 2025.

Things can change quickly, so I’m not too worried about Jamie Dimon and the next generation of charismatic bank CEOs.

(If your intern isn’t this deep into the model, they aren’t getting a return offer)

Using Claude for Excel

You need a Claude Pro plan, free one won’t cut it I’m afraid.

Next you need the full version of Microsoft Excel, sorry Google sheets and Numbers users. You shouldn’t be using these to model anyway.

Once you download Claude for Excel, you just need to make sure it appears as an Add-in the top right on your Home ribbon. With that you can start prompting.

To test it, I asked it to build me a fully integrated three financial statement forecast. This is a common case question you get when interviewing for investment roles. Depending on the questions you can get anywhere from 30 minutes up to a few days or even a week to complete, sometimes with an accompanying presentation.

I just wanted something dynamic that balanced. It took only five minutes to complete the task. Without copying from an existing template, there’s no way a human could do it this fast.

At the peak of my powers, I was probably doing this in 20-30 minutes. If I wanted to add scenarios, value drivers and other fancy stuff maybe closer to 45 minutes if I didn’t care about formatting. Naturally most finance hardos use plug-ins like Thinkcell, Macabacus and other tools to help with formatting and manual work but the point remains, being able to do this in 5 minutes is wild.

Yet I was still skeptical, I tried a few other tools in the past year that could also build models in minutes. They worked fine until you gave them real data that wasn’t neatly organized, then the hallucinations would start.

I added a few tabs of raw data pulled from Quickbooks (financials), Ramp (spend data), Hubspot & Stripe (sales & payments), with minimal enrichment. With this, I asked it to build a 12 month forecast across the 3 financial statements. I had done the same exercise a few months prior and it was weeks of work on and off.

Within 15 minutes, during which time I could make a cup of tea and fold some laundry, Claude produced a forecast that was pretty good. During this time it used other tools such as Python to analyze the large quantities of data. The net effect was it outputted something around 10% of what I had forecasted for most values. Keep in mind, it didn’t have context beyond the raw data, which limits effectiveness.

For example, it overstated some expenses because it couldn’t go into Ramp and see that the latest invoice was quarterly not a single month. It also couldn’t have known certain details around accounting adjustments or reversals.

Producing this from a few simple prompts was as good as you could have hoped for. I tried to add a few corrections to get it closer to what I had done, but this started to push the limits of Claude. The formulas weren’t as dynamic as I would have liked. I started to see a bunch of hardcodes and manual in cell calculations, something only noobs would do.

As I fixed some sections, others stopped making sense. I would decrease the projected revenues, but gross margins and sales commissions weren’t changing. Upon closer examination, it’s because these sections weren’t tied to schedules or driven off their own assumptions. Another intern move.

I asked it to make everything dynamic and build out supporting schedules, it fixed some of these errors. After an hour of this, the model wasn’t near finished but it was much further than if I was building it normally.

Next I asked it to build me some dashboards and charts, which it did fast, but the charts were the basic excel pre-built ones and while the dashboards were nicely formatted there was some unformatted data below the tables. When I asked it to clean it up, Claude just hid those rows. Not what I was looking for.

To further test it, I gave it part of a model I built. It was super granular, about 600 rows deep with a lot of formulas, referencing other tabs and multiple scenarios. It was a little bit messy because there were a number of schedules I had built but later decided not to use. I asked Claude to remove rows that were no longer in use, or tied to other rows in the tab.

This is where all hell broke loose.

It took 10 minutes to review the tab, then began to do the cleanup as instructed. It stopped to ask questions along the way and things seemed to be going fine. Then suddenly I saw the #REF!s appear. For the uneducated, a #REF! error happens when a formula is trying to reference a cell that doesn’t exist or you’re using circular calculations. This usually appears when you delete something you shouldn’t, which Claude was in the process of doing.

@fentifriedchickenMBA Interns: the most competently incompetent! #Working #Corporate

Tiktok failed to load.

Enable 3rd party cookies or use another browser

I pointed these out and it took a few minutes to fix them but it created a few more in the process. When I pointed these out Claude started spazzing. It said I might have to refresh the window.

At the moment I noticed in my company Slack page our Head of Operations was asking who breached their limit on Claude? This was a regular occurrence across the team, but usually from devs using Claude Code. I had breached my limit in two hours.

This ended my experiment for now but it was enough to demonstrate what Claude for Excel could and cannot do. It’s great at doing the grunt work in setting up a model, but it’s not ready to run it unsupervised for now. Too often it forgets to ask itself the key question anybody who works with numbers or data for a living should wonder “Do these numbers make sense?”.

This is what separates good decision makers from bad ones. Anyone can see if numbers balance, but figuring out if the output is realistic is what matters. If you are going to make important choices based on what these numbers tell you, they need to. Before making an investment, an acquisition, hiring or firing spree, you need to be as sure as can be.

This is an instinct few junior finance employees have. It takes repetition, experience and a certain generalist skill set to sense when numbers are off. This is rare in most organizations, but it’s likely seen either at the executive level or people with hands on operational experience.

You can train Claude on as many models as you like, but it won’t build this instinct. People with this ability will become increasingly valuable and productive. As they offload more work to Claude, they can spend more time digging into validating key assumptions. Or more importantly, improving them.

This will lower the barrier to entry for areas of finance that were historically reserved for people coming out of investment banking, private equity or consulting. Modeling ability acted as a gatekeeper, which screened out potentially great people with strong business judgment.

With tools like Claude for Excel, that dynamic begins to change. The mechanical barrier weakens. Instead of evaluating somebody on their ability to build a model, the shift goes towards understanding how a business works, and what questions should be asked? The intellectuals among you might even ask if financial models will even be a thing for much longer. The answer is yes. Excel will be the last software to go. It’s the way we use it that will change.

The net effect is smart, hardworking people who understand economics, incentives and strategy can use AI to close the execution gap much faster than before. Modeling skills will be deemphasized and judgment becomes the moat.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Actually, you can extend that to anyone who bought shares since they became public in 2015. Unless they sold during the peak of the 2021 ZIRP era, PayPal is only up 15%.

If you bought and held the S&P over that same period you would be up over 150%. You don’t need to be Warren Buffet to know those PayPal returns aren’t good.

At the current share price, the market is treating PayPal as a relic. A once promising fintech that lost its edge. PayPal isn’t any fintech company though.

They were one of the most important startups of the internet era. It helped invent peer-to-peer payments, defined online checkout, and launched the careers of Peter Thiel, Elon Musk, David Sacks, Reid Hoffman and countless others.

After being acquired by eBay in 2002, clearly nobody who remained at PayPal ever read Zero to One. Instead of aiming to monopolize the online payment space or become the last fintech company, they practically rolled out the red carpet for Stripe, Shopify, Revolut and countless other competitors to eat their lunch.

PayPal’s decline is fascinating because it wasn’t the result of a single bad decision, but a series of incentives, acquisitions, and optimizations that changed the company’s DNA from an innovative fintech pioneer to a boring but secure checkout tool.

Today’s stock chart is the delayed symptom after 20 years of poor choices. It’s a story exemplifies how innovative companies lose their way. PayPal’s fall was avoidable, but the market might be too early to pronounce the company dead.

Keep reading if you want to learn the fascinating PayPal origin story, why eBay’s acquisition might be the most successful botched acquisition of all time, the current payments landscape and if might be a buy at these prices.

If this week’s article does not interest you, please check out some other recent ones:

PayPal’s Fascinating Origin Story:

PayPal could be considered one of the first consumer fintechs and arguably the most consequential startup of the early 21st century.

Founded by Peter Thiel, Max Levchin and Luke Nosek in 1998, with an initial vision of permitting people to send money over their Palm Pilots, they eventually expanded their ambitions to permit people to send and receive money over the internet. What became known as peer-to-peer (P2P) payments. At the time, the main use case for this was eBay, the online auction site that was exploding in transaction volumes. To remove friction, they embedded Merchant checkout buttons (Pay with PayPal) directly onto eBay seller pages (this payments category is called Merchant checkout).

Considering eBay’s own payment options were subpar, they tolerated PayPal at first. PayPal saw rapid growth, but were burning cash quickly. Not only was fraud a big problem, to convince people to fund their accounts PayPal would give them $20. Their margins were thin, so it would take a while to offset this cost to acquire them. This meant, the faster they grew, the more money they lost. This is a lesson most fintech companies continue to ignore.

PayPal soon discovered they weren’t the only one going after this opportunity. Another startup called X, led by Elon Musk, with more funding, was competing for the share of eBay transaction volume. After a few quarters head to head, Thiel and Musk understood that if this continued, the main benefactor to this would be eBay.

They decided to merge the two companies, creating a formidable group. Initially instead of Thiel or Musk leading the combined entity, they brought on former Intuit CEO Bill Harris. There was a clear culture clash, as the PayPal and X people were mostly young developers, while Harris was more of a big company, sales focused guy.

The PayPal and X groups agreed Harris had to go, so Musk replaced him as CEO. Yet this was short lived.

Thiel had stepped away from day to day involvement after the merger but remained a major shareholder and board member. From the PayPal group, Levchin, David Sacks, Reid Hoffman, and several others still played leading roles in the combined entity.

Shortly after Musk replaced Harris as CEO, there were a few seemingly minor but consequential clashes between Musk and the PayPal group. Chief among them were:

1. Musk wanted to discontinue the PayPal brand in favor of X (which he did to Twitter 20 years later). The PayPal group felt they had built good brand equity and X would be associated with elicit content. This could hurt adoption with people skeptical of providing personal information to a website (remember this was early 2000s).

2. The other point was technical. PayPal built on Linux and X was built on Microsoft. Levchin and his team didn’t want to rebuild everything in Microsoft which they felt was slow and clunky and would hurt their release velocity. Musk believed they had to migrate to Microsoft because Linux wouldn’t have scaled.

Neither group was willing to relent, so the PayPal group decided to pull off their second corporate coup within a year. They went to the board to fire Elon and replace him with Thiel. The original X employees were not happy with this but they ultimately stayed on. Musk didn’t like it either but he ultimately accepted it and wasn’t disruptive.

Despite this corporate drama, PayPal continued to grow rapidly and put out great products. Thiel knew the IPO window was closing and decided PayPal needed to go public, which they did in February of 2022 at a valuation of $800 million with annualized revenue of $100M. Only 3 years from launch, not bad.

Their time as a public company was short lived; only a few months later eBay acquired them for $1.5 Billion. There were several reasons why they sold but chief among them was the regulatory uncertainty; they were fine with federal regulators but a rogue state attorney general threatened to bring a lawsuit. They decided the risk of dealing with 50 state regulators would hamper their progress to a meaningful degree. Thiel was already a fervent libertarian, this experience did not temper his views.

By this point, it seemed like he was happy to focus on investing, Musk could use the windfall to launch Tesla and SpaceX and the rest of the PayPal mafia went on to launch most of the key companies of the Web 2.0 era. It worked out.

Few decided to stick around post-acquisition, for reasons that explain the problems PayPal find themselves in today.

(If you want to learn more about early PayPal days I suggest reading The PayPal Wars by Eric Jackson or Founders Fund series by )

The Most Successful Botched Acquisition

PayPal was the exemplary scrappy, nimble startup. Beyond Thiel and Musk who were in their early 30s, mostly everybody else was in their twenties. What they lacked in experience, they made up for in work ethic and willingness to experiment. The team worked seemingly 24/7, and moved quickly. They had to given how fast they were growing. The atmosphere at PayPal was intense, exciting and in full growth mode.

By 2002, eBay was not this. Launched in 1995 by Pierre Omidyar, they quickly became the dominate online marketplace. In 1998, Omidyar stepped down as as CEO and was replaced by Meg Whitman. Whitman had a successful career as an executive at Proctor & Gamble, Bain & Co, Walt Disney and others before joining eBay when they were a 30 person team doing $4M in revenue.

eBay took a big leap forward under Whitman joined, as they expanded globally and become one of the dominant internet companies. Payments were a constant thorn in their side. PayPal’s emergence helped mitigate some of these issues, but eBay didn’t like ceding control to a 3rd party application. eBay tried to introduce a competitive product, but it was bad.

Seemingly eBay was not very good at building products. Shortly after Whitman took over, the priority shifted to platform uptime and stability, not new features. When they acquired PayPal, they didn’t do so with the goal of expanding internet payments but to retain control of their checkout experience. This was felt by the PayPal team.

Instead of quickly iterating on new product or features, they spent their time in meetings going over Powerpoints about work that needed to be done. eBay had a comparatively corporate feel, which felt slow and suffocating compared to what they were used to. Given the choice between supporting eBays product joining one of their friends at a new startup or beginning their own, most of the PayPal employees opted for one of the latter options. Within a year almost everybody from PayPal had left.

While Whitman and eBay achieved their goal from acquisition, they undervalued a critical part of the company: the employees. They acquired a fintech company but let all the people who understood fintech leave. If the PayPal team had stayed together for even a few more years, they likely would have fenced off the market.

Their departure wasn’t immediately felt. eBay’s core business continued to expand along with the internet but as competitive ecommerce offerings emerged, growth began to slow. Whitman left in 2008, to join HP and was replaced by John Donahoe from Bain. By the time Donahoe took over, the belief was that PayPal was more valuable than just an eBay checkout tool but the product was becoming clunky and legacy like. Before leaving in 2015, under pressure from Carl Icahn, Donahoe spun PayPal out as a public company again, which the stock market deemed as valuable if not more than commerce segment. This along with the Braintree acquisition were likely the most memorable highlights of PayPal under his watch.

This is because post acquisition PayPal didn’t release new products. They made some enhancements to existing features and eventually launched a mobile app, but from a user perspective, the product barely changed from 2002 - 2015. Their eventual marquee product came from Braintree: Venmo founded by . Yes the longevity guy. By this time, PayPal was facing stiffer competition across various products from Square, Stripe, Adyen, and even Mastercard & Visa. They had a difficult time building and releasing their own products, forcing them to rely on acquisitions, which they couldn’t integrate into their existing suite.

Former PayPal executive David Marcus, admitted as much in an X post last week. He felt they were quietly starting turning things around between 2012-2014, with the Venmo product being a huge boon for the company. However, after he left, PayPal replaced him with Dan Shulman, who he called a financial operator,. Shulman presided over a number of costly product decisions that would hurt them dearly years later. Basically, they prioritized payment volume over margin or product differentiation at a time where many competitors were innovating.

“The common thread through all of this is incentive design. Once PayPal became independent, short/medium-term predictability beat long-term vision and ambition. Stock performance mattered more than platform risk and network opportunity. Financial optimization replaced product conviction.” —

David Marcus, February 3rd 2026

Despite these struggles, when PayPal went public again in 2015, they did so at a $50B valuation, >30X what they acquired it for 13 years earlier. By this point PayPal was doing $9B in annual revenues, all without meaningfully changing the product in over a decade.

The eBay acquisition was great for the tech ecosystem because of what the PayPal mafia did after leaving, but eBay missed out on the opportunity to dominate the fintech landscape. The combined market cap of the companies started by former PayPal employees exceeds $3 trillion dollars, while eBay’s own core business peaked around 2010.

Fortunately for eBay, PayPal could still grow and command a sizeable valuation in the public markets, reaching a peak share price of $308 for a market cap of $360B in 2021 when fintech companies were commanding premium multiples.

Since then the stock is down more than 80%, trades at barely above 1X revenue and is only slightly above its 2015 IPO price. They just fired their CEO Alex Chriss, also formerly of Intuit and replaced him with former HP CEO Enrique Lores (acting chairman of PayPal). They seem to love ex Intuit and HP employees.

As of early February 2026, the stock is in free fall. The market is valuing PayPal as though revenue has peaked. For some value investors, they look at the stock and see a wonderful opportunity to pick up an established name facing overly bearish sentiment for cheap. Which one is it?

Dead Man Walking or Wolf in Sheep’s Clothing?

PayPal operates in many aspects of financial services but they still generate the bulk of their $32B in annual revenue from transaction volumes. They charge fees to customers or merchants for processing payments. Unlike other fintechs, they have not pursued a bank charter which prevents them from lending off their balance sheet. This allows them to operate an asset light business with less regulatory overhead but it relies on growing transaction volumes and capturing fees. There’s an estimated $2-5 trillion in global payment revenue, but also plenty of competition.

Competition

While PayPal is still one of the most widely downloaded and used financial services apps, they face credible rivals at every layer of the stack.

On the peer-to-peer (P2P) side, PayPal and Venmo compete directly with Cash App and Zelle, both of which benefit from tighter bank integration and faster settlement for domestic transfers.

In online merchant checkout, competition is even more intense. Shop Pay dominates within the Shopify ecosystem, while Stripe has become the default choice for developers and modern internet businesses. Layered on top of checkout are Buy Now, Pay Later (BNPL) providers such as Klarna and Affirm increasingly own the consumer relationship at the moment of purchase, relegating PayPal to a background funding source rather than a front-end brand.

For in-store payments, PayPal has to contend with hardware-plus-software ecosystems like Square, as well as platform-level wallets such as Apple Pay and Google Pay. Not to mention the traditional credit card networks, Visa and Mastercard which still control the rails PayPal relies on.

PayPal is getting squeezed from every direction, and they haven’t been able to respond with enough new and exciting products to maintain payment volume growth. Merchants are starting to abandon them for cheaper and better solutions offered by Stripe, Shopify, Adyen and others.

PayPal still has the leading market share amongst these apps in terms of payment volumes and users but the question is durability. Most estimates say have global TPV grew around 4% in 2025, which is around the same rate PayPal grew. Payments isn’t a fast growing industry, PayPal and these other fintechs are in competition to pull volume away from banks, credit cards and legacy players.

What’s concerning, is that PayPal is increasingly looking like a legacy player. They only had 1% growth on their online branded checkout business, which is a higher margin product. If merchants start abandoning them, their business starts to look weak very quickly. Which begs the question. If their product keeps being viewed as subpar, how much longer can they keep this market share?

Non-Cohesive Product Strategy

The UI needs to be refreshed; the product feels closer to a legacy bank than a modern fintech. I tried using PayPal to send money to a colleague last week and it showed why they are stalling.

It took 8 days to send money from Canada to the US, and I had to abandon the mobile app to send the money via desktop to avoid paying FX conversion fees twice. Not inspiring.

Next time, I’m sending JP the money via a Stablecoin (click here to learn what that is). Stablecoins are a clear threat to cross border payments, which have been a great source of fees for companies such as PayPal, Western Union and banks.

To their credit, PayPal identified this and launched their own a few years ago, PYUSD, but adoption is low. As Marcus claims, “The product is sound but it launched without a compelling transactional reason to exist. PYUSD had distribution, but no organic demand. It was not embedded deeply enough into flows to become a true settlement layer, a cross-border merchant rail, or a programmable money primitive. It sat adjacent to the product instead of inside the core of it.”

PYUSD has a weird value prop. Crypto people don’t want to use a token launched by a fintech. Even for people who don’t mind, it’s less liquid than USDC or USDT, and less widely accepted. As currently construed, it’s not clear why anyone would use it.

If they were focused on driving adoption, they would just embed PYUSD into the background of their product, and use it as their new payment rails for international transfers. They could aggressively cut fees to take a larger share of the market and drive users into a more integrated product stack. This would hurt their own revenues short term but if they aren’t willing to integrate it into the product, why have it all?

This was a common theme with PayPal over the past decade. They would acquire companies for their products but they wouldn’t integrate them. Venmo remains a separate product ten years later. That lack of integration didn’t matter when e-commerce and mobile adoption provided strong tailwinds. It matters now.

(If you want to learn more about payments or the fintech landscape, check out Simon Taylor)

$PYPL Stock Analysis

Today, PayPal is no longer a growth company. In 2025, revenue grew just 4.3%, only slightly above inflation. The stock trades at 1X revenue, which is below most fintech peers at 2.5–4×, and widely below where it was after the sharp multiple compression across the sector since 2021.

From a profitability standpoint, PayPal sits in an interest spot. They have operating margins near 20%, and net income margins of ~15%, which compares favorably against median fintech (8.62% and 4%), but poorly against large banks such as JP Morgan, Goldman Sachs etc., with margins north of 40 and 30%.

You would expect the asset light, tech forward business to be growing faster or have better margins. In the case of PayPal, if they can’t reinvigorate growth, they need to improve their margin and cashflow profile or else they sit in no mans land.

What investor will get excited about holding a low growth, medium profitable fintech that doesn’t pay dividends? At this point, you would only be buying the stock because you think it’s cheap, and it definitely is. PayPal only trades at 6 times operating cash flow, ~5X EBITDA. This trades like a business the market doesn’t think will endure.

Provided their revenue doesn’t immediately start plummeting, at these prices it seems difficult to envision multiples compressing further. At the same time, unless they return to double digit growth, they won’t command multiples close to Shopify or Adyen (~10X sales) either. Those companies can grow 20-30%, with similar or better margins. Therefore, you probably can’t get a great return just waiting for multiples to drift back towards median values.

If you’re buying the stock, you need to have confidence the new regime will find a way to return to growth by driving greater product adoption. Unfortunately, the company has struggled to do this consistently. They have a difficult time launching new products internally and when they acquire companies, it takes too long to integrate them. The constant turnover of executives doesn’t help, and their competitors aren’t going to just let them keep their market share.

Alex Chriss was supposed to be the product focused CEO, but his tenure was short. He promised to shock the world back in January 2024. The world wasn’t shocked, I don’t think anyone even noticed. Now Chriss is being replaced by PayPal Chairman and former HP CEO Enrique Lores. He’s neither a payments or product person.

He might only be temporary but for time being, it seems like they are sticking with a similar executive profile that got them into their current mess. If they are going to turn things around, they need to make some major changes to their product and this won’t happen in a few quarters.

Their other choice is to copy the Private Equity playbook and try to run the business with far fewer than ~27,500 employees to boost profitability. This might help margins but it won’t help growth. Private equity rarely makes products better.

In either case, they can likely keep meaningful share of the market for a few more years, largely because inertia is a powerful thing, but the market won’t reward them with a higher multiple. If you are buying the stock today, it’s not because PayPal has shown anything to deserve it but largely because it’s cheap.

Conclusion

Early PayPal succeeded because it solved a problem no one else could, in a new way. It built a product people needed, that helped propel ecommerce and the internet forward. They prioritized product conviction over short-term financial optimization.

Once acquired, that changed. Preserving existing revenue streams became more important than inventing new ones. PayPal did just enough to defend its position, but not enough to redefine it.

Despite an extended cold streak, PayPal can’t be counted out yet. Scale, distribution, and trust matter in payments, but not forever. Right now, PayPal’s relevance is sustained more by inertia than inspiration.

What happens next will determine whether PayPal becomes a case study in slow decline, or one of the rare incumbents that successfully reinvents itself. That outcome won’t be decided by margins, buybacks, or cost cuts. It will be decided by whether PayPal once again chooses to build something genuinely new, even if it disrupts its own business in the process.

Until then, the stock will probably continue to look cheap.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

The smartest and dumbest people you knew were 100% certain Crypto was inevitable, while everyone in the middle was skeptical.

Since inception, most signals have been on the side of the midwits. Despite massive but volatile price appreciation in Bitcoin, Ethereum and other tokens, there was always the missing killer/wedge use case for Crypto that wasn’t speculating on Crypto. That changed in 2025.

The use case midwits have been asking for arrived. Stablecoins (check here for a primer).

In 2025, Stablecoins moved $33 Trillion in transaction volume all on-chain. That’s ~50% more than Visa and Mastercard combined. There was seemingly endless momentum. Starting with the passing of the GENIUS Act, going public at a market cap of ~$7B and many major banks, payment companies, and asset managers announced pilots, partnerships, and production use cases..

By Q3 2025, Crypto had an estimated $225 Billion dollars in Total Value Locked (TVL). TVL measures the cumulative dollar value of crypto assets deposited into decentralized finance protocols (ex: Lending, Staking, liquidity pools). This only represents 10-15 basis points (0.1%) of global bank deposits. Tiny relative to the traditional off-chain financial system, but an all-time high for crypto.

Despite its relatively insignificant size, there is plenty of reason to expect this won’t be the case for long.

Institutional acceptance has surged to levels not seen in prior crypto cycles. Spot Bitcoin and Ethereum ETFs are now offered by major financial institutions. Banks are accepting BTC and ETH as collateral. Even long-time skeptics like Jamie Dimon have been forced to moderate their stance as clients demand access.

Stablecoins are only the beginning. Prediction markets such as Polymarket are processing billions of dollars using smart contracts on Ethereum. Financial institutions are tokenizing stocks, credit, and money market funds. Many more tools are emerging. The tipping point has been reached.

Not because influencers are going on CNBC or because people are paying six figures for JPEGs. The underlying financial infrastructure of the global economy is being rewired. Regulators are engaging. Institutions are building. Money is moving.

This is not an argument to put your entire net worth into Bitcoin, Ethereum, or whatever token is trending on X this week. It’s evidence crypto is here to stay and the proof is starting to look overwhelming. It’s time to pay attention or have fun staying poor! (I’m sorry I couldn’t help myself).

Keep reading for evidence the future of finance has arrived.

If this week’s article does not interest you, please check out some other recent ones:

Crypto Has Arrived

The main arguments for why Crypto could never compete let alone supplant the existing financial system boiled down to three beliefs:

1. Regulators would never allow it

2. Incumbents would try to block it

3. Consumer won’t trust their money to an anonymous network

For most of Crypto’s existence, these seemed like credible concerns. In 2025, it became clear they no longer are.

Regulators Would Never Allow It

It’s no secret the second Trump administration has taken a markedly different stance toward crypto and digital assets than its predecessor. President Trump started by appointed David Sacks to the newly created role of AI and Crypto Czar, signaling a coordinated federal effort to engage with the industry rather than constrain it.

This represented a sharp departure from the Biden administration, which relied heavily on enforcement actions and informal pressure while declining to provide legislative clarity. Even during Trump’s first term, crypto received little explicit regulatory support. In 2025, it was all systems go!

In January 2025, the SEC rescinded SAB 121 via SAB 122, removing a major accounting and custody obstacle that had discouraged banks from holding crypto on behalf of clients. Its removal materially lowered the barriers for institutional participation.

Shortly thereafter, the Office of the Comptroller of the Currency (OCC) reaffirmed/clarified bank authority for crypto activities. Later guidance confirmed that banks could hold certain crypto assets as principal to pay network fees, explicitly normalizing operational use of so-called gas tokens within regulated institutions.

At the sovereign level, the US federal government proposed a Strategic Bitcoin Reserve and a digital asset stockpile. While largely symbolic, the proposal placed crypto assets into the same strategic conversation as other nationally significant reserves such as Gold and Oil, signaling long-term governmental interest rather than hostility.

This shift has not been limited to the United States. The Dubai Multi Commodities Centre signed a strategic partnership with Crypto.com to accelerate tokenization and global trade infrastructure, embedding blockchain technology into one of the world’s most important commercial hubs.

The most consequential regulatory development, however, was the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, (people just call it the GENIUS Act). Signed into law in July 2025, it established the first federal regulatory framework for payment stablecoins, providing long-sought legal clarity for banks, issuers, and payment companies.

Several other jurisdictions, including Canada, Japan, Singapore and even the EU have since followed with similar regulatory frameworks permitting the issuance and use of stablecoins. Regulators have changed the debate from whether crypto could exist, to how it should be integrated.

Incumbents would try to block it

The establishment made no secret about their dislike of Crypto. Who can blame them? Large banks, asset managers, and market infrastructure providers had too much to lose. Crypto threatened their margins and was born with the ethos to disrupt their centralized business model. They used their considerable economic and political power to stop it.

Yet at the same time, many of these financial players kept a watchful eye on the space. As the technology improved and adoption scaled, there was gradually an opening up and willingness to engage. That’s why it didn’t take long between the shift in regulatory environment to these incumbents willingness to embrace it.

In March 2025, Deutsche Börse’s Clearstream announced custody and settlement services for Bitcoin and Ethereum for institutional clients. This integrated crypto assets directly into regulated European post-trade infrastructure, placing them alongside traditional securities rather than outside the system.

A few months later, Standard Chartered became the first major global bank to offer direct spot Bitcoin and Ethereum trading to institutional clients. By embedding crypto into its existing FX and trading franchise, the bank signaled that digital assets were no longer experimental side products, but instruments worthy of balance sheet support and client-facing distribution.

As market access expanded, crypto also began to scale inside traditional investment vehicles. Throughout 2025, institutional crypto ETFs grew materially, with products such as BlackRock’s Bitcoin ETF attracting large, long-term allocations. Crypto exposure increasingly resembled other allocatable asset classes, held in diversified portfolios rather than traded tactically.

There were seemingly announcements of new pilot projects, Crypto ETF approvals or bank policy changes weekly, each more consequential than the last. Including in October 2025 when JPMorgan announced plans to allow institutional clients to use Bitcoin and Ethereum as collateral for loans. This marked a massive escalation from custody or trading. Crypto was now being treated as financeable collateral, eligible for use in core credit and margin workflows. Not long ago Jamie Dimon was loudly calling Crypto worthless. This goes even further than the bank’s prior acceptance of crypto-linked ETFs as collateral, putting digital assets into traditional lending.

Yet arguably the asset managers were the most eager to embrace the technology either as a tool or as an asset. J.P. Morgan Asset Management launched a tokenized money market fund, MONY, on Ethereum. Meanwhile, Goldman Sachs and BNY Mellon partnered on tokenized money market fund mechanics, bringing blockchain settlement into established asset management and custody workflows. Beyond new products, Bank of America and Morgan Stanley announced their advisors would begin suggesting to its clients to allocate up to 4% of their total assets into Crypto.

These legacy financial players aren’t just allowing Crypto a seat at the table, they are actively trying to partner or leverage it as much as they can.

Consumer won’t trust their money to an anonymous network

The Crypto/Defi user experience in the early days was horrendous. It was everything a person can hate when it comes to using money. The products were unusable at times since transaction fees (gas prices) and speeds were too volatile; you couldn’t be sure how long it would take to send your money and how much it would cost. If you didn’t have enough gas money in your wallet, you wouldn’t be able to execute a transaction. For some chains and tokens you couldn’t receive without gas money. If you had an issue you couldn’t pick up the phone and talk to somebody, you would have to search internet forums or Discord channels for help from FAQ sections. If you sent money to the wrong wallet address, well tough luck. You aren’t getting it back.

I could go on for much longer, but needless to say, this would not work for a mainstream audience. I can’t promise none of these problems exist today, but there has been incredible leaps made in the past few years as products kept improving and Decentralized Apps (Dapps) have proven they aren’t all scams. This has played a key role in making people feel comfortable

Just look at all the capital moving on-chain. Stablecoin usage reached record levels, with roughly $33 trillion in on-chain transaction volume processed during the year. This wasn’t just trading. Real value transfer, settlement, and payments are occurring on public blockchains at a global scale.

At the same time, on-chain participation broadened. Unique wallet activity increased across major networks, with millions of addresses interacting regularly with blockchains for transfers, decentralized finance, and applications. In 2025, there were 246M unique stablecoin sending addresses and 306M receiving addresses. That’s more than just a few drunk Crypto bros on a Friday night.

Trust also showed up through traditional investment channels. Bitcoin and Ethereum ETFs attracted tens of billions of dollars in net inflows with more to come. Seemingly every bank is now trying to launch their own Crypto ETF. These are regulated vehicles held by retail investors, financial advisors, and institutions allocating crypto alongside equities and bonds. ETF holders aren’t just chasing sh*tcoins they see on X.

Now ~30% of U.S. adults claim to own some cryptocurrency, with a much larger share open to owning it in the future. This is massive considering only around 60% of Americans hold stocks. Whatever people agree with the crypto philosophy or not, a growing number are willing to trust it with real money.

This has moved beyond speculation. Meaningful amount of capital is moving on-chain, more wallets are being spun up and an increasing number of people want to hold Crypto.

Although most consumers don’t fully understand how blockchains work, they don’t understand how banks work either (you can find out here). Few people are willing to abandon their banks to go full crypto native but don’t be surprised if an increasing percentage of people’s assets move out of their mobile banking and on-chain. As On and Off-Ramps improve, and Crypto get increasingly integrated with traditional finance products, we won’t know if we are on-chain or not.

This is already happening. Polymarket did around $20B in transaction volume in 2025, the majority of which was settled using smart contracts on-chain. Prediction markets are expected to soar in 2026 and beyond.

All this proves that the original case against crypto rested on three assumptions, and all have failed. What remains is not a speculative experiment, but a financial technology that is increasingly used, regulated, and integrated.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

As we waited in line at my favorite café, one of the few places open, I realized I had a problem. I had left my wallet at home. No cash. Apple and Google Pay disabled on my phone (thank you Edward Snowden). I was empty handed. My dog was just getting comfortable, and it was my turn to order.

So I did something that felt illegal. I asked the barista, someone I see several times a week, if I could have an espresso now but pay for it tomorrow. My own version of Buy Now Pay Later (BNPL), but without interest. I could feel the judgment from the people in line. I was violating an unspoken rule. Hobbes would have been spinning in his grave. To his chagrin, I imagine, the barista said “sure” and made my coffee.

Sitting there, quietly enjoying it, I noted how rare that kind of exchange has become. A business had handed over a good without collateral, without a credit check, without verifying my identity or my ability to pay.

They did it based on trust. Not faith in an algorithm or a payment processor, trust in my character. A belief that I was the kind of person who would come back and make good on my word. Which I did.

Before credit cards and globalization, this kind of arrangement was commonplace. Banks lent to people they knew. Shopkeepers extended credit to regulars. Trust was not abstract. It was local, personal, and built over time.

Since then, trust has experienced Weimar Republic levels of inflation. Financial intermediaries and oceans of data have rendered trust optional. Transactions no longer require character, only credentials. As society has expanded, it has shifted from high-trust relationships to low-trust systems, relying less on who someone is and more on their collateral, capital, and capacity to pay.

This is why a person’s word no longer buys what it once did. Social credit has been replaced by formal credit. Reputation matters less when every interaction is mediated by platforms and scores. The benefits are obvious: more customers. more commerce. Less friction. However, when people believe there are endless opportunities, relationships become transactional. People are interchangeable. Burning bridges feels inconsequential when it seems like there are unlimited crossings.

The modern economy doesn’t care about character, their systems don’t need it. The apathy towards character extended to social interactions as well.

This article will explain how the modern economy, built on the four Cs of Credit Capital, Capacity, Collateral and Character, no longer cares about the latter, and the downstream effects on society.

Keep Reading To Learn Why Nobody Values Social Credit!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

What is Credit?

Credit 101 — The Driver of The Financial System

Credit is the ability to receive something today based on the expectation that you will make good on it later. It is a claim on the future, granted in the present. Exactly like the coffee I received on Christmas Day, that was paid later.

When finance people think about credit, their minds usually go to a company’s balance sheet. How much of a company’s operations are funded through liabilities, obligations that will eventually need to be repaid? Taking on more commitments than you can reasonably fulfill puts you at risk of defaulting on those promises.

Even when a borrower fully intends to repay a loan, many things can happen between the day the loan is made and the day repayment is due. Anyone extending credit understands that non-repayment is a possibility. That’s why, according to finance textbooks, lenders determine creditworthiness with a framework built around four Cs.

Collateral, Capital, Capacity and Character.

The logic is simple, a lender will extend more credit to somebody they believe is more likely to repay them. If a borrower has collateral, the lender can claim it if they default on the loan. This is why when you miss a mortgage payment the bank can kick you out of your house then sell it to somebody else to get their money back.

Banks and lenders don’t have endless time to kick people out of their homes, so they would rather avoid this. Therefore, in addition to securing their loan with a claim on the house, they will do an income verification check, expect the home buyer to own meaningful equity, via a down payment and ensure they don’t have other outstanding loans or a history of defaulting on loan payments.

Lenders can require additional covenants (restrictions) the borrower needs to abide by, but for the most part this is the logic that powers the mortgage market but also the $145 trillion global fixed income market. (We discussed this in How Private Equity Ruins Great Companies)

If a lender has less confidence in a borrowers’ 4 Cs, if the covenants are weak and other claims have priority, they will perceive a higher risk of not being repaid. In turn they ask for a higher interest rate. As the financial system has gotten more developed and interconnected, lenders have increasingly relied on this framework, and other quantitative measures instead of their personal feelings or trust in the lender.

It’s still a factor but financial actors are heavily scrutinized for lending practices by regulators and shareholders. As a result they reduce exposure to creditors with weakness in the other Cs. It creates an uncomfortable dynamic between regulators. Some want to reduce risk in the financial system, others want to reduce income inequality. These two goals can often run contrary to each other; it’s harder for people with limited financial resources to generate wealth if nobody is willing to lend to them. This exacerbates inequality and creates K shape economies.

Unfortunately, character is difficult to measure, audit, and defend at scale. Capital, Capacity and Collateral is not. Modern finance didn’t decide character was unimportant, just inefficient.

Outsourcing Trust

That same logic escaped finance and spread everywhere. In many cases, businesses know little about their customers. Nor do they need to care. Any person can enter a store or restaurant and pay cash. Money is the same to the business. When somebody pays by credit card, the business isn’t paid by the customer. Visa pays the business then it’s their problem to settle the balance with their customers.

Stores don’t need to decide if a customer is worth extending credit to because they’ve outsourced this to the credit card companies. For the cost of 2-3% of this transaction volume, they can get paid immediately. Businesses want to maintain a relationship with their customers, but since it’s credit card companies paying the bills, they don’t need to worry about creditworthiness anymore. Just their purchasing habits and preferences. Whether they have mountains of credit card debt or not, isn’t their concern so long as one of their cards doesn’t get declined.

Some will argue this is a feature, not a bug. Businesses don’t need to stand up entire underwriting departments, make gut decisions or worry about unpaid debts. They can focus on offering their product to customers and that’s it.

Yet without a deep relationship with clients, the exchange is purely transactional. They are a series of numbers in a database, hopefully spending more money over time. This is unfortunately not limited to business relationships, people are increasingly less concerned about who they engage with, since relationships are shorter term.

From Commerce to (Anti) Social Behavior

Behavior follows incentives.

People in big cities have deeper dating pools and can play the field longer before committing. If they are meeting people outside their normal dating circles, such as through dating apps or at a bar, they don’t feel like there are consequences if they break things off in an abrupt or rude manner. Such as ghosting.

Ghosting is when somebody unprompted stops responding to your messages. This mostly happens in a dating context but can also happen in other settings. Such as when you try to talk with your boss about a pay raise or promotion.

Ghosting has become so common in the dating world, almost everyone has been on the receiving or delivery end. Although it’s rude and cowardice, it has become par for the course.

Since you can easily avoid the confrontation by hiding behind technology, most choose to evade an awkward or uncomfortable conversation. Instead of being honest about why they no longer want to pursue their entanglement further, its easier to let the other person jump to their own conclusion. There are rarely consequences for this. While there are apps such as Tea or Are We Dating The Same Guy this hasn’t made ghosting or infidelity any less common.

This is because behavior is driven by attitude which is shaped by beliefs. If somebody doesn’t believe there is anything wrong with being rude or unethical, they will behave accordingly. The only thing that can keep them in line is consequences.

As we increasingly live in a consequence free society, it stands to reason there isn’t much keeping people in line. They don’t feel like their word has much value since in a transactional world, you can get by with Capital, Capacity and Collateral. In the dating world, singles might have a slightly different underwriting criteria than banks but nonetheless, character or being considered a good member of their community is often deprioritized (we discussed this in Is pretty (male privilege) a thing?)

The Death of Character: What Comes Next?

In the TV Show Black Mirror, a popular episode Nosedive depicts a world where society runs on a social credit system, each citizen gets a rating between 1-5 stars, with each interaction rated like a Uber ride. People with higher ratings get access and privileges, the others do not.

You don’t need to know if somebody is a good citizen or not, you can just look at their rating. Your Character has become quantified into metrics, like Capital, Collateral and Capacity. You don’t need to trust people anymore, since trustworthiness can be demonstrated through a higher score.

Naturally this will prompt people to focus on optimizing their reputation, instead of consistently doing the right thing. Choosing to spend hours perfecting their Linkedin or Instagram profile to look high status instead of just being a respectful and interesting individual.

Unfortunately, these kinds of people get rewarded. Cringe Instagram influencers get plenty of sponsorships, not to mention exclusive invites. People posting awful engagement bait on Linkedin get their profile viewed more, heightening their status and affording them more opportunities.

You keep seeing this type of engagement hacking because it’s incentivized. If it was punished or ineffective it would go away quickly. That’s why the only way to save social credit is to bring back scrutiny and consequences. Who would be against demerit points every time an influencer posts a selfie, or somebody posts a photo of their passport on their lap trying to “discreetly” show they are in business class/flying private? That will get people to fall in line quickly.

Although, the social credit system idea brings promise, human rights advocates worldwide have been unhappy with China since they implemented something similar in 2018. Even if in China people are more supportive (apparently).

The Death of Character

The value of character quietly disappeared because it was priced out. New systems which are helpful to outsiders hurt familiar people.

People don’t feel like they can rely on character alone, so it doesn’t offer them much value. Should we be surprised when people stop cultivating it? We’ve been rewarding signaling over substance, optionality over commitment, performance over consistency.

The coffee shop exchange felt weird not because it was generous, but rather it relied on something we’ve engineered out of business. Trust without verification now feels reckless. Yet, it’s the only thing that made social credit meaningful in the first place.

It’s more important than Capital, Capacity or Collateral. What good is lending to somebody with plenty of money, if they have no intention of ever repaying you? If they think ghosting is an appropriate mechanism, good luck collecting on your outstanding obligations. We’ve ironically taught people to focus the least on the aspect that matters the most, creating a society that increasingly trusts each other less because they don’t feel like they need to.

Will interactions like the one I had at the cafe go completely extinct or is will there be a resurgence of the value of character? Would you accept trust as a currency?

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Nothing shatters that image faster than a humbling moment that forces you to accept you might be less capable than you thought. I had such an experience this weekend.

Our space heater stopped working just before my in-laws were to arrive for the holidays. Eager to get it fixed, my wife called an electrician while I was traveling. He quoted over $1,000 for what he claimed was a ten minute job.

Unwilling to pay that price, she decided to wait until the man of the house returned, expecting I would be up to the task. Nobody would confuse me for blue collar but I’ve accomplished things in my life. How hard could changing a space heater be?

We went to Home Depot and bought a similar unit. While unboxing it, I noticed the instructions were missing, but that didn’t discourage me. I began by removing the old unit from the wall with my bare hands. I tried to gently separate it from the wall mount. I blinked, and suddenly the entire unit, along with the mount, was on the floor, surrounded by a small mound of drywall.

Was I unaware of my own strength? Perhaps it had been poorly installed. In any case, the old unit was off, but now there were some exposed wires. None of them seemed to match the heater we just bought. I consulted ChatGPT. It was unhelpful. So I turned to an even more knowledgeable source. My dad.

My father also spent his career in white collar roles, but he usually knew how to fix things. If not, he knew enough to call a professional when it was needed. He came by the next morning and confirmed a component was missing but after a few hours of work, we managed to install a new heater.

Standing around pleased with ourselves, we then realized the second heater had stopped working. It turned out it was designed to operate in tandem with the unit I ripped off the wall. The replacement was not compatible. The job, it seemed, was less finished than we thought.

Nonetheless, I was grateful for my father’s help. As I reflected on the experience, I wondered who I would have called if he hadn’t been available. The overwhelming majority of my friends are like me, white collar professionals and relatively new homeowners. Those of us that own our homes.

Some are more handy than others, but none would describe ourselves as confident when it comes to home repairs. Some can manage basics, minor installations, hanging paintings, that sort of thing. I have other friends that I genuinely wonder if they’ve ever changed a lightbulb? Some probably think a Phillips screw is a wrestling move.

Is this just my circle, or do Millennial and Gen Z know less about home repair? Ask any old person or the internet and the answer is obvious. My research indicates the answer is less straightforward.

Keep Reading To Learn If Young People Are as Useless as Old people say!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

Are Millennials and Gen Z Less Handy?

The answer is unclear. There is conflicting data and reports but the general anecdotal consensus appears to be that Millennials and Gen Z are less involved in home repair and maintenance compared to Boomers at the same age.

There isn’t one conclusive explanation as to why. Reddit will suggest some combination of lower exposure, confidence and willingness. Whether these are valid or not, the belief is that young people are less likely to be involved in home maintenance compared to previous generations at the same age.

The elderly agree. Ask any grandparent and they’ll probably whine about how young people are overly coddled. While they were forced to walk uphill to and from school each day, their children had to be dropped off by car. After a few whiskeys they might mumble that men haven’t been the same since Vietnam while they drift off in front of a Ken Burns documentary. Who is to say which truth is more valid?

Although I’m not convinced by the data, if we assume this is true, some part of this could be explained by the higher proportion of millennials and Gen Z attending university and working in white collar roles. If fewer people work in professions requiring some type of manual labor, home repair knowledge would have to be self taught or from friends/family members. If each successive generation does less manual work than the previous one, it becomes harder for this information to get passed down. This is why despite vastly more access to information, the average person knows way less about farming than our ancestors.

Although with plenty of Do It Yourself (DIY) Repair sites, Youtube and now ChatGPT, it should be easier to take care of household repairs. Anyone with an internet connection, can access a step by step guide for minor repairs. They just can’t physically stop you if you are about to drill through a pipe or set your house on fire.

That is, if it’s even your place. Young people are far less likely to own their homes than Boomers or Gen Xrs at the same age. Millennials and Gen Z are generations of perpetual renters, and attempting a repair might not be worth the risk. If there’s a problem, it’s technically the responsibility of the landlord. If the renter messes up attempting a repair, they lose their deposit. They take all the downside risk, while saving money for the owner, none of which trickles back to them.

Adam Neumann believes the solution is to make renters feel like owners. Except his version does not include giving them any equity. Following his departure from WeWork, he launched another real estate startup called Flow. Flow acquires and rents out apartments to tenants. They use some buzz words related to technology to justify software valuations but from all intents and purposes, they seem like a commercial residential real estate firm. Where have I seen this before?

In any case, Flow believes by bundling apartments, amenities and the concept of a community, renters will want to make their own repairs.

“If you’re in an apartment building and you’re a renter and your toilet gets clogged, you call the super,” . If you’re in your own apartment, and you bought it and you own it and your toilet gets clogged, you take the plunger. That’s the difference, when feeling like you own something.” — Adam Neumann, 2023

Neumann was mocked when he made this comment a few years ago but whether you believe renters would want to fix their own toilet or not, investors had enough confidence in Neumann to invest $350M. A16z made another follow-on investment earlier this year, bringing Flows valuation to a reported $2.5 Billion.

Before Flow launched, there were already rent to own startups such as Divvy available on the market. They provide renters with ability to build equity or eventually purchase their rental apartments. Divvy was acquired for around $1B earlier this year, well below its peak valuation north of $2B in 2021. Therefore Andreessen must believe Flow’s approach has significant upside.

In any case, virtually everyone will be a renter at some point in their life, but pawning off home repairs on the landlord should only be a temporary solution. Yet the median age of first-time home buyers has climbed from 28 to 38 in the last 30 years. With young people having a more difficult time purchasing homes, and more believing they will never be owners, are they incentivized to ever learn?

What about the people that manage to become homeowners? Surely, it’s too expensive to hire a professional for every small job, why aren’t they willing to fix things like their baby boomer parents/grandparents? Were the boomers built different? I’m sure they would like to think so but perhaps the problem has nothing to do with home repair, but rather a disconnect between the realities of each generation.

Men and women face different challenges, and spend time differently than their elders. With technology we don’t need to spend half of our day maintaining the house; the dishwasher and washing machine save us countless hours. Although your old fashioned Italian Nona might not like it, childcare is no longer exclusively a female responsibility. Men and women are more involved in child rearing than ever before.

Older generations may not view this as work in the traditional sense, but it’s an enormous time commitment. Between spending time with their children or patching drywall, parents prioritize their kids. If something has to give, it’s often the infrequently utilized skill that can be outsourced, delayed, or ignored until it becomes unavoidable.

This creates a distorted comparison. Previous generations remember the skills they developed but forget the time and social structure that made acquiring them easier. Today’s younger homeowners might not know how to repair a wall, but they are navigating dual income households, higher career intensity, longer working hours, and a parenting culture that demands constant engagement. Oh! and how to save a file as a PDF. The skills that get rewarded have changed, even if the nostalgia has not.

Every generation believes it faced tougher circumstances because it lived through them. Everyone else’s struggles are theoretical, filtered through anecdotes and selective memory. It is easier to believe we were uniquely capable than to accept that circumstances shape competence. Skills follow incentives. When the world changes, so do the skills that matter.

So no, young people are not useless. They are simply optimized for a different set of problems. I will continue to call my father when something breaks, and neither he or you should judge me for it. If adulthood is defined by self sufficiency in all domains, then no generation has ever truly qualified.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Yet millions of copies get sold each year, mostly to sit on somebody’s bookshelf to try to convey to people they are literate. These books could be empty for all these people know, since most remain unopened. In many cases, they are better off that way.

I’ve had to suffer the indignity of taking the time to read them to confirm this was the case. I could have used some of that time instead re-organizing an elaborate book shelf, to convey status during Zoom meetings. I can’t help it though, I like to read.

Last month I released the books I read in 2025, the ratings are good, largely because I’ve started abandoning bad books early, and I don’t include them on my lists. By chance I happened upon a book in a London book store that made this excavation worthwhile.

Roald Dahl is known for Willy Wonka, chocolate factories, and children’s stories. Near the end of his career, he decided to write a novel about erections and artificial insemination. What was meant to be humorous fiction turned out to contain more genuine business insight than most business books or articles (even on Substack). Dahl’s protagonist, Oswald Cornelius understood incentives, product-market fit, pricing power, and strategy better than most venture backed founders today.

Keep reading if you want to learn these business insights from a fiction legend !

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

Who is Roald Dahl?

If you don’t think know who Roald Dahl is, you are wrong. If you can read in English, it’s hard to believe you are not familiar with some of his works. Willy Wonka and The Chocolate Factory was not a documentary, it came from Dahl’s imagination. As did The Gremlins, The Fantastic Mr. Fox, The Wonderful Story of Henry Sugar and many more.

Even if you haven’t read his original works, many of his stories have made it to the screen. Wes Anderson alone has adapted several of them. Dahl’s style is dark but mischievous, grotesque and imaginative, yet still sharply observant. His ability to create worlds that mix the fantastic and the realistic, filled with characters you can simultaneously love and hate, is unique. His children’s stories entertain kids and quietly humour parents.

Born in 1916 in Wales to a family of Norwegian immigrants, he lost his father young, but there was enough money left for Roald to attend reputable British boarding schools. He was a fighter pilot in WWII, spending time in different parts of Africa, Egypt, and Greece. He then became a diplomat, living in Washington alongside other British literary figures such as Ian Fleming (of James Bond fame) and David Ogilvy, helping promote British interests and counter the America First mentality of the time.

He began writing seriously during WWII, during his time as a pilot, with “A Piece of Cake” (originally titled Shot Down Over Libya) published in the newspaper in 1942. He didn’t really reach major notoriety in the 1960s with the release of James and The Giant Peach and Charlie and The Chocolate Factory. He was a prolific writer, publishing 50 books and nearly 100 short stories up until his death in 1990.

Despite his prowess as a writer, his legacy took a hit because he was a raging antisemite (and not in a fun way). Over his life time he gradually went from being critical of specific Israeli policies, to hating all Jews. He wasn’t discreet about it either. Looking at some of his quotes from magazine articles, you would have a difficult time discerning if it was Dahl or Kanye West during his latest bi-polar episode. At least that was in the past and jews no longer need to worry about discrimination1.

Beyond his problematic views on Jews, his frequent lack of seriousness, bordering on immature behaviour, cost him other honors, including knighthood. This robbed him of acclaim his incredible talent deserved. Nonetheless, he remains a legendary fiction author with vast range and life experience, which allowed him to write on an extraordinary variety of topics, including those explored in My Uncle Oswald.

Short Book Summary

Spoiler Alert. If you plan to read the book you can skip to the next section which only contains light spoilers.

My Uncle Oswald is presented as Roald Dahl recounting the journal of his fictional uncle, Oswald Hendryks Cornelius. Oswald describes his adventures galivanting across Europe, meeting women, and building a business empire predicated on erections. Yes, you read that correctly. Young Oswald learned early what the modern pharmaceutical industry would later discover: there are billions of dollars to be earned in supporting male reproductive health (and women benefit too).

As a 17-year-old enjoying a gap year in Paris, a chance encounter with an acquaintance of his ambassador father cuts Oswald into a secret. The secret was that if a certain Sudanese insect was consumed, the consumer would be overcome with lust and experience substantial growth in the loin region.

A curious and enterprising lad, Oswald immediately went to Sudan to track down the insect. He procured a major quantity of the powder and brought it back to Paris. After getting it into pill form and testing its potency, he shared samples with a few diplomats. Needless to say, it was a smashing success.

These diplomats were banging down Oswald’s door for more and happy to pay any price. Word spread quickly in their circles, allowing Oswald to amass a sizeable fortune. When his gap year ended, he went to Cambridge, but his education and fun were interrupted by World War I. When it ended, he returned to resume his studies. Before he could continue with his pill business, his professor let him in on another secret: a scientific discovery not yet public. Artificial insemination. His professor planned to use it to help his brother breed good horses. Oswald had far more ambitious breeding plans.

He believed that wealthy women would pay enormous sums for the sperm of world-famous men such as artists, scientists, royalty, and business leaders. The appeal was the hope that their children might inherit the talent or prestige of these men.

His professor was skeptical. With the help of his partner, Yasmin Howcomely, Oswald created a scheme to obtain semen from celebrated men across Europe. Yasmin seduced the targets, Oswald collected the results, and the professor processed the material for future customers. The operation grew quickly, and the team prepared to expand to the United States.

Yet the travel and hard work involved in extracting the semen began to take a toll on Oswald’s partner. She demanded a month-long break before setting off for America. When the month was up, Oswald returned to discover she had stolen the sperm and ran off with the professor, cutting him out of the deal.

Oswald realized he had been had but decided to revert to selling the erection pills, which once again helped him amass a major fortune.

Oswald Cornelius: Europe’s Warren Buffet?

“Every great business is built around a secret that’s hidden from the outside.” — Peter Thiel

Oswald did all the right things for someone looking to start a successful venture. After learning of a secret hidden from the world and understanding how valuable this discovery could be, he did not hesitate. He immediately headed to Sudan to seek it out for himself.

He believed that a product capable of producing such intense lust would be valuable to many men. He first tested it on himself, then validated demand with a small subset of his target market: rich, middle-aged men. The fact that they were banging down his door, completely price insensitive, and telling others about it validated Oswald’s hypothesis. He had found Product Market Fit.

The product was flying off the shelf at any price point. Without advertising, he sold it at outrageous margins, and every buyer tried to purchase as much as possible. He had virtually no overhead and was operating at close to a 90 percent profit margin.

While he never scaled his small venture into a large enterprise, he did not need to. With profits that high, it would not take him long to amass a large fortune. Since everything was done discreetly, he could avoid declaring taxes. If he continued on this trajectory for two or three years, he could have reached a level of wealth that would allow him to live off the interest alone. He was the ultimate solopreneur.

Yet instead of milking this for what it was worth and scaling up the operation, he tried to pivot to a potentially more lucrative endeavor: famous person semen. However, unlike with his first venture, Oswald invested heavily up front before commercializing anything. Galivanting across Europe, staying at the Ritz Carlton, and eating at Michelin-level restaurants for weeks at a time gets expensive. If you do not believe me, try it yourself, just don’t ask me for reimbursement. This is without factoring in storage costs and other operational overhead.

While Oswald was confident there was a market for famous person sperm, he did nothing to validate it or prove willingness to pay. He did all this work without speaking to any customers. For all he knew, the price they would be willing to pay might not justify the effort or investment. In essence, he abandoned a proven and lucrative boner-pill business to pursue a risky and unproven sperm venture long before he needed to.

There was no competition, growth showed no signs of slowing, and he had not come close to saturating the market. Oswald owned a money-printing machine with minimal overhead but temporarily abandoned it for a riskier venture that had similar upside but perhaps a deeper moat. In exchange for this moat, he had to rely on partners, which split the profits, and they eventually decided they did not need him at all. He never had this issue with the pill business. He could run it himself or at least without equal equity partners.

This is the conclusion he eventually reached. Scaling up the pill business made him a very wealthy man, and he did not need to sleep with any kings or poets. Some would call that a plus. Although Oswald did not get to profit from the semen business, his partners did, and he still managed to amass his own fortune. It appears that things worked out best for everyone. It was a perfect capitalist outcome. A group of upper-middle-class bourgeois types extracted money from the very wealthy and became the very wealthy themselves. Roald Dahl understood this and perfectly captured this dynamic in a laugh out loud story, teaching the young and old how to amass a fortune, and have fun while doing it.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

As the music built, the leader shouted, asking for a final seance. She counted down from ten, the room erupted, and then everything dropped into silence. Some people let out a primal roar. Others collapsed onto the floor.

I just finished my first Barry’s Bootcamp class. I missed the memo about the matching sports bra and shorts uniform, but otherwise I did fine. For such a simple format, treadmill intervals plus weighted floor work, it delivered a solid workout to the 40 or so participants that Sunday morning. Not everyone staggered out gasping, but the structure lets anyone dial with the intensity, from first timers to elite athletes.

What really stood out was the culture. The waiting room walls were lined with photos of members who have completed 100, 500, even 1,000 classes. They remembered birthdays. They wrote handwritten notes for newcomers. It is all part of the Barry’s formula. Build a community that feels supportive, slightly obsessive, and just cult-like enough to make it hard for people to quit once they start.

Now, I’m in a pretty good place in my life and not feeling like I’m missing something, so I’m not a prime candidate to join a cult or organized movement. It was a decent workout but not revolutionary, so their siren song was ineffective on me.

Which begs a few questions. How did a simple workout class become a global fitness phenomenon? Surely, there business model can’t be entirely reliant on preying on impressionable fitness enthusiasts looking to fill a void (or can it?). What propelled Barry’s from a small studio to one of the leading brands in the boutique fitness industry? Is the workout actually good, or is it just hype?

Keep reading to learn the story behind Barry’s and if it’s worth checking out!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

Origins of Barry’s Bootcamp

Barry’s began in 1998 in West Hollywood, long before boutique fitness chains were a thing. There were large chain gyms and some individual studios but beyond bodybuilders and powerlifters, people definitely didn’t make workouts a part of their personality the way they would for fine dining, clothing styles or travel destinations.

The founder, Barry Jay, was a fitness instructor in Los Angeles that saw an opportunity. Gym classes were missing something. They were either all cardio or all weights, which would get predictably stale for even ardent fitness enthusiasts. When you would find a class with both, the atmosphere was lacking. This prompted high turnover, making it difficult to cultivate a community feel.

Jay believed there was room for something more intense, and communal. Something blending the best of personal training with the motivation of the group fitness environment. He partnered with John and Rachel Mumford, and the three of them launched what would become the first Barry’s Bootcamp.

The original studio looked nothing like the polished Barry’s locations you see today. It was grungy and leaned into the military bootcamp theme. Camo wallpaper, netting on the ceiling, and participants were given dog tags after classes. Joining the actual army is hard, but for an hour you can get some of the fitness benefits. It’s not all fun in games, the lightning sucked back then, making it difficult for good Instagram posts.

Beside the gritty aesthetic, the workout format itself was novel. Barry’s combined treadmill intervals with floor strength work in rapid rotation, using high-energy music, red lights and a drill-sergeant-style instructor. The idea was simple: hit every major muscle group, spike your heart rate, demand total focus and give people a feeling that they had survived something meaningful together.

The timing was perfect. Barry’s was part of the wave in the late 90s and early 2000s that saw many concepts take off and form what would eventually become the boutique fitness boom. Whether it was SoulCycle, Crossfit or CorePower Yoga, people were looking for specialized classes rather than generic gym memberships. Group classes were getting more creative, and fitness brands were starting to embrace personality, identity and community. Barry’s was one of the first to understand how powerful that combination could be. Instead of selling access to a room with equipment, they were selling an experience. Barry’s was closer to Soho House than 24 Hour Fitness.

Barry’s was exclusively an LA and eventually a California thing until they expanded to New York in 2011. The NYC studio helped transform Barry’s into a national trend. It proved the model could work even in markets saturated with gyms and fitness concepts. From there, Barry’s expanded to Europe, starting in Norway, before opening in other major cities. The brand gradually shed its military decor in favor of a more premium, early 2000s Enrique Iglesias music video nightclub-style design. They kept the original red-room but made things more contemporary and Instagram pic friendly.

By the early 2010s, Barry’s had become a blueprint for modern boutique fitness. It validated there was a large market for people willing to pay premium prices for high-intensity classes in exchange for results and a community. The format didn’t change much from the original studio, but the audience became global. It turned out, it’s not only West Hollywood types that loved the combination of intensity and social connection it created. Barry’s became a culture, a ritual and for many people a defining part of their identity. In a pretty annoying way.

Is It a Good Workout?

Short answer, yes. If your goal is fat loss, conditioning or general fitness, doing Barry’s consistently will get your heart rate up, burn a lot of calories and build a decent amount of muscular endurance. The combination of lifting and treadmill intervals is effective. Because you alternate between the two, you can push harder during the running segments than you would if you were only running for a full hour. It is a form of HIIT whether they describe it that way or not.

The strength portion is high rep with relatively light weights. It will not make you explosive and it will not make you huge, but it does help with muscular endurance and basic strength. People who use Barry’s as their primary workout are usually not very muscular, but they tend to be fairly lean with good conditioning. That is exactly what the format trains you for.

Ignoring the economics, depending on your goals, Barry’s is best used as a 1-2 day per week supplement to an existing strength training and cardio program. There’s declining benefits to exclusively HIIT style workouts every day, especially if it comes at the expense of strength or other types of training (like Pilates, which is definitely not just a girl exercise). The problem, which is not specific to Barry’s, is that these boutique fitness concepts are cost prohibitive on a per class basis (anywhere from $30-60), so people opt for the monthly memberships (closer to $150-400). To justify spending this much, need to go almost every day but then they aren’t exposing themselves to other kinds of training formats. Ideally you should be doing a combination of different workouts, to have a well rounded fitness regiment.

That said, compared to many group fitness classes or the average workout most people do at a big box gym, Barry’s is a major upgrade. You get a full hour that includes both full body strength and real cardio. It’s effective enough that tens of thousands of people use it as their primary fitness routine, which has helped turn a local Los Angeles experiment into a global business.

Business Takeaways

Running a Barry’s Bootcamp location is actually pretty simple. Most in North America are corporate owned but there are franchise locations in other markets. Whether these locations are corporate or franchise owned, setting one up carries meaningful setup costs (renovations, equipment etc.), which easily runs into the high hundreds of thousands to low millions of dollars. Otherwise, expenses are predictable once the location is open.

The major item is going to be rent; Barry’s Bootcamp locations are generally in downtown cores or luxury areas within major cities, which carry high costs. This is a fixed expense, which can run anywhere from tens to hundreds of thousands per month. This along with the setup costs are going to be one of the primary variables that will decide if a location will be profitable or not. If setup costs run out of control and the location costs millions of dollars each year in rent, the location needs to be overbooked almost immediately to justify the investment.

The other major expense is staffing. Barry’s needs at least one instructor per course and a few other support staff to check participants in, make smoothies and clean up between courses. Besides that, equipment needs to be replaced every now and then but unlike big box gyms, Barry’s only has treadmills, dumbbells, step boxes and bands. With the exception of the treadmills, these don’t cost very much and don’t require maintenance until they break, which can be years.

The treadmills they use are Woodway, which are the best. Although they are expensive, they can handle a lot of wear and tear, and have long guarantees. The assumed depreciation is closer to 5-7 years instead of the usual 2-5 for standard treadmills getting such heavy usage in a commercial setting. This difference in useful life doesn’t save money from a capital expenditures standpoint, at best it will be approximately the same. The reason they make this investment, isn’t even to justify a premium price point, it’s because they lose potentially thousands of dollars for every day a treadmill isn’t operational.

A single drop in class typically costs between $30-40 USD (the sports bra is sold separately), monthly memberships can range from $200-500 depending on the location and frequency. There are between 30-50 places in each class and 5-7 classes per day, capping participation at max 2,450 per week. Assuming each class is full and everybody does drop in classes, which is unrealistic, their maximum revenue from classes is ~$100,000 per week. Since half the participants start on the treadmill and the other half on the floor before switching places, if a treadmill is out of order for even one day, that’s 14 lost class positions.

Not only would they miss out on drop ins, but also other spending on smoothies, apparel etc. If members can’t find enough available slots, they downgrade their membership and/or look elsewhere. This is not what the Lord Barry wants. If people are to get fit and find sense of community, it better be at Barry’s or nowhere else!

In all seriousness, it’s important for them maximize capacity because each additional person they can fit in a class flows directly to their contribution margin, getting them closer to profitability. A successful location can generate in the millions of dollars per year, but that’s predicated on them keeping their classes full; this isn’t like Planet Fitness where people keep their membership even if they never go.

Barry’s is now majority private equity owned, so you know they are going to want to maximize profits, even if it means diluting the brand. In the investment’s press release, they announced aggressive expansion plans, confirming these concerns and that Private Equity Ruin’s Great Companies.

It would be a shame, since there are no shortage of boutique fitness studios trying desperately to replicate the devotion and financial success of Barry’s. New fitness concepts pop up all the time, but most come and go faster than a hyped Netflix series. Barry’s has not only helped built the category, but they are still among the leaders nearly 30 years later.

For now at least, the cult lives on and you be certain if you pop into a Barry’s studio anywhere in the world, you can be greeted with flashing lights, loud music, screaming, matching outfits, a good workout and great community.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

If you regularly blow money on trips to Las Vegas or things you see on TikTok, this is probably a common feeling. Assuming you still bother to look at your bank accounts. However, if you have some income and pay back even a small amount of your outstanding debt, financial institutions will be happy to extend you credit for a while. This does eventually run out though, especially when the economy starts to slow.

These days, governments look more like the person waking up from Vegas benders and TikTok shopping sprees. Even if they will both argue the money was well spent.

Since COVID public-debt burdens have surged to levels previously reserved for major wars. Advanced economies now routinely carry debt-to-GDP ratios exceeding 100 % or more; but continue to run major budget deficits with no end in sight. Emerging markets are also under pressure and their borrowing costs are rising.

The question looms: how will these countries get out of this debt? This isn’t the first time countries have gotten into debt trouble, how did they get out of it? In this article I examine the current debt situation, revisit the last era when debt was this bad (post-World-War II), analyze how countries got out of their financial trouble and what I expect will be the likely outcome.

Keep reading if you want to learn how Governments will get out of debt !

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

The Current Debt Situation

It’s really bad. The longer the wait, the harder it will be to get out of it. Getting debt back to manageable levels will not be easy peezy lemon squeezy. It will be lemon difficult, difficult, difficult.

Virtually every advanced economy is carrying a massive debt burden and running meaningful deficits consistent with a prolonged war. You don’t need to be an economist to understand this a bad combination. Few politicians care. Austerity is unpopular, and it takes courage because even suggesting the notion can cost careers.

Look at France. Earlier this year, former Prime Minster François Bayrou, proposed a budget calling for substantial spending cuts (~€44 billion). France still would have ran a large deficit (5.4%), well above the EUs deficit limit of 3%, but at least it was lower than the 2024 budget (6.1%). His colleagues responded to his proposal with a motion of no-confidence. He lost and resigned. France has yet to pass an updated budget, meaning they will continue to with the an extension of the 2025 budget.

(Canadian net debt appears low because the major pension funds hold over a trillion dollars in assets)

The French aren’t alone in their reluctance to rein in deficit spending. The US is projected to run a deficit above 6% in 2025. Many European countries will exceed the 3% deficit limit. The emerging countries with lower deficits mostly do so because capital markets prevent them from borrowing more. This is a global problem.

(This chart shows estimates for 2024 compiled mid-2025)

Advanced economies have previously carried public-debt to GDP ratios exceeding 200%, but this was usually after events such as WWII. The current debt was used not for war, but for stimulus after The Great Financial Crisis and COVID-19. The low interest rate regime throughout this stretch masked the budgetary burden, but as debt levels and rates have risen, so has interest service costs. Now interest payments on this debt are becoming one of the biggest line item, on par with military/defense, healthcare, social security/retirement pensions, costs people care a lot about.

(This is for the US as of July 2025)

This has been a growing problem for years politicians have tried to ignore or dismiss. Perhaps they can continue with this approach for longer but without some eventual intervention, it won’t be long before major economies enter a debt burden trap, they won’t be able to get out of. This won’t be a country like Greece or Venezuela, this could be multiple G8 countries.

This prompts the question, how have countries previously gotten out of major debts?

What has Worked Before?

After WWII, government debt in advanced economies reached levels that make today’s numbers look like child’s play. In the UK, public debt peaked at roughly 270% of GDP in 1946. By 1971, it had fallen to about 50 percent. The US followed a similar trajectory. American government debt was about 106% of GDP in 1946, but by 1974 it was down to 23 percent.

Modern politicians willing to acknowledge the matter, target “waste.” Elon Musk and DOGE style efficiency campaigns argue that cutting bureaucratic fat can save billions. Maybe so, but even the most generous estimates of their efforts were drowned out by the trillions poured into tax cuts, subsidies, and new spending. Since President Trump began his second term, the deficit has gotten bigger, not smaller.

Argentina proved the same point from the opposite angle. President Milei slashed spending aggressively and still needed a bailout. Cutting spending helps, but it can’t solve debt problems alone.

Even left-leaning governments now pay lip service to waste reduction. In the 2025 Canadian budget, the Carney led Liberal government committed to reduce government spending by tens of billions over the next few years yet they still project a much larger deficit ($78B CAD) than the proposal that got Trudeau ousted last year.

Efficiency is useful, but it can’t fix a structural problem. Most government budgets are tied to programs that cannot be touched without major political fights. Social Security, Medicare, Veterans Affairs, and interest payments make up most of US federal spending. Many countries face similar constraints. Cost reductions can help trim the edges, but strong growth is needed to run sustained surpluses to shrink debt.

The bigger issue is that spending cuts reduce economic activity unless the private sector steps in. That rarely happens on its own. It usually requires new incentives, easier credit, or technological breakthroughs that open new investment opportunities. This was the real engine between 1945 and 1975.

As wartime budgets unwound, government spending as a share of GDP fell sharply. About 38% lower in the US and 30% lower in the UK. Wars are expensive. Avoiding them is the best austerity there is. Redirecting money from weapons toward housing, highways, and education built a much stronger foundation for growth.

Policy helped too. The US passed the Employment Act of 1946, invested heavily in infrastructure, and lifted wartime price controls so markets could function normally. The UK nationalized key industries, created the National Health Service, expanded public education, and phased out rationing.

They also benefited from low real interest rates. Treasury yields stayed below inflation, which quietly reduced the real value of outstanding debt. In 1971, the US ended the gold standard, which gave policymakers more room to manage the economy. Of course, that eventually led to rampant inflation, but that was after.

Most importantly, postwar growth stayed strong. Once the war ended, the US shifted from 10% annual growth to a steady 3-4%. Since growth stayed above the cost of interest, the debt burden became easier to carry. Debt to GDP fell even though the debt kept rising. Ray Dalio refers to this as the beautiful deleveraging (his piece last week touches on some of these points). That relationship is why many economists argue that debt levels only become dangerous when interest rates rise above long term growth. This is one of the reasons central banks get heavily criticized when they try to raise rates. With the current debt levels, even a slight increase in the cost of debt has major budget implications.

The lesson form history, is that spending cuts alone don’t bring down debt. That can only happen when spending grows more slowly than the economy itself. That requires low real rates, steady inflation, and a private sector strong enough to replace emergency era government spending.

What Is Likely To Happen Now

Countries will attempt to solve the debt problem in different ways, but almost all of them rely on the same basic formula. They want strong GDP growth and low interest rates. Technologically advanced economies such as the United States and China are pouring public and private money into AI, data centers, energy infrastructure, and the minerals and manufacturing that support them. China has been building these supply chains for years. Other countries are trying to catch up.

Stock prices and venture funding announcements do not matter unless all this investment eventually turns into higher productivity and higher GDP. After the internet boom of the 1990s, the United States experienced rapid economic expansion, which helped produce its first budget surplus in decades. That surge was not driven by technology alone. The political gridlock of the era forced fiscal discipline, globalization expanded, the Cold War ended, and the country enjoyed several powerful economic tailwinds.

The debt trajectory reversed when the Bush administration financed the War on Terror and later responded to the Great Financial Crisis with large deficits. The Obama administration continued the pattern. Other countries followed a similar path. Cloud computing, smartphones, and social media boosted productivity, but not enough to offset the scale of government spending. With birth rates declining and aging populations, developed countries leaned on higher immigration to keep their labor forces stable. This approach did not generate enough growth to close the gap, and public support for immigration has since weakened. With immigration decelerating, a smaller working population will need to support a larger base of retirees and debt obligations.

These debt levels will rise. These deficits ensure that the outstanding debt keeps climbing. Many of the investments that might raise growth could take decades to pay off. For this to improve the situation, nominal GDP growth needs to exceed interest costs + primary government deficit. For the US and the average OECD country, this threshold is roughly 5-8%. Today, nominal GDP growth sits closer to 3-6%. Sustaining growth above 6% is extremely rare in peacetime. Eventually, deficits have to shrink or inflation has to rise to achieve this reduction.

Unlike post WWII, many countries didn’t have the same pension commitments and universal healthcare coverage. These line items by default make up a large part of the countries budget, anywhere from 10-25% of GDP across the OECD, and are difficult to change. Realistically, retirement ages will need to be pushed back, but this is always met with very hostile opposition from unions and left leaning parties. Healthcare is another main cost which will only rise as the aging population requires more medical attention. Unless humanoid robots and Chat GPT can treat all of these patients, it will be difficult to reduce costs. Canada’s creative solution is to encourage people to die but I’m cautiously pessimistic this will solve the problem. Therefore with higher medical costs, pension contributions unlikely to come down, the options are to try to cut other government programs, find a way to raise taxes without stifling growth or have the money printer go BRRRRRR.

The likely outcome is a mix of everything above. Governments will trim a few programs, then spend the savings somewhere else. Tax revenue will rise, but not because anyone raises tax rates. Inflation pushes salaries higher, which quietly moves people into higher tax brackets even as their purchasing power falls. The same happens with property taxes. When home prices climb on paper, governments collect more revenue even if nothing about the tax rate changes.

None of this will be enough to fix the gap, so policymakers will lean on a familiar tool. They will allow inflation to run hotter than they admit. They will try to avoid the double-digit mistakes of the 1970s and 1980s, but history suggests they will slip at some point. It might not happen this decade or the next, but it is almost inevitable.

The net effect is simple. Expect higher deficits and higher inflation for a long time. If we are lucky, this combination will gently push debt-to-GDP ratios down. While the ratio will improve, the actual debt levels will not actually decrease; they will continue to climb just at a slower rate than nominal GDP grows. This is because countries don’t repay their debts like people or companies, they continue to roll them over indefinitely, putting these obligations on future generations.

This is how countries will unwind their debt problems. In the same way they created them in the first place. Nothing really changes.

(If this topic is of interest to you, I suggest you check out Big Debt Crises by Ray Dalio)

(Here is a great article by of the dangers of these policies and the quiet cost of inflation)

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Most of it exists for engagement farming, to drive clicks and make money. That didn’t start with the internet. Media companies have been serving nonsense for as long as they’ve existed. There’s nothing wrong when it’s purely to entertain.

While not my cup of tea, adults can watch as much bad TV they want. Binging The Kardashians, Selling Sunset, etc. should not change your understanding of the world.

Things get dangerous when nonsense masquerades as credible information. When people take it at face value, it warps their understanding of reality and weakens everyone else’s. Knowledge and truth don’t exist in a vacuum. Either can be disproven at any time and are only useful if people believe them.

Belief is optional. People can ignore mountains of proof, evidence, data and facts. They can shop around until they find anything that confirms their view. It’s even been suggested there is no such thing as the objective truth. Each person has their own lived experiences and truth, which they may consider equally valid to empirical research or well documented facts. The way they see the world will inform how they react to information.

Remember the uproar over “fake news” and “misinformation” during Trump’s first term? Anytime the media attacked the President, his supporters dismissed their claims as lies, while detractors were convinced every word was true (remember the Steele dossier?). Once Biden took office, the outrage flipped sides. This happens every time a new party takes power.

The truth is, most people don’t seek information to understand the world; they seek confirmation. Unfortunately, even the earnest get deceived. It’s not just Russian bots. Journalists, academics, and credentialed experts are just as guilty as spreading misleading, deceiving or straight up wrong information.

How often have you heard somebody start or finish a sentence with “That’s a fact” only for them to accompany those words with something that isn’t actually a fact? Despite more people attending higher education, the population hasn’t gotten better at separating fact from fiction. Universities care more about their rankings and endowments than producing alumni capable of deciphering signal from noise. This is why being able to navigate truth from fiction, you need to learn this on your own. Here are some tools to help:

Keep reading if you want to learn to detect real from fake insights !

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

What Is The Truth?

“ In a time of universal deceit – telling the truth is a revolutionary act.” — George Orwell

Ask Chat GPT for the definition of the word truth. It returns multiple responses depending on the context. There’s the truth in a general sense. She said it was raining outside, while it was raining at that time1. However, in a philosophical sense, the truth doesn’t have one homogenous definition.

Correspondence theory would align with the general sense. A statement is true if it corresponds to what can be observed in the real world. We can step outside and feel the rain on our skin. Therefore if somebody says it is raining, there is an easily verifiable way to confirm this is the truth. This is the most restrictive definition of the truth, since it’s not always possible or feasible to easily observe each claim.

Coherence theory is slightly less restrictive. Truth is determined by how well a statement fits with a consistent set of beliefs or propositions. We can accept something as true, if it aligns with everything else we accept as true. If we are in a room with no windows but can observe there is no change in moisture, atmospheric pressure etc. we can rule out it’s raining without needing to go outside and verify.

Pragmatic theory is even more expansive. The truth is what works. What proves reliable or useful in practice. Dare I say Serviceable? We can’t prove the sun will rise tomorrow but given this has happened every day as long as the sun and earth have existed, we can safely assume it will. We need assumptions like this to make any decisions for the future.

The most open interpretation of the truth comes from Constructivist theory. The
truth is created through social processes, it’s whatever society agrees is true.

The truth most people believe in, conforms with Constructivist theory. Few people do primary research themselves, they take cues from the people around them. The famous Asch conformity experiments demonstrated an individual will abandon what they believe they know to conform due to social pressure. (This is the line experiment).

(The stooges all confidently called out that B was the longest line, until eventually the innocent participant would start calling out the same answer)

Therefore for all intents and purposes, the truth is the set of facts and beliefs the most people subscribe to. Whether they are true are not, is largely irrelevant since most statements or facts are not as easily disprovable as looking out the window. Few people will verify things on their own, therefore they outsource this work to people they trust. Teachers, journalists, authors, academics & Substack writers etc.

These groups are the designated and self anointed guardians of the truth but many are just as clueless. They claim to be experts with superior knowledge and context to decipher the truth, see fact from fiction but in reality they are the blind leading the blind. Just with more certainty they are right. They have plenty of facts and data to support their believes giving them the utmost confidence they can’t be wrong.

Some will disparagingly refer to this as Liberal Arts Confidence.

People with this illness can be deceived into believing outrageous ideas completely divorced from the reality because somebody they like/trust share a few facts that align wit their world view. They accept this as dogma because people care more about winning arguments, or imposing their beliefs on others than discovering the truth in a correspondence or even coherence manner.

Society encourages this. People will claim to have a truth, to gain trust and power. Politicians will claim to have the truth that will improve their citizens lives. Execs promise investors they know how to lead their company to success. Journalist’s and authors make big claims to get attention, clout and sometimes change.

The verifiable truth doesn’t always align with these people’s agendas, therefore they make their views the truth by making it the consensus belief.

How do they do this? Praying on people’s biases. The modern version of the truth hides behind data and data is the new propaganda medium.

You Don’t Even Know What a Fact Is

“Trust, but verify,” — Russian proverb popularized by President Reagan

It’s easy to convince somebody of something when they want it to be true.

If you believe LeBron James was better than Michael Jordan, you will be more receptive to an article citing advanced statistics like Wins Above Replacement (WAR) that claim to prove LeBron is the greatest of all time. Even if you don’t understand the statistic, you will likely trust that the data is objective and reliable.

Michael Jordan fans, of course, will reject the premise and respond with other statistics such as titles, scoring averages, or playoff records. Both sides are citing facts, but those facts do not necessarily amount to evidence, and evidence is not necessarily proof.

That is because people usually search for proof to justify what they already believe, instead of reviewing proof to form their beliefs. Whether the claim is true or not becomes secondary to whether it feels right.

The statement “Lebron James is better than Michael Jordan” is not a fact. Without anything supporting this, it’s simply somebodies opinion, sure to upset old heads.

“Lebron James had a greater impact on his teams ability to win” could qualify as a fact, if it had data to support it.

“Lebron’s WAR for his career his higher than Jordan’s” would be a data point, but it’s not necessarily evidence, unless WAR can be proven as a good way to compare players.

Even if WAR is accepted as a valid way to compare players, it’s not necessarily proof because there can be alternate explanations or ways to determine which basketball player is best. Such as team performance/titles, playoff performances, individual accolades etc.

In short:

• Statements are not facts.

• Facts are not data unless representative.

• Data is not evidence unless relevant and conclusive.

• Evidence is not proof unless universal.

(This hierarchy and the image below is from Alex Edmans’ book May Contain Lies.)

Numbers Don’t Lie, but People Do

In May Contain Lies, Alex Edmans describes being approached by a major asset manager that wanted to prove a new trading strategy: investing in companies with greater diversity would produce higher returns. Edman could not find any proof or evidence that would indicate such a strategy would work.

Instead of abandoning this quest, the asset manager went to somebody else that used the same data set as Edman, yet claimed it was possible. When Edman investigated, he saw this other researcher manipulated the data to justify the conclusion the asset manager wanted.

The asset manager now had “academic validation.” They used it to market their strategy to institutional investors, raising billions. Other firms copied them. Over time, the claim that diverse companies outperform became consensus truth, despite no statistical proof. The asset manager was not looking for the truth, they wanted the truth that institutional investors already wanted to believe. So they lied.

There might be other valid reasons to invest in diverse companies such as ethics, governance, or culture, but the claim about guaranteed superior returns was false. Most investors did not review the studies themselves, they trusted the credentialed experts. If Edmans did not review the data firsthand, he might have believed it too.

The Limitations of Peer Review

Academics often treat publication and peer review as quality control. In theory, peers play the same role Edmans did, checking whether findings are sound, replicable, and honest.

In practice, this system fails frequently. Researchers shop around for journals with weaker standards. Reviewers may be friends or ideological allies. Critiquing flawed studies can be professionally risky, especially when those studies align with a fashionable or politically popular narrative.

Speaking out against consensus can lead to reputational damage or ostracism. It is easier to stay silent than to be the lone dissenter. That is how Ivor van Heerden, Peter Ridd, Judith Curry and others lost their university positions after challenging dominant views within their fields.

This creates a situation similar to the Asch experiment. If you are the only person seeing flaws with your groups consensus view, few will want to speak out because of insecurity of looking stupid if wrong. Others might decide it’s not worth the ramifications even if they are certain they are right. This is the premise of the story An Enemy of The People: Telling an unpopular truth can make you the enemy of the crowd.

What often happens is that flawed studies go unchallenged but continue to be cited until they become truth by repetition. The researchers begin to win prizes and sell bestselling books, only further adding to their stature and making it more difficult to refute. Once enough people believe something, the burden to convince them becomes increasingly difficult. This problem gets exacerbated by Chat GPT, Google, Wikipedia and others since they prioritize information or articles most heavily cited. Once information makes it onto these platforms they are the Constructivist truth.

Whenever people want or need something to be true, whether it’s that LeBron is the GOAT, that diverse companies outperform, or that a new health trend can fix everything, their ability to doubt disappears. The stronger the desire for something to be true, the more closely you should scrutinize it. When someone makes a claim that runs against their own interests, they are far less likely to be lying.

Our collective understanding of the world is far smaller than we think. Citing facts and studies does not equal knowledge any more than watching sports makes you an athlete. Be skeptical of claims about the world that lack real proof, evidence, data, or facts. The truth is whatever people believes it to be.

Checklist for Smarter Thinking

Alex Edman, author of May Contain Lies was kind enough to include this checklist at the back of his book. These are the type of questions you should ask yourself whenever you see somebody making a claim, whether it’s supported or not.

A. Preliminaries

1. Do you want the conclusion to be true?

2. Is the conclusion extreme? Does it suggest something is always good, bad or applies everywhere?

Ex: You can defeat cancer with diet. Carbs are always bad.

B. Statements

1. Does The Statement Contain a superlative or imply universality?

Ex: “Shareholder value is the dumbest idea in the world. Every company will be a fintech company.

2. If yes, can you come up with a clear counterexample? (can you disprove the hypothesis?)

3. Is the statement backed up evidence? Does this evidence exist and is it publicly available? People often cite studies but can’t name a specific one that can be easily audited.

4. If it does exist, does the evidence and findings from the evidence support the statements?

5. Do the inputs and outputs correspond to the statement? (does the study actually measure the claim in a rigorous way?)

C. Facts

1. Does the study test a hypothesis?

2. Does the study consider a representative sample? (Is the sample size even big enough)

3. Does the study consider a control group? (same characteristics that achieved the same outcome without factor X?)

4. Does the study calculate the average output across the two groups?

5. Does the study check for statistical significance?

   1. Is the difference large enough that it can’t be explained by luck or noise?

D. Data

1. Are there other ways the researchers could have measured the input and output? (Alternate Hypothesis, Data Mining)

2. Is the data chopped up? (did they conveniently omit or structure data in such a way to achieve their desired outcome?)

3. Could the output have caused the input (reverse causation/tail wag the dog)?

4. Are there any common causes that could be driving both the input and output? Have the authors controlled for them in the same regression?

5. Imagine if the study found the opposite result. What alternative explanations would you come up with to try to explain it away? Then ask if these alternative explanations still apply, even though the finding are in the direction you like?

E. Evidence

1. What was the setting studied? Is this the same as the setting for which you’d like to draw conclusions? If not, are there any reasons why the relationship might be different in other settings?

2. What was the population studied? If this the same as the population of interest for which you’d like to draw conclusion? If not, are there any reasons why the relationship might be different in other populations? (the 10,000 hour rule and others)

F. Shortcuts

You can’t review every cited study but here are some questions to filter if they were performed properly:

Studies

1. Is the paper published in a top peer-reviewed journal?

2. What are the credentials of the authors? Do they have a Ph.D or a track record of top peer reviewed publications in the relevant field? Are they affiliated with the leading research institution? If the same study was written by the same authors, with the same credentials but found the opposite results, would you still believe it?

3. What are the authors incentives to claim their result? Would they have published the paper if it had found the opposite result?

4. Do the authors exaggerate their credentials, the rigor of their methodology, or their conclusions?

Books and articles

1. Does the book or article back up its claims with evidence?

2. Can you find informed critiques on the web?

3. Is it balanced? Does it consider evidence or arguments that contradict its core thesis?

4. Do the authors exaggerate their credentials, the rigor of their methodology, or their conclusions?

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

After 3.5 years with the company, I resigned on September 30th. There was no dramatic reason, I had simply decided it was time.

As people within the organization learnt of the news, the general reaction was some combination of shock, sadness, and in a few isolated cases, a slight hint of jealousy. Yet none of this resulted in candlelight sigils or hour long moments of silence.

It’s understandable, although I had been with the company since its early days, it’s only natural for people to reconsider their own standing when they learn of this kind of news. I’ve been in their shoes many times as colleagues have left, voluntarily or not. Before long people need to go back to focusing on their jobs.

As you read this week’s newsletter, I am now unemployed. I know what you are thinking and the answer is no. Unfortunately, I do not earn enough money from Serviceable Insights to retire. While I appreciate every one of my 1,000+ subscribers, none of you pay me anything, alas I will eventually need to find employment.

In the meantime, I hope new and existing readers enjoy this week’s article discussing the concept of a “career”. When did it start? What does the average career look like. Is loyalty rewarded or is it better to job hop?

Keep reading if you want to find out!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

What is a Career?

The sequence of jobs, roles, and professional experiences a person pursues over the course of their working life.

The concept is fairly new. For most of civilization most people were farmers, hunters or foragers. None of these roles came with much opportunity for advancement (Assistant to the Chief Forager?).

A handful were born into nobility, which had hierarchy and progressions, but promotions depended on birth order and waiting for someone ahead of you to die. Performance reviews weren’t a thing. If times were good, there wasn’t much to worry about besides gout or dying from a minor infection.

If times were bad, you might have been presiding over a war, an insurrection, or a barbarian invasion. In that case, your main concern was keeping your head but at least you didn’t have to sit through company downsizings.

Most would assume dreaded conversations with the HR department only began during the Industrial Revolution but they started well before that. The army. New recruits, would begin similar to interns. First by training, or holding spears while real soldiers fought until it was their time to stab people. Except the cases when their armies were desperate so they were just thrown into battles without training or guidance. Similar to when startups can’t afford experienced people so they just take anyone willing to join.

If a soldier proved himself and didn’t die, he could climb the ranks and eventually call the shots. That is, until the new emperor got jealous and tried to have him killed by his own men, forcing him to fight for freedom in the gladiator pits.

While there was progression, the high chance of dying in battle made it difficult to make long term career plans. There wasn’t much possibility to change either. Perhaps they would occasionally change legions but I doubt the soldiers had a say.

Even once trades and guilds came around they provided more opportunity but they also restricted people’s ability to change careers (this is why Benjamin Franklin’s father left England for the United States). Therefore the notion of being able to freely pick and decide your own career or easily change likely only started, at least in western countries as late as the 18th century.

That’s when “careers” began: when the average person could have a self-directed, evolving journey across multiple roles or employers. I’m not saying they were good jobs, but for the first time, there was some semblance of choose your own adventure.

What Does The Average Modern Career Look Like?

It’s 2025, so I probably didn’t need to dedicate the opening section explaining what a career is. However, several of my Subscribers made a killing buying Crypto and Meme Stocks at the right time so they’ve never had to grapple with the concept of a job. For the rest of us though, our career plays a meaningful role in our existence; especially since we spend most waking hours during our prime years working.

With anywhere from 50-70% of high school graduates in the west going to university or some sort of trade school, most people start their careers in their early 20’s and retire in their mid sixties. At least that’s what the Boomers and Silent Generation got to do, us millennials and Gen Z will definitely be working into our seventies and eighties, to pay for their pensions and other government programs.

Given that careers span 30 to 50 years, my three-and-a-half-year stint at my firm will ultimately represent only 5% to 10% of my total working life. Still, since I’m only ten years into my career, it feels significant, and it is. The roles you take early on set the foundation for everything that follows.

Titles, growth, and trajectory matter less than the skills and networks you build in those early years. Those things matter especially for people with management ambitions. Only 10-15% of employees will ever reach the level of manager, and well below 1% will reach the executive level at any size company. This does not include people running banana or lemonade stands.

Several studies indicate salaries peak in a worker’s late forties to early fifties, then typically stagnate or decline until retirement. Outside of skills and education, the trajectory of salary growth can also be influenced by a young worker’s a) willingness to relocate and b) readiness to change jobs for higher wages or seniority.

This makes sense. In many cases, the longer someone stays at the same company, the more likely they are to become underpaid. Any company with an HR department will generally standardize pay scales, limiting what workers can earn relative to their seniority. It’s rare for a junior software developer to earn more than a senior developer, even if the junior is far superior. A senior can’t out-earn their manager, who can’t out-earn the VP of Engineering, who can’t out-earn the CTO etc.

Since only so many employees can be promoted, the net effect is that stronger employees at each level earn less than they should, while the beneficiaries are their relatively weaker colleagues or seniors. (I discussed this premise in Benchmarking is Lazy). As such, if you’re a strong employee who isn’t regularly getting promoted or receiving meaningful raises, at least 5% to 10% annually, you’ll likely find yourself getting paid much less than what you could earn elsewhere.

There’s plenty of data that confirms this. Job hoppers, people changing jobs every 1.5 to 3 years, earn on average 10% to 30% more than longer-tenured employees. I haven’t taken the time to review these studies in depth, but this aligns with anecdotal evidence, so let’s assume it’s true.

(Even a 2% difference in wage growth nets out to 22% after 10 years)

Therefore, this would imply to maximize career earnings, a worker should work at least seven-twelve companies before they reach forty. If you’re impatient, you can just pull a Soham Parekh, and work at four Y Combinator backed companies simultaneously.

This sounds nice in theory, but money isn’t everything (I apologize if this offends any of my maxi-capitalist readers). Even if you can consistently find companies willing to hire and pay you more, that approach treats your career like a hedonic treadmill you need to sprint through. Is it crazy to prioritize other factors, like enjoying your work environment, the mission, the people, or some combination of all the above?

At a certain point, lower pay starts bleeding into other aspects of your life, but endless job-hopping can do the same. Some people enjoy starting somewhere new every year, but changing jobs is among the most stressful life events. Up there with marriage and divorce, for good reason. Interviews offer limited visibility into what it’s actually like to work at a new company. You won’t realize what a nightmare your new company is until after you join. This shouldn’t be the reason to never leave a job either.

The right balance is finding an environment you enjoy that you feel pays fairly. This isn’t necessarily about work hours or prestige, it’s about supporting and aligning with your other life objectives. If it means working less hours to be more available to your family, taking a pay cut might make sense. If your personal burn rate is low, you have a lot of options. If your credit card statements look like a set piece from Home Alone 2, you have fewer.

Too much of the career conversation revolves around salary, seniority, and exit opportunities. Not enough attention is given to finding work that lets you enjoy both your job and your life. That might not maximize prestige or earnings, but careers last decades. If you have the chance to make your daily life meaningfully better, both inside and outside of work, you owe it to yourself to take it.

Careers are a relatively new concept. The freedom to change jobs and take chances is a modern luxury that most people throughout history never had. If you are fortunate enough to choose an environment that aligns with your values and goals, you should explore it. You may not find the perfect balance, but the pursuit itself is what makes a career worth having.

So here I am, between jobs, somewhere in the middle of my own “choose your own adventure.” Careers are no longer supposed to be a straight line. It’s a series of choices, chances, and the occasional leap of faith. This just happens to be one of mine.

Let’s see how this turns out, and if it doesn’t work perhaps I might need to start charging for these. Just kidding, Serviceable Insights will continue to operate as a reluctant non-profit for the foreseeable future, and I appreciate your non-monetary support.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

Like many men, I played many home games with friends in my late teens and early 20s. I even briefly tried my hand online. I was decent enough to win at the home games or low stakes online tables but against professionals and people earning a living from poker (grinders) I was overmatched. I could occasionally win a hand against them but over a long session, eventually the talent difference took over.

I sat down at the lowest stakes table available and before long I realized everybody at the table was a grinder. The smart thing would have been to get up and leave but since I didn’t know the next time I would be playing poker in Las Vegas, I decided to stay for the novelty of it and make a kind donation to the grinder fund.

After mostly watching hands unfold, eventually my patience was rewarded with a premium starting hand. I slow played my cards and trapped somebody. I won a large pot, angering him greatly as he didn’t think I had that move in my bag. To quote George W Bush: He misunderestimated me. I should have gotten up and ran but I hadn’t been at the table long so I decided to stick around. A few hands later, I was in a coin flip situation with the same player. I had the flush draw, he had the low pair, putting our odds at around ~50% each. We both went all in, I didn’t get the card I needed so my session ended there.

Poker theory, would have said I made the right move but I still lost. Even if I played perfectly that night, the outcome would have likely been the same. I was at a table against sharks but with a lower bank roll (especially after the pool party) and tolerance for risk.

Now you might be wondering why you should care about my gambling losses and what this has to do with financial markets? While gambling is never investing, sometimes investing looks a lot like gambling. At least in the casino you know your odds.

This article will share a few gambling anecdotes that will hopefully help you make better decisions in financial markets or at a minimum, a slightly more conscious gambler.

Keep reading if you want to try to lose less money!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

Find Games You Can Win

In a casino, not all games are created equal. Some are designed to entertain while slowly emptying your wallet. Others, while still stacked in the house’s favor, give you a fighting chance.

Blackjack, when played correctly, has a house edge of about half a percent. Craps and baccarat are close behind. Roulette takes about five percent of your money before the wheel even spins. Slot machines are the worst, you might as well light your money on fire. The flame might last longer than your playing session.

If your goal is to make money at the casino, your best move is not going. The second best move is to play games with better odds, that you understand. Good gamblers, like good investors, understand one simple truth: you do not have to play every game. You just have to find one where the odds tilt slightly in your favor.

For the average individual with no knowledge of finance or business, their best bet is buying exchange traded funds (ETFs) which will provide returns on par with the general market. Since most retail investors lag the market by 6-8% annually this would be the smarter move. (We discuss this concept and more in:

However, this doesn’t mean you should never buy individual stocks or make other investments. You should invest in areas where you have an edge.

The brilliant minds on Wall Street regularly end up on the losing of a trade. If you tried to go up against a hedge fund on every tradeable asset, you would definitely lose. If you stuck to industries or instruments you know very well, you have more of a chance. Most equity research or hedge fund analysts need to cover dozens, potentially hundreds of stocks, their job requires it. As a retail investor, you can concentrate on a handful and learn everything there is to know about them. It’s not a stretch for a non-professional investor to know more about a company than a full time investor. Gambling is no different. However edges don’t last forever.

How I got banned from betting on hockey

I was early to discover advanced statistics for hockey. Baseball had already gone through its analytics revolution after the Oakland A’s Moneyball success, but in the late 2000s hockey was just getting started. Only a handful of bloggers were writing about it, and the audience was small. As one of their few readers, I could message them directly and they would actually reply. At fifteen, I was far from a statistician, but my love of hockey pushed me to learn enough math to keep up with their work.

Advanced analytics in hockey do not predict single games very well because the sport is too noisy. Over a full season, however, they used to offer an edge. I learned to use that advantage to dominate fantasy hockey pools and long-term prop bets. As an unemployed teenager, my bankroll was tiny, so the money never amounted to much. However in percentage terms, my returns were absurd. For five straight years, I won or finished in the top three of nearly every fantasy league I joined, usually against ten to twenty other people. My prop bets were hitting around thirty-three percent when the odds implied less than a ten percent chance.

I was driven more by pride than money. Still, after a few seasons of crushing the competition, my invitations to hockey pools began to disappear. The final league I joined included several of the analytics bloggers I had followed for years and a few employees from fantasy hockey websites. The competition was too strong. I quickly realized my advantage was gone and decided to retire from fantasy hockey to focus on my homework.

As analytics became mainstream, sportsbooks and fantasy platforms started using the same stats I had been using. My edge vanished overnight. I walked away with a small profit and a much deeper understanding of how you can find an advantage and why you need to pick your opponents wisely. This is why you don’t drop out to gamble fulltime.

Sometimes it’s better to be lucky than good

During that same trip to Vegas, a member of my party turned $200 into $10,000 at the Blackjack table. I was there when it happened. Let’s call this person Greg. Greg was not a regular gambler; he’s normally a fairly straight laced individual. In the night in question, he was not. While a few of us were having dinner, Greg joined, already quite inebriated and impatiently wanted to play Blackjack.

He reluctantly waited for us to finish our dinner then struggled to walk in a straight line between the restaurant, which was located next to the casino floor, and the blackjack table. We were unsure if they would let him play in this state but we quickly realized people like Greg were their ideal customer profile (ICP). If they were licking their chops before he sat down, they certainly weren’t for long.

Greg started hot and never cooled off. Hand after hand went his way. He doubled his bets, then tripled them, even played two spots at once. Sometimes he made the right decisions, other times he didn’t, yet the cards kept rewarding him. He hit endless blackjacks and high hands while the dealer kept busting. Multiple pit bosses came to observe but quickly decided he was far too drunk to be counting cards (or was as good an actor as prime Daniel Day-Lewis). Within an hour, Greg had ten thousand dollars in chips stacked in front of him. He also couldn’t sit upright anymore, which was our cue to call it a night.

By the next morning, Greg woke up next to his mountain of chips and a puddle of his own making, unsure how either got there. His winnings did not come from talent. He rode a streak of pure luck and happened to cash out at the top. Greg won by far the most, but everybody had a profitable session, largely because the dealer kept busting. Greg could benefit because he was by far the most aggressive, which was largely a result of his inebriated state.

Most investors think they are Michael Burry, seeing patterns the world misses. In reality, many are closer to Greg. A few lucky streaks can feel like skill until the cards stop falling your way.

Don’t Invest Like a Gambler. If you do, be smart about it

Like our friend Greg, many people try to earn outsized returns by being aggressive during a bull market. I know plenty of people who boast about triple or even quadruple-digit gains from trading crypto or leveraged ETFs on margin. Sometimes those trades work. When they don’t, the same aggressiveness that creates wealth can erase it overnight. Just the other week, many crypto whales got margin called liquidating years of investment gains. You can think of this as Greg betting his $10,000 in winnings, borrowing another $10,000 from the casino, and losing it all on the next hand.

If Greg had another $100,000 sitting in savings, he could afford to be aggressive. Losing ten or twenty thousand would sting, but it wouldn’t ruin him. If that original $200 was all he had, he would be finished. Investing works the same way. If you trade on margin without enough capital behind you, one bad swing can end the game.

Aggression in investing is not inherently bad, but it must be calibrated. If you want to take big swings, you need to design your portfolio so that one mistake cannot bankrupt you. Nassim Taleb popularized what he calls the barbell strategy: keep one part of your portfolio extremely safe and the other part aggressively risky. This approach lets you pursue large upside while protecting yourself from total ruin.

Taleb is a trader, not a gambler, but he has seen countless traders blow up because they behaved like gamblers. The difference between the two is not luck or confidence; it is risk management.

Conclusion

Every gambler believes they can beat the odds until the cards stop going their way. Investors are no different. The smartest ones know the game is never about winning every hand, it is about surviving long enough for the math to work in their favor.

You cannot control luck, but you can control your exposure to it. Whether you are sitting at a poker table or watching your portfolio, the same rule applies: protect your bankroll, play the games you understand, and leave the table before the house reminds you who is in charge.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now

As his films have earned more praise and awards, Anderson’s willingness to experiment has only grown. He plays with framing, light, pacing, surrealism, and sometimes pure absurdity. On the spectrum between Marvel and Terrence Malick, he has leaned closer to the latter. His movies are strange, funny, and unmistakably precise.

His latest, The Phoenician Scheme, is no exception. It is less outlandish than Asteroid City or The French Dispatch and more in line with The Grand Budapest Hotel. The story follows Anatole “Zsa-Zsa” Korda, a wealthy industrialist wanted by global authorities. His latest venture, a sweeping infrastructure overhaul of Phoenicia, promises enormous profits for his partners and ruin for everyone else.

The plot unfolds around Korda’s schemes, family tensions, and fragile alliances. I will not spoil the details, but it is excellent.

What caught my attention were the books Anatole keeps reading throughout the film. Each title is bizarre, precise, and perfectly Andersonian. As it turns out, these are entirely fictional creations. So I decided to imagine what these books might be about, their real-life parallels, and what they reveal about Korda’s mindset.

You do not need to have seen the movie to enjoy this, but you should. It is Wes Anderson, after all.

Keep reading if you what books the greatest businessman in the world was reading!

But first, make sure to hit the Subscribe button to join 1,000+ other Subscribers that get Serviceable Insights delivered directly to their inbox each week.

Subscribe now

If this week’s article does not interest you, please check out some other recent ones:

The Anatole “Zsa-Zsa” Korda Reading List

1. Great Botanical Collections of Western Europe
   A richly illustrated compendium cataloguing the eccentric gardens and forgotten greenhouses of Europe’s aristocrats, from medicinal herbs grown in Venetian courtyards to the sprawling orchid mania of Victorian England.
   Closest real-life parallel: The Brother Gardeners by Andrea Wulf (on Britain’s 18th-century plant collectors) or Orchid Fever by Eric Hansen.

For those who intend to one day amass sizeable fortunes, it comes in handy to have a working knowledge of botanical gardens. Whether this is to donate a public trust or to set one up in one of your properties. When you own a lot of land, you will need to do something with it after all. You may scoff at this but it’s one thing to manage a small patch of grass on your front lawn, a botanical garden is an entire different ordeal.

2. Important Patrons of the High Renaissance
   Profiles of wealthy bankers, dukes, and cardinals whose commissions reshaped art history and whose vanity projects occasionally rivaled the masterpieces themselves.
   Closest real-life parallel: The Agony and the Ecstasy by Irving Stone (a biographical novel of Michelangelo) or Patronage in Renaissance Italy by Mary Hollingsworth.

Closely related to Great Botanical Collections of Western Europe, Anatole is likely seeking inspiration from other great philanthropists of their day. Already wealthy at the start of the film, and expecting to add further to his fortune, he has begun planning how to use the proceeds from his venture. A man can only spend so much during his lifetime, and it is difficult to trust what will become of any money left to charity or the state. Naturally, he settles on becoming a patron of the arts, following in the rich tradition of the Borgias and Medicis. At this point, belief in the success of his mission is still high.

3. Fragments of Antiquity: Noteworthy Scraps, Shavings, and Rubble
   A serious-minded survey of the minor relics archaeologists trip over: broken amphora handles, chipped mosaics, and the world’s most celebrated pile of marble dust.
   Closest real-life parallel: Fragments: Lost Words of the Ancient World by Tony Harrison or Lives of the Ancient Greeks by François Chamoux, with sections on archaeology’s smaller finds.

Anatole reads this book during a quieter, more introspective stretch of the film. His plan has run into complications, and the path forward looks uncertain. The book’s focus on broken relics and forgotten pieces mirrors his attempt to make sense of a plan now in shambles. It also reflects the literal excavation required as part of his scheme. In a way, the act of reading becomes a metaphor for self-excavation: studying the ruins to understand what went wrong.

4. Fleas of the Americas
   A pioneering entomological atlas of New World fleas, complete with intricate engravings and overly in depth detail on everything there is to be known about everyone’s favorite Siphonaptera.

Closest real-life parallel: The Flea: The Amazing Story of Leo Messi by Michael Part (unintentionally!) or more seriously, Fleas: Biology and Control by K. Mehlhorn.

Michael Cera’s character, Bjørn, is first hired as a tutor to Korda’s children and later becomes his administrative assistant. Bjørn is a trained entomologist, which might seem like an irrelevant quirk, but it serves as a quiet commentary on Anatole and his associates.

Fleas are parasites that occupy hosts without their knowledge or consent. Korda’s scheme does the same to the people of Phoenicia. He and his partners feed on the land and its resources, enriching themselves at the expense of those who live there. The book functions as both a metaphor and a mirror, hinting at the predatory nature of Anatole’s world.

5. Depictions of Blasphemy in Gouache (Vol. III: 16th Century)
   An illustrated catalogue of religious controversies, spotlighting forgotten painters who dared smear heresy in opaque watercolor across Europe’s church walls and tavern ceilings.
   Closest real-life parallel: Art and Heresy in Renaissance Siena by Fabrizio Nevola or The Forbidden Image by Alain Besançon (on iconoclasm and blasphemy in art).

This book is a reflection of Sister Liesl, Korda’s daughter (played by Mia Threapleton) current dilemma. She is a devout believer, now faced with the choice whether to live like an ordinary nun or to become her father’s heir and beneficiary to his estate. On one hand, the trappings of wealth goes against her teaching but she could do a lot of good with this money.

The book’s subject is about artists who defied doctrine in pursuit of higher truth. This parallels Sister Liesl crisis. Like those painters, Liesl risks being seen as a heretic if she acts on conviction rather than dogma. To accept her inheritance might feel like blasphemy, yet refusing it could waste an opportunity to do genuine good. In both art and faith, purity and corruption are not easily separated, and this ambiguity defines her struggle.

5. Questionable Authenticity: Masterworks, Forgeries, and the Dilemmas of Attribution
   An exposé on the shadowy middlemen and clever forgers who blurred the line between genius and counterfeit, with entire chapters devoted to paintings now hanging in respectable museums.
   Closest real-life parallel: Provenance by Laney Salisbury & Aly Sujo (on one of the biggest art frauds) or The Forger’s Spell by Edward Dolnick.

Anatole is a world-renowned arms dealer, forever balancing alliances with partners, suppliers, and rivals. He is accomplished, but his success depends on maintaining appearances. To make the Phoenician scheme work, he must stay one step ahead of both the CIA and his own associates. The risks are growing, and one misstep could expose everything.

This book reflects Anatole’s dual nature. Like the forgers it profiles, he operates in the gray zone between authenticity and deception. His life, built on negotiation and illusion, is its own masterpiece of controlled deceit. He reads not to learn how to lie, but to understand the psychology of those who do it best. Even after years of survival and near-death encounters, he continues to study, convinced that mastery requires constant refinement. Reading, for him, is both education and confession.

6. Arms and Armour: Princely Works from Around the Globe
   Lavishly detailed portraits of jeweled swords, ceremonial shields, and impractically ornate helmets designed less for battle than for dazzling rival monarchs at banquets.
   Closest real-life parallel: Arms and Armor of the Medieval Knight by David Edge & John Miles Paddock or Swords and Swordsmen by Mike Loades.

Anatole’s fascination with this book reflects his obsession with power, image, and legacy. The ornate weapons described here are not tools of war but symbols of status, precision, and intimidation. Like the princes who commissioned these works, Anatole treats business as both spectacle and combat. He’s already very wealthy but continues to engage in these schemes despite the many assassination attempts against his life.

It’s not just about amassing wealth. It’s about leaving an enduring legacy that will persist for centuries. Evidentially his many children alone are not enough.

7. Pavement Engineering in the Post-Roman Era
   A technical yet oddly lyrical history of medieval road-making, complete with diagrams of cobblestones, trade routes, and the political collapse caused by potholes left unrepaired.
   Closest real-life parallel: On the Road to the Ancient World by Etruscan scholar John Haywood, or Roman Roads: A Study of Infrastructure and Society by Raymond Laurence.

Anatole reads this near the end of the film, when his empire begins to show cracks. The book’s focus on infrastructure and decay mirrors his growing awareness that every system, no matter how sophisticated, eventually erodes. Roads once built to unify kingdoms crumble under neglect; so too do his alliances and ambitions.

It is a fitting choice for a man who profits from rebuilding nations he helped destabilize. In studying ancient roads, Anatole seems to understand, perhaps for the first time, that foundations matter more than façades. Whether that realization comes too late is left for the viewer to decide.

Although these books are fictional, I hope you enjoyed these summaries and how I think Anderson was trying to use them to signal what was happening in the film. If you haven’t seen The Phoenician Scheme yet, you definitely should. If you aren’t a fan of Wes Anderson’s movies, please re-evaluate your life choices. For those interested in a reading list containing real books, I will release mine in December but in the meantime, here’s a collected list of titles I’ve previously shared.

Thank you for reading. If you liked this article please Subscribe below. I publish articles on a wide range of topics from business, books, current events or anything on my mind.

Subscribe now