Founder & Partner asymmetrymgmt.com
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There’s a more straightforward reason high performers can sustain massive workloads: they love what they do. They don’t consider it work
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Society would be much better off if schools globally mandated every student take at a minimum an intro course on the following:
- Personal finance: budgeting, investing, compound interest, taxes, dealing with debt, retirement planning
- Statistics: probabilistic thinking, distributions, statistical fallacies
- Behavioral science: cognitive biases
- Basics of law: how the legal system works, constitutional rights, federal vs state, criminal vs civil, etc.
- Basics of entrepreneurship & running businesses: incorporation, equity/ownership, governance, accounting, fundraising
- Journalism/media: the investigative process, how stories are ideated/researched/drafted/fact checked/edited/published, incentives of different players, how to read with a critical eye
Proposal for American high schools: Replace geometry and trigonometry with economics and statistics.
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Imagine the VC industry consists of 2 funds: one is $99.9B, the other is $100M.
Let's say after 10 years, the first fund is worth $105B. The second is worth $500M.
The first fund has generated 93% of the industry's profits. But no rational person would rather be an investor in the first fund than the second fund.
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This isn't surprising at all based on how much token arb-ing I'm seeing with Instinct. Even if they're not using frontier models, the COGS for their top 5-10% users must be astronomical
Instinct looking to raise $1B, potentially at a $10B valuation.
Compute costs are high and Noah doesn’t want to charge users for the product.
Instinct has raised $350M to date, mostly uses open source models and wants to own chips and data centers
theinformation.com/articles/…
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The golden age of Apple was circa 2005-2010. Steve Jobs in full command, with a ridiculously stacked bench. Jobs' top lieutenants in that era included Jony Ive, Scott Forstall, Tony Fadell, Ron Johnson, Avie Tevanian, Bertrand Serlet, Bob Mansfield, Peter Oppenheimer, and of course, Tim Cook, Phil Schiller, & Eddy Cue.
Each was arguably the best in the world in their respective domains: industrial design, mobile software, consumer hardware, consumer retail, systems architecture, engineering management, hardware engineering, corporate finance, operations, consumer marketing, consumer services.
I remember counting down the days to WWDC and Macworld, when SJ would give his world famous keynotes & live demos. Many of these execs would also present live during the keynotes, showcasing upcoming products & new features. The energy around these events, around Apple in general, was electric. It went beyond a cult. It was practically a religion.
With Tim and Phil both stepping down, Eddy Cue is the last remaining exec from that time still active in a leadership role at Apple.
What an era. I'm not sure we will ever see a company like that again, on top of the world, with the best innovator in the world, the deepest executive bench in the world, and the best products of any company in the world. I hope we do, but it's a damn high bar.
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This is very true, with two important caveats:
1) They have to maintain that growth rate profitably because they are unlikely to get consistent VC funding.
2) They must be priced at much lower multiples.
2 interesting arbs right now in VC:
“Slow” growth - everyone is obsessed with funding the companies going 1 to 10m+ in ARR, lots of overlooked businesses going 1 to 3m.
“Small” TAMs - everyone is obsessed with funding the next trillion-dollar companies. Lots of great outcomes to be had with funding the next 1-10b companies at the right entry price (particularly for smaller funds).
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This is one of the best aspects of Silicon Valley tech culture. Helps build up and support the ecosystem, plus I've seen quite a number of people build generational wealth through 1-2 prescient angel investments
There is this phenomenon where a lot of young founders or operators in tech companies will have a modest 6-figure salary and ship a lot of it into their friends' companies in small 5-25k checks throughout their early-mid twenties.
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Glad to see him survive & live to fight another day.
There have been an obnoxious number of posts from VCs who have no idea how hedge funds operate, gloating at the alleged demise of this firm. Leveraged positions are totally normal in public markets. In fact, it's near impossible to generate outsized returns in most public strategies without leverage. In volatile markets, positions can very quickly move against you, exacerbated by other firms that deliberately will try to move all your positions against you at once.
Yes, in retrospect I'm sure they will firm up some of their risk management procedures. But these kind of situations, which are often fatal, can lead to much stronger, battle tested firms that endure if they survive. Citadel itself was battle tested during the GFC, when its flagship funds were down 55%. Everyone said it would die. It did not, and became the dominant firm it is today in large part because of how it learned and evolved from that trial by fire.
Being up 80% YTD even after a 67% drawdown is ridiculously good. Would love to see the VCs taking shots compare their fund performance.
I see people asking why you have to liquidate when you’re up 80%? And how do you fall 67% in one month when the positions aren’t down that much?
Liquidity and leverage.
Think of the fund like this:
• You start the year with $100 of investor capital.
• By June 30, a 439% return turns it into $539.
• By July 28, a 67% drawdown reduces it to $178.
btw this example ignores inflows and outflows. Disclosures suggest they were relatively small, but newer investors didn’t earn the full 439% return.
How could it fall so quickly?
• Situational was leveraged 4–5× (WSJ) So $539 may have supported approximately $2,156–$2,695 of positions, plus options.
• A $361 loss is 67% of the fund’s capital, but only 13–17% of its leveraged exposure.
SanDisk fell about 37%, Bloom Energy 31%, other major longs declined sharply, and some software stocks the fund was short rose against it. With leverage, those gains and losses were multiplied.
Then came the margin calls.
The banks had lent SALP billions against its portfolio. As the positions fell, the fund’s equity (which is what the banks are lending off of), collapsed, so the banks demanded additional collateral.
He tried to raise more capital to meet the calls on Weds, and sold shares to do so earlier this week... But selling gradually was becoming dangerous. Other traders knew its positions, bet against them and made them harder to sell without pushing prices down further.
So SALP sold the vast majority of its public stock portfolio to Citadel in one block at a discount of more than 10% and used the proceeds to repay its lenders, closed every short and eliminated all leverage.
It kept its roughly $3.5B Anthropic stake, its other private investments and a much smaller, fully paid public portfolio.
So the fund wasn’t liquidated because it was down for the year, it was still up approximately 80%.
It had to liquidate most of the public book because its current liquid collateral was no longer sufficient to safely support the money it had borrowed.
I saw some interview on here from Steve Cohen where he said said, “Leverage, concentration and illiquidity are the three things that can kill you.” Situational appears to have checked all three boxes!
FWIW I would totally invest in Leopold's Fund now.
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Great startups tend to have great perks. But those perks are a byproduct of their success, not the cause of it.
The best perk of all? Winning. A startup that is winning will easily attract and retain great talent. A startup that isn’t never will, no matter how good the perks are
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Work ethic is a mindset, not a lifestyle.
It is not about how many hours one sits in an office, or how late into the night one works. It is not about how many meetings or emails or deals you get through.
It is about obsession. World class work ethic is about when you can’t help but think about your craft: what to do next, how to improve, how to chase excellence. You think about it all the time. It can be anxiety inducing at times, but always energizing. It’s hard to fake.
Every successful person in a field with power law outcomes has had it.
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💯 coding becoming truly agentic is the canary in the coal mine for the agentic era. It’s hard for most to grasp because the improvements are step functions, not linear.
It feels more like a switch turning on. Everything suddenly works, seemingly out of nowhere
The events of the last 6 months in technology are arguable amongst the most important in human history
The tools now increasingly exist for recursive self improvement of models & agents
We are likely in very early lift off & exponential
Largely unnoticed outside of tech
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