(Day 6/60) Wow, those responses we're incredible
This is week 2, and I can start to see more clearly the shape of the product we're building with this community
Frankly, I just figured I was embarrassing myself in order to hold myself to some level of accountability that wouldn’t allow me to back-out of a personal challenge. Like having a gym buddy..but mine is this newsletter :)
But these responses were amazing!!
That honestly made my morning, so thank you to whoever wrote those. I love the idea of keeping the submissions anonymous, so I truly don’t know, but I am truly thankful <3.
»»»»> The suggestion box is always open!
Based on your suggestions..
You asked…
'“Give me your 30 second take on something trending.”
So here’s my 30 second hot take on a trending topic.
#7 Trending on Twitter this morning is First Republic Bank (FRC 0.00%↑ )
(disclosure 1, I own the stock and have continued to buy)
(disclosure 2, I AM NOT an expert, it’s very likely I’m WRONG, do NOT follow this as investment advice)
If you hadn’t heard: The Californian financial regulator took possession of First Republic Monday, resulting in the third failure of an American bank since March, after a last-ditch effort to persuade rival lenders to keep the ailing bank afloat failed. -CNBC May 1st 2023
Functionally, the operations for customers and depositors will not change one bit. There are 84 offices in eight states, and starting today they will officially open as JPMorgan Chase Banks (JPM 0.00%↑). Meaning depositors of First Republic Bank will become depositors of JPMorgan Chase Bank. Cool, no harm no foul.
But here’s where things get tricky, what happens on the business side now that JPM is acquiring FRC. Hm. Equity, debt, what happens….
My hot take is that equity holders will be totally fine. I’ve been buying FRC shares all the way down (LOL, likely huge mistake, I started at $18 and purchased more as low as $2 on Friday evening).
But this was my logic, it was pretty obvious to me that JPMorgan would acquire Republic by Friday because I looked deeply into FRC’s earnings call, and have been studying their financials for weeks, and simply put they have an INSANELY good wealth management business. It actually grew by 7% and had $111B of capital inflows even despite all the outflows on deposits. And, factoring out the $30B loan from the major banks that happened a few weeks ago, then the majority of deposits (52%+) are from consumers not businesses. *from what I gather in back of napkin math, and a beginner level understanding
All that is to say, JPMorgan gave FRC basically free money in order to keep them alive last month. I think JP Morgan Chairman and CEO Jamie Dimon most likely knew what he was doing, he was propping up FRC so he could take them over. A genius move, and also one that did 100% help stabilize the banking system. So it was both good for the system as well as good for his business… once gain proving why he’s a local legend.
He acquires “substantially all” of the First Republic assets. I have no clue what that means yet, and by the time you read this you’ll likely have more news then when I’m writing it (5:26 AM EST).. but First Republic had about $229.1 billion in assets and $103.9 billion in deposits. So this is a big deal.
I BELIEVE, THE FIRST REPUBLIC BUSINESS IS REALLY REALLY VALUABLE!
When I purchased shares on Friday the business was valued somewhere around a $500-700M market cap. If you total their past 12 months of profit… they’ve made well over $1.3B+.
Plus their preferred equity (= assets - liabilities) is in $3B, so they’re trading below equity value. PLUS, they’ve generated $1B in profit in the past year, and have a market cap that implies they’re trading below a 1 P/E ratio.
Anyways, all that is to say, I’m a huge fan of this bank, the FDIC, and JPMorgan for the way they handled all of this. I was very impressed. I really hope that I find out that the Equity holders we’re saved by JPMorgan and we get some JPM stock :), I do believe FRC was a strong company, is a strong assets, and the equity holders should be rewarded for continuing to fund this through the past week. Either that, or I’m going to lose all my money lololol, but it was a risk I felt was smart to take based on FRC having good earnings report last week and feeling like the fundamentals were strong.
»»»»> Want my 30 second take on something else, or have other ideas to improve the newsletter?
Alright :), next you asked for….
“Startup lessons. Web 3 & XR Lessons. Vision of the future. Networking tips. Sales and pitching tips. Networking events in your field online, offline, hybrid. You have a lot of knowledge in networking and Startups. Build in public is also good, maybe tieing up everything together. I learned a lot from you in the past, I wish I had more time working with you to learn more.”
&
“I would tie in the other elements of your startup, web 3 & XR and networking experience and lessons and made it more educational. For me that is what I would like to see more, you have so much knowledge in those areas. A lot of your network is super successful, but there are a lot of people with less experience/success who would like to absorb your knowledge”
Where is the VR/AR/Web3/Metaverse/Crypto headed?
Just last night I found a new feature on Coinbase, called ‘Quests.’ Basically they challenge you to do a certain task which forces you to learn ‘how to use crypto.’ great idea.
I swapped USDC for ETH.. and I believe it cost me $0.90 in gas and I only swapped $3 worth. So, it seems like transaction fee’s are still working their way down because that is 30%… much too high. I’m not 100% positive how Optimism works as a Layer-2 solution when it comes to fee’s, does it scale proportionally or is it always somewhere near the sub $5 range? If the latter, then Crypto is farther along than most people think. If it’s the prior, then Crypto is still headed in the right direction, but just it will take more years and be hard to sustain any sort of high-volume transaction business anytime soon. If you have info about OP transaction fee’s - let me know
This is a great example of where VR/AR/Web3/Metaverse/Crypto is within the adoption curve. It’s in the education phase for consumers. Those technologies are all so new, that it’s going to just fundamentally take some time, and a lot of people asking a lot of questions, to ever really find the mainstream hit success the industry is looking for.
I’m personally most bullish on music x NFTs. It feels like NFTs are nothing more than membership cards to online communities. And frankly, that’s probably going to be a Trillion dollar industry. I think online access passes will become the way we operate within the immersive internet in the future. The ‘immernet’ or what some might call the ‘metaverse’
I’m probably somewhere around being early to mid adopter of new tech.. depending which tech we’re talking about. So examine where I am today = I still am learning crypto basics, studying AI basics, using my VR headset only for basic things like gaming (rarely, bc the form factor is uncomfortable on my face), and just beginning to start donating crypto to other Music artist on Audius.co.
Personally, I find I’m learning things more frequently, and the lessons within those many new technologies are just starting to compound on eachother. We saw this with AI…… AI powered processing chips drove a lot of VR/AR innovation, and now that horsepower was applied to something more simple (2D text) and now we have ChatGPT.
»»»»> Thanks for your suggestions :), that was fun, if you have more…
GOALS TODAY:
Send day 6 newsletter - done
Set up Doncor Hard money lending website with an online ad account so I can test to see if we can rank within Google and generate 50 page clicks for $8 CPC (this is the research which I did and it looks like sadly that’s going to be the cost per click in order to try this and get good data) - tbd, never done this before
Chat with some ex-meta alumni to see how they’re handling layoff and see if I can find synergies to work on anything with anyone, and/or see if they’d want to test out my Vouch product for hiring
Since I was traveling, I’ve been slow to respond, will try to catch up with everyone on LinkedIn/Email today. Sorry if I missed, please feel free to bother/nudge me as there’s been a tone going on this last week
Open Role, you interested?
I am specifically looking for a co-author who wants to write VR/AR/Metaverse content on a daily and/or weekly basis for my Metaverse Monday Newsletter, I want to let you run the VR/AR specific newsletter with my oversight. This is an incredible opp for someone to leverage my network and their writing/research ability within VR/AR who wants to go really deep into it and build THE BEST newsletter for VR/AR around.
»»»» DM me LinkedIn.com/in/donstein
To avoid mixing too much ‘hustle p*rn’ as one of you so elegantly put it, I’m going to set up a VR/AR/Metaverse/AI/NEW TECH specific newsletter, you can sign up here:
GOALS TOMORROW:
-Let’s just make it thru today first :)