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General Life Framework and DeFi Sr. Analyst Slides
Level 2 - Value Investor
Welcome Avatar! One of the interesting conversations we had on Twitter surrounded: 1) avoiding mistakes, 2) general life arc/framework and 3) what we were looking for with the recent DeFi hires. After some back and forth we’re going to post some of the good quality slides but won’t give out the winning slide deck (three were good enough to be hired). This way some anonymity can remain and you can see why the slides were good/what was expected.
One of the bigger concepts here is that you can live a *good* life by simply avoiding dumb decisions. Dumb decisions include: 1) debt at an early age, 2) following your passions and 3) making life long commitments before you are mature enough to make these types of decisions.
#1 Debt: This is what the college education scam has created: “the life-long rebill”. Unlike other debt it is difficult to get out of it even if you can’t make payments! What a scam. Paying $10K+ for classes that you’ll never use in the future. Thinking back, maybe 10-15% of the classes we took are even relevant now. That is being generous.
Now if you do have to take a small loan to get your first career (you are risk averse) you should focus on getting internships/small odd jobs to make sure you don’t have much debt after 4 years. As a good rule of thumb, no more than 20% of your first year of income should be debt. So if you’re going to graduate and make $100K for the computer science degree you got, $20K is more than enough debt. Also. There are boatloads of bootcamps that can get you high quality careers without the burden.
Mortgage: Since home ownership is a cult/religion no one will like this. Unless you’re at least 10 years into the work force, do not get a mortgage. Only exception is if you are 100% certain you will stay in that particular city for the next decade. Why? In the beginning of your career you want to be mobile/malleable so you can move to new opportunities.
Credit debt is a huge no and shouldn’t even be considered.
#2 Following a Passion: This is a huge mistake. For someone to be successful their passion should be “winning/being the best”. If you’re the best or at the top in nearly anything, you will make money (yes there are exceptions but the point is the same).
Instead of asking if you are passionate, you should ask if you’re good at it. This is the first step. As you try and learn 100-200 different skills (not a ton of time, just a try out) you should be pretty good at 10-20 of them. After you figure this part out, you should then look at the following: 1) is this skill valued? coding/sales are valued today, 2) is this skill scalable?, 3) will this skill be useful long-term?, 4) is this skill easy to learn for a robot? and 5) can i combine this skill with something else i am good at?
Once you’ve done this a few times, you can then focus on how much you like or dislike it. In the end, you’re going to have to do a ton of tasks you hate. If you want to break out of Shawshank eventually you have to crawl through the sewage.
Flow: 1) try a bunch of tasks, 2) figure out what you are naturally skilled at, 3) cut down to list of things that will actually make money, 4) cut down to the ones that can be combined/scaled and then 5) do everything you can to focus in that direction.
If you want to ensure failure, just follow your passions with no regard to scale or income. This is a trap that the masses believe in. Just because you love something doesn’t mean you’ll be good at it. The only thing you should love is winning/being the best.
#3 Avoid Life Long Commitments: If you are under the age of 30 the chances that you know what you want out of life is practically zero. The funny thing is that anyone who is in their 20s will disagree with that statement! So. Basically writing to a brick wall.
In a last ditch effort anyway, do not make any lifelong commitments in your mid-20s. These include: 1) having kids, 2) getting married, 3) getting a mortgage or 4) committing yourself to a single form of income. The fourth one gets ignored all the time even though it is just as important as the other three. If you are making $100K a year from a single income you are *worse* off than a $50K a year career with a $50K a year side income/online business. It isn’t even close. The mental barrier of thinking the only way to earn money is with “option A” is something that 99% of people cannot shake off by the time they are 30. Also. It only gets harder as your responsibilities likely go up in your 30s as well.
Autist Note: You know you’re talking to someone who only has one skill when they are surprised you’re able to learn something new. This is an “impossible” task according to them. You can’t possibly learn a new way to make money because they only have one form of income and will never get a second. Funny enough if you follow the transitions on here they all make logical sense: 1) investment banking, 2) sales, 3) lots of degenerate gambling, 4) lots of affiliate marketing software products and 5) crypto. Tons of gamblers and affiliates found the crypto space first for clear and obvious reasons (remittance and software understanding).
General Life Arc
There are really four decades we focus on. 20s, 30s, 40s and 50s. After age 35-40 you probably have your own views anyway. And. We still walk through the clear pitfalls/frameworks we’ve seen that work/don’t work.
Twenties: Your focus should be on learning a million different skills. Most people in their 20s just "survive” the weekday and live for the weekend. This is a complete mess.
Reality. Anyone working a 40 hour work week is really working 15 hours a week or so. The rest of the time is spent doing nonsense (talking to co-workers, watching netflix/sports highlights on their phone etc.). If you’re really looking to get ahead, you should try to find a way to get a t least 2-3 income streams up by the end of your 20s.
If you’re in the technology field you’re probably in the best position. Focus on remote work and try to do 2-3 at home positions. After you build up a good “balance sheet” or liquid net worth, you should drop it to two income streams and focus on building a side business. In the end, equity is the only real way to wealth. Owning a business that earns money while you sleep.
Thirties: Here you should be in scale mode. Scale, scale, scale and maintain as much ownership as you can. Partnerships don’t work (don’t even bother), the ideal situation is 100% ownership. If you need to give away ownership, do it in the form of having investors instead of having a partner. There is practically no situation where there is a 50/50 partnership (someone is always doing more than 50% of the work). You will “suddenly” meet a ton of people who want to invest in your company/work with you *after* you succeed. This is generally how life works. Everyone waits for the hard stuff to be done then they jump in with both feet!
This age band should be the “rocket ship” part of your life. It could be early 30s or later 30s. Everyone has a different path. However. By your 30s you should be seeing a “step-function” in your life. The people who give up usually do so some time in their late 20s or early 30s.
The funny part about this is that your career and your side business should be going vertical. When you suddenly stop caring (doing the minimum to bleed out) or quit, this will shock pretty much everyone you work with. They will be appalled that you were not 100% committed to the Company the whole time. If you can, you always bleed it out but sometimes you are forced to quit (business goes vertical).
Autist Note: As you pass people who were “ahead” of you in life, expect a lot of animosity. You’ll be faced with 1) people claiming you’re crazy, 2) people attempting to say you got lucky, 3) people attempting to grift off of you and 4) people unhappy that you did well. In the end, the vast majority have huge egos and they will assume you failed to protect their own egos (coping mechanism). Don’t be surprised and stay positive. How? Write down all the people who were happy when you made it. You’ll count them on one hand.
Forties: Learn to delegate. At this point you should begin to look around you and think about a tapering off plan. In the end, everyone loses a step as they age. If you look at history, most people start to become disconnected around their 50s. This means you need to prepare for your 50s by learning how to delegate everything you have.
If you don’t believe this, do a general check of all the people you admire. When they hit 50s or so, they are usually behind the times. Many are there in their 40s as well (they turn their focus to a particular niche).
Instead of trying to fight this (you end up losing more money fighting it) the goal is to delegate and find talented people in their 20s/30s to hand the responsibility over.
We know there are “exceptions”. Always some guy or some girl who breaks the mold. Don’t really care about exceptions. If you are smart you will learn to identify talented people so you can free up your time for the main revenue items that matter.
Fifties: As mentioned most lose a step here. Honestly it makes sense. People have kids, they start to juggle family + work + health all at the same time (in their 40s). So they really start losing a step in their 40s and it’s a slow boiling frog scenario (they don’t realize they are falling behind since it’s a slow bleed).
You can always keep up, it just isn’t as easy when compared to 20s/30s where you simply avoid blacking out at the club (too much). Can’t really ignore your kids education, sports leagues etc.
Beyond = No Idea: Haven’t looked out that far! Enjoy you life and think about how to give it back when you move onto the after life.
DeFi Finalist Slides
Generally speaking, the slides on Yearn Finance were the most in-line with what was expected. Professionalized and relatively dense. And. There were several other slides that were great so you can get a feel for what the DeFi Substack will look like. Instead of putting up all the slides from one person we’ve provided some of the better slides with commentary.
Team Slide: Overall, solid across the board not much to change. This is a hint that the DeFi substack will use a similar format to this to explain each team. “Newbies” don’t care about team slides. We care a lot. This is how companies/protocols are built to last. You’d be crazy to invest into any public company without knowing the CEO.
Valuation Slide: Great snapshot slide. some issues as follows: 1) no time frame listed for prices, 2) too big of a range using our Substack numbers and 3) should have used some other comparable protocols to shorten up the football slide. Overall, visually the football field slides are a lot easier to read
Summary Slide(s): Visually a good slide very simple and to the point. That said, we think using comparisons is always easier and a comp sheet or a tear sheet would be easier. For example if you have 10 different DeFi protocols it’s easier to say why you would or would not buy it if all ten are listed. Will fix that for the Substack. Not included here but this person also put in the “top borrows”/”use cases” for the protocol which should be a standard.
Introduction Slide Example (Easy to Follow)
Comp Table Slide: This was solid, the formatting needs work but it is a good snapshot. Generally speaking, we’re probably going to go with a denser comp table with 15-25+ coins. This way you can see everything in one place and we can write text above the slide instead of including it into the slide deck
Risks: This was a high-level risk slide. The format is good but in our opinion not dense enough and not enough information. Would be useful for a quick glance but needs more details for each one. In our opinion, every single one of these DeFi protocols have major risks so it’s smart to try and find all of them. Tons of ponzinomics everywhere.
Valuation Slide: Tons of information and dense. That said it does give clear thought process on what to compare DeFi to and how to value it. Our general view is that you shouldn’t have more than two charts/tables if you’re doing a valuation slide since it just becomes too dense. Would use the sensitivity analysis and he projected income piece only to save space and enlarge the text.
Recommendation Slide: No example! There is always something that can be improved upon and we found it odd that everyone gave price targets *only* on the coin. Meaning they didn’t say what they thought the price of BTC/ETH would be or give any risk framework for it. Pretty strange as there is no reason to invest into a DeFi coin if it is going to underperform say BTC or ETH by 50%!
In general, everyone reading this (or looking at any investment) should always have a “probability framework”. Ask yourself what is the percentage chance it outperforms ETH/BTC and percentage chance it does *not*. This will make it a lot easier to remain focused on the protocols you invest in.
DeFi Substack: Now you have a feel for what the slides/content will look like. The above were simple submissions made in ~10 hour case competitions by each individual. The Substack will be run by five people (BTB, Brain, Iguana, Owl and Duck). When you combine all of that you can assume the quality will be higher, better visually and we can answer more questions in the future.
Point of emphasis. If you are just looking for buy/sell opinions you don’t need the DeFi substack. The DeFi substack is catered towards Turbo Autists looking to go it alone in the future with various projects. It is just too important to ignore in our opinion. So. Expect the substack to move in the direction of more and more education. Building out software info, data sets etc. to track everything and make it easier to read in one place vs. a bunch of random comments all over twitter or overcharged services at $5K a year.
Disclaimer: Nothing here is to be deemed legal or financial advice in any way. These articles are simply opinions written by a Cartoon Bull Avatar run by anonymous individuals.