RESEARCH

We must create separate ideas and handle our own risks to be better investors. DYOR is crucial.

The only thing unsustainable is your cluelessness.

DYOR: Why

• On social media, there is a lot of false information and divergent viewpoints. All of these facts might be accurate, but they might not be appropriate for your portfolio and investment preferences.

• You become a more knowledgeable investor thanks to DYOR.

• DYOR improves your portfolio's risk management.

My DYOR resources are below.

Messari: Major Blockchains' Activities

New York-based Messari provides cryptocurrency open data libraries.

Major blockchains offer 24-hour on-chain volume. https://messari.io/screener/most-active-chains-DB01F96B

What to do

Invest in stable cryptocurrencies. Sort Messari by Real Volume (24H) or Reported Market Cap.

Coingecko: Research on Ecosystems

Top 10 Ecosystems by Coingecko are good.

What to do

Invest in quality.

• Leading ten Ecosystems by Market Cap

• There are a lot of coins in the ecosystem (second last column of above chart)

CoinGecko's Market Cap Crypto Categories Market capitalization-based cryptocurrency categories. Ethereum Ecosystem www.coingecko.com

Fear & Greed Index for Bitcoin (FGI)

The Bitcoin market sentiment index ranges from 0 (extreme dread) to 100. (extreme greed).

How to Apply

See market sentiment:

• Extreme fright = opportunity to buy

• Extreme greed creates sales opportunity (market due for correction).

Glassnode

Glassnode gives facts, information, and confidence to make better Bitcoin, Ethereum, and cryptocurrency investments and trades.

Explore free and paid metrics.

Stock to Flow Ratio: Application

The popular Stock to Flow Ratio concept believes scarcity drives value. Stock to flow is the ratio of circulating Bitcoin supply to fresh production (i.e. newly mined bitcoins). The S/F Ratio has historically predicted Bitcoin prices. PlanB invented this metric.

Utilization: Ethereum Hash Rate

Ethereum miners produce an estimated number of hashes per second.

ycharts: Hash rate of the Bitcoin network

TradingView

TradingView is your go-to tool for investment analysis, watch lists, technical analysis, and recommendations from other traders/investors.

Research for a cryptocurrency project

Two key questions every successful project must ask: Q1: What is this project trying to solve? Is it a big problem or minor? Q2: How does this project make money?

Each cryptocurrency:

• Check out the white paper.

• check out the project's internet presence on github, twitter, and medium.

• the transparency of it

• Verify the team structure and founders. Verify their LinkedIn profile, academic history, and other qualifications. Search for their names with scam.

• Where to purchase and use cryptocurrencies Is it traded on trustworthy exchanges?

• From CoinGecko and CoinMarketCap, we may learn about market cap, circulations, and other important data.

The project must solve a problem. Solving a problem is the goal of the founders.

Avoid projects that resemble multi-level marketing or ponzi schemes.

Your use of social media

• Use social media carefully or ignore it: Twitter, TradingView, and YouTube

Someone said this before and there are some truth to it. Social media bullish => short.

Your Behavior

Investigate. Spend time. You decide. Worth it!

Only you have the best interest in your financial future.

It’s only a loss if you sell, right?

Nayib Bukele proclaimed himself “the world’s coolest dictator”.

His jokes aren't clear.

El Salvador's 43rd president self-proclaimed “CEO of El Salvador” couldn't be less presidential.

His thin jeans, aviator sunglasses, and baseball caps like a cartel lord.

He's popular, though.

Bukele won 53% of the vote by fighting violent crime and opposition party corruption.

El Salvador's 6.4 million inhabitants are riding the cryptocurrency volatility wave.

They were powerless.

Their autocratic leader, a former Yamaha Motors salesperson and Bitcoin believer, wants to help 70% unbanked locals.

He intended to give the citizens a way to save money and cut the country's $200 million remittance cost.

Transfer and deposit costs.

This makes logical sense when the president’s theatrics don’t blind you.

El Salvador's Bukele revealed plans to make bitcoin legal tender.

Remittances total $5.9 billion (23%) of the country's expenses.

Anything that reduces costs could boost the economy.

The country’s unbanked population is staggering. Here’s the data by % of people who either have a bank account (Blue) or a mobile money account (Black).

According to Bukele, 46% of the population has downloaded the Chivo Bitcoin Wallet.

In 2021, 36% of El Salvadorans had bank accounts.

Large rural countries like Kenya seem to have resolved their unbanked dilemma.

An economy surfaced where village locals would sell, trade and store network minutes and data as a store of value.

Kenyan phone networks realized unbanked people needed a safe way to accumulate wealth and have an emergency fund.

96% of Kenyans utilize M-PESA, which doesn't require a bank account.

The software involves human agents who hang out with cash and a phone.

These people are like ATMs.

You offer them cash to deposit money in your mobile money account or withdraw cash.

In a country with a faulty banking system, cash availability and a safe place to deposit it are important.

William Jack and Tavneet Suri found that M-PESA brought 194,000 Kenyan households out of poverty by making transactions cheaper and creating a safe store of value.

2016 Science paper

Mobile money, a service that allows monetary value to be stored on a mobile phone and sent to other users via text messages, has been adopted by most Kenyan households. We estimate that access to the Kenyan mobile money system M-PESA increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty.

The impacts, which are more pronounced for female-headed households, appear to be driven by changes in financial behaviour — in particular, increased financial resilience and saving. Mobile money has therefore increased the efficiency of the allocation of consumption over time while allowing a more efficient allocation of labour, resulting in a meaningful reduction of poverty in Kenya.

Currently, El Salvador has 2,301 Bitcoin.

At publication, it's worth $44 million. That remains 41% of Bukele's original $105.6 million.

Unknown if the country has sold Bitcoin, but Bukeles keeps purchasing the dip.

It's still falling.

This might be a fantastic move for the impoverished country over the next five years, if they can live economically till Bitcoin's price recovers.

The evidence demonstrates that a store of value pulls individuals out of poverty, but others say Bitcoin is premature.

You may regard it as an aggressive endeavor to front run the next wave of adoption, offering El Salvador a financial upside.

Higher startup valuations are often favorable for all parties. High valuations show a business's potential. New customers and talent are attracted. They earn respect.

Everyone benefits if a company's valuation rises.

Founders and investors have always been incentivized to overestimate a company's value.

Post-money valuations were inflated by 2021 market expectations and the valuation model's mechanisms.

Founders must understand both levers to handle a normalizing market.

2021, the year of miracles

2021 must've seemed miraculous to entrepreneurs, employees, and VCs. Valuations rose, and funding resumed after the first Covid-19 epidemic caution.

In 2021, VC investments increased from $335B to $643B. 518 new worldwide unicorns vs. 134 in 2020; 951 US IPOs vs. 431.

Things can change quickly, as 2020-21 showed.

Rising interest rates, geopolitical developments, and normalizing technology conditions drive down share prices and tech company market caps in 2022. Zoom, the poster-child of early lockdown success, is down 37% since 1st Jan.

Once-inflated valuations can become a problem in a normalizing market, especially for founders, employees, and early investors.

the reason why startups are always overvalued

To see why inflated valuations are a problem, consider one of its causes.

Private company values only fluctuate following a new investment round, unlike publicly-traded corporations. The startup's new value is calculated simply:

(Latest round share price) x (total number of company shares)

This is the industry standard Post-Money Valuation model.

Let’s illustrate how it works with an example. If a VC invests $10M for 1M shares (at $10/share), and the company has 10M shares after the round, its Post-Money Valuation is $100M (10/share x 10M shares).

This approach might seem like the most natural way to assess a business, but the model often unintentionally overstates the underlying value of the company even if the share price paid by the investor is fair. All shares aren't equal.

New investors in a corporation will always try to minimize their downside risk, or the amount they lose if things go wrong. New investors will try to negotiate better terms and pay a premium.

How the value of a struggling SpaceX increased

SpaceX's 2008 Series D is an example. Despite the financial crisis and unsuccessful rocket launches, the company's Post-Money Valuation was 36% higher after the investment round. Why?

Series D SpaceX shares were protected. In case of liquidation, Series D investors were guaranteed a 2x return before other shareholders.

Due to downside protection, investors were willing to pay a higher price for this new share class.

The Post-Money Valuation model overpriced SpaceX because it viewed all the shares as equal (they weren't).

Why entrepreneurs, workers, and early investors stand to lose the most

Post-Money Valuation is an effective and sufficient method for assessing a startup's valuation, despite not taking share class disparities into consideration.

In a robust market, where the firm valuation will certainly expand with the next fundraising round or exit, the inflated value is of little significance.

Fairness endures. If a corporation leaves at a greater valuation, each stakeholder will receive a proportional distribution. (i.e., 5% of a $100M corporation yields $5M).

SpaceX's inherent overvaluation was never a problem. Had it been sold for less than its Post-Money Valuation, some shareholders, including founders, staff, and early investors, would have seen their ownership drop.

The unforgiving world of 2022

In 2022, founders, employees, and investors who benefited from inflated values will face below-valuation exits and down-rounds.

For them, 2021 will be a curse, not a blessing.

Some tech giants are worried. Klarna's valuation fell from $45B (Oct 21) to $30B (Jun 22), Canvas from $40B to $27B, and GoPuffs from $17B to $8.3B.

Shazam and Blue Apron have to exit or IPO at a cheaper price. Premium share classes are protected, while others receive less. The same goes for bankrupts.

Those who continue at lower valuations will lose reputation and talent. When their value declines by half, generous employee stock options become less enticing, and their ability to return anything is questioned.

What can we infer about the present situation?

Such techniques to enhance your company's value or stop a normalizing market are fiction.

The current situation is a painful reminder for entrepreneurs and a crucial lesson for future firms.

The devastating market fall of the previous six months has taught us one thing:

1. Keep in mind that any valuation is speculative. Money Post A startup's valuation is a highly simplified approximation of its true value, particularly in the early phases when it lacks significant income or a cutting-edge product. It is merely a projection of the future and a hypothetical meter. Until it is achieved by an exit, a valuation is nothing more than a number on paper.
   

2. Assume the value of your company is lower than it was in the past. Your previous valuation might not be accurate now due to substantial changes in the startup financing markets. There is little reason to think that your company's value will remain the same given the 50%+ decline in many newly listed IT companies. Recognize how the market situation is changing and use caution.
   

3. Recognize the importance of the stake you hold. Each share class has a unique value that varies. Know the sort of share class you own and how additional contractual provisions affect the market value of your security. Frameworks have been provided by Metrick and Yasuda (Yale & UC) and Gornall and Strebulaev (Stanford) for comprehending the terms that affect investors' cash-flow rights upon withdrawal. As a result, you will be able to more accurately evaluate your firm and determine the worth of each share class.
   

4. Be wary of approving excessively protective share terms.
   The trade-offs should be considered while negotiating subsequent rounds. Accepting punitive contractual terms could first seem like a smart option in order to uphold your inflated worth, but you should proceed with caution. Such provisions ALWAYS result in misaligned shareholders, with common shareholders (such as you and your staff) at the bottom of the list.

Product game mindsets? How do these vary from Project mindset?

1950s spawned the Iron Triangle. Project people everywhere know and live by it. In stakeholder meetings, it is used to stretch the timeframe, request additional money, or reduce scope.

Quality was added to this triangle as things matured.

Quality was intended to be transformative, but none of these principles addressed why we conduct projects.

Value and benefits are key.

Product value is quantified by ROI, revenue, profit, savings, or other metrics. For me, every project or product delivery is about value.

Most project managers, especially those schooled 5-10 years or more ago (thousands working in huge corporations worldwide), understand the world in terms of the iron triangle. What does that imply? They worry about:

a) enough time to get the thing done.

b) have enough resources (budget) to get the thing done.

c) have enough scope to fit within (a) and (b) >> note, they never have too little scope, not that I have ever seen! although, theoretically, this could happen.

Boom—iron triangle.

To make the triangle function, project managers will utilize formal governance (Steering) to move those things. Increase money, scope, or both if time is short. Lacking funds? Increase time, scope, or both.

In current product development, shifting each item considerably may not yield value/benefit.

Even terrible. This approach will fail because it deprioritizes Value/Benefit by focusing the major stakeholders (Steering participants) and delivery team(s) on Time, Scope, and Budget restrictions.

Pre-agile, this problem was terrible. IT projects failed wildly. History is here.

Value, or benefit, is central to the product method. Product managers spend most of their time planning value-delivery paths.

Product people consider risk, schedules, scope, and budget, but value comes first. Let me illustrate.

Imagine managing internal products in an enterprise. Your core customer team needs a rapid text record of a chat to fix a problem. The consumer wants a feature/features added to a product you're producing because they think it's the greatest spot.

Project-minded, I may say;

Ok, I have budget as this is an existing project, due to run for a year. This is a new requirement to add to the features we’re already building. I think I can keep the deadline, and include this scope, as it sounds related to the feature set we’re building to give the desired result”.

This attitude repeats Scope, Time, and Budget.

Since it meets those standards, a project manager will likely approve it. If they have a backlog, they may add it and start specking it out assuming it will be built.

Instead, think like a product;

What problem does this feature idea solve? Is that problem relevant to the product I am building? Can that problem be solved quicker/better via another route ? Is it the most valuable problem to solve now? Is the problem space aligned to our current or future strategy? or do I need to alter/update the strategy?

A product mindset allows you to focus on timing, resource/cost, feasibility, feature detail, and so on after answering the aforementioned questions.

The above oversimplifies because

Leadership in discovery

Project managers are facilitators of ideas. This is as far as they normally go in the ‘idea’ space.

Business Requirements collection in classic project delivery requires extensive upfront documentation.

Agile project delivery analyzes requirements iteratively.

However, the project manager is a facilitator/planner first and foremost, therefore topic knowledge is not expected.

I mean business domain, not technical domain (to confuse matters, it is true that in some instances, it can be both technical and business domains that are important for a single individual to master).

Product managers are domain experts. They will become one if they are training/new.

They lead discovery.

Product Manager-led discovery is much more than requirements gathering.

Requirements gathering involves a Business Analyst interviewing people and documenting their requests.

The project manager calculates what fits and what doesn't using their Iron Triangle (presumably in their head) and reports back to Steering.

If this requirements-gathering exercise failed to identify requirements, what would a project manager do? or bewildered by project requirements and scope?

They would tell Steering they need a Business SME or Business Lead assigning or more of their time.

Product discovery requires the Product Manager's subject knowledge and a new mindset.

How should a Product Manager handle confusing requirements?

Product Managers handle these challenges with their talents and tools. They use their own knowledge to fill in ambiguity, but they have the discipline to validate those assumptions.

To define the problem, they may perform qualitative or quantitative primary research.

They might discuss with UX and Engineering on a whiteboard and test assumptions or hypotheses.

Do Product Managers escalate confusing requirements to Steering/Senior leaders? They would fix that themselves.

Product managers raise unclear strategy and outcomes to senior stakeholders. Open talks, soft skills, and data help them do this. They rarely raise requirements since they have their own means of handling them without top stakeholder participation.

Discovery is greenfield, exploratory, research-based, and needs higher-order stakeholder management, user research, and UX expertise.

Product Managers also aid discovery. They lead discovery. They will not leave customer/user engagement to a Business Analyst. Administratively, a business analyst could aid. In fact, many product organizations discourage business analysts (rely on PM, UX, and engineer involvement with end-users instead).

The Product Manager must drive user interaction, research, ideation, and problem analysis, therefore a Product professional must be skilled and confident.

Creating vs. receiving and having an entrepreneurial attitude

Product novices and project managers focus on details rather than the big picture. Project managers prefer spreadsheets to strategy whiteboards and vision statements.

These folks ask their manager or senior stakeholders, "What should we do?"

They then elaborate (in Jira, in XLS, in Confluence or whatever).

They want that plan populated fast because it reduces uncertainty about what's going on and who's supposed to do what.

Skilled Product Managers don't only ask folks Should we?

They're suggesting this, or worse, Senior stakeholders, here are some options. After asking and researching, they determine what value this product adds, what problems it solves, and what behavior it changes.

Therefore, to move into Product, you need to broaden your view and have courage in your ability to discover ideas, find insightful pieces of information, and collate them to form a valuable plan of action. You are constantly defining RoI and building Business Cases, so much so that you no longer create documents called Business Cases, it is simply ingrained in your work through metrics, intelligence, and insights.

Product Management is not a free lunch.

Plateless.

Plates and food must be prepared.

In conclusion, Product Managers must make at least three mentality shifts:

1. You put value first in all things. Time, money, and scope are not as important as knowing what is valuable.

2. You have faith in the field and have the ability to direct the search. YYou facilitate, but you don’t just facilitate. You wouldn't want to limit your domain expertise in that manner.

3. You develop concepts, strategies, and vision. You are not a waiter or an inbox where other people can post suggestions; you don't merely ask folks for opinion and record it. However, you excel at giving things that aren't clearly spoken or written down physical form.