Inside the ‘Billionaires Bunker,’ Grimes goes AI, MedTech startups up, China VCs down, Drug Lord saves rainforest, What’s hot in Greentech, Just War? and more trouble...
China takes Big Brother into the metaverse
CCP-owned China Mobile aims to create a ‘digital identity system’ that tracks and stores a user’s ‘social scores’ to their digital ID.
China has implemented a highly controversial ‘social credit score’ system measuring citizens’ loyalty to the CCP metrics since 2014. A low score can result in individuals being blacklisted from public services and other inconveniences and violations of civil liberties. A document the CCP released in November 2022 detailed a plan to finally roll out the system on a unified national scale.
Now, the totalitarian regime also wants to apply its spy and control tactics to virtual worlds. They will accomplish this by tracking a person’s ‘natural’ and ‘social’ characteristics and ‘identifiable signs’ to their digital ID so ‘law enforcement’ can peruse and store this invasive personal data permanently. The proposals, drafted by the state-owned telecoms operator China Mobile, floated a ‘Digital Identity System’ for all users of online virtual worlds, or metaverses.
The CCP is also leveraging TikTok and smartphone data, and other tactics to build a centralized, national facial recognition database that can identify any of China’s 1.4 billion people within three seconds. Already, China has more cameras per person than any other country in the world, and their cities are the most surveilled in the world.
The bottom line is that the CCP is creating a system of commercial rewards and state controls. Most Chinese people have been convinced that surveillance provides a safe environment and the credit system keeps citizens trustworthy. Perhaps this is where the comparisons to the bleak and relentless iron fist in the velvet glove Aldous Huxley’s Brave New World foretold.
In George Orwell’s Nineteen Eighty-Four, he forecasted a managerial industrialism, in which man builds machines that act like men and develops men who act like machines, where the protagonist is doomed. The only thing Big Brother can’t monitor is your inner thoughts.
Sounds like the CCP’s playbook—and could be our own as well, if we do not seize on the decentralization compurting opportunity, and take back the power!
Did you know?
(Overheard on the streets of the global Silicon Valley. Got any hot insider tips? Email us @ editor@cryptoniteventures.com)
The Billionaire Boys Club
While Ronan Farrow’s Elon Musk’s Shadow Rule, New Yorker post was a bit conspiracy-ladden and certainly exaggerated, it is still a provocative read. The milieux in the Middle East proved a ‘Just War’ is no longer possible; providing Internet access rather than cluster bombs sounds good to us.
Billionaire Bunker. Since the COVID-inspired flight to Florida, Miami residential real-estate megadeals are on the up. Recently, Jeff Bezos bought into the neighborhood that includes Ivanka and Jared, Julio Iglesias, Carl Icahn, Tom Brady, Citadel chief Ken Griffin, and Kayak founder Steve Hafner.
Zuck’s gospel of efficiency, which led to 24,000 layoffs at Facebook, has been implemented at the Chan Zuckerberg Initiative, a philanthropic organization dedicated to ‘curing all disease.’ Founded by Zuck and his wife, Dr. Priscilla Chan, who runs the place, CGI handed pink slips to 50 staffers last week.
The Bohemian Club, the secretive San Francisco men’s club that is the subject of most conspiracy theories about the rich and powerful, is being sued by its ‘valets’ for not paying enough to survive the boozing members’ ‘frat house’ behavior, especially during the annual July retreat in the redwoods.
VC Whispers
VC medtech startup funding is on its way back up across an increased variety of medtech categories—including surgical robotics, cancer care and neurostimulation, precision medicine, treatment for sleep disorders, and mixed reality surgical navigation, says Pitchbook’s new MedTech Report.
Prominent Chinese VC funds like CMC, Genesis Capital, and Sinovation struggle to raise funds from US and overseas investors due to rising geopolitical tensions. Total US dollars raised by China-focused VC/PE funds peaked at $49B in 2021, sunk to $21B in 2022, and just $2B this year.
AI Tacker
The AI race is on. Google’s in-house competitor to OpenAI, Gemini, launches this fall. The AI software will generate conversational text and imagery and power its Bard chatbot, which competes with chatGPT, its apps like Google Docs and Slides, and license to app developers through Google Cloud.
It stands to reason that former Elon GF and baby mamma Grimes would be the first artist to offer fans a 50% split on royalties for AI-generated music using her voice. The Canadian electro-pop artist likes the idea of ‘open sourcing all art and killing copyright’ and operating with ‘no label and no legal bindings.’
The US Career Institute has ranked the top 65 jobs with the lowest risk of automation via AI and robots based on the skills required to do them and projected growth by 2031. The top jobs are heavily weighted towards physical and mental health.
A judge upheld a finding from the U.S. Copyright Office that AI-created art isn’t copyrightable because copyrights are only granted to human works. A ruling that should give Hollywood studio honchos pause. The counter-argument is that IP ownership should be vested in the machine’s owner.
Best on the Block
The blockchain and AI power couple. Bitcoin miners are seeking to exploit the AI boom by meeting. 'It’s critical that published data gets and validated as authentic, and there’s no better way than the Bitcoin blockchain.’ says Fred Thiel, the CEO of Marathon, one of the largest publicly traded Bitcoin miners.
A Bitcoin sales pitch framework based on new on-chain analytics. BTC asset manager ARK Invest and cryptocurrency research house Glassnode developed an investment measure based on the last time a BTC coin moved. Heavy ‘coinblock’ destruction suggests that long-term holders are selling.
Western Union’s CEO Hikmet Ersek told analysts they are actively exploring integrating Ripple’s blockchain technology and its native digital asset, XRP, to facilitate cross-border payments. This follows the Saudi Arabian Monetary Authority's agreement to implement Ripple’s blockchain software as well.
Coinbase says the National Futures Association will allow the exchange to offer crypto futures products to users. Derivatives products are regulated by the Commodity Futures Trading Commission (CFTC) and fall outside the purview of the SEC, which has been busting crypto companies right and left.
On Hollywood
Sound of Freedom ranked third at the box office in a summer that premiered Barbie, Oppenheimer, and the new Mission: Impossible and Indiana Jones sequels. Producer Stefano Da Frè credits ‘the forgotten viewers’ for the film’s success who feel that Hollywood elites are out of touch with their core values.
‘It’s like a mutual fucking,’ says a casualty of the 100-day-old writer and actor strikes that have cost the California economy at least $3B so far. Our advice to artists: Embrace the underlying innovation forces causing the disruption (e.g., blockchain artist-to-fan distribution and NFTs) and take back the power.
Netflix will shutter DVD.com on September 29, 25 years after they shipped their first DVD—Tim Burton’s Beetlejuice. To appease their 1M remaining subs., Netflix says they could keep discs rented before the close date and enjoy final shipments until the discs are gone.
Going Green
Green tech top trends: Vertical farming (uses less land, less water, and can be set up in cities), Composting (turning food waste into fertilizer), Wave energy (using ocean waves to generate electricity), and Green Batteries (crucial in the transition to renewables).
Low-carbon construction is also in vogue to correct an industry notorious for releasing harmful pollutants. Startups incorporating cleaner construction materials are developing green materials such as hemp-based concrete, bamboo flooring, sheep’s wool insulation, and non-toxic paints and glues.
Ivan Mordisco, a cocaine warlord with a bounty on his head, is protecting the Amazon rainforest more than almost anyone else on Earth. The destruction of the Colombian Amazon fell 76% QoQ from a year ago, but environmentalists fear violent outlaws will not produce lasting results.
The Science of Life
Generative AI is beginning its journey into life sciences, with a potentially profound impact on drug discovery, predicts Greg Yap at Menlo Ventures. a backer of Genesis Therapeutics, which serves as a prime example. The Silicon Valley biotech company raised $200M, co-led by Andreessen Horowitz.
Buyers beware. American society is mentally and physically falling apart, and anxiety cure (snake oil?) merchants are booming. However, much of the science behind the products is considered dubious by many scientists and researchers, and supplements do not require FDA approval.
Entrepreneurial Huddle
Valuations for late-stage VC investments (Series D and above) experienced a sharp -33% quarter-over-quarter decline. In contrast, startups at the earliest stages (seed and angel rounds) experienced 5% growth in median valuation.
A stalled sales growth curve can result from poor activation, your product novelty has worn off, seasonal swings, or a marketing channel that has been saturated. Finding the levers to correct the stall requires patience, analytical abilities, and deep customer empathy.
Straight outta Silicon Valley
Who cares? Facebook launched a web version of Threads this week as usage of the new X (formerly known as Twitter) competitor has fallen off a cliff since launching in July.
‘Quiet quitting’ refers to a trend where unmotivated, disinterested, checked-out employees do the bare minimum, just enough to get the job done and nothing more. Gallup’s latest worker poll found nearly six in 10 adults in America are quietly quitting after the pandemic and prioritizing ‘me time.’
Chaos & Complexity
To us, Tesla’s are shaped like big penises and are primarily driven by drivers seeking adequacy. If that wasn’t weird enough, we now suffer from the ‘Tesla Syndrome,’ where innovation worsens everything. Ubers often cost more than taxis; streamers serve up Suits rather than original movies, etc.
Gallup reports that compared to its same poll in 2006, we think New Orleans, Miami, Los Angeles, and Washington, DC, are safer. At the same time, Americans feel less secure in Chicago, San Francisco, Minneapolis, and Seattle. Dallas was considered the safest city in 2006 and still owns that status today.
Gen Z and Joe Biden in 2024 don’t mix. A recent New York Times-Siena poll shows that Joe Biden has a dismal 4% approval rating with voters ages 18 to 29 versus 17% of the general population. This is a stunning reversal of support, given that nearly two-thirds of young people voted for Biden in 2020.
What the Math Says
An ‘alarming’ new study suggests that 45,000 people hospitalized by COVID with no history of hypertension showed signs of high blood pressure within six months. In addition, people over 40, men, black adults, and those with pre-existing conditions showed elevated risk.
A recent YouGov study commissioned by Australian crypto exchange Swytyx found that 23% of the country’s population holds crypto assets. A study released last February of 2,000+ American adults suggests 20% own crypto, and the vast majority see an urgent need to update the financial system.
Know Thy Enemy
This week, the FBI identified six cryptocurrency addresses tied to hundreds of millions of dollars in stolen cryptocurrency tied to the Democratic People’s Republic of Korea (DPRK). Recently, authorities in Australia arrested a sixth Chinese National involved in stealing $100M crypto from US victims.
China faces record youth unemployment, a deep housing slump, stagnant spending, and deflation. The Chinese people think that their dictator, Xi Jinping’s bias against the private sector/market economic practices that fueled China’s previous success, can turn around the spiraling economy.
Due to rising political tensions, the Chinese nuked Intel’s $5.4 billion planned acquisition of Israel’s Tower Semiconductor. The deal was part of Intel CEO Pat Gelsinger’s plan to enter the exploding chip foundry market currently dominated by Taiwan Semiconductor.
Revive Thyself (or not)
9 Ways to tame anxiety naturally: 1) de-catastrophising problems, 2) prayer & meditation as medicine, 3) belly breathing, 4) no alcohol, caffeine or sugar, 5) more music, 6) eat organic/grass-fed, 7) adaptogens, 8), move, move, and movr, 9) Selank nasal spray— ‘Nature’s Xanax.’
Most US folks between the ages of 35-50 admit to regular binge drinking, 40% are obese, and another 32% are overweight. Translated: 3/4 of us are headed for diabetes, cancer, and other physical limitations that will create a lifetime of anxiety and depression.
Flashback Interview
Venture pioneer Tom Perkins (RIP) unveils what made Kleiner Perkins the dominant VC of his time—circa 1993
At the tail end of his reign as one of Silicon Valley's most powerful VCs, Mr. Perkins told us if he were to start over again in 1993, he would be an entrepreneur focused on the China opportunity.
By Anthony B. Perkins
From the December 1993 issue of Red Herring
By the age of 40, Tom Perkins had already established a legacy of successfully working under his mentor, David Packard, and driving Hewlett-Packard into the computer business. Along the way, he took $10,000 of his personal savings and built a company around a low-cost easy-to-use laser he invented. His initial investment eventually turned into a couple of million dollars when he sold the company to Spectra-Physics. “I guess I was already a de facto venture capitalist before I even raised my first fund,” he told The Herring. When we interviewed Mr. Perkins in his glass-walled office on the thirty-fifth floor of a San Francisco high-rise, we experienced the keen intelligence and casual confidence of his lore. All one has to do to measure Mr. Perkins’ success as a venture capitalist is to count the hundreds of thousands of jobs and billions of dollars in wealth created by the companies his firm has started; many in its spare offices, including Tandem Computers and Genentech.
The Herring: How big was your first fund?
Perkins: Believe it or not, our first fund was only $8 million, which, however, was the largest venture fund ever raised at that time. In the end, we never invested all the money, but we returned hundreds of millions of dollars back to the investors in that first fund.
The Herring: What were your biggest hits?
Perkins: We had two super deals in that fund and only two. They were Genentech and Tandem Computers. Both were incubated by our partnership. I think that we were the first venture firm to try to incubate a company right out of our own office. Jimmy Treybig [CEO of Tandem] and Bob Swanson [chairman of Genentech] were both partners in our fund. In both cases, we were the only venture investors.
The Herring: How would you summarize KPCB’s competitive advantage?
Perkins: Well, everyone says we’re arrogant. I hope that’s not our only differentiating factor. (laughs) I think that we’re proud, ambitious, and work very hard right alongside the entrepreneur. Once we sign the check, we’re on the team. We consider it our responsibility that the company never runs out of money, we help them hire the right people, and we help them identify the risks and put those risks behind them. If anything, we have been accused of being too involved.
Current Wisdom
‘Just War’ then…
‘War is always accompanied by much evil, such as the death and suffering of humans. Therefore, it should only be waged when it is necessary and just, and even then, it is to be conducted with prudence and restraint. In order for a war to be just, three things are necessary. First, the authority of the sovereign by whose command the war is to be waged. Second, a just cause, so that they who are attacked be thereby wronged. Third, it is necessary that the belligerents should have a rightful intention, so that they intend the advancement of good or the avoidance of evil. If a war is to be just, it must be waged in a proportionate manner. The harm inflicted and the costs incurred in war must not outweigh the good expected from removing the injustice. War should not be an end in itself, but a means to reestablish justice and order.’
—Thomas Aquinas, Summa Theologica (1265-1274)
…and now
“There were not sufficient reasons to unleash a war against Iraq. To say nothing of the fact that, given the new weapons that make possible destructions that go beyond the combatant groups, today we should be asking ourselves if it is still licit to admit the very existence of a ‘just war.’”
—Pope Emeritus Benedict XVI’s (then Cardinal Ratzinger) prophetic comments on the day after the US-led invasion of Iraq in 2003. The Iraq Body Count project documents 186,901 to 210,296 violent civilian deaths.