Updated: Jan 19
Is it me, or is everything moving too fast?
This fledgling decade opened with Covid barreling into our consciousness, speeding across the globe like some sort of exponential exit out of the 2010s.
Nothing has felt the same since.
Now, at the end of 2021, the latest Covid variant, known as Omicron, is surging across the United States while the United Kingdom just reported more than 100,000 daily cases for the first time since the pandemic began. Just days later, the UK’s updated number was over 183,000.
It’s the latest twist to our “Exponential Age.” And the dizzying speed with which aspects of our economy are being reorganized seems no less confounding.
Accelerating into Blitzscaling….
The grocery delivery space is an excellent place to start pondering an accelerating online business landscape.
According to research firm eMarketer, in 2020, overall online grocery sales in the United States grew nearly 64% year over year, and 80% in the United Kingdom. Meantime, there seems no end to the number of startups offering ultrafast, app-based grocery delivery (ie, arriving in less than 15 minutes). The likes of Gorillas, Fridge No More, 1520, Buyk, Jokr, Getir, and Gopuff continue to pitch investors in search of fresh cash. They’re “blitzscaling” so as to expand networks of warehouses – micro-fulfillment centers known as “dark stores” – where they can stock goods for rapid delivery.
The frantic pace of investment and high valuations is head-turning. Consider that in 2021, Istanbul-based Getir brought in close to $1 billion in funding and is now valued at $7.6 billion. As for Gopuff, the company is raising $1.5 billion via a convertible note offering in a third fundraising round this year. In a July fundraising round, Gopuff was valued at $15 billion.
Such startups are not only competing with Uber and DoorDash, but Amazon. In 2021, Amazon launched its own online grocery ordering and delivery business in the United Kingdom that offers same day grocery delivery through Amazon Flex drivers. Now the company intends to expand the service throughout Europe and the United States in 2022, coming into direct competition with Instacart, which we recently learned is piloting its own ultrafast grocery deliver service even as it seeks to maintain its main grocery customers. Reportedly, Instacart has been asking for proposals from logistics companies that would manage couriers, aiming for a February launch in the United States.
The Great Resignation and Crypto Mania….
The grocery delivery realm slips seamlessly into the next instructive trend – that of talent turning over across the economy at a rapid clip. Indeed, Instacart just watched company president Carolyn Everson leave her new job after being at the company all of three months. Such management turmoil isn’t anything new at the company. As The Information put it on December 10:
Since January, Instacart has hired a new CFO, COO, president and CEO—Fidji Simo, who succeeded founder Apoorva Mehta—along with a host of lower-level staffers. With so many new faces, some casualties aren’t surprising. Everson wasn’t the first to flame out. Max Eulenstein, who joined Instacart in April as a product vice president before Simo became CEO, left within a few months. Meanwhile, another, longer-tenured senior executive, ad sales chief Seth Dallaire, recently departed for Walmart.
Clearly, Carolyn Everson is not alone in her restlessness. And while grocery delivery is one thing, the rush of talent into the crypto space seems even more frantic. Crypto investor Katie Haun, Andreessen Horowitz’s first female general partner, is leaving the firm after three years (Andreessen Horowitz has invested in at least 45 crypto deals this year so far). She’ll be launching her own crypto-focused fund early in 2022.
There are still more examples of VC partners racing off to specialist firms. David Pakman of Venrock, one of the oldest VC firms, recently jumped to a crypto-focused VC firm called CoinFund. The rush of talent into crypto is remarkable to watch. As The New York Times notes:
… beyond that speculative mania, a growing contingent of the tech industry’s best and brightest sees a transformational moment that comes along once every few decades and rewards those who spot the seismic shift before the rest of the world. With crypto, they see historical parallels to how the personal computer and the internet were once ridiculed, only to upend the status quo and mint a new generation of billionaires.
The examples keep coming. Just this month, the CFO of Lyft, Brian Roberts, jumped ship to join crypto startup OpenSea. “I’ve seen enough cycles and paradigm shifts to be cognizant when something this big is just emerging,” he said. “We are Day One in terms of NFTs and their impact.”
When You’re Not Ever Sure What You’re Reading….
And so we come to our third instructive trend as 2021 comes to a close, perhaps the most confounding of all – that mad mix of blockchain-powered promises, from crypto to NFTs and the metaverse. Many believe these “Web3” businesses will be the foundation for a third generation of internet companies that will challenge existing “Web 2.0” giants such as Facebook, Microsoft, Google, and Spotify.
And one recent chronicle in The Information seems particularly apt in capturing the weirdness of it all. The piece describes the opening night of a show at the garish-sounding Bright Moments gallery in Soho called “Incomplete Control,” featuring the work of “non-fungible token artist” Tyler Hobbs and a crowd of 100 or so “crypto influencers, venture capitalists, and traditional art connoisseurs” who “minted” their own original Hobbs by spinning the artist’s code into a one-of-a-kind NFT.
“The art,” the article opens, “was worth at least $7 million, and it hadn’t even been created yet.”
The excitement of the scene seems palpable, even as most readers are doubtless confused about exactly what’s being described. And then suddenly –
At 8:15 p.m…. the screens around the gallery went black and the chatter faded, replaced by a band tapping cymbals in anticipation. The crowd gathered around the display at the front of the room.
The black screen lifted like a pixelated curtain, revealing the first mint: a chaotic tangle of gray lines intersecting with blue, yellow and red rectangles. The pieces were accompanied by live commentary from Hobbs, who watched as his own art revealed itself to him. ‘This one has a strong positive energy to me,’ he said as a piece with yellow splotches scrolled by….
Something is going on here, but it’s hard to know exactly what. The entire scene is a head-scratcher. Alas –
As this weekend’s stories demonstrate, the race to mint NFT’s is overtaking everything in life once held precious, from fine art orgies in Miami, to fancy downtown galleries in New York, to the dusty archives of venture capital firms on Sand Hill Road….
Will this mad, non-fungible rush end in tears? Will it flame out spectacularly, like so many Tom Sachs NFT rockets? Or… will it continue to evolve into new formats and new tech mediums? Only time will tell.
As The New York Times puts it:
The technology industry… has been moving far beyond social networking, search and ecommerce. The cryptocurrencies industry is booming. Globally, the value of all outstanding cryptocurrency has jumped from $200 billion two years ago to more than $2 trillion — approximately the same as the value of United States currency in circulation. This is from an industry that was born only a dozen years ago, when the biggest cryptocurrency, Bitcoin, was introduced.
According to financial data firm Pitchbook, there’s already been over $30 billion invested in crypto startups this year. It’s a furious pace. Now Silicon Valley expects dozens of new crypto-focused investment funds to launch in 2022.
One article comment called this, “A new world of exponential speed of investing.” Indeed. In a sense, it feels like the metaverse is already here, and we’re all walking around inside a giant casino. Sort of like what’s happening in the world of sports betting, which – like the world of online grocery delivery – is also frantically spending money to acquire new customers as more and more states legalize online sports gambling. As one sports betting media CEO put it, “This is unequivocally a massive category in terms of revenue and bet handle… which is just growing exponentially.”
Voices in the Wilderness
In the face of both a new Covid variant’s exponential spread and the network effects behind online businesses' exponential growth, many grope to get their sea-legs. And some voices call to us from the wilderness.
Take, for example, Robert McCauley of Boston University, who just took to The Financial Times to argue that comparing Bitcoin to a Ponzi scheme is “unfair to Ponzi schemes”:
… in calling bitcoin a Ponzi scheme, critics are arguably being too kind on two counts. First, Bitcoin doesn’t have the same endgame as a Ponzi scheme. Second, it constitutes a deeply negative sum game from a broad social perspective….
In its cashflow, bitcoin resembles a penny-stock pump-and-dump scheme more than a Ponzi scheme. In a pump-and-dump scheme, traders acquire basically worthless stock, talk it up and perhaps trade it among themselves at rising prices before unloading it on to those drawn in by the chatter and the price action.
To conclude, an economic analysis of Bitcoin must recognize its uniqueness in the history of manias. As an object of speculation, Bitcoin is unprecedented in the degree to which there is no there there.
More voices cry out. Charlie Munger thinks the markets are crazier now than they were at the end of the 1990s. He believes cryptocurrencies, “should have never been invented.” According to Munger, China made the right decision to ban them, while the United States “has made the wrong decision” not to.
And then there’s investor Paul Singer, who seems to agree with McCauley and Munger. Singer sees today’s markets as being even crazier than those of the late 1990s:
At present, risks are at, or close to, the highest levels in market history. For instance, the market capitalisation of all domestic US public and private equities is now at 280 per cent of gross domestic product, much higher than the previous peak of 190 per cent just before the collapse of the dotcom bubble. And household equity allocations are at an all-time high of 50 per cent.
When it comes to the metaverse specifically, even Elon Musk recently expressed skepticism to The Babylon Bee. “I don’t want to be like some old codger, dismissing the internet in ‘95 as not amounting to anything,” he said. “So there’s some danger that that’s the case, but I’m currently unable to see a compelling metaverse situation. Web3 sounds like more marketing than reality. I don’t get it.”
Of course this is the same Musk, Dogecoin cheerleader, who claimed in a recent tweet that he’s, “thinking of quitting my jobs & becoming an influencer full-time wdyt”… later suggesting he might join OnlyFans.
For his part, Marc Andreessen insists that the New Economy Emerging is no laughing matter. He seems unphased by the doubters. Things are going at a manic pace, but the blockchain is real. “There’s a fundamental technological breakthrough that has actually happened,” he said in an August interview on Bloomberg TV. “We take it very seriously.”
Are we sliding deeper into a strange kind of euphoria as a way of coping with the sadness of a seemingly unending pandemic? I’m not quite sure what’s going on. But things certainly seem to be moving fast.
Happy New Year.
See you in 2022.
Image credit: The Wisdom Daily