Hic Sunt Leones
Disclaimer: the following post is not as technical as my normal blogs. It’s much more reflective on the state of the investing world today. You might even say it’s a little sanctimonious. I won’t be offended if you came here looking for my take on the most recent AfterPay acquisition and walk away a little disappointed.
“Here Be Lions”.
If you are looking at a map in 1509, and you saw that phrase, you would probably think twice about exploring that part of the geographic location. Lions are, much like the Wu-Tang Clan, not to be *clears throat* trifled with.
When we dissect that (somewhat dubious) phrase, folks weren’t ever looking for lions, they were trying to avoid them. That phrase didn’t mean “Hey, come over here and discover something cool!” It meant “stay the hell away”. But back when there were parts of the map that were still unexplored, there was less of a desire to face the unknown. Being an explorer was not nearly as romanticized. Hell, romanticization of ideas like that wouldn’t exist for several hundred more years. What people cared about was staying alive.
Despite all of that, someone did explore those unknown corners. Sometimes they found nothing at all. Sometimes they found a part of the world that was already mapped out, just on someone else’s map. Sometimes they found something incredible. And sometimes they met their doom. Each time they ventured into the unknown - the lion’s den - they knew that one of the above outcomes was a possibility, and that some of them were certainties.
When I was a kid, I did romanticize explorers and adventurers, much like most kids my age. I thought Indiana Jones was the coolest guy alive. I wanted to explore new worlds and chase after buried treasurers. These dreams were signs of my young curiosity on full display. As I grew up, I became less interested in chasing after treasures and finding new worlds, but my curiosity didn’t wane all that much. And, if I were to be particularly cheesy, I would say I try to carry that same curiosity whenever I am looking at new new investment opportunities. Finding out and discovering new worlds like robotics integrators, enterprise SaaS companies, or access control businesses is something I find genuinely very interesting. Much like explorers from old pulp movies, financiers today face unknown paths, new journeys, and parts of maps that still say “here be lions”. They might be coming across a new asset class, an emerging manager, a new growth pattern, or a new technology altogether. Each one poses perils and fears.
There are plenty of investors who are typically looking at the same place on the map, just trying to find hidden nooks and crannies on well-trodden terrains. Discovering new parts of a the map can be scary because, well, “here be lions”. Warning about lions was more about self-preservation - focus on what you know and stay away from what you don’t know and you will live a longer life. The shorthand effectively meant, this region is uncivilized and should be avoided by civilized folk as it will not share the traits that they have become accustomed to.
Of course, there is a reason folks still stay away from the unknown: there is risk in entering into new territories. You could get blown up, have your lunch eaten, get eaten alive yourself. Exploration isn’t for everybody. So of course, explore at your own peril. But the beautiful thing about the world we live in today is that information is effectively free. Exploring ideas is pretty cheap. Your biggest risk might be opportunity cost - maybe you spent the past five years focused on investing into Gold, when you should have been thinking about Bitcoin.
In 2021, the finance world is full of unexplored territory. Maybe it’s a reddit message board, or a Discord chat room talking about NFT’s, or a twitter thread about the importance of Ethereum. That’s where the lions are hiding right now. Those parts of the finance world’s map have not been civilized and do not play by the traditional rules we have all become accustomed too. They look totally foreign to a private equity investor, a venture capitalist, an multi-family real estate guy. And while they might be uncivilized, that doesn’t mean that opportunity doesn’t exist.
In fact, it’s the exploration of new territories that can lead to abundant wealth, both literally and metaphorically. If you are scratching your head and thinking to yourself “I don’t understand the rules of the road when it comes to NFT’s”, don’t fret - it’s not that you don’t understand them, it’s that there aren’t any rules, yet. They are currently being written by the players deep in that territory right now. And while that may be scary, it’s likely that they won’t stay that way forever - civilization will come for these territories at some point.
But who civilizes these new, unchartered geographies will have a lot to say about what their future holds. So while sharp elbows are being thrown and empires are being built, the rules of the road are being changed by the folks in the scrum. You can sit back and watch it happen and wait for law and order, or you can try and make an impact yourself.
It’s not just about making an impact either, but learning more about the world in which you live as well. Personally, I know that I would be a much better investor if I actively paid attention to the rules of the road that are being written by current crypto enthusiasts. I know that I would have a better grasp for retail investor appetite if I paid more attention to meme stocks. That’s not necessarily important because I am going to make a lot of money in those sectors (although maybe you could), but because it will help me have a better view of the future. If I study Ethereum and Solana, I might be less surprised when they upend the current payments industry’s infrastructure or radically alter life via smart contracts (if that is actually what happens). Or maybe I will study them deeply and become convinced that our current banking system will look very similar in twenty years.
Or to use a non-tech example, maybe I need to pay attention to opportunity zone investing to have a stronger view on real estate investing over the long term.
Or maybe none of those things will change the world as we know it today. But there is one thing for certain: the world as we know it today will likely be different in five years, ten years, fifteen years, and so on. As a finance professional, I think it’s my job to try and better understand where everything is headed.
To go back to our original metaphor, explorer’s weren’t really trying to predict the future. They were just trying to better understand the world we lived in, which in turn helped them have a fuller view of the present.
I know this whole blog is a little more preachy than I normally post. That’s not because I think I am a particularly good explorer of new financial topics. This is to serve a reminder for me, as much as for anyone, to keep an open mind and that new things shouldn’t be written off immediately just because they aren’t immediately in my purview. If the last 18 months have taught me anything, it’s that you never know where the next thing is going to come from. So keep your mind open, your maps out, and don’t stop exploring.