Software is Eating the Markets

Additionally, with bonds at all-time low rates, investors can make a rational argument that they should actually diversify into more interesting asset classes like art, trading cards, real estate, and sneakers, which are now more accessible due to Reg A+ and the businesses the regulatory change has enabled. It’s hard to measure the impact of “fun” ... See more

We will see more products that make owning stocks feel like owning a piece of the company itself over time, whether from existing startups or new entrants. One idea would be to create a digital equivalent of AmEx’s “Member Since ‘00” card for stock ownership. I would love to show off the fact that I’ve owned Shopify since $89 and SNAP since $20 wit... See more

But while each new form factor or delivery method for music stole share from the previous generation, new forms of video and video games increased the size of the overall pie.

Like mobile gaming, new investment platforms will grow the overall investing pie.

In San Francisco, owning a Ferrari wasn’t nearly as cool as owning pre-seed shares in Stripe or Uber. In some ways, startup equity behaved more like a Veblen Good -- one that paradoxically sees more demand as the price goes up -- than like an investment.

When angel investors wrote checks into startups, they were really buying two things: an asset with a potential financial return and a status symbol.

Like angel investments in the Bay Area, when you add social and experiential value to other asset classes like stocks, sneakers, and cryptocurrencies, price is divorced from hard math and becomes more emotional.

Although they’re often derided as irrational, or gamblers, or YOLO traders, retail traders might be behaving perfectly rationally when you price in everything else that they’re buying: an experience, a status symbol, a digital good, belonging, entertainment, education, and more.

Software is eating the markets. Flush with cash and empowered by new tech platforms that blur the lines between investment, experience, entertainment, and digital assets, a segment of consumer investors are shifting money from consumption to investment. Consumer investors expect different things from their investments than professionals do and valu... See more

One of the reasons that angel investing in the Bay Area was such a status symbol is that it was fairly exclusive.