Contrarianism: How to Invest Time & Money | Miko Matsumura - gumi Cryptos Capital

Capital I've been investing in this space professionally since uh 2018 uh I was actually doing Angel investment before but you know really what is a professional investor a professional the word professional next to the word investor means other people's money that's what professional means and the reason why is a professional is someone who is paid right so how do you get paid you get paid by taking fees right so basically I've been I've been investing in other people's money since 2018 in the form of go crypto's Capital so today I wanted to talk to you about contrarianism contrarianism is super super important when it comes to the Future and I'll explain why it's very simple which is effectively that if you look at jobs the thing that is really important is what are the jobs that will be replaced by AI right what is AI going to do so I'll tell you what is I have a way for AI to replace venture capital and it's actually heuristic and the way it works is is the AI looks for y combinator and then they look for hipster shoes and then they throw checks that's my algorithm right so what why is that ridiculous it's ridiculous because it's doing pattern matching right Venture Capital people are famous for doing pattern matching and the thing that's really interesting is that the best entrepreneurs are not pattern matched the best entrepreneurs are pattern breaking they're pattern breaking so the idea that a VC is pattern matching if you if you a VC that does pattern matching you are going to be replaced by an AI you will be replaced by an AI and the world doesn't need you right now there are too many VC in blockchain there's too many right like V why why do I think there's too many VCS because VCS don't make anything VCS don't make products they don't make things all they do is they throw checks they just write M they just throw checks around right so to me they're not actually building anything so the thing that I think is important for me to communicate in this talk about contrarianism is is really ultimately the answer to the question that a lot of people want to know which is they want to know how do I become rich how do I get rich so it turns out that getting rich requires three strategies there are three strategies so the research on how people go from being poor actually it's not even how they go from being poor how do they become rich so strategy number one of how do you become rich is you start Rich so that's the that's in fact that's the best one the best one is you start Rich right what's the best way to make a billion dollar company is to ruin a 10 billion dollar company right so that's the easiest way to get rich is to be rich is to start Rich okay I'm guessing that a lot of you are not already rich so then there's only two left so it turns out that the research suggests there are two other things you can do right the second one is you can get lucky getting lucky right so that's kind of crazy to think but the thing that's really interesting is is that it turns out that Venture is actually pretty hard and what I mean by Venture is pretty hard is if you look at my job right as an investor I say that an investor is someone who puts their time and other people's money or some of their money and they put their care and their attention into projects right and with the sincere hope that everybody in the project becomes deliriously happy right and a venture investor is someone who does this repeatedly even though 90% of the time it ends basically in disaster right and the thing that happens with Venture investing is two super powerful principles one of the super powerful principles is diversification diversification which is we do place a lot of different bets in order to win right and the thing that is important to understand is that the difference between a good VC and a bad VC is obviously performance right but it's performance over time so there are these incredibly large funds like Pension funds University endowments right very very large family offices insurance companies all Sovereign wealth funds Sovereign wealth funds right so this the biggest capital in the world looks at a VC and what you want is you want a fund one with hits so for example uh gomy cryptos has hits in our fund one like we were we LED one of the seed stage rounds into Open Sea you know we were in the seed stage of yield Guild games we were early into uh 1 inch so we we definitely have hits in fun one right so what are you when you have hits in fund one I'll tell you what you are is you are a candidate emerging investor but also candidate dart throwing monkey right which is if you have really good timing you can throw darts like a monkey and you can hit you can have billion dollar outcomes right so the important thing is having hits in fun too so right now we feel like we're having some indicative hits we have some really exciting companies in our fun too but the thing that happens is if you have hits in fund one and you have hits in fund two that's when you become what's called an emerging manager right which means that I could be like the world's luckiest dart throwing monkey right so but I wanted to talk to you about contrarianism and the reason why I think I'm so passionate about contrarianism is I feel like there are two styles of crypto investor and I think that the second style isn't even an investor and the reason why I say that is the two styles are basically fundamental and the second style is narrative narrative investor right yesterday I was looking at a party invite and the party invite said what did it say it basically said Bitcoin Tech reaking and AI that was the invite right so this is about chasing narratives right narrative investing is speculation and and the reason why it's speculation is because you're interested in investing in something based on your ideas of what other people will invest in not based on fundamentals right so to me this type of investing is really gated by something that is a this is zero sum in other words in this short time frame narrative speculative investing there are winners and there are losers and the winners are the ones who sell and dump on the losers that's the game of narrative investing and speculative investing and it is a zero sum game right this is actually not even investing this is trading this is not investing it is trading what is investing investing is you basically have to change the time time frame and you have to basically put the money in and you actually can't yank the money out until the team has actually delivered something amazing and how do you judge how amazing it is you judge its amazingness in terms of how much dissatisfaction does it cure in the market right which is how valuable is what they built right so to me I wanted to say now the thing that is amazing is that there's tons of narrative investing which is speculation and it is zero sum and it is a casino game and basically the way you get rich in narrative investing is you sell you dump on others and you basically try to create Believers so that you can dump on them that is you win at narrative investing and if you are not The Insider who is planning the dump the pump and the dump you will be the one who is getting dumped on right so narrative investing is pretty dangerous I think the thing that I think makes sense is thesis investing thesis investing and the thing that I think makes sense is fundament mental analysis which is you actually and one of the things that's so important is that people look at the story right so they read in social media they're like what do I invest in right and so narrative investing is investing in stories that's a nice story right but fundamental investment is investing in reality it's it's reality right so you have to know so to me the story is what they dream about making right where as the reality is is what they actually made right so you have to figure out who you can trust right you have to figure out which Builders actually know how to build and you need to understand which Builders know which Builders are solving real problems right real problems like if the Builder isn't solving a real problem then you should not invest right because they're just spinning their wheels the other thing that I think is so important is where does yield come from where is yield right I can tell you very simply that yield comes from risk that's where yield comes from right so the idea of oh I can get yield for free right it's no you cannot get yield for free right you can only get yield by exposing yourself to risk right so what can you do about the risk so there's two things so there here's what I have to say about risk which is that the best thing you can do as an investor is you can reduce the risk using skill skill that's the way you do it right and here's the thing is I had on my Facebook a friend sent me a picture of a free solo climber a rock climber and he is climbing El capit toown he is climbing one of the most challenging Rock faces in the world and he's just the picture of him he's just hanging there stuck on this rock and it is just insane right but the thing that's crazy is the reaction of someone seeing this image of the climber is that is risky that is very risky but the thing is maybe it's not risky because of skill maybe that climber has the skill right so I think the thing that becomes important is if you want to earn yield you need skill you it you have to have skill right and if you have no skill like so the amount of risk that you can take the amount of yield that you can take is related to the amount of skill that you have so to me you know if you go into a situation and someone is saying oh you can get 50% apy with no skill I would be careful about that configuration right like to me that's too good to be true and here's the thing is if you don't know where the yield is coming from you are the yield you're the yield like you're the one and how are you giving up yield you are exchanging good money for bad money that's how you are the yield you're exchanging something like ether for some shitcoin is what you're doing right and you're being told that the shitcoin Co is worth more than the ether and then you're believing it right so to me you you've got to convert and here's the funny part is when you expose yourself to risk you can convert use skill to convert risk into non-risk right much like a rock climber people can say oh that's risky it's like no that person's really good but the problem is there are unconvertible risks unconvertible risks risks so it doesn't matter how skillful of a rock climber you are if there is a gust of wind that hits at 100 Mil an hour you're coming off that rock it your grip strength doesn't matter humans don't have grip strength that can hold the mondor Rock at that level so that risk is unconvertible it's an unconvertible risk now here's the thing you could say the climber would be like oh I saw the weather report I was going to go up today I'm not going up today right skill it's skill the person is converting and reducing the risk but the point is is that even on a blue sky in a clear day Sam bankman freed can rug pole the whole industry sorry pardon my French but the point is that there are unconvertible risks and that your skill can be very high and you can still be rugged So based on this the thing that you require is diversification do not put all your eggs in one basket and if you look at what the professionals are doing they're definitely doing that now here's the thing is the idea so the third thing so I said to get rich you need to either start Rich the other one is you get lucky right the third one is actually working hard right working hard gives you an edge but the thing that's interesting is is the magic combination of working hard and getting lucky but the thing that's really interesting is is how do you create your own luck right creating your own luck to me involves skill and the truth right and not narrative right because the thing that's amazing is that there are bull markets when narratives dominate fundamentals and then there's bare markets where fundamentals are dominated by narrative right so right now we're in a bull market but I can tell you that that at the end of all of this right you don't want to be the bag holder right the bag holder is the one who can't sell because they're underwater by like 90x right so they can't sell right and that's the person who got dumped on right so if you traded good money for bad and then they dumped on you because you were chasing a narrative like you know big regret so definitely watch out I think be careful out there make sure you diversify right and I think the thing I wanted to say as a final note on contrarianism contrarianism right is that the it's the opposite of narrative investing because narrative investing is I'm going to invest in something that everybody already believes like for example oh AI is going to be big so I'm going to invest in AI it's priced in it's priced in everybody's already you you're buying high you're not buying low and selling high you're buying High don't buy High Buy Low sell High how do you do it you understand the future right you you predict the future you understand the truth and you're correct now even if you have an idea of what you think the future holds don't put all your eggs in that basket cuz the future is unknowable so you diversify but you still have opinions and you're still contrarian because that is how you win right don't go chasing narratives because the Insiders will just they'll rug pull you they will pump and dump you like the Insiders are going to control the game so narrative investing is a Fool's Paradise and if you can get in and ride it up and get out quickly you might be okay but doing that does not involve fundamental belief and it doesn't involve thesis and it doesn't involve conviction and it doesn't create basically Zer toone benefits right it's a zero some Trader game so I would say I very much encourage you to develop your thesis invest with conviction and pay a lot of attention to Founders and really CU those are the ones who really create and build the future so that's it for me thank you very [Applause] much