Hello friends 👋,
Welcome to the weekly edition of our newsletter. The Pallet Post features conversations with awesomely insightful professionals, jobs from companies they recommend, and some of our own takeaways from building a startup.
Pallet People is a deep dive into experiences: failures, successes, and everything in-between, of founders, directors, and high-level professionals. At the top and bottom of each segment you'll see a guest-curated list of companies you can follow to track jobs from! In Packy's case, he's releasing a list of his portfolio companies, which feature tons of not-so-well hidden gems!
Today's guest is the wonderful Packy McCormick, newsletter writer, business strategist, and meme-maker extraordinaire.
Finding your niche
I think I was more intimidated by other writers at first. Was I going to do tech strategy better than Ben Thompson? If not, why even try? The thing that really got me over the hump is realizing the thing I can do that he can't: being less serious and allowing that light heartedness to alleviate my worries about getting things wrong. I could be more "out there". That was the unlock for me. Someone like Ben Thompson he can't just like guess stuff and make jokes. He has to be serious because that's his brand. So if I could do something that pushes the boundaries a bit, there was an opportunity there.
Packy's Investment Thesis
Great teams and big markets. Obviously, all the normal stuff has to be there. Something I'm finding really interesting— there is a continuously growing number of companies where storytelling really matters. More and more companies are getting smarter earlier and earlier. So before, a company would have some sort of feature and they'd launch with that. They would find success being just that feature. Nowadays, it seems like everybody has a wedge that they can lever into a bigger, longer term thing. There is a narrative that ties a huge future vision to the thing that they're starting with now. Those are the ones that are the most compelling and interesting. Where as an investor you're like "Oh my god, if these seventy-five things happen this could be massive". And there's a clear plan to get there. I think I can come in and help figure out how to tell those stories.
On Disruption Theory
The interesting thing about disruption theory is that the companies being disrupted realize that the threat is looming. And on top of that there's structural, cultural, even organizational barriers in place to prevent them from responding to opportunity. They don't want to go downmarket because it'll erode profits. Let's say you're Google right now, and you had built the world's largest, greatest money printing machine ever. And all of the sudden, somebody says, "Let's start deemphasizing that, and actually build something that allows people to own certain keywords and then pays them whenever it's searched." They'd kill that person.
Breaking Into Newsletters
I'm definitely extroverted. But I feel like there are two types: marketers or salespeople. I realized I'm much more of a marketer than a sales person in that I hate asking people one-on-one for anything. So the newsletter format where I'm speaking directly to an audience, instead of individuals, just worked better for me. I didn't have to go to any one person and make introductions or ask them to come to events. And I had been writing this newsletter called "Per My Last Email" for about a year at that point. So I shut the physical community down and basically put it all into the newsletter. I was already doing some roundups on business so it was a somewhat logical transition into writing full-blown essays.
How many people were you writing for at that point?
There were 400 people on the list at that point. I figured out my niche pretty quickly — combining business strategy and pop culture. So at first I was mixing like doing movies and business strategy each once a week. But eventually that transitioned into this question of "can we make learning about strategy and finance more fun by just lightening the tone and not taking it too seriously while still doing the actual analysis". That's kind of a long-winded way of saying none of this was planned. It kinda just came together.
Was their immediate traction?
When it was my initial email list it grew pretty slowly. I was really only doing links to helpful things. It wasn't outlandishly successful when I wasn't doing it full-time. But when I really starting writing full essays people started to subscribe. But still, every week feels like a mini-disaster. I hit send and if there isn't immediate feedback on Twitter or people aren't sharing it I'm like "shit, this is the week that people realize I'm not good at this anymore". But I fight through it and ultimately there hasn't been a week where I've lost like a thousand subscribers.
Do you feel your audience is loyal at this point?
Building an audience is a really hard thing to start, but then, I don't like to use this word because it's overused, but it's almost anti-fragile in a sense because it would take a mass exodus from my subscribers to really fall a part. Everyone leaving at the same time.
In terms of the actual content of the newsletter, were you inspired by anyone?
I think I was more intimidated by other writers at first. Was I going to do tech strategy better than Ben Thompson? If not, why even try? The thing that really got me over the hump is realizing the thing I can do that he can't: being less serious and allowing that light heartedness to alleviate my worries about getting things wrong. I could be more "out there". That was the unlock for me. Someone like Ben Thompson he can't just like guess stuff and make jokes. He has to be serious because that's his brand. So if I could do something that pushes the boundaries a bit, there was an opportunity there. But certainly he's the biggest inspiration.
What are some companies you'd quit, Not Boring for?
Stripe is one of the very few that I would do that for because I think like obviously just huge world changing potential and they cared deeply about good writing and communication. I wish I had gotten in at a lower value. Ramp is another cool place to work, they have fantastic design and I love their team. I wouldn't have guessed that a business credit card company was something I'd be intrigued by but thats how it is these days.
Packy's Investment Thesis
Great teams and big markets. Obviously, all the normal stuff has to be there. Something I'm finding really interesting— there is a continuously growing number of companies where storytelling really matters. More and more companies are getting smarter earlier and earlier. So before, a company would have some sort of feature and they'd launch with that. They would find success being just that feature. Nowadays, it seems like everybody has a wedge that they can lever into a bigger, longer term thing. Companies where there is a narrative that ties a huge future vision to the thing that they're starting with now. Those are the ones that are the most compelling and interesting. Where as an investor you're like "Oh my god, if these seventy-five things happen this could be massive". And there's a clear plan to get there. I think I can come in and help figure out how to tell those stories.
Is there a type of idea, or some sort of industry / company type that makes you less risk averse? Like you're just down?
Hm, I'm not sure. I will tell you I think the riskiest one we've done was a syndicate investment into this company called Crucible. They have an SDK that gives games Web 3.o powers. You can use a single identity to log into a bunch of different games in virtual worlds, or bring your NFTs and skins from one world to another. Totally early and totally crazy.
What's so risky about it?
Well the way the industry is structured right now, with Epic and Unity they can basically tell a company like Crucible to go fuck themselves. They can choose to close off their games and make it so that they can't integrate. And then they're dead. But generally with the metaverse and web 3.0 stuff, there's just such huge potential and it's hard in these early stages to figure out the right path. I also like Fintech stuff generally, but in that sector its way more about competitive dynamics. Talent marketplaces are hot right now.
👀 are they?
Haha, I mean Pallet obviously, but I also recently invested in a company called Pesto, which essentially trains and matches Indian developers with US jobs.
Is that like Andela?
It's a bit like Andela but obviously not Africa focused. It started as a developer bootcamp and really the realization there is that you don't need to train the India market much on the tactical side. There may be some small stuff, but what you really need to do is build a community that helps them understand the cultural aspects of working for a US company. They've done a ton of business which is great. I actually think it would make a lot of sense for them to talk to you guys at Pallet because there's just so many qualified Indian engineers but few are super trusting on their sales side. I also did Panther, which makes it easy to spin up remote teams anywhere in the world. So they become the employer of record essentially anywhere. It's a huge unlock.
Completely tangential but just popped into my head— do you think remote work is going to kill exploitative outsourcing?
It depends on the job type right. It's a lot easier for the best people, wherever they are, to have a bit of leverage at this point. The optionality is there. You could be an outsourced engineer in a back office somewhere or go to Pesto and get a great job at a big company you've actually heard of. And its pretty meritocratic, compared to regular outsourcing jobs. I will say that to be average, you're still kinda fucked. You're probably more fucked now than ever before. But if you're really good, anywhere you are, it's easier and easier to find the right opportunities.
Responding to Packy's piece: Who Disrupts The Disruptors
Something I love about essays is that once you've written something, once you've cited people and made a point, you enter a discourse. So I just wanted to respond to your piece with a couple of my own questions.
Let's do it! Just as a meta point here, this goes back to what I was saying about Ben Thompson. In the case of this essay, it's more future-looking— I'm trying to look at theory and ascertain whether certain things could possibly make sense. Half of it is based in the goal of just making people think, not getting it right.
And I'd argue that's exactly what's great about it— these are topics my co-founders and I argue about all the time in the office, whether its going to be this trend or that trend. Jumping right in: You talk about how when it comes to Web 3.0, smaller companies with less resources are going to be able to "plug" into the blockchain's scale. And they're going to use that as a sort of competitive advantage to side skip any weakness they might have based on size and stage. What's to stop larger companies from doing the same thing? What stops them from getting there first? Is it domain expertise? Structural blockers? Race to adoption?
I don't think it's domain expertise. Like fuck there's crypto people who work for the IRS, right? Pay people enough money to come work for Google and they'll be doing it too. Every big tech company is trying to do a crypto thing. Facebook tried to do Libra. The interesting thing about disruption theory is that none of the companies being disrupted ever realize that the threat is looming. And on top of that there's structural, cultural, even organizational barriers in place to prevent them from responding to opportunity. Let's say you're Google right now, and you had built the world's largest, greatest money printing machine ever. And all of the sudden, somebody says, "Let's start deemphasizing that, and actually build something that allows people to own certain keywords and then pays them whenever it's searched." They'd kill that person. No chance they're doing that because the money they're making is fueling all these other bets that honestly have not been doing particularly well.
Funny you mention that because my co-founder Kai actually had the idea of creating some sort of derivatives market for Google where you can essentially make bets on search volumes you think are going to go up. Two-sided market where if the expected search is X and 80% of the people are taking the under, it'll sort of level itself out until its equal.
That is 100% going to happen on Crypto. Like for sure. Especially since the equivalent right now, options contracts, they're so long and complicated. They're not well-suited for that type of thing. It's going to be much easier on Web 3.0 to build something like that. Just make a smart-contract.
Are there some platforms potentially well-suited to adopt ?
Twitter maybe. They've already said they want to do blue sky and like a decentralized version. Maybe it happens. Maybe it doesn't. Their business model sucks that much right now that they probably have the least to lose. Microsoft has actually done a really good job of being very forward-thinking. Their evolution has been one of the most under-appreciated things in big tech. They just decided to go open and work with open-source. That being said, they're not going to create some decentralized version of office where you buy office coin, they're going to sell you a license. Nobody's going to disrupt their core baby. And so that's where I think opportunity comes. It's not like they can't do it or that they won't, or won't try mini-experiments— they just won't orient themselves to be totally decentralized and open nor do I actually think the disruptors will be totally decentralized.
Obviously you can't perfectly predict it, but you seem to be referring to some kind of hybrid ?
Yeah there's probably going to be a lot of very regular front-ends with some kind of web 3.0 back-ends. So it'll all be a kind of hybrid. At the same time, the thing about disruption theory is that it never makes logical sense in the moment to go do the new thing until all of the sudden you're like "Oh fuck".
With established revenue streams
Well, again, Facebook is trying to do Libra— micropayments for a free flowing social economy type of thing. That's expensive and slow on current rails. So what if they did their own kind of stable coin. It's a little feature that could be really powerful and easily plug into Instagram, WhatsApp. Maybe Microsoft could do something but it's less obvious. I think they'd probably try it on GitHub where stars become some form of crypto-based micropayment. Or some kind of MineCraft virtual economy. Ultimately I think the technology enables different things that we can't frankly picture, we don't know what companies will build.
Feels like everything you've mentioned relates in some way to finance, payments, coins, is that going to be the main application of Web 3.0?
It's not just that. There is going to be this element of switching dollars out for crypto, doing one minute options trading because everything is settled so quickly, the financial use cases are the most obvious and the easiest to attract energy too.
We've actually talked about some Web 3.0 possibilities at Pallet. Half jokingly half serious. Lenny's had huge success on his job board, and there's a sort of natural supply and demand there, so we've just been shooting the shit on creating a coin and price-to-post is done in said coin and is determined on analytics: eyeballs, applies, quality applicants and so on. That's been an interesting discussion.
I mean it's interesting, Lenny is an investor?
Yes, he is.
So for people like Lenny and me or whatever, who see the upside and want to invest that's great. But it's still fundraising, obviously as you're seeing, it's a slow and clunky process, with a ton of documents. But you could make it so that the first thousand people who joined and made job boards all had some stake in the success of Pallet overall. And you could do that in a way that you couldn't do in the traditional equity fundraising side. That's where it really gets interesting.
When we partner with people we definitely try and manually align incentives as much as possible.
And I think with permissionless, and I don't like a lot of the vocabulary around web 3.0, for whatever reason, permissionless sounds like its anti permission. A lot of it feels like the man versus not the man. From a narrative perspective, that's a useful early kickstarter for conversation, but not useful longterm. That idea that its permissionless so its not like you have to sit down and give a pitch. You don't have to waste the time saying the same thing a million times over.
I had never thought of that angle.
The things that have really, really strong network effects are hard to break down. But I think that's where crypto is the most dangerous because the easiest way to dissolve a network effect that's predicated on finding people to complete a certain transaction, like Linkedin's network effect comes from the fact that maybe you'll meet somebody who can give you money, if you can shortcut that and make the "get money" part more direct you can break that network.
Network effects become completely redundant in that case because it's like the end goal is already achieved. And nobody need to suffer through the means.
The other interesting thing here is that I think it allows for more seamless appreciation, recognition and rewarding of different jobs that happens. So like maybe there's somebody who doesn't have an audience but is really good at connecting people to the right jobs. There are tons of important agents in the job-search process that can all be incentivized to funnel their energy into pallet versus a LinkedIn or something else because they have a direct incentive to do that.
And again, we're trying to achieve that incentive affect not through Web 3.0 but by capturing as many communities as possible and inviting businesses to follow. If we have a natural business demand because of our volume, we get to unlock this long-tail of participants who, like you said, don't have an audience.
Yeah and that's super interesting. And as interested as I am in the future of Web 3.0, you're probably best served building non-crypto. If you want to get something off the ground, and this is what makes disruption so hard, you're going to want to use the stuff that already works. Even as a startup with no vested interests. It's easier to build on existing tech than on the blockchain.
My intuitive take is that realistically the people who are most well-positioned to disrupt are the people who are willing to fail.
Which is why the speculation piece of it is so interesting, because its both a good and bad thing. You're attracting people who aren't going to necessarily take the business risk but they'll enter themselves into the ecosystem by making some cash on a crypto.
Do you have a Bitclout? And did you claim it?
I don't know if I claimed it or not. I did the tweet but there was some other stuff I had to do and didn't do it. We had a Twitter Spaces on this with Joe Carlson who knows exactly what she's talking about and she was destroying it. The arguments for it just seemed a bit fluffier but hey, who knows, they're backed by great investors so it's a hard one to sus out.
Do you think the fact that very few people truly understood it drove that interest? Or is it more that direct money grab you were referring to earlier that breaks down network effects?
It's interesting because there have been Web 2.0 versions of this, betting on athletes, having a stock market for people. I don't know what Crypto does in this case that makes it easier to do that. I could be missing something.
Going into NFTs, in the Disruptors piece you talk about how NFTs are turning non-consumers into consumers. I probably have the tendency to agree with you in the case of digital art, but I'd almost say its the inverse. It's turning non-producers into producers. Like the people who are buying NBA Topshot cards, it might be getting some new people here and there because the product is so cool and new, but don't you think its capitalizing on the same people who are spending so much money on physical cards or memorabilia?
I think it's both. I think there's a distinction I didn't make clear between the fact that its the NFT format itself driving new consumers and the fact that there's a bunch of new crypto rich people. Most people who are buying the expensive NFTs are the people who just made a fuck ton of money on whatever coin. Those are non-consumers probably. They weren't going to a Christie's auction. And there's different ways of creating new consumers not exclusive to NFTs. Like Masterworks allowing for fractional ownership of fine art. Obviously Web 3.0 is not the first disruptor of all time but I do think its causing both non-consumers and non-producers to participate. And those are virtuous cycles, because the more non-producers become producers the more different types of shit there is out there the more people you can attract. So there's a feedback loop there as well.
The fact that NFTs and this sort of digital authentication has no historical precedence, it almost creates this self-fulfilling value. It doesn't matter what the piece is. The fact that its an NFT gives it value. What's your take on how that's going to move forward? I'm seeing a lot of non-valuable art being sold at huge prices.
Where it comes over time, there will be an NFT premium over what it would be if it was just a 1x1 physical piece. Everything trends towards what the value is, if it was physical. Topshot probably has a little more value because it does something a bit different. 1x1 digital pieces that are consumable will have value over time. But that premium will go away at some point. The NFT art isn't that great, but there's all this cool stuff you can by it being programmable that you simply can't do offline. You can speculate on the Super Bowl by buying an NFT that turns into the winning's team logo. There's so many layers above that. Art that changes programmatically with the weather. That piece of digital art will have the value that it alone will have.
I suppose in my thoughts I overlooked the more unique technical aspects you can achieve with the format. Just looking through the marketplaces, SuperRare, Foundation, etc, it just looks very amateur. Some of it is good. But there's also an interesting question of medium. For visual art it works great. But seeing things like Mirror, for writing, seems like the dynamics are a little different. Are you on Mirror?
Yeah I minted a piece on Mirror. We did a twitter spaces with Bored Elon Musk this afternoon. And I've been making this dogshit art in Figma for the cover art. And its a running joke that it's really bad. But basically he told me if you mint this as an NFT and call it the ugliest piece of promo art ever made, I'll buy it. And so I did, and he bought it. And I just made 600 bucks. That was a funny use-case.
That is incredible.
I also wrote this piece called "Power to the Person" that's all about different technologies, Web 2.0, Web 3.0, just in general tech is making it easier and easier for individuals to run more complex businesses. And over time you can imagine with the proliferation of APIs and AI becoming more standard and user-friendly, you can imagine a reality where one person can truly run a trillion dollar business. So for that piece, I did an auction where I split the proceeds with all the people who I cited in the piece itself. These little ideas that are way too expensive to track and manage become somewhat easier with NFTs. It's hard to picture what the ultimate manifestation will be, but I do think its easy to say that there will be some amazingly interesting ones.
Maybe a trillion dollar business if you can afford the SaaS fees...
Right but that's a different story.
Is it accurate to say that because it's so flexible, while there's no way to predict exactly what will happen it'll get used in so many different ways that something is bound to hit?
Totally and we haven't even talked about composability. You can plug in all these different open-source things that have money baked in. It just compounds and gets really crazy really quick.
Do you see the same value determined by scarcity for writing NFTs? With fine art a 1x1 makes sense, but its a bit different in terms of what makes something valuable in writing.
What makes something valuable in art is that you can display it. Like come to my Web 3.0 virtual reality museum and check out everything I've bought. With writing that's absolutely not the case. The people who bought my essay NFT hit me up and was like "you're writing in this essay changed the way I'm thinking about building my business", so its a bit more peer-to-peer in that sense. It's just a different way of doing price discrimination and giving people who like your work the most the ability to show that.
At the end of the day Pallet is always about jobs. Packy's created a list of his portfolio companies so you can track their jobs! Follow for a curated-feed sent to your inbox every week.