最新报道：This is a snippet from The Breakdown newsletter. To read the full version, subscribe. “We are the best place in the world to fail.” — Jeff Bezos You can win in the cryptocurrency market by failing frequently Charlie Munger once said that after 50 years of reading Barron`s, he had only found one investable idea. It was a pretty good one, though. After a Barron’s article caught Munger’s attention in 2020, he spent just 90 minutes researching auto parts company Tenneco before investing about $5 million. Two years later, Tenneco was taken private for 15 times what Munger paid. Munger then plowed his $80 million windfall into a fund managed by his friend Li Lu, from which Li Lu earned more than a fourfold return. “So I made $400 million or $500 million after reading Barron`s for 50 years and following one idea,” Munger concluded. The dual moral of the story, he suggests, is that 1) it only takes one great idea to succeed, and 2) you should ignore all other ideas while you wait for that one to come along. Warren Buffett likes to say, “The trick to investing is to sit there, watch pitch after pitch fly by, and wait for the one that hits you right in the sweet spot.” I’m not sure how practical this advice is for us mere mortal investors; few of us can pick a single winner in 50 years of reading Barron’s. But we can take solace in the idea that one big winner can make up for our many inevitable losers. This is especially true in business. To extend Buffett’s analogy, in baseball, a full swing will only get you four runs at best. In the stock market, you might get the occasional “10x” (or even, as with Munger’s Tenneco investment, a 15x), but not much more. In business, however, “there’s really no ceiling to the upside,” as Jeff Bezos explains. “In business, you occasionally go to the plate and swing as hard as you can, and you score 1,000.” Bezos always swings as hard as he can. Unlike Munger, he usually strikes out. Worse, many of the pitches he misses seem a little ridiculous in hindsight. At one point, Bezos hired a jeweler to create custom rings with an open flame on the mezzanine of an Amazon distribution center in Kentucky, because he briefly believed the retail jewelry market was key to Amazon’s future. Personalized “zShops,” automotive retail, a partnership with Toy “R” Us, and cashierless stores are other fleeting passions of Bezos that have failed to capture the interest of others. His investment record is not much better. Bezos used the money raised in Amazon’s 1997 IPO to make venture investments in Drugstore.com, Pets.com, Gear.com, Wineshopper.com, Greenlight.com, Homegrocer.com, and Kozmo.com, all of which, perhaps predictably, turned out to be losers. (The seed round investment in Google was a huge winner, but it was with personal money.) In other cases—auctions, search engines, and cell phones, for example—he picked a reasonable pitch to swing at, but missed. Yet he never regretted those misses, because Amazon wouldn’t have been just an online bookstore if he hadn’t been willing to swing so hard at every reasonable pitch. From the beginning, he was always looking for opportunities to become much more than that. For example, when an employee suggested a subscription service for unlimited free shipping, Bezos not only took the idea, he committed Amazon to losing an untold amount of money, making it not just a big bet but a transformative one. Likewise, when Amazon engineers began working on an early version of cloud computing—when they were still unsure it would work—Bezos challenged them to think bigger: “This has to scale to infinity. Infinity!” Amazon Web Services now effectively does scale to infinity, which makes Bezos look like a prescient tech genius. But he’s equally confident about all his misses, suggesting that his real genius is that he’s always willing to swing so hard—just in case he hits something. This strategy wouldn’t work for most of us; if we invested as aggressively as Bezos does, we’d all be broke pretty quickly. But the best financial markets encourage this kind of risk-taking—where would we be without the founders of businesses willing to take irrational risks? We’re lucky that every entrepreneur vastly overestimates their odds of success, because society gets the infinite upside of all that risk-taking without taking any of the downside. At its best, crypto will enable more of this. For example, during Permissionless last week, I heard that “AI arbitration” would be a perfect use case for crypto; crypto would turn data into an asset class; decentralization is the only way to audit AIAnd “DeSci” could accelerate personalized medicine. Whatever the investment merits of these ideas, I find it remarkable that they are being proposed at all, because stock markets, with all their centralized gatekeepers, are unlikely to encourage these types of bets. It’s not that “permissionless capital markets” are completely decentralized. Far from it. But they are permissionless in the sense that they allow anyone to try to build something important, and anyone to back them. Of course, the next big crypto hit may be a long time away. In addition to finding only one investable idea after reading Barron’s for 50 years, Munger says he read Fortune magazine for 60 years and found nothing. No one in crypto has that kind of patience. But permissionless capital markets may be a perfect fit for Bezos’ model of swinging hard at every reasonable pitch, no matter how great the odds of hitting it. Like Amazon, crypto can win by being the best place to fail. Get news in your inbox. Explore Blockworks newsletters: The Breakdown: Decoding crypto and the markets. Daily. Empire: Crypto news and analysis to kickstart your day. Forward Guidance: The intersection of crypto, macro, and policy. 0xResearch: Get Alpha straight to your inbox. Lightspeed: All about Solana. The Drop: Apps, games, memes, and more. Supply Shock: Bitcoin, Bitcoin, Bitcoin