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Letters #44/45: Dylan Field and Peruggia (2021)
Founder of Figma and Crypto Anon | 2021 Speech: What is Art? | 2021 Statement: How I Learned to Stop Worrying and Love the Punks
Hi everyone! Due to popular request (and a few persistent individuals), I’ll be restarting this newsletter, but with a few changes. Most notably, rather than sending “A Letter a Day”, I’ll be sharing a letter or transcript twice a week, once on Tuesday afternoon (2:22pm) and once on Saturday morning (6:06am). Second, I’m expanding the scope of the newsletter to include a broader range of subjects, but still focused on thought-provoking investors (across venture, hedge funds, and private equity), founders (not just tech), and operators (sales, marketing, product, etc). Lastly, I’ll be limiting my commentary so it’s a smoother reading experience and you can read the work as is. (If you’d like to see my notes or trade thoughts, shoot me a DM on twitter!)
Today’s letter is a double-header. The first is a transcript of Figma Founder Dylan Field’s speech commemorating the sale of CryptoPunk 7804. The second is crypto anon Peruggia’s tweetstorm on reflecting on his purchase of CryptoPunk 7804. Whatever your beliefs on crypto, Dylan’s speech was eloquently written and emotionally delivered, and Peruggia’s statement thoughtful and reflective.
For those of you who are pro-crypto, these pieces will explain why crypto != tulips and why NFTs = art. For those of you who are anti-crypto, these pieces will explain exactly why the crypto bubble happened.
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So for those who don't know, CryptoPunks was the first Ethereum crypto art project. It was created in 2017 by two visionary artists, Matt Hall and John Watkinson.
There are only 10,000 CryptoPunks, which anyone could claim for free in the early days. And of those 10,000 Crypto punks, there are 88 zombie punks, 24 apes, 9 aliens, and exactly 1 alien punk smoking a pipe. His name is 7804.
And I personally believe, that in 100 years, we will look back on 7804 as the Mona Lisa of digital art.
My relationship with 7804 started in January 2018, when I bought it for 12 Eth, or 15k USD. At that point, most CryptoPunks traded for about $100 or $200. So why did I pay $15k for this picture of an alien? It wasn't just how rare it was, though it was rare. 7804 compelled me. It had gravitas. I found it to be absolutely magnetic. And I had a sense that others out there would feel the same way. I also believe that the question of "What is art?" would propel the crypto art movement forward.
So, what is art? And what does it mean to own art? What does it mean to have relationship with art? In the case of CryptoPunks, the answers to all these questions are unclear. Which is part of why I personally find the project so, so fascinating.
Let's start with What is art? You might say that CryptoPunks' art piece is the algorithm Matt and John used to generate the CryptoPunks' images. Or you might claim that the art piece is each individual punk. I personally believe that the actual art piece is the crypto art--CryptoPunk community, which has been feverishly speculating on and trading Punks and discussing Punks over the past three and a half years. This might sound absurd to people listening. But many of us in the community have formed deep relationships with our Punks. We set them as our avatars, we discussed them at nauseam, we even dream about them. The Punks become deeply intertwined with our identities. They effectively function as masks.
So, why did I sell 7804? To be completely honest, it's because I wanted to see 7804 become the patron saint of digital art. Or perhaps the patron alien, if you will. It bothered me that it was not universally acknowledged that 7804 was the best, most valuable CryptoPunk. It bothered me that it was not a symbol for the entire crypto art movement. And there's a paradox, because 7804 cannot be seen as the symbol for the crypto art movement unless it changes hands.
So, I priced it at 4200 Eth, which was extremely aggressive, yet still a believable price point for someone who resonated with 7804 as much as I did. Knowing that if it was bought at that price point, it would bring even more attention to CryptoPunks the project, and also to 7804 as a piece of art.
7804 was purchased earlier this week by a mysterious figure known only as Peruggia. Peruggia is, of course, a reference to Vincenzo Peruggia, who stole the Mona Lisa on August 21, 1911. And his theft was heavily covered the news, and made the Mona Lisa the most known piece of art in the world.
Since purchasing 7804, Peruggia has made a beautiful statement on Twitter, which I encourage all of you to read. And as I reflect on it, selling 7804 has been surprisingly emotional for me, which I think speaks to its power. It's emotional not because I think I could get more money from it, but rather because I had a relationship with the work.
As I reflected on the sale, I also felt a very deep bond to Peruggia, the new owner of 7804. And I don't know who Peruggia is, I don't know what their gender is, or what ethnicity they are, or where they live. But I have, finally, found someone who appreciates 7804 as much as I do. So with that, it's time for me to change my mask--
And Peruggia, if you're out there listening, enjoy your time was 7804. But please know that owning 7804 is a paradox, and possibly a curse. Because, if you appreciate 7804 as much as I do, then you will stop at nothing to make sure it is seen by everyone as the most valuable piece of digital art. And because of that, your time will be limited with it. And when you sell, which you will, you will forever live with the question of why you parted ways with the digital Mona Lisa.
How I Learned to Stop Worrying and Love the Punks:
If this comes across your timeline you likely believe that in the future the world will grow more digitized and decentralized. If not I doubt a guy who values MS Paints at over $13,000 per pixel will convince you otherwise.
If you’re anything like me- your current self has learned a lot of things about digitization that your past self doubted. Each unnecessary purchase I made or other investment I held when bitcoin was $100 was me financially voicing an opinion that bitcoin is worth under $100.
Each quarter I left in my change jar was me deciding it was better than used to fund @VitalikButerin building @ethereum because my past self underestimated innovation. Each lot of bitcoin I’ve sold was me fighting innovation and financially choosing other assets.
If you’re a participant in cryptocurrency markets who has less holdings than you’d like- it’s probably safest to just keep accumulating your preferred chain. Avoiding the NFT and Punks craze is likely the prudent decision.
That said scarcity is what this whole space is about and many people miss the forest for the trees. When I see (fellow) bitcoin maximalists belittle other digital investments it makes me feel that they’ve simply gotten lucky and do not understand why this space is valuable.
Whether they think 10 minute blocks are a lucky number, or that a cherry-picked version of certain things Satoshi believed in 2009 is a requisite trait for a digital asset to be a good investment is beyond me.
Each investment in this space is a bet that over time people will allocate more resources in that direction. The arguing I see over which chains/projects are “better” is something I find strange as your goal should be to speculate on adoption for your intended time horizon.
And here is my time horizon surrounding punks: I think the cryptocurrency space is going to both produce and eventually be joined by all of the wealthiest people on earth. Those that embrace technology will outperform those that fight it which is a tale as old as time.
I’ve seen extremely prominent figures in this space mock my purchase. I feel exactly the way you do when someone asks you what bitcoin is backed by. I know you don’t “get it” yet but you will. Just like they’ll get it a few cycles from now.
If anything this has informed me just how early I am. Many of these same people buy art, or trading cards, or other collectibles. Is it because that card feels better in their hand than a cheaper card? Or that painting looks better than a cheaper painting?
No. They buy it because they are fine paying the market price for something they like with resources they’ve earned. It is a testament to their accomplishments that they can afford such luxuries.
As society progresses do we expect this trend to change? As wealth disparities between rich and poor grow progressively larger do we expect demand for scarce assets to decrease? Do we think the world will grow less digital?
Cryptopunks were first. A floor punk is 2,100 times scarcer than the bitcoin I cherish so deeply. Much like bitcoin’s biggest advantage being that it was first to gain adoption- as were CryptoPunks.
Not only that but the distribution model was incredibly fair. Everyone had an equal chance to participate and those who believed in them were enriched. There was no slew of pre-sales, shilling, and seed rounds like we see with most assets in the space. I look at @larvalabs, @scott_lew_is, @zoink, @citizen2890, @seedphrase, @sethspalding, and others I’m sure I’m missing and realize you guys are visionaries. You valued what I believe to be the scarcest assets in the space before anyone else did. And I applaud you.
What is scarcity worth? I like to view the Mona Lisa as the scarcest asset. If the French government were facing bankruptcy and needed to sell assets and put it to auction what should it sell for?
Long after @elonmusk is priced out- would the U.A.E government and the high value their country places on scarcity be able to outbid superpowers like the U.S Government and Chinese government? What’s the right price? 0.01% of world wealth? 0.1%?
My framework for valuing punks is:
how large is the global demand for scarce assets?
how likely is it that in the future the most valued assets are digital?
how likely are the first NFTs to be viewed as the scarcest?
among scarce assets what % of that value should be placed on the most esteemed?
how likely is Punk 7804 to be viewed as one of the most esteemed?
I think it requires very minimal faith in innovation to reach a conclusion this space will be more valued in the future.
And thus from my estimates I think the 4200 ETH I spent on this punk is virtually a rounding error. Much like my namesake I may have acquired what will one day be viewed as the scarcest asset for a cost basis of roughly $0.
Are NFTs a bubble? Absolutely.
Are cryptopunks? You betchya.
But so was bitcoin at $30.
Time in the market beats timing the market. It always has. And it always will.
Much like how one of my idols @ptj_official felt in May when buying bitcoin for the first time—I feel that the small percent of my portfolio I’ve allocated into this speculative space will be my best performer.
Also @justinsuntron my condolences on losing the auction. Us anons have a way of winning these things ;). I sent you something as a small token of my appreciation for helping to grow the NFT space. Red on white seemed appropriate:
If you want an asset that'll be worth far more in 20 years at a fraction of the cost I suggest you acquire one of my colleagues. Let’s grab a drink sometime whether on my planet or yours.
If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kevg1412 or my email at email@example.com.
If you're a fan of business or technology in general, please check out some of my other projects!
Speedwell Research — Comprehensive research on great public companies including Constellation Software, Floor & Decor, Meta (Facebook) and interesting new frameworks like the Consumer’s Hierarchy of Preferences.
Cloud Valley — Beautifully written, in-depth biographies that explore the defining moments, investments, and life decisions of investing, business, and tech legends like Dan Loeb, Bob Iger, Steve Jurvetson, and Cyan Banister.
Compilations — “An international treasure”.
Memos — A selection of some of my favorite investor memos.
Bookshelves — Collection of recommended booklists.
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