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1/ Why I'm advising @LevelInvest:
Executive summary:
- They're disrupting crypto exchanges
- They can make a lot of money $5/user/month at scale
- This is the next level of financial inclusion that we need
Executive summary:
- They're disrupting crypto exchanges
- They can make a lot of money $5/user/month at scale
- This is the next level of financial inclusion that we need
2/ A lot of people are asking about my involvement, especially since they're really skeptical of the business model. How is it possible they can charge $5/user/month and make money where other exchanges charge 0.15% per trade? The conclusion they've jumped to is that I'm scamming
3/ Allow me to lay out my investment thesis:
First, most people are skeptical because they've been abused by the financial services industry. They expect financial services of any kind to cost a lot of money in some way, shape or form. This is due to a lot of rent-seeking.
First, most people are skeptical because they've been abused by the financial services industry. They expect financial services of any kind to cost a lot of money in some way, shape or form. This is due to a lot of rent-seeking.
4/ Second, most other industries have been disrupted by software. Software allows you to massively scale and provide a ton of value at very low marginal cost. The pricing, however, has been copied from the traditional financial services sector where it's usually a percentage.
5/ Exchanges have leveraged this to make a lot of $$$ and capture a ton of value. A $1M vs a $100 trade really isn't that different from a software point of view. They're the same database updates. Charging a % is not really necessary. A $1M trade doesn't cost 10000x a $100 trade
6/ After all, this is how it works in Bitcoin. 10,000 BTC transaction or 0.0001 BTC transaction both pay the same fees if they're the same size/weight.
In other words, cost can be significantly lowered with a different model for trading.
In other words, cost can be significantly lowered with a different model for trading.
7/ At scale, you can definitely make a lot of money charging $5/user/month. Think about it. How much do you pay for Netflix? For GitHub? For World of Warcraft? These are software that are orders of magnitude more complicated than an exchange and they all still make lots of $$$.
8/ Software allows for great leverage and the fees from the traditional financial system are relics of the past that have been carried over by rent-seekers of various stripes. This is exactly the type of industry that's ripe for disruption by a much fairer model to customers.
9/ You don't need to charge on a per-trade basis to make a business work when you have software. That means all sorts of other things are possible like auto-rebalancing of portfolios and so on.
10/ This is the next level of financial inclusion. You give users the ability to invest like the pros without the massive cost. You can have different strategies that can be iterated on. You can try stuff without it costing you a ton.
11/ This is the sort of opportunity that I always look for as an investor. Massively asymmetric bets. If it works, this company absolutely crushes other exchanges that can't compete on the low cost and the Coinbases of the world look like Blockbuster to Level's Netflix.
12/ If it doesn't, then oh well. At least I tried to make the world better doing it.
/fin
/fin
