iTulip is back?

[dcarrigg]

Re: iTulip is back?

Reminding readers that I'm not in the "what should happen" business. I have plenty of ideas about that. In the book I wrote in 2010 I offered many ideas, as is customary in the book biz: if you're going to explain a problem you need to offer solutions, no matter that they are unlikely to ever be implemented.

Here are iTulip we're in the "what's going to happen whether we like it or not" business.

I'm saying that PPPs are shaping up to be a major part of our future, not that they're a good idea.

Oh, I understand that. Sorry if it read otherwise.

[EJ]

Re: iTulip is back?

With all due respect, I'm having some serious doubts about what business you're in. You've posted more in the last week than you did in 2016, and FRED suddenly popped up for the first time since 2015.

Now you're offering SAFEs with an iTulip membership... SAFEs are usually early stage, and you've been at VirZoom since at least 2014. Valuation at $8 million... what was the valuation when you were courting iTulip members back in 2014-15?

I'll be frank: if you just came in here saying, "Things have changed, we can see a way forward on the macro, here's part 1 and part 2 costs $375," I'd be a lot less skeptical. But throwing in VirZoom equity claims just makes it seem like you have a VC matching opportunity if you can sell a certain amount of SAFEs at $8m, or something. It just smells fishy.

It's just weird. The trajectory of this thread's discussion highlights the focus on macro issues and how they affect micro. It has NOTHING to do with the intricacies of VR placement or the development of your company.

I mean, that's the stuff we've been talking about while you were MIA. What additional equity claims are going to be offered to members like JK and GRG and DCarrigg for keeping the lurkers like me coming back here with thoughtful commentary?

Your response is understandable. Here's the situation.

I'm running a start-up called VirZOOM that I co-founded founded in 2015. I estimated then that it will take about four years to get it to get the company to the point where the company is getting it's footing and it's starting to now. This is typical for start-ups generally.

As everyone knows, running a start-up is more than a full time job. My wife will tell you I spend 100% of my time running the company and the other 100% of my time raising money. That's the life of a start-up CEO.

The methodology I use to write iTulip articles is I believe unique, as I explained above. It's labor and time intensive. A relaunch of iTulip is major time commitment to add to my existing commitments.

I've been at this iTulip project since 1998 and have over that long period developed a particular understanding of the way that the economy and markets operate that I think is unique and can be valuable to others. I planned to restart iTulip at some point in this cycle, but had no date planned; in a perfect world I'd relaunch iTulip after I complete my tour of duty running VirZOOM when I can devote more time to devote to it, but the timing is not working out that way.

The precipitator of the relaunch was market volatility and the effect that it was having on my fund raising activity since mid-October. VCs are not much influenced by market volatility. They are paid to put money to work regardless of market and economic conditions. However, VirZOOM is largely Angel investor funded, and Angel investors are sensitive to market conditions because they are at any point in time making new investment decisions based on a judgement of the prospects for liquidity from existing investments. When markets appear to be headed down, so do expectations of future liquidity. Angels pull in their horns, and I've been seeing that since mid-October.

This phenomenon is amplified in the post-2008 crash market environment. Asset bubble crashes are now widely expected by investors whereas previously when these were identified here in April 2000 and December 2007 they were not. Today "everyone knows" that a bobble collapse is due, including Angel investors as a group.

SP500 declines from 2,925 on Oct. 3 were causing Angel investors to back off in the expectation that the current cycle had reached a terminus. I suspected that as usual they among the majority were incorrectly interpreting the markets, that antecedents that resulted in the previous two crashes are not at all the same today, and the lessons of 2000 and 2008 do not apply to current circumstances. However, to find out one way or the other if this expectation is justified I had to commit a few weeks of nighttime effort to reorient myself with the 100s of charts and other tools that I’ve used since 1998 to inform an analysis and develop new tools as well. After completing it I decided that ongoing analysis and tracking of the final stages of the cycle could be useful to members as it had been 1998 to 2000 and 2005 to 2007 and committed myself to a re-launch now but not if I waited until my VirZOOM tour of duty ends.

With respect to the specific timing of the date of the posting of the article that took two weeks to write, when it was first posted in the staging area of the forums for editing on Nov. 23 the SP500 was at 2632, a full 10% below the Oct. 3 level, which correction included several dramatic 2-day declines. The general mood was fearful and the consensus for more rate cuts and market volatility. I thought it might be useful to iTulip members who are short-term traders to hear a timely dissenting opinion.

Finally, connecting the re-launch to the VirZOOM-WeFunder campaign came about at the suggestion of several iTulip members who are accredited investors in VirZOOM. The timing from an economic cycle perspective is right to re-start iTulip but problematic with respect to work time available to do it. If iTulip memberships are applied to help close the WeFunder round, that will free up a bit of my time needed to fulfill a commitment to iTulip relaunch. Since WeFunder is open to non-accredited investors iTulip members who are not accredited can invest, making the incentive broadly applicable to all subscribers. If the investment doesn’t work out, iTulip subscribers who subscribe by investing in the WeFunder still have the value of a subscription that they could have made directly. If the investment works out, then there is upside to subscribing via WeFunder investment.

There is no VC matching opportunity or other hidden agenda. iTulip members are free to subscribe directly. I benefit because time can be freed up both to operate the company and do iTulip analysis, the iTulip community benefits from a relaunch of iTulip going into the latter innings of the cycle, and existing iTulip investors in VirZOOM benefit from both. If there is downside exposure to any party to this arrangement it is to me, in the event that VirZOOM does not work out.

RegCF crowd funding is a heavily regulated process. SEC rules prevent me from discussing the specific terms of the round off-platform. However, with respect to valuation caps generally, they are often mistaken for valuations. A cap is not a valuation. A cap puts a limit on the SAFE conversion price such that the investor is protected from dilution on conversion of the SAFE to equity in the event that a high valuation is achieved in a future qualified financing.

There is much to discuss about this new macro environment. Noting events in France and elsewhere today, political instability worldwide, a symptom of the regressive effect of measures taken to reflate economies after the last crisis, was not present in either of the previous periods covered here. I look forward to getting into the details in the coming months.

[EJ]

Re: iTulip is back?

Yes, but who is going to build the infrastructure? China has peasants, Singapore imports South Asians to do the building which are paid 300 dollars a month in wages.

The discussion of future PPP growth in the recent literature is not limited to infrastructure, and includes technology and science R&D including transportation, energy, biotech, fin tech, and so on.

[dcarrigg]

Re: iTulip is back?

Here in the States we've elected two Democratic presidents who promised us either "Universal healthcare" (Clinton) or "Single-payer healthcare" (Obama). We got something, which is pretty awful, but at least the government is on the hook.

What we need to recognize is that this industry is one that we can no longer afford to subsidize. Until then, it's looking increasingly like the US is the place that people of moderate means flee when they can afford to do so.

I really think you're onto a future trend there. I've said it before, but it seems totally plausible to me that the US will become a net exporter of students by 2030. The trend-lines are moving that way from both sides. Fewer foreign students are applying to come to US schools. And more US students are going abroad to flee high tuition (and healthcare) costs. I'm struck by how popular the idea is with kids now. They hear the news and the smart ones find solutions. Could easily turn into a brain drain. Not just when they can afford to do so, but the smarter ones who are young and adventurous enough leave when they realize they'd be fools not to. The average person could save $4-5k per year every year in healthcare costs alone just by moving a couple hours from my house to Canada, and the gap is growing. Average person can also save about $60k on the cost of a 4-year education by going to Canada instead of UNH or UVM in-state. The above average students with parents of moderate means can do the math.

[globaleconomicollaps]

Re: iTulip is back?

The latest pablum from David Brooks is titled "It's Not the Economy, Stupid." He could not be further off.

For 50 years the cost of health insurance has been the number one issue behind everything political and economic. The bottom pays the top more for less in the name of "free markets." It has been a spectacular transfer of wealth.

In Thailand 3,000 dollars buys a year of insurance even in your 60's with pre-existing conditions. If you can't afford insurance, healthcare is free. Insurance gets you faster treatment in more expensive hospitals which are like four-star hotels. I go to one that has a Yamaha grand player piano in the lobby.

Consider this. A year after chemo, my wife said, "I think I have another lump in my breast. By noon that morning without an appointment, she had had blood tests, a mamogram, ultrasound, and gotten the results (negative) to confer with her oncologist. Her doctor who is one of the best I have ever met, graduated from Rochester Medical School, (Google it if you think it's second tier.) I didn't even submit the bill. It equaled 120 dollars. Universal healthcare pacifies the average working person. The lack of it has created abnormalities in the US.

Single payer would have transformed the political and economic landscape of the US. I doubt anyone from Carter on would have made it to the white house. Sizable cuts in so-called entitlements along with another massive bail-out would bring people into the streets.

I live in France where the health care flows like water. The French are well aware that they are paying for it. This has lead to widespread tax evasion and social unrest.

[Chris Coles]

Re: iTulip is back?

The discussion of future PPP growth in the recent literature is not limited to infrastructure, and includes technology and science R&D including transportation, energy, biotech, fin tech, and so on.

My understanding, taken from attending several conferences, largely on the subject of infrastructure investment, in Paris this year, is that there simply is insufficient liquidity available to cover even those projects considered most important; that the underlying problem is a lack of available funding; which will be why PPP has surfaced as a possible solution. We have entered a period where seeming full employment has not produced the expected income flow to satisfy the need. My view is that the full employment is an illusion created by those more inclined to worry about their career path than the accuracy of their reporting.

[vt]

Re: iTulip is back?

EJ, In your 9th paragraph: "The general mood was fearful and the consensus for more rate cuts" Didn't you mean increases?

[Southernguy]

Re: iTulip is back?

My understanding, taken from attending several conferences, largely on the subject of infrastructure investment, in Paris this year, is that there simply is insufficient liquidity available to cover even those projects considered most important; that the underlying problem is a lack of available funding; which will be why PPP has surfaced as a possible solution. We have entered a period where seeming full employment has not produced the expected income flow to satisfy the need. My view is that the full employment is an illusion created by those more inclined to worry about their career path than the accuracy of their reporting.

As I understand PPP's can be used to privatize pieces of infrastructure, eg. ceding some highway and let a company collect tolls. Or it may be used to hide public spending and debt. In our place the latter is the most used. Some company builds a jail: it cleans, feed the interns, does laundry. It collects a fee from gov. for each intern on a daily basis. No new debt on national accounting. No one time expenditure. Of course debt is real, aforementioned payments are debt. When you check public debt records, however, such payments do not show up. Costs are far higher than if the state was directly borrowing from some creditor (in these cases BID, WB, etc. pony most of the money) and contracting the building and eventually running the facility. An accounting scam. Last IMF agreement with Argentina formally forbids such ppp agreements. Of course they perfectly know how this works.

[seobook]

Re: iTulip is back?

Your response is understandable. Here's the situation.

I'm running a start-up called VirZOOM that I co-founded founded in 2015. I estimated then that it will take about four years to get it to get the company to the point where the company is getting it's footing and it's starting to now. This is typical for start-ups generally.

As everyone knows, running a start-up is more than a full time job. My wife will tell you I spend 100% of my time running the company and the other 100% of my time raising money. That's the life of a start-up CEO.

The methodology I use to write iTulip articles is I believe unique, as I explained above. It's labor and time intensive. A relaunch of iTulip is major time commitment to add to my existing commitments.

I've been at this iTulip project since 1998 and have over that long period developed a particular understanding of the way that the economy and markets operate that I think is unique and can be valuable to others. I planned to restart iTulip at some point in this cycle, but had no date planned; in a perfect world I'd relaunch iTulip after I complete my tour of duty running VirZOOM when I can devote more time to devote to it, but the timing is not working out that way.

The precipitator of the relaunch was market volatility and the effect that it was having on my fund raising activity since mid-October. VCs are not much influenced by market volatility. They are paid to put money to work regardless of market and economic conditions. However, VirZOOM is largely Angel investor funded, and Angel investors are sensitive to market conditions because they are at any point in time making new investment decisions based on a judgement of the prospects for liquidity from existing investments. When markets appear to be headed down, so do expectations of future liquidity. Angels pull in their horns, and I've been seeing that since mid-October.

This phenomenon is amplified in the post-2008 crash market environment. Asset bubble crashes are now widely expected by investors whereas previously when these were identified here in April 2000 and December 2007 they were not. Today "everyone knows" that a bobble collapse is due, including Angel investors as a group.

SP500 declines from 2,925 on Oct. 3 were causing Angel investors to back off in the expectation that the current cycle had reached a terminus. I suspected that as usual they among the majority were incorrectly interpreting the markets, that antecedents that resulted in the previous two crashes are not at all the same today, and the lessons of 2000 and 2008 do not apply to current circumstances. However, to find out one way or the other if this expectation is justified I had to commit a few weeks of nighttime effort to reorient myself with the 100s of charts and other tools that I’ve used since 1998 to inform an analysis and develop new tools as well. After completing it I decided that ongoing analysis and tracking of the final stages of the cycle could be useful to members as it had been 1998 to 2000 and 2005 to 2007 and committed myself to a re-launch now but not if I waited until my VirZOOM tour of duty ends.

With respect to the specific timing of the date of the posting of the article that took two weeks to write, when it was first posted in the staging area of the forums for editing on Nov. 23 the SP500 was at 2632, a full 10% below the Oct. 3 level, which correction included several dramatic 2-day declines. The general mood was fearful and the consensus for more rate cuts and market volatility. I thought it might be useful to iTulip members who are short-term traders to hear a timely dissenting opinion.

Finally, connecting the re-launch to the VirZOOM-WeFunder campaign came about at the suggestion of several iTulip members who are accredited investors in VirZOOM. The timing from an economic cycle perspective is right to re-start iTulip but problematic with respect to work time available to do it. If iTulip memberships are applied to help close the WeFunder round, that will free up a bit of my time needed to fulfill a commitment to iTulip relaunch. Since WeFunder is open to non-accredited investors iTulip members who are not accredited can invest, making the incentive broadly applicable to all subscribers. If the investment doesn’t work out, iTulip subscribers who subscribe by investing in the WeFunder still have the value of a subscription that they could have made directly. If the investment works out, then there is upside to subscribing via WeFunder investment.

There is no VC matching opportunity or other hidden agenda. iTulip members are free to subscribe directly. I benefit because time can be freed up both to operate the company and do iTulip analysis, the iTulip community benefits from a relaunch of iTulip going into the latter innings of the cycle, and existing iTulip investors in VirZOOM benefit from both. If there is downside exposure to any party to this arrangement it is to me, in the event that VirZOOM does not work out.

RegCF crowd funding is a heavily regulated process. SEC rules prevent me from discussing the specific terms of the round off-platform. However, with respect to valuation caps generally, they are often mistaken for valuations. A cap is not a valuation. A cap puts a limit on the SAFE conversion price such that the investor is protected from dilution on conversion of the SAFE to equity in the event that a high valuation is achieved in a future qualified financing.

There is much to discuss about this new macro environment. Noting events in France and elsewhere today, political instability worldwide, a symptom of the regressive effect of measures taken to reflate economies after the last crisis, was not present in either of the previous periods covered here. I look forward to getting into the details in the coming months.

The integration in the original article felt a bit rushed & out of place.

If the explanation about raising funding taking lots of time & running this site well taking lots of time were in the original post it wouldn't have felt so off message.

I think it would have been better to have a bit of this post (or at least the concepts in it) at the end of the first article.

Other option you could have listed there also would maybe be some sort of iTulip offer for buying the device too, so people could subscribe normally, get free access to iTulip by investing, or get free access by buying a device.

[Mega]

Re: iTulip is back?

.......how about cash?

[jk]

Re: iTulip is back?

The US can't follow Japan's path to Federal government debt at 253% of GDP without finding a way to encourage domestic government bond purchases that are built into Japan's economy since WW2, and if implemented in some fashion in the US will crowd out private investment in the economy -- a more or less zero sum game.

the u.s. has "encouraged" various entities to move from other investments into treasuries. e.g. the regs on money market funds, then pensions.

and this is already "crowding out" other investments- the eurodollar market has become very tight, rates are up, mortgage rates are rising and the housing market slowing, sub-prime auto credit is drying up, and a credit squeeze is recognized as a big risk for over-leveraged companies. this process will indeed crowd out more and more of the private economy until, eventually, the fed resumes qe. qe is an example of "large scale asset purchases." the broader label is perhaps looking to a future in which the fed also starts accumulating large amounts of other assets, again like the boj.

the biggest source of treasury paper "demand" will be the fed itself when it re-institutes qe on a massive scale [just like the boj essentially owns the whole japanese gov't bond market]. this will devalue the usd in the process. liquifying the high-deficit federal budget will inject plentiful funds into the economy, aid the balance of payments, and stimulate u.s. economy as i outlined above.

"modern monetary theory" will gain newfound respect.

[EJ]

Re: iTulip is back?

The integration in the original article felt a bit rushed & out of place.

If the explanation about raising funding taking lots of time & running this site well taking lots of time were in the original post it wouldn't have felt so off message.

I think it would have been better to have a bit of this post (or at least the concepts in it) at the end of the first article.

Other option you could have listed there also would maybe be some sort of iTulip offer for buying the device too, so people could subscribe normally, get free access to iTulip by investing, or get free access by buying a device.

Actually, the above is summarized in the post, and one of the perks for investing via WeFunder are discounts on VZfit ranging from $1,000 to the full cost.

Received several emails like this.
___
Eric,

I invested $1,000 in VirZoom - seems like exciting things are happening.


Really really excited to have you back writing. You have been missed.
____

Nice to get those but I didn't expect many members to jump on the offer, and there's no short-term time limit on it.

I assume it will take time to educate iTulip members re VirZOOM.

Over the next four to fives years we're building a $1B business and a new industry based on a new form of human activity that takes place in VR and a new sport based on physical competition in VR.

That's a pretty ambitious project, and finding time in my 6AM to 1AM seven-days-a-week work schedule to write for iTulip, too, will not be easy.

This history of VirZOOM video in six minutes tells the story of how we got here over the past three and a half years.

We'll be running a series of webinars to review the investor deck that VCs see to get everyone up to speed on the strategy going forward.

In the mean time posted a few slides from the investor deck in the VZ NDA forum that summarizes the strategy.

It's a big idea, and we're making it happen.

Stay tuned!

p.s. I'm not at all surprised that members of an online community that has by its very subject nature selected for skeptics and contrarians are reacting to the VirZOOM proposition with skepticism. But I'm confident that once the iTulip community understands what VirZOOM is that the skepticism will give way to excitement.

[bpr]

Re: iTulip is back?

Your response is understandable. Here's the situation...

I appreciate your detailed response. Suffice it to say that my biggest concern is that my interest in iTulip is the various and learned points of view offered here that may be compromised by a unified interest in a private concern, followed only by the concern that you are wearing too many hats (though the iTulip hat seems to wear itself in your absence, thanks to a few select members).

[bpr]

Re: iTulip is back?

I really think you're onto a future trend there. I've said it before, but it seems totally plausible to me that the US will become a net exporter of students by 2030. The trend-lines are moving that way from both sides. Fewer foreign students are applying to come to US schools. And more US students are going abroad to flee high tuition (and healthcare) costs. I'm struck by how popular the idea is with kids now. They hear the news and the smart ones find solutions. Could easily turn into a brain drain. Not just when they can afford to do so, but the smarter ones who are young and adventurous enough leave when they realize they'd be fools not to. The average person could save $4-5k per year every year in healthcare costs alone just by moving a couple hours from my house to Canada, and the gap is growing. Average person can also save about $60k on the cost of a 4-year education by going to Canada instead of UNH or UVM in-state. The above average students with parents of moderate means can do the math.

Ivan Illich (author of "Medical Nemesis" and "Deschooling Society") described it as the Latin Conspiratio, etymologically, literally "breathing the same air or breath."

We breathe the same breath, DC.

[geodrome]

Re: iTulip is back?

6AM to 1AM seven-days-a-week work schedule

How do people function on five hours of sleep a night? I hope you take naps EJ.