5 Tweet Tuesday - my new crypto framework

I saw a great framework on twitter, but the poor guy only had 8 likes

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That means nobody was seeing his gold. So I'm going to talk about it here so that he gets the shine he deserves..

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Tommaso Tosi @tosi_tommaso A Web3 thesis: the "reverse" test 🧵 October 5th 2021 2 Retweets 8 Likes

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So what is the "Reverse" test?

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It goes as follows:

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When you hear about some new way of doing things, our first reaction is: CHANGE --> UNFAMILIAR -->EW --> NO --> THAT WONT WORK

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Sometimes that is right. For every 100 startups trying to "change" things, only 1-2 really succeed.
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...So.. how do you figure out which 1-2 will succeed?
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That's where the Reverse Test framework comes in..

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Instead of asking - will this ever happen?

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Imagine the reverse. if it happened, would we ever go back?

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For example:

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Uber changed the way taxis work.

• push a button
• see the car approaching on a map with a precise ETA
• driver has the fastest route to your destination
• hop out and it pays automatically from the app

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Can you imagine going back to taxis?

• call a taxi dispatch
• wonder when the hell the car will arrive?
• maybe it never does
• get in, tell them the address, hope they know the way there
• fumble with cash and tipping at the end

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You'd never go back. It fails the reverse test.
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In fact, if i get to an airport I'll walk 0.5 a mile into some random parkting garage to find an uber rather than take a curbside taxi.

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Same goes for food delivery, or travel booking.

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who the hell wants to go back to calling a travel agent and talking to them on the phone to hopefully find the lowest price flights?
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Our brains are wired to favor familiar paths, even if they are shitty paths. The reverse test helps re-wire the brain to focus on customer experience.

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For example - today, crypto gets a lot of shit for being useless random speculation (and sure, a lot of it is)

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But crypto believers think crypto is going to change the world.

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Let's use the Reverse Test to feel it out.

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Sending Money in El Salvador

Today:

• millions of people left El Salvador and live elsewhere, but send money back home every month to family ($6B a year)
• the most popular way was Western Union. It takes 3-5 days and has a ~12-30% transaction fee. (If you want to send $10, you pay $3.25 in fees!)

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​As one guy said: "i can't believe i still have to go to a western union office. hand them cash. Then hand them a $25 bill for sending the cash.. it takes 3 days, and then on the other side my family member might get robbed walking out of the western union local office"

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The current president just named Bitcoin legal tender. Created a wallet called the Chivo wallet. Where bitcoin transfers are free. And he gave $30 of free bitcoin to anyone who downloads the app (that's not a tiny amount, because the avg monthly wage is $300)

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So the future is:

• send money from your phone
• they get it on their phone
• instantaneously, for free
• they withdraw from 250 Chivo Bitcoin atm locations

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Can you imagine going back?

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You can play this game with many technologies. Imagine self driving cars. We're going to be able to hop in a car, go to sleep, work or watch a movie while the car gets us safely to our destination.

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Can you imagine going back to sitting in traffic, staring at the road for an hour as you inch-forward, all while hoping you're not one of the 4.4M people who are seriously injured in a car accident each year?

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no way jose

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This is why my investment holdco is called Inevitable Outcomes. I want to invest in things that I think are inevitable. I may get the timing wrong, or pick the wrong founders.. but the outcome is irreversible.

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This framework helps you live in the future, before the future arrives.

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^This is a critical skill for any investor, entrepreneur, or just a person who embraces change.

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OK holdup - what's the catch? does everything that passes the reverse test work?

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in the words of my brother in law aaron - helllll no

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Here's 2 traps to look out for:

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First - don't mistake a clear view for a short distance. Just because something will happen eventually, doesn't mean it's going to happen anytime soon.

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Second - don't ignore the chicken & egg problem. Yes, uber is a great user experience when there are tons of drivers available to pick you up. But how do you get the drivers on the road in the first place? They will only drive if they make money from riders. And riders will only pay if there are drivers. Chicken & Egg.

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Most of the great "reverse test" ideas fail in reality because they can't solve the chicken and egg problem.

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Crypto's Chicken & Egg solution

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So Uber had a great vision. Push a button, Get a ride. Wham bam thank you maam.

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But how did it overcome the chicken & egg problem?

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Money & Marketing.

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Uber would focus on a specific city (eg. san francisco) and then pour tons of money they raised from VCs into bypassing the chicken and egg problem.

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Drivers would get paid more driving uber than driving a taxi. And riders would get cheaper rides than if they took a taxi. So they used money as the incentive to hook users into the system. Once they got enough momentum (enough riders & drivers in a city) it would naturally grow on its own.

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So how is crypto going to solve this problem? It doesn't have a CEO. It doesn't have a marketing budget. It doesn't have any employees.

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Here's how Bitcoin has bootstrapped itself:

• ~2010 - nerds & anarchists buy it because it's a cool gadget and a f*ck you to the financial system
• ~2013- druggies & criminals buy it because they use it on the silk road website to buy drugs
• ~2017- tech investors buy it as a long term investment
• ~2019 - finance bros buy it as a speculative flip
• ~2020 - companies (eg. Microstrategy, Telsa, Square) start buying it as an inflation hedge

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The more people get it, the more valuable it becomes. And... the more useful it becomes (as a medium of exchange).

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Sometimes to get to the irreversible (or as I say, Inevitable Outcome) you have to figure out the chicken and egg problem.

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Ok- time to go eat lunch. Chicken & broccoli stir fry. delish

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-shaan

ps. that was fun. I should write more

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