Founders have little to no diversification. They are all in on one idea, company, and mission. It's an insanely high-risk, high-reward endeavor. As founders become increasingly wary of this level of risk concentration, they begin to think about ways to mitigate it. One idea I've heard repeatedly is the notion that a group of founders can self-assemble and contribute a percentage of their equity in their company to a shared pool. That way, if they fail and one of the other founders in the group succeeds, everyone else can benefit to some degree. It's a coordinated equity swap. I've heard this idea many times over, but I have yet to see it work in practice (although I am hopeful that someone can find a way to make this work for founders in either a programmatic or bespoke way).
I have found a solution to this problem, and it has worked marvelously well. Whenever I tell people about it, they think it's batshit crazy. But then they usually come around and see how unique, important, and beautiful it is. I think more people, founder or otherwise, should do it. Here's the story.
Steve Martocci and I have known each other for nearly twenty years. We built GroupMe together and when you found a company with someone you form a bond that stands the test of time. After GroupMe was acquired, our interests diverged. Steve had an idea for a company that would change the music industry, and I wanted to shake up the world of small business lending. But we knew we always wanted to work together and bet on each other no matter what.
So we made an agreement. We would do all of our investing and company building together, even if we wanted to do totally different things. For every company I would start, Steve would own a meaningful piece of my equity/carry (e.g. ~15%), and vice versa. And for every investment we wanted to do, we'd always bring it to each other and offer to split it evenly. It has worked out, and we have been able to make concentrated bets with our time over the years building companies and now doing venture capital while diversifying risk.
The neat thing about this agreement is that nothing is papered. It's just a code we live by. I feel very lucky to have this deep sense of trust and respect with a partner like Steve. I acknowledge how rare it is. And I think more founders should try to find something similar. In the short term it might feel strange, but over the long term it's extremely powerful economically, psychologically, and emotionally. This concept doesn't just have to apply to founders, it could apply to anyone. Making bets and investments in people you admire and work well with produces returns that cannot be measured in cents or dollars.
I am convinced that the best way to fix the healthcare system is to reinvent it from the outside in. I am hopeful that this is possible and that there are enough entrepreneurs and people disenchanted with the status quo who are ready to create this change. There are certainly tailwinds, many of which we articulated in Healthcare at the Edge. People are fed up with the existing system, they are taking charge of their own health and wellness, we have tools like Supp and Consensus to make our own research-informed decisions, the DeSci movement is pushing science to the edge, and services and products are popping up at the edge of the system that are going direct to consumers.
One thing I have been thinking about lately is the types of structural business models that might emerge to facilitate this transformation. Right now, the way our healthcare system works in the US is insane. For most of the population, our employers pay for our insurance which dictates what doctors or hospitals we can visit and how much we pay for medications. This makes absolutely no sense and is the result of years of bad policy, lobbying, and decisions that were sometimes made with the best of intentions but, when layered upon each other, created a labyrinthine mess of complexity and inefficiency. It also put everyone else's interests at the center of the system and leaves the patient on the periphery. Fuck that.
For as long as I can remember, the web3 ecosystem has shouted that crypto is too hard for the masses to use. The user experience is too clunky, and the concepts are too foreign. It's true. Web2 applications are convenient and easy to use, onchain applications are still a pain in the ass to use and are largely inaccessible to the mass market.
But you know who doesn't complain about crypto being difficult to use? AI agents. And web3 has found product-market fit with an entirely new audience of bots and agents dancing around the internet doing our (and their own) bidding. This market is growing at warp speed, and it will continue to do so until our human (and agent) agentic needs are met. We are rapidly ushering in a new paradigm of product-bot fit, a world in which we build infrastructure and applications to be used by agents instead of humans.
Several weeks ago, an AI agent was set loose in the Farcaster ecosystem and started to do some mind-blowing things. Here's a good rundown of the sequence of events. You should click through and read all of it.
Quick map and explainer:
1. It starts with Higher...
✷ @higheronchain is a decentralized lifestyle brand and token.
✷ Anyone can contribute content, nfts, physical products.
2. Higher's co-founder created an AI agent
✷…
