Tonight's Gonna Be A Movie
In the early 1900’s neither New York nor any other place in America was the global capital of the film industry. That distinction belonged to Paris, where the famed Pathé-Freres distributed twice as many films as all American studios combined. French directors were the first to put famous stage actors on camera and the “grandest theater in the world” was the Palais Gaumont. American films were short – few longer than a handful of minutes – and while popular, remained a novelty.
There were some though, who hoped to bring the French-style film & European experience across the Atlantic. One problem was that the “Film Trust”, a cartel of ~10 firms owned every important American patent on motion picture technology. The Trust was comprised of the largest film producers and the leading film stock manufacturer (Kodak). Its members pooled patents, blocked imports, and fixed prices at every stage of film development and showcase. Why? To avoid cutthroat competition amongst each other of course. The Trust leveraged this power to become the arbiter of what films would be shown in the United States. An economic problem sure, but a cultural one as well. To go against the Trust meant certain ruin for theater owners and distributors alike, or so it would seem.
One man, Carl Laemmle – a Jewish immigrant originally from Germany who found success in textiles before trying his hand in the film industry – was the first to openly challenge The Trust, declaring himself an independent. He risked being denied films and becoming the subject of public attacks and patent lawsuits.
This is a dynamic we see play out over and over when we observe information technology industries: outsiders very often have the will and/or interest to challenge the dominant forces, often acting on ideals outside the scope of a rational economic actor.
We will return to our friend Carl Laemmle in due time.
A Crypto Aside
I’m not going to cover any of the recent market events because I suspect anyone reading this has spent too much time on twitter dot com the last week or so anyway. You all know what’s going on. Any grand conclusions about this week’s events & what it means for the future are probably overblown (except for those positing the regulatory timeline will speed up – this seems likely). That won’t stop me from sharing my own thoughts on longer-term, squishier topics related to the space.
I don’t need to remind you that we’re firmly in “kick ‘em while they’re down” territory when it comes to coverage of crypto. This won’t be popular, but I can’t say I blame them. There was a lot of brash, abrasive, “have fun staying poor!” behavior from crypto during this cycle. Some of that was directed at people legitimately curious but skeptical of the technology or use-cases. Add to that the many folks who only tangentially cover our industry (i.e. traditional media) and are incentivized by clicks & views = recipe for a doomsday narrative.
This is the reality we are likely to live in for some time. No sense in stressing about it. What’s done is done. Our response is the only thing we can collectively control and will shape how we come out of this bear market. If this doesn’t sound like the type of concrete actionable advice you were hoping for, that is by design. Every one of us has our own unique situation: family, friends, work, time commitments, mental energy, hobbies, leisure, etc. Sweeping generalizations about when to buy or what job to leave/take aren’t appropriate in my opinion. Taking a step back to look at the bigger picture is always a good idea, but especially when things get reflexive (in either direction). If this was your first cycle, hopefully you spent more time building conviction about the tech and less time playing ponzi games. If not, there’s a decent chance you’ll be swayed by prevailing narratives that dominate bear markets. Some likely candidates:
“crypto was solely a function of money-printing”
“house of cards propped up by low interest rates”
“10+ years and still no use cases”
Do not be deterred, these are strawmen. If this isn’t your first cycle, tuning out the noise and staying engaged will certainly come easier, but is by no means promised.
This part of a thread from Avi rings deeply true. Crypto, like most things in life, is very much about people & relationships. I can remember vividly when I was introduced to the space by my weird-brain roommate in 2015. Most of my friends ignored him but I’d known him for years and trusted him such that I blindly followed him down the rabbit hole. I am forever grateful to him for introducing me to the space. There’s a reason so many immensely wealthy (yes even after the recent PA) people hang out on CT, Discord & TG all day long – they’ve built real relationships and enjoy engaging with the community. Of course the mission of leveraging this cool new technology to build things that improve society is a driving force (duh!), but it’s important to highlight how this mission makes people feel also really matters. People need to feel supported. Especially during difficult times. If you have the capacity, I urge you to avoid disengaging. Things will be quieter but that’s an opportunity to read more whitepapers, go deeper in discords, help steer DAO development, etc. Trust and relationships do not develop overnight but I can promise if you remain involved during difficult times, you’ll meet some incredible, equally passionate people. Plus it will be much more fun on the other side ;)
Back to our friend Carl Laemmle. When we left him, he had declared himself an independent distributor and proclaimed “as sure as water runs downhill, we will win this fight with flying colours”. Unfortunately, his peers lacked the same passion for fighting The Trust and soon enough it had bought-out or otherwise acquired 119 of the 120 major exchanges. The lone owner who refused to sell out was Wilhelm Fuchs, another Jewish immigrant who refused to succumb. Together the pair moved west to Los Angeles, a much easier location to quickly escape injunctions & subpoenas (thanks to its Mexican border proximity).
“The Trust’s rules controlled not just costs, but the very nature of what film, as a creative medium, could be. In an information industry the cost of monopoly must not be measured in dollars alone, but also in its effect on the economy of ideas and images, the restraint of which can ultimately amount to censorship”
“But whatever the motive behind Laemmle and Fuchs’ instinct to fight the Trust, the effect was to blow open a new and incredibly powerful medium of expression and one with greater economic potential than had been allowed before. The film industry, once cracked, would be an extreme example of how an open industrial market and an open economy of ideas can overlap entirely”
I won’t insult your intelligence by explicitly calling out the obvious parallels to crypto. I bring the Carl Laemmle story to light because it is a message of hope & optimism. There are many who’ve become disillusioned with various aspects of our society, which is unfortunate. But there are huge problems yet to be solved where crypto can be leveraged.
The “aging WASPS [of The Trust] were increasingly losing touch with the predominately young, urban, ethnic audience – the audience from which the Jewish exchangemen and theatre owners had themselves recently risen”. Much of the talent entering crypto will be younger than I am, and your peers will increasingly be the audience that products and real-world use-cases are built for.
Since this is getting a bit long for bear market reading, I will give you the cliff notes on how the Laemmle story ends.
“The founders of Hollywood, for the most part, went on to riches and fame, including the very first rebels, Laemmle, Fuchs and Hodkinson. Their studios – Universal, Twentieth-Century Fox, Warner Bros. and Paramount – continue to dominate American film.”
If you’re interesting in deeper reading on information tech empires, shoot me a dm (@0xsmac) – happy to provide some recs.
I will leave you with a well-known Chinese proverb I often come back to.
Once upon a time, there was a Chinese farmer who lost a horse, it ran off on him. All the neighbors came around that evening to the farmer’s house & said that’s too bad.
And the farmer said “maybe”
The next day the horse came back & brought seven wild horses with him. All the neighbors came around that evening and said well that’s great!
And the farmer said “maybe”
The next day the farmer’s son was trying to tame one of the wild horses but was thrown from it, breaking his leg. All the neighbors came around that evening and said well that’s too bad isn’t it?
And the farmer said “maybe”
The next day the conscription officers came around looking for people for the army, and they rejected the farmer’s son because he had a broken leg. All the neighbors came around that evening and said well isn’t that wonderful!
And the farmer said “maybe”
It is impossible to tell whether anything that happens in life is good or bad on its own. You never know what the consequences of misfortune will be, just as you never know what the consequences of good fortune will be either.
thx for reading & as always you can find me on twitter @0xsmac