Dear Reader,
This week we’re going to do something different in The Bleeding Edge. I’m opening the doors to a project I’ve been working on for almost seven years.
This is something that I’ve wanted to bring to my subscribers for so many years, but I couldn’t do so until recently. Now, thanks to improvements in crowdfunding regulations that happened at the end of last year, I can.
This will change how capital is raised at the earliest stages, giving normal investors the opportunity to build generational wealth in the same way that venture capitalists (VCs) and high-net-worth individuals have done for decades. And now we have the chance to do the same.
So throughout the week, I’d like to share with you a handful of private investments I’ve made that have been transformational to my own portfolio. Some of the names you might recognize – others, probably not.
And that’s the point – tiny “day one” companies can grow into multi-billion corporations, and very few people know about them. But the wealth generated is unlike any other investment class that I know.
Take JumpCloud for example. I invested in the company back in September 2016 during its Series B raise at a $20 million valuation. I prefer to invest even earlier, but the valuation was very reasonable… And the potential of the company was incredible.
Yet it didn’t appear that way to most.
JumpCloud at the time was focused on just one thing: positioning itself as a cloud-native alternative to Microsoft’s own LDAP (Lightweight Directory Access Protocol) directories.
LDAP is a protocol used in information technology. We can think of it as a massive directory that contains information about users on a network, the kinds of applications running on a network, and other services available on the network. A simple analogy would be to compare it to a phone book 50 years ago.
Even as recently as 2016, Microsoft still had pretty tight control on directory services in the industry, and it was the dominant player in the space. But it was clear that the market was quickly shifting towards cloud-based software solutions that no longer needed to rely on Microsoft to function. In fact, the performance was far better on JumpCloud.
I knew that if JumpCloud could execute well on its LDAP solution, it could grow rapidly into adjacent spaces. And that’s exactly what happened.
Fast forward to today: JumpCloud is now a major player in not only directory services, but in single sign-on (SSO) technology, privileged access management, and multi-factor authentication. It is now used by more than 150,000 organizations around the world.
And last month, the company just raised its Series F round at $2.625 billion. That puts my own personal investment up more than 131X – more than a 13,000% return on investment.
The best part? JumpCloud is still growing. It could easily be worth more than $10 billion in less than two years. That would result in 500X returns – about 50,000%.
One single modest investment like this can turn anyone into a millionaire. Imagine making more on a single investment than a decade of salary from your hard work. That’s the power of investing at day one.
Who knows where my investment in JumpCloud will finally end up? I only know that it’s going higher from here. It may pursue an IPO in due time, or it may be acquired by a larger information technology company for a large premium. Either way, the results will be phenomenal.
And here’s the thing – I didn’t need to wait 50 years for these kinds of returns. I didn’t need to wait 20 years for the company to mature. This all happened in just five years – five years!
That’s the power of investing at day one in high-growth technology companies that have the ability to scale their businesses at breakneck speed. We no longer need to wait a lifetime to build generational wealth.
With that said, I’d like to remind readers that in just a couple of days, I’ll be unveiling the details of my latest project, one that is deeply personal to me.
At the Day One Summit, I’ll show attendees how investing on “day one” can make an incredible difference in your returns. It’s how I have ensured my family will be well cared for… even generations to come.
So if you haven’t yet, please don’t wait. Go right here to sign up to attend this event. It’s happening this Wednesday, November 17, at 8 p.m. ET.
If investing as I did in a company like JumpCloud is interesting to you, this is not an event to miss. I hope to see you there.
Nigeria is now joining the list of countries launching central bank digital currencies (CBDCs). Home to 206 million people, it is the first African country to create its own CBDC.
Nigeria’s digital currency is called eNaira. With its launch, it becomes the largest country to launch a CBDC. And the CBDC is positioned as a complement to Nigeria’s fiat currency – it is not meant as a replacement.
Nigeria has started small by minting 500 million eNaira, which is about $1.21 million. To make the possession and transaction of eNaira possible, the country developed two applications along with the company Bitt. One is focused on citizens, while another is designed for merchants.
Bitt is also involved with the Eastern Caribbean Central Bank. That central bank oversees five countries that have also launched CBDCs – Antigua and Barbuda, Grenada, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and Grenadines. The only other country to launch a CBDC to date is the Bahamas with its Sand Dollar, which makes seven official CBDCs launched to date.
Now, when it comes to eNaira’s rollout, this is the first phase. The country has already made plans to roll out its national identity system that will be tied to the application – meaning its CBDC plans are about more than simply a currency.
But what’s even more fascinating here is in the lead-up to eNaira.
Back in February, the country placed a ban on crypto transactions in the banking sector. Then soon after the ban, the country announced its plans to introduce the eNaira. This was likely done to gain control of the digital currency sector prior to launching its own currency with minimal competition.
This move reminds me a lot of what we see unfolding with China…
Last month, I wrote about how China puts its foot down against cryptocurrencies. The move clears the field to prepare the country for a digital Yuan.
China is expected to launch its CBDC next year. But what is important to note is that its pilot programs are larger than any of the CBDC projects already live. It’s a much tougher task to roll a CBDC out to 1.4 billion people versus what we see with Nigeria’s initial rollout or any of the small Caribbean islands.
With seven CBDCs now launched across the globe and China nearing its rollout, we can expect a lot of countries will follow suit. I expect the introduction of more CBDCs will only accelerate after China’s rollout. Meanwhile, the U.S. is still woefully behind in developing its digital dollar.
Hopefully, some of these new developments will light a fire under regulators, politicians, and policymakers who seem hell-bent on sending blockchain innovation offshore.…
A major announcement from Mastercard will enable thousands of banks and millions of merchants to integrate crypto into their products. It’s a partnership with a major, well-backed player in the digital asset space, Bakkt.
Bakkt is a company that spun out the Intercontinental Exchange (ICE). It went public via a special purpose acquisition corporation (SPAC) earlier this year. And it is the company that will enable the buying, selling, and storing of cryptocurrencies for Mastercard.
The announcement was well-received. Mastercard works with more than 20,000 financial institutions around the world and has 2.8 million cards in use. In other words, it is a dominant player in global payments. And Bakkt’s stock jumped over 200% on the news.
The market seems to understand that an entity like Mastercard – with its extensive payment rails in place and ability to provide debit and credit cards to anybody on the planet – joining the crypto space is a significant moment.
Customers will also be able to convert loyalty points into crypto. This means merchants can offer rewards in bitcoin to their customers… which can turn loyalty points into an asset that can grow over time.
And the news that Mastercard is moving in this direction is a no-brainer.
The card company charges an average of 1.55% to 2.6% for processing transactions. It is a lucrative model. And with crypto, people will need to convert between loyalty points, crypto, and U.S. dollars. That means Mastercard can capture a spread on each conversion and additional fees on crypto payments.
It will be very lucrative for Mastercard. But more importantly, this announcement highlights a bigger trend…
As cryptocurrency investors witness the value of digital assets rise, they are looking for ways to leverage those assets in the real world.
Most of the time, those assets stay in crypto and only transact in the digital world. Investors typically buy other cryptos, digital art through NFTs (non-fungible tokens), or transact in a metaverse. Moving digital assets into traditional payment vehicles can be difficult.
However, with crypto now representing almost $3 trillion, we are starting to see a wider range of services sprouting up to bridge this gap. The news with Mastercard and Bakkt via debit and credit cards is a great example.
Another example appears with more sophisticated products like loans. Investors can use their crypto as collateral and borrow capital against it to buy a house or car. This avoids the investor needing to sell and realize capital gains taxes. And at the same time, it lets them enjoy their profits through larger real-life transactions.
I expect to see products like this continue to become more mainstream and evolve over time.
Mastercard’s news is highlighting a larger trend of financial institutions wanting to generate revenue from cryptocurrencies. This trend will continue to unfold in the coming years.
And if any readers want to join this trend, there are some great ways to find out more. In my Unchained Profits service, I follow this growing trend closely – the digital world colliding with the physical world.
It is one of the most important trends to be aware of right now. If you want to find out what my top picks in this once-in-a-generation trend are… then simply click here for more information.
We finish up today with what might be the latest decacorn (a startup worth $10 billion or more). The company is Thrasio, and it aggregates Amazon brands.
Thrasio’s strategy is fairly simple. It goes out and buys small merchants who sell their products on Amazon with revenue between $1 million and $10 million. These merchants don’t have the right systems in place to scale, tend to have low margins, and lack the decent cash flow to invest in growth.
Thrasio then looks to improve margins while scaling the operation. It is a modern roll-up strategy, one that has exploded over the course of two years.
The success of Thrasio is attributed to how it acquires companies. It incentivizes them by keeping people on board and giving them equity in the company, or it buys the company outright if necessary.
Its execution in the strategy is incredible, as shown by the more than 200 brands in its portfolio. This translates to Thrasio buying an average of 1.5 companies per week. It is a torrid pace that has shown no signs of slowing down.
In fact, its success is returning about 178X returns to its seed investors from April 2019.
And with this latest round, that number will be even more… The company recently raised $1 billion in a Series D round, which will value it somewhere between $5 billion and $10 billion. That’s quite the jump from its $7 million valuation just over two years ago.
These impressive returns highlight a larger trend unfolding in e-commerce over the last couple of years. In fact, companies similar to Thrasio are replicating this model and applying it to another e-commerce marketplace – Shopify.
Shopify represents another massive chunk of e-commerce. There, companies like the Hedgehog Company, Interweave Brands, Una Brands, Aestuary, and OpenStore are looking to replicate the success of Thrasio.
The business model represents a major area of growth, where companies acquire smaller brands, scale them, and boost margins.
Aggregating smaller brands like this helps improve the procurement of raw materials at a discount while also integrating marketing and delivery systems. Smaller brands can scale and earn greater profits on each sale.
There is clearly a lot of money to be made as seen with Thrasio’s latest raise.
Investing in fast followers is a very useful investment strategy if an opportunity presents itself.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
