Retail trading is having a moment: The Pope just downloaded fomo to trade stockmemes. Everybody wants to be a streamer. Prediction markets are everywhere.
I love Guy, this is a point where we really disagree
The default explanation for all this is pretty depressing: Young people can’t afford homes, wages haven’t kept up with asset prices, and the economy has increasingly split into people who own appreciating assets and people who don’t. Faced with the prospect of working for 40 years and still falling behind, an entire generation has decided to gamble its way to the top of the K.
I won’t deny the truth in this. If lottery tickets are the only perceived path of upward mobility, then might as well hit the casino. However, I vehemently deny that this is the whole truth. What if the real answer is that we’re at the inflection point of a 20-year retail trading megatrend?
I Wanna Be An Influencer
Did you know YouTube used to be a default app on the iPhone? From the very first iPhone sold in 2007 up until iOS 6 was released in 2012, the YouTube app came preinstalled on every single device. In fact, at this point in time you couldn’t even delete the default apps on the phone. YouTube was stuck on your phone whether you liked it or not.
The decision to do this is really interesting when you consider that Steve Jobs was the key driver of this. We know a few things about Steve: One, he was a visionary. Two, he was obsessively involved in every decision related to the design and experience of the iPhone. Three, he loved content, film, and storytelling (remember: Steve Jobs founded Pixar during his exile period from Apple [he made Toy Story for God’s sake, the guy loved content]).
search up this video & give it watch
Jobs clearly understood that YouTube was going to matter to where media was going. He personally presented the native YouTube application as a major feature of the iPhone at the first launch. Google even re-encoded its entire library of YouTube videos from Flash to H.264 at the behest of Apple so they could have a native experience on-device.
Jobs was clearly right. YouTube is an undisputed juggernaut. Estimates are obviously imperfect, but they range from 5-10% of ALL content in the world being consumed through YouTube. That’s compared to the entire consumption profile of TV, social media, movies, livestreams, competitive streaming apps, Cornhub, et al. We’ve never seen anything like this, and it’s completely reshaped entire industries:
- YouTube-native news channels like Breaking Points get ~3x the viewership of Fox & CNN, changing how news is produced and consumed. For better or worse, the median person under 35 is now more likely to believe what they’ve been told on the Tim Dillon Show than anything they’ll ever see on cable news (me included in this group).
- MrBeast and Logan Paul are redefining the playbook for consumer packaged goods, building their own household brands, Feastables and Prime, on the back of their owned distribution. Fun fact: did you know both of them are also prolific venture investors? It’s worth considering they’re probably the single most value-add names you could possibly put on your cap table given their unmatched distribution. No wonder a16z is so desperate to get into the new media game, don’t wanna be left behind by the broccoli-headed zoomers.
- YouTubers are taking Hollywood head-on as Iron Lung (Markiplier), Obsession (Curry Barker), & Backrooms (Kane Pixels) all set box office records for profitability. Even further than that, Markiplier is now one of the single largest individual shareholders of GoPro. Slowly but surely, YouTubers are eating the entire stack of Hollywood, from equipment, to movies, to direction and acting, to publishing and distribution.
It’s impossible to deny that what we’ve seen is a retail content supercycle, full stop.
complete domination
What started as viral videos like “oooh Charlie bit my finger” transitioned to homegrown content studios like Smosh making cadenced content and hiring an entire team. This would progress to megastars like PewDiePie reaching 100M subscribers (a mind-boggling number) and beyond. Now creators like MrBeast could hardly even be called a “retail” content creator considering the sheer scope of his empire, but remember, he started with a zero-subscriber channel and a webcam just like everybody else.
The “new institutions” of media are really just the natural maturation of “retail” content creators. Now those retail creators are coming for TV, news, Hollywood, consumer goods, venture capital, … all of it. It’d be crazy to think they aren’t gonna win.
What I want you to see here is that YouTube created a 24/7 permissionless global platform for content where the marginal cost to participate is zero and users do not bear the network cost. Forgive me for the insanely cheesy comparison, but it’s basically a blockchain for content.
In that environment, the best creators rose to the top and pushed the platform forward, growing the pie for everybody. In the blink of an eye, content creation went totally mainstream. Working as a clipper, editor, producer, or operator for a creator is now a completely normal career path. You probably even know somebody with 10k+ followers on some social media platform who’s taken a paid deal. It’s not even, like, a big deal, something they just kinda do on the side sometimes—complete integration with our society.
Even if you yourself aren’t as addicted to YouTube as I am, it’s still shaping the world around you and not even slowing down a little.
Everyone Will Trade
What YouTube is to content/media, crypto is to trading/markets. A permissionless 24/7 global infrastructure for markets where the marginal cost to transact is essentially zero and the users do not bear the network cost. Like YouTube, crypto started from humble roots but is taking on (and winning against) the traditional institutions of finance. Look at our achievements so far:
- We're literally fixing the money. Whether the future is Bitcoin/Zcash, stablecoins, or some mix of the two, we are the pioneers of the future of money. This alone is a generational achievement.
- The rails of finance are being rewritten to run on public blockchains like Ethereum, Solana, and Hyperliquid. It isn’t the case that TradFi has stolen our open-source technology. Instead, they’ve had no choice but to issue stablecoins and RWAs on our networks, to wrap our protocols as builders, and to be rollups to our distributed consensus networks. This is a total victory. We aren’t going to TradFi, TradFi is coming to us!
- Beyond existing financial markets, we’re all inventing new primitives. Prediction markets create novel markets for truth (ignore the gambleslop). Perpetual futures are a homegrown crypto product. There’s no equivalent to flash loans (zero-duration, zero-risk, infinite-borrow atomic loans) in TradFi. Yes, a lot of the experimentation is vapor, but it’s a worthwhile endeavor nonetheless.
- On top of all this, it looks like we’re creating the first new social media apps since TikTok (2017), shoutout social trading.
we're winning
All of this is coming as a bottom-up revolution. First, crypto was just for buying drugs and fake IDs online. Then each subsequent domino and function of the markets started to fall one by one. It is not the case that crypto is big because we now have the respect of Wall Street; it’s more so that crypto has gotten so big Wall Street has no choice but to acknowledge our existence and live in the reality that we are creating.
This supertrend in markets is reorienting markets from an institutionally gatekept product to a retail playground. If you want to trade memecoins, go for it. If you want to bet on the weather or the Iran war or what Tom Brady is gonna say while announcing a football game, go for it. If you’re a perps trader, turn on that VPN and let loose. Maybe you like trading cards and JPEGs. There is truly something for everybody, and that’s exactly why we are winning.
The scale of this megatrend is so large it’s unavoidable. Yes, there’s a deluge of people trading who are just losing money and should probably stop for their own good, but in the primordial soup of the memepool, you also find extraordinary talent being continuously surfaced, tested, and sharpened by the open nature of these networks. You find traders with brilliant minds for market design like Jeff, Shoku, Shayne Coplan, and Cobie. You find traders with brilliant minds for content like Threadguy, Rasmr, and Orangie. You find traders with brilliant minds for philosophy like Ryan Watkins and Based16z. You find traders with brilliant minds for product like Brandon Millman, Alon, Se and Paul, and Alex Atallah. Everybody is going to be drawn into crypto markets like moths to a flame.
As our homegrown champions mature and we attract the best/most-aligned talent from the traditional financial system, the appeal of being a crypto market participant will only grow. People will want to trade like their favorite content creators and build like their favorite founders. This is inevitable.
Open Systems Win
Let me reaffirm this core tenet of crypto because many of you seem to have forgotten or gone completely pessimistic: open systems win. Open content wins. Open software wins. Open markets win. This is capitalism, welcome to it.
Something magic happens when marginal costs go to zero and distribution is global. It’s true for both centralized systems like YouTube & software (Linux is technically a dictatorship) and decentralized systems like crypto. So long as practically anybody can participate, the market will work its magic and talent will rise to the top, growing the pie for everybody.
The Consequences
First, I hope you like Threadguy and Rasmr because they’re only going to get bigger as trading becomes more and more of a sport. As the crypto trading experience gets more and more refined, the audience for these streams will grow with the inflow of new people. Normies will tune in to streams to learn how to make money. TradFi traders will tune in to streams to learn about 24/7 markets, perps, tokenized stocks, and yes, even the memes paired with those stocks. Builders will tune in to streams to see where the culture and consumer demand are going. Venture capitalists will tune in to streams to try and be cool (a requirement in the new VC landscape) and to learn about the future of capital formation.
The ascension of the social trading applications is only going to provide fuel to the rising tide. Audiences will naturally trust creators with proven track records more, although performance will never be the only thing that matters. Example: the largest chess creators, GothamChess and the Botez sisters, aren’t the best chess players, just the best at storytelling around chess (this same thing applies to video game content in general).
LBO has really good takes about the future of capital allocation
Second, it’ll create a new trend in capital allocation. Trading firms will look to hire traders with proven onchain track records rather than taking bets on new traders with unproven track records. Family offices and foundations will shift away from investing in passive indexes and opaque money managers to onchain vaults with public returns generated at size. Venture capitalists will get squeezed out of deals if they can’t effectively drive narratives for portcos in the new media landscape of money.
Finally, people will lose money. Yes, that will not change. Markets are markets. A supermajority of all active traders lose money. Money always flows from the unwise to the wise. Welcome to the order books, I hope you have fun. But that is OKAY. My contention in this megatrade is not that everybody will become a trader and everybody will be profitable. My contention is that these will just be the new markets, and they’ll consume traditional markets, driven by the tide of truly global adoption and integration into society.
Don’t take these numbers literally, they’re just to prove my point, but essentially: If professional capital is 90% of all volume in today’s markets, with 90% of all profit going to 10% of the actively traded professional capital, in the future 90% of all volume in markets will be driven by what are currently considered “retail” allocators; however, 90% of profit will still accumulate to only 10% of that active money. In the same way MrBeast’s Squid Game parody got more views than the original Squid Game by Netflix, his hypothetical market maker would make more money than Citadel.
My Advice
Stop gatekeeping. Stop clutching your pearls about publicly trading memecoins. Stop hating on the broccoli-headed content creators. Instead, take the trend for what it is, whether or not you like it. Figure out how to align with the future because the tide of retail trading is rising, and it’s better to rise with it than to drown in your pride.
