Rishi Sunak: He Just Like Me Fr

This is The Startup Breakdown, the newsletter where we breakDOWN startUPs (just had to make sure you appreciated the word play). By joining this growing community of dozens of interested people, you're getting firsthand access to my observations and opinions on the current state of startups and venture. If you'd like to receive these newsletters directly in your email once a week, go ahead and subscribe to never miss an email!

Happy Monday, folks.

Markets decided that last week was a No Bones Day and were down pretty big apart from a brief breath of air on Friday. Though there's rarely a single reason for these trends, a big contributor was likely the Fed's interest rate hike.

J-Pow bumped rates another .75%, an expected increase, and reiterated his commitment to bringing down inflation by any means necessary. For those of you counting at home, they now stand at 4%. Luckily, there do appear to be a few cracks in prices' armor, so it's possible that the next hike might be a jump of just .5% in the next round of announcements next month.

For you de-Gen Zers, out there, you might not be as idiotic risk-prone as your grandparents accused you of! In fact, most of them were placing ill-afforded bets long before you could bet on a 19-game parlay. Just look at the Boomer version of NFTs, the Powerball, which is up to $1.9 billion before its drawing tonight.

This lottery is now the biggest jackpot pool of all time, surpassing 2016's total of nearly $1.6 billion. Before you go and buy a ticket (or your 100th), you should be aware that the odds of winning are 1 in 292.2 million.

Even if you did manage to win, a big chunk of that would be taken by Uncle Sam via taxes. A minimum of 24% of the prize would be taken as federal income tax, and depending on where you live, this amount could even reach up to 37%. For you real hustlers out there, lottery winnings of up to $599.99 are exempt from taxes. Maybe just go win the gas station $10 grand prize scratch off 190 million times?

Perhaps the biggest consideration when considering whether to play the lottery, have you considered the psychological effect such a big event would have? You might even become entitled and lazy. Well, at least these concerns are what one Chinese man was worried about when he won just over $30 million in a Chinese lottery and showed up to claim his booty in costume to prevent his wife and child from learning that they were rich so that they would never be "too complacent and would not work hard or work hard in the future." Boss moves.

Rather than dig into a specific startup today, I figured I'd kick things off with a pretty significant macro development which has taken place over the last couple of weeks and will potentially shape much of the startup landscape for years.

If you blinked when Boris Johnson resigned as British Prime Minister a couple of months ago, you might have still been in the process of reopening your eyes when Rishi Sunak was announced as the new PM just a couple of weeks ago.

But wait! Sandwiched between was a 44 day stint from Liz Truss, the shortest term served by a Prime Minister in Britain's very long history. Frankly, I think that most Britons wish that they could forget what managed to be a pretty impressive disaster of a tenure for such a short duration, marked by fiscal mismanagement and indecision which added gasoline and Everclear to an already blazing bonfire of a financial market.

Luckily, if there is any person qualified to try to tackle these aftereffects and manage to right the swaying economic ship, it is Sunak, a former hedge fund manager who began his career with a "you did it" slip from Stanford Graduate School of Business and "Proficient in Excel" certification as an investment banker at Goldman Sachs.

The British Pound has gained strength since his appointment, signaling an Impractical Jokers level thumbs up from the suits of the world. However, it's not just his financial chops that have many excited about the years to come in the financial sector in the UK, as Sunak has also been an outspoken advocate for both fintech innovation and web3 adoption across the pond. In fact, he has expressed his interest in making England "the jurisdiction of choice for crypto and blockchain technology."

While it is not yet clear what moves Sunak will take to accomplish these goals, there are a few measures which could have crypto bros calling Booyah.

To start, he could push forward the crypto projects which he already proposed when he served as the Minister of Finance under Johnson. One project was a request this past spring to the Royal Mint to launch a national NFT which was accepted and scheduled for launch this past summer. Unfortunately, the department's word is about as valuable as Benedict Arnold's, and the launch never took place.

Other goals which were outlined in Sunak's plans to utilize stable coins, update crypto legislation on issues such as tax status and classification, and even explore blockchain-based government debt instruments.

Though it might not be as immediately feasible, Sunak could also encourage the central bank to look even deeper into CBDCs. Rather than being the product fueling the dispensary economy in Denver, CBDC stands for central bank digital currency. Unlike decentralized cryptocurrencies like Bitcoin or Ethereum, CBDCs are managed by a country's central bank and function merely as digital versions of a country's national currency, in this case like a digital British Pound.

A few developed countries like the United States have discussed the feasibility of CBDCs in the past, but only China has actually tested them. The CCP successfully launched a campaign last spooky szn and has already reached $14B in transactions. The digital yuan test has been successful enough to warrant extending the test to four more provinces as of a couple of months ago.

Britcoin (big fan of the unofficial name) has been in the exploratory phase since June of last year, and there has been little progress since. That might change now that one of the minds behind it is sitting in the Iron Throne.

The most realistic progress which could be achieved within even just a couple of months would be updated regulation on crypto. Trying to build and operate in the space right now is like trying to navigate in the thick fog that appears in every single New England lighthouse movie ever. It discourages many entrepreneurs and investors from even engaging in the space, and it encourages others to utilize the lack of clarity to partake in questionable behavior with the trusty "sorry I didn't know" excuse in their back pocket.

In the non-crypto fintech world, there is also room for disruption, and Sunak seems to be just as open to innovation in this sphere.

Given his experience in tradfi, he likely recognizes the promise of disruptive financial providers such as Revolut. As of now, though, the Union Jack is making it a bloody pain for these startups to operate because they lack access to many of the tools that traditional banks have access to. For example, neobanks are not allowed to access overnight reserves, become FSCS accredited, or make international sweeping payments. Allowing these companies to utilize these tools would allow them to offer customers valuable and affordable financial services and protection.

Like crypto, fintech is a landscape riddled with uncertainty. Possibly the most beneficial measures which could be taken to support growth in the industry are just some black and white lettering of what people can and cannot do.

Both fields are also some of the most fluid, with new innovations seemingly being introduced every other day. This should be reflected in legislation, and regulations should be an iterative process whereby new developments are being constantly considered and factored in with updated guidance.

You might have heard that the UK left the European Union a few years ago. Apparently, it was a pretty big deal. Even had a fancy nickname "Brexit" and everything.

Prior to the move, London was the unquestioned European hub for all things finance. Since the move, though, many of the firms swapped the bangers and mash for the croissants and schnitzel as they moved their operations to mainland Europe to bypass changing regulatory restrictions imposed by leaving the union and to be closer to the larger market broader Europe provided.

London is trying to stage a Tiger Woods type of comeback in the worlds of tech and finance, and crypto and fintech might allow it to do both. Providing more transparent stances and guidelines around usage and development might allow it to pave the way for these industries in Europe, attracting entrepreneurs, creating millions of jobs, and cracking open a Bang Radical Skadattle energy drink for the entire economy in the process.

And Rishi might be the man to lead the charge.

Hope you all enjoyed the first standalone edition of The Startup Breakdown! If you liked it, feel free to hit reply and let me know. Hated it? Let me know what you'd like more of instead, and I can pretend to "take that into consideration" as I copy and paste this week's edition into next week's with a maximum of five changed words.

Finally, if you want to read about the big business that is tearing down, marching out, and dumping goalposts in the river in the glorious sport of college football, make sure to check out Pigskin Economics, the newsletter bringing you the biggest stories from the sidelines to the box suites!

Cheers to another day,

Trey