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4) But to who, exactly, do they sell ads? Well, a lot of people. For instance, Uber. Or Sofi, or Affirm, or Robinhood, or Coinbase, or Doordash. (Or, for that matter, FTX, although not in large size--it's mostly exploratory/experimental for us.)

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5) The flow of funds here is: a) company P pays $ to Meta b) Meta runs ads, customer S sees them c) S buys services from P for $ d) P uses the $ from S to buy more ads; return to (a) above Ok, cool, so what?

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6) Well, a lot of companies are currently making negative money, on net. Including a lot of companies that advertise on Meta, and Google. So the $ from (a) -- that companies pay to Meta to advertise -- are often greater than the $ they get from (d), i.e. customers.

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7) If P is net loss-making, where is the money coming from that it's using to advertise?

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A pizzeria owner made money buying his own $24 pizzas from DoorDash for $16

8) To make it even weirder: someone once made money by buying *his own pizzas* from Doordash:

theverge.com

This must make sense to someone, right?

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9) Ok, well, so, what's the *full* flow of funds here? Well... a) VCs invest in Meta b) VCs invest in $ X company P c) P sends $ X to Meta for advertising d) Customer S buys services from P, paying back $ X/2 e) P raises $ X/2 more from VCs f) Go back to step (c)

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10) You might think that Meta, and Google, are making their money from customers, or from companies. And to some extent that's true!

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11) But to some extent they're making money from VCs, because here's the *net* flow of funds: i) VCs: - $ X/2, + stock ii) Customers: - $ X/2, + some pizza iii) Companies: - stock, create pizza iv) Meta: + $ X

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12) In other words: --Customers buy cheap pizza from companies --VCs send money to Meta --VCs get equity in companies

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13) And what exactly do the companies get out of this? Well, one of the following, really: a) marketshare: future profit (???) b) founders get to sell out in secondaries c) you get to be 'a part of the future'

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14) But it gets even weirder. Because who is Meta, exactly? Well, Zuckerberg, to some extent. But mostly, it's similar shareholders to the companies investing in it.

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15) And so the flow of funds is, to some extent, really a cycle of funds.

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16) But how about VCs that *don't* get large dividends from Meta and Google?

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17) And who exactly are the ultimate investors? They're people, investing in stocks. Also, they're college endowments, and pension funds.

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18) When deployed correctly, modern finance can be breathtaking: seamlessly providing financing to innovative ideas, with the sharpest investors getting paid back a lot in the long term. When deployed recklessly, it can be breathtaking, I guess, just in a different way.

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19) That's kind of how modern finance works. It's also, for what it's worth, similar to how postmodern finance works:

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