105: Invest in Loss, Make this Capital Allocation Chart Standard Please, Amazon Apparel, Elliot Turner x2, Visa + BTC, Photoshop ML Super Resolution, and Mobula Rays

"Do I have your sword?"

If people do not believe that mathematics is simple, it is only because they do not realize how complicated life is.

—John von Neumann

(There’s an anecdote I’ve always loved about JVN. Possibly apocryphal, but he was really something special, so maybe it’s real.

I can’t find the exact source right now, but it goes something like this:

Apparently he was so smart and constantly said such interesting and novel things that some people around him (his students maybe?) had him walk around with a microphone tied around his neck, recording to tape all day, so his ideas and insights wouldn’t be missed and lost.)

🛀 My native language is French. I’m from Québec, in Canada.

I didn’t learn English as a young kid, so I’m not one of those bilingual people who basically have two languages stored in the “native” part of their brain. I learned as a late teen and had to really work for it.

Anyway, one thing that I find weird is when I’m speaking English and I get to a French word. Something like “entrepreneur”, “amateur” or “bon appétit”.

I always have a moment of hesitation/panic right before saying it because I never know if I should say it the French way, or try to imitate the English way of saying it to be more clearly understood, because that’s how people are used to hearing it (I’m not a purist who thinks that there’s just one way to say a word — the anglicized version is also valid).

Problem is, I can never quite remember how anglos say “amateur” or “entrepreneur” (you guys don’t have that “eu” sound that we have), so it comes out all wrong, and I just sound like someone not sophisticated enough to use French words, which is kind of ironic… ¯\_(ツ)_/¯

🛀 Most people can't just be told something, they have to see it happen to someone else, or themselves. Try not to be one of those people, as much as you can.

🖼 So I was mulling NFTs a bit more, because why not, right? It’s like thinking about “what is consciousness” or some other abstract philosophical question (more of my NFT thoughts in edition #101).

One argument I’ve seen a bunch is that with physical art, the value is in the proof-of-authenticity anyway, in the signature or the paperwork. If you don’t have that, or if the piece is found to be fake, suddenly it’s worthless (or at least, worth a tiny fraction of the Real McCoy).

I think this confuses things slightly. Yes, the signature or proof-of-ID makes it valuable, but the value is not in the proof. The proof is something that refers back to the thing itself, and the value is still in the thing.

If an old van Gogh painting is found in an attic somewhere in Holland, and then authenticated by experts, was it worthless all that time, or was it worth something all along? Would you prefer to get just the painting, or just the expert’s authentication report?

To take an example just as abstract and modern as NFTs, let’s say that someone tells you that the value of your cryptocurrency is in your password, because without your digital wallet’s password, the coins are worthless.

Well, kind of, but not really. It’s not because something helps you realize/get at the value of something that the value is in that thing.

With physical art, I think the value often comes down to control. Can you control the original?

If I had to guess, I’d say it’s probably why we’re seeing lots of really really expensive paintings and statues and such, but not that many photographs selling for $25m, because the concept of an “original” is a lot fuzzier with a photo, and the control that the “owner” has on it means a lot less.

With a photo or a song recording, the value tends to come more from copyright, which is a legalistic way to force others to pay you to use something. Inside a closed world, like a video game, digital goods can have value because the people who operate the game can enforce whatever rule they write in the code.

But outside of such a closed world, like on the open internet, I’m not sure how that’s supposed to work for digital art… What does it really mean to have an entry in a distributed database saying you own something if you don’t have any special control on the thing that comes from the database entry and every copy has the same fidelity?

Are we seeing a speculative mania on scarce database entries? ¯\_(ツ)_/¯


💉 I was thinking about vaccines, and the amount of motivated reasoning and hypocrisy among vaccine “skeptics” , and how much framing matters to how things are perceived.

I’m sure a lot of the same people who will drink alcohol frequently, maybe even daily — a known poison that you have to dose just right or you get dizzy, then sick on the spot, and can even fall into a coma and die if you take too much, not to mention the issues with liver damage, addiction, and drunk driving deaths — will talk about not wanting to put “that stuff” in their bodies because who knows, it may possibly cause some harm, we can’t be sure; a bunch of short-lived molecules that go away quickly after showing your immune system the shape of a protein so that it can recognize a virus that has actually killed millions despite the whole world being shut down and taking drastic measures, while also destroying the economy and causing massive global mental and physical suffering...

Nice double-standard there.

💚 🥃 One does not simply walk into a project like this alone. We’re putting together a fellowship. Do I have your sword?

Investing & Business

Invest in Loss

Some good wisdom from Josh Waitzkin, via George Mack:

[Josh has] gone from chess grandmaster ---> Chinese push hands world champion ---> First ever black belt under Marcelo Garcia (GOAT of BJJ) ---> Mastering surfing in some unknown town in South America.

One of his most difficult (and powerful) lessons to understand is the idea of "investing in loss". [...]

in order to succeed at something - you have to lose a lot. You've gotta invest in loss. That's where all the beautiful lessons are. 

It’s something I try to constantly remind myself of when I start something new.

I’m going to suck at it for a while, and that’s ok. Whoever I admire today, when they started, they sucked too. They just didn’t let that stop them and pushed through.

Now of course, it’s not because you push through that you’ll become great at anything; the condition is necessary but not sufficient.

But the converse of that is that if you don’t push through, you can be certain that you won’t grow and learn enough to become good.

"If you have a mindset of domination everyday, you're static and you can't grow. If you have a mindset of expanding your repertoire, you're going to lose but you have a steeper learning curve." - Waitzkin

"Everyone is ducking that stretch point as a way of life, which is why they are fundamentally mediocre at what they do." - Waitzkin

"What if we learn to love risk, our stretch point, the pain that comes with having our weakness exposed. So if one person gives you negative feedback, instead of hating it or them - you view it as an incredible gift." - Waitzkin

This is one of those “simple but hard” lessons. You read the words above, and you nod along.

And then you go back to your life of ducking the hard, painful things. I know, I’m the same… But I’m trying, and so should you!

If you want to win in the long term, focus on creating an environment where you can lose in the short term (doing things out of your comfort zone) 

If you want to lose in the long term, focus on creating an environment where you can only win in the short term (doing things in your comfort zone) 

A way of phrasing it that I like is from Jerzy Gregorek, an olympic weightlifter from Poland who’s still kicking ass in his 60s:

Hard choices, easy life. Easy choices, hard life.

Can we make this chart standard for all public companies please?

I often say that I wish more companies were as good at explaining their capital allocation decisions as Texas Instruments.

Gabriel Colominas raised me with this chart from Sanderson Farms (a company I know nothing about).

What a beauty. I’m adding it to my list of things I’m lobbying for when it comes to the public markets:

  1. Let’s abolish offset fiscal years. Everybody on the calendar year. I don’t care what your reasons are to have picked a weird fiscal year in the past, just deal with it.

  2. Have conference calls start with Q&A. Make sure the earnings are released at least 30 minutes before the call to let the analysts and investors time to read whatever you want to say about the quarter.

  3. Put high-quality transcripts on every investor relations website. Have them up rapidly after calls.

  4. Make the “capital allocation stacks” chart above a standard (both for capex and to decompose R&D/SG&A). All companies have to use it in a presentation at least once a year.

The #1 Apparel Retailer in the US is now… Amazon?!

One of these things that kind of seem like “yeah, makes sense” today, because we’ve slowly acclimated to the idea over time, but 10-15 years ago it would’ve seemed weird.

Wells Fargo estimates that Amazon’s apparel and footwear sales in the U.S. grew by roughly 15% in 2020 to more than $41 billion, which is 20% to 25% above rival Walmart.

“This represents highly impressive 11%-12% share of all apparel sold in the U.S. and 34%-35% share of all apparel sold online.” (Source)

Remember when “buying clothes online” was a big question mark? Won’t people need to try things on, to touch them, see how they look in movement, with natural light, etc..?

I guess not ¯\_(ツ)_/¯

(well, at least for one side of the barbell… I’m sure there will remain the more specialty/fancy/trendy side that will also do well offline and for niche e-comm retailers)

Interview: Elliot Turner (Twitter, Naked Wines, Kambi)

Another good interview by Rob Koyfman (who I interviewed here — yes I’ll keep plugging it every chance I get, it’s a good interview!).

And, if you want a double-Turner, an interview of him by friend of the show Bill Brewster just came out:

The Twitter discussion was great, and I loved this line by Turner:

[In my portfolio] I let concentration be an outcome, not an input.

That’s kind of like how I do things too. I plant these seeds, and if they don’t work out they tend to become smaller and insignificant, and if they work out, I mostly don’t trim them because of arbitrary size rules, I’m ready to let them become quite big as long as I’m comfortable with this specific companies risk/reward dynamic (for example, I’m more comfortable if the business is highly internally diversified by geography, product, industry vertical, etc, than if it’s a single-product company in a single country).

Visa to Enable Bitcoin Transactions on its Rails

CEO Alfred Kelly:

We’re trying to do two things. One is to enable the purchase of Bitcoin on Visa credentials. And secondly, working with Bitcoin wallets to allow the Bitcoin to be translated into a fiat currency and therefore immediately be able to be used at any of the 70 million places around the world where Visa is accepted.

WSB Adopts 3,500 Gorillas

Around 3,500 gorillas have been adopted by Reddit's WallStreetBets (WSB) community in six days.

The Dian Fossey Gorilla Fund International, a charity for the protection of endangered mountain gorillas, has also received more than $350,000 (£252,000) in donations. (Source)

Ok, that’s good.

Video from the Director of the Dian Fossey Gorilla Fund to WSB to thank them.

🤔 Now imagine if charities just started selling NFTs of what they’re trying to protect… All the world’s problems solved, right?

Wikipedia mischief, young Ryan Petersen edition


In 2003 when Wikipedia was still new, I added my college roommate
[George Strompolos] and myself to Wikipedia's page on "Famous Alumni of UC Berkeley." Later that year the school sent out a fundraising brochure. On the back page there was a list of famous alumni.

The brochure listed Wozniak, Eric Schmidt, Jason Kidd, famous Olympians, a bunch of Nobel prize winners, plus me and George.

My dad, also a proud [UC Berkeley] alumni, was super surprised to read my name on this brochure since I was 23 years old, unemployed, and living in his basement.

As the founder of Flexport, Ryan probably belongs on that page now, but I checked, and he isn’t on it… ¯\_(ツ)_/¯

Speaking of Wikipedia, it looks like the Wikimedia Foundation has decided that its big commercial users should pay a bit more, and has created a product better tailored to their needs to encourage that:

Enterprise [version[ will help ensure that commercial operators display the latest, most accurate version of articles and crack down on vandalism quicker. A contractual relationship will also more formally recognize that these companies are extracting value from a volunteer project, and therefore must “contribute back to the commons,” [...]

The Foundation says it doesn’t expect Enterprise ever to become the primary source of funding for the foundation’s roughly $100 million budget. User donations, supplemented by grants, should still carry most of the load, Seitz-Gruwell says, but having a reliable additional revenue stream from companies would offer stability for the foundation

As an early contributor to Wikipedia with thousands of edits in the 2002-2009 era, I’m happy to see this move. The more revenue streams the Foundation has, the better, as long as they don’t start changing things in ways that make it worse just to please Big Tech.

Science & Technology

🐝🐝🐝🐝🐝 Bees! 🐝🐝🐝🐝🐝

Somehow I ended up on Bee TikTok, and these videos by TexasBeesWorks, a professional beekeeper, are just so good. Here’s a couple really good ones:

Trust me, watch at least the first one even if the description doesn’t sound like much.

‘Adobe Photoshop’s “Super Resolution” Made My Jaw Hit the Floor’

I used to use Photoshop, but after the version I had (pre-cloud era) started to feel old and was missing too many modern features, I decided to look at alternatives (because Photoshop is expensive and money doesn’t grow on trees).

For a few years, I tried a bunch of things, but couldn’t find anything that quite worked for me. But around 2 years ago, I tried Pixelmator Pro, and the version out at the time was really good and really fast and did everything I needed so I’ve been using it ever since.

A little over a year ago, they introduced a feature called “ML Super Resolution” that upscales photos using machine learning models. It did a decent job from the start, but over time they’ve iterated on it and it’s now basically like magic.

Most of the time, it feels like Pixelmator is finding a higher-rez version of that photo you’re looking at through some black magic portal and pulling it to this dimension.

It looks like Adobe has now released something similar for Photoshop. I haven’t had a chance to try it, but it sounds impressive:

Once I upsized the image using the Super Resolution feature, I zoomed into the resulting image and was very impressed. The image seemed just as sharp (if not a little sharper) as the original image file but of course it is massively larger (in terms of resolution and file size). Kudos to the folks at Adobe for creating a truly revolutionary addition to Photoshop. [...]

So what does this mean? For starters, it means that AI technology will have a huge impact on photography. Going forward, the software we use to work up our images (and upres them) might in some instances have a larger effect on the final images than the camera that was used to capture the image.

To a certain degree, this new tool in Photoshop significantly equalizes the playing field no matter what camera you are working with. All of a sudden my Nikon Z6 and Fujifilm X-Pro3 (respectively 24MP and 26MP cameras) are capable of producing stunning large prints in a way that was previously just not possible. [...]

this could be the best upgrade to any and every camera ever. This is certainly one of the most incredible features Adobe has ever released in Photoshop. (Source)

There’s a video demoing the feature here.

The Arts & History

‘Large school of mobula rays’

Just a cool photo.

Negrete, 36, from Mexico City took the incredible pictures while on a trip off the coast of Baja, where he was helping to unhook sharks caught in fisherman's long-lines. [...]

'I took the photos free-diving to a depth of about 60 feet. It was an amazing experience that humbled us all.

Photographer: Eduardo Lopez Negrete

‘Indiana Jones and the Last Crusade EGA/VGA comparison’

I have fond childhood memory of graphical adventure games (as they were then called), stuff like the King’s Quest VI, Gabriel Knight, Police Quest IV, Day of the Tentacle, etc.

Once I went to a friend’s cousin’s house, and he had this amazing Indiana Jones game, and we spent a few hours playing. I don’t think we got very far, because he had the English version and we couldn’t understand what was written on the screen, so we mostly walked around and randomly clicked on stuff until something happened, but it was still fun.

The original game came out with EGA graphics in 1989, and an updated version with VGA graphics came out the next year. Someone did some monk’s work compiling screenshots of each version so you can compare them by mousing over.

If you grew up in the 1990s and remember this game, this is your nostalgia dose for today.