107: Investing... in mice, Intel!, Amazon Ads & AWS CEO, Microsoft + Discord, Shopify's Tobi Lütke, Software & Real Estate, Intercontinental Exchange, and Nintendo Switch 4K
"there's a burden of proof to overcome there"
We are not the average of the 5 people we spend most time with.
We are the average of the 5 thoughts we spend most time with.
And those thoughts needn't come from people in our life.
🐭 In scientific circles, they joke that you can append "... in mice" to almost any media headline about a new study that “discovered XYZ” (implying that some important steps are missing and things aren’t as simple as they sound).
In investing, the equivalent is to add "... for me" to whatever process or system you've found that works and that you’re telling others about. This is because they likely can't just run that software successfully, for they have a different hardware (personality/brain wired differently) and different data on their hard-drives (different life experiences, knowledge base)…
The vice versa applies when you hear about what others did, you can mentally add "...for you" to it.
This doesn't mean it can't work for you.
Just that there's a burden of proof to overcome there, and that you may need to modify it (recompile it after some tweaks?) so that it runs on your own specific mind-hardware.
🤝 Almost all my favorite finance/investing people tilt way more 'collaborative' than 'competitive' with peers (nobody is 100% one or the other, but they tilt heavily that way).
I don't think it's just that they're nicer; they get an advantage from the higher velocity of exchange of ideas, feedback, connections, resources they can call on, etc, so it’s shrewd too.
But regardless of who benefits most, the win-win way of life is just more fun to live
🔦 Being wrong isn’t that bad if you have a mindset and a process that will lead you to eventually discover that you’re wrong, accept it, and correct it.
Being wrong is terrible if you are rigid about beliefs, actively look away from disconfirming evidence, only seek things that reinforce what you already believe, and care more about consistency than truth (ie. It’s an insult to politicians to be seen to change their minds — “flip flopper!” — that’s bonkers and it implies that they’re always right and never learn, two things that are incompatible).
👍 Good talk by Alain De Botton (“Swiss-born British philosopher and author”), sent to me by friend-of-the-show Laurence Endersen when discussing what I wrote in edition #106 about empathy vs narcissism.
It’s a nice companion to the classic talk by David Foster Wallance, “This is Water”.
I think it’s quite insightful and I recommend it (it’s just 8 minutes):
More great life lessons, and maybe some revelations that could explain some stuff you or people close to you have been struggling with.
I’m a big podcast listener and the format feels complementary to writing/reading, so it may be a good tool to have in the toolbelt for future projects.
A lot of what we dislike are just things we’re bad at — becoming better is often a way to like it better, as backwards as that sounds. So I want to figure out if I can like it, or if it’s just not for me.
I plan to write a thing or two about what I learned on the production side for each mini-podcast.
I’ve already learned some things about audio editing, about the importance of the energy level/tone of your voice (at first you tend to only think about what you’re saying, not how you’re saying it), types of microphones, how it’s easy to start thinking about the fact that you’re being recorded and that throws you off and you lose your train of thought, etc.
I’ve already recorded episode #2. It’s about a couple of investing concepts that I find interesting. At this stage, these are going out only to paid supporters so I can learn publicly, but not too publicly.
Investing & Business
Intel’s New CEO Comes Out Guns Blazing
Ok, color me impressed so far (or is “cautiously optimistic” the traditional hedged pundit cliché?):
Intel announced plans to become a major provider of U.S.- and Europe-based foundry capacity to serve the incredible global demand for semiconductor manufacturing. To deliver this vision, Intel is establishing a new standalone business unit, Intel Foundry Services (IFS), led by semiconductor industry veteran Dr. Randhir Thakur, who will report directly to Gelsinger. IFS will be differentiated from other foundry offerings with a combination of leading-edge process technology and packaging, committed capacity in the U.S. and Europe, and a world-class IP portfolio for customers, including x86 cores as well as ARM and RISC-V ecosystem IPs
So rather than spin-out the fabbing as some had suggested, Intel decided to open it up to third-parties, but while keeping it inside the org. It remains to be seen if they can develop the kind of customer orientation that makes TSMC what it is, but it’s good to see them try something bold like this.
Expanded use of third-party foundry capacity [...] Gelsinger said he expects Intel’s engagement with third-party foundries to grow and to include manufacturing for a range of modular tiles on advanced process technologies, including products at the core of Intel’s computing offerings for both client and data center segments beginning in 2023.
This likely means that until they can get their own process back on the leading edge, that they’ll use TSMC (and maybe Samsung?) for some stuff. Makes sense, as they can’t easily compete with AMD at a process disadvantage.
Gelsinger announced significant manufacturing expansion plans, starting with an estimated $20 billion investment to build two new factories (or “fabs”) in Arizona [...]
Gelsinger re-affirmed the company’s expectation to continue manufacturing the majority of its products internally. The company’s 7nm development is progressing well, driven by increased use of extreme ultraviolet lithography (EUV) in a rearchitected, simplified process flow. Intel expects to tape in the compute tile for its first 7nm client CPU (code-named “Meteor Lake”) in the second quarter of this year. (Source)
Meteor Lake. Hmm. Is that a geeky version of an acknowledgment that something kind of blew up in their roadmap?
In any case, it’s good to see them doubling down on their manufacturing expertise.
My Amazon Ads Question 🤔
I wonder if Amazon always knew they’d be doing search ads/sponsored results on the retail side (the new slotting fees!), and delayed them for years as a way to “buy growth” by making the site as attractive for 3P sellers as possible, or if they only really realized the opportunity in recent years.
You’d think that with the Google model it would have been fairly obvious to them that this is a great way to monetize a search engine (especially when it’s used to search for things to buy).
But at the same time, things always seem more obvious looking back than they were at the time, and I don’t remember that many people in 2010 saying that Amazon was leaving billions on the table by not going having search ads…
AWS has a New CEO (White Smoke from the Chimney)
Now that Jassy is admiral of the whole fleet, kremlinologists were wondering who would be captain of the AWS aircraft carrier.
Turns out, it’s someone from outside, but who used to be inside. Here’s highlights from the email that Jassy sent to employees:
Adam Selipsky will be the next CEO of AWS.
Adam is not a new face to AWS. Back in 2005, Adam was one of the first VPs we hired in AWS, and ran AWS’s Sales, Marketing, and Support for 11 years (as well as some other areas like our AWS Platform services for a spell). Adam then became the CEO of Tableau in 2016, and ran Tableau for the last 4.5 years. Tableau experienced significant success during Adam’s time as CEO—the value of the company quadrupled in just a few years, Tableau transitioned through a fundamental business model change from perpetual licenses to subscription licensing, and the company was eventually acquired by Salesforce in 2019 in one of the largest software acquisitions in history. Following the acquisition, Adam remained the CEO of Tableau and was a member of Salesforce’s Executive Leadership Team.
With a $51B revenue run rate that’s growing 28% YoY (these were the Q4 2020 numbers we last publicly shared), it’s easy to forget that AWS is still in the very early stages of what’s possible. Less than 5% of the global IT spend is in the cloud at this point. (Source)
Microsoft Apparently Wants to buy Discord for $10bn+
What’s the opposite of discord? Agreement!
We’ll see if Microsoft can get there:
Microsoft Corp. is in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion, according to people familiar with the matter.
Discord has been talking to potential buyers and software giant Microsoft is in the running, but no deal is imminent, said the people, who asked not to be identified because the discussions are private. Discord is more likely to go public than sell itself, one person said. (Source)
As Blake Robbins was discussing on Twitter, in theory there are many strategic buyers for Discord, but in practice, many of those would have trouble acquiring it (Facebook and Google probably wouldn’t be allowed by regulators…).
According to various reports, Discord has about 140 million active users per month.
Microsoft makes a lot of sense as a buyer. There would be obvious fit with its gaming businesses and they’ve shown the ability — in the Nadella era — to leave acquired companies enough freedom to keep doing well (under Ballmer they’d have tried to turn it into MS Windows Discord).
We’ve certainly seen a tsunami of IPOs lately, so that wouldn’t surprise me either, but the strategic value to a buyer like Microsoft may mean a price that is hard to say no to. I wouldn’t be surprised if others like Amazon (and Epic? Tencent?) were also bidding, but were just quieter about it than Microsoft.
Interview: Tobi Lütke, Shopify CEO
"Friction shapes the world more than policy, in a lot of cases."
"[On programming:] Never since blacksmithing have we had a craft where the craftsman makes their own tools."
I tend to agree with Jason’s suggestion of doing challenge trials for vaccines (around 28 minutes in the podcast) when there’s potential for a pandemic and time is of the essence. Or at least, I haven’t yet heard a convincing argument against it.
Instead of spending almost a precious year in large scale population trials waiting for people to be naturally infected to know the results, you could gather a bunch of young, healthy volunteers, pay them a boatload of money for their troubles (even at $10 million each it’d still be a bargain compared to a pandemic that kills millions and causes trillions in economic damage), sub-divide them in groups and vaccinate some with vaccine candidate #1, some with candidate #2, etc, some with placebo, and then infect them on purpose with the virus to see which vaccines work.
You get results much faster and potentially save millions of lives and trillions of dollars, and the risk to life (of course the young, healthy volunteers get the best medical care possible) is pretty minimal compared to a lot of other things we’re fine with (soldiers, astronauts, test pilots, aircraft carrier deck crew, base jumping, whatever).
Global Streaming Video Subs Top One Billion for First Time
According to the MPA's THEME 2020 Report, online video subscriptions reached 1.1 billion globally, up 26% year over year. [...]
Global revenue was $68.8 billion in U.S. dollars, up 23% over 2019. [...]
In the U.S., there were 308.6 million online video subs, up 32% from 2019, and market for home and mobile subs was up 21% to $30 billion.
But cable TV remains the highest revenue pay TV market globally representing $116 billion in 2020.
‘Investing in mature software businesses is not too different from multi-family real estate’
Interesting post by Suthen Siva, who does corporate dev and M&A at Constellation Software (a company that I’m a little familiar with), making some parallels between the some of the VMS software that he looks at and real estate:
101 on Intercontinental Exchange
Good overview of an interesting exchange & data business by YoungHamilton:
While the company is probably best known for owning the NYSE, it is actually the company’s weakest business. Cash equities trading is a competitive market (almost 20 stock exchanges in the U.S.) with each exchange having little differentiation which leads to price competition in the form of rebates.
By the way, never try to search for the ICE cashtag on Twitter, all you’ll get is U.S. Immigration and Customs Enforcement stuff…
High Quality Classifieds, Tegus Edition
We're looking to hire a FinTwit native to join our team at Tegus as our first marketing hire. Are you (or someone you know) passionate about investing? Interested in building a brand focused on deep trust with this community? Our DMs are open!
If interested, DM Tegus.
Science & Technology
‘Nintendo to Use New Nvidia Graphics Chip in 2021 Switch Upgrade’
After all the trouble I went through to buy a Switch last Spring (they were extremely hard to find because at the beginning of the pandemic, everybody had the same realization at the same time — oh no! the kids are home and we have to work!), it looks like our Switch is about to be obsolete (well, not really, but…):
Nintendo Co. plans to adopt an upgraded Nvidia Corp. chip with better graphics and processing for a new Switch model planned for the year-end shopping season, according to people familiar with the matter.
The new Switch iteration will support Nvidia’s Deep Learning Super Sampling, or DLSS, a novel rendering technology that uses artificial intelligence to deliver higher-fidelity graphics more efficiently. That will allow the console, which is also set for an OLED display upgrade, to reproduce game visuals at 4K quality when plugged into a TV, said the people, who asked not to be identified because the plan is not public.
The U.S. company’s new chipset will also bring a better CPU and increased memory. (Source)
I’d love to see a remastered version of ‘Zelda: Breath of the Wild’ with higher quality textures and improved environment and models geometries, with DLSS support.
Or maybe we’ll have to wait for BotW2 (whatever it’s called) for that…
Cloudflare Launches New Browser Isolation Tech
Browser isolation works a bit like cloud gaming.
When you log in Nvidia’s GeForce NOW or Microsoft’s xCloud or Google’s Stadia, the game runs on a server in the cloud and the images and sounds are then streamed as a video on your computer.
But unlike a Netflix video, it is interactive, so when you press keys on your keyboard or move the joysticks on your controller, those signals are sent over the internet to the server…
Basically, imagine that you’re playing on a game console, but the wires that connect the controller and TV that are in front of you to it are miles and miles long, and the console itself is in a warehouse on the other end.
Remote browsers work similarly. You see the results of your mouse and keyboard actions on your screen, but the actual browser engine that is doing the rendering is in the cloud, and it’s just sending you a cleverly compressed video stream of the rendered webpage.
Why? Because any malicious code that executes won’t be on your local machine, it’ll be on the hardened, sandboxed Cloudflare server in the cloud. So there’s no way for an attacker to get out of that sandbox and do bad stuff like try to steal some of your local data or burrow in some spyware that remains undetected but gathers sensitive data and phones it back to some mothership in a suburb of Moscow…
Anyway, these remote browsers have mostly sucked historically, but Cloudflare is trying to do it right, and it sounds really promising (I haven’t tried it yet, this was just announced yesterday):
Network Vector Rendering allows us to deliver a safe view of a remote webpage without high bandwidth usage or degraded image quality but it is one part of the solution. By leveraging our global network we position remote browsers close to everyone connected to the Internet. This allows us to deliver a responsive, low latency stream of the webpage regardless of where you are physically located.
Running a web browser on powerful servers connected to the backbone of the Internet introduces a powerful performance benefit. By sending minimal draw commands over the last mile wire, user’s with low bandwidth Internet connections enjoy a faster more responsive Internet. [...]
Like a not-too-distant past when HTTPS encryption was reserved for “sensitive” login pages and eCommerce checkouts, we believe that trusting arbitrary website code will seem just as archaic creating the new paradigm of Zero Trust web browsing. (Source)
This is just one of a ton of announcements that Cloudflare is making this week (Security Week! Their development velocity is amazing…). Another interesting one is a partnership for endpoint security (with VMware Carbon Black, CrowdStrike, and SentinelOne).
Another cool one is malware detection and prevention right from the edge of their network, where it interfaces with the open internet (“Gateway will scan files inbound from the Internet as they pass through the Cloudflare edge at the nearest data center.”).
‘Suez Canal blocked in both directions by mega container ship’
Humanity’s Scale Insensitivity Problem
There should *at least* be a constant, ongoing effort to move this ball forward on the level of urgency and resources that we saw for vaccines and therapies during the pandemic, but unfortunately it's a small fraction of it.
I’ve posted it before, but it’s worth reposting it again because it’s that good:
The Arts & History
Reverse Perspective Paintings
Ok, this is cool. No point in writing about it, this is something you should see.
More on Patrick Hughes and his very special paintings here:
Interview with Patrick Hughes (also shows his studio)
‘Song for Dad’
That's my kind of wholesome, dad joke album cover.
The track is titled "Song for Dad", and I'm guessing that's his dad on the receiving end on the photo.