117: Bezos' Last Amazon Letter, Microsoft's Nadella on Nuance, Costco 101, Facebook, Coinbase IPO, Snowflake's Sales, Jamie Dimon, Google, Omega 3, and Deadwood

"I remain amazed at what a good business it is"

Is it ten thousand hours to mastery?

It doesn’t matter.

There is no end.

—Ryan Holiday

🤔 For many years now, I’ve had a printout of this graphic taped to my bedroom mirror, as a reminder to my wife and I:

A Twitter thread reminded me of this ability to focus on what matters and is under your control, and the reverse ability to ignore what doesn’t matter and/or isn’t under your control.

One scene that comes to mind is from ‘The Blues Brothers’ (1980), when Jake’s ex-wife — played by Carrie Fisher — is trying to kill him (probably for good reasons). She blows up the building where they are with a remote-detonated bomb.

They get up from under a pile of bricks, dust themselves off a bit, check the time… “It’s almost 9 o’clock, we gotta go” and leave without ever even acknowledging the explosion. It’s a good gag (the sound of the bricks as they get up makes it), but also a good reminder that if you can’t do anything about it, don’t worry and just keep going.

🛀 The ability to separate bad execution from bad ideas is really helpful.

Otherwise, you can throw away good ideas, or keep going with bad ones…

Also, as Peter Attia often says, we should always be very clear about what is the objective, what is the strategy, and what are the tactics.

💚 🥃 If you like this newsletter, please consider throwing a few bucks — the equivalent of one alcoholic drink — in the open guitar case by becoming a supporter.

Without supporters, I can’t spend the many hours per week that it takes to research and put together and will have to stop. Thank you.

💙 Subscribe now 💙

Investing & Business

Bezos’ Swan Song Shareholder Letter (as CEO, anyway)

Some highlights:

Last year, we hired 500,000 employees and now directly employ 1.3 million people around the world. We have more than 200 million Prime members worldwide. More than 1.9 million small and medium-sized businesses sell in our store, and they make up close to 60% of our retail sales. Customers have connected more than 100 million smart home devices to Alexa. Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate. In 1997, we hadn’t invented Prime, Marketplace, Alexa, or AWS. They weren’t even ideas then, and none was preordained. We took great risk with each one and put sweat and ingenuity into each one

1.3 million employees, with 500,000 just in the past year. 200 million Prime members. Think about that. That’s bonkers.

His last point is a good reminder that with some businesses, what you’re trying to evaluate is their ability to innovate and grab opportunities and expand their market into adjacencies and whole new areas.

Some businesses have what it take to do it. Often there’s a talented founder still in charge — as Peter Thiel says, hardest is to go from 0 to 1, so those who have proven that ability can sometimes replicate it — and a shareholder base that has been cultivated and messaged to from the start to think long-term and expect periods of pain during which the necessary investments that will pay off later are made.

Most businesses don’t have what it take, and you see it in their actions, not in their words (because many will mimic the words of those in the spotlight for their success).

Along the way, we’ve created $1.6 trillion of wealth for shareowners. Who are they? Your Chair is one, and my Amazon shares have made me wealthy. But more than 7/8ths of the shares, representing $1.4 trillion of wealth creation, are owned by others. Who are they? They’re pension funds, universities, and 401(k)s, and they’re Mary and Larry [followed by story of couple who bought 2 shares at IPO, now split into 24 shares worth about $81k] [...]

I know people who’ve used their Amazon money for college, for emergencies, for houses, for vacations, to start their own business, for charity – and the list goes on. I’m proud of the wealth we’ve created for shareowners. It’s significant, and it improves their lives

Good reminder to those with a simplistic view of the world that Bezos isn’t a dragon hoarding a pile of gold, but that what he owns are shares in a company that is productive and doing stuff for its customers, and creating plenty of wealth for society both through these products and services, 1.3 million direct jobs (“In 2020, employees earned $80 billion, plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion”) and millions of indirect ones (third party merchants, manufacturers, AWS ecosystem players, etc), and through the fact that it’s publicly traded and the vast majority of shares aren’t owned by Bezos or other insiders.

Not to mention that Bezos is giving back his money through philanthropy (currently very focused on climate change).

Politicians and ideologues love slogans and soundbytes, but reality is — as usual — more complex.

If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.

Non-zero sum, win-win, baby!

Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important.

That’s something I had never thought about consciously, though I realize I’ve always been very aware that I much prefer ordering something online than driving to the store to get it.

let’s value the time savings at $10 per hour, which is conservative. Seventyfive hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation.

And what if you value people’s time more highly (which we should)…!

this value creation is not a zero-sum game. It is not just moving money from one pocket to another. Draw the box big around all of society, and you’ll find that invention is the root of all real value creation

Well said. We have the exact same planet that people had 500 or 2000 or 10,000 years ago. We have the same bodies and brains (evolution isn’t that fast).

All the differences between these epochs come from ideas and their implementations.

Stuff we’ve figured out, invented, discovered, codified and taught and passed on and built on.

Let’s do more of that! (not saying progress doesn’t come with problems, but solving those problems while keeping the benefits should be a goal).

We’re also proud of the fact that Amazon is a company that does more than just create jobs for computer scientists and people with advanced degrees. We create jobs for people who never got that advantage.

Shots fired at other big tech (well, I guess Apple is in-between, with its large retail store employee base).

Not long ago, most people believed that it would be good to address climate change, but they also thought it would cost a lot and would threaten jobs, competitiveness, and economic growth. We now know better. Smart action on climate change will not only stop bad things from happening, it will also make our economy more efficient, help drive technological change, and reduce risks.

Yes! When you take the long view and look at the whole picture, it’s clearly a lot more expensive and risky not to transition to cleaner and more efficient technologies.

53 companies representing almost every sector of the economy have signed The Climate Pledge. Signatories such as Best Buy, IBM, Infosys, Mercedes-Benz, Microsoft, Siemens, and Verizon have committed to achieve net-zero carbon in their worldwide businesses by 2040, 10 years ahead of the Paris Agreement. The Pledge also requires them to measure and report greenhouse gas emissions on a regular basis; implement decarbonization strategies through real business changes and innovations; and neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets. Credible, quality offsets are precious, and we should reserve them to compensate for economic activities where low-carbon alternatives don’t exist.

Peer-pressure, making it table-stakes, fear of being left behind by competitors who get more efficient faster and/or who have cleaner brand with customers… It works.

Amazon is making progress toward our own goal of 100% renewable energy by 2025, five years ahead of our initial 2030 target. Amazon is the largest corporate buyer of renewable energy in the world. We have 62 utility-scale wind and solar projects and 125 solar rooftops on fulfillment and sort centers around the globe. These projects have the capacity to generate over 6.9 gigawatts and deliver more than 20 million megawatt-hours of energy annually [...]

To help rapidly accelerate the market for electric vehicle technology, and to help all companies transition to greener technologies, we invested more than $1 billion in Rivian – and ordered 100,000 electric delivery vans from the company. [...]

I have also personally allocated $10 billion to provide grants to help catalyze the systemic change we will need in the coming decade. We’ll be supporting leading scientists, activists, NGOs, environmental justice organizations, and others working to fight climate change and protect the natural world


In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness? To keep alive the thing or things that make you special? [...]

The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen.

You have to pay a price for your distinctiveness, and it’s worth it. The fairy tale version of “be yourself ” is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don’t expect it to be easy or free. You’ll have to put energy into it continuously [...]

To all of you: be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings

Free-thinking isn’t free.

But it’s worth the price.

Facebook 💯 Renewable Energy

Speaking of clean energy, Facebook has announced:

We are also marking a milestone as our global operations are now supported by 100% renewable energy. (Source)

This needs to become table-stake for big, highly profitable companies.

I get that companies barely scraping by will probably be late-adopters and should wait until the cost curve for renewable energy is even lower, but everybody else needs to show some leadership (renewables would already be cheaper than fossil fuels almost everywhere if the costs of pollution were not externalized to the rest of society, but you go to war with the army you have…).

Costs are now low enough that it’s not much of a sacrifice anyway, if at all, unlike a decade or two ago.

Satya Nadella on Nuance Tech/Products

Microsoft’s CEO spent some time talking about the three key areas that Nuance focuses on, and this first one jumped at me by how he described it (transcript on Koyfin):

First, ambient clinical intelligence.

Nuance's Dragon Ambient eXperience solution has completely redefined clinical documentation by capturing and contextualizing every word of the physician/patient encounter and automatically documenting it into EHR. Deep learning securely converts conversations into structured notes tailored to each medical specialty.

This clinical documentation essentially writes itself, giving physicians time back to focus on patient care. It's a fantastic example of how AI and cloud computing are being embedded in the world today, whilst preserving trust, security and privacy.

This is projected to be one of the fastest-growing infrastructure software revenue streams in history.

Hard to sound more bullish than that.

Nuance will double our TAM in health care provider space and increase our TAM across health care to nearly 500 billion. This acquisition brings our technology directly into the physician/patient loop, which is central to all health care delivery.

This last part is important too, since the regulations on data in the space are very strict, so it’s always harder to do things from the outside looking-in.

Costco Broken Down

Good episode of the recently launched ‘Business Breakdowns’ series by the very talented & prolific Patrick O’Shaughnessy:

One thing I’d add that wasn’t mentioned in the episode, and that I don’t remember hearing about elsewhere, is how Costco doesn’t shy away from the things that at first may have seemed like downsides, and even owns them fully and turns them into a distinctive part of the brand.

Put yourself in the context of when Costco was a new entrant and people weren’t used to the concept. People may have thought the bare concrete floors, big cardboard boxes and pallets, bare-metal warehouses, etc, were "bad" things, not polished, not great aesthetics, not "branded", whatever.

But now it's part of the appeal and when you see it elsewhere it makes you think of Costco.

Jamie Dimon Peeks into Your Chequing Account

“What happened is, the consumer has so much money, they’re paying down their credit card loans, which is good,” Dimon said. “Their balance sheet is in excellent, outstanding shape – coiled, ready to go and they’re starting to spend money. Consumers have $2 trillion in more cash in their checking accounts than they had before Covid.” (Source)

Canadian spelling is superior. ‘Checking your chequing’ just works better than ‘checking your checking’…

Coinbase in the Big Picture

Matt Levine provides a little context:

Cryptocurrency exchange Coinbase goes public today, and I remain amazed at what a good business it is, compared to regular finance. [...]

“$90 Billion Assets on Platform,” boasts Coinbase; it also notes that that represents about 11.1% of the total value of all crypto assets. Goldman Sachs’s earnings presentation notes that it has about $2.2 trillion of assets under supervision just in its asset management division; JPMorgan’s earnings supplement notes that it has almost $3.7 trillion of assets on its balance sheet. [...]

One way to look at that is that the total value of all cryptocurrency in the world is about $2 trillion, and Coinbase took about 0.09% of that value as revenue for itself this quarter. (As of 2020, the total value of all crypto in the world was about $800 billion; that year, Coinbase took about 0.16% for itself as revenue.) Almost $1 out of every $1,000 in the entire crypto market — not $1 out of $1,000 traded, but $1 out of $1,000 of all the crypto that exists — went to Coinbase. [...]

Goldman is, you know, doing stuff for that money; it is taking on principal risk to do trades, it is writing and hedging complex derivatives, it is using its own balance sheet to finance client activities, it is underwriting and advising on initial public offerings. Coinbase is mostly just a computer platform where people can trade crypto among themselves.

You can see why Coinbase is so valuable, but also why big traditional banks might want to get into the crypto business. As a financial market, it is still not that competitive [...] if Coinbase can do it, that should show the way to other people who want to do it, and those outsized returns are going to attract competition.

❄️ Growing Snowflake’s Sales Operation ❄️

Ok, this one is a bit in the weeds and I don’t really recommend it to everyone. But if like me, hyper-growth enterprise software sales ops isn’t a world you know too much about and want some exposure, I think it does a good job:

At first I didn’t even understand some of the acronyms they were using (AE = account executive) and I gotta admit that ‘sales ops’ hadn’t really been on my mind before…

Was very impressed by how planned-out Snowflake’s growth was as a private business. Very methodical, clearly not Slootman’s first rodeo.

h/t Paul Barnes

U.S. Imposes Sanctions on Russia

Kinda nice to see the US back to having, y’know, a backbone.

The United States on Thursday imposed a broad array of sanctions on Russia [...] to punish it for interfering in last year's U.S. election, cyber-hacking, bullying Ukraine and other alleged "malign" actions.

The U.S. government blacklisted Russian companies, expelled Russian diplomats and barred U.S. banks from buying sovereign bonds from Russia's central bank, national wealth fund and finance ministry. Washington also warned the Kremlin that more penalties were possible though the United States said it did not want to escalate. (Source)

I don’t think this is quite the way to do it, though. Magnitsky Act-type of sanctions are probably more effective because they target the mob bosses directly and hit them where it hurts (the wealth that they stash in sunny and/or politically-stable places).

Targeting the government/financial system also hurts, but it also can hurt the population, making it easier for the mob bosses to blame foreigners for people’s problems.

Science & Technology

‘Google Earth’s historical 3D time lapses show the ravages of climate change’

Google Earth is getting a new 3D time-lapse feature that lets you observe how Earth has changed from 1984 to 2020 [...]

To create the 3D time-lapse imagery for Google Earth, the company says it used more than 24 million satellite images taken from 1984 to 2020 to create one 4.4 terapixel-sized video mosaic. (To give you a sense of the scale there, one terapixel is 1 million megapixels.) The company worked with NASA, the US Geological Survey (USGS), the European Commission, and the European Space Agency (ESA) to collect the data used in the time lapses. (Source)

Omega 3 Impact on ‘Critically ill’ COVID19 Patients

Relatively small sample size, but double-blind and randomized:

21% of critically ill COVID-19 patients given 600 mg of fish oil daily for two weeks had a 1-month survival rate compared to only 3% of the patients given a placebo. Fish oil also improved microcirculatory function.

This was a double-blind, randomized controlled trial on 128 critically ill COVID-19 patients. Omega-3 also improved markers of kidney function. The results need to be confirmed in larger studies perhaps with increasing doses of fish oil (dose-response). (Source)

Guessing the food at most hospitals isn’t super rich in EPA and DHA…


Personally, I’ve been taking 4.8 grams of fish oil daily for years (2,000mg EPA, 1000mg DHA), via Costco’s ‘Kirkland Signature Super Concentrate’ and I give my kids this stuff daily.

Magnitude of upside not entirely known, but plenty of evidence that it’s present, while no real downside other than cost.

Well, I’m glad I bought a new microphone…

When audio quality is high (vs low), people judge the content as better and more important. They also judge the speaker as more intelligent, competent, and likeable.

In an experiment, people rated a physicist’s talk at a scientific conference as 19.3% better when they listened to it in high quality audio vs slightly distorted, echo-prone audio.

The effects were similar in experiments with NPR’s Science Friday interviews, where the researchers tested the same interview in high quality audio vs a simulated bad phone line (but still fully understandable).


Intel Videos on CPU Architecture

Very accessible to the non-geek, and pretty promotion-free. I recommend them:

h/t Gavin Baker

The Arts & History

Keith Carradine Interviewing David Milch, Creator of Deadwood

Do I even need to warn that there’s some swearing in the video?

It’s great that Wild Bill Hickock is conducting the interview. Just perfect.

Fascinating to see just how much thought Milch has put into the philosophy and meta-themes of the show. Very sad that such a brilliant and subtle mind is under fatal attack from Alzheimer’s disease (diagnosed in 2015).

I liked this line by Milch around 20-mins in:

“I try to be very careful about who I steal from. Only steal from the best!”

Also learned that the real Seth Bullock was a good friend of Theodore Roosevelt!

Bullock's friendship with Roosevelt led to his becoming a Captain of Troop A in Grigsby's Cowboy Regiment. This was another volunteer cavalry regiment which Congress authorized in the Spring of 1898. It was similar in composition to Theodore Roosevelt's Rough Riders [...]

After Roosevelt was elected president, Bullock organized 50 people (including Tom Mix) to ride in the inaugural parade in 1905. Bullock was then appointed U.S. Marshal for South Dakota for the next nine years. Roosevelt later selected Bullock as one of 18 officers (others included Frederick Russell Burnham, James R. Garfield, and John M. Parker) to raise a volunteer infantry division, Roosevelt's World War I volunteers, for service in France in 1917 (Source)

If you haven’t seen Deadwood yet, I recommend it, but with a few caveats:

  1. It’s not for everybody, but it’s for you, it’ll probably be really for you.

  2. Commit to at least 3 episodes if you’re going to try. That should be enough to know if it’s for you.

  3. Don’t go in if you can’t handle lots of swearing, and regular nudity and violence (aka HBO).

If you are already a Deadwood fan and haven’t pre-ordered Matt Zoller Seitz’s book on the show, what are you waiting for? 🤠