126: Constellation Software Annual Meeting, Signal's Banned Facebook Ads, Twitter Tip Jar, Daniel Ek, Youtube's Custom Silicon, Value Wins, and Nature is Metal

"I take a perverse joy in keeping it retro."

Habits are reinforced by your habitual environment. That’s a big part of why retreats work: they take you away from your usual surroundings and people.

If you want to start meditating, doing pushups, intermittent fasting, etc, try starting on a vacation where the new circumstances make it easier to integrate new habits.   

Jacob Falkovich

(I wonder if this works as well for purely cognitive habits 🤔 Maybe it’s most effective to try new ways of thinking/working outside of our regular world?)

🛀 A cool one via ‘Oogimauskii’ on Reddit:

I read a book that blew my mind. The main character goes crazy when he realizes no one really knows him.

The gist is that the person you think of as "yourself" exists only for you, and even you don't really know who that is. Every person you meet, have a relationship with or make eye contact on the street with, creates a version of "you" in their heads. You're not the same person to your mom, your dad, your siblings, than you are to your coworkers, your neighbours or your friends. There are a thousand different versions of yourself out there, in people's minds. A "you" exists in each version, and yet your "you", "yourself", isn't really a "someone" at all.

If you’re curious, the book is “Uno, nessuno e centomila” (translated from Italian to English as “One, No One and One Hundred Thousand”) by Luigi Pirandello.

Pirandello began writing it in 1909. In an autobiographical letter, published in 1924, the author refers to this work as the "...bitterest of all, profoundly humoristic, about the decomposition of life: Moscarda one, no one and one hundred thousand." The pages of the unfinished novel remained on Pirandello's desk for years and he would occasionally take out extracts and insert them into other works only to return, later, to the novel in a sort of uninterrupted compositive circle. Finally finished, Uno, Nessuno e Centomila came out in episodes between December 1925 and June 1926 in the magazine Fiera Letteraria.

That’s how life is, sometimes.

h/t George Mack

Update: Saw a tweet by Geoffrey Miller that kind of touches on a similar theme (in the context of the recent Bill & Melinda Gates news):

📝 I’ve been playing with Obsidian for a few days.

The learning curve is a bit steep, especially if you have no experience with markdown (thankfully I did), but I gotta say, after setting up my vault, customizing everything and adding a few plugins, this is some of the best and most exciting software that I’ve used in a long time. There’s lots of small delights everywhere (sometimes hard to discover, but worth the digging), and I think it’ll actually make my life better and improve my thinking.

And it’s free! It’s super-fast, everything is saved locally in an open format, and from what I can tell, development is rapid and the two co-founders are highly talented and responsive.

They even have a public Trello board that shows their roadmap, and my biggest annoyance is something that they plan to address (I’d like to have a WYSIWYG editor too, rather than edit everything in markdown and then render it).

I think I’ve largely cracked how I want to use it to organize my investing notes. I’m not 100% sure on all the details, and whether I’ll be able to fully replace my linear investing journal document, but I think there’s a decent chance I’ll get there.

This is what my graph looks like so far:

💚 🥃 3.4/5% — the needle is moving! If you like this project, you can move the needle some more by becoming a supporter, it takes 20 seconds:

💙 Subscribe now 💙

Investing & Business

Constellation Software Annual Meeting 2021

Yesterday was Constellation Software's annual meeting.

It's the second year it is remote, but this one hurt more because last Spring, I kind of thought that by now we'd be back to in-person, so didn't expect to miss two in a row.

I mean, you get a lot of the same information by streaming the audio or reading the transcript, but this AGM has been the only one I've traveled for in recent years, and I've always had a great time meeting other investors face-to-face (many that I’ve known for years from Twitter or forums but had never met).

The tradition I started ˜4-5 years ago is to do drinks at a downtown pub the night before the AGM. I usually end up late because of the planning fallacy (my train is late, then it's raining, then I can't get an Uber, then I have to run to my Airbnb to drop my stuff, etc), but once I'm there, the people and conversations have been uniformly great. This company seems to attract the kind of people I like to talk to...

And the fun thing was that year after year, the pre-AGM pub meeting became bigger, so I was starting to think that over time I may need to rent a space in a restaurant or something. Maybe it'll turn into something like the Markel breakfast, who knows!

But two years without it, and I'm going through a bit of withdrawal 😔

Anyway, here are some highlights from the AGM. These are from my notes, so any mistakes are mine, and some parts are paraphrased a bit because I'm not a court stenographer:

Mark Leonard: "I was a failed VC, so it means I have a dangerous desire to go back and try, but I won't do it with shareholder money. The thing that appealed to me most about VC is what appeals to me with CSI. Small teams working hard, trying to do a good job for their clients. That sense of mastery and purpose that comes from these small teams. I love the startup work, that intensity, frequently coupled with intelligence. To recreate that, again, inside of CSI would be something I'd thoroughly enjoy, so I talk about it once in a while with managers. But it's a very hard thing to do, especially at scale. So I don't think we'll do VC in any significant way."

Home builder manager: "A lot of our customers are spending more for the caulking on their windows than our software"

Now that is a great line that I hope their salespeople are using (or variants of it), because it really puts in perspective how little it costs for something so mission-critical.

Mark Leonard: I HATE talking about pricing power, because it implies you're selling the same thing year after year, but at a higher price. Nearly always, we improve the product, it'll be more tailored, have more features, etc. So it's more about selling more product to the same customer. What we often do when we buy businesses -- a diamond in the rough -- we polish them up and improve them, and then increase the price, but not just on the same thing.

This is a point that he made a few times in the past, at least once in a quarterly call back when they still had them, and at an AGM that I attended.

Very important to keep in mind when thinking about the sustainability of their price increases. Also, when comparing with businesses that are in industries where pure pricing is being flexed (ie. you sell the exact same widget at a higher price every year).

Mark Leonard: If you're in a branch in Spain, you may not feel loyalty directly to CSI. But you feel it for your team and your manager and your customers. It's very much dependent on that manager to create that atmosphere, and motivate and create a career path for the people they manage.

I'm not a big fan of "Constellation Software", I wanted it to be as generic as possible, but my partners wouldn't let me. I wanted employees to feel loyalty to the teams they work with. I hope the managers at head office are proud of the work of art that they've created, but I don't want "Constellation" on coffee cups and t-shirts.

Makes a lot of sense, and fits perfectly with his first-principle, goal-oriented approach.

Still interesting to learn decades later that the CEO and founder of Constellation Software doesn’t like the name of his company because he thinks it’s too good and not generic enough

Q: Will the CSI Website ever get a paint job?

Mark Leonard: I take a perverse joy in keeping it retro. I'm thinking of making it monochrome.

Arnold said it best.

Signal Uses Facebook’s Targeting to Target… Gets Account Shut Down

We created a multi-variant targeted ad designed to show you the personal data that Facebook collects about you and sells access to. The ad would simply display some of the information collected about the viewer which the advertising platform uses. Facebook was not into that idea.

Facebook is more than willing to sell visibility into people’s lives, unless it’s to tell people about how their data is being used. Being transparent about how ads use people’s data is apparently enough to get banned; in Facebook’s world, the only acceptable usage is to hide what you’re doing from your audience. (Source)

h/t John Gruber

Value now doing better than both growth & momentum for the trailing year

Worth highlighting to give this one to the long-suffering value investors (you know what I mean — I think value is about more than the value factor).

If you zoom out to the 5 or 10 year view, things look quite a bit different, though…

Ek’s Clippers?

Spotify CEO and founder Daniel Ek has contacted Arsenal owner Stan Kroenke’s family to make an offer to buy the Premier League club [...]

Ek said last week he had secured the funds to buy Arsenal, valued at $2.8 billion (Source)


Twitter Tip Jar (Limited)

No much else to say, but nice to see Twitter trying new things lately.

Matt Levine on Dogecoin 🦴

Just imagine traveling 10 years back in time and trying to explain this to someone; just imagine what an idiot you’d feel like. “There’s going to be this online currency that people think is a form of digital gold, and then there’s going to be a different online currency that is a parody of the first one based on a meme about a talking Shiba Inu, and that one will have a market capitalization bigger than 80% of the companies in the S&P 500, and its value will fluctuate based on things like who is hosting ‘Saturday Night Live’ and whether people tweet a hashtag about it on the pot-joke holiday, and Bloomberg will write articles and banks will write research notes about those sorts of catalysts, and it will remain a perfectly ridiculous content-free parody even as people properly take it completely seriously because there are billions of dollars at stake.”

Investor Psychology Masterclass: ‘Divorce, Denial, Dissonance Reduction’

This is a courageous piece by friend-of-the-show Frederik ‘Neckar’. It shows a rare level of deep introspection and a growth mindset. Check it out:

Classifieds, Classifieds Edition

Friend-of-the-show Edwin Dorsey from The Bear Cave is diversifying his empire by launching a job board focused on finance jobs. Some nice out-of-the-box thinking there. If it’s your thing, check it out:

Science & Technology

‘YouTube is now building its own video-transcoding chips’

Google’s custom Tensor Processing Unit (TPU), which is basically a TensorFlow machine-learning accelerator, has gotten a bunch of attention in recent years, but it’s not the only custom silicon that the company is fielding.

One of the most recent examples is this Argos Video (trans)Coding Unit (VCU) that Youtube is using to help it manage the huge computational load required to compress and re-compress a gazillion videos to different resolutions and bit-rates so that the streaming experience can gracefully scale up and down with screen size and bandwidth constraints (from some small phone over a bad cellular connection to a living room TV doing 4K HDR over fiber).

As you can see above, it looks a bit like a GPU card, but with a massive passive heatsink. Each board has two Argos chips.

Google provided a lovely chip diagram that lists 10 "encoder cores" on each chip, with Google's white paper adding that "all other elements are off-the-shelf IP blocks." Google says that "each encoder core can encode 2160p in realtime, up to 60 FPS (frames per second) using three reference frames." (Source)

Their paper on the design claims:

We evaluate these accelerators “in the wild" serving live data center jobs, demonstrating 20-33x improved efficiency over our prior well-tuned non-accelerated baseline. 

Based on data in the paper, the Argos cores seem particularly tuned to Google’s VP9 codec.

The speedup multiple over h.264 vs a CPU is much lower, but that codec is getting old anyway, now that the more modern HEVC/h.265 and VP9 codecs can compress files to about half the size for a given quality (and Youtube no doubt wants to use VP9 over HEVC to save on the licensing fees).

‘Acoustics-based Physical Key Inference’

The techniques used for espionage/surveillance are often very cool.

I remember years ago when I learned that keys could be made from a photo taken with a very powerful telephoto lens from very far away.

Someone’s at a restaurant, puts their keys on the table, someone takes a photo and then, through software, creates a duplicate of the keys.

Or how audio recordings of someone typing on a keyboard could be used to know what was typed, because each key sounds a bit different and is used at fairly predictable statistical frequencies, etc.

This video shows a kind of hybrid of these: How the sound of a key going in a lock could be used to know the shape of the key, and make a duplicate of it. Very cool.

The Arts & History

Honey buzzard, Nature is Metal 🤘 Edition

Foxfeather Zenkova (bio describes them as “falconer… beekeeper”, so very on-brand):

Have you heard of the honey buzzard? If you haven't, you are in for a treat! These raptors specialize in raiding wasp & bee nests, eating honey, larvae, and pollen. Their head feathers have developed into hard, armor-like scales to protect them from stings.