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15: E-Commerce Surge, What Buffett Does that Doesn't Get Imitated, and Koala Fingerprints
"How many people are in jail because of koala fingerprints?"
"The loser of a knife fight dies in the streets, the winner dies in the hospital." -The Eternal Void
With some fights, the only winner is the one who avoids it altogether.
Investing & Business
E-Commerce Surge (US and UK)
Ben Evans has some nice charts on the COVID19-related e-commerce surge that we’ve been living through.
The headline numbers are pretty dramatic. The UK went from 20% ecommerce penetration to over 30% in two months, and the USA from 17% to 22%.
This spike partly reflects a shift in the denominator: digital increased while sales at most physical retail declined, except for groceries. This effect was much stronger in the UK, where lockdown was much deeper. Even so, absolute US ecommerce sales rose 32% in Q2.
Read the rest here (more charts too).
Few Do What Buffett Does
Buffett is still doing things that very few of his followers do. Yes, I understand, the stock portfolio is just part of the capital base, permanent capital, etc.. but still!
Many can quote all the partnership letters by heart, but few will truly concentrate meaningfully on their best ideas.
I’m not saying it’s for everyone or doesn’t come with risk. Just observing the difference between most disciples and the teacher.
Also, there’s a good piece by Brooklyn Investor that puts into perspective Buffett’s cash pile and looks at it not just as a nominal figure, but in relation to Berkshire as a whole (not only the publicly traded equity portfolio, but all the other equity in various wholly-owned businesses).
Chris Mayer posted this page from McKinsey’s ‘Valuation’ (definitely worth reading — the highlights here are mine). It’s not about quite exactly what I was talking in Edition #14 about Roper, but it brings up a related point.
Sometimes if you focus too much on a metric that is a proxy for something else, you can lose track of what you’re really trying to accomplish.
Texas Instruments often says this to analysts on quarterly calls, when asked about what margins they’re targeting or similar questions. They say that what they care about is free cash flow per share, not a certain margin percentage. It can be the same with ROIC. It’s a useful metric, but if you optimize so much for it that you end up reducing your absolute FCF dollar numbers, you may be losing sight of the forest.
Speaking of Roper, looks like they’ve raised debt for Vertafore at incredibly attractive rates.
Hyperscalers Extending Useful Life of Servers
in Q4 2019 we completed a useful life study for our servers and are increasing the useful life from three years to four years for servers in January 2020, which, based on servers that are included in “Property and equipment, net” as of December 31, 2019, will have an anticipated impact to our 2020 operating income of $2.3 billion.
In July 2020, we completed an assessment of the useful lives of our server and network equipment and determined we should increase the estimated useful life of server equipment from three years to four years and increase the estimated useful life of network equipment from two years to four years. This change in accounting estimate will be effective beginning fiscal year 2021. Based on the carrying amount of server and network equipment included in “Property and equipment, net” as of June 30, 2020, it is estimated this change will increase our fiscal year 2021 operating income by $2.7 billion.
Of course, this is accounting changes, and as such, it’s only partially correlated to reality. But there must be something there, and equipment is probably being kept longer than it once was…
Institutional Ownership of Amazon and Microsoft
Internet Scale, Subscription Podcast Edition
In this world of very-low-cost global distribution of digital goods and services, two guys can start a podcast of them chatting for 15 minutes, three times a week, and get 10,000 subscribers in 4 months (Dithering, with Ben Thompson and John Gruber, launched in mid-May 2020).
I’m a happy subscriber, and happy for their success, which is well deserved.
At $5/subscriber per-month, that’s $50,000/month in gross revenues (they have to pay credit card fees, someone to edit the audio, some bandwidth costs, but not much more than that) or $600,000/year run-rate (but growing fast). And this is their new side-project, with their main jobs making a lot more than that.
Pretty, pretty good…
Big Adobe SNAFU
Lightroom App Update Wipes Users’ Photos and Presets, Adobe Says they are ‘Not Recoverable’
The TikTok Soap Opera
According to The Information:
President Trump on Tuesday called Oracle a “great company” and said he would support its purchase of TikTok.
I’m sure it has nothing at all to do with this.
Toronto Real Estate
Science & Technology
Marvell ThunderX3 ARM server CPUs (up to 96 cores and 384 threads!)
There’s interesting stuff going on with server CPUs, with more and more ARM-based chips coming out and actually competing in the wild (for example, AWS’s Graviton v2, which is a 64-core monolithic design based on ARM’s Neoverse N1 cores, which are derived from the popular mobile Cortex-A76 cores).
One of the new contenders is made by Marvell, The ThunderX3, and details are coming out:
From a SoC-perspective, the ThunderX3 die scales up to 60 cores, with the 2-die variant scaling up to 96. [...] Marvell had made the performance improvement claim of 2-3x over a ThunderX2 at equal power levels. This latter had a TDP of 180W [...]
A single die supports 8 channels of DDR4-3200 which is standard for this generation of a server product and essentially in line with everybody else in the market. I/O wise, we see a disclosure of 64 lanes of PCIe 4.0 – which is again in line with competitors but half of what higher-end alternatives from Ampere or AMD can achieve. [...]
On paper at least, the ThunderX3 seems quite similar to Amazon’s Graviton2 as they both share a similar amount of CPU cores and similar memory and IO configurations. The bigger differences that one can immediately point out to is that the ThunderX3 employs SMT4 in its CPU cores and thus supports up to 240 threads per die.
Koalas Have Human-Like Fingerprints
Maybe it’s because I’ve been watching ‘The Innocence Files’ (on Netflix, I recommend it to everyone), but seeing this, I can’t help but wonder how many people have been falsely accused of crimes in Eastern Australia because of these cute creatures… Or because of chimps and gorillas elsewhere.
A crime in a zoo's koala cage would probably confound the efforts of even the best detectives. Why? Because koalas, doll-sized marsupials that climb trees with babies on their backs, have fingerprints that are almost identical to human ones. Not even careful analysis under a microscope can easily distinguish the loopy, whirling ridges on koalas' fingers from our own.
Koalas aren't the only non-humans with fingerprints: Close human relatives such as chimps and gorillas have them as well. The remarkable thing about koala prints is that they seem to have evolved independently. On the evolutionary tree of life, primates and modern koalas' marsupial ancestors branched apart 70 million years ago.
MS Flight Simulator vs Reality
A follow-up to what I wrote about in Edition #14:
“A pic I took [in real life] vs Microsoft Flight Simulator.” Source.
Google is Adding Wildfire Data to Maps
One more useful real-time dataset being incorporate to Google Maps:
Today we’re launching a new wildfire boundary map in Search and Maps SOS alerts in the U.S. to provide deeper insights for areas impacted by an ongoing wildfire. In moments like a growing wildfire, knowing exactly where a blaze is underway and how to avoid it is critical. Using satellite data to create a wildfire boundary map, people will now see the approximate size and location right on their phone or desktop.
I love this kind of stuff. There’s lots of data that exists in all kinds of databases and in the hands of all kinds of organisations, but it’s not nearly as useful as it could be it made widely and intuitively available. By building it into general purpose products and only surfacing it when needed, you leverage the data and make it much more useful.
When people look for things like “wildfire in California” or a specific fire like “Kincade fire” in Search, they will be able to see a wildfire’s approximate boundary of the fire, name and location, as well as news articles and helpful resources from local emergency agencies in the SOS alert.
More details on Google’s Maps blog.
Line Art by Sasha Lend
Soundscapes & Your Brain
He tells an anecdote about how he likes to work to a background of loud thunder sounds, so he has playlists that are nothing but storm noises on a loop. A few years ago, he rented a small one-room office in some building in London, where he works on his scripts.
His description of how weird is must’ve been for the office workers all around him to see him pacing around (because of course modern offices have glass walls) to loud thunder sounds, while speaking to himself (because to tweak his scripts he says them out loud over and over) was funny to me…
I kind of felt like that today, when I found a playlist that contains 13-hours of oceans sounds (mostly waves crashing on the shore and birds in the distance). I mostly listen to instrumental music while reading - jazz, classical, electronic - because lyrics and vocals tend to distract the part of my brain in use when reading, and I felt these ocean sounds were really nice and encouraged a good flow state.
But then a discussion on Twitter reminded me that a while ago I used to listen to coffee bean noises (I know, it’s weird) because, for some reason, they tingle my brain and help me relax and focus (the whole ASMR thing, if you’re curious about it — for some people nothing works, for others, you just have to find the sound that works for you).
So I decided to combine both! I’m playing the ocean sounds and the coffee beans at the same time, and it’s glorious. It sometimes even feels like I’m on drugs or meditating, but while reading. Going to keep experimenting with this a bit…
"We shape our homes and then our homes shape us." - Winston Churchill
Same with soundscapes and music, right?