152: Pentagon Goes Nuclear on JEDI, What's Your Edge?, Time Travel, Andy Jassy, Josh Tarasoff, Ocado Robots, 1% Vaccinated, Nintendo's New Switch, and Mad Men Subtext
"That new acronym sure isn’t as catchy as JEDI was"
“When talent is lacking, habit will often suffice.”
💸 The "what's your edge?" question has both saved and cost investors enormous amounts of money.
As Community Adj. Alpha points out (great WeWork reference there), any time someone talks about investing in some huge FANG-type business, the clever naysayers will ask “what edge you could possibly have?” And yet the “obvious” no-edge FANG equal-weight portfolio has generated something like 37% CAGR since 2015.
I guess your edge is knowing on which side of that question you fall… Sometimes simplicity is the ultimate sophistication, sometimes obvious things work. Sometimes.
If you did the work, like with any other investment, and built up enough confidence to buy something, don’t let the fact that it's "obvious" deter you.
If obvious things never worked, they wouldn’t be considered obvious in the first place…
🛀 Sounds are just as arbitrary as colors.
What we perceive to be high-pitched is just located at the top end of what we can physically detect with our ears, and what we perceive as bass it's just at the bottom (that part is less arbitrary, zero vibrations per second is a hard floor).
But to an AGI robot with sensors detecting the vibrations in the air, it’s all just different frequencies, there's nothing about them that says they have to sound a certain way, just like photons of a certain wavelength don’t have to look “blue” or “green”.
If our ears could easily detect sounds up to 40khz, maybe what we now consider mid-range would be in what we now consider high-pitched…
❓Without looking it up, what would you guess the population of the Czech Republic is? Write down the answer before you look it up. How close were you?
🚘 I drove three hours on Friday — which is something I only do a few times a year — to go pick up my oldest son at my parents' (where he spent a week).
This long drive gave me time to think about how archaic manual driving will seem in a few decades.
We all have to rely on other drivers not being really bad, or tired, or drunk, or distracted, or all four at the same time. The difference between life and death (or at least a very bad day) is often just a movement of a few inches on the steering wheel, or a moment of not paying attention.
If driving didn't exist and was invented today, we probably wouldn’t hand out permits to almost anyone the way we do now.
I’m surprised there aren’t more accidents — but when you look at numbers, there’s plenty, we’re just used to it. Different sources have different numbers, but there seems to be about 6 million car accidents per year just in the US, and worldwide 1.35 million people die in road crashes each year.
I get that large parts of the world are designed around cars, so you can’t easily remove people’s access to cars without huge consequences on their lives, so we put up with all the risks because we feel there are big rewards. But when there’s a viable alternative, I think the calculus will change a lot.
We’re really good at rationalizing things when we feel we don’t really have a choice, but as soon as we do, things can move fast.
💚🥃 What can I say?
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Investing & Business
‘Time Travel to Make Better Decisions’
Ok, this is cool.
Friend-of-the-show and supporter (💚🥃) Brad Slingerlend wrote an interesting essay that uses time travel concepts to look at decision-making, and looks at the various psychological impulses that make us so fascinated with the idea of time travel.
He even did taxonomy work to classify the various sub-genres of time travel fiction. There’s a David Foster-Wallace reference — see if you catch it:
Pentagon Cancels $10bn JEDI Cloud Contract Awarded to Microsoft, Will Ask Both AWS and Azure to Bid on New Proposal
This is kinda bonkers, and smells really fishy…
Like, they couldn’t claim in the courts with a straight face that there was no political interference, so they’re cancelling the whole thing and starting over, but they’re going to pull a Solomon and split the baby this time so it’s less contentious:
The Department of Defense announced Tuesday it’s calling off the $10 billion cloud contract that was the subject of a legal battle involving Amazon and Microsoft. [...]
The Pentagon said in the press release that it still needs enterprise-scale cloud capability and announced a new multi-vendor contract known as the Joint Warfighter Cloud Capability. The agency said it plans to solicit proposals from both Amazon and Microsoft for the contract, adding that they are the only cloud service providers that can meet its needs. But, it added, it will continue to do market research to see if others could also meet its specifications.
That new acronym sure isn’t as catchy as JEDI…
I’m sure that Larry Ellison’s ears perked up at that last line… And GCP is no doubt polishing up the slide presentations stored in the “presentations for Pentagon Generals” folder of their Google Drive.
the inspector general noted in the 313-page report published in April 2020, that it had limited cooperation from White House officials throughout its review and, as a result, it could not complete its assessment of allegations of ethical misconduct.
All euphemisms to say that of course they can’t claim impartiality when the president was tweeting and saying in press conferences that AWS shouldn’t get the contract for clearly personal/political reasons (and not national interest/security).
Robinhood Traders Trading Trades
John St. Capital looked at the Robinhood S-1 so you don’t have to:
"30% of retail investors in the US place orders using a mobile app, according to 2018 FINRA surveys. That number grows to 59% when looking solely at participants aged 18-34."
"Retail investing now comprises roughly 20% of U.S. equity trading volume, doubling in the decade from '10 to '20."
"~60% of all Americans still do not have investments outside of their retirement accounts, and, an even greater % of young adults aged 18-29—68%—have no money invested in the stock market at all.”
"U.S. retail investors are estimated by Charles Schwab to have total assets of approximately $50 trillion"
"Among customers who visited our app in a given day, they did so nearly 7x a day on avg"
Friend-of-the-show and Extra-Deluxe supporter (💚💚💚💚💚 🥃 ) Byrne Hobart also has a good take (no sub required on this one):
the core driver of revenue for Robinhood is to acquire customers and then convert them into crypto and especially options traders. [...]
A $5,000 account, all invested in equities, might start out producing $10 in annual revenue this year. But it might end up being a $50,000 or $100,000 account after a decade of saving, producing $100 or $200 in annual revenue instead. On the other hand, if Robinhood convinces that user to switch from holding $5,000 worth of stock to trading $5,000 worth of out-of-the-money options, the account will produce around $1,645 in revenue in year one. [...]
More than half of Robinhood's investors are first-time investors, and the company says it's responsible for almost half of new brokerage accounts funded in the US since 2016. This means that, for a significant share of Robinhood customers, bear markets lasting longer than a couple months are an entirely hypothetical construct.
WSJ Feature on Andy Jassy, as he Officially Takes Over Amazon as CEO
Ok, maybe it’s just me, but here’s the only two interesting things that I read in this whole full-length feature on Jassy:
Mr. Jassy and a team began planning out what would become AWS between 2000 and 2003. Amazon had become skilled at overseeing the massive low-cost computer infrastructure needed to run its retail operations, and AWS became a way to sell that expertise externally. Amazon launched it in 2006 with Mr. Jassy at the helm.
Somehow that’s earlier than I expected. Amazon moves really fast, so I would’ve thought that they only really started on AWS relatively soon before launching — 2000 seems really early.
I wonder what the journalist actually heard on this. Was it just an idea floating around at that point, or was it really a plan that they knew they were going to do? Did they really spend up to 6 years planning it and working on it before launch?
Mr. Jassy himself was once considered for the CEO position at Microsoft, according to people familiar with the matter. That job went to Satya Nadella in 2014.
That second one isn’t even that interesting, I just didn’t know that fact. Makes sense that Microsoft would’ve looked at him and maybe even approached him.
I guess it’s hard to find interesting things to write about Jassy. The whole rest of the piece of rehashing stuff I had read elsewhere, or it’s boring stuff like “oh, we looked through his high-school yearbook and he liked disco” or “he bought a house in Seattle with his wife, here’s how old his kids are”. I guess he's a hard subject to write about, as AWS is not as easy to peer into as the retail side, and he's a private guy who hasn't been on journalists' radar much previously.
Something else to note: When journalists write about really successful CEOs, the way they describe how they work almost sounds like an accusation.
They can’t believe someone would work that hard and care about such minute details of their companies, and push people to get the details right, demanding really high performance and not accepting mediocre work, etc.
How do they think a really successful business is built? Just phoning it in, doing an average job, not being informed about what is going on, and allowing others to half-ass their jobs?
Welcome to the real world, where extreme results require some extreme attributes.
🔥 Josh Tarasoff’s Investment Wisdom 🔥
If you’re interested in investing, drop what you’re doing and check out this essay by friend-of-the-show Josh Tarasoff:
When you read a lot of investment stuff over the years, at some point you get to diminishing returns. That’s why I haven’t read many investing-related books in recent years, and why I don’t read that many letters by money managers.
This is a notable exception.
I’ve added so many quotes and excerpts to my Obsidian file, I won’t even give excerpts, just go read the whole thing, I suspect you may enjoy it too (oops, did I just raise expectations too high? I mean, it’s total crap, but go read it anyway).
Science & Technology
Ocado Robots: ‘In Ocado's grocery warehouses, thousands of mechanical boxes move on the Hive’
Amazing video. I loved it.
I wish we could better see the underside of the “box” robots and what they do when they stop over a cart, but maybe that’s proprietary information..?
h/t Friend-of-the-show Trevor Scott
‘Only 1% of people in low-income countries have been given at least one dose’
Around 11 billion doses are needed to fully vaccinate 70% of the world’s population against COVID-19. As of 4 July, 3.2 billion doses had been administered. At the current vaccination rate, this will increase to around six billion doses by the end of the year [...]
But so far, more than 80% of the doses have gone to people in high-income and upper-middle-income countries. Only 1% of people in low-income countries have been given at least one dose (Source)
Jennifer Nuzzo (Epidemiology and global health security policy, DrPH):
This is a moral stain on the handful of high-income countries that are sitting on more doses than they are using and are casually contemplating use in low-priority groups before most of the world has had a chance to vaccinate even their most vulnerable.
Seeing now surges of covid19 cases even in countries that had previously been able to contain the spread of the virus illustrates how all countries will remain extremely vulnerable to this virus until they are able to vaccinate.
Seems bonkers to me that countries where basically everyone vulnerable is vaccinated would sit on stockpiles that they’re not using while in some countries almost all 70 and 80-year-olds have no access to vaccines yet, and may have to wait more than a year (with the very contagious delta variant coming for them).
NSA, CISA, FBI, & NCSC on Russia’s Brute-Force Hacking Campaign
When all these letter-agencies sit down and write a cybersecurity advisory together, probably better to have a look:
Since at least mid-2019 through early 2021, Russian General Staff Main Intelligence Directorate (GRU) 85th Main Special Service Center (GTsSS), military unit 26165, used a Kubernetes cluster to conduct widespread, distributed, and anonymized brute force access attempts against hundreds of government and private sector targets worldwide. GTsSS malicious cyber activity has previously been attributed by the private sector using the names Fancy Bear, APT28, Strontium, and a variety of other identifiers. The 85th GTsSS directed a significant amount of this activity at organizations using Microsoft Office 365 cloud services; however, they also targeted other service providers and onpremises email servers using a variety of different protocols. These efforts are almost certainly still ongoing.
This brute force capability allows the 85th GTsSS actors to access protected data, including email, and identify valid account credentials. Those credentials may then be used for a variety of purposes, including initial access, persistence, privilege escalation, and defense evasion. [...]
Network managers should adopt and expand usage of multi-factor authentication to help counter the effectiveness of this capability. Additional mitigations to ensure strong access controls include time-out and lock-out features, the mandatory use of strong passwords, implementation of a Zero Trust security model that uses additional attributes when determining access, and analytics to detect anomalous accesses. Additionally, organizations can consider denying all inbound activity from known anonymization services, such as commercial virtual private networks (VPNs) and The Onion Router (TOR), where such access is not associated with typical use.
Meanwhile: “Between 800 and 1,500 businesses around the world have been affected by a ransomware attack centered on U.S. information technology firm Kaseya”
💡🤔 Energy-Efficient Lightbulbs, Random Musings Edition
As a rule of thumb, modern energy-efficient residential lightbulbs use about 1/4th of the electricity used by the incandescent bulbs they replaced.
Now that they’re pretty much everywhere (first as CFLs, then as the much better LEDs), I wonder how much power they’re saving vs a theoretical world where we’d still use incandescents as much as we did 30 years ago.
According to the EIA: “[U.S.] Residential sector electricity consumption for lighting was about 62 billion kWh or about 4% of total residential sector electricity consumption and about 2% of total U.S. electricity consumption in 2020.”
So if we could snap our fingers and all residential CFLs and LEDs were instantly replaced by incandescents, would that 4% turn into something closer to 10-15%?
There’s all kinds of interactions too, since in the summer and warmer regions, the heat produced by incandescents mean that A/C is working harder, using even more power, though in the winter and colder areas, they may reduce furnace load a little.
I suspect the A/C impact is much bigger than the furnace benefit, though…
Nintendo’s New Switch has… OLED
An upgrade to the still very popular Nintendo Switch (first released in 2017) was known to be coming soon, and people had a wishlist… 4k docked, a better screen, maybe a more powerful SoC, more battery life, maybe even DLSS support, etc..
Looks like Nintendo made a black & white version and went with a bigger OLED screen. Oh, and the dock now has a wired LAN port and stuff like that. Nothing on 4K or better graphics (which, to be fair, isn’t as simple as it sounds in a tiny portable, and with games that haven’t been designed with high-res assets).
The Arts & History
Text and Sub-text, Mad Men Edition
My wife and I are still making our way through Mad Men (re-watch for me, first time for her). We’re now in season 5.
What a great show, just as good the second time around, if not better.
Above is a neat study of the finale of season 1, the famous Kodak Carousel pitch episode (“It’s not a spaceship, it’s a time machine”), and how sub-text is used.
Greenlea Lane Essay-
"I think of the highest quality companies as being in a class of their own: the 99th percentile is
not 10% better than the 90th percentile but 10x better. Linear thinking and analysis—though
they play an important role in building a full understanding—are insufficient for revealing
superlative quality. A superlative company is best understood on its own terms, not by way of
comparison or analogy. Because the best companies are so good, are so rare, and defy
standardized methods of analysis, I suspect they remain undervalued for a long time"
🧠💪🤙 Oh.. Indeed!