154: Video Game Pricing, Amazon Book, Brad Gerstner & Rich Barton, ByteDance IPO, Net Revenue Retention, Africrypt, JPEG XL, Do They Use Their Own Product?, and Dash Cams

"what matters is the output, not the input"

“It can take me 50 hours of research and writing to produce something that can be read in 5 minutes. Doesn’t seem fair.”

—David Kim aka Scuttleblurb (friend-of-the-show and Extra-Deluxe supporter (💚💚💚💚💚 🥃)

“It's the only way reading can be powerful, though.

If something took 5 minutes to read and 5 minutes to research, I'd rather do the research than read. But I'd rather read 5 minutes than do 50 hours of research…

That way I can read for 50 hours, which would be 600hr of research.”

— Me

🐦 Follow-up on what I wrote about Twitter in the intro of edition #153:

I was chatting with friend-of-the-show and supporter (💚🥃) The 10th Man (check out his great writings) about Twitter, and I think I became even more convinced of special this is:

Sure you could move to city X because more people interested in tech/aerospace/pharma/music lived there, or move to some neighborhood or attend some university known for a certain thing.

But that pales in comparison to a global network where sub-groups form around interests that they can discuss — publicly and privately — 24/7, learn from each other and form new connections that would *never* have happened in a geographically and socially constrained environment.

Sure Fintwit’s nice, but I’m particularly excited about the collabs between scientists and technologists.

🛀 The way most knowledge workers work doesn't make sense and is a leftover from the early industrial era. ie To run a factory, you need everybody doing specific things at specific times on regular schedules.

Humans don't naturally operate like that. It's cycles and seasons for productivity, creativity, learning, etc. Sprints and rests, marathons and violent skirmishes, muscle building over months and then lifting that heavy rock in 5 minutes, etc.

We also tend to forget that what matters is the output, not the input.

Whether the work feels fun and not like work at all, or is gruelling and boring and difficult, if the end result is something that creates value for others and is good, that’s all that really matters.

Knowing that, try to find work that isn’t boring to you, you’ll probably do a better job at it anyway (it’s the “fun being a competitive advantage” mentioned in the Ho Nam section of edition #153).

The worst of both worlds is someone who works like crazy on something, while finding it boring and excruciating, and the result is useless crap. A double tragedy.

🐦💘 Speaking of Twitter, on Friday morning I published something on how special and great it is to find your niche/tribe on the platform, and during that day, the community reminded me that I wasn’t just making it up.

Someone must’ve slipped some MDMA in Fintwit’s cereals, because I was the victim of a small love-fest, and I can’t lie, it was neat.

Thanks to friends-of-the-show and supporters (💚 🥃) Elliot Turner of RGA, Mostly Borrowed Ideas of MBI Deep Dives (💎 🐕), Alex Morris of The Science of Hitting (💚 🥃), Conor of InvestmentTalk (💚 🥃), Jim O’Shaughnessy (💚 🥃), readers Roman (SPQR FTW), Dhaval Kotecha (h/t), Milwaukee Investments & Omri Velvart & Damien C. Tanner, and I’m sure I’m forgetting some (I don’t mean to make this sound like an Oscar speech either — just saying I’m grateful for the support!).

Welcome to those of you who joined this show at the recommendation of the people above. There were over 320 of you in a period of about 36 hours 🤯

If you want to get a feel for this place, you can have a look at the archives — it’s all free — or the about page for the rules of the road on what I’m trying to do here.

📹 🚘 I decided I want to get a dash cam for my car.

I figure that with today’s technology, you can get something pretty good for not much money, and it’s nice insurance to have in case something happens — at least it’s not just my word and my flawed memory, I’d have 1080p footage.

Not sure what model yet, haven’t really done the research, but something like the Vantrue N1 Pro would probably do the job.

💚 🥃

………………..………….👋 ⬇️ 🤝 👍 🙏

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Investing & Business

‘Do these people even use their own product?’

There’s some thought-patterns that you should train to catch yourself when you have them.

The classics are “uh! that’s strange!” and “that makes no sense”.

Most of the time, it’s nothing, but it’s also what people tend to think when exposed to the most interesting ideas too.

Another one that I recently thought about is:

“Do these people even use their own product?”

It’s always a bad sign when I’m using some product and catch myself wondering if the people making it are even using it, because there are such obvious problems with it that they would have no choice but to catch them if they just tried the thing.

What it means isn’t always simple: A lot of the time, the they are using it, and very aware of the problems, but can’t fix them for organization/structural reasons, etc.

It’s still a bad sign, just about a different part of the product-producing-stack than it may seem at first…

‘Working Backwards’: Book by 2 Amazon Veteran Execs

I wrote about my thoughts on Brad Stone’s ‘Amazon Unbound’ book in edition #136. In short: I liked it, but it didn’t cover a lot of what I wish it covered, and covered too much stuff I think is kinda unimportant.

Reader William Ferrell brought to my attention a book that wasn’t even on my radar: ‘Working Backwards: Insights, Stories, and Secrets from Inside Amazon’.

It’s written by two long-time Amazon executives, including one that was Jeff Bezos’ ‘Shadow’ for two years (the second to do that job, after Andy Jassy — big shoes to fill..).

I haven’t had a chance to read it yet, but I got good feedback about it on Twitter, so I got a copy. Hopefully it fills some of the holes in Unbound.

Here’s a good podcast from A16Z with the co-authors:

Bye-Bye-ByteDance IPO

ByteDance, the Chinese owner of TikTok, reportedly scrubbed plans for an offshore listing after government officials asked the company to focus on data security risks.

🤔

Video Game Pricing, Cartoon Villain Edition

Friend-of-the-show Skeletor Capital (Skele-san!) has a good thread on video game pricing, in answer to David Schawel’s question:

“Name a product or service you use where the price could double, but you’d still be a customer.”

Most video games. They’re too cheap vs other media and have very high production costs. Right now most stateside devs make their money back on predatory monetization because the base price hasn’t increased in ~20 years but dev costs have 20xed. Install base hasn’t grown like that [...]

Video games have actually seen DISinflation since the 1990s. Part of this was shifting to optical disks which were way cheaper than carts and thus margins could increase (I sense a trend). But I recall going to Toys R Us and forking over $50 for a brand new Final Fantasy 7.

This is about the same price I paid for FF3 now 6 3ish years prior in a period of much higher CPI.

Today that’s above with what I paid for Final Fantasy 7 Remake collector’s edition during COVID. Jokes about recycling one disk’s plot and Nomura making everything worse or at least dumber aside, the hedonic adjustments are INSANE. And yet…

Tbf contributory reasons:

Incremental GM went from 45ish to 70%+ on shift to digital

DLC and MTX esp cosmetic are insanely profitable from an R&D perspective

Video gamers used to be children and parents didn’t see it as worthwhile, true budget constraint.

User growth

GFC sad

Interview: Brad Gerstner & Rich Barton

Another pod by Patrick O’Shaughnessy that I really enjoyed:

The link above has detailed show notes and a transcript, if you’re curious what they cover. The bit about Frank Slootman ❄️ is neat.

What a Chart, Net Revenue Retention Edition ❄️

Source.

Africrypt founders have apparently disappeared with $3.6 billion worth of crypto-coins

Many of Africrypt’s investors came from a circle of largely well-to-do South Africans that included a professional athlete and business owners. Clients like Ms. Mudditt [72yo] had met the brothers through friends or family, and introduced them to others.

The amount managed by Africrypt, and how much the brothers owe those investors, is in dispute. A lawyer for one group of investors says he believes that Africrypt, or a syndicate of which it was a part, controlled a blockchain address that at one point held assets worth $3.6 billion but now holds nothing. (Source)

😬

h/t Extra-Deluxe (💚💚💚💚💚 🥃) supporter John Mihaljevic

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Science & Technology

JPEG XL: The Modern Image Compression Format We All Deserve

I don't know why, but I'm always been a compression geek.

From a pretty young age, I’ve enjoyed learning about video compression, audio compression, lossless file compression, image compression, etc.

I think it's a side-effect of being an efficiency geek more generally, and feeling that "waste is ugly" and "doing more with less" is elegant.

Digital compression is the perfect encapsulation of that.

This site gives an overview of the a new format called JPEG XL. Here’s the official website, and if you want to geek out, this presentation is pretty neat, as is this one.

Basically, most photos you see around the web use compression technologies from the early to mid 1990s (though modern encoders are better than what they had at the time), and it’s been hard to get new formats adopted since.

It’s always a bit of a chicken & egg problem because you need browser and big platform support.

Those that have had any traction have been pushed by the big gorillas (like Apple with HEIC in HEIF, based on the intra-frame encoder of the h.265/HEVC video codec which is for example used by Netflix for 4k video, and Google with WebP, which is based on the intra-frame tech of their royalty-free VP8 video codec).

This new format just seems to have almost everything going for it — at least on paper — and I’d love to see it widely adopted.

It's not as big a deal as a video compression tech when it comes to absolute numbers, but still, imagine how much bandwidth is used by images that are compressed using a REALLY ANTIQUATED format.

Here’s JPEG XL vs the old JPEG:

  • Lossy: about 60% smaller than JPEG for same visual quality

  • Lossless JPEG transcoding: about 20% smaller (this is when you store a JPEG XL file on a server, but can still served a legacy JPEG file from it to a client that doesn’t support the new format)

  • Lossless: about 35% smaller than PNG (50% smaller for HDR)

Like a glass of water in hell!

It's not like CPU cycles to decode it are scarce these days, and over time we'd probably get hardware-decoding built in CPUs for maximum power-efficiency and speed.

It would save petabytes of bandwidth and disk space worldwide, and we’d probably also get better-looking images on the web since you can have a much higher-quality image using the same space, or whatever trade-off in between. We’d save disk space on our phones and computers storing our photo libraries, etc. Basically, kumbaya! Let’s do it!

I’ll leave you on this message from someone on the Facebook infrastructure team experimenting with the technology (because if there’s someone who uses a lot of storage and bandwidth for photos, it’s Facebook):

Erik Andre from the Images Infra team at Facebook here. [...]

After spending the last 5 months investigating and evaluating JPEG XL from both a performance and quality point of view, it's our opinion that JPEG XL has the most potential of the new generation of image formats that are trying to succeed JPEG.

This opinion is based on the following findings:

  • JPEG XL encoding at speed/effort 6 is as fast as JPEG encoding (using MozJpeg with Trellis encoding enabled). This means that it's practical to encode JPEG XL images on the fly and serve to client. This can be compared with the encoding speed of AVIF which necessitates offline encoding which offers much less flexibility when it comes to delivering dynamically sized and compressed content.

  • Depending on the settings used, JPEG XL can also be very fast to decode. Our mobile benchmarks show that we can reach parity with JPEG when using multiple threads to decode. This matches and in many cases surpasses the decoding performance of other new image formats.

  • The JPEG XL image format supports progressive decoding, offering similar gains in perceived image load performance we are already benefitting from with JPEG. This is a feature lacking in the other new image formats which are all derived from Video codecs where such features makes little sense to support.

Having browser support from all the major browsers is going to make our lives a lot easier in upcoming WWW experiments and ensure that we can deliver a consistent experience across platforms and browsers.

It’s weird because a change of format wouldn’t change my life that much, but it’ll feel good to me knowing it’s more modern and efficient. ¯\_(ツ)_/¯


The Arts & History

Everything Wrong with the Physics of Guns in Movies

I like these “reality vs fiction” vids. Usually a good way to learn while having fun.

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See important disclosures.