157: Fin-FANG, Investment Milestones, Opportunity Cost, Amazon + Facebook's Satellite Group, Teslas for Referrals, Valve Steam Deck, and Microsoft's Cloud PCs (Win365)

"a gloriously cringe-worthy dad joke, but alas…"

Even the most promising venture can be derailed by interpersonal conflict.

A dysfunctional team will find creative methods of self-sabotage.

High trust environments produce many pleasant surprises, low trust environments produce many nasty ones.

—Stoic Emperor

✌️💡 I had a great video call with two friends of mine, Abdullah aka Mostly Borrowed Ideas of MBI Deep Dives and David Kim of Scuttleblurb, the two most under-priced business analysis services out there, IMO — when you subscribe, you’re basically robbing them, but in a good way.

Two observations came out of that call:

1) I’ve known David for years, I think since 2017 (I’m no good with time).

We had never spoken on the phone or done a video call.

I wondered why that was for a moment, especially since I’ve had multiple calls with MBI and we’ve only known each other for something like a year or two (again, I’m bad with time).

Then I realized that it’s because David and I met online pre-pandemic, and it was a lot less prevalent to do video calls with people back then, at least to us introverts. And when you get into a pattern of communication with someone, you tend to stick to it (Twitter DMs or whatever).

2) Something was mentioned during the conversation that made me think of how I implicitly measure my opportunity cost, and I kinda liked the idea, so I’m going to recycle it here:

Basically, if you look at what you’re doing and think “well, I could be doing some other job and make $100k/year (or 200, 300, whatever) instead of this, so am I meeting my opportunity cost?”, you may be doing yourself a disservice.

Unless your life fulfilment/contentment/happiness/reaching your own potential/etc is currently very money-constrained (and it rarely is for the people who think in terms of opportunity cost in the first place…), this probably isn’t the main variable you should focus on.

The way I prefer to think about it is, my opportunity cost is how much fun, how much freedom and independence and control over my time, how much creativity I have doing what I’m doing, and if I traded large doses of these things to do something else that earned more money but reduced these, I likely wouldn’t be making a good trade because of how valuable these things are to me.

You need to figure out what your own yardsticks are. They may not be the same as mine, but whatever they are, I’m pretty sure that money is just one of many components, and should be viewed as a tool rather than an end in itself, because more of it has rapidly diminishing returns when it comes to most of the things that matter past a certain point.

🕹 There’s something I should have done in edition #156, but I didn’t think of it…

Fear not, that’s why we have follow-up:

If an unopened copy of Mario 64 sold for $1.56m, what kind of CAGR is that?

M64 came out in 1996. Let’s say it retailed for about $50 at the time (it came with the console, but most N64 games were in that range).

That’s a 25-year compound annual growth rate of 51.27% (unless I messed up the math).

The Legend of Zelda cartridge sold for $870,000. It came out in 1987, so that’s a 34-year CAGR of 34.14%. Not bad at all.

🤦‍♀️ Ok, another one that I should’ve thought of for #156, but I didn’t, and now it’s too late, and I’ll never be able to live with myself not having made this dad joke…

The moth should’ve been called Mothy McFly, and I should’ve photoshopped this iconic jacket on it:

It would’ve been a gloriously cringe-worthy dad joke, but alas…

💪 Update on the “get to 10 full pull-ups challenge”: I can do 6 in a row now. Not perfectly clean, but it’s an improvement from the barely 4 a few weeks ago.

I could look it at “only 2 more”, but hey, I know how psychology works, so I choose to look at it as “a massive improvement of +50%!”.

💚 🥃 Random stat: 73% of supporters pick the annual option (either regular or Extra-Deluxe), and the rest pick monthly.

I guess this crew doesn’t suffer from too much fear of commitment! (ha!)

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Investing & Business

The Non-FANG Fin-FANG

It may be a bit hard to see what the arrows point to here, because the images are scaled down, but here’s what these show:

  • Visa's stock CAGR for the past 10 years: 28%

  • Mastercard's stock CAGR for the past 10 years: 29.5%

  • Moody's stock CAGR for the past 10 years: 27.9%

  • S&P Global's stock CAGR for the past 10 years: 28%

These 4 feel like pretty "obvious" ones that have been well-liked and well-known on Fintwit during all that period, and that have still worked really well.

Kind of the non-FANG Fin-FANG, so to speak.

Some may say: “ⒶⒸⓉⓊⒶⓁⓁⓎ, it was pretty hard to buy Mastercard 10 years ago during the Durbin thing… or Moody’s after the GFC, etc”

But eve if you move the timeline around a bit and only look at 8 years or 7 years, the CAGR remains pretty much the same, so this isn’t an artifact from some artificially low starting point or particularly uncertain period.

Some will also “ⒶⒸⓉⓊⒶⓁⓁⓎ” about how their multiples expanded, but multiples have expanded for the whole market too (and with low multiples, these companies buybacks would’ve gone further, so there’s lots of variables pushing and pulling).

Zugzwang on Twitter did some work (unlike my lazy back-of-the napkin crayon sketches):

Personal Milestone Investments

I enjoyed this post by friend-of-the-show Shomik Ghosh. It’s mostly about his personal evolution as an investor, as seen through some of the key lessons he learned from what I’ll call “milestone investments”. A couple highlights:

Berkshire Hathaway: The importance of capital allocation. Also, how to centralize and decentralize decision making to run an efficient organization. Both of these are areas that I evaluate deeply when looking at enterprise software companies. Berkshire was the first time when I realized that capital allocation means not just money but also people and time. [...]

Amazon: Decentralized decision making and making your org structure into a competitive advantage. Two pizza teams has now become a meme but the time and effort that Amazon has spent engraving this into the culture continues to have compounding effects on its way to being a $2T company. Also, how sometimes the biggest risk to the business long term may be not taking bold risks at all. [...]

Salesforce: Too much to write about but a lot of my learnings around distribution come from studying this company.

Made me wonder what my own such “milestone investments” list would look like…

Which companies taught me the most when it comes to important lessons/concepts that I rely heavily on today to make decisions and filter the wheat from the chaff? 🤔

Maybe at some point I’ll take the time to try to come up with it, but in the meantime, you may also enjoy doing that exercise for yourself.

I will never not find this chart bonkers 🤯

I get that retired 65+ skew the average upward, but it’s still a lot, and the recent downward trend is probably because people spend hours on other screens (that’s when they’re not doing two things at the same time on TV + mobile).

h/t Friend-of-the-show and supporter (💎 🐕) Mostly Borrowed Ideas

📡 🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰 Amazon 🛰🛰🛰🛰🛰🛰 Acquires 🛰🛰🛰🛰 Facebook’s 🛰🛰🛰🛰🛰 Satellite 🛰🛰🛰🛰🛰 Internet 🛰🛰🛰🛰 Group 🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰🛰

Amazon has acquired a team of more than a dozen wireless internet experts from Facebook in an effort to boost its multibillion-dollar effort to launch thousands of satellites and offer broadband service in the U.S. and abroad, a Facebook spokesperson confirmed.

The Facebook employees moved to Amazon in April to help the company develop its network of low-orbit satellites by the middle of this decade. The workers are in the Los Angeles area and included physicists as well as optical, prototyping, mechanical and software engineers

This is Amazon’s Project Kuiper, which aims to deploy a constellation of 3,236 satellites that will provide fast internet broadband to areas of the world where it isn’t accessible (see also: SpaceX Starlink).

Kuiper’s sats are projected to use an orbit with a height between 590 and 630 km (370 and 390 mi), in 98 orbital planes, and in three orbital shells. (Have you read a cooler sentence today?)

Amazon said it’s going to spend $10 billion on the project, and based on the FTC paperwork, they have until July 2026 to launch the first half of the sats, and until 2029 for the rest.

h/t Friend-of-the-show N.S. (🥯 — locked account)

Amazon Seller Rollup Offering Teslas for Referrals

Acquco, one of the many start-ups that’s acquiring Amazon sellers, started a referral program this week at the Prosper Show to give away $10 million worth of Model Ys.

The company is competing with heavily-funded start-ups like Thrasio, Branded, Perch and Heyday in the emerging market for Amazon seller aggregators.

On one hand, it's kind of a crazy situation, and when it's that competitive, you can guess that the economics will deteriorate…

On the other hand, it's a good way to make your marketing dollars super-efficient.

Most would just have a boring system like "we have a $10m pool for referrals".

But if you take the same pile of cash and turn it into "we're giving away $10m of Teslas!", then the media writes about it and suddenly you've reached 1,000x as many potential referrers as you would've otherwise with the same investment.

Way to lower your CAC, guys! It’s such a good system that even I am writing about it, even though I know what they’re doing. Clever clever.

Investing Wisdom Corner, Modest Proposal Edition

Modest Proposal:

Investing in privates has helped me try to be less of a linear thinker. I now try to catch myself in the act of doing so to at least entertain other possibilities. Investing is weighing future outcomes, but if you aren't even conceiving of certain states, you can't price them.

Reflexively discarding anything uncertain or seemingly silly is as costly as believing all the hype all the time. I was certainly guilty of the former for much of my career.

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Science & Technology

Microsoft Wants *Everything* to move to the Cloud, Windows 365 Cloud PC Edition

Films and TV streaming via Netflix and Disney+, games streaming via GeForce Now and xCloud, and now…

Stream a full Windows PC via Windows 365.

The Cloud PC draws on the power of the cloud and the capabilities of the device to provide a powerful, simple, and secure full Windows 10 or Windows 11 experience that you can use to empower your workforce, regardless of location or device.

Windows 365 provides an instant-on boot experience that enables users to stream all their personalized applications, tools, data, and settings from the cloud across any device including your Mac, iPad, Linux device, and Android.

The Windows experience is consistent, no matter the device. You can pick up right where you left off, because the state of your Cloud PC remains the same, even when you switch devices. You can get the same work done on a laptop in a hotel room, a tablet from their car between appointments, or your desktop while you’re in the office.

It’s thin clients all over again! Everything old is new!

Organization can size instances, depending on what they need, and security is based on the zero trust model.

It’s basically turning Windows (and other apps) into one more SaaS service.

I gotta say this makes a lot of sense, especially in a world where there’s a lot of remote work and hybrid work (mix of office + home).

Having the exact same computing environment wherever you are, without having to lug around a laptop and deal with docking stations, would be a big quality of life improvement to many.

This allows the employer to keep more control on its security posture and data, and it gives more flexibility to the worker to use the hardware that fits their needs the best — wanna work on your big screen iMac? Sure, just stream that work Windows computer, and when you’re done, disconnect that and you get back your own personal computer.

And it also means that when you want to upgrade your workforce’s PCs, you can just click a few checkboxes rather than buy a bunch of new machines that are a pain to deploy, and figure out how to get rid of the old ones…

Valve Steam Deck Handheld Gaming System + That’s How You Do a Product Website

Valve, best known for the Steam game store and the Half-Life games, has released a new handheld gaming system called the Steam Deck.

Nvidia has been talking a lot about the growing popularity of gaming laptops...

The next logical step of miniaturization is this, a Nintendo Switch-style handheld that is basically a small-form factor Linux-based PC with low-power mobile components, with enough power to play Steam PC games.

I like the mini-thumb-trackpads below the sticks to provide some pointer precision for games that require it (wether it works well remains to be seen in practice).

Here’s some tech specs:

AMD APU
CPU: Zen 2 4c/8t, 2.4-3.5GHz (up to 448 GFlops FP32)
GPU: 8 RDNA 2 CUs, 1.0-1.6GHz (up to 1.6 TFlops FP32)
APU power: 4-15W

RAM: 16 GB LPDDR5

Display: 7”, 1280 x 800px (16:10 aspect ratio)

The display’s low rez has been called out by many, but I tend to think that for such a small display where you mostly care about moving images (not UI or still photos, like on phones and tablets), this DPI is probably fine and will look good. This lower resolution also helps extend battery life by lowering computational/memory needs.

Valve has a really well-designed website to explain the various aspects.

Even if you don't care about portable gaming, I recommend checking the website and navigating to the various sections on software and hardware. It's really well-made, kudos to whoever was in charge of it at Valve.

Many product companies could learn from it (they were clearly inspired by Apple’s product pages, and are better in some ways, but worse in others).

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The Arts & History

Poster for Denis Villeneuve’s Dune

I love this. My man Denis has great taste, and knows how to surround himself with people who also have great taste and skill.

I wish Roger Deakins had done the cinematography on Dune, as I’ve loved his partnership with Villeneuve (Sicario, Prisoners, Blade Runner 2049), but Greig Fraser has done some good-looking stuff too, so I’m looking forward to it (he was cinematographer for Zero Dark Thirty, Lion, Rogue One..).

I found a version without any text or logo and use it as my iPhone’s lock screen wallpaper.

I call this one ‘Butter & Dark Chocolate’

Maybe it’s not exactly high art, but I kinda like how it came out (my wife was cooking — another allulose experiment that tasted delicious).

I think it’s the mix of high-contrast rich colors and textures. Makes me hungry.

If you want to see how the cookies turned out, check out this thread.

I guess I’m turning into a freaking food blogger, because I also posted about homemade granola here.