168: AWS Wins $10bn Secret NSA Contract, A16Z, Tiktok & Facebook, Greatest Engineer Recruiter Ever, Constellation Software Resilience, Putin vs COVID19, Twitter, and Deadwood

"NSA won't confirm or deny it (very on brand for them)"

Obsessing over your enemies will make you more like them.

—Stoic Emperor

⛱ I’ll be taking a vacation with my family during the next 2 weeks.

Not sure exactly how many editions I'll skip, or if maybe I’ll have some lighter editions.

So far, I’ve been posting 3x/week for over a year without skipping a single day, so it feels like breaking a streak... But so what? Where’s my 🏅 for consistency, right?

There are no rules anyway, I’m just making all this up as I go along.

To me this is fun, not work, so I may not be able to stay fully away even if I’m technically on vacation ¯\_(ツ)_/¯

It may be a kind of Warren Buffett-type deal, “when the phone don't ring, you'll know it's me.” (when the email doesn’t show up, you’ll know I took that day off)

🎥 I almost can’t believe it, but I think that Google Meet’s background blur implementation is better than Zoom’s.

In Meet, you can select between two levels of blurring. If you pick low, the effect is fairly unobtrusive. Most things in the background are still recognizable, but details can’t be made out.

Zoom appears to only have one blur mode, and it’s basically super-high-blur, which makes you stand out from the background like you were shot from a 300mm lens at 1.2 f/stop aperture or something crazy like that. It’s just not realistic, it doesn’t look like the person is part of the scene, and to me it’s not aesthetically pleasing (especially in full-screen — it’s better in small video size).

I understand having a high-blur mode for privacy, but you should *also* have a low-blur mode, or have a slider to pick your depth-of-field effect intensity.

I’m surprised that the company known for focusing just on video comms hasn’t figured that out yet, unless I’m missing some hidden setting.

I mean, see for yourself:

💚 🥃 The price of a couple coffees or one alcoholic drink isn't a bad trade for 12 emails per month (plus 𝕤𝕡𝕖𝕔𝕚𝕒𝕝 𝕖𝕕𝕚𝕥𝕚𝕠𝕟𝕤) full of eclectic ideas and investing/tech analysis.

The entertainment has to be worth something on its own, but for those that care most about the bottom line, there’s also optionality:

If you make just one good investment decision per year because of something you learn here (or avoid one bad decision — don’t forget preventing negatives!), it'll pay for multiple years of subscriptions (or multiple lifetimes).

As Bezos would say of Prime, you’d be downright irresponsible not to be a member, it takes 19 seconds (3 on mobile with Apple/Google Pay):

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Investing & Business

Resilient Business, Constellation Software Edition

Above is CSI's organic revenue growth, by category, with foreign exchange fluctuations adjusted-out.

Through the pandemic, maintenance/recurring revenue (where most of the value is created) only went negative one quarter, and only by 1%, and it fully rebounded now.

Aaron Sorkin: Greatest engineer recruiter of all times?

Considering how often I've heard that the movie ‘The Social Network’ was a great recruiting tool for Facebook, I wonder if that makes Aaron Sorkin the greatest engineer recruiter of all times?

Or maybe it was Steve Jobs?

I've heard plenty of stories of engineers joining Apple specifically because they wanted to work with/for Steve.

If you’re really talented and want to work on good stuff, your chances were better at Apple than, say, Dell. Others may have been really creative, and thought that showing their stuff to someone with great taste would increase likelihood of it being appreciated rather than try to get some pointy-haired boss to get it at a more boring company.

‘variant conviction > variant view’

Friend-of-the-show and OG Extra-Deluxe (💚💚💚💚💚 🥃) supporter David Kim aka Scuttleblurb had a good tweet on something that I’ve been thinking about for a while:

Often variant conviction > variant view.

“I also agree, only more so” won’t win Ira Sohn but can make all the difference in the world

Many people are looking to be bullish on a company when everybody is bearish, or vice versa. It makes sense, when you’re right on one of these, it’s a great feeling (and provides the biggest $ outcomes).

But the “hitting singles” approach of being aligned with others but having the intensity knob set to a different level can also work, and often with lower risk (because the inverse of being fully contrarian is that when you’re wrong, you get the worst outcomes… Ask Einhorn how that has been feeling lately).

For example, there may be a company that almost everybody agrees is a really high-quality business, great management, fast growth, large TAM, etc. And you may agree to all of this too.

But when you look at the embedded expectations and at analyst estimates and the general discourse around the company, you may find that most people expect growth rates to revert-to-the-mean fairly rapidly, for profit margins to peak relatively soon, for little value-creating M&A to take place, whatever… And you may disagree with some or all of this, and the variant view may be that they can have a slower rate of growth decel than expected and higher mature margins, etc.

Over a few years, the diff between this — if you’re right — and the expectations embedded in the price at the time when you made the investment can become pretty wide and result in some pretty nice positive developments.

‘Microsoft challenges NSA cloud contract reportedly awarded to Amazon’

Microsoft and Amazon are still battling it out in courts in the post-JEDI world for those big juicy government cloud contracts. *cue lightsaber battle sounds effects*

The latest thing that got stuck in Microsoft’s craw is that it looks like AWS won a very big NSA contract:

The National Security Agency has awarded a secret cloud computing contract worth up to $10 billion to Amazon Web Services, Nextgov has learned.

The contract is already being challenged. Tech giant Microsoft filed a bid protest on July 21 with the Government Accountability Office two weeks after being notified by the NSA that it had selected AWS for the contract.

The contract’s code name is “WildandStormy,” according to protest filings, and it represents the second multibillion-dollar cloud contract the U.S. intelligence community—made up of 17 agencies, including the NSA—has awarded in the past year.

In November, the CIA awarded its C2E contract, potentially worth tens of billions of dollars, to five companies—AWS, Microsoft, Google, Oracle and IBM—that will compete for specific task orders for certain intelligence needs. (Source)

But NSA won't confirm or deny it (which is very on brand for them):

In a statement to CNBC, a spokesman for the NSA said that the agency “recently awarded a contract for cloud computing services,” declining to elaborate further on the matter.

Andreessen Horowitz History, Acquired Podcast Edition

The always excellent Ben & David duo are doing a history of A16Z. I’ve only heard part 1 so far, but it was great, and chances are by the time you read this I’ll have heard part 2 too (part tutu!):

• The Complete History & Strategy of Andreessen Horowitz Part I

• The Complete History & Strategy of Andreessen Horowitz Part II

I think the fave thing I learned from #1 is that Internet Explorer was built on top of MOSAIC browser code, so both Netscape and IE have their roots with Marc Andreessen’s code.

I mean, wow. Talk about a ‘10x coder’ at the time…

‘TikTok overtakes Facebook as world's most downloaded app’

A global survey of downloads in 2020 shows TikTok, a video-sharing app developed in China, on top of the list of social media providers for the first time since the study was first conducted in 2018. [...]

ByteDance launched the international version of TikTok in 2017, and has since overtaken Facebook, WhatsApp, Instagram and Facebook Messenger -- all of which are Facebook owned -- in downloads, even in the U.S. (Source)

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Science & Technology

When Putin Says “I don’t want to see it above 800 per day”…

Bayesian Look at COVID-19 Cases in a Heavily Vaccinated World

This is probably an important one to get in front of: At some point in the future, almost everybody hospitalized with COVID-19 will be someone vaccinated (that’ll happen at different time in different countries, of course).

There’s an example that is often given to explain Bayesian probabilities, and the short version is: if 1% of women have breast cancer, and you screen them with a test that is correct 99% of the time (I won’t get into sensitivity and specificity), getting a “you have breast cancer” result should still mean that there’s only a 50/50 chance that you actually have it. (longer explanation here)

Why? Because the disease is rare enough that there’s so many more people who don’t have it, so just 1% of this vast group getting a false positive means as many people as the people who actually have it.

We’ll get to a similar point with COVID cases, because if almost everybody is vaccinated (and most unvaccinated have had it and now have antibodies), then even if vaccines are very effective at protecting you, some small % of vaccinated people will still get sick and end up hospitalized.

This small % of a huge vaccinated population can be as much or more than the large % of the smaller unvaccinated population over time, and so you’ll get headlines about how hospitals are full of vaccinated people, and to those who don’t understand what I just explained, it’ll seem scary.

Also, this article by Ed Yong was quite good at giving us the 360 view on what’s going on currently with the pandemic and Delta.

I recommend the whole thing, but here are my highlights:

Full vaccination (with the mRNA vaccines, at least) is about 88 percent effective at preventing symptomatic disease caused by Delta. Breakthrough infections are possible but affect only 0.01 to 0.29 percent of fully vaccinated people, according to data from the Kaiser Family Foundation. Breakthroughs might seem common—0.29 percent of 166 million fully vaccinated Americans still means almost 500,000 breakthroughs—but they are relatively rare. And though they might feel miserable, they are much milder than equivalent infections in unvaccinated people: Full vaccination is 96 percent effective at preventing hospitalizations from Delta, and unvaccinated people make up more than 95 percent of COVID-19 patients in American hospital beds [...]

highly vaccinated communities can still be vulnerable, for three reasons. First, unvaccinated people aren’t randomly distributed. Instead, they tend to be geographically clustered and socially connected, creating vulnerable pockets that Delta can assault. [...]

a point of recent confusion. The CDC has estimated that Delta-infected people build up similar levels of virus in their nose regardless of vaccination status. But another study from Singapore showed that although viral loads are initially comparable, they fall more quickly in vaccinated people. That makes sense: The immune defenses induced by the vaccines circulate around the body and need time to recognize a virus intruding into the nose. Once that happens, “they can control it very quickly,” Marion Pepper, an immunologist at the University of Washington, told me. “The same amount of virus might be there at the beginning, but it can’t replicate in the airways and lungs.” And because vaccinated people are much less likely to get infected in the first place, they are also much less likely to transmit Delta than unvaccinated people, contrary to what some media outlets have claimed. [...]

“it’s not really the virus on its own that is terrifying,” Jennie Lavine, an infectious-disease researcher at Emory University, told me. “It’s the combination of the virus and a naive immune system. Once you don’t have the latter, the virus doesn’t have to be so scary.”

Twitter Pro-Tip

I’m sure many of you are already aware of this, but for those who aren’t:

By clicking on that little starry thing at the top right of your Twitter timeline, you can set it so that your timeline is chronological rather than algorithmic. It also works on the web version, and you have to do it on every device separately.

Why is this better? Because Twitter’s algo will mostly show you stuff from big accounts and stuff that is getting lots of engagement, rather than what is best for you (how can it know, right?).

A lot of the 🔥 content may come from small accounts or people who you don’t interact with much, but still want to read their stuff, so it’s better to use the chrono-view to get a more objective view of what is going on among the people you selected to follow and intended to read but that the algo will largely hide from you.

Everything around us is a huge Rube Goldberg machine

We too rarely stop and think about how amazing it is that all this even works:

What you think of as “the Uber app” is actually a patchwork of about four thousand microservices—some developed by Uber engineers, and many provided by external cloud platform operators

(Source: Jeff Lawson, “Ask Your Developer”)

Everything is so complex when you look under the hood… Don’t even get me started on biological systems.

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The Arts & History

Deadwood: A Systems-Thinking Show

I love Deadwood. There’s the great and unique writing, but it's also a rare shows that is a systems' thinker's show (The Wire is also like that).

It's about complex systems and institutions, how they evolve, and how some people seek power and others just randomly end up with it, how real-time is confusing and chaotic and there’s no clear narrative, etc

If you’re also a fan of the show, there are two books that I think you’ll love (one is published, the other is coming out soon):

• Deadwood: Stories of the Black Hills, by David Milch (main creative force behind the show)

This books makes it quite clear that Milch was explicitly thinking in terms of systems and institution and emergent order and properties to human societies, this is no accident.

The second book is being written as we speak by one of the biggest fans of the show, media writer Matt Zoller Seitz (who also has published two great books on the works of Wes Anderson — great illustrations and photos in them too!):

• A Lie Agreed Upon: The Deadwood Chronicles (pre-order)

I was part of the Kickstarter on this one, and can’t wait to get my hands on it, since I know how Matt works from his books on Anderson, but also on Mad Men (and I also want to read his book on the Sopranos at some point), and I expect it to be very thorough and satisfying.