172: If Your Portfolio was a Single Business, Google's Messaging, Datadog, Golden Handcuffs, Neuro Athletics, Berkshire's Tech, VR Couple, WebGPU, and Rick & Morty
"I think I may have an overdose (the good kind)"
Wealth is created... primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor.
The corollary is that we can figure out how to make more [wealth].
—Steven Pinker, Enlightenment Now
(historically, creating wealth has been mostly about arranging “matter”, a.k.a. atoms through new ideas/techniques. But in a world where a lot of wealth comes from arranging ideas/information more directly, a.k.a. bits, doesn’t it imply that wealth can be created much faster?)
🗣📞 💻 📹 I was telling my wife yesterday how glad I am that I started having more calls with people that I met online in recent times.
Not that long ago, I actively tried to avoid calls, and only did a few when others insisted on them.
I saw myself as someone who prefers text to voice, and as an outsider to tech and finance (never studied or worked in either field), I felt like speaking to someone off the cuff was intimidating and would rapidly reveal what an impostor-who-has-no-idea-what-he’s-talking-about I am.
Well, I still have no idea what I’m talking about, but I embrace it:
There’s no situation where I can be forced to BS. If I don’t know something, I can just say “I don’t know”, and if I think I know something but it turns out it’s wrong, I want to know so I can update to a more correct belief.
So what was I afraid of exactly?
While talking with my wife, something else became clear. Something did in fact change:
Almost all my calls are now video, and I feel 10,000% more comfortable with those than with the purely audio calls that were the norm before the pandemic.
I know those of you with a Real Job™ are sick to death of Zoom calls, and I totally feel your pain, but I’m in the enviable position of only doing them once in a while, and only with who I want to, and for me it’s a huge improvement over voice-only. Just fits better how my brain works.
If you could plot my stress levels (cortisol?) before a call with someone who I’ve never talked to before, video vs audio, the delta between the two would probably be pretty large. I’m not 100% sure why (I have a bunch of theories, though).
🥪 As I write this, I’m 63 hours into my water + electrolytes + vitamins fast.
The plan is still to end it tomorrow, probably in the afternoon or evening.
I’m not quite at the point at which I start to daydream a list of options for what my first meal is going to be, but it’s getting there.
Otherwise, except for a few lower energy moments around the 48-hour mark when I’m likely switching into ketosis, everything’s pretty normal.
The trick is to drink a lot of water, as it’s easy to accidentally become dehydrated while fasting. There’s a few different reasons for that: we don’t realize how much water there is in food + how meals are associated with drinking fluids, and being in ketosis makes our body retain less water.
🛀 Do extrovert ever wish they were introverts?
I feel like I’ve often heard it the other way around, but I can’t really think of occasions that I’ve heard it in that direction...
💚 🥃 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 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 secs on mobile with Apple/Google Pay):
Investing & Business
If your portfolio was a single business, what would its financial metrics look like?
Friend-of-the-show and Extra Deluxe (💚💚💚💚💚 🥃 ) supporter Daniel Abood reminded me of something I did a few years ago.
If you follow Terry Smith of Fundsmith, you know that he likes to show how his portfolio compares to indices, as if the portfolio was a single company or an index. It looks like this:
A few years ago, I did a similar exercise for my portfolio, with different metrics. This is what I got (everything is weighted by the size of my positions at the time):
I originally meant to keep updating it over time, but I never did ¯\_(ツ)_/¯
It’s interesting to look at, but I’m not sure if it’s very useful. You have to keep in mind that these aggregate numbers can obscure rather than reveal, depending what you own.
For example, if you have a very fast-growing business that is early in its life, it may have terrible profitability numbers that would lower the average here, but not in a way that destroys value.
I think I may have an overdose (the good kind) of Datadog reading material, with two friends-of-the-show publishing in-depth pieces on the company days apart:
First Peter Offringa (💿) on August 28 with: Datadog (DDOG) Q2 2021 Update
Don’t let the modest titles fool you, these are seriously detailed pieces that do some serious 360 on both the dog 🐕 and his data 💻.
A Theory of Golden Handcuffs
I was discussing something with a reader (👋 J.) and had an interesting thought:
During times of changes, the sectors that will be worse at adapting to it will be where people are most overpaid vs the value they deliver to customers.
The dynamic means that a change in almost any direction will result in them making less $, so they’ll have huge inertia/incentives to try to keep doing things the way they’ve always done them and keep cashing those fat paychecks for as long as possible.
It probably also reinforces the bystander effect:
When individuals actors are fat & happy, even if *they see problems on the horizon*, it’s easier for them to think that it’s someone else’s job to figure out a plan. If your belly is empty, you are more motivated to try new things.
This works for the overpaid in the short-term, but means that they’re likely to end up with just a big fuming crater in the ground in the longer term.
You can probably guess which industry we were talking about…
Neuro Athletics — The Right Regimen for your Brain
If you’re a knowledge worker (or a ‘symbol manipulator’, as friend-of-the-show and supporter (💚 🥃) Jim O’Shaughnessy would say), nothing matters more to your long-term performance than the quality of your thinking and decision-making.
There’s a bunch of factors that influence this output, and I think most of us know a long list of them.
The problem is, few of us actually do something about it, or at least, not with an intensity commensurate with the importance this has (I’m guilty-as-charged).
One big category is the mental models that have become kind of clichés at this point, but that are still extremely important.
As a mental exercise, imagine someone who has never heard of things like confirmation bias, anchoring, base rates, leading and pacing, loss aversion, the endowment effect, the impact of strong emotions on decision-making, the halo effect, availability bias, signal vs noise, etc (and I’m not talking about an intuitive genius who can reinvent all those things from first principle from a young age — just someone who literally operates without these).
Not that knowing about them means we’re never going to fall for them — Daniel Kahneman is famous for his line about not being better at avoiding them than anyone despite studying them his whole life — but life is a question of degrees, and just because you can’t always succeed doesn’t mean that these tools aren’t useful.
I certainly can think of plenty of examples in my life where I’ve made better decisions because of them.
Another big underused toolset is more biological.
Our brains aren’t these disembodied things floating out in the ether. They’re fully tied and interconnected to our bodies, and impacted by whatever happens to us and around us.
As evolved organs, they have a bunch of characteristics that we should take into account when we try to keep them working well (ie. how were things during most of human evolutionary time vs now).
The reason I’m thinking about this now is because friend-of-the-show and supporter (💚 🥃) Luis V. Sanchez introduced me to Louisa Nicola, a neuroscientist & neurophysiologist (not just doing theoretical science either — she was telling me about helping a surgeon during brain surgery) who works with elite athletes, like NBA players, to help them move closer to peak performance.
We had a nice video call, and talked about how a lot of her science and craft also applies to people in finance (well, anyone with a brain, really — but the more competitive the field and the higher the stakes, the more small improvements matter).
I’ve subscribed to her newsletter and listened to a few of her podcasts, and am liking what I see/hear so far.
Here’s a good episode to give you an idea:
"The New York Times will put The Wirecutter behind subscription paywall" 🤔
Who's the #2 recommendation site, and will they seize the moment to get their name known to every Wirecutter reader?
Or is there even a competitive #2? ¯\_(ツ)_/¯
I hear it’ll be a fairly porous paywall, with 9 free hits/month, so that’s not too bad (after that, you switch to a different browser)…
Interview: Tom Morgan
I had the pleasure to do a video callwith Tom Morgan a couple weeks ago, and also enjoyed this conversation he had with friend-of-the-show and supporter (💚 🥃) Jim O’Shaugnessy (who I mention a lot lately, but what can I say, he keeps making good stuff, so I gotta mention it):
I listened to it on vacation and didn’t take notes on it, so no highlights here, but I do remember it’s an interesting convo!
You should also check out Tom’s very smart and eclectic writings here.
Berkshire Portfolio Probably has More Tech than Most Funds…
Berkshire’s exposure to technology stocks has grown to 45% of its equity portfolio, thanks to its massive stake in Apple, worth more than $120 billion.
Science & Technology
Virtual Reality Trans-Altantic Couple Meets for First Time
This is really cool.
Gotta admit, my eyes got dusty the moment they hug for the first time at the airport.
Can you imagine, building a romantic relationship with someone across the Atlantic ocean almost entirely in VR, and then meeting them for the first time?
Your brain has already “felt” their presence, with spatial audio and 3D rendering of their avatar and such, but it’s all simulated through beaming a bunch of photons to your retinas and sound-waves to your eardrums…
But then, when you’re with someone in person, you’re still just “a brain in a jar” inside your skull and whatever you know from them only comes from photons hitting your retinas and sound-waves your eardrums.
Ok, add touch and smell and much higher fidelity/bandwidth signal and interaction with the local environment, but this makes me think that in some number of years, there’ll probably be an increasing number of couples that have never met in person, and yet feel like they are with each other daily (likely most will eventually transition to relocating and in-person, but still).
There’s a large variety of relationships out there, and this will be added to the mix.
As long as everyone’s happy, I say why not?
Chrome Browser Beta — WebGPU
Was looking at the latest new APIs in Chrome v.94 beta, and this caught my eye:
The WebGPU API is the successor to the WebGL and WebGL2 graphics APIs for the Web. It provides modern features such as "GPU compute" as well as lower overhead access to GPU hardware and better, more predictable performance. This is an improvement over the existing WebGL interfaces, which were designed for drawing images but could only be repurposed for other kinds of computations with great effort.
WebGPU exposes modern computer graphics capabilities, specifically Direct3D 12, Metal, and Vulkan, for performing rendering and computation operations on a graphics processing unit (GPU).
That’s neat. Once it’s easier to access GPU compute from the browser, that opens the door to different kinds of webapps to be built over time.
Looking forward to what devs figure out how to do with this..
Google’s Thousand Messaging Apps (‘Is anyone in charge at Google?’)
It’s easy to make fun of Google’s product/app/service graveyard, because, well, it’s really crowded.
The site Killed by Google provides a good overview.
The frustrating part is that it doesn’t just contain stuff that didn’t quite work, failed experiments, etc. There’s no shame in that.
But there’s also really good stuff (RIP Google Reader) as well as an inexplicable proliferation of messaging apps that just confuse the hell of everybody (and most of them ended up basically being abandoned… Google Hangouts had no improvements for years).
Ars Technica did a really detailed feature piece that looks at Google’s Messaging apps over time. The best way to give you an idea of what a mess we’re dealing with is probably to show you the table of content (that last one… ouch):
Don’t get me wrong, there’s a lot of good ideas and neat tech sprinkled in there, but to have a good messaging product you need things like stability, ubiquity, clarity, keeping up with innovation at other platforms, etc.
Because messaging is all about a network effect, if you try to spread things out across a bunch of platforms, chances are that someone’s contacts won’t be on them and that makes them useless for most people. If instead Google had picked one (maybe two) platforms and just focused on making them as good and ubiquitous as possible, maybe it’d have something like Whatsapp by now.
The closest thing it has is Gmail, but that important piece of internet infrastructure feels pretty abandoned too, these days (as I wrote about at the very top in edition #138).
The Arts & History
Rick & Morty
I finally did it, I watched my first episode of Rick & Morty.
And then I watched two more.
I think for a long time I had this weird dynamic with the show, where a lot of people who’s taste I respect thought it was really good, but the few images of it that I have seen had an aesthetic that didn’t really attract me (the drooling, burping, etc — ironically, it’s probably how my parents felt whenever they saw the Simpsons when I was growing up), so I kinda wasn’t in a hurry to check it out...
But I’m glad I finally did.
The level of creativity in it is amazing. It’s like a concentrated dose of high-concept sci-fi LSD dream.
The pilot was pretty good, but it’s the second episode that hooked me and made me want to see more.
The only other animated show I’ve seen in recent years is Bojack Horseman, and I loved that (after they find their feet mid-first-season).
China: ‘Billionaire Actress no longer exists’
She has millions of adoring fans. She’s worth billions of dollars. But Beijing has all but erased actress Zhao Wei from history. And they won’t say why.
Zhao’s name won’t be immortal. Her entire internet existence has been scrubbed.
All serials and chat shows featuring her have vanished from major Chinese online streaming sites. She no longer even appears in the online credits for the movies she appears in.
Discussing why is being censored on social media.
How Orwellian is this? Down the memory hole… the modern version of Stalin removing people from photos in the pre-photoshop era.
At least back then it was hard to change every physical copy of a document, which is why they burned books, or maybe ripped out a few pages out of library books. Today, digital files can be changed and filtered/censored for everyone, and I doubt China has an equivalent to Archive.org’s Wayback Machine that shows past versions of webpages… To anyone unaware, it looks like nothing ever happened.
What if every Nicole Kidman movie disappeared and she was scrubbed from the net?
I guess the intro foreshadowed that I would mention some of the calls I’ve had…