193: Incentive Alignment, Robotized Trains, China May Pry Open Tencent & Bytedance, Toyota EVs & Bad Taste, Exponent, Paypal + Pinterest, and Cthulhu’s Babies

"At one point, Warren Buffett didn’t know what free cash flow was"

Many think great success will pacify their critics. Quite the contrary. Criticism will multiply as you grow and progress. Positive attention does not come without negative attention. This is the price of having an impact.

—Stoic Emperor

🤔 My first thought after reading this tweet…

…was that this includes the problem of changing incentives to better ones.

That’s often an incentive alignment problem too, because those who benefit from the current bad incentives are likely those in a position to change them.

🥗🥓 I’ve made some adjustments to my daily time-restricted feeding schedule (what some call ‘intermittent fasting’, but I think that better describes longer fasts, rather than the daily number of hours when you don’t eat daily).

For many months, I’ve been skipping both breakfast and lunch on weekdays, eating my first meal in the evening around 5 PM, and then eating again later, up to around 9:30 PM before going to bed.

Great way to get an easy 18/6 and to get a bunch more time during the day to be productive, and skip the afternoon post-meal drop in energy.


Life is trade-offs, and the problems of this approach have been bugging me for a while…

The snacking I do before bed tends to be pretty crap (I have a weakness for salty snacks, so chips and nachos are like crack to me).

Eating before going to sleep also hurts sleep quality — I could clearly track that on my Oura ring, with resting heart rate only reaching its nadir way late in the night, body temp not going down as much, deep sleep was shorter, etc..

I decided to go back to what I did a couple years ago, and start eating lunch again, but try not to snack after 6 PM (we eat pretty early, we have young kids…).

This way I still get my daily 18-19h of not eating, but now my sleep quality has bounced back (and I’m feeling the difference), and I eat a lot less crap. I’ll still have rebel days when I grab a bowl of spicy Takis while watching ‘Mad Men’ with my wife, but it shouldn’t be multiple nights a week now.

Turns out it’s a lot easier to control snack intake if you don’t have any rather than if you do, but try to keep portions small (I usually lose that willpower fight).

🤯 I made the heads of untold numbers of furniture nerds explode when I asked what this chair was (this is a screen capture from a video showing Zane Low’s studio during Apple’s event on Monday).

I genuinely didn’t know. Furniture design isn’t something I’ve really explored yet. I also don’t know much about clothes — I basically own 20 black t-shirts and wear that every day. ¯\_(ツ)_/¯

I think it’s important to never be embarrassed not to know something. The only thing embarrassing is not wanting to learn.

At one point, Warren Buffett didn’t know what free cash flow was, or what an insurance combined ratio was. What matters to his life isn’t that he didn’t always know, but that he learned at some point — I think his life would be pretty different if he had been too afraid to ask questions and learn about all these things…

So yeah, cool chair. I like it.

💚 🥃 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. That’s 77¢ per edition.

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 — if you don’t see paid options, it’s because you’re not logged into your Substack account):

💙 Subscribe now 💙

A Word from our Sponsor: 💰Watchlist Investing 💰

What’s an investor without a good watchlist?

Watchlist Investing is a monthly newsletter devoted to studying great businesses and helping readers be ready to pounce when Mr. Market gets irrational (🤪).

You’ll get access to independent, bottom-up primary research, including Deep Dives, Quick Looks, and analysis of long-term capital allocation decisions.

Join the growing list of value investors, C-Suite execs, managers, and students by subscribing. It’s worth full price, but as an enticement to you get 10% off your first year with the coupon code “Liberty”.

Sign up here for just $15/month on the annual plan (that’s with the coupon 🔥)

Here’s a free taste with two issues from the back-catalogue:

Investing & Business

🛳 🚛 🚂 & Robot Trains (“Blaine is a pain, and that is the truth”)

Who doesn’t like trains? (except those who live close to tracks)

Trains might seem like a mature technology with little room for improvement or expansion, since adding new rail lines is prohibitively expensive [...] making them fully autonomous could improve their safety and also significantly increase the amount of freight that can be carried on America’s rail network, by making more efficient use of it.

As the U.S. struggles with truck driver shortages and companies scratch their heads over how to meet their goals for slashing carbon emissions, trains—which are four to five times as efficient in energy used per mile as trucks—could be a two century-old technology whose time has come again. [...]

Many parts of the operations can be automated and optimized, including the way trains are loaded and unloaded.

A future of autonomous trains could mean putting a lot more freight onto America’s existing rail network without adding new lines [...] Existing and future technology allows trains to be longer, to run with less distance between them, and to be broken down and reconstituted at ports and rail yards in a more efficient fashion [...]

And we’re not talking about marginal improvements. This is potentially pretty significant:

A European Union-funded study published in 2020 found that moving to newer systems for managing trains could increase the capacity of existing rail networks by up to 44%. An internal study by Wabtec indicates in the U.S. the increase could be even higher, up to 50%.

And here’s a bonus for those who got the Blaine reference at the top:

"What can run but never walks, has a mouth but never talks, has a bed but never sleeps, has a head but never weeps?"

h/t SITALweek

‘China Weighs Opening Tencent, ByteDance Content to Search’

China is considering asking media companies from Tencent to ByteDance to let rivals access and display their content in search results, a move that could further eradicate online barriers and shake up the internet advertising arena.

The Ministry of Industry and Information Technology is debating rules to make hundreds of millions of articles on Tencent’s WeChat messaging app available via search engines like Baidu (Source)

Interesting. I wonder what would happen if the US walled gardens were forced to make their content (more) visible to the rest of the open web… 🤔

Google would certainly like that, but I wonder if all kinds of other ecosystems could suddenly be more viable by integrating and aggregating content acquired through these official APIs…

Toyota EVs, Part 2 (the one where I complain about design…)

I was having another look at the Toyota bz4xwhatever that I mentioned in edition #192, and when looking at more photos that show different angles, I noticed this (on the left side):

Toyota really has to get new designers on these projects. A lot of their recent conventional designs have been good, why not do the same with the EVs and PHEVs?

The latest generation Prius (above on the right) has already been ruined by this total lack of taste, they can’t let this happen to their upcoming EV lineup….

FedEx: Playing in Hard Mode

From the always excellent Extra-Deluxe (💚💚💚💚💚 🥃) supporter Byrne Hobart:

If you want to start the world's most difficult business, you're out of luck because FedEx already exists. The company fits all of these criteria, and while it exists today, with an enterprise value of $88bn, that was a close call. Among other things, in the company's early days FedEx repeatedly defaulted on loans and had trouble paying suppliers, had to ask employees to delay cashing their paychecks, might have forged a loan guarantee1, and the infamous incident in which the CEO knew the company didn't have enough cash on hand to pay a bill due Monday, and won the money for it in Vegas. FedEx raised what was then the largest venture round in history, totalling $52m in equity and debt.2 At one point, the company avoided getting its planes repossessed by a lender only because they successfully argued that the cost of retrofitting cargo planes as passenger planes would eliminate most of the loan recovery.

Exponent Podcast on Technological Revolutions

Lots of food for thought in there, a good conversation between supporter (💚 🥃) Ben Thompson and friend-of-the-show James Allworth (🇸🇬).

I don’t know what I think about all this yet, but as is often the case, most of the value is in raising interesting questions and putting forward hypotheses that can be explored and tested over time.

‘Time is a Circle’

Context: “PayPal Is Exploring a Purchase of Pinterest” and management’s incentives in the proxy (why don’t they use “per share” numbers?!)…

💙 Subscribe now 💙

Science & Technology

Cthulhu’s babies 🦑

Just a cool photo via Reddit.

For those wondering, the species is an ancient Australian Crinoid (Jimbicrinus Bostocki). Such an epic find!

A similar fossil is for sale here and claims to be about 280 million years old.

Interview: Matthew Walker on sleep science, what changed in past couple years…

Good interview of Matthew Walker by Kevin Rose:

This is mostly an update that assumes you’ve heard the first interview he did with Rose and/or read his book. But IMO, the best place to start is this 3-part interview with Peter Attia (I found it better than the book — linking just part 1, you can find the other 2 easily).

💙 Subscribe now 💙

The Arts & History

Inside Out, Adoption or Recessive Genes Edition

My kids were watching Inside Out (great film!), and I noticed something for the first time... Not sure how genetics work in the film's world, but both of Riley's parents have brown eyes and she has blue eyes. It's not impossible, but fairly low probability...

If you're curious how this works: