202: The Trade Desk Q3, Rivian IP😮, Complexity Investing & Semiconductors, Unity + Weta, Microsoft & Facebook, Affirm Whiplash, SpaceX vs Boeing, and Cast Iron

"Everybody else got whacked over the head by Apple"

Things that have never happened before happen all the time.

—Scott Douglas Sagan, The Limits of Safety

🧾 I’m trying something new with the format of the quote at the top. You like it?

🤧 🦠🦠 My wife and I caught the kids’ cold (got them tested, it’s not COVID-19).

It’s not that bad, but it got me thinking…

There are many many strains of viruses that can cause what we call the common cold (rhinovirus, coronaviruses, adenoviruses, etc).

I had never thought about this before, but there’s nothing stopping me from getting more than one “cold” at a time (technical term: coinfection).

How many times in my life have I had *two* colds at the same time without knowing it?! Three?!?

What’s the maximum number of symptomatic ‘cold-virus family’ infections on record? Is it possible to have 10+?

It seems likely that in the past there were times when I thought “wow, this one is really bad”, but I was actually fighting off two infections at the same time. Or “this one just never ends” but I got two overlapping ones… Ugh.

I can’t wait until we use our recently gained vaccine tech to make much more effective and universal vaccines against common cold viruses, targeting craploads of strains at the same time.

The other thing I was thinking — after I woke up one morning sounding like Barry White — was why does our voice gets lower when we have a cold.

Like, it’s the most obvious thing in the world that it does because *something* is happening in our throat, but *what* exactly?

Is it mucus-related? Inflammation of the vocal cords? Something else?

I looked it up… and it turns out that the inflammation theory is correct, as applied to the vocal cords and the structures that surround them. TIL.

🐦 I still think the best decision Twitter made in the past few years was to go to 280 characters. ¯\_(ツ)_/¯

Why? Very little negative came out of it. Most top-level tweets are still fairly short. What tends to go longer is inside reply threads, where you only see it if you dig into it.

So it both preserved what works, while allowing for more depth when needed. Pretty big win, IMO.

🍳 This week I bought my first cast iron grill pan. It’s this one. Another world to discover… (like everything, there’s a sub-reddit of people talking about cast iron 24/7)

Update: Reading more, it seems I may have made a mistake going for a grill pan… Flat bottom is probably better even for things where you’re trying to replace a BBQ grill during the cold season. Hmm. Live and learn ¯\_(ツ)_/¯

🌙 💍 😴 Just ordered a 3rd Generation Oura Ring, which just came out (if you’re not familiar, they basically made a computer and a bunch of sensors fit into a ring, and it tracks your sleep quality/quantity — isn’t miniaturization amazing?).

They had a pretty decent offer for owners of the 2nd generation: $50 off and a free lifetime subscription to their new service (they added a monthly fee, because nowadays every hardware company has to turn into a subscription company).

I liked the tracker enough to want to keep using it for a while, so the free lifetime thing alone seemed worth the upgrade.

They also explicitly say that you can give your Gen 2 ring to someone else, no problem, and no subscription needed to keep operating it. I’ve got someone in mind for it, and I’ve already checked that it fits on their finger, so that works out well too.

🤔 How wonder how big the digital assets are for a modern Pixar or Disney Animation film.

I don't mean the rendered frames, but the ‘raw materials’ from which those are made.

The 3D models, animations meta-data, textures, shaders, physics code, light sources, audio assets, code to procedurally generate stuff like terrain, foliage, clouds, etc.

☀️ My morning was made brighter yesterday when someone messaged me to let me know that Ben Thompson (💚 🥃 🎩) had mentioned this humble steamboat in a post about Nvidia (sub required, but I’m sure you’ve already got one, right?).

Ben’s probably tired of hearing it at this point, but as the grand-daddy of the modern paid tech newsletter, he was an inspiration to me to start this project (along with others, like Brooklyn Investor, Andrew Walker, Bluegrass Capital, etc).

Anyway, Ben does a great job of explaining Nvidia’s stack, and why it was so important for the company to vertically integrated into software, and then into higher and higher planes of abstraction over time, to make possible the extremely varied stuff that they and their customers now work on (my line about “Robots and digital twins and games and machine learning accelerators and data-center-scale computing and cybersecurity and self-driving cars and computational biology and quantum computing and metaverse-building-tools and trillion-parameter AI models”).

💚 🥃 In the immortal words of philosopher Dan Wieden (working for Phil Knight), Just Do It:

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Investing & Business

The Trade Desk Q3 Highlights

Kind of bonkers to see the stock go up 40% in the two days after earnings…

What were the results?

39% revenue growth year-over-year at 41% EBITDA margins, but:

Jeff Green: Excluding political spend related to the U.S. elections in Q3 of last year, our growth was about 47% from a year ago.

Pretty, pretty good.

Everybody else got whacked over the head by Apple’s iOS changes to tracking behavior, but TTD was an exception:

our mobile business continues to be resilient. As we predicted, the most recent iOS changes have had no material impact on our business, and we expect that to remain the case.

On Google:

we expect to continue to do very well regardless of Google's policy choices. A very small percentage of our business runs through Google's Ad Exchange, and we are not dependent on Google for our business.

On the Unified ID standard, which they originally created and then made open source, to help replace the ancient identifiers (like browser cookies) with something more modern and private:

UID is setting new benchmarks every week and every month. The growth is phenomenal. As I've said before, I've never seen the industry come together like this around a common agenda, collaborating on new technology that benefits all participants. The daily avails on our platform with UID reached an all-time high just last week, having broken record dozens of times through August, September and October.

(Ok, I gotta point it out: UID is kind of a weird acronym for this…)

The vision for programmatic advertising that got Green to join the industry:

I believe digital advertising is still a relatively young industry. I got into this business initially because I thought there was a better way to price advertising, that we could build something like the stock market or the markets for commodities where there is transparency of information and mechanisms that drive efficiency because these are the kinds of characteristics that any market demand, that any mature market creates over time. This approach remains central to our mission at The Trade Desk. We believe that an open competitive market for digital advertising is the only way that we build long-term trust of marketers.

If you’re wondering about Green’s mood going into next year, I’d say it’s pretty positive:

Jeff Green: I'm really excited about '22. I don't know that I've gone into a year more excited than I am going into '22. […]

the regulatory environment is actually really net positive. So if Google and Facebook are a little bit more controlled or making -- forced to make more deliberate decisions or what's even more likely is that they go a little bit slower, that's a net positive for us given how much they've gained share over the years. [...]

We don't see any material impact from iOS, and we don't see any material impact from supply chain. So given that, it makes me even more excited about the things that are going really well. [...]

we're consistently grabbing share. So just constantly getting more than the space is growing. Second, we've never seen what's happening in CTV happen in any channel ever before. And I don't know that we'll ever see something like that happen again. [...]

In '22, we have midterm elections, which we think there's been some forecasts that basically the spend in digital will be the same as the presidential election year [...] And then UID, it's just going incredibly well.

Some idea of scale on UID (I know):

as it relates to the scale of UID, so we have produced hundreds of millions of unique users inside of UID and the growth rates are breaking records every -- seemingly every week. I think we mentioned in the prepared remarks that I think we broke our record something like 12x in the quarter just every week. It feels like we're hitting a new watermark and getting more and more users. So the month-over-month gains being in triple digits, while we're talking about billions of Unified IDs, it is just unbelievable. [...]

even walled gardens are creating paths to pass this through, while it's encrypted and they may not necessarily consume it, they're supporting customers so that they can use it if they want to. And then you've got infrastructure plays like Snowflake adopting it.


Interview/Conversation: Brinton Johns and Jon Bathgate on Complexity Investing & Semiconductors

I’m still amazed at how many people I’ve gotten to know online through the interest graph. Here’s a perfect example of this:

This is a great podcast, and it just so happens that 3 out of the 4 people are friends-of-the-show (in fact, two are supporters, so 💚 💚 🥃 🥃 I guess).

The first half is largely about complexity investing and NZS’ way of seeing the world (looking for resilience and optionality, non-zero sum, etc), and the second half is about the semiconductor super-organism-cluster of interdependent companies on top of which our modern reality is built.

If you want to go deeper in semis, make sure to check out Acquired’s TSMC episode, and Jon and Brinton’s great in-depth interview with another friend-of-the-show, Shane Parrish (I wrote more about this one in edition #58):

Unity Acquiring Weta Digital for $1.625bn

Unity, the 3D engine company that fights it out with Epic’s Unreal at the top of the food chain, is acquiring the visual effects company co-founded by Peter Jackson in New Zealand in 1993 (trivia: It wasn’t created for Lord of the Rings, but for Heavenly Creatures).

What they really want are the engineers and software — the more artistic side of the house is being spun-off into a new entity, where Jackson will remain:

Weta Digital’s 275+ engineers will join Unity. The VFX artists will be spun out into a new entity, “Weta FX,” of which Peter Jackson will continue to own the majority. The two companies expect to continue working together, with Unity noting that it sees Weta FX being one of their “largest customers in the Media and Entertainment space” moving forward.

So what is Unity looking for? The tools:

Unity will be taking over the development of Weta Digital’s many built-in-house tools — things like City Builder (which procedurally generates the massive 3D cities we see destroyed in movies like “King Kong”), Manuka (their custom, physics-simulating renderer that helps make everything look oh-so-real in the final version), Gazebo (their faster real-time renderer, used by artists to accurately preview scenes before the much more time-consuming final render), and all of the other bespoke tech the team has built for rigging characters, animating and rendering faces, processing motion capture or simulating hair/fur/smoke/a thousand years of vegetation growth across an abandoned cityscape.

And the digital assets:

As part of the deal, Unity will also acquire the massive catalog of digital assets that Weta Digital has built over the years — a list of creations that is much, much, much too long to list, but think everything from 3D models of cities or cars or people, to the algorithms determining how smoke works as it comes off a fire in the rain, to simulations of how a herd of animals might move together through the trees — all of which, potentially, could find its way into Unity’s products for creators to build upon. (That won’t include “recognizably clear IP,” Whitten notes, so don’t expect to be able to drag-and-drop Gollum into your next game.) (Source)

Microsoft and Facebook to Partner on Integrating Teams inside VR Workplace

Facebook Workplace, or Workplace by Meta as it’s now been rebranded, will soon integrate Microsoft Teams to livestream video into Workplace groups.

The Microsoft Teams integration into Workplace will also allow employees using Teams or Workplace to view, comment, and react to meetings in real time without having to switch between apps.

Microsoft is also integrating Workplace into Teams, which will enable Teams users to access Workplace content through an app within Teams. The app will be pinned to the Teams navigation bar and will include a homepage of Workplace content. Microsoft Teams admins will also be able to mark content as important to showcase it in the Workplace app. (Source)

Seems pretty win-win for both companies, each going horizontal with the other on something that is more important to it than to the other (Ricardo would be proud).

Question is, what happens when/if the two companies start clashing a bit more and are less complementary in their offerings in the space?

That’ll be an interesting one to keep an eye on.

Rivian IP😮

Rivian stock recently started trading.

It’s $128 right now, giving the company a market cap of $105bn.

Don’t get me wrong, the reviews on Youtube make it seem like they know what they’re doing, I like the focus on light trucks and commercial delivery, etc.

But ramping up heavy manufacturing in hyper-growth mode is haaaaaaaard, as Elon showed all of us, and there’s still many challenges on the road ahead…

The company has a lot of pain (😫) to go through if they want to reach the promised land.

Alexa, what is whiplash?

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Science & Technology

U.S. Airlines and Amazon Aviation Unit Working on Sustainable Aviation Fuel

"By working together with other companies, we are demonstrating there is strong and growing demand for the rapid deployment of cost-effective sustainable aviation fuels, which will help Amazon meet our commitment to reach net-zero carbon by 2040,” said Sarah Rhoads, vice president of Amazon Global Air. (Source)

The Rocky Mountain Institute, which created the Sustainable Aviation Buyers Alliance, has this to say about these fuels:

SAF is produced from sustainable feedstocks including crops like switchgrass or poplar, or from reusable waste materials such as cooking oil, corn stalks and cobs, or municipal solid waste.

Looks like there’s support from some big names:

On top of Amazon, there’s Alaska Airlines, JetBlue, and United Airlines on the operators side, and Boeing, Bank of America, JPMorgan Chase, Microsoft, and Netflix on the corporate side.

In the end, what matters is scaling up production of advanced liquid fuels that are made with carbon already present on the Earth’s surface rather from sources that were sequestered in the crust and thus are additive.

I don’t really care how that’s done; advanced biofuels using algae or plants or genetically engineered microorganisms, or purely synthetic fuels made with energy that comes from some clean source (nuclear? solar?).

Of course it won’t be easy or economic overnight, but that’s all the more reasons to get started ASAP.

How much money is SpaceX saving NASA (and taxpayers)?

Here’s a good comment summarizing the situation of SpaceX vs Boeing on the capsule projects:

How totally [SpaceX] have beaten Boeing is quite amazing. Boeing received almost 2 billion more money (or will if they actually finish). SpaceX total development contract was for only 2.3 billion.

Boeing high price was partly justified by 'higher schedule certainty'. They were selected over Sierra Nevada who had a 3.6 billion $ proposal using the Dreamchaser aircraft.

Some news emerged that Boeing believed that SpaceX could not deliver anyway and if they both didn't deliver the could renegotiate with NASA and demand more money. Unfortunately for them, SpaceX delivered without asking for more money.

Since then Boeing has failed its first test flight and has run into major issues with the second one, and it will not launch for many more months. All of these costs are carried by Boeing, only when they complete further milestones will the get paid.

This is very unlike the contracts that Lockheed Martin and Boeing work under for the Orion capsule and the SLS contract. Just in comparison, those system already at up almost 20 billion each, they have sometimes over 2 billion a year in funding. The extra cost for failing to deliver these systems is paid by NASA.

So the complete Dragon capsule development is basically 1 yearly budget for one of those programs. Dragon could do almost everything Orion does with a few enhancements (certainty not costing billions every year).

SLS and Orion are left over from the dark days and they need to be canceled, all future human spaceflight need to be done at fixed cost. If you want to play, you need to be willing to risk your company on it.

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The Arts & History

Dune ‘Making Of’ Vignettes

These ‘making of’ videos are a bit frustrating, as they’re basically marketing material and just bounce between 50 things, spending 5 seconds on each…

I wish I could have a video of an hour just on the design and practical decisions surrounding one set or the making of the ornithopters or whatever. To learn how the artists work, why they made certain decisions, etc. That’s what feels most interesting to me.

But if you saw Dune and liked it, this is still interesting.