209: Semiconductor Capex, Shopify, FICO, Omicron Variant, Google vs Hackers, Funding a Renaissance, Careful What you Let Into the Core, and The Beatles Get Back
209: Semiconductor Capex, Shopify, FICO, Omicron Variant, Google vs Hackers, Funding a Renaissance, Careful What you Let Into the Core, and The Beatles Get Back
"Caring what strangers think is a way to let them control you"
Work to become, not to acquire.
—Kevin Kelly
🚗💨 As a follow-up to my fuzzy napkin math on the carbon in fuel combining with oxygen from the atmosphere during combustion, reader Thanos Massias posted the actual math:
1 liter of petrol weighs 750 grammes.
Petrol consists for 87% of carbon, or 652 grammes of carbon per liter of petrol. In order to combust this carbon to CO2, 1740 grammes of oxygen is needed.
The sum is then 652 + 1740 = 2392 grammes of CO2/liter of petrol.
(“petrol” is UK-speak for “gasoline”)
👍 In the intro of edition #199, I wrote about how I was thinking of getting a CO2 detector for my home, just to see if I could optimize air quality.
This week I was happy to get a email from my kid’s school saying that my province has bought 90,000 CO2 sensors and will install one in every classroom to monitor air quality, and fix any detected problems (they’re also buying “several hundred air exchange systems [to install] within the school network”).
This is awesome news, and I hope this renewed interest in indoor air quality because of the pandemic will lead to big improvements everywhere — not just for viral transmission, but overall health and cognitive performance too.
🤔 Here’s something that I’ve learned to internalize over the years (I’m sure that at a younger age I could’ve said the right words on this topic, but it wasn’t quite fully part of me):
Don’t make the things you like part of your core identity.
They can still be important, they can still be a big part of your life, but they should be outside the core, and you should be able to change these things or replace them without a major crisis.
This also means that if someone criticizes one of these things, you shouldn’t take it personally, as if you were attacked.
And if a thing starts to suck for some reason (maybe it got worse over time, or you changed and don’t get as much joy out of it as you used to, or it was always toxic but it took you some growing up to realize it), then you can hopefully have enough objectivity to realize it and jettison it without an identity crisis, or worse, without lying to yourself about it for a long time to protect your ego.
This is a bit abstract, so here are a few examples:
I’m sure we’ve all met someone who just *hates* Macs, or Windows, and anytime the topic is brought up, they talk about how much X sucks and is terrible, poor gullible idiots who have been conned into using it, etc.
I started out on DOS, used Windows for years, then Linux for years, and Macs for years. I look at all of them as tools with different trade-offs, that have been better or worse relative to each other during various eras. What matters most is your needs and tastes and how your tools meet them. Like pickup trucks vs a sports cars, there’s no one-size fits all.
To me it seems like the person who’s tribal about it is likely to be blind to most of the problems about their thing *and* blind to most of the benefits of the other side. Just way more likely to make errors in judgement and miss big changes over time.
The only categories that matter are: Stuff you like and stuff you don’t like.
In practice, there’s only two kinds of music/films/etc: Good & bad (to you, subjectively). No need to worry about ‘it is cool? does it signal that I’m part of sub-group XYZ?’ etc.
One thing that makes this harder to put into practice is that even if *you* decide to think like this, you know others don’t, so you need to develop another skill before it can work:
Stop caring what other people think of you (except for a select group of trusted people who really know you).
If you don’t, you’ll always feel judged, and you’ll consciously *or unconsciously* hold back from really exploring what you like, and miss out on lots of good stuff because it doesn’t fit with the ‘type of character you feel you are’ in the movie of life.
For example, as a teen and in my early 20s, I listened to a lot of fairly underground music (lots of death metal, grindcore, black metal, industrial, etc).
Most of the people I met who were also into it seemed to make it a lot more part of their identity, so they had the cluster of traits/interests that came with it: Looking a certain way, professing to hate certain other things that were seen as incompatible with the music/lifestyle, etc.
I never really got into that part, and while I had a bigger CD collection and knew more about the music than most of these guys, they mostly judged my book by its cover and thought that because I had short hair, no beard, and a t-shirt without anything on it, that I wasn’t “a real metal fan”.
But hey, what’s the length of my hair got to do with music? ¯\_(ツ)_/¯
If you’re a burly dude and you enjoy watching Gilmore Girls, or you like jamming to Punish my Heaven by Dark Tranquility right before lip-synching the chorus of Off to the Races by Lana Del Rey, just do what you do and forget others.
Caring what strangers think is a way to let them control you (made worse by the fact that they don’t really think about you, you just imagine they do).
💚 🥃 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):
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Investing & Business
‘Funding the Next Renaissance’
Funding the Next Renaissance
A friend says that the *entire Renaissance* cost roughly $150 million to fund, adjusted for today’s dollars. Considering its impact on art and culture, that’s a trivial amount of money. Given how little cash it takes to fund intellectual work, I believe we are wildly underinvested in patronage.
I don’t know where the number comes from, but it doesn’t sound that improbable, since the patrons of the arts and science mostly weren’t providing funds for huge capital projects, but rather for the living expenses of a bunch of geniuses and their helpers so they could spend their days creating ideas.
The patronage idea made me dream about the possibilities at first, but thinking some more about it, I don’t think we’d get nearly as much leverage on this money today, as a civilization.
I suspect that at the time, brilliant people were so capital and opportunity-starved that these patrons and benefactors made a *huge* difference.
Today, there’s both a lot more opportunities and capital swirling around, so the marginal dollar added to the pool doesn’t make nearly as much of a difference (which isn’t to say that patronage can’t be great)
The biggest levers that we have today are probably continuing to bring more of humanity out of poverty, emancipating women in places where they don’t have the equal opportunities, bringing more people online, with access to the sum of humanity’s knowledge and into the great world-wide exchange of ideas (artists, scientists, engineers, etc, connecting with each other), encourage all kinds of mobility (geographical, social, whatever) so that people can end up where they are happiest and most productive, keep building tools and platforms that are ever cheaper and more accessible, etc.
This is the kind of stuff that is powering the next renaissance, IMO.
‘Credit card profitability by FICO score’
Friend-of-the-show Ray:
Source of profits: Left end of spectrum through net interest revenue and far right end from net interchange.
Semiconductors: Capex as far as the eye can see… 👀
U.S.-based companies represent about half of the $464 billion semiconductor industry, according to the Semiconductor Industry Association and market-researcher International Data Corp. But many of the biggest names, like Qualcomm and Nvidia, design chips but don’t manufacture the parts themselves, choosing instead to outsource the work. And that is often done overseas.
Sometimes, your strengths are your weaknesses.
In many ways, it has been beneficial for a lot of these companies to go fabless and leave all the heavy lifting required to build fabs and design the machines that allow nodes to keep shrinking to others…
But after years and years of that model iterating, you’re left with a power law of winners on the semicap and foundry side, and everybody else is going through these few bottlenecks (geographically and company-wise — Taiwan, TSMC, ASML, SK…).
This makes the whole edifice more efficient, and the best processes available more widely, but also more brittle than if the ecosystem was more diversified.
About three-quarters of global semiconductor production capacity sits in just four Asian locations: Taiwan, South Korea, China and Japan, according to the Semiconductor Industry Association. The U.S. represents just 13%.
Global chip manufacturers are projected to lay out $146 billion in capital expenditures this year, about 50% higher than before the Covid-19 pandemic began and double the level of just five years ago, according to Gartner Inc., a market researcher.
$146 billions in capex. Let that sink in for a moment.
The U.S. is capturing just about a seventh of that global investment, a level similar to two years ago, Gartner said. Asia, by contrast, represented more than 80% of the total spending. The ratios are expected to be similar through 2025, Gartner says.
Only about 6% of new semiconductor global capacity added over the next 10 years is expected to be located in the U.S., according to a Monday report from the U.S. Chamber of Commerce, which urged Congress to pass legislation that provides $52 billion in direct subsidies for new chip factories.(Source)
What’s tough is that this isn’t just about throwing big $ numbers around.
It takes a while to educate engineers, and it’s hard to teach new engineers about some extremely cutting-edge, esoteric problem if you don’t already have engineers doing this very thing around, and with the free time to do this rather than their main jobs at the fab.
Kind of a chicken & egg problem for the US to bootsrap a lot of this. One more reason why Intel’s manufacturing expertise is so valuable.
‘Yesterday's luxuries become today's commodities’
The ultimate example of this is computing power.
I guess a king could’ve employed a bunch of people good at math, but this didn’t scale very well. You can’t keep adding more people, because the communication/coordination costs eat most of your gains…
More recently, you could have a computer the size of a house that cost millions and employed many technicians just to keep it running, but even that only gave you a relatively low number of operations per second… A few years later and it could be miniaturized enough to be put into Apollo capsules and got us to the moon, but even that was extremely limited.
And now, well, most of humanity’s compute capacity is sitting idle at any one time — it’s so cheap and plentiful, we don’t even know what to do with it most of the time...
Many homeless people probably have smartphones with more compute than the Manhattan AND Apollo projects combined had at their disposal.
Even just 20-30 years ago, the ultimate was sequencing DNA (sequencing the first human genome was a project that begun in 1990 with a $3bn projected cost over 15 years).
Today, we do it at the drop of a hat millions of times a day because of the pandemic (granted, these PCR tests aren’t full genomes, but the aggregate number of base-pairs sequenced on Earth every day right now must be enormous).
Even writing DNA, which is much harder than reading it, is becoming much cheaper thanks to the work of companies like Twist Bioscience.
What else is expensive and rare and exclusive today, but won’t be in the future?
Access to space certainly is becoming a lot cheaper and easier thanks to companies like SpaceX.
I certainly hope the next big category to see rapid progress is rejuvenation therapies and cures for the various diseases of aging. Nothing else causes as much human suffering…
👟 Shopify Black Friday Sales: $2.9bn
This represents a 21% increase over Black Friday in 2020 when sales by Shopify merchants surged 75% over 2019 driven by COVID-19 lockdowns, and is more than double their sales on Black Friday 2019. Collectively, merchants on Shopify generated peak sales of nearly $3.1 million per minute at 12:02 PM EST on Black Friday, and merchants crossed $1 billion in sales by 4:00am EST, four hours earlier than Black Friday in 2020. [...]
Average cart price: $101.20 USD, which is up from last year’s Black Friday average of $90.70 USD. (Source)
That’s a lot of Allbirds and bottles of beard oil…
High Quality Classifieds, Muji Edition
Friend-of-the-show Muji (💾) is looking to hire someone:
I'm looking for a sidekick in HHHYPERGROWTH.
I want to find a DevOps-oriented techie that knows their way around cloud infrastructure and coding, and who is "investing-savvy", or... at least "investing-aware" (and hungry to learn more about hypergrowth investing).
I am seeking a dev-savvy research assistant (paid consultant) that can triage the interesting bits out of product announcements, company announcements, and customer conferences.
Email me at muji @ my blog domain, or DM me [on Twitter].
Science & Technology
Omicron Variant: “The earlier the warning, the less we know.”
Good reads on the new Sars-CoV-2 variant from Dr. Katelyn Jetelina (who has a Masters in public health and a PhD in epidemiology and biostatistics):
New Concerning Variant: B.1.1.529 (Nov 26)
Here’s Noah Smith roundup up what we know from various sources:
And here’s the always thoughtful Zeynep Tufekci:
Even if current vaccines lose some effectiveness against preventing Omicron breakthrough cases, it’s reasonable to expect them to maintain a good level of protection against hospitalizations and deaths — something we’ve seen with other variants. This is because preventing breakthrough infections and blocking progression to severe disease involve different parts of the immune system — the latter is more able to keep recognizing a virus and continue working well despite some mutations. Still, we can do much better.
All vaccines are still designed to protect against the original virus that emerged in Wuhan, even though that version is rarely found at this point. The Food and Drug Administration has previously said it was ready to approve variant-specific vaccines without the same scope of trials required for the initial vaccines. The F.D.A. should start getting ready for that possibility.
🍳 The US’ Largest Cast Iron Factory, Video Tour Edition 🥘
In edition #203, I posted about buying a cast iron grill pan, and later I got a 12” cast iron skillet from Lodge.
On Twitter, Brian Sholis shared this great video tour of the Lodge factory, where raw materials come in one side and cast iron cookware comes out of the other.
The title says they make “Almost Two Million Pans per Month” 🤯
I’ve always been a fan of these “how it’s made” videos.
‘Google warns crypto miners are hacking cloud accounts’
Not only are ransomware attacks enabled by cryptocurrencies, but hacking cloud accounts is now lucrative because of the ability to steal compute and get it billed to someone else:
Cryptocurrency miners are using hacked Google Cloud accounts for computationally-intensive mining purposes, Google has warned. [...]
Google said 86% of 50 recently compromised Google Cloud accounts were used to perform cryptocurrency mining. In the majority of the breaches, cryptocurrency mining software was downloaded within 22 seconds of the account being compromised, Google said. (Source)
If Google is seeing this, there’s no doubt that a similar thing is going on at AWS & Azure and anyone else with similar capabilities…
The Arts & History
'Succession' Theme Song Explained By The Composer
I'm guessing there must be some Succession fans reading this...
I've only seen 5-6 episodes from season one, but I thought this explanation of the music from the intro was quite interesting. I always enjoy learning about the creative process and how much thought goes into things.
‘The Beatles: Get Back’, Episode 1
There’s a new 3-part documentary by Peter Jackson based on 56 hours of previously unreleased footage of the band writing, rehearsing, and recording the album 'Let it Be'.
I’ve only seen the first part, but so far it’s really interesting.
There’s probably too much unstructured jamming for casual fans, but it’s a great view into the creative process and these people when they are “offstage” (not fully, as they know they are being filmed, but it feels like they forget about them at times, especially when really focused on the music).
This may be the least germane take on the Beatles' ‘Get Back’ documentary imaginable, but I'm finding the simple process of watching several uninterrupted hours of human interaction without cell phones entirely arresting. It’s incredible. They just stare out into space and smoke. (Source)
It makes my wish I had video like for any album I wanted.
Can you imagine if we could see them in studio while they recorded Revolver or Sgt. Pepper? Or if I could peer into the creative process of Bob Dylan in the 60s, or Leonard Cohen, or Metallica writing and recording Master of Puppets, or Strapping Young Lad writing City during Devy’s manic episodes…
There’s a moment when Paul is improvising ‘Get Back’ live on camera first thing in the morning, while waiting for Lennon who’s late, and the rest of the band is yawning and still half-asleep around him.
Or Paul writing ‘Let it Be’ on the piano while everybody around him is loudly talking about what kind of plastic to use for the live show set design… ha!
Pretty incredible
I’m looking forward to the rest of the documentary episodes.
Credit card profitability by FICO score- Nerd 🤓 Alert. That is a graph that is jam packed with information. Very well done! Nicky Likey!!