235: Re-Founding CEOs, Capturing vs Creating Value, Intel Deep-Dive, Airline Pilot Shortage, Robinhood, Hydropower, Medieval Elephants, and Mad Men S6

"They conform from peer pressure, not belief."

A defender must always seek to change over to the attack as soon as he has gained the benefit of the defense.

—Clausewitz

💧⚡️ Why don’t we have a lot more run-of-the-river hydro-power?

Run-of-the-river projects are dramatically different in design and appearance from conventional hydroelectric projects. 

Traditional hydroelectric dams store enormous quantities of water in reservoirs, sometimes flooding large tracts of land. 

In contrast, run-of-river projects do not have the disadvantages associated with reservoirs and so cause fewer environmental impacts

I get that you don’t have the storage and scale advantage of the largest hydro projects with reservoirs, but once you’ve found a river with a flow that is high and predictable enough to build *one* run-of-the-river dam, why can’t you build *a bunch more* on the same river? Like this (spaced out to the best sites, I don’t mean literally next to each other):

There’s probably an obvious reason I’m not thinking of ¯\_(ツ)_/¯

⏳⌛️ I wonder if time would seem to go by really fast to someone who's 500 or 1000 years old…? 🤔

I mean, because of logarithmic perception: To a 5-year-old, a year is 20% of their life (subjectively more, since you don't remember the first part of your life). To a 50-year-old, a year is just 2%…

I already feel this, and I’m just in my late (late) 30s…

I wonder if this effect subjectively tops out at some point, or if it just keeps going.

Chances are there’s a kind of “U” shaped memory effect where you remember very well your most formative childhood & teenager years, and then the most recent years, and everything in the middle kind of gets compressed and is lower-resolution.

After all, our sense of time over longer periods is 100% about memory, not about how time feels on the day-to-day scale.

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Investing & Business

Company Re-Founders?

During my recent chat with friend-of-the-show Cedric Chin (🇸🇬), we talked about operators, and the conversation got to Snowflake and Frank Slootman. We’ve both read his earlier book ‘Tape Sucks’ and been following his recent work.

It made me think about how, while not a founder at Snowflake, he very much feels like a founder, and made enough changes at the company (apparently, people were quite nervous when he came in… and he did ended up firing a bunch of people) that you could almost say that he “re-founded” it.

Who else would qualify as a re-founder? I’m sure there’s a bunch.

Has anyone tracked such individuals and determined if some can do it over and over, like serial entrepreneurs starting multiple companies, or if it’s more dependent on fluke person-to-company fit that is hard to replicate..?

Some names that come to mind are Brian Jellison at Roper, Ryan Pape at XPEL, Todd M. Cleveland at Patrick Industries, Satya Nadella at Microsoft, Lisa Su at AMD…

But it may be different to buy a huge stake into a company and then run it as an owner (even if not original founder), than to be a hired management without huge ownership, but still “re-found” the company and run it for the long-term as an owner (Brian Jellison fits that mold).

Creating Value vs Capturing Value

Mostly Borrowed Ideas @borrowed_ideas

I built my entire newsletter biz on Twitter; it wouldn't exist without Twitter. Yet Stripe will make >1,000x more money from the payment processing fees than Twitter ever will from my biz. Perhaps a good rule of thumb in investing: Infrastructure layer > consumer internet

I think it shows just how different creating and capturing value are.

There's also lots of infrastructure projects that are tremendously useful and create massive value, but capture very little of it, either by design or accident — f.ex. Open Source on one side, and some easily copied innovations that becomes commoditized on the other, like machine learning techniques or compression algorithms or publishing tool or whatever.

On the stickiness front: Once you've built a money-making operation on top of some building blocks, it’s very disruptive to rip them out.

But most of the stuff that consumers use is rarely that deeply embedded in their life — if something better comes along, it’s much easier to switch.

Intel 101 Primer, Roads Not Taken Edition

Friend-of-the-show and Extra-Deluxe supporter (💚💚💚💚💚 🥃) David Kim recently published a deep-dive on Intel.

I think it’s a great primer on the company & industry, for those who aren’t eating sliced silicon ingots for breakfasts:

• [INTC] Intel Corp. — Scuttleblurb (sub $ required)

A couple highlights:

It is sometimes said that Intel, consumed as it was by the desktop and server markets, was late to mobile. On the contrary, it began positioning itself for cellular handsets as early as 1999, acquiring communications chipset makers Level One Communications and DSP Communications for $4bn. As early as 2002, Intel’s XScale microprocessor, based on ARM’s RISC architecture no less, could be found in mobile devices supporting Palm and Windows mobile operating systems, and later in Motorola and Samsung phones. It launched an “[system] on a chip” (SoC) processor, Manitoba, that integrated an XScale application processor, DSP, and flash memory. In 2006 Intel sold XScale to Marvell Technology for $600mn, arguing that ARM’s ecosystem wasn’t mature enough and that it was better off developing a low-power version of x86.

There are so many interesting alternate histories that can be imagined...

What if they had kept developing ARM chips in parallel to x86 and been really successful at it by the time demand mobile exploded? What if the low-power Atom stuff had been much better?

In 2013, Intel planned to have 10nm production running in 2015. By the time 2015 rolled around, Intel struggled to ramp up 14nm and high volume 10nm production was pushed out to 2017, which also came and went. Intel only started manufacturing 10nm at scale in 2020 and most chips shipped that year were designed for 14nm, which they had been running for 7 years(!), with minor improvements (“tocks”) along the way. Last July, Intel announced that, due to a yield-degrading defect, 7nm production was trending a year behind schedule. [...]

Intel, which in 1997 convinced Motorola and AMD to help fund an EUV [extreme ultra-violet] proof-of-concept machine, was actually one of the original proponents of EUV.  And yet, the company long held that it was more cost effective to multi-pattern down 10nm+ than it was to invest in EUV.  TSMC had EUV in place by early 2017 for light experimental production on 7nm and is now using it for high volume manufacturing at 5nm.  Intel, meanwhile, won’t be fully adopting EUV until it begins manufacturing on Intel 4 (previously Intel 7nm) in the second half of 2022.

That’s another road not taken… What if Intel kept better on EUV and succeeded? It may be much more competitive with TSMC today, maybe even ahead…

Did you know there’s a shortage of airline pilots?

In North America, with an aging pilot population and heavy use of early retirements, the shortage reemerges quickly and is projected to reach over 12,000 pilots by 2023 — 13 percent of total demand. However, Asia Pacific, with a faster growth trajectory will surpass this by the end of the decade with a projected shortage of 23,000 pilots by 2029.

Source.

Robinhood’s true colors

This slide where the negative results are dark green — one of the most ridiculous 🤡 dark patterns I’ve seen lately — reminded me of the fact that in some Asian countries (China, Japan, Korea), the stock market uses red and green in opposite ways than in most of the rest of the world (ie. red is up, green is down).

Maybe Robinhood just has Western profits, and Asian losses… ¯\_(ツ)_/¯

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Science & Technology

Superstition, Peer Pressure Edition

Ethan Mollick:

This is a paper on how irrational beliefs persist that I think about often.

Bocconi University, like many colleges, has a superstition: if you walk between these lion statues, you won’t graduate. The paper finds 20% of students wouldn’t walk between the lions for $1,000!

But 80% of students will privately take much less 💰 & break the superstition if others do. They conform from peer pressure, not belief. If others stop acting like they believe, so will they. But the 20% of people who really believe are validated by the 80% who conform. Cycle!

A relevant lesson: as true believers are enabled by others: “...policies that target false beliefs with the intention to change individual & group behavior may face substantial headwinds so long as those false beliefs are validated by the conforming behavior of the majority.”

Irrational beliefs can persist because the true believers convince the majority that there might be SOME risk to the belief being true, and the majority acting cautious based on this belief validates the true believers in turn.

‘Evolution of the elephant depiction throughout the middle ages’

Found this one on HN, it’s kind of esoteric, but I love it:

After the fall of the Roman Empire, elephants virtually disappeared from Western Europe.

Since there was no real knowledge of how this animal actually looked, illustrators had to rely on oral and written transmissions to morphologically reconstruct the elephant, thus reinventing an actual existing creature. This tree diagram traces the evolution of the elephant depiction throughout the middle ages up to the age of enlightenment.

The screenshot above is just a small fraction of it, and every drawing on it is clickable to get more details and see a bigger version. Check it out.

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The Arts & History

Mad Men S6 (mild mild spoilers, I guess)

I’m now a couple episodes into season 6 on my rewatch of Mad Men.

That scene where the surgeon neighbour goes to the hospital on skis on New Year’s Eve had always been very memorable to me from my first watch. It was great to see it again (this is in S6E2, ‘The Doorway, part 2’).

The Hawaii scenes from the season premiere were so well done, great sense of place.

That 20 minutes was much better and richer than the 2 hours of ‘White Lotus’ that I’ve seen (not that it’s fair to compare the two, but that’s the availability heuristic I guess..).

The way that zippo from the private keeps popping up in S6E3 is nice symbolism…