240: Constellation Software Q4, Amazon Footprint on Toronto, David Tepper, Ports, Microsoft + Mandiant?, Canada, Cash for Clunkers, and Hydropower for NYC

"I’m weary from watching people punch themselves in the face"

A complex system that works is invariably found to have evolved from a simple system that worked.

A complex system designed from scratch never works and cannot be patched up to make it work.

You have to start over, beginning with a working simple system.

—John Gall, Systemantics: How Systems Really Work and How They Fail

🛀 This may seem really obvious, but the internet allows anyone to be everywhere at the same time, and that’s kinda magic.

Because of this, the choices we make have a lower opportunity cost in foreclosed alternate choices, and so our optionality is much higher.

Historically, wherever you decided to go made you miss out on whatever happened anywhere else…

But now, I can be having conversations with my friends in Bangladesh, California, and Toronto at the same time as I’m reading what someone in Sweden wrote, then reply to a message from my wife. I can catch up on recordings of great conversations asynchronously, and not have missed the thing. I can learn about XYZ without spending the day in a library or university basement, which would make me unavailable to other opportunities that day, etc.

I can “be” everywhere. Or rather, everywhere is connected to me.

(I’m not saying this doesn’t have downsides — Cal Newport is good on explaining how to manage those — but I think we largely take the upsides for granted)

📺 🎬 Eugene Wei has a good riff on subtitles (for TV, films):

Like many, I often watch movies with subtitles on now.

But doing so changes how I receive movies.

Because we read faster than actors speak, when subtitles are on I often feel one step ahead of the movie.

And, while subtle, that lowers my suspension of disbelief. I'm more aware of the artifice, that they're following a script (even if they may have been ad-libbing on set)

Maybe it's just me, but without subtitles, every line feels just that tiniest bit more surprising, immediate. So I try, if possible, to not use subtitles on my first watch-through of a movie I'm excited about.

I tend to agree, which makes me sad because I like sub-titles to avoid missing anything (especially when we can’t crank up the volume because the kids are asleep).

I’ll still use them when I feel the pros outweigh the cons, like for example when the dialogue is badly mixed or for hard-to-understand accents, but I think I’ll avoid them more for comedy, where timing matters, and for the more immersive films that I’m seeing for the first time.

💡🔗💡 Friend-of-the-show and Extra-Deluxe supporter (💚💚💚💚💚 🥃 🇨🇭) John Mihaljevic posted a thought-provoking tweet:

John Mihaljevic @JMihaljevic

We are moving toward a world in which each of us curates his or her own sources of community. Traditional communities (ethnic, national, religious) will persist, and even their significance may persist. Meanwhile the significance of our chosen communities will increase manifold.

It's the power of the interest graph.

Bringing people together from around the world based on interests, creating "bioreactors" for rapid growth/idea-sharing, which was never possible before on anything close to this scale, and certainly not for the full long-tail of interests.

Pre-internet, millions and millions of people with unusual interests/skills/passions were alone, with almost nobody to share/learn from for their whole lives...

Twitter is the best interest graph right now, but the internet as a whole also acts like one. Before Twitter, people found each other on Usenet, discussion forums, blogs, and IRC channels...

I grew up on music and tech forums, posting every day, making close friends that I’ve never met.

💚 🥃 4.95% of paid supporters! So close!

Reminder: If we get to 5%, I’m doing an Ask Me Anything podcast.

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Investing & Business

Amazon’s SQ-FT footprint overlaid on Toronto

Friend-of-the-show Braden Dennis:

If you took Amazon's footprint and placed it on top of Toronto.

600M sq ft = 55.7 km2

Constellation Software Q4

There’s not a ton to say here, it’s a low-drama company, but here’s what stood out to me:

Organic growth ex-FX is doing well, especially in the all-important “Maintenance & recurring” line where most of the value is created. Comps were easier in 2020, but even taking that into account, it was strong.

FY21: "A number of acquisitions were completed for total consideration of $1,517 million including holdbacks, contingent consideration and amounts related to Topicus B.V"

That’s a huge confirmation that their efforts at scaling up and decentralizing M&A are working. Braden Dennis made this convenient graph:

The income and cash flow statements are noisy because of the Topicus spin’s strange structure (for tax efficiency), but that’ll make its way through the snake 🐍 and things will become clearer again. You can see from the top line (+29% FY, +27% Q4) that things are humming along quite well.

And the cherry on top: Subsequent to Q4 they did $150 million in acquisitions.

David Tepper 🏀⚽️

Friend-of-the-show and supporter (💚 🥃) Frederik ‘Neckar’ (he’ll always be Neckar to me) wrote a good piece on Tepper’s ups & downs:

• David Tepper: The King of Bouncing Back

from Appaloosa’s inception in 1993 until its conversion to a family office in 2019, Tepper compounded its capital at more than 25 percent net of fees.

Ports 🛳 📦 🚚

Just imagine if the US decided to run its ports as strategic national assets rather than leave them up to municipalities, and did a "cut & paste" on the Port of Rotterdam or Singapore when it comes to tech and process.

My point isn't government vs no government, it's that right now the assets are being steered at the wrong level of government.

Operations can be by the private sectors, but maybe high-level long-term strategic planning should be with a national rather than municipal lens?

A city controlling an asset crucial to the whole country is like the US Air Force being controlled by Chicago. The mayor of Long Beach can’t be expected to think about supply chain issues in Texas or Detroit. They want to be re-elected locally, not nationally, and that’s where most of their thinking surely remains focused.

Rotterdam, Netherlands.

I can dream, can't I?

🚙 Cash for Clunkers, Redux 🚗

Modest Proposal:

When the book is written on the pandemic economy, there will be a bunch of crazy charts like oil going negative. This one of used car prices definitely will get a starring role as well. Love the phrase "upward journey" to describe it.

Microsoft Looking to Acquire Security Firm Mandiant 🐙

Microsoft is kind of like an octopus, with the big brain being Azure, and the independent tentacles doing their own things…

The fact that the gaming tentacle announced a ˜$70bn acquisition isn’t slowing down the security tentacle from looking into a deal with Mandiant (market cap of around 4.5bn after jumping 20%+ on these rumors).

Adding Mandiant would build up Microsoft’s arsenal of products for protecting clients and responding to cybersecurity threats. The software giant bought two smaller cybersecurity companies last year, and said last month that it had amassed $15 billion in security software sales in 2021, up almost 45% from a year earlier. The company last year named former Amazon.com Inc. cloud executive Charlie Bell to oversee its security efforts

FireEye connection:

Mandiant became a standalone company again last year when FireEye Inc. -- which had acquired Mandiant in 2013 -- sold its eponymous security-product business for $1.2 billion to a consortium led by Symphony Technology Group. While FireEye’s products focus on security for networks, email and cloud systems, Milpitas, California-based Mandiant’s work is primarily in incident response and cyber-intelligence cases. (Source)

🇨🇦 🧍‍♂️🧍‍♀️🤰🧍‍♂️🧍‍♀️🧍‍♂️🧍‍♀️🧍‍♂️🧍‍♂️🧍‍♀️🧍‍♂️🧍‍♀️🧍‍♀️🧍‍♂️🧍‍♀️…

Canada's population grew at almost twice the pace of other G7 countries from 2016 to 2021, thanks in large part to immigration... There are approximately 1.8 million more people living in Canada than there were five years ago, a growth rate of 5.2% between 2016 and 2021. (Source)

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Science & Technology

NIMBYEnvironmental Group opposes Hydro-Québec Transmission line bringing wind & hydro power to NYC

How did we get to this point?

Are people so bad at thinking that they don’t understand that by blocking everything that isn’t perfect — which is everything — they just de facto choose the oldest and dirtiest things that just happened to have been built before everything could be blocked and/or better alternatives existed?

In a Feb. 7 letter to the New York Public Service Commission, the environmental group Riverkeeper said building the high-voltage direct-current line could cause environmental harm and may not reduce carbon emissions. The line would run about 330 miles from the Canadian border and into the city primarily under the Hudson River and along existing rail lines.

"Hydropower in general is not low carbon," the group wrote. "Dams transform natural landscapes into reservoirs. Many natural landscapes function as carbon sinks, and their inundation not only causes a loss of these natural sinks, but also results in a large and ongoing flux of greenhouse gas emissions."

Since the contract term for the transmission line goes beyond 2040, those emissions directly violate the New York State Climate Action Council Draft Scoping Plan, which targets generating 100% of electric power from zero-emissions sources by that year, Riverkeeper said. [...]

In Maine, Hydro-Québec recently suspended work on the Canadian segment of a transmission project to carry 1,200 MW of hydropower to New England. The $1 billion New England Clean Energy Connect project stalled following a Maine referendum in which 59% of state voters rejected the transmission project.

This is all so screwed up.

I’m weary from watching people punch themselves in the face and making life easier for coal and gas plants by shutting down nuclear reactors and blocking hydro transmission lines…

Oh, and this group had previously agreed to the project, but its word is clearly not worth much:

Riverkeeper acknowledged it previously negotiated a settlement with the transmission project's developers as an "essential alternative" to the Indian Point nuclear plant, the last reactor of which retired in 2021, the group said it has "had the courage to take a second hard look at this project." (Source)

‘Courage’. 🤦‍♀️

‘Macron announces France to build up to 14 new nuclear reactors’ 🇫🇷 ☢️ 🇫🇷

Meanwhile in France:

President Emmanuel Macron has announced France will build up to 14 new reactors [...] Nuclear energy currently provides about 70 per cent of French electricity, more than in any other country. [...]

"What our country needs, and the conditions are there, is the rebirth of France’s nuclear industry," Macron said.

Promising to accelerate the development of solar and offshore wind power in France, Macron also announced he wanted to extend the lifespan of older nuclear plants to 50 years or more from 40 years currently, provided it was safe. (Source)

Methane Leaks 💨

Not one, but *two* different pieces on the stinky killer, methane:

A satellite finds massive methane leaks from gas pipelines

"No one expects that pipelines are sometimes wide open, pouring gas into the atmosphere," he says.

Yet they were. Over the course of two years, during 2019 and 2020, the researchers counted more than 1,800 large bursts of methane [...]

The researchers consulted with gas companies, trying to understand the source of these "ultra-emitting events." They found that some releases resulted from accidents. More often, though, they were deliberate. Gas companies simply vented gas from pipelines or other equipment before carrying out repairs or maintenance operations. [...]

The countries where bursts of methane happened most frequently included the former Soviet republic of Turkmenistan, Russia, the United States, Iran, Kazakhstan and Algeria. Lauvaux says they found relatively few such releases in some other countries with big gas industries, such as Saudi Arabia.

According to the researchers, the large releases of methane that they detected accounted for 8-12% of global methane emissions from oil and gas infrastructure during that time. (Source)

Next is a study and residential natural gas appliances:

Methane and NOx Emissions from Natural Gas Stoves, Cooktops, and Ovens in Residential Homes

Natural gas stoves in >40 million U.S. residences release methane (CH4)─a potent greenhouse gas─through post-meter leaks and incomplete combustion. [...]

More than three-quarters of methane emissions we measured originated during steady-state-off. Using a 20-year timeframe for methane, annual methane emissions from all gas stoves in U.S. homes have a climate impact comparable to the annual carbon dioxide emissions of 500 000 cars.

‘Paralysed man with severed spine walks thanks to implant’

Science FTW:

It is the first time someone who has had a complete cut to their spinal cord has been able to walk freely. [...]

Michel Roccati was paralysed after a motorbike accident five years ago. His spinal cord was completely severed - and he has no feeling at all in his legs.

But he can now walk - because of an electrical implant that has been surgically attached to his spine.

Someone this injured has never been able to walk like this before.

The researchers stress that it isn't a cure for spinal injury and that the technology is still too complicated to be used in everyday life, but hail it nonetheless as a major step to improving quality of life.

More details in Nature.

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The Arts & History

St. Paul & The Broken Bones

I was listening to a Nathaniel Rateliff live album that I had somehow never noticed even existed (“Live at Red Rocks”), and decided to use the “similar artists” feature on Apple Music to explore a bit.

I found St. Paul & The Broken Bones¹, and ended up listening to their 4 albums one after the other and really enjoying them (with the caveat that this is my first impression and can change).

The sound is kind of retro-soul, kind of bluesy, big horns, etc. Reminds me a bit of the band Próxima Parada too.

1. I found a way to use a single link for multiple platforms. Let me know if you like it.