248: Heico, Second Option Bias, Big Tech & Russia, Microsoft on Cyberwar Frontlines, Exxon, Anti-Nuclear NGOs, On-Prem Incentives, and Thoughts on Ukraine
"I'm calling it now"
You make a living from what you get.
You make a life from what you give.
🕸 🧭🕷 🐜 🐝 I wonder how spiders navigate their environment?
For example, if a spider has a web or a nest somewhere, and you pick it up and move it by, say, 10 feet somewhere close by. How is it going to find its way back? Does it navigate by sight? Does it have some kind of crude 3D map of the immediate environment that it keeps in memory? By smell? By “counting” steps and keeping track of orientation somehow? Something else?
Or is it just going to stay lost because it didn't make the trip itself, so it can’t somehow “reverse” it, and that scrambles its memory of location? If you move a spider, does it basically have to start its life from zero from the new location?
I guess this also raises a bunch of questions about bees and ants... I know some of the keywords, like “pheromones” and communication via "dances", but that’s not the same as actually understanding how they really do it with such limited neurology.
🇺🇦 I know some of you will look at this edition and be like, ‘Liberty, you’re being a little intense about this Ukraine stuff. It’s a lot.’
The way I look at it, I see people get really intense about sports or politics, about Elon Musk (great or terrible? let’s talk about it every day for years like TSLAQ did), or crypto maximalists vs nocoiners, COVID measures, iOS vs Android, or whether Kanye is just a dick or also a clinical malignant narcissist.
Well, this war is my thing to be intense about right now. If I can’t get a bit intense about a war that has changed the whole world in a week, what can I get intense about? Only human ¯\_(ツ)_/¯
🇷🇺 I want to make one thing clear, as context for anything I say about the invasion of Ukraine:
The vast majority of Russians are *victims* in this too — whether dying in Ukraine because of Putin or suffering in Russia because of him — dictators *always* hold their populations hostage and make their lives much worse than they have to be. My problem is with Putin, not Russians, and I wish them the best.
People are people, wherever they live — Russia, China, Iran, North Korea. The average human is pretty much the same everywhere.
Russia is a pretty poor country (and poorer by the minute thanks to Putin).
Imagine if they could use the GDP that they do have to make the place better, investing in things that diversify away from commodities and in better lives for their citizens, rather than bombs & tanks, mega-yachts & luxury villas, and offshore accounts..?
☎️ I’m calling it now:
I see ZERO ways that Putin can "win" the war in Ukraine (by win I mean come out better off than he went in). The only question is: How much death & suffering on both sides because of him. Russia cannot permanently militarily occupy a country of 40m+ people that don't want them there, it will bankrupt them from the cost and sanctions. They cannot install a puppet regime and leave. The puppet will be assasinated at the first opportunity and the regime overthrown. The mythos of a free Ukraine is now stronger than ever among the population; whoever used to be on the fence is now deeply anti-Russia. At this point, it's only about how deep Putin digs the hole for Ukraine and Russia. But winning is not in the cards for him.
🕰 📰 Historically, we’ve thought of bad things as having happened in the past, because by the time they got to us, plenty of time had elapsed.
While that’s still often true today, there’s also bad stuff that we’re seeing happen in real-time or close-to-real time. That started trickling in decades ago with the television era, but it was still fairly rare to catch something massive live, as-it-happened. Now the floodgates have fully opened… 😐
📚 I heard from friend-of-the-show and supporter (💚 🥃) Jimmy Soni that the 10 signed copies of his new Paypal book have been mailed to the winners of the giveaway.
Expect them in your mailbox in however-long-it-takes-to-ship-from-the-US
💚 🥃 Still no plea. Just know it means the world to me if you support this weird project that we’re building together, and that I can only do it thanks to amazing paid supporters:
Liberty’s Highlights is reader-supported. To support my work, consider becoming a free or paid subscriber. 💛
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Investing & Business
22-year history of the Russian Ruble
Don’t be fooled by the line going up and to the right… This isn’t a good chart.
And don’t be confused by the similar-looking words…
The currency of Russia: The Ruble (₽)
The economy of Russia: Rubbles (🏚️)
(To be clear, the obliteration of the Russian economy is the responsibility of only *one* person: Putin. If he hadn’t picked up the phone and sent the order to invade, his country wouldn’t be time-travelling to the late-1980s right now..)
Second Option Bias
Thanks to Dave Waters of Alluvial Capital for sharing this one when I was discussing what I call “contrarian disease” (people forget that you have to be contrarian AND right, not just try to sound smart by saying any random contrary thought):
Second-option bias is a well-documented phenomenon among fringe and counterculture groups in which they assume that any widely-held opinion among the general population must be untrue, and therefore, the prevailing contrary opinion must be right. It could be considered a form of "hipsterism" in which it is assumed that anything popular is wrong, but the workings behind the idea are more complex.
Second-option bias is the prevailing cause of crank magnetism [“Crank magnetism is the condition where people become attracted to multiple crank ideas at the same time”] and is an important mechanism in conspiracy theories, pseudoscience, and other fields where a person feels their views and ideas are being marginalized by society. (Source)
As Dave points out, this is “Rampant amongst investors. They fail to account for base rates. The conventional wisdom is correct very, very often. That’s why it is the conventional wisdom.”
Update: Mat Roiss has a good post today on ‘Contrarian disease’.
🛩 Heico Q4 Mini-Tiny-Highlights 🛰
Yea yea, fiscal Q1…
Our net debt-to-EBITDA ratio improved to 0.22x as of January 31, '22
I wonder if they'll ever get to do what they say they're ready to do, which is to go up to 5-6x if they find the right elephant(s)…
you realize that 90% of all acquisitions are not successful… it's easy to make acquisitions, it's easy to buy but it's not so easy to make them work out. And our model requires us to buy a company, continue it and keep it in the portfolio virtually forever.
Successful serial-acquirers have expertise that isn’t easy to replicate…
Big Tech & Russia, something’s gotta give edition
Russia's Foreign Ministry suggested on Tuesday that a system should be created to hold Western tech companies accountable for "inciting war"
Google and Meta are among the few tech companies that are facing possible restrictive measures in Russia after failing to open offices and apply other measures that are required by the country's communication law, according to Reuters.
Russia's state communications agency also demanded tech companies stop discriminating against Russian media in Europe, according to the report. (Source)
Looks like the internet is fracturing some more, and Big Tech may end up leaving or being booted out of the country as it grows ever more isolated and paranoid about controlling information and keeping its citizens fed a steady drip of Orwellian propaganda.
And before I forget: Hey Apple and Microsoft, stop selling products in Russia.
Update: After I wrote the above, I saw this:
Apple stops all product sales in Russia, stops exports to Russia sales channels, is pulling RT News and Sputnik News from App Stores outside of Russia, and is disabling traffic and live incidents in Apple Maps in Ukraine. [Also,] payment platform Apple Pay has been “limited.”
According to Stephen Nellis: “The move was voluntary - it wasn't required to do so by U.S. sanctions imposed last week”
Microsoft on the frontline of cyber-warfare
Speaking of Microsoft, they were kind of first on the cyber-war frontline in Ukraine:
Last Wednesday, a few hours before Russian tanks began rolling into Ukraine, alarms went off inside Microsoft’s Threat Intelligence Center, warning of a never-before-seen piece of “wiper” malware that appeared aimed at the country’s government ministries and financial institutions.
Within three hours, Microsoft threw itself into the middle of a ground war in Europe — from 5,500 miles away. The threat center, north of Seattle, had been on high alert, and it quickly picked apart the malware, named it “FoxBlade” and notified Ukraine’s top cyberdefense authority. Within three hours, Microsoft’s virus detection systems had been updated to block the code, which erases — “wipes” — data on computers in a network. [...]
I’m sure similar scenes took place inside of Zscaler, Crowdstrike, SentinelOne, Cloudflare, and other security firms…
[Anne Neuberger, the White House’s deputy national security adviser for cyber] asked if Microsoft would consider sharing details of the code with the Baltics, Poland and other European nations, out of fear that the malware would spread beyond Ukraine’s borders, crippling the military alliance or hitting West European banks. [...]
After years of discussions in Washington and in tech circles about the need for public-private partnerships to combat destructive cyberattacks, the war in Ukraine is stress-testing the system. [...] Even if American intelligence agencies picked up on the kind of crippling cyberattacks that someone — presumably Russian intelligence agencies or hackers — threw at Ukraine’s government, they do not have the infrastructure to move that fast to block them.
It’s kind of incredible to think that the gov’t has these huge SIGINT and cyber-attack capabilities, but when it comes to defense, the first line are corporations like Microsoft, Apple, Google, Facebook, Crowdstrike, Zscaler, Cloudflare, etc…
“We are a company and not a government or a country,” Brad Smith, Microsoft’s president, noted in a blog post issued by the company on Monday, describing the threats it was seeing. But the role it is playing, he made clear, is not a neutral one. He wrote about “constant and close coordination” with the Ukrainian government, as well as federal officials, the North Atlantic Treaty Organization and the European Union. [...]
Company executives, some newly armed with security clearances, are joining secure calls to hear an array of briefings organized by the National Security Agency and United States Cyber Command, along with British authorities, among others. But much of the actionable intelligence is being found by companies like Microsoft and Google, who can see what is flowing across their vast networks.
Welcome to the 21st century, guys. You can’t stay neutral, even if you try — Russia will try to hack you even if you’re trying to just mind your own business…
‘Stoxx to axe 61 Russian companies from its indices’
It turns out that indexing is active, not passive… (shocking, I know)
The list includes most leading Russian companies, such as Gazprom, Lukoil, Sberbank, Rusal and Aeroflot.
Overseas-listed American and global depositary receipts issued by Aeroflot, Sberbank and X5 Retail are also on the list of index constituents that will be deleted on March 18. (Source)
Hey MSCI and S&P Global, what’s up?
🛢 Exxon literally peaces out of Russia ✌️🕊
ExxonMobil to discontinue operations at Sakhalin-1, make no new investments in Russia
ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.
Glad they didn’t use the passive, weasely voice that so many corporations use.
Exxon isn’t exactly my fave company in the world, but good for them on this one!
Science & Technology
Putin funding anti-nuclear NGOs in Europe ☢️
Surprising probably no one, Putin (via Gazprom and likely other state-controlled entities, as well as suitcases of cash, no doubt) has been funding environmental NGOs in Europe that oppose nuclear power:
Kâplan @KaplanBen_FrDominique Reynié : "On a retrouvé des financements de Gazprom en particulier dans des ONG écologistes qui ont fourni des ministres à certains pays d'Europe comme la Belgique et qui ensuite sont embarqués dans une sorte de retour d'ascenseur en défendant la sortie du #nucléaire." https://t.co/PzvAdjb43F
On-Prem vs In Cloud, Incentives 101 Edition
Kanjun adds: “I so resonate with this - with a ton of on-prem GPUs, we really feel like our job is to keep the GPUs busy, and this subtly leads to thinking about how to launch more experiments, as well as constantly running our hyperparameter optimizer.”
I had never thought about it this way before, but it makes sense — a change in mindset, from playing defense to playing offense 🤔
Russia & Canada, Oh yeah, the Earth is round edition…
We in Canada tend to think of Russia as “on the other side of the world”, because maps show it as way over there. I think we forget that if you look at the Earth from the top, it’s not as far as it may seem, and we share a long Northern border.
What’s a ‘thermobaric’ bomb?
I think a lot of people are learning this word lately — and wish they didn’t have to 😢
A vacuum bomb, also called an aerosol bomb or fuel air explosive, consists of a fuel container with two separate explosive charges.
This can be launched as a rocket or dropped as a bomb from aircraft. When it hits its target, the first explosive charge opens the container and widely scatters fuel mixture as a cloud.
This cloud can penetrate any building openings or defences that are not totally sealed. A second charge then detonates the cloud, resulting in a huge fireball, a massive blast wave and a vacuum which sucks up all surrounding oxygen. The weapon can destroy reinforced buildings, equipment and kill or injure people.
“These pressure/vacuum surges (up to 427 pounds per sq inch) cause a ripping effect on soft materials (such as airplane skin, radar surface, human lung tissue). Walls and surfaces within the affected area do not necessarily shield victims, rather cause multiple pressure waves, which amplify the tearing effects and can topple structures.”
"A secondary effect is high-temperature heat — 2,500-3,000° C. An incomplete explosion renders a near-devastating effect, wide-area long-duration high-temperature flame,” it continues. “Even those outside of the blast area will be rendered ineffective with debilitating mental and physical trauma.”
The Arts & History
Adam Savage sits down with the Corridor VFX artists
Savage worked in old-school film special effects for years before Mythbusters, and in this video we get to see some amazing animatronics and miniature VFX work.
Some of these puppets operated by a whole team of people who need to be perfectly synched while filming things at a low framerate and then speeding it up is just 🤯
The mouth movements on that giant plant are better than on a lot of modern CGI, and they did it with a freaking puppet!
Lots of stuff I had never thought about before in this one — I guess I was too young to really question what I was seeing when I saw these films in the late 80s/early 90s…
Interview: Colonel John Spencer on Urban Warfare
File this one under: History-as-it-happens.
(at the end, he mentions his website being down from a DDoS… I messaged him the details of how Cloudflare would protect their site for free, I hope that’s helpful and they get the site back online — he just replied “thanks”)