269: Ads on Netflix, Amazon vs Shopify, Google Aquila, Blue Collar to Tech Jobs, Microsoft & In-Game Ads, Gavin Baker, and Farming Logistics

"Everybody’s going to be a Facebook moderator?"

Our acts can be no wiser than our thoughts. Our thinking can be no wiser than our understanding.

—George S. Clason

🧠 ⚙️⚙️ I heard an interesting expression on a podcast recently. I don’t remember exactly who said it, but she said something like:

 I’m an external processor, not an internal one.

They weren’t talking about computers. She meant that some people will process things that happen to them, emotions, trauma, good news, life changes, whatever, in an internal way, while others will process them externally.

This has a ring of truth to me.

Some people will talk with their friends, or go work out until they dissolve in a puddle of sweat, climb a mountain, do some rounds of kick-boxing, whatever.

Others will go in “leave me alone, I need to deal with this” mode, go somewhere quiet to let their mind run through things and (hopefully) find a new stable state to settle on.

It’s probably not binary — not 100% one or the other — but on that spectrum, I know I’m definitely more internal than external. Maybe 85/15.

Have you ever noticed how you deal with things? In which direction do you lean most?

😫📝 ‘Hide not Slide’, who writes Front Month, recently shared how he became burnt out writing his newsletter on top of having a ‘real’ job:

• Burnout, The Promised Land & Taking A Break

Most people have no idea how much work goes into this type of project (it’s easy to imagine writing *one* piece, hard to imagine writing *hundreds*), and especially how it's a marathon that often has to be run at sprinting pace.

Many creators will only talk about the puppies and rainbows in public (🐶🌈), and not the more difficult times, so this is a useful and necessary testimonial.

I hope Mr. Hide recharges his batteries promptly and finds a sustainable balance for his work & projects!

🐞🛀 The psychology of ladybugs is interesting.

My wife, who’s not a big fan of insects generally (especially not spiders — I know they’re not technically insects, but I mean bugs generally), will treat a ladybug discovered in the house differently than some ant or millipede.

What a difference a red shell with black dots makes!

If you look at a ladybug up close from the bottom or imagine it with a black shell, you quickly realize how the illusion of ‘cuteness’ is pretty thin.

This reminds me of how people are treated differently depending on how attractive they are, and the huge halo effect tied to this.

Intuitively, we may think that only very unattractive people feel like their life goals are hindered by their appearance, but at the other extreme, I’m reminded of an article I read a few years ago about a woman having trouble at work because she was deemed too attractive.

It sounded like someone who could probably have been a model, but had no interest in that and had a regular office job. But management claimed she was affecting the productivity of the whole office because she was too attractive (or so was claimed — I don’t want to litigate this specific story, I just want to explore the thought in general). It sucks and it’s really unfair to her — but I guess, as much as we try to deny and contain it, we’re still just a bunch of apes wearing clothes…

Imagine the most attractive person you can think of — with movie-superstar looks, 20/20 on magnetism and charisma — and now imagine that they’re working in the cubicle next to you every day. Would that be weird? I’d like to think it would be fine and I’d just get over it, but I don’t know. Would it be harder to focus..? ¯\_(ツ)_/¯

💚 🥃 If you make just one good decision per year because of something you learn here (or avoid one bad decision — don’t forget about preventing negatives!), it'll pay for multiple years of subscriptions (or multiple lifetimes).

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🏦 💰Liberty Capital 💳 💴

👨🏻‍🔧→👨‍💻 ‘Blue-Collar Workers Make the Leap to Tech Jobs, No College Degree Necessary’

One more reason why we’ll need more automation to do some blue-collar jobs where there’s a huge shortage of labor (especially in the US if immigration isn’t revived):

As the labor market reorders, more Americans are making the leap from blue-collar jobs and hourly work to “new collar” roles that often involve tech skills and come with better pay and schedules.

More than a tenth of Americans in low-paying roles in warehouses, manufacturing, hospitality and other hourly positions made such a switch during the past two years, according to new research from Oliver Wyman, a management consulting firm that surveyed 80,000 workers world-wide between August 2020 and March 2022. Many of the new jobs are in software and information technology, as well as tech-related roles in logistics, finance and healthcare.

Everybody’s going to be a Facebook moderator?

Thousands of businesses are in the thick of a digital revolution that is requiring them to fill new roles and adapt existing ones to integrate more data and automation.

Altogether, these forces have led to a giant shock to the workforce. “I don’t think we’ve seen a talent transition of this magnitude, really, since the disruption of World War II”

“On-the-job training vs college degree” is often a false dichotomy, because even if you have a degree, you still usually need to learn the *actual job* once you start, it’s not like you can hit the ground running just because you spent a few years sitting in class:

In January, Mr. Ayala started as a business development associate at Okta Inc., which provides tools that allow secure access to business applications. Once hired, he learned the technology behind the company’s identity-verification products, plus skills like making PowerPoint presentations. [...]

Mr. Ayala said he relishes the trappings of corporate life at the office, including standing desks, an on-site gym and free snacks. Only a year ago, he was working out of his car, selling cable plans door to door and relying on gas stations and fast-food places for bathroom breaks. [...]

Okta said it removed college-degree requirements for a number of sales positions last year to cast a wider recruiting net. It also formed a new business development associate program that Mr. Ayala joined to bring in and develop such candidates. (Source)

That’s good, we need more of that.

People who want to work should have more paths to do so, and employers should care more about whether people can learn and do the job, rather than diplomas and acronyms next to names.

Part 3: 📺 📢 Netflix opens door to ad-supported tier

Reed Hastings on Netflix’s Q1 call said:

Related to that, Greg has done great work on the price spread. And one way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. And those who follow Netflix know that I've been against the complexity of advertising and a big fan of the simplicity of subscription.

But as much I'm a fan of that, I'm a bigger fan of consumer choice and allowing consumers who would like to have a lower price and our advertising tolerant get what they want makes a lot of sense. So that's something we're looking at now. We're trying to figure out over the next year or 2. But think of us as quite open to offering even lower prices with advertising as a consumer choice. [...]

We're probably not that advanced, but now, I think it's pretty clear that it's working for Hulu. Disney is doing it. HBO did it. I don't think we have a lot of doubt that it works, that all those companies have figured it out.

The possibility of this was discussed in editions #263 and #268.

On the roll-out details and how much of the stack they are interested in keeping in-house:

It's not a short-term fix because once you start offering a lower price plan with ads as an option, some consumers take it. And we've got a big installed base that probably are quite happy where they are. So think of it as it would phase in over a couple of years in terms of being material volume.

And in terms of the profit potential, definitely, the online ad market has advanced. And now you don't have to incorporate all the information about people that you used to. So we can be a straight publisher and have other people do all of the fancy ad matching and integrate all the data about people. So we can stay out of that and really be focused on our members creating that great experience. And then again, getting monetized in a first-class way by a range of different companies who offer that service.

Here’s Jeff Green in 2018 (CEO and founder of The Trade Desk) predicting this:

Green believes Netflix will follow Hulu’s lead soon enough, offering a cheaper ad-supported option alongside its existing ad-free subscriptions, because it needs to compete with the free-by-default YouTube. And he told Recode’s Peter Kafka that he’s said as much to Netflix’s departing CFO David Wells (who sits on the board of The Trade Desk) and other executives at the company.

“They’ve envied YouTube’s international reach for a very long time, where even less than two years ago, 80 percent of subscribers for Netflix were in the U.S.” Green said. “Our median household income’s at $50,000-ish, roughly, a year ... compare that to all the places where there’s growth in the world, which is also where advertisers are willing to pay ahead. I don’t think there’s any chance that they can catch up to YouTube, whose geographical distribution is exactly inverted, which is 80 percent comes from outside the U.S., unless they go ad-funded in the same way that YouTube is.”

NFLX 0.00%↑

Microsoft working on in-game digital ads in free-to-play titles 🎮 👾

Microsoft wants to let advertisers place ads inside free-to-play Xbox games, and it is currently identifying adtech companies who can create the in-game inventory and work with ad agencies to place the ads

Those sources said those ads would show up as, for instance, digitally rendered billboards in a car racing game. [...]

While ads in mobile games are common, ads in console games are rare. Xbox currently allows limited forms of advertising. Right now, advertisers can buy ads on the Xbox dashboard, and they can buy in-game ads on certain games [...]

The two sources said the tech giant did not seem intent on taking a cut of ad revenue, and that it seemed more interested in building out the Xbox ad network. Ad revenue will be shared by the game developer and the adtech company that places the ad, those sources believe. (Source)

Free-to-play isn’t free-to-build, so game makers have to monetize somehow. All those artists and coders don’t work for loot boxes.

Selling digital goods (skins, items, etc) is one way to do it. I suppose that allowing ads can offer some flexibility, though I sure hope they’ll find a balance that is tasteful and doesn’t ruin the games.

There’s certainly enough games out there that if some go too far, gamers will vote with their feet… MSFT 0.00%↑

🗣 Interview: Gavin Baker, Atreides 🗡

Long interview:

• Gavin Baker: «There Is No Playbook»

(I rarely see those French-style quotemarks online)

Some highlights:

During the first twenty years of my career, I was always very negative on cybersecurity because it was one of the very rare industries where scale was a massive disadvantage rather than an advantage. Before the rise of artificial intelligence, human beings were writing software, it was a very manual process. And, as a cybersecurity company got bigger, hackers would start to optimize more and more for hacking that particular cybersecurity company’s software. As a result, the performance of that company would go down and it would lose customers. AI changed all of that because if the AI learns from the attacks, then you get better with scale. So that’s another area I’m excited for. Antonio Gracias, a fantastic thinker, has this great phrase «pro-entropic». To me, cybersecurity companies are pro-entropic. They benefit from rising chaos in the world.

Interesting take on cybersecurity. I remember saying similar things to my friend MBI last year while we were walking along the Ottawa river…

Generally, I’m negative on semiconductors on a short-term basis. Nassim Nicholas Taleb said it best: «I’ve seen gluts not followed by shortages, but I’ve never seen a shortage not followed by a glut». We haven’t seen a true semiconductor capacity cycle in more than twenty years. The last time you had this kind of ramp in semiconductor capital expenditures, their stocks imploded. It was not until 2015, that semiconductor wafer fab equipment spending reached its 2000 peak. What’s more, government subsidies like the Chips Act are geopolitically very important for America and Europe. But by definition, when supply in any industry goes up for geopolitical rather than economic reasons, it’s very negative for the supply and demand balance in that industry.

📦📦📦 Amazon 1P & Amazon 3P & Shopify 📦📦📦

Ben Evans: “$175bn of GMV makes Shopify roughly 45% of the size of Amazon Marketplace.” AMZN 0.00%↑

When will GPU futures trade in Chicago? 🤔

Kourosh Shafi @kouroshshafi

NVDA and AMD SKUs are on average selling 50% above MSRP

NVDA 0.00%↑ AMD 0.00%↑

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🧪🔬 Liberty Labs 🧬 🔭

‘The Incredible Logistics Behind Corn Farming’

If your job is not agriculture, you probably don’t realize how complex and sophisticated growing corn at scale can be these days. It’s also interesting to see how much of an advantage to the US corn belt the Mississippi is.

It reminds me of this podcast about precision agriculture:

• Precision Agriculture and Angry Optimism

There’s plenty of innovation in agriculture, but the challenge is sometimes to actually deploy these best practices and use the techniques that we know work at growing more food with fewer energy inputs while protecting arable land, etc.

Friend-of-the show Doomberg (🟩 🐓) also had a piece about the perfect storm currently hitting farmers worldwide (with some better able to withstand it than others):

• Farmers on the Brink

after spending the past two weeks traveling across the US Midwest and conferring with our contacts in the agricultural sector, even we are a little spooked by what we’ve learned. In a financial crash, the correlation between all asset classes converges to one. The coming crash in global food supply will be driven by a similar phenomenon across virtually every input into farming – they are all spiking to historic highs simultaneously, supply availability is diminishing across the spectrum, and the time to reverse the worst of the upcoming consequences is rapidly running short.

They discussed the piece on this podcast, if you prefer to listen.

⚡️ ‘Cumulative growth in electricity generation since 2000, in terawatt hours’ (Hydro & Nuclear Edition) 🔌

🐇 Cloudflare Speed Test (with jitters!) 🐢

I think Speedtest.net is probably the most ubiquitous way to test an internet connection. For the past few years, I’ve been using Fast.com, because, well, it’s faster (it’s made by Netflix, btw).

I recently found out that Cloudflare has created its own speed test page. It provides more granular information and includes jitter, which is the variation between ping measurements. NET 0.00%↑

Too often, people will focus too much on raw bandwidth and not enough on latency and jitter; a very fat pipe may still give you a mediocre internet experience if latency and jitter are very high.

Making jitter more visible and getting people used to measuring it is probably a good way to pressure ISPs to improve their game on that front, so kudos to Cloudflare.

I hope Speedtest and Netflix will add jitter metrics to their speed testing pages.

Google improves on Ethernet with Aquila networking stack

Frustrated by the limitations of Ethernet, Google has taken the best ideas from InfiniBand and Cray’s “Aries” interconnect and created a new distributed switching architecture called Aquila and a new GNet protocol stack that delivers the kind of consistent and low latency that the search engine giant has been seeking for decades.

Ooh! This sounds cool!

Aquila, which is the Latin word for eagle, explicitly does not run on top of – or in spite of – the Ethernet, IP, or TCP and UDP protocols that underpin the Internet. [...]

Forget all that. Google threw it all out and created what it calls a cell-based Layer 2 switching protocol and related data format that is not packets. A cell in fact, is smaller than a packet, and this is one of the reasons why Google can get better deterministic performance and lower latency for links between server nodes through the Aquila fabric. The cell format is optimized for the small units of data commonly used in RDMA networks, and with the converged network functionality of a top of rack switch ASIC and a network interface card, across the 1,152 node scale of the Aquila interconnect prototype, it can do an RMA read in an average of 4 microseconds.

They built both hardware and software to do this. This article goes into a lot of depth into it, and I don’t understand most of it, but what I do understand is really cool

In early tests, the Aquila fabric was able to have tail latencies of under 40 microseconds for a fabric round trip time (RTT in the network lingo), and had a remote memory access of under 10 microseconds across 500 host machines on a key-value store called CliqueMap. This tail latency is 5X smaller compared to an existing IP network, even under high load.

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🎨 🎭 Liberty Studio 👩‍🎨 🎥

🖥 ‘Beyond the Infinite Two Minutes’ (2020, Japan 🇯🇵) ⏱

Original title: Droste no hate de bokura.

I forgot who recommended this one to me, but I’m pretty sure it was a reader, so thank you if it was you! 👋

It’s a low-budget Japanese film that is kind of like an old-school science-fiction short-story. There’s a neat premise — what if two monitors connected together in a video call were actually showing you the future & past, 2 minutes apart? — and they do a kind of fugue on it, exploring the idea and taking it further and further.

The acting isn’t amazing, there are no fancy special effects, Bourne-style action scenes, etc.

But it’s a fun ride that has many little “ah-ha!” and delightful moments. They didn’t try to make it airtight and realistic (those long power cords!), but rather chose their battles and focused on the fun premise.

I like how they tried to make it look like a single continuous shot, and used very small handheld cameras, giving you a better 360-degree sense of being in the room with them, rather than a soundstage.

You can see part of the ‘making-of’ during the end credits — at first, it looks like they’re shooting it on iPhones, but I read that they used the phones as monitors, and it was a different small camera doing the actual shooting.

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