283: 100 Big Tech Employees vs OPEC, TSMC + Apple, March 2020 vs Now, Cloudflare's Platform-Building, Buffett, Dan McMurtrie, SpaceX, and Hiring Freeze
"George, I'm sorry"
Progress is made by trial and failure; the failures are generally a hundred times more numerous than the successes; yet they are usually left unchronicled.
🔪🫀🩸 Ever heard of the ‘Fisher Protocol’?
It’s quite clever and reveals some of our moral blind spots.
It comes from Roger D. Fisher, who was a Professor of Law at Harvard Law School and director of the Harvard Negotiation Project at the time. Back in 1981, he wrote about an idea for nuclear deterrence and to better calibrate the decision to use nuclear weapons:
My suggestion was quite simple: Put that needed code number in a little capsule, and then implant that capsule right next to the heart of a volunteer. The volunteer would carry with him a big, heavy butcher knife as he accompanied the President. If ever the President wanted to fire nuclear weapons, the only way he could do so would be for him first, with his own hands, to kill one human being.
The President says, "George, I'm sorry but tens of millions must die." He has to look at someone and realize what death is—what an innocent death is. Blood on the White House carpet. It's reality brought home.
When I suggested this to friends in the Pentagon they said, "My God, that's terrible. Having to kill someone would distort the President's judgment. He might never push the button."
— Roger Fisher, Bulletin of the Atomic Scientists, March 1981
For the people making decisions on the life & death of others, distance makes a huge moral difference. But for those on the receiving end, there’s absolutely no difference.
🏃♂️🏃🏻♀️ On Friday I did something new: I went for a run.
This may seem like the least notable thing in the world for any runners reading this, but exercise doesn’t come naturally to me.
My parents and extended family never really exercised as I was growing up, and while some of my friends played sports, I didn’t really have much interest in that so when they went off to soccer practice or whatever, I went home and built some Doom maps.
For a long time, I’ve been looking for ways to incorporate more exercise in my life. The data is crystal clear: It’s very good for mental and physical performance, health, and longevity.
Many popular drugs and supplements have a much smaller effect size than just adding a few hours of weekly exercise, and yet… it’s been a slog convincing myself to do enough of it.
The closest I’ve come to it is some bodyweight exercises (pull-ups, push-ups, squats — I recommend the book ‘Convict Conditioning’) and taking long walks. But to really get more of the benefits, I need more *intensity* and *volume*! (the other thing I’ve been considering getting into are deadlifting and/or maybe getting a rowing machine..? Projects for another time)
My wife has been a runner for many years, and over time, I’ve slooowly convinced myself that this may be the thing for me. You can do it almost anywhere, alone, without much equipment or preparation, while listening to music or a podcast. All factors that make it attractive to me!
Last Friday I just went for it. 👟 I took it relatively easy because my goal is long-term: I want to build up to it and not push too hard, making it so unpleasant that I give up. So I did a little 2.6km/1.6 mile loop and alternated between running and walking (I probably did about 60/40).
It was fine. Relatively easy and painless! Not as bad as I expected (and we know how important expectations are).
A good start, but the real challenge is to turn the experiment into a habit. Part of my reason for writing about it is in fact to leverage commitment bias. I also created a file in Obsidian where I can track runs and gamify it a bit, which tends to help me stick with things.
🛀 🪨🛠🔬 If you follow the causality chain far back enough — including from ASML’s most advanced extreme-ultraviolet photolithography machines and SpaceX’s rockets that can land vertically on drone ships at sea — everything was originally made with rocks that humans found on the ground:
Every tool that exists today, from hammers to particle accelerators, has been constructed with others tools, and those with other tools, and so on, and eventually all tools where fabricated with rocks.
💚 🥃 If you are not a paid supporter yet, hopefully this is the edition that makes you go:
“Hey, I think I want to support what he’s doing here.”
Thank you for that!
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🏦 💰 Liberty Capital 💳 💴
“Officially worse drawdown than the March 2020 drawdown at QQQ”
Friend-of-the-show Mule wrote the above on Friday. I had to see for myself:
Everybody has to learn things for the first time at some point 🤔 🤷♂️ 🙋♂️
There was a time when Warren Buffett didn’t know what a gross margin was.
Friend-of-the-show David Senra (🎙📚) shared a good reminder of this with me recently, while discussing something else. He wrote:
I was talking to two different founders this past weekend. Both times I interrupted our conversation and asked them to define a term or simplify an explanation of something I didn’t understand — no one knows everything and we all don’t know much about anything — the worst thing you could do is be afraid to look stupid or change your mind
This is an excellent habit in itself, but a probably underrated second-order effect of this is that it signals explicit permission to the people you’re speaking with that they don’t have to pretend to know everything either... it helps *everyone* when people model this behavior!
It may even indirectly weed out idiots because anyone who has a lower opinion of you because you ask “stupid/basic” questions probably isn’t someone you want to associate with anyway…
100 people working on digital advertising at Big Tech control more economic capacity than OPEC… 💰💰💰
Eric Seufert on how a “very small cadre of product and engineering managers working on advertising privacy across Apple and Google” are shaping the future of digital advertising, and thus of large swathes of the economy that depend on it:
there’s probably 1,000 people in the world that have agency over these decisions at these big tech companies that will be responsible ultimately for the future of the Internet. A lot of people corrected me, it’s like, “Now, it’s probably closer to 100”.
So few people understand, and my sense is those 100 people probably, if you think about that on a go forward basis, control more economic capacity than OPEC does. This is a massive, massive part of the economy and it’s being controlled by 100 people because so few people work in the space, have worked in it, understand it. [...]
these platform policies are not laws, but that impact the economy in very momentous ways.
Such an eye-opening framing of the situation. 🔥
Why does it matter? Because the recent changes in the ad market (ATT, etc) are making it much harder for Facebook to effectively target ads, which means that more of that weight falls back on the shoulders of advertisers (and probably favors Google).
If you’re a large company with lots of 1st party data and teams of data scientists, you can do something about it. If you’re a small business with 5 employees, you probably can’t do much and may not even be able to stay in business if the ROI on these ads goes low enough.
Ben Thompson (💚 🥃 🎩) says it well:
the reason why I get worked up about this is I’m so excited about the Internet as an opportunity for new kinds of businesses, particularly the small businesses where the whole world is your market. You can serve a niche, but you’ve got to be able to find that niche and the casual way that not just Apple killed it, but the way people cheered them on, it’s been frustrating. Facebook’s going to be fine, Google will be fine, yes they took this big hit, they’ll figure it out to your point, but this world in which you could just be a one- or two- or five-person business and actually compete, it’s gone. And that makes me sad.
These two excerpts are from this excellent interview.
Cloudflare on how to Build a Platform 🛠
I thought this commentary by Cloudflare’s founder on how they’re thinking about building their Workers platform was very interesting:
if you look at developer platforms, 1 million developers using the platform tends to be a milestone. And we are -- we believe we are on path to get to that milestone this year. It takes time for people to adopt things. [...]
The challenge with developer platforms, and we've studied lots of them, is that it always takes between 8 and 12 years for successful developer platforms to really catalyze. And the reason for that is you need a community to develop, you need sort of the first killer app to be out there. You need the people who built the first killer app, some of them to leave that company and then go migrate to other companies where it starts to be like, oh, if I invest in this platform, I'm going to be successful in my own career.
And so we took a time to look at how did Microsoft build their platform, how did Salesforce build their platform, how did Apple build their platform? And were there any shortcuts somewhere along the way.
A good way to get devs familiar with your platform is to get other large existing ecosystems to build on top of you, giving their devs experience on your system:
the partnership that I'm the most excited about with that right now, although I think you're going to see more in this space is with Shopify. So if you think about all the developers that are building storefronts on Shopify today, tomorrow, right, if they're building stores on Shopify, they are learning the workers' platform. Because Workers has gotten built directly into that.
The way they keep expanding their markets through innovation and building new products has always been one of the most impressive things about the company, and it turns out that they think of it as “acts”, which get progressively larger:
I tend to think of Cloudflare's business as having acts.
Sort of Act 1 with the application services businesses. Again, we've got tons of penetration there. That's what we're known for.
Act 2 is really the Zero Trust services. That will be the big driver of revenue for us over the next period of time as a significantly larger market than the application services market.
Act 3 is Workers. That's a significantly larger market than Zero Trust.
And then Act 4 we're already working on as well.
Act 3 is gathering steam, as they keep adding ‘lego blocks’ to the set.
I think it’ll be very non-linear in adoption, because when they first announced Workers, it was cool and powerful, but pretty limited in potential use cases. But now that they’ve added object stores and databases and all kinds of other stuff, the utility is becoming very very broad.
Act 4 is further ahead, but here’s what they have to say about it:
the telco opportunity. I think it's way too early to say. But I do think that everyone agrees, technologies like MPLS are way too expensive, way too slow to provision and actually not that secure. And so if you can find more efficient ways to give people the ability to have a software-defined network that has either physical presence in the buildings that you have to access or uses radio to get you that same performance, that there is going to be an opportunity [...]
well over 90% of office workers in the world were within a 5G radio hop of where they work, we are usually within a very — within a dark fiber light up of where they work. [...]
you go from Garmin's office through a piece of fiber-optic cable to the edge of our network, across our backbone, to another edge of our network and then we hand off directly to Google, you've never touched the public Internet [...]
there's never been a truly global telecom, even global crossing or Level 3, were not truly global telecoms. If we can figure that out, and again, that's Act 4, that's — we'll be really talking about that in 10 to 20 years. If you can really figure that out, I think that they are — that is more than 50% of the Fortune 500 IT spend.
🇹🇼 TSMC+Apple 🍎
TSMC gets a lot of praise for its semiconductor work, and Apple also gets a lot of praise for its semiconductor work (at a different level).
While the separate praise is warranted, I think the *partnership* between the two companies should get more attention.
Pushkar Ranade has a good post on it. Here are my highlights:
The TSMC-Apple partnership has been one of the defining relationships of the mobile computing era. Without Apple as a predictable, high volume and demanding customer, it is unlikely that TSMC would have been able to catch up to Intel on advanced node semiconductor manufacturing. Similarly, without the support of the TSMC ecosystem, it is unlikely that Apple would have been able to become a pre-eminent chip design house, let alone support the massive manufacturing scale required for its products.
Here’s Jeff Williams, COO of Apple, on the partnership:
It seems obvious right now, but it wasn’t then, because the risk was very substantial. The way Apple does business is we put all our energy into products, and then we launch them, and if we were to bet heavily on TSMC, there would be no backup plan. You cannot double plan the kind of volumes that we do. We want leading-edge technology, but we want it at established technology volumes.
By pushing TSMC, Apple is also indirectly helping other large fabless semis:
Apple has been the lead customer on TSMCs advanced technology nodes since 2014. Massive iPhone wafer volumes and a rigid launch schedule requires TSMC to quickly debug and stabilize yields on the most complex, advanced geometry process nodes. This in turn, enables TSMC to rapidly improve manufacturability and pave the way for the second wave of advanced node customers (e.g., NVIDIA and AMD).
TSMC ❤️ Singapore (?)
[TSMC] is considering building a semiconductor factory in Singapore to help address a global supply shortage [...]
A final decision hasn’t been made yet and details of the plan are still under discussion, but preliminary talks involve a major plant whose cost would run into the billions of dollars [...]
For the Singapore project, TSMC is studying the feasibility of production lines that would make seven- to 28-nanometer chips (Source)
So it wouldn’t be cutting edge, but that doesn’t matter too much, there’s still plenty of demand for bigger node chips.
But of course, it’s not a done deal and nothing is certain, as TSMC points out.
Interview: Dan McMurtrie 🎤
They discuss problems with crypto, the market crash, challenges facing various market players, etc. Most of it is above my pay grade and/or a different game than I’m playing since I don’t run a fund, but I found it interesting and entertaining nonetheless.
SpaceX looks to raise $1.7 billion at $127 billion valuation 🚀 📡🛰🛰🛰🛰🛰
The space venture is looking to bring in up to $1.725 billion in new capital, at a price of $70 per share, according to a company-wide email on Friday obtained by CNBC. Notably, SpaceX split its stock price 10-for-1 in February, which reduced the common stock to $56 a share – with the new valuation representing a 25% increase.
SpaceX is also conducting a secondary sale to company insiders and existing shareholders for up to $750 million in common stock. (Source)
If it works out (I’m not sure how far along they are), it would be a very rare ⬆️ round in these choppy market waters. 🌊
Hiring Freezes 🥶
Various things have been flying around lately — excerpts from earning calls, memos sent to employees at certain companies, etc — showing that lots and lots of companies are slowing down hiring and/or laying off employees.
1 Main Capital has compiled a few examples in this thread.
This can’t help but have all kinds of 1st, 2nd, and 3rd order effects on various things. Fewer employees = fewer software seats of various enterprise software sold, for example.
Fewer employees making tons of money probably means a slowdown for various retailers selling stuff to them, for crypto coins that tech bros tend to speculate on, whatever.
What may be less obvious are the 3rd order effects of this… What weird places will this show up in? ¯\_(ツ)_/¯
🧪🔬 Liberty Labs 🧬 🔭
The argument for the base-12 number system 🤯 🧮
I never thought I had much of an opinion on our base-10 numeral system, but after watching this video, I can see the attraction of base-12! (some NSFW language in the video)
☢️ How Illinois kept its nuclear plants back when natural gas was cheap, and is now reaping the benefits
How did I start having a regular nuclear power beat? ¯\_(ツ)_/¯
In September, Illinois lawmakers passed a watershed clean energy law which established the state as a leader for its efforts to decarbonize. One of the key provisions in the law was a commitment to keep its existing nuclear power fleet online, even if the plants were not profitable.
Nuclear reactors generate power without emitting greenhouse gasses but they often can’t compete when other forms of energy such as natural gas and renewables become really cheap. But Illinois needed to keep its nuclear fleet online to meet its clean energy goals.
Now, less than a year later, utility customers in the northern part of the state and around Chicago are saving an average of $237 a year on their energy bills because of that legislation, according to state regulators.
That’s one benefit of nuclear power… While natural gas prices can go up and down by multiples (from $1.49 in the summer of 2020 to $8.78 recently on the New York Mercantile Exchange), nuclear tends to just keep chugging along fairly predictably, and even volatile uranium prices don’t matter too much since fuel is such a small fraction of total costs.
It would be insane to get rid of dependable nuclear power every time natural gas is cheap for a little while and then leave yourself vulnerable to future volatility while polluting more.
The Illinois clean energy law agreed to keep nuclear plants open if they were losing money, but it also capped the amount of money the nuclear plants’ owner, Constellation Energy, can earn if energy prices rise.
“To date, Illinois consumers have not paid a penny to nuclear plants under the law, and instead will be receiving a substantial credit,” Constellation Energy said. (Source)
🎨 🎭 Liberty Studio 👩🎨 🎥
🎸 PJ Harvey — I get it now! 🤘
I’ve tried many times over the years to get into PJ Harvey, but it never quite stuck with me. I listened to a bit of her stuff, it didn’t really grab me, and I moved on.
I don’t know if I just didn’t happen to be in the right mood/mindset at those particular times, or started with the wrong albums, or what… but I gave it another try recently, and NOW I GET IT! She’s great.
The albums above are the ones I’ve been listening to the most, and I’m really impressed at how out-of-time a lot of her stuff is. Either she was ahead of her time, or made timeless stuff, because a lot sounds like it could’ve been released today, yet it’s almost 30 years old.
I get why she was a favorite of so many other musicians — Kurt Cobain, Nick Cave, etc — she’s an artist’s artist. Her stuff probably sounds fresh because she influenced so many artists that came out with similar stuff 10-15 years after her…
She may not be for you, but I recommend you at least find a playlist with an overview of her career and give that a go. Maybe it’ll ‘click’ with you too (if you’re not already a fan). I’ve had the track ‘C’Mon Billy’ stuck in my head for a while now…