325: Thoughts on iPhone 14, Cloudflare Infrastructure, Inside the CCP, Airlines Pilot Shortage, China’s SMIC 7nm, Korean Babies, and Musical Instruments

"This isn’t just about feelgood, it’s about effectiveness and productivity."

An industry where companies can 10x in size is an industry where they're perfectly capable of going to zero.

—Byrne Hobart

🏋️‍♂️ Some answers are simple:

SYDN-E @demiurgently

lifting heavy weights has produced such a consistent mood boost that i'm kinda convinced any psychiatrist not forcing their patients to exercise is guilty of malpractice

(before you write that exasperated email: I’m *not* saying at all that it’s a cure for everything — but because the size of the effect is large, there are lots of positive side-benefits, and the downsides are very small, it should probably almost always be tried, and can only be additive when combined with other approaches like cognitive behavioral therapies or medication or meditation or whatever)

🎙⚡️☢️ In case you missed it, here’s my latest podcast, still fresh from the oven:

• 🎧 Going Deep on the Energy Crisis and Nuclear Power with Mark Nelson (Part 1 of 2)

🍿For some reason, I was trying to think of the best way to explain the concept of “surface area” to my 8yo boy.

This is what I came up with:

Imagine you have a marble and a piece of popcorn that are about the same size.

Your goal is to paint the whole thing with a tiny paintbrush and a special paint that has no thickness (so that it wouldn’t just goop together in the holes of something and fill them). You can picture it as digitally changing the color of what you touch with the paintbrush.

Now imagine doing the marble. Pretty easy.

Now the popcorn… You have to do the exterior, but there’s also the interior of the folds, the walls of the inside, and in between the tiny cracks of everything.

Which of the two would take the longest to paint if you were going the exact same speed with your brush-strokes? That’s the one with the most surface area.

Now imagine that inside of the popcorn, there were tiny miniature popcorns stuck to the interior walls, and you had to zoom in and paint each of those, inside and out… You can increase the surface area of something a lot without changing the size of the thing much.

That’s why identical twins of the same weight and height could have vastly different surface areas if one of them has a shaved head and the other has long hair.

Losing a lot of surface area.

💚 🥃 I know that you’ve been sitting on the fence for a while, meaning to support this project but always putting it off to a later time because nothing is forcing you to and nobody likes paying for things.

But your support makes a big difference and allows me to keep going and do more. Thank you for doing it, your kindness is appreciated 🧡

---

A Word From Our Sponsor: Stream by AlphaSense

👉 Power your investment decisions with quality expert insights on demand 👈

Need help making investment decisions based on vetted market insights? 🤔 Look no further! Stream by AlphaSense helps investment research teams access unique, high-quality expert insights faster and more cost-effectively than most traditional expert networks. 🚨 Sign up for a free 14-day trial here! 🚨

With Stream, you’ll have instant access to:

• 20,000+ on-demand transcripts of interviews between experienced buy-side analysts and company experts provide first-hand perspectives on the companies and sectors that matter to you. 

• The fastest-growing library in the industry, you're bound to find what you need, when you need it!

• Insight from experts with 500+ hours of industry interview experience. 

Instead of using the same pool of experts for multiple interviews, we custom source and recruit experts for every request. Each expert has recent involvement in their industry and our rigorous vetting process helps create the highest quality interviews, so you can make truly informed decisions. 🕵️‍♂️

⭐️ Start your 14-day free trial today! ⭐️

---

🏦 💰 Liberty Capital 💳 💴

🍎 Thoughts on the iPhone 14 & iPhone 14 Pro 📱

There’s no point in listing every feature, lots of other sites do that and you can see everything on Apple’s specs page.

What I want to focus on is the dance that happens on every iPhone release: A bunch of people will complain that there’s no innovation and it’s the same as last year, while others will be overjoyed at the new goodies and improvements.

I think the dichotomy is largely caused by expectations and what you’re looking for.

If what you want is a mind-blowing demo on stage for a totally new product or feature that nobody had ever thought about, you’re going to be disappointed often, because even back in the Steve Jobs era, there were years between big category-defining moments (from iMacs to iPod, to iPhone, to iPad...), and that was at a time when both computers and mobile devices were a lot less mature than they are now, so changing more quickly.

Apple has always been more about iteration than anything else, really. Sure, once in a while they make a big splash by entering a category with a big leap forward over the rest of the field, but it’s the relentless refinement for years after that which makes them hard to compete with. Especially since almost nobody buys a new iPhone or Mac every year, so the absolute improvement after 2-3-4 years is pretty huge.

I think the group that is really pleased by Apple’s products tends to focus more on actual day-to-day use rather than what demos well on stage. Sleeper hits are always things like longer battery life, better screens, better cameras, and faster SoCs/RAM/storage.

Apple has delivered in spades on that stuff in recent years, so much so that they’ve decided to only use their latest chips on the Pro line, further segmenting it, and use last year’s chips on the regular iPhones, since the competition is having trouble keeping up with even that and it’s harder to make huge year-over-year gains without full TSMC nodes (I hear this year’s “4nm” is really a variant of the 5nm they’ve had for a while).

The Era of Computational Photography 📸

To me, it’s really the cameras that are the main course.

We call our pocket computers “phones” because they grew from mobile phones, but there’s no doubt there’s an alternate universe where they call them “cameras”.

The new cameras in the Pro seem 🤯 thanks to the combination of hardware and software — not only are the optics getting better, with larger sensors that can gather more light, with more focus pixels, better image stabilization, using LiDAR to focus in the dark, sapphire crystal lens cover, etc, but we’re deep in the era of computational photography.

The complex software pipeline that extracts as much quality as possible from what remains tiny cameras (compare that to a full-size DSLR or mirrorless..) is getting ridiculous, fusing multiple images and exposures together, running machine-learning models on uncompressed RAW sources, etc.

Photos and videos are central to everybody’s digital lives in 2022, and Apple is the #1 camera maker in the world. It’s just that their cameras also happen to be really good internet-connected pocket computers.

🧑🏼‍🏫📝 The Link Between Learning & having fun 🎓😆

Imagine you’re being mentored by someone.

This can look many many ways, depending on both your personalities, what you’re trying to learn, and how you most effectively learn.

But the chances of it looking like a traditional classroom, with the mentor standing in front and monologuing for an hour or three and you taking notes mostly in silence, once in a while asking a question or being asked one… are almost nil.

It’s such a big problem with school... students retain very little, and that’s when they even pay attention at all, because too much of it is so boring.

People underestimate how much better we learn when we're having fun and are interested. This isn’t just about feelgood, it’s about effectiveness and productivity.

But in practice, including fun in the equation often make it a harder sell, not an easier one, because people are conditioned to value more highly "serious stuff" and that learning important thing *should* be painful (I suspect that we make the association as kids after a few years of school… learning = sitting still all day hearing about things I don’t care about right now).

I think the same effect happens with my NL. Because of the stupid dad jokes and emojis and all that, it’s harder to take seriously, but the feedback I get is that people stick around because they're learning new things but it doesn’t feel like homework.

h/t to friend-of-the-show Ben Gilbert (🎙🎧) for the seed of this idea

⛅️ Cloudflare’s Infrastructure & Empty Container Ships

This is a bit of a long excerpt, but I think it’s very good:

because you have this gigantic visibility now of how much traffic move, you get constantly innovation input into, well, how could we develop a future product that takes advantage of that specific situation.

And Zero Trust to a certain extent, is a result of that. [...]

We pay for our infrastructure, not by the amount of traffic that moves through, but the size of the pipes that transports that traffic.

So as long as the back and forth in that pipeline is not getting bigger than the size of the diameter of that pipe, we don't have any additional cost. So now think about what I said, our first Wave 1 products where all about protecting infrastructure. So it was all pushing traffic out.

And then you have all the planes that are sitting, so to speak, in all the cities, and they are empty. So how can we load them when they come back and Zero Trust products are just transporting traffic in the other direction.

So all the products we have there and Magic Transit, that push traffic in the other direction are literally for free from a cost perspective that's when we talk about margin accretiveness, even at low prices, these products are extremely margin accretive. It gives you an idea of how we think about this network.

It’s a bit like cargo ships leaving China full and coming back empty. If you can figure out ways to load them up on the trip back…

🇨🇳 A View Inside the Chinese Communist Party 🪟

I’m no expert on China, but it’s hard not to be fascinated by this country and how a lot of what’s going on everywhere is shaped by it directly or indirectly.

One aspect that has always been very opaque — at least from the outside — is the CCP.

This piece was written by a Chinese defector who spent 15 years training high-ranking party officials, and gives a glimpse (at least one person’s POV) inside the machine. I can’t say what’s true or not, and every op-ed has bias (find me one that doesn’t), but it’s interesting to get info from the inside, for once.

Some highlights:

Outwardly, Xi still projects confidence. In a speech in January 2021, he declared China “invincible.” But behind the scenes, his power is being questioned as never before. By discarding China’s long tradition of collective rule and creating a cult of personality reminiscent of the one that surrounded Mao, Xi has rankled party insiders. A series of policy missteps, meanwhile, have disappointed even supporters. Xi’s reversal of economic reforms and his inept response to the COVID-19 pandemic have shattered his image as a hero of everyday people. In the shadows, resentment among CCP elites is rising. [...]

Trapped in an echo chamber and desperately seeking redemption, he may even do something catastrophically ill advised, such as attack Taiwan. Xi may well ruin something China has earned over the course of four decades: a reputation for steady, competent leadership. In fact, he already has. [...]

Outsiders may find it helpful to think of the CCP as more of a mafia organization than a political party. The head of the party is the don, and below him sit the underbosses, or the Standing Committee. These men traditionally parcel out power, with each responsible for certain areas—foreign policy, the economy, personnel, anticorruption, and so on. They are also supposed to serve as the big boss’s consiglieres, advising him on their areas of responsibility. Outside the Standing Committee are the other 18 members of the Politburo, who are next in the line of succession for the Standing Committee. They can be thought of as the mafia’s capos, carrying out Xi’s orders to eliminate perceived threats in the hope of staying in the good graces of the don. As a perk of their position, they are allowed to enrich themselves as they see fit, seizing property and businesses without penalty. And like the mafia, the party uses blunt tools to get what it wants: bribery, extortion, even violence. [...]

The more a political system centers on a single leader, the more the flaws and peculiarities of that leader matter. And in the case of Xi, the leader is thin-skinned, stubborn, and dictatorial.

---

🧪🔬 Liberty Labs 🧬 🔭

Where will we find pilots? 🛩 👨🏻‍✈️

Interesting thread by Ben Golus about pilots:

There are no new pilots.

When the pandemic hit, passenger airlines in the US laid off all their pilots. If those pilots were within 5, maybe 10 years of retiring, they mostly decided to retire early.

Fast forward to now and the airlines are trying to hire back all those pilots, who are responding 🖕

So they're trying to hire new pilots instead. But there's a problem with that. There's no such thing as "new pilots" that you can just hire.

Airliner pilots come from two main career paths. One is rich kids who can afford to pay for flight training and either own or rent planes to fly, and rack up at least 1,500 hours in the air flying. That's very expensive. And that's minimum to become a copilot.

The other way is via the military. The vast majority of airline pilots in the US are ex navy or air force.

But there's the big problem. The military isn't training many aircraft pilots anymore, they're training drone pilots.

Drone pilots never leave the ground, and as such any "flight time" they might have doesn't count towards that 1500 hour requirement. Just like simulator training doesn't count.

And thus, the pool of new pilots has disappeared. This happened a while ago, but it hadn't yet become a big problem for airlines because their (aging) pilot workforces were flying for longer.

But they just laid off all those older pilots, and they aren't coming back.

To make things worse, to become the primary pilot of an airliner requires a ton of hours flying as a copilot. And the pilots that did remain are either the younger ones that still aren't full pilots and are still copilots, or are getting close to looking to retire too.

As an outside observer to the industry, I don’t know how accurate this is, but I suspect there’s some hyperbole even if the problems described are real. f.ex. I’ve seen data that the ratio of commercial pilots with military backgrounds has been going down over time, but I bet that’s still a big factor.

Are airlines just going to have to bite the bullet and offer big raises to try to get some retired pilots back and start training a lot more pilots directly?

Maybe some types of planes (cargo?) could eventually be more automated/flown remotely to free up pilots/copilots for the passenger side where not having a pilot on board would be a very hard sell…?

‘Korea to Triple Baby Payments After It Smashes Own Record for World’s Lowest Fertility Rate’ 🇰🇷 🤰🏻👩🏻‍🍼

A follow-up to edition #320’s spotlight on South Korea’s extremely low fertility rate:

South Korea plans to provide every family with a newborn child a monthly allowance of 1 million won ($740), in its latest move to encourage more births and try to address the world’s lowest fertility rate.

The handout will begin next year at a level of 700,000 won a month and then rise to the full amount in 2024, according to a budget proposal unveiled this week. Once the child turns one, the stipend will be reduced by half and run for a further year. [...]

Under the previous administration of Moon Jae-in, who ran a more expansionary fiscal policy, each new-born child was provided with 300,000 won a month over their first year. (Source)

Not a bad idea. They should do a lot more too, but direct payments certainly allow each family to help remove monetary bottlenecks to having more kids — or any kids, in this case, with the fertility rate at 0.8.

There are probably lots of structural, non-monetary barriers to larger families in South Korea, but I don’t know what they are. Any South Koreans can explain what’s going on? Please let us know in the comments.

China’s SMIC got to 7nm 🇨🇳

Dan Nystedt has a good summary:

1. SMIC's 7nm process is true 7nm. This is real.

2. "it is a notable achievement for SMIC to take only two years to reach 7nm without access to the most advanced western equipment & technologies."

3. "Our analysis shows many similarities in process technologies, designs and innovations between SMIC 7nm and TSMC 7nm."

(Note: SMIC often hires key ex-TSMC R&D personnel. TSMC has sued SMIC before over technology theft, and won.)

4. Analysis compares SMIC 7nm to TSMC N7, N7HPC/N7P and N7+ 

(Note: TSMC only used EUV equipment on N7+ ; not on other N7 processes. It's not clear that the most advanced tech is needed for 7nm.) 

Point #4 is important: SMIC will likely hit a pretty hard wall as soon as they can’t go smaller without EUV, and without ASML’s equipment and expertise… 😬

---

🎨 🎭 Liberty Studio 👩‍🎨 🎥

🎺🎻🎹🎷🎸 How do musicians select their instruments? 🤔

I was watching Treme’s S2E8, and there’s a scene with a woman on stage playing the trombone.

It struck me that certain instruments are more associated with men and others with women, while some are more unisex, and I don’t know why. Of course, nothing is all one or the other, but over time, seeing lots of musicians, you can’t help but notice patterns.

Brass instruments and horn sections seem to have fewer women, but string instruments, like violins and cellos, seem to have plenty. Piano seems rather unisex. The Western concert flute, piccolos, and other flutes seem to lean more toward women… When I was growing up, the electric guitar seemed more masculine, but now it seems more evenly distributed (like skateboarding, which is great to see 🛹).

Is it a totally random cultural thing? Young boys & girls see more role models for certain instruments because of accidents of history and things just keep going from that inertia? ¯\_(ツ)_/¯