“We know the past but cannot control it. We control the future but cannot know it.”
“Information is the resolution of uncertainty.”
—Claude Shannon

Tomorrow will be the 3-month anniversary* of this newsletter project (edition #1 here).

I think I’m starting to get a better feel of what it is, but it’s a bit like making a sculpture from a block of granite. You may have an idea of what you want to make when you start hammering at it, but it’s only really in doing it that you find out what it is you’re making.

*Yes, it’s like with a new couple — at first you celebrate the months, and after a while you stop caring about anything other than years, if that…

Maybe I should only do exponential retrospectives..? Next one at 6 months, then 1 year, then 2 year, then 4 years, then 8 years…

Let’s imagine I’m still doing this in 8 years. Napkin math, if I keep this pace and don’t take breaks, that’d be 1,248 editions of the newsletter.

Maybe by then I’d even start to become decent at it. Ha!

If you’re curious, this is what subscribers over time look like after 3 months (minus 1 day).

You made this line move up a little bit when you hit that subscribe button, so thanks for that!

And if you’re wondering what made the big step up happen around August 10th, it was a tweet by John Huber. The most recent bump was a tweet by Mostly Borrowed Ideas. Thanks John & Abdullah!

→ If you’re a US citizen, please vote. ←

Investing & Business

A Word From Our Sponsor

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The free webcast takes place on Thursday, October 22, at 2 pm ET. (Can’t make it? Sign up, and they will email you the recording.)

Koyfin Beta and Thailand’s Terrorism Index

I spent a couple hours on a video call with Koyfin’s founders Rob & Rich (do you need a “R” name to join the company?). The idea was for me to try the new beta of the site while sharing my screen with them, so they could see how a user deals with the new features, UI changes, etc. But also to provide feedback and ideas, when I had them.

(Current version on left, beta on right. Yes, I have permission to share images)

It was a lot of fun, I love their platform, R&R are great (I just looked it up — we’ve been chatting on Twitter DM since 2018, wow time flies), and I’m really excited about the next version of Koyfin.

We were joking about how it’s like your favorite band releasing not only a great new album, but a triple-album with the fancy cardboard case and a booklet that’s like a book (I guess this may not mean much to the digital music generation)…

There’s too many things that I really liked to write here. I’m sure I’ll revisit my thoughts on the new features and the changes after the new version launches and you can follow along and try for yourself.

While I was playing with the new advanced search feature, I somehow stumbled on the Thailand Terrorism Index (this page shows levels since 2017).

Uh?

I mean, I know I’m a pretty vanilla investor, long-only and equities-only (except for some weird debentures, you can probably guess which ones if you know me a bit), and there’s a vast world of finance that I know nothing about, but I certainly didn’t expect the Thailand Terrorism Index (though now that I know of it, it makes sense — like a lot of things, you’re surprised going in, and then think it wasn’t that surprising looking back. Humans adapt really rapidly to novelty; the better-than-Star-Trek technology we carry around seems totally banal to most of us).

This raises so many questions. Does every country have a terrorism index or just some? Is price set purely through a kind of betting market (like PredictIt) or does it have other inputs? It this used mostly by insurance companies and local operators who want to hedge risks?

Back to the New & Improved Koyfin, here’s a pro tip: When the new version comes out, press “/” before keyboard commands…

Bill Ackman ❤️ Stripe

So this is probably nothing, but as Dan Hurley points out, Bill Ackman’s most recent follows on Twitter are three accounts: Stripe, John Collison, and Patrick Collison.

And Bill Ackman has raised a big SPAC with the express purpose of:

looking at mature “unicorns” and private-equity-sponsored companies but also family-controlled and employee-owned businesses [...] [with the] goal to use it for a minority interest in a large company [...]
There are many interesting companies in the $10 billion to $15 billion range, he said. Taking a minority interest could mean a better price, he added.
“If you’re selling 100% of your company, you want the last dollar. If you’re selling 20% of your company in a merger which enables you to take your company public but you keep control, you’re much less price sensitive,” Ackman said. “We are confident that we’re going to find a very interesting company on attractive terms.” (Source)

I mean, it doesn’t mean much, but it’s fun to speculate.

‘Visa seems to be flexing its pricing muscle’

Visa seems to be flexing its pricing muscle in the business-to-business (B2B) “virtual card” market. The company recently issued a bulletin saying it would impose a new “B2B virtual payment service fee” of 0.60% on domestic transactions and 1.55% on cross-border transactions.
Susquehanna analyst James Friedman estimates that the new fees could lift Visa’s revenue 2% to 4% above current estimates, starting in 2022. “It’s a large fee for the card networks,” he said in an interview, noting that Mastercard (MA) charges similar fees. [...]
Virtual B2B payments are a large and growing market for the card networks, worth $320 billion in annual transaction volume. Accenture estimates the U.S. virtual B2B market is growing at twice the rate of consumer card volumes and will reach $553 billion in volume by 2024. (Source)

h/t @Roadmap2Retire

Interview: Mostly Borrowed Ideas on Etsy (and more!)

It seems redundant to link to one more interview by Andrew Walker, but as long as he produces good ones, I’ll keep linking them. It’d be worse to not highlight his interviews because there are too many good ones… An embarrassment of riches is a high quality problem to have.

This one is with my friend Abdullah Al-Rezwan a.k.a. Mostly Borrowed Ideas of MBI Deep Dives. He recently published a deep, deep dive on Etsy (still available to all for a limited time — subscribe now while the free trial period is still going) and most of the podcast is a discussion about the company and the thesis.

Good stuff, and I like that there’s pushback on certain ideas, some points are conceded, and both are clearly looking to improve and update their thinking rather than defend a static position (the Maginot Line approach to conversation is rarely fruitful).

Proposed N.J. High-Frequency Trading Tax Gets Reduced and Made Temporary

A revised draft of the bill obtained by Bloomberg would impose a temporary tax of a hundredth-cent per trade, down from an earlier bid to levy a quarter-cent tax. The fee would be paid by “high-quantity processors of financial securities,” meaning firms that collect and store data. And under the new plan, the tax would end after two years. [...]
The new tax plan would apply only to instruments subject to fees under the Securities Exchange Act of 1934. If the tax is already paid to another state, New Jersey would adjust or cancel the amount due. (Source)

So from $0.0025 to $0.0001, and for two years. 🤔

In-Depth Write-ups on Spotify and Peloton

@LongHillRoadCap has made two of his Implied Expectations write-ups free as sample posts:

Check them out, and if you like and want more, you can subscribe here.

Larry Ellison Donated $250,000 to a Senator With Influence on TikTok Situation Right as Deal Took Place

Oracle CEO Larry Ellison donated $250,000 to a super PAC supporting Sen. Lindsey Graham’s (R-SC) reelection campaign as his company closed in on a coveted position as TikTok’s US technology partner. [...]
It’s an unusually large donation for Ellison, who also donated $5,200 to Graham’s Majority Fund in January. The timing of the larger donation is also remarkable, coming mere hours after Oracle officially announced that it had been chosen as TikTok’s technology partner for its US operations, beating out Microsoft in a high-profile bidding process to save the popular video app. [...]
Sen. Graham was reportedly pivotal in arranging the deal, although it’s unclear if he had any influence over the specific companies involved. In an interview with Vanity Fair in August, Graham said that he personally called Trump to suggest that he find a US company to purchase the platform in order to remedy the administration’s concerns over the app’s relationship with China. [...]
“If TikTok is saved, you can thank me,” he said. (Source)

Purely coincidental, I’m sure.

Nintendo Switch: the Dark Side of the Moon of Consoles

The Nintendo Switch has been the #1 selling console for 22 consecutive months breaking the old record of 21 consecutive months by the xbox 360 according to the NPD (Source)

And it’s probably not over, as October is probably still going to go to the Switch. Then we’ll see how big the PS5 and Xbox launches are.

Trade Desk Proposes Dual-Class Structure that Expires After 5-Year

This letter is getting long, so I won’t go into too much detail, but you can read the proposal here:

We would not enjoy the enviable industry position we hold today without our platform, our founder’s ability to both see around corners and keep us a step ahead, and the support and trust of our stockholders. That is why we are writing to you now. As you know, our company operates with a dual class capital structure. [...]
If the amendments are approved, the dual class structure will terminate in five years, which allows for certainty regarding the end of the structure and reasonable time for the company to execute on its long-term strategy. [...]
To compete, we have held firm to a long-term vision and strategy for our platform, supported by long-term investments. [...] the next five years will be critical as advertisers seek a viable alternative to walled gardens—one that can operate at scale, across advertising channels. As a result, the next five years will also be critical in solidifying the long-term success of our model. [...]
Over six years ago, for example, we began investing in ConnectedTV, well before the market started to transition. Fast forward to 2020—according to Standard Media Index, US advertising revenue declined over 30% on a year-over-year basis due to the coronavirus pandemic in the April to June period. By contrast, during that same period, ConnectedTV spend on our platform increased about 40% year-over-year. (Source)

YouTube Stars Giving TikTok a Try… Who Gets Bumped Off?

A lot of creators are on multiple platforms. Youtube, Instagram, Twitter, Facebook, Snapchat… It’s kind of like Uber and Lyft drivers dual-homing. It helps spread your content and get a larger audience, and you don’t have all your eggs in the same basket if for some reason your account gets suspended by one of the big platforms or it gets hacked or whatever.

But I wonder what’s the limit on this multi-homing. Of course the exact number will be different for different creators - some have teams of people who can do a lot of the tedious work of putting all the content on every platform for them, others are solo people doing everything themselves - but there’s gotta be a limit somewhere that hits most of the bell curve distribution.

I don’t know what it is, but what I’m wondering is, if a content distribution platform like TikTok becomes popular enough that a lot of big creators feel they have to be on it, do they just add it to the list without any other changes, or does some weaker platform gets bumped off by many of them? And who’s the weaker platform for most creators right now?

Science & Technology

DPUs, SmartNICs, Why? (Nvidia)

I thought this explanation of why you’d want to offload a lot of networking compute (encryption/decryption, firewall, TCP/IP, HTTP processing, etc) to SmartNICs and Nvidia’s new DPUs to be well explained in this presentation from October 5 by Nvidia:

…as the amount of data grows, the East-West traffic between servers in the data center is growing dramatically. And so if you look at where we are at today, we already see that more than 30% of the resources on the CPU in every server is being occupied with these infrastructure functions, leaving less resources available to the actual application itself. And this problem is only going to grow because the amount of data is growing exponentially [...]
The role of the DPU is to take the software function and offload them from the CPU and put them into a new kind of chip that we call the DPU. It is an extension of the chip that we already have in the NIC.
[...] along with the acceleration engines that we have on this chip, we have now introduced CPU in the form of powerful ARM cores that can host these infrastructure functions… by moving these functions over to this new chip, the DPU, all of the resources of the host CPU are now available to run the applications [...]
It is not just about offloading, it is about a dramatic acceleration, which leads to a massive reduction in the amount of infrastructure needed to run the same amount of application workload leading to TCO benefits for the customer.

So basically, you free up a bunch of CPU cycles on expensive servers that could be doing something of higher value, and do the same work on chips that are more efficient at it, requiring less hardware to do the same work, or ideally do it even faster than before. It seems inevitable as modern apps and services get so big and complex that they can’t run on single servers and basically run across whole data-centers (requiring lots of data to move around between nodes — what they call East-West traffic, as opposed to North-South traffic, which enters and leaves the data-center).

An example they give is their new BlueField-2 DPU:

If you consider the different activities performed by the DPU and you were to perform them on the host CPU, you would require upwards of 125 x86 cores to perform the same functionality, which is not really practical.

And this is just the beginning, as they have shown a roadmap that would increase the computing capabilities of their DPUs by orders of magnitude over the next 2-3 years (“the BlueField-4 [in 2023], which is a combination of the silicon of the DPU as well as our state-of-the-art GPUs, will have 600x the computational capability of the BlueField-2”).

Zooming in on the security angle:

I believe in the world of zero trust. I believe that protecting data centers at the perimeter is historic. It's like building a big wall. It makes no sense. That the future of security is about zero trust, and it's about securing every single transaction, every single node, every single application.
And therefore, you need to take what it used to be security appliances at the perimeter of the data center and put it into the servers, every single one of them, every single network. That's the reason why the networking chip is going to be the most important security chip in the future because that's where all the input and output comes from. That's exactly where you want to put it, and that's exactly why the DPU is invented. Security is going to force every single computer on the planet to have something like a DPU. And so I believe that every single server node will be accelerated by a DPU.

Pandemic’s Impact on Global Carbon Emissions

the first half of 2020 saw an unprecedented decline in CO2 emissions -- larger than during the financial crisis of 2008, the oil crisis of the 1979, or even World War II. An international team of researchers has found that in the first six months of this year, 8.8 percent less carbon dioxide was emitted than in the same period in 2019 -- a total decrease of 1551 million tonnes. [...]
"Largely because of working from home restrictions, transport CO2 emissions decreased by 40 % worldwide. In contrast, the power and industry sectors contributed less to the decline, with -22 % and -17 %, respectively, as did the aviation and shipping sectors. Surprisingly, even the residential sector saw a small emissions drop of 3 %: largely because of an abnormally warm winter in the northern hemisphere, heating energy consumption decreased with most people staying at home all day during lockdown periods."(Source)

Study.

Craigslist: Anyone Wants a Soviet Submarine?

I was able to screenshot this Craigslist ad before it was deleted:

Favorite parts are “I picked up this one from my uncle Rico in Vladivostok” and the last line: “There are 6 old torpedoes on the forward section but I’m not sure if they are functional”.

I wonder if it got deleted because of the suggestion that you could smuggle drugs form Columbia with it to pay for it… ¯\_(ツ)_/¯

The Arts & History

The Work of Insects that Burrow Under Tree Bark

Photo I took last weekend. Another angle that shows more of the tree here.

40: Koyfin's Magnum Opus, Thailand's…