446: ICE + Black Knight + Constellation, Meta, ARM IPO, Starlink & Cloudflare, Toyota, Novo Nordisk, Exoplanets, and Flipside
446: ICE + Black Knight + Constellation, Meta, ARM IPO, Starlink & Cloudflare, Toyota, Novo Nordisk, Exoplanets, and Flipside
"I met an old friend for the first time."
No computer has ever been designed that is ever aware of what it's doing; but most of the time, we aren't either.
—Marvin Minsky
👋 I’m back!
I’ve missed you.
I didn’t expect my hiatus to be this long, but the stars aligned in a way that made it hard to get the uninterrupted time necessary to write.
Even though I wasn’t publishing, I couldn’t turn off the shower thoughts from coming. I have so many things to share with you, they won’t all fit in one Edition!
But first, let me tell you about what I realized during my family vacation:
I need to get better at being on vacation. ⛱️
It may seem like it should be the easiest thing in the world, but it’s a skill, and I don’t think I did very well…
2023 has been a very busy year for me.
Lots of changes and hard work, getting to know a lot of new people, and learning about a lot of new things. Exciting stuff! Very positive! But you can’t sprint the whole marathon 🏃♂️ so I was looking forward to being off the grid and relaxing.
But when it finally happened, my brain kept revving at pretty high RPM for a few days and my body had all kinds of Sarno/psychosomatic issues that I could tell were stress-related (not ‘stress’ as in conscious anxiety, but more like the inability to fully let go and transition into vacation mode).
My stomach bugged me for the whole first week. It only got better during the last 3 days 😞
I tried to stay offline, but ubiquitous connectivity and a lack of Jocko-style discipline made that difficult. A few days in, I checked my email “just in case” while I was poolside with my kids.
I saw something important and time-sensitive, so I spent almost the whole day texting back and forth with a colleague trying to figure things out, my brain racing through possibilities and decision trees for hours because of that one email.
Overall, I would give the vacation itself a B+.
I think my wife and I found a good model, with multiple mini-vacations at different locations one after the other rather than spending the whole time in one place. That worked for the kids — they never had time to get bored and we avoided diminishing returns…
But I would give myself a D when it comes to making the most of it, unwinding, relaxing, and recharging my batteries.
Maybe like with physical exercise, I need to get more reps and try to get better at relaxing in smaller doses on evenings and weekends.
Build up my vacation muscles! 🏋️♂️💪
💚🗣️🗣️ Last weekend, I met an old friend for the first time.
It’s kind of weird that this sentence even makes sense, but in this connected world, my experience is proof that it’s possible.
I have considered Jim O’Shaughnessy (💚 🥃) a close friend for years, and I joined O’Shaughnessy Ventures (OSV) earlier this year largely because I can have what I call a “real-time conversation” about almost anything with him and feel like not only is he interested in the same things and thinks about them in similar or complementary way, but I come out on the other side with more ideas than I put in and more questions to plug into the Curiosity Engine™️.
But until last Saturday evening, we had never even been in the same room!
I mean, the internet’s great, but nothing beats having a 5-hour long face-to-face conversation about life, the universe, and everything! (and that was just on the first day)
No matter how rich and detailed your mental model of someone can be from video calls, text messages, and emails, it gets a massive resolution upgrade after you spend time in person.
It made me want to meet more of my online friends in the near future.
🎟️ Speaking of which, my friend David Senra (📚🎙️) will be doing a live show in New York City with none other than Patrick O’Shaughnessy (☘️🎙️) on October 19th, 2023.
This is a unique opportunity — they may never do this again, who knows ¯\_(ツ)_/¯
Their first podcast together on ILTB was 🔥 and I expect this to also be great.
I wanted to let you know as soon as it was announced, but the news came out right after I posted my last edition… Sorry for the late notice, but hopefully you can still get your ticket!
Speaking of those two, while you wait for the event, check out the new podcast they did together:
I listened to it during my kid's jiu-jitsu class yesterday (🥋) — it’s a double shot of espresso straight into the spinal column! Very motivating and inspiring ☕️☕️🩻
⚓️🚢 The newsletter just passed 20,000 total subs!
Thank you for your support, I truly appreciate it and never expected this little steamboat would have such a big crew!
4,000 more and we’ll have two full Hobarts!
If you want clearance to go below deck and poke around the engine room, you can become a paid supporter, which will give you access to additional editions and to the private Discord. It’s the best way to make sure I can keep doing this!
➡️ There’s a 7-day free trial if you want to explore! ⬅️
Thank you for your support, I TRULY appreciate it! 💚 🥃
🏦 💰 Liberty Capital 💳 💴
💍👰🏻♀️🤵🏻♂️ Intercontinental Exchange and Black Knight marry… ✨ Constellation Software ✨ gets the crown jewels 👑
ICE’s acquisition of Black Knight was greenlit by regulators, but that required divesting some of the best assets…
Guess who was conveniently there to pick them up?
The Canadian VMS Crew, of course: 🚂
Accordingly, the parties expect to close the acquisition on September 5, 2023 and to complete the previously announced divestitures of Black Knight’s Empower and Optimal Blue businesses to subsidiaries of Constellation Software within 20 days thereafter.
The Empower deal is estimated at $190m.
Optimal Blue is the biggy:
$700m, but only $200m of that is in cash.
The rest is a 40-year promissory note at 7% interest but they don’t have to start payments until 5 years after closing! (so they’ll essentially pay it back with some of the cashflow from the asset itself).
It’s estimated that Constellation is paying 7x Adj. EBITDA or 3.3 EV/S for a growing asset with 47% adj. EBITDA margins. 😯
So that’s almost $1bn in assets divested for non-economic reasons. I love the smell of forced selling in the morning! 🔥
See also:
🇬🇧 ARM IPO Question 🤔 🐜 💰
If you were Masa Son at Softbank, having bought ARM for $32bn back in 2016, wanting to get a nice pop on the IPO of this asset, how would you go about it?
Ideally, you’d do this in 2021 in a hot market, but at the time Nvidia was still trying to buy the company… So now that the window has been missed, what else could you do?
Here’s one thing: Float less than 10% of the shares on the market. Then further reduce the float by having big chunks go directly to various strategic customers/partners.
TSMC recently announced that they wanted a $100m slice, but many others have expressed interest, including Apple, Nvidia, Intel, Samsung, Google, AMD, and MediaTek.
So the actual float is going to be pretty pretty small, I think. It’ll be interesting to see if that dynamic causes a big supply/demand imbalance for the stock out of the gate.
The narrative on ARM certainly is kind of lukewarm.
I think it’s fairly well understood that while there are a gazillion ARM chips out there and the company’s IP is very important to everything from phones to cars to industrial devices, the company’s economics are very different from, say, Nvidia or TSMC.
They just don’t have that kind of favored position in the value chain.
Could they start squeezing harder, jacking up prices and extracting more value for themselves? Would that accelerate the move to RISC-V for certain sectors?
Can they catch up with Apple, Qualcomm, and the hyperscalers when it comes to non-mobile chip design? How expensive would that be? ARM was laying off people in recent times (probably to make the margins look better for IPO), are they going to reverse that once they are public?
There are more questions than answers, but we’ll know soon enough!
🕵️♂️🩻 Going Deep on Meta Platforms with MBI (Facebook, Instagram, Whatsapp, VR/AR, AI, regulators, competition, etc)
In case you missed it, right before going on vacation I released a new podcast with my friend MBI (💎🐕):
It’s not 100% about Meta & Zuck, but the tangents are often the best parts!
🇯🇵🚘🚘🚘🏭 Production at 14 Toyota manufacturing plants in Japan was halted due to… insufficient disk space 😬
We think we’re so smart because we invented extreme ultra-violet lithography machines and large transformer models, but getting the basics right can still be a challenge:
Toyota's 14 Japanese factories all shut down for about two days last week due to a production order system malfunction caused by a lack of disk space, the company announced [...]
its Japanese factories and their 28 assembly lines were halted due to "some multiple servers that process part orders" becoming unavailable [...]
During the maintenance procedure, data that had accumulated in the database was deleted and organized, and an error occurred due to insufficient disk space, causing the system to stop. Since these servers were running on the same system, a similar failure occurred in the backup function, and a switchover could not be made.
Toyota made it very clear that the outage was "not caused by a cyberattack", but I don’t know if this isn’t worse from an optics point of view 🤔
Starlink 🤝 Cloudflare 📡 🛰️🛰️🛰️🛰️🛰️🛰️🛰️🛰️
The two cos are reported to be partnering to try to improve latency issues with Starlink. Here’s how they might be doing that:
Last June, SpaceX CEO Elon Musk said in a tweet that Starlink was working to address some issues with latency—delays in network transmissions—which can affect applications like online videogames.
In response, Cloudflare CEO Matthew Prince said that he would be interested in working with Musk to improve Starlink speeds by putting antennas on the roofs of Cloudflare’s data centers. It couldn’t be learned whether that is part of the arrangement between the two companies.
Cloudflare has a massive content delivery network (CDN) with over 300 points of presence in over 100 countries — basically, they cache a lot of content very close to internet users, often inside the datacenter of ISPs.
Cloudflare servers are 50 milliseconds or less from 95% of the Earth’s population.
So when you try to load a website or video, the bits don’t have far to travel and don’t face congestion on the open internet. This is one way that putting Starlink ground connections on top of Cloudflare DCs should improve performance.
Cloudflare also has some very fat private pipes that connect its various DCs together (from the latest published numbers, they have 209 terabits-per-second of capacity 🤯), so maybe part of the deal is also for some of Starlink’s ground traffic to flow through that infrastructure to speed things up.
🇨🇳✋🛑🐜 Intel Drops $5.4bn Tower Semiconductor acquisition because of China… But will still offer foundry services
Clearly in retaliation for the U.S. restricting access to leading-edge semiconductor equipment and chips, China has been holding back Intel’s acquisition of Tower Semiconductor for so long that they ended up dropping the whole thing.
It’s really putting Intel in a tough spot, because they already faced a ton of challenges trying to pivot the company into a foundry, and injecting some of Tower’s culture and know-how would’ve likely made that transition smoother.
Despite the deal falling through, Intel is finding other ways to collaborate with Tower:
Intel will offer foundry services to Tower Semiconductor in a new deal that will see the Israeli contract chipmaker invest $300 million in Intel's New Mexico factory, the companies said on Tuesday.
The partnership comes less than a month after both companies dropped their plans to merge as the proposed $5.4-billion deal failed to secure approval from regulators in China.
Under the latest agreement, Tower will acquire and own equipment and other fixed assets to be installed at the Rio Rancho fabrication unit.
It will gain a production capacity of over 600,000 photo layers per month at the site, helping the chipmaker support demand for the next generation 300 mm chips [I think they mean “wafer” here, not “chips” -Lib].
Not quite the same as a full integration between the two companies, but I’m sure they can figure out a win-win way of getting some of the same benefits.
Novo Nordisk (maker of Ozempic and Wegovy) rapidly becoming Europe's largest market cap
The race is between hyper-advanced semiconductor equipment and biotech vs old-world luxury 🤔
Via Chartr (that chart is a few days old, by now Novo may be #1)
🧪🔬 Liberty Labs 🧬 🔭
🎥 💣💥 Recreating the practical special effects of Nolan’s Oppenheimer (on a budget)
This is very cool, and a reminder that you can achieve all kinds of really neat effects practically.
A lot of know-how in the field is getting lost these days, so it’s nice to see Nolan still insisting on it.
Michigan’s Palisades nuclear power plant may get a second life ⚛️ 🪦🪽
This would be a big deal — the first time that a U.S. nuclear power plant that was closed would be restarted (unlike Diablo Canyon in California, which was thankfully saved before it would have been stupidly shut down).
Holtec has signed a power purchase agreement needed to restart the shuttered Palisades nuclear power plant in Michigan [...]
The energy company has entered a multidecade agreement that calls for restoring Palisades Power Plant's full 805 MW generating capacity
Sources say the agreement was signed Monday.
The agreement is contingent on the U.S. Department of Energy approving a $1 billion loan to reopen the plant.
If it moves ahead, it would also allow Holtec to add further capacity to the site, such as by installing new, small modular reactors.
If the money comes, it’s expected that Palisades could reopen in about 18 months.
I’m particularly intrigued by the expansion capability of the site.
The U.S. has lots of decommissioned coal plants with sites that could fairly easily be turned into nuclear power sites because there’s already infrastructure (transmission lines, rail lines, etc), but the obvious place to put new reactors whenever possible is at existing plants.
‘Hydro-Québec mulls reviving province's nuclear reactor, 10 years after shutdown’ 🇨🇦⚛️
Speaking of reviving nuclear power plants, I never thought I would *ever* see this:
The government-run utility confirmed Thursday that it is considering the revival of Gentilly-2, the province's only nuclear power plant, which was shut down in 2012. [...]
"Given the anticipated situation of energy in Quebec in the next few years, it would be irresponsible at this time to exclude certain energy sources and premature to draw any conclusions," the spokesperson, Maxence Huard-Lefebvre, said. [...]
The reactor, with a power of 675 megawatts, had been in commercial operation since 1983 before it was decommissioned, following the Fukushima disaster in Japan in 2011.
The plant employed some 800 people
As someone living in Quebec, I can tell you that hydropower is a big part of Quebec’s self-image, so even just looking at other sources is kind of a big deal.
We’re pretty far from the finish line on Gentilly-2, but I’m happy that it is considered at all. Looking at forecasts for tighter electricity supply in the future and the fact that hydro *is* weather-dependent, I’d feel a lot better if we diversified a bit to this other clean and 24/7 source.
The worst case is we just have extra power to export to the US, which isn’t so bad, but if it turns out that we’re unlucky with hydro at some point, having this plant could help stabilize the grid and make us a more dependable export partner.
‘If Earth were an exoplanet, JWST would know there's an intelligent civilization here’ 🌏🔭🛰️
We’re finding tons of exoplanets, which is pretty amazing considering that the first confirmed one was only discovered in 1992.
As of September 1st of this year, there were 5,506 confirmed exoplanets in 4,065 planetary systems.
But could we detect life on them if there was some? (Earth-like life, anyway)
A new study tried to simulate this using Earth’s own spectral signature, adding a bunch of noise to simulate the distance and see if it would still be possible to identify the presence of life.
The goal was to determine if enough data could still be captured to identify atmospheric models, even when the observations are faint and noisy. Sure enough, the signal-to-noise ratio was strong enough to identify many of the molecules for an Earth-like exoplanet within 50 light-years of Earth. [...]
he team showed that JWST could identify both biological signatures and technological signatures should they exist on a Trappist exoplanet.
Of course, the capability doesn’t mean that there can’t be false positives or false negatives, but it’s cool to know that in theory, our equipment is now sensitive enough to detect Earth’s life even if it was 40 light years away.
🎨 🎭 Liberty Studio 👩🎨 🎥
🍿 I went to the ‘Flipside’ Premiere at TIFF in Toronto 👍👍
Last weekend, I attended the premiere of the film 'Flipside' at Toronto's International Film Festival.
What a wonderful film! I laughed, I cried, and I'll never look at hotel soap the same way again!
Flipside is hard to describe, which is part of what makes it so interesting — Chris Wilcha has interwoven multiple of his film projects created over decades and somehow assembled them into a coherent whole thanks to the central thread of his own life connecting it all together — you have to see for yourself how he is able to successfully land the plane despite the high level of difficulty of what he's doing here! 🛬
The film shows how messy the creator's journey can be in real-life (unlike in fiction where you get a quick montage and everything turns out great), with some surprisingly deep lessons, some of which are delivered by none other than Deadwood creator David Milch! 🤠 🐴
(I did a podcast about Deadwood with David Senra, it was lots of fun!)
I may be biased because Jim O’Shaughnessy is co-executive producer along with Judd Apatow, and OSV's Infinite Films was involved, but you don’t have to take my word for it: The reviews have been very positive, and it got a rare A grade from IndieWire.
Here’s highlights from other reviews:
“There may not be a way to properly wrap up a movie of this sort, which couldn’t be more perfect if it tried… 'The Flipside' lives up to this in a triumphant way… A leap forward in the documentary genre, a supercut of nearly all the hallmarks of what it takes to make these sorts of films as much as what it takes to make them attractive…. With 'Flipside,' Chris Wilcha has tried to do everything and not only succeeds but can safely say it’s finished." (A-)
– Brian Farvour, The Playlist
“Wonderfully poignant… An extraordinary little documentary with a creative approach you might not see coming… It’s an ingenious concept, and Wilcha uses it to create an extraordinary ode to what it means to take a risk and pursue one’s dreams… A rousing meditation on the many forks in the road we face in life… One of the most creative and ambitious documentaries in recent memory.”
– Sean Boelman, Disappointment Media
If you are in Toronto and can make it to a screening, I highly recommend it, I think you’ll enjoy it. And if you aren’t, hopefully it will get wider distribution soon!
I’ll let you know when and where it’s available.
🎬🎨🧑🎨🇯🇵 Miyazaki un-retires for 4th time!
In the good news corner, it is reported that Hayao Miyazaki may be un-retiring for the fourth time and ‘The Boyd and The Heron’ (coming out in December) may not be his last film.
“He is currently working on ideas for a new film. He comes into his office every day and does that. This time, he’s not going to announce his retirement at all. He’s continuing working just as he has always done.”
Yay!
Welcome back! Vacation transitioning is difficult. Step one is complete, though, which is to know you need a switch that flips you into relaxation mode a bit quicker. The canoeing looks magical!