54: ❄️ Snowflake's Big Dog, Shopify & Affirm, Roblox & Nvidia Tease, Vietnam Threatens Facebook, Apple Makes a Move, the Real Ben Graham, AMD's GPU, and a #NeverSell Story for the Ages

"A typical PM."

John, when people thought the earth was flat, they were wrong.

When people thought the earth was spherical, they were wrong.

But if you think that thinking the earth is spherical is just as wrong as thinking the earth is flat, then your view is wronger than both of them put together.

-Isaac Asimov, The Relativity of Wrong

[If you’re curious, the Earth is an oblate spheroid]

You know in Lord of the Rings when they go "you have my sword" and "you have my axe" and so on.

Well, that's how I want to feel about the things I do. Life's too short to not really be in.

❖ I'm constantly learning stuff, but I'm also constantly forgetting stuff.

The real challenge is to keep the rate of #1 higher than the rate of #2. And hopefully the stuff I forget is less important/useful on average than the stuff I remember…

❏ This one starts with a square because it’s boring:

If it was just up to me, every edition would have about 25-33% more images. But email spam filters tend to get tripped by too many images, so one of the last things I do before publishing a new edition is go through and delete whatever images I feel I can live without. Some good ones end up on the cutting room floor, but ¯\_(ツ)_/¯

This is a reminder that a simple way to ensure this doesn’t happen to you is to create a filter in your email client (they can all do this — here’s a guide for Gmail) that forwards whatever comes from “LibertyRPF@substack.com” to Inbox. Sometimes just adding that email address to your contacts is enough, but not always.

h/t Mikey Rabinowitz for bringing to my attention that this was still an issue for some people.

Investing & Business

❄️ Frank Slootman: The CEO’s view of the CIO

Good short talk by Frank Slootman in Dec 2019 at CIODAY (14 minutes long). He’s funny and a good speaker, and makes some good points about the dynamics of that relationship.

Note: Colorful language in there, so be warned if you’re around young kids or whatever… though I guess the upside of your kids learning about cloud computing may outweigh the downsides of them hearing frank say “shit” a bunch of times ¯\_(ツ)_/¯

(I’m sorry I lost track of who shared this one with me. I usually write that down in my notes, but for some reason I don’t have it for this one. Hat tip to you, whoever you are!)

Stuff I didn’t Have Time to Get To: Roblox S-1, Nvidia Q3

Will probably have some stuff to say about both next week. In the meantime, you can read Matt Ball’s thread on Roblox. Also check out one of his piece from last Spring about “Digital Theme Park Platforms”.

On Nvidia, the numbers are kind of bonkers:

Overall revenue: +57%

Gaming revenue: +37%

Data-center revenue: +162%

Gross margin: 62.6%

By my napkin, data-center is now about 40% of revenue during this quarter, and this was a big gaming launch. If you have something that is 40% but is growing much faster than the rest, how big of a slice of the silicon pie does it become a few years down the road? I get there’s some inorganic in there with Mellanox, but still…

Anyway, looking forward to reading that transcript and probably sharing highlights next week.

Shopify’s Affirm Warrants (5%+)

San Francisco-based Affirm filed late Wednesday for an IPO that is projected to value the instalment payment provider at up to US$10-billion. As part of the paperwork, Affirm revealed that in July, it gave Shopify warrants to purchase up to 20.3 million of its shares for a penny each. The warrants were part of a transaction that made Affirm the sole provider of “buy now, pay later” plans to the thousands of U.S. retailers that use Shopify’s software.

The exact value of Shopify’s stake won’t be clear until Affirm completes the IPO and lists its shares on the Nasdaq exchange. However, Affirm’s prospectus states Shopify will own 5 per cent or more of the company, a holding that could be worth up to US$500-million.

Affirm was founded in 2012 by PayPal co-founder Max Levchin.

Meanwhile, Tobi is making his case to the video game industry for pandemic-friendly games (“We need a new class of multiplayer games. Specifically ones that don't require your whole brain and whole attention.”)…

Source. h/t @Komrade_Capital

Vietnam Threatens to Shut Down Facebook in the Country

Vietnam has threatened to shut down Facebook in the country if it does not bow to government pressure to censor more local political content on its platform [...]

Facebook complied with a government request in April to significantly increase its censorship of “anti-state” posts for local users, but Vietnam asked the company again in August to step up its restrictions of critical posts, the official said. (Source)

I don't think it’s likely it’ll be shut down. But I think it's a sign of the kind of political pressure that we're going to see more and more of, and the strange position that FB will find itself in, accused of too much censorship in some places and not enough in others.

And if it was shut down — because rulers in one-party states care about controlling information more than almost anything else — I bet there's a more compliant home-grown replacement that could appear in its place within not that long, so FB does have some real pressure to buckle... If it loses Vietnam, it probably doesn’t get it back, ever. And the company certainly doesn’t want to set precedents for other countries.

Ben Graham Appreciation, Recalibration Edition

Jason Zweig (hi Jason!) reminds us that the real Ben Graham was different from the caricature/short-hand that his name has become in many investing circle:

[The] common perception that Ben Graham was somehow in thrall to book value is silly.

(From the sixth edition of "Security Analysis," p. 558, h/t @DistillateCap )

(like Jason, I imagine, I hate when I don’t have a proper highlighter handy and need to do my best with a pen instead…)

I replied: “Graham was basically a renaissance man, and investing was just one of his interests. Not that many of his followers can say the same.”

To which Jason added this extra context:

Ben Graham finished college at age 20, published a paper on integrals in the American Mathematical Monthly at 23, was fluent in ancient Greek & Latin, wrote a Broadway play, patented an improved slide rule and taught himself Spanish to translate a Uruguayan novel.

A typical PM.

I rest my case.

Apple Reduces App Store Cut to 15% for <$1M Devs

The new App Store Small Business Program will benefit the vast majority of developers who sell digital goods and services on the store, providing them with a reduced commission on paid apps and in-app purchases. Developers can qualify for the program and a reduced, 15 percent commission if they earned up to $1 million in proceeds during the previous calendar year. [...]

The App Store’s standard commission rate of 30 percent remains in place for apps selling digital goods and services and making more than $1 million in proceeds, defined as a developer’s post-commission earnings. (Source)

This is a big deal, as Apple doesn’t touch this stuff very often. Clearly the pressure, political and from big platform participants like Epic, has been getting to them.

The new formula is a clever way to keep most of the same revenue — because of the power law nature of the App Store — but make millions of small devs happier.

There’s always less public outcry for big devs… Now anyone complaining about the cut is implicitly saying they’re in the “>$1M/year” club.

Countdown until Google is forced to do the same with the Play Store: T-minus...

Interviews: Anu Hariharan and John Collison (as an encore)

I enjoyed this recent interview with Anu Hariharan by Patrick O’Shaughnessy. She’s a partner at Y Combinator, used to be a Andreesen Horowitz. They mostly discuss investing in fast-growing businesses:

But during the conversation, she mentioned Stripe, and that made me go back and re-listen to Patrick’s interview with Stripe co-founder John Collison from… I was going to write “last year”, but it’s from June — it feels like at least a year or two ago:

I remembered really enjoying that one at the time, and it delivered on the second listen. The Collison brothers are modern renaissance men, and they’re a duo that I’d love to bring with me on my walks in the woods, I’m sure we wouldn’t lack for topics to discuss.

Oh, and Patrick is such a mensch that there’s a full transcript of the interview here.

Interview: Muji on ZScaler, Crowdstrike, Fastly, Cloudflare, and more

I’ve enjoyed Muji’s writings on hyper-growth B2B software names (hhhypergrowth!!!! the guy understands branding), and he recently gave an interview where he talks about the names above in a fairly accessible way (the interviewers aren’t nerds like me). Check it out:

‘Tell me a good #neversell story’

If you want more of the story, here’s Robert Wayne’s Wikipedia page.

Wayne's business attitude was already risk-averse due to his experience five years prior with the "very traumatic" failure of his slot machine business, the debt of which he had spent one year voluntarily repaying. Jobs secured a US$15,000 line of credit to buy product materials for Apple's first order which had been placed by The Byte Shop, whose reputation as a notoriously slow-paying vendor gave Wayne great concern for his future. Legally, all members of a partnership are personally responsible for any debts incurred by any partner; unlike Jobs and Wozniak, then 21 and 25, Wayne had personal assets that potential creditors could possibly seize.

Trivia: Wayne drew the first Apple logo. And no, it’s not the one you think. It’s this incredibly baroque one that I can’t exactly see stamped on millions of laptops and smartphones out there.

Science & Technology

Well, now I want one… ❤️

Mike Rose:

People have realized they can float ping pong balls on the Series X vent and

it's glorious

Sony and Nintendo will need an answer to this…

Battle of the Titans: AMD RX 6800 XT vs Nvidia RTX 3080

Here’s the back of the baseball card for both these monsters.

I’m really impressed that AMD managed to be this competitive with Nvidia’s great 3080 (in the benchmarks, Nvidia is about 5-6% ahead). It’s nice to see both companies being synchronized in having a really good generational leap forward, as the winners are all of us (even if you don’t game, this competition is healthy and will indirectly affect your life because GPUs aren’t only for games now).

The video gives benchmark results, but I’d be curious to see a comparison of how things look on one card vs the other. Is Nvidia’s RTX tech doing a better job at quasi-ray-tracing, for example?

I bet AMD’s engineers that did career-making work are a bit bummed: they had a chance to beat Nvidia at the high-end for an architecture generation, but their great work just so happened to coincide with Nvidia’s also career-making work and they end up neck & neck. Oh well, so it goes ¯\_(ツ)_/¯

h/t Will Hassell

Looks Like Mask Compliance is About to Go Up

Addressing male sexual and reproductive health in the wake of COVID-19 outbreak

COVID-19 features a state of hyperinflammation resulting in a “cytokine storm”, which leads to severe complications, such as the development of micro-thrombosis and disseminated intravascular coagulation (DIC). [...] great attention should be directed towards the possible long-term outcomes of the disease. Despite being a trivial matter for patients in intensive care units (ICUs), erectile dysfunction (ED) is a likely consequence of COVID-19 for survivors, and considering the high transmissibility of the infection and the higher contagion rates among elderly men, a worrying phenomenon for a large part of affected patients. (Source)

Some good context for this is this interview of Dr. Paul Offit by Peter Attia, which is mostly about the vaccines under development, but also contains a discussion (I’ve excerpted the audio here, just 1min20secs) of how Sars-CoV-2 can cause vasculitis, which can damage blood vessels in any organ in the body.

In short: It can be bad even if you survive, and focusing on just deaths is too binary and leads to bad decisions and worse outcomes than with a more nuanced view.

Or as CorpRaider said: “Either way, pfizer wins.” (ha!)

Proud Dad Corner, Electrical Experiment Edition

I'm impressed. I told my 6yo about static electricity, and one of the examples I gave was the sparks in his bedsheets in the dark.

The next day, by himself, like a miniature Ben Franklin, he decided to experiment. He took a string of LED Xmas lights, put the metal pins on the bed, and rubbed a blanket next to it with the room’s lights off.

The LEDs actually light up briefly! I didn’t even know that 1) the sheet would conduct electricity to the metal pins and 2) that it would be enough to light up a 10-15 feet long string of lights (granted, not to max brightness).

I’ve got a video of it, looking forward to showing it to him when he’s older.

Here’s a photo of the experimental setup.

The Arts & History

Killing Eve (Season 1)

I was reminded of that show recently. I think the first season was one of the funnest shows I’ve watched in a while, and I’m sad that Phoebe Waller-Bridge (‘Fleabag’ was just great — Thanks to Matt Ball for evangelizing that one) wasn’t the showrunner on S2 (where I stopped watching).

I think I’ll definitely rewatch it in a few years.

If you haven’t seen it, and are okay with violence — nothing that’ll give you nightmares like ‘Hannibal’, but let’s just say that one of the characters is a professional assassin — I recommend S1.

Already 4 Years Since Leonard Cohen Died

A true mensch, a sensitive soul who’s words have raised my EQ over the years. My second boy's middle name is 'Cohen' in his honor.

His music and wordsmithing isn’t for everyone, but if it’s for you, you probably love it.

I grew up with ‘The Future’ (1992), and still think it’s probably a good starting point for his mid-to-late era. I was just a teen thinking I was all edgy for liking Oliver Stone’s ‘Natural Born Killers’, and on that soundtrack were a couple track by a deep-voiced singer that just intrigued me to no end…

I also really enjoy his last few albums, and think he was on top of his game to the end. There’s also a pair of great live album from 2009 and 2014 (London and Dublin) that have a lot of good stuff (The Partisan and Who By Fire are *chef’s kiss*).

Melvins/KISS Anecdote

This one tickles me. It’s not a huge thing, so don’t expect 🤯, but I like these little anecdotes…

There’s a band I like called the Melvins.

While a lot of rock/metal/punk bands have pushed the limits of speed over the years, there’s always been a contingent of bands going the other way and trying to go slower and slower, kind of like the band Low (sometimes called “slowcore” — I recommend the albums ‘Trust’ and ‘Things We Lost in the Fire’), there’s also whole sub-genre of metal called Doom-Metal that also takes things slooooow (I really like the album ‘Foundations of Burden’ by Pallbearer)… Anyway, I’m getting carried away with the music taxonomy and only about 1.5% of you will care about this.

All you need to know about the Melvins for this is that they often will play more slowly than would be natural for the song, kinda dirge-like. It’s part of their style (they sometimes go fast too, btw).

On their 1993 album ‘Houdini’, they did a KISS cover of the song “Goin’ Blind”, which was written by Gene Simmons. But their version is slower, and downtuned.

So legend has it that they sent a cassette of the cover to Gene Simmons, and Gene bought a new tape deck because he thought it was broken.

If you want to compare, here’s the original Kiss song:

Here’s the Melvins cover:

And btw, the lyrics of this one are weird. Not sure what Simmons had in mind, but it’s basically a 93-year-old man flirting (?) with a 16-year-old girl…