82: My Thoughts on Comparing Prices, AWS vs Elastic, WallStreetBets, Twitter Social Audio, Alteryx, Samsung 3nm Fab in Texas, SpaceX, and Glenfiddich's Bathroom
“How can we have insider knowledge when we don’t have any knowledge?”
People who have trouble coming up with good ideas, if they’re telling you the truth, will tell you they don’t have very many bad ideas.
But people who have plenty of good ideas, if they’re telling the truth, will say they have even more bad ideas.
So the goal isn’t to get good ideas; the goal is to get bad ideas. Because once you get enough bad ideas, then some good ones have to show up.
Comparing the price of good & services is the road to madness.
I mean, if I go system 2 on it, I get it, but my system 1 brain still gets riled up…
For that price, I could get a 24-core workstation with 128 gigs of RAM... Why does a pile of wood with an electric resistance heater (that I have to assemble myself, IKEA-style!) cost as much as a high-end workstation with more compute power than all the supercomputers in the world not that long ago?
I mean, I understand that tech has these huge deflationary pressures and economies of scale, but I still can't help but compare how getting some workers to change the shingles on my roof costs as much as half a car (which is the engineering, design, manufacturing, assembly, and safety testing work of thousands of highly trained people, and contains countless sensors, CPUs, wireless systems, and sophisticated moving parts that each required the work of thousands of other engineers and manufacturing people…).
I certainly wouldn’t mind seeing some of those tech pressures finally improve productivity in sectors that have been mostly untouched...
If one of the billionaires reading this feels like gifting me one of these babies so I can improve my cardio and brain health, I’ll be very grateful. Thanks.
🤔 Sometimes I wonder where David Sokol would be today if he had never owned those Lubrizol shares..
⏳ Ok, this one is a little weird. You can skip it (unless you are reading this in 2026).
I had a shower-thought: At least one person has to somehow stumble on this page in the archives 5 years in the future, most likely because a weird Google search leads them here.
Thinking about the eerie feeling that he or she will get when reading these words predicting this 5 years in the past makes it worth taking the time of writing this. Especially if their name is…. Jessie! (I imagine goosebumps if that was a good guess — but yes, I did look up the most unisex names in the US, can’t leave it all to chance…)
Hello from the past, Jessie. Ain’t the world a special place? Photons from your screen are hitting your retinas, and my words are in your brain, from many years ago. I wish I had a special message for you, other than “hello”, but sadly, nothing comes to mind ¯\_(ツ)_/¯
Please send me a email and let me know you found the time capsule, it’ll no doubt make my day because I’ll have forgotten about it by then, and it’ll be a nice surprise!
Investing & Business
AWS Strikes Back
The death star is powering up and it now looks like the jedi at Elastic will have to fight this in the trenches…
AWS is officially forking:
Our forks of Elasticsearch and Kibana will be based on the latest ALv2-licensed codebases, version 7.10. We will publish new GitHub repositories in the next few weeks. In time, both will be included in the existing Open Distro distributions, replacing the ALv2 builds provided by Elastic. We’re in this for the long haul, and will work in a way that fosters healthy and sustainable open source practices—including implementing shared project governance with a community of contributors.
Amazon’s angle in the rest of their blog post seems to be: we’re doing this for open source, Elastic’s new license isn’t really open source, we’re the defenders of the open source community, etc.
It all sounds great, but kind of overlooks that there’s also a large part of the open source community that thinks that AWS takes a lot and doesn’t give enough back, and threatens the survival of some of the companies that are doing almost all the building of those open source projects (the theory of open source is anyone can contribute, but in practice, you usually end up with the company that runs the project doing 95%+ of the work).
Or in Muuuuuuuujiiiiiiii’s words:
Tired of Elastic’s draconian measures? Come join our open source fork ... and help AWS profit off it!
I'd be more worried for Elastic if they didn't have insane development velocity. I may be wrong, but it feels to me like the diff between the fork and main branch will grow large pretty quickly and keep widening fast.
Focus in important, and Elastic’s whole company is focused on making this suite of products as good as possible and adding features as fast as possible. The Elasticsearch fork at AWS may not be in the top 50 priorities inside the behemoth… But time will tell.
I do think it’s a bit strange that AWS is taking such a hard-nosed approach on this and isn’t doing like Azure and GCP and partnering with the open source companies.
These partnerships must be pretty much pure margin on the software licensing side, and they also get paid for usage of their infrastructure. Seems like a better deal than generating a bunch of negative goodwill with developers by pushing around companies that are a small fraction of their size.
The WallStreetBets Wisdom/Madness of Crowds
Good post by ‘Dubra’ on the crazy phenomenon that is the WSB subreddit:
a community of approximately 1.6 million as of today [...] on a collective adaptive educational journey. [...]
It is not uncommon to see WSB acolytes pile into what are perceived to be the riskiest of trades. Calls on stocks trading at 100x enterprise value to revenue? Sure, no sweat. Weekly out of the money calls with 4 days left to expiry? No problem at all. Bankrupt equity looking to do an unprecedented equity offering while currently in bankruptcy? Load the boat.
WSB in essence has tried every trade type that your average Wall Street trader/investor/analyst would never do. While most trades end poorly, some have really worked. [...]
A common trade type on WSB that seems to work persistently is the mass buying by the collective of out-of-the-money (OTM) calls on various equities. The lower free float, the better. I have seen this enough now to declare the following: They have hacked Wall Street in this regard. [...]
Imagine being the poor option market maker at Citadel or Susquehanna. You might suddenly see $250 million worth of notional buying activity happen in OTM calls in minutes for no apparent reason. Then, as a market maker what do you have to do now that you are short $250 million notional of some stock via options? Delta hedge
In this case, that means you have to buy the underlying stock. As the stock rises, the option delta rises, which requires more buying by the market maker - a virtuous cycle. WSB just took what could have been a relatively small sum of money, multiplied it once via options and then again via the option market maker.
In essence, WSB can become the tail wagging the dog.
Even crazier is that since markets are adaptive and forward-looking:
WSB has likely taken some of these option market makers and turned them into Pavlov’s market makers. In not too long a time the WSB crew may not even need to buy the OTM calls, they may just need to think about buying OTM calls!
And if you want to get some flavor for the kind of copywriting that goes into whipping up the mob, check out this WSB “battle speech”. It’s very reminiscent of the crypto-speculation self-romanticizing that was particularly popular in 2017.
This line from Luke Kawa’s article on WSB back in February 2020 (15 years ago) is very good:
After user SolTrainRnsOnHolGran wondered whether r/WSB’s activities might constitute insider trading, a user named recentlyunearthed replied, “How can we have insider knowledge when we don’t have any knowledge?”
And for the latest WSB story, you can read about GME’s “infinite gamma squeeze”.
When All Is One?
More good writing by Byrne Hobart:
it wasn't easy to see why Russia's default in 1998 was so bad for Long-Term Capital Management, a company that didn't own any Russian assets. If everything is connected, and leverage is the single point of failure, then liquidity becomes the single source of success.
This is a self-fulfilling prophecy: as crises get more finance-driven, the financial sector becomes a more important mechanism for solving them, so the crisis-intervention cycle tends to make the financial sector more important and easier to intervene with—which makes the next round of emergency central bank measures more effective (at the cost of making them more necessary). (Source)
Social Audio: Twitter Spaces
The eventual monetization aspect is particularly intriguing and could create yet one more channel for independent creators to pay their bills:
Spaces is not currently monetized, but here’s how it could work—and it’s incredibly straightforward.
Charging for entry. Say $3.99 a head. With 500 listeners per week, you net over $100k annually via paywalls.
Accepting tips. This removes the barrier to entry, while allowing for active revenue based on the value you offer to your audience.
These could apply not only to the independent Substacker, but to the creator economy at large. Imagine Mr. Beast taking questions at $100 a pop. Imagine Cardi B raising $1M for charity before dropping a new single. The possibilities are endless and represent disintermediation of the creator economy.
Historically, as an introvert, I’ve not been the most comfortable with audio — I feel safer with writing, because you can revise things before hitting “send” — but I’ve been trying to overcome that because it opens the world to more opportunities to learn from cool people. Who knows, maybe I’ll give to Spaces thing a try at some point.
For more on the main player in that space right now, ClubHouse, check out what my friend Tae Kim wrote.
h/t Elliot Turner
Interview: Josh Silverman, Etsy CEO
I enjoyed this one:
Especially the part about how you shouldn’t do all the good ideas that come up at a company, but really try to focus on the fewest number of things you need to win, and execute as well as possible on those (rather than dilute effort and resources and attention among a million merely good ideas — he calls it “the worthwhile many vs the vital few”).
I also quite like what he says about (paraphrasing): “With every experiment that fails, we ask ourselves, could we have learned this faster and cheaper… we could probably have put a prototype in front of fewer people to learn this… didn’t have to put this in front of 4 million users…”
One of Josh’s big strengths seems to be how he’s constantly thinking about the process of building his product, and how to tune the various variables. This kind of systems’ thinking is fairly rare.
Interview: Abdullah Al-Rezwan aka Mostly Borrowed Ideas
Speaking of my friend MBI, here’s a good thoughtful interview by the also excellent Investment Talk:
One thing I really like is the long-term perspective that permeates all his thoughts (f.ex. “I constantly tell myself I have signed up for investing for the next 50-60 years. Whenever I think about in such time-frames, it instils a sense of calm in my investing process and root out FOMO as much as possible.” “Longevity, in my opinion, is the most important thing in the game of investing since as long as you remain alive, you can keep taking your shots.”)
The State of the Alteryx
Muuuuuuuuuuujiiiiiiiiiiii has a good overview of the recent developments (and more importantly, what they mean) at the company:
How are they transitioning to SaaS and what new management may have to do with that, that recent Snowflake partnership announcement, etc.
Science & Technology
Samsung Considers $10 Billion 3nm Fab in Austin, Texas
The world’s largest memory chip and smartphone maker is in discussions to locate a facility in Austin, Texas, capable of fabricating chips as advanced as 3 nanometers in the future, people familiar with the matter said. Plans are preliminary and subject to change but for now the aim is to kick off construction this year, install major equipment from 2022, then begin operations as early as 2023, they said. While the investment amount could fluctuate, Samsung’s plans would mean upwards of $10 billion to bankroll the project, one of the people said. [...]
The envisioned plant will be its first in the U.S. to use extreme ultraviolet lithography, the standard for next-generation silicon, the people said, asking not to be identified talking about internal deliberations. Asked about plans for a U.S. facility, Samsung said in an email no decision has yet been made. [...]
If Samsung goes ahead, it would effectively go head-to-head on American soil with TSMC, which is on track to build its own $12 billion chip plant in Arizona by 2024. (Source)
Having this type of capability in the US — including all the know-how and ecosystem of engineers — is probably important-enough that the government should be very generous with incentives. You don’t want to be penny-wise and pound-foolish on this kind of stuff, especially since the global competition isn’t exactly standing back and letting the chips fall where they may on their own…
SpaceX Record: 143 Satellites in One Trip
A new world record has been set for the number of satellites sent to space on a single rocket.
The 143 payloads, of all shapes and sizes, rode to orbit on a SpaceX Falcon rocket that launched out of Florida.
The number beats the previous record of 104 satellites carried aloft by an Indian vehicle in 2017. [...]
SpaceX itself had 10 satellites on the Falcon - the latest additions to its Starlink telecommunications mega-constellation, which is going to deliver broadband internet connections around the globe.
San Francisco's Planet company had the most satellites of all on the flight - 48. (Source)
This may as well be a technology, since it’s such a useful tool and most of us don’t possess it innately. And I’d guess most people reading this make a living with the quality of their comprehension and thinking, and one really improves the other.
Stephen Covey said “Most people do not listen with the intent to understand; they listen with the intent to reply.”
There’s a good discussion thread on Reddit about this idea here, and there’s a lot of good stuff in it, both anecdotes that might be eye-opening to some, and tips to do better that are worth trying out.
A friend who needed some serious marriage counseling with his wife now live by this rule: when they're arguing, neither is allowed to respond to a statement until they have re-stated what was said demonstrating understanding of it to their spouse's satisfaction. And it occurred to me that aside from making sure everyone is moving forward in the same direction, the practice slows down the pace of the argument allowing everyone to take their words into consideration before just blurting out "I hate you, you ruined my life."
Nice literary reference too:
When people think you're dying, they really, really listen to you, instead of just waiting for their turn to speak.
—Chuck Palahniuk, Fight Club 1996
h/t Blake Robbins & N.A.
The Arts & History
I still think about when Samin Nosrat was in that parmesan warehouse in Italy once in a while... I love that stuff so much.
Those of you who haven’t seen ‘Salt Fat Acid Heat’ (2018, Netflix, 4 episodes), I recommend it. There’s also a book that seems quite good, and it’s on my kitchen shelf, but I haven’t had time to explore it much yet.
I also just learned that she has a podcast — thanks Damien C. Tanner — which made me realize that it’s probably time for me to flip around my default assumption and just assume that everybody has a podcast now, until proven otherwise.
My fave scotch-related photo is the Glenfiddich distillery bathroom. Very on-brand.
I just learned that 'Mindhunter' (David Fincher) is on "indefinite hold" and the actors are released from contract. Too bad, it was a good show.
I've read the book on which the series is based and there's so much stuff I was looking forward to them covering... Hopefully it’s not dead, just mostly dead, and as we all know, there’s a big different between mostly dead, and all dead.