84: My Thoughts on WSB Phenomenon, Constellation Software's Topicus Spin-Out, Okta's Vantage Point, Databricks, Jason Zweig, and the Benefits of Gaming
"Waste is ugly, waste is inelegant."
If you think you are too small to be effective, you have never been in the dark with a mosquito.
Here's one for you flywheel fans (or is it time for some game theory? ugh):
The more WSB's stunts work, the more people hear about them.
The bigger the WSB forums gets (gained over 4.5m members in a few days, and lots of non-registered lurkers), the bigger the stunts they can pull off.
Rinse & repeat.
But the endgame was always the same, even if the reflexive faith-based nature of the experiment was primarily about not thinking about an endgame (diamond hands! I’m hodling forever!). And by the nature of these things, the dollar-weighted returns of the unsophisticated is always terrible because they all pile on near the top.
If you just keep asking “and then what?”, you see that at some point, things were going to go down a whole lot really quickly.
Just in the time it took me to write this, the stock has been up and down hundreds of dollars per share — it seemed like Robinhood stopping trading on a few names was crashing the stocks yesterday (the blowback of turning trading off in only those securities will be immense, even if it was out of their control — the first rule of liquidity crises is, you don’t talk about them…), and today we’re back to the races. But eventually, something will happen (“and then what?”).
I wish we had a name for these variants on ponzis where there's a romantic narrative that is sold very well, but the underlying structure is basically "I bought some at a lower price, and I want to convince tons of people to buy to make it go higher so I can make money".
There's The Real Plan that is unspoken (“convince lots of others to buy so the shares I bought low are worth more”) and The Plan You Talk About In Public (“this is about justice for the little guys against the ogres in their ivory towers, let’s get payback”).
Bitcoin has a lot of that too. Unspoken: “The more people are convinced to buy a limited supply asset, the richer I get” vs the spoken: “It’s about justice and creating a better world and giving power back to the little guy and democracy and building a techno-utopia and trustless decentralized systems, etc”… Meanwhile, the ratio of speculation on price moves vs. actual products and services being used is pretty skewed, at least so far — I still find the tech cool, but I wish it would deliver more cool stuff. Real artists ship.
It's like a secular religious movement around an asset... The propaganda and true believers and all that are very different from a traditional and purely cynical pump & dump.
These P&D always existed, but I think it's qualitatively different when millions are involved and it can take up all the attention-oxygen-in-the-room for weeks. Same with crypto and ICOs a few years ago (I remember watching some PUBG on Twitch and the gamers were chatting crypto with their audience — I bet if I log on Twitch right now, they’re talking about Gamestop). At some point, a big enough quantitative difference becomes qualitative.
But even the cynical take isn’t quite right, because the presence of “true believers” implies that some really are in it just for the stated mission, and have no idea they’re groomed as someone else’s greater fool/source of liquidity.
I also find the self-romanticization/myth-making that is central to these movements hugely fascinating.
All the memes about being the Spartans needing to hold off the hordes, William Wallace making a battle speech, Gladiators in the arena, storming the beaches in Normandy, lots of underdog metaphors and traditional virtues of valor and self-sacrifice for the cause, community, we happy few, we band of brothers, etc.
There’s also the vein of “YOLO, throw caution to the wind, just enjoy the chaos like the Joker would, betting it all/losing it all is a badge of honor, etc”.
It's tapping into a lot of tribal and religious instincts, it's very well done, and obviously effective. Hijacking very emotionally resonant metaphors and using them for their own ends.
Very darwinian too, how there's an army churning out a million memes, and those that are successful at resonating/selling the idea rise to the top (through up-voting and viral sharing). After this iterative process, these memes have very high fitness at helping recruit more people into the crusade (I feel it too, when I see the best Bitcoin HODL or WSB memes — very seductive).
It’s all fascinating. I don’t think it’s the last that we hear of these large groups of people emerging online and loosely coordinating on strange ‘projects’ that nobody saw coming. It's like a DDoS attack on Wall Street, but Wall Street forgot to set up their Cloudflare reverse-proxy....
It’s a bit like how Wikipedia emerged (nobody could “make” it happen) once the right tools/platforms were available — now tools like Robinhood/free options trading and Reddit/social media are creating these emergent behaviors that, once they have shown proof-of-concept and reach critical-mass for awareness, will be hard to put back in the box.
The question is, is this an acute outbreak of something that will be around, but mostly in the background, or is this more like Bitcoin in 2012 when people started ordering pizzas, and the real 2017-moment for WSB-style movements is still ahead?
BTW, if you’re looking for a good summary of the GME story since the real beginning in 2019, this thread does a good job.
🤦♀️ So in #83 I screwed up. I posted the wrong Elliot Turner interview video. I corrected it on the site, but in the email that went out, you got Elliot’s first interview with Andrew, which is mostly about Dropbox. If you want the second one, which is mostly about Twitter, this is it.
I even made a joke about Andrew’s pandemic beard because I saw it in the Youtube thumbnail (I listened to the interview as a podcast, didn’t watch video), but in the new video he’s clean shaven. Oops. Mea culpa.
🤔 I wonder if there's a hedge fund that had triple-digits returns last year, and was even working on a letter for LPs about the great returns... but blew up this week
Investing & Business
My Thoughts on Public Mobile (🇨🇦 Mobile Discount Carrier)
By nature I don't like to pay for things I don't use. Waste is ugly, waste is inelegant.
Being almost always on wifi (I "work" from home), when I got a smartphone, I picked up the cheapest, lowest-data plan that I could find.
It was a 500 megabytes/month plan with Videotron that is now costing $47 CAD/month (after some silent increases over the past few years, I’m sure — I should’ve paid better attention to that).
First, that seems ridiculously expensive to me for what it is, and the trade-offs are all wrong. Sure they reduce the "data" dial, but the "speed" dial was still maxed out (full LTE speed). I’d much rather have it the other way around.
That's why I was happy to learn of the existence of Public Mobile, a subsidiary of Telus (one of the major carriers in Canada) that keeps costs down by keeping it self-service and capping speeds at about 3G speeds (3mbps, or about 375 kilobytes/sec), but giving you a lot more data. It’s a clever way to segment the market.
So I'm now on a $28 CAD/month plan with 2.5 gigabytes/month of data, and after one year I’ll get a a “loyalty reward” of $1 off every month, and after 2 years, $2 off per month, etc.. It goes up to $5 off per month after 5 years. Cool concept, I wish more subscription services did that, instead of just raising prices quietly on you over time.
Overall, it’s a much way better fit for me.
The only sacrifice would be HD video and other big files, since at 3mbps text and photos are fine (I can scroll through Twitter smoothly!), but it’s not a real sacrifice since I couldn’t watch HD video on on a 500meg/month budget anyway. So nothing lost here.
But it's a big quality-of-life improvement to go from 500megs to 2.5gigs, as I can now stop worrying that I'll be out with my data turned on and my mother will send 10 photos and 2 videos on iMessage and use half my data for the month.
So I basically feel like I'm getting a better experience for almost half the price. Very cool.
I usually don't bother with referral stuff, but if this sounds interesting to you and you're in Canada, if you sign up with this Public Mobile referral code (P0KNQX) or through this link and you get $10 CAD in credit, and I get $1 off/month on my bill, which seems pretty win-win.
(Yes, to Americans or Europeans, all this will sound crazy expensive and limited — Welcome to Canada’s telecoms!)
Topicus to Trade February 1st (Constellation Spin-Out)
Topicus will trade on the TSX-Venture (that alone is bound to scare some) on February first under the ticker TOI. Trivia: “toi” means “you” in French, though of course that has nothing to do with anything.
There’s not much to add about it, except this little detail that I thought was kind of funny:
There are (i) 39,412,385 Subordinate Voting Shares issued and outstanding, of which 39,412,367 Subordinate Voting Shares are held by public shareholders and 18 are held by CSI (as fractional shares were not distributed as part of the dividend-in-kind)
I don’t know why, but it makes me smile to think that someone at CSI HQ has this account with the 1 super-voting share (super important) and 18 lonely common TOI shares.
Will they just be forgotten there forever? Will they be dumped when trading starts? Poor, unloved shares. That account is like a share orphanage. If CSI wants to donate the shares, I can provide a good home for them.
Okta’s 2021 ‘Businesses at Work’ Report
Okta has a good vantage point to see what apps and services are on the ascendent and which are waning, and they share some of those insights yearly.
Interview: Ali Ghodsi, co-founder and CEO of Databricks
Good interview by Patrick O’Shaughnessy. The biggest surprise to me was that Snowflake wasn’t mentioned once, but hey, expectations are made to be subverted, I guess.
It’s a good overview of the evolution of “big data” and what to do with it that doesn’t get too technical. MapReduce and Hadoop and Spark are discussed, but more with analogies than jargon, so if this isn’t your field, you can jump in and not feel too overwhelmed.
Interview: Jason Zweig (you know who he is)
It’s the father & son edition today: Jim O’Shaughnessy has a good interview with Jason Zweig.
I listened to it while walking in the snowy woods, and as the rest of the world was obsessing about what would WallStreetBets do next, it was refreshing to listen in on a thoughtful, calm, and fairly timeless conversation about human psychology and the importance of character and discipline. It certainly matched the calm setting around me.
Maybe you’ll find it refreshing too:
Science & Technology
Interview: Jane McGonigal, on the Benefits of Gaming (for Kids & Adults)
I really enjoyed this interview by Shane Parrish:
It’s one that I’ll be discussing with my wife after she’s also heard it. As parents of young kids, I think it’s important to think deeply about these kinds of questions and not just go with either what ‘society’ pushes on you, or first instincts, or what was ‘common sense’ 20 years ago when I was growing up.
Personally, I do think that gaming growing up helped me a lot. From the social aspects — games are a kind of social network, a built-in topic to discuss with peers — to the problem-solving training, the confidence-building, the training with computers and technology, the engineering ideas about optimization, financial ideas about managing an economy in RTSes, the strategic and tactical lessons from fighting games (either for a whole army in Starcraft or C&C, or the tactics of a FPS).
Interview: Psychologist Guy Winch
Excellent interview by Peter Attia.
I particularly liked the part with practical advice on how to clearly mark the separation from “work time” to “family time” or whatever else you want to do.
And the discussion about how our society is still in the early days of recognizing “psychological injuries”. You break your leg, people get it… You have diabetes, they can’t see it, but they understand. But you suffer from a rejection you can’t easily get over, and there’s very little understanding, everybody feels like it must be just them, and proven strategies for dealing with it aren’t always well-known. He thinks the pandemic will probably accelerate that process because the scale of the damage to people’s mental health is a lot bigger than we’ve had in a long time — it’s not just digital technologies being pull forward from the future...
Made me add his book to my list:
Who’s Building Artificial General Intelligence?
"Don't worry about AGI, people building AI are deeply ethical and fundamentally good people"
"DeepMind co-founder Suleyman had most of his management duties stripped away from him in following complaints that he bullied staff." 🤔
The Arts & History
Photo by Toshiyasu Morita
Artist’s website (you can buy various prints).
This pic was taken on Sep 25 at Filoli in Woodside, California. They have two water fountains in the sunken gardens which attract both birds and bees on hot days. [...]
For this photo, I used a high-end bridge camera with a 24-200mm lens. It seems like an odd choice to most people, but I prefer this camera for a for a few reasons: 1) It has a very quiet shutter. When I shoot hummingbirds I'm usually about three to four feet away, and they're easily startled by loud noises, so this is important; 2) It has a leaf shutter instead of a focal plane shutter, so it's much better for capturing fast motion; 3) The RX10 has a smaller image sensor, one inch, so it has more depth-of-field, which allows me to get more of the scene in focus. In the hummingbird and bees photo, it allowed me to get both the hummingbird and bees in focus for one shot; 4) I prefer a lighter camera. When I shoot hummingbirds, I am usually sitting for at least two hours with the camera less than two inches from my eye most of the time. Hummingbirds don't like sudden movement, so I sit very still, and when a hummingbird shows up, I slowly move the camera to my eye which I cannot do with a heavier camera.
VR 3D Painting is Really Cool
And even if I never paint anything, I think it could be fun someday to download other people’s paintings and explore them in my living room…
This is by Anna Zhilyaeva aka Anna Dream Brush.
This one of the famous Eugène Delacroix painting is also very cool, with her basically walking into the painting to add details, and then walking out to see it as a whole.