89: Druckenmiller, Matt Ball Disassembles Apple, S&P Global, Julie Young on Roblox, Shopify + Facebook, Nissan's EVs, Grand Theft Auto, Substack, Pfizer's Learning Curve
"I feel like I just went to my own funeral, and I didn't like the eulogy."
It has always appalled me that really bright scientists almost all work in the most competitive fields, the ones in which they are making the least difference.
In other words, if they were hit by a truck, the same discovery would be made by somebody else about 10 minutes later.
—Aubrey de Grey
Sometimes we focus so much on the bear case 🐻
We forget to think about the beer case 🍻
📚 Books are fuel for thinking, but they don't replace thinking, despite many acting as if they did...
Reading something smart isn't enough to make you smart. An active part is required to digest, interconnect and integrate (it’s like that old Hugh MacLeod drawing). Many skip that part.
Obviously the best combination is reading a lot of good stuff and thinking a lot, but if I had to choose between reading a lot and thinking little, or reading little and thinking a lot, I know what I’d pick.
🛀 The thing with being online for a very long time: there are some people you've been following for years, and you kind of feel like you know them, even if they don't know you.
For example, I've been listening to the ATP podcast since 2013. I've heard 2 hours of conversation (at 2x) every week, so that's something like 715 hours of conversation between these three guys (and I've heard many of them on other podcasts/interviews, and read some of the stuff they've written).
That's a lot. How many hours of conversation have I had with most of my friends during that period? It's likely that only my wife ranks higher in quantity.
This is especially true for people who share a lot about their lives. Some journalists are just a vehicle for some information, they lend their voice to an institution that speaks through them, and only some small amount of their personality seeps through.
But with others, what you get is close to 100% them. They hold some back for privacy reasons or whatever, but apart from that, you get the essence.
Well, invert, always invert, and all that...
It made me think that I've been online for a long time, and I'm a bit of an over-sharer (or at least, I've never been online as "a professional trying to sell my services so I have to put up a professional front and restrain myself”).
So I'm guessing that there must be at least one person who's just been lurking and following me around (probably by accident, we just have similar interests so hang on the same corners of the internet) and over the past 5-10 years they've learned all kinds of crap about me, and seen me evolve as I learned about various things.
If that's you, drop me a line. Why lurk? Forget about the prime directive, establish contact, if only to say "hiya" — life's much more fun when we do these kind of things, because worst case, nothing happens, but when we're lucky, good stuff comes out of it.
Investing & Business
🐐 Stanley Druckenmiller Interview (Feb 3, 2021)
Druck’s talking about the size of the deficit and all I can think about is, “wow, he has a lot of framed photos in his office… oh look, there’s a cushion on the floor. Is that a polar bear tie?”
Ok, now I’m paying attention, the fed-macro part is over and he’s talking about companies (nothing against macro, but I’m just a tourist). 3-4th inning in cloud, thinks Asia will come out winner for coming years, FANG could do well because everybody’s in 40x sales names or “radioactive” reopening plays, betting on higher inflation, commodities, short dollar. Hmm.
“No down year since 1981 at Duquesne”
S&P Global Revenue Growth, Past 15 Years by Segment
Julie Young on Roblox
Great write up on this phenomenon that may be a bit under the radar to us old folks (does your birth year start with a 19xx?), but is ridiculously popular with the kids these days:
Roblox is where many kids are going today to hang out with friends, play games, and chill out. In August of 2020, Roblox had 56 million monthly active users. DAUs grew from 17mm in 2019 to a whopping 31mm in 2020 (54% are under 13). Users are on the service for an average of 2.5 hours PER DAY.
Probably the craziest stat from all of this: over half of all children in the United States have a Roblox account!!!! HALF!!!! This is absolutely insane to me. If you look at something like Twitter, for example, only 22% of all US adults use Twitter. When you consider how influential Twitter is in our lives, it gives you an idea of just how important Roblox is to Gen Alpha.
Julie’s really smart and has that quality of being right really often, so you should follow her on Twitter and subscribe to her thing.
Matthew Ball Puts Apple in the X-Ray Machine
This is a hard one to excerpt, because like most of the best essays, it builds things up piece by piece using such a tight interlocking mechanism that if you just look at C in isolation, it’s good, but not nearly as good as if you keep it in context of the A → B → C → D → E → F logic-crescendo.
So in short, put some time aside and read the magnum-opus tour-de-force supreme-court-oral-argument doctoral-thesis:
I love many things about Apple, and I want the company to be at its best, which is why it’s important that it gets some tough love and pushback to keep it on the path.
And because Apple is now big enough that it impacts everything in its orbit, Ball is doing all of us a favor here. I love the open internet more than Apple, but with some course-corrections and guardrails, both should be able to do well, and be a positive influence on each other.
Apple has been profoundly scarred and shaped by its near-death experience in the late 1990s, and that has colored a lot of their actions and obsessions since — but now they need to realize that they’re so big that past adaptations may be maladaptive now, and their protective reflexes don’t just impact them anymore.
I think Matt is pretty fair, and recognizes the good-faith argument that Apple has for many of the things that it does, and the real benefits produced (there’s not mustache-twirling villain here). But he also doesn’t flinch away from the unintended consequences or self-serving justifications either, and that’s required to approach the core of truth in a thing. Kudos.
Shopify Pay Becomes Native on Facebook and Instagram
The Shop Pay option will first be available to Instagram users on Tuesday and will roll out on Facebook Shops, the social-media company’s platform for small businesses, in the next few weeks.
Consumers will be able to use Shop Pay to complete purchases, expanding on existing options to use PayPal or manually enter credit or debit card information (Source)
Logical continuation of that partnership with FB that was announced a few months ago. Should be a win-win for both companies, and another sign that FB is making a big push into e-commerce.
Though I wonder, if FB keeps building its e-commerce stuff, some sites that may have been built on Shopify may be built directly on FB’s platform and maybe stay there and not need Shopify’s core product (even if they use Shop Pay, that’s still a loss for Shopify)? Or am I missing something about FB’s ambitions in the space… Not something I’ve followed too closely.
A Storm is Gathering
These four companies accounted for $86 billion in 2020 revenue, a 41% growth rate relative to 2019. [...]
We believe that collectively, these four companies will account for more than $115 billion in 2021 IaaS and PaaS revenue. (Source)
Of note, Alibaba’s Cloud seems larger than Google’s GCP, though not growing as fast.
Azure’s estimated revenue (because MSFT doesn’t break it out fully) is now over 50% of AWS’.
‘Grand Theft Auto V video game sold 20 million units in 2020, bringing its total sales to 140 million since the initial release in 2013’
“initial release in 2013”
Rockstar Games has sold more than 335 million units of the “Grand Theft Auto” series since the first installment launched in the late 1990s. (Source)
Nissan on EVs
“[Nissan will be] building on our strengths to electrify 100% of our all-new vehicle offering from the early 2030s in key markets.” (Source)
A few weasel words in there, but still good.
I love these battery cost charts. The price of gas engines isn't melting like that over time, so it's just a question of when it stops making any sense to even make internal combustion engines (and we're seeing the signs lately that 'when' is getting closer and closer).
Interview: Tim Urban of Wait But Why?
Another great interview by Jim O’Shaugnessy, one of my favorite of his so far:
I really liked Tim’s metaphor for the “idea lab” and the “echo chamber”.
This is ‘The Story of Us’ that they reference. I haven’t had a chance to read it (it’s quite long), but it’s on my list. Maybe by the time I get to it the book will be out…
Elliot Turner’s 2020 Letter, Shopify Story
RGA’s letter for 2020 is an interesting read, in good part because central to it is a section on a big mistake of omission (Shopify). It reminds me a bit of Giverny’s letters, where François Rochon has his “Podium of Errors” where he ranks the biggest mistakes of the year (even gives them bronze, silver, and gold medals).
Good habit to not sweep these under the rug, but rather highlight and learn from them.
Back to Turner:
So why did we pass on Shopify despite 1) deeply believing in the qualitative elements of the business; and, 2) seeing a meaningful gap between what we expected and the consensus expected? The answer is unfortunate but simple: we
lacked confidence in ourselves. It was the first time we truly experienced such a stark divergence between our expectation and the consensus and the result was the inclination was to pound ourselves over the head with how dumb we must be, rather than the other way around.
Also, we often thinks that mistakes are a point in time. But mistakes are often an ongoing process that can last quite a while:
While we say we missed Shopify in early 2016, the fact of the matter is, we missed it repeatedly between 2016 and 2018, when prices were comfortably above our uncompromising value framework. In effect, we missed purchasing shares in this company every single day we woke up for two years running, largely as a consequence to anchoring bias
I try to fairly frequently remind myself of my big mistakes, because it’s the best way to get some value from them, and not let them have been for nothing.
I even sometimes like to think that some of my biggest successes happened because of things I learned from past mistakes (paying tuition to the market gods), making them somewhat worth it. But I’m probably just lying to myself, and it’s still better to avoid mistakes in the first place, or at least learn from other people’s mistakes.
Hyundai-Kia: Apple who?
As predicted, Apple was ANGRY at the blabbing to the media, and this happened:
Hyundai Motor Co. and its affiliate Kia Motors Corp. were forced in separate exchange filings to say they weren’t in any talks with the tech behemoth, backing away from an earlier Hyundai statement that confirmed they were in discussions. (Source)
It’s clear who’s boss in that relationship (if there’s still one)…
Substack: Business Model & Some Numbers
Substack’s co-founder Hamish McKenzie wrote a piece riffing on Slack’s ad welcoming Microsoft to the space when they launched Teams (which itself was a riff on an old Apple ad welcoming IBM to the PC space), highlighting what he sees as Substack’s differentiated business model vs Twitter’s Revue and Facebook’s whatever new thing:
Substack is designed to be a calm space that encourages reflection. You read Substack posts in your inbox or on a web page that is free of advertising or any other distraction. There are no addiction-maximizing feeds, autoplaying videos, or retweetable quote-retweets to suck you into a psychological space you never asked to be in. You make decisions about which information to put into your brain based on how well certain writers reward your trust, not based on a dopamine hit gained by refreshing a feed packed with performative posturing.
But it’s the calmness of the model that’s the real killer feature. [...] We’re not hoping you become addicted to our feeds or that you will trade sleep for content consumption so we can sell your attention to advertisers.
I don’t know if it’ll be enough to keep winning, but there’s certainly some truth there.
It’s nice to have some things be separate. You probably don’t want to do dating on Facebook, so Tinder probably doesn’t have to worry too much. If you try to read ebooks on your iPad, it’s easier to get distracted than on a single-purpose Kindle.
Will it be hard for Twitter to really “get” the Substack space despite its main product being so different? Maybe. I don’t know. We’ll see.
Back to Hamish:
There are now more than 500,000 paid subscriptions across Substack, and the top ten writers collectively make more than $15 million a year. It’s still early days, but this thing is happening. [...]
In particular, Facebook and Twitter should do their utmost to give power to writers and readers. That means letting writers own their relationships with their readers and giving them the ability to take those relationships off the platform whenever they want.
That last one is important. Lots of creators realized in recent years that there’s someone between them and their fans/supporters, and if you’re publishing on Youtube or Facebook or the App/Play Store, whatever, you aren’t really in control, and Darth Vader can alter the deal on you, and pray it isn’t altered any further.
Science & Technology
‘Why does everyone have a unique gait when biologically most of us are all pretty similar?’
I liked the answer to this question, mostly because the image of the human body and all our limbs and articulations that it conjures up is really cool and makes the point really well:
Your gait is super-heavily influenced by the size, shape, and mass distribution of your entire body. You are basically a stack of pendulums on top of another, upside-down pendulum, and since every part of you is connected to every other part, your organs' momentum pulls on everything. Something off about your shoulder might change how you move your arms, which changes how you move your feet in order to compensate. Even subtle differences exponentially compound just because of how complex people are. (Source)
Pfizer Cutting Time to Produce Batch of COVID19 Vaccine from 110 days to 60
Pfizer expects to nearly cut in half the amount of time it takes to produce a batch of COVID-19 vaccine from 110 days to an average of 60 as it makes the process more efficient and production is built out [...]
“Nobody’s ever produced mRNA vaccines at this scale, so you can bet your bottom dollar the manufacturers are learning as they go. I bet you every day they run into some vaccine challenge and every day they solve it, and that goes into their playbook” [...]
Pfizer based its production system on how the vaccine was developed in the laboratory, Calitri said. Normally engineers would spend years improving efficiencies and cost-effectiveness. That's not what happened with COVID-19 [...]
making the DNA that starts the vaccine process first took 16 days; soon it will take nine or 10 (Source)
Hopefully they overshoot on efficiencies, along with the other manufacturers, and we get doses quicker than we expected.
Speaking of mRNA vaccines, here’s an interesting post that looks into the manufacturing process, and some of the myths surrounding it (don’t we have dozens of other companies that could produce plenty of doses if only Pfizer and Moderna allowed them to?):
Yeah, it’s a bit strange to quote an article about another article, but I don’t have time to read everything:
In his New Yorker article, “Why Walking Helps Us Think,” journalist Ferris Jabr writes that when we go for a walk, we perform better on tests of memory and attention; our brain cells build new connections, staving off the usual withering of brain tissue that comes with age; we can actively change the pace of our thoughts by deliberately walking more briskly or by slowing down; and our attention is left to meander and observe, helping us generate new ideas and to have strokes of insight. According to the Centers for Disease Control and Prevention, a single bout of moderate-to vigorous activity (including walking) can improve our sleep, thinking, and learning, while reducing symptoms of anxiety.
And doing it outdoors can compound the dividends. According to Dr. Jo Barton, Senior Lecturer of the School of Sport, Rehabilitation and Exercise Sciences at the University of Essex, you can improve your self-esteem and your mood with just five minutes of exposure to nature. Why does it work so quickly? As Barton shares, exposure to nature helps us switch from voluntary attention, which draws on our reserves of focus and energy, to involuntary attention, which requires less focus and energy. This allows us to recover from mental fatigue. (Source)
Now if you’ll excuse me, I’m going for a walk in the woods.
Update: I’m back, it was a good one. Here’s a photo I took:
The Arts & History
Difference between 10fps, 20fps, 30fps and 60fps
"I feel like I just went to my own funeral, and I didn't like the eulogy."
Recently (re)watched 'Mad Men' S3E6, the one with the lawnmower. What a great one that is. "We're sending you to Bombay!"
"It's like Iwo Jima in here." "He lost a foot." "Too bad. Just when he had gotten it in the door."
Or when they have to add Roger to the org chart slide with a marker...
In other news, I think I’m due for a rewatch of ‘The Royal Tenenbaums’ soon…