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We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 25 July 2021:

1. The Highest Forms of Wealth – Morgan Housel

Money buys happiness in the same way drugs bring pleasure: Incredible if done right, dangerous if used to mask a weakness, and disastrous when no amount is enough.

The highest forms of wealth are measured differently.

A few stick out:

1. Controlling your time and the ability to wake up and say, “I can do whatever I want today.”

Five-year-old Franklin Roosevelt complained that his life was dictated by rules. So his mother gave him a day free of structure – he could do whatever he pleased. Sara Roosevelt wrote in her diary that day: “Quite of his own accord, he went contently back to his routine.”

There’s a difference between working hard because you want to and working hard because someone else told you you had to, and how to do it, and when to do it. Even if you’re doing the same work, the independence of doing it on your own terms changes everything in the same way that sleeping in a tent is fun when you’re camping but miserable when you’re homeless.

To me, the highest form of wealth is controlling your time.

Wealth can lead to time independence, but it’s never assured. It can be the opposite, as whatever created the wealth – whether a company or an inheritance – creates a claim on your time in equal proportion to its financial reward. A great number of CEOs fall into this category: They have an abundance of wealth and not a moment of free time or scheduling control even when it’s desired, which is its own form of poverty.

Charlie Munger summed it up: “I did not intend to get rich. I just wanted to get independent.” It’s a wonderful goal, and harder to measure than net worth.

2. How to Predict a Market Crash – Ben Carlson

I’m not actually sure if Dent believes each one of his predictions but his latest interview provides some clues as to how the most preeminent market soothsayers are able to make market crash predictions over and over again.

Here’s how to predict a market crash without ever admitting you were wrong if it doesn’t come true:…

…Move the goalposts when you’re wrong. Once you’ve gone out on a limb with a prediction for a crash with a specific time frame in mind, eventually you have to pay the piper. Either you’re right or you’re wrong.

And since market crashes are fairly infrequent, if you keep predicting one you’re going to be wrong way more often than right.

You have two options when you make a prediction that turns out to be wrong:

(1) Admit you were wrong.
(2) Move the goalposts.

Let’s see which one Dent went with since he’s been predicting “the biggest crash ever” for years:

[Question] “You told me in an interview this past March that “the biggest crash ever” would likely occur by the end of this June. What are your thoughts on why that didn’t happen?

[Answer] It’s the same old story: We’ve been rebounding since COVID crashed us in March of last year. The stimulus was off the reservation! The central banks said, “We’ll triple down.” But that stresses the system: not letting the economy rebalance, not washing out zombie companies. Twenty percent of large public companies can’t meet their debt service.

So it was massive stimulus and the natural recovery — [Americans] had to hold back [spending] for months. So now we have this bounce.

We’ve been rebounding since COVID crashed us in March of last year. But I don’t think it’s going to last, and the markets don’t think it’s going to last. The bond markets are saying, “Yeah, now we’ve got 3% or 4% inflation, but it’s temporary.”

Governments will keep this bubble going no matter what. So the question is: When does it blow?”

Ah yes, the time-honored tradition of blaming the Fed for your ill-advised predictions. It’s almost like some pundits would like to invest as if central banks don’t exist, when in fact, they do.

3. Mark In The Metaverse – Casey Newton and Mark Zuckerberg

As always, there’s a lot to discuss with you — and the White House is demanding Facebook do more to remove vaccine misinformation, which I know is on a lot of people’s minds right now. I want to get to that, but I want to start with this talk you gave internally at Facebook a few weeks ago, which I recently had a chance to watch. You told your employees that your future vision of Facebook is not the two-dimensional version of it that we’re using today, but something called the metaverse. So what is a metaverse and what parts of it does Facebook plan to build?

This is a big topic. The metaverse is a vision that spans many companies — the whole industry. You can think about it as the successor to the mobile internet. And it’s certainly not something that any one company is going to build, but I think a big part of our next chapter is going to hopefully be contributing to building that, in partnership with a lot of other companies and creators and developers. But you can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it. And you feel present with other people as if you were in other places, having different experiences that you couldn’t necessarily do on a 2D app or webpage, like dancing, for example, or different types of fitness.

I think a lot of people, when they think about the metaverse, they think about just virtual reality — which I think is going to be an important part of that. And that’s clearly a part that we’re very invested in, because it’s the technology that delivers the clearest form of presence. But the metaverse isn’t just virtual reality. It’s going to be accessible across all of our different computing platforms; VR and AR, but also PC, and also mobile devices and game consoles. Speaking of which, a lot of people also think about the metaverse as primarily something that’s about gaming. And I think entertainment is clearly going to be a big part of it, but I don’t think that this is just gaming. I think that this is a persistent, synchronous environment where we can be together, which I think is probably going to resemble some kind of a hybrid between the social platforms that we see today, but an environment where you’re embodied in it.

So that can be 3D — it doesn’t have to be. You might be able to jump into an experience, like a 3D concert or something, from your phone, so you can get elements that are 2D or elements that are 3D. I’d love to go through a bunch of the use cases in more detail, but overall, I think that this is going to be a really big part of the next chapter for the technology industry, and it’s something that we’re very excited about.

It just touches a lot of the biggest themes that we’re working on. Think about things like community and creators as one, or digital commerce as a second, or building out the next set of computing platforms, like virtual and augmented reality, to give people that sense of presence. I think all of these different initiatives that we have at Facebook today will basically ladder up together to contribute to helping to build this metaverse vision.

And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company. And obviously, all of the work that we’re doing across the apps that people use today contribute directly to this vision in terms of building community and creators. So there’s a lot to jump into here. I’m curious what direction you want to take this in. But this is something that I’m spending a lot of time on, thinking a lot about, we’re working on a ton. And I think it’s just a big part of the next chapter for the work that we’re going to do in the whole industry.

4. New cancer treatments may be on the horizon—thanks to mRNA vaccines – Stacey Colino

Molly Cassidy was studying for the Arizona bar exam in February 2019 when she felt an excruciating pain in her ear. The pain eventually radiated down through her jaw, leading her to discover a bump under her tongue. “I had several doctors tell me it was stress-related because I was studying for the bar and I had a 10-month-old son,” recalls Cassidy, who also has a Ph.D. in education. After continuing to seek medical care, she found out that she had an aggressive form of head and neck cancer that required intensive treatment.

After doctors removed part of her tongue along with 35 lymph nodes, Cassidy went through 35 sessions of radiation concurrent with three cycles of chemotherapy. Ten days after she completed treatment, Cassidy noticed a marble-like lump on her collarbone. The cancer had returned—and with a vengeance: It had spread throughout her neck and to her lungs. “By that point, I was really out of options because the other treatments hadn’t worked,” says Cassidy, now 38, who lives in Tucson. “In the summer of 2019, I was told my cancer was very severe and to get my affairs in order. I even planned my funeral.”

When doctors removed the tumor from her collarbone, they told her that she might be eligible to join a clinical trial at the University of Arizona Cancer Center that was testing an mRNA (messenger ribonucleic acid) vaccine—similar technology to the Pfizer and Moderna COVID-19 vaccines—in combination with an immunotherapy drug to treat colorectal and head and neck cancers. Whereas the COVID-19 vaccines are preventative, mRNA vaccines for cancer are therapeutic, and Cassidy jumped at the opportunity to participate. “I was at the right place at the right time for this clinical trial,” she says….

…Some mRNA vaccines for cancer take an off-the-shelf approach: These ready-made vaccines are designed to look for target proteins that appear on the surface of certain cancer tumors. How well they work is a matter of speculation right now, but some experts have concerns. “The question is: What is the target? You always have to have the right thing to target for the vaccine to be effective,” says David Braun, an oncologist at the Dana-Farber Cancer Institute and Harvard Medical School who specializes in immunotherapies. After all, with cancer, there isn’t a universal target the way there is with the coronavirus’s spike protein, and DNA mutations in cancer cells vary from one patient to another.

This is where personalized mRNA cancer vaccines enter the picture—and these may be more promising, experts say. With the personalized approach, a sample of tissue is taken from a patient’s tumor and their DNA is analyzed to identify mutations that distinguish the cancer cells from the normal, healthy cells, explains Bauman, who is also chief of hematology/oncology at the UA College of Medicine-Tucson. Computers compare the two DNA samples to identify the unique mutations in a tumor, then the results are used to design a molecule of mRNA that will go into the vaccine. This is typically done in four-to-eight-weeks—“it’s a technical tour de force to be able to do that,” says Robert A. Seder, chief of the Cellular Immunology Section of the Vaccine Research Center at the National Institute of Allergy and Infectious Diseases.

5. Twitter thread on how the use of Glassdoor could lead to better investing results – Impact Growth 

Glassdoor a worthwhile tool for forecasting stock returns?

🧩 I recorded the following data for all Nasdaq constituents to find out 

– ✨ Current Rating

– 📊 # of Reviews

– 🗣️ Rec to a Friend? 

– 👔 Approve of CEO? 

– 📈 Rating 2yrs ago

1) Do overall ratings correlate with stock returns?

✅ Yes!

📈 There exists a clear relationship between how highly employees rate a company and how well the stock does

2) Do stock returns correlate with 2yr rating changes? 

✅ Yes, but only over the longer-run

Avg 1/3yr returns when ratings are up/down over the last 2yrs:

📈 +35% / +107%

📉 +34% / +77%

3) The better the CEO, the better the stock?

Yes!

A clear relationship between CEO rating and long-run stock performance

6. Infinity Revenue, Infinity Possibilities – Packy McCormick

From an internet cafe in Cabanatuan City, Philippines, a 22-year-old named Howard described the game he plays to make a living as innocent-looking but strategic. That game, Axie Infinity is a Pokémon-like game built on the Ethereum blockchain in which people buy digital pets, called Axies, as NFTs, and breed, battle, and trade them. It’s cute. It’s unassuming…

…Axie’s cuteness obfuscates an absurdly fast-growing business, one counterintuitively trying to vertically integrate in a web3 ecosystem known for composing modularly. Beyond the business, it has a wildly bold master plan to reshape economic policy and local governance by showing what’s possible when people work in the Metaverse. In its whitepaper, Axie developer Sky Mavis explicitly says, “You can think of Axie as a nation with a real economy.”

That’s the grand plan. Right now, most of the focus on Axie centers around its eye-popping growth… Axie Infinity is picking up players and revenue at a nearly-unprecedented clip…

…In April, Axie did about $670k in revenue.

In May, it did $3.0 million.

In June, $12.2 million.

In July, just 18 days into the month, it’s already at $79 million.

Delphi Digital projects that it will close this month at $153 million. 

The Axie protocol generates revenue by taking a 4.25% fee when players buy and sell Axie NFTs in its marketplace, and by charging fees for breeding Axies to create new ones in the form of its tokens, Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). AXS and SLP are denominated in ETH, which has been cut by more than half since May; Axie has grown USD revenue even in the face of falling ETH prices.

7. Software Beyond the Stratosphere: Loft Orbital Launches World’s First Commercial Ride-Share Satellites – Ubiquity Ventures

On June 29, 2021, Loft Orbital activated the world’s first two commercial ride-share satellites in orbit around Earth. The missions were called YAM-2 and YAM-3, where YAM stands for “yet another mission”. Prior to Loft Orbital, it would take 5 to 10 years to design, build, and launch a satellite containing a single dedicated payload to Earth orbit where it can carry out its work such as transmitting signals like satellite TV or internet, snapping photos for Google Maps, etc.

Instead, Loft Orbital’s satellites bring several different customers’ payloads to orbit at the same time. These two particular Loft Orbital satellites are carrying 10 different customer payloads, spanning many different industries:

• Established space: Eutelsat (Europe’s largest satcom provider)
• Government: DARPA and the UAE space agency
• Newspace: Totum and others

These customers are utilizing their sensor payloads for a variety of use cases including IoT connectivity, weather data, flying space autonomy software, precision positioning, and more. Future Loft Orbital missions have already signed up customers including Honeywell, NASA, and the US Space Force.

For each of these customers, Loft Orbital is the fastest and simplest path to space…

…Loft makes it simple and fast for more people to utilize space.

By doing so, Loft is unlocking a massive amount of demand from potential space users who may not have had the knowhow, resources (typically billions of dollars for a sovereign government) or time (typically 10+ years) to get to space. To accomplish this, Loft Orbital designed these satellites leveraging their plug-and-play payload adapter, attached various customer payloads, booked launches on rockets, coordinated regulatory certifications, tested the completed satellite (thermal, vibration, and more), and integrated these satellites onto a rocket. From here, Loft Orbital will manage these satellites in orbit using their Cockpit mission control software and downlink data from these customer payloads for the next few years. Loft Orbital customers get to focus on their payload and leave everything else to Loft.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Facebook. Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 18 July 2021:

1. Think different: 10 unconventional lessons from owning Apple shares for 10 years – Chin Hui Leong

3. Unconventional wisdom

The world plunged into a financial crisis in 2008. When it comes to recessions, conventional wisdom suggests that you should rotate out of discretionary into non-discretionary stocks.

Yet, Apple’s strong business performance during this period puts a dent in this belief. Sales of its devices, which are often deemed to be discretionary in nature, propelled the firm’s revenue up by over 52 per cent between 2007 and 2009.

In contrast, non-discretionary stocks such as Proctor and Gamble (NYSE: PG) only managed a tepid 5.6 per cent revenue growth in that period.

Conventional wisdom does not always hold up. Look for real-life evidence.

4. Unimaginable growth

When I bought Apple shares in 2010, the company generated a little under US$43 billion in revenue for fiscal year 2009. By 2012, its topline had exceeded US$156 billion. In just three years, sales more than tripled, a phenomenal feat by any measure.

As investors, we should recognise that we can only project what we can imagine. When it comes to great companies such as Apple, you are better off leaving plenty of leeway to be surprised on the upside. From my experience, they often do.

5. Internet-scale businesses

In 2010, there were no trillion-dollar companies; today, there are five such companies. A big reason is smartphones, which have helped to increase the global population with Internet from 1.8 billion in 2010 to over five billion today.

Connectivity has made it possible to reach billions of customers today, a scale that did not exist a decade ago.

As investors, we should expect to see more trillion dollar, Internet-scale companies in the future.

6. A different future

If you plan to buy an innovative company, be ready for the business to look different a decade from today.

Case in point: At the end of fiscal year 2009, Apple was a product-focused company. Sales of iPhones, iPods and Macs made up well over 80 per cent of its revenue. Software and services accounted for less than 6 per cent.

By fiscal 2020, services had grown to almost a fifth of all its revenue and over a third of its gross profits. For a sense of scale, Apple’s services revenue alone is more than twice what Netflix (NASDAQ: NFLX) makes in a year.

7. Value you can’t see

Apple has introduced new products over the past decade. The Apple Watch was introduced in 2014, followed by the debut of Airpods two years later . In 2017, HomePod was launched.

Thing is, much of its roadmap was not visible in 2010.

Therefore, if you valued Apple’s business a decade ago, you would not have known the future value these products would create.

Again, innovative companies tend to surprise on the upside.

2. What Is CRISPR? – CB Insights

CRISPR is a defining feature of the bacterial genetic code and its immune system, functioning as a defense system that bacteria use to protect themselves against attacks from viruses. It’s also used by organisms in the Archaea kingdom (single-celled microorganisms).

The acronym “CRISPR” stands for Clustered Regularly Interspaced Short Palindromic Repeats. Essentially, it is a series of short repeating DNA sequences with “spacers” sitting in between them. 

Bacteria use these genetic sequences to “remember” each specific virus that attacks them.

They do this by incorporating the virus’ DNA into their own bacterial genome. This viral DNA ends up as the spacers in the CRISPR sequence. This method then gives the bacteria protection or immunity when a specific virus tries to attack again.

Accompanying CRISPR are genes that are always located nearby, called Cas (CRISPR-associated) genes.

Once activated, these genes make special proteins known as enzymes that seem to have co-evolved with CRISPR. The significance of these Cas enzymes is their ability to act as “molecular scissors” that can cut into DNA.

To recap: in nature, when a virus invades bacteria, its unique DNA is integrated into a CRISPR sequence in the bacterial genome. This means that the next time the virus attacks, the bacteria will remember it and send RNA and Cas to locate and destroy the virus.

While there are other Cas enzymes derived from bacteria that cut out viruses when they attack bacteria, Cas9 is the best enzyme at doing this in animals. The widely-known term CRISPR-Cas9 refers to a Cas variety being used to cut animal (and human) DNA.

In harnessing this technology, researchers have added a new step: after DNA is cut by CRISPR-Cas9, a new DNA sequence carrying a “fixed” version of a gene can nestle into the new space. Alternatively, the cut can altogether “knock out” of a particular unwanted gene — for example, a gene that causes diseases.

One way to think about CRISPR-Cas9 is to compare it to the Find & Replace function in Word: it finds the genetic data (or “word”) you want to correct and replaces it with new material. Or, as CRISPR pioneer Jennifer Doudna puts it in her book A Crack In Creation: Gene Editing and the Unthinkable Power to Control Evolution, CRISPR is like a Swiss army knife, with different functions depending on how we want to use it.

CRISPR research has moved so fast that it’s already gone beyond basic DNA editing. In December 2017, the Salk Institute designed a “handicapped” version of the CRISPR-Cas9 system, capable of turning a targeted gene on or off without editing the genome at all. Going forward, this kind of process could ease the concerns surrounding the permanent nature of gene editing.

3. Let the bullets fly for a while – Lillian Li

There’s a symbiotic relationship between old public institutions and rising new digital institutions in China. Didi cleaned up the grey market for black cabs, Meituan and Ele.ma act as de facto restaurant inspectors. Every content platform carries out content moderation on behalf of the party. The government is pragmatic. In the fragmented authoritarian governance structure of China, the agents that can introduce and maintain legibility stay. 

With these hybrid governance structures experiencing hypergrowth, it is not obvious what should be regulated and how. Despite the absence of a blueprint, there is a regulator cadence that I term “let the bullets fly for a while”…

…To fully grok China, one needs to watch the brilliantly dark film called Let the Bullets Fly. Since its release in 2010, the tale about a robber-turned-pretend governor in the feudalist Goosetown has become a Chinese cyberspace meme staple. Ladened with things said and unsaid about the rules and boundaries of power, money and lawfulness in China, it is a cultural touchstone.

In the midst of pivotal scenes —bewildering battles where nothing is clear — subordinates ask the robber-governor what to do. Inevitably, he responds with the infamous line “Let the bullets fly for a while.” Meaning, let the chaos run; who knows what issues resolve themselves without intervention, or when the tide will turn. Inaction is an asset during uncertainty. Calling things too soon shuts down possibilities.

My love of Chinese Internet memes aside, this turn of phrase has resonance amongst regulators and economists. It’s been a favourite catchphrase in conversations when they are asked to describe the Chinese regulatory approach. This is also borne out by macroeconomic theory3, when markets experience high future uncertainty (as is the case in new emerging markets) where regulators have inadequate regulatory tools, bias towards inaction is a dominant strategy.

Deng’s slogan of “crossing the river by feeling the stones” captures the subtle pragmatism needed to navigate brave new worlds. Partly due to imperfect information and partly due to the lack of consensus on the regulatory approaches to take, Chinese regulators have historically taken an-observe-then-act approach. 

4. Scale: Rational in the Fullness of Time – Packy McCormick

When Wang and co-founder Lucy Guo founded Scale out of Y Combinator in 2016, the company was called Scale API and its value prop was essentially that it was a more reliable Mechanical Turk with an API. They started with the least sexy-sounding piece of an incredibly sexy-sounding industry: human-powered data labeling.

Customers sent Scale data, and Scale worked with teams of contractors around the world to label it. Customers send Scale pictures, videos, and Lidar point clouds, and Scale’s software-human teams would send back files saying “that’s a tree, that’s a person, that’s a stop light, that’s a pothole.”

By using ML to identify the easy stuff first and routing more difficult requests to the right contractors, Scale could provide more accurate data more cheaply than competitors. Useful, certainly, but it’s hard to see how a business like that … scales. (I’m sorry, but I also can’t promise that will be the last scale pun).

Scale’s ambitions are obfuscated by its starting point: using humans to build a seemingly commodity product. A bet on Scale is a bet that data labeling is the right starting point to deliver the entire suite of AI infrastructure products.

If Wang is right, if data is the new code, the biggest bottleneck for AI/ML development, and the right insertion point into the ML lifecycle, then the brilliance of the strategy will unfold, slowly at first then quickly, over the coming years. It will all look rational in the fullness of time.

Scale has a high ceiling. It has the potential to be one of the largest technology companies of this generation, and to usher in an era of technology development so rapid that it’s hard to comprehend from our current vantage point. But it hasn’t been all clear skies to date, and the future won’t be easy either. It will face competition from the richest companies and smartest people in the world. It still has a lot to prove.

In either case, Scale is a company you need to know. It’s also an excellent excuse to dive into the AI and ML landscape and separate fact from science fiction. It’s looking increasingly likely that AI will find itself in the technology impact pantheon alongside the computer, the internet, and potentially web3.

5. Lessons in Low Ego Leadership with DocuSign CEO Dan Springer – Mathilde Collin and Dan Springer

Mathilde Collin: Great. I’ve heard from many people that you’re a great leader and I think you’ve already spent twenty five years in leadership positions. And I’m curious if you have any philosophy on leadership that you’d like to share with our audience.

Dan Springer: Yeah, I mean there’s a slightly geeky term that I like to use to sort of simplify how I evaluate leaders in the company or when I’m interviewing people about potentially bringing in a company which is sort of combining three different factors that I think are really critical.

The first one is whether people have the right sort of skills and smarts to be effective in their job. The second one is, are they able to manage their ego and so that they’re able to be manager, you go well, folks on the teams results as opposed to their individual results and credit analysis is simply how hard they work and how much they apply themselves.

And the formula that I like to use with those three things is I take the S or the smarts and skills divide that by the ego. Did you want to do a better job minimizing that and then raise that quotient to the power of how hard you work and you can play around with numbers like one to five and do your own assessment. And so to see this sort of interesting things, you do play around with the math. But the key thing for me is to realize that to some extent you can get smarter and you can develop more skills. But we’re all sort of given some certain level of capabilities that we have and some better for some jobs. Once you have that, the parts you can really control with how you manage your ego and how you really apply yourself and how hard you work. And so I try to encourage people to say that’s where you should put your focus and developing yourself as an individual contributor, but particularly as a manager is are you going to be successful by those two variables you can control?

Mathilde Collin: And I’m curious, how do you teach people or help people work on their ego?

Dan Springer: So that’s the part that’s interesting because sometimes it’s easy for people, some people naturally have high cues. Their personality is to be supportive of other people. They get their joy out of watching people develop. So it’s easy for them to do it. And some people, it’s really, really difficult. And the thing I would tell you is that we’re all on a journey. And when I try to talk to people about ego management, if you will, I try to go back and say, hey, let me tell you, I think today I’ve gotten to a point on a one to five scale, which is I’ve gotten to about four. I think I do a pretty good job of putting the organization first. Customers first. The other employees first over myself.

But when I was twenty three, a young person I go, I probably was a one or two on ego. I you know, I was very focused on my own career. I was competitive, I was ambitious. And, you know, I was not great at that. I had some early management jobs where it wasn’t, I don’t think, very good as a manager and very sensitive. I was managing people much older than I was, and I just didn’t have an awareness of how to do that.

Well, so you sort of start off and say, I’ve been there is someone struggling, I’ve been where you are. It takes some work. But what it mostly takes is awareness and focus. And so that’s what I try to tell them stories about. Here’s places that I wasn’t aware of. So not just me, so I could be other stories of other people. And here’s what they did to be more successful, because that’s one. And the second big thing is giving people feedback. And I would say feedback is a gift and you need to be able to explain to people why you see them underperforming on the ego dimension and say, this is how I saw you interact with your teammates. And this is what other people say when they come out of interactions with you and why they maybe feel bruised or not supported whatever it might be, and giving people that direct, you know, and really critical feedback on how they’re showing up is, I think the only way you can really help if it’s not about book learning. I mean, you can read stories, but it really is about that intensely personal development.

6. Commentary: Chinese fashion giant Shein has taken over the world. It has just met its match – Patrick Reinmoeller, Mark Greeven, and Yunfei Feng

With fast fashion firms under pressure to stay ahead of fashion cycles and entertain customer desire for the newest styles, there’s a growing countertrend that questions its breakneck speed.

The global fashion industry generates about 4 to 10 per cent of total greenhouse gas emissions, more than all international flights and maritime shipping combined.

According to the World Bank, the fashion industry uses 93 billion cubic metres of water every year, an amount that 5 million people could use for consumption instead.

The industry also produces about 20 per cent of wastewater worldwide through dyeing and treating fabrics. It dumps microfibers that amount to about 50 billion plastic bottles into the ocean and disposes 87 per cent of total fibre input annually.

These negative effects of fashion are predicted to increase by 50 per cent by 2030, as more buy into the ethos of fast fashion: Buy fast, buy new, and dispose prematurely. According to the Ellen MacArthur Foundation, the average person today buys and discards about 60 per cent more clothing compared to 2000.

Fast fashion leaders have launched initiatives that boost their sustainability record, though they’ve been met with scepticism. Although H&M has started already in 2010 with its Conscious Collection emphasising organic and sustainable fabrics, the Norwegian Consumer Authority said information provided about the clothing, such as the amount of recycled material in each item, is insufficient.

A rejection of overconsumption in favour of essentials and basics, espoused by brands like Patagonia, fares better with those concerned about fashion’s environmental impact.

New models are emerging fast. Business models of vintage, recycled clothes are quickly losing their stigma in the West.

7. Too Smart – Morgan Housel

What’s boring is often important and the smartest people are the least interested in what’s boring.

Ninety percent of personal finance is just spend less than you make, diversify, and be patient.

But if you’re very intelligent that bores you to tears and feels like a waste of your potential. You want to spend your time on the 10% that’s mentally stimulating.

Which isn’t necessarily bad. But if your focus on the exciting part of finance comes at the expense of attention to the 90% of the field that’s boring, it’s disastrous. Hedge funds blow up and Wall Street executives go bankrupt doing things a less intelligent person would never consider. A similar thing happens in medicine, a field that attracts brilliant people who may be more interested in exciting disease treatments than boring disease prevention.

There’s a sweet spot where you grasp the important stuff but you’re not smart enough to be bored with it.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Apple, DocuSign, Meituan, and Netflix. Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 11 July 2021:

1. The Beginning of Infinity – Naval Ravikant and Brett Hall

Brett Hall: Hello Naval, it’s great to be here. You’ve raised so many interesting aspects of The Beginning of Infinity, which has become a real passion of mine. Like a lot of people who enter science, when I was at school I thought, “Well, I want to be an astronomer, so I’ll go to a university and do a physics degree, then do an astronomy degree, and then become a professional astronomer.”

One day I picked up David Deutsch’s The Fabric of Reality in a bookstore and started reading it. The first chapter described what I was trying to achieve in my life. It was putting into words what I felt my university studies and my general outlook on life was about.

Deutsch says that the ancient philosophers thought they could get an understanding of the entire world. As time passed, though, modern science made it seem as though this was an impossible project. There’s no way you could understand everything about reality. There’s too much to know.

How could you possibly know everything?

At the beginning of The Fabric of Reality, David Deutsch presents this idea that you don’t need to know every single fact to fundamentally understand everything that can be understood.

He presents this vision that there are four fundamental theories from science and outside science: quantum theory, the theory of computation, evolution by natural selection, and epistemology—which is the theory of knowledge. Together they form the worldview, or lens, through which you can understand anything that can be understood…

…Brett: Deutsch’s worldview is that reality is comprehensible. Problems are solvable, or “soluble,” as he writes. It’s a deeply rationally optimistic worldview that believes in good scientific explanations and progress.

Progress is inevitable as long as we have these good explanations. Good explanations have tremendous reach. They are acts of creativity.

Humans are problem solvers and can solve all problems. All sins and evil are due to a lack of knowledge. One can be optimistic about constant progress. That’s what the title refers to: We’re at the beginning of an infinite series of progress.

It’s a very optimistic take. It states that we are at home in the universe and the universe is ours as a resource to learn about and exploit; that material wealth is a set of physical transformations that we can affect; that everything that is not forbidden by the laws of physics is eventually possible through knowledge and knowledge creation.

He also writes about how humans are universal explainers, that anything that can be known and understood can be known and understood by human beings in the computation power of a human system.

Everything is knowable by humans. We’re at the beginning of an infinity of knowledge.

We understand things using good explanations and constantly replace old theories with better ones. There’s no endpoint in sight. There’s no perfection. Every theory can be falsified eventually and improved.

We are on our way to being able to do everything that is not forbidden by the laws of physics…

…Naval: Does probability actually exist in the physical universe, or is it a function of our ignorance? If I’m rolling a die, I don’t know which way it’s going to land; so therefore I put in a probability. But does that mean there’s an actual probabilistic unknowable thing in the universe? Is the universe rolling a die somewhere, or is it always deterministic?

Brett: All probability is actually subjective. Uncertainty and randomness are subjective. You don’t know what the outcome’s going to be, so you roll a die. That’s because you individually do not know; it’s not because there is uncertainty there deeply in the universe. What we know about quantum theory is that all physically possible things occur.

This leads to the concept of the multiverse. Rather than refute all of the failed ways of trying to understand quantum theory, we’re going to take seriously what the equations of quantum theory say. What we’re compelled to think about quantum theory, given the experiments, is that every single possible thing that can happen does happen. This means that there is no inherent uncertainty in the universe because everything that can happen actually will happen. It’s not like some things will happen and some things won’t happen. Everything happens.

You occupy a single universe, and in that universe, when you roll the die, it comes up a two. Somewhere else in physical reality, it comes up a one, somewhere else a three, a four, a five, and a six.

Naval: If I’m rolling two dice, then the universes in which they sum up to two is less than the number of universes in which we roll a seven, because that can be a three and a four, a five and a two, and so on. So the number of universes still does correspond to what we calculate as the probability.

2. A Framework for The Metaverse – Matthew Ball

The Metaverse is often mis-described as virtual reality. This is like saying the mobile internet is the iPhone. The iPhone isn’t the mobile internet; it’s the consumer hardware and app platform most frequently used to access the mobile internet.

Sometimes the Metaverse is described as a virtual user-generated content (UGC) platform. This is like saying the internet is Yahoo!, Facebook, or World of Warcraft. Yahoo! is an internet portal/index, Facebook is a UGC-focused social network, World of Warcraft is an MMO. Other times we receive a more sophisticated explanation, such as ‘the Metaverse is a persistent virtual space enabling continuity of identity and assets’. This is much closer to the truth, but it too is insufficient. It’s a bit like saying the internet is Verizon, or Safari, or HTML. Those are a broadband provider that connects you to the entire web, a web browser that can access/render all of the internet’s webpages from a single screen and IP identifier, and a markup language that enables the creation and display of the web. And certainly, the Metaverse doesn’t mean a game or virtual space where you can hang out (similarly, the Metaverse isn’t now ‘here’ just because more of us now are hanging out virtually and/or more often).

Instead, we need to think of the Metaverse as a sort of successor state to the mobile internet. And while consumers will have core devices and platforms through which they interact with the Metaverse, the Metaverse depends on so much more. There’s a reason we don’t say Facebook or Google is an internet. They are destinations and ecosystems on or in the internet, each accessible via a browser or smartphone that can also access the vast rest of the internet. Similarly, Fortnite and Roblox feel like the Metaverse because they embody so many technologies and trends into a single experience that, like the iPhone, is tangible and feels different from everything that came before. But they do not constitute the Metaverse.

3. Twitter thread on how Facebook uses user-data – Jesse Pujji

Is Facebook listening to your conversations? No, they are not. They are doing something MUCH more effective! Here’s how it works

The two most valuable pieces of software on earth are: 1) the $FB pixel and 2) the $FB newsfeed. When you wonder, how come FB is worth $1T and Twitter is only $55BN, those two pieces of software are your answer.

The FB pixel is a tiny piece of code that nearly every website on the planet has embedded. It feeds data back to FB (in aggregate, anonymized) for the list of websites visited, how much time was spent, did you buy or not, etc.

The newsfeed algo looks at that as a signal as well as hundreds of other things (your age, who your friends are, what ads you screenshot) to determine which ad to place in front of you. Again, all of this is done in groupings. Not personal.

When they get it right: right message in front of right person at right time….everyone wins. A brand finds a new customer. You find a product you want. FB makes $.

And this is a good thing. You get value from this all the time. You’re shopping for a mattress. You go to Casper’s website. Then back to FB/IG. You start getting ads for other mattress companies and even a mattress comparison site. You find the right choice, you buy!

4. Money Rules – Morgan Housel

The formula for how to do well with money is simple. The behaviors you battle while implementing that formula are hard.

“Save more money and be more patient” is too simple for most people to take seriously, but it’s the best solution to most financial problems.

Expectations move slower than reality on the ground, so it’s easy to become frustrated when clinging to the economic trends of a previous era.

Everything is relative. John D. Rockefeller was asked how much money was enough and said, “Just a little bit more.” Everyone, at every income, tends to feel the same. 

5. Doing Nothing is Hard Work – Ben Carlson 

If you watch all 10 penalty kicks you begin to notice a theme in the strategy by the goalies — they like to dive. In fact, each goalie dove on every penalty kick attempt. And as luck would have it, this strategy worked on the very last kick.

I’m not exactly a soccer expert, but there are a few obvious reasons the goalies dive like this.

The striker has the advantage since the goal is so large and they get to kick from a relatively short distance. And since they can kick the ball with such force the goalie has to make a split-second decision.

But it also looks really cool.

Saving a ball that’s kicked right at you is boring. A diving save, on the other hand, makes you look like a hero. And so it was in yesterday’s match.

It’s hard to argue with this strategy considering it won Switzerland the game.

There is an alternative to the horizontal diving save, though. The goalie could simply stay put in the middle.

Researchers in Israel studied nearly 300 penalty kicks from various leagues and championship matches over the years to gain a general sense of the strategy for both goalies and strikers.

They found the goalkeeper dove left or right nearly 94% of the time, meaning the other 6% of the time they basically just stayed in the middle hoping the kick would come right down the pipe…

…Strikers were five times more likely to kick it down the middle than goalies were to stay in the middle waiting for a direct kick.

We humans simply have a bias towards action over inaction.

Goalies admitted they felt worse about themselves if they stayed put in the middle and there was a goal kicked to the right or left. It’s easier to stomach a ball kicked right down the middle if they dove left or right because it showed their effort.

We want to have our hands on the steering wheel to give us a sense of control, even when that control is an illusion.

The illusion of control applies to investing as well.

Successful investing tends to be boring and long-term in nature but it’s hard to look cool with a boring, long-term strategy. Where’s the fun in that?

In many areas of life, the harder you work, the more you are rewarded for your efforts. This rule of thumb does not apply to the markets. Much of the time the more you press the worse your results when it comes to the markets.

A bias towards action at all times when investing opens you up to all sorts of mistakes, many of which are of the avoidable or unnecessary variety.

6. David Velez – Building The Branchless Bank – Patrick O’Shaughnessy and David Velez

Patrick: [00:04:26] What do you think are the most important differentiators between what we’ll call the incumbent banks that maybe Berkshire invested in more traditionally, versus Nubank? What are the largest important differences for those out there, listening to understand?

David: [00:04:40] I think the first one is, the consumer obsession and a culture that is based on consumer obsession. I don’t think this is necessarily specific to financial services. I think one common denominator of incumbent industries, either financial services, or if you look at insurance or even in media or transportation, is that after let’s say six, seven decades of traditional capitalism, you ended up with a number of players, oligopolies, where four or five companies effectively own the market. Whenever you see another golf police structure, you find that there are abnormal returns and you also find a lot of complacency among incumbents. That complacency, ultimately ends up translating into taking customers for granted when it should be the actually opposite. Ultimately, you win because customers choose you. What you find in Latin America and a lot of emerging markets and a little bit of the US, is that there are five banks that have won, let’s say banking 1.0, and they will become complacent and they forgot about customers.

There are a number of different things that we’re doing differently. But I would say the number one is having a culture that is obsessed about customers and doing the right thing for the customers, from doing the right decisions, to giving the right customer service, to building products that are really actually good for them. I would say that’s number one. Then there is all the tactical advantages that being a technology company at heart provides. Obviously from being a fully digital company and not needing to have a full offline distribution, very expensive backend branches, that allows us to have about 50X more customers per human, than traditional banks. Just being in total detail, we have one building here in Sao Paulo and have 40 million customers different 5,570 Brazilian cities in the Amazons, in the south, we have customers in Mexico city, obviously, and Columbia. That gives us a huge operational efficiency.

Ultimately, that translates into significant cost efficiency, that we can pass to the end consumer via lower fees. We don’t need to charge so many fees. We don’t charge any fees. Then there’s all the other advantages of being a tech company from a data first, analytics infrastructure, to be able to use a lot of data to make a lot of different decisions. All of these different advantages, add up to building a type of offering that is very hard for the traditional incumbents to match.

Patrick: [00:07:11] Maybe you could just level set for us, today in the markets where you operate, if I was about to become a new Nubank customer, what does that traditionally feel like? What is the model customer doing with you and how do they sort of get on board to begin?

David: [00:07:24] 90% of our customers come through word of mouth, completely referred by other friends. We’ve been really growing fully by word of mouth, no customer acquisition costs since 2014, when we launched. And our latest cohort last month, is exactly the same as our first cohort in 2013. It’s been viral, which is unexpected for a financial services product. You don’t see a credit card has no virality characteristics. There’s no real network effects when you think about it. It’s not Facebook. It’s not Instagram, where if all your friends are there, you want to be there. Here, you will have a loan product that doesn’t necessarily make it better for your friends. I’ll provide a little bit more nuance then later on because in effect that’s one of the things that we’ve done differently. But in general, most people will hear from us through a friend, will download the app or will be invited by a friend. The friend will send you an invitation via WhatsApp or email or Facebook or any type of channel. You accept the invitation. You download the app. And in a few seconds or a few minutes, you have a bank account open. You have a credit card, a virtual credit card working. We’ll send you a physical credit card to your house in one or two days it’s there.

Then you get access to a number of different products that we have. You can get an insurance product, you kind of start investing your money in a number of your funds, and also equities through Easynvest, a company we bought last year. If you have any questions, you can ask any questions via the chat that we have in our app. And all your interaction is fully digital through the app. The last thing I’ll add is, one of the big pains in this market is, over 40% of the population are blacklisted in the consumer bureaus. They are outside of the credit system. If you want to credit, you do not pay the average 500% APR. You pay 1000% APR. Because there are a couple of institutions that will lend you money at that rate. Most traditional institution will not lend you if you are black listed in one of the bureaus. Just because there was no FICO score. There was no positive credit information, only negative.

I’ll give you an example. In my case, I moved apartments and the cable company still send me a bill for $10 and I never got that bill. So I became a delinquent for them. They sent me to one of these credit bureaus. If I needed a loan from one of the big banks, I would have had been rejected. A lot of the opportunity here was for us to build new credit methodologies, build our own FICO, proprietary. Allow us to underwrite most of the population, both the banked and the better. One of the big variables in our model is, who invites you? Since 90% of our customers come through referrals, we use the credit information of their referral as an input into our credit model. It turns out, it is very predictive and it has allowed us to underwrite two people on lower costs that never had access to any type of credit product.

7. The Elon Musk Productivity Email – Elon Musk

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

– A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Alphabet (parent of Google), Facebook, and Tesla. Holdings are subject to change at any time.

We’ve constantly been sharing a list of our recent reads in our weekly emails for The Good Investors.

Do subscribe for our weekly updates through the orange box in the blog (it’s on the side if you’re using a computer, and all the way at the bottom if you’re using mobile) – it’s free!

But since our readership-audience for The Good Investors is wider than our subscriber base, we think sharing the reading list regularly on the blog itself can benefit even more people. The articles we share touch on a wide range of topics, including investing, business, and the world in general.

Here are the articles for the week ending 04 July 2021:

1. RNAi is Setting a High Bar for Gene Editing – Maxx Chatsko

Although there are many therapeutic modalities in the field of genetic medicines, individual investors have been most excited about gene editing tools such as CRISPR-Cas9. The valuations of publicly-traded CRISPR companies suggest investors have very high expectations — perhaps unreasonably high considering the general lack of meaningful data.

In the second quarter of 2021, three different drug candidates or drug products based on RNA interference (RNAi) have demonstrated the ability to reverse three different diseases — all with convenient dosing…

…Intellia Therapeutics (NASDAQ: NTLA) is initially focused on developing in vivo drug candidates for gene silencing applications. The approach uses CRISPR-Cas9 to “knock out” a gene by disrupting the sequence responsible for its expression. At a high level, the clinical objective of reducing protein levels is identical to that of RNAi.

Not surprisingly, there’s plenty of overlap between the company’s knockout pipeline and those of RNAi drug developers. Intellia Therapeutics’ lead in vivo drug candidate is taking aim at hATTR, while the next most-advanced program is targeting hereditary angioedema (HAE), another Alnylam target. Discovery-stage programs that might use knockouts include PH1, A1AT liver disease, and others that promise to square off with RNAi drug candidates and drug products.

On the one hand, gene knockouts promise to drive deeper reductions in protein levels than current-generation RNAi. They would also represent a permanent, irreversible change to a patient’s genome. Although CRISPR gene editing compounds must be administered intravenously, a single dose is the most convenient dosing.

On the other hand, there are clinical and commercial challenges for investors to consider. First-generation CRISPR gene editing requires making a double-stranded break in the genome, which is repaired with mutagenic (“mutation-causing”) processes. Double-stranded breaks can result in random insertions and deletions of genetic material far from the cut site, while there’s evidence that sections of chromosomes can be rearranged. Each is a hallmark of cancer cells. (It’s important to note that these are on-target effects inherent to CRISPR gene editing, separate from the more familiar off-target effects discussed in the media, which are largely exaggerated.)

The long-tail safety risks from on-target effects might not become evident until years after clinical development is completed. Therefore, drug candidates utilizing CRISPR-mediated knockouts might generate promising safety and efficacy data in clinical trials, but regulators might balk at speedy approvals for knockouts or require long-term patient monitoring. This is especially true considering many indications being targeted by knockouts will likely have safe, effective, and convenient treatments provided by RNAi. In other words, although these indications are called “rare diseases,” regulators probably won’t be under pressure to approve knockout drug candidates for the sake of patients.

Even if knockouts earn regulatory approval, it could be difficult to dislodge RNAi treatments. For example, by the time Intellia’s lead drug candidate reaches the market (assuming it does), most global hATTR patients will be taking treatments from Alnylam. An estimated 3% of global patients are taking the relatively inconvenient Onpattro, although many more could be eligible for treatment with vutrisiran should it earn regulatory approval in 2021 or 2022. That could result in Intellia boasting an approved knockout drug product and frustratingly little opportunity to capture market share. It’s more likely that the market experiences cutthroat pricing competition between RNAi treatments and gene knockouts, which would be great for patients, but perhaps not so great for the drug developers arriving a little too late to the market.

2. The Devastating Decline of a Brilliant Young Coder – Sandra Upson 

In Cloudflare’s early years, Lee Holloway had been the resident genius, the guy who could focus for hours, code pouring from his fingertips while death metal blasted in his headphones. He was the master architect whose vision had guided what began as a literal sketch on a napkin into a tech giant with some 1,200 employees and 83,000 paying customers. He laid the groundwork for a system that now handles more than 10 percent of all internet requests and blocks billions of cyberthreats per day. Much of the architecture he dreamed up is still in place.

But some years before the IPO, his behavior began to change. He lost interest in his projects and coworkers. He stopped paying attention in meetings. His colleagues noticed he was growing increasingly rigid and belligerent, resisting others’ ideas, and ignoring their feedback.

Lee’s rudeness perplexed his old friends. He had built his life around Cloudflare, once vowing to not cut his hair until the startup’s web traffic surpassed that of Yahoo. (It took a few short months, or about 4 inches of hair.) He had always been easygoing, happy to mentor his colleagues or hang out over lunch. At a birthday party for Zatlyn, he enchanted some children, regaling them with stories about the joys of coding. The idea of Lee picking fights simply didn’t compute.

He was becoming erratic in other ways too. Some of his colleagues were surprised when Lee separated from his first wife and soon after paired up with a coworker. They figured his enormous success and wealth must have gone to his head. “All of us were just thinking he made a bunch of money, married his new girl,” Prince says. “He kind of reassessed his life and had just become a jerk.”…

…WHAT MAKES YOU you? The question cuts to the core of who we are, the things that make us special in this universe. The converse of the question raises another kind of philosophical dilemma: If a person isn’t himself, who is he?

Countless philosophers have taken a swing at this elusive piñata. In the 17th century, John Locke pinned selfhood on memory, using recollections as the thread connecting a person’s past with their present. That holds some intuitive appeal: Memory, after all, is how most of us register our continued existence. But memory is unreliable. Writing in the 1970s, renowned philosopher Derek Parfit recast Locke’s idea to argue that personhood emerges from a more complex view of psychological connectedness across time. He suggested that a host of mental phenomena—memories, intentions, beliefs, and so on—forge chains that bind us to our past selves. A person today has many of the same psychological states as that person a day ago. Yesterday’s human enjoys similar overlap with an individual of two days prior. Each memory or belief is a chain that stretches back through time, holding a person together in the face of inevitable flux.

The gist, then, is that someone is “himself” because countless mental artifacts stay firm from one day to the next, anchoring that person’s character over time. It’s a less crisp definition than the old idea of a soul, offering no firm threshold where selfhood breaks down. It doesn’t pinpoint, for example, how many psychological chains you can lose before you stop being yourself. Neuroscience also offers only a partial answer to the question of what makes you you.

Neural networks encode our mental artifacts, which together form the foundation of behavior. A stimulus enters the brain, and electrochemical signals swoosh through your neurons, culminating in an action: Hug a friend. Sit and brood. Tilt your head up at the sun and smile. Losing some brain cells here or there is no big deal; the networks are resilient enough to keep a person’s behaviors and sense of self consistent.

But not always. Mess with the biological Jell-O in just the right ways and the structure of the self reveals its fragility.

Lee’s personality had been consistent for decades—until it wasn’t…

…In mid-March of 2017, Kristin and Lee went to a neurologist to get the results of an MRI. To Kristin, it seemed that the neurologist had initially been skeptical of her concerns. Lee was young, healthy, and communicative.

The MRI told a different story: There was atrophy in the brain inconsistent with the age of the patient, the neurologist reported to them. When Kristin asked her what that meant, she said Lee had a neurodegenerative disease of some kind, but they’d need to do more tests to get a specific diagnosis. One of their doctors suggested they go to the Memory and Aging Center at UC San Francisco…

…The neurologists delivered their verdict: He appeared to have a textbook case of frontotemporal dementia—known by the shorthand FTD—specifically, the behavioral variant of that disease. It targets a network of brain regions sometimes described as underpinning one’s sense of self. As the pathological process advanced, it was carving a different person out of Lee’s raw substance.

The term frontotemporal dementia refers to a cluster of neurodegenerative diseases that affect a person’s behavior or speech while leaving memory largely intact, at least early on. Unlike Alzheimer’s disease, FTD isn’t well known. It is a rare disease, affecting roughly one in 5,000 people, though many of the neurologists who study it believe it is underdiagnosed. What is known is that for people under the age of 60, it is the most common form of dementia. Still, as a man in his thirties, Lee was unusually young to be afflicted. For some patients, one of several genetic mutations turns out to be the likely cause, and a subset of patients have a family history of neurodegenerative diseases. But nothing in the neurologists’ investigations turned up even a hint as to why Lee had been struck down.

Regardless of cause, the prognosis is grim. There’s no treatment. Lee’s doctors warned that his symptoms would grow worse, and that over time he would likely stop talking, become immobile, and struggle to swallow, until eventually an infection or injury would likely turn fatal. The best the doctors could recommend was eating a balanced diet and getting exercise.

The family sat stunned at the neurologist’s words. The brain scans were undeniable. On a wall-mounted screen the doctors showed a cross-section of the four lobes of Lee’s brain. In a healthy brain, the familiar, loopy folds of tissue appear white or gray and push up against the edges of the cranium, filling every available space. Lee’s brain looked nothing like that.

Black voids pocked his frontal lobe, areas where brain tissue had gone dead. Seeing it, Kristin gasped. “There were huge dark spots in his brain,” Alaric says. “That’s what … that made it concrete.”

3. Interview: Marc Andreessen, VC and tech pioneer – Noah Smith and Marc Andreessen

N.S.: One of the themes of my blog so far has been techno-optimism. I have to say that some of that attitude comes from talking to you over the years! Are you still optimistic about the near future of tech? And if so, which tech should we be most excited about?

M.A.: I am very optimistic about the future of tech, at least in the domains where software-driven innovation is allowed. It’s been a decade since I wrote my essay Software Eats The World, and the case I made in that essay is even more true today. Software continues to eat the world, and will for decades to come, and that’s a wonderful thing. Let me explain why.

First, a common criticism of software is that it’s not something that takes physical form in the real world. For example, software is not a house, or a school, or a hospital. This is of course true on the surface, but it misses a key point.

Software is a lever on the real world.

Someone writes code, and all of a sudden riders and drivers coordinate a completely new kind of real-world transportation system, and we call it Lyft. Someone writes code, and all of a sudden homeowners and guests coordinate a completely new kind of real-world real estate system, and we call it AirBNB. Someone writes code, etc., and we have cars that drive themselves, and planes that fly themselves, and wristwatches that tell us if we’re healthy or ill.

Software is our modern alchemy. Isaac Newton spent much of his life trying and failing to transmute a base element — lead — into a valuable material — gold. Software is alchemy that turns bytes into actions by and on atoms. It’s the closest thing we have to magic.

So instead of feeling like we are failing if we’re not building in atoms, we should lean as hard into software as we possibly can. Everywhere software touches the real world, the real world gets better, and less expensive, and more efficient, and more adaptable, and better for people. And this is especially true for the real world domains that have been least touched by software until now — such as housing, education, and health care…

…N.S.: Your most famous quote is probably “Software is eating the world”. How is that likely to manifest over the next decade or so? Will A.I. automate whole business models out of existence? Will old-line companies that try to patch software into their existing operations and business models get outcompeted by companies that start out as software companies and then branch into traditional markets, as my friend Roy Bahat believes? Or something else?

M.A.: My “software eats the world” thesis plays out in business in three stages:

1. A product is transformed from non-software to (entirely or mainly) software. Music compact discs become MP3’s and then streams. An alarm clock goes from a physical device on your bedside table to an app on your phone. A car goes from bent metal and glass, to software wrapped in bent metal and glass.

2. The producers of these products are transformed from manufacturing or media or financial services companies to (entirely or mainly) software companies. Their core capability becomes creating and running software. This is, of course, a very different discipline and culture from what they used to do.

3. As software redefines the product, and assuming a competitive market not protected by a monopoly position or regulatory capture, the nature of competition in the industry changes until the best software wins, which means the best software company wins. The best software company may be an incumbent or a startup, whoever makes the best software.

My partner Alex Rampell says that competition between an incumbent and a software-driven startup is “a race, where the startup is trying to get distribution before the incumbent gets innovation”. The incumbent starts with a giant advantage, which is the existing customer base, the existing brand. But the software startup also starts with a giant advantage, which is a culture built to create software from the start, with no need to adapt an older culture designed to bend metal, shuffle paper, or answer phones.

As time passes, I am increasingly skeptical that most incumbents can adapt. The culture shift is just too hard. Great software people tend to not want to work at an incumbent where the culture is not optimized to them, where they are not in charge. It is proving easier in many cases to just start a new company than try to retrofit an incumbent. I used to think time would ameliorate this, as the world adapts to software, but the pattern seems to be intensifying. A good test for how seriously an incumbent is taking software is the percent of the top 100 executives and managers with computer science degrees. For a typical tech startup, the answer might be 50-70%. For a typical incumbent, the answer may be more like 5-7%. This is a huge gap in software knowledge and skill, and you see it play out every day across many industries.

As for Artificial Intelligence, as an engineer myself, it’s hard to be quite as romantic as a lot of observers tend to be. AI — or, to use the more prosaic term, Machine Learning — is an incredibly powerful technology, and the last decade has seen explosive AI/ML innovation that’s increasingly showing up in the real world. But it’s still just software, math, numbers; the machines aren’t becoming self aware, Skynet is not here, computers still do exactly what we tell them. So AI/ML continues to be a tool used by people, more than a replacement for people.

A famous story from the birth of computer science has Alan Turing, father of the computer, lunching with Claude Shannon, father of information theory, in the AT&T executive dining room near Bell Labs in the early 1940s. Turing and Shannon engage in an increasingly heated discussion about the future of thinking machines when Turing stands up, pushes his chair back, and says loudly, “No, I’m not interested in developing a powerful brain! All I’m after is a mediocre brain, something like the President of AT&T.'”

I think about AI like that — although, for the record, the President of AT&T is a friend of mine, and he’s actually quite bright. I suspect “Artificial Intelligence” is the wrong framing for the technology; Doug Engelbart was probably more correct with what he called “Augmentation”, so think “Augmented Intelligence”. Augmented Intelligence makes machines better thought partners for people. This concept is clearer for considering both the technological and economic consequences. What we should see in a world of rapidly proliferating Augmented Intelligence is the opposite of a jobless dystopia — productivity growth, economic growth, new job growth, and wage growth.

And I think this is exactly what we are seeing. It’s worth remembering that before COVID, only 18 months ago, we were experiencing the best economy in 70 years — rising wages, low and falling unemployment, and essentially zero inflation. The economy was even improving more for lower skill and lower income people than it was for people like us, despite computers everywhere. Unemployment among the most disadvantaged in our society — people without even high school degrees — was as low as it’s ever been. This is far from an automation-driven dystopia; in fact, it’s the payoff from three centuries of increasing mechanization and computerization. As the economy recovers from COVID, I expect these positive trends to continue.

4. Individuals or Teams: Who’s the Better Customer for SaaS Products? – David Sacks

There are three main reasons for the superior economics of Team products:

1. Deal Sizes

Team products have larger initial contract values as a result of the ability to sell multiple seats. By contrast, the small deal sizes of Individual products may be insufficient to justify the cost of a sales team. Unless the Individual product is highly viral, it will be easier to build a distribution strategy for a Team product.

2. Retention

Team products are stickier than Individual products. To use a gaming analogy, multiplayer mode is more engaging than single-player mode. Users can do more interesting things when coworkers are part of the experience; value creation is higher.

Once a team is collaborating in a product, no single user can easily make the decision to leave. The decision to migrate to another tool requires coordination (aka a “rip and replace”). By contrast, a solo user can leave an individual product at any time.

Finally, collaboration provides constant opportunities for reactivation. A subscriber who stops using an Individual product is likely churned whereas an inactive user on a Team product is just one notification away from being reengaged. As long as the team maintains some minimum threshold of engaged users, it will avoid churn at the account level.

For all of these reasons, account-level churn rates for Individual plans are commonly around 5% per month, but only 1-2% per month for Team plans. This translates into much higher revenue retention for Team plans.

3. Seat Expansion 

Team plans have the ability to add new seats as the product spreads within a company, creating revenue expansion. As a result, successful Team products have “net negative churn,” meaning that expansion from retained accounts exceeds revenue lost from churned accounts. 

5. It’s Official: US Government Says Electric Vehicles Cost 40% Less To Maintain – Steve Hanley

In its latest study, the Office of Energy Efficiency and Renewable Energy says,

“The estimated scheduled maintenance cost for a light-duty battery-electric vehicle (BEV) totals 6.1 cents per mile, while a conventional internal combustion engine vehicle (ICEV) totals 10.1 cents per mile. A BEV lacks an ICEV’s engine oil, timing belt, oxygen sensor, spark plugs and more, and the maintenance costs associated with them.”…

…Big deal, you say? Who cares about a difference of a measly 4 cents? Consider this. The light duty vehicles — sedans, SUVs, passenger vans and the like — owned and operated by the federal government traveled nearly 2 billion miles in 2019, according to the General Services Administration. That difference of 4 little cents translates into savings of about $78 million a year, according to Motor Trend.

The one thing that the EERE study doesn’t show is the reduction in fuel costs for those government owned vehicles, which allows us to do a little speculating. Let’s assume the average fuel economy for all of them is 20 miles per gallon. That means it would take about 100 million gallons of gasoline to drive 2 billion miles.  Now lets assume that gas costs an average of $3.00 a gallon (I am math challenged so I like to use round numbers). 100 million gallons at 3 bucks a gallon equals $300 million, does it not?

Now let’s assume further that the cost of electricity is roughly half the cost of gasoline. The end result is that a fleet of electric vehicles would save Uncle Sam about $150 million in fuel costs every year. Add in the $78 million in lower maintenance costs and the total annual savings from switching the entire US government fleet to electric vehicles could be $228 million every year from here to eternity or $2.28 billion over the next decade.

6. Casualties of Perfection – Morgan Housel

So many people strive for efficient lives, where no hour is wasted. But an overlooked skill that doesn’t get enough attention is the idea that wasting time can be a great thing.

Psychologist Amos Tversky once said “the secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”

A successful person purposely leaving gaps of free time on their schedule to do nothing in particular can feel inefficient. And it is, so not many people do it.

But Tversky’s point is that if your job is to be creative and think through a tough problem, then time spent wandering around a park or aimlessly lounging on a couch might be your most valuable hours. A little inefficiency is wonderful.

The New York Times once wrote of former Secretary of State George Shultz:

His hour of solitude was the only way he could find time to think about the strategic aspects of his job. Otherwise, he would be constantly pulled into moment-to-moment tactical issues, never able to focus on larger questions of the national interest.

Albert Einstein put it this way:

I take time to go for long walks on the beach so that I can listen to what is going on inside my head. If my work isn’t going well, I lie down in the middle of a workday and gaze at the ceiling while I listen and visualize what goes on in my imagination.

Mozart felt the same way:

When I am traveling in a carriage or walking after a good meal or during the night when I cannot sleep–it is on such occasions that my ideas flow best and most abundantly.

Someone once asked Charlie Munger what Warren Buffett’s secret was. “I would say half of all the time he spends is sitting on his ass and reading. He has a lot of time to think.”

This is the opposite of “hustle porn,” where people want to look busy at all times because they think it’s noble.

7. Tobi Lütke – Sriram Krishnan and Tobi Lütke

This is a very natural segue to my next question. One of the theories behind this whole set of interviews is diving into the atomic bits of how we spend our time in meetings. This time compounds over the long term and has a massive effect. What does a good meeting with Tobi look like? Alternatively, what does a bad meeting with you look like?

So actually, agendas are not terribly successful with me. I admire how other CEOs I’ve spoken with always have a strict agenda where everyone has a speaking slot. I find that absolutely fascinating. Even if I really set myself to an agenda and say, “Okay, great, this is going to happen,” I can’t get through half of a meeting like this. Partly because a good meeting is, for me personally, when I learn something.

I started a company because I love learning. I went into programming because I found it fascinating. During meetings, I just love to hear the things that teams have discovered. When you’re discussing an idea or a decision, I want to know what has been considered. To be honest, I find myself more interested in the inputs of an idea than the actual decision. I say this because when I have my own ideas, the first thing I tend to do is just try to falsify them, to figure out why what I’m thinking about is probably incorrect. This is actually something that I have to explain to people that I work with. If I like someone’s idea, I tend to do the same thing: I try to poke holes in it.

I usually say, “Well, the implication of this choice means you’ve made the following assumptions. What inputs did you use to make these foundational assumptions?” Effectively, I’m trying to figure out if an idea is built on solid fundamentals. I find that shaky fundamentals tend to be where things often go wrong. The decision being discussed could be the perfect decision according to the various assumptions that everyone came into the room with. But if those assumptions are faulty, the seemingly perfect decision is faulty too. Interestingly, assumptions are rarely mentioned in the briefing docs or in the slide deck. Usually, I’m trying to make sure those are rock solid. Through this process, I invariably end up learning something completely new about a field. That gives me great confidence and comfort both in the decision and the direction…

…You try and design how your company spends time and attention. One particular incident came up recently which I found really fascinating. You wrote a script to delete every recurring meeting at Shopify. Talk about why you did that, and what you ended up learning from it.

[Laughs] So, going back a little bit further there—you know what, I should talk about books. One thing that is interesting is how people have accused Shopify of being a book club thinly veiled as a public company.

We tend to read a lot and talk about a lot of books. We read Nassim Taleb’s books and one person on my team began talking about Antifragile and gave an outline. He said, “I think Nassim is putting a word to the thing that you keep talking about…”

Now, I come from an engineering perspective. One of my biggest beefs with engineers, in general, is that they love determinism. I think there’s very little determinism in engineering left that’s of value. An individual computer is deterministic; once you introduce even just a network connection into the mix, everything becomes unpredictable and you have to write code that’s resilient to the unknown. Most interesting things come from non-deterministic behaviors. People have a love for the predictable, but there is value in being able to build systems that can absorb whatever is being thrown at them and still have good outcomes.

So, I love Antifragile, and I make everyone read it. It finally put a name to an important concept that we practiced. Before this, I would just log in and shut down various servers to teach the team what’s now called chaos engineering.

But we’ve done this for a long, long time. We’ve designed Shopify very well because resilience and uptime are so important for building trust. These lessons were there in the building of our architecture. And then I had to take over as CEO.

When that happened, I made two decisions: one, I’m going to try to learn as much about business as possible. But, if business is very different from software architecture, I’m going to be no good no matter what I do. And so, I ran an experiment to treat engineering principles, software architecture, complex system design, and company building as the same thing. Effectively, we looked for the business equivalent of just turning off servers to see if the system has resiliency. For instance, we used to ask people to use their mouse on their non-dominant hand for a day. We introduced these little nudges to ensure that people didn’t become complacent.

There are a bunch of really fun stories around this. I had a conversation with one of my co-founders, and we were discussing our unique problem: namely, Shopify was a company initially for American customers, built by German founders, in Canada.

[Both laugh]

It’s a very complex thing.

For instance, we talk a lot about how different cultures interact because we couldn’t have built Shopify without the Canadian optimism. These things were not necessarily things that we would recognize, at least when it comes to optimism, coming from Germany. That said, there are also challenges between cultures. For instance, Canadians are unbelievably nice. Like, no one wants to ever say anything to upset anyone. This is why we need to emphasize the importance of feedback. In this way, the uphill battle is more real for us than it would be for a Silicon Valley company.

There’s so much on the theme of how Shopify is not a Silicon Valley company. I think you pointed out one of these themes right here.

Exactly.

For instance, if we had built the company in Israel, this would not have been a challenge. It’s really important to understand that culture is real and multi-layered. The “host” city’s effect on the employees in that local office is very real. To do something world class, you have to show up with a lot of world class skills, and not a lot of downsides.

In this way, pushing people to give feedback is something very important for us.

That was a tangent, but to get back to the question you asked, we found that standing meetings were a real issue. They were extremely easy to create, and no one wanted to cancel them because someone was responsible for its creation. The person requesting to cancel would rather stick it out than have a very tough conversation saying, “Hey, this thing that you started is no longer valuable.” It’s just really difficult. So, we ran some analysis and we found out that half of all standing meetings were viewed as not valuable. It was an enormous amount of time being wasted. So we asked, “Why don’t we just delete all meetings?” And so we did. It was pretty rough, but we now operate on a schedule.

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Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Of all the companies mentioned, we currently have a vested interest in Shopify. Holdings are subject to change at any time.