Category: What We’re Reading

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 22 August 2021:

1. 40 Things I Don’t Know by Age 40 – Ben Carlson

I turn 40 today.

I’ve seen lots of people share the wisdom they’ve gained over the years on their milestone birthdays.

I still have plenty of stuff to learn so here are 40 things I don’t know at age 40:

1. I don’t know why sports losses still put me in a bad mood. You don’t get to pick your sports allegiance as much as you’re born into it. I was born into a Michigan family. I love Michigan football.

I don’t watch sports nearly as much as I once did because little kids don’t have the patience for it but a bad loss (and there have been many) still stings.

It’s a horrible emotional investment yet all sports fans subject themselves to it.

Why do we care about this stuff so much?…

…6. I don’t know what took me so long to start eating healthy. Growing up I never watched what I ate. At all.

I played sports, lifted weights and had a relatively fast metabolism. Well, 2 out of those 3 dropped off as I got older.

I really overhauled my diet once twins were in the picture for us. I knew I was going to need more energy. I still eat junk food and carbs but typically only on the weekends or vacations.

The result is I feel healthier at age 40 than I did at age 30…

…11. I don’t know if the internet has been a net negative or positive on humanity. The internet has been a huge net positive for me personally. It’s changed the trajectory of my career. It’s allowed me to meet new friends, colleagues and business partners.

It’s given me the opportunity to work from West Michigan for a company headquartered in New York City. This would have been impossible 15-20 years ago.

For others, the internet has broken their brains or made their lives miserable.

The internet makes it far easier to communicate, do business, work and connect with people all around the globe.

It also makes it easier to compare yourselves to others, spread hate, troll and say things to others you wouldn’t dare say in normal life.

12. I don’t know what kind of person I’m going to be at age 60. In some ways, I’m the same as when I was 20. In other ways, I’m a completely different person.

Life is bizarre in that the older you get the more you feel like you’re done improving or changing yet it just keeps happening…

…19. I don’t know how much help you can actually provide as a parent when shaping your children. We have boy-girl twins. They have both grown up in the same household, with the same parenting at the exact same time.

Yet they couldn’t be more different, whether it’s their looks or personality or behavior.

Most of us would like to believe we’re shaping lives as parents but I wonder how much control we even have. I guess the best you can do is try to avoid teaching them the worst behaviors and support whoever they turn out to become.

2. Fusion experiment breaks record, blasts out 10 quadrillion watts of power – Tom Metcalfe

Scientists used an unconventional method of creating nuclear fusion to yield a record-breaking burst of energy of more than 10 quadrillion watts, by firing intense beams of light from the world’s largest lasers at a tiny pellet of hydrogen.

Researchers at the Lawrence Livermore National Laboratory in Northern California said they had focused 192 giant lasers at the National Ignition Facility (NIF) onto a pea-size pellet, resulting in the release of 1.3 megajoules of energy in 100 trillionths of a second — roughly 10% of the energy of the sunlight that hits Earth every moment, and about 70% of the energy that the pellet had absorbed from the lasers. The scientists hope one day to reach the break-even or “ignition” point of the pellet, where it gives off 100% or more energy than it absorbs.

The energy yield is significantly larger than the scientists expected and much greater than the previous record of 170 kilojoules they set in February…

…Modern nuclear power plants use nuclear fission, which generates energy by splitting the heavy nuclei of elements like uranium and plutonium into lighter nuclei. But stars can generate even more energy from nuclear fusion, a process of smashing together lighter nuclei to make heavier elements.

Stars can fuse many different elements, including carbon and oxygen, but their main energy source comes from the fusion of hydrogen into helium. Because stars are so large and have such strong gravity, the fusion process takes place at very high pressures within the star.

Most Earthbound efforts to generate energy from fusion, such as the giant ITER project being built in France, instead use a doughnut-shaped chamber called a tokamak to confine a thin plasma of hot, neutron-heavy hydrogen inside strong magnetic fields.

Scientists and engineers have worked for more than 60 years to achieve sustainable nuclear fusion within tokamaks, with only limited success. But some researchers think they will be able to sustain fusion in tokamaks within a few years, Live Science previously reported. (ITER is not projected to do this until after 2035.)

The method developed at Lawrence Livermore National Laboratory is one of a few ways of achieving nuclear fusion without using a tokamak.

Instead, the NFI uses an array of laser-light amplifiers the size of three football fields to focus laser beams on hydrogen fuel pellets in a 33-foot-wide (10 meters) spherical metal “target chamber.” These lasers are the world’s most powerful, capable of generating up to 4 megajoules of energy.

The method was originally designed so that scientists could study the behavior of hydrogen in thermonuclear weapons — so-called hydrogen bombs — but scientists think it could also have applications for generating energy from nuclear fusion.

3. The Metaverse is a Dystopian Nightmare. Let’s Build a Better Reality – John Hanke

As a society, we can hope that the world doesn’t devolve into the kind of place that drives sci-fi heroes to escape into a virtual one — or we can work to make sure that doesn’t happen. At Niantic, we choose the latter. We believe we can use technology to lean into the ‘reality’ of augmented reality — encouraging everyone, ourselves included, to stand up, walk outside, and connect with people and the world around us. This is what we humans are born to do, the result of two million years of human evolution, and as a result those are the things that make us the happiest. Technology should be used to make these core human experiences better — not to replace them.

Some might argue that we ought to ditch technology completely and return to a simpler way of life. But we don’t think that’s the answer either. Technology isn’t going away. The benefits of connecting us with information, friends, and family are simply too great. But over the last decades, those benefits have taken a huge toll, increasingly cutting us off from the experiences that we enjoy the most. It’s all too easy to get lulled into a routine of Zoom calls, online shopping, gaming, and scrolling through our social feeds. It encourages behavior toward one another that we would never tolerate in person, and is dividing our society by algorithmically pushing people into bubbles which reinforce the most extreme views.

At Niantic, we ask the question: what if technology could make us better? Could it nudge us get us off the couch and out for an evening stroll or a Saturday in the park? Could it draw us into public space and into contact with neighbors we might never have met? Could it give us a reason to call a friend, make plans with our families, or even discover brand new friends? Collectively, could it help us discover the magic, history, and beauty hiding in plain sight?

If this fresh perspective is the goal, what are we doing to achieve it? For us, it starts with a technology that connects the real world (the atoms) with the digital one (the bits). You could call it the ‘real world metaverse’ to distinguish it from the virtual videogame version, but honestly, I think we are just going to experience it as reality made better: one infused with data, information, services, and interactive creations. This has guided our work to date, both in terms of our first attempts to incorporate these concepts into products like Field Trip, Ingress, and Pokémon GO, and in terms of inventing critical technology to enable them. The core of this isn’t only the computer graphics challenge of adding annotations and animations to the physical world; it’s also — maybe even mainly — about the information, services, and experiences where digital meets physical.

Building the real world metaverse lies at the intersection of two major technical undertakings: synchronizing the state of hundreds of millions of users around the world (along with the virtual objects they interact with), and tying those users and objects precisely to the physical world. The first exists today in the Niantic Lightship platform, which underpins Pokémon GO and all of our products and supports hundreds of millions of users around the world. It means that those millions of users can create, change, and interact with digital objects in the physical world and that experience is consistent and shared by everyone. In the world of software, we call that a ‘shared state’ — we are all seeing the same thing, the same enhancements to the world. If you change something it’s reflected in what I see, and vice versa, for the millions of participants using the system.

Tying all of that precisely to the physical world is an even bigger project. It requires a new kind of map, similar in concept to something like Google Maps, but different because this map is built for computers, not people. It requires an unprecedented level of detail so that a phone or headset can recognize its location and orientation in a highly accurate way anywhere in the world. It is designed to enable the ultimate kind of digital wayfinding and coordination. Think of it as a kind of GPS, but without the satellites and a much higher level of accuracy. Niantic is building that map, in collaboration with our users. This is one of the grand challenges of augmented reality, and it’s the key to making it work the way we want it to — to make the real world come alive with information and interactivity.

Other big opportunities and challenges lie in semantically understanding the world. What are those pixels: an oak tree, a pond? A park bench, a cafe, or a historical building? Human cartographers have been doing this for hundreds of years. The new twist is in using computer vision to do this more or less automatically. Think of the opportunity as an analog to the web crawlers that search the web for pages to be indexed by Google. Today, computer vision powered by deep learning algorithms can provide a basic version of this in real time. In the future, offline processing can extend this to a much higher degree of fidelity and persistently tie this understanding to an ever-evolving AR map of the world. Niantic is pursuing these and other capabilities within the Lightship platform.

4. Other People’s Mistakes – Morgan Housel

But Daniel Kahneman mentions a more important truth in his book, Thinking, Fast and Slow: “It is easier to recognize other people’s mistakes than our own.”

I would add my own theory: It’s easier to blame other people’s mistakes on stupidity and greed than our own.

That’s because when you make a mistake, I judge it solely based on what I see. It’s quick and easy.

But when I make a mistake there’s a long and persuasive monologue in my head that justifies bad decisions and adds important context other people don’t see.

Everyone’s like that. It’s normal.

But it’s a problem, because it makes it easy to underestimate your own flaws and become too cynical about others’.

I try to stop myself whenever my explanation for other people’s behavior – financial or otherwise – is “well, they’re not very smart.” Or greedy. Or immoral. Yeah, sometimes it’s true. But probably less than we assume. More often there’s something else going on that you’re not seeing that makes the behavior more understandable, even if it’s still wrong.

5. Masters of Scale: Rapid Response Transcript – Francis DeSouza – Bob Safian and Francis DeSouza

DESOUZA: Illumina, for the first decade plus of our existence, we used to sell genomic analysis tools into the research market. And then in 2013, we entered the clinical market for the first time through the acquisition of a company called Verinata that did noninvasive prenatal testing.

Now, the way GRAIL started was, we were processing samples from pregnant mothers in our noninvasive prenatal testing lab. One of our scientists, this incredibly brilliant woman, noticed that although the fetal DNA in the blood was normal and healthy, there was something unusual about the maternal DNA. And so, she alerted us, we alerted the doctors to say, “Look, something seems to be off with the mothers here.” The doctors got back to us and said, “No, all the moms are fine, but we’ll stay in touch with them and see how they do.” In all of those cases, the mothers went on to find that they had cancer and didn’t know it.

I remember clearly the meeting at Illumina, and I still get goosebumps when I think about it, where we realized that we could be seeing the signals of cancer in a blood test. And so, we quickly put a team on it in Illumina. This was in the 2014, 2015 timeframe. They worked for over a year and came back and said, “Yeah, it looks like we’re seeing signals for cancer, but there is a lot of work that needs to be done between where we are now and actually having a safe test that we can bring to market. We need to do some very large clinical studies, and we need to hone the test to understand what specifically are we looking for in the blood.”

We knew that would take huge investment, and so we spun out the technology into a company called GRAIL. We put over 40 Illumina people into GRAIL, and we raised, ultimately, over $2 billion. And that’s one of the reasons we wanted to spin it out, to get access to the capital to move this technology as quickly as it could. The GRAIL team worked for a few years, and in the fall of 2019, they published their results. And the test they developed is truly extraordinary. This is a blood test that can identify 50 types of cancers across all stages.

Now, we know cancer kills 10 million people a year around the world, 600,000 here in the U.S. alone. We also know that if you catch cancers early, the patients have a much higher chance of survival. In a lot of cancers, you’ll see the odds of survival can get higher and up to 90 plus percent if you catch it in stage 1 or stage 2. The challenge is that 71% of people who die of cancer, die from cancers that have no screen. In fact, 45 out of the 50 cancers that GRAIL screens for have no screen today, like pancreatic cancer, for example. And so, there’s no ability to catch it early.

And so, when GRAIL published their data at the end of 2019, we realized this was a huge breakthrough and that this would save a lot of lives. That’s sort of how we initiated the process to acquire GRAIL. What we want to do is bring the GRAIL test to market as fast as possible to people around the U.S. and around the world. GRAIL has a terrific technology, and Illumina, we have the commercial presence in over 140 countries around the world. We have the teams that can work on reimbursement and regulatory approval, and so we can dramatically accelerate getting this test into the hands of people whose lives it could save

6. Enterprise Metaverses, Horizon Workrooms, Workrooms’ Facebook Problem – Ben Thompson

I wrote at the end of Metaverses earlier this month:

This is why I don’t think it is absurd that Nadella was the first tech executive to endorse the metaverse as a strategic goal. There is likely to be good business in building private metaverses for private companies, in a not-dissimilar way to Stephenson’s Franchise-Organized Quasi-National Entities made it easy for small-scale entrepreneurs to set up their own franchise-states.

Facebook’s goal is more audacious: the company already serves 3.5 billion users, which means creating a shared reality for over half of the world is a plausible goal. That reality, though, will likely sit alongside other realities, just as Facebook the app sits alongside other social networks. This metaverse is universal, but not exclusive.

What I am skeptical of is the idea of there being one Metaverse to rule them all; we already have that, and in this case the future is, in William Gibson’s turn of phrase, here — it’s just not very evenly distributed. I speak from personal experience: for two decades I have lived and worked primarily on the Internet; it’s where I experience friendship and community and make my living. Over the last year-and-a-half hundreds of millions of people have joined me, as the default location for the work has switched from the office to online (that “online” is primarily experienced at home does not mean that home is intrinsic to the work — “work from home” is a misnomer). This too is an inverse of Snow Crash, where most jobs are in the real world, and recreation in the Metaverse; the future of work is online, and the life one wants to live in the reality of one’s choosing.

I’ve been looking for an opportunity to come back to this point; much of that article was focused on the fact that while Snow Crash had a dystopian real world defined by walled gardens, along with a universal Metaverse, it is the Internet that is in fact defined by walled gardens, while the real world is our shared universal reality. Snow Crash had it backwards. That wasn’t the only thing that was backwards though: in Snow Crash “most jobs are in the real world, and recreation in the Metaverse”, but, thanks in part to COVID, reality is turning out to be something different.

The reason this matters is that the adoption of new technologies requires some sort of forcing function. PCs, for example, were first adopted by enterprises because of the productivity gains they afforded, and then later on by consumers who had already experienced a PC at work (generally speaking of course; there are always exceptions). This is how Microsoft, which has no real idea of how to build a consumer product, briefly became a consumer computing powerhouse: the PC monopoly gifted to them by IBM meant that Windows PCs were the obvious choice for the home.

Smartphones went in the opposite direction: by 2007 almost everyone had a mobile phone of some sort (usually a dumb phone), then Apple came along and offered a compelling consumer product that, under subsidy, wasn’t that much more expensive, and much more useful and entertaining. Only then did consumers demand to use those phones at work.

To date most assumptions about VR — the most obvious manifestation of the metaverse concept — have focused on the consumer use case, primarily gaming. This is why I have long been relatively bearish on virtual reality, especially relative to augmented reality. I wrote about CES 2016 in a Daily Update:

I think it’s useful to make a distinction between virtual and augmented reality. Just look at the names: “virtual” reality is about an immersive experience completely disconnected from one’s current reality, while “augmented” reality is about, well, augmenting the reality in which one is already present. This is more than a semantic distinction about different types of headsets: you can divide nearly all of consumer technology along this axis. Movies and videogames are about different realities; productivity software and devices like smartphones are about augmenting the present.

I argued in The Problem with Facebook and Virtual Reality that this made VR less valuable:

That is the first challenge of virtual reality: it is a destination, both in terms of a place you go virtually, but also, critically, the end result of deliberative actions in the real world. One doesn’t experience virtual reality by accident: it is a choice…

That is not necessarily a problem: going to see a movie is a choice, as is playing a video game on a console or PC. Both are very legitimate ways to make money: global box office revenue in 2017 was $40.6 billion U.S., and billions more were made on all the other distribution channels in a movie’s typical release window; video games have long since been an even bigger deal, generating $109 billion globally last year.

Still, that is an order of magnitude less than the amount of revenue generated by something like smartphones. Apple, for example, sold $158 billion worth of iPhones over the last year; the entire industry was worth around $478.7 billion in 2017. The disparity should not come as a surprise: unlike movies or video games, smartphones are an accompaniment on your way to a destination, not a destination in and of themselves.

That may seem counterintuitive at first: isn’t it a good thing to be the center of one’s attention? That center, though, can only ever be occupied by one thing, and the addressable market is constrained by time. Assume eight hours for sleep, eight for work, a couple of hours for, you know, actually navigating life, and that leaves at best six hours to fight for. That is why devices intended to augment life, not replace it, have always been more compelling: every moment one is awake is worth addressing.

In other words, the virtual reality market is fundamentally constrained by its very nature: because it is about the temporary exit from real life, not the addition to it, there simply isn’t nearly as much room for virtual reality as there is for any number of other tech products.

The point of invoking the changes wrought by COVID, though, was to note that work is a destination, and its a destination that occupies a huge amount of our time. Of course when I wrote that skeptical article in 2018 a work destination was, for the vast majority of people, a physical space; suddenly, though, for millions of white collar workers in particular, it’s a virtual space. And, if work is already a virtual space, then suddenly virtual reality seems far more compelling. In other words, virtual reality may be much more important than previously thought because the vector by which it will become pervasive is not the consumer space (and gaming), but rather the enterprise space, particularly meetings. 

7. Low Rates, More Risk – Michael Batnick

Lower interest rates encourage people to take more risks, in general. There is little question about this.

By taking short-term interest rates to zero, which I had no objection to, the federal reserve “forced” me to find better ways to allocate my cash…

…Okay, wait a minute. If everyone is taking more risk, then who plowed $17 billion into fixed income ETFs in July? And if everyone is taking more risks, then how do we explain this?…

…For years, we’ve seen massive flows into bond funds and ETFs, even with rates low and getting lower. And simultaneously, even with stocks high and going higher, we’ve seen massive flows out of stocks funds and ETFs.

Are lower interest rates pushing up the valuation of stocks? Without a doubt. Are lower interest rates pushing people into SPACs? Eh, I don’t know about this one. People were doing crazy shit with their money in the 90s when the 10-year was at 6%.

I’m taking more risks in an area of my portfolio that I would prefer to have no risk. That’s a direct result of the fed taking rates to zero. But I’m not taking even more risks with areas of my portfolio that are already at risk. I continue to buy index funds every two weeks in my 401(k) and every month in my taxable account. I’m not YOLOing into call options on SPACS. I’m not going all-in on Pudgy Penguins. I’m taking risks, but I’m not sniffing glue.

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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, Facebook, Illumina, and Microsoft. 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 15 August 2021:

1. Hanging By A Thread – Morgan Housel

Robert E. Lee had one last shot to escape Ulysses Grant’s troops and regroup to gain the upper hand in the Civil War. His plan was bold but totally plausible. All he needed was food for his hungry troops.

An order was put in to have rations delivered to a Virginia supply depot for Lee’s men.

But there was a communication error in Richmond, and the wagons delivered boxes of ammunition but not a morsel of food.

Lee said the mishap “was fatal, and could not be retrieved.” His troops were starving. The Civil War ended two days later.

History hangs by a thread…

…Finance professor Ellroy Dimson says, “risk means more things can happen than will happen.” An important point here is that if none of these big events occurred, something else just as wild and unpredictable could have taken their place. Even when some part of the outcome is the same, the context and little bits of trivia are different in a way that can totally change the final story. America may have joined World War I without the Lusitania’s sinking, but its participation could have been less, or later, or not as popular. That could have shifted how the interwar period in the 1920s and 1930s played out, which would have impacted how World War II occurred, which would have altered the course of the most promising inventions of the 20th century … on and on, endlessly.

I try to keep two things in mind in a world that’s this fragile to chance.

One is to base your predictions on how people behave vs. specific events. Predicting what the world will look like in, say, 2050, is just impossible. But predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations and social persuasion in the same way is a bet I’d take.

Another – made so starkly in the last year and a half – is that no matter what the world looks like today, and what seems obvious today, everything can change tomorrow because of some tiny accident no one’s thinking about. Events, like money, compound. And the central feature of compounding is that it’s never intuitive how big something can grow from a small beginning.

2. How Millennial Investors Lost Millions on Bill Ackman’s SPAC – Michelle Celarier

Last fall, he started hearing about the boom in SPACs, and Ackman’s Tontine stuck out: It was the largest, with more than $4 billion to shop for a company. Ackman, a legendary hedge-fund manager who’d just made $2.6 billion on a timely Covid short bet, was behind the SPAC, and he claimed it was the most investor-friendly one ever.

In November, when Ackman told investors in his hedge fund that he expected to be able to announce a deal with a target company by the end of the first quarter, the psychiatrist jumped in. 

The SPAC market was red hot, with SPACs sponsored by venture-capital guru Chamath Palihapitiya and former Citigroup investment banker Michael Klein also soaring. In early February, Ackman tweeted a rap video about SPACs minting money, and Redditors went crazy. “That video literally single-handedly caused the stock to rise 10 percent,” recalls the psychiatrist.

The sense of urgency was palpable. “It was like, okay, this is coming very soon. If you don’t get in now, you’re going to miss it,” he says. “There’s just that frenzy of wanting to get in on the ground floor. It’s like getting in an IPO at the ground level” — something that is unavailable to retail investors and a key reason why they buy shares of SPACs before deals are announced.

By March, the psychiatrist was plunking all of his capital into call options on Tontine, which goes by the stock symbol PSTH. “Whatever money I had, I pretty much was putting it all into buying more of it,” he says.

At one point, his stake in Tontine was worth over $1 million on paper. He lost it all when his June 18 calls — with a strike price of $25 — expired worthless; the stock was around $23 at the time.

The Reddit gang had convinced themselves that Ackman’s Tontine was going to merge with a unicorn like Stripe, the online payments processor, or Elon Musk’s Starlink — largely because Ackman himself had joked about “marrying a unicorn” when he launched his SPAC last July. The media was also obsessed with the unicorn theme. But most everyone seemed to ignore the fact that Tontine’s prospectus listed unicorns as just one type of company that Ackman was chasing.

And when a deal was finally disclosed on June 4, Tontine’s partner wasn’t a unicorn, the moniker for a private startup valued at more than $1 billion. Moreover, there would be no merger. In a highly unusual move, Tontine had agreed to take a 10 percent stake in the upcoming spinoff of Universal Music Group from French conglomerate Vivendi. There would be money left over for another deal and a chance to get in on the ground floor of a third vehicle. 

The structure was too complicated for both investors and their brokerages to quickly unpack, and the stock, along with the warrants and options attached to it, tanked. Within weeks, the Securities and Exchange Commission stunned Ackman, essentially killing the deal by telling his lawyers that it did not meet the New York Stock Exchange’s requirements for a SPAC — even though Ackman said on CNBC that the NYSE had given him the go-ahead months earlier.

By the time the deal fell apart, the psychiatrist’s savings had already evaporated. He is now scrambling to make quarterly tax payments to the IRS, while owing $350,000 in student loans.

“I considered this a safe, calculated bet,” he says. So did a lot of people, including 16 others II interviewed by phone, Zoom, direct message, or in person. But as they all learned, there is little safety in SPACs — especially in the call options on those that haven’t found a partner. 

3. Magic beans – Josh Brown

Imagine the chutzpah it takes to say to yourself that you know definitively what the global economy is going to look like in six months. Now imagine thinking you could take this certainty about the future and use it to predict exactly which investment markets would rise and fall as a result – so not only can you see the economy’s future, but you can predict how all of the other investors will react to it!

Now imagine saying you could do this sort of thing consistently, out loud in front of other people.

Now imagine charging them money for it.

At this point, you’re selling magic beans. A talking dog. A singing frog. A goose that lays golden eggs. You’re a medicine show.

When I explain like this, the whole notion sounds crazy. Crazy sells.

The internet is filled with people who will believe nearly anything they read, if presented in the right circumstances. In part, it’s because they don’t spend a lot of time considering how unlikely it is that someone is willing to sell you the future for twenty dollars a month. In part, it’s because they do know better, but deep down they still want to believe. So if you speak with enough conviction, and don’t get asked too many questions about whether or not you’ve been right about these predictions historically, you can make a lot of money. The outcome doesn’t matter, you’re filling a void of rampant doubt with the opiate of your professed certainty and confidence.

So what’s the right answer? For me, it’s always been accepting the limitations inherent in trying to understand the future and arranging your bets in such a way that you can succeed despite a multitude of potential outcomes. Building durable portfolios, expecting risk to eventually be rewarded and accepting the fact that there will be good times and bad.

4. Sebastian Mejia – Mastering On-Demand Convenience – Patrick O’Shaughnessy and Sebastian Mejia

Patrick: [00:08:43] Can you talk about the early network dynamics where you had to go get couriers, convince them to log into the app and you had to go get demand? What was that like? What literally was the first city or first few order? This free text thing sounds extremely unique and different than the structured inventory that you saw from basically every other app. How did that work? How did you figure out how much you needed to pay the couriers? All the basics of like the unit economics must’ve been fascinating to figure out on the fly, how did you do that? What was it like?

Sebastian: [00:09:12] Previously, we had experience building companies, but it was more enterprise. And we were basically selling software to supermarket. So we got some sort of idea of how the industry worked, but we wanted to do something completely different, focused on the customer. So we basically started building and initially, that convenience product had a very limited assortment. I’m talking about 1,000, 2,000 SKUs. And basically said, “Well, we already have this consumer-facing app, it’s going to be very easy to build all of the logistics behind it.” And of course, that’s not the case. When we initially launched, we had no traction whatsoever. So it was literally us trying to understand what was going on with the customers, why they were not engaging with the product. So Rappi from the beginning, had this DNA of being very hyper-local and very guerrilla. And that meant that we literally went out to get customers onboarded and talking to customers. And we were basically offering donuts in exchange of downloads.

And that was our customer acquisition costs. And we also had to do the same thing on the courier front. And what are they interesting insights is that although eCommerce is still very small and it was way smaller back then, you had a culture of delivery. You had a culture of calling the restaurant, calling the store, and there were couriers already working. There were just completely disconnected. There was no network bringing them together, making them productive, making them more efficient in the way they routed. So we didn’t have to go against, let’s say culture. We didn’t have to go and educate couriers and even go ahead and educate deeply the customers, because they already understood that delivery was this thing that existed. We just applied technology to organize all of these agents and these add on let’s say, in the physical world to make them function more efficient.

I remember us doing the deliveries early on. I remember I was being scooters, making drops, testing the courier app. And from there, we started to evolve the product and we started to also engage couriers to make it better. For us, part of the mission was super critical on how are we going to make these guys not only more efficient, but we’re going to make sure that they are paid very well, and that they’re making significant more than their minimum wage. And I’m only talking about two sides of the marketplace, right? If you introduced the merchant side of the marketplace, it adds another layer of complexity. And at the beginning, when we launched, we really didn’t understand how to integrate with catalog of a supermarket. How do you actually integrate with a 30,000 SKU store? How do you make sure that you have relevant inventory on real time? How did you integrate with a restaurant?

Rappi, when we launched, we didn’t even have tablets. We didn’t have integrations with POS systems. So it was literally us going placing the order as if it was a random customer. A lot of the things were built as we learn. And many of the things had to be built from first principles very early on, because it’s not that you have a lot of tech stack or logistics stacks that you can just jump on and use to launch. It’s one of the challenges of building in the emerging market. But I also think it’s an advantage because you get to build these very core competencies that tomorrow are going to be very valuable business, right? I see ourselves doing all sorts of services on top of these piece of the stack, whether it’s logistics, whether it’s customer service, marketing tools, etc.

Patrick: [00:12:37] When I talked to the founders of Loft, they had an interesting, similar experience where there’s no MLS system. So there was no proper database of apartments or homes or something they could tap into. They basically had to build it themselves. I’ve got this obsession with companies that make previously non legible data legible to some system tend to do really, really well. And so I’m really interested how you solve that problem in these specific cases. So that 30,000 SKU supermarket, or if there’s a restaurant with 200 menu items, literally, what was the process of getting that legible to your software in your platform? How did you do?

Sebastian: [00:13:11] The supermarket and the restaurant business is quite different. I think in the restaurant, you basically have two options to actually integrate with what happens inside the business. You can use a tablet or you can use an integration with the POS. So you’re basically getting as close as possible to the kitchen that gives the restaurant owner the ability to actually update the menu, the ability to pick the cooking time and selected depending on the dish that you’re cooking. So you’ve got to go really deep in the operations of the restaurant. Then when you’re going through the supermarket space or the retailers, we’re dealing with inventory per store, you’re dealing also with inventory levels. So you need to make sure that you have the assortment, but you also need to have some sort of measurement or way of identifying where certain products are being stocked out. And that’s a big, big challenge that has a lot of different angles that you can tackle it from machine learning to project; what are going to be the products that are stocked out with more probability, to just better integrations with the supermarkets.

Not all of these companies have a proper API where you can actually connect with and understand what is the assortment that they have in the store. So you basically end up using flat files, and you need to have data that is coming in. You have to clean that data in so it connects actually with your core catalog, which is the nervous system of any type of eCommerce business. So that represents a lot of different challenges. Today Rappi is operating with more than 200,000 points of sale from restaurants to retailers of all sorts. So that data challenge, I think, is very, very intriguing. It’s something that we are investing a lot of energy and time. And I wouldn’t say we are fully on that plays where we can say, “Look, this is something that we mastered,” because there’s a lot of complexity. Bt I also think it’s one of the most interesting aspects of this business because local means that you’re integrating such a deep way with the local economy that you’re creating all of these modes and all of these integrations that are just very hard to replicate.

Patrick: [00:15:21] Is there a good example of that? I want to understand what you mean by local. Is it measured in blocks? Is it measured in the equivalent of a zip code? What is local and how different might one unit be from a neighboring unit and in what ways?

Sebastian: [00:15:34] We could be talking about two kilometer radius for a specific zone. And then it’s not only how you actually draw the zone in a city. You also have Latin America with a lot of income disparity. So it’s like your perfect Manhattan. It’s much more mixed, and you can have a very wealthy neighborhood next to a neighborhood that is not wealthy at all. So you have to navigate all of that hyper locality aspect. And then once you set those polygons, you’re basically delivering inside those zones. And then what I mean by local is that you also have to integrate with the stores inside that specific zone. You have to position the couriers inside that specific zone.

But once you do that, the marketplace starts to thrive because the customer experience is amazing. 10, 30 minute delivery. The courier experience is amazing because they’re super productive. You don’t have to do a lot of long distance. Structurally, that also means that you can deliver in a very affordable way. As a customer, you’re paying $1 to $1,50, then you’re still allowing the couriers to make two times the minimum wage. So the model works really, really well. And then you have to have all of the dimension of catalog really, really tied into what you do. And by that, I mean all of those integrations with inventories, with catalogs as real time as possible. So that, in my view, is a very, very hard thing to replicate. That’s why I have this idea that if you look at all of the eCommerce companies in the world, the majority of them that deal with, let’s say, infrastructure or the ones that really thrive in their specific markets tend to be local with very few exceptions. And the exceptions are much more the companies that do drop shipping or that are exporting from China into the world.

But if you really understand that you gotta deliver fast, the companies need to build a local presence, and it’s hard for a foreign company to actually replicate this because of the level of depth at which you need to operate.

5. Eternal Change for No Energy: A Time Crystal Finally Made Real – Natalie Wolchover

A novel phase of matter that physicists have strived to realize for many years, a time crystal is an object whose parts move in a regular, repeating cycle, sustaining this constant change without burning any energy.

“The consequence is amazing: You evade the second law of thermodynamics,” said Roderich Moessner, director of the Max Planck Institute for the Physics of Complex Systems in Dresden, Germany, and a co-author on the Google paper. That’s the law that says disorder always increases.

Time crystals are also the first objects to spontaneously break “time-translation symmetry,” the usual rule that a stable object will remain the same throughout time. A time crystal is both stable and ever-changing, with special moments that come at periodic intervals in time.

The time crystal is a new category of phases of matter, expanding the definition of what a phase is. All other known phases, like water or ice, are in thermal equilibrium: Their constituent atoms have settled into the state with the lowest energy permitted by the ambient temperature, and their properties don’t change with time. The time crystal is the first “out-of-equilibrium” phase: It has order and perfect stability despite being in an excited and evolving state.

6. What’s an API? – Justin Gage

An API is a group of logic that takes a specific input and gives you a specific output. A few examples:

• If you give the Google Maps API an address as an input, it gives you back that address’s lat / long coordinates as an output
• If you give the Javascript Array.Sort API a group of numbers as an input, it sorts those numbers as an output
• If you give the Lyft Driver API a start and finish address as an input, it finds the best driver as an output (I’m guessing)

When engineers build modules of code to do specific things, they clearly define what inputs those modules take and what outputs they produce: that’s all an API really is. When you give an API a bunch of inputs to get the outputs you want, it’s called calling the API. Like calling your grandma.

Inputs

An API will usually tell you exactly what kind of input it takes. If you tried putting your name into the Google Maps API as an input, that wouldn’t work very well; it’s designed to do a very specific task (translate address to coordinates) and henceforth it only works with very specific types of data. Some APIs will get really into the weeds on inputs, and might ask you to format that address in a specific way. 

Outputs

Just like with inputs, APIs give you really specific outputs. Assuming you give the Google Maps API the right input (an address), it will always give you back coordinates in the exact same format. There’s also very specific error handling: if the API can’t find coordinates for the address you put it, it will tell you exactly why. 

7. Jim Ling – Chris Tucker

Through the Sixties and early Seventies, conglomerate-in Texas and throughout the country -meant Jim Ling, creator of the huge Dallas-based Ling-Temco-Vought (LTV). How big was LTV? Massive.

At its peak in 1969, Ling’s company controlled Wilson, the nation’s largest producer of sporting goods and its third-largest meatpacker; Jones and Laughlin, America’s sixth-largest steel company; Braniff, the eighth-largest airline; and Vought, the eighth-largest defense contractor. Toss in a string of other companies with their innumerable subsidiaries and you have Ling-Temco-Vought, at the time the 14th-largest company in America.

How big was LTV? So big, some say, that only the U.S. government was big enough to stop it. Calling LTV “a force destructive of competition,” the Justice Department filed an antitrust suit to force LTV to give up Jones and Laughlin. Ling, not his lawyers, devised a settlement to placate the feds.

How big was LTV? So vast, according to some observers, that not even the man who created it really understood its inner workings. And Ling, an idiosyncratic genius, was finally caught up in a swirl of circumstances-market reversals, government harassment, personal conflicts with associates-that led to the famed Palace Revolt of 1970, when Ling was booted out of the company he built.

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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 do not have a vested interest in them. 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 01 August 2021:

1. China Discovers the Limits of Its Power – Michael Schuman

The dispute between Australia and China has been brewing for years. Like the U.S. and other democracies, Australia embraced engagement with China, and the two economies became entwined in a highly profitable symbiotic relationship: Australia’s treasure trove of natural wealth became indispensable to China’s rapidly expanding industrial machine. The countries even entered into a free-trade agreement in 2015.

The ink had barely dried, however, when Canberra began to grow nervous about Chinese President Xi Jinping’s bellicose foreign policy. Turnbull, who as prime minister from 2015 to 2018 was instrumental in forging Australia’s response, wrote in his book A Bigger Picture that China “became more assertive, more confident and more prepared to not just reach out to the world … or to command respect as a responsible international actor … but to demand compliance.”

Australia more openly criticized China’s encroachments on the South China Sea—vital for Australian shipping—where Beijing built military installations on man-made islands to solidify its contested claim to nearly the entire waterway. Turnbull also grew alarmed by the sums of Chinese money sloshing around Australian politics, spent to sway government policy in China’s favor. That led to new legislation designed to curtail foreign influence. Then in 2018, Turnbull’s government banned Chinese telecom giant Huawei from supplying equipment for Australia’s 5G networks, considering it too much of a security risk to essential infrastructure. Relations really fell off a cliff in April 2020, when current Prime Minister Scott Morrison’s government called for an independent investigation into the origins of the coronavirus outbreak—a prickly issue in Beijing, where such demands are perceived as politically motivated efforts to tarnish China.

Beijing duly went ballistic. (Hu’s chewing-gum comment was part of the angry response.) To force Canberra to back down, the Chinese government unsheathed what has become its weapon of choice against recalcitrant nations: economic coercion. Among other measures, Chinese authorities suspended the export licenses of major Australian beef producers; imposed punitive tariffs on barley and wine; and instructed some power plants and steel mills to stop buying Australian coal. In all, Wilson, of the Perth USAsia Centre, figures that Australia lost $7.3 billion in exports over a 12-month period. Some industries have been hit especially hard: The rock-lobster industry, almost totally dependent on Chinese diners, was decimated after Beijing effectively banned the delicacy.

Canberra wouldn’t budge, though. “We have to simply stand our ground. If you give into bullies, you’ll only be invited to give in more,” Turnbull told me. “There is a lot to be said for nuance and artful diplomacy, but you can’t compromise on your core values and your core interests.”

So far at least, the Australians haven’t had to. Beijing hasn’t been able to inflict sufficient pain to compel Canberra to concede. Wilson notes that the sacrificed exports amount to a mere 0.5 percent of Australia’s national output—not pocket change, but hardly a crisis, either. A few industries have adapted by diversifying their customer bases. Some coal blocked by China was redirected to buyers in India. And there was a limit to how hard Beijing could squeeze: Australian iron ore is the lifeblood of China’s construction industry, and Australian lithium underpins the Chinese electric-vehicle industry.

2. ‘The Ledger and the Chain’ Review: Human Cost – Harold Holzer

Isaac Franklin, already an experienced slave-driver, joined forces in the 1820s with his nephew John Armfield to create a human-trafficking juggernaut. The trans-Atlantic slave trade had been illegal since 1808, but no laws prevented cash-strapped owners from separating families and designating “surplus” men, women and children for deportation to places in the country where demand for forced labor far outstripped supply. The result was a “federally protected internal market for human beings.” By the mid-1830s, Franklin and Armfield’s “slave factory,” as one abolitionist called it, was trafficking up to 1,200 enslaved people each year—with much profit and no regrets. Originally headquartered at an innocuous-looking Alexandria, Va. town house—its high walls concealed outdoor slave pens and a “black hole” dungeon in the cellar—the enterprise grew exponentially as prices soared. Eventually a third colleague, Richmond-based Rice Ballard, helped widen the firm’s reach.

The trio specialized in driving enslaved people into Mississippi and New Orleans, where planters looking to expand their rice, sugar and cotton crops lined up to offer hundreds of dollars each for field hands, house servants and, as Mr. Rothman reminds us, sex slaves. The traders took turns driving coffles of heavily shackled, ill-clad, barely fed chattel as many as 1,000 miles on foot to be sold publicly at outdoor auctions or hotel lobbies. The firm became the first to acquire ships of its own, so that they could transport thousands more from the Chesapeake in stultifying confinement below decks. Those people who took ill in sweltering holding pens, at sea, or on forced marches received only enough attention to preserve their market value. Those who succumbed to death from measles, cholera, smallpox, starvation or exhaustion were left behind like scrap. Along the way, guards intimidated adult males with whips and rifles and routinely dragged women into the woods to rape them.

Mr. Rothman has done an astounding amount of research into period narratives testifying to the brutality endured by trafficking victims. He also uncovered many gruesome period advertisements for “Likely Slaves” and “Fancy” women (translation: candidates for forced sex). The author acknowledges that he often grieved over the material he uncovered, and “The Ledger and the Chain” can be equally painful to read.

The “ledger” part of the narrative presents mind-numbing data on the business side of slave-trading and its reliance on a colluding network of Southern and Northern banks, insurance companies, cotton brokers, judges and sheriffs. One cannot help but be reminded of the compulsive Nazi record-keeping of a century later. Then there are the parallel, tragic stories of the “chain”—the physical and psychological terror that involuntary relocation exacted on defenseless families and individuals. What Mr. Rothman calls “the desperation, and the rage of the enslaved . . . subjected to white whims” still tear at the heart.

Though antislavery newspapers periodically singled out Franklin and Armfield as “Cannibals” who “trade in blood,” the partners survived the period not only unmolested but ultimately in splendor. By the time some Southern states finally began banning domestic slave imports, the three had bought lavish town homes and bucolic plantations, acquired (and mistreated) their own slaves, and in semi-retirement gained community respect equal to their economic power. Seldom mentioned within white society was that, as younger men, each also had used enslaved women for their pleasure, boasting lasciviously to each other about the “hard work” required of their “one eyed men.” When Franklin and Armfield married white women, they simply got rid of their non-consensual sex partners along with the sons and daughters they had produced. How was it possible, asked one anguished rape victim as Rice Ballard arranged for her banishment, “for the father of my children to sell his own offspring?” Such appeals fell on deaf ears.

3. Engineers of the Soul: Ideology in Xi Jinping’s China by John Garnaut – Bill Bishop

In Xi’s view, shared by many in his Red Princeling cohort, the cost of straying too far from the Maoist and Stalinist path is dynastic decay and eventually collapse.

Everything Xi Jinping says as leader, and everything I can piece together from his background, tells me that he is deadly serious about this totalising project.

In retrospect we might have anticipated this from the Maoist and Stalinist references that Xi sprinkled through his opening remarks as president, in November 2012.

It was made clearer during Xi Jinping’s first Southern Tour as General Secretary, in December 2012, when he laid a wreath at Deng’s shrine in Shenzhen but inverted Deng’s message. He blamed the collapse of the Soviet Union on nobody being “man enough” to stand up to Gorbachev and this, in turn, was because party members had neglected ideology. This is when he gave his warning that we must not forget Mao, Lenin or Stalin.

In April 2013 the General Office of the Central Committee, run by Xi’s princeling right hand man, Li Zhanshu, sent this now infamous political instruction down to all high level party organisations.

This Document No. 9, “Communique on the Current State of the Ideological Sphere”, set  “disseminating thought on the cultural front as the most important political task.” It required cadres to arouse “mass fervour” and wage “intense struggle” against the following “false trends”:

1. Western constitutional democracy – “an attempt to undermine the current leadership”;
2. Universal values of human rights – an attempt to weaken the theoretical foundations of party leadership.
3. Civil Society – a “political tool” of the “Western anti-China forces” dismantle the ruling party’s social foundation.
4. Neoliberalism – US-led efforts to “change China’s basic economic system”.
5. The West’s idea of journalism – attacking the Marxist view of news, attempting to “gouge an opening through which to infiltrate our ideology”.
6. Historical nihilism – trying to undermine party history, “denying the inevitability” of Chinese socialism. 
7. Questioning Reform and Opening – No more arguing about whether reform needs to go further.

There is no ambiguity in this document. The Western conspiracy to infiltrate, subvert and overthrow the People’s Party is not contingent on what any particular Western country thinks or does. It is an equation, a mathematical identity: the CCP exists and therefore it is under attack. No amount of accommodation and reassurance can ever be enough – it can only ever be a tactic, a ruse.

Without the conspiracy of Western liberalism the CCP loses its reason for existence. There would be no need to maintain a vanguard party. Mr Xi might as well let his party peacefully evolve.

We know this document is authentic because the Chinese journalist who publicised it on the internet, Gao Yu, was arrested and her child was threatened with unimaginable things. The threats to her son led her to make the first Cultural Revolution-style confession of the television era.

In November 2013 Xi appointed himself head of a new Central State Security Commission in part to counter “extremist forces and ideological challenges to culture posed by Western nations”. 

Today, however, the Internet is the primary battle domain. It’s all about cyber sovereignty. 

4. DeepMind’s AI has finally shown how useful it can be – Grace Browne

Marcelo Sousa, a biochemist at the University of Colorado Boulder, had spent ten years trying to crack a particularly tricky puzzle. Sousa and his team had collected reams of experimental data on a single bacterial protein linked to antibiotic resistance. Working out its structure, they hoped, would help to find inhibitors that could stop that resistance from building. But, year after year, the puzzle remained unsolved. Then along came AlphaFold. Within 15 minutes, DeepMind’s machine learning system had solved the structure.

It’s the kind of result that could soon be repeated in labs across the world. In a paper published in the journal Nature, DeepMind has released over 350,000 predicted protein structures. Included in that is almost the entirety of the human proteome, the proteins that make up the human body. Within these predicted structures could lie key insights into diseases such as cancer and Alzheimer’s, the possibility of new drugs and even better ways to recycle plastic.

To put that number into context, the Universal Protein database, a collection of all the proteins that science has uncovered thus far, contains over 180 million protein sequences. These protein sequences tell us how the amino acids in a protein are ordered, but that’s only the beginning of the puzzle. To really understand how proteins function in the body, we need to know how that sequence determines the 3D structure of the protein – and that is a much more difficult task than simply knowing the right order of amino acids.

Of those 180 million protein sequences, scientists have so far worked out the structure of just 180,000 proteins. DeepMind’s new database provides predictions for more than double the number of known protein structures to date. Now biologists will be able to work on understanding how proteins interact and function – and beyond that, designing new proteins, enabling quicker drug discovery, deciphering disease-causing gene variations and more. “There’s much more to proteins than structure, and so we need to bring it together,” says Janet Thornton, a director emeritus of EMBL’s European Bioinformatics Institute. “It’s one component in that broader understanding of how life works.”

In the coming months, the AlphaFold team plans to release 100 million protein structures. “We’ll go from protein structures being a very precious resource to [them] dropping at every street corner,” says John Jumper, AlphaFold lead researcher.

AlphaFold cracked the protein folding problem back in December 2020, when the DeepMind team won at CASP, the Critical Assessment of Protein Structure Prediction. At the time, the company promised it would make the data and code openly available. Less than eight months later, in July 2021, DeepMind published AlphaFold 2’s full code and methodology in Nature, and now it has announced that it will all be free to use through a partnership with the European Molecular Biology Laboratory (EMBL) in order to share this massive resource, which will be called the AlphaFold Protein Structure Database. “We believe that this represents the most significant contribution AI has made to advancing the status of scientific knowledge to date,” DeepMind’s CEO and co-founder Demis Hassabis said at a press briefing.

5. Twitter thread on how Robinhood’s insiders are enriched during its IPO – Christopher Bloomstran

For those that haven’t read Robinhood’s 360-page S-1 and subsequent registration amendment, some brief observations follow on some of the most egregious aspects of one of the most one-sided, enrich the insider casino offerings I’ve ever seen, and there have been some doozies. 1/…

…Robinhood, who in December paid a $65 million fine (without admitting or denying guilt, wink) for best execution and payment for order flow alleged violations, will raise on the order of $2.3 billion from new shareholders in its upcoming IPO. What does The IPO investor get? 3/

The expected $2.3B brought to the party by new shareholders represents almost 30% of all of capital raised since 2013, including proceeds raised in the offering. For their money these new “investors” will only own 7% of the company and far less voting rights. Dilution, baby. 4/…

…New shareholders will bring $2.3B to the party, over 29% of all of the capital raised since 2103. For their money they will own 7% of the company. Did I already mention dilution? Wait until you see the dilution in book value and evisceration of per share book value. 20/

Cash in the firm will total about $7 billion with the addition of proceeds from the IPO. So how do you get to a ~$34B valuation? On fundamentals, 2020 REVENUES totaled $959m. 3/31 quarterly revs were $522m & 6/30 are estimated by the company at a range of $546 and $574m. 21/

At the midpoint, sequential revenues were up 7.3%, growing fast but decelerating in a hurry…In fact, monthly revenues in March of this year actually declined from February. The company reports $81 billion in assets under custody at March 31 and 18 million accounts. 22/

That works out to a whopping $4,444 per account (the median must be even WAY lower). The company further reports annual revenue per user of $137. No doubt some averaging is involved, but what they don’t report is that $137 in revenues from a $4,444 account is 3% per year. 23/

On those 18 million $4,444 accounts, total assets under custody break down as:
$65 billion in equities (AMC, GME & TSLA for sure)
$2B options
$11.6B crypto (up from $3.5B at 12/31 & $481m a year ago)
$7.6B cash
($5.4B) margin
Total assets under custody total $81B. 24/

14% of customer assets are crypto! You don’t see any bonds. You don’t see any mutual funds. Half of transaction revenue, which are 81% of firm revenues, come from OPTION rebates, while options at market value account for only $2B of customer assets. Tell me its not a casino. 25/

Option trading should definitely be allowed for the inexperienced, small, retail “investor.” This is how you get experience, and initiated. On assets held as crypto, these “assets” can neither be transferred in our ACAT’d out. They must be transacted while in the hood. 26/…

…17% of firm revenues were earned in Q1 from crypto transaction “rebates,” up from 4% in the prior quarter. Wile $HOOD supports 7 cryptos for trading, no less than 34% of crypto revenues were from DOGECOIN! Hilarious reading this. I’m probably wrong about this being a casino. 28/

In the first quarter alone, “customers” traded $88B of crypto against $11.6B held at 3/31 and $3.5B at year-end 2020. Definitely not a casino, but a platform encouraging the long-term ownership of investments. You think new “customers” learn all about the coffee can approach? 29/

6. Thinking About Macro – Howard Marks

In January’s memo Something of Value, I described the way my genetic makeup, early experiences, and success in blowing the whistle on some unsustainable financial innovations and market excesses had turned me into something of a knee-jerk skeptic.  My son Andrew called this to my attention while our families lived together last year, and what he said struck a responsive chord.

The old me likely would have latched onto today’s high valuations and instances of risky behavior to warn of a bubble and the subsequent correction.  But looking through a new lens, I’ve concluded that while those things are there, it makes little sense to significantly reduce market exposure:

• on the basis of inflation predictions that may or may not come true,
• in the face of some very positive counterarguments, and
• when the most important rule in investing is that we should commit for the long run, remaining fully invested unless the evidence to the contrary is absolutely compelling.

Finally, I want to briefly touch on the level of today’s markets.  Over the four or five years leading up to 2020, I was often asked whether we were in a high yield bond bubble.  “No,” I answered, “we’re in a bond bubble.”  High yield bonds were priced fairly relative to other bonds, but all bonds were priced high because interest rates were low.

Today, we hear people say everything’s in a bubble.  Again, I consider the prices of most assets to be fair relative to each other.  But given the powerful role of interest rates in determining those prices, and the fact that interest rates are the lowest we’ve ever seen, isn’t it reasonable that many asset prices are the highest we’ve ever seen?  For example, with the p/e ratio of the S&P 500 in the low 20s, the “earnings yield” (the inverse of the p/e ratio) is between 4% and 5%.  To me, that seems fair relative to the yield of roughly 1.25% on the 10-year Treasury note.  If the p/e ratio were at the post-World War II average of 16, that would imply an earnings yield of 6.7%, which would appear too high relative to the 10-year.  That tells me asset prices are reasonable relative to interest rates.

Of course, it’s one thing to say asset prices are fair relative to interest rates, but something very different to say rates will stay low, meaning prices will stay high (or rise).  And that leads us back to inflation. It isn’t hard to imagine rates increasing from here, either because the Fed lifts them to keep the economy from overheating or because rising inflation requires higher rates in order for real returns to be positive (or both). While the possibility of rising rates (and thus lower asset prices) troubles us all, I don’t think it can be said that today’s asset prices are irrational relative to rates.

7. MUM: A new AI milestone for understanding information – Pandu Nayak

When I tell people I work on Google Search, I’m sometimes asked, “Is there any work left to be done?” The short answer is an emphatic “Yes!” There are countless challenges we’re trying to solve so Google Search works better for you. Today, we’re sharing how we’re addressing one many of us can identify with: having to type out many queries and perform many searches to get the answer you need.

Take this scenario: You’ve hiked Mt. Adams. Now you want to hike Mt. Fuji next fall, and you want to know what to do differently to prepare. Today, Google could help you with this, but it would take many thoughtfully considered searches — you’d have to search for the elevation of each mountain, the average temperature in the fall, difficulty of the hiking trails, the right gear to use, and more. After a number of searches, you’d eventually be able to get the answer you need.

But if you were talking to a hiking expert; you could ask one question — “what should I do differently to prepare?” You’d get a thoughtful answer that takes into account the nuances of your task at hand and guides you through the many things to consider.

This example is not unique — many of us tackle all sorts of tasks that require multiple steps with Google every day. In fact, we find that people issue eight queries on average for complex tasks like this one. 

Today’s search engines aren’t quite sophisticated enough to answer the way an expert would. But with a new technology called Multitask Unified Model, or MUM, we’re getting closer to helping you with these types of complex needs. So in the future, you’ll need fewer searches to get things done…

…Language can be a significant barrier to accessing information. MUM has the potential to break down these boundaries by transferring knowledge across languages. It can learn from sources that aren’t written in the language you wrote your search in, and help bring that information to you.

Say there’s really helpful information about Mt. Fuji written in Japanese; today, you probably won’t find it if you don’t search in Japanese. But MUM could transfer knowledge from sources across languages, and use those insights to find the most relevant results in your preferred language. So in the future, when you’re searching for information about visiting Mt. Fuji, you might see results like where to enjoy the best views of the mountain, onsen in the area and popular souvenir shops — all information more commonly found when searching in Japanese.

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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). 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 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.

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 27 June 2021:

1. Little Stories – Morgan Housel

After years of tests, Lockheed engineers finally built a stealth plane. They could fly their prototype without radar picking it up. It was a miracle.

Then one day, it just stopped working.

“You lit up the radar like a goddamn Christmas tree” an engineer tells a test pilot in the book Skunkworks. “They saw him coming from 50 miles away.”

No one could figure it out. They hadn’t made any changes to the plane’s design.

The cause, they eventually discovered, highlighted the complexity of their work.

A screw hadn’t been secured tightly enough during maintenance, its head extending a few millimeters above the plane’s surface. That was maybe half a drill spin less than ideal. It was more than tight enough for the plane to operate. But on radar, it “appeared as big as a barn door.”

There’s a lot of hidden leverage in the world – tiny things that seem inconsequential but operate in a tightly wound system where one flaw can bring everything down.

It also makes me wonder: How much incredible technology has been abandoned in frustration when we were half a drill spin away from success?…

…Skateboarder Tony Hawk landed a 900 – two and a half spins – at the 1999 X Games. It was the biggest achievement the sport had ever seen, the equivalent of the four-minute mile.

It catapulted Hawk into legend status. His video game came out a year later and sold 30 million copies. Six Flags named a rollercoaster after him.

But here’s the craziest part of this story: fifteen years later, an eight-year-old landed a 900.

Hawk was also the first person to land a 720 (two spins) – a feat later accomplished by a second-grader.

A lot of sports work like that. One person raises the bar over what previously seemed impossible, and that becomes the baseline for a new generation to build upon.

Just qualifying for the Boston Marathon requires a time that, 100 years ago, would put you within nine minutes of a world record.

A gold-medal gymnast 70 years ago would not make the cut in a local competition today.

Same with technology, business, and investment knowledge. One generation builds on the impossible feats of the previous one. It’s like compound interest.

A fifth-grader recently landed a 1080 – three spins, unthinkable in Hawk’s day. Asked what he thought of the achievement, Hawk replied: “It represents everything I love about skateboarding: constant evolution.”

Which is a statement you can apply to just about any field.

2. Tech Companies Discover Hidden Costs of Remote Work – Sarah Krouse

As companies prepare to implement new remote-work policies, they are finding those policies come with a host of unexpected costs. What’s racking up the bills: new time off and financial benefits to boost morale and help with challenges like child care, immigration fees and paperwork for workers who hold visas, and reimbursing employees for home office equipment. Plus there are potential tax costs associated with employees moving to a state where the company doesn’t already have a presence and business registration.

Intuit’s consumer finance app, Credit Karma, incurred an additional 8% to 10% of expenses for new benefits to support remote workers during the pandemic, said Colleen McCreary, the division’s chief people officer. The company added additional mental health benefits such as remote therapy and agreed to cover remote doctor visits that were outside its health plan’s coverage last year—perks that will remain in place as the company reopens its office. It plans to do so fully by September and expects workers to report in person some of the time, but it will not dictate how often or when they must do so.

To limit costs last year, Credit Karma told its 1,300-employee workforce they could only work remotely from certain states like California and North Carolina where the company already has business operations, she said.

A year ago, CEOs or chief financial officers believed their overall costs could fall dramatically if they relied less on real estate and went remote, said John Bremen, a managing director at Willis Towers Watson who advises companies on their work arrangements. But many corporate leaders have come around to a hybrid approach that allows employees to work part time in the office and part time remotely. That means companies aren’t giving up all of their office space as expected…

…More than a year into the pandemic, some tech companies say remote work has improved productivity and morale, in addition to allowing them to hire talent regardless of where workers live. Those benefits, remote work advocates say, surpass any additional financial costs associated with remote and hybrid work.

3. Howard Marks – Embracing the Psychology of Investing – Patrick O’Shaughnessy and Howard Marks

Patrick: [00:09:11] Living through 2020 and now into 2021 has surely been one of the most interesting markets that anyone’s ever seen. You’ve seen a lot of fascinating markets in your career. And I think your memo output in 2020 was prolific. You wrote a lot about the market. How does this 18-month period stack up to your own experience with market history in terms of its uniqueness and the fact that we had a vicious bear market very quickly and then a pretty similarly vicious bull market? It just strikes me as unusual relative to history, and I’m curious your read on it.

Howard: [00:09:43] Mark Twain said, “History does not repeat, but it does rhyme.” And if you look at the cycle of 2020, it doesn’t rhyme with very much. The main reason is because in every other crisis that I lived through, the upcycle, down cycle, let’s say, the cause was endemic. The cause came from within. And most cycles, I think, occur because people become over optimistic and everything departs from the secular trend line in the direction of excess. And as I mentioned, people become excited and enthusiastic and eventually their excitement and enthusiasm take things to an excess. And in the long run, that access is not sustainable. And so you get a correction back toward the trend line. You get a downward correction. But, of course, it goes through the trend line to an excess on the downside, which ultimately turns out to be unsustainable. So you get a correction back up toward the trend line. So I think cycles are best understood not as ups and downs, which sounds kind of random, but as excesses and corrections.

The point is that what happened in 2020 was obviously not the result of excess optimism. It happened because, for an exogenous reason, that is we were hit by a meteor from outer space in the form of a pandemic. That’s what caused the downturn, along with the fact that in order to fight the pandemic the authorities closed business to keep people from infecting each other. So you had, I would say, a manmade recession prompted by an exogenous event. And then you had an upturn which was engineered by the Fed and the Treasury, not because the upturn did not occur because things got so bad that they were unsustainable and there was a natural regression back toward the trend line of the economy. The recovery occurred because the Fed and Treasury did things that caused it. There’s no similarity to past cycles in terms of cause, speed, amplitude, and impact. You had to learn a whole new game plan.

Patrick: [00:11:59] Do you think that that entire new game plan affects all investors going forward? Because you’ve written a lot in the past about the role of liquidity in markets, famously in the Great Depression monetary supply contracted. The toolkit seems to be fight every battle by flooding liquidity into the system, and so how do we adjust our model of the world going forward?

Howard: [00:12:21] I think that there’s every possibility that people will look at the last two experiences, which are 2020 and 2008, the global financial crisis, and say, the Fed obviously has the firepower to prevent every downturn in the economy and they should do so when people think that way. I’m not confident on this subject because I’m not a professional economist or Fed watcher. And you know, you should beware of analogies. But in the forestry business, if there’s a small fire they let it occur and sometimes they even cause some small fires to burn up the fuel that lies on the forest floor. And if you don’t permit any small forest fires, when you finally have one that you can’t put out right away, you’re going to have a doozy because of all the accumulated fuel on the forest floor. I believe that if they prevent every recession, that will give rise to such excesses on the high side, it will be, as I say, unsustainable and will cause a recession and that’s going to be a doozy.

So it just seems to me that if I were running Fed, which I’m absolutely unqualified to do, I would opt for leaving it alone most of the time, the economy, and having it do what it does naturally. All of us in the investment business, I don’t think there are any socialists in the investment business. We’re all in the investment business because we believe in the efficacy of the free market as an allocator of resources. So if you do, then shouldn’t you leave the economy and the capital market alone as much as you can so that it can freely allocate resources? So I guess I would not be an activist.

Now having said that, what they did in 2020 they had to do. And if they hadn’t done it, we’d have a worldwide depression now. And I made the point in one of my memos that just because something has negative possible ramifications doesn’t mean you shouldn’t do it. But in this case, they had to do it. But it did have, in my opinion, negative possible ramifications, so they should try to avoid doing it again anytime soon. And I’m a visual person, so I come up with visual images. And my visual image for the economy is its kind of like a ball at the top of a water spout. And as long as the water spout is strong, the ball stays up in the air, it stays out of the water. So the Fed levitates the economy through the water stock, which consists of liquidity. But it only stays up as long as the Fed is injecting liquidity. And is it appropriate for the Fed to inject incremental liquidity on a permanent basis?

4. What Makes Quantum Computing So Hard to Explain? – Scott Aaronson

The trouble is that quantum computers will not revolutionize everything.

Yes, they might someday solve a few specific problems in minutes that (we think) would take longer than the age of the universe on classical computers. But there are many other important problems for which most experts think quantum computers will help only modestly, if at all. Also, while Google and others recently made credible claims that they had achieved contrived quantum speedups, this was only for specific, esoteric benchmarks (ones that I helped develop). A quantum computer that’s big and reliable enough to outperform classical computers at practical applications like breaking cryptographic codes and simulating chemistry is likely still a long way off.

But how could a programmable computer be faster for only some problems? Do we know which ones? And what does a “big and reliable” quantum computer even mean in this context? To answer these questions we have to get into the deep stuff.

Let’s start with quantum mechanics. (What could be deeper?) The concept of superposition is infamously hard to render in everyday words. So, not surprisingly, many writers opt for an easy way out: They say that superposition means “both at once,” so that a quantum bit, or qubit, is just a bit that can be “both 0 and 1 at the same time,” while a classical bit can be only one or the other. They go on to say that a quantum computer would achieve its speed by using qubits to try all possible solutions in superposition — that is, at the same time, or in parallel.

This is what I’ve come to think of as the fundamental misstep of quantum computing popularization, the one that leads to all the rest. From here it’s just a short hop to quantum computers quickly solving something like the traveling salesperson problem by trying all possible answers at once — something almost all experts believe they won’t be able to do.

The thing is, for a computer to be useful, at some point you need to look at it and read an output. But if you look at an equal superposition of all possible answers, the rules of quantum mechanics say you’ll just see and read a random answer. And if that’s all you wanted, you could’ve picked one yourself.

What superposition really means is “complex linear combination.” Here, we mean “complex” not in the sense of “complicated” but in the sense of a real plus an imaginary number, while “linear combination” means we add together different multiples of states. So a qubit is a bit that has a complex number called an amplitude attached to the possibility that it’s 0, and a different amplitude attached to the possibility that it’s 1. These amplitudes are closely related to probabilities, in that the further some outcome’s amplitude is from zero, the larger the chance of seeing that outcome; more precisely, the probability equals the distance squared.

But amplitudes are not probabilities. They follow different rules. For example, if some contributions to an amplitude are positive and others are negative, then the contributions can interfere destructively and cancel each other out, so that the amplitude is zero and the corresponding outcome is never observed; likewise, they can interfere constructively and increase the likelihood of a given outcome. The goal in devising an algorithm for a quantum computer is to choreograph a pattern of constructive and destructive interference so that for each wrong answer the contributions to its amplitude cancel each other out, whereas for the right answer the contributions reinforce each other. If, and only if, you can arrange that, you’ll see the right answer with a large probability when you look. The tricky part is to do this without knowing the answer in advance, and faster than you could do it with a classical computer.

Twenty-seven years ago, Shor showed how to do all this for the problem of factoring integers, which breaks the widely used cryptographic codes underlying much of online commerce. We now know how to do it for some other problems, too, but only by exploiting the special mathematical structures in those problems. It’s not just a matter of trying all possible answers at once.

5. Twitter thread on the “fighter mentality” of Mark Zuckerberg – Dan Rose

In my experience the best founders develop a fighter mentality. Mark Zuckerberg was a fighter, and without that mentality Facebook would never have achieved its full potential. Here’s what I saw over 13 years working for Zuck:

One of Mark’s first big fights was with his own board + exec team. They tried to convince him to sell the company to Yahoo for $1B in ’06. At the time FB had 5M users (all college) and was 2 yrs old. At the age of 22, Mark stood to gain $300M personally. How could he say no?

Everyone told Mark to sell. Friends said he’d be crazy to pass up $1B. His management team wanted an exit. His board put pressure on him. But Mark knew something they didn’t – FB was on the cusp of launching new products that would completely change the trajectory of the company.

I joined FB in mid-2006, right after Mark made the decision not to sell (I’m glad he did!). He had the courage to go against everyone around him, and he was promptly vindicated the following year when we raised our Series C from Microsoft at $15B.

Within a couple of years after the Yahoo near miss, Mark replaced his entire management team and reconstituted the board. He needed people around him who believed in his vision, people he could trust to fight alongside him. I was one of them…

…The Social Network came out in 2010. Mark had been warned it would portray him in a negative light, and he was appropriately concerned about its impact on team morale, FB’s brand and his personal reputation. His advisors told him to ignore it, keep his head down, stay focused.

In one of the greatest jiu jitsu moves of all time, Mark rented out the Shoreline cinema complex and bussed in the entire company to see the premier of the movie. His first (and probably only) viewing of The Social Network was in a giant cinema with the rest of his employees.

Adding to the surrealness of this scene, Mark’s admin asked me to sit next to him – she thought my positivity would be a calming influence. When the character portraying him was being seduced by a girl, he leaned over and whispered “now this is awkward.” We both laughed out loud!

6. How Software Is Eating the Car – Robert N. Charette

“Once, software was a part of the car. Now, software determines the value of a car,” notes Manfred Broy, emeritus professor of informatics at Technical University, Munich and a leading expert on software in automobiles. “The success of a car depends on its software much more than the mechanical side.” Nearly all vehicle innovations by auto manufacturers, or original equipment manufacturers (OEMs) as they are called by industry insiders, are now tied to software, he says.

Ten years ago, only premium cars contained 100 microprocessor-based electronic control units (ECUs) networked throughout the body of a car, executing 100 million lines of code or more. Today, high-end cars like the BMW 7-series with advanced technology like advanced driver-assist systems (ADAS) may contain 150 ECUs or more, while pick-up trucks like Ford’s F-150 top 150 million lines of code. Even low-end vehicles are quickly approaching 100 ECUs and 100 million of lines of code as more features that were once considered luxury options, such as adaptive cruise control and automatic emergency braking, are becoming standard.

Additional safety features that have been mandated since 2010 like electronic stability control, backup cameras, and automatic emergency calling (eCall) in the EU, as well as more stringent emission standards that ICE vehicles can only meet using yet more innovative electronics and software, have further driven ECU and software proliferation.

Consulting firm Deloitte Touche Tohmatsu Limited estimates that as of 2017, some 40% of the cost of a new car can be attributed to semiconductor-based electronic systems, a cost doubling since 2007. It estimates this total will approach 50% by 2030. The company further predicts that each new car today has about $600 worth of semiconductors packed into it, consisting of up to 3,000 chips of all types…

…How little software is developed by car makers is illustrated by comments made in 2020 by Herbert Diess, then CEO Volkswagen Group and now its Chairman, when he admitted that “hardly a line of software code comes from us.” VW estimates that only 10% of the software in its vehicles is developed in-house. The other 90%  is contributed by tens of suppliers, and at some OEMs, this number reportedly reaches more than 50. 

So many software suppliers, each with their own development approach, using their own operating systems and languages obviously adds another level of complication, especially in performing verification and validation. This is highlighted by a recent Strategy Analytics and Aurora Labs survey of software developers across the automotive supply chain asking how difficult it was to know when a code change in one ECU affects another. Some 37% of those surveyed indicated it was difficult, 31% indicated it was very difficult, 7% indicated that it was pretty darn close to impossible, while 16% indicated that it was not possible.

Car companies and their suppliers are realizing that they must collaborate more to keep tighter control of data configuration management to keep unintended consequences from occurring due to unanticipated ECU code changes. But both admit that there is still a way to go. 

7. Twitter thread on the rise of intangibles and what it means for investors – Eugene Ng

Sharing my key takeaways from @mjmauboussin’s latest piece on “The Impact of Intangibles on Base Rates” and how it should affect us as investors. A must read! https://www.morganstanley.com/im/publication/insights/articles/article_theimpactofintangiblesonbaserates.pdf?1624494283562

1️⃣ Thinking Casually White heavy check mark: Taking the inside view, gathering lots of information of what is of interest, combining with your own input & experience & project into the future and coming up with a narrative trumps…

2️⃣ Thinking statistically Cross mark: Taking the outside view, relying on the past & base rates. Not relying of own experience, but others experience. Outcomes tend to be average, outliers rare, best for bell-shaped distributions, not in stocks where power laws and tails exist.

3️⃣ Intangibles & Growth. Two key characteristics: (1) Grow Faster Chart with upwards trend: Enjoy strong economies of growth, cheap to reproduce and share Rightwards arrow companies can grow much faster & more persistent; (2) Decline Faster Chart with downwards trend: Obsolescence and sunkeness Rightwards arrow companies can decline much faster

4️⃣ Intangibles & Access: The distinction between tangible is access. Only one can use a tangible asset at one time, whereas many can use an intangible asset at the same time. Marginal cost of sharing can be very low. E.g. Software.

5️⃣ Intangibles & Scalability: Because intangibles are much more scalable, companies that rely on intangibles can grow much faster than those built on tangibles. Chart with upwards trendRocket

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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 and Microsoft. 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 20 June 2021:

1. Blink – Michael Batnick

I can’t believe it’s been ten years since my mother passed away. The passage of time felt like the blink of an eye.

I was only 26 when my mother died. She only had 26 years with me. My fingers are shaking while I type because this is the most painful part. It’s not that I didn’t have enough time with her. It’s that she didn’t have enough time with me. She didn’t see me get married. She never got to meet her grandkids. She was robbed of some of the most joyful parts of life.

Even though my mother was the center of my universe, I don’t spend every second of every day thinking about her. It comes in waves. Tidal waves…

…I’m sad that my mother isn’t here, but I’m a better person for it. I would undo this in a second if I could, but losing her gave me a perspective on life that would have been impossible otherwise.

Ten years ago, I was a child in a man’s body. I had no prospects for a bright future. Death was staring me in the face, both metaphorically and literally. Now I’m a successful adult. I don’t mean that in the traditional sense of people equating success with money.

I’m successful because I don’t yearn for more. I have my wife and my boys and my freedom. I’m good. I have a unique appreciation of what I have because I already lost everything when my mother died. Now I have everything I need and everything I want.

Health is the only thing that matters. We all know this. But some people know it more than others. Losing my mother hurt like hell, but I’m grateful for what came of it. It taught me not to take anything in life for granted, especially life itself. Years aren’t promised, so I try to enjoy every day.

2. Technology Saves the World – Marc Andreessen

Only 15 months ago — March 13, 2020 — COVID-19 became a national emergency in the United States. My assumption at the time was that COVID lockdowns could extend as long as five years, the previous speed record for modern vaccine development, with many millions of deaths — a generational cataclysm.

While COVID certainly has been plenty devastating in the U.S. and around the world, with 600,000 Americans dead of and with COVID, and with shockingly broad destruction of American small businesses, it has not been nearly as destructive as it could have been. We are coming out of COVID years early, with many livelihoods and businesses preserved, compared to what we had any right to expect. And overwhelming credit goes to our spectacular technology industry.

The most amazing COVID technology story has to be the vaccines. Moderna, a product of the American venture capital system, created the first mRNA COVID vaccine within two days of receiving the genetic code for COVID by email. It’s hard to overstate the tremendous advance in both speed and effectiveness of this new technological platform — and now that we know how well mRNA vaccines work, we can look forward to decades of new vaccines both for potential COVID variants and for many other health threats. We now have the technological tools to quite literally code nature, and the payoff to human flourishing will be profound…

…Finally, possibly the most profound technology-driven change of all — geography, and its bearing on how we live and work. For thousands of years, until the time of COVID, the dominant fact of every productive economy has been that people need to live where we work. The best jobs have always been in the bigger cities, where quality of life is inevitably impaired by the practical constraints of colocation and density. This has also meant that governance of bigger cities can be truly terrible, since people have no choice but to live there if they want the good jobs.

What we have learned — what we were forced to learn — during the COVID lockdowns has permanently shattered these assumptions. It turns out many of the best jobs really can be performed from anywhere, through screens and the internet. It turns out people really can live in a smaller city or a small town or in rural nowhere and still be just as productive as if they lived in a tiny one-room walk-up in a big city. It turns out companies really are capable of organizing and sustaining remote work even — perhaps especially — in the most sophisticated and complex fields.

This is, I believe, a permanent civilizational shift. It is perhaps the most important thing that’s happened in my lifetime, a consequence of the internet that’s maybe even more important than the internet. Permanently divorcing physical location from economic opportunity gives us a real shot at radically expanding the number of good jobs in the world while also dramatically improving quality of life for millions, or billions, of people. We may, at long last, shatter the geographic lottery, opening up opportunity to countless people who weren’t lucky enough to be born in the right place. And people are leaping at the opportunities this shift is already creating, moving both homes and jobs at furious rates. It will take years to understand where this leads, but I am extremely optimistic.

3. Stripe: Thinking Like a Civilization – The Generalist (Mario)

The Roman poet Ovid coined that phrase, roughly translatable as “the end justifies the mean.” With that deft turn, Ovid summarized a school of moral philosophy referred to as consequentialism. 

If Silicon Valley’s ethics can be distilled into a coherent ethics, this is it: do what is necessary to change the world, no matter how many toes are trampled, privacy rights violated, or human norms deranged. The method does not matter, consequentialism tells us, the result is what counts. 

This is the ethos of Kalanick and Zuckerberg, and many tribute acts. It could not be further from the morality of the Collisons. 

Though perhaps they would disagree, and could certainly put a finer point on their particular weltanschauung, Patrick and John seem to adhere to a deontological ethics. This school, best articulated by glorious weirdo Immanuel Kant, suggests that the morality of an action is determined independently of its outcome. Though much too simple, deontologists argue that things like intent matter. 

All of which is to say that the Collisons seem to have forged an alternative for elite leadership that does not seek to excuse a noisome, polluting process with a favorable outcome. Just as Patrick notes that the “no jerks policy” companies sometimes apply to restrain themselves from hiring brilliant assholes is “too low a bar,” Stripe’s leadership seems to understand that success alone is not enough. You have to win with grace…

…Above all, Stripe is defined by its commitment (and espousal) of a multi-decade timeline. Leadership constantly reinforces the message that Stripe is in its early innings and that its most defining products are yet to come. 

This is a useful message for nearly every company to advance, but it carries extra weight given Patrick’s intellectual influences and extracurriculars, particularly his service as a Board Member for The Long Now Foundation. The organization, “established in 01996” exists to encourage thinking about humanity over the next 10,000 years. 

Stripe doesn’t have explicit plans for the next several millennia, but the company has succeeded in shifting employee mindset to think further ahead. In an interview with Ken Norton, Business Lead Michael Siliski articulated this trait: 

“We talk a lot about building multi-decade abstractions. I personally like to think 10 to 30 years to get out of the three- to five-year mode, but generally here people do say “multi-decade” a lot. Patrick and John and the entire leadership team are clear that this is a long-term bet and that we’re still very early. That long time horizon comes from the top, and it’s in the culture. And my sense is it’s been like that at Stripe since day one.”

Others make the same note. From Patio11:

“[M]y career success metric is making a large improvement in the lives of a large number of software people. I encourage anyone who isn’t already planning on a 45 year time scale to try taking a stab at this and reviewing the plan every year; the weeks are long but the years fly by sometimes. At present I’m at Stripe because I think it is probably the best option available in working against those long-term goals. 15 years down; 30+ to go; still early innings.”

Even in the visionary world of technology, this extremity of foresight is unusual; it’s even more uncommon to have it effectively distributed through an organization. 

This manifests in the company’s recruiting. Patrick notes that “the biggest thing we did differently…is just being ok to take a really long time to hire people.” 

It took the company six months to hire its first two employees. Describing their “painfully persistent” process of recruiting in his conversation with Lilly, Patrick noted that he could think of five employees that Stripe had taken three or more years to recruit. 

This approach makes sense when you think of it in a decades-long framework. As he notes in that discussion, employees — particularly managers — bring more employees with them over the years. Taking the time to find someone truly exceptional, though painful in the short term, compounds year after year. 

4. Are Inflation Worries Over-Inflated? – Chuin Ting Weber

What happens to markets when inflation becomes a problem? For the US, historically, the worst inflationary period in recent memory was from 1973-1981. CPI started to print consistently in low single digits from 1982 onwards, with the exception of 6.0% in 1990.  Many analysts point to OPEC and the oil crisis as the trigger for cost-push inflation starting in 1973. However, others have put the responsibility for the long drawn-out stagflation and economic slowdown on tightening by the Fed – the same concern being flagged by the worry camp today.

Let us take a look at the historical performance of the S&P500 during this time, for a one-time investment made at the start of each of these “bad” inflation years…

…For the two most unfortunate start points (1973 and 1974), it took 9-12 years for a lump sum investment to break even, net of inflation. This is consistent with MoneyOwl’s guidance for investors who wish to be in a 100% equities portfolio to have a time horizon of 10-15 years, based on the historical performance of markets. These are not magic numbers, but it gives the long-term investor some degree of comfort. In the example, we did not factor in dollar cost averaging, which is a more common way of investing and which could change the breakeven thresholds; nor adjustments to the investor’s personalised CPI or PCE based on his basket of goods.

However, what is counter-intuitive and remarkable, is that despite the inflationary environment, an investment took less than 5 years to break even on a real return basis in 7 out 9 years, or 78% of the time. In 6 out of 9 years, you break even within a year. More intriguing is that in as many as 4 years, investments started at the beginning of those years have not lost money since. This includes investments deployed at the beginning of the worst inflationary year of 1979.

Our little empirical study of US inflation vs. markets tells us that:

• There is no relationship between contemporaneous inflation and an investor’s long-term experience, or even in any single year. In fact, you can be handsomely rewarded by markets even during a period of very bad inflation.
• The odds of a positive return from being invested and staying invested are much higher than trying to time the market. Staying invested is valid even in inflationary and uncertain times.
• Having a line in the water to capture an outsized return if it comes along can cushion you against cumulative losses into the long term. We do not want to miss those years by timing the market, because it matters to our overall, cumulative return.
• There is a case for Dollar Cost Averaging during times of severe economic dislocation, because it means that your total return will not be the worst-case and you will also catch the good years. The regular saving plan (RSP) way of investing out of your monthly income, which is what we recommend for our mass market accumulation clients, has benefits beyond the formation of a good financial habit.

This walk down a “scary” memory lane supports what we already know about markets: that asset prices move quickly to incorporate all expectations and information about inflation and its potential impact on interest rates and equity prices. This is also indeed, a random walk. There is a randomness to year-on-year return and any investment approach built on trying to outguess markets repeatedly is quite futile.

5. He makes up to $3,900 a week racing cars on a blockchain game – Shihan Fang

If you haven’t heard of F1 Delta Time or its publisher, Hong Kong-based Animoca Brands, you’re not alone. It’s a game so new that it doesn’t even have its own Wikipedia page. F1 Delta Time is among a growing category of online games that are leading the “play-to-earn” movement. Built on blockchain technology, these games allow players to make money from in-game assets.

This offers gamers more opportunities to monetize their gaming efforts. Many games currently allow for virtual items to be traded for virtual currency. But unless they are built on blockchain technology, there’s no way to cash out either the virtual currency or items.

As such, gamers who want to turn their hobby into their line of work either have to climb their way up to a professional level or participate in peripheral activity like livestreaming or giving gaming tutorials. Another popular but tedious option is to build up an account and then sell it in an off-game transaction.

The play-to-earn movement has gained tremendous investor interest of late. Two unicorns were minted just last month, with Animoca Brands raising US$88.8 million and San Francisco-based Forte securing US$185 million at a valuation of $1 billion each. Neither of these companies are strictly in the gaming business; instead, they provide the blockchain platform to enable play-to-earn games…

…Besides Revv, F1 Delta Time issues digital assets tied to NFTs. It’s a process known as the “tokenization” of an asset and enables what Animoca calls “true digital ownership,” or having identifiable property rights to unique digital assets.

To race, each player needs a driver, a car, and a set of tires. These can be further customized by gear (suit, helmet, gloves, boots, trinket) and parts (front wing, rear wing, transmission, brakes, turbocharger, energy store, engine block, suspension) to create the best configuration for every race and type of weather.

Each of the aforementioned assets can be bought and sold on game-agnostic NFT marketplaces such as Opensea. Even the segments of each race track are tokenized, allowing owners to make money from entry fees.

Another novel application of NFTs is the in-game “staking” mechanism, a virtual event that allows players to temporarily lock up their cars in exchange for revv. According to its developers, “staking” was designed to increase the value and utility of in-game NFTs, and to allow owners to generate passive Revv income.

All tokenized items come in four levels of rarity: common, epic, legendary, and apex. The rarer the car, the lower the in-game supply, and the higher the earnings from staking.

NFT enthusiasts may want to note that a tokenized asset is made up of two parts: the NFT itself, which resides on blockchain, and the digital asset, which is stored off-chain, usually on a server run by Amazon Web Services. This means that the digital asset could potentially still be lost if its server is damaged or hacked, or if Amazon goes bust.

According to NFT insiders, this dependency is a weakness of the “centralized storage” model. While no one has the solution yet, there are some nascent efforts to create decentralized storage schemes for more “persistent” availability of assets.

“We have people in our team that are not good gamers at all. But they earn more because of other things like staking. If you’re purely investment and money-driven, there is money for you. If you are just a gamer, then there is something for you. If you like motorsports, there are collectibles. If you are across a few of those sectors, this is perfect,” says Brock.

6. Genetic Control of Aging and Life Span – Jill U. Adams, Ph.D

When studying life span, scientists tend to work with organisms that do not live very long; that way, they can observe the entire course of an organism’s existence and obtain relatively rapid experimental results. One organism that researchers frequently employ in their studies of life span is Caenorhabditis elegans, a microscopic roundworm that typically lives to a ripe old age of two to three weeks. Another advantage of using C. elegans is that these worms have a simple physiology and easily manipulated genes.

Over the last several decades, C. elegans has been the subject of many published studies, but perhaps the most famous of these appeared in 1993. In that paper, researcher Cynthia Kenyon and her associates showed that C. elegans with a specific single-gene mutation lived twice as long as members of the species that lacked this mutation (Kenyon et al., 1993). This finding was groundbreaking for a number of reasons. First, it challenged the prevailing concept that aging occurs as the body deteriorates over time. Second, it led to a shift in thinking, even among researchers who already believed that aging was subject to some sort of genetic control. Prior to this point, most such scientists figured that aging, age-related illnesses, and death were consequences of multiple cellular and physiological processes, and therefore under the regulation of a wide and diverse set of genes. Kenyon’s paper, however, suggested that a single gene could dramatically regulate how long an organism lived, thus opening the door to new hypotheses about modifying life span through genetic manipulation.

The responsible gene is called daf-2, and, in 1997, a research group led by Gary Ruvkun finally solved its DNA sequence (Kimura et al., 1997). Scientists were surprised to find that the protein coded for by this gene (designated DAF-2) looked much like the receptor protein within humans that responds to the hormone insulin. In other words, the worm protein is simply a primitive form of our own insulin receptors…

…So, how does a single gene cause such a dramatic effect? It turns out that daf-2 normally controls many other genes, which in turn regulate a variety of physiological processes at different stages in life. For example, in their studies of C. elegans, researchers have found a large set of genes that are either “turned on” or “turned off” in worms that carry two copies of the daf-2 mutation. The genes that show the most change fall into several different classes, some of which line up nicely with existing hypotheses about the mechanisms of aging in other organisms; this includes the belief that various genes encode for proteins that extend life by acting as antioxidants, regulating metabolism, and exerting an antibacterial effect.

One particular gene affected by daf-2 is daf-16; this gene encodes a transcription factor, or a protein that determines when and where hundreds of other genes are turned on. Normally, the DAF-2 protein (which is an insulin receptor) exerts a dampening effect on the DAF-16 protein through phosphorylation, or the addition of a phosphate group. In the mutant worms, however, DAF-16 is not phosphorylated, and it is thus active and present in cell nuclei. Experiments have determined that this activation of DAF-16 (caused by the absence of a phosphate group) is a necessary step toward life span extension (Figure 1).

7. Harder Than It Looks, Not As Fun as It Seems – Morgan Housel

Good advice that took me a while to learn is that everything is sales. Everything is sales. It’s usually framed as career advice – no matter what your role in a company is, your ultimate job is to help sales. But it applies to so many things.

Everything is sales also means that everyone is trying to craft an image of who they are. The image helps them sell themselves to others. Some are more aggressive than others, but everyone plays the image game, even if it’s subconscious. Since they’re crafting the image, it’s not a complete view. There’s a filter. Skills are advertised, flaws are hidden.

A friend recently complained about how inefficient his employer is. Processes are poor, communication is bad. He then said a competitor company had its act together. I asked him how he knew that – he’s never worked there and has never been inside the company. Fair, he said. It just seems that way from the outside.

But almost everything looks better from the outside. I guarantee workers at the competitor find flaws in the way their company operates, because they know about their company what my friend knows about his: how the sausage is made. All the messy personalities and difficult decisions that you only see when you’re inside, in the trenches. “All businesses are loosely functioning disasters” Brent Beshore says. But it’s like an iceberg, only a fraction is visible.

It’s the same for people. Instagram is full of beach vacation photos, not flight delay photos. Resumes highlight career wins but are silent on doubt and worry. Investing gurus are easy to elevate to mythical status because you don’t know them well enough to witness times when their decision-making process was ordinary, if not awful…

…When you are keenly aware of your own struggles but blind to others’, it’s easy to assume you’re missing some skill or secret that others have. The more we describe successful people as having guru-like powers, the more everyone else looks at them and says, “I could never do that.” Which is unfortunate, because more people would be willing to try if they knew that those they admire are probably normal people who played the odds right.

When someone is viewed as more extraordinary than they are, you’re more likely to overvalue their opinion on things they have no special talent in. Like a successful hedge fund manager’s political views, or a politician’s investment advice. Only when you get to know someone well do you realize the best you can do in life is to become an expert at some things while remaining inept at others – and that’s if you’re good. There’s an important difference between someone whose specific talent should be celebrated vs. someone whose ideas should never be questioned. Eat the orange, throw away the peel.

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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 no vested interest in any of them. 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 13 June 2021:

1. #023 – The A/B sides of the Internet – China Playbook

What’s the number 1 competitive element in an industry?

It’s the status quo, not the competition between competitors. The US has a long commercial history, so many industries and businesses have developed very well over several generations. If we call the last generation companies as the conservatives, then the conservative forces in the US are very strong. In China, the conservative forces are very weak. 

When I just started working on the food delivery business, I conducted some market research and found something that surprised me.

The largest delivery site in the US is called Grubhub, but they only had hundreds of thousands of orders a day. Domino’s Pizza had more orders than it did! Big chains like McDonald’s and KFC didn’t want to work with Grubhub either because they can offer delivery themselves. The delivery service has become a standard in established F&B chains. Additionally, the Americans eat pretty much the same things every day, unlike the Chinese, we have a lot of varieties.

This led to the last-gen solution being rather satisfactory, leaving very little room the the next-gen solution.

From the research that I did at the time, there were only three companies in China focusing on food delivery. In total, their orders were less than 100K a day. There’s no wide consumer awareness [of this product experience]. Their finances were not great either. If we see them as our last-gen, when we started, they were very weak.

What does this mean? It means when we started, we were not just bringing the Internet to the food delivery industry, we were building the food delivery industry itself. In fact, since we’re building the food delivery industry itself, our impact to the industry is much greater than just digitalizing the industry, our commercial value would also be greater.

This is a core difference between China and the US. This is a core difference between China and the US. Considering all these factors, we can understand why American investors can’t understand Meituan.

Lastly, a simple judgment – for the LBS [location-based services] category, China is a much better market than the US due to our population density, labour cost, population size and generational competition…

…Categorizing also has implications for which products can be made into one app and which can’t.

Taobao and Alipay have huge traffic, but putting Ele.me there didn’t do much.

WeChat and its Moments have such great traffic, but Weibo is still thriving.

It’s also why Meituan is able to consolidate so many things into one app, because most of them are in B2.

Douyin and Toutiao are separate apps. They didn’t incorporate Douyin into Toutiao despite Toutiao’s huge traffic.

All these have to do with categorizing. Categorizing correctly involves core competencies, resource allocation, consumer psychology, and organisational abilities.

2. How SEA Tech Giants Solved The “Cold Start” Problem – David Fallarme

If you’re introducing a radically new operating model to the industry, your primary constraint will be supply. You’ll use high-touch tactics to onboard sellers. You’ll need to go where they are or tap into existing networks, then manually onboard them to make sure they’re good representatives of your platform.

If you’re competing within well-understood industry dynamics, then you’ll be constrained by demand. You’ll use tactics with high scalability. This could take the form of owning digital marketing channels where you have an unfair advantage, riding the wave of a media narrative, or localizing wider and faster than anyone else.

A final lesson not explicitly mentioned here is that the solving Cold Start Problem is already hard, but even harder in a fragmented market in Southeast Asia.

Solving it in one country doesn’t necessarily give you a tailwind to set up in another country, even if those countries are neighbors or can speak the same language. And when you think you’ve got it nailed, your market can suddenly turn into a red ocean.

3. An interview with Patrick Collison – Elad Gil and Patrick Collison

Elad Gil:
Stripe has done an amazing job both in terms of scaling and in terms of attracting people with common values and a shared interest in building infrastructure for the internet economy. I’d like to hear some of your thoughts on how to build a culture, and how to let it evolve.

To start, how do you see culture evolving as an organization scales, and what you think is important early versus later in that evolution?

Patrick Collison:
When it comes to culture, I think the main mistakes that companies make are being too precious about it, being too apologetic about it, and not treating it as dynamic and subject to revision.

Generally speaking, and certainly if a company is working well to some degree— if you’re making progress in building the product you want to build and the service you want to create, and if the organization is growing and customers are adopting—there are empirically some things about your culture that are working well. And I often see companies making a mistake by being too abashed about simply being specific about those.

For example, you might believe firmly in the importance of working hard. Or you might believe firmly in the importance of minute attention to detail to the degree that you’re willing to redo something five times over. What often happens is that companies allude to these things, but in overly oblique fashions. They’ll say, “We believe in the importance of commitment,” but won’t be concrete enough to say that, well, we want people who really want to pour their hearts into this for several years, and we expect this to be the singular focus of your working life.

Similarly, on the attention-to-detail front, it’s easy to describe things in overly milquetoast terms without being really explicit, like: “If you work with us, you’re going to have to be okay with your work being repeatedly designated as inadequate, and okay with it being redone several times over.” These aren’t things that everyone is looking for. And you’re going to have to be okay with some people having that conversation with you and deciding that it’s not for them.

If you aren’t having these explicit conversations about what your culture is, the downsides are threefold: You don’t have the right people joining you, and you’re being unfair to those who do join you, in the sense that they end up being surprised by this emergent friction and tension in work styles. Thirdly, and I think this may be the non-obvious one, people’s disposition with regard to the company is actually a function of what they feel like they signed up for. If they feel like they signed up for an all-encompassing project, they’ll be much more willing to treat it that way than if they discovered it by surprise later on. And so you can actually change the outcome simply by being explicit at the outset…

…Elad:
How do you think about reinforcing or reminding employees about an organization’s cultural values? Do you incorporate it as part of performance reviews, incorporating it into weekly all-hands?

Patrick:
I think the macro thing to bear in mind with a lot of culture stuff is that a rapidly scaling human organization is an unnatural thing. The vast majority of human organizations that we have experience with, be it the school, the family, the university, the local community, the church, whatever, these are not organizations that scale really rapidly. And so the cues and the lessons and the habits you might learn from them are not necessarily going to be sufficient for the kind of human organization you’re building, which is perhaps doubling—or even more—in size, year over year.

As a consequence of that, you’ll often hear people talk about things like using explicit cultural values in performance reviews or in weekly all-hands. And you think, “Well, most of the other human organizations I see don’t do that,” and so it seems sort of contrived or whatever. But the difference is that you actually have a much more difficult challenge, which is to maintain a high degree of cohesion despite the really rapid evolution in the group of constituent participants.

So I’m a big fan of all the things you just mentioned. I think most companies start to explicitly encode and articulate their principles or values too late. I would try to produce a provisional revision literally when you’re just a handful of people. Then continue to update it on an ongoing basis, because assuredly there will be things you realize or come to appreciate are wrong over the course of the company.

But I would start with something right from the outset. And I would absolutely weave it into your product development, your collective communications with each other, your decision-making in general. For example, when you’re choosing the right series A investors, say, I think it would be ideal if the principles by which you ran the organization and the culture internally could help guide you to the right kind of investor for the company…

…Elad:
As you look across the Valley now, it seems like there have been some shifts that have created almost a culture of entitlement. People get enormous benefits, then start to complain about things that may not be that important, like the number of times they can get a free haircut on campus. How do you manage that? As people get bigger and bigger benefits, how do you make sure they don’t feel that they deserve everything?

Patrick:
I think that this is simply a challenge that we collectively have in the U.S. and in the Bay Area in this era of history. Such wealth has been created by our predecessors that we’re short-term benefiting from that it’s easy for that to have spillover effects in the culture and to distract from focus or lead to a loss of determination.

And again, if you just study and read a little about the early days, and ideally talk to people who were around, you see that at the first semiconductor companies and the early software companies and, up to Seattle, early Amazon and Microsoft, there was nothing to be entitled about. People thought that software companies were inconsequential add-ons to the hardware. They were dismissed, they were subject to brutal release cycles, companies were going out of business left, right, and center, there was a lot of concern over competition from Asia. It was a tough market to grow up in. Of course the survivors have done well. But while people are attuned to how successful a cradle for technology Silicon Valley is, they pay less attention to, and are I think less aware of, how densely populated a graveyard it is.

And so while I think that selective pressure was good for the surviving companies, it really kind of screws with our intuitive sense for what’s required to actually build one of these. You have some early success or you raise series A or gain some early traction, and it’s easy, even subconsciously, to start lining up the plots in your head: “Well, Facebook raised its series A in 2005, and went on to be worth $15 billion in 2008 or 2009 or whatever it was,” and so on. And I think the effects of that, in blunt terms, are really pernicious. In many ways it’s harder to create an organization with the kind of focused, determined, disciplined, non-complacent mindset that you need today than it was 20 or 30 years ago. That’s just a structural headwind that we all face.

There are many natural benefits and tailwinds that Silicon Valley enjoys, but I think this is one of the challenges we face. And if Silicon Valley is supplanted by another region, or even just more broadly by a general diffusion, I think this is one of the top contenders as to why that would be the case. It’s because we had too much wealth, we had too much early success, and it caused us to lose our hunger and our edge.

People who’ve spent any time with the great software companies in China— JD, Tencent, Alibaba, and now the next generation of startups—will tell you in no uncertain terms that there is a lack of entitlement, a lack of complacency, and a real determination to succeed that is at least not uniformly present here in Silicon Valley. And so I really think it’s something that should be top of mind for everyone.

4. Boxes, trucks and bikes – Ben Evans

The traditional way to think about ecommerce penetration is to look at share of total retail sales, and then deduct things like car repair, gasoline and restaurants – to get to ‘addressable retail’. On that basis, US ecommerce was at 16% penetration at the end of 2019 and increased to 20% or so in 2020, adding 12-18 months of growth in a year. 

The obvious problem with this analysis is that penetration of different retail categories varies a huge amount – penetration of makeup is different to books, which is different to shoes. This reflects how different the buying journey can be for different kinds of products – we sometimes talk about ‘high touch’ versus ‘low touch’ goods. The chart hides a lot of variation.

However, there’s also another way to split this, that I think is becoming increasingly important – instead of looking at the product category and the buying journey, look at the logistics model.

For Amazon, makeup, books and shoes are all just interchangeable SKUs with the same buying journey that can all be stored in the same fulfilment pod and all go into the same brown cardboard box, but a cucumber, a stove, a bag of cement or a bowl of soup do not fit this model at all – they might need a different buying journey, but they definitely need a different logistics model. So, as well as thinking in terms of hardline versus softline, or high touch versus low touch, we should also think of parcels versus collection or delivery versus bikes.

5. Getting the Goalpost to Stop Moving – Morgan Housel

Paul Graham wrote a few years ago about what happened to the U.S. economy after World War II:

“The effects of World War II were both economic and social. Economically, it decreased variation in income. Like all modern armed forces, America’s were socialist economically. From each according to his ability, to each according to his need. More or less. Higher ranking members of the military got more (as higher ranking members of socialist societies always do), but what they got was fixed according to their rank. And the flattening effect wasn’t limited to those under arms, because the US economy was conscripted too. Between 1942 and 1945 all wages were set by the National War Labor Board. Like the military, they defaulted to flatness.”

Indeed, a few years after the war historian Frederick Lewis Allan wrote:

“The enormous lead of the well-to-do in the economic race has been considerably reduced. It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more. As for the top one percent, the really well-to-do and the rich, whom we might classify very roughly indeed as the $16,000-and-over group, their share of the total national income, after taxes, had come down by 1945 from 13 percent to 7 percent.”

This went beyond income – even the variation in consumer goods flattened out. Harper’s Magazine wrote something in 1957 that was so important to the era:

“The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely. The differences between his automobile and the poor man’s are minor. Essentially they have similar engines, similar fittings. In the early years of the century there was a hierarchy of automobiles.”

If you look at the 1950s and ask what was different that made it feel so great?, this is your answer. The gap between you and most of the people around you wasn’t large. It created an era where it was easy to keep your expectations in check because few people lived dramatically better than you.

It’s the one thing – maybe the only thing – that distinguishes itself from other periods.

The lower wages felt great because they’re what everyone else earned.

The smaller homes felt nice because everyone else lived in one too.

The lack of healthcare was acceptable because your neighbors were in the same circumstances.

Hand-me-downs were acceptable clothes because everyone else wore them.

Camping was an adequate vacation because that’s what everyone else did.

It was the one modern era when there wasn’t much social pressure to increase your expectations beyond your income. Economic growth accrued straight to happiness. People weren’t just better off; they felt better off.

And it was short-lived, of course.

By the early 1980s the post-war togetherness that dominated the 1950s and 1960s gave way to more stratified growth where many people plodded along while a few grew exponentially. The glorious lifestyles of the few inflated the aspirations of the many.

Rockefeller never yearned for Advil because he didn’t know it existed. But modern inequality mixed with social media has made it so you do know that people drive Lamborghinis and fly in private jets and send their kids to expensive schools. The ability to say, “I want that, why don’t I have that? Why does he get it but I don’t?” is so much greater now than it was just a few generations ago.

Today’s economy is good at creating two things: wealth, and the ability to show off wealth. Part of that is great, because saying “I want that too” is such a powerful motivator of progress. Yet the point stands: We might have higher incomes, more wealth, and bigger homes – but it’s all so quickly smothered by inflated expectations.

That, in many ways, has been the defining characteristic of the last 40 years of economic growth. And Covid-19 pushed the trend into hyperdrive.

The point isn’t to say the 1950s were better or fairer or even that we should strive to rebuild the old system – that’s a different topic.

But nostalgia for the 1950s is one of the best examples of what happens when expectations grow faster than incomes.

And all of us, no matter how much we earn, should ask how we can avoid the same fate.

6. How Startup Founders in Southeast Asia Should Value Their Company – Monk’s Hill Ventures

One of the real challenges Series A founders face is identifying a reasonable valuation for their business before they engage with VCs. At MHV, Peng’s team looks for ‘win-win’ valuation scenarios where both founders and investors agree on valuations that reflect first principles.

Founders need to avoid making the mistake of calling out a company’s valuation upfront. As a founder, you’re typically focused on your own business – and rightly so. However, this means that walking in with a ready-to-go valuation is a mistake. Simply put, you’re going to be wrong when you propose a valuation because you’re not the experienced party. VC’s like MHV see 50 – or more – deals a year in your domain, and see valuations across the board.

Instead, Peng suggests there’s a good way to answer the question about what your company’s valuation is – and that’s to not reference yourself.

“For instance, you could say something like ‘I’ve seen another company get funded at this level and the revenues were X, and the valuation was in Y range’. Give two or three examples. That’s how you answer that question. It shows you’re smart enough not to put forward a number you’re not sure about.” Indicate that you’re fine with what the market offers.

Founders need to take onboard that the principle of a win-win is all about both parties bringing an educated view of a company’s valuation to the table. Being educated means doing your homework and knowing how similar companies in your sector, region, and stage of growth are valued. The idea is to settle somewhere in a range where both parties think it could have been better for them but come out saying ‘it’s reasonable’.

Later in the session, one founder asked Peng whether one approach founders may employ is to establish how much they need to raise based on their strategic goals.

“Absolutely. If I asked what the valuation is for your company, as a founder, that’s something you should avoid answering upfront.”

“But then if I asked how much you need to raise, which is a typical follow-on question, then you’d better have that answer and be able to back it up.”

7. What is Zero Trust? – Muji

Today’s enterprise networks are fractured, moving farther and farther away from a centralized location. Zero Trust is the next-gen security paradigm that is capable of helping to secure today’s scattered networks, but it’s becoming so heavily used a term that the definition is getting blurred.

Let’s look at what Zero Trust is solving, how the ecosystem has evolved, and look at the moves major players like CrowdStrike, Okta, Cloudflare and Zscaler are making within it.

Traditionally, the primary usage of an enterprise network is interconnecting infrastructure which runs services hosted internally, handling traffic from enterprise users who use some type of device to access the network. Remote workers had to use connection tools, like a VPN, in order to get onto the trusted company network to access internal services.

The old method of castle & moat security, where you maintained a trusted network across all of your enterprise infrastructure, apps, devices and users – with a secure perimeter around it all – is becoming a thing of the past, as all of those areas continue to sprawl outside of the perimeter (and IT’s grasp).

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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 Amazon, Facebook, Meituan, Okta, and Tencent (owner of WeChat). Holdings are subject to change at any time.