Marvin’s Best Weekly Reads December 17th, 2023
“Keep your fears to yourself, but share your courage with others.” —Robert Louis Stevenson
"You have to get used to saying sorry to yourself for owning some underperforming asset class. And, trust me, there will always be some underperforming asset class. It’s unavoidable. Right now those underperforming asset classes are emerging market stocks, long duration U.S. bonds, and REITs, but, one day, the underperformers will be the S&P 500 and technology stocks. It’s happened before and it will happen again.
The good news is that most of the downsides of diversification are in your head. There’s almost no chance that you will ever go broke while being diversified. However, you will question whether to be diversified in the first place. If you can overcome that, then you’ll be just fine."
https://ofdollarsanddata.com/the-downsides-of-diversification/
2. "China's propaganda, cybersecurity tactics, and its political efforts to lure nations away from Taiwan will increase strains in the Indo-Pacific region and make cyber sovereignty a major priority in maintaining security in the region.
China has made it very clear that it is actively seeking to create a “Chinese Century”[15], where China will geoeconomically and geopolitically dominate world affairs. The forefront of this effort will be in the cyber domain."
https://www.breakingbeijing.com/p/cause-and-cyber-effects
3. "Now 47 years old, Sanderson has already published 21 Cosmere books, and he plans on publishing at least 19 more. “But I do have to finish all this by the time I’m 70,” he says. I get the feeling he doesn’t want to wind up like a certain someone in New Mexico who’s already 74. Still, even now, Sanderson is easily one of the most successful and prolific fantasy writers of the century so far.
Sanderson has been extremely popular among fantasy readers for more than a decade, but last year, he made international headlines for raising $41 million on Kickstarter (doubling the previous fundraising record) to self-publish four secret books and deliver them directly to 185,341 fans. No publisher, no Amazon, no bookstores.
“I think some of the things [traditional publishing companies] do in New York are wrong-headed,” he says. “Somebody has to step up and say, ‘Here’s another way.’”
“We’ll see if our philosophy holds out, but the idea is that you invest in your people and the company will be successful, rather than investing in your company first,” says Sanderson’s wife, Emily.
Back when they first founded the company, Emily quickly became Sanderson’s business manager, “helping with fan mail and doing all the paperwork.” But as her responsibilities grew, she hired more and more people to help. Now, she acts as the COO for a one-of-a-kind business: part independent press, part merchandise manufacturer, part streaming content producer, part editorial and artistic support system for the Cosmere.
“Brandon’s the big vision person and I’m the detail person. I probably wouldn’t dare do some of this on my own,” she says.
“And I’m a little overambitious,” Sanderson adds.
https://www.esquire.com/entertainment/books/a43438119/brandon-sanderson-profile/
4. “Victory is now much more than a word in Ukraine. It’s a conviction, an aim to be willed into existence. Even the bitter fighters, even the most dejected know it’s victory or death. But what it’s costing to get there transcends any quantifiable figure or metric. Numbers lose their meaning quickly, at any rate. Personal stories are the only measures that don’t fade.
And measures in wartime are whole lives.”
https://www.esquire.com/news-politics/a45805515/ukraine-russian-invasion/
5. "It is imperative that the Milei administration focuses on the most important thing first: the economy.
All the rest, except perhaps for security, is secondary and will divert the attention from the main goal, which is that Argentina gets its ducks in a row from an economic perspective.
If Milei is not able to fix it, Peronism/Kirchnerism will come back with a vengeance to “clean up Milei’s neoliberal mess”. The fact that they originally created that mess means nothing, since voter memories are short lived in Argentina.
This could well be the playbook laid out all along by appointing Massa as the main presidential candidate for the Peronist block."
https://www.bowtiedmara.io/p/the-milei-starter-pack
6. "By knowing how our current system works, we can reverse-engineer what is needed to make a new monetary system function properly. In his groundbreaking book, Layered Money, Nik Bhatia lays out this new framework in monetary science; the existence of different levels of monetary networks to service disparate users with vastly different needs.
He explains that money as we know it does not exist, and should not exist, as a singular network upon which all transactions are completed. Various conflicting interests and user needs mean that any system built to service everyone will have to make severe compromises in all respects, and end up being sub-optimal for the vast majority of users.
In reality, the modern financial system does not operate as a single layer, upon which all transactions, no matter the size, must be executed. Instead, it operates at multiple layers- each of which has scaling solutions and key differences in security, transparency, and operability."
https://dollarendgame.substack.com/p/layered-money
7. Always good conversation and perspective on Silicon Valley. This time the gang opines on the Open AI drama.
https://www.youtube.com/watch?v=tPwpiTN94iQ
8. "My recommendation is for every entrepreneur to visit the Mochary Method Curriculum, bookmark it, and revisit it on a weekly or monthly basis as new challenges and opportunities arise in their business. It truly is one of the most remarkable curriculums for entrepreneurs."
https://davidcummings.org/2023/11/25/mochary-method-curriculum-for-founders/
9. "a lot of you have had or will have a rough year. Even a Year of Hell (more on that here). We all have at least one. I sure did.
And for most of us, there’s one natural reaction: Hide. At least a bit. Put your head down, and grind it out. Try and get that one more customer in the door. Push harder. Analyze that data more. Cut everything quietly. Lay low and just “focus” until you can get growth back on track. Stare at that monitor, until you figure it out.
It’s natural, but please, don’t do that.
We’ve all been there. I hid a few times.
But I tried at least to always still Get Out There. Win that Award (even if it was kind of a stupid award). Get on that TV show (even if no one would really see it but my team). And close that Important Logo that the team loved (e.g., Google, Facebook, Twitter) … even if the revenue itself wasn’t that material.
Be Present. Bridge the gap between one great year and the next year at least in part by getting out there. Even if today, you have to do that somehow from inside the house."
https://www.saastr.com/rough-year-dont-hide/
10. "Every empire in written history has rolled out the same playbook during its sunset years.
Inside the Empire, runaway debt forces the governing body to rapidly expand the money supply.
The devaluation of currency inflates asset prices and widens the wealth gap between the haves and the have-nots. Populism explodes, as civil unrest erupts in response to seemingly any cultural divide.
Outside of the Empire, competitive powers start rising. Rarely is it just one rising counter-power; it is typically a syndicate of smaller nations who can pause their ideological differences to align against the lone superpower."
https://jaymartin.substack.com/p/this-may-be-the-most-dangerous-time
11. "Maybe now it’s easier to understand why Sam Altman and Open AI’s skill sets are both extremely valuable and extremely feared by both sides. It’s not just a matter of whose side he is on. The question is, will his work bust us from one temporal dimension to another? Will it burst the American mythology and allow that to be replaced by a new Chinese mythology? In a world where the average person doesn’t know anything about science and doesn’t really care about facts, mythologies can become more effective military tools than any gun, tank, or aircraft carrier.
Remember that the US did not succeed in building an Anti-Ballistic Missile system but the mythology that the US had this capability helped bankrupt the Soviet Union. The Gurkha’s and the New Zealand All Blacks are equally feared on different battlefields. Are they really more ruthless or imbued with superhuman powers? Some will say yes but they are also really brilliant at mythmaking. Geopolitics has always depended on mythmaking skill which is closely tied to propaganda skill. It still does today.
You can’t take this element lightly. It wins wars."
https://drpippa.substack.com/p/q-tigris-eq-4d-the-power-of-a-haka
12. "One of those factors is geography. As the last two U.S. National Defense Strategies made clear and the latest congressional strategic posture commission confirmed, today’s U.S. military is not designed to fight wars against two major rivals simultaneously. In the event of a Chinese attack on Taiwan, the United States would be hard-pressed to rebuff the attack while keeping up the flow of support to Ukraine and Israel.
This isn’t because the United States is in decline. It’s because unlike the United States, which needs to be strong in all three of these places, each of its adversaries—China, Russia, and Iran—only has to be strong in its own home region to achieve its objectives.
The worst-case scenario is an escalating war in at least three far-flung theaters, fought by a thinly stretched U.S. military alongside ill-equipped allies that are mostly unable to defend themselves against large industrial powers with the resolve, resources, and ruthlessness to sustain a long conflict. Waging this fight would require a scale of national unity, resource mobilization, and willingness to sacrifice that Americans and their allies have not seen in generations.
The immediate priority for the United States has to be to ensure that Ukraine, Israel, and Taiwan have the weapons they need to defend themselves. These are the players with the most skin in the game at present. The best hope for avoiding a general conflict is that these frontier states will be so plucky and prickly that aggression is stopped or deterred before it can spread.
That won’t be possible unless the United States gets its defense-industrial base in order. Since the start of the Russia-Ukraine war, total U.S. defense production has increased by a mere 10 percent—even as the war demonstrates the staggeringly high consumption of military ammunition in a major conflict between industrial powers compared to the limited counterinsurgency operations of the recent past."
13. "You can understand why the OpenAI Board might have become uneasy when they realised that Altman was racing around the Middle East and Asia trying to raise billions for this vision. But, as Bloombergwrote, “these are not “side ventures”, they are “core ventures”. This is about redefining the cutting-edge of chip design, data collection and storage, computational power, and the interface between AI and physical robotics.
This new supply chain would not only challenge America’s IT infrastructure; it could be facilitating the diminishment of US power. It implies innovation is shifting outside of the US and acquiring data that is beyond the reach of regulators.
The truth is Altman does not believe in borders. He has one goal: to build the best AI possible. He has a vision that probably worried his board and unnerved Washington. Given that the US is trying to slow down technological innovation in other parts of the world by restricting the sale of the best chips and computers, it is hugely challenging when he says: “We’ll build our own stuff — in fact we’ll build our own supply chain and ecosystem.” So much for ITAR, the US system for banning the export of critical tech.
There was a time when an American would have been arrested for selling such protected high-tech innovations abroad. Today, can you stop a smart American from innovating outside the US? Can you tell entrepreneurs not to take foreign money and not to partner with foreign firms? Can you demand that they stop challenging existing firms like Nvidia? No. Not when others are offering so much money."
14. "I like the phrase "finding the right home." I like it not only in the sense of physical location, or entity ownership, but spiritual finality. Some companies are not meant to survive, and that's okay. Failure, death, defeat—the possible threat of all of those are things that make the lived experience more poignant and meaningful. Consolidation is simply one path towards "finding the right home" for people, ideas, and technology.
But one thing that the consolidation and shutdowns of 2023 reminds me is that we're not out of the woods by any stretch. Each company is bearing the burden of having to prove that it deserves to exist. Because increasingly, we're losing the veils that have hid a multitude of sins. And each of us has to stand and defend the existence of the things we are trying to build."
https://investing1012dot0.substack.com/p/revisiting-the-age-of-acquisition
15. "Few content creators realize that most businesses are the same nowadays.
They acquire customers online with a brand, content, product, and promotions.
Meaning:
If you learn the skills that make your creator business a success, you can use those skills to offer other businesses in the form of a freelance service or digital product.
Every single skill it takes to build a creator business is a high-value skill that everyone is talking about.
Learn graphic design as you build your profile picture, banner, website images, thumbnails, etc.
Learn copywriting and content writing as you build your landing pages, website, social media content, and newsletters.
Learn social media (yes, it’s a skill) to build your following, network, and authority.
Learn marketing and sales as you build your product or service.
Learn advertising and promotions as you promote your products or services to get buyers."
https://thedankoe.com/letters/how-smart-creators-make-money-the-build-teach-earn-method/
16. Valuable conversation on sales leadership in these tough times for startups.
https://www.youtube.com/watch?v=-1EZ3kKhFWI
17. "To some observers at the Reducetarian Summit, though, it was clear that the entire model of venture capital-backed food startups has serious issues. David Meyer, CEO of meat reduction nonprofit Food System Innovations, says that VC-backed alt-protein companies faced a lot of pressure to hype their products, and to make rosy projections about how long it would take consumers to start buying them en masse. The reality of building food businesses to that scale, though, was always going to be much more difficult, a reality on full display now as the prospects of early leaders slump.
A lot of that difficulty has to do with the costs of scaling: the so-called “valley of death” between small-scale pilot-production facilities and the truly monstrous installations businesses need to reach global scale and achieve economies of scale. Meanwhile, getting around some of the more fundamental issues holding back alternative meat—that so far, no one has created something actually indistinguishable from the real thing—may take more basic research, perhaps at university labs."
https://time.com/6339050/plant-based-meat-movement-harsh-reality/
18. This is a must for B2B founders.
https://www.youtube.com/watch?v=xjiQCB8Ugao
19. Worthy pad for a media mogul.
https://manofmany.com/living/dave-portnoy-home-nantucket
20. Always lots to learn from Tai Lopez.
https://www.youtube.com/watch?v=arGpXqi0SvM
21. "It is strange that so many Westerners expect Russia to win in the long run. In the 1970s, the FNL defeated the mighty US in Vietnam. In the 1960s, Algeria defeated France in the long Algerian war. In 1967, still poor Israel defeated a broad coalition of Arab countries. In the Finnish Winter War of 1939-40, tiny Finland held off Joseph Stalin’s Soviet onslaught, etc.
Size has not turned out to be decisive in many wars. Large but poorly motivated countries usually lose wars against smaller and more motivated countries, especially if the aggressor’s objective is colonial. It would be strange if the authoritarian kleptocracy Russia were therefore to win in Ukraine. Precedence suggests that Ukraine is more likely to win this war than Russia."
https://www.kyivpost.com/opinion/24660
22. "Generally speaking, we’re keeping leaner inventories to be safe. For those that have been following along, Oil prices really haven’t moved and after the spike from the Gaza Event, they are down pretty significantly. When it comes to investing, never really makes a ton of sense to invest in mature industries.
Inventory: More importantly on the E-com side… This means you don’t have to worry too much about a sudden spike in freight costs. Previously we warned every holiday season to plan ahead due to terrible supply chains. This year is the reverse. Demand has slowed a ton and on top of that? Freight costs won’t be spiking due to a broken supply chain.
Add this all up. No significant risk to running slightly lower inventory levels than usual.
AI and Imaging Becomes More Advanced (Source): On the digital side, we’d bet extremely heavily on loneliness. More and more people are sending money to digital/fake models. It is already bad enough. Tons of only fans women/men are legitimately 4/10 on the standard 1-10 looks scale but with filters, angles and perfect lighting they look like 10s. Recently, we’ve had the (unfortunate) chance to be in meetings with a few Tier 1/A-list content creators. To say they were hideous would be an understatement.
There is good news in all of this. You can remove the need for human models to advertise your products. Anyone who has worked online for more than a week knows that having attractive women on your roster is a *must* have. Not a nice to have. A *must* have. Women prefer talking to attractive women. Men prefer talking to attractive women. Now? You don’t even need to hire them, just use digital photos of attractive chat women."
https://bowtiedbull.io/p/on-the-state-of-digital-marketing
23. "This is a completely new game, and I think it’s going to challenge current leaders’ mental models of power and authority. People used to get legitimacy and authority from their title and role and some of that will remain. But increasingly, leaders will have to understand that authority will also need to come from a diverse network of support, possibly including people outside of the organization.
Companies will inevitably develop sophisticated mechanisms to squash these swarms and/or prevent them from ever happening, which means increased monitoring, surveillance, and immediate firing of people who try to organize.
Robb shares his own thoughts on what these trends mean for corporate governance and organizations:
“Networked swarms are a significant danger to corporate-run governance. These unthinking swarms, leveraging open-source organizational dynamics, can form quickly to coerce governments and corporations into alignment with their goals. In so doing, they actively negate the “voting” preferences people make through purchasing and employment behavior (the swarm-coerced advertising boycott of Twitter was an attempt to negate consumer choice).
Worse, the autocratic absolutism of these swarms, in combination with the inherent amorality of corporate bureaucracies (no intrinsic ability to resist moral coercion from swarms), will result in increasingly draconian action by corporations against a global population unprotected by rights that protect their freedoms.”
While this is grim there is also the positive side of things.
Returns to good leadership and coalition building should increase. While companies will increasingly screen incoming employees and be fearful of their ability to organize, happily replacing the middle ranks of the company with effective AI bots and automation, the best companies will be able to soak up great talent through their reactions to the inevitable crises they will face."
https://newsletter.pathlesspath.com/p/organizations-and-the-network-swarms
24. "Across the board the West has been too slow, too timid in its approach to Putin’s war on Ukraine, whether that is in the supply of arms to sanctions, utilising frozen Russian assets, to creating the right institutional setting around recovery and reconstruction.
It’s always been last minute, drip feed support for Ukraine and a failure to see the big strategic picture - what happens if Putin wins in Ukraine? Think through that and what that would mean for Western security."
https://timothyash.substack.com/p/support-for-ukraine
25. "At no point did the Icelandic authorities learn the identity of this mysterious client, the backer of the Minden expedition. They couldn’t have known that the German ship was one of dozens he’s pursued over the years. Media reports about wrecks this man has found or recovered have described him variously as an anonymous London financier, “the unknown salvor” and “the Originator.”
He’s marshaled a high-tech operation to recover the lost treasures of history, spanning centuries and entire civilizations and covering most of the blue portion of the planet. And he’s managed to keep this remarkable enterprise secret—until now.
Right now, the only ones with the resources to join in are corporate interests and wealthy individuals whose goals may or may not be aligned with the rest of humanity. The Originator is the most prolific of them all—the most successful shipwreck hunter in modern times, perhaps in all of history. His name is Anthony Clake, and he’s a 43-year-old hedge fund executive who rarely leaves dry land."
https://www.bloomberg.com/features/2023-deep-sea-treasure-hunter-hedge-funds/
26. "As we argued when we ran the following post last year, these trends have tragic historical echoes: the price of doing business with those who traffic in hate is not measured in dollars, but in lives. What this post is ultimately about is the difference between opinions and principles. Opinions are easy to hold and cheap to change, and their value is commensurate. Principles, on the other hand, are things for which you are willing to sacrifice. Willing to draw a line."
https://www.profgalloway.com/the-line-2/
27. "For those that don’t have a financial background, it is still pretty easy to understand. Tech guys should get it immediately as well.
If you have a return of say 6% and the risk free rate is 5.5% it means your real return was only 0.5%. Now take that and divide it by the amount of volatility you assumed.
Using the same example, if you squeaked out a 0.5% return (above risk free) but the standard deviation was 50% this would get you a whopping 0.01. For a frame of reference, a ratio of 1.0 is considered good.
Using the Bitcoin Comparison: Despite being seen as a highly volatile asset, not only has BTC gone up significantly over the past 10 years but its volatility *justifies* the risk. That is something that is still true today despite the massive decline from $69K to $16K back to $37K."
https://bowtiedbull.io/p/probability-based-investing-and-cz
28. "So when she ended up getting laid off six months later, Sacks decided to channel her digital content creation prowess, previously reserved for comedy videos on Vine and Facebook, into Instagram, and Mrs. Dow Jones (a nod to one of the better-known stock market indexes) was born.
Now, Sacks has more than 820,000 Instagram followers and another 286,000 on TikTok. She tries to be as up front as possible with her followers about her own financial situation — she’s a millionaire, but she doesn’t share specific numbers. “A lot of my money is tied up in my business,” she explains, which consists of her online presence, as well as speaking engagements, advisory roles at early-stage companies, and hopefully soon, a book. She knows her situation is thanks in part to coming from financial privilege. She doesn’t have student loans, for instance, nor has she struggled with things like emotional spending. The details of her portfolio aren’t surprising, she says, but aren’t really the purpose of her work.
“The American dream has really changed,” Sacks acknowledges. But that doesn’t mean we should just give up. “I’m a millionaire who rents, you know what I mean?” Instead of resenting our current financial situation, Sacks prefers her followers take advantage of it.
We should be switching jobs frequently in order to maximize salary increases and setting up our own side hustles. “In many cities, it makes a lot more sense to invest the money in the S&P 500 versus buying property,” she says. “At the end of the day, your returns are going to be greater if you’re in the stock market.”
https://www.bustle.com/life/mrs-dow-jones-haley-sacks-profile
29. I know it’s not fashionable to be optimistic about Egypt — and my cab driver certainly wasn’t — but I believe they can do this. They’ve proven themselves to be one of the most stable and peaceful countries in the Middle East, they’ve achieved a middling level of income without significant natural resources, and they’ve shown they’re willing to spend a lot on infrastructure.
The pieces aren’t all in place yet for a successful industrialization story, but some of them are, and the government knows that growth is the only thing that will keep its people happy. Egypt has plenty of problems, sure, but it just doesn’t look like a hopeless basket case to me.
https://www.noahpinion.blog/p/feeling-strangely-optimistic-about
30. "The Kissinger operation was vintage Wylie: tempting an author away from a competitor and then leveraging that client’s reputation to mutually beneficial ends. “He’s playing a multiyear game in which he is constantly trying to consolidate the board,” Scott Moyers, the publisher of Penguin Press and a former director of the Wylie Agency, told me. In the 1980s and 90s, so the legend goes, Wylie used his commercial cunning to disrupt the chummy norms that reigned in the publishing industry, replacing them with what one tabloid newspaper referred to as a “greed storm”.
When he met Wylie in the late 1980s, the author Hanif Kureishi later wrote, he was reminded of “the bullying, loud-mouthed suburban wide-boys I’d grown up with, selling socks and watches from suitcases on a pub floor”. Since the mid-90s, Wylie has been known as The Jackal, and many other agents and small publishers still see him as a predator who seizes literary talents nurtured by others. His agency’s approach is “very adversarial”, Valerie Merians, the cofounder of the independent publisher Melville House, told me. The head of rights at a London literary agency put it more bluntly: “He uses Colonel Kurtz methods.”
But there is more to Wylie’s success and his character than mere rapacity. Better than anyone else, Wylie and his agency have figured out how to globalise and monetise literary prestige.
The Wylie Agency hunts for undervalued literary talent the way a private equity firm might trawl for underperforming companies that it can turn into major profit centres after firing the current management. When he started out in the early 80s, Wylie saw more clearly than anyone else that literary reputations are commercial assets, and that if you control those assets, you ought to wring as much value from them as possible. Never mind if you have to use tactics that others consider unethical or underhanded."
31. "Over the few days when OpenAI looked like it might collapse, I do think that there was a temporary sense of opportunity among founders and VCs. But now that Altman is back, that seems like a mirage. (In the long term, this chaos does create room for open-source alternatives to flourish as people seek the power to opt out of OpenAI’s monopoly. But, as I argued last week, I think this only starts to happen as the S curve of model performance begins to level out.)
The more interesting and concerning user base is OpenAI’s enterprise customers. Startup people don’t mind palace coups and Silicon Valley intrigue if you ship good product. If you’re a mid-level insurance executive in Connecticut with a seven-figure Microsoft/OpenAI contract, you’re likely reading the headlines and wondering whether you should invoke force majeure.
I have heard that even before this disruption, some enterprise customers were disgruntled at the rate that OpenAI models were changed or replaced with newer versions, thereby negatively impacting reliability. Adding corporate chaos on top cannot be good for trust—and a loss of trust is hard to undo.
Realistically, though, startups are chaotic and hard. They are even more so when you’re playing with high stakes at the highest levels. No CEO is blameless, but you can make up for chaos and bad decisions if you build something incredible enough. What Altman has created at OpenAI should certainly lend him the benefit of the doubt, in my view.
But, as the saying goes, you only get one coup. If something like this happens again, I’ll question whether I can trust you to actually deliver on your enterprise contracts, much less safely birth a digital god into the world. Serious companies don’t go through this more than once."
https://every.to/chain-of-thought/the-king-is-back-in-the-castle
32. "Finding the next Amazon or Tesla, a small company which grows to an astonishing scale, dominates mainstream investment thinking, but throughout history, it’s been buying good companies and even better valuations that has made both men like Jim Rogers and Warren Buffet exceedingly wealthy."
https://calvinfroedge.substack.com/p/finding-value-in-an-overvalued-world
33. This is a pretty illuminating discussion. Ideas on how to Focus on Health, wealth & happiness.
https://www.youtube.com/watch?v=Oj7S4T6o6Fc
34. Oh wow....sad news. Death of an investing legend and brilliant thinker. RIP Charlie Munger.
35. I always learn stuff here. Worth watching to see how writing can help you with your life and business.