Marvin’s Best Weekly Reads July 30th, 2023
“Your calm mind is the ultimate weapon against your challenges.” — Bryant McGill
"The endurance of alliances can be partly explained by inertia, vested interests, and sunk costs. But there is more to it. Modern alliances are defensive in nature and are therefore more resilient than the aggression-oriented pacts of the distant past. Moreover, they are generic as opposed to threat-specific: they apply to any aggression. This has rendered them capable of confronting the re-emergence of perceived threats, or be the vehicle for dealing with new ones.
The growth of the Western system of military alliances and partnerships is mostly a consequence of the radicalization of Russian and Chinese policies (as well as North Korean and Iranian ones). To use political science jargon, there is more “balancing” going on vis-à-vis Moscow and Beijing, and more “bandwagoning” with the United States.
Then again, the US system is “unique in human history.” A scholar calculated that US alliances covered some 25% of the world’s population and 75% of its GDP. It is institutionalized like no other. NATO is not only the biggest formal alliance in the world but also one of only two (with RoK/US Combined Forces Korea) that has a permanent military command. It has proven flexible enough to lead major operations with non-members. Unlike ad hoc coalitions, NATO allows for collective decision-making, tested procedures, interoperability, and the use of common assets. US-based alliances tend to last twice as long as non-US-based ones: the main treaty-based US alliances forged after 1945 are historical outliers in terms of their duration.
The United States stands out as a security guarantor due to the combination of its helpful location, its democratic nature and it unparalleled power. US-led formal alliances are also unique in that they involve both interests and ideals."
https://samf.substack.com/p/the-role-of-security-guarantees
2. "Turkey’s eventual acquiescence, the many pledges to Ukraine, and the broader commitments to NATO’s defense helped everyone leave Vilnius with the sense that solidarity and unity were intact but maybe not unshakable. As Biden noted, NATO did not break apart. Russia’s invasion of Ukraine gave NATO a renewed sense of purpose. But the alliance is still figuring out exactly how it will fulfill it."
https://www.vox.com/world-politics/2023/7/12/23784649/nato-summit-ukraine-biden-zelenskyy-vilnius
3. "As with all bear markets, the appetite for risk drops, and although emerging fund managers are often noted to outperform their more established counterparts, some limited partners are weary of bringing on new venture partners. Instead, they retreat to their trusted, established partners.
For some emerging managers, this means the market will become tougher to penetrate. For those with funds that are focused on backing diverse founders who are already working with less capital, the drawback is often the difference between another round or closing shop."
https://techcrunch.com/2023/06/19/small-vc-firms-bear-market/
4. "U.S. venture continues to be a hits-driven business. Overall industry returns, and most fund returns, are driven by the relatively small percent of outcomes that are the winners."
https://medium.com/correlation-ventures/venture-capital-were-still-not-normal-9d07d354db88
5. "Where does Team Doomberg fall on the matter? Longtime readers will know that our personal financial strategy has three pillars: we earn money in fiat, we save by buying real assets, such as gold, land, and collectibles, and we invest privately where we can personally impact the outcome. Within that context, gold plays an important role as a wealth preserver, and we own a meaningful amount of both physical gold and the Sprott Physical Gold Trust (NYSE: PHYS).
Gold is not our vehicle for speculation, and the prospect of a competitor to the US Dollar does not compel us to change our current allocation either way. A careful reading of what our five experts submitted finds surprisingly little they disagree upon: displacing the US Dollar system will be hard and take longer than many think, lots of countries would like to do so, the seizing of Russia’s assets has only increased the motivation to try, and the ultimate impact on the price of gold, oil, and the value of the US Dollar in the unlikely event such an effort succeeds is incredibly challenging to model.
A bedrock philosophy of prudence is “when in doubt, do nothing.”
https://doomberg.substack.com/p/something-or-nothing
6. "Confronted by a toxic cocktail of high energy costs, worker shortages and reams of red tape, many of Germany’s biggest companies — from giants like Volkswagen and Siemens to a host of lesser-known, smaller ones — are experiencing a rude awakening and scrambling for greener pastures in North America and Asia.
Absent an unexpected turnaround, it’s hard to avoid the conclusion that Germany is headed for a much deeper economic decline.
To understand the long-term effects of deindustrialization, one needn’t look further than America’s Rust Belt or the U.K.’s Midlands, once thriving industrial corridors that fell victim to policy missteps and global competitive pressures and never fully recovered.
Only with Germany, the consequences would play out on a continental scale.
The country’s reliance on industry makes it particularly vulnerable. With the exception of software maker SAP, Germany’s tech sector is essentially non-existent. In the financial world, its biggest players are best known for making bad bets (Deutsche Bank) and scandal (Wirecard). Manufacturing accounts for about 27 percent of its economy, compared with 18 percent in the U.S.
A related problem is that Germany’s most important industrial segments — from chemicals to autos to machinery — are rooted in 19th-century technologies. While the country has thrived for decades by optimizing those wares, many of them are either becoming obsolete (the internal combustion engine) or simply too expensive to produce in Germany."
https://www.politico.eu/article/rust-belt-on-the-rhine-the-deindustrialization-of-germany/
7. Never get enough of Justin Waller. The Blue Collar Baller.
https://www.youtube.com/watch?v=RZ7sy14nO8I
8. This is the new face of war. Drone swarms.
https://www.youtube.com/watch?v=sjInnRL-HUg
9. Rise of California in last 40+ years were driven by several trends now going in reverse. Exacerbated by stupid Progressive left policies & declining quality of life.
A major transformation and reinvention will be needed soon.
https://www.youtube.com/watch?v=AU9zwaF08SA
10. "So. If we know the following trends are here to stay: 1) gambling, 2) quick fixes, 3) drugs, 4) partying/sugar arrangements and 5) complete emphasis on fast results, you have the blueprint to avoid all of this stuff and get miles ahead in less than 5-10 years or so. *gasps a whopping 5-10 years to get crazy rich is too long!*. Better go find a FOREX course for turning $20K into $500K in 6 months! Only $20K to sign up!
Why It Is Happening?
This isn’t really important but people obsess over knowing the “why”. The why is actually simple. It is due to the platform nature of the USA. There are now “platforms” that dominate everything. Twitter, Instagram, Pinterest, TikTok etc. Once you see platforms, you see what we mean.
Platforms are full of billions of people. They are also extremely easy tools to trick people."
https://bowtiedbull.substack.com/p/americas-future-degeneracy-and-milking
11. I always learn from this man: Justin Waller.
https://www.youtube.com/watch?v=Tr-aS3YD-sA
12. "Finding product-market fit is a game, and games have levels. My product-market fit game has five levels:
-Find a significant problem to work on
-Validate the problem by talking to users
-Get users to use your product
-Keep users coming back
-Onboard your first 5 reference customers
You need to complete all five levels to win. All but the first have multiple failure modes, which I've listed – go through them sequentially. You might find you cannot complete a level. This is a sign you need to pivot your entire company. I touch on this at the end."
https://posthog.com/blog/product-market-fit-game
13. Tokyo is amazing and it’s my favorite city on the planet. It’s a magical place.
"There is only one Tokyo, like there is only one Paris.
That’s true in quantitative as well as qualitative terms; the sheer scale of Tokyo is unimaginable. With over 37 million people, it is the largest human city in existence, whether measured by “urban area” or “metropolitan area”. It is important to understand exactly what this means. The city of Tokyo proper is about half as dense as New York City — 6,169 people per square kilometer compared to 11,316. That is because the “population density” of a municipal area is counted as the number of people who sleep there, not the number of people who are there. Tokyo proper is less “dense” than New York proper because so many of the people who work and shop and hang out in Tokyo live outside the city’s statutory boundaries.
In Tokyo, you can meet pretty much anybody — business execs, artists, professors, entrepreneurs, even gangsters if you want to. One great thing about a city as safe as Tokyo is that it’s not really dangerous to meet strangers. There’s a subtle sense of communality in Tokyo that exists in very few large cities. The shared spaces feel more shared.
Combine diversity with the tourism boom — which has returned with a vengeance since the end of the pandemic — and Tokyo has become a place where you hear every language of the globe spoken in the streets and shops and restaurants. In fact, if there is one thing that has gotten significantly worse about Tokyo over the last few years, it’s overcrowding due to the tourism; Tokyo is just so wonderful that everyone goes there. I can’t exactly blame them.
The immigration boom, among other things, has enriched Tokyo’s already excellent food culture immensely. The country is a culinary mecca; so many chefs have moved there that the country arguably has better Italian food than Italy itself. It has also enlivened the already world-class art, music, and fashion scenes — in my opinion, even above NYC. If you’re an artist or author or musician looking for where it’s at, in the past you would go to Paris, then to New York; now, increasingly, you will go to Tokyo. I predict that over the next two decades, trends and ideas will increasingly originate in Tokyo and spread to the rest of the world."
https://www.noahpinion.blog/p/tokyo-is-the-new-paris
14. Bullish on Poland, as an economy but also major regional power.
https://www.youtube.com/watch?v=6I6FczLXc5M
15. Ukrainian agriculture coming offline and this has huge effects for the Middle East, South Asia and Africa.
https://www.youtube.com/watch?v=nPg7AdXSrbE
16. Good description of Europe's doom loop.
"I think the macro lesson here is bad things happen when you stop valuing innovation and the benefits of creative destruction. (Of course, it would be even worse if the US went down the EU path since at least the EU can benefit from American innovation.)
We’re already seeing Europe embrace the precautionary principle with AI, with plenty of American policy activists and policymakers suggesting the same here. I hope the US continues to show that its competitive advantage is mostly avoiding the anti-progress mistakes that Europe continues to make."
https://fasterplease.substack.com/p/learning-from-europes-doom-loop-of
17. "Horns of a Dilemma
The solution is a concept familiar to military planes and pundits alike – and the objective of any self-respecting fire support planner – which is to put the enemy on the horns of a dilemma: in seeking to avoid one weapon, he makes himself more vulnerable to another. Drip-feeding ever more capable systems enables any enemy – and the Russians are no exception – to avoid such a fate, by dealing with one horn at a time.
This will mean employing multiple long-range capabilities –without getting too focused on specific platforms -- at sufficient scale to put the Russians on the horns of dilemma. ATACMs may contribute to this goal, but it cannot be the only solution. ATACMs combined with long range drones and Storm Shadow missiles would be a start – along with plans to add F-16s armed with NATO compatible missile systems to keep the pot bubbling."
https://amilburn.substack.com/p/ben-wallace-amazon-and-atacms
18. More data on the rise of Poland as a military power. Their tragic history of multiple partitions shows you can never be complacent.
https://www.youtube.com/watch?v=uvFTJUrJi_o
19. An excellent guide to consumer subscription businesses and how to overcome challenges inherent to them. Highly recommend it.
https://caseyaccidental.com/consumer-subscription
20. Good summary of Turkey's economic situation. It's ugly but some green shoots if they stick to a more orthodox economic policy.
https://timothyash.substack.com/p/turkey-economic-outlook
21. "Nowadays, there are four things that are gonna decide if I have a good day. Did I sleep enough? Did I connect deeply with people I love? Did I get some time to myself? Did I make choices for my body that felt good—like, did I take a good walk, did I eat healthy, did I exercise? If I get those four things in place, usually my days are pretty good. The more they begin to fall apart, the worse everything else gets. So those can be built on habits, but they’re not exactly habits.
The hard thing is that when they begin to degrade, it actually becomes harder to keep them in place. If you’re more disconnected from people you love, it's harder to sleep. If it's harder to sleep, you're more irritable. So I have to think of things as being less about habits and more about fundamentals."
https://www.gq.com/story/ezra-klein-routine-excellence
22. Actually Saudi has already been a welcoming place for me personally. I recommend visiting. But this is a good explanation of their involvement in investing in global sports franchises.
"Now, there is definitely some sportswashing going on here. Saudi Arabia will never make back the billions it spent on LIV Golf, and many of its other sports investments are too small for them to seriously claim its intent is financial diversification.
But I don’t think that’s their goal. Instead, Saudi Arabia wants to turn their country into a tourist destination, like Dubai. That’s because they will make significantly more money on that than anything else.
And by investing in sports assets like Formula 1, Newcastle United, and the PGA Tour, companies like Uber, Disney, and Facebook, and multi-million-dollar tourism sponsorship deals with athletes like Cristiano Ronaldo and Lionel Messi, Saudi Arabia is hoping to soften its image and promote its country as a welcoming place."
https://huddleup.substack.com/p/why-saudi-arabia-will-invest-billions
23. Turkey is the other growing power to watch in Europe (besides Poland)
https://www.youtube.com/watch?v=aXPMTJN_bCo
24. End of an era in venture capital. Mike Moritz is a legend in the business.
25. This is an eye-opening documentary. This is also why we absolutely must support Ukraine against Russia's invasion. They won't be stopping at Ukraine.
https://www.youtube.com/watch?v=7Y_t3ayMOvY&t=1619s
26. "The point of this essay is to explain
-why venture is different from other asset classes (you cannot “index” it)
-why many fund-of-funds aren’t worth the fees (they try to index it)
-why some fund-of-funds are (they concentrate where others don’t)
This, I also suspect, is why it’s nearly impossible to index venture. Most funds can’t capitalise on the asymmetry to begin with. Those who can, usually only do it for one or two vintages. If a fund manages to do well over multiple cycles, they inevitably become access constrained and out of reach for most LPs."
https://jordsnel.substack.com/p/indexing-venture-and-other-fools
27. "Taiwan’s bid to mass produce drones is part of an intensifying military rivalry that is dividing Asia, setting off a sprint to harness emerging technologies with the potential to deliver a decisive boost in firepower. On one side are the United States and its allies, including Taiwan, Australia, Japan and South Korea, who want to preserve American dominance in the region.
On the other is an increasingly assertive China, determined to gain control over the democratically governed island and displace America as the leading regional power.
In this high-tech arms race, military and civilian researchers from both sides are scrambling to seize the lead across a swathe of fields, including artificial intelligence, autonomous weapons, advanced semiconductors, hypersonic flight, quantum computing and cyber warfare.
The presentation noted Ukraine had used drones to conduct “asymmetrical warfare” and surprise attacks. It advised that Taiwan aim to become a major exporter of drone components and an R&D center for this technology in Asia, with the government coordinating efforts. Taiwan should accelerate mass production of a range of military drones to boost self-reliance in the struggle with Beijing, it concluded.
While Taiwan gears up to build a drone pipeline, it is also planning measures to offset China's advantage in numbers.
Local companies are working on counter-drone technology, including interceptor drones. If the enemy sends in “hundreds of drones all at once, we need to be able to identify them and assign missions,” said Wang Yu-jiu, chairman and CEO of Tron Future, which is developing anti-drone devices such as jammers that will disable incoming drones.
“This is a war of technology,” said Wang."
https://www.reuters.com/investigates/special-report/us-china-tech-taiwan/
28. "What is the point of all this? Our economy, education, laws, our society? I’d offer that the whole shooting match, the whole reason for a nation, is to create a context for deep and meaningful relationships. Deaths of despair, a lack of economic opportunity, and lost young men are all signs that our nation continues to offer prosperity but not progress. It’s time again to start investing. America needs young men, and they need us."
https://www.profgalloway.com/boys-to-men/
29. "This is the part of the startup cycle that’s the grit-your-teeth grind.
Some startups focus on product development. Others focus on winning competitive share by investing in sales & marketing.
Having that focus enables companies to continue to execute through the dark skies & maintain a level of urgency in the organization throughout the storm to be well positioned once the rain abates."
https://tomtunguz.com/its-supposed-to-be-hard-2/
30. "If you want to start a revolution, you have to be willing to do things that the other side won’t. The difference today is in the way the combat is happening. Nobody is really “marching through the institutions”; they’re marching through your mind.
Go through the list of politicians and pundits on the Left and Right both and you will always find that the person who seems less entangled in rivalry, counter-punching, and grandstanding language (framing everything as an existential crisis which only they, or their party can solve, etc.) is the person getting less engagement and generating less “energy”."
https://read.lukeburgis.com/p/the-age-of-gladiators
31. "My theory is that the more money people have, the more social debt they tend to be burdened with.
The point is not to say you should avoid nice cars and nice homes – I like both. It’s a realization that once money goes from being a tool you can use to make yourself happy to a symbol of what other people measure you by, you are buried in a kind of social debt that’s hard to measure but has a real impact on your happiness.
I once did some consulting for a family that’s worth $8 billion. If you Googled their name, nothing came up. No Forbes list, no gala photos, no profiles, no Wikipedia pages … nothing.
That was intentional.
They figured out what so many other people fail to recognize: The way you maximize enjoying your money is by eliminating social debt.
They had total freedom, privacy, and independence. They chose their friends carefully and gave money away anonymously. It may have been their most valuable asset.
It reminded me of what Naval once said: The best position to be in is rich and anonymous."