Marvin’s Best Weekly Reads June 18th, 2023
“Ambition is the path to success. Persistence is the vehicle you arrive in.” – Bill Bradley
"The current fundraising environment for B2B SaaS companies is more challenging than it has been in years. While venture capital firms still have ample dry powder, they have largely retreated to shoring up existing investments (or investing in AI!) and are being far more selective with their investments.
For founders of post-seed B2B SaaS companies that have raised some funding but are struggling to achieve the growth rates required to raise a Series A on the venture track, this poses an existential question: continue pushing for venture scale at all costs or explore alternative paths to a meaningful outcome for the founders and team?
This article is aimed at founders in this position, caught between the venture capital (VC) and private equity (PE) tracks, and unsure which direction will lead to the best outcome for their companies and teams.
Here we define the key characteristics of the VC and PE tracks, discuss the factors influencing the choice between them, outline the potential benefits and risks of each, and advise on appropriate timing for making a switch."
https://www.discretioncapital.com/articles/the-crucial-choice-vc-track-or-pe-track
2. "Should Startups Pursue LLM Opportunities? Absolutely Yes!
The takeaways for startups here are twofold. First: choose your target carefully. While companies like Microsoft and Amazon can integrate LLMs with relative ease, large legacy companies in antiquated industries do not have the capability to do so. They lack both engineering and fast decision-making, making them the same attractive targets they’ve always been.
Second, startups need to be thoughtful about their product. Try to find less obvious but equally powerful uses of the tech. This can mean focusing on less sexy markets rather than building the 50th competitor to Jasper. Or by connecting LLMs to workflows to make them more difficult to copy via an OpenAI plugin.
When it comes to LLMs, David won’t always beat Goliath. And startup founders have to be very strategic about which fights they pick."
https://aaronmichel.substack.com/p/when-goliath-wins-who-benefits-from
3. "Ultimately, there is ego, and there are business realities. Crivello said the growing consensus from him and his cohort of founders is there’s simply no replacement for in-person collaboration. For one, virtual meeting technology just sometimes doesn’t work, and even when it does, the quality of conversation is just not up to par.
“The experiment is over; we tried, and we failed as an industry,” Crivello said. “It’s very hard to beat how the brain has evolved over millions of years for synchronous in-person collaboration. Everyone just wants to get out of the darn Zoom meeting.”
His thoughts echo a growing chorus of public comments from tech leaders like OpenAI CEO Sam Altman, who called the industry’s rush to embrace permanent remote work one of its “worst mistakes in a long time.”
https://sfstandard.com/business/is-san-franciscos-remote-work-backlash-finally-gaining-steam/
4. "That said, the outcome of our analysis plays a key role in whether or not we invest in a startup. If, at the end of the day, there isn’t a version of the future where a company can generate a 50x return on our investment, then we will not invest. No matter how good the team is. No matter how cool the product is.
Because to VCs, market matters most."
https://chrisneumann.com/blog/why-market-matters-most-to-vcs
5. The folks at Fifty Years are doing great stuff. A truly important VC working on real world life changing solutions.
https://fiftyyears.substack.com/p/a-vc-that-builds
6. This is an absolutely must read and understand. How to benchmark yourself for financial independence.
"Everyone’s different. But while almost everyone can adapt to their stuff, having control over your time through independence will always feel great when you have it and always be a miserable burden when you don’t."
https://collabfund.com/blog/the-spectrum-of-financial-dependence-and-independence/
7. Athens is a cool place. Can't wait to return there.
"Athens is an accidental capital in search of an identity, even nearly 200 years after achieving independence from the Ottoman yoke. The key components of a night on the town were Karelia cigarettes in a flip-lid box; a café frappé at the Art Deco Open Air Cinema Thision (still open today); and gyros at O Kostas, also still going strong.
The financial crisis that caused a humanitarian and social collapse a decade ago ended up galvanizing Greece’s creative and entrepreneurial spirits. The art scene, lubricated by a flow of activism, was the response—the howl of anger—of a society under pressure.
In the past decade, Athens has drawn expats from the United States and Europe due to its relatively low cost of living. Now it’s a playpen for artists and hipsters, as Berlin was 20 years ago."
https://airmail.news/issues/2023-6-3/athens-unbound
8. "A ramp-up in artillery production won’t be instantaneous in either the US or Europe. But plans to do so are a signal of political support — a sign, at least, that the West is willing to support Ukraine for the long haul.
But, in lots of ways, the decisions by Washington and Brussels to invest in arms manufacturing goes well beyond Russia’s invasion."
https://www.vox.com/2023/6/6/23744349/ukraine-artillery-counteroffensive-united-states-europe
9. "Eager Ukrainian soldiers are getting their guns and ammo faster than ever, thanks to the work of the U.S. government’s top bulk shipper: the U.S. military.
The Europe-based unit in charge of shipping weapons to Ukraine has sped up deliveries by 30 percent compared to the start of Russia’s full-scale invasion last year, said a spokesperson for the U.S. Army’s 21st Theater Sustainment Command."
10. I actually enjoyed this. Raoul has a good perspective on the global macro environment. He is a Bitcoin guy but has very good experience as a global macro investor in the past.
https://www.youtube.com/watch?v=9UzMNewP5pc&t=5210s
11. “Youth unemployment is a more pressing issue than the aging population,” says Keju Jin, an associate professor at the London School of Economics and author of The New China Playbook. “The 1.1% annual reduction in the labor force doesn’t compare to the fact that the most productive and highly-educated generation cannot find jobs.”
The crisis has led to an outpouring of sardonic grumblings on Chinese social media and the inevitable pushback from officials.
Youth joblessness reinforces growing discontent over a lack of social mobility in China."
https://time.com/6284994/china-youth-unemployment-aging-demographics/
12. "This is one of the dirty little secrets of the debate over defense spending. Governments need to increase military budgets to respond to a new threat environment, but the defense industrial base must be expanded all over the world or those growing budgets will go unspent.
Colby denies that he wants to abandon Ukraine. Rather, Europe should be leading in the defense of one of its own, while relying on the U.S. nuclear deterrent and conventional capabilities that are not needed to counter China. As always, this challenge demands reapportioning the division of labor between the U.S. and its allies.
This also means rethinking the U.S. approach to sharing defense technologies: licensing its systems to make them easier to produce and promoting the use of allies’ weapons systems."
13. "The Arabs have what it takes to be an important player in the new emerging world. Their natural and human resources, geography, history, and civilization enable them to be an independent pole that can confidently deal with the rest of the world based on mutual respect and interest.
With a population of more than 450 million - around 60 percent of whom are under the age of 25 - and a geographic area of over 13 million square kilometers, the Arabs would be ranked the 3rd and 2nd in the world, respectively. Most Arabs share the same religion, history, culture, and language.
The Arab world's combined nominal GDP of around $3 trillion would make the Arabs among the top eight economies in the world. When measured in Purchasing Power Parity (PPP) terms, the combined economic output of the UAE, Saudi Arabia and Egypt alone would make them one of the top six global economies.
The Arab world is in the center of global trade routes; it is the place where the three continents of Asia, Africa and Europe intersect. The Arabs administer some strategically important maritime trade chokepoints such as Bab Al-Mandab and Suez Canal, through which around 12 percent of global trade and approximately 30 percent of global container traffic pass."
https://www.globaltimes.cn/page/202305/1290387.shtml
14. "The top 5% of S&P 500 index firms have contributed 50% of the index gains in the past year. The bottom 2% have contributed 50% of the losses.
Sub-divide any portfolio (including our partnership) and one will find a similar pattern.
This implies an essential rule: only make investments that have the potential for power law outcomes. The magnitude of power law outcomes (10x, 100x, 1000x returns or more) is such that catching them, and hanging on when you do, is nearly all that matters."
https://phronesisfund.substack.com/p/power-laws-rule-the-world
15. The Comanche were pretty frightening foes.
https://www.youtube.com/watch?v=eXIF8q1sHek
16. History is fascinating. Lessons & reforms from defeat leads to victory.
https://www.youtube.com/watch?v=t-022t9VbFU
17. So much to learn from this guy. How to live an abundant life with intention.
https://www.youtube.com/watch?v=yEQvFT5EQ-8
18. “The thing we see across all the wargames is that there are major losses on all sides. And the impact of that on our society is quite devastating,” said Becca Wasser, who played the role of the Chinese leadership in the Select Committee’s wargame and is head of the gaming lab at the Center for a New American Security. “The most common thread in these exercises is that the United States needs to take steps now in the Indo-Pacific to ensure the conflict doesn’t happen in the future. We are hugely behind the curve. Ukraine is our wakeup call. This is our watershed moment.”
But a swift response may not be possible, in large part because of how shrunken the U.S. manufacturing base has become since the Cold War. All of a sudden, Washington is reckoning with the fact that so many parts and pieces of munitions, planes, and ships it needs are being manufactured overseas, including in China. Among the deficiencies: components of solid rocket motors, shell casings, machine tools, fuses and precursor elements to propellants and explosives, many of which are made in China and India.
Beyond that, skilled labor is sorely lacking, and the learning curve is steep. The U.S. has slashed defense workers to a third of what they were in 1985 — a number that has remained flat — and seen some 17,000 companies leave the industry, said David Norquist, president of the National Defense Industrial Association. And commercial companies are leery of the Pentagon’s tangle of rules and restrictions.
“Unfortunately, the more you dig under the hood the more problems you see,”
https://www.politico.com/news/magazine/2023/06/09/america-weapons-china-00100373
19. "Asparouhov’s realm has steadily expanded over the past several years, and the latest marker of his growing profile came just a week ago: After careful tutelage by Founders Fund founder Peter Thiel and top Thiel lieutenant Keith Rabois, Asparouhov was officially elevated to partner at Founders Fund, a reward for landing deals like Hadrian, which manufactures parts for the aerospace and defense industries, and Cover, a custom home startup.
What part of my time with Asparouhov presented was a rare window into the closed-door world of Thiel and Founders Fund. Over the last decade and a half, Founders Fund has established itself as one of the top venture capital firms, funding Facebook, Stripe, Airbnb and SpaceX, among a slew of other notable businesses. But unlike those at many of the other big firms, its partners prefer to shy away from much media attention. When they do want to speak, they prefer to do so for themselves—often through Twitter.
And Asparouhov has certainly learned not only how to invest like his mentors but how to talk like them: He delights as a libertarian provocateur on Twitter—endorsing Donald Trump, joking about moving Silicon Valley to Dubai and applauding Elon Musk’sleadership at Twitter. Still, he’s undeniably proved himself to be more than another contrarian loudmouth. It was a viral Asparouhov tweet to Miami Mayor Francis Suarez that sparked the great migration to the Magic City during the pandemic.
Yet Founders Fund represents just one half of Asparouhov’s world. There’s Varda, too, his gamble that the dawn of the commercial space industry is indeed finally here.
With his two worlds tightly wound together, Asparouhov has managed to both simultaneously position himself as a leading successor to Founders Fund’s aging old guard and become a leading player in what might be one of the fastest-growing industries in the coming decade.
“Delian has been the single most important player in hard tech in the last three to four years,” said Jai Malik, the general partner at Countdown Capital. “With Varda, Delian and his co-founders showed investors that space is a market to invest in and take seriously beyond SpaceX.”
https://www.theinformation.com/articles/the-overlapping-galaxies-of-delian-asparouhov
20. This guy very much hates the USA & Dollar run world but it’s good to understand the other side’s view.
I think he is a bit too idealistic and his hate collars his view too much. Like the alternatives of China or Russia will be so much better & fairer (hint: it WON'T)
https://slkanthan.substack.com/p/10-benefits-of-dedollarization
21. Hmmm.......
"In the US, banks and corporations control the government. In China, it's the other way around.
Thus, a successful Chinese system threatens the corporatism in the West
Chinese can think in gray areas, while the West lives in a bubble of reductionist and absolutist slogans. Thus, the collective West cannot fix its system, let alone admit its failings. Instead, its only option to is to take down its competitor."
https://slkanthan.substack.com/p/usa-v-china-who-runs-the-system-heres
22. This guy SL is an A--hole & anti-USA on everything but I try to read counter-veiling views out there.
His criticism of Peter Zeihan's views are interesting. Zeihan has been more right than wrong so far though & I do think Zeihan ignores important technological trends and is too bombastic/negative about China's ability to figure stuff out.
Some good points on deglobalization and how real it is.
"The West’s “China plus one” strategy has become “China plus China” strategy!
While you may see more “Made in Vietnam, Malaysia, Thailand, Mexico” etc. labels in the stores, they are still mostly made in China.
So, you see, decoupling is a delusion. The US economy cannot function without other countries. And that’s true for China and all countries in the world."
https://slkanthan.substack.com/p/peter-zeihan-is-the-jim-cramer-of#details
23. Great conversations this week. Very interesting.
https://www.youtube.com/watch?v=aPMNbMR1p70
24. "We should all care about a Chinese invasion of Taiwan. The global semiconductor industry would freeze. Inflation would spiral further upwards and the post-COVID recovery would be reversed. So many of the tools we rely on would disappear from our shops for years. It would wreak enormous damage on us all —- with the Taiwanese people bearing the greatest cost."
25. "Andreessen is one of the more prominent names in a new class of tech wealth that includes figures like Elon Musk and Peter Thiel whose political vision and methods conflict both with dot-com tech titans like Bill Gates and Pierre Omidyar, as well as with those of old world industry and media, like Rupert Murdoch and Ted Turner.
While it might seem strange, given his own position of power, for someone like Andreessen to criticize elites, the truth is that elites have cliques, just like the rest of us. And in the cafeteria of America’s billionaires, Andreessen and his peers are hurling food and spoiling for a fight, while the incumbents are calling in favors at the State Department and New York Times.
Of course, neither camp is driven solely by high-minded ideals, but both maintain fundamentally irreconcilable views of the kind of country they want to build. While Reid Hoffman and Pierre Omidyar, respectively, founders of LinkedIn and eBay, pledged $27 million to help artificial intelligence “vindicate social values of fairness … and justice,” Andreessen publicly laments the ill effects of training artificial intelligence on the “woke mind virus.”
Marc Benioff’s company, Salesforce, announced last year that they would tie executive pay to environmental, social, and governance (ESG) initiatives, which Andreessen has sharply criticized.
While these disagreements may look like a contest between conservatives and liberals, the reality is not that simple. Garry Tan, a successful investor who is now the president and CEO of famed startup incubator Y Combinator, has been a vocal critic of San Francisco’s progressive politics in recent years, while affirming that he has “always been and likely will always be a Democrat.”
He and Andreessen, like others, appear to believe instead that this disagreement is centered around the embrace or rejection of a certain set of principles—uncovering and amplifying the best talent, valuing meritocracy over credentialism, fixing problems by circumventing institutions, and thinking from first principles—which underpin the tech industry’s runaway success.
Both camps also believe that the other team is the root of the country’s (and maybe the world’s) problems. It’s a fight worth watching, and understanding, because its outcome will have long-term implications for all of us."
https://www.tabletmag.com/sections/news/articles/silicon-valley-civil-war
26. This is long overdue but better late than never.
https://www.autoblog.com/2023/06/10/the-us-is-building-factories-at-a-wildly-fast-rate/
27. Maybe.....
"The United States and the European Union, he said, would lose from moves to freeze hundreds of billions of dollars of Russian sovereign assets as many countries were moving to settling payments outside the U.S. currency and the euro while China was moving towards a removal of currency restrictions.
"The long historical era of the dominance of the American dollar is coming to an end," Kostin, 66, told Reuters on the 59th floor of the gleaming VTB (VTBR.MM) skyscraper overlooking southern Moscow. "I think that the time has come when China will gradually remove currency restrictions."
28. Great profile on a liquor tycoon Sidney Frank.
https://www.shaanpuri.com/sidney-frank
29. "Entrepreneurs would do well to put together a Google Doc or Notion Doc with a running list of their favorite interview questions. It should be a living doc that’s visited regularly, and when a new question emerges, add it to the list and continually experiment with them. The better the interview questions, the better you understand the candidate."
https://davidcummings.org/2023/06/10/build-a-running-list-of-interview-questions/
30. "Make no mistake: Governor Ueda knows exactly what he is doing. It has been more than 30-years since inflation was a real problem in Japan, so inflation expectations are still firmly anchored in the deflationary “post bubble” mindset. He is right, in my view, to insist - for now - on the virtues of continuity with his predecessor’s policy. The all-out attack on deflation is still on"
https://japanoptimist.substack.com/p/no-bubble-no-trouble
31. Love these kind of stories.
"Turner started her shop last November, around the time Swift announced her Eras Tour. That tour, which began in March, is expected to be one of the most lucrative in history, generating ~$11.3m from tickets and ~$2.4m from merchandise every show, according to industry analysts.
It’s also opened up a market for Swiftie entrepreneurs. As fans swarm concert venues for Swift, some have chosen to forgo hours long lines to buy official concert merchandise, and others couldn’t afford tickets in the first place.
Instead, many have purchased Swift-related merchandise from online shops that can gross several thousand dollars per month.
Lately, Turner has been making four to six sales a day of Swift-inspired hats, sweatshirts, T-shirts, candles, and more — enough to cover her monthly rent.
“Honestly,” Turner said, “running this Etsy shop has been pretty life-changing financially.”
https://thehustle.co/the-etsy-sellers-paying-rent-with-taylor-swift-merch/
32. "This war is not going to end with these Ukrainian operations, and much of this conflict has been defined by incremental gains and attritional warfare. The Ukrainian counteroffensive might not shift the map all that drastically, but Kyiv does need to emerge stronger, Russia weaker.
Russian President Vladimir Putin likely believes he has the advantage, that he can wait out Ukraine and its Western backers. But if Ukraine can batter Russia’s forces, or even leave Russia with less territory than it had at the start of this offensive, it will be hard for Russia to continue to claim it is winning. That likely does not usher in the war’s end, but it will transform this conflict once again."
https://www.vox.com/2023/6/10/23750041/russia-ukraine-war-counteroffensive-begins-explained
33. I've always liked Ryan Gosling. A fellow Canuck trying to figure out his way in America.
"Gosling started asking himself: What is my talent? He began auditioning, and the auditions he was traveling to led to him being cast, at age 12, in Disney’s The All-New Mickey Mouse Club, alongside Justin Timberlake, Christina Aguilera, and Britney Spears. Unlike his peers, he did not make much of a mark there. “Everybody was at, like, prodigy level.
I certainly wasn’t a child prodigy. I didn’t know why I was there. And I think that was the consensus. It’s why I didn’t work—it was like, they dressed me up as a hamster or put me in the background of someone’s song. But it was all a great experience in a way because it helped me figure out what I wasn’t going to be good at. Which is important to learn too.”
https://www.gq.com/story/ryan-gosling-summer-2023-cover-profile-ken-barbie