Marvin’s Best Weekly Reads May 29th, 2022
“Don’t run away from a challenge. Instead, run toward it, the only way to escape fear is to trample it beneath your fett and the more difficult the victory; the greater the happiness in winning.”--Kemmy Nola
Always a good geopolitical discussion with Zeihan. Lots of implications for the global economy.
https://www.youtube.com/watch?v=nYZGlmX6HXY
2. I don't agree with everything Doug Casey says but this is a very timely interview.
Net net: Diversify Politically as this world gets more chaotic.
https://www.youtube.com/watch?v=E6LINUyA5WY
3. "All along the winding cobblestone streets nearby, outside cafés, inside parks, on laptops and iPads, this old town teems with about 200 guinea pigs in the wireless workforce of tomorrow. In the taxonomy of wanderlust, they’re called digital nomads, early explorers of Generation Zoom, liberated by technology and changing norms to work anywhere there’s Wi-Fi. As John Weedin, a long-haired 30-year-old freelance copywriter from Kansas City, Missouri, says as he rolls up his yoga mat, “I want to keep traveling, man. People are making it work.
No place is making it work quite like Madeira. While countries from Aruba to Georgia have been trying to lure nomads to boost their pandemic-ravaged economies, this tiny island off the coast of northwest Africa is leading the way. Barrett and the other visitors here are part of Digital Nomads Madeira, a unique program catering to their needs—helping them find rental homes, equipping them with a state-of-the-art coworking space in the center of town, and organizing social events, like today’s yoga session, via a private Slack channel.”
"As nomadic living spreads, the only obstacle to stop someone from joining the tribe is fear. “It’s just the status quo and the fear keeping people from a nomadic lifestyle,” he goes on."
https://www.gq.com/story/escape-to-zoom-island
4. "Instead, Putin started a war of conquest with 250,000 troops. About one-twelfth of the number he should have had.
His armies, at the start of the offensive, should have been so large that they formed a line of tanks, trucks, and armoured cars stretching back into Russia for 200 kilometres.
This is something that Stalin would have understood. He would not have blinked. You want three million? Sure. In fact, here’s another million from the reserves in the Far East.
That is why I got my calculation about the threat of war wrong. I saw that Putin did not have anywhere near the critical mass needed for a knock-out blow. And so at the time I thought to my self, idly, hey — no one would be so batspit crazy that he would launch a war with an army tid-bit so small that failure would be guaranteed!"
https://medium.com/@barry-gander/the-real-reason-russia-is-losing-is-really-basic-4abf0adffb23
5. "China is an old empire; it endured much hardship in those times when it was weak. It is also run by a Leninist political party that firmly believes power ultimately grows out of the barrel of a gun. China, that is to say, fundamentally respects strength and is contemptuous of weakness. Russia was therefore long worthy of sincere respect because, while it’s Soviet glory days were behind it and its economy backwards and puny, it retained a military uniformly judged to be among the foremost in the world.
In truth, from China’s perspective it was this, and almost this alone, that made Russia a great power worthy of standing as an equal in the councils of the world – a notion Putin himself went out of his way to encourage by staking his reputation on having remade Russia into a formidably martial state.
Far from being poised to overrun Europe, Russia’s Potemkin army proved incapable of even making it through the rag-tag volunteers of Kiev, with their consumer drones and yoga matts. Even if it “wins” and ends up with a few more bites out of Ukraine, it no longer credibly poses any serious conventional threat to NATO.
For Beijing, this necessarily changes its whole strategic map. For the more than 100 years since the October Revolution of 1917, China and the CCP has been deeply connected to and shaped by Russia. But Russia’s shameful display on the battlefield will prove the original sin that transforms China’s view of it from one of respect into one of thinly veiled contempt.
Though they won’t let the mask slip in public, leaders in Beijing will now be in a state of intense uncertainty and insecurity, paralyzed over what to do. China must somehow regain strategic momentum, but Russia’s missteps in Ukraine have pushed it down a path with no good off-ramp to either salvage its relationship with Europe or ensure a Russian triumph capable of breaking Western unity."
https://theupheaval.substack.com/p/the-world-order-reset
6. "If you look at the USA and China, it seems that we’re moving towards more authoritarianism and less freedom.
We know. Private companies and public companies have to do what is best for them. That said, we’ve reached pretty questionable levels when people can be fired for tweets and actions based on their private lives (unrelated to the company) that gets pulled up due to some weird guy with no life living in a basement somewhere.
What does this mean? It means that as inflation goes up (and likely taxes as well), people will be too *scared* to do anything and more and more rights will be taken away over the long-term.
If you want to “make it” you’re going to have to make an extreme bet over the next 3-5 years (assuming you’re not where you want to be). If you’re already one of the “chosen ones” due to COVID you can probably relax a bit.
If you’re reading this and have no real hope, you’re forced to take action and begin building in the following direction: 1) lowest tax basis country - USA no longer necessary - sad to say it, 2) least likely to adopt authoritarian ideals - evade China and the current powerhouses such as Australia and 3) make a sizable bet on what assets people flee towards."
https://bowtiedbull.substack.com/p/running-out-of-time
7. This is a good case that China is in bigger trouble than we all believe.
https://www.youtube.com/watch?v=3ERsEKLdphk
8. Kyiv 2 months into the war. Enjoying JohnnyFDs videos and cannot wait to return to Kyiv. Curse Putin and his Russian army orcs for this evil.
#standwithukraine
https://www.youtube.com/watch?v=y5Jx-I9TbUY
9. Always a good episode for "Not Investing Advice". Talking about Hollywood deals & NFTs.
https://www.youtube.com/watch?v=R7CBN7h6txM
10. These guys are ballers. Best deal flow in the Baltics for sure.
https://sifted.eu/articles/taavet-sten-startup-fund
11. We may one day need to be "rooftop Koreans."
"Standing on the rooftops of Koreatown shops they and their families owned, clad not in body armor or tactical gear, but instead dressed like someone’s nerdy dad, often smoking cigarettes, but always on alert, the Roof Koreans provide a stirring example of how free Americans of all races can defend their own communities without relying upon outside help."
https://ammo.com/articles/roof-koreans-civilians-defended-koreatown-racist-violence-la-riots-1992
12. These are some very solid predictions of life in America over the next decade. Worth a read.
https://mobile.twitter.com/BowTiedCaiman/status/1521142254978715651
13. This is a very interesting and cool guy with one of the best Twitter feeds around. Ukrainian Journalist covering the Russian invasion of Ukraine.
"I never intentionally worked for this. I just ended up being the most-followed Ukrainian journalist. Within several days, I went from zero to hero. I ended up being somewhat interesting to a lot of people—not only in terms of news coverage but also my opinions and experience in this world. I did not consider this purely news Twitter. I also attach a lot of things that happen in my life and in the context of war. For some reason, these things that I write ended up being interesting to people."
14. This is smart and justified.
"Away from the active battlefronts within Ukraine, though, there’s a less bloody, less prominent front in the two-month-old war, a shadow campaign that has included attacks on military and industrial targets in Russia itself.
It’s not clear how many incidents have occurred, or whether they resulted from air strikes, or missiles, or sabotage. An unofficial tally by RFE/RL, based on open-source reporting, counts at least a dozen since the war’s beginning."
https://www.rferl.org/a/ukraine-shadow-war-russian-border-attacks/31827632.html
15. Hopeful here. We need more & better cooperation between Silicon Valley and the Defense Department. We're literally in a gray war with China and Russia already.
https://acquisitiontalk.com/2021/12/time-is-running-out-for-dod-with-silicon-valley
16. "To be bold and transparent – when we see outperformance, it *always* comes down to making investments in great companies and generating outlier multiples on each subsequent financing into these winners. Reserves, therefore, impact funds based on the returns they generate. And while reserves can occasionally boost returns, they can, and more frequently do, bring down fund multiples. They also (dare I say) sometimes create potential conflicts of interest with LPs."
https://sapphireventures.com/blog/dirty-secret-venture-reserves-are-not-always-a-good-thing
17. This is all spot on. #standwithukraine
18. Yikes.
"Behind the scenes, though, Bolt’s revenue growth fell dramatically, and questions have arisen about the veracity of its past statements about merchants that were using its services. Revenue from transactions Bolt processed grew around 10% to $28 million last year after it slashed the fees merchants pay for its services, according to an internal document viewed by The Information.
The dramatic slowdown shows Bolt is under significant competitive pressure from PayPal and Shopify, which have launched their own one-click checkout buttons for merchants. And while Bolt has touted efforts to work with more high-profile retailers, the number of merchants it works with has been hovering in the low 300s since 2020 and declined in the beginning of this year, the document showed."
19. "Howitzers are key to American combined-arms operations—ones that bring forces like infantry, artillery, and aviation to fight together. M777s have been used in Afghanistan, Iraq, and Syria by American forces.
For Ukraine, the artillery, in combination with counter-radar capabilities and drones, will be a “pretty significant addition to the Ukrainian capacity to fight,”
https://www.defenseone.com/threats/2022/04/how-much-can-us-howitzers-help-ukraine/366093
20. "If any of of the people in this chain stop believing the hype around which their project is organized, then the hype becomes unjustified. So the con view of tech bubbles is that the entire party crashes if one person leaves early. And once the bubble starts to wobble, 10x employees will move on to the next compelling tech vision, causing the leveraged death spiral mentioned in the last section. Leveraging your company with talent increases your volatility - either you orchestrate a revolution, or you implode.
Technology, more than any other sector, seems to have this strong pattern of producing bubbles, where one hype train follows another. Perhaps this is because the smartest, most talented people go to work in tech, and just as credit produces bubbles in financial markets, talent accelerates bubbles in technology."
https://www.dwarkeshpatel.com/p/talent-as-leverage
21. These buggy's are cool.
"Scrappy Ukrainian troops have made do with all sorts of vehicles and weapons in their struggle against Russia. In a truly David-versus-Goliath turn of events, the Ukrainians have fielded these small, inexpensive UTVs against some of the most feared armored vehicles on the planet. But it really isn't all that surprising that combining a small, highly agile, and reliable buggy with an ATGM, paired with hit-and-run tactics, could be a really effective tool against Russia's armored leviathan."
https://www.thedrive.com/the-war-zone/ukrainian-battle-buggies-are-out-to-kill-russian-tanks
22. "In good times, people are encouraged by past success to place larger and larger bets, thinking they're less risky than they actually are, when often it's the very existence of these large bets that drives present success and depresses perceived risk.
Investors believe the trend will continue indefinitely, and become complacent. They invest in lower quality instances of the asset, while increasing their leverage.
And then the music stops. Markdowns lead to deleveraging which lead to more markdowns; the positive feedback loop now operates in the other direction. Eventually, the asset class overshoots as investors become overly risk averse, setting the stage for the next bull market. Stability breeds instability, and vice versa."
https://pivotal.substack.com/p/minsky-moments-in-venture-capital
23. "The inflation is entrenched because a large number of jobs are now being done from home, and the wealthy computer desk jockeys working these jobs now require a different mix of goods. The global supply chain was not prepared for the wealthiest and largest consumers to ditch their one- to two-hour daily commute in favour of strolling into their home office clad in the latest Lululemon jammies.
If you’re one of these keyboard warriors, your consumption basket in and around the office is completely different from the basket of goods you enjoy inside your place of abode. That is why inflation, at least from a goods perspective, will remain sticky.
On the energy spectrum, wealthy Western citizens decided to underinvest in fossil fuels, which provide a high return relative to the energy invested in them, and invest heavily in renewable energy, which has a much lower return relative to the energy invested.
As wealthy Westerners aim to fight the good fight again carbon emissions, the success of their wind and solar buildout — and the accelerated retirement of internal combustion engine vehicles accompanying it — is predicated on developing countries polluting their local environments in order to produce nickel, copper, cobalt, and other key industrial commodities.
Unfortunately, pulling a vast amount of industrial metals out of the ground requires miners to burn fossil fuels. The demand for hydrocarbons continues to rise as CAPEX falls. This bass-ackwards energy policy does and will continue to produce high and rising fuel prices.
Whether it’s goods or energy, the price is rising on the things we need in this post-pandemic existence."
https://entrepreneurshandbook.co/the-doom-loop-161a42bbcd50
24. "My sense is that the current reality of the market is a lot worse, because deal data is a trailing indicator – financings are often announced months after they closed.
We’ve rapidly, perhaps brutally, transitioned from a hyper frothy VC environment to a world where many deals are not getting done.
As tends to be the case, the correction started happening in public markets (sometime in H2 2021), then propagated down to the private venture growth market (Q1 2022), then to the Series A/B stage (currently). Venture tends to work as an assembly line, with each investor depending on the next stage (either a next round of financing or a public company IPO exit) for their short term success.
As the next stage becomes trickier, the natural inclination is to slow down activity to avoid having more investments slam into a wall. It takes a few months for that cycle to happen, and for a bear market to trickle down from post-IPO to seed."
https://mattturck.com/vcpullback
25. This is a pretty good geopolitical view of the Russian invasion of Ukraine. Kagan is one of top analysts here.
https://www.youtube.com/watch?v=uwPy1T2FvQ0
26. There is so much insight here if you want to really understand what makes the best Venture capital investors tick. I really need to read the book.
But this interview is excellent as well.
"the act of entrepreneurship, which is scary and risky, is a bit de-risked by venture capital. Venture capital is a machine for manufacturing courage. That's extremely important to understanding how Silicon Valley grew up.”
https://neckar.substack.com/p/sebastian-mallaby-and-the-machine
27. This is a good discussion on why Ukraine will win over Russia. Worth watching.
https://www.youtube.com/watch?v=gOPr96L0wA4
28. "Individuals, too, have turned their attention-capture skills into wealth and power. Social media has been a steroid for reality television, turning suburban teenagers into “influencers,” B-listers into millionaires, and the attention economy has turned game show hosts and comedy actors into presidents. There is real upside in the reshaping of the attention supply chain. From Substack to Spaces, thinkers and entertainers with heft and talent have established distribution channels outside the superstructure of media brands.
What Facebook did to traditional media and Netflix did to cable TV, TikTok is doing to Facebook and Netflix both. The social media/streaming hybrid has quietly become one of the most powerful WMDs in the world, with a production army of a billion users producing its content for free. This unrivaled reserve of energy is refined by an algorithm that is a supercollider of the TV Guide, TiVo, a remote control, and the brain, choosing between billions of programs (globally) in a fraction of a second. Imagine if Netflix reported that it had reduced its content budget from $17 billion to zero … yet still added new users equal to the populations of Japan and the U.K. No need to imagine, that’s TikTok.
We become what we pay attention to. So we are becoming celebrities people are addicted to … but don’t really care about."
https://www.profgalloway.com/wmds
29. "The one thing I tell my students is that when you get to a confrontation of any type, you have to remain calm. When you remain calm, you can see the board a lot clearer. You can see the person you're playing or arguing with a lot more clearly, for who and what they are. So you don't even have to entertain that shit. You understand?
I tell everybody that they should be proficient in the Bible, even if you're not religious. To me, the Bible is Basic Information Before Leaving Earth—B.I.B.L.E. If you utilize the Bible, 99% of all the things you do bad, you wouldn’t do."
https://annekadet.substack.com/p/life-advice-from-nyc-chess-hustlers
30. "A shirt would only muffle the Liver King’s message: that the modern world has made men unconscionably soft, and that the only way to fight back is by living more like our earliest, most-jacked ancestors.
The way to accomplish this, according to the Liver King, is by following his nine “ancestral tenets” (sleep, eat, move, shield, connect, cold, sun, fight, bond), doing the most brutal workouts imaginable, and, above all, eating more raw liver—the nutrient-dense meat favored by, as his website puts it, “lions, great whites, and other wild alpha organisms.
It’s a message the 45-year-old influencer, supplement-brand owner, and self-styled “CEO of the ancestral lifestyle” born Brian Johnson wants to share with the world, and one that is communicated most loudly and effectively by the Liver King’s own bulging physique. In his videos on TikTok and Instagram, he submerges himself in ice baths, drags weights down his driveway using only his teeth, and generally subjects his body to the kind of treatment prohibited under international human rights agreements.”
“Hard times make strong men, and there’s no requirement for hard times anymore,” he said, sitting back in his office chair, framed by a wall of nutritional supplements. “Look at shelter. Today, a realtor can find you shelter. There’s no requirement for effort or hard times if you want sex, or if you want a mate. There’s apps for that.”
https://www.gq.com/story/in-the-court-of-the-liver-king-brian-johnson-ancestral-supplements
31. "It might seem stupid, but legitimately one of the best ways to counter burnout is to get a hobby. You know, an activity you do during your leisure time for pleasure?
Hobbies give us a sense of control, of progress, and of enjoyment. We do them not because someone is expecting us to do it, but because we want to. And we can go at our own pace, and we are the primary ones judging our output."
32. "We have to get better at making bets. We can't, as Buffett says, "swing at every pitch."
To make better bets, we really need to do our research (this could include doing smaller experiments). But we're looking for evidence that the market it "pulling" for a particular product or solution.
It also means we have to be patient: founders shouldn't go after every opportunity (we shouldn't swing at every pitch that comes our way)."
https://justinjackson.ca/effort
33. "If Elon is the new archetype of the Silicon Valley hero, then Silicon Valley and the world of tech innovation is a far more complicated, occasionally dark and not obviously good place than perhaps we want to believe. To fully accept Elon, Silicon Valley needs to give up on its Promethean ideal.
Perhaps in a sense this new version of the Silicon Valley hero is more honest than the Promethean vision. Thomas Edison was no Prometheus. Neither was Steve Jobs. Nor is Bill Gates.
If this is where we’re going, however, it will be a rough cultural transition. Even as the narrative of the American dream has withered, I would argue that the narrative of the Silicon Valley hero’s journey of technical innovation has stayed largely intact to date. But Elon’s brand of entrepreneurship, mixed with his success and prominence, rewrites the book.
As technology has come to engulf the entire business world, victory and success are no longer about blinding insight from a lone voice. They are about leadership, business management and wrangling a crowd—or a mob.
No longer is the hero the engineer who went out on their own and proved everyone wrong. It is now the capital raiser who stakes a claim, raises unfathomable amounts of capital and delivers a new future, sometimes at a great price."
https://www.theinformation.com/articles/elon-musk-is-silicon-valleys-new-hero-for-better-or-worse
34. So many good tips and advice here re: company building at some of the top growing startups in Silicon Valley.
35. This is an alternative view of the fall of Rome.
"Rome stopped being a nation the moment its elements turned upon themselves. And this is the real lesson for America: You are not likely to perish from outside enemies, but from your own politicians spinning a story for momentary gain."
36. "In other words, if technology is shifting away from the things that the VC model is optimized for, maybe we just won’t have as much VC. Ultimately, this might be traced back to the end of Moore’s Law. Smooth, continuous improvement in the general-purpose technology that enabled all of software allowed everything to just get better and better.
New vistas of computing opened up — desktops, the internet, cloud, mobile, wired devices — and each one created new applications and new megacorporations to monetize them. But if there’s going to be a slowdown in computing itself, then perhaps the software business has simply reached the end of a long and amazing rainbow.
I do entertain the notion that crypto is actually symptomatic of this — that it’s tech’s version of the financialization that happens at the end of every productive industrial boom. Obviously it’s possible that crypto may do a lot of incredibly useful things, but it’s also possible that tech investors are pouring money into casinos because there are fewer other places for it to go."
https://noahpinion.substack.com/p/suddenly-startups-are-having-trouble
37. "Russia’s advantages have turned into its weaknesses. They now face a better version of themselves in the east of Ukraine. Kamikaze drones are diving out of the sky at will. Ukrainian artillery is outperforming their own.
If your men don’t want to fight in infantry combat, and you can’t win in ranged combat, what are you left with? Threatening nuclear strikes.
You don’t threaten nuclear strikes when you are winning a war.
Every day that goes by results in Ukraine getting more equipment, training, intelligence, and funding to fight off Russia. It’s only a matter of time."
https://medium.com/@seanjkernan/ukraine-is-starting-to-win-this-war-7288d7d8bbf9
38. If you believe in Bitcoin, Microstrategy is probably the best leveraged play for it. Assuming they survive the slump that is.
"As is widely known, Saylor is in the process of turning MicroStrategy into a vehicle for leveraged speculation in Bitcoin. His strategy is to borrow as much money as lenders will give the company to buy and hold Bitcoin. In December of 2020, he issued a $650 million convertible bond and followed that up with another $1.05 billion convert in February of 2021.
The second of these was issued just as MicroStrategy’s stock was experiencing a blow-off top and the conversion price of the embedded option in that bond was set at $1,432 per share. The stock trades below $300 a share today, making the value of that option nearly worthless.
In essence, by converting MicroStrategy into a leveraged bet on Bitcoin, Saylor is exposing his shareholders to a potential doom-loop price spiral. If Bitcoin crashes (as it has done many times before), MicroStrategy would become a forced seller, driving prices even lower. In that scenario, one of the few ways the company could raise money is by selling more stock but selling when everybody knows you have to can be…challenging."
https://doomberg.substack.com/p/double-down
39. This is worth watching to prepare for the slowdown coming in SV.