Marvin’s Best Weekly Reads November 3rd, 2024
"Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all." —Dale Carnegie
"In January of 2011, Netflix was worth $11 billion. By November, the company’s market cap was just over $3 billion. The reason? As Netflix pivoted to streaming it tried to spin off its DVD business. The Qwikster backlash cost Netflix 1 million subscribers. As it turned out, Netflix was right, but early, as they ultimately closed their DVD business in 2023. In 2012, Best Buy was on the brink of bankruptcy and the big-box sector looked doomed. A year later, Best Buy’s market cap increased 3X as a new CEO led one of the biggest turnarounds in retail history. And then there’s the turnaround story everyone knows: Apple.
We’re wired to overestimate the impact of negative events, a phenomenon known as the negativity bias. It’s a cognitive distortion that makes us believe that failures have a greater impact than they actually do. At some point, every business experiences a crisis, i.e., an opportunity.
As a Professor of Brand Strategy, I can’t help but wax nostalgic and believe these firms are ripe for a comeback. They all boast global brands, talented workforces, and robust supply chains. However, the most attractive thing about these firms is just how badly they’ve been beaten down. In the first four weeks of 2024, Nvidia added the value of all four of these firms. And that’s the bull case as at some point every stock (unless it’s going to zero) is too expensive/cheap. These angels have fallen so far, redemption is overdue."
https://www.profgalloway.com/fallen-angels/
2. The fertility crisis in the world. Curse of modernity?
https://www.youtube.com/watch?v=mEQEMpxLnGA
3. "Remember Power is not money, status, or the ability to get others to do something.2 No, Power is the ability to control potential Energy. Monopolies are associated with Power and price gouging for this reason. HR has Power because they decide if you get fired or get a raise. And the Longshoremen have Power because they have a monopoly over cargo movement.
It’s a little more than a month to the US national election and a little over two months till Christmas and Daggett was willing to be the bad guy and extort all of America and its children for a pay raise. One man in New Jersey determines if your kids get Christmas Presents.
That’s Power. The ability to control, shape and redirect potential energy.
You may not like it, but that’s the sort of thing that gets you a 77% pay raise with no repercussions.
Yet what caused the ILA to cave prematurely is social media pressure. The framing of the issue where it wasn’t poor union workers against machines, but a mafia cartel extorting America and hindering relief. In this sense Power was reigned in by one of the forces they drew from Public Opinion.
Everyone pitches the David vs Goliath story when fighting, to win public opinion. But that only works when you’re the weakest faction in the story. Against big billion dollar corporations you can get sympathy; but when you’re withholding aid to disaster victims to advance your position, people sour."
https://mercurial.substack.com/p/port-authority
4. Deeply philosophical conversation with OG Silicon Valley philosopher and investor. Naval Ravikant. Living well and how to do your best work.
https://www.youtube.com/watch?v=wQGOYnWHnto
5. Still trying to figure out this Crypto thing......interesting debate.
https://www.youtube.com/watch?v=qsiIilxAzYs
6. "The amount of money going to venture has 10x’d, and the combination of more efficient pricing and a limited amount of great deals means that - for two decades - the hot got hotter. The rising tide has kept seed graduation rates steadily around 45%, but it’s also meant that consensus deals get bid up heavily at Series A as the dopamine and social capital of an up-round encourages junior investors to look for consensus.
The last two decades have awarded sourcing the best deals, and winning access to them, so big funds hired and trained for this. This dynamic has created a generation of investors who are excellent networkersand salespeople, but fairly limited pickers.
If a small fund is taking punchy bets, with unique insights, they are likely benefitted by a pullback in venture funding provided they can raise their fund. At seed, having smaller funds means that each unique insight you have has a greater impact on your fund MOIC. They have less access constraints and smaller teams which means more freedom for independent decisions.
In a less liquid environment, they’d face less competition, their signal would mean more to big funds, and since they are not usually investing behind consensus narratives, their money would be worth more to founders. However, finding these funds requires going far out the risk curve - usually something like SaaS in San Francisco is too efficiently priced."
https://jordsnel.substack.com/p/big-funds-small-funds-and-the-changing
7. This is a great conversation from 4 of the most accomplished folks in tech. Lots of big topics and strong views on Open AI, Defense-tech, Regulations and Social Media. Really educational.
https://www.youtube.com/watch?v=bcwelhe9Rys&t=886s
8. "So I wanted to look into the past, what were people thinking when they were thinking bigger, when they were willing to look at wackier paths.
When they were willing to consider things that have been eliminated often because technologies just weren't ready. There's a lot of technologies that have been discarded because they weren't practical at the time, and nobody ever revisited them and said, "Hey, I actually think the time has come." A good example is with the Rift. Doing real-time distortion correction is not a new idea. It existed in the 1980s and 1990s in the virtual reality community. It had been discarded even by NASA.
And most of the things that made the Rift successful were ideas like that, there's a few others where I was just going back to the future and realizing, "Wait a sec, these ideas, they were actually pretty good. They were just a little too early."
What Palmer is describing is a systematic review of past ideas that were ahead of their time. Often, those are in obscure government documents or research reports. But a lot of times they're also tucked into science fiction you've never heard of. Not just Star Wars or Blade Runner, but in something like Stranger in a Strange Land. It may not be mainstream fiction, but its considered one of the books that shaped America."
https://investing1012dot0.substack.com/p/back-to-the-future
9. "The poles of Earth used to be remote, romantic places for weather-hardy adventurers and nature-loving, climate change-worrying research scientists. Now, NATO ships and British military resources are converging on both poles. Why? Because the Arctic has oil, gas, minerals, fish protein, and many other assets. But, if data is now more valuable than oil, then the Arctic is now the land of “digital gold.” GPS, SATNAV, and satellite-based WIFI are only possible because most satellites connect to Earth through massive golf-ball-shaped geodesic domes that dot the landscape inside the Arctic Circle on a tiny Norwegian island called Svalbard.
Home deliveries, Uber rides, internet surfing on your smartphone, military logistics, and data transmission for the economy depend on the satellite ground stations that SvalSat (Svalbard Satellite Station) manages there. This is the home of the fastest internet cable on Earth. It’s not there for the polar bears. It’s the umbilical cord to the global digital economy.
Other things are present that are now luring nations and treasure seekers to the South Pole: uranium, manganese, iron ore, and coal, in addition to oil and protein. The value of all this black gold in Antarctica and digital gold in the Arctic is indisputable.
Britain, Australia and others who have Antarctic Claims could potentially generate cold hard cash on a spectacular scale due to their positions at Earth’s poles – if they can defend these positions. China, Russia, Iran, India, Turkey, and other nations also have their eye on these valuable locations. The Polar Research Institute of China (PRIC) describes Antarctica as a "global treasure house of resources."
https://drpippa.substack.com/p/why-the-icy-poles-are-hot-in-geopolitics
10. "The Arctic is important for another reason - the return of nuclear threats has also focused superpower attention there. The Arctic has become the front line for the modern Cuban Missile Crisis. In February 2023, Norway’s normally silent and invisible intelligence service publicly warned the world that they were concerned that nuclear weapons might be present on Russian submarines and ships in the High North. Murmansk is the headquarters of Russia’s Northern Fleet.
Sweden and Finland’s accession to NATO also brings the possibility that Western nuclear weapons may be deployed in these locations as well. Russia’s threat to deploy nuclear weapons and lowering the threshold for doing so has all the Arctic and high North nations on high alert. So, tracking the movement of nuclear capability in the Arctic has emerged as a very high priority for Russia and NATO alike.
Anyone who cares about geopolitics cannot afford to ignore what is happening at both poles these days."
https://drpippa.substack.com/p/why-the-icy-poles-are-hot-in-geopolitics-321
11. Lessons from one of the juggernauts of SMB-focussed SaaS: Klaviyo.
https://www.youtube.com/watch?v=jgot7lmwKA8
12. Some good perspective on how AI changes SaaS. Vertical Saas is here, horizontal SaaS is challenged.
https://www.youtube.com/watch?v=WXN6zYD3JqU
13. This is incredibly enlightening re: vertical LLM Agents. Successful case study of Casetext.
https://www.youtube.com/watch?v=eBVi_sLaYsc
14. "How did China accumulate so much power, so quickly, without inciting American suspicions for so long? Since 1990, China has not only transformed its economy but has pulled itself out of the diplomatic isolation of Tiananmen and created a fighting force of astonishing – though untested – strength. Yet it took twenty-five years for the West to really pay attention.
The answer, Skylar-Mastro suggests in her new book, is the "Upstart strategy". Drawing the analogy with a start-up technology company, she shows how China has risen by avoiding emulating the methods of its main competitor. Rather, China has exploited gaps in US power and developed novel strategies which capitalise on China’s strengths, including so-called "entrepreneurial" strategies such as the Belt and Road Initiative."
https://reactionpolitics.substack.com/p/upstart-why-it-took-the-west-so-long
15. One of the originals and arguably the most important entrepreneurs in America. Palmer Luckey. A hero. We need more folks in Defense-tech.
https://www.youtube.com/watch?v=az81MHug0Nw
16. So much good stuff here with Justin Waller. I always learn from him.
https://www.youtube.com/watch?v=AfF8q6c2jOo&t=87s
17. "It will be the same; the most successful and productive members of those societies will leave their home countries behind, take their productivity and assets abroad, and leave their nations in a worse state than before.
We live in a world where moving abroad is easy. Where changing one’s tax residency can be done in a matter of weeks. And where setting up an offshore company with a 0% tax rate can be a reality in mere days.
Yet Western leaders seem to set this fact on the sidelines.
Only a few days ago, I was talking to a client who we’re in the process of setting up his global tax plan. I asked him a simple question: if he did have to continue paying taxes, is there anywhere he’d like them to go?
His answer was simple, but telling.
“Anywhere but the West.”
https://anticitizen.com/p/our-rotting-nations
18. This makes me optimistic for America.
https://www.youtube.com/watch?v=6WlHF75TeDI
19. Thought provoking discussion. SaaS investing is over. So many nuggets of insight here worth listening to.
https://www.youtube.com/watch?v=cH9oREJnEaU
20. "Without question, the past decade-plus has been an unprecedented build up and expansion of VC as an asset class. This was seemingly happening more naturally and then the pandemic came and threw the world into crisis. But channeling JFK, with the danger, many VCs also saw an opportunity. It seemed like there were suddenly new opportunities in a changed world – social voice networks, virtual conference software, 15-minute delivery apps, etc – but what really happened is that the pandemic just created this sort of temporary bubble, which rather quickly deflated. But it also impacted basically every other company, with most others that operate online in meaningful way seeing growth pulled forward by a couple of years or more. This was true of Amazon on down.
But as the world normalized, it became clear that growth would return to the place where it was almost as if the pandemic hadn't happened – it was just a blip, a massive one. But this all was largely masked by both stimulus and zero interest rates that the government put in place to try to avoid economic collapse. Cash was basically worthless, might as well invest. And what better place to invest than in the future? Startups. High risk, yes. But high reward! Even more money plowed into VC which led to not only the creation of far too many new firms, but also the existing firms getting supersized. Foie gras economics.
A lot has to go right. And a lot has to stop going wrong. Which again, would seem to speak to the state of VC as a whole right now. There's opportunity and there's danger. A true crisis."
https://spyglass.org/vc-crisis/?ref=spyglass-newsletter
21. Solid critiques and learnings from decades in the venture capital industry. Must watch by investors and founders.
https://www.youtube.com/watch?v=i6CiNYZViCM
22. "Assessing battlefield success and failure is often quite simple. Winning and losing are quickly and clearly visible. However, assessing the strategic and political outcomes of battlefield events can often take a little longer. However, sufficient time has passed since the beginning of the August Kursk campaign for an initial assessment of the political and strategic effectiveness of the campaign to be made. It is a campaign that is sure to be assessed for its impact on the trajectory on the war for a long time to come.
Two months after Ukrainian forces cross their lines of departure and began their breach of the Russian defenses in Kursk, the Ukrainian campaign has settled into a series of smaller battles to push back Russian counter attacks and defend the ground they have seized since early August this year. The campaign is consuming valuable combat formations and resources."
https://mickryan.substack.com/p/assessing-the-kursk-campaign
23. "Progress is non-linear.
You don’t go to the gym for 10 years and build the same amount of muscle every single year. You build a lot at the start because you’re new. Then you build muscle in cycles of consistency and intensity. You bulk and cut. Life happens and you get thrown off for a year. The next year you regain motivation and are hyper-disciplined, gaining more in year 10 than you did in year 3.
The same holds true for productivity.
I do not believe that 12 hour workdays are something you sustain forever. That’s just stupid. The downsides are obvious. Burnout. Neglecting other domains of life. And simply not having something to work on.
12-hour workdays shouldn’t be forced.
No amount of work should be forced.
If it is, change your work (or change your mind.)
Like a lion hunts and rests, we’re going to replicate that in our work."
https://thedankoe.com/letters/how-to-focus-for-12-hours-a-day-on-your-purpose
24. Jason is the best, so many good insights for sales leaders and founders trying to figure out this sales thing.
https://www.youtube.com/watch?v=pEhXeY8oTB0
25. A really interesting and broad discussion on VC investing and future societal trends. Glad I watched it.
https://www.youtube.com/watch?v=wjnozgzMEX4
26. "As I tell Akshat and his team constantly, you have a job at Maelstrom because I believe you can compile a portfolio of the best-in-class Web3 projects that will outperform my core holdings of Bitcoin and Ether. If that weren’t the case, I would continue buying Bitcoin and Ether with my spare cash and not pay salaries and bonuses.
As you can see here, if you bought a token at or around the listing price, you have underperformed the hardest money ever known, Bitcoin, and the top two decentralised computer layer-1’s, Ether and Solana. Given these results, retail should never buy a newly listed token. If you want crypto exposure, just stick with Bitcoin, Ether, and Solana.
This tells us that projects must cut their valuations at launch by 40% to 50% to become attractive on a relative basis. Who loses if tokens list lower prices, VCs and CEXs.
While you might believe that VCs are in the game to generate positive returns, the most successful managers realise they are in the asset accumulation game. If you can charge a management fee, usually 2%, on a large notional, you make money regardless of whether your investments appreciated in value. If you invest, as VCs do, in illiquid assets like early-stage token projects, which are just future token promissory notes, then how do you get the value to rise? You convince the founders to continue doing private rounds at ever-increasing FDVs.
As the FDV in private rounds increases, VCs get to mark-to-market their illiquid portfolio up in value. This shows great unrealised returns, which allows the VC to raise the next fund based on stellar past performance. This enables the VC to charge the management fee at a higher fund value. Also, VCs do not get paid if they don’t deploy capital. That isn’t so easy when most VCs set up in Western jurisdictions are not allowed to buy liquid tokens.
They can only invest in equity of some sort of management company that writes a side letter giving their investors token warrants in the project they develop. This is why Sale of Future Token (SAFT) agreements exist. If you want VC money, and they have a fuck ton of dry powder, you must play this game.
What is toxic for many VCs is a liquidity event. When that happens, gravity takes hold, and token values plummet back to reality."
https://cryptohayes.substack.com/p/pvp
27. "For the companies that make them, games (and comics, and anime, etc.) are not a canvas for unfettered expression. They are a canvas for expressions that sell. And their makers would rather sell more product than less – even if it means changing things to appeal to different customers in different regions of different cultures. I know this from experience, because in my work as a localizer, I was often asked to suggest such changes — by the creators themselves.
So the Japanese pop-content industry is not a wonderland of freeform artistic expression being compromised by foreign invaders, of the conservative or liberal varieties. It’s a capitalist enterprise dedicated to making money by appealing to as many customers as possible.
None of this, will of course, do anything to dissuade those determined to fit Dragon Quest III HD-2D’s changes into their personal narratives.
There are conversations to be had about the agency of creators over the legacy of their products; about the murky criteria and draconian rulings of ratings boards; or the ethics of modifying the designs of an artist after their passing (Akira Toiriyama died earlier this year, alas.) Perhaps the conversation unfolding online may lead to that kind of nuanced discussion. One can dream."
https://blog.pureinventionbook.com/p/when-pop-culture-meets-culture-war
28. How did we mess up so badly to be reliant on China for critical minerals like Tungsten.
https://www.youtube.com/watch?v=gEHG1deCPC0
29. "You have to embrace new technology and put an effort to use it if you don’t want to be left behind.
If you want to not be technologically illiterate in the future, you have to FORCE yourself to learn new tech as it comes out.
Otherwise you WILL be the senior citizen of tomorrow with tech skills equivalent to the senior citizens of today.
When all the kids will be making the equivalent of online transfers, you will be doing the equivalent of writing a cheque."
https://lifemathmoney.com/how-not-to-be-technologically-illiterate/
30. "The team you build is the company you build"
https://www.youtube.com/watch?v=JBKfUFp6EWw
31. This is the acme of venture capital.
A must watch for anyone looking to master the craft of venture investing, including founders who should be the best investors (of time/energy) in their own company.
https://www.youtube.com/watch?v=B-elii6G7pE&t=653s
32. Wow, this is gripping reading on the Scribe Media episode. So many lessons for everyone in business. Big lesson is be very careful with who you do business with and sociopaths abound.
"Looking back at the true financials, and knowing the core team at Scribe and the situation, I still believe that had JeVon been courageous and taken the hard path, even starting as late as January 2023, he could have turned Scribe around and either sold it or made it profitable. It would have been hard, because he spent all of 2022 squandering the huge lead that Zach and I handed him–but it was still possible.
He didn’t take the courageous path. Once Jawad put his money in it appears that JeVon doubled down on his bullshit, and in May 2023 JeVon’s house of cards fell.
JeVon didn’t fool a few people. He fooled (almost) EVERYONE he came in contact with.
He fooled everyone at Scribe, including Zach and I.
He fooled multiple billionaires, including John Mackay, the billionaire founder of Whole Foods, who put him onto the Board of Directors of Conscious Capitalism (no, seriously).
He fooled Jawad Ahsan, John Kim, and other investors, who are each very smart and very successful and do not get fooled by people.
How could someone do that?
Well, first off, he’s actually good at his job. I wrote about his managerial ability here, and it’s still true. He is a skilled dude–at certain things–and you cannot fake that over a long period of time. He can deliver when he wants to.
And along with that, he’s an INCREDIBLE manipulator. Some of the things I have seen him do to people were, quite frankly, breathtaking."
https://www.tuckermax.com/the-scribe-media-collapse-and-recovery/
33. "Simply put, there is too much capital seeking too few opportunities, particularly at the seed stage. Multi-stage firms have eliminated pricing discipline at seed stage and the proliferation of seed firms has made the task of investing at this stage as competitive as it’s ever been, leading me to believe that indexed seed investing in today’s environment will produce poor returns.
What does this mean for today’s environment? It’s never been more important to break away from median performance. While there is risk in breaking away from the pack, the risk (at least performance wise) of staying part of the herd is simply far worse. Median returns for the recent vintages are simply terrible. One could argue that funds are still in their j-curve phases, but I suspect this doesn’t explain the divergence we’re seeing between GOOD performers and GREAT performers.
More than ever before, it’s clear to me that playing the same game as everyone else will not work, so fund managers should question whether they are really capable of being in the top 5% of whatever strategy they are employing. From a LP perspective, allocators should likely ask the same of their managers and consider whether allocating to indexed mega funds or indexing across too broad of a portfolio of managers is tenable in achieving their return targets."
https://newsletter.equal.vc/p/the-power-law-of-venture-fund-returns
34. The Dorito-fication of media and food. Not a good trend.