Marvin’s Best Weekly Reads November 5th, 2023
“The smallest deed is better than the greatest intention.”--John Burroughs
I'm enjoying this series of interviews with Tai Lopez. Excellent life and business insights.
https://www.youtube.com/watch?v=zzwj2CrRuY0&t=2548s
2. Building Audiences and Holding Cos. Excellent conversation.
https://www.youtube.com/watch?v=lGX30whbJ1s
3. "In most industries, competition is a knife fight—it’s fast and dirty. In contrast, B2B SaaS is a chess match, cerebral and drawn out. And it’s because rather than merely guessing about what their foes will do, founders can forecast with a spooky level of certainty what is going to happen.
At its core, the software universe is paradoxical: common playbooks that should herald predictable commoditization instead yield unpredictable successes. This might be unsettling for the traditional economist, but it's a fascinating phenomenon for the astute founder.
Where does this leave us? First, it's essential to recognize that the uniqueness of software strategy isn't rooted in what companies do but in how they do it. In a world where everyone has access to the same roadmap, the differentiator becomes the vision, culture, and adaptability of the company itself. It's not just about selling a software solution; it's about selling a belief, a future perspective that entices and resonates."
https://every.to/napkin-math/every-software-business-has-the-same-playbook
4. "If we were to write Triangle Investing again the entire cover of the book would be changed. For the majority it would say: 1) Corporate bonds, 2) Crypto and 3) Emerging Companies/Tech. The entire idea of buying stuff like dividend aristocrats, the S&P 500 etc would be thrown out the window. It just doesn’t make sense today and until the government decides to either go back to ZIRP or print tons of money, you can’t justify holding them.
Hopefully we can all agree that the government really only has three options: 1) wealth tax, 2) print and 3) cut rates to zero. Crypto is the lotto ticket for Gen Z, Gen Y and perhaps a good chunk of Gen X as well. All three of these long-term conclusions benefit crypto.
If they try to use a wealth tax, people will self custody. If they print, money will flow into crypto due to inflation (we saw this in covid). If they cut rates suddenly to zero, unemployment will be high… desperation sets in and people turn to crypto as their “last shot” at making it."
https://bowtiedbull.io/p/rewriting-triangle-investing-in-2023
5. "At a time like this, some people might see it as dismissive or callous to talk about the long-term economic future of Gaza. Perhaps it takes a terminal case of Economist Brain to look at a land in the grip of endless war and say “You know what this place needs? Some GDP!”. But I think it’s an important exercise, because economic development provides a nation with a purpose other than the catharsis of violence.
Finance is another industry where Gaza could conceivably shine. Arab countries are a big market, with about $3.5 trillion in GDP. Currently, the Gulf Countries and Israel are the main financial hubs for the Middle East, but Gaza could ultimately challenge their dominance. It could be a gateway for investment in countries like Egypt, Syria, Lebanon, and Jordan, using its cultural affinity to cut Israel out of the loop.
Software and finance take a lot of skills, and Gaza will need a big increase in education to master these complex, high-value industries. But Gazans overseas can take advantage of already-existing education systems in rich countries, and learn practical business skills from working at foreign companies. These skills could then be transferred back to Gaza, along with investment capital, to create software and finance industries in the territory.
In any case, it’s a bit of a pipe dream to look at the devastation and dysfunction of today’s Gaza and imagine that one day the strip could be a wealthy hub of software and finance. But it’s exactly that sort of pipe dream that makes stability, peace, and good government worth fighting for in the present."
https://www.noahpinion.blog/p/economic-possibilities-for-gaza
6. "I’m repeating myself, because I want to stress this: on a long enough timeline, everyone (individuals & brands) will learn trust is only real currency of the internet, and so the world. It has to be this way as there's essentially infinite content, people and brands online and we need a filter. These aren’t human-created rules, they’re immutable, universal laws.
A thing too many haven’t realized yet is the internet isn’t some magical, distinct place separate from the real world, it is the real world (as mirror reflection). Where do you guess people and brands who run around screaming fire in crowded theaters end up? There’s a children’s story about all of this if you need a hint (for what happens to them, and also those who endorse them).
So I ask very seriously, why anyone would want to be left holding the bag of the subprime attention bubble online? You’re basically actively working to kill your credibility and any future chances to compound (productive) attention, reputation and trust — the things you actually need to survive. It all will come crashing down and end poorly for many. And it’s even worse than an investment bubble, because there was never actual liquidity potential for participants, it was always worthless."
https://www.hottakes.space/p/the-subprime-attention-bubble
7. "Today, the Department of Defense released its annual report to Congress on Chinese military power. This report has been around for more than two decades and is always an interesting read, but I don’t think I’m alone when I say this year’s report was more detailed and more responsive to evolving threats than in previous years."
https://www.breakingbeijing.com/p/10-takeaways-from-the-pentagons-2023
8. Sober perspective on Gaza and Israel. Thankfully not WW3......yet......
https://www.youtube.com/watch?v=OagYlYna75Y
9. I hate Orban but love Hungary and Hungarians. I'm hopeful for this country and market.
"In the 1990s, Hungary was one of the most open economies in Eastern and Central Europe and widely regarded as a benchmark for the changes that took place across the region.
Right now, its reputation is mixed, at best. The country is admired by some, and despised by others. It has had real economic issues to deal with, and being known as the country with the highest inflation rate in Europe is not conducive to attract investors.
Equally, within the region, Hungary is cheaper even than its peers. All the bad factors that the country is known for should already be priced in – and then some. In addition, according to Raiffeisen Bank's analysts, inflation is seemingly on the way down."
https://www.undervalued-shares.com/weekly-dispatches/hungary-investor-trip-what-we-learned/
10. Some more on Hungary as an investment. Worth watching the video included.
11. "Rather than hiring as a first resort, you should focus instead on building the systems and processes that will enable your team, existing and new, to operate more efficiently and effectively. These will scale and are easier to build when the team is small and agile than when it has ballooned and established biases and habits.
These systems and processes are one of the core things to do after raising your Seed round in order to be able to raise a Series A. You probably haven’t done this before, but your investors, fellow cofounders, mentors or advisors should be able to help you with this.
So, as that dust settles and you smile at your bank balance with more zeros (good ones!) than you have ever seen, take a moment before you hit the big red hiring button. What made you successful till now was your ability to do more with less, and that shouldn't change just because you have money in the bank.
As a seed-stage company, you do not have a scalable growth engine into which you can pour the fuel of VC capital. That is what you need to figure out now so that you can raise a Series A and realise the full potential of your startup."
https://sturgeoncapital.substack.com/p/processes-before-people
12. "When people seek advice, it often isn’t advice they want, but someone to listen. A good listener — someone who is present, who asks probing questions, who doesn’t use the person’s pain as a starting gun for them to speak — is a balm for anxiety. That’s why a good listener makes a useful partner in problem-solving. Some of the best mentorship moments I’ve experienced, on both sides, have been when the mentor doesn’t offer advice, but expresses affection by focusing solely on you and what you are saying.
The best advice you can give is to listen, which is to tell that person that they matter. The most effective treatment for anybody’s grief or anxiety is time and care. The former takes care of itself, and the latter can be achieved when we tell someone we love them, without words. By listening."
https://www.profgalloway.com/listen/
13. "The enemy of techno-optimism isn’t sustainability; it’s short-termism. Humanity should not build new things to pump up quarterly earnings; we should build them so that our descendants, in whatever form they come, will own the worlds and the stars. And if we are to own the worlds and the stars in perpetuity, we must take care not to despoil them, starting with the one we now sit upon.
Techno-optimism is thus much more than an argument about the institutions of today or the resource allocations of today. It’s a faith in humanity — and all sentient beings — propelling ourselves forward into the infinite tomorrow."
https://www.noahpinion.blog/p/thoughts-on-techno-optimism
14. "In San Francisco, techies have been pumping their chest about AI, spending days attending “Cerebral Valley” events and nights partying at AI hacker houses. In Seattle, the vibe is more work, less play. Locals say that’s characteristic of the city’s resident tech workers, who are more pragmatic—a trait often instilled in them navigating bureaucratic Seattle mainstays Microsoft and Amazon—and less interested in showboating, even when they ought to.
“Seattle, to a fault, is OK being underappreciated,” said Matt McIlwain, a managing director at Seattle-based venture firm Madrona Venture Partners, during an interview last week at the firm’s headquarters. “The Seattle story is a great story. And it continues to need to be told better.”
https://www.theinformation.com/articles/seattles-more-pragmatic-and-quieter-ai-boom
15. "Though Convoy had been frequently hailed as the “Uber for trucking,” it turns out that the $800 billion U.S. market is incredibly difficult to disrupt. Building a profitable business involves navigating volatile trucking prices while inking both short-term spot deals for customers and longer-term contracts—dynamics that leave little margin for error. And Convoy, led by co-founder and CEO Dan Lewis, a leader with an Amazon pedigree but no experience as a trucking executive, couldn’t figure out how to play the game.
Convoy’s shutdown, which wiped out the equity investors that poured $900 million into the company, marks the most extreme downfall of a once-high flying startup in recent years, amid a contraction of venture funding that has left many money-losing startups struggling to survive. It also puts the spotlight on investors’ past willingness to pump money into companies despite management's lack of experience in the industry and questions about their business model."
https://www.theinformation.com/articles/how-trucking-startup-convoy-drove-itself-into-the-ground
16. "One question for entrepreneurs to ask prospects and customers: does this solution solve your most pressing issue? They might see this as a nice-to-have while a must-have is on the tip of their tongue. Prospects and customers are always the best source of ideas.
Many talented entrepreneurs work on startups that will never succeed, no matter the circumstances. If we can guide them toward more opportunity-oriented thinking and encourage ways to find even better needs in the market, everyone will benefit. Entrepreneurship isn’t a zero sum game and we need to move the world forward, faster."
https://davidcummings.org/2023/10/21/talented-entrepreneurs-working-on-the-wrong-idea/
17. "Was I getting pushed out? Was I running away from something I didn’t like?
And while it was a demanding job, that wasn’t really my motivation to leave.
Instead, I was feeling the pull. The pull towards something new. Something exciting. Something different."
https://radreads.co/david-solomon/
18. "When you step outside the city, you realize you’re in a rat race with no end and that you need very little to be happy.
Don’t get me wrong. You should not become lazy and complacent. We are men and we should strive for more.
But it needs to be done in a sustainable tempo. You don’t want to become a high stress type A person who dies of a burst artery at 32.
Build. But enjoy the process of building.
Don’t burn yourself out.
If you do get burned out, step outside of the city to get some fresh air and climb some mountains."
https://lifemathmoney.com/appreciate-the-simple-things-in-life/
19. "And once you realize you can stay for a month you realize it’s even cheaper to stay for three months, so why not? While these kinds of possibilities can become overwhelming it’s also freeing in that I know I’m not living my life downstream from my relationship to work anymore.
In fact, it is flipped. Where I live dictates how much I have to work. If I was living in a place like New York, I’d need to worry a lot more about money and I’d have to constrain the things I’d think about and work on to make sure that I can actually make money. And I might actually opt into a place like that if I was feeling that it might be fun to tap into the raw ambition of the city.
But I’ve also lived in places that cost 10% of what it would cost me to live in New York and I noticed how much that actually freed me to experiment, not worry as much about money, and do things just for the sake of it. And it has been those kinds of experiments that have actually led to more money in the long-term, which reminds me that I still don’t really know what is best for “work” and that’s okay."
https://boundless.substack.com/p/on-travel-living-abroad-and-losing
20. "Your offer to help is only really warranted if the founder finds you, as a firm, attractive. So that's the very first step. Communicate your vibes. But if you've done your best to articulate to the founder why your offering is attractive? Then all you can do is your best to offer well-intentioned calculated help.
It's up to the founder whether they choose to be transparent and receptive to the value add. Otherwise? Maybe it is just a Jedi mind trick that's stopping them from leaning into the value add."
https://investing1012dot0.substack.com/p/you-dont-want-my-value-add
21. This is an excellent interview with Chris Williamson who is one of the best interviewers around and Codie Sanchez.
https://www.youtube.com/watch?v=cG8ih5DwOlM
22. "When investing, I’ve done my fair share of stupid things.
And like everyone else, I always found a way to justify those absurdities, especially when it paid off, one out of a dozen times under the fact that Venture Capital is a power law where 95% of the returns are driven by 5% to 10% of the companies we invest in."
https://2lr.substack.com/p/absurdity
23. "This is the evolution of ESG - it is now a social good to invest in domestic energy production, in the raw materials sectors - and I don’t think it’s a stretch, but in defence and security.
Whether bullets or batteries - the lack of supply will continue to trigger rising prices, and a wave of capitalists will rush to finance the gap.
The importance of raw materials, metals and energy has never been more important than it is right now."
https://jaymartin.substack.com/p/pray-for-peace-vote-sensibly-and
24. "Almost everywhere, our taxes continue to rise. But instead of life getting better because of handing over more of our money to the state, life is becoming demonstrably and statistically worse for almost everyone at the bottom levels of the Western world. The cost of living continues to rise, and we’re constantly hearing how the quality of basic services like healthcare, public transport, and utilities are getting worse in most developed countries.
If you’re a part of today’s modern workforce, it’s the first time in generations that you’re statistically likely to be worse off financially and economically than your parents or grandparents were. And good luck attempting to afford a home.
Peasants in 14th century England revolted against their masters based on paying barely above 20% of their total income in estimated taxes. So why do we accept paying 50%, 60%, or 70% of our income like this should be a normal part of everyday life?
Why don’t we protest? Why don’t we revolt? Why don’t we rebel?
Because we’ve been raised to believe since birth that this is normal. Because we’ve been made dormant, fat, and slovenly by entertainment, culture, and an industrial food system that poisons our bodies and numbs our minds."
https://abundantia.substack.com/p/slave-nations
25. What a speech. Choose a life of strength by giving up your life of hate. Worth listening. Conquer your mind!
https://www.youtube.com/watch?v=jsETTn7DehI
26. "Here’s the craziest part: we ironically trust these faceless accounts more than we do personal brands. Without the face, all we know is the intention — get you from point A to point B."
https://latecheckout.substack.com/p/the-guide-to-faceless-brands
27. "Despite Halloween’s ever-increasing popularity, haunted houses are risky endeavors, labor-intensive businesses that must earn a year’s worth of income over a few weekends in September and October.
Only a small number of haunted houses see more than 10k visitors annually and stick around for longer than a few years. Even for the established houses, survival isn’t guaranteed.
“In a seasonal business,” says Amber Arnett-Bequeaith, VP of Full Moon Productions, which owns three haunted houses in Kansas City, Missouri, “you are gambling your livelihood every single year.”
https://thehustle.co/the-frightening-economics-of-haunted-houses/
28. "Between USV selling 30% of their Twitter stake, Menlo selling half of their Uber, Benchmark only selling 15% of their Uber pre-IPO shares, and Blackbird recently selling 20% of its Canva stake, it feels more like the former than the latter. Then when Howard Marks says selling is all about relative selection and the opportunity cost of not doing so, it seems to reinforce the artistic form of getting “moolah in da coolah” to borrow a Chris Douvos trademark.
Everyone seems to have a financial model for when and how to invest, but part of being a fiduciary of capital is also knowing when to distribute – when to sell. When RVPI turns into DPI. And we haven’t seen many models for selling yet. At least none have surfaced publicly or privately for us.
The best thought piece we’ve seen in the space has been Fred Wilson’s Taking Money “Off the Table”. At USV, they “typically seek to liquidate somewhere between 10% and 30% of our position in these pre-IPO liquidity transactions. Doing so allows us to hold onto the balance while de-risking the entire investment.”
https://cupofzhou.com/the-science-of-selling/
29. "The problem I’m seeing with many managers is that they’re seeking transactional relationships. The urgency to get to their first or final close leads them to optimize for LPs who can close fast. And I get it, that’s been the game historically.
But it’s leaving a massive opportunity in the market for those who have the time and are willing to educate their and prospective LPs. Who are willing to spend time building a relationship through giving first."
https://cupofzhou.com/to-define-or-to-be-defined-by/
30. The great unbundling geopolitically. Or shattering of the world order. General systems collapse. Important discussion.
https://www.youtube.com/watch?v=XkutC3XT6e4&t=1323s
31. "The biggest surprise in modern warfare is that small players with almost no resources can overcome big players with big resources using recycled materials and 3D printers. Ukraine is fending off Russia with 3D printed “Candy Bombs” that cost “$3.85 on a 3D printer that cost about $1,200”. They are also deploying cheap and fast underwater “Sea Baby” drones that inflicted an estimated $1b of damage on The Russian Fleet and forced it to pull back from its Black Sea position.
Technology has completely reversed The Malmgren Ratio and forever changed the nature of war (See our joint piece in UnHerd “Gaza Will Change the Future of War.”) This means the military doctrines we relied upon in past wars simply no longer hold true. (See: Gaza and The Future of War). This means the reporting on this WWIII is way off the mark.
This means we cannot answer the critical questions: How long will these wars last? Who will win? How many will be hurt or killed? How will these wars be won? Can they be won? What is the definition of “winning”? These questions are relevant whether one is working in financial markets or militaries or a regular person trying to figure out day-to-day living, whether you are far from the conflict or right in the middle of it. Yet, imagination is always lacking.
We revert to known scenarios, even though technology always profoundly changes possibilities. We cannot bring ourselves to believe what always proves to be true. Technology gives the greatest advantage to those with the least money and the greatest imagination. It may seem unimaginable but, when faced with overwhelming technology, the only answer is to embrace our opponents and reconfigure hate into love."
https://drpippa.substack.com/p/a-hot-war-in-hot-places
32. "Despite my seemingly negative bias towards the US (which mostly comes from my view on the desperate fiscal picture and cultural degeneration), I always enjoy my trips to the United States.
The United States remains one of the world’s preeminent industrial powers, and reshoring seems to be a real trend. The current macro environment is interesting, and in many ways resembles the 1970s (rising yields, high inflation, rising energy consumption, and major geopolitical instability). Continued reshoring should only accelerate this trend. I would continue to avoid bonds and favor assets that perform well under inflation, like energy assets.
I think money managers still fail to appreciate the magnitude of this trend. Three money managers (one claimed to manage over twenty billion dollars) I had dinner with in Charleston weren’t even aware of the Treasury maturity schedule. One 30 year RIA was pounding the table on buying bonds. I don’t think people get it yet.
My assessment of the coal mine was mostly favorable, and I have no worries that my subscribers who invested in it will get paid back and make money for a long time. For my personal portfolio, I don’t see the usurious returns I usually seek (like in Petrobras and Ecopetrol) to justify the illiquidity, but I do see a very safe investment that will likely cash flow for decades."
https://calvinfroedge.substack.com/p/coal-and-machining-summary-of-us
33. Have always thought of Ann as being one of the more thoughtful VCs in the industry. This was a great interview.