Marvin’s Best Weekly Reads September 29th, 2024
“It is the working man who is the happy man. It is the idle man who is the miserable man.” – Benjamin Franklin
"This observation backed me into what I now use as my four-question framework for evaluating angel opportunities:
Why this idea? Do people need this? Will they pay for it? How big can it be? Is this really a company or just a feature?
Why now? Is this idea too far ahead of its time? Or, is this company too late?
Why this company? Do they have a technological head start? Do they have uncommon expertise that is difficult or impossible to replicate?
Why this leadership team? Why is this particular group of smart people (hint: they’re all smart) going to win? What is special about the founders that makes me believe they will beat everyone else in this race?"
https://kellblog.com/2024/08/26/the-4-key-questions-on-every-angel-investment-opportunity/
2. "The Ukrainian attack into Kursk in Russia, now into its third week, was a tactical and operational surprise for the Russians. There are many reasons for this, including Russia not assembling all the available pieces of intelligence to anticipate the Ukrainian attack, the Ukrainian deception plan, and a failure of humility on the part of Putin’s regime and military.
The Ukrainians have also surprised their supporters in the West. This was in large part because Ukraine deliberately withheld details of the Kursk attack to preserve operational security, maximise its chances of achieving surprise and shock against the Russians, guard against the inflated expectations of the failed 2023 counteroffensive and avoid second guessing by talkative, risk-adverse bureaucrats in the West.
Ukraine has shown that, fortunately, strategic audacity is not entirely dead in democratic nations."
https://engelsbergideas.com/notebook/ukraine-kursk/
3. "So where to invest in an AI world? Invest in the things that AI can’t change. Invest in uniquely efficient customer acquisition models, because all the people playing the standard customer acquisition game will have perpetually worsening business models."
https://investinginai.substack.com/p/the-indirect-implications-of-ai-when
4. "Quick Summary of Good Options
Boat Rentals
Smaller tiny homes if at/near major city
Car detailing for luxury vehicles
Pets - but more niche has to be something high-end to keep margins up
AI GF/BF experiences
Handbags/status good product resells
Upscale Mid 30s-40s bar experiences
Niche collectables that are expensive
Rehab/mental health type establishments (would pass honestly but needs to be mentioned)
This is our general view of what will become more common. Of these probably like car detailing, niche upscale bar and AI girlfriend/boyfriend.
As usual, we’ll have to wait and see for something like this. We’ll check back in 5-years to see how we did!"
https://bowtiedbull.io/p/monetizing-extended-youth-the-next
5. "With AI, we believe there’s a new opportunity to win on quality. We anticipate a shift in this three-point framework, moving from an emphasis on convenience & price (Access) to convenience & quality (Edit). So for example, rather than providing greater access to healthcare, companies in this new paradigm will provide better healthcare. Price will always be a factor, but parity will suffice — similarly to how quality parity was serviceable for the last wave of access-focused companies.
With AI, quality largely hinges on a product or service's ability to properly capture nuance, intent and context to either 1) effectively serve up the most relevant and useful insights, or 2) effectively perform tasks on our behalf.
We see a world of opportunity for products and services that help people get to the best possible output, providing fundamentally more useful value than the previous alternatives rather than cheaper or more accessible extensions of existing standards."
6. "Though it has no large warships in its navy, Ukraine has used these drones to outmaneuver one of the greatest naval powers in the world. Produced at a cost of around $200,000 apiece, the weapons have damaged or destroyed about two dozen Russian warships—as much as a third of the Black Sea fleet, including large landing ships and missile carriers worth billions of dollars. These strikes have forced the rest of the Russian navy to pull back from Ukrainian shores, all but conceding defeat in the greatest sea battle Europe has seen since World War II.
Standing on that beach, nose to nose with the Magura, it was hard to believe this motorized dinghy could score such an epic victory. Russia’s status as a naval power dates back more than three centuries to the age of Peter the Great, the Russian czar who was so obsessed with battleships that he once traveled in disguise to the Netherlands to learn how to make them. Now, thanks to a drone conceived in a Kyiv garage, the Russian navy has begun to look useless along a critical front in the war. Vladimir Putin knows it. In February, he fired the commander of the Black Sea fleet; a month later, he sacked the head of the entire Russian navy as the Ukrainian drone strikes intensified."
https://www.youtube.com/watch?v=gMxE_hXUKQI
7. Very timely discussion on the AI Hype cycle. The YC guys have an amazing data set.
https://www.youtube.com/watch?v=_-5xJQ4U8g0
8. Sad that it's needed in modern society but here we are. The growing divorce coach industry
https://thehustle.co/originals/getting-a-divorce-theres-a-coach-for-that
9. "The important thing to note here is that these two profit drivers are driven off of two fundamentally different things. Fees are driven off AUM. The bigger the AUM? The bigger the fees. Carry is driven off returns. The better your returns? The bigger your carry.
And maximizing fees vs. maximizing returns are not only fundamentally different games, but are in many ways diametrically opposed. The bigger your AUM, the worse your returns. Understanding that dichotomy is fundamental in understanding the strategy of many (though not all) venture firms.
You might come to the conclusion that bigger just means better. The bigger you get, the more swings you can take, you can take bigger losses, and have lower expectations.
But there is a fundamental bottleneck. Not every company can be a really big success. And building a model around massive pools of capital that require massive outcomes to move the needle will increasingly give investors "nail goggles" and they'll take their hammers, and just start swinging. But in the process, they'll shatter a lot of good businesses trying to form them into $10B+ outcomes.
Some firms, while being large, have still made attempts at being responsible stewards of capital, like in early 2023 when Founders Fund chose to reduce its eighth venture fund from $1.8B to $900M. It wasn't that they couldn't raise the size of fund they wanted; they told LPs they wanted the fund to be smaller, and pushed capital out of that fund.
And don't get me wrong, I'm hopeful that more and more of these massive firms can be responsible stewards of capital. I want there to continue to be great successes and outcomes that will continue to alleviate LP's concerns and continue to build the pool of capital going towards big, ambitious ideas.
But I've worked with a lot of these firms and I gotta say, I'm not super optimistic. And the existential danger to all of us, from the funds that want to be big or small, to the founders that want to build productivity tools or humanoid robots, is that the more irresponsible the biggest firms continue to be, the more capital gets destroyed, the more we run the risk of chasing a large volume of capital out of the asset class."
https://investing1012dot0.substack.com/p/mo-money-mo-problems
10. "Perhaps the most unsettling conclusion we can draw from all this is that billionaires represent a kind of moral singularity—a point beyond which our usual ethical frameworks break down. They operate at a scale where intentions, actions, and consequences become so intertwined and far-reaching that clear moral judgments become nearly impossible.
This doesn't mean we shouldn't try to evaluate, and also regulate, the impacts of billionaires. But it does suggest that we need new frameworks for thinking about them. Maybe the question isn't, "Are billionaires good or bad?" but instead, "How can we structure society so that no individual wields outsized influence over everybody else?"
In the end, the Bill Gates paradox—philanthropist or predator? Savior or sinner?—may be less about Gates himself than about the limitations of our moral intuitions in the face of vast wealth and power. As we grapple with the rise of the billionaire class, we may need to develop new ethical tools, alongside all the new economic and technological ones."
https://every.to/napkin-math/billionaire-or-despot-or-both
11. "Yet, despite this returns compression, venture capital remains an incredible asset class. Here is some fascinating data from JP Morgan. Despite the downturn, it still seems to be the best long-term asset class (this is not investment advice). Between 2014-2023 annualized VC returns were 16.2% IRR, compared to 14.6% for private equity, 4.4% for hedge funds, and 8.8% for direct lending."
https://99tech.alexlazarow.com/p/vc-hot-or-not
12. Great conversation here on zigging when others are zagging. All three of them are original thinkers. Made me question my own investment thesis a lot.
https://www.youtube.com/watch?v=rQIMRXp1qkg
13. "First and foremost, it’s a reminder to stay vigilant. The strategies and decisions made in Washington, Beijing, Moscow, Delhi, Brussels, and elsewhere will ripple across the globe, affecting everything from trade policies to military alliances.
Next, it’s likely that the United States will remain the most powerful of the great powers at least over the next decade. Beyond that, there are too many variables to account for (kind of like how weather forecasts remain only good for ~8 days, as explained by Chaos Theory).
We can maintain our strength through intelligent investment in defense capabilities (both high-end exquisite systems as well as low-cost attritable ones), continuing economic policies that strengthen the American base (reshoring / friendshoring manufacturing, restoring infrastructure, leveraging competitive edges in software, etc), regaining control over information systems messaging our vision of progress (the one that glamorizes hardwork and industry more than influencer status domestically and that sees a rising tide lifting all boats internationally), and smart diplomacy that doesn’t just talk-the-talk, but walks-the-walk.
Of course, it’s not all doom and gloom. This period of competition also brings opportunities—opportunities for innovation, for forging new alliances, and for rethinking old strategies. The key will be to stay adaptable, to keep our eyes on the long-term game, and to understand that in this new world, nothing is set in stone."
https://andrewglenn.substack.com/p/buckle-up-the-era-of-great-power
14. "Just like how I eat candy bars and sugar goo when I’m not hungry to avoid a drop in blood glucose levels, the Fed is committed to never letting financial markets stop their upward ascent. The US is a hyper-financialised economy that requires up-only fiat asset prices so that the population feels rich. In real terms, stocks are flat to down, but most people don’t look at their real returns.
Nominally rising stocks in fiat terms also drive capital gains tax receipts. In short, a falling market is bad for the financial health of Pax Americana. Therefore, Bad Gurl Yellen began subverting the Fed’s interest rate-raising cycle in September 2022. Powell, I believe, under instructions of Yellen and the Democrat party leaders, is falling on his sword and cutting rates when he knows he should not be."
https://cryptohayes.substack.com/p/sugar-high
15. "As postulated by Carlota, this new world enables a wider surface area for founders and one where the core skillset may very well be industry knowledge and connections, not just technology acumen. Founders and investors alike need to be able to tap into the knowledge and networks of their industry segment if they’re hoping to unlock opportunity. As Kanyi Maqubela puts it “The Services as Software era is about industry.”
Ultimately, our mission is to find, fund and help founders capable of transforming their industries. Sometimes this will be through SaaS and other times it will be competing with incumbents directly. The freedom to pursue investments outside of traditional SaaS presents an incredible opportunity along with the equally incredible burden of (as one of our LPs lovingly put it) “knowing your shit”.
Learning these industries is rewarding, but time consuming given their nuance. It’s not for the faint of heart and even some of the most brilliant investment minds have been burned by approaching these markets without a fully informed appreciation for their difficulties. That said, those who do invest the time to unravel those complexities of these markets may have the opportunity to unveil some of the largest investment outcomes ever achieved.
Buckle up as we leap forward into the age of “Technology Deployment”.
https://newsletter.equal.vc/p/the-technology-deployment-phase
16. This is a must listen to. Incredible discussion on the future of AI, Semiconductors and Robotics. The future of tech. I'll have to re-listen to this one as it’s insight dense.
https://www.joincolossus.com/episodes/67636422/baker-ai-semiconductors-and-the-robotic-frontier
17. One can never listen to Luke Belmar enough. The youngest wise man around.
https://www.youtube.com/watch?v=09HJKepCY8E
18. As always: a great informative and fun discussion on whats happening in business.
https://www.youtube.com/watch?v=eMbaAZtCJR8
19. "Generally speaking, we buy the idea that *income* taxes will go up. That makes logical sense to us. It doesn’t impact anyone with real money. Income taxes entrench mega companies because their employees can no longer save enough money to leave and create a competitor.
The truly rich do not have large salaries. The truly rich are CEOs and private company owners. They pay themselves a fake salary ($1 is common amongst major tech executives) and then get the rest in stock. When they sell the stock they incur a 15-20% capital gains tax (USA)
Summary: The faster you can get your income tied into businesses? The safer you are. You can move them, shut them down, sell them to someone else to put in a trust… so on and so forth. The chances of anyone tracking this down is limited. It is even less likely they bother with you if you just retain the paper work. You get a letter asking for proof of the transaction and that is it.
They can’t do much if you gift your grandmother a house. You have $13,610,000 to give away in your lifetime and they can just put that into a trust that goes to someone else. For small money you can gift $18,000 to anyone you want tax free (current limit for 2024). As long as you have some trustworthy relationships, none of the tax rules will ever impact you."
Similarly, if you run a private company, you can avoid paying yourself a salary and simply get paid out in dividends."
https://bowtiedbull.io/p/taxing-unrealized-gains-wont-be-passed
20. Luke Belmar is the man. Most of this is on crypto & trading side but it's really good.
https://www.youtube.com/watch?v=vAdahc6xEmY
21. A wide ranging conversation with Luke Belmar. Small parts of this veers into tinfoil hat land but overall it's an exercise in thinking for yourself and first principles thinking. Understand the world around you.
https://www.youtube.com/watch?v=kQs8ZHfZNq8
22. Great conversation here. Is coding even relevant in an AI world? Can u build billion dollar cos with less people.
I don't agree that more Unicorns are being created every year, as they are just valuations from ZIRP-era stupidity. Question is are they sustainable businesses.
But I do believe it's easier than ever to start up a startup.
https://www.youtube.com/watch?v=CKvo_kQbakU
23. "Talent and funding are great, but they won’t get you anywhere if customers don’t want to buy what you’re selling. And that’s where recent economic and political tailwinds come in. Tensions with China and Russia have created pressure on our government to fund defense innovation.
Strained relations with China are also causing companies to rethink their material sourcing and manufacturing for the first time in years or decades. Additionally, rising minimum wage laws and intensely seasonal hiring needs in sectors like agriculture are pushing many industries toward increasing automation in order to survive.
These global trends are an immense tailwind for startups focused on robotics, manufacturing, defense, energy, and many other areas."
https://www.codingvc.com/p/the-golden-age-of-deep-tech
24. "This post barely scratches the surface of these dynamics (trust me, I’ve got plenty of adjacent topics for future blog posts). For now, if you take anything away from this analysis, it’s the following:
Silicon Valley is a global outlier when it comes to fundraising dynamics.
In the rest of the world, early-stage funding rounds are overwhelmingly led by local investors.
U.S. participation in early-stage Canadian funding rounds is higher than anywhere else in the world — including in most U.S. states (which is either a blessing or a curse, depending on whether you’re a hungry startup looking for funding or a Canadian investor wary of competition)."
https://chrisneumann.com/archives/the-mythical-us-lead-investor
25. There is so much gold here for founders. How to buy back your time and become a more effective leader and parent.
https://www.youtube.com/watch?v=eZF_7_tjepU&t=2247s
26. This provides good details for the simmering hybrid war & spy war happening on European soil between Russia and the West.
https://www.youtube.com/watch?v=f2DkseOnL2M
27. Japan ramping up their military force to meet the increasing CCP threat in Asia. Good rundown on Japanese military capabilities and plans.
https://www.youtube.com/watch?v=UqqAtDqq6Mw
28. Great edition this week on what's up in tech.
https://www.youtube.com/watch?v=LVoyROHOPt0
29. There can never be too much Luke Belmar. Mental reframing for success.
https://www.youtube.com/watch?v=19aKbciNKdA&t=2199s
30. "You cannot produce a top decile fund with just reserves and recycling. You need to be working with great founders and teams who are building breakout companies. Just like a poker player needs to get dealt some great hands. But how you play those hands when you are dealt them is also critically important.
I have seen early stage VCs make way too little on their best companies because they ran out of money and could not keep on participating or they had to sell too soon or some other reason that was effectively poor portfolio and fund management.
Reserves, recycling, and returns go hand in hand. So build them into your firm's culture and processes. They make a difference over the long run."
https://avc.xyz/reserves,-recycling,-and-returns
31. "While much, if not most, of the furor surrounding fake news is due to a power struggle over control of the new medium, fakes exist. Let’s toss around some ideas on this:
We’ll get used to them. Like marketing fakes in the past, we’ll learn to live with them. Most AI fakes, even political fakes (see above), are far more humourous than harmful.
The power of network dissent. In open media networks, free of authoritarian censorship, dissent will flourish. This means that every published fact and their narrative interpretation will be challenged. It also means that facts won’t be overlooked or ignored (on the main).
Opt-in narratives. Without control over the narrative, governments will be forced to adopt narratives that deliver beneficial results. If they do, people will opt in voluntarily, and alternative narratives will wither. If not, dissent will flourish and hound their every move. Forcing people to adopt a narrative without delivering beneficial results is tyranny."
https://johnrobb.substack.com/p/fakes
32. "Open source is a powerful idea that's shaped the modern world but it's largely invisible because it just works and most people don't have to think about it. It's just there, running everything, with quiet calm and stability. That's made it hard to defend and that's a tragedy because open source gives everyone a level playing field.
With that kind of reach and usefulness I never saw it as even remotely possible that someone would see open source as a bad thing or something that must be stopped ever again.
But I was wrong. Here we are again. The battle is not over. It's starting anew."
https://danieljeffries.substack.com/p/why-open-source-is-so-hard-to-defend
33. "This idea of a negative roadmap is complementary to the normal roadmap. It’s a way to document things that are not going to happen in the product or things that are going to be removed from the product. Roadmaps are critically important, and as organizations grow, getting everyone on the same page becomes harder. Adding a negative roadmap to the mix is another exercise in aligning the team around what is not going to happen. Entrepreneurs should consider adding a negative roadmap to their collection of documents and best practices that they use to run their startup."
https://davidcummings.org/2024/08/31/negative-roadmaps-for-startups/
34. "We all crave access to experts. It’s why people show up to hear Scott speak. It’s why someone once paid $19 million for a private lunch with Warren Buffet. It’s why, despite all the bad press re: their ethics and ineffectiveness, consulting firms continue to raise their fees and grow.
But most of us can’t afford that level of human expertise. And the crazy thing is, we’re overvaluing it anyway. McKinsey consultants are smart, credentialed people. But they can only present you with one worldview that has a series of biases including how to create problems only they can solve with additional engagements, and what will please the person who has a budget for follow-on engagements. AI is a nearly free expert with 24/7 availability, a staggering range of expertise, and — most importantly — inhumanity. It doesn’t care whether you like it, hire it, or find it attractive, it just wants to address the task/query at hand. And it’s getting better.
The hardest part of working with AI isn’t learning to prompt. It’s managing your own ego and admitting you could use some help and that the world will pass you by if you don’t learn how to use a computer, PowerPoint … AI. So get over your immediate defense mechanism — “AI can never do what I do” — and use it to do what you do, just better. There is an invading army in business: technology. Its weapons are modern-day tanks, drones, and supersonic aircraft. Do you really want to ride into battle on horseback?"
https://www.profgalloway.com/what-does-ai-think/
35. "Fear of missing out, today’s parlance for "keeping up with the Joneses,” can drain on your wallet.
Use this mantra next time you feel compelled to do something or be somewhere:
“There will always be another ___.” For example [party/event/rave/Burning Man/conference/vacation].
Knowing and repeating this mantra will help you get over not feeling compelled to attend for whatever reason."
https://shindy.substack.com/p/how-to-be-good-at-money
36. "One of the major questions for web3 exists in the US where the regulatory regime isn’t clear.
Overall, web3 continues to see activity but most of the interest exists in the public markets as the market awaits next-generation of infrastructure & applications & regulatory clarity."
https://tomtunguz.com/web3-disclocation-public-private/
37. "The scale and nature of the task is determined by the capabilities of the opposition. In World War 2, the Axis powers had advanced manufacturing prowess, but small populations and a lack of access to fuel. In the Cold War, the Soviet bloc had a lot of fuel and a population similar to ours, but had a small and dysfunctional economy and struggled with advanced manufacturing.
In contrast, a potential “New Axis” of Russia and China would control enormous population, vast fuel resources, advanced manufacturing capabilities, and a combined economy of enormous size. Except for the fuel part, this is all just China.
So today’s post is about how the U.S. and its likely allies stack up against the New Axis in economic terms."
https://www.noahpinion.blog/p/sizing-up-the-new-axis-3ce
38. "As a result, that soil is a precious resource the Ukrainians ought to safeguard, but which foreign firms, funds, and banks have long eyed like wolves. Now, with the Russo-Ukraine war presenting an opportunity, it is a resource up for grabs that those same firms and funds are now are coming for.
However, the exigencies of war since the Donestk conflict began in 2014 have meant that corrupt entities, including foreign companies and even the Saudi Arabian pension fund, have managed to gain not just a foothold in Ukrainian agricultural land but also acquire control of a major percentage of it."
https://www.theamericantribune.news/p/when-ukraine-finally-falls-american
39. "Instead, learn the names of who is on your city council, school board and other people making multi-million dollar decisions with your property taxes, and make sure they know YOUR name. This can be done on a middle-class income and the energy you expend on this endeavor will have a far-higher likelihood of improving the quality of your life."
https://kaichang.substack.com/p/the-favor-bank-local-politics
40. "Whether the ancient Aztecs, Rome, China, or the US, civilizations traditionally flourish as long as they invest in the fertility of their soil bank. Once they begin extracting the soil’s future fertility by consuming its stock of carbon at unsustainable rates, the clock is ticking, and they need to expand outwards with imperialistic might if they are to sustain themselves (with the US being the starkest example of this in history).
At a certain point, they are no longer able to continue expanding outwards and managing already-conquered territory, and at this point, collapse is a single generation away. The high time-preference thinking that invariably captures empires on the decline can arise from many sources, but all the patterns of consumption and waste that an empire employs to feed itself by robbing from the future lead to the same outcome."
https://www.theamericantribune.news/p/soil-and-money
41. "The Vibe Shift I’m talking about is the speaking of previously unspeakable truths, the noticing of previously suppressed facts. I’m talking about the give you feel when the walls of Propaganda and Bureaucracy start to move as you push; the very visible dust kicked up in the air as Experts and Fact Checkers scramble to hold on to decaying institutions; the cautious but electric rush of energy when dictatorial edifices designed to stifle innovation, enterprise, and thought are exposed or toppled.
Fundamentally, the Vibe Shift is a return to—a championing of—Reality, a rejection of the bureaucratic, the cowardly, the guilt-driven; a return to greatness, courage, and joyous ambition.
Most folks in the tech and venture orbits are probably aware of the most salient example of the vibe shift in startups: the happenings in The Gundo. The tl;dr on the Gundo is a bunch of bright, young, ultra-ambitious dudes in El Segundo, CA have forsaken the “don’t rock the boat by saying what you believe and focus on hitting the SaaS jackpot” ethos of 2010-2020s Silicon Valley and are instead unapologetically pro-America, pro-family values, openly religious, all of which they channel into challenging and important missions like manufacturing hydrocarbons out of thin air, making it rain where it doesn't, and more generally “rebuilding America.”
But part of what is causing the Vibe Shift is that it goes well beyond the Gundo: indeed, no matter what circles you run in, almost everyone—from AI accelerationists to techbros to gun owners to Bitcoiners to Christians to normal families to children who like math to American citizens—is undergoing a variation of the same kind of pressure to conform, stagnate, decelerate."