Marvin’s Best Weekly Reads August 16th, 2020

“In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of.” — Confucius

1. Rolling Funds. Will be watching this closely. Very interesting development in VC.

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Sahil Lavingia @shl

Rolling funds are about to roll over a whole lot of VCs. An ongoing thread:

August 7th 2020

2. Implications of increasing remote work in the long run are Wages will go down. Just Supply and demand.

“With sufficiently advanced remote work capabilities, each worker in a large region could compete for any job in that region, without having to move their home. So whole big regions, continents or even the whole planet could function like single huge cities, with matching levels of work specialization, at least for tasks that can be done remotely. As a result, tasks that workers do remotely in such regions could become very specialized, in part via larger more complicated firms and work task coordination. Many small fragmented labor markets would merge into a few large integrated labor markets.

Of course, we are a long way away from this situation now, and the path to get there is harder than futurists anticipated decades ago. But this pandemic has given us a big push, and in thirty years I think we will have gone far enough that at least one quarter of human work will be done remotely.”

Remote Work Specializes

3. I know it looks bad now but people ignore the rejuvenative power of the USA. But yes, it’s pretty bad now in America and will continue to be for the near future.

“COVID-19 didn’t lay America low; it simply revealed what had long been forsaken. As the crisis unfolded, with another American dying every minute of every day, a country that once turned out fighter planes by the hour could not manage to produce the paper masks or cotton swabs essential for tracking the disease. The nation that defeated smallpox and polio, and led the world for generations in medical innovation and discovery, was reduced to a laughing stock as a buffoon of a president advocated the use of household disinfectants as a treatment for a disease that intellectually he could not begin to understand.”

https://www.rollingstone.com/politics/political-commentary/covid-19-end-of-american-era-wade-davis-1038206/?fbclid=IwAR27l7ZKjn0JzhmUo8YmjYNz4L9Ey53GFjOnoVJAG4bzTl6dF5XP_thIXfk

4. I was actually in the middle of a write up on this same podcast episode. But David Cummings does a far better job summarizing it than me. The 3 generations of SaaS.

SaaS Generations 1, 2, and 3

5. Professor Galloway is the best. He is angry, he is funny, insightful and prescient at the same time.

“In 2020, the mantle of “business guru for people who aren’t interested in business” arguably belongs to Scott Galloway, a professor of marketing at New York University’s Stern School Of Business, tech startup veteran, brand consultant and bestselling author. A graduate of UCLA and UC Berkeley HAAS School Of Business, Galloway has been at the forefront of the digital economy since its earliest days.”

Meet Professor Scott Galloway: the tech guru who terrifies Silicon Valley

6. “When I see goals, and talk to entrepreneurs about their goals, I try to tease apart if the goal is within his or her control. If it isn’t, I work at helping reshape the goal to something that is more controllable, and share the idea about systems.

Control what you can control.

Start thinking in systems.”

Start Thinking in Systems, Stop Thinking in Goals — David Cummings on Startups

7. “The automation industry will see a steeper growth than previously anticipated and this pandemic is possibly the largest boost to the mainstream adoption of a new system of employment.

Why? Because this crisis has revealed many things that aren’t working properly (anymore) and by paying attention to these inefficiencies you can innovate to overcome and profit from them. The simplest and surest way to create wealth in the coming decade will be the ability to see things others don’t and bring creative solutions to the table that add value & fix what isn’t working properly. All those times your manager told you the job could not be done remotely, all those university courses that couldn’t be taught online, and every time the government had no budget for X, all lies. This crisis has exposed things that were already common sense to many.”

COVID19’s influence on business & innovation in the near future.

8. This thread is really interesting. “Hedging in 2020.”

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Venkatesh Rao @vgr

Hedging 2020 — Staying healthy — Favors banked in diverse, global social graph — Cash — Retirement, insurance portfolio — 2–3 in-country refuge places — Foothold in country #2 — Crypto; keys backed up abroad — Bug-out bag — Mad-Max toolbox — Junkyard skills — Med triage skills

August 10th 2020

9. This makes me mad. The incompetence and corruption. Don’t read this if u don’t want to get angry. It’s appalling how PPE and Gov’t grifters are. #BIFD

The Grifters, Chapter 2 — N95 Masks

10. This is really good stuff for startup founders trying to raise $$ in the new Zoom environment.

How VCs Judge Your Startup (on Zoom): 15+ Tactics Behind Successful Fundraises

11. I’m actually a big fan of Angellist’s Rolling VC Funds. Great move to democratize VC Startup investing. But there are considerations. Nothing is perfect. Biggest concern would be below. But overall I am positive on this development.

“These rolling funds can be great solutions for individual investors who can’t hit normal fund minimums. On top of that, it seems like the way they are being set up allows for general solicitation, which is a way more open and transparent process for providing fund returns.”

“Trying to deploy X/time period is really hard. Accelerators do it, and I’ve never understood how. I’ve written about this before, but for me — deals often come in waves. Some quarters we do 3–5, others we do none.”

https://medium.com/@alibhamed/some-thoughts-on-rolling-funds-c56513c4ec84

12.”The Lebanese are too fixated on corruption. It is bad, it causes a loss of social trust, it brings unfairness. But corruption does not necessarily slow down economic activity — red tape and patronage do. Just consider how many places thrived (Rome, Renaissance Italy, the Industrial Revolution, etc.) in the presence of a high level of corruption. Furthermore, localism tends to reduce corruption.”

“So the worst thing you can do to a country is give it oil or some valuable resource, and not just because of the so-called Dutch disease (resources wreck the rest of the economy)…Similarly, today, Singapore and Hong Kong are the most successful economies, while devoid of resources — Singapore needs to import water. The same applies to similar historical successes: the Dutch Republic, Venice, Genoa, Carthage. Consider the postwar bounces by Germany, Japan, Soviet Russia, etc.”

Lebanon: from Ponzi to Antifragility | by Nassim Nicholas Taleb | Jul, 2020

13. “As far as I can see, cancel culture is mercy’s antithesis. Political correctness has grown to become the unhappiest religion in the world. Its once honourable attempt to reimagine our society in a more equitable way now embodies all the worst aspects that religion has to offer (and none of the beauty) — moral certainty and self-righteousness shorn even of the capacity for redemption. It has become quite literally, bad religion run amuck.

Cancel culture’s refusal to engage with uncomfortable ideas has an asphyxiating effect on the creative soul of a society. Compassion is the primary experience — the heart event — out of which emerges the genius and generosity of the imagination. Creativity is an act of love that can knock up against our most foundational beliefs, and in doing so brings forth fresh ways of seeing the world. This is both the function and glory of art and ideas. A force that finds its meaning in the cancellation of these difficult ideas hampers the creative spirit of a society and strikes at the complex and diverse nature of its culture.”

Nick Cave — The Red Hand Files — Issue #109 — What is mercy for you?

14. “Apps and themes are Shopify’s fastest growing revenue segment today, contributing 14% of Shopify’s total revenue, and many of these apps are growing faster than the Shopify platform itself. This segment works similar to Apple’s App Store or Salesforce’s AppExchange, where the platform (Shopify) has a 20% take rate on all software through the app store and the developer gets 80%. Today, Shopify has over 4,600 apps and 30K+ agencies and web designers serving merchants in its ecosystem.

Certain standout products like Attentive and Klaviyo were among the earliest and fastest moving third party apps. Both companies leveraged the Shopify ecosystem as a unique distribution channel to help grow their businesses quickly beyond the $100M revenue threshold. Today, there are many more fast-growing apps following this trajectory. For all its success as an open ecosystem, it seems these businesses that comprise the Shopify ecosystem are rarely discussed in the venture world — so let’s dig into why this is the case and why more VCs should be spending time looking at companies growing on Shopify. “

https://base10.substack.com/p/faster-than-fast-smb-retailers-move

15. Good advice. It’s gonna get ugly.

“So what can you do moving forward?

First, this has been an incredible learning opportunity for many people. You must do the hard, disciplined things during the good times, so that you can drastically reduce the likelihood of economic ruin in bad times. Spend less than you make. Invest your capital intelligently. Let compound interest work for you. Hold assets that protect you against inflation. These timeless personal finance rules are as true today as they have ever been.

Second, you can prepare yourself for what is likely to transpire over the coming months and years. There have been trillions of dollars printed, with more probably on the way, so it is a common belief that inflation will naturally rise. As this happens, those caught holding cash will get their purchasing power destroyed, while those holding real assets will see their wealth artificially inflated. Building wealth is a game and that game has rules. You have to understand these rules in order to successfully play the game.”

https://pomp.substack.com/p/a-recap-of-the-pandemic-related-economic

16. “What happens when 6 months of effort meets 6 months of laziness? A wide separation in skills.The picture is not pretty for people who sat on their hands.

While average people focus on the inability to go out and “rage with their friends”… You can’t really change the laws. So instead of complaining about the laws it’s time to take action and focus on the positives. You now have time to read, write, work on a project you’ve been neglecting, eat healthier, kick out bad habits and improve all intangible skills that were unimportant pre-pandemic. If none of these items apply to someone, what they are really saying is they don’t want to improve their lives.

So think about it simplistically, if you try to look at the positive of any situation, you will naturally move in the correct direction. If we remain locked down, you can focus on reading, fitness, copywriting and other indoor activities that are productive. If the world partially opens up a little and say restaurants are “good to go” then you can say “great, i can now skip out on cooking X days out of the week and free up time for project Y”. The key is to look at the positive productive angle based on the environment. Productivity will drive your long-term individual value to society.”

https://wallstreetplayboys.com/people-suffer-from-a-lack-of-prioritization/

17. “Modern semiconductor manufacturing is at least as important to the economy as oil was in the 1970s — at least in the case of oil, it was available all over the world albeit at higher prices than in the Middle East. If the overwhelming majority of leading edge semiconductor manufacturing is concentrated in Taiwan with the rest in South Korea, then the geopolitical implications are significant as there is no cost curve with leading edge semiconductor manufacturing — either you can do it or you cannot.

It would be as if the Middle East was the only place in the world with oil rather than simply the region with the lowest costs. And it is strange that that the Chairman, CEO and CFO of Intel have zero technical expertise in semiconductor design or manufacturing at arguably the most critical time in the history of Intel.”

Investing Mistakes, Chapter 1001. Investing is a difficult, humbling… | by Gavin Baker | Aug, 2020

18. The always perceptive Mr. Danco. I love his keen observations.

“In that sense, and here’s the twist conclusion — these rolling funds reinforce the social contract, if anything. They’re a way to successfully extend the social subsidy of angel investing into individual trendy managers, increasing the total number of brand-name startups that any individual can get social exposure to, without costing anything along the way except for carry.

Remember, the social returns to angel investing (and now, rolling fund investing) don’t respond to dilution the same way that financial returns do: follow-on investments don’t dilute your stake, they augment your cred. So unlike with “real” venture capital, where it’s not about your number or % of winners (it’s all about your percentage of dollars in the winners), here it just strictly becomes “how do I get into a many companies as possible, even if it’s a tiny amount that’ll get diluted into insignificance?”

Rolling funds: maybe not so aligned with actual return on investment, but totally aligned on what really counts — empowering the maximum number of people to get to say they’re an investor in whoever next year’s version of Roam is. Or better yet, getting to say something like “Oh, I’m in Roam, I got in as an LP” or something eye-rolling like that. Just wait, people will start saying this.”

Rollin’ (ARR-paid vehicle) — alexdanco.com

19. This is a very good idea. Hallway Values test. Most companies would fail this.

https://davidcummings.org/2020/08/15/the-hallway-zoombomb-values-test/

20. This is really useful.

“In order to better understand how a business is running (i.e. diagnostic metrics) and then help it improve (i.e. operating metrics), you need to thin slice the ARR into its fundamental components. Those fundamental components are:

New ARR: additional ARR from newly signed customers

Churned ARR: lost ARR from customers who have churned

Upsell/Expansion ARR: additional ARR from customers who are paying more than they did before

Downsell/Contraction: lost ARR from customers who are paying less than they did before”

https://alexoppenheimer.substack.com/p/thin-slicing-arr

21. This makes me sad. I love New York City. I hope he is wrong but this is a very strong bear case against recovery.

NYC Is Dead Forever… Here’s Why

Written by

Ever curious: Tsundoku, Reader, Aspiring Shokunin, World traveller, Investor & Tech/Media exec interested in almost everything! www.marvinliao.com

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