Marvin’s Best Weekly Reads Dec 4th, 2022

“Rest and be Thankful” — William Wordsworth

This will be a shorter than normal recap this week and possible next week. I’ve been very sick with a bad cold for the last 2 weeks :( This is on top of lots of work travel and crazy business deadlines. Back to regular programming length after December 12th.

  1. This is an extremely cool thing to do. Worth a read.

2. “After deep examination, I’ve concluded that becoming what one is is the proper definition of becoming an adult.

Transforming from an infant to a child is the process of conforming to a set of norms given to you by the adults in the world. It’s the gradual process of becoming less of an individual and more of a part of the crowd. Becoming an adult is a reversal of that. Transforming from a child to an adult is the process of shedding societal expectations that encourage or require conformity. “Growing up” is to become the unique individual you were before the world told you who to be.”

3. “In a sense a16z is following its own recipe for turning startups into large companies — prioritizing growth while hoping to dodge the potentially fatal dangers that come with it. Based on the more than $35 billion the firm has raised in the past seven years, a16z is almost certainly reaping about $500 million a year on management fees alone — a sum that stands to grow even more as the firm sprawls into new markets.

“They are running a lot of experiments,” says a former Andreessen Horowitz investment partner. “It seems to me relatively obvious that some will fail. The flip side is that some of them will work out.”

There are plenty of reasons why venture — and Andreessen Horowitz specifically — might not be able to keep scaling: Larger funds and bigger bets may hinder the outperforming returns that have attracted limited partners; Andreessen Horowitz may find it’s not as well suited for the public markets as it has been for the private ones; and star partners may leave in favor of building their own brand rather than being another cog in the wheel.”

4. “So while China’s pivot is the smart thing to do, I don’t expect it to immediately restore the equilibrium that prevailed before the country started making big policy mistakes a year and a half ago. Xi’s attachment to particular public-facing narratives, as well as his disdain for economic sectors he doesn’t consider crucial, seem likely to outweigh the effects of the short-term, halting policy reversals.

Now of course, none of this means that “China is done”, or that the country’s manufacturing prowess will evaporate, or that it will become a weak actor on the international stage, or any of the other melodramatic things that people say on social media when they see news like this.

These problems are stumbling blocks, and China will almost certainly recover after a while. But they illustrate the downsides of dictatorial decision-making in a way that should prompt observers to recalibrate their own narratives about the ascendance of autocratic systems.”

5. “Putin’s army are unable to solve his Ukraine problem, and their efforts to do so have only made the situation worse. Nothing can now be done to reset Russo-Ukrainian relations for the long-term in a way that would serve his interests and be at all stable.

The gap between his desired ends and available means has grown ever wider over the past nine months. The war was lost long ago. The challenge remains one of getting Putin and his circle to accept this view. If this is to happen there is no alternative to keeping up the military pressure.”

6. “One reason the shut off of access to cash causes this atrophy in a crowded space is because most of them, built to chase growth, structured their strategy around unsustainable customer acquisition costs. Couple of examples? Uber vs. Lyft. Bird vs. Lime. Casper vs. Purple. Most of these companies saw drops in valuation from billions to millions. Many of them are built on an unhealthy reliance on paid marketing.

The same is true in the B2B world. When you have tons of companies getting funded that are offering similar nominal product improvements, and then pouring fuel onto a GTM fire, you’re going to have a lot of outbound sales that go unanswered. So you’re spending more to acquire those same customers, since all your competitors are out there with very similar messaging.

When capital is plentiful? They’re all competing for the same subset of customers, driving prices down and acquisition costs up. When the cash spigot gets shut off? It exposes a multitude of sins, and they have to start to think about how else to own a category, other than just spending like a drunken sailor.

One path forward? Consolidation.”

7. This is a good sum up of why 2023 will be tough. Worth a read.

8. This is a very good thing.

“Venture capitalists in Silicon Valley and other tech hubs are investing money in nuclear energy for the first time in history. That’s changing its trajectory and pace of innovation.

“There’s not been a resurgence of nuclear power, ever, since its heyday in the late 1970s,” Ray Rothrock, a longtime venture capitalist who has personal investments in 10 nuclear startups, told CNBC.

Now, that’s changing. “I have never seen this kind of investment before. Ever.”

https://www.cnbc.com/2022/12/02/why-silicon-valley-is-so-hot-on-nuclear-energy.html

9. “A less obvious point — but a very important one — is to remember that this period is extremely challenging for everyone no matter how outwardly successful, confident, and happy they appear. Every company I know — and probably every company on the planet — is making tough decisions right now that affect the lives of employees.

Every CEO and every manager has probably just been through a round of layoffs and is staring down the barrel of more. Every sales pipeline is getting re-evaluated, and every sales target is looking a bit too optimistic right now. No one is having any fun. No one is “killing it.”

What this means is that your situation is probably better than you think it is — on a relative basis. You have your problems and your competitors have theirs. Maybe you wish you had more cash in the bank and are considering laying off 25% of your 20-person team to extend runway. Your scary competitor with $50M in the bank might be burning $3M a month and is trying desperately to figure out how to lay off 30% of their 100-person team. He might also be dealing with pretty challenging board dynamics, or other issues you might not be aware of.

Just as the rising tide lifted all boats previously, the storm we are weathering right now is battering everyone. The frustration and exhaustion you are feeling right now are common to everyone — and it is not necessarily a sign of something specific to you and your business.”

10. I love a good pirate story. Especially if it’s obscure.

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Marvin Liao

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