Marvin’s Best Weekly Reads February 11th, 2024
“Vulnerability sounds like truth and feels like courage. Truth and courage aren’t always comfortable, but they’re never weakness.” ― Brené Brown
- “The reason things have gone so badly for Israel is that this war was a trap. A trap laid in a last-ditch move (just before the normalization of relations between Israel and much of the Arab world) by a weak adversary with few other options. A perfect trap that Israel was compelled to walk into.
The only thing that Israel can do now is reorient itself and take action accordingly. Will it? Probably not, even though even slight changes in orientation could significantly mitigate the damage it is experiencing.”
2. Timely conversation for any VC and founder. Worth listening to if you want to understand what’s happening right now in Silicon Valley as we go thru clean up in the startup world.
3. This is one of the best shows to understand what’s happening in popular culture and business.
4. Good discussion on the rise of Singapore and how city-states are well positioned for the future.
5. I love Taiwan. It seems some people are finally waking up to the threat the CCP is to them and the West at large.
6. I’m a fan of these two gentlemen: Chris Williamson & Mike Thurston. We need more influencer types like this unlike the extremists we see these days.
7. The book and trilogy overall was mind blowing. I hope Netflix does not mess this up.
8. This is a valuable discussion on some great startup trends. Worth listening to.
9. Excellent discussion on how to think about sales in growing startups.
10. This was very educational. Describing how the Red Sea crisis is a big deal for global trade.
11. “We should beware. The Houthis have demonstrated significant resilience and military capability until this point. We should not assume they will be a pushover in this new conflict.”
12. Super insightful discussion on history, geopolitics and a very contrarian view of geopolitics.
13. The best conversation on what’s happening in Silicon Valley.
14. Lots of great insights on being a great VC. Rabois is one of the top investors and operators around (not sure he is a nice man but he is a very smart & experienced one).
15. “Fighting piracy to protect international maritime trade is something the U.S. has been doing since its inception. The Marines’ Hymn mentions the “shores of Tripoli”; this is a reference to the First Barbary War, in which the newly formed U.S. dispatched its ships to battle Ottoman-backed North African pirates. So this may seem like business as usual.
But the truth is that the U.S. can’t really afford this conflict. Its naval resources are stretched very thin by global deployment, fiscal austerity, and industrial weakness, at a time when a Chinese naval buildup threatens to outmatch and overwhelm the U.S. in its most crucial theater of operations. The problem is that the entire world has basically gotten used to the U.S. singlehandedly protecting the entire world’s oceans over the last 75 years. So now, instead of stepping up as U.S. capabilities get stretched thin, they’re free-riding and expecting America to do what it always did.
And this is very dangerous, because if U.S. sea power is stretched to the breaking point — or smashed in a war with China — the world will suddenly find itself without a guardian of the seaborne trade that the entire global economy depends upon.
Cheap long-range missile designs and better guidance systems have changed the game in terms of naval technology — they make it easier to deny whole areas of the ocean to ships. The old adage from the age of sailing ships that “a ship’s a fool to fight a fort” might be coming true again — except this time, thanks to long missile ranges and cheap drones, it’s a lot harder for ships to simply sail around forts and avoid them.
In other words, the global economy might be facing a very difficult problem. With the global economy more dependent than ever before on seaborne trade, cheap anti-ship weapons proliferating, and American naval power fading, finding a country — or a coalition of countries — to be the Ocean Police is getting more important just as it also gets more difficult. My worry is that the Houthis are just the first chaos agents to discover how vulnerable global trade really is. I don’t think we can count on them being the last.”
16. “The apparent strength of the Hollywood “studios” masks the international nature of their operations and the decreasing importance of the L.A. basin to moviemaking. Netflix has led the way. The company is based in California’s other industrial crèche, Silicon Valley. But it’s part of the Hollywood ecosystem nonetheless, with a quarter of its employees in L.A. and a flagship office on Sunset Blvd.
It also understands the future is not in California, but everywhere else. The company will spend $2.5 billion on Korean content over the next four years, and it’s increasing investment in Brazil, Spain, Italy, and other countries, while “pulling back” on overall spend. (Translation: It’s reducing budgets for U.S. content.) There are now five Netflix offices in the U.S. and 24 internationally. Of its subscriber base, 69% resides abroad, up from 45% in 2016.
The ecosystem is evolving to accommodate this shift. A third major film studio is opening in New York City this year, Wildflower Studios, but with a twist. The brainchild of Hollywood royalty and NYC native Robert De Niro, Wildflower plans to offer the entire production ecosystem under one roof, a “Hollywood in box” that can be replicated globally. Globalization means fewer jobs in L.A., not just for actors, but also for prop masters, makeup artists, and film editors.
The ROI on entertainment investment is increasingly the inverse of the screen size it’s produced for. Theaters are dying, streaming to televisions is maturing, and user-produced 45-second videos on phones are crowning new royalty. This week’s Golden Globes felt like a retirement dinner for Pan Am pilots in the seventies, basking in their fading relevance.
Bite-size content has inherent advantages: It’s cheap to produce and easy to consume, with platforms such as TikTok offering a frictionless lack of choice. Netflix watchers spend 78 hours per year just deciding what to watch — TikTok lets you spend that time watching. And its staggering signal liquidity makes it better than you are at deciding what you want to watch.”
17. This is really deep inside Silicon Valley and worth it for LP and GPs to understand the VC business.
18. This was a fun interview & discussion.
19. “The human toll of such a war would be staggering. A recent wargame by the Center for Strategic and International Studies found that while a US-led international force, presumably including East Asian allies like Japan, could defeat the Chinese military in a conflict over Taiwan, in just three weeks of fighting, the US could lose half as many troops as in 20 years of fighting in Iraq and Afghanistan. In the CSIS scenario, the US was projected to lose two aircraft carriers and 10 to 20 large surface ships — the kind of losses not seen since World War II. And this is even without taking into account China’s growing nuclear arsenal.
While the fighting would likely be contained around Taiwan, the economic impact of a war, or even just a full-scale Chinese blockade of the island, would be felt worldwide. Taiwan’s dominant company, TSMC, produces the microchips used in nearly all the world’s smartphones, about a third of its personal computers, and myriad other devices. Should these highly sophisticated factories suffer major damage or be destroyed in the course of an invasion, “we’d face an economic crisis globally akin to the disruptions that we saw during the Great Depression,” as Chris Miller, author of the book Chip War, said on The Ezra Klein Show last year.
The world’s reliance on these chips is so great that it has sometimes been called Taiwan’s “silicon shield.” The idea is that the global economy, very much including China itself, is simply too reliant on Taiwan-made semiconductors to risk any action that might take the supply offline. But as the invasion of Ukraine has shown, countries can be willing to incur severe economic costs to accomplish what they see as major geopolitical goals — and reunification is about as fundamental as it gets for China.”
20. This is really interesting. Direct Primary Care trend in the USA. We all pay way too much for crappy healthcare in the US.
21. “While there’s no surefire strategy, having your software adopted as a standard by a business or strategic partner can create a strong acquisition opportunity.
My advice for entrepreneurs is to look for ways to deeply embed their products or solutions in a manner that’s more than a standard customer/vendor relationship. This not only strengthens your market presence but also opens doors to a potential acquisition in the future.”
22. Good but grim macroeconomic predictions for 2024.
2024 Predictions
This year is going to bring a lot of change. Are we ready?
dollarendgame.substack.com
23. Some solid marketing tips for SaaS startups.
24. “The real political-economic danger of Bitcoin was that it would unleash an ever-expanding wave of chaos agents upon the world, whose ranks and wealth grew and grew as their disruptive efforts succeeded, allowing them to spread even more chaos in a self-reinforcing cycle.
Thanks to the institutionalization of Bitcoin, that danger now looks increasingly remote. If you get the urge to complain about the approval of Bitcoin ETFs or other measures that direct institutional money into Bitcoiners’ wallets, you should stop to consider the political-economic benefits. I suspect that the SEC did consider those benefits when it made its decision.”
25. “It is an “opt-in” game rather than an “opt-out” game. Meaning that the default answer is going to be “out,” and investors need to actively make a decision to opt-in to any given investment. Not hating something is not a reason to opt-in. Not loving something is a reason to remain “out.”
26. “Remember that when you’re investing in startups, you have to spread your money around. My hit rate is only 20%, but the average return is quite a bit higher than 5x on the ones that work out.
It all makes sense if you’re able to make more than 10 investments total, and if you can stomach the length of time it takes to get a return, which can be more than 10 years. Overall it’s a great way to invest.”
27. Mining magnate with a troubling and accurate view of the global macro environment.
USD hegemony is in trouble and gold is well positioned. Many Central banks are buying more gold.
28. “When Russia invaded Ukraine, everything changed. The U.S. and NATO countries (the West) not only imposed sanctions on Russia, but they also froze its U.S. dollar reserves and blocked it from the SWIFT dollar transfer system.
Seeing an opportunity, China took notice and encouraged much of the world to follow suit. The race began to find alternatives. While the West was right to confront Russia for its unprovoked aggression, they underestimated the global response to these sanctions.
The BRICS countries and much of the global south have been reluctant to sever ties with Russia for a variety of reasons — from needing their oil, food, fertilizer, and military equipment, to taking advantage of the Wagner Group to counter domestic anti-insurgency efforts.
Additionally, many in the global south have harbored long-held resentments towards the West’s rhetorical “rules-based world order,” which they see as hypocritical and self-serving. The freezing of Russia’s dollar reserves and exclusion from the SWIFT system also put countries on notice that they might be next.
Financial systems are built on trust and, if they are weaponized, they lose the trust necessary to retain their dominance.
The critical unanswered question is how the U.S. will respond to moves to de-dollarize. Any sudden decrease in U.S. dollar demand could have disastrous consequences for Americans. It could potentially trigger a U.S. dollar crisis leading to very high inflation, or even hyperinflation, and initiate a debt and money printing cycle that could tear apart the social fabric of society.”
29. Learning from war-gaming scenarios for CCP invasion of Taiwan. God it will be ugly and hope it never happens.
30. The irony is that any VC investing now will be well positioned. 2024 & 2025 will be great vintages.
“The glory days of VC are over, and if history is any guide, the tech bust should last through 2024 and beyond. In other words, the venture capital bust has only just started.”
31. “Since I first started to believe in the Roaring 20s, we’ve gotten at least two huge technological surprises: absolutely stunning progress in generative AI, and the advent of the first really effective anti-obesity drugs in history. Those breakthroughs seemed to come out of left field, kind of like mRNA vaccines did, but this is an illusion; in all three cases, years of hard work and incremental progress suddenly reached a point where the technology was ready for prime-time. Which means that there might be a few more such surprises in store for us in the years to come; the decade has six years to go!
Why are all these breakthroughs coming in the same decade? I think some of it has to do with the productivity slowdown of 2005. When the burst of productivity from computerization and the early internet petered out, some private capital and government grants focused on incremental refinements, but some went in search of long-term breakthroughs that would reignite rapid progress.
Now I suspect many of those efforts are bearing fruit. I think another factor is that the economy has running hot for most of the last decade, which gives companies both the spare cash and the incentive (high labor costs) to spend on innovation.”
32. Predictions on Sub-saharan Africa in the Post American order world.
33. “The outcome of the current struggle between authoritarians and democracies is far from certain. But current trends in civil discourse, political friction and small defence budgets in democracies don’t auger well for a positive 2024.
In a recent article, British strategist James Sherr wrote that “as in the 1930s, feebleness abets cynicism and defeatism …The question today is not whether the West is doing what is required but whether it is capable of doing it”.
34. “Second, even for those industries where you might have a technical person or team on staff — looking at the above list of publicly-traded vertical SaaS businesses, that might include chip manufacturing, banking, higher ed, and energy — the idea that companies within these industries will focus time and human capital on building internal software vs. spending that time/resources on their core competency seems unlikely.
Even if these companies could spend a lot less money on internally-developed software than purchasing third-party software, cost cannot be the only factor in the equation: you must also factor in human psychology. As the old saying goes: “you don’t get fired for hiring IBM or McKinsey.” Well, if you’re a company operating in an industry like construction or life sciences, you also don’t get fired for purchasing Procore or Veeva.
The same gold standard rationale applies within specific industries, and for an executive to make a decision to build software internally (and continually upkeep that software, including all the data privacy and other security and regulatory issues that come with maintaining software) vs. purchase software from the industry-standard vertical SaaS provider is a major career risk.”
35. This guy is considered the best executive coach in Silicon Valley these days (outside of the Reboot team that is).
