Marvin’s Best Weekly Reads June 9th, 2024

Marvin Liao
13 min readJun 9, 2024

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“Count your age by friends, not years. Count your life by smiles, not tears.” ― John Lennon

  1. “Putting it more simply, it may be that all the data starts to fall into patterns, perhaps fractal-like repeating patterns. Our job won’t be to guess the price of the S&P or the Yen anymore but to rely on AI and supercomputing to tell us how all financial instruments are moving in repeated patterns over the course of time. We’ll stop focusing on prices and start focusing on the movement of prices. Instead, of looking at price moves, we’ll start focusing on the movement of the financial system as a whole.

Dredge says, “This brings us full circle and ties perfectly back into the teachings of Taleb and Mandelbrot, the power law distribution of things, and the non-smooth fractal nature of the real world. Likewise, the work from Per Bak on Self-Organized Criticality and the fact that relevant change in systems comes through significant phase transitions, that evolution jumps along the paths of Punctuated Equilibriums. It is the divergence that matters and ever more so the greater the scale of the variation.” In other words, volatility at the global financial systems level is very different from volatility at the level of the US bond market.

This means maybe we won’t have specialists in US Government bonds or Japanese government bonds. Maybe we won’t even have bond specialists. We’ll have people who are reading the patterns of all financial instruments in all markets all at once. This brings a whole new meaning to what we call global macro.”

2. This is an important story. Ignore the clickbait title. Anduril is one of the most important companies in the West now.

3. Insightful take on West Africa. Geopolitical earthquake coming here if Nigeria wakes up.

4. “This point of view, manifest in a model funded by some of Silicon Valley’s wealthiest investors, fits what I’ve observed in my own coaching practice: Many founders have a needlessly fraught relationship with wealth. As a result, they either downplay their financial ambition and lower the bar on the value they create, or lean into unscrupulous, short-sighted practices that they believe are inherent to making money.

We need to rework this perspective. One can do many amazing things with money — especially if one is creative and high agency.

Consider your tradeoffs, prioritize, and revisit your choices regularly and actively to ensure your life-building project is moving in the direction you want. Only you can know whether the tradeoffs are ultimately worth it — this is your life to build.”

5. I always have to rethink my assumptions and views geopolitically after listening to Andrew Bustamante.

6. Pieter Levels has been an inspiration for many people.

7. This is a deeply insightful conversation on the art of VC from one of the best in the biz.

8. The best convo on Silicon Valley businesses these days.

9. “If you get a paycheck, whether it’s salary or freelance, and that’s how you pay your bills, you’re an Earner. Owners, on the other hand, might collect wage income, but their real money comes through profits from investments: stock sales and dividends, rent from property, and other income streams derived from the ownership of assets.

To be an Earner is noble; you work for a living, and labor is a sacred thing. Labor is the source of food, shelter, entertainment, and every material pleasure of society. We even celebrate it with a holiday, the first Monday in September. Pro tip: If you want to celebrate Labor Day somewhere awesome, try as hard as you can to become an Owner.

Think of building wealth as launching a rocket ship into orbit. Rockets burn 95% of their fuel to escape Earth’s soupy atmosphere and incessant gravity. Once you get to orbit, you’re a master of the universe — covering thousands of miles with just a touch of propulsion. Wealth is similar. The atmosphere is your expenses; the distance traveled, your income.

Most of us never generate enough current income to make the jump to space and become an Owner — save enough to invest so our primary source(s) of income are passive. Investing is difficult, if not impossible at low income levels. Saving your first $100,000 is incredibly hard. The next $100,000 is tough, but you now have momentum and start to see the curvature of the Earth. Once your current income is substantially greater than your expenses, and you’ve deployed an army of capital that fights for you and your family in your sleep, you’ve made the jump.

What we’ve done with the tax code has rendered the atmosphere thicker and gravity stronger. Go to law or medical school, or live at the office, and you’ll see your (current) income increase, but you’ll also lose a bigger share to taxes, and the harder it gets to save and escape the gravity of being an Earner.”

10. “The key thing to understand about this decoupling, I think, and the reason it’s for real, is that this is something the leaders of both the U.S. and China want. No matter what you heard in 2018, this is not a case of a protectionist U.S. trying to defend its manufacturing industries while China becomes the champion of globalism. The U.S. is acting not out of concern for its industries — indeed, its chip industry will take a huge hit from export controls — but because of how it perceives its own national security. And China’s leaders want to shift to indigenous industry, regulated industry, and even nationalized industry, even if that shift makes China grow more slowly.

The decoupling between China and the developed democracies, so long a topic of conversation and speculation, now appears to be a reality. A critical point has been reached. The old world-economic system of Chimerica is being swept away, and something new will take its place.

One reasonable prediction is that the era of global value chains will not come to an end. Offshoring and supply chaining are just how companies know how to produce stuff now, meaning that — barring a very catastrophic war — we will not go back to an era of largely self-contained national manufacturing economies. Instead, supply chains will shift into blocs.

China is obviously one bloc; Xi and his followers want China to make and own everything valuable in-house and rely on other countries only for raw materials and other low-value goods.

In the absence of the U.S.-led liberal world order to enforce free trade, securing those resources will require geopolitical and even military action — a return, in some form or another, to the pre-WW2 era that will doubtless draw at least scattered protests of neo-imperialism. There will be struggles over the resources of some neutral countries, including poor countries, and this could turn into some ugly Cold-War style proxy struggles.

The second bloc is less certain. I expect the Biden administration and/or its successor to get tripped up for a while by the mirage of a self-sufficient U.S., and to implement “Buy American” policies that hurt our allies and trading partners and slow the formation of a bloc that can match China.

But if Americans can finally pull their heads out of their rear ends and recognize that their country doesn’t dominate the world the way it used to, there’s a chance to create a non-China economic bloc that preserves lots of the efficiencies of the old Chimerica system while also serving U.S. national security needs.

That bloc would not only include America’s formal allies or the developed democracies; instead it would include lots of developing countries that would like to hedge against Chinese power and secure access to rich-world markets.”

11. “As diverse as these innovations are, there is one thing these innovations in autonomous weapons have in common: they point to a world where trade, travel, and connectivity can be actively contested. A contested world where small states and even smaller insurgent and criminal groups can use autonomous weapons to;

— reliably, inexpensively, and selectively

— disrupt, blockade, or redirect trade, travel, and connectivity

— on land, air, and sea over vast distances or focused within urban environments.”

12. “It’s important to reiterate that none of these theories are mutually exclusive. It’s possible that the objectives of war production, industrial policy, forced deindustrialization of rivals, and recession-fighting simply align in the minds of China’s leaders. And it’s possible that natural forces like China’s recession and a long-term shift of manufacturing to China are lending a helping hand to the government’s effort. All of these theories could be true at once. Or perhaps only some subset of them.

But I think breaking the possibilities down in this way is a helpful prelude to thinking carefully about what tariffs and other protectionist measures might realistically hope to accomplish.”

13. Excellent conversation this week. Silicon Valley is popping.

14. “In the US we’re used to discounting career claims. We drill down. We ask, “what precise role did you play?” We use behavioral questions. We check references, both those provided and backdoor. It’s all a normal part of the process. We do it without thinking.

But European founders are not used to all this. They come from an understated culture where people tend to discount their accomplishments. To understand a European resume, an American might need to amplify it. Think: “yes, we grew the company from $20M to $200M but I was only part of the team that did that,” when they were actually its leader who built it from nothing.

What happens when a culture of understated accomplishment meets a culture of overstated achievement?

“These people are gods.” That’s what happens.”

15. “The convergence of FinTech and SilverTech presents promising opportunities to address the financial needs of an aging population and facilitate the transfer of wealth between generations. By leveraging innovation and a commitment to inclusivity, fintechs are reshaping the future of wealth management and empowering seniors and their families to build towards a brighter financial future.”

16. Important discussion on geopolitics and war in the world.

17. “Classic tacos include al pastor, carnitas, barbacoa, guisados and tacos de canasta — and the search for the best of each has been the subject of countless books and TV shows.

Of the 18 Mexican restaurants given one or two Michelin stars this week, El Califa de León stands out for its earthiness. Arturo Rivera Martínez, one its chefs, has been serving customers for more than 20 years. “The secret is the simplicity of our taco,” Rivera Martínez told the Associated Press on Wednesday. “It has only a tortilla, red or green sauce, and that’s it. That, and the quality of the meat.”

18. Great discussion today on how to build a great venture fund. Brand new vc fund Saga & what they have learned from the top veteran VCs & operators.

19. Bullish on gold and commodities.

20. We absolutely need to bring manufacturing back to America.

21. Important discussion for defense-tech founders and where we sit in the world geopolitically. The world has changed.

22. For fellow Dune fans, this is coming out soon on HBO. Dune Prophecy: a Prequel

23. Good convo on VC and tech with an east coast view.

24. “The list goes on. Gold is breaking out to all-time highs in every currency as it appears to be reintroduced back into the global monetary order as a neutral reserve asset.

I continue to pick up breadcrumbs and I am watching the signposts. I think the next few weeks could be extremely interestingly and I intend to be all over it.

I love the Lenin quote. I’ll use it again here: “There are decades where nothing happens; and there are weeks where decades happen.”

25. Good discussion here as always on timely topics in VC and Silicon Valley.

26. Important global macro discussion from one of the best observers around.

27. “But they were ultimately a bunch of cowards who weren’t even willing to get a bloody nose for their so-called beliefs. And France’s ‘civil war’ was over in no time.

This is one of the great lessons from history: it’s easy to pretend that you stand for something when the cost for doing so is absolutely nothing. You only find out what people truly believe when their own blood and livelihood is on the line.

In our modern era, we have equally incompetent, idiotic, wimpy politicians who are devoid of backbone. They have no clue how the real world works, and they live a life of lavish status courtesy of the taxpayer.

Let’s be honest: an actual “war”, i.e. shooting, violence against violence, etc. isn’t going to happen.

Just like the French civil war in the mid-1600s, the majority of the hyper-angry progressive rebels in America today are elitist cowards. One need only take a look at the people who have taken over the universities: they’re idiot kids, not terrifying holy warriors.”

28. “Soft skills like communication actually materially impact the terms of trade between individuals, reducing friction, coordination costs, and thus enabling greater frequency of task trading to solve increasingly complex human capital challenges.

So in a world where more rote and routine tasks are going to AI, and where complex tasks remain the bread and butter of what human workers do, it makes sense therefore that there are a premium for these soft skills that enable greater task trading, and reduce coordination costs. This was the thesis of my book, and why “the Liberal Arts will rule the digital world.”

Thin startups of tomorrow will ruthlessly prioritize accuracy, precision, and economy, meaning they will prioritize listening and humility to find product market fit, internal culture to continually refine precision and execution, and leverage new tools such as AI to trim and refine the inputs necessary to achieve more company on less.”

29. “The global elites have various policy tools to prop up the status quo, which inflict pain now or later. I take the cynical view that the only goal of elected and unelected bureaucrats is to remain in power. Therefore, the easy button is constantly pressed first. Hard choices and strong medicine are best left for the next administration.

A series of extremely long essays will be needed to fully explain why the dollar-yen exchange rate is the most important global economic variable. This is my third attempt at describing the chain of events that led us to crypto Valhalla.”

30. Good conversation on the growing Defense-tech sector and investing/selling in it.

31. “Peter W. Singer, a defense analyst and author of 2009 best-seller “Wired for War”, sees the war in Ukraine as playing a similar role to the Spanish Civil War, which served as a dress rehearsal for new techniques and technologies ahead of World War II. Modern tank warfare and aerial bombing — as captured in Pablo Picasso’s dramatic oeuvre Guernica — were arguably forged in the Spanish crucible.”

32. Valid discussion on how critical timing and execution is in Silicon Valley for big technology waves.

33. “China hasn’t yet proven the superiority of its system, but its successes raise the uncomfortable question: Can this be what wins? Can universal surveillance, speech control, suppression of religion and minorities, and economic command and control really be the keys to national power and stability in the 21st century? How could that be true, when those same things failed so comprehensively in the 20th?

I don’t know. But it’s useful and to think about how and why totalitarianism might be well-adapted to the world of the 21st century. In fact, I have a theory of how this might be true. This theory is only a conjecture — it’s something I don’t believe in, but also something I can’t yet convince myself is wrong. It’s a refinement and extension of some of the things I’ve written about before, but over time I’ve begun to bring these ideas together in a more coherent form.

So here you go: a theory of how totalitarianism might naturally triumph. The basic idea is that when information is costly, liberal democracy wins because it gathers more and better information than closed societies, but when information is cheap, negative-sum information tournaments sap an increasingly large portion of a liberal society’s resources.

But we shouldn’t accept this theory as true just because I managed to write a halfway-coherent blog post about it. We should continue fighting for liberal democracy, and hope that technology and human nature allow for its continued victory. We should try to tweak our institutions to prevent our time from being cannibalized by information tournaments — restraining the excesses of high finance, limiting campaign spending in order to give legislators more time to govern, directing more capital to long-term risky high-tech projects, and so on. Liberalism may or may not still have the advantages it had in the 20th century, but whether or not it does, we shouldn’t give it up without a fight.”

34. “There are two workloads in AI : training the models & running queries against them (inference). Today training is 60% and inference is 40%. One intuition is that inference should become the vast majority of the market over time as model performance asymptotes.

However it’s unclear if that will happen primarily because of the massive increase of training costs. Anthropic has said models could cost $100b to train in 2 years.

“In our trailing 4 quarters, we estimate that inference drove about 40% of our Data Center revenue.”

The trend shows no sign of abating. Neither do the profits!”

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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