Marvin’s Best Weekly Reads Mar 20th, 2022
“Life Shrinks or Expands in Proportion to One’s Courage” — Anais Nin
- “The coming years of Putin’s rule will thus look very much like the worst years of Yeltsin’s rule. Putin was brought out of the deep shadows with the idea that he would protect the gains of Yeltsin’s family and the oligarchs while reimposing some degree of internal stability. In his first two terms, he was successful in doing that.
But at the end (or whatever the current point it is) of has reign, he brought all the original diseases back and made them in some sense worse because his policies stuck the country in an impasse and simultaneously closed off all the venues of change.”
2. Net net the Russian economy long term is in deep doo doo.
“Both policies, namely import substitution and shift towards the East, will therefore meet with almost insuperable obstacles. It does not mean that they cannot be undertaken; some of them will by done, by necessity: Russian softwares will have to be produced to replace the 95% of western-origin software that is currently used in automatized Russian companies (Russian newspaper sources).
Closer economic ties with China would also imply some movement of companies and people East. A Siberian or a Pacific city can become the second capital (as Ankara did in Turkey). But a significant success in either of these two domains seems — the best that can be seen from today’s perspective — simply unreachable.”
3. Jim Rogers is the man. Commodities are the place to be. Also Invest in places that are hated (most of the time).
4. “There is now more downside risk than upside risk as I currently weigh the optimistic case at 33% (and declining). When it comes to your fear versus greed toggle, it is time to be more fearful. However, fortunes are made in bear markets. As Buffett has said, we should be fearful when others are greedy, and greedy when others are fearful.
To position ourselves to play offense in a bear market (either as investors or as founders), we must be proactive before the bear market materializes. For both investors and founders, the takeaway is simple: raise a war chest now. For founders, this means raising enough cash to survive and indeed to press competitors during tough times. For investors, this means raising liquidity in anticipation of chances to buy attractive assets at dimes or pennies on the dollar.
Individuals should try to lock in long term fixed mortgages at today’s low rates while they still can. I would also recommend maxing out the amount of non-recourse loans you can borrow against your home at a low 30-year fixed rate. Inflation will ebb away at your debt load. I recently renegotiated my mortgage on my New York apartment for instance.
Despite high inflation, I would keep a fair amount of cash on hand. While its value is being deflated it gives you optionality to buy assets cheaply should there be a large correction. It’s the reason we pursued an aggressive secondary strategy over the last 12 months.
Founders should raise now while keeping an eye on their unit economics and burn. Private market multiples have not yet compressed to the level of public markets. Given a potential multiples compression, you might get the same valuation today as you will in 1 year despite having 1 year of growth.”
5. “As the initial Bretton Woods era (1944–1971) was backed by gold, and Bretton Woods II (1971-present) backed by “inside money” (essentially U.S. government paper), said Pozsar, Bretton Woods III will be backed by “outside money” (gold and other commodities).
Pozsar marks the end of the current monetary regime as the day the G7 nations seized Russia’s foreign exchange reserves following the latter’s invasion of Ukraine. What had previously been thought of as risk-free became risk-free no more as non-existent credit risk was instantly substituted for very real confiscation risk.”
6. A cogent and hopeful view of the Russian invasion of Ukraine. Net net: Russia cannot win in the long run.
7. “To meet the new authoritarian challenge, the U.S. and its existing allies will have to bring more partners into the fold. A 21st century diplomatic revolution is necessary in order to create a coalition that has the power both to stabilize international relations and safeguard the human rights that have gradually but steadily made the world a better place to live.
It starts with India.
It’s time to recognize that the unipolar hegemony the U.S. and our close allies enjoyed in the 1990s is gone, and will not return for a very long time if ever. We simply do not have the luxury to get on our high horse and try to ostracize everyone who doesn’t live up to our declared standards — never mind the fact that with the Iraq War and the Trump presidency, we proved that we ourselves don’t always live up to those standards. If we try to make every country without a perfect Freedom House score into a pariah, it is we who will become the pariah — and the world will be ruled from Beijing and Moscow.”
8. “Many years ago, I was on the other side of the table after we sold Pardot. I was talking to a successful entrepreneur, seeking advice as to what to think about now that it was time for the next chapter in life. He said something that has always stuck with me, “Your skills will immediately start atrophying if you don’t stay in the game.”
Figure out what game you want to play next.”
9. This is absolutely right on for many of us. We should be grateful for our peacetime problems.
10. Some good stories behind the “Great resignation” in the USA.
11. “But people like Mearsheimer just play to the Kremlin’s narrative — it was all the West’s fault. So how about the tens, if not hundreds of billions of dollars in development aid which went into Russia after 1991? Billions of dollars in the EU TACIS programme. We opened up our markets — allowed Russia to raise more than $2 trillion via our capital markets to let them modernise their industry. We allowed our managers, accountancy first, banks, law firms to bring Russia inc up to modern standards. We gave Russia a window and market to the world via WTO membership. We allowed it’s elites to enrich themselves and fill state coffers. We actually funded Putin’s rebuild of the Russian military.
And what did we get from all this? Animosity, jealousy, and now war. We gave Russia an open hand and got slapped in the face. Worse for Ukrainians now who are being murdered because they aspire to live by our values and not Putin’s.
Let’s not try and find scapegoats at home but realise that all this is because of one plain evil man — Putin — which we have enabled for too long and failed to realise the true nature of the threat.”
12. “So there are risks to these sanctions, I think. But de-dollarization is not one of them — at least, not in the current conflict. The first reason this is true is that the kind of financial shift people are worrying about would have to mean not just abandonment of the dollar, but also abandonment of the second most important international currency — the euro — at the same time.”
13. This is a really great initiative to support the innocent Ukrainian refugees fleeing Putin’s awful invasion.
14. Brave men I really admire.
“Collectively, these recruits amount to the most significant international brigade since the Spanish civil war, when volunteers including leftwing intellectuals fought in communist-organised military units between 1936 and 1938 in support of Spain’s popular front government. Gavrylko said he was aware of these historical echoes. Ukraine, in his view, was now fighting Vladimir Putin and a 21st-century version of fascism.”
15. I would NOT want to be on the wrong side of Anonymous.
16. This is a damn shame. We need to be alot more thoughtful here.
Not all Russians support the war & at minimum let’s not alienate the ones who have spoken out. (in fact most of young Russians and Russians in general outside of RU do not support the war or Putin).
Collective punishment is dumb. Its like what happened to Japanese Americans in WW2, or Arabic (or even Arabic looking) people after 9/11 or any Asians during Covid.
17. Good overview of the sanctions being used on Russia. Very helpful to understand.
18. This whole thing is a complete tragedy inflicted on these wonderful people by the deluded sociopath Putin.
This is why we in the West must support Ukraine anyway we can.
19. “In the past 15 years, Russians have become used to living a reasonably comfortable life. It’s a nearly-developed consumer society that has become accustomed to deep economic integration with Europe. Now suddenly that is all being yanked away — Russians are being asked to go back to the economic isolation, shortages, and hardship of the 90s, or even of the USSR, almost overnight.
I can’t say I know what political effect that will have. Will Russians rally around the flag and see this as an attack from the West that they need to resist? Or will discontent over Putin’s pointless war of choice rise and rise? Only time will tell.”
“Protocol did a report on Russian dependence on foreign chips last year, and found that European and U.S. companies sell them a lot of microprocessors, while their memory chip imports come mostly from South Korea and the U.S. That’s all done now.
This will hit Russian defense manufacturing immediately. Over the longer term, there will also be the problem that the machines Russians use to make their tanks and planes and rocket launchers and transport trucks will need spare parts as they wear out, and these will be in short supply.
And on top of all that, financial sanctions make it difficult for both the state and defense companies to actually pay their employees! Companies — including state-run ones — generally rely on a lot of overnight loans to make payroll and other payments.”
20. “Image rights encompass everything to do with a person’s likeness, such as their name, signature, voice, image, and any other characteristic which is unique to them. By selling these rights, both MINT Media and Peter Lim control all decision-making power over the use of Cristiano Ronaldo’s image.
Essentially, this means any brand that wishes to associate itself with Cristiano Ronaldo needs to first seek permission from MINT Media. The team then assesses whether the arrangement will be beneficial to the CR7 brand portfolio and if approved, will grant permission in exchange for a very hefty fee.
The decision to sell his rights came after winning his third Ballon D’or award and at a time when European football was becoming increasingly popular in Asia. Being one of the most prominent businessmen in the region, Peter Lim seemed like the perfect fit to provide both the network for Ronaldo to diversify his audience and expand his popularity by entering the Asian market. And it paid off big time.”
21. “Putin built his legitimacy around the idea of restoring Russia’s stability, prosperity, and global standing. By threatening all three, the war in Ukraine is shaping up to be the greatest test of his regime to date.”
22. Humility is an investor’s best friend.
“I have had a spectacular two-year run with hardly any large mistakes. Yet, I know that mistakes are part of this game. We all get over-confident and get them wrong.
I don’t think I have ever seen a diversified basket of stocks collapse this rapidly. It’s the sort of thing that keeps you humble. It keeps you from ever ramping the leverage too hard. Hopefully, it helps me avoid much larger land-mines, because I expect extreme volatility in the coming weeks. Then again, I guess I was simply over-due to get kicked in the nuts…”
23. “Self-Service motions are fundamental to the success of many modern startups. For founders embracing a Go-To-Market strategy with Self-Service as a core component, there are four key takeaways:
-A product experience that has limited friction for users to experience the “Aha!” moment
-Highly supportive Education and Community programs to assist users on their journeys
-An organization that treats self-service as a first-class initiative
-Dedicated resources and cross-functional execution”
24. “By the way, I often see product teams and engineering falling for the “better products” belief. Probably because they always perceive their own “baby” differently. Mostly more positive than in the reality of those who are supposed to buy it.
Marketing and Sales believe they can do this with a good story but quickly realize they are selling to the wrong customers or Customer Success and Support are bombarded by frustrated customers.
In summary, there are five areas that must be properly defined and, most importantly, must work together. This applies above all to the teams.
-Market segmentation / Ideal Customer Profile
-Product vision and roadmap
-Positioning
-Messaging
-Go-to-market approach”
25. These business models are the toughest to execute in my book.
26. “In just one week, Liscovich, a handful of fellow Ukrainian volunteers, and seven former Uber colleagues in the US have built an operation running trucks of essential supplies like boots, phones, portable chargers, cables, tourniquets, and protective gear to pickup locations for volunteer fighters to collect.
Liscovich turned up at the Zaporizhzhia volunteer enlistment office to fight on March 2, roughly one week into the Russian invasion. But when local leaders learned about his experience in tech and his Harvard degree, they put him to work building a supply chain for the under-equipped local volunteer forces.
“They decided given my background it would not be the best use of my time to give me an AK-47,” Liscovich told Insider on Wednesday morning. “There were a lot of volunteers ready to fight, but not enough supplies.”
27. “The Russian economy has been de-platformed. The Russian Ruble has lost more value than during the Russian Financial Crisis in 1998 and Russia’s credit rating has been slashed to junk and is on a par with Angola and Nicaragua (which observers point out is wildly unfair to Angola and Nicaragua). Central banks are boycotting Russia’s FX reserves. Russian Banks are going bust. The public cannot access cash. Russia is cut off from SWIFT. Western banks, Amex, Visa, Microsoft and pretty much every app no longer works in Russia.
Grindr, however, is still on because it has turned out to be an amazing backchannel, allowing Russian soldiers to communicate battleplans to the West. The Russian public are having to queue for money, food. Almost all commercial airlines are no longer available. Russian ships are banned from ports. Many Western firms have cut Russia off. Star link is allowing regular Russians to connect to the internet against Putin’s vociferous objections.”
28. “Prevent Famine: Every core element of the food supply chain is affected by the war in Ukraine: Putin has dropped a bomb on the European agricultural sector. Russians have suspended fertilizer exports and Belarus declared a Force Majeure and cannot export their potash. Russia won’t allow it to be exported now either. Nor will the world buy anything from them as long as they are Russia’s lackeys. To remove that much fertilizer from the world economy (Belarus provides 40% of the global supply of potash and Russia supplies 66% of ammonium nitrate), is to set the stage for massively reduced yields and possibly famine.
On top of this, we now see the oil price up at $125 and heading a lot higher. This too will remove fertilizer from the reach of the common farmer. In addition, Russia won’t sell their wheat and the world won’t buy it (or anything else due to sanctions). The good news is that alternative suppliers are coming online like, of all places, Michigan and Morroco They need to move much faster though.”
29. I am not so optimistic about any government’s “good intentions” here.
“The world needs to create a digital money system that brings the ease of use and the radical transparency needed to prevent government authorities from doing things in the dark but that also protects the human freedoms of the individual. The good news is that there is still time. The good news is that currency is the one the world will want to use. If the new currency is Bitcoin, with all its anonymity and non-KYC/AML compliance, then a new war has been declared.
The good news is that all this means even the government will want a way to convert their crypto into sovereign money or something they can actually use. A digital sovereign dollar will make that faster and easier and give the world a way to transact even if chaos is breaking loose. That’s why Coinbase started to distinguish between dodgy customers and innocent victims of war. Dirty versus clean. The distinction will only become sharper over time. That means more digital money is on the way. Investors just need to figure out which ones will be the winners here. For those focused on the social contract, we’ll need a Digital Bill of Rights too.”
30. This might look like a hit piece but this dude was always dodgy as F — k…..
“He was bound for San Francisco, completing the first of his many escapes. Sun learned early that in the world of cryptocurrency, heaps of money can be made with ease, so long as you’re ready to exit before it catches up to you.
One of the crypto-finance lawyers I talked to warned, “Business execs should never go lawyer to lawyer until they get a ‘yes.’ You’re not looking for counsel — you’re looking for a yes man.” Sun was often able to find them at his companies, and as his business decisions became more risky, few resisted the way Labhart did. It seemed as though Sun believed that counsel were disposable, like he could afford to leave them behind, tarred by the acts they unwittingly facilitated, while he kept his eye on the pathway out.”
31. These policies are so sensible that even the deluded political officials at the top of the US Gov’t will probably eventually follow them……stress on eventually……only after lots of pain to regular people.
“The US, Canada, and Mexico have enormous proven energy reserves and the technical know-how to become the dominant energy-producing region on the planet. We can do so cleanly, safely, and domestically — reducing the strength of our geopolitical enemies and simultaneously creating high-paying jobs, providing a significant and durable competitive advantage to our manufacturing base, and increasing the standard of living of our population and that of our allies.
Russia’s invasion of Ukraine and the subsequent economic destruction of Europe due to an energy crisis of their own making should serve as a serious wake-up call to North America’s political establishment. Instead of seeking to replace our energy reliance on one dictatorship (Russia) with three others (Venezuela, Saudi Arabia, and Iran), we should be looking inward for the answers to our problems.”
32. I firmly believe this view.
“If you’re dissatisfied with the Achievements and Results you’ve amassed by this time in your life, you need to go out there and DO STUFF. Learning skills are great, but it’s even more important that you USE those skills to make your life better. Skills that don’t actually, you know, do anything might as well not be skills at all.
Because Humans Need Things. And People need to step up and provide Those Things. Being a Producer and not just a Consumer isn’t just good for you in material terms, it makes you a wiser, happier, more moral person. So go out there and PRODUCE.”
33. In case anyone has any illusions of the brutality & evil of Putin and the Russian army’s approach to this awful invasion and war on Ukraine, you should read this.
It is also why Ukrainians are fighting so hard & why the West needs to help them.
34. This story really stuck with me.
“My grandparents had doubted their decision to flee their friends, family, and home until they saw these dignitaries departing. They abandoned their suitcases, stuffed whatever they could fit into knapsacks, and walked across the border with the help of a smuggler and a healthy bribe — my grandfather handed over his precious silver pocket watch to the border guard.
My father describes that his grandfather had the foresight to liquidate much of his net worth into a handful of bars of gold, one kilogram each, which he carried in his knapsack. As I read reports of modern-day Ukrainians carrying their cryptocurrencies across the border and the millions of dollars of donations flowing through the blockchain into the hands of Ukrainian families and relief organizations, I get the chills.”
35. Logistics and supply chain matters. This is why Russia will lose in the end, even IF they have tactical victories (which I don’t see many of either).
36. “So people still don’t think the Fed is ready to drop the hammer on the U.S. economy. But even a mild rise in rates could have some effect — Yellen’s announcement of gentle hikes in late 2015, which ultimately topped out at only 2.4%, still probably triggered the mini-downturn of 2016 (which may have helped Trump win that election). And once the China disruptions are factored in — and especially if the lockdowns get even worse — rates could end up being more than 2% by this time next year.
Will this cause a recession? It’s notoriously hard to predict recessions until they’re right on top of you. Economists have a few tools available to predict financial crises a few years in advance, but this recession, if it comes, will be the Fed-induced variety rather than the 2008 type. “
37. “While in one respect the MOF would like not to be able to pay their foreign creditors as this a) saves now scarce FX reserves; b) hurts investors in adversary nations, and they then hope these will lobby their own governments for sanctions relief, the downside is that non payment and potential default would have serious and long run consequences for Russia.
A default would see Russian ratings cut to default status, and given likely difficulties in ensuring speeding debt restructuring, this status could remain for a very long time. This would keep Russian borrowing costs very high, liming financing options even from so called allies, such as the Chinese. Even should the war end quickly, and peace be resolved, markets and ratings agencies will remember this crisis for some time and ratings will be slow to recover and Russian borrowing costs slow to moderate. This will crimp Russian economic development for years to come.
Through its invasion of Ukraine, Russia has clearly marked it out as an ardent adversary, even enemy, of the West — and its hard to see this changing very quickly. The West will have a strong interest in keeping Russia contained, both militarily and economically. They will have little interest in opening the floodgates again to Western financing of Russia. And as agreement on a debt restructuring is a key initial requirement, I think the West will look to drag its feet. So think here more Venezuela style debt restructuring talks, than a speedy conclusion as per recent Ecuador or even Ukraine 2015.”
38. “So the separation of state and money becomes interesting from the vantage point that a non-state money can not be debased intentionally by any one individual or group. The odds of success are incredibly small, and every prior attempt has failed, but if someone was able to successfully achieve this breakthrough, it would be wildly valuable.
The non-state money idea is a perfect power law investment. In fact, I would argue that it may be the largest addressable market and potentially the biggest financial gain available. Regardless, the asymmetry is hard to fathom when compared to other moon shot ideas.”
39. “For the 99.9% who don’t become the next Elon or join the next SpaceX, we should emphasize collective purpose/meaning bigger than our own happiness: a positive-sum mindset based on expanding the pie. The idea that they are enough and should be proud of what they are, but also aspire for more as a way to continue contributing. The dual advice of “You’re doing OK, and that’s OK, and yet, if you want to contribute more, you can and should also strive to be better and do more”.
Most people need to believe in some deeper purpose behind what they’re doing. We need a more accessible, transcendent narrative for why more people should be ambitious, especially if it comes as any form of sacrifice.”
40. “Nowhere is this decision weightier than in Germany, Europe’s economic great power. Germany is the key to any European boycott because it buys so much Russian energy. By the same token the impact on the German economy of ending energy imports from Russia is likely to be large. Energy has long been part of German statecraft, a way of exercising leverage and shaping its neighborhood. Will Berlin, faced with the current crisis, deploy the full force of the economic weapon?
The basic facts are clear. Oil accounts for 32 percent of German primary energy input and one third of that comes from Russia. Gas accounts for 27 percent of Germany’s primary energy input, of which 55 percent comes from Russia. Of the coal burned in Germany, which accounts for 18 percent of energy input, 26 percent comes from Russia. All told that means that just over 30 percent of Germany’s primary energy input comes from Russia.”
