Marvin’s Best Weekly Reads October 11th, 2020
“Action Expresses Priorities” — Gandhi
“the idea of Google as a company is just a fictional concept. It only exists because multiple people believe in it. The same is true for legal systems, nations, religion or money. Every large human cooperation system is based on a fictional idea that only lives in our collective minds.
If Hollywood created the fantasy worlds that reality is catching up with today, who is creating the fantasy worlds of tomorrow?
Maçães thinks the answer is Silicon Valley, which he describes as “a fantasy land where engineering talent and capital come together to power the serious project of creating new worlds out of nothing”. It’s one of the most idiosyncratic descriptions of how startups work that I have read. VCs are the new Hollywood studios; founders are the directors and actors.
….it’s not the lack of tech talent or venture capital that explains why Europe hasn’t been able to create a tech ecosystem on par with the US. It’s the absence of religiosity that has kept Europe from creating its own Google or Facebook. The US is able to create larger companies because it’s able to believe in larger and more ambitious narratives.”
“Some in the crypto space believe that the slow erosion of the state’s tax powers will eventually determine its final collapse, at least as we know it today.
Others have told me that they expect all nation-states to disappear over the coming decades, with the notable exception of China, which alone, they maintain, has the political & social resources to penetrate or disable fundamental choke points in the crypto system. China is responsible for something between half & two-thirds of global Bitcoin mining, but local authorities have made it clear that they regard the crypto space with enormous suspicion.
The Chinese case does offer a possible template for the ongoing power rivalry between crypto and nation-states. In this scenario, crypto systems would double down on their technological superiority, while states would necessarily appeal to their secret weapon: the monopoly of the legitimate use of physical force. But a second scenario seems much more plausible, at least outside China.
Public authorities and crypto systems could reach a grand bargain or agreement, whereby the state would be able to tax crypto-assets in exchange for security guarantees for crypto.”
This is pretty fascinating and seems like a great side hustle.
“It is estimated that roughly ⅓ of the world’s ~15m vending machines are located in the US.
Of these 5m US-based vending machines, ~2m are currently in operation, collectively bringing in $7.4B in annual revenue for those who own them. This means that the average American adult spends ~$35 per year on vending machine items.
What makes the vending industry truly unique is its stratification: The landscape is composed of thousands of small-time independent operators — and no single entity owns >5% of the market.”
“Curation businesses — universities, bootcamps, accelerators — are incredibly powerful.
At first glance, they wouldn’t seem to be as powerful as tech companies, in the sense that they don’t have data moats or tech leverage. And yet, when you look at how long these institutions can dominate without being disrupted, they start to look that much more impressive. The last time a new university cracked the top 10 was over 100 years ago, whereas most tech businesses get disrupted every few decades or so. Indeed, curation businesses last centuries.
Curation businesses create socially acceptable context to build close relationships.”
This is a cool dude. His secret of longevity: good clean food (he is vegan) and working out a lot.
“Between April and June, shoppers purchased $346 million worth of masks from Etsy stores, more than 5 percent of which would be pocketed by Etsy itself. It was an enormous surge for the site.
Masks accounted for more than one out of every 10 dollars spent on the platform that quarter. For sellers, it was also a huge opportunity: a lucrative new market that existing shops hadn’t cornered. There was money to be made for anyone who wanted it — and for those who already knew the ins and outs of manufacturing, there was a lot of it.”
Well, makes sense these days to have a plan B or C. Canada, Mexico and Georgia are good options for Americans.
It’s getting tense on the internets.
“Maybe it’s just that simple: be better. Expect people to be better. Demand something better, for all of us, and from our friends as well as from our rivals. Because we’re the adults in the room now, and I understand that’s scary. But it’s not nearly as frightening as what will happen if we refuse to grow up, and to get a grip.”
“the SMBTech stack is the new Main St storefront.
Think about it — if you were launching a new restaurant today, would you do so without mobile ordering, pickup and delivery via Slice, Toast, DoorDash or another technology platform? If you were launching a women’s clothing boutique, would you do so without an ecommerce presence on BigCommerce, Shopify, Etsy or Poshmark? Or if you were opening an outdoor gear rental business would you do without a POS system from Square or a web site from Wix? Today in almost every vertical there are SMBTech platforms like Brightwheel and ServiceTitan offering “operating systems” for SMBs.
Every single new company formed in every single industry will start with the question of “What technology do I need to launch and grow my business?” This is a trend that started a decade ago and will accelerate at an unprecedented pace over the next 6–12 months.”
Wow. Go Finbarr Taylor & the Shogun team.
“Shogun, which lets companies build sites that sit on top of e-commerce back-ends like Shopify, Big Commerce or Magento to let them sell goods and services, is today announcing that it has raised $35 million in funding after seeing its business growth 182% over the last year, with 15,000 companies — including Leesa, MVMT, Timbuk2, Chubbies and K Swiss, as well as household Fortune 500 brands that it declines to name — now using Shogun’s tools, up 5,000 in the last eight months.”
Talk about catching the Zeitgeist of times in America. Emergency preparation app. I like it!
Woohoo! Batch 20 represent! Go Matt Harris!
What a great interview here.
“Of these, a conflict over Taiwan is the key scenario. The defense establishment should focus on preparing the military for a Taiwan scenario above all others. The United States needs to be able to effectively defend Taiwan because it is important to frustrating China’s strategy to achieve hegemony in Asia. Adapting the U.S. military to be able to defend Taiwan will be hard, but it is necessary, and will also allow the United States to defend other allies in Asia against China.
The Trump administration has made this point increasingly clear, but it is a bipartisan one. Taiwan is militarily significant, located as it is in the center of the vital first island chain, and is critical to American credibility in Asia. Other states regard it as the canary in the coal mine — a strong indicator of how far the United States would go to defend them against China. If China were able to suborn Taiwan, the U.S. and allied defense position would be substantially compromised, and U.S. credibility seriously diminished. For these reasons, subjugating Taiwan is very likely China’s best next step toward its strategic goal of regional hegemony.”
“In the past the game of “scale” was to add headcount. This made sense in the industrial era. Companies want to prove that they are growing. They want to prove that they are adding headcount. Unfortunately, the is a skill-set for the physical realm not the digital realm.
In the 2020s, it is clear that you can build $30–50M+ annual revenue businesses with a handful of people (or less!). This is an amazing opportunity for anyone with a high IQ and limited resources. The resource constraint goes away since digital transactions will have limited friction.
Since you can generate millions of dollars as a solo organization (or a small number of people), the amount of self-sufficiency you receive is also higher.
You’re paid based on what you are delivering. There is no middle man. There is no racism. There is no physical limitation (since no one can tell). &. You don’t even have to work for an organization.
This is also a huge hit to people who were rent-seekers (adding no real value and simply doing nothing at work). This is a big negative because they cannot fake value by knowing the “right” people anymore. You’re flattening the access to clients/customers/consumers. Therefore, be extremely wary of people who are negative on the future (and technology) as they are announcing *publicly* that they are rent seekers in their current positions.”
“Why is Amazon having so much trouble making good video games? Because Amazon’s internal structure and culture are optimized to generate mass commercial products, not foster creative entertainment, according to people close to and involved with the company’s game efforts.”
“By now, folks understand that API-driven businesses are not just viable, but tremendously efficient and value-accruing. There are by my count about 10–20 amazing API startups that don’t get a lot of press or Twitter love, and they will emerge this decade like Twilio did in the previous decade. Twilio and Segment helped pave the way, and it will all come to a head when Stripe goes public.”
“Why protect privacy?
You may be thinking “I’m not doing anything wrong — why should I be concerned about privacy?” It’s important to over-invest in privacy because once it’s lost, it’s really challenging to recover. Consider this: you may not be a target right now — but you may become one in the future as your wealth increases, you endorse unpopular political or religious perspectives or… you make a single post on social media in poor judgment.”
“In order to build conviction, we rely on founders to tell us a compelling story, almost always in the form of slides. We’ve funded companies almost entirely because of the quality of their seed decks. Poor deck? We’ll likely pass on the opportunity.”
“The bottom line is that SPACs are a very legtimate path to the public markets. They have a lower cost of capital vs a traditional IPO. That cost of capital is falling due to market pressure, whereas it is rising for the IPO. The SPAC has fresh capital whereas the Direct Listing does not (yet), and the SPAC is clearly the fastest path to the public markets (which is a form of risk reduction).”
This new edition of top tier Silicon Valley led SPACs like Reid Hoffman’s, Kevin Hartz’s or Chamath’s are Venture capital at scale. Very exciting.
“Our vision is that SPACs like Reinvent Technology Partners will be able to take the proverbial startup baton from great venture investors that have spent a decade helping build a great business. Reinvent will take the company public, and then guide it through its next decade of growth and reinvention.
This kind of reinvention is essential, whether in the case of Netflix shifting from mailing movies on DVD to streaming original programing, or Amazon launching AWS and becoming a cloud computing platform as well as “the everything store.”
“The vital signs of SaaS are Revenue Growth, Sales Efficiency, Revenue Churn and Cash Burn. Almost everything that matters about the financial performance of a SaaS business is captured in these four metrics.”
“Throughout the early 2010s, Cudi cut a fascinating figure in the music industry: an all-purpose player with some of the best melodic instincts hip-hop has ever seen, the hits to match, and a Rolodex of the biggest names in the game. And with those enviable resources, he decided to make the weirdest shit he could. He collaborated with anyone he thought was cool (seriously, anyone: dude has Father John Misty, Kendrick Lamar, Haim, and Michael Bolton on the same album), increasingly pulled from psych-rock influences (he eventually recorded two full-on, ill-advised rock albums), and, essentially, refused to ever think of his art as a commercial venture.
“I think the truth is what brings people to me,” Cudi says. “The fact that they’re going to get something unfiltered from me to them is something that has people so invested in me.” While contemporaries like Drake and Kendrick Lamar became the best-selling artists of their generation, Cudi always seemed content with simply following his own muses. It won him a huge cult following…..”