Marvin’s Best Weekly Reads October 20th, 2024
“You can’t use up creativity. The more you use, the more you have.” — Maya Angelou
- “When people think about the risks of outsourcing, the first thing that comes to mind is usually IP (intellectual property). In actuality, the impact of outsourcing on a company’s IP is generally low. A typical contract with an outsourcing agency or freelancer will make clear which aspects of the work product belong to the company and which (if any) belong to the contractor. So there should be no surprises.
However, there is an indirect impact that outsourcing has on IP that many founders underestimate: the institutional knowledge that a startup loses out on by not having solved the problem itself.
When you outsource development of something, the project is typically defined in terms of input and output. Rarely, if ever, does the project specification define how that should be done. The company will likely make some suggestions based on their experience and expertise, but the “how” is usually left up to the agency or freelancer. As a result, the startup doesn’t get the benefits of all of the lessons learned along the way while building the project.
And those lessons and their associated learnings can be significant.”
2. “Starting in the late 19th century, the elites running global governments made a deal with the plebes. If the plebes handed over more and more of their freedoms, the “smart” people running the state would create a calm universe by keeping entropy, chaos, and volatility at bay. As the decades progressed and the role of government became greater in every citizen’s life, it became extremely expensive to maintain a veneer of ever-increasing order in a world becoming more complex as our knowledge about our universe increased.
Previously, a few men wrote books that were the definitive source of truth about how the universe operated. They killed or shunned any man that practised science. But as we removed the shackles of organised religion and thought critically about the universe we inhabit, we realised we know nothing and things are much more complex than you would otherwise believe if you just read the Bible, Torah, or Koran, for example. It is then understandable that humans flocked to politicians (mostly men, a few women) who replaced priests, rabbis, and imams (always men, never women) in offering a prescriptive way to live that promises safety and a rubric to understand how the universe operates. But whenever volatility spiked, the response was to print money and paper over whatever problems were ailing the world so as not to admit no one knows what the fuck is going to happen in the future.
Just like when you hold an inflated ball underwater, the deeper you push the ball, the more energy is required to maintain its position. The distortions are so extreme globally, especially for Pax Americana, that the amount of printed money required to maintain the status quo grows exponentially each year. That is why I can say with confidence that the amount of printed money from now until the eventual system reset will dwarf the total amount that has been printed from 1971 to date. It’s just maths and physics.
Assuming you don’t misuse fiat leverage, the real risk is when the elites can no longer suppress volatility, and it surges to its natural level. At that point, the system resets. Will it be a revolution like in Bolshevik Russia, where bourgeois asset holders got wiped out entirely, or like the more common varieties where one group of corrupt elites is replaced by another and the misery of the masses continues under a new “ism?”
In any case, everything goes down, and Bitcoin just falls less vs. the ultimate asset … energy. You are still outperforming, even though your overall wealth is diminished. Sorry, there ain’t nothing in the universe that is risk-free. Safety is an illusion peddled by charlatans pining for your vote on election day.”
3. Seriously valuable discussion on the art and science of practicing venture capital from one of the best.
4. “A model that is trained on a specific problem, by a team who intimately understands each industry’s control points, with an excellent user experience focused on a specific vertical, can gain a lot of traction in today’s SaaS world. More traction, in fact, than many are giving it credit for.
We’re at a pivotal moment where several factors are converging to create a perfect storm of vertical SaaS innovation. The endpoint of this shift is what we call “the verticalization of everything:” AI empowered vertical companies are going to unbundle and dominate compared to horizontal SaaS.
Great companies are changing the way they look at software in general — it’s not just about incorporating algorithmic intelligence. It’s like hiring a superstar employee. The ability to understand and execute job tasks at a high level is only the beginning. Those hires distinguish themselves by understanding the larger context of the organization, and the domain you’re operating in, and fluently translate that understanding to others.
AI-powered companies with deep vertical expertise should be like superstar employees. Perhaps we may even think of them that way in the future.”
5. This was a great episode for what’s up in Silicon Valley.
6. Actually, really insightful discussion this week. The section on VC and AI killing call centers was excellent.
7. This was a thoughtful interview and discussion from one of this generations best founders and entrepreneurs.
Zuck was widely known as a great strategist but he really has come into his own in recent years.
Learning through suffering.
8. Fun discussion this week on NIA. Mr Beast Memo teardown.
9. One of the best operating execs around. It’s clear now that it was skill not luck. Google, Softbank and Palo Alto Networks.
10. This is an important geopolitical discussion around AI, lots of alternative and “spicy” takes. Worth listening to.
11. Lots of great insights from a top vc for founders and investors: have an internal locus of control. 1517 Fund.
12. “Because it’s probably the country least affected by anti-growth, anti-progress, and anti-technology ideology, China represents the future of energy technology better than anyone else. And that future appears to be slow growth in nuclear, but an explosion of solar.
Nuclear still has important uses — in particular, where land and sunlight are scarce. But it’ll be a relatively niche energy source — a backup to the solar and batteries that form the backbone of our energy usage.
We shouldn’t hate nuclear power, or fear it. It really is good for the environment, and it really did get mistreated by the regulators and social movements of the 20th century — especially in America. Our failure to build nuclear when it was the best alternative energy source is a cautionary tale in how panic and misguided ideals can lead to national self-sabotage. And it will certainly be a useful supplement to solar and batteries.
But at the same time, we need to let that nuclear retrofuture go. We need to understand that even without regulation, nuclear would have been passed up by solar and batteries. We might have gotten the glossy 50s-poster atompunk future for three decades or so, but we missed our chance. Fortunately, the only reason we missed our chance is that we found something even better. Sometimes the future you get is even more amazing than the ones you merely imagine.”
13. This talk happened 9 years ago. I was there and it was instrumental in changing my views on the world of work. If you rewatch this, Peter Levels was incredibly prescient.
14. This is a masterpiece and incredible state of the VC & Startup Industry. Must watch. Explains a lot of the situation in Silicon Valley right now.
15. Incredible teardown of the amazing career of Francis Ford Coppola. So much about the business of creativity.
16. For Silicon Valley OGs, this is one of the top conversations around.
17. One of the top shows on what’s up in Silicon Valley news, sentiment and trends.
18. Energy in America and how Data centers are driving increasing demand. This is a very helpful video to understand what’s happening in America in this important driver of our economy.
19. “The fix is on the demand side. If we want to stop illegal immigration, we need to decrease demand by raising the costs and enacting real deterrence. The quickest route to a solution would involve punishing employers. Create a biometric database of documented immigrants. Then levy any employer who knowingly hires somebody who’s not on it with a $10,000 fine. No restaurant is going to risk getting hit for $50,000 hiring five cooks or dishwashers without papers. No chicken processing plant is going to risk a $1 million fine for hiring 100.
This, of course, will likely not happen. Too many of the people who employ undocumented workers also employ lobbyists and give significant money to politicians. Those politicians are happy to accommodate their backers and exploit the racism and fear of many Americans by continuing to tell lies about immigration.
I believe one of the keys to healthy relationships and relative harmony is to not inject agita (argue, get upset, etc.) when the stakes are low. To not create disharmony where there isn’t a real problem. Yes, illegal immigration is a real problem, but why let it divide us when neither side seems genuine about fixing it, or even having an honest discussion? I believe we will have immigration reform once the perception of the problem appears to eclipse the benefits of our existing hush-hush system. And maybe that time has come.
The fix will need to come in the middle of the election cycle; the issue is too easy for politicians to demagogue when they’re campaigning. Again, if we’re serious about the issue, why was the legislation presented during an election year?”
20. Good stuff this episode. How to turnaround the Japanese economy.
21. The first 3/4 of this podcast are excellent when they speak about Silicon Valley and startups, I disagree with their take on geopolitics and Russia-Ukraine. I think they are misinformed here (and don’t travel enough).
22. Fun and interesting conversation on consumer AI trends.
23. The new intellectual Renaissance in San Francisco.
24. A must watch with one of the most thoughtful frontier tech investors around. Been following Compound for a while. Incredibly insightful.
25. “Investing has never been harder than it is today because there are so many distractions tempting us to trade and speculate on anything, anywhere, all the time, but investing is supposed to be a passive endeavor.
We have a stock market that has averaged 9% returns annually for the last century, and, sure, future returns of that level aren’t guaranteed, but the track record looks good so far. Less than a year ago, you could get a guaranteed 5% return on 10-year treasuries. You can just invest your money here, keep adding money over time, let compounding do its thing, and you’ll be just fine.
But no one wants to talk about long-term compounding when you can trade your way to a 100% return, right here, right now. Just hit the correct buttons, of course. And that’s why investing is so hard in 2024: how are you supposed to take a “long-term” perspective on anything when your brain is constantly stimulated by temptations begging you to make a trade?”
26. I love the Great Gatsby. This is a great history of the book and how it became so popular.
27. “When AI products are sold as services, they replace in-house labor. This changes internal processes.
When the internal processes change, the opportunity to replace the system of record arises because the existing workflows are no longer relevant.
Selling service-as-a-software enables a startup to change the way a customer works. Behavior change is hard. But successfully executed, it’s a moat.”
28. “Caro’s experience reminded me of what it was like to be an investor. Paradoxically, good investing is boring, yet discovering a great investment is exciting. It’s like the investor looks around, stops, squints, and goes “Oh, that’s weird.”
This is also what made great investors interesting to me. They spent their lives trying to find what others missed and their careers seemed like portfolios of surprising insights. I found the same curiosity in both Caro and Mr. Beast and it felt as inspiring as their passion.”
29. “In 2021, everyone wanted to become a VC, and it was easy to raise. It attracted the wrong crowd. We don’t want people to get into VC because they think it’s easy or cool or the pathway to a lifestyle.
Now, interest rates are higher, and fewer are trying. But there’s still capital there for people with the vision and expertise to go after it. And you should go after it. We need people to get into VC because they have a vision for the future that others don’t, and believe they can make the vision a reality.
If we have the same types of people looking for the same types of investments, we’re never going to get big, radical ideas off the ground.”
30. Zuck’s view of the future. It’s pretty fascinating and exciting.
31. “If winners hire winners, and losers hire losers, what do bureaucrats hire? More bureaucrats of course.
The reason is that companies that highly prize consensus, process, etc., will inevitably hire the people who are good at executing against this set of constraints. This continues and continues, until the moment the company is required to actually move nimbly to face off against an entrepreneurial new startup (example: car companies versus Tesla) or a big technology trend occurs (example: AI and Europe). Because there’s so much that’s unknowable about these situations, and so much of what’s required is just to try things and learn things fall apart. The highly consensus-driven, collaborative organization that has become staffed with self-replicating bureaucrats end up not being able to bureaucrat themselves out of the situation.
The cycle of life
This phenomenon is so ubiquitous that it’s almost a cycle of life within tech.
A new, nimble startup with an aggressive new founder(s) emerges
To scale, it hires well-intentioned, competent managers
It wins the market (woohoo!) and IPOs
Later, bureaucrats who are attracted to peacetime (and brand, and stability) sneak into the company. They have shiny resumes
The entrepreneurial people quit, or leave, and can’t deal with the new processes. The bureaucrats take over. The founder either checks out, or retires
The company is in Bureaucrat Mode
A new, nimble startup then emerges…
Without this cycle of life, the tech industry would not exist. I saw this first hand at Uber, which was respected as the fastest-moving big company led by an aggressive founder, and eventually things got bogged down as it grew.”
32. “Unlike with previous generations of software companies, investors and founders are underwriting science risk as well as product risk. In the 2000s era of SaaS, we knew the cloud worked, and we knew how to make software on it.
The only question was if you could make a product that used the cloud in a way that benefited customers. With agents — both tooling and models — we haven’t completely figured out the science of making it work, let alone the product.
That is a mouthful, so let me repeat myself as simply as possible: This shit does not currently work, but investors are betting it can. Many assume we are just one or two scientific advancements away in models or tooling to make agents available at scale.”
33. “The last post in this series discussed the ways in which the supply networks underlying modern economies can break down: concentrated dependence on an upstream supplier like Russia; the complexity trap of economy-wide gridlock when most of the nodes and links in a large system are simultaneously hurt by, say, spiking energy prices. During the crisis triggered by Russia’s war, German business leaders were lobbying the government aggressively to take these arguments seriously in forging its foreign policy.
They were successful. But, in August 2022, despite Germany’s forbearance, Moscow turned off the taps, closing the critical Nord Stream 1 pipeline.
The expected economic apocalypse? It never came. Germany’s economy actually grew by nearly 2% in 2022. Winter brought only a “technical mini-recession”.
How did Germany defy forecasts of economic doom? The answer lies in a textbook macroeconomic idea whose origins go as far as 1955: Economies are far more adaptable than individual companies — they have more substitution possibilities. Think of the economy as a forest ecosystem: while a single tree species might struggle with changing conditions, the forest as a whole can adapt and thrive.
By reviving and quantifying this insight, a team of leading economists accurately predicted that the overall impact on Germany of cutting ties with Russia would be small. If some firms could substitute Russian imports in their production, even imperfectly, they could provide a route for the German economy as a whole to go around the missing Russian gas.
While some heavily gas-dependent firms struggled, others found creative solutions.”
34. This is a great discussion on excellence whether in Olympics, Navy Seals and Startups.
35. “In this example of aligning interview questions with core values, we took one value I care about and organized a series of common questions around it to assess how the candidate responds and presents their answers. Entrepreneurs would do well to enumerate their core values and ensure that, during the interview process, they have a series of questions for each core value and a rubric to score responses accordingly.”
36. “So why is this allowed? And why do consumers continue to eat this junk? A major reason is the food industry’s lobbying power, which spent $28 million last year to keep the same ingredients banned in Europe legal in the U.S. The influence of processed food giants has a direct impact on public health policy, allowing known harmful ingredients to remain in circulation.
Other causes of this health epidemic include a lack of food education, the loss of the art of cooking, misleading advertising and seductive labelling with words like “natural.” Food deserts, where fresh food is difficult to access, affect 17 per cent of Americans. Even when fresh food is available, the long distances it must travel often deplete its nutritional value, necessitating the use of preservatives. Some foods are so laden with chemicals that even mould refuses to grow on them, no matter how long you leave them on the counter.
Adding insult to injury, the pharmaceutical industry preys on the health problems caused by processed food. Americans spend an astronomical amount on medications, accounting for about 45 per cent of the global pharmaceutical market. The pharmaceutical industry spends significantly more than the food industry on lobbying efforts to ensure consumers remain dependent on medications.”
37. “Don’t be a YouTube creator.
Don’t be a personal brand.
Don’t be an influencer.
Be you. But in a place where your work can be discovered, followed, and supported. Right now and for the foreseeable future, that’s on the internet.
The internet is a tool.
Social media is a tool.
Software is a tool.
If you think these things are toxic and negative, that’s a direct reflection of yourself. Algorithms show you more of what you pay attention to. Social media, for the right people, is the singular thing that will change their life. If you believe it’s toxic, you close yourself off to that reality.
These new forms of technology are tools to display your work, your art, your findings in the unknown that others can benefit from.
Jordan Peterson isn’t a “content creator.”
He goes on tours, writes books, leverages social media as a base, and uses all of the tools at his disposal to spread his life’s work. He isn’t worried about the latest content idea trend. His mind outperforms any of those myopic growth strategies. The quality of his ideas is what sets him apart and changes people’s lives (regardless of your opinion on Peterson).”
38. “So yes, another game changer. We are going into a phase of more uncertainty sure, but Israel has boldly re-arranged the power balance, reasserted deterrence and regained the initiative.”
39. “Taking the human out of the loop opens up a massive new frontier, and a troubling one at that.
This is what’s so important to understand. The man-in-the-loop (MITL) control concept is hugely restrictive on what lower-end drones — including longer-range kamikaze types — could potentially do. This is especially true if you are trying to hit a dynamic target or target of opportunity at significant distances. These barriers rapidly degrade when the drone has the ability to pick its own targets using commercially available sensors and onboard artificial intelligence-enabled hardware and software.
What you end up with via the injection of machine learning/AI into lower-end weaponized drones are far smarter, more dynamic, and far less predictable weapons that are harder to defend against. With the current ‘man-in-the-loop’ shackles cast off, these weapons will take on a much more impactful role on the battlefield of tomorrow than what they have already achieved.”
40. “Your time is limited,” Steve Jobs said in his famous commencement speech, “so don’t waste it living someone else’s life.” Well yes. What he doesn’t mention is how many people it took to stage the story in which he was the main character.
That’s not necessarily a bad thing. You can of course be true to yourself working for other people (and getting Apple stock must have been a sweet deal). I’m not saying don’t compromise. I am saying the world is ready for you to cast you as an extra in someone else’s story. To avoid this regret, you have to build something like an anti-force field around your truth.
We’re so used to doing the opposite. We’re rewarded for pitching ourselves, for condensing our lives into easily digestible tiny Hero’s journeys. But words shape reality and the stories we tell get etched into our minds. One day, we wake up and think that’s us. Decades later, we wake up and regret.”
41. “The very best entrepreneurs are not just storytellers. And the very best business builders are not just chasing payoffs. The people who build the most exceptional businesses are those that understand the artistically nuanced balance between big promises and big payoffs. Do they deliver every time? No. But they deliver enough to maintain that balance; that equilibrium between fantasy and reality.
The best stories are those that compel you to believe in them, but its the payoff that rewards the faith people put in storytellers. Its when I’m promised a product or feeling or experience that compels me. And then I get it!
Bezos’ customer obsession principle isn’t “pay super close attention to what the customer wants so we can tell them a nicer and nicer story.” You’re obsessed with the customer because you want to understand the payoff they’re hoping for and then tell them a story that will compel them to believe you long enough for you to deliver.
Investors spend a lot of time wondering about the question, “what do you have to believe?” But as you spend more time with a company or a founder, you also need to start asking yourself, “why should I believe this?” One of the most common phrases at Contrary Research that we use to push back on each other is “prove it.”
42. Good perspective on global macro and end of globalization by Zeihan. Massive inflation coming over the next 5 years.
43. This show is always fun and educational. Two accomplished people talking about new and interesting things.
44. “Anxiety and depression are now twice as common among students as concerns about academics or relationships.
Don’t expect more positivity in popular culture until we reverse these trends.
But we might have already created a vicious circle where a bleak society leads to gloomy songs and stories, which further amplify the depression and desolation.
In other words, the culture is not just an effect — it’s also a cause.
If that’s true, the people who have the most responsibility here are entertainment execs as well as technocrats who run the main cultural platforms — TikTok, Instagram, Facebook, Twitter, etc.
Their algorithms and addictive interfaces are literally the growth engines for dysfunction. They amplify it, they disseminate it, they help it go viral.”
45. Fascinating conversation with Silicon Valley thinker and intellectual, Samo Burja.
46. “What does this mean for VCs? The overall basket of early-stage investing is nowhere near as attractive as it was in 2014. The AVERAGE manager is likely going to produce far less exciting returns in today’s environment, than those of these previous vintages.
Early-stage investors need to figure out their “right to win more” than ever and practice discipline to ensure they are breaking away from the crowd. Those that do are likely to deliver returns that resemble those that look far more like the 1999–2000 vintages.
What does this mean for LPs? They need to look back at managers from prior vintages and determine whether past performance was driven by skill or luck. Michael Mauboussin often writes on the entanglement of these and the danger of focusing on outcome > process.
Turns out a lot of prior managers benefitted from a bull market (some of which were more lucky than skillful), so it may be worth considering new managers capable of addressing the needs of today’s market rather than assuming the prior returns will persist.”
47. “So, when she was named CEO of Food52 in April, the appointment felt odd.
While Barstool serves an audience of young men seeking sports takes and blue humor, the chic food media firm, started by New York Times journalists Amanda Hesser and Merrill Stubbs, caters to an affluent, primarily female readership with a penchant for boutique flatware and seasonal cooking.
The two media publishers — on the surface, at least — could hardly be more different. But Badan sees it as a “natural fit.”
“I think to evolve your career, you need to do things that scare you, and I knew I wanted to work with a different kind of customer,” Badan said. “There is never going to be another Barstool, but I liked the idea of an organic content experience that can be monetized in multiple ways and serve a commerce business.”
