Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, energy from thin air, and whatever else made me think last week. Please grab me on Twitter with any thoughts or feedback.

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In today’s post: batteries making an impact on the electrical grid; using machine learning to make chips cheaper; alternative lending on the rise; value of ads on streaming video apps could vault higher; paint your walls and power your house at the same time with Geobacter; an update on US-China semiconductor tensions and, lots more below...

Stuff about Innovation and Technology
Game On for Chess!
Chess is seeing a resurgence thanks to live-streaming match play amongst younger fans of the game. According to Twitch’s VP of global esports: "Across all the different various competitive games on Twitch, chess has seen some of the most substantial growth in the same period of time than any other esport in the world.” NBC News reports on the new generation of players who are making the game popular again.

Solar+Batteries are Future of US Energy
Over the past decade, solar panels have declined 77% in cost while batteries have dropped 87%; this increased affordability is resulting in a surge in combined solar+battery storage projects at utilities. One example, according to this FT article, is the 200MW solar+50MW battery installation by the Tennessee Valley Authority. Battery capacity in the US is expected to grow from 4,800MW in 2020 to 32,000MW in 2025, or roughly equivalent to the power usage of 26M homes. Google and Berkshire Hathaway’s NV Energy are planning a 350MW solar array with 280MW of batteries. 

Amazon’s in-Store Robot Grocery Fulfillment 
Amazon’s new grocery store in LA will dedicate 21% of its 33,500sf to a microfulfillment center powered by robots from Dematic, which should fulfill a 60-item order in five minutes, according to HNGRY. As designed, the robots will grab the room temp items while humanoids pick the cold stuff, produce, and front-of-house items. Prepared foods can also be added to an order from the store’s kitchen. 

Shopify Backs Payment Democratization 
Shopify has joined Facebook’s Libra consortium in an effort to make payments easier for underserved banking populations around the world. Shopify also signaled they would be supporting many options like Libra to open up transactions globally. 

Building a Better Semiconductor via ML
Neural networks are increasingly too large to run on a single chip or single memory store. This led Google to use AI to determine how best to route parallel workloads, which, in turn, led Google to look into whether machine learning could design better semiconductors. The problem is enormous: while a game of Go has 10^360 possible states, placing blocks of IP on a chip has 10^9000. Using ML, Google saw a 20% improvement in congestion and 27% improvement in wire lengths compared to human IP block placement. The ultimate goal is to reduce the software and engineering costs of developing chips. As we approach 5nm for leading-edge semis, the development cost of a single chip could run over $500M. On the one hand, these improvements could shrink the number of chip designers and the need for software tools; but, on the other hand, it could drive a large expansion in the number of leading-edge chips that get developed when cost becomes less of a gating factor. 

Ad-Supported Video on the Rise
Compared to 2018, ads on linear TV in 2022 are projected to be viewed about half as frequently by the under-24-year-old crowd; yet, until then, the effectiveness and ROI of the TV ad should remain relatively strong. Those younger folks are on YouTube, TikTok, etc., but the quality of attention is quite a bit lower (because of digital distractions...the quality of the people is just fine!). This Marketing Week article also suggests outdoor and radio stand to benefit as advertisers look for more mass exposure (recall last week I pointed to rising ad budgets across CPG companies to bolster brands against the two-pronged attack by private label and specialty niches). The heart of the advertising reach problem is one of scale for brands – as we saw last week, many direct-to-consumer brands relying solely on digital marketing are struggling to scale. Meanwhile, larger brands are losing relevance if they can’t reach mass audiences. If you need scale, you need mass advertising mediums to get in the heads of consumers. It would be great to live in the world where no advertising is needed, and every product/brand was built on quality and reputation; but, for the time being, marketing is playing an increasing role in the fight for consumer attention. Ad-supported streaming apps are likely to do quite well, including Hulu, Pluto, the soon-to-be expanded CBS All Access, as well as the imminent Peacock and HBO Max apps. The WSJ also reports that there is a rush to acquire other ad-supported apps such as Vudu and Tubi. Walmart’s sale of Vudu leaves them empty handed in their battle with Amazon, unless they do a significant distribution bundle with someone like Disney or Netflix. 

Bed Bath & Befuddled
Bed Bath & Beyond is struggling to handle the existential threat of e-commerce and the changing needs of the consumer. Like many other retailers (who have also known about this problem since the late 1900s), the company has decided now is the time to...buy back more stock! Because, you know, they went to business school, and shareholder value, etc. Of the $1B the company has to spend, 40% will go toward improving the experience for consumers while the remaining 60% will go toward debt reduction and share repurchase. The company will remodel only 25 locations, or less than 2.5% (!) of its store base this year, while both sitting on cash and evaporating the rest appeasing short-term shareholders.🤦‍♂️

Patreon Loans
Fan platform Patreon is experimenting with loans to podcasters via Patreon Capital – yet another example in the long list of platforms using internal data to source loans that would have been otherwise challenging to obtain, or just done on credit cards. The interest rate terms of a Patreon Capital advance weren’t available in the article; but, as we’ve seen, these new sources of capital aren’t always friendly and often skirt regulations on interest rate disclosures. It seems to be just a small leap in logic to think that Patreon could begin crowdsourcing loans for creators directly from their patrons.

Abundance Fosters Isolation, but Technology Could Bring us Closer
Abundance tends to drive humans (and other mammals) toward isolation and self reliance, while scarcity tends to have the opposite effect, increasing cooperation and collaboration to promote odds of survival and reproduction. We live in an age of abundance, which is rising every year, thus increasing isolation. Technology is often blamed for the isolation; but, in many instances, it might simply be correlated, as the availability of smartphones and other tech has risen with the general abundance in the economy. Modern agriculture and transportation combine with productivity-driven deflation to give most developed-nation citizens what they need when they need it and within their budget. It’s possible we are over attributing changes in family structures and personal interactions to shifting use of technologies, government incentives (tax breaks for having kids, etc.), and other factors, which may simply be circumstantial to the rising level of progress and quality of living associated with abundance. Viewing the world a different way, the Amish vote on every new technology to determine if it will “strengthen or weaken relationships within the community and within families”, according to this WaPo article. Such a system works when a small group can agree to simulate scarcity by artificially inhibiting progress. A more broadly applicable solution might be to instead leverage technology to eliminate isolation rather than feed it. As Kurt Vonnegut wrote: “What should young people do with their lives today? Many things, obviously. But the most daring thing is to create stable communities in which the terrible disease of loneliness can be cured.”

Miscellaneous Stuff
Conjuring Energy from Thin Air
A cross-disciplinary effort between an electrical engineer (Yao) and microbiologist (Lovely) at UMass Amherst has come up with a biogenically-based device that makes electricity using ambient moisture. This advance is thanks to the versatile Geobacter (which especially-attentive readers will recall from SITALWeek #200 last July). Geobacter are bacteria that have “living wires” (pilli) that transport electrons. As detailed in the new Nature paper, when sandwiched between two electrodes, a film composed of these nanowires, with one side partially exposed to ambient air, can power small electronic devices. The continuous nature of power generation (on the order of months, rather than seconds, as was true for other hydrovoltaic efforts) is what makes this a landmark study. While maintaining a stable moisture gradient appears key, the exact mechanism of the power generation is yet to be fleshed out. If the technology is scalable, one commercial use case could be wall paint that powers your home. Importantly, it appears that other, more tractable bacteria, such as E. coli, could be used as factories to produce the pilli to help scale production. 

Measuring Pre-Industrial Methane Production
Methane is responsible for around 25% of global warming, and a recent study published in Nature shows humans are a significantly bigger contributor than previously thought. Using radiocarbon dating of Greenland ice cores, which required “a large-diameter ice drill and a large-volume ice melting apparatus”, combined with other data from ancient air samples, researchers were able to calculate a baseline for pre-industrial methane production. The upside: "If more methane is created by humans, there’s an even bigger opportunity to rein in how much we release. Methane stays in the atmosphere for only a decade (compared with 200 years for carbon dioxide). So efforts to cut methane, which mostly comes from the production and transportation of gas and oil, could pay big dividends right away." Ball Aerospace is one of the leaders in detecting methane emissions with highly sensitive (2 parts per billion!) LIDAR technology, and the company recently announced progress on the advanced spectrometer instrument for the MethaneSAT project (for locating/measuring methane emissions from oil and gas operations) launching in 2022.

Stuff about Geopolitics, Economics, and the Finance Industry
Ditch the Wall, Build Welcome Centers
I am fond of paraphrasing Adam Smith when defining the two necessary requirements for capitalism: 1) productive reinvestment of profits, and 2) growing population. Both of these are necessary unless you want to shift out of capitalism to something new. “Something new” is certainly on the table as the Information Age has brought about less productive asset reinvestment (because the economy is increasingly less reliant on capital-driven businesses like manufacturing), and the developed-nation birth rates are below replacement rate. At this point, immigration is the only practical way to eke some more life out of our capitalist model – growing the population and the number of people consuming goods and services. According to this WaPo report, acting White House Chief of Staff Mick Mulvaney said at a recent gathering: “We are desperate — desperate — for more people...We are running out of people to fuel the economic growth that we’ve had in our nation over the last four years. We need more immigrants.” Duh. And, so does every other developed economy, which is why I suggested back in SITALWeek #206 that there will be competition to incentivize immigrants to come to developed economies. 

Trump’s Semi Scheming 
Trump is floating the “nuclear” option with regard to China’s use of Western technology by moving to limit the use of all equipment from US companies, like Lam Research and Applied Materials, by fabricators for making chips for Huawei. I’ve discussed China’s dependence on foreign chip tech many times over the last three years, and I call this the “nuclear” option because limiting chip supply in China could have as devastating an economic impact as a nuclear strike (Note: CLEARLY an actual nuclear strike would result in more human and environmental damage, I’m just talking economics here). For example, Huawei used to use Xilinx FPGAs (American company) for 5G infrastructure; but, with export bans, Huawei shifted to an internally-designed ASIC made by TSMC using American (and Dutch) fab equipment. So, Trump’s ban here would effectively cut Huawei out of the 5G market, and force China to rely on foreign suppliers for all of their wireless communications (which would obviously give the West complete ability to spy on China). Taiwan continues to be the ultimate chess piece in trade negotiations, and China fancies TSMC a Chinese company while the rest of the world (including TSMC and Taiwan) do not. This move by Trump would also put Samsung in South Korea in the hot seat. I can only continue to conclude this is yet another surprisingly savvy negotiating tactic with an ulterior motive by Trump, because it would appear to force China to play nice, or use their “nuclear” option and take military possession of Taiwan. 
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Disclaimers:

The content of this newsletter is my personal opinion as of the date published and are subject to change without notice and may not reflect the opinion of NZS Capital, LLC (“NZS”).  This newsletter is simply an informal gathering of topics I’ve recently read and thought about. It generally covers topics related to the digitization of the global economy, technology and innovation, macro and geopolitics, as well as scientific progress, especially in the fields of cosmology and the brain. I will frequently state things in the newsletter that contradict my own views in order to be provocative. I often I try to make jokes, and they aren’t very funny – sorry. 

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