Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, bleeding crabs, 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: virtual walls for countries; virtual conference rooms for video chat; Walmart’s spaghetti; Tom Hanks’ overlord; decision making in complex systems – getting comfortable with not predicting the future; and lots more below...

Stuff about Innovation and Technology
“Scream Inside Your Heart”
The WSJ reports on the potential problem of screaming on roller coasters in the pandemic world: even with a mask, any expelled infectious particles are likely to hit the people seated behind you. Fuji-Q Highland amusement park implemented a “no screaming” rule for its coasters, with a promo video of park execs stoically and silently plunging 230 feet on the Fujiyama roller coaster while declaring: “Scream inside your heart”.

EVs On the Road Again
Elon gave another Twitter update on Supercharger network utilization: “North American Supercharger usage is now at pre-covid high, Europe about a week behind, China & Asia-Pacific in general doing great.”

Elven-Forged Border Security
Anduril, a startup from Oculus founder Palmer Luckey, has secured a 5-year contract with the U.S. Customs and Border Protection to build a virtual border wall, according to the WSJ. The practicality of a physical wall made little sense to anyone (well, maybe to one person); and, moreover, the negative symbolism of a physical wall is problematic, especially when the US needs to promote immigration to fend off the pending demographic nightmare (a major headwind to economic growth facing all developed nations as birth rates drop below replacement rate). That said, the idea of a virtual wall built with solar-powered sensors and AI on towers (and maybe drones) has some logic and purpose to it even if you are pro-immigration and anti-wall (which I am!). However, I could also see this going to a dark place resembling the Sphinx gates at the entrance to the Southern Oracle...hopefully the operators of the virtual wall maintain the same compassion – and purity of heart – as the original bearer of Andúril. 

Dropped Frames Vol. 1
Linkin Park’s Mike Shinoda put together his latest solo album while live streaming the process on Twitch. He solicited feedback, and even vocals, from viewers. According to Shinoda, live streaming has helped him stay sane during the pandemic – I think we can all relate to the lockdown-induced “crawling in my skin” feeling. (Linkin Park’s “Hybrid Theory” album turns 20 this October! We miss you, Chester). Also, Linkin Park is big in China.

A Cure for the Common Zoom Fatigue
Microsoft announced a new “Together Mode” coming to Teams in September that tries to tackle some of the problems of video conferencing. The new feature separates you from your background and virtually seats you in a shared space. I initially blew it off as a gimmick until I realized Jaron Lanier was involved in its development. In this blog post for Microsoft, Jaron explains “People in Together mode know where others are in a shared virtual space. That means your brain can keep track of what other people are signaling or emoting in a natural way, relying on social/spatial perception; people can intuitively signal each other nonverbally. In a grid, you don’t know where other people are on the screen, relative to you, from their point of view, so natural glances and other subtle cues are impossible.” Jaron goes on to explain the utility of the feature in encouraging interaction: “Playfulness is not a waste of time, even for adults. It is not a bug in human nature, but rather a fine-tuned process crafted over deep evolutionary time that transcends species. It is how we learn to interact with new people, how we build trust and comfort, and how we investigate our environment.”

Waymo’s Disco LiDAR
Laser Bear Honeycomb, the LiDAR made and licensed by Waymo, is still bucking the trend of solid-state miniaturization and sticking with their old-school method of a rotating mirror on a turntable. The disco-like LiDAR has an impressive field of view: 95-degree vertical and 360-degree horizontal, which means you need fewer of the siren-looking things. This (and more than you could ever possibly want to know about LiDAR, including coherent and SPAD) is in this article from Junko Yoshida on EE Times. Elon Musk, who thinks LiDAR is for babies, said last week that Tesla is “very close” to level five autonomous...perhaps as close as when he said the same thing four years ago?  

Law Enforcement Buying Hacked Data
Following last week’s bit on the IRS abusing data (buying readily available advertising data that gave them access to the location of anyone anytime in order to prosecute tax fraud cases), Motherboard reports on law enforcement buying large pools of data from hackers, the vast majority of which is information on innocent people. “Riana Pfefferkorn, associate director of surveillance and cybersecurity at the Stanford Center for Internet and Society, told Motherboard in an email, ‘it's disturbing that law enforcement can simply buy their way into obtaining vast amounts of account information, even passwords, without having to obtain any legal process. Normally, if the police want to find out, say, what IP address is associated with a particular online account, they do have to serve legal process on the service provider. This is an end-run around the usual legal processes. We impose those requirements on law enforcement for good reason.’”

Walmart Revives Prime Competitor
Walmart is expanding and rebranding its $98/yr same-day grocery delivery service as Walmart+, which will also cover non-grocery items from supercenters as well as fuel purchase discounts. The expanded service comes three years after they shut down the $49.99/yr Walmart ShippingPass. Back in SITALWeek #234, when the relaunch rumor surfaced, I discussed Walmart’s spaghetti-based ecommerce strategy – whereby they throw things against the wall to see what sticks, and then pick up the leftovers and throw them again. Only months after selling streaming service Vudu, Walmart may even be getting back into video, according to the Vox article. No word yet on when Walmart will be re-exiting video and shipping membership services. Perhaps I’m being a little unfair; after all, Walmart is growing faster than Amazon in ecommerce, but they are also racking up huge losses as they build new distribution and capabilities. I’d like to see Walmart integrate a digital bundle with Walmart+ that includes services like Netflix and Spotify – and maybe even Lyft or Uber – that would be a compelling answer to Amazon Prime. Walmart is also trying out a lot of pasta dishes in other areas, which is admirable experimentation for such a large, established company. News last week of Walmart hiring agents to sell Medicare insurance is perhaps part of their broader health initiative with clinics and health supercenters.

Twitter 2.0?
Twitter might be working on some sort of subscription platform, according to a posted (and since removed) job listing. It’s not clear if Twitter wants to create a platform for Tweeters to build and monetize fan followings, provide an ad-free access option, offer paid access to premium tools for power Tweeters, or all of the above. The job listing indicated the platform would be “reused by other teams in the future”. At the company’s annual meeting in May, in response to a shareholder question about whether the company would consider “premium memberships, subscription-based follows for premium accounts, in-app purchases, cash transfers, et cetera”, Twitter’s CFO indicated: “we want to be thoughtful about doing them in a way that make sure that we provide people a great experience on Twitter, where they continue to find the things they're looking for and trust the information that they see”. So, you're saying there's a chance? Twitter is in an interesting spot in which to experiment with alternate revenue models – their event-driven advertising spenders have jumped ship during the pandemic, and they have a much smaller revenue base to replace compared to Facebook. 

Please Re-bundle, I'm Begging
We are supposed to be in the "Golden Age of Television", but instead Netflix is buying reruns of the 1990's game show Supermarket Sweep. Perusing the top-ten most popular shows on Netflix of late, I find there is a lot of classic, channel-surfing, syndicated drivel. Awash in a confusion of apps, rights, content windows, content wars, logins, battling connected-TV platforms, SVOD, AVOD, and rising prices for MVPDs, viewers have lost hope, and they’ve gone back to just watching whatever crap happens to be on (except for the Floor is Lava – possibly the greatest show ever!). The burden to find and watch something is so high that its pushing viewers to instead watch gaming or life streaming on Twitch and YouTube, spend time on TikTok, or play video games themselves. Something is wrong. Chris McCarthy, the head of MTV, Comedy Central, and other brands, said in a Vulture profile last week “The reality is we’re not channels. We’re content”. Yes, but, we need a way to search, keep track, and actually enjoy the content with much lower friction.  People are giving up (like SITALWeek’s Editor, who will only pick up a remote under exigent circumstances). Who will save us? As I have said in the past, let the great re-bundling of content begin! (Please?)

Being Late in 5G’s a Good Thing
The West is trailing China in 5G technology and deployment, but being late to the party just might have its advantages. Standards are coming together for virtual radio access networks (VRAN), which could be a superior and more flexible option compared to the current hardware from Huawei. It’s a trend Nokia is trying to capitalize on as Huawei is increasingly banned from global telecom networks. After putting all their chips in the FPGA basket, Nokia fell behind Ericsson and Huawei as the Finnish company’s expensive products were a non-starter for most cash-strapped telcos. After losing share in what is essentially a duopoly in many markets, Nokia has found itself in a very strange circumstance: underdog in a highly concentrated industry. In response to the situation, Nokia decided to go against the long-standing tradition of closed architectures and go whole hog into OpenRAN (O-RAN). O-RAN is an open-standard, software-based radio access network favored by carriers. Nokia’s moves could cause Ericsson to follow, which could ultimately enable lower-cost, more innovative 5G networks in the West. Huawei is not a member of the OpenRAN Alliance, and Chinese 5G could suffer long term as a result. Dish Network is building out a complete 5G network in the US with VRAN based on O-RAN-enabled vendors.

Chinese Chip Activity
As the Chinese chip stock market bubble continues, foundry SMIC is looking to raise $6.6B in a Shanghai equity offering. This capital raise, along with another $50B, unrestricted access to design software and manufacturing tools made exclusively in the US and Europe, and several miracles, could give SMIC a shot at being a leading-edge foundry in five to ten years time. Of greater note is the opening of open-source RISC-V research institutes by StarFive and LeapFive (affiliates of SiFive) in cooperation with local governments in China. This research could lead to low-cost chips that could be made in trailing-edge fabs, like SMIC, to challenge several global semiconductor makers' business in China down the road.

Tom Hanks’ Apple Overlords
The “world’s most relatable megastar”, Tom Hanks, bristles at Apple TV+’s micromanagement (to the point of dictating what can be on display behind him in his own home office) while doing Zoom press for his new movie “Greyhound” (reluctantly sold to Apple by Sony): “‘The cruel whipmasters at Apple’ decided the background needed to be a blank wall...as if he’s in ‘a witness protection programme. But here I am, bowing to the needs of Apple TV’.” I’m not sure micromanagement will win Apple TV+ a lot of creative talent deals.

Miscellaneous Stuff
Horseshoe Crabs Key to Vaccine Safety
Every year, 500,000 horseshoe crabs are captured along the mid-Atlantic seaboard, bled, and returned to the ocean. This is done by pharmaceutical companies to harvest limulus amebocyte lysate, the only known natural substance capable of detecting deadly endotoxin (a bacterial toxin) contamination. Endotoxin can make its way into vaccines, knee replacement parts, etc., with potentially deadly consequences, which is why detection is so important. There’s a synthetic reagent approved for use in Europe, but the US still isn’t sure it’s up to snuff with the blue blood of the primitive critters (“living fossils” of the arachnid group). For now, there seems to be plenty of blood available, even if we needed to test production for five billion vaccine doses; but, National Geographic reports that the increased bloodletting (which an estimated 30% of crabs don’t survive post-release), as well as commercial harvesting, could have broader ecosystem implications for the food chain.

Stuff about Geopolitics, Economics, and the Finance Industry
Crystal Ball Broken? Adapt!
At NZS Capital, we are very comfortable not knowing the road conditions ahead. How to navigate without knowing the future is  the core of our 2014 paper: Complexity Investing. We’re strangely at ease operating in the current, uncertain times because we know we always operate in uncertain times – we’ve acclimatized ourselves (not without effort) to not knowing what the future will bring. Indeed, we have an entire framework based on complex adaptive systems (and their frequent habit of spawning fat-tail events) built to function and find winning companies – regardless of the current macroeconomic climate – via adaptability and non-zero-sum outcomes. One lesson from this framework is that adaptability matters above all, and ‘barriers to entry’ or ‘competitive moats’ are mere illusions in most cases. Efficiency, however, is Enemy Number One of adaptability. In biological systems, messy redundancy is key to survival and progress. However, in a company, too much redundancy can drain resources and/or lead to bureaucratic paralysis, either of which can be even more dangerous. It’s a really hard – but feasible – cultural balance for organizations to achieve. And, there’s no time like the present to experiment and build adaptability into your organization anywhere you can. This essay, published in Nautilus by Geoffrey West and David Krakauer of the Santa Fe Institute (the home of complex systems science), is an interesting read on the fragilities of our existing systems in the face of the pandemic. Here is one excerpt:
“A key insight from complexity science is that complex systems function by the continuous tradeoff between robustness and evolvability. Robustness describes the ability of a system to withstand a critical perturbation without a significant loss of function. For example, individuals are able to sustain high levels of damage to the brain, such as severing the two hemispheres, while continuing to function. Evolvability describes a mechanism that allows for the efficient exploration of adjacent novelties, whereby small changes to a mechanism or structure can engender new functions. Many enzymes can be mutated into functioning alternatives once the space of functional molecules has been mapped. Evolution has discovered the means of balancing the competing demands of these two principles and together they account for both the long-run stability of lineages and the diversity of life. Contrast this complex, evolved reality to our modern, social-technical world. A typical strategy of companies and corporations is to eliminate redundancies and degeneracies in the name of minimizing costs. This is the major reason why almost all companies have great difficulty adapting to change, and eventually disappear. Just as biological systems pay a cost for robustness and evolvability foregoing efficiency for long-term persistence, so too should we demand this of our institutions.”

SEC Mulls Raising 13F Floor
SEC-registered investment firms in the US currently file quarterly 13F reports listing all holdings if they have over $100M in assets. The bogey was set 45 years ago, and the SEC has proposed changing it to $3.5B. The matter goes to vote after a 60-day comment period. There are countless algorithmic traders, and even individual investors, who track the moves of small managers; but, it’s also equivalent to giving away the 11 herbs and spices every quarter for some investors.

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Disclaimers:

The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC.  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. Often I try to make jokes, and they aren’t very funny – sorry. 

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