Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, drones, 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: Accelerating app store revenue; frontline robots; new ways to invest in physical assets – like vacation homes and art – as cash idles; a slew of positive news and maneuvers from Google last week, with some confusion remaining; nuclear fusion; supernovae and pale blue dots; and lots more below...

Stuff about Innovation and Technology
Bluffing is Popular
A relatively unknown mobile game called Among Us has soared to the top of the charts with 100M downloads and 60M+ daily players. The game, which was built by InnerSloth on the Unity platform, is available on iOS or Android for $5, and an additional $2 will remove the ads. In-game purchases to customize avatars and unlock new maps are also available. Among Us is a social game, with one team of crewmates trying to run the spaceship, and a second team of imposters trying to bluff their way through the game, killing off the crew members and sabotaging the spaceship. Players can vote out suspected imposters. If you haven’t heard about it, ask your teenagers! The relative ease by which these games can quickly grab attention underscores the ongoing fragmentation of entertainment options toward interactive, unscripted content.

Hacking the IoT
A researcher was able to hack a smart home coffee maker to dispense water, beep, and grind beans, as well as display a ransom message. While unplugging the unit would stop the madness, it underscores the array of connected device vulnerabilities we are likely to encounter in the coming years. 

App Revenue Up
Globally, mobile app revenue was up 32% y/y in the third quarter of 2020, a significant acceleration from the 23% growth achieved in the first half of 2020, despite being well into the pandemic. Google’s Play Store grew slightly faster than Apple’s App Store, a reversal from the first half of the year. Total app revenue growth in the 3rd quarter exceeded game revenue growth, implying that streaming video, social networks, and perhaps work-from-home-related apps are driving the acceleration. Zoom and TikTok were amongst the top-three global app downloads (for both Apple and Google stores) for the quarter. 

Frontline Automaton Assistants
IEEE Spectrum reports on the slew of frontline robots developed and deployed this year to aid with COVID-19. Bots are assisting with myriad tasks, such as sterilization, temperature taking, and running errands. As I’ve mentioned recently, the age of robots is finally upon us. Some of the aesthetics, however, leave a bit to be desired; for example, the fully-automated throat-swabbing robot has a slight Clockwork Orange vibe to it.

Zero-Emission Prop Plane
ZeroAvia retrofitted a Piper M-class, 6-seater prop plane with a hydrogen fuel cell, potentially leading the way toward zero-emission passenger flights in the future. 

Amazon's Testing Prowess
Amazon reported it will have 650 sites performing 50,000 COVID-19 tests per day by November for its employees. With that kind of significant capability, I wonder how easily Amazon could evolve those sites into its broader healthcare initiatives.

Solving Cash Conundrum with Alternative Investments
Cash continues to burn holes in investors' pockets thanks to zero interest rates and some possibility of near-term inflation from fiscal stimulus and monetary policy (don’t worry, I still think long-term deflation is a more likely scenario!). How about taking part of that money and buying into a 2nd home? In the US and Europe, 30 million 2nd homes go unoccupied nearly 11 out of 12 months. To tap into that unused potential, Pacaso, a new startup from Austin Allison (founder of real-estate software company dotloop, acquired by Zillow) and Spencer Rascoff (former CEO of Zillow), aims to make 2nd homes more affordable using a concierge approach to fractional home ownership. Pacaso also invests its own capital into homes and has raised $250M in debt financing to do so. Tools for managing the LLC structure, scheduling stays, performing maintenance, and refurbishing are all part of the platform. The homes are for the exclusive use of the owners, and you can own as little as one eighth or as much as one half. Pacaso charges 10% of the purchase price (of the ownership fraction) at the time of purchase, plus an annual management fee of 1% (of the fractional purchase price). They will also buy part of your current 2nd home and sell to other buyers using traditional real estate channels.

Or, if you’re not ready to buy part of a vacation home, why not own part of a classic car, work of art, or sports memorabilia/wine collection? Rally is a platform designed to enable just that. As far as I can tell, the original merch owner keeps permanent and exclusive possession, but you can buy and sell a share in it like a stock on an exchange. On Otis, you can own a share of a Banksy original for as little as $20. There is obviously a broader pattern developing as people look for places to put money rather than watch it sit idle – or even slowly evaporate – in the bank. I’m not familiar with any of these alternate asset platforms, so this is not an endorsement, but I am pleased to see democratization coming to a previously difficult-to-reach set of physical assets.

Google Clarifies App Store Strategy
Google’s latest maneuver in the app store war is a smart one. The company will facilitate the install and use of competing app stores in Android 12, which should enable 3rd-party stores to use their own payment engines. The company is also granting a one-year grace period before more strictly enforcing rules around payments/policies in the current Google Play Store. Currently, you can download alternate app stores – but with few security assurances – and, as I mentioned last week, even Amazon was unable to successfully compete and shuttered their Android store in 2017. I am not sure what Google is planning for Android 12, but ensuring user security with a firewall and only allowing 3rd-party app stores from vetted sources – such as Epic, Microsoft, or others (maybe Apple should launch the iOS app store on Android!🤣) – would be a great way to increase competition and grow the pie for all. Epic has seen revenue on Android drop from $58M in June to less than $20M in August, according to Sensor Tower data cited in the WSJ; but, if they were to launch a competing app store, I think players would flock back to the game on Android. In #258 I wrote the following: 
“For Google, their stubbornness on high app store fees is puzzling. While significant, the money they make on apps and in-app purchases is still small relative to search and YouTube, so why not cut fees to 10% now and draw developers over while putting significant pressure on Apple’s services business and stock multiple? The important question from my perspective is always: where will the developers focus their energy in the future? If you’re a fifteen year old kid with a great idea for an app that’s going to change the world, are you going to write it for iOS, or are you going to create it with Epic’s Unreal Engine to run inside of Fortnite? At NZS Capital, we’re always looking for the companies that maximize non-zero-sum (win-win) outcomes. Sometimes that means we miss great stocks, but we think it’s the most important factor, along with adaptability, for long-term success in the Information Age. Monopoly app stores with high fees are much lower NZS than ones that compound value for developers and users with lower fees.”
I like this move from Google, and I am willing to view it as sincere, but will reserve judgement until we get a better look at Android 12.

EU Set to Approve Google’s Acquisition of Fitbit
Google also notched a win last week with EU approval for the proposed Fitbit acquisition. The concessions Google offered included making Fitbit’s data accessible (with user permission) to other connected fitness apps and a commitment to not use the data for advertising for a period of time. I think this is a smart outcome, and it’s in alignment with our previously detailed philosophy on tech regulation: allow adjacent innovation, but democratize access to the data.

Google’s New Hardware and Software
In other Google hardware news, the company released a new Chromecast with a remote control (yay!) and a revamp of Google Play Movies as Google TV. I got my new Chromecast this weekend, and the user interface and search are so far as good, or better in some cases, compared to all the competition. It has all the top apps (even HBOMax and Peacock), but is still missing some apps I frequently use like Peloton and the Criterion Channel. New Pixel 5G phones were announced as well, but Nikkei reports that Google is only planning on making three million of the new Pixel models, which seems to cast increasing doubt on Google’s ability to sustain its high-end hardware efforts against Apple. I’ve had every Pixel from the very first model – they are the only phones I have used since 2016, and I’ve loved them all. The low Pixel count puts the spotlight on Samsung as a de facto Android winner outside of China (Google and Samsung were rumored to be getting closer this summer). A couple of new features on Android are notable – the new Hold for Me assistant will notify you when a person picks up so you don’t have to listen to elevator music on repeat; and, the photo app will have face retouching off by default and will avoid ascribing value terms – like beauty – to filters. 

Grocery Delivery Succeeds with Verticalization and Automation
Picnic, the Dutch online grocer creating the “Milkman 2.0” makes heavy use of automation, robotics, and data in its operations – from specially-built warehouses to electric delivery vehicles. This blog post dives into the complicated task of end-to-end temperature tracking, including incorporation of variables like real-time weather, which is all done via a data warehouse on AWS.

Crypto-Friendly Visa
Forbes interviewed the crypto leaders at Visa, which increasingly sees itself as a “network of networks”, including interfacing with blockchain networks in the same way they would handle a credit card transaction with a 3rd-party platform. One such example is the Coinbase Visa card, which links to the crypto exchange’s customer balances. 

Significant Streaming Shift
In a new audience report, NBCUniversal claimed 76% of viewing by adults 18-34 years old is now via streaming and on-demand (i.e., not live); and, even more remarkably, 50% of viewing by folks over 50 is also streaming/on-demand. NBCU is owned by US cable giant Comcast, whose CEO, Brian Roberts, recently said at the Goldman Sachs Communacopia Conference: “I think we would like to get to a place where we're indifferent, that to me -- and I think we're almost -- frankly we're there. That way, we can think as a consumer thinks.” The barriers are clearing completely to create the new consumer digital bundle of all types of content – video, music, games, phone, and Internet service, etc.

Miscellaneous Stuff
Fusion with “Extremophile” Semi Tech
Nuclear fusion involves combining two or more nuclei from lighter-mass atoms (like hydrogen) into a single, heavier nucleus, while throwing off excess energy (note: current nuclear power plants use nuclear fission – a.k.a. dissociation – of nuclei from much heavier atoms, like uranium-235, which also generates excess energy). Commonwealth Fusion Systems, a spinoff from MIT, is aiming to commercialize a small fusion reactor within a decade. A working model could potentially be ready within four years, well ahead of the timetable for other efforts. Unlike the competition, the Commonwealth researchers aim to use high-temperature semiconductors to generate and maintain a higher-powered magnetic field, enabling a smaller footprint for containing the plasma – the superheated, fusion-capable soup of dissociated nuclei and electrons, which can reach upwards of a toasty ~100 million degrees (i.e., significantly hotter than the inside of the sun). Indeed, main-sequence stars, like our sun, generate energy by fusing four protons of hydrogen into helium, which is a self-sustaining process once it gets going. Eventually, once enough helium is created, our sun will begin helium fusion as it transitions to a “red giant” star and expands to engulf the inner planets. Luckily for us, we won’t be around when that happens in about five billion years. 

Telltale Cosmic Dust
Speaking of dying stars, the presence of iron-60 and manganese-53 in an undersea rock layer formed 2.5 million years ago can be traced to a “nearby” star that went supernova. This type of super-energetic explosion is one of only two known sources of iron-60 and is unique in its ability to produce manganese-53. These radioisotopes subsequently rained down on Earth along with our regular “background” precipitation of cosmic dust, creating an unequivocal supernova signature. The explosion also produced cosmic rays that could have increased cloud cover and contributed to the Pleistocene Ice Ages, which began around the same timeframe. In contrast, The Earth’s sun doesn’t have enough mass to explode (expanding, rather, as a red giant, as mentioned above). Type I supernovae come from white dwarfs (~1.4x the mass of our sun), and Type II supernovae originate from stars with at least 10x the mass of our sun. Based on the radioisotope abundance detected, it’s believed the Pleistocene supernova originated from a star that was 11-25x as massive as our sun. 

Pale Blue Dot
And, while we are on the subject of astronomy, there is no better time than now to put forth my periodic link to Carl Sagan’s Pale Blue Dot. 

Stuff about Geopolitics, Economics, and the Finance Industry
Corporate Fraudsters Beware
Since 2012, the SEC has paid $562M in rewards to whistleblowers, $175M of which came in just the last year, according to Bloomberg.

Illegal Ransomware Payments
The US treasury is warning victims of ransomware that paying off hackers from sanctioned groups or countries is illegal. It raises a provocative question: if it’s illegal to pay ransomware, and a company’s only option is to walk away from the impacted systems and restart, then either: 1) companies will keep ransomware secret, 2) hacks will stop (which seems unlikely as the data can still have value to hackers even without ransom), or 3) companies could get their act together and modernize their IT much faster.

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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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