30: 1999 Bezos Interview, TikTok SNAFU, Amazon Launches Game Streaming Service, and Gavin Baker on Technology Investing

"Analog semiconductors are like the black magic"

Nothing is judged more carelessly than people’s characters, and yet there is nothing about which we should be more cautious. Nowhere do we wait less patiently for the sum total which actually is the character.”

“Erudition can produce foliage without bearing fruit.”

“If people should ever start to do only what is necessary, millions would die of hunger.”

“He who knows himself properly can very soon learn to know all other men. It is all reflection.”

“The sure conviction that we could if we wanted to is the reason so many good minds are idle.”

All by German physicist Georg Christoph Lichtenberg (1742 – 1799), who worked a lot on electricity (dielectric materials, etc).

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Investing & Business

China Daily on TikTok Deal

What the US has done to TikTok is almost the same as a gangster forcing an unreasonable and unfair business deal on a legitimate company. [...]

It seems as if TikTok can remain in the US. But only if ByteDance allows Oracle and Walmart to effectively take over the company. Of the five board seats of the proposed entity TikTok Global, four would be Americans, with only one board member being Chinese. A national security director would be included on the board, and although in theory ByteDance would still own the algorithm that runs TikTok and license it to the new US-based company, Oracle would have the authority to check the source code and any updates. Since TikTok and its Chinese version Douyin have the same source code, it means that the US would get to know the operation of Douyin.

ByteDance therefore stands to lose not only control of the company, but also its core technology that it has created and owns. That would be detrimental to the long-term development of the company.

China has no reason to give the green light to such a deal, which is dirty and unfair and based on bullying and extortion. If the US gets its way, it will continue to do the same with other foreign companies." (Source)

I know some people’s first reaction to this will be: “well, China also steals technology from foreign companies, restricts their operations for ‘national security reasons’, it shields its own companies from competition, etc”.

All true.

But what is the goal, here? (I don’t mean the government’s goal, I mean, what do you want?)

Do you start stealing things because someone else is a thief? Does that reduce thievery, or increase it? Does that encourage the thief to reform, or keep stealing? Does it encourage others to do the same? What if India now wants to force Facebook to sell its Indian business to Reliance and Jio for “national security reasons” with source code/algorithm oversight? And then Russia, etc? Do you become more autocratic and less free because others are autocratic and ruled by dictators?

Seems counter-productive, and longer term, the result of going in the direction is… not good.

As I wrote in edition #28, there are real national security issues with TikTok, but this deal, and the way it happened, have mostly just made things more confused and further eroded trust in important institutions and their fairness.

Don’t get me wrong, I’m not saying there’s nothing to do when a country like China doesn’t play by the rules. There’s plenty. But I’m saying that what was done here probably doesn’t help the situation, and likely makes it worse.

Interview: Gavin Baker on Being a Technology Investor

Q: Why are these [big tech] companies a new kind of monopoly?

If you’re willing to spend enough capital, you can recreate the railroad systems in America with $500 billion. With a lot of money, you can also build a new cable system or a new electric or gas utility network. FedEx and UPS have shown us that you can recreate the postal system. But you actually cannot spend any amount of money and create a search engine that is better than the world’s dominant search engine today. People have tried: Amazon had an internal effort to build a search engine, and they concluded it was impossible. Microsoft has worked at Bing for many years and never really gained market share. The reason is that with any product where the quality is driven by artificial intelligence, it’s almost impossible to compete with the market leader.

Q: What’s the reason for that?

To improve the quality of AI, you have to increase the amount of data you use to train the model. In essence, if you train an algorithm with 10x the data, the quality of the algorithm doubles. So you get these feedback loops: If you have a great product like a search engine, more people use it, you get more data, the product gets better, even more people use it and so forth. That fly wheel just spins and this is why it’s hard to replicate Google. It’s a game of cumulative knowledge and data. The primacy of data for AI quality means that some of these companies are truly unique because their competitive advantage is not just growing every year, it’s literally growing every second. Those are great dynamics for investors, but for society they create very difficult trade-offs: How do you regulate these monopolies? Do you regulate them in such a way that the product gets worse?

I liked this line about analog semiconductors:

I often say semiconductors are the closest thing to magic in the modern world. Analog is like the black magic because there are only a small number of people in the world today who can design these analog chips. It’s trial and error, it takes a very long time, and it’s almost as much of an art as it is a science.

I'm imagining sold old dude at Texas Instrument with a pocket protector on his wizard's robe, holding a gem-encrusted staff in one hand and a soldering iron in the other. Of course there’s also a TI-89 calculator on his desk… Can’t do black magic without that.

But in general, I would just say that the current US industrial policy [toward China] is very strange. [...]

Essentially, the US is saying to China: We are not going to sell you these semiconductors, but we are going to sell you all the equipment you need to make your own semiconductors. [...] If our goal is to limit China’s access to these advanced technologies, the US is doing the exact opposite of what would be logical.

Strange indeed. I may even use a different word…

Read the whole thing here. It’s good stuff.

1999 Playboy Interview with Jeff Bezos

Bezos: We are famously unprofitable. Many companies expect to be unprofitable at first. We think it would be incredibly shortsighted to try to optimize for short-term profitability when we face innumerable opportunities, all of which require investment.

DS: But at some point, investors will insist on profits.

Bezos: Which will come.

DS: How far in the future?

Bezos: When they will come is fairly straightforward. You have to look at the ratio of mature businesses to new opportunities at Amazon.com. When that ratio starts to get higher, it begins to make more sense to focus more on short-term profitability.

Right now, we have one business that is semi-mature, our U.S. book business. But we are investing in the UK, Germany and other countries; in music, videos, toys, electronics; and in completely new business models with auctions and our zShops. There is more coming that we haven’t yet announced. Investing in all these new opportunities is good business, as far as I’m concerned.

Interesting comment on Microsoft:

DS: Besides Amazon.com, what other net companies have done it right?

Bezos: Microsoft has done a fantastic job. They’ve taken some criticism for some of their Net efforts, but not for the important ones. It’s amazing how quickly they adapt. I have a lot of respect for that company, mostly because they’ve done such a great job of hiring. The depth of the team they’ve built stands out over time—brainy people all the way down.

You can read the whole thing here. h/t @NeckarValue

Interview: Liz Hall

Interesting conversation between Bobby Kraft and Liz Hall. Video above, and audio here. If you’re not familiar with her, a good intro is her interview with Jim O’Shaughnessy.


Science & Technology

Above the Cloud

Microsoft is building a global network of antennas co-located with its data centers that will enable satellite operators to download data from orbit more easily... [the] ground stations will become available on-demand via a new service called Azure Orbital (Source)

Here’s the 21-minute launch presentation for the service, if you want more details.

‘It’s not just about child mortality, life expectancy improved at all ages’

Classic “but actually” cocktail party conversation is incorrect:

It’s often argued that life expectancy across the world has only increased because child mortality has fallen. If this were true, this would mean that we’ve become much better at preventing young children from dying, but have achieved nothing to improve the survival of older children, adolescents and adults. Once past childhood, people would be expected to enjoy the same length of life as they did centuries ago.

This, as we will see in the data below, is untrue. Life expectancy has increased at all ages. The average person can expect to live a longer life than in the past, irrespective of what age they are.

Note the huge impact of WWI and the ‘Spanish’ flu epidemic of 1918, and WWII’s impact on younger cohorts.

Source.

Google Maps Adding COVID19 Data Overlay

When you open Google Maps, tap on the layers button on the top right hand corner of your screen and click on “COVID-19 info”. You’ll then see a seven-day average of new COVID cases per 100,000 people for the area of the map you’re looking at, and a label that indicates whether the cases are trending up or down (Source)

The data’s coming from multiple sources like the World Health Organization, government health ministries, state and local health agencies and hospitals, etc.

It’s a good idea. There’s a lot of data in databases that could be made a lot more useful and widespread by 1) putting it in a popular app 2) in a visual, intuitive, easy-to-understand format. I’m not saying that this is exactly nailing #2, but it’s a first step in that direction.

Luna: Amazon’s New Game Streaming Service

Amazon announced a bunch of stuff yesterday, including new Echos, Eeros, and FireTV stuff, but what stood out to me was the game streaming service:

With Luna and the incredible scale and capability of Amazon Web Services (AWS), it’s easy to stream high-quality, immersive games. Players can enjoy Luna games on their favorite devices without lengthy downloads or updates, expensive hardware or complicated configuration. They can even start playing on one screen and seamlessly pick up and continue on another. At launch, Luna will be available on Fire TV, PC, and Mac as well as on web apps for iPhone and iPad, with Android coming soon [...] through web apps on iOS

Trying to bypass the Apple App Store through the browser… How much worse an experience will that be than a native app? Apple really needs to figure out a way to thread the needle and allow these game-streaming platforms without creating a trojan horse that bypasses fully the app store by creating stores within stores (everybody thinks of the money aspect, but there’s also an important user experience aspect).

Luna+ will be offered at an introductory price of $5.99/month during the early access period, with more titles to be added over time. Additionally, Luna+ subscribers can play on two devices simultaneously and get resolutions of 4K/60fps for select titles. [...]

Amazon also announced a new gaming channel with leading global video game publisher Ubisoft, available directly through Luna. Players who subscribe to this channel will have access to their favorite Ubisoft titles in up to 4K resolution

So is the goal to do kind of like on Prime Video, with a bunch of content for a low price, and then additional “channel” subscriptions to get more premium content?

There’s this interesting integration with Twitch too:

Inside the Luna experience, players will see Twitch streams for games in the service, and from Twitch, they’ll be able to instantly start playing Luna games.


The Arts

You look like a good Joe…

Blade Runner 2049 pixel art by prodigalkal7. Source.

Here’s the film scene on which this is based, if you want to compare.

Rain Monster

Our brains are pretty good at seeing faces in things (including demonic faces)…

This is an ad from Turkey for Audi’s automatic rain sensors. It was created by an agency called Tribal in 2017. Source.