The Great Stagnation in Clothing

Inside the Equinox Hotel at Hudson Yards

Jeffrey Katzenberg’s Quibi

The French are coming for Netflix (who isn’t)

Effect of Potential USD Shortage on Chinese Asset Sales

China’s Economy: What Everyone Needs to Know

What parallels can be drawn between Thailand, South Korea and Japan that could explain why their economic growth has outpaced that of the U.S. and other developed nations? LSE Professor Robert Wade suggests three main pillars of state-led macroeconomic planning:

1. Land reform: breaking up big estates/plantations and creating a class of rural small holders, thereby raising the productivity/output of the land, especially in areas with unlimited supply of farming labor. This raises capital needed to invest in infrastructure.
2. Export manufacturing: this helps the technological catch-up of developing nations in two ways. 1) Exports can be exchanged for the necessary foreign currencies to buy the capital equipment to increase productivity per worker (especially given weaker currencies in developing nations). 2) Once the country’s manufacturing base has been established, their exporting capabilities can help compete globally.
3. Financial repression: controlling financial markets to facilitate the state directing capital to industries best aligned with its developmental strategy. Examples: regulated, low interest rates to reduce rentiers from living off interest income and encourage borrowing for domestic investments. A cheaper exchange rate also boosts exports. Capital controls can curtail capital from moving abroad and further incentivize domestic reinvestment.

Posting a little early this week…

A Story of Courage – The Life of Charlie Munger

“Charlie was 31 years old, divorced, broke, and burying his young son. It would have been tempting to just give it all up and turn to vices (alcohol, drugs) as so many people around him had done at that time. But Charlie was not that man and he kept going.” Contrast this narrative to today: billionaire partner of Berkshire Hathaway and Warren Buffett, Giving Pledge co-signer, Stanford dormitory designer, and much more.

Peter Thiel’s Religion – David Perell

” At first, two people who share the same desire will be united by it. But if they cannot share what they both desire, their relationship will transform. They’ll turn from the best of friends to the worst of enemies.”

“Prestige-oriented environments can create nasty feuds over little prizes.” – similar to Naval Ravikant’s saying, “play stupid games, win stupid prizes.”

Conversations with Tyler: Peter Thiel

Concept: The “Straussian reading” refers to a form of reading between the lines. For example, the Straussian reading of Thiel’s Zero to One might be, don’t become an entrepreneur, despite the book outlining a playbook for how to become a successful one. One way to improve the skill: watch actions instead of words. A money manager with integrity will put his money where his advice is.

Where Are The Customers Yachts?

“All of these theories are true part of the time; none of them true all of the time. They are, therefore, dangerous, though sometimes useful.”

“For one thing, customers have an unfortunate habit of asking about the financial future. Now, if you do someone the single honor of asking him a difficult question, you may be assured that you will get a detailed answer. Rarely will it be the most difficult of all answers – “I don’t know.” Ask a barber if you need a haircut…

Against Against Billionaire Philanthropy – Slate Star Codex

The Untold Story of Facebook’s Building 8 – and their struggle to develop a hardware business

How to Win in a Winner-Take-All-World: Succeeding in High-Performance Careers

• Neil Irwin (NYTimes, The Upshot) writes about how employees can improve their career navigation by seeking “pareto optimality”, which is essentially building specialized/niche skills while applying lateral thinking. Marc Andreessen and Scott Adams both offer similar advice: becoming top 25% in the world at multiple skills might be a better pursuit than top 5% in only one arena.
• Examples: Omer Ismail‘s track to partner @ Goldman Sachs, Henrik Green‘s path to Volvo CTO, Joe Berger‘s journey to President of Hilton Americas, Nick Caldwell of Microsoft, and many many more
• Similar content to Range by David Epstein, but much better in my opinion, using concrete and thorough examples of real career journeys to highlight the thesis
• Next read: The Alchemists by Neil Irwin, about the three central bankers (U.S. Federal Reserve, Bank of England, European Central Bank) in the ’08 financial crisis

Linked: The New Science of Networks

• Remarkably similar to the Social Networks class I took at Northwestern with Professor Noshir Contractor; this book would probably be the best course summary anyone could’ve made
• Key lessons: the 80/20 principle/Pareto Principle/Price’s law, graph theory, six degrees of separation, properties of populations (density, transitivity, reciprocity, clustering)

Really great blog on tech, markets and investing: 25iq.com

When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein – a documentation of LTCM, a hedge fund made up of highly-qualified quantitative traders which at its peak commanded $100B, but rose to prominence and collapsed within 5 years.

How I Practice What I Do by Tyler Cowen: analogous to how I imagine many athletes practice their sport. He reads and writes every day, and practices laying out points of view that are not his own. He focuses on his competitive advantage, compounding skills that age well, he avoids the tempting distractions.

Inside Walmart’s Fight with Amazon: it’s hard to envision Walmart competing effectively against Amazon, given Amazon’s huge leads in infrastructure, patient capital and product selection. But the article ends with an interesting note: what are the anti-trust implications for Amazon in an e-commerce world devoid of Walmart?

Lee Kuan Yew interview: strategic thoughts on the future of global geopolitics (U.S. vs China, India’s power rankings, conditions for growth and collaboration between superpowers).

Decision Points by George W. Bush: what if every global leader self-documented their most critical decisions, outlining how their decisions were made and reflecting upon the outcomes?

Premature optimization: it can be tough to choose where to focus your software development efforts, and the stakes can be tremendous. A useful framework: start with the part that is most expensive to change later on.

Preferential attachment theory of complex networks: the idea that the existing distribution of resources (attention, money, talent, etc.) often guides future resource distribution. Implications: to those that have, more will be given; the rich get richer; top talent will cluster with other top talent, etc.

When They See Us (Netflix): the epitome of the power of storytelling. A miniseries based on the 1989 Central Park jogger case in which a woman was attacked, raped and left for dead. The brutalities were wrongfully pinned upon five teenagers who received harsh sentences after being coerced into admissions of guilt despite no physical evidence. Can’t recommend highly enough.

Formula 1: Drive to Survive (Netflix): I’ve never been interested in F1, Motorsport or competitive racing, until now.

Berkshire Hathaway Annual Shareholder’s Meetings since 1994, in podcast format

Tech and Anti-Trust – Stratechery. Focuses on potential outcomes of anti-trust scrutiny of big tech. FTC defines “monopolization” via two key characteristics: market share (usually 50%+, but obviously contingent upon the definition of the particular “market”), and durability of market power.

Starting with monopoly allegations: 1990s Microsoft was deemed a monopoly on personal computing operating systems given its market share and the lock-in it had due to network effects between Windows API and users. Apple, even in the US (its best market), only has 45% of share with the iPhone. However, in its app store, it charges 30% commission on subscriptions sold on apps, imposing an economic disadvantage upon apps that compete with those offered by Apple, including Spotify. As for Google and Facebook, it seems difficult to define the addressable market for digital advertising; the total advertising inventory on the internet is virtually boundless. Amazon plays in the retail and ecommerce spaces, and does not command 50%+ of either gross merchandise volume.

Where to invest in the next 10/20/30 years – 13D Research: the late-mover advantage suggests emerging markets will be tremendous growth opportunities, highlighting drivers that include demographics, fintech and solar power advancements, improving trust in governance and an undervalued emerging markets index relative to the U.S.

AQR on how pension funds and endowments should think about portfolio allocation to equities. Key thesis: Warren Buffett often recommends investing in low-cost index funds and sit tight while your returns compound. AQR notes, however, that endowments and pension funds have periodic payment obligations that consume most of the returns, specifically for pension funds who’s growing benefit payments are an even larger burden in drawdown years. Conclusion: diversification from pure-equity strategies is necessary to protect the sustainability of these periodic obligations.

Beyond Meat Valuation – Aswath Damodaran.

How Aldi’s Beating Walmart at its Own Price Game – CNN

Amazon seeks to revive its faltering loans business – FT. You’d think with all their transaction, inventory and cash flow data on their SMBs sellers, Amazon would have great data to assess their creditworthiness and generate a smart lending business. But growth has been challenging, jobs have been cut and they’ve stopped issuing loans in some countries. FT notes that new ‘open banking’ rules in the UK and the Payment Services Directive in the EU allow tech companies greater access to banks’ customer data (through a larger initiative to increase European competition in the payments industry), if consumers consent. This could give Amazon repayment information and income data of sellers from other marketplaces, effectively giving them greater access to bank data while retaining their own seller data in private, extending an advantage.

It’s been a busy few weeks, both in work volume and reading, starting with this 66 hour behemoth of an audiobook:

The Power Broker by Robert Caro, winner of the 1974 Pulitzer, sheds some light on questions like: how do large-scale, billion-dollar public works like bridges, highways and state parks get built? Who makes the decisions, what causes delays and snowballing costs (see Tyler Cowen and Scott Alexander on cost disease), and how can power be created and wielded to overcome these barriers? Between the lines, the book challenges you to think about what prices cities should be willing to pay, and the consequences (financial, social and humanitarian) when we overpay.

More commentary on high construction costs in the US. Example drivers of construction costs (9 total are listed in the article):
– Tunnels: NYC cost per km is much higher than peer cities; in part because the unwillingness to disrupt traffic flow disallows the otherwise-conventional cut-and-cover tunneling method and requires longer material transport times, higher costs, and potentially rising probabilities of delays.
– Sourcing: contracts are usually awarded in the U.S. solely based on price submitted by a construction firm; however, some firms underbid and then raise change orders, causing cost over-runs. On the flip side, NYC looks to minimize these events by overexacting specs, reducing flexibility, limiting the competitive pool, and increasing the price.

Genghis Khan and the Making of the Modern World by Jack Weatherford. Like the Free Folk from Game of Thrones, the Mongols were historically a fragmented and nomadic set of tribes until united under Genghis Khan (here’s where the metaphor is more aptly suited for the Dothraki), when they conquered 16% of the world’s landmass (the largest contiguous empire ever), and contained 25% of the world’s population. Genghis (born Temujin) had tremendous success in uniting such a large empire under one ruler, no doubt driven by power and reputation for retaliation, but also supplemented by policies like sharing spoils of war with families and converting enemy leaders into followers.

The Economics of the Cloud – Microsoft (2010). Cloud services shift traditional IT economics via three key drivers: large scale data centers reduce costs per server (supply-side savings), server utilization rates are sustainably grown as aggregated user demand smooths variability (demand-side aggregation), and efficiency gains from a multi-tenant model reducing application management and per-tenant server costs – analogous to the AirBnb model (multi-tenant efficiencies).

Why bankers can’t stop running – Financial Times