[VIC – 158] I ❤️ Pop-Tarts!!

Business & Money

I have a rule that I live by when it comes to looking for investment ideas. When I hear about a company/product in 3 different settings, I commit to doing a bit of digging to learn more.

One of my favorite websites to read is Stratechery. It’s all about the strategic decisions made by technology companies. Perhaps 6 months ago, I got an email from Stratechery saying they were launching advanced search capabilities on the site, powered by Elastic.

One of my favorite email newsletters is from a company called Stocktwits. It’s Twitter for people that like to follow markets. They recently launched Stocktwits advanced search, which allows you to track down the best posts and memes related to specific stock tickers. You guessed it – also powered by Elastic.

One of my favorite venture capitalists to follow is Howard Lindzon. He carries himself in a down-to-earth manner, while nonetheless finding & funding incredible seed-stage companies on the regular. And he’s incredibly bullish on Elastic (he wrote about them here)!

That makes 3!

Google was founded in the late 90s to organize the world’s information. With the exponential increase in the information at our fingertips that comes with the internet, discovery becomes paramount. Google solved that problem in a major way. Now they’re the 4th largest company in the world.

In today’s environment, every company has a similar problem. They have tons of information stored in different places and need an easy way to index and search through it all. Elastic solves that problem in a major way.

Finally, with economic uncertainty on the rise, I love searching the markets for relative strength. By relative strength, I mean that I’m looking for the companies that continue to perform well as other market leaders begin to suffer. It seems to me that companies with good relative strength are often the ones that become leaders when good times return.

This one is definitely going on the watch list!

Human Progress

I often use this section to talk about technological progress or progress concerning the ways we organize and interact with one another. But irrespective of the specific sort of progress in question, progress is, by definition, relative. You can only measure it in comparison to a previous point in time. Something is better today than it was yesterday.

Let’s take an example.

The other day I was walking Dutch beside our apartment building. The front of the building has a beautiful facade and faces the East River. Thus it would create a rather ugly picture if trash from the building was piled high in front of the place where people enter and exit. As a result, trash is instead piled on the side of the building where dumpsters come a couple times a week to take it away.

On this particular day, as Dutch and I were walking on the side of the building, from the back of the building toward the front, it was trash day. So, per usual, trash and recycling bags were piled as high as the windows of the cars parked there along the curb, perhaps 4 feet or so. As we got closer to the bags, I could see a family of people picking through the bags. This is not an uncommon sight in New York City. I believe you get a few cents per bottle/can if you bring them to waste disposal facilities. So these (what I assume to be) poor families track down as many as possible to make a few bucks.

Perhaps 10 meters ahead of Dutch and I was another woman walking her dog. She very clearly wasn’t a huge fan of the family picking through the trash. She altered her course so that she was as close as possible to the building, and thus maximized the distance between her and the “trash pickers.”

As Dutch and I passed, I wasn’t quite as concerned. They were focused on what they were doing and there was at least 5 feet or so of distance between us. I, of course, had no desire to come in to contact with trash at 7 in the morning (or any other time for that matter), but I also sort of appreciated the sight. Here was what looked like a mother and father, a grandma, and 2 kids, all focused on collecting as many bottles as possible to maximize that day’s earnings.

To me, this is the quintessential image of progress; the definition of hustle. I don’t know their situation, but I imagine that those people were not passionate about trash picking. Rather, they were doing what they needed to do to get by, to ensure that the family had food on the table and that bills were paid. At the end of the day, that family had a bit more money than they started the day with (I hope).

And if you ask me, I bet those kids will be just fine. I don’t know how many 7-year-olds know what it’s like to get up early in the morning to pick through trash to ensure your family gets to eat that day.

I think we all would be well served to keep the image of this family in mind when we think about our own definition of progress.

What can you do today that will make for a better tomorrow, if even only a little bit?

Philosophy

Many of you know that I love Pop-Tarts. Especially, the frosted brown sugar cinnamon ones! And I’m not sure I’ve ever read the nutritional label, but safe to say they’re terrible for you! But some things in life are just worth it!

While these things are so so good, it’s clear you can’t eat them all the time. So I limit myself to one sleeve (2 individual Pop-Tarts) per week. Rather, I don’t eat one sleeve every week, but when I do decide to eat one, the rule is that I cannot have another for 7 days. Gotta watch the waistline 😉.

During this past week, my Pop-Tart craving hit me hard on Wednesday. And, as one does, I gave in to it (unfortunately, I was forced to resort to frosted strawberry because my main squeeze was MIA).

Then, when I finished working on Friday night, it hit me again as I was shutting down my computer around 9:30 pm. And the timing was inopportune because I needed to walk Dutch. Our normal route takes us past a Duane Reade with every flavor of Pop-Tart imaginable. So I decided to leave my wallet and phone at home (no cash, credits cards, or Apple Pay with which to make a purchase).

I left everything at home for the same reason that we do not buy boxes of Pop-Tarts to store at home. I don’t trust myself.

None of us has a bottomless well of discipline and motivation, myself included. We’re human. Our desires and emotions overpower rational thought on a daily basis. It happens like clockwork and it’s perfectly predictable.
So, for me, the way to hack the system is to remove opportunities to cheat. If I have no way to pay, I can’t buy Pop-Tarts.

It’s the same reason that, whenever I have hunted for apartments in the past, the number 1 prerequisite is a good gym in the building. If I don’t have to leave the building, there’s never an excuse not to go.

It’s why my phone is always face down on my desk and on silent. If I cannot hear the notifications or see them pop up, there’s no chance of distraction.

Long story short, it seems to me that the shortest route to discipline is making it easy to remain focused on whatever it is you’re trying to accomplish. Make it hard to cheat.

But at the same time, be compassionate with yourself every now and again. Someone has to eat those Pop-Tarts!

My Latest Discovery

On Wednesday, I enjoyed one of the most, perhaps THE most, tender cuts of beef tenderloin on the planet! It was a part of the “beef tenderloin stir fry” dish at Llama Inn.

Yes, your eyes do not deceive! The beef tenderloin is covered with french fries and a cream pepper drizzle.

I wouldn’t generally describe steak with the phrase “melt in your mouth,” but it’s apropos in this case. It’s almost as if it wasn’t beef at all. Magnificent!

[VIC – 151] F*** the golden rule!

Business & Money

I love the following parable that Howard Marks included at the end of his latest memo.

Suppose that every day, ten men go out for beer, and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes (by taxpayer decile), it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you’re all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six? How could they divide up the $20 windfall so that everyone would get his fair share?

The bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to suggest the new lower amounts each should now pay.

And so the fifth man, like the first four, now paid nothing (a 100% saving).
The sixth now paid $2 instead of $3 (a 33% saving).
The seventh now paid $5 instead of $7 (a 29% saving).
The eighth now paid $9 instead of $12 (a 25% saving).
The ninth now paid $14 instead of $18 (a 22% saving).
The tenth now paid $50 instead of $59 (a 15% saving).
The first four continued to drink for free, and the latter six were all better off than before. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the fifth man. He pointed to the tenth man, “But he got $9!”

“Yeah, that’s right,” exclaimed the sixth man. “I only saved a dollar, too. It’s unfair that he saved nine times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $9 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.
The next day, the tenth man didn’t show up, so the other nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important: They didn’t have enough money between all of them for even half of the bill!

And that’s how taxes work. Tax breaks, quite naturally, flow to those that already pay the highest taxes. Raise rates too much, they get more creative (find loopholes) and take their money elsewhere.

Human Progress

In many (perhaps most) fields, veterans have stark advantages over rookies.

Sometimes the difference is structural. If you want to be an elite lawyer, doctor, or politician (is elite politician an oxymoron?), you simply have to put in your time and pay your dues.

Sometimes it has more to do with experience. Years in the trenches help you more readily recognize patterns and make better decisions.

But I love technology because it does not follow this model. If you come up with a novel new technology or business model, and you are adding real value for your customers, you can do well with almost no experience. It’s pretty 🍌🍌🍌!

Think about when Netscape first rolled out the web browser. At the moment, rookies and veterans were indecipherable because the web browser was brand new for everyone.

The same thing is happening in crypto right now. There are high school seniors that are more adept at building decentralized applications on the blockchain then software engineers that have been working in their field for decades.

In technology, it almost pays to be a rookie, at least in the earliest stages of building something new. It’s the only way to truly think from first principles.

(of course, adult supervision can be a great thing when it’s time to scale)

Philosophy

You’ve likely heard of the “golden rule.”

Treat others how you want to be treated.

To me, it made a ton of sense for a long time. Why would you do something to someone else if you wouldn’t like it done to you? Pretty straight forward.

But when you think about it more closely, the golden rule is ridiculous. In fact, I’d venture to say it encapsulates much of what is wrong with humanity. At the core, people are selfish individuals that can’t help but see the world from a first-person perspective. “Why wouldn’t everyone want to be treated like I want to be treated? After all, my views are right and true and pure.” 🤣

The reality is that people are different and have very different views about how they’d like to be treated. When I get frustrated, I like to be left alone. Quiet time and isolation are my preferred methods for reflection and introspection. Other people want to be comforted and asked if everything is ok. So to treat that person like I want to be treated is to neglect their emotional and psychological needs.

Lucky for me, my coach recently made me aware of the “platinum rule.”

Treat other people the way they want to be treated.

Makes FAR more sense!

My Latest Discovery

If you haven’t been to Koi in Bryant Park, do yourself a favor and go check it out! It’s a tad pricey, but the food is on point. Especially the crispy rice with spicy tuna!

[VIC – 127] 🔎 🧠 ⚖️ 🍣

Business & Money

Google was recently fined $5B by the European Commission for antitrust violations. I find this ruling interesting for a number of reasons, but let’s start by listing out specifically what they were found guilty of:

  1. Illegally bundling Google Search, Chrome, and the Google Play Store. To get the Play Store, and a full suite of Google apps by extension, Android OEMs (original equipment manufacturers aka phone makers) were forced to preinstall Google Search and Chrome, and also make them available within one screen of the home screen.
  2. Illegally paying OEMs for search exclusivity – they had to preinstall Google Search (and no competing search apps) on every Android they made.
  3. Illegally barring OEMs from selling Android devices that ran Android forks (basically negating the open source nature of the operating system).

Does this ruling remind you of anything? For me, it harkens back to the days when Microsoft was facing its own antitrust allegations. Similar to Google, Microsoft was under fire for bundling Internet Explorer to the Windows operating system, effectively killing off competition from other browsers, namely Netscape and Opera. In the days when application downloads were slow and users often had to buy software in retails stores, it was an insurmountable advantage that Microsoft could bundle its browser with the operating system that was preinstalled by PC OEMs.

But the interesting thing here is that Microsoft basically got a slap on the wrist. They settled the case with the DOJ without having to unbundle anything or change their go to market strategy.

By contrast, Google has to:

  1. Pay $5B in fines,
  2. Unbundle Google Play from Search and Chrome,
  3. Stop paying OEMs for Search exclusivity, and
  4. Stop barring Android OEMs from running Android forks.

That’s a massive difference in outcomes. I think that difference partially stems from the business model. Microsoft charged a per-device license fee to OEMs that wanted to pre-install Windows. Android is free to smartphone OEMs. Actually, it’s less than free. OEMs were paid for Search exclusivity and Google also shares a portion of search revenues. One could easily make an argument that that describes predatory pricing.

Perhaps most interesting, though, will be what happens next. Will this result be enough to shake Google’s competitive edge? I’m not so sure. And how will this affect Google investors? AT&T is up over 500% since it was broken up in the early 80s. Microsoft is up over 300% since it’s tussle with Uncle Sam in the early 2000s. In other words, I don’t think there’s much to worry about for long-term investors. Regulation isn’t what usually unseats dominant players. More often it is a new paradigm (e.g. mainframes > PCs > web > cloud > mobile).

Human Progress

Modern humans have been around for a couple hundred thousand years. Interestingly enough, our structure and physiology haven’t changed much during that time. However, our way of life has changed drastically. We’ve been hunter-gatherers, agriculturalist, and industrialists. We’ve covered all corners of the globe and subscribe to many different cultures and ideologies.

I don’t write this to kick off some long-winded history lesson, but rather because I find neuroplasticity to be fascinating. We are all basically the same, but each of our brains has the ability to undergo rapid changes based on our environment.

I remember reading a while back about how a taxi driver in London will exhibit an enlarged hippocampus after many years on the job.

Then you have the Moken, a seafaring people off the coast of Myanmar and Thailand who exhibit incredible underwater vision due to the amount of time they spend diving for shellfish and other food items.

I find myself thinking about this do to the moment we currently occupy. At a crucial juncture in our lives (our teens), my generation (dare I say “millennials”) experienced a shift to a world dominated by algorithms. Much of the news and information that many people consume is algorithmically curated to serve up things that confirm preexisting beliefs (or stoke anger and mistrust toward the “other”).

So I wonder how long someone needs to be exposed to this type of information before the brain rewires itself so that this is the new normal? And when that happens, how much harder will it be to reverse course?

Philosophy

What’s more, there’s a paradox at play here.

Many of the platforms that rely on algorithmically curated information are based around the premise of networks. In fact, it might be said that our ability to collectively organize is one of our greatest assets. Quotes abound about the value of working together and standing on the shoulders of giants.

However, when we organize, we are also at our most vulnerable. Collective biases, social pressure, and groupthink are nefarious forces. From these you get mob mentality and pluralistic ignorance. You get small transgressions that snowball into fascism.

Personally, I’m not sure how to reconcile the two.

My Latest Discovery

Last week I had an incredible omakase sushi dinner at Sushi by Bou at the Jue Lan Club. But neither the venue nor the food is the discovery, though both were incredible. Instead, the bartender was curating the evening with the “Sushi Flow 🐠🍣🦐” playlist on Spotify. It’s a must listen!!

[VIC – 126] Musing on mortality ☠️

Business & Money

I wrote in VIC 112 about why I love the insurance business. As such, I am always keeping my eyes peeled for new investment opportunities within this vertical. I recently stumbled upon Trupanion (TRUP), a pet insurer, and it’s got me giddy for a whole host of reasons!

First off, it’s basically a technology company masquerading as an insurance company. They’ve built a software platform that integrates directly into the practice management software of veterinary hospitals so that they can pay claims in under 5 minutes (while most of the industry uses a reimbursement model that requires the pet owner to pay out of pocket and later file a claim). Further, it appears that Trupanion collects a greater volume and far more granular data than traditional pet insurance companies. That means they are in a better position to deploy machine learning to better price insurance policies across different breeds of dogs and cats.

Second, I love how management thinks about the business model. Like a SAAS software company, they have created “a business model based on monthly recurring revenue,” as opposed to many traditional insurance companies that focus on float and capital allocation. Recurring revenue provides great predictability for companies and peace of mind for investors.

Third, the addressable market appears massive. Trupanion focuses on North America, where all of the research I can find puts market penetration for pet insurance at less than 2%. That’s in contrast to western Europe where I’ve seen estimates as high as 25% penetration.

There’s a lot to like about Trupanion!

Human Progress

There’s this saying that “everyone wants to go to heaven, but no one wants to die” (I’m not sure who said it). In other words, people want to reach the destination, but aren’t willing to make the journey.

There are also schools of thought (e.g. stoicism) that preach a constant awareness of one’s own mortality. They posit that an acute awareness of death encourages one to be present in each moment and live the best life.

In either case, or any other for that matter, death has been front and center in many (perhaps most) cultures/religions/philosophies for millennia.

But we’ve reached an interesting moment in time wherein it’s up for debate whether death is, in fact, a certainty as it has always been thought (putting aside reincarnation and things like that).

For example, there’s mounting evidence that caloric restriction has the effect of extending lifespan in many different types of organisms.

There are also certain genes that when inhibited or overexpressed in organisms can double or triple life spans, such as the overexpression of tkr-1 in C. elegans (a type of roundworm).

Then you have blood transfusions where you exchange young blood into older animals, with the effect of increasing the rejuvenating capacity of older animals to, for example, repair a damaged liver or increase neuroplasticity.

Finally, there are a couple FDA approved drugs, namely rapamycin and metformin, that have been shown to increase lifespan by up to 30% in a variety of different creatures.

It’s easy to dismiss these things as science fiction, but the evidence is real that there a number of things that can modify the pace at which different types of organisms, mammals included, age.

Philosophy

Now, extending lifespan seems like a great thing, assuming that we can maintain good health and a high quality of life during the extended period.

But there are also tons of second-order effects that we need to consider, such as overpopulation, energy consumption, climate change, health care costs, etc.

But more interesting to think about, for me at least, are the social, ethical and philosophical implications.

We seem to be in a time of rising income disparities and less social mobility. So if someone is born poor, would a lifespan that’s twice as long give them a better shot at upward mobility, or simply lock them in a disadvantaged situation for longer?

What about power structures and societal norms. If people lived for 200 years, how much longer might slavery have persisted? Might it have taken longer for women to secure the right to vote?

If you think about Thomas Kune’s definition of paradigm shifts, scientific progress itself might even be at risk. “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with [the new paradigm].”

Or you might even think about this from a personal perspective. If your forties technically lasted 30 years instead of the normal 10, how might you live your life differently? Would you have children earlier or later? What about marriage? Do you stay single longer? Or perhaps have multiple families sequentially?

Tons of questions here and not a lot of answers. But one thing’s for certain: this conversation is as philosophical and ethical, as it is scientific.

My Latest Discovery

On a lighter note, the brisket burrito at Flats Fix Taqueria in Union Square is 🔥🔥🔥!!!

Do yourself a favor and get one!

[VIC – 100] Don’t talk 💩 . Heeeeeem (heme). The right questions. Samsung soundbar.

Business & Money

I was listening to an episode of a podcast called Industry Focus this week about Fedex (FDX) and UPS (ticker is the same). Basically the conversation was about whether or not these two stocks might offer attractive return profiles in light of the explosion in global shipping volumes (grew by 48% from 2014 to 2016 across 13 major global markets).
During the 30-minute conversation, the following question was posed, “With Amazon entering the shipping and fulfillment market, do you think they pose a threat to FedEx and UPS?”
One of the analysts on the line responded with, “FedEx and UPS have pretty big moats in terms of the sorting centers they have and fleets they operate. That’s not to say that Amazon couldn’t enter the business. They’ve shown over the years that they’re willing to spend billions when Bezos decides to enter a new market. But I think that FedEx and UPS have massive moats nonetheless, and not too much to worry about.”
I literally laughed out loud as I was walking on the sidewalk.
First off, to doubt Bezos is to dig your own grave. When all is said and done, he may be in the running for the greatest business person of all time.
Secondly, we’ve seen this movie before. Analysts and incumbents making foot-in-mouth statements about startup competitors, only to later fall into obscurity at the hands of those same companies.
In fact, here is FedEx’s Executive VP Mike Glenn talking about Amazon:
“While recent stories and reports of a new entity competing with the three major carriers in the United States grabs headlines, the reality is it would be a daunting task requiring tens of billions of dollars in capital and years to build sufficient scale and density to replicate existing networks like FedEx.”
Or remember back when Siebel was the king of CRM. Thomas Siebel of Siebel Systems told Bloomberg in 2003, “Microsoft will roll [Salesforce] over. They get Zambonied.” I used Siebel when I was AT&T, before adopting Salesforce when I moved to AdRoll. It’s unfathomable to me how Siebel owned that market.
And we can’t forget about Blockbuster CEO Jim Keyes when he said “Neither RedBox nor Netflix are even on the radar screen in terms of competition. It’s more Wal-Mart and Apple.”
You almost wince at the incredible hubris coming from these guys and gals. The lesson is simple. Stop talking shit and heed the lessons of history!

Human Progress

All animals either eat other animals, plant matter, or a mixture of the two. As you move down the food chain, it’s primarily plants for food, and perhaps bugs. And same goes for bugs. They either it other bugs, plant matter, or a mixture of the two. So it’s fair to say, if you follow the chain, all of the nutrients start with plants.
It’s a pretty basic idea when you really think about it. So there really shouldn’t be anything that we can’t get from plants, from a nutritional standpoint.
But then why is meat consumption so pervasive? First off, it’s been culturally baked in. Our food pyramids have it, our holidays and celebrations are centered around it, you usually have to call ahead to ask about vegetarian options at restaurants. It’s just the default.
Secondly, and more importantly for most people, it’s delicious! But if we go back to our core idea, there shouldn’t be any reason we can’t recreate that taste with plans. If the cows are consuming a purely vegetarian diet, then it’s only the chemical reactions and bacteria throughout their digestive systems that’s responsible for converting the plant matter into meat. I’m not a biology major so I’m just trying to oversimply this matter for sake of conversation.
In any case, it turns out that a specific molecule called heme is a key catalyst in the chemical reactions that take simple nutrients (fats, amino acids, etc) and turn them into the unique explosion of flavor, aroma, and juicy-ness that is the meat we love. This fact was discovered by Patrick Brown and his team from Impossible Foods, a startup making burgers that look, feel, and taste like the real things, but are made solely from plants.
Patrick recently spoke at Stanford about what they’re up to and thought you guys might like to check it out:

Philosophy

I recently had a friend ask me whether I was for or against net neutrality. Easy answer. I’m for net neutrality. A fair and open internet is a no-brainer. It’s key to innovation, economic growth, fair markets, and much more.
But that’s not really the right question. What’s really at issue is how internet companies (ISPs, tech giants, etc) should be regulated and whether Title II of the Communications Act is the right approach. That’s a much harder question to answer with tons of grey areas. And I don’t want to get into that here, but rather to point out that it’s important to focus on the right question.
Let’s frame it differently. Are you for or against killing human beings? Stupid question. Killing people is wrong. But then again, you could get into tons of conversations about capital punishment, assisted suicide, and self-defense. Another poorly framed question.
The framing of questions is so immensely important, and often not given enough attention. I’d even venture to say that this might be one of the most important challenges we face in everyday life.
Are you a democrat or republican?
What religion are you?
Are you for or against Black Lives Matter?
These simple and surface-level questions often lead to equally simple and surface-level responses, that then result in snap judgments, misunderstanding, and polarization. If only people could spend more time asking thoughtful and well-framed questions.

My Latest Discovery

I was recently in market for a soundbar + subwoofer combination for my living room. The speakers on the TV seemed to be on the fritz, but it’s a great TV and not yet ready to be replaced. After a bit of searching, I landed on this one:

It has far exceeded my expectations and I would highly recommend it! Great bang for not so many bucks.