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A Few Things: The Sohn Conference, What Climate Alarmists Are Getting Wrong, Spinoza, What's Next In The Chip War, A New Game Plan For Venture, News And Charts You Might Have Missed....
May 11 2023
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
You can check out last week’s edition here: Marko on Markets, The Future of Work, Solving American Obesity, Family Office Thematic Investing, LLM 101, There is No AI, How To Capture the AI Moment, A16Z on Crypto
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Quotes I Am Thinking About:
“A critic is a man created to praise greater men than himself, but he is never able to find them.”
- Richard Le Gallienne
“People demand freedom of speech to make up for the freedom of thought which they avoid.”
- Søren Kierkegaard
“Your friend has a friend, and your friend’s friend has a friend; be discreet.”
- The Talmud
“It has been my observation that most people get ahead during the time that others waste.”
- Henry Ford
“The highest reward for a person’s toil is not what they get for it, but what they become by it.”
- John Ruskin
“If a man will begin with certainties, he shall end in doubts, but if he will be content to begin with doubts, he shall end in certainties.”
- Francis Bacon
"Where facts are few, experts are many.”
- Donald R. Gannon
A. A Few Things Worth Checking Out:
1. The Sohn Conference was on May 9th, below are two great sessions from the event. Here are notes from the event.
Sam Altman (Open AI) speaking to Patrick Collison (Stripe):
My notes were:
Sam thinks that our kids will have more AI friends than human friends. We will soon be able to converse with AI agents much like we converse with humans.
All models above a certain threshold of compute should have regular audits, offer full visibility and pass safety tests before releasing new systems.
Silicon Valley has over-pivoted away from the model of funding highly capital-intensive, ambitious and long-term companies towards the ‘lean-startup model’.
The four companies Sam is primarily involved in: OpenAI, Helion (nuclear fusion), Retro and Worldcoin.
It will cause an evolution in search, and not a revolution. Sam has been impressed by Google’s response to the AI revolution.
Kiril Sokoloff spoke to Stan Druckenmiller:
My notes were:
Druckenmiller has been warning about a big bear market for close to a decade now - 2013, 2016 and 2018, even before COVID. So it’s hard to take a lot of his bearishness seriously given his recent track, but of course it doesn’t mean he is wrong now.
“If we get into a hard landing, are we finally going to allow creative destruction and Capitalism to do it’s thing? I think if we do, we’ll have a chance and what’s made America great for 200 years could possibly revive.”
On his current positioning: "I'm in gold & silver right now. They historically have not done well In hard landings...I'm betting for the time being against the history of silver and gold in hard landings. Could be wrong...I could change my mind in a week or two folks". "Copper is in the tightest position frankly, I've ever even studied. I'm actually afraid to have a meaningful position in it at this point as we approach the hard landing. Only because I'm not an idiot"
2. Dr Bjorn Lomborg is an environmental economist, Copenhagen Consensus Center president, public speaker and an author of books like:
Over the past two decades, the media has made some alarming predictions about the imminent end of the world due to global warming. But is this the priority that global efforts should be focussed on fixing? Does it have real world benefits, or are there better ways to improve human lives?
He was on the Modern Wisdom podcast with a great discussion, that I even made my kids listen to. Expect to learn why climate change is a favourite fear tactic in the media, the most cost-effective ways to make the world a better place, why sending kids to school doesn't necessarily mean they are educated, why cold weather is much more deadly than heat, just how inefficient it is to save lives through carbon reduction, how dangerous NetZero is as a policy and much more...
3. Baruch Spinoza is my favourite philosopher. There is something inspiring about the man and of all the philosophers it’s his world view that I most agree with.
He is also one of the most important western philosophers. Bertrand Russell calls him in his book, The History of Western Philosophy the most loveable of philosophers.
Here is a piece from the Big Think: Spinoza on how to stop living a substandard life
B. Chip Wars
Finally read Chris Miller’s superb book Chip Wars. It’s a page turner and I couldn’t put it down last weekend.
It’s one of those books that helps you understand the past, present and future better.
“We rarely think about chips, yet they’ve created the modern world,” writes the historian Chris Miller. He’s not exaggerating. Semiconductors don’t just power our phones and computers; they also enable our cars, planes and home appliances to function. They are essential to everything from developing advanced military equipment to training artificial intelligence systems.
Chips are the foundation of modern economic prosperity, military strength and geopolitical power.
The 5 key ideas in the book:
Microchip technology is the most critical resource for modern power, as it enables everything from military weapons to economic growth to geopolitical influence. In the early days of the chip industry, there was deep interconnectivity between the defence industry and technology.
The US has dominated the chip industry for decades, but it’s lead is threatened by China’s massive investment and ambition to catch up and surpass the US in chip production and innovation. It’s still probably 5-10 years ahead. A crazy stat: China spends more on importing chips every year than oil.
We have come a long way in processing capacity, and surprisingly Gordon Moore foresaw in 1965 that the number of transistors in an integrated circuit (IC) would doubles about every two years.
This technological process has come at the cost of a complex and global supply chain, which leaves the industry vulnerable to supply chain disruptions, cyberattacks, natural disasters and political conflicts, especially as most of the world’s chips are made in Taiwan, a flash point for US-China tensions. Taiwan produces over 37% of the global annual computing capacity. Korea produces over 44% of the global annual memory capacity. Even the entire OPEC is only 40% of the Oil market.
The semiconductor has seen numerous cycles, starting with desktops then data centers, mobile computing and now AI. Most companies cannot make the transition. This leaves the industry in a constant state of re-invention. Beyond the product cycle, another theme that has made the industry more complex and competitive is the move to fabless manufacturing. Most chip companies focus entirely on designing chips and leave production to folks like TSMC. Very few “fabs” remain - TSMC, Global Foundries, Samsung, Intel, UMC. Of these only Intel is based in the US.
Key terminology worth knowing:
DRAM: Dynamic random access memory (DRAM) is a type of semiconductor memory that is typically used for the data or program code needed by a computer processor to function.
CPU: Central processing unit (CPU), a central processing chip that can handle all the main functions of a computer.
GPU: Graphics processing unit (GPU), a specialised processor originally designed to accelerate graphics rendering but great at parallel processing of mathematical equations making them great for AI.
TPU: Tensor Processing Unit (TPU), an AI accelerator application-specific integrated circuit (ASIC) developed by Google for neural network machine learning.
The space is evolving fast, and if you’d like to skip the book, these two podcasts will get you upto speed fast.
The author Chris Miller was on the Ezra Klein podcast in early April discussing what semiconductors are, why they matter and how they are shaping everything from U.S.-China relations, the CHIPS Act and the Russia-Ukraine war to the Biden policy agenda and the future of A.I.
The team at Bloomberg Odd Lots Podcast had an episode last week titled: Inside the Battle for Chips That Will Power Artificial Intelligence with Bernstein semiconductor analyst Stacy Rasgon.
No one knows who is going to make all the money when it comes to artificial intelligence. Will it be the incumbent tech giants? Will it be startups? What will the business models look like? But we do know that AI requires a lot of computing power and that means demand for semiconductors.
Right now, Nvidia has been a huge winner in the space, with their chips powering both the training of AI models (like ChatGPT) and the inference (the results of a query.) But others want in on the action as well.
How big will this market be? Can other companies gain a foothold and "chip away" at Nvidia's dominance?
C. The Technology Section:
1. The LA Milken Conference was held at the start of May: this was my favourite panel: A New Game Plan: A Reset for Venture Capital, Innovation, and Entrepreneurship in 2023, moderated by my friend Jamie Montgomery and panelists including: Ibrahim Ajami (Mubadala), Raj Ganguly (B Capital), Lo Toney (Plexo).
Here are two of the slides he opened with to set the stage:
2. How might we develop and deploy beneficial, safe artificial general intelligence for humanity? Reid Hoffman and Aria Finger spoke to Sam Altman and Greg Brockman (OpenAI co-founder and president).
Sam and Greg trace their journey: They explore the transformative impact artificial intelligence can have on other industries, like energy, medicine, education, and law.
D. News and Charts You Might Have Missed
1. In 2017, it was “blockchain.” In 2021, it was “metaverse.” In 2023, “AI” is the term that’s received a strong response from investors looking at the potential in value that could be unlocked by the new technology. There have been more than 1,000 mentions of AI on S&P 500 company earnings calls so far this year, according to reports.
And emphasising your AI capabilities makes financial sense: Companies embracing generative AI have been earning shareholders 0.4% more per day than those with less exposure to the tech in the months after ChatGPT was released, according analysts.
2. Meta is releasing a new multimodal AI model, called ImageBind, as an open-source tool. While still in the early stages, ImageBind acts as a framework for eventually creating complex scenes and environments from one or several inputs, such as a text or image prompt.
For example, if fed a picture of a beach, ImageBind could identify the sound of waves. Similarly, if given a photo of a tiger along with the sound of a waterfall, the system could produce a video of both.
3. Average office usage rates are roughly half what they were pre-pandemic, and the consequent decline in customers has left urban businesses struggling. To adapt, many retailers have relocated to the suburbs where foot traffic is higher. For most, that move has worked and may cause a permanent shift from urban to suburban retail.
Suburban retailers are gaining what urban retailers lose. Many workers work remotely on Mondays and Fridays, hitting city retailers on those days and supporting suburban ones instead. Businesses are following the customers. In the second half of 2022, urban retail availability exceeded suburban availability for the first time since 2013.
4. Lionel Messi and several of his former teammates appear to be on their way to Saudi Arabia. Has reportedly agreed to a deal with Saudi Pro League club Al-Hilal, according to reports. Messi had reportedly initially requested a $662 million per season, but the two sides reportedly settled on $386.5 million, which would still easily make him the highest-paid athlete in the world, ahead of rival Cristiano Ronaldo, who plays for Saudi side Al-Nassr for a reported $220 million per year.
5. I think a lot about this:
Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you enjoyed this, don’t be shy.