China Is Changing, The Future of Medicine, AlphaFold, Metaverse, The Creator Economy and DAOs

July 27, 2021

“Do you remember the things you were worrying about a year ago? How did they work out? Didn't you waste a lot of fruitless energy on account of most of them? Didn't most of them turn out all right after all?”

- Dale Carnegie

“It is never too late to be what you might have been”

- George Eliot

“Attitude is a little thing that makes a big difference.”

- Winston S. Churchill

A. A Few Things Worth Checking Out

1. A paradigm shift is occurring in China. The CCP on its centenary has decided to focus on social equality, partly driven by panic around falling birth rates and a determination to make child rearing more affordable - see the crackdown on the education sector which was becoming a huge cost for most families.

Secondly, the CCP wants a development strategy that focuses on hard-tech manufacturing rather than soft-tech internet companies. 

My China watchers tell me that China’s aim now is to set global standards in platform regulation (see news on Didi) and anti-trust enforcement, and focus far more on hardware and enterprise software innovation, not the consumer internet.

They expect regulation around three key areas:

  1. FinTech / Payments - this is about the CCP getting more data about what’s happening in the economy.

  2. Monopoly power - reduce inequality and encourage small businesses.

  3. Innovation - focus on creating real innovation in the economy not just distribution scale by growing quickly through cash burn.

This article on: Why is China smashing its tech industry is a great read. Thank you Mark Evans for flagging.

The folks at Trivium China, do great work, it’s really worth following them if you want to track the changes in China.

Zack at Young China Group highlighted a great chart from the Economist showing how the balance of global trade has changed in twenty years.

In 2000, the most countries did far more trade with the United States than with China. By 2020, this picture has reversed.

This makes me wonder how true the headlines on companies retreating from China post US pressure, sanctions really are.

2. The shape of Europe is shifting rapidly - The Nord Stream 2 pipeline is going ahead, and will bring Germany much closer to Russia going forward. This is a huge deal geopolitically but very under reported (no mention in either WSJ or FT yesterday)

This is also occurring at the same time as the US withdrawal from the Middle East.

3. Druckenmiller Warns Of 'Dire Consequences' Of More Government Spending.

4. Part 2 of Niall Ferguson’s WealthTrack interview, we covered Part 1 last week.

5. A Mole in North Korea - In 2010, Danish director Mads Brügger received an email from a stranger who had seen a documentary he had made about North Korea. He asked if Mads would be interested in making a new film about his quest to become a member of his local North Korean ‘friendship’ association in Denmark to enable him to travel to Pyongyang undercover.

There are Korean Friendship Associations (KFA) in countries around the world, and their members, bizarrely, are devoted to the glorification of the world’s last totalitarian communist dictatorship. 

This is the crazy BBC documentary on the mole infiltrating North Korea. Thank you Fran G for sharing.

6. My latest summer reading last week has been “The Key Man” by Simon Clark and Will Louch (both WSJ reporters). It’s the insane story of Arif Naqvi and Abraaj.

This WSJ article is a great summary of what happened and how he fooled so many people for so long. The book has made me a lot more concerned about where exactly my cash goes after I send a capital call.

Thank you Mamoun for flagging.

B. The Future of Medicine

While the world remains largely focused on the rollout of COVID-19 vaccines and the new virus variants, the race for the next generation of mRNA vaccines that fight against a variety of other diseases and illnesses is accelerating. 

This chart about the polarisation of vaccinations rates across Red and Blue states surprised me.

If you had asked most people in January 2020, what was the future of medicine, they would have said something about CRISPR, but COVID-19 changed that.

Ever since I heard the Business Breakdowns podcast discussing Moderna: The Software of Life and mRNA technology a few weeks ago, I’ve been thinking about what mRNA could mean for the future of healthcare.

The two big advantages to using mRNA for vaccines are versatility and speed. These advantages arise out of the basic methodology on which these vaccines function.

Cells use mRNA to inform DNA to produce proteins specific to various disease conditions, which then prepare the person’s immune system to fight infections or cancerous cells. mRNA allows drug makers to alter their target by inserting new genetic code into a manufactured form of messenger RNA that instructs the body to produce specific proteins. 

This versatility means that mRNA isn’t just about vaccines, but can be used to make various new proteins in the body.

Currently, there are 520 ongoing mRNA-based clinical trials testing across more than 20 disease categories, according to CB Insights. Many big pharma players, including Johnson & Johnson, AstraZeneca, GlaxoSmithKline, and Merck, have partnered with emerging mRNA vaccine and therapeutics companies. 

mRNA vaccines targeted to fight other diseases are advancing through clinical trials. Moderna and BioNTech alone have 24 and 19 mRNA candidates in preclinical or early clinical trials, respectively. Six mRNA vaccines targeting influenza are in the pipeline, and a similar number also against HIV.

And of course no conversation about the Future of Medicine would be complete without a discussion of CRISPR.

Here is Walter Isaacson’s Aspen Ideas lecture on CRISPR and the Age of Biology.

C. News You Might Have Missed Last Week - The Future of Medicine continued…….

Demis Hassabis and the team at DeepMind, announced work that had more than doubled humanity’s accumulated knowledge of high-accuracy human protein structures.

We discussed DeepMind and AlphaFold in January.

The new protein structure database is available to everyone. It will allow scientists and researchers to accelerate work in neglected diseases as well as speed up our shift towards synthetic biology.

Wired did a great overview here

Nature’s deeper dive is here.

D. The Tech and Crypto Section

1. This interview from The Verge with Mark Zuckerberg got my attention. 

In it he describes how he sees Facebook being a “Metaverse” company. Thank you Wouter J for flagging.

A great quote (thank you Sean Maher):

‘I think a lot of people, when they think about the metaverse, they think about just virtual reality — which I think is going to be an important part of that. And that’s clearly a part that we’re very invested in, because it’s the technology that delivers the clearest form of presence. But the metaverse isn’t just virtual reality…I don’t think that this is just gaming. I think that this is a persistent, synchronous environment where we can be together, which I think is probably going to resemble some kind of a hybrid between the social platforms that we see today, but an environment where you’re embodied in it. So that can be 3D — it doesn’t have to be.

I think that this is going to be a really big part of the next chapter for the technology industry, and it just touches a lot of the biggest themes that we’re working on. And my hope, if we do this well, I think over the next five years or so…I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company.’ 

And if you want to go deeper into the Metaverse, this tweetstorm will help:

2. The "creator economy" is a phenomenon that needs to be grasped if you want to make sense of the future of the internet.

Social-media platforms are embracing the word “creator” as the successor to the internet's most recent obsession, the "influencer". 

Just last week, Facebook said that it would invest $1bn in content creators for Facebook and Instagram, but what does the creator economy mean?

In short, “creator” is being adopted as a byword for a new generation of social-media spaces purportedly designed to provide support for content producers. Where the ad-driven platforms Facebook and Twitter profit from our data and attention without giving much back, such as Clubhouse and OnlyFans, deliver a larger share of value to users by allowing them to monetise directly. 

Instead of the company’s selling ads based on factors such as engagement, creators get paid by their viewers via subscriptions, tips, or crowdfunding.

The word “influencer” emphasised a person’s effect on their followers. “Creator,” on the other hand, stresses that everyone posting on social media is producing something, pitching into the collective effort of making user-generated platforms compelling and profitable.

This excellent explainer in the New Yorker is a great help.

3. One of the structures powering the Creator Economy is a DAO - Decentralised autonomous organisations.

To quote and paraphrase a recent report from WILTW:

Decentralised autonomous organisations (DAOs) are internet-native, programmable organisations that are run by the community. Early followers join a community based on a shared mission and a common set of values. DAO members have an ownership stake in the community that allows them to hold voting rights in governance decisions and to capture profits if the value of the ecosystem increases. DAOs represent the inverse of centralised, hierarchical institutions where power, decisions and the setting of values coalesce around a board of directors and large shareholders. 

Tokens represent a mutually agreed means of exchanging value and contributing to the DAO. Together, DAOs and tokens are providing the tools for a new, open and permissionless digital economy built on public blockchain infrastructure. 

As Josh Rosenthal discussed in this Bankless podcast, there is a precedent for the disruptive power of community and networks. 

In the late Middle Ages, two new, decentralised, permission-less and distributed technologies (double entry book-keeping and the printing press) led to the rise of a new mercantile class that challenged, and ultimately broke, the monopoly of the Church. The stasis of feudal society was unplugged by disruptive technology.

Today, the internet and distributed ledger technology (open public blockchains) are laying the foundations for a new, globally distributed creator-owner class who are only just beginning to experiment with their new sense of economic agency. 

The concept of individual micro-economies is not as atypical as one may initially think. The construct of a company is a product of the Industrial Age as a means to aggregate capital in order to create economies of scale and to maximise productivity.

During the Middle Ages, companies and their employees did not exist. Individuals, once free from the shackles of serfdom, worked as sole proprietors in newly formed communities: urban centres. Seen through this broader arc of history, the rise of NFTs and social tokens are providing the tools for any individual with an internet connection to coordinate, reward, incentivise and interact with their core following directly in new online communities. Where centralised institutions aggregated and concentrated wealth, decentralised and permissionless blockchains are providing a trustless and open construct to disaggregate wealth. 

4. Despite the wild swings in crypto markets over the last seven months, a new survey by Fidelity's cryptocurrency arm found that seven in 10 institutional investors are looking to buy digital assets in the future.

The vast majority of these institutional investors said they will include digital assets in their portfolios in the next five years.

5. The Wall Street Journal did a deep dive into the TikTok’s algorithm to understand what makes it so unique. Thank you to Yaser for flagging.

6. Great Zero Hedge article on how the Chinese use illegal online gambling and Tether to launder over $1 trillion yuan. Thank you Yaser for flagging.

Entrepreneur and investor Ben Casnocha how to find opportunities:

"Every opportunity is attached to a person. Opportunities do not float like clouds in the sky. They’re attached to people.

If you’re looking for an opportunity — including one that has a financial payoff — you’re really looking for a person."