SITALWeek #248
Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, quantum dots, and whatever else made me think last week. Please grab me on Twitter with any thoughts or feedback.
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In today’s post: quantum dots for growing plants; automation renaissance is around the corner; trade promotion spending is going digital; four years of zero progress from social networks; your brain is a massive parallel processor; US ramping up research funding; and lots more below...
Stuff about Innovation and Technology
NZS Talks Stocks and Investment Philosophy on Investing City🎙🎧
Brinton and I were on Ryan Reeves’ Investing City podcast last week covering a host of topics including adaptability and what evolutionary biology teaches us about complex systems and investing. You can find the podcast on Ryan’s site here, or here is the Spotify link. Our thanks to Ryan for having us on and to our friend and reader who connected us!
TikTok Gives Lift to Space Kitten Sales
TikTok is driving increased growth for beauty product sales on Amazon and fledgling brands’ websites. While no official links exist between the Chinese-owned, Gen-Z dance-meme platform and ecommerce sites, viewers are clicking through to online stores from popular profile pages on TikTok. One such successful brand is 'I Dew Care', with their Sugar Kitten, Disco Kitten, and Space Kitten peel-off face masks. If you think that I don’t understand anything I wrote in this paragraph, you’d be correct.
Quantum Dots Boost Crop Yields
Researchers are experimenting with sheets of quantum dots to shift the wavelength of incoming light to promote greenhouse plant growth. This is the same material you might have in your TV if you have a relatively new model like the QLED from Samsung. QD TVs use blue LEDs as a source of light, which the quantum dots (semiconductor nanocrystals) absorb and selectively emit as green or red, so there’s no filter involved and less light is lost between source and screen. For the greenhouse use case, the sheets of quantum dots convert sunlight to the optimal growth-boosting wavelength – peppers grow better under a yellow light, while tomatoes prefer magenta, roses white, and lettuce orange. The latter is apparently the favorite flavor of the month – for crops ranging from cannabis to cucumbers – and the orange-shifting film is now in mass production.
Humans still Superior Screwdrivers
The Information reports on the problems of automation in manufacturing, highlighting Apple’s decision to revert to humans for iPad assembly. “Building a robot that can fasten screws is among the hardest challenges in the industry. A robot must pick up the screw at a specific angle and align it with a hole using multiple industrial cameras. Apple uses screws so tiny that robots had no way to measure the force used to drill them in. By contrast, human workers can feel the resistance from their hand and can tell when something is off.” The article mentions other companies, such as Boeing and Tesla, which also deautomated; however, Tesla has since acquired more than one robotic automation company in the last few years, and they are certainly still focused on robots. A fully automated production line has been the White Whale of manufacturing for a long time now. Clear advances have been made in machine vision; but, in most cases, it’s hard to beat the dexterity afforded by human hand-eye coordination, proprioception, and parallel processing (for the latter, see “Human Brain’s a Parallel Processing Powerhouse” below). Perhaps more important, humans can process complex visual input and manipulate items with only a fraction of the watts required to power an AI-based robotic arm (though we do still need sleep and bathroom breaks!). That said, there is a renewed interest in automation on a much grander scale than ever before. What we’ve learned from a decade of setbacks will no doubt foster breakthroughs in the coming years. Robotic animation is unlikely to be a winner-takes-all market, but rather a fragmented set of highly specialized solutions for a plethora of difficult-to-solve problems. One example of a specialized use case would be this supernumerary (wearable robotic arm) that can – somewhat awkwardly – pick fruit, paint, and smash through walls (video).
Shipping Surcharges a Break for Omnichannel Commerce?
UPS and FedEx are instituting peak surcharges on ecommerce deliveries of around 30 cents a package and $30 (!) for oversized packages. This move follows surcharges for peak air shipments, as well as a suspension of service guarantees, put in place in the early days of COVID-19. The fees are adding up – and likely won’t stop coming – as the capacity of current US delivery logistics is far below where it needs to be, both now and long term. If delivery costs keep rising, retail stores able to offer local fulfillment could have an increasing advantage. The Economist reports on the surging demand for warehouse space as commerce goes digital, but I wonder if that extra capacity is necessary, given that existing retail may quickly morph into hybrid warehouse space itself?
Trade Spend Goes Digital
The surge in post-COVID-19 ecommerce has only been one of revenues – not profits – as expenses associated with fulfilling orders of (predominantly) lower-margin items – what Amazon lovingly refers to as CRAP (Can’t Realize a Profit) – have so far largely produced profitless prosperity. One way to drive ecommerce profits would be to shift the $500B annual trade-promotion market from physical to digital commerce. This spending, largely by brands, rivals the global ad market in size and includes things like coupons and in-store shelf placement. App placement is the new shelf placement, and BI reports that Instacart is rolling out an ad platform for brands to get their products in front of consumers. This move seems pretty obvious – if you search for Campbell’s Soup, you might happily click on an ad for a lower-sodium choice that appears alongside the result.
In Face of Police Abuse, Big Tech Inaction Speaks Volumes
The protests in reaction to the poignant and tragic murder of George Floyd have helped spotlight the hypocrisy of the big tech platforms: they claim to stand with protesters while helping to enable the very abuses that necessitate protest and change. Protocol discussed the contracts that companies, like Microsoft, IBM, and Amazon Web Services, have with police departments, and Wired highlighted similar issues and complexities of companies calling for change on the very issues that their own technology helped create. One of the more glaring problems is the application of algorithms and facial recognition tools that often contain inherently racist biases, further compounding injustice. The cloud-based tools are becoming more powerful with no clear regulation in sight at either the federal or state level. In SITALWeek #197 last July, I expressed my dismay at AWS CTO Werner Vogels' laissez-faire attitude on facial recognition abuse, citing the following from a BBC article:
"Mr Vogels doesn’t feel it's Amazon’s responsibility to make sure Rekognition is used accurately or ethically. 'That’s not my decision to make,' he tells me. 'This technology is being used for good in many places. It’s in society’s direction to actually decide which technology is applicable under which conditions. It’s a societal discourse and decision - and policy-making - that needs to happen to decide where you can apply technologies.'"
This is the same straw-man argument I wrote about last week, especially with respect to Mark Zuckerberg. You can’t build a product – over which you have control – and then cede all responsibility to society and the government, while you print money and claim you have no way of controlling use of the product. 160 scientists funded by the Chan Zuckerberg Initiative (CZI) let Mark know how they felt this week as well, declaring “The spread of deliberate misinformation and divisive language is directly antithetical to [the goal of CZI] and we are therefore deeply concerned at the stance Facebook has taken.”
It's been four years since Facebook was used to brainwash and mind control millions of people in order to sway elections. Since then, as far as I can tell, Facebook has done nothing to address exploitation of the platform, transferring blame to the government and Facebook users while continuing to profit heavily from its misuse. It's well within Facebook's ability to fix the problems it’s enabling around the world, and it's an active choice they make to do nothing but cash checks from advertisers. Instead of using technology to police and harass, perhaps we could use it to identify and root out systemic bias and prejudice across the system and incent better behavior? The racial and ideological cracks in our world run deep, and, while I’m hardly an expert, the dire impact of the shifting economy seems crystal clear, with income inequality only set to worsen with the ongoing digital transition. Most constructive paths forward lead to social spending programs, such as UBI, as a step towards remediation of our society’s giant, complex, and increasingly urgent problems. The success of increased welfare in Nordic countries indicates that rectifying inequality is a direct way to help people while reducing the need for police and criminal persecution. Tech could play a positive role; but, for now, instead of lifting up the people who need help, it’s exacerbating the problems.
Come on Down! You’re the Next Investor in Indian Telecom!
The competition to see who can write the biggest checks to Indian wireless carriers continues, with rumors of Amazon plunking down $2B into Bharti Airtel and Google looking to acquire 5% of Vodafone Idea (which could potentially be around $1B; it’s not clear how the investment would be structured, but the enterprise value of the company is around $20B). Joe recapped the reasons behind Facebook’s interest in Jio back in SITALWeek #242; since then, Jio has lined up over $10B in investments from Internet platforms and private equity firms, plus another $1.2B late last week from Abu Dhabi. Wait, there’s more – another $600M investment from Silver Lake! Every time I think I am done with this paragraph, a new fundraising headline hits! The value that Facebook sees in Jio to help build the 'Tencent of India' by leveraging WhatsApp is a little more obvious than what these other investors might be hoping to achieve. It’s early days in India for platform monetization, so much of Facebook’s investment, while optimistic, amounts to a bit of FOMO (remember when Walmart put $16B into Flipkart in 2018!?). It’s less clear what Amazon and Google would get out of an investment in the unprofitable #2 and #3 carriers. It also remains to be seen just how open India will be to outside companies given their history of forcing partnerships and rendering licenses difficult to acquire.
Miscellaneous Stuff
Human Brain’s a Parallel Processing Powerhouse
A transistor in a computer processor has three nodes total for input and output, but a neuron in a human brain can handle 1,000 signals to and from other neurons. This also enables mass parallelism along with serial computation, while in a typical x86 processor only serial functions take place, according to this Nautilus article. GPUs from companies like Nvidia are parallel, which makes them more suitable for AI and machine learning, but still far inferior to human brain capacity per watt (factor of 10 difference). This is one of the reasons I mentioned in the automation paragraph above that it’s hard to beat humans when it comes to a lot of tasks, especially if it involves learning.
Sleeping Dragon’s Last Lunch
The fossilized remains of an 18-foot-long, 3,000-pound, armored dinosaur were found with preserved stomach contents. The herbivore, known as Borealopelta, had been eating predominantly a single type of fern growing in the lush conifer forests that once covered prehistoric western Alberta, likely in an area of recent vegetative regrowth following a wildfire given the amount of ingested charcoal found. Other clues indicate the dino died just a few hours after its last meal in early to mid summer, approximately 110 million years ago. It was then swept down a river and far out into the inland sea that once vertically bisected North America. Undersea fossilization allowed for superb preservation of both bone and plant material, as well as a clear delineation between true stomach contents (terrestrial plants) and random infill during burial – an incredibly rare occurrence. Pebbles were also present, like what birds (a.k.a. modern-day dinos) use today, to help food digestion in the gut. Fossil lovers will find NatGeo's photos of the so-called “sleeping dragon” truly remarkable.
Impermanent Permafrost Poses New Threats
A 20,000 ton leak of diesel fuel from a holding tank at a thermal power plant in Russia heavily contaminated the surrounding area, including two rivers. The tank’s support pillars reportedly sank when the underlying permafrost ground thawed. Soaring Arctic temperatures have caused the melting of permafrost throughout northern latitudes, which is creating an increasing threat to infrastructure that had long been stable in the – now – not-so-frozen North.
Wayne Newton and Cleopatra Play Craps
The Las Vegas Review-Journal has scenes from Vegas’ grand reopening this week, including Wayne Newton at the craps table next to Cleopatra and Caesar...all wearing face masks. The person in charge of the Bellagio fountains had apparently been storing up pressure for the last couple of months, and then pulled the lever all at once Friday night!
Stuff about Geopolitics, Economics, and the Finance Industry
ANTs Go Marching
BlackRock will license Precidian’s active, non-transparent (ANT) ETF platform to offer actively-traded structures in an ETF wrapper, which is more popular and cost efficient for most investors, according to CityWire. Fidelity is also launching three new ANT ETF products as the market heats up. It’s going to be very difficult for traditional mutual fund firms to hold onto their already decreasing share without this lower-cost, more flexible option arriving for investors. 🐜🐜🐜
Border Tensions Flare between China and India
As India aligns less with China and, in some cases, more with the US, China has escalated tensions along its border with India, according to Bloomberg. The decades-long border dispute has flared up recently as India has been more actively building infrastructure in the disputed region between India, China, and Pakistan. The recent Chinese troop buildup and ensuing skirmishes are part of a broader pattern of China asserting power in its environs, including Hong Kong and the South China Sea. Donald Trump’s offer to mediate the dispute was reportedly rejected.
US Lobbying for Semi-Cold-War Funding
The Semiconductor Industry Association (SIA) is lobbying for $37B in government funding to boost the US’ chip capabilities in what has become the key battleground between East and West. There appears to be bipartisan support for such an effort, which, as proposed, includes $5B for a new, federally-backed semi fab, $15B in state incentives to bring new chip manufacturing capacity, and $17B for research and development. The SIA is also backing the “Endless Frontiers Act” that I mentioned last week, which has bipartisan support for over $100B in funds for expanding technology and scientific research. As Jon said to me last week: “if we can subsidize soybeans, we should probably subsidize semiconductors”. This MarketWatch op-ed – “A semiconductor ‘cold war’ is heating up between the U.S. and China” – recaps several of my recent thoughts on US-China semiconductor tensions. Hat tip to Dex McLuskey with Context Content for putting the article together.
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Disclaimers:
The content of this newsletter is my personal opinion as of the date published and is subject to change without notice and may not reflect the opinion of NZS Capital, LLC. This newsletter is simply an informal gathering of topics I’ve recently read and thought about. It generally covers topics related to the digitization of the global economy, technology and innovation, macro and geopolitics, as well as scientific progress, especially in the fields of cosmology and the brain. I will frequently state things in the newsletter that contradict my own views in order to be provocative. Often I try to make jokes, and they aren’t very funny – sorry.
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