SITALWeek #269

Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, moon water, 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: The digital unshackling of creativity; third party algorithms; semiconductor consolidation could match 2015’s record year; moon water; Mister Rogers; and more below...

Stuff about Innovation and Technology
Telehealth for Pets
Ecommerce pet supply leader Chewy announced last week that it will enter the televet market to connect animal owners with vets over video. Imagine trying to get your dog, cat, guinea pig, mouse, snake, lizard, etc. to stare into the Zoom, stick out their tongue, and say “ahhhhhh”!? Video vet visits are free to Autoship members; but, in an apparent acknowledgement of televet limitations, Chewy says they won’t diagnose conditions or prescribe medications.

Digital Invites Unbridled Creativity
As long-suffering SITALWeek readers know, I think a lot about how video content is evolving from a scripted Hollywood-style toward live, social, gaming, and/or unscripted for digital venues like YouTube, etc. Indeed, there’s even a growing trend of professionally-produced made-for-digital content. As I’ve watched network television shows resurface from the pandemic and various creative artists choose the media by which they wish to reach fans, I have a new lens on the trend: video is experiencing a freeing of the creative process via removal of the cumbersome layers and filters between the creation and consumption of art. The pandemic-accelerated vector of the Internet Age is providing bigger digital audiences for creative expression and collapsing the space between creation and enjoyment. Formulas are less useful, and the creative process has become more iterative. Video and music are even being made in real time in front of fans in some cases, and the fans are part of the process.

In contrast, the reboot of the satirical “Jon Stewart” news anchor character on Apple TV will no doubt be great, but multiple bureaucratic layers might filter the art into a predictable, formulaic box designed to drive the Apple ecosystem (I’m sure it will be entertaining, but it won't necessarily be art). Artists want to create art, and now they can for a much larger audience – independent of Hollywood. Netflix is probably the epitome of the current, boring formalism: they plug data into a formula to give their zombiesque viewers what they want, which overwhelmingly leads to the absence of art. There have been a ton of exceptional and brilliant shows/movies produced over the last decades, but they are a shrinking percentage compared to mechanically-mass-produced video content. With the big streaming platforms recently passing on MGM’s $600M bill to stream the new Bond movie, I can’t help but think that maybe formulaic Hollywood content is worth a bit less today than it used to be. The playing field has expanded, and not everything fits neatly into the traditional categories anymore; for example, the new satire show, Sassy Justice, from the South Park creators (which cleverly uses deepfake face-swapping AI for its interviews) is professionally produced but appears on YouTube for free. To be clear, in no way do I think Hollywood content is going away or even shrinking; but, if creativity continues to rise faster on live, social, interactive, and gaming media, then it seems unlikely that Hollywood will gain viewing share going forward.

Zen Dorsey’s Pragmatic Approach to Section 230
I thought Jack Dorsey’s opening statement on Section 230 last week was well put. In particular, I was glad he emphasized that increased regulation will only serve to entrench the biggest companies at the expense of smaller companies and new ideas. I also thought his suggestion to allow 3rd-party algorithms to curate social media content was smart and intriguing. (I wrote more about Section 230 in SITALWeek #267; since then, it has become more clear that the law is sufficiently vague that people can interpret it to support a whole spectrum of preconceived notions depending on the weight and orientation of their particular partisan lens; I tend to agree with Jack and favor a more unfettered approach, as increased regulation is sure to create regulatory capture and kill innovation.) Speaking of Twitter, I had to laugh at Rupert running a negative article on Dorsey in the WSJ to seemingly pressure Twitter to reinstate the NY Post's Twitter account!

Semiconductors Headed for Record Consolidation in 2020
Jon Bathgate weighs in on Semi M&A: Consolidation in fabless semiconductors continues, with AMD announcing their intention last week to acquire Xilinx for $35B. Not surprisingly, the focus of the deal is on the data center, where Xilinx will bring some incremental tools to AMD's presence – Xilinx's leading edge FPGAs are being used as accelerators in growing applications like video encoding, image processing, and gene sequencing. Xilinx also has a small SmartNIC portfolio (also called data processing units, or DPUs these days) that AMD can leverage similarly to Nvidia's approach with their Mellanox acquisition. The challenge for AMD will be software and ecosystem – FPGAs have always been difficult to program, and Xilinx's efforts to democratize FPGAs through updated software platforms have seen mixed results. Continuing to drive Xilinx's ecosystem – and stitching it into AMD's software ecosystem – will likely be Lisa Su's largest challenge over the next 5-10 years. Overall, the deal reinforces some key trends we're seeing in compute and in fabless semis: the data center is getting more heterogeneous – with CPUs, GPUs, DPUs, FPGAs, and custom accelerators all playing crucial roles in various applications; and, despite AMD's success in CPUs, the reality remains that CPUs are likely to play a smaller role in the data center over the next decade; also, scale continues to be key as the costs of designing leading-edge silicon are ballooning, and companies need to match that hardware spend with software investment. 2020 is shaping up to match 2015 as a record year of consolidation in the semi industry, with transaction values for the year likely crossing $100B for the second time in history. Of course, all of this assumes that acquirers like Nvidia and AMD can get through what is going to be a long and painful regulatory process.

Miscellaneous Stuff
Aqua Luna
It’s long been known that there are likely 600M+ metric tons of water buried on the moon, but last week NASA announced that there is water accessible on the surface of the moon. I can’t wait for the new Lunar-Spiked Seltzer made with moon water – could be a good way to fund NASA.

Modeling Viral Aerosol Spread
Here’s an animated mathematical model of infection odds via aerosolized virus particles in various indoor scenarios, published in El Pais, that account for talking quietly or loudly, duration, and ventilation. Students, it is theorized, are low vectors of transmission, because while in school they do little talking in the classroom, whereas teachers could be high vectors given they are speaking most of the class time. (More details on the model can be found in this Google Doc from Professor Jimenez of The University of Colorado.)

Garden of Your Mind
I had Mister Rogers on my mind this week; so, from SITALWeek #219 almost a year ago:
Here is a moving story by Tom Junod about Mister Rogers, and what he might say today, were he alive.
“...because we all long to know that there’s a graciousness at the heart of creation.”
“He wanted us to remember what it was like to be a child so that he could talk to us; he wanted to talk to us so that we could remember what it was like to be a child. And he could talk to anyone, believing that if you remembered what it was like to be a child, you would remember that you were a child of God.”
This bit is heartbreaking to me:
“[Mister Rogers] lost because the great conceit of the internet is that it has unveiled and unmasked us, that it shows us as we really are and our neighbors as they really are, and that hate is more viral than love.”
But, to end on an upbeat note, here is the delightful PBS remix of Mister Rogers’ memorable moments on YouTube.

Stuff about Geopolitics, Economics, and the Finance Industry
FAAAT Earnings
I was on CNBC’s Squawk Alley Friday talking about FAAAT (Facebook, Alphabet, Amazon, Apple, and Twitter) earnings results, and the potential for a 2021 hangover. The video is available on CNBC’s Pro (paywall) site.

The NZS Philosophy...and Vampires
SITALWeek is abbreviated (and sporting a few extra typos and ill-advised sentence constructs) this week as we spent Halloween slaying vampires (we emerged victorious, but it was a close one).

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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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