SITALWeek #310
Welcome to Stuff I Thought About Last Week, a collection of topics on tech, innovation, science, the digital economic transition, the finance industry, Black Bart’s Cave, and whatever else made me think last week.
Click HERE to SIGN UP for SITALWeek’s Sunday EMAIL
In today’s post: the digital ghosts we leave behind in augmented reality; robots: the Tesla Bot, a drug bot, the need for construction bots; office worker surrogates; avatar-based meetings could reduce bias; the complex interplay between Afghanistan, China, Taiwan, and the US; Casa Bonita; and much more below.
Stuff about Innovation and Technology
Innerspace Docking Station
Researchers in Italy have developed an implantable robotic device for insulin delivery that attaches to the small intestine and receives insulin re-supply via ingested magnetic capsules. Following robotic docking, a capsule transfers its insulin payload to the microinfusion system located in the abdominal cavity. The motors/actuators in the phone-sized device are charged and controlled wirelessly. As reported in Science Robotics, the team from the Sant’Anna School of Advanced Studies has already trialed the device in pigs with good success. The possibilities seem endless here – it would be a great way for everyone to get their Soma in the future.
Digital Ghosts
The current situation is Afghanistan is beyond concerning for those that need to leave the country but cannot. While pale in comparison to the humanitarian crisis, it’s strange to think of the digital-only footprints we will leave behind all over the world, invisible from the distant future. Stars and Stripes magazine reports on the Pokémon left behind at American bases in Afghanistan. Pokémon Go was apparently quite popular at the Bagram Airfield. The augmented reality game, which brought together troops, contractors, and civilians, can only be played in geographic proximity to the gamer’s device, meaning many Pokémon at now-uninhabited locations could languish at their posts unchallenged. “Screenshots of Bagram after the troops left show low-level Pokemon, normally easily defeated, stuck guarding locations, perhaps indefinitely. A tiny Lotad has defended the former Warrior Chapel at Bagram for 10 days, while a lowly Aron has defended a memorial to a fallen service member for about two weeks.”
Smoothing CA’s Energy Supply
The world’s largest battery storage facility is now online in Moss Landing on California’s Central Coast. The Vistra project has a 400MW capacity, enough to power 300,000 homes during peak demand periods using energy stored during times of excess renewable energy production. The site is adjacent to PG&E’s Tesla Megapack storage facility, which has 182.5MW of power. In aggregate, the location could power ~2% of homes in California, and Vistra anticipates their facility will ultimately power over 1M homes.
Looming Infrastructure Mega-Projects Need Robots
As I was thinking about the cost to upgrade infrastructure to handle more extreme weather swings, it seems like there are a lot of ~$20B projects under consideration. A couple weeks ago, I mentioned (#306) it would cost about that much for PG&E to bury a portion of its power lines in high risk areas, and for Detroit to upgrade their stormwater drainage system. Apparently, it was also determined that damming the Golden Gate Bridge to keep rising tides at bay would cost...$19B. It’s certainly easy to see how expenses could add up to well into the trillions. I can’t help but wonder where the labor will come from (and with what incentives) to even consider some of these projects. 21,000 people were involved in the construction of the Hoover Dam. Is it less people-intensive to build a dam today than during the New Deal era? It’s possible that governments won’t even be able to contemplate breaking ground until deflationary automation/robotics renders construction more affordable. In the meantime, I’d expect a lot of design and simulation engineering to take place as projects are proposed and considered. And, we might expect a stronger focus on greener steel production in the coming years.
Tesla Exocomps vs. Facebook Avatars
Perhaps the labor needed for the global infrastructure overhaul is going to be available soon. The Tesla Bot, revealed by Elon Musk last week, is meant for repetitive and unsafe tasks. The 125-pound, 5’8” humanoid bot is designed such that humans can run away from it if it goes rogue (what if it grabs a weapon!?). Musk said: “Essentially, in the future, physical work will be a choice. If you want to do it, you can, but you won't need to do it.” Tesla’s AI event is more for recruiting than product announcements, so the Tesla Bot may never see the light of day (at the event, the bot was just a person dancing in a costume, and it’s highly likely the bot announcement is something between a joke and a troll). But, it does seem likely that, in the next decade, we will have purpose-built robots for many manual labor tasks, which could coincide with the timeline for rebuilding failing infrastructure (I talked more about our future of purpose-built robot minions in #257).
And, perhaps instead of Facebook’s new VR-based Workrooms cartoon collaboration tool for virtual meetings in the metaverse – complete with avatars that track movements and facial expressions (which does seem more compelling than today’s Zoom) – Tesla could make us office-bot doppelgängers who can be physically present in meetings with the real humans (or maybe just each other). Instead of congregating around the coffee pot, we could gossip at the communal charging station. What’s interesting to me about Workrooms is that you could theoretically appear in any form – if you remotely interview and work on such a platform, it could remove a lot of bias in human interaction that is based on subconscious (and conscious in some cases) reactions.
Embiggening the Bot Brain
And, these robots have the potential to become a lot smarter. Nvidia’s Jensen Huang mentioned on last week’s earnings call that AI models are doubling in size every two months! Current models are in the 100-trillion parameter range. Although the comparison isn’t a fair one, Huang noted the human brain has around 150 trillion synapses (connecting around 86B neurons).
AI Chip Design Goes Commercial
Samsung is using Synopsys’ new AI chip design tool, DSO.ai, for its Exynos mobile processors. As we’ve discussed in the past, letting algorithms configure more efficient chip designs (pathways between blocks and billions of transistors, etc.) could have a meaningful impact on performance. There may be a step function in chip design over the next few years, particularly if a design platform is able to aggregate learnings across various chip designs to improve overall efficiency.
Miscellaneous Stuff
Cartman’s Casa Bonita
In some delightful hometown news, the creators of South Park are buying Casa Bonita. For those of you who didn’t grow up in/near Denver, Casa Bonita is a bit hard to explain. It’s certainly a restaurant, but it’s more of a fantastically campy dining experience, with tables spread throughout a multi-tiered, 52,000 square-foot jungle-like setting, complete with grottos, mariachi bands, cliff divers jumping off a 30-foot-tall indoor waterfall, dancing gorillas, games, and more. The business, which declared bankruptcy during the pandemic, will get some much needed investment and improvement from Matt Stone and Trey Parker, who featured the “Disneyland of Mexican restaurants” in a 2003 episode. As a ViacomCBS shareholder, I can’t think of a better use of proceeds, from the duo’s recent $900M expanded content deal, than revitalizing Casa Bonita.
Stuff about Geopolitics, Economics, and the Finance Industry
Fall of Afghanistan Heightens US-China Tensions
China’s proximity to – and complex relationship with – Afghanistan could be something to watch as control shifts in the embattled region. The Washington Post reports: “Afghanistan’s stability is key to protecting the approximately $60 billion in Belt and Road projects in neighboring Pakistan that provide an overland route to the Indian Ocean. With those concerns in mind, China’s Foreign Minister Wang Yi hosted a senior delegation of Taliban officials last month, where he pressed the group’s chief negotiator Mullah Abdul Ghani Baradar to break with the East Turkestan Islamic Movement and prevent it from launching attacks on China’s interests from Afghan soil.” The article concludes: “In the long term, China wants Xinjiang to be a prosperous and stable neighborhood, and for that, there cannot be instability in their backyard. But with the Taliban back in power, instability is all there is.” Vice reports that: “Chinese state media have sought to frame the Taliban as an enemy of the U.S. that enjoys some degree of popular support. On Monday, the Communist Party mouthpiece People’s Daily shared a one-minute video about the Taliban on Weibo, saying the group had expanded in its early days thanks to its anti-corruption efforts and the support from the poor population. But many Chinese social media users questioned why the official media did not report on the group’s radical ideology and human rights violations.” The situation in Afghanistan is a good example of a complex adaptive system for which the ultimate outcome is somewhere between difficult and impossible to predict. With the anticipated shift of Xi from party-elected official to dictator in 2022 and the escalating tensions surrounding Taiwan, increased Chinese support of the Taliban could compound what is already a tense situation with enormous stakes. While Xi may not be ready to openly throw the CCP’s full support behind Afghanistan’s new leaders just yet, his government is using the Taliban’s rise as an opportunity to discredit the US and question their military support of overseas allies. Military Times reported on China’s intensified drill activity near Taiwan last week, and the official China state news agency said: “The fall of Kabul marks the collapse of the international image and credibility of the US...Following the blows of the global financial crisis and the Covid-19 pandemic, the decay of the American hegemony has become an undisputed reality. Its failure in Afghanistan is another turning point in that spiral fall”, as reported by CNN. The US, for its part, held one of the largest drills since the Cold War, according to the WSJ, involving 25,000 Marines and US Navy personnel in the Western Pacific. The exercise involved several allied countries and was designed to simulate the takeover of islands in the region. At any point in time anything can happen, a key lesson from complex adaptive systems. And, at this point in time, it seems like a wide range of outcomes is possible, and should perhaps be anticipated.
More-for-Less Digital Wave Wiping Out Inflation-Surfing Dinosaurs
A key area of investment focus at NZS Capital is the analog-to-digital transition of the global economy. At present, we are probably 5-10% of the way through this decades-long transformation. So far, we have few, if any, good examples of 1900s companies that have truly reimagined themselves into digital leaders. Winning in the Information/AI Age takes adaptability and a focus on maximizing non-zero-sum outcomes for all constituents. That’s a very hard DNA rewrite for companies that were built on maximizing profits at the expense of some other group (customers, suppliers, distributors, society, the environment, etc.). In many ways, analog companies were built to take advantage of inflationary growth, but digital companies are built as engines of deflation – providing more and more value for the same or less money over time. In this context, we typically run away from companies claiming pricing power and get nervous when we see management raising prices without an accompanying increase in value provided. Just because a product might be underpriced doesn’t mean companies should charge more for it. Underpricing keeps the customer base growing and limits vulnerabilities exploitable by tomorrow’s next upstart. It’s easier than ever to start and grow a new business, and the tools that enable startups are multiplying rapidly. When we ask ourselves: would we rather own inflation beneficiaries or deflation enablers, it is almost always the latter.
✌
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 an informal gathering of topics I’ve recently read and thought about. I will sometimes state things in the newsletter that contradict my own views in order to provoke debate. Often I try to make jokes, and they aren’t very funny – sorry.
I may include links to third-party websites as a convenience, and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by NZS Capital, LLC. If you choose to visit the linked sites, you do so at your own risk, and you will be subject to such sites' terms of use and privacy policies, over which NZS Capital, LLC has no control. In no event will NZS Capital, LLC be responsible for any information or content within the linked sites or your use of the linked sites.
Nothing in this newsletter should be construed as investment advice. The information contained herein is only as current as of the date indicated and may be superseded by subsequent market events or for other reasons. There is no guarantee that the information supplied is accurate, complete, or timely. Past performance is not a guarantee of future results.
Investing involves risk, including the possible loss of principal and fluctuation of value. Nothing contained in this newsletter is an offer to sell or solicit any investment services or securities. Initial Public Offerings (IPOs) are highly speculative investments and may be subject to lower liquidity and greater volatility. Special risks associated with IPOs include limited operating history, unseasoned trading, high turnover and non-repeatable performance.