SITALWeek #367

Welcome to Stuff I Thought About Last Week, a personal collection of topics on tech, innovation, science, the digital economic transition, the finance industry, and whatever else made me think last week.

Click HERE to SIGN UP for SITALWeek’s Sunday Email.

In today’s post: electric air taxis to the airport; connected license plates; fractal dimensions can improve AI-generated art; the AOL stage of the metaverse; using school buses to stabilize the grid; robot bee dances; Shatner; the big lesson we never learned from choose-your-own-adventure books; the escalating chip war with China is likely to meet retaliation and require cloud regulation; and, much more below...

Stuff about Innovation and Technology
Car Tags Go Digital
California has legalized digital license plates across the state. Although the plates can display a custom message along the bottom and, in the future, may enable tolls and other services, the real value is of course the freedom from the tyranny of having to affix a new expiration sticker every year. (Although, at a cost of $215/year if you prepay, it’s a bit steep even for us sticker haters.) We say it far too often, but anything that can be connected will eventually be connected to the digital world.

Aerial Airport Taxi
Delta Airlines is investing up to $200M in eVTOL startup Joby with a goal of providing air taxi service to airports in cities with heavy traffic. As mentioned in #348, the electric vertical takeoff/landing maker previously received FAA approval to begin testing its service. Delta plans to launch at LAX and LaGuardia when the service is ready. If there were some way to clear security remotely and then have Joby drop you right at the gate that would be very cool.

AI Art and Fractal Dimensions
Phenaki is a new text-to-video transformer model from Google that creates much longer videos from narrative inputs. The video at the bottom of Phenaki’s website starting with “Lots of traffic in futuristic city...” is a good example. The Verge reports on Phenaki and other recent text-to-video innovations. While the renderings and realism are distinctly beta, you can imagine a future where any one person could write a story and end up with a Pixar-like output. Obviously, there’s great value in a well-crafted and honed storyline, so Pixar, which excels in this area, will likely still be around for a long time. Yet, giving animation capability to anyone who wants it will no doubt create a deluge of new content to compete for our limited attention (see also: The TikTokification of Consumption Habits). Kevin Kelly goes one step further in this interview, suggesting the next step is the creation of an entire interactive virtual world from a text prompt. One topic concerning text-to-image and text-to-video engines that I have yet to see explored is the fractal dimension of the output. Fractal dimension is a number between 1 and 2, where 1 is a straight line and 2 is an extremely complex fractal pattern. Human eye movement evolved to trace a fractal dimension of 1.4 because it’s very common in nature (e.g., tree branches and such). We therefore are drawn to art that reflects this level of complexity. I suspect fractal dimension could be used to greatly improve the believability and beauty of AI-generated art. This 2017 Nautilus article exploring the concept of fractal dimensions and how they relate to human consciousness is a fascinating read.

Metaverse of AOL Chat Rooms
There was no shortage of articles last week ridiculing the launch of Meta’s new high-end VR passthrough headset and its other metaverse announcements. Most of the criticisms are hard to argue with, but what I am far more interested in are the glimpses we are starting to see of where the technology and experience will be in 5-10 years’ time. Many of our real-world activities could be made more useful and interesting with an unobtrusive augmented overlay. I think AR has the potential to be even more transformative than the Internet and will follow a similar adoption curve, going from non-existent to ubiquitous within a decade or two. If we want to see where things are headed, the area to focus on is what artists are doing with VR/AR (a topic I explored in more detail in AI Art, Video Toaster, and Back to the Future). A NYT reporter, Kashmir Hill, spent months exploring Meta’s Horizon World VR app and reports on several interesting aspects in this article. She encountered users like Aaron Sorrels who runs a standup comedy club in Horizon with 13,000 weekly visitors. That number may not sound impressive, but it’s likely far more patrons than your local comedy club garners. Sorrels offers access to the virtual club’s private lounge to paid supporters and is making enough that running the club is a full-time job. Attending live, real-world events (where real people appear real in the headset) as a virtual participant is another compelling use case. To be clear, I don’t think the future of AR will be anything like Meta’s Horizon platform, and the devices won’t be like the Quest, but I do think this early tech offers some insight into the applications that may migrate to future platforms. Hill sums up her experience well: “explaining the metaverse through the lens of Horizon feels akin to unpacking the potential of ‘the web’ by surfing AOL chat rooms in the 1990s, during the days of dial-up modems. Meta’s V.R. social network is an early and singular part of what could become a large technological shift.”

Fleet-to-Grid Power
School buses sit idle most of the day, as do many other types of fleet vehicles. A startup called Synop has software and tools to turn fleets like school buses into large vehicle-to-grid (V2G) power banks, providing reserve energy to the grid during peak usage. Buses can be fully charged overnight while demand for power is low, drive morning and afternoon routes, and still have plenty of battery capacity to drain out during the middle of the day and in the evening. Given variable pricing for energy, the goal is for schools to make money off their buses as they provide peak electrons to grids. Many fleets, such as rental cars/trucks, have times throughout the day (or year) when they could be used as V2G ballast. Synop software tracks vehicle routes and usage to assure they have enough reserve capacity when they are in use.

Miscellaneous Stuff
Hive Hacking
Bees communicate where to forage using a waggle dance. Researchers in Germany have learned how to create maps from the bee dances to figure out where bees have visited and also program their own robotic bee proxies to communicate specific directions. Using high-tech hives equipped with cameras and dancing drones, it should be possible to identify areas where bees are picking up toxins and reroute them to safer areas free of pesticides and other dangers. Other researchers are working on spy bees to infiltrate and influence queens: “The idea is for robots to infiltrate the queen’s group of closest attendants. In theory, the impostor bees might be able to induce the queen to lay more eggs by feeding her more protein-rich food. Or they could make her egg laying more efficient by guiding her to areas of the nest where cells for babies have already been prepared.”

Reconnecting with Our Pale Blue Dot
William Shatner experienced a roller coaster of emotions during his trip to space on Blue Origin. He reflects on those feelings in this essay he wrote for Variety:
It was among the strongest feelings of grief I have ever encountered. The contrast between the vicious coldness of space and the warm nurturing of Earth below filled me with overwhelming sadness. Every day, we are confronted with the knowledge of further destruction of Earth at our hands: the extinction of animal species, of flora and fauna...things that took five billion years to evolve, and suddenly we will never see them again because of the interference of mankind. It filled me with dread. My trip to space was supposed to be a celebration; instead, it felt like a funeral.
The experience of viewing Earth from space tends to cause a shift in perception known as the Overview Effect:
It can change the way we look at the planet but also other things like countries, ethnicities, religions; it can prompt an instant reevaluation of our shared harmony and a shift in focus to all the wonderful things we have in common instead of what makes us different. It reinforced tenfold my own view on the power of our beautiful, mysterious collective human entanglement, and eventually, it returned a feeling of hope to my heart. In this insignificance we share, we have one gift that other species perhaps do not: we are aware—not only of our insignificance, but the grandeur around us that makes us insignificant. That allows us perhaps a chance to rededicate ourselves to our planet, to each other, to life and love all around us. If we seize that chance.
Perhaps, whenever we sing national anthems at organized events, we should also take 3.5 minutes to pay homage to our Pale Blue Dot.

Choose-Your-Own State of Mind
I recently stumbled across a bit of writing from Edward Packard titled The View from Ninety. Packard was the creator and author of the popular choose-your-own-adventure youth books for three decades beginning in the 1970s. The essay is a reflection on his own path through life and what he learned. Notably, the notion that you can actually choose your path through life is challenged by the seeming randomness of it all. Life in some ways represents a choose-your-own adventure where someone is also rolling the dice every time you flip the page. Luck plays a far bigger role than choice, and you have to be ready to open that door when luck comes knocking. Here is an excerpt:
My view from ninety is a lot different from the one I had at twenty, fifty, and even eighty. To explain this, I have to go back a ways. When I thought up the idea of a book in which “you” are the main character and make decisions from time to time leading to multiple plot lines and endings, I realized that, as the story moved along, I ought to give readers plausible choices as to what to do. The idea was that they would have to think about the pros and cons of each possible choice and analyze which would be best. It wasn’t until many decades later that I realized that the way life plays out doesn’t just turn on conscious decisions made at key junctures. Rather, the paths you take are determined largely by chance and by what kind of person you are. Countless things about you, such as your genetic makeup and life experiences, even your body language, even a propensity to smile or scowl, can affect other people, change dynamics, and produce situations in which you fail to perceive options or unthinkingly dismiss them and seize upon one that looms large in your consciousness, and events seem to be happening in rapid sequence before you can assimilate them, so that you have little or no sense of making decisions, and in fact you are not –– you are traveling through time as if floating downstream on a river raft, poling now and then and sometimes hanging up on a shoal, not paying proper attention, maybe falling asleep, and finding yourself almost on the opposite bank, where the wind took you, which is not where you meant to be, all the while missing something, and you may not even know what it is.
At least that’s the way it was for me while I was growing up and after growing up. I was sleepwalking through life, and as a consequence making a lot of bad decisions. Reflecting decades later on my long succession of them, as to each of the most important ones I asked myself, How could I have acted that way? What was I thinking? Why wasn’t I thinking?
This line of inquiry led me to an insight: When you face a choice in life, particularly an important one, whether you choose wisely or unwisely isn’t likely to depend on how good your powers of analysis are, but on your state of mind: Having the wrong state of mind is conducive to making wrong choices. Having the right state of mind is conducive to making right choices.

Stuff about Geopolitics, Economics, and the Finance Industry
Divisive Banking
As culture continues to fracture into smaller and smaller factions, an effort has emerged to create more parallel economies. There is, of course, the East-West divide where in the case of China a separate political economic system and Internet exist. There are upstart businesses catering to one political viewpoint, social networking alternatives to Meta, Twitter, etc., and states pushing anti-ESG agendas. The WSJ writes about the failure of GloriFi, a bank that focused on “pro-America values such as capitalism, family, law enforcement and the freedom to ‘celebrate your love of God and country.’” I don’t believe any of this behavior is new in terms of aligning beliefs with businesses – consumers have boycotted or favored businesses of various types (e.g., based on union affiliations or social/environmental ideology) for decades (if not millennia). However, the potential to create parallel economies at scale inside a Western country with businesses and Internet tools aligned to only one viewpoint seems like a step in the wrong direction.

Know Your Cloud Customer
The Biden administration escalated our trade war with China by placing a slew of new restrictions on chips and chip equipment sales into the country. The fear in D.C. seems to have been recently elevated by China’s achievement of hypersonic missiles and increased attempts to crack key US encryption, according to the NYT. As I’ve noted before, the chip industry has failed to keep its basic programmable chips, as well as higher-end devices, out of places like the Russian military, thus becoming a key enabler of tyrannic wars. While the US fear seems well placed, the idea of restricting access to high-powered computer chips is increasingly challenging given the availability of cloud platforms. In the banking industry, the complex problem of tackling money laundering and criminal activity is handled with KYC, or know your customer. It seems likely that all cloud platforms will have to go through similar processes in order to grant access to GPUs or large amounts of compute power to train machine learning models, etc. It's plausible that cloud platforms will be required to know what workloads are actually doing on their platforms, a slippery slope of regulation. I suspect the US is overplaying its hand in this latest salvo given how reliant the West remains on China for a myriad of goods and raw materials. One thing is for sure: the stakes are high given the relative importance of a small number of semiconductor companies, and this maneuver is unlikely to go without retaliation.

✌️-Brad

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.