SITALWeek #399
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.
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In today’s post: performance gains in computing are shifting from hardware to software thanks to AI; the technical roadblocks and social isolation of passthrough VR goggles; the peril of living inside of a memory; the rise of fake fashion and decline in human authenticity; the loss-of-desire problem for GLP-1s; $40M of nostalgia; the drop in VC funding heavily favors incumbents; a manufacturing construction boom; and, much more below.
The next issue of SITALWeek will arrive on July 2nd.
Stuff about Innovation and Technology
Prizing Inauthenticity
“Dupes” is the new slang for knockoff luxury items, which are becoming mainstream hot commodities. The Atlantic claims that their popularity with TikTok influencers is partially behind the increasing demand and acceptance. According to the NYT, the rise of high quality superfakes is roiling the fashion industry. Commercialized counterfeits have of course been around for decades (centuries?), whether hawked on the sidewalk in Times Square, in eBay and Etsy listings, or in various other back-alley exchanges. And, Alibaba and other direct-from-China sites have been instrumental in making dupes widely available. What’s changed recently is the tendency of younger consumers to flaunt their dupe purchases. I’d speculate there is a broader behavior connected to duping: a growing dearth of authenticity. Ever since the front-facing megapixel selfie cam appeared on the iPhone (over a decade ago) and social networking hijacked the human brain, we’ve grown used to living in a post-truth, inauthentic world. With AI and mixed reality glasses on the horizon, what’s “real” doesn’t seem like it matters as much to most people. Who needs “real” when we can have whatever reality we want whenever we want it? Social-status-seeking behavior is perhaps the defining characteristic of primates. If inauthenticity becomes the norm, what will define the status hierarchy in the real world? Or, in a world of infinite “dupe” realities, is status irrelevant? That question is perhaps too philosophical to be useful. In the meantime, brands (fashion or otherwise) might want to think about what will define their value in a world of dupes.
Dystopian Headache Pro
Passthrough VR continues to look like a dead end to me, or, at best, a mediocre means to a completely different end that is too far into the future to see clearly. Apple’s new $3500 Vision Pro doesn’t appear to demonstrate anything new that changes my mind on the shortcomings of passthrough technology – namely the social isolation and the problems associated with representing the 3D world in a flat plane mere inches from your eyes. Strapping a high-resolution laptop to your head definitely has some applications (probably in design and enterprise use cases), but it’s fundamentally more of a new type of monitor than a new computing platform. Despite better latency (which Apple discussed in its presentation), passthrough VR is still likely to be something that’s only physically tolerable for relatively short periods of time (e.g., the WSJ’s Joanna Stern noted that she became nauseous during her 30-min demo). Apple also seemed to lay claim to the term “spatial computing” at their product unveiling, but I first heard this exact phrase popularized by Magic Leap cofounder Rony Abovitz in 2016. Further, every Apple demo shown has long been available on headsets like the ML1 and ML2 (which feature superior mixed reality where you see the real world in 3D; here is a good explainer of how true augmented reality technology, unlike Apple’s, takes advantage of – rather than fights – human evolution). The goofy addition of an outward facing eyeball screen is, well, goofy, especially since all of the Apple demo videos showed people sitting on their dystopian future couches in complete isolation (and, I haven’t come across any footage of Apple execs wearing the Vision Pro in public!).
When I saw Apple’s demo of taking a 3D picture and then revisiting it in the future with passthrough VR – effectively time traveling to that memory in full immersion of sight and sound – I was viscerally reminded of the people living inside their dreams and memories in Wim Wenders’ 1991 director’s cut masterpiece Until the End of the World…and not in a good way (I covered a lot of ground on VR, the brain, and that movie a couple of years ago in Until the End of the World: 1991’s Virtual Reality Informs Consciousness). Goggle-type headsets like the Vision Pro reinforce the rising loneliness and isolation humanity has been experiencing as we struggle to adapt to a screen-based world and algorithmic behavioral influence. To the extent the iPhone has played a role in declining birth rates (which I suspect it has), the Vision Pro is the ultimate anti-baby-maker. VR is a purgatory of not quite existing in the real world (or the reality our brains have come to understand over the last few thousand years of trying to make sense of everything). I am not trying to come across as pessimistic here, because I am very optimistic about AR, but I am skeptical of this temporary phase of passthrough VR. As I’ve noted in the past, it’s important to follow the developers and pay close attention to the artists in order to discover what the next computing platform will be and how we’ll use it. If these groups adopt and find purpose for passthrough VR, I’ll be happy to change my mind on its viability. In the meantime, the shift to a conversational user interface via AI and away from a screen-based, multi-touch platform will have far larger near-term opportunities (and risks) for the big tech platforms.
Moore Software
Decades of advances in computational output per wattage input have largely been driven by Moore’s Law and semiconductor innovation. Chips will surely keep advancing, especially for low-power, untethered computing (smartphones, future AR headsets). Going forward, however, the great leaps and bounds that sustain a Moore’s Law pace of innovation are more likely to come from software rather than hardware. Google’s DeepMind recently published a paper in Nature demonstrating how AI can drive significant gains in sorting algorithms, a key component of many commonly used apps. From DeepMind’s blog post on the paper: “By optimising and launching improved sorting and hashing algorithms used by developers all around the world, AlphaDev has demonstrated its ability to generalise and discover new algorithms with real-world impact. We see AlphaDev as a step towards developing general-purpose AI tools that could help optimise the entire computing ecosystem and solve other problems that will benefit society.”
Miscellaneous Stuff
Food Apathy: GLP-1’s Achilles’ Heel?
Danish professor Jens Juul Holst is one of the pioneers whose research concerning the hormone GLP-1 led to the new class of diabetes and weight loss drugs. Holst brings some needed perspective to the floor given his decades of experience with GLP-1 analog clinical trials. One of the things he noticed is that although long-term usage is required to maintain weight loss, people often quit the drug regimen, perhaps because they miss enjoying food: “GLP-1s have been on the market since 2005. Do people stay on them? No, they don’t. It’s just like every other drug, they don’t stay on it for many reasons. One of the reasons, as I said, is that once you have tried it and you realize you’ve lost interest in food, then that may be enough. We don’t know why people stop taking these drugs, but we know for a fact that they do stop. They do that all over the world.”
Casa Muy Bonita
Twenty years after the South Park creators Matt Stone and Trey Parker featured their favorite childhood restaurant, Casa Bonita, in a classic episode of the show, the duo is set to unveil the newly restored landmark. Having grown up in the Denver area, I am thrilled to see this nostalgic locale brought back to life. Responding to Parker’s comments (quoted in the NYT) on the eye-popping $40M bill to painstakingly rehabilitate this iconic location that “is such a visceral place”, Stone commented: “That’s worth infinity dollars”. If you’re looking forward to dining in the new Casa Bonita, you can probably thank AT&T, who ponied up $500M for the South Park streaming rights in 2019 – during the frenzy of the now-defunct streaming wars – before unloading WarnerMedia to Discovery in 2022.
Stuff About Demographics, the Economy, and Investing
Underfunded VC Favors Big Tech
There’s been a couple stories recently about VCs falling short of fundraising targets (see the FT and The Information). This situation might worsen as valuations come down over the next couple of quarters and investment allocators rethink their exposure to VC. Predictably, it’s probably a good time to be allocating to new startups as capital becomes more scarce, but it’s a hard decision to make as many private companies are now running out of runway provided by the last funding cycle and are shutting down. I’ve covered the excesses of the last, low-rate-fueled VC bubble many times (for example, see Bubble, Bubble Toil and Trouble from 2021), but what matters now is looking forward. The potential for innovation created by smart entrepreneurs is brighter than ever, and I hope they can still find capital to build that future. I think the most interesting opportunities involve AI and bringing innovation to the infrastructure layers of the economy. AI will transform how we work and open up entirely new fields in areas like design, healthcare, etc. These open-ended opportunities, combined with anemic VC, will advantage the large incumbent companies in tech and other industries. They will face less competition from startups, better retention of key employees, and will be able to ramp up their corporate VC funds to secure future positions of power. The situation all but guarantees today’s giants will persist as tomorrow’s major platforms.
Factory Buildout
The seasonally adjusted annual rate of construction spending in the manufacturing sector peaked at around $90B in the 20-teens and then leveled off until the pandemic. Over the last couple of years, this number has roughly doubled to $190B, driven by a spate of new plants for EVs, batteries, chips, and companies looking to stabilize their global supply chains after the pandemic perturbations. While it’s difficult to predict whether this trend will continue, it’s a strong sign of a renaissance in Western manufacturing that should also drive demand for AI, automation, and robotics.
✌️-Brad
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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 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.
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