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: Waymo passes 100,000 fully autonomous rides a week; a new injectable can stop bleeding instantly; reality TV production plummets as Hollywood and viewers move on; evidence mounts for spontaneous emergence of life and the similarities of humans and LLMs; Mr. Market is long dead; startups are in a funding air pocket; a 1999 interview with Tom Waits and the Last Leaf on the Tree; and, much more below. 

The next SITALWeek will publish on September 8th.

Stuff about Innovation and Technology
Vans Go
As Waymo surpasses 100,000 autonomous paid trips per week, the company is evolving the form factor of its driverless vehicles toward a small electric van, made by China’s Geely, called Zeekr. The Zeekrs will be equipped with Waymo’s new, lower cost, “generation 6” technology package, which has 13 cameras (down from 19) and four (instead of five) lidar sensors. The vans are similar in size to Waymo’s current fleet of Jaguar I-PACE models but have lower floors and higher ceilings, making for easier access. Although Waymo introduced the Zeekrs in late 2022, they are now testing them with the new tech configuration with drivers on US roads. Related, one of my favorite new ambient YouTube channels features Waymo’s vehicles maneuvering around each other in one of their staging lots in San Francisco.
 
PHEV Pivot
Ford is scrapping plans for its large electric SUVs and will instead pursue plug-in hybrids (PHEVs). As I noted in EV Chill, PHEVs are the only logical path for the auto industry, and regulations requiring automakers to shift to PHEVs would be a welcome impetus for hastening the transition.
 
Sugary Coagulant
Traumagel by Cresilon is a hemostatic gel composed of long polysaccharide strands derived from algae that can stop bleeding when applied to a wound. The product is an easier, safer, and less painful way to stop acute bleeding for an injury like a gunshot. Recently approved by the FDA for treatment of traumatic injuries, the gel received prior approval for treatment of minor cuts and has also been in use by veterinarians (as Vetigel) since 2020.
 
Show Stopper
Showrunner is a platform for creating AI-generated animations, including script, voices, and video. They debuted last year with an episode of South Park, and their website showcases a growing roster of shorts. As these technologies advance, it will be immeasurably more difficult to stand out against the sea of content, as each show could become a node for infinite AI-generated derivatives. This nascent tech does not bode well for the already contracting (dying) film industry. We are now close to a year out from the most recent Hollywood strikes, and productions have stabilized at around 15% below “normal” filming levels, according to FilmLA in the LA Times. Reality programming has been hit especially hard, down 50% compared to its five-year average. Although ballooning content and streaming wars could account for this deficit, perhaps depictions of “reality” through the lens of TV shows simply aren’t that interesting anymore. And, in a truth-is-stranger-than-fiction plot twist, amidst the dwindling productions in Hollywood, fried chicken fast-food purveyor Chick-Fil-A announced plans to start a new video streaming service with original and unscripted reality TV content. 

Miscellaneous Stuff
Self-Replicators
Sean Carroll hosted the former head of Google Research and current head of Google’s Cerebra team, Blaise Agüera y Arcas, for a discussion of their latest paper, which implies that spontaneous emergence of self-replicating life may be a common outcome when starting from a multitude of “pre-life” environments. Here is the synopsis of the podcast: “Understanding how life began on Earth involves questions of chemistry, geology, planetary science, physics, and more. But the question of how random processes lead to organized, self-replicating, information-bearing systems is a more general one. That question can be addressed in an idealized world of computer code, initialized with random sequences and left to run. Starting with many such random systems, and allowing them to mutate and interact, will we end up with ‘lifelike,’ self-replicating programs? A new paper by Blaise Agüera y Arcas and collaborators suggests that the answer is yes. This raises interesting questions about whether computation is an attractor in the space of relevant dynamical processes, with implications for the origin and ubiquity of life.” Blaise also seems to support the idea that the human brain works in a very similar way to large language models (see You Auto-Complete Me).
 
“What’s He Doing in There?”
The Tom Waits YouTube channel released a 1999 interview coinciding with the release of the album Mule Variations. The interviewer starts out by asking if the album reflects Waits coming full circle from his various musical styles throughout the 1970s, 80s, and 90s. Waits, with his uncanny ability to quickly coin an expression, responded: “I get the image of somebody with one foot nailed to the floor when I think about comin' full circle. If I was comin' full circle, I guess I'd move back to the town I grew up in, you know.” Waits also describes songwriting as being in the salvage business: “Yeah, we had 25 [songs]. And then, you put 16 on the record. And the rest of 'em wind up in the orphanage. That's kinda how it works. And then, you use 'em on something else, or you cut 'em up and use 'em for parts. It's kinda like being in the salvage business when you're a songwriter. You pay attention to things. And particularly, things that other people don't seem to need, or aren't using, or threw away in a conversation and didn't pay any attention to. And you hang onto it and use it later.” In addition to 17 studio albums, Waits has appeared in over three dozen films since the late 1970s, which perhaps explains why he discusses songwriting and band formation in terms of casting, directing, editing, and producing. Waits compared the spoken word track “What’s He Doing in There” to a short film about our endless curiosity to create rich stories about our neighbors from scant tidbits of disconnected information. YouTube is a treasure trove of Waits-ology, including his many late-night television appearances. Here’s one more quote from the interview: “Roosters will never crow when you're crowing. They wait till there's some clean air. They wait till you're done. And then, they get the best spot.” Willie Nelson recently released the first single from his upcoming album, a cover of Tom Waits’ “Last Leaf on the Tree”. The eponymously titled album will be released on November 1st and is Nelson’s 76th solo studio album and 153rd career album. The majority of the album will feature 91-year-old Nelson covering a diverse roster of artists and styles. Last Leaf has the haunting feeling of a swan song:
I’m the last leaf on the tree
The autumn took the rest
But they won’t take me
I’m the last leaf on the tree
When the autumn wind blows
They’re already gone
They flutter to the ground
Cause they can’t hang on
There’s nothing in the world
That I ain’t seen
I greet all the new ones that are coming in green
...
Nothing makes me go
I’m like some vestigial tail
I’ll be here through eternity
If you want to know how long
If they cut down this tree
I’ll show up in a song

Stuff About Demographics, the Economy, and Investing
Startups Power Down
As VCs chase shiny, new AI startups, they are leaving their old investments with a shorter runway. Carta, a provider of services for venture-backed companies, has seen the failure rate of its customers rise 7x from 2019 (and 5x from 2021) to 254 in the first quarter of 2024. Of course, enlargement of the starting pool is one reason for the failure number uptick, with more startups funded during the pandemic capital bubble. BI also reports that family offices are increasingly investing in venture-backed companies directly in addition to routing their money through venture funds. As I wrote in Private Asset Malaise, there could be broader trends at play following a decades-long private asset price bubble.
 
“Mr. Market” Myth
I continue to see otherwise intelligent investors cling to the idea of a “Mr. Market” that drives stocks. There is no value in imagining agency of any type behind the stock market whether it be human, an animal spirit, or some other type of alien-like intelligence, given that valuations are set by the complex interactions between algorithms, AI, and the dwindling cohort of human investors, who are themselves largely mind controlled by algorithms and AI. While some people might be willing to agree that what I state here is true in the short-term, “voting machine” nature of the stock market, most investors will push back and say that, in the long term, the “weighing machine” still sets the value of an asset relative to its current and prospective free cash flows. I, however, believe the weighing machine is broken as well. I wrote more about this notion in early 2023 in Vanishing Edges:
 
Only one-third of active mutual fund managers beat their market benchmarks in Q1 of 2023, according to the WSJ. Bill Miller has often articulated three sources of advantage an investor can have over the broader market: informational, analytical, and behavioral. Miller provides more detail in this letter, but, briefly, I interpret the framework as follows: an information edge is knowing something before others; an analytical edge is having similar information but coming to a different conclusion; and a behavioral edge is acting differently than others despite a similar analysis of similar information. From my perspective, the opportunity for an informational advantage began declining with the onset of the Information Age in the 1980s. Today, thanks to the Internet and ubiquitous access to real-time data (not to mention podcasts, YouTube videos, etc.), I would posit that today there is essentially zero value in investors seeking an informational edge. Analytical strategies to beat the market rose to prominence in the mid part of the last century. I would point to the classic Security Analysis by Graham and Dodd (first published in 1934) as a hallmark for the use of analytical methods to gain an edge over the market. I suspect analytical advantages rose over time (perhaps even fed by the rising use of technology and availability of information), but then they too began to lose value as the machines took over and algorithmic and quantitative strategies rose in both prominence and share of assets, arbitraging away many seeming advantages. LLMs and AI will soon relegate whatever meager analytical edge remains to the refuse heap of ticker tape machines and other investing anachronisms. What then of the last source of advantage, behavioral? Miller’s framework has historically described a behavioral edge as taking advantage of the biases of other humans. That human-focused perspective becomes complicated as passive investing steers past 50% share, and daily market activity is increasingly a reflexive, hyper feedback loop between machines and machine-created information and algorithms. It’s one thing to have a theory of mind for other humans and then to try to take advantage of their biases, it’s quite another thing to have a theory of mind for AI when we don’t even fully know how emergent behavior works in LLMs. Even if we were to recognize that behavioral advantage has shifted from overcoming human bias to overcoming machine bias, soon AI and LLMs will be smart enough to eliminate Miller’s final edge...Investing has been one of the earliest professions to be heavily impacted by evolving technology, probably because stock trading is digital and largely information based (the more digital an industry, the more it is susceptible to technological disruption). We would apply the same lens to investment firms and investment strategies that we apply to any company or industry we analyze: the winners will be the most adaptable organizations that offer the most non-zero-sum outcomes. It’s not entirely clear what the path forward is for professional investors whose goal is to consistently beat the market, but it’s worthwhile to think deeply about the areas to which humans can still uniquely contribute and those that would benefit from adept implementation of AI.

✌️-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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