Curated Insights 2018.09.07

A market shakeup is pushing Alphabet and Facebook out of the tech sector

One of the biggest impacts will be on tech—a sector that has grown so big, at 26.5% of the S&P 500, it has produced more than half of the market’s gain this year, according to Bespoke Investment Group. Tech is being cut down to size, though, as several of its biggest stocks head over to the new communication sector. The losses will chop about 23% off the tech sector’s market value. It will be more oriented to chip makers, hardware, and software.

Thankfully, S&P and MSCI don’t make such changes often. The GICS taxonomy goes back to 1999. It has grown to 11 sectors, the latest being real estate, carved out of financials in 2016. But that was minor compared with the new musical chairs—affecting more than 1,100 companies globally.

Redrawing the GICS boundaries was necessary to reflect the changing tech and media landscapes. When the old sector lines were drawn, people made calls with flip phones, used MySpace for social media, and paid AT&T for cellular service and landlines. But mergers and tech developments have jumbled things up: Netflix is threatening Hollywood, Comcast has turned into a media giant, and Alphabet is in everyone’s business. Sure, technology remains the heart of these businesses. But so what? Facebook and Alphabet aren’t like Apple and Microsoft, which develop hardware and software, says Blitzer. It makes more sense to group Facebook and Alphabet with firms making money off advertising, content delivery, and other types of “communications,” he says.

Amazon sets its sights on the $88 billion online ad market

In turn, brands are increasingly recognizing Amazon’s vast customer reach, particularly to its more than 100 million Prime subscribers. In a study conducted last summer by Catalyst, the search and social media marketing company, only 15 percent of the 250 brands marketers polled felt they were making the most out of advertising on Amazon’s platform, and 63 percent of the companies already advertising there said they planned to increase their budget in the coming year.

In India, Google races to parry the rise of Facebook

Facebook ads, compared with those on Google search or YouTube, tend to transcend language barriers more easily because they rely more on visual elements. Pinpointing younger consumers and rural populations is easier with Facebook and its Instagram app.

Facebook and Google between them took 68 percent of India’s digital ad market last year, according to advertising buyer Magna. Media agency GroupM estimates digital advertising spending will grow 30 percent in India this year.

The tension is building between Spotify and the music industry

The easiest way for Spotify to save money would be to cut labels out of the process entirely. While the company has said time and time again that it doesn’t want to operate a label or own copyrights, it has been taking on functions of a record label. The company has developed tools to help artists plan tours and collect royalties, funded music videos and recording sessions, and held workshops with songwriters.

Record companies know Spotify can’t cut them out completely. They control too much music and offer resources artists need. But Spotify’s growth poses a threat. Successful independent artists, like Chance the Rapper, have created the perception that musicians may not need labels at all. “The music industry hates that Spotify, YouTube and Apple Music reduce the relevance of the traditional music business,’’ Masuch said. “Distribution is controlled by companies that aren’t part of the traditional ecosystem.’’

4 reasons Tesla Mobility is worth a lot less than Alphabet’s Waymo

Jonas estimates that Tesla has a 13% discount rate, versus Waymo’s 10%. “Tesla likely has a higher cost of capital vs. Alphabet/Waymo,” he writes.

Tesla will have to make money on the rides themselves, while big tech companies like Alphabet can also make money off the time spent in the car as well as what it learns from drivers. “Tesla’s business model offers potentially less room for adjacent revenue monetization,” he explains.

Tesla has offered very little information on what Tesla Mobility’s business model will look like, while Waymo and General Motors (GM) have “become increasingly conspicuous with their efforts to grow the business with specific targets for commercialization and deployment,” he explains.

More than half the value assigned to Waymo by Morgan Stanley’s internet team came from logistics, by which they apparently mean moving people and stuff around. That’s an opportunity Jonas doesn’t include for Tesla. “Logistics accounts for $89bn of the total $175bn value in our internet team’s Waymo DCF,” he writes. “We have not specifically ascribed any logistics based revenue to Tesla Mobility at this time.”

Lessons from Chance the Rapper (Value chains and profit pools)

“There is what’s called a master and a publishing portion of the record. So the master is the recording of it, so if I sign a record deal or a recording deal, I sign away my masters, which means the label owns the recording of that music. On the publishing side, if I write a record, and I sign away my publishing in a publishing deal, they own the composition of work… so the idea of it, you know what I’m saying? So if I play a song on piano that you wrote, I have to pay you publishing money, because it comes from that idea. Or if I sing a line from that song, it’s from the publishing portion. If I sample the action record, if I take a piece of the actual recorded music, that’s from the master. None of that shit makes any sense right, that shit didn’t make any sense to you? ‘Cause that shit is goofy as hell.”

Peak Valley?

Silicon Valley has always had one important advantage over other regions when it comes to the tech sector. There is a much higher density of talent, capital, employment opportunity, and basic research in Silicon Valley versus other locations. When I say density, I mean physical density. If you walked a mile, how many tech companies would you pass along the way? That metric in Silicon Valley has always been higher than elsewhere and still is. So even though the return on capital (human and invested) has significant headwinds in today’s Silicon Valley, it is still a lot easier to deploy that capital there. And I think that will continue to be the case for a long time to come.

Quantum computing: the power to think outside the box

That could make it easier to design new materials, or find better ways for handling existing processes. Microsoft, for instance, predicts that it could lead to a more efficient way of capturing nitrogen from the atmosphere for use in fertilisers — a process known as nitrogen fixation, which currently eats up huge quantities of power.

When something is familiar and common, you set a low reference point. So most bad outcomes are placed in the “Oh well, you got unlucky. Next time you’ll do better,” category, while all wins are placed in the, “Easy money!” category. Index funds live here. Even in a bad year, no one thinks you’re crazy.
When something is new or unfamiliar, you have no idea where the reference point is. So you’re cautious with it, putting most bad outcomes in the “I told you so” category and most wins in the “You probably got luck” category. When something is new and unfamiliar, the high reference point means not only will bad outcomes will be punished, but some good outcomes aren’t good enough to beat “par.” So even high-probability bets are avoided.

Newcomers

We were doing something different. And anytime you’re doing something different the only people who can participate are people who don’t have career risk. Anytime you introduce the factor of career risk into the decision-making process, you have to do the norm. It’s a divergent system: If you invest in a divergent system and it goes wrong, you have massive downside for your career personally, separate from the organization. It could be the right decision – it was probabilistically a great bet. But if it goes wrong and it looks different, you could get fired. And if it goes right, you still may not have enough upside career-wise.

Deciding whether to do something isn’t just about whether or not it’ll work. It’s not even about the probability of whether it might work. It’s whether it might work within the context of a reference point – some gauge of what others consider “normal” to measure performance against. Thinking probabilistically is hard, but people do it. And when judging the outcomes of decisions, a win isn’t just a win; it’s “You won, but that was an easy bet and you should have won.” Or, “You won, but that was a gamble and you got lucky.”

Curated Insights 2018.01.14

As of this year the App Store alone will overtake Global Box Office revenues.

The iOS economy, updated

Facebook, Twitter, Linkedin, Tencent, YouTube, Pandora, Netflix, Google, Baidu, Instagram, Amazon, eBay, JD.com, Alibaba, Expedia, Tripadvisor, Salesforce, Uber, AirBnB and hundreds of others are all “free” apps enabling hundreds of billions of dollars of interaction none of which are captured in the App Store revenue data. The vast majority of activity for the top commerce, communications and media properties are now coming through mobile devices.

By weight of users and their propensity to engage, iOS enables about 50% to 60% of mobile economic activity. Based on assumptions of revenue rates for mobile services and iOS share of engagement, my estimate of the economic activity on iOS for 2017 is about $180 billion. Including hardware sales, the iOS economy cleared about $380 billion in revenues 2017.


Wal-Mart already has a thriving online grocery business—in China

Wal-Mart has already developed a big online grocery delivery business in China, capable of transporting fresh produce from its shelves to homes within an hour. To accomplish that feat, it’s created a network of chilled mini-warehouses, used artificial intelligence to tailor inventories, and employed an army of crowdsourced deliverymen to rush meat, fruits, and vegetables to customers’ doorsteps. That could provide the megaretailer with plenty of insight and experience to keep tech upstarts from disrupting it out of one of its core U.S. businesses.

Only 2 percent of fresh food was bought online in China last year, according to data from Euromonitor International.


Ensemble Capital: Nike Update

Nike’s sales are 50% larger than its closest competitor Adidas and it is more than twice as profitable. The next few competitors, like Under Armor and Puma both at $5 billion, are markedly smaller in scale. When Nike was founded in 1964 by Phil Knight, Adidas was a much larger incumbent in the sneaker business and Nike was the scrappy startup.

The bigger growth opportunity going forward comes from the international markets, where Nike expects 75% of its future growth to come from and now accounts for about 60% of sales. In addition, this growth is likely to be more profitable over time as its direct to consumer business via its own stores, website, and app will account for a greater percentage of its total sales while creating a more direct relationship with the customer.

New lift technology is reshaping cities

The lift is to the vertical what the car is to the horizontal: the defining means of transport. Like cars, modern lifts are creatures of the second industrial revolution of the late 19th century. Like cars, they have transformed the way that cities look, changing how and where people live and work. And today, like the cars that are lidar-sensing their way towards an autonomous future, lifts stand ready to change the city again.

The Chinese appetite for more, higher and faster lifts is like nothing seen since 1920s New York. In 2000 some 40,000 new lifts were installed in the country. By 2016 the number was 600,000—almost three quarters of the 825,000 sold worldwide. China not only wanted more skyscrapers; it wanted taller ones. More than 100 buildings round the world are over 300 metres; almost all of them were built this century, and nearly half of them in China. The country is home to two-thirds of the 128 buildings over 200 metres completed in 2016.

Liftmakers say that “Destination control”, in which the lift system tells the user which lift to use, rather than the user telling the lift where to go, reduces door-to-desk time by 30%. Pair it with double-decker lifts, which in very tall buildings usefully serve odd and even floors simultaneously, and you increase capacity even further.

Why experts believe cheaper, better lidar is right around the corner

“Our lidar chips are produced on 300-millimeter wafers, making their potential production cost on the order of $10 each at production volumes of millions of units per year,” MIT researchers Chris Poulton and Michael Watts wrote last year. Their chip uses optical phased arrays for beam steering, avoiding the need for mechanical parts.

Experimental, low-volume hardware for cutting-edge technology is almost always expensive. It’s through the process of mass manufacturing and iterative improvement that companies learn to make it cheaper. Right now, lidar technology is at the very beginning of that curve—where antilock brakes were in the early 1980s.

The world’s biggest miner is building a battery supply hub it doesn’t want

BHP began work to build a nickel sulphate plant at Nickel West in recent weeks and is considering a slate of further expansions to make it the largest source of the material and a hub for other battery ingredients. It’s aiming to sell 90 percent of output into the battery supply chain by about 2021, from less than a third at the end of last year. Global nickel demand could more than double by 2050, fueled in part by rising electric vehicle sales, Bloomberg Intelligence said in a June report.

The world’s biggest mining companies are ratcheting up their response to the booming demand for battery raw materials. Rio Tinto Group is developing a lithium project in Serbia, while Glencore Plc plans to double production of cobalt and is effectively “a one-stop-shop” for investors seeking exposure to EV gains, Sanford C. Bernstein Ltd. said in a note this month.

The good luck for BHP is that only about 40 to 45 percent of existing nickel mine supply is suitable for processing into a battery-grade chemical product, Melbourne-based UBS Group AG analyst Lachlan Shaw said by phone. “BHP’s Nickel West fits into that category.”


The most powerful research tool is a great network

The two changes he noted are global environmental standards sponsored by the International Maritime Organization. The first is the “Ballast Water Management Convention” that went into force late last year. It requires that newly built ships have waste-water treatment equipment that purifies ballast water to certain minimum levels. After September 2019, ships that were built before these standards came into force will need a costly upgrade to their equipment to meet this standard for the vessels to pass their periodic inspections.

The second standard will be implemented in 2020. I was amazed to learn that the world’s biggest 25 ships emit more sulfur than the entire world’s fleet of cars! Accordingly, the regulation’s goal is to limit this pollution. Ship-owners must achieve this goal and have several ways to do so, such as retooling to switch to a less polluting fuel like gas or methanol or by installing scrubbers to lower concentrations of pollutants.

If freight rates do not rise with the investment required to build new ships, then there is little economic incentive for many ship-owners to spend the additional capital required to meet the new regulations. This short term squeeze on shipping economics could prompt an increase in vessel scrapping as older ships are retired from service and less new supply is forthcoming from shipbuilders, who are already under pressure from the collapse in freight rates. Any force that constrains supply relative to demand should be positive for freight rates and, in time, the economics of shipping. One unintended consequence of these regulatory changes could be a surprisingly strong bull market in shipping costs!

Why it is time to change the way we measure the wealth of nations

Invented in the 1930s by Simon Kuznets, initially as a way of calculating the damage wrought by the Great Depression, GDP is a child of the manufacturing age. Good at keeping track of “things you can drop on your foot”, it struggles to make sense of the services — from life insurance and landscape gardening to stand-up comedy — that comprise some 80 per cent of modern economies. The internet is more perplexing still. In GDP terms, Wikipedia, which puts the sum of human knowledge at our fingertips, is worth precisely nothing.

Among GDP’s shortcomings, the distinction between flow of income and stock of wealth, highlighted by the story of Bill and Ben, is one of the most serious.

Among the report’s findings, the full details of which are embargoed, is a huge shift of wealth over 20 years to middle-income countries, largely driven by the rise of China and other Asian countries. A third of low-income countries, however, especially in Africa, have suffered an outright fall in per capita wealth over that period, in what could be a dangerous omen about their capacity for future growth. In the world as a whole, the report finds, human capital represents a whopping 65 per cent of total wealth. In 2014, this was $1,143tn, or about 15 times that year’s GDP.

The report is particularly illuminating in tracing the path to development as countries, in the manner described by Dasgupta, trade in one form of capital for another. Crudely put, they use income derived from natural resources to build up other forms of capital, principally in infrastructure, technology, health and education. So, while natural capital accounts for 47 per cent of the wealth of low-income countries, it represents only 3 per cent of the wealth of the most advanced.

The Ripple effect

XRP, the Ripple token, is unlike any other crypto token in the market. It is entirely centrally controlled, operating more like an ETF unit than anything else since the issuer has the capacity to release or absorb (pre-mined) tokens in accordance with their valuation agenda. More egregiously though, the token plays little part in Ripple’s central business case. For the most part it’s just a cute add-on.

Ripple “the settlement tech” is thus arbitrage tech, highly dependent on the whims, activities and behaviours of its liquidity provider community. This means it’s partial to the same exact problems HFT suffers from: namely, the fact there’s no guarantee liquidity providers will always be around when you really need them. In FX this sort of solution doesn’t really cut the mustard. People want a dependable FX service, not one that’s subject to the whims of unknown third-party participants. A bit of historical context is useful at this point, since what XRP really aims to do (we think) is copycat the role played by the offshore dollar in the days before the euro.

Curated Insights 2017.10.29

How Intuitive Surgical turned medical sci-fi into reality

Intuitive’s devices are now used at all of the top-ranked U.S. hospitals for cancer, urology, gynecology, or gastroenterology—including venerable institutions like New York’s Memorial Sloan Kettering Cancer Center, the Mayo Clinic, Johns Hopkins, and the Cleveland Clinic. More than 4,100 da Vinci base units have been installed worldwide as of June 30, including 2,703 in the U.S., 698 in Europe, 538 in Asia, and 210 in the rest of the world.

The systems aren’t cheap: The list price for the fourth-generation da Vinci Xi is $1.9 million, and that doesn’t include the cost of various surgical appendages, which can add tens of thousands of dollars more to the price tag. Still, the robots keep selling—and surgeons are increasingly adopting them in their practices.

The company says that more than 4 million minimally invasive surgeries have been performed with da Vinci systems since 2000—a new one begins every 42 seconds somewhere around the globe, Intuitive CEO Gary Guthart tells Fortune. The number of those procedures done worldwide spiked 15% in 2016 compared with the previous year, and Intuitive pro­jects an additional 14% to 15% rise in the number by the end of 2017. Indeed, for certain more complicated procedures, such as radical prostate removal, robotic-assisted surgeries now account for nearly 90% of operations.

The boom has driven Intuitive to $2.7 billion in 2016 global revenue, with more than 70% of sales being recurring in nature—a fact that underscores the advantage that comes from being the first major player in a rapidly growing market.

It isn’t clear whether robotic surgery uniformly leads to better outcomes. (Don’t look to the extensive medical literature for a clear-cut answer; conclusions differ from study to study.) But surgeons who swear by their robotic arms tend to return to the same words of praise: They tout the “speed of recovery” for patients, who typically don’t need to spend days or weeks in a hospital as they might after traditional open surgery. They speak of the “clarity” of its camera, the “flexibility” of its instruments.

A survey by investment and research group RBC Capital last year found that American surgeons think that within five years, 35% of operations will involve robots in some form, compared with 15% today.

 

Shake Shack founder on changing the way restaurants do business

And I think what fine-casual is doing is, “If you’re willing to give up waiters and waitresses and bartenders and reservations and table cloths and flowers, we’re gonna s– we’re gonna give you about 80 percent of the quality that you would have gotten in a fine-dining restaurant. We’re gonna save you about 80 percent of the money you’d spend in a fine-dining restaurant. And we’re gonna save you about 60 percent of the time.”

So by saying, “Hospitality included,” it’s basically saying, “You see that price that it costs to get the chicken? That includes everything. That includes not only the guy that bought the chicken and the guy that cooked the chicken, but it also includes the person who served it to you and how they made you feel.”

 

AlphaGo Zero: Learning from scratch

Previous versions of AlphaGo initially trained on thousands of human amateur and professional games to learn how to play Go. AlphaGo Zero skips this step and learns to play simply by playing games against itself, starting from completely random play. In doing so, it quickly surpassed human level of play and defeated the previously published champion-defeating version of AlphaGo by 100 games to 0.

It is able to do this by using a novel form of reinforcement learning, in which AlphaGo Zero becomes its own teacher. The system starts off with a neural network that knows nothing about the game of Go. It then plays games against itself, by combining this neural network with a powerful search algorithm. As it plays, the neural network is tuned and updated to predict moves, as well as the eventual winner of the games.

 

Nike’s focus on robotics threatens Asia’s low-cost workforce

For Nike, the shift to greater automation has two huge attractions. By driving down costs, it could lead to a dramatic improvement in profit margins. It would also allow the company to deliver new designs more quickly to fickle, fashion-conscious customers at a premium. A pair of Nike Roshe shoes costs $75 without Flyknit uppers, compared to as much as $130 with Flyknit.

The potential upside for Nike of greater automation is immense. Analysts at Citibank estimate that by using the Flex manufacturing process to produce Nike’s 2017 Air Max shoes, one of its top-selling lines, the cost of labour would decrease 50 per cent and materials costs would fall 20 per cent. That would equate to a 12.5 percentage point increase in gross margins to 55.5 per cent, according to analysts Jim Suva and Kate McShane. If Flex were to produce 30 per cent of Nike’s North American footwear sales, Nike could save $400m in labour and material costs, representing a 5 per cent benefit to earnings per share, according to Citibank estimates.

Traditional shoe production has required as many as 200 different pieces across 10 sizes, often cut and glued together by hand. The new manufacturing process being developed by Flex has introduced two ideas once thought impossible: the gluing process has been automated and lasers are used to cut the Flyknit material. Lead times in the shoe industry once ran to several months: Flex has promised to help Nike speed up lead times, which can be three to four weeks for a customised pair of sneakers.

Nike has reduced its supply chain by nearly 200 factories in the past five years to focus on fewer “quality, long-term partnerships”. However, the process of closing a factory, including those with compliance issues, can be a long and costly process for “brand-sensitive companies like Nike” to mitigate the disruption to local economies.


Birth of a Hidden Champion: TSMC & Morris Chang

Morris Chang said Intel’s advantage lies in its robust technological power and strong business operation foundation, having maintained No. 1 in the global semiconductor for decades. But its biggest drawback rests with its inexperience in the wafer foundry sector that highlights a service-oriented corporate culture, as Intel’s technology departments have long served the company’s own needs, totally different from the core culture of serving others seen in the pure-play foundry sector. With his 25-year experience at Texas Instruments before founding TSMC, Chang said he realized very well what kind of corporate culture was needed for the foundry sector. He said when establishing TSMC 30 years ago, he was able to easily inject the service-oriented culture into the TSMC at the very beginning.


Apple’s COO Jeff Williams recounts how business with TSMC began with a dinner at the founder’s home

Williams said that in the next 10 years, the biggest problem lies not in computing performance, but in the lack of sufficient visions to apply new advanced technologies such as AI (artificial intelligence) as well as how to safeguard privacy.

He said Apple has many expectations for AI applications, but what the company needs is neither to make chips with faster computing performance or to make cars able to fly, but to utilize advanced technologies to change the world, such as making use of semiconductors to achieve medical technology innovations.”


Apple supplier TSMC says Moore’s Law is no longer valid

Chang said that the time frame set in Moore’s Law is no longer applicable. He said TSMC has kept increasing transistor density, but not at a pace according to the law. Chang continued by noting that discussions about the applicability of Moore’s Law in recent years have often focused on ASML, a leading semiconductor lithography equipment supplier, because the company is now the world’s only supplier of EUV (extreme ultraviolet) lithography equipment and EUV technology bears a great responsibility of keeping Moore’s Law valid. Chang said major semiconductor firms have been keen to incorporate EUV technology into their 7nm process.


ChowNow, a GrubHub competitor, raises $20 million Series B round

ChowNow prides itself on being different from the likes of GrubHub and Seamless. ChowNow’s flagship service offers restaurants a white-label platform that enables restaurants to own their customer data, and feel confident their customers aren’t constantly fending off menus and discounts from competitors. Unlike its competitors, ChowNow charges an upfront monthly cost of $150/month per location instead of taking a commission on all orders.

“Yes, our software supports delivery but we have a unique place in the restaurant where we don’t play in the delivery space outright,” Webb said. “We’re also not a traditional marketplace either. Shopify for restaurants is an accurate way to describe us. Restaurants can plug in to our system and integrate it into their delivery backend.”

In charts: has the US shale drilling revolution peaked?

Throughout its existence, the shale oil industry has consumed cash. Companies have been unable to cover their drilling costs from their incomes, and have needed constant infusions of debt and equity financing. They have had little difficulty in raising that money, in part because investors wanted to share in the productivity miracle that the companies represented. If the miraculous days are over, and a more humdrum reality is setting in, will investors still be prepared to back the industry so willingly? Already equity raising by US exploration and production companies has slowed sharply this year. Plenty of attractive investment opportunities still exist in shale: internal rates of return of 30 per cent and higher are available in the Permian Basin, according to S&P Global Platts Well Economic Analyzer. Will there be enough of those attractive opportunities to keep US oil production rising, as the government’s Energy Information Administration and others expect? The industry says yes, but the drilling and productivity numbers will be worth watching closely over the months to come.

 

Australia’s got a lock on supply of the metal used for EV batteries

“Australia’s importance has been cemented by offtake deals and equity investments in mines,” Alice Yu, a Hong Kong-based consultant at CRU, said by phone. Backing from major battery manufacturers and auto producers could also see the nation add processing facilities to develop exports of higher-value lithium chemicals, she said.

Still, Macquarie Group Ltd. has warned there’s a bearish outlook for lithium prices in the short-to-medium term as “too many Australian rock producers are crowding in” with new projects. The surge is threatening to create a period of oversupply before rising demand for electric vehicles clears the surplus from about 2021, the bank said in a note this month.

Even with a wave of new supply, including from Australia, the lithium market is likely to remain tight with a stronger demand outlook than anticipated, according to Melbourne-based UBS Group AG analyst Lachlan Shaw. “We have had increased supply this year, and all the while lithium prices have kept going up,” he said. “The market is probably underestimating demand.”

How Saudi Arabia is building its $2 trillion fund

The kingdom plans to transfer ownership of Saudi Aramco, the state-owned oil company, to the PIF. An initial public offering of a small Aramco stake — probably just under 5 percent — will provide investment cash. That sale could raise about $106 billion, according to the Sovereign Wealth Fund Institute. Transferring Aramco to the PIF would allow the government to get its revenue from investments, rather than oil, according to the Prince, and along the way transform the PIF into the world’s biggest sovereign fund.

 

Bogle: Vanguard’s Size a Worry

The economies of scale just can’t keep going on much longer. We’ve only got 12 basis points to go, and let me say it: There’s an irreducible minimum, no matter how big you are, just for the fun of it, 8 basis points, cost a lot of money to run this business. We’re now talking about a 4 basis point improvement in cost. I just don’t think it’s worthwhile, hyping and trying to bring in more and more money.

The David Rubenstein Show: Masayoshi Son

On his US$100bn Vision Fund: He thinks that machines will become more intelligent than humans across a wide range of subjects within the next 30 years, an event referred to as the singularity. This will have a profound and largely positive impact on humankind. The fund will invest in companies that underpin the global shifts brought on by artificial intelligence.

On the Alibaba investment: Invested US$20m early on in the company’s history. He met with Jack Ma, who at the time had no business plan, zero revenue and only 35-40 employees. Still, he could tell from the way he talked (with “strong, shining eyes”) that he had a vision and impressive leadership skills. Similar story with Jerry Yang and the Yahoo! investment.

On his recent investment in ARM: Biggest investment to date. UK-based semiconductor company that has an overwhelming market share for semiconductor designs used in mobile phones and other mobile devices. He says they will ship more than 1 trillion IoT chips in the next 20 years.

Chinese women are getting rich by simply livestreaming their days

In China, young women like 23-year-old Huan Huan can earn up to $20,000 a month livestreaming themselves just doing regular things. That’s about 30 times more than the average college graduate makes at their first job.

In China, which banned online porn in 2000, PG-rated livestreaming has become a $4 billion-a-year industry with nearly 350 million followers — more than the entire population of the United States.


How do I get my daughter interested in computers?

Nobody becomes a software engineer because they love writing code; they become a software engineer because it allows them to build out ideas. This is a useful skill to have. Except that most software engineers aren’t realizing their own ideas. They’re getting paid to build someone else’s pet project. Software engineers are the wage labourers of the tech industry.

The most important tech skill, then, isn’t computers or engineering — It’s the art of getting paid to control vast amounts of money. Then you can make programmers build out whatever dumb ideas you like. Parents who want their daughters to succeed in Silicon Valley need not worry about teaching their girls to code: Teach them about capitalism instead.