Too Many Phones

On My Mind | 2024.02.16

Author

EJ
February 16, 2024

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On My Mind

I was reading through CrowdStrike’s (a >$75bn market cap cybersecurity company) earnings transcript from May 2023 and George, co-founder and CEO, shared the following:

Driving better customer outcomes relies on having a data advantage and the context derived from that data. While we expect that LLMs will become commoditized over time, the data on which they are trained will not.

While he was talking about how the human-contextualized data the company has forms a fairly sizable moat now that AI is able to learn from the proprietary dataset, I was reminded of something I heard from The Cultural Tutor (see second-to-last “Things to Read” for more) late last year. He was talking about how he focuses his reading on items written 50+ years ago and said:

If you read what everyone else is reading, then the likelihood that you will write what they are writing, and worst of all, think what they are thinking increases. It’s not certain, but if we all read the same books, we all think the same things.

I don’t follow The Cultural Tutor much — he tends to have a bent towards architecture and but for a short period of time when I was into Korean T.V. shows and there seemed to always be a young, successful architect winning the pretty lady, I have minimal interest there. However, his idea stood out back then, as well, given I was reminded of something Ted Weschler, of Berkshire, shared earlier in a 2022 podcast on the importance of reading things others are not:

Because I think one of the great mistakes of investing is that people do end up reading the same thing. And the only way you're going to have success in the stock market is if you've got what's referred to as a variant perception, something that's different from the masses.

All three people, each of whom is rather successful in their own domains, are essentially saying the same thing — learning is an undifferentiated action. Anyone can learn. However, what you choose to learn from can lead to differentiation.

The real trick then, it seems, is learning differently in a way that is valuable, as different for different’s sake isn’t a guaranteed path to positive outcomes.

Quote of the Week

Try more to profit from always remembering the obvious than from grasping the esoteric. It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.

— Charlie Munger

It’s easy to think that you can gain some amount of advantage by understanding something complex. Sometimes, however, the effort it takes to understand all that complexity doesn’t carry with it a return.

We have to spend our limited time on things that matter, and if something seems obvious, don’t overcomplicate it for the sake of saying you did something complex.

Poll of the Week

What was the last book you read that is 50+ years old?

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Things to Read

The phone market in 2000-10 was crazy, but Nokia’s strategy was even crazier. Just in the year ‘05 alone, it launched more than fifty models, more than the number of iPhone models Apple has shipped in sixteen years since the first…

Nokia’s Mobile device division had three sub-divisions: mobile phones, multimedia, and enterprise solutions business groups. And each of those divisions had further sub-divisions. Each sub-division was independently creating phone models, trying to capture the market they were assigned.

Nokia was once the king of the mobile phone world, but I am not sure they even compete in that market anymore. The article is a short read on how that fall from grace happened, and it presents a cautionary tale for tech companies today — don't divide your attention too greatly and make sure you see the bigger picture.

Increasing Marginal Returns | From Increasing Returns and the New World of Business by W. Brian Arthur, 1996

Our understanding of how markets and businesses operate was passed down to us more than a century ago... It is an understanding based squarely upon the assumption of diminishing returns: products or companies that get ahead in a market eventually run into limitations…

But steadily and continuously in this century, Western economies have undergone a transformation from bulk-material manufacturing to design and use of technology… As this shift has occurred, the underlying mechanisms that determine economic behavior have shifted from ones of diminishing to ones of increasing returns.

In the mid-90s, W. Brian Arthur wrote about how competition in the tech industry is different than pre-technology industries — and that it is important to understand the differences between the two when it comes to the marginal value of an incremental unit of production.

In industries like farming or energy, the more land you use or wells you drill, the less marginal value you get from each incremental activity. This is because in these industries you have limited production potential. An energy company would usually start drilling the best wells first. A farmer would usually plant the best ground first. This leads to less and less productive real-world assets over time.

But in the world of software, it's different. Each new user is often even more valuable than the previous one given the new user increases the size of a network, which increases the number of connections throughout the network, and thus increases the value in a way that marginally increases per addition over time.

BYD’s global impact is hard to ignore and cannot be wished away. Its batteries have been powering millions of cell phones long before it started making cars. Its EVs can be now seen on the streets of every Chinese city, and quite a few European and Latin American cities. Its battery-powered buses are transporting commuters in Hyderabad, Bogotá, and the Los Angeles International Airport. It is also making electric SkyRails (subway in the air) that may soon appear in São Paulo’s skyline. Oh, and it supplies batteries to Tesla too…

The late Charlie Munger called him a “genius”. Yet, there is no comprehensive biography (that I’m aware of) about the man. (Musk, on the other hand, has at least three about him.)

Kevin Xu wrote an in-depth profile on Wang Chuanfu, founder and CEO of BYD, which recently surpassed Tesla in electric vehicle sales due to its position in China’s market. It’s a remarkable rags-to-success story of a poor boy, whose parents both died before he enters high school, that builds a battery empire out of hard work, intelligence, and passion.

For those of us that follow Berkshire / Buffett / Munger, it is an in-depth look at the man Charlie Munger said was “was a genius. He had a Ph.D. in engineering and he could look at somebody’s part in the morning…and in the afternoon he could make it. I’ve never seen anybody like that. He can do anything. He is a natural engineer and a get-it-done-type production executive, and that’s a big talent to have in one place.”

History in Color | From This Photo is 113 Years Old by @culturaltutor, 1909-1915

Black and white photographs lull us into thinking that the past was a less colourful time than now... [but] the past was not the grim and colourless era we see often see in in cinema or television…

Sergey Mikhaylovich Prokudin-Gorsky was a photographer and chemist in early 20th-century Russia. What made his pictures stand out, at the time, was that he was able to produce color images.

While he did not invent the method, he mastered the approach of using three separate monochrome photographs taken through red, green, and blue filters to recreate the full spectrum of colors in his photographs by combining them.

From Wikipedia, “While some of his negatives were lost, the majority ended up in the US Library of Congress after his death. Starting in 2000, the negatives were digitised and the colour triples for each subject digitally combined to produce hundreds of high-quality colour images of Russia and its neighbours from over a century ago.”

Learning to Write | From Who is Ken Wilber by Frank Visser, 2003

Once he had decided to write books, in order to develop his fluency as a writer he took Alan Watts then a popular author as a model:

“I basically taught myself how to write using Alan Watts' books. Alan Watts was one of the clearest writers I had read. He is really a great, clear, elegant writer. I took all thirteen or fourteen of his books and copied every one of them, literally sentence by sentence. I still have the notebooks downstairs. I wrote the books out, so that I could know the style of writing. Just getting a sense of being able to write clearly, and study syntax, seeing how you put paragraphs together.”

I studied a foreign language in college for a number of years. One of the most effective things I could do to get better was to read in the language. While doing that, I would steal sentences that were useful for everyday life and then memorize and practice them.

Oddly, I have never done the same in English. It seems like an obvious approach. There is a certain cadence to some authors’ writings, their word choice can be unique, and something akin to a fingerprint sometimes can be felt in their words — but the secret to that fingerprint is written right there on the pages. You just have to copy it.

Whereas when learning a new language you are just trying to get new vocabulary layered into complex grammar in your head naturally, maybe in your native language you can work on a more nuanced theft of style.

Visuals

123.4mm watched Taylor Sw… the Super Bowl (WSJ)

Declining reading rates in high school (mid-2000’s pop from Harry Potter?) (MtF)

100 years of returns (@InvestmentTalkk)

Have a great weekend,

EJ

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