Roundup June ’22 Edition

Greetings FutureBlind readers!

In this roundup edition:

  • ✈️ To Increase Progress, Change Culture: Why progress needs better marketing.
  • 🎡 We need a new World’s Fair
  • 🔦 Company (Startup) Spotlights: Hadrian, First Resonance, and Mashgin.
  • 🎙 Request for Podcast Series
  • 🔗 Interesting Links: “The man in the arena”, Grid scale energy storage, Kevin Kelly’s advice, the metaverse, jobs-to-be-done for investing, and how companies die.
Continue reading “Roundup June ’22 Edition”

To Increase Progress, Increase Desire

The key to faster progress is increased desire for more. That’s my theory, at least.

In all the commentary on the “Great Stagnation”, much is written about the lack of progress in tech areas like transportation. Commercial airplane speeds, for example, have decreased on average since the ‘70s:

Since 1973, airplane manufacturers have innovated on margins other than speed, and as a result, commercial flight is safer and cheaper than it was 40 years ago. But commercial flight isn’t any faster—in fact, today’s flights travel at less than half the Concorde’s speed. (Airplane Speeds Have Stagnated for 40 Years, by Eli Dourado and Michael Kotrous.)

There are clearly many contributors to this. Regulation is cited in the above post and seems to be most common reason mentioned. Rising energy costs is another major one. The less-talked-about contributor is consumer demand.

Most things are “good enough”

Clayton Christensen’s theory on disruptive innovation shows that as average performance demanded goes up, the performance level supplied by products generally goes up faster, eventually surpassing the majority of the market.

As a technology improves, its performance surpasses most market demand, and things became “good enough” over time. Customers aren’t willing to pay more for better performance. This leaves the market open for disruptors — either on the low-end (good enough performance but cheaper), or by having better performance on a completely different metric.

Back to airline travel. Flying from NYC to LAX in 6 hours became good enough for most people. Sure, less would be better, but not at much more cost. Only high end, richer users truly needed more. So airplane makers moved on to other attributes that weren’t good enough: safety, flexibility, price.

Continue reading “To Increase Progress, Increase Desire”

Investment: Planet Labs

A Planet “Dove”

Even though FutureBlind started as an investment blog, I almost never write about investments anymore. I’m still an investor of course but writing about it just isn’t as interesting to me anymore. ¯\(ツ)

This is an exception. I first purchased shares of Planet ($PL) in the private markets almost 4 years ago. They went public via SPAC this past December, and shares promptly got cut in half along with many other former SPACs and high growth companies. I added more to my position between $5 and $6 as it fell (currently around a 5% allocation, a mid-size position for the fund I manage).

Planet Labs is an Earth observation (EO) company. It creates tiny imaging satellites, pays to launch them into space, collects and analyzes imagery from them, and sells that data to customers. Their largest satellite constellation (called “Doves”) are built from mostly off-the-shelf components, making them much cheaper than traditional satellites. Planet is currently the only company that images the entire globe every day.

Here are the main points:

  • Competitive advantage comes from both the capital barriers to entry and their data flywheel. The more past imagery they have, the easier it is to build detection models for future imagery. And because it currently takes a lot of money and time to launch that many satellites, Planet is ahead of any competition by many years. (It won’t be until Starship is launching regularly that this gap can be easily narrowed.)
  • Market currently isn’t large but it has the potential to be huge. The biggest applications are in agriculture, defense/intelligence, climate, energy, finance, and mapping (Google is an investor and partner for map data).
  • Opportunity to move up the stack. Most of their prior business was in selling access to raw imagery data. This can be really useful for some (think tech cos and intelligence agencies) but a hard sell for most. Planet is now selling services like the ability to analyze and detect specific things, which has a much bigger and more profitable market. Like “give me a chart of how many cars are in these parking lots in the last year” or “what is the crop yield on these fields” or “how many Russian tanks got destroyed in this convoy”.
  • I see Planet as a “utility for data”, similar to Bloomberg, FactSet or Compustat. They have an installed hardware base that needs some maintenance — new satellites to replenish + ground communication costs — but most of the future opportunity lies in software.

The bear case it seems is primarily that the market won’t be able to profitably expand much. I don’t have any counter evidence but it just feels like this data is too valuable for that to happen — customers just don’t know how to use it yet. The biggest risk I see for Planet is competitors giving access to different light spectrums. This can allow customers to do things like see through clouds. But if Planet can get to this space soon it should help mitigate the risk. They just deployed 48 “SuperDoves” that have access to more spectral bands.

So there are risks. But this to me is a clear case of a lollapalooza of positive factors. Good managers, good product, huge market size potential, recently public and more incentivized for growth/profits, and optionality of moving up stack. As always, do your own research — but I think Planet is a good buy here.

The new wave of science and research models

There has been an increasing amount of experimentation in the philanthropic and scientific funding space over the past few years. This is good news — as I mentioned in my last post, we need better ways to fund crazy ideas.

Here’s a sampling of some of the recent efforts:

  • The Astera Institute — Pursuing new tech areas through multiple models including FROs, PARPA (based on the DARPA model).
  • Fast Grants — An effort by Tyler Cowen, Patrick Collison and others to quickly disburse grant money to COVID-related ideas. Funded by many wealthy donors and philanthropies. Impetus Grants for longevity research was recently launched and inspired by Fast Grants.
  • New Science — Funding life science labs outside of academia. Partly funded by Vitalik Buterin.
  • Arcadia Science — Bio research institute.
  • Arc Institute — Funds individuals similar to HHMI, in partnership with Stanford, Berkeley, and UCSF. Founded by Fast Grants “alumni” Silvana Konermann, Patrick Hsu, and Patrick Collison.
  • Convergent Research — Uses focused research organizations (FROs) to solve specific scientific or technological problems. Funded by Eric Schmidt’s philanthropy.
  • Altos Labs — Biotech lab, another “academia outside of academia” model.
  • VitaDAO — A DAO-based longevity funding org where holders get a cut of IP proceeds.
  • Actuate — Also using the DARPA approach to fund and implement R&D.
  • FTX Future Fund — A non-profit fund from the FTX crypto exchange, aiming to allocate at least $100M this year to a wide variety of long-term focused areas.

In “Illegible Medicis and Hunting for Outliers” Rohit observes that:

There are two common themes here. That’s speed and autonomy. They mostly act under the assumption (the correct assumption it would seem from a betting lens) that they can identify talent, not bug them excessively, and leave them to do their thing. Instead of imposing rules and strictures and guidelines, they focus on letting the innate megalomania do the work of focusing their research.

The academic and government driven funding models have come up against their limits in recent years (decades?). These experiments provide new methods to allocate capital to research, development, and implementation of efforts that for whatever reason aren’t amenable to the startup funding ecosystem.

Prior to World War II, support from non-government or educational institutions was the norm. Patrons like Alfred Loomis ran a lab at Tuxedo Park, hosting scientists and engineers from around the world that was integral in the creation of radar. Funding was provided by philanthropies from the likes of Carnegie and Rockefeller. Or private R&D from Edison, Bell Labs or Cold Springs Harbor Lab.

These past models are still doing well of course — HHMI, the Gates Foundation, Google X, etc. — but much more is needed to expand experimentation. The government can continue to play a valuable role, particularly as a buyer of first resort.

I’m super excited to see what comes from these orgs. A few like Fast Grants have already had some impact.

For more on the topic, see:

Cover photo by The National Cancer Institute, Unsplash.

Let’s jumpstart the new industrial revolution

There is as much headroom in physics and engineering for energy as there is in computation; what is stopping us is not lack of technology but lack of will and good sense. — J. Storrs Hall

There have been three industrial revolutions. The first two spanned from the late 1700s to the early 1900s and essentially created the technological world we know today. Energy, transportation, housing, and most “core” infrastructure is pretty similar now as it was at the end of this period — especially if you extend it into the 1970s. The third revolution, the “Digital Revolution”, started around this time and as anyone reading this knows has made computing and communication ubiquitous.

There were bad things that came from these revolutions: pollution, environmental destruction, war, child labor, etc. But the good overwhelmed the bad, leading to GDP per capita (”resources per person”) doing this, which we can use as a proxy for progress in a host of other areas like longer/healthier lifespan, lower child mortality, less violence, lower poverty, and more.

Wikipedia describes the potential Fourth Industrial Revolution as “…the joining of technologies like artificial intelligence, gene editing, to advanced robotics that blur the lines between the physical, digital, and biological worlds.”

These things are great, but we need more. Much more.

As just one example, it’s become abundantly clear over the past few weeks the importance of energy independence. But why don’t we already have it?

The cost of PV cells has collapsed over the past few decades. We also know it’s possible to build nuclear reactors far safer and more productive than any in the past. There should be solar panels on every home, geothermal wells in every town, and multiple nuclear fission (possibly fusion?) reactors in every state. A setup like this would lead to redundant energy at every scale, not reliant on geopolitics or over-centralization.

We should want to consume more energy, not less. (And unlike the second industrial revolution, it can be clean energy with minimal externalities.)

What else could a new industrial revolution bring? Just imagine what you’d see in a typical sci-fi movie:

Space parks/hotels/colonies, limb regeneration, flying cars, supersonic jets, same-day shipping to anywhere on Earth, self-replicating nanobots, new animal species, plants everywhere, infrastructure made out of GM trees, universal vaccines for all viruses, mobile robotic surgeons that can save lives on-location, convoys of self-driving cars, batteries with 50x current power, etc. etc.

To build these things — or even to see if they’re possible — a lot needs to change. Here’s just a few I’ve been thinking about:

  • Create a pro-progress culture. Pro-progress means anti-stasis. We’ve come a long way, and things are pretty good now. But they could be better. Far more people should be optimistic about the future and what they can do now to make it better.
  • Find more ways to celebrate and fund scientists and inventors like we do founders, celebrities, executives and sports stars. More crazy ideas should be funded, and even if they don’t succeed, the culture should be accepting of it.
  • Take more risks as a society. Incremental progress is great but even over long periods it can lead to a local optimum. To get to a higher peak, we need more exploration, experimentation, and invention. With this comes risk. We should do whatever we can to be conscious of and mitigate these risks, but in the end if the precautionary principle is applied to everything, we’ll be stuck in stasis until a global catastrophe forces our hand.
  • Allocate more resources to efforts that have high expected return to life on Earth. Nuclear fusion, for example, may have only a small probability of succeeding in the next 10 years. But if it does, it could bring enormous benefits to the world (to humans, animals, plants, you name it). The probability-weighted return to life on Earth is thus very large, and yet minimal resources are being devoted to it. The industrialization of space is another example. Concerned about depleting Earth’s resources or peak “X”? You wouldn’t be if we could mine asteroids and move potentially harmful processes off-planet.

If you agree with any of the above or are interested in similar ideas, here’s a few good resources I’ve enjoyed recently:

Singularities

The “Singularity” in artificial intelligence is the future moment when generalized AI becomes smarter than humans. In theory this starts a feedback loop of runaway intelligence that radically changes our world in ways that are hard to predict.

Similar points exist in other industries as well. These are ultra tipping points that would lead to drastic changes in the industry and our world — changes so great we could only make very rough guesses as to what they’d be.

What are some potential examples?

  • Highly reliable level 5 autonomous cars.
  • Rockets able to sustainably send a kilogram to orbit for under $100.
  • Abundant renewable energy under $20 per MWh.
  • Near perfect protein folding algorithm available via API call.
  • Low-cost ability to manufacture any protein at scale.
  • Battery cost below $100 per kWh at scale.
  • Battery energy density over 500 Watt-hours per kilogram.
  • Plant- or cell-based meat cheaper than animal meat with ~same nutritional profile.
  • Affordable VR/AR glasses with variable depth of focus and up to 60 pixels per degree of resolution (~matching the human eye).
  • A definitive method for stopping cellular senescence without noticeable side effects.
  • Cost of aerospace-grade carbon fiber comparable to aluminum. (Currently ~10x more.)
  • Cost of carbon nanotubes comparable to current carbon fiber. (Currently 5-10x more.)

Some of these tipping points look like they’re in our near future, and there’s no reason to believe any of them aren’t possible. A few of them would likely make others on the list easier. Every one of them has downsides but the upsides are massive. How exciting!

What else can be added to the above list that I forgot?

(Tipping points in brain-machine interfaces, construction and building, healthcare, etc.)

Roundup: Space updates, Progress studies, New World’s Fair, Web3, DAOs, and “The First Tycoon”

Greetings FutureBlind readers!

It’s been a while. Although I have 3 or so posts outlined and in various states of completion, life has gotten in the way. My wife and I’s first child is due in a few months (Are we in the thick of a post-Covid baby boom?) and in an act of complete lunacy this summer we started a major home renovation. This has, to put it mildly, put a damper on my free time.

Nonetheless I really wanted to write a bit and put something out there. So instead of the typical focused post, I’m doing it roundup style. Each section below is an area I follow or find interesting.

Here’s an outline of the roundup so you can jump to whichever section sounds interesting:

  • 🚀 Space updates
  • Progress Storytelling & a New World’s Fair
  • Web3, tokens, and the future of governance
  • Solving big problems
  • What I’ve been reading
  • Quotes from “The First Tycoon”
Continue reading “Roundup: Space updates, Progress studies, New World’s Fair, Web3, DAOs, and “The First Tycoon””

Passages from “The First Tycoon”

The following are passages from the book The First Tycoon by T.J. Stiles. The book is a biography of Cornelius Vanderbilt, who built a steamship and railroad empire in the mid-1800s.

More than that, it’s a history of the early corporation and the beginning of the era of modern business. This is the subject of the quotes below. While reading them, I was constantly reminded of recent (and ongoing) innovations in blockchain tokenization, corporate governance, and new financial mechanisms.

There are a ton of other interesting stories in the book — one epic business battle after another — so I highly recommend it.

On the birth of the corporate structure:

This was the birth of a kind of abstract thinking never before required in everyday life. It sparked a fierce resistance. On a daily basis, most Americans rarely interacted with corporations; they still lived in a society of farms, small businesses, and independent proprietors. Jacksonians viewed corporations in much the same way that the evangelists of the Second Great Awakening saw the Masons or popery: as a corrupt conspiracy, a mysterious encrustation on the beautiful simplicity of the true religion. As artificial beings, Gouge intoned, “corporations have neither bodies to be kicked, nor souls to be damned.”

If ever corporations were necessary, it was now, for railways were far more costly and far more complex than textile mills (almost all of which were owned by individual proprietors or partnerships).

On what stock/equity ownership represented:

They placed great emphasis on the “par value” of stock, usually set at $100 per share. This represented the original investment in a company; it was expected that the total value of all its shares would equal the cost of the physical capital—land, buildings, machinery, livestock. A stock certificate might be a slip of paper, but it was thought to represent something real, much as paper currency represented cold, hard gold that could be retrieved on demand from a bank’s vault.

On the intangible nature of corporations and the tokens that represent them:

Vanderbilt and Drew’s business careers, coming in the first half of the nineteenth century, were acts of imagination. In this age of the corporation’s infancy, they and their conspirators created a world of the mind, a world that would last into the twenty-first century. At a time when even many businessmen could not see beyond the physical, the tangible, they embraced abstractions never known before in daily life. They saw that a group of men sitting around a table could conjure “an artificial being, invisible, intangible,” that could outlive them all. They saw how stocks could be driven up or dropped in value, how they could be played like a flute to command more capital than the incorporators could muster on their own. They saw that everything in the economy could be further abstracted into a substanceless something that might be bought or sold, that a banknote or promissory note or the right to buy a share of stock at a certain price could all be traded at prices that varied from day to day. The subtle eye of the boorish boatman saw this invisible architecture, and grasped its innumerable possibilities. [. . .]

At fifty-four, Vanderbilt could look back on a career of breathtaking leaps of imagination. Steamboats and railroads, fare wars, market-division agreements, and corporations: all were virtually unknown in America when he mastered them. He understood the emerging invisible world far better than those who condescended to him. And this knowledge was about to serve him better than he could have dreamed. He was about to imagine a work of global significance—to create a channel of commerce that would help make the United States a truly continental nation. [. . .]

By 1859, he operated almost entirely through corporations; he proved himself an expert at using the stock market to concentrate capital or avenge himself on his enemies, and emerged as a master of corporate structure. He saw the corporation as just another type of business organization.

Vanderbilt split the stock of his company, doubling its par value (which was ~equivalent to equity value back then). This wasn’t accepted at the time as there was no concept of goodwill or intangibles. So Vanderbilt had someone re-value the assets to make the claim the stock dividend would still account for “real” value.

EVEN BEFORE THE COMMODORE assumed control of the New York Central, his historical legacy as a railroad king began to take shape. He would be no Leland Stanford, no James J. Hill, building transcontinental lines through thousands of miles of unsettled plains and mountains; rather, he would be a creator of the invisible world, a conjurer in the financial ether. What made him powerful—and controversial—was not his riches alone, but his mastery of the corporate golem.

For his first magic trick, he took what was one and made it two. On March 30, 1867, the Hudson River shareholders (himself foremost among them) approved his plan to nearly double the stock by issuing new shares worth $6,963,900 at par value. Called a stock dividend, it was similar to a stock split, an operation that would become common in the twentieth century. In the nineteenth century, it sparked outrage. [. . .]

Stock that did not reflect construction costs was derided as “fictitious capital,” to use the formal term—or, more commonly, “watered stock,” which called up the image of livestock encouraged to gorge on water before weighing and sale at the market. By contrast, new stock was not seen as diluting share value if it reflected actual construction or additional real estate.

On Vanderbilt’s “invisible” world of abstractions of business, money, and markets. It can be hard to imagine what life was like before these abstractions, and how big of a change it truly was to have something as conceptual as a corporation controlling so much of the economy. Tokenization of these concepts created markets where they couldn’t exist before.

For such was the world that swallowed Billy Vanderbilt: a netherworld populated by those artificial persons called corporations that masked the real persons behind them; by paper money, that masked real gold and silver; by whispered rumors, that masked the manipulations of self-serving men. [. . .]

[Vanderbilt] may have left his most lasting mark in the invisible world, by creating an unseen architecture which later generations of Americans would take for granted. The modern economic mind began to emerge in Vanderbilt’s lifetime, amid fierce debate, confusion, and intense resistance. The imagined devices of commerce gradually abstracted the tangible into mere tokens, and then less than tokens. Money transformed from gold coin to gold-backed banknotes to legal-tender slips of paper and ledger entries of bank accounts. Property migrated from physical objects to the shares of partnerships to par-value stock to securities that fluctuated according to the market, that could be increased in number at will [emphasis mine]. Like a ghost, the business enterprise departed the body of the individual proprietor and became a being in itself, a corporation with its own identity, its own character, its own personhood.

[. . .] Vanderbilt lived out the history of this abstraction, the invention of this imagined world. More than that, he took it to a new level by pioneering the giant corporation. By consolidating his New York lines into the New York Central & Hudson River Railroad, he constructed something larger than himself, not to mention virtually every other enterprise that had ever existed. It was a massive organization, one that served to depersonalize, to institutionalize, American business and life. It helped to lead the way to a future dominated by large enterprises possessing wealth and power that changed not only the economic landscape, but the political one as well.

A lot of parallels to our current situation.

Over the next 20 years — What effects will DeFi have on finance and markets? How much of the economy will be run by DAOs and how will this be exploited by the next Vanderbilts? How far can tokenization go and how will having a market in everything change our behavior?

New Podcast

Audio!

I’ve been wanting to explore doing something in the audio/podcasting area for a while now. There’s plenty of good interview-focused shows out there so I didn’t want to go that route. Taking inspiration from Stratechery, I settled on doing an audio version of selected blog posts. It’s just an experiment at this point but I’ve been enjoying the creation of the first few episodes so I’ll see how things go.

The first full episode is already up: “The Future of Space, Part I: The Setup”. I’ll follow with the audio version of Part II in the next week. (Though similar to the blog, new episodes will be sporadic.)

Apparently I picked a bad time to launch a new podcast feed. Last week with their “paid subscriptions” announcement Apple deployed a new version of their podcast upload software and it was plagued with bugs and has been unable to upload new shows since Friday.

So although the podcast is available, it is not discoverable on the Apple Podcast app. [Update: It is now available in search and in the link below.] You can subscribe using one of the buttons below or click the “RSS Feed” button, copy the feed URL, and paste it directly into your Podcast app. (IMO, Overcast is the best player out there so I’d highly recommend it.)