Open Source Notes: All-In Podcast Ep 33

Apple's hypocrisy, America fails math, crypto's regulatory correction, Clubhouse, UFO & more

In Open Source Notes, I share key insights, ideas and learnings from some of my favourite podcasts. None of the facts and opinions expressed herein are my own and I attribute full credit to the author(s) of these works.

Key takeaways

Antonio García Martínez and Apple

  • Companies need to have a predictable standard regarding what their HR policy is and what they are willing or not willing to accept.

  • Strong leadership helps to direct and evolve the culture at companies. When companies get too large, it is not the leaders but the employees who dictate culture.

  • The danger of “family thinking” in for-profit companies is that it becomes incredibly hard to let poor performers go.

America failing math

  • Proposition to remove gifted programmes for math is based on an incorrect definition / understanding of equality: equality is having equal access to, and being able to participate in the same opportunities, not being forced to achieve the same outcomes

  • Political programmes should be measured by the amount and equality of opportunity they provide

  • Removing gifted programmes and standardised testing is an attempt to destroy evidence and hide the fact that America is failing math

Infrastructure bill

  • No broad-based support for Biden’s proposed stimulus and capital gains hike

  • Will likely mean a reversion of the inflation narrative and capital allocation back to growth stocks as consumption picks up

Clubhouse

  • Clubhouse failed to gain traction because its product was not asynchronous - users cannot play back conversations; they needed to be live to be part of the conversation

  • Question of whether this is a sensible bet by Andreessen

Cryptocurrency regulation and melt-down

  • Unclear what effect China’s announcement on regulating cryptocurrencies will have. On the one hand, likely inconsequential as the government cannot take away something that has so much retail and institutional demand. On the other hand, Bitcoin may be censorship-resistant but China has banned things like the VPN in the past.

  • Seems strange that Bitcoin is constantly compared to the value of the dollar when its intention is to not be part of a dollar-based monetary system - we should instead be looking at metrics like the number of transactions, use cases, number of people on the network, etc.

  • Government-based blockchain doesn’t accomplish anything because it is still centralised and prone to debasement - the whole point of Bitcoin is you can’t arbitrarily control its supply, and it is the technology that enforces its scarcity.


Antonio García Martínez (AGM) and Apple

  • What happened:

    • AGM was fired from Apple unceremoniously for a quote from a book he wrote called Chaos Monkeys: "most women in the Bay Area are soft and weak, cosseted and naive despite their claims of worldliness, and generally full of shit"

    • More than 2,000 employees signed a petition to get him fired

  • Passage was distorted and taken out of context, in that the book was a bestselling book and the quote was contrasting the mother of his children / love of his life with every other women, as a heightened literary device

    • The 2,000 Apple employees lied in their petition about their safety being threatened by hiring this guy - clearly untrue, this was a specific tactic to remove AGM from the workplace because it triggers HR machinery

    • Mistake for Apple's management to cave to the pressure, without subjecting AGM to proper HR processes - HR by mob rule is unacceptable

    • In trying to justify their decision, Apple attributed the decision to AGM's "behaviour", but this is clearly untrue

  • Potential hypocrisy regarding Apple's supply chain (Uyghurs, slave labour) and partnership with Dr Dre

  • Companies need to have a predictable standard regarding what their HR policy is and what they are willing or not willing to accept. Companies have the right to enforce whatever policy they want but it cannot be arbitrarily enforced

  • Hypocrisy is the obvious first-order point. More important is a failure of leadership:

    • Strong leadership at other companies like Coinbase and Basecamp (purging of woke mob) helped to evolve the culture, but with companies like Apple and other big tech that have gotten too big, it is not the leaders but the employees who are dictating culture

    • The effect is there are no longer leaders in charge but managers, whose job is just to execute operationally without defining clearly the company's values

    • These types of issues are not happening at companies that are founder-led

  • A lot of tech companies have over-hired employees, many of which are very smart but not doing a lot of useful things - there is a core group of people who provide most of the value and add value but the rest not so much and need to find things to do

    • AGM's own quote from interview with Matt Taibbi: this is "interjecting the whole Twitter cesspool, with all the dogpiles, and all the performative signalling, and all that crap, replicating it in a corporate setting, and calling it work"

    • Toby's quote from Shopify: "Shopify, like any for-profit company, is not a family. The very idea is preposterous. You are born into a family. You never choose it, and they can't un-family you. It should be massively obvious that Shopify is not a family but I see people, even leaders, casually use terms like "Shopifam" which will cause the members of our teams (especially junior ones that have never worked anywhere else) to get the wrong impression. The dangers of "family thinking" are that it becomes incredibly hard to let poor performers go. Shopify is a team, not a family."

  • Companies now have a choice about whether they want to be Apple or Coinbase / Basecamp

America is failing math

  • What happened:

    • California considering getting rid of gifted programmes for Math as it is considered unfair to the kids who are not gifted

    • OECD now ranks 37th in the world (China is number 1), despite ranking 5th in the world for spending (it's not a spending problem)

  • Moral equivalent of eliminating welfare for bottom 5% of population

  • Job of society is to find the broadest set of solutions for most number of people, and solve for both extremes: i.e. provide support for those under-performing academically, and enable opportunities those who are over-achieving. Eliminating anything at extremes is ridiculous.

  • Based on an incorrect definition of equality: equality is having equal access to and being able to participate in the same opportunities, NOT being forced to arrive at the same outcomes

    • To be distinguished from equity which is levelling everyone at the same result

    • Equity prevents the top quartile of the population from being able to progress. We should be supporting the smartest kids and providing them with the best opportunities so they can drive our society forward.

  • Political programmes should be measured by the amount of opportunity they provide

  • More nefarious interpretation: education establishment is completely failing our kids and schools, and getting rid of gifted programmes is an attempt to destroy evidence of that failure by hiding the results

    • When school resumes, board is planning to eliminate accelerated math (no more algebra for 8th graders, no more calculus for high-schoolers)

    • Entire idea of gifted students is coming under attack

    • University of California system is now getting rid of SATs / ACTs and not bringing these back until 2025 (attempt to stop measuring these metrics)

  • Standardised testing was originally invented to prevent discrimination. To take the counterpoint, it does tend to benefit rich people in that you can game the system to some extent, but admission boards can holistically take that into account by reference to other factors - it is not a reason to remove testing altogether

  • Removing competition at all levels from the school system cripples the incentive for progress

Infrastructure bill

  • What happened: Biden pulling back on stimulus and capital gains

    • Biden cuts infrastructure bill proposal from $2.3 billion to $1.7 billion

    • No broad-base support for capital gains tax so unlikely to happen

    • Corporate tax likely to increase to 25% rather than 28%

    • Closing loophole of big tech companies parking IP in offshore tax havens

  • Companies have a practice of exploiting a loophole of transferring IP to lower-tax subsidiaries - this is an accounting issue whereby earnings are recognised at the subsidiary and is taxed in its local jurisdiction. Issue Facebook had in getting fined by the IRS was that it undervalued the IP at the time of transfer relative to the future value of its earnings power.

  • Reports of inflation spiking as a result of the rumored public spending, with growth stocks taking a hit as a result as interest rates anticipated to increase to offset future inflation. Shows how government spending can crowd out private investment because it raises interest rates.

  • Markets are an extremely elegant voting machine in the short term: 10-year breakevens indicator (what people think the 10-year breakeven interest rate will be) has peaked at 2.54% last week - emerging theory that the worst may be behind us and technology companies (growth) will start picking up again

  • People may pull forward their spending and consumption will happen now

Clubhouse

  • What happened:

    • Clubhouse is an application - a casual audio space with live guest speakers and listeners

    • Had a massive increase in downloads during pandemic, but came crashing down in March and April 2021.

    • Valuation has nonetheless skyrocketed to $4 billion in latest round despite no revenues, led by the same investor each round

    • Acquisition offer from Twitter for $4 billion which they turned down

  • Question of whether this is a function of the broader over-valuation in the market or whether the social media hyper-growth narrative of the company collapsed after the market realised the product had no stickiness

  • Issue with product is that it is not asynchronous - users cannot play back conversations and have to be live to be part of the conversation

  • Makes sense for Andreessen to double-down on investment as they are essentially going for the big outcome (e.g. $100 billion) - reference of past companies that sold too soon. The implied valuation was $4 billion but they invested much less than that.

Cryptocurrency regulation and melt-down

  • What happened:

    • China announcement (again) that they will regulate cryptocurrencies

    • Wider story of China taking out top CEOs in China (effectively showing them who's really in charge)

    • US Treasury calling for stricter regulation with disclosure every time a transaction above $10k is conducted

    • Fed developing their own digital currency - will be releasing white paper in the summer

  • David Rubenstein, president of the Carlyle Group, said it most aptly, that the government cannot take away something that has so much retail and institutional demand

  • Crypto should be bought and sold like any other asset and people should pay taxes

  • Over the past year, huge institutional players and pools of capital have been allocating capital into Bitcoin, so likely a good dip-buying opportunity

  • Counterpoint: potential parallel to BitTorrent whereby everyone said you couldn't stop it, but ultimately it was stopped?

  • Bitcoin may be censorship-resistant but China has the power to stop Bitcoin in China (like having a VPN)

  • The more oppressive these countries become, the more they increase the value of Bitcoin as a use-case for censorship-resistant, digital money that can be transported and deployed anywhere in the world

  • Potential black-swan: Counterfeiting Bitcoin (double-spend problem). Not likely to be an actual problem because it is too visible now and time window (first few years) has now passed. Also it is open source, and everyone will be able to see the problem coming.

  • Seems strange that everyone in Bitcoin compares it to the value of the dollar which seems to run contrary to the intention of Bitcoin (to not be part of the dollar-based monetary system) - should instead of number of transactions, use cases, number of people on the network.

  • Current obsession with being able to buy it with less dollars than you can take it out at, which in turn is based on the belief that more people will buy in to the idea tomorrow than today.

  • Government-backed blockchain doesn't accomplish anything because it is still centralised and prone to debasement - the whole point of Bitcoin is you can't arbitrarily control its supply (the technology enforces its scarcity)

  • Positive black-swan for Bitcoin could be the US dollar no longer being the world's reserve currency, and it instead being Bitcoin because they trust its decentralisation more than they trust any government

  • Governments can't just arbitrarily ban something overnight - they need centralised policy, and Bitcoin is far down the priority list of things to ban