Interesting new Interview (Elon/Ron Baron)

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Elon interview with Ron Baron Nov 2022 #Newsletter

Elon’s longer term vision for Twitter is to use it as the base for his next generation identity & payments platform (apart from being a useful digital town square for ‘most’ people). Elon says that he knows how to make a better Paypal – a business that could be the world’s biggest/most valuable financial services company. He claims to have developed the blueprint during his days at ‘x.com’ (the pre-cursor to paypal); relatedly Twitter is owned by ‘X Holdings Inc’. Possibly related, the largest PE firm – Apollo Global is also focussed on identity & payments. This also links with something Dr. Harshvardhan (Trust Capital) alludes too – the value for transactions is not in the moving of money/entries in a ledger, but in fraud reduction through identity verification/KYC. The idea being that $MA, $V are not so much in the business of facilitating the movement of money as in the prevention of fraud. A bitcoin or Doge or similar network with an identity layer on top could be very interesting.

My read is that Elon has switched from saying that [[$TSLA]] is over-valued to TSLA is undervalued, especially if as he believes autonomy adds 5x the value to cars without changing manufacturing cost. TSLA has 15% operating margin at the moment (gross margin: 27%); if cars can be sold for 5x current price, gross margin would expand to 85% (and given the size of the market, this would be larger than any other business in the world). In other interviews Elon has repeatedly said that he thinks TSLA will be worth more than Apple and Saudi Aramco combined (the two largest currently listed entities).

Edited: Nov 9: Elon sold an additional $4B of $TSLA (https://www.reuters.com/business/autos-transportation/elon-musk-sells-195-mln-tesla-shares-worth-395-bln-sec-filing-2022-11-09/). So my read was wrong; it looks like Elon thinks there is more pain to come. At some point his wealth could flip with the more of Elon’s net-worth coming from SpaceX & Starlink than from TSLA! (600B marketcap on Nov 9; Elon 14% => $84B).

Back of the envelope $TSLA model: At this point most TSLA analysts believe that TSLA will be selling between 10-20M cars by the end of 2030 (1.6M/year at the moment, with a 50% CAGR). At a 25% operating margin, and 20x terminal EV/EBIT $TSLA’s NPV is ~$990B. At at 40% operating margin, this increases to: $1.7T. Current market-cap: $655B (ATH: $1.2T)

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Alternative Investment Platforms #TAM #India

Private Equity Oriented

  • LetsVenture: Crowdsourced VC (India)
    • Private Equity / Unlisted companies 
  • OurCrowd: Crowdsourced VC (Global)
    • Private Equity, Unlisted companies, enables retail to LP Funds (small ticket sizes)
    • US Based, Jason Calacanis is the founder, high quality deal sourcing/diligence.
    • Takes Indian clients also, they do all the LRS and other work for you.

Public Equities 
Alternative MF/ETF/AIF structures

  • Smallcase:
    • Baskets of stocks purchased through your regular broker
    • Very expensive (fees) for smaller ticket sizes
    • More transparency than regular MF

Debt/Fixed Income Oriented

  • CredAvenue (now known as Yubi): ~7000 cr
    • Debentures, Bonds, Commercial Paper, 
    • Claims 1Mn+ retail customers
  • Grip Invest : ~300 Cr
    • Private Equity, Asset Leasing
  • Jiraaf : ~300 Cr turnover
    • Invoice Discounting, Asset Leasing, Corporate Debt, Revenue Based Financing
  • WintWealth
    • Bonds (Primarily NBFC)
  • Golden Pi
    • Bonds (wide variety)
    • Low third party volumes
  • BondsKart
  • IndiaBonds

Crowd Sourced Property Investment / Real Estate

US / Global Equities

  • IndMoney : popular; provides semi-robotic “wealth management”/reporting as well as ability to invest in MF, ETF, US Equities etc.
  • Winvesta : US Bank account + ability to invest in global Equities, startups, real-estate
  • Vested : Fractional share investing in US / Global equities
  • ZeroDha
  • Fintox
  • Kuvera
  • Interactive Brokers : OG, Full service broker

Gargoyle Theory by @shakoist

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My notes from Gargoyle Theory by #@shakoist

  • Financial markets are our collective attempt to predict what we will want to consume in the future, and to fund production and technology to get us to our future consumption
  • Hayek claims interest rates that are too low results in more investment going to long-term projects relative to short-term projects.
  • It also leads to Malinvestment – investment in projects that are barely profitable and could quickly become unprofitable if rates rise; and to projects that do not match future consumption (plausible example NFTs)
    • The problem we observe is that once interest rates rise again, these malinvestments which made sense at lower rates, can become worthless.If you can borrow large sums of money at a very low rate, you can consider bankrolling projects that may not generate returns for a very long time. If the cost of money increases, this stops working. This can also permit investment in projects that are barely profitable if money is free. And then become unprofitable once money becomes expensive again.
  • Natural rate of inflation is one which keeps employment and output high, without causing inflation. (Mises)
    • This would minimize the “misery index” (sum of unemployment & inflation)
  • “Gargoyles” fill with rage when the link between the financial economy and the real economy become a farce, and then seek to restore order by taking their money back through inflation, lowering asset prices, and forcing people out of jobs.
    • Firms that have no right to live anger them, and need to be killed.
    • People either retiring early, or working in the wrong job, angers them.
    • ==> Gargoyles will not be happy till BTC, NFT, Web3 is all dead, because they see it as disconnected from fundamentals
    • What this should look like is layoffs, bankruptcies, and transitions to more productive jobs
    • ==> Rate of bankruptcies must rise (to please Gargoyles)
    • We’re seeing bankruptcies & layoffs in Crypto world, is this enough?

macOS Allow CLI binaries from third-party devs

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macOS Big Sur (apparently from macOS Catalina onwards) restricts binaries from third-parties. This sux when using cli apps like alfred-plugins.

Allow CLI app: spctl --add /full/path/to/my/app

Show all rules: spctl --list

Disable Gatekeeper: sudo spctl --master-disable

Another was to achive the same result: Hold ⌥ (option) when opening app in Finder; this will fail but give you the option to “open anyway”. If you forget to hold ⌥ or it does not work, try opening anyways, then open System Preferences -> Security & Privacy -> General; click the Open Anyway button.

Rating: Bad Apple.
Good intentions (methinks), but Apple’s gonna lock down macOS, just like it locks down iOS today. 😔. This is one more arrow in their quiver.

AI Tools you can use *today*

5 great tools you can use for everyday tasks …

  1. Coding: Github Copilot  

Your AI pair programmer
Guesses what you want to write and writes it for you. Hard to describe how good it is. 

2. Writing, like Blog Posts, Headlines, Flyers, Reports…: Copy.ai
Improve the quality of your writing in seconds. A “Bicycle for writing”, http://copy.ai is a tool that helps you craft great copy by giving you prompts and examples to get started/inspired.

3. Background Noise Removal during Zoom / other calls: krisp.ai (mainly desktop)
(Also iPhones now have a voice isolation mode that is spookily good – try calling someone from a noisy playground – it just works, though hard to turn on/off and know when its been turned on etc).

4. Image cleanup: Magic Eraser
Remove unwanted things from images in seconds

5. Image Super-resolution: Image Enlarger

Honourable mentions; stuff so good you probably already use it and don’t know it:

  • OCR on all images on iPhones
  • Google Translate is 🤌

Thoughts on Bitcoin/Crypto

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Banking / Traditional finance (#tradfi) is ripe for disruption (and perhaps needs to be disrupted). Why 👇

  1. Fiat Currencies: Store of Value/Mobilize Savings
    Inflation is Taxation Without Legislation -Milton Friedman
    1. Government issued currencies (fiat) are prone to debasement – losing value every year
    2. Rely on a central government that controls supply (and value) 
    3. The central government has an incentive to create more money every year (steal from savers)
    4. Checks & Balances in the form of a link to gold / something with limited supply (scarcity) have disappeared
    5. Predictably supply increases every year (and in times of crisis, by massive amounts)
    6. ==> The USD has lost 95-96% of its value over the last ~100 years (at the FED’s current inflation goal of 2% the USD would loose half its value in ~34 years). If inflation is closer to 7% then the USD looses half it’s value in just 10 years!

  1. Banks
    1. “Fiat” cannot be stored without the use of intermediaries (banks, regulated by Central Banks)
    2. Your money is just some banks’ liability; you have exposure to a bank’s creditworthiness (and the banks in turn are exposed to the creditworthiness of the central bank)
      1. One can store “cash/gold/diamonds/paintings”, but this is inconvenient at scale; susceptible to seizure; susceptible to demonetization; susceptible to theft etc.
      2. Gold/cash can be faked; BTC cannot, easily verifiable by anyone.
    3. If banks go poof, then the money they created/owe you also goes poof
    4. FDIC / Government insurance of this money, makes the government liable to pay when/if banks go poof
      1. So the government protects the banks from going poof (systemically important)
      2. This means banks are immune from failure; so they do not innovate and improve customer service; instead they find new ways to tack on “fees”.
    5. Original intent: Bitcoin was created after the 2008 bank bailouts; https://news.bitcoin.com/a-deep-dive-into-satoshis-11-year-old-bitcoin-genesis-block/ (Note the bailouts were required because 95-96% of all dollars/rupees/pounds (fiat) are actually just bank liabilities not physical “notes”/real money.)
  1. Fiat Currencies: Medium of Exchange
    1. “Fiat” currencies cannot be transferred without the use of intermediaries (payment networks like Visa/Mastercard/Amex which are susceptible same regulations as banks)
    2. Banks are exclusionary. Only a few have access to the SWIFT network.
    3. You can move “cash” without using a bank, but this is difficult to do at scale (inconvenient form factor, susceptible to seizure, theft etc)
    4. Regulations limit innovation at banks (and now bank’s culture), because they are systemically important entities.

Enter Bitcoin:

Bitcoin is many things; digital gold; a commodity with limited supply; a medium of exchange; a store of value

The core innovation is the lack of central “authority” (aka gatekeeper, that can be corrupted). Central authority is distributed and yet no participant can just claim all the coin. Scarcity without a single authority! Incredible. 

  1. Medium of Exchange:
    1. Easy to transfer anywhere in the world, where there is internet; code is open, network is open
    2. No permission needed; every single participant (node) can verify & create transactions without requiring any permission from anyone
    3. Becoming a participant is permissionless too; no gatekeepers
    4. DOES NOT work without internet; sure you can write down long codes and use pigeons, but really it does not work. (In times of crisis, governments like to cut off internet access; see Kashmir, Yemen, Syria ….)
  1. Store of Value
    1. Supply is “algorithmically” limited; cannot be debased – (not without a hack/security flaw/corruption of the core BTC dev-team); 
    2. There can never be more than 21M Bitcoin*; in fact some will get lost every year in abandoned wallets, so the supply is likely to decrease YOY.
    3. No insurance (FDIC); if your money is stolen no government will help. May be alleviated by private cos offering insurance?
    4. No plunge protection team like the US FED (i.e. no Bernanke PUT)
    5. No one to kill competitors (the US has an army and uses stronger army diplomacy when folks want to supplant the USD as the reserve currency)
    6. OTOH the army of bitcoin maximalists grows every day and is quite a strong force 
  1. Commodity:
    1. Similar to say physical steel; supply is limited; mining is needed to mint new coins; has high volatility; 

Risks to participation as a speculator

  1. Security
    1. A single double spend, or other weakness in the core consensus algo would destroy all value.
  1. Competition: Competition among peers, BTC vs ETH vs Doge vs CumRocket etc.
    1. Is this a winner take all market? Will there be one global ledger (blockchain) or many? Will some be more important than others?
    2. While easier to transfer if you have internet, physical stores like gold/diamonds/guns don’t need internet or electricity … 
    3. Central Banks could also create their own “coin”, and thus compete. They’d have the resources to force compliance, esp. from institutions & companies.
  1. Regulation
    1. IMHO Crypto is anti-fragile, regulation will spur innovation and make crypto even more resistant to threats.
    2. Something with this much demand is more likely to be taxed than outlawed; but heh, Cocaine has demand and it outlawed, so …

Risks that I don’t think are really risks, but hey, I could be wrong

  1. High volatility ; the USD exchange rate is volatile 
    1. Has not hurt adoption so far; # of wallets, nodes, transactions all rising
    2. High vol is good, it removes paper hands.
  1. Excessive Power Usage / Inefficient
    1. The network will and can vote to change from Proof of Work to say Proof of Stake or Proof of Space or something else
    2. This can be solved.
  1. Stability: 2.5 trn of crypto recently went thru a 30-50% drop in price; no FED/SEC stepped in to save the “banks”. No vultures (economists) jumped in to save the rich by stealing from the plebs (or Is the Fed meant to the opposite, protect the plebs? I get confused sometimes). Nothing bad happened, no systemic risk. There was plenty of leverage and those who took the leverage paid for it. No one else was affected. Imagine if the SPX plunged 50%; there would be carnage and the losses would be socialized. Crypto market cap is now > than top 2-3 banks I think – which should be considered systemically important! and yet nothing untoward happened when it tanked. The fact that Central Banks want to get in on the game, by making a digital currency (crypto) just legitimizes the model. It works. If you can’t beat ’em join ’em. 
  1. Lack of Utility:
    1. What is the utility of money if it cannot be exchanged for good & services? BTC is liquidateable at scale (100’s of M/day)…

Risks to adoption / Technical Risks

  • Low transaction speed; since every transaction must be broadcast / verified by every node, there is an inherent limit to the number of transactions per second. There are solutions like Bitcoin lightning, but there is no one clear winner as yet. This is also a problem for Ethereum and similar chains;
  • Poor UX: Wallets are not terribly easy to use; much easier to use hosted wallets like Coinbase, but then the distributed, pseudonymous nature of Bitcoin is lost.
  • Trust / Anti-fraud: For example there is no reliable service that provides trust; #Bitcoin has the carrots that incentivise good behaviour but none of the sticks. Cannot kick out / ban bad actors especially since pseudonymity makes it harder to identify a bad actor.

Apple Earnings Call – Jan 27 2021

Notes from earnings call/transcripts:

  • 40% GM with 20% rev growth!
  • Rev up 21% YOY to $111B (Annual Rev: $300B)
  • EPS up 35% YOY
  • Operating Cash Flow: $38.8B
  • Gross Margin: 40% (39.8%, up 0.16 pts, products GM: 35.1%)
  • R&D Spend Last Qtr (Sep 30, 2020) grew at 21% YOY
    • Was 11% in June Qtr
    • This continues to be predictive…
  • USA sales: 36% of rev (64% international)
  • Installed Base: 1.65B devices
  • Services: $16B revenue (65% GM)
  • iPhone: 17% YOY Growth (installed base 1B)
    • #thought iPhone 12 looks visibly different ∴ China sales up
      • Also China, Korea => 5G well established; all new phone sales need 5G, which could have driven upgrades. USA, EU well behind, could have upgrade growth in the coming quarters.
      • Confirmatory Kremlinology; “I think you’ve seen that our performance has been particularly strong in China” – Luca
    • Vol growth is underestimate because of late launch; this is insane growth.
    • Both switchers and upgraders grew!
    • Mix skewed to higher ASP models (Pro, Pro Max). Oddly the iPhone 12 despite being fantastic value seems be under-represented
    • Tim Cook sees “opportunity” in India? HUH? 1% penetration, so where is this opportunity? 5G from Airtel + Jio (too small?), why was this bought up/mentioned?
  • iPad: 41%
    • #thought WFH favours iPads? It’s great for Zoom calls, great for kids schools. Was it something else? “And as COVID-19 kept us apart, we saw the highest volume of FaceTime calls ever this Christmas.” from Earnings Call Transcript
  • Mac: 21% ✔
    • M1 getting started, next qtr they will fix the touchbar, magsafe and the then it’s gonna be perfect 👌
  • Wearables+Home: 30% (WFH?)
  • Search Advertising: aka blackmail biz: going strong dude, thx for asking! (per Tim Cook)
  • Cash: $200B (approx)
  • Projections: Next Qtr:
    • Wearables+Home will be weaker;
    • AirPods Pro / Max will do great (supply constrained)

Enterprise / Server Cloud Storage (not “Personal” cloud storage)

Cheapest:

  • Backblaze B2: $5/Tb/mo (data transfer: $10/Tb)
  • Wasabi Storage: $5/Tb/mo (data transfer: ??)
  • OVH physical server: $3/Tb/mo (zero data transfer and other charges, but you do need to setup ZFS and some API layer software yourself).

Backblaze and Wasabi are both S3 compatible object stores. Note that data transfer can easily dominate storage charges, for even somewhat frequently accessed data. OVH is therefore much cheaper than it appears.

Other Options

  • google / gcloud: $10/Tb/mo
    • 1 Tb  => $10/mo ($120/pa)
    • Nearline (USA): 1000 * 0.01 => $10/mo (Using prices for nearline storage, South Carolina data center)
    • Nearline (Mumbai): 1000 * $0.016 = $16/mo ($200/pa)
    • Nearline has some charges if stored for less than 30d (min term). So could be a bit more than $10 (perhaps the same as S3’s intelligent tiering)
  • amazon / s3
    • 1 Tb => $12.5/mo  (between $12.5 and $20 because intelligent tiering will take some time to kick in).
    • Using prices for S3 Intelligent Tiering, USA data center: 1000 * 0.0125 => $12.5
  • Digital Ocean / volumes: (Block storage built on Ceph)
    • 1 Tb => $100/mo (approx 10x S3 prices, yiiikes.)
    • rsync’able storage
  • Digital Ocean / spaces: $0.02 gb/mo (S3 Compatible File Storage)
    • 1 Tb => $20/mo (about the same as S3 without intelligent tiering)
  • Backblaze B2: $5/Tb/mo
    • $10/Tb data transfer; cheaper than Amazon, but can still dominate.
    • S3 compatible API

Max value

Store HOT on Digital Ocean spaces (save on bandwidth)

Move older items to gcloud nearline or lower tier

#[[Hosting / Servers / Cloud Guide]]