"Not Even Wrong" Podcast
Investing in fundamentally new concepts and engineering practices with large impact.
Discussing “A Flicker in the Dark” by Stacy Willingham. Thriller with suspense. Who’s the killer type of book. 1/2 female vulnerability. 2/2 Who are you gonna stick with? Who can you trust? Ultimately only spouse. 3/3 Book about identity in a non identity political way. Who are you? Where are the demarcation lines between you and rest around you. What is the limit? Eventually what you do is what you are.
Discussing Interview with Chelsea Finn on Robot Brains podcast. 1/4 Meta learning, learn how to learn. Robots need to be more flexible in learning. We can’t always intervene. When to use greedy policy and when to use exploration? 2/4 Reward function research. Define goal and find best reward function. Reward is complex. Even for humans it’s not clear. 3/4 Robotics needs more data and ways to intervene less. Leverage data across domains. 4/4 How can robots better adapt to new types of data. What if data distribution changes. Three important take aways 1/3 Solve meta learning problem by teaching robot how to ask relevant questions. Kind of how we raise kids 2/3 Jürgen Schmidhuber, Gödel Machine = hypothetical self improving computer program that solves problems in increasingly optimal ways. 3/3 Tesla has high likelihood of success in robotics because they solve some of the problems Chelsea talks about. Data, scalability, intervention, flexible learning, autonomous nature of Tesla data collection. Meta learning used in auto-labelling.
Exiting Biotch adding NVDA. Biotech is not delivering on its promise. Crispr needs an Elon Musk or Jensen Huang. Nvidia is trying to become the AWS of AI. Solve AI for general purpose compute and storage that work for many diverse customers. When compute offers new solutions typically markets grow exponentially.
Discussing essay “Through the Stranger of Liberty, Freedom has come”. 1/2 Liberty is the absence of oppression. It's a good problem to solve for. Freedom is a consequence of liberty. Three major threats to liberty are Military, Academic and Public Health Industrial Complex. Fighting threats to liberty starts with designing better institutions. Use AI and game theory to improve institutions. Orwell’s 1984 shows us threats to liberty such as unchecked power, doublethink and perpetual war.
Liberty is under threat. Use AI and game theory to design better institutions. Liberty rests on institutions that ultimately drive incentives. Humans are driven by incentives. AI and game theory can iterate over many complex scenarios to explore better solutions to problem of how to increase likelihood of more liberty in the future.
Tesla and the UFC are the defining companies of our time. Both have disrupted previously impenetrable markets. By doing so both have created a lot of value for insiders and other stake holders. EV engineers are much better of today than 20 years ago, whether at Tesla or not. The same applies to athletes in combat sports. For example, collegiate wrestlers are much more valuable thanks to the UFC. Both the UFC and Tesla are building an industry by vertically integrating the value chain. Both have a monopoly on talent. That comes with risks. Another parallel is the cult of the founder. We can learn a lot from both businesses about what free expression of entrepreneurship brings to society. It creates lots of value and lots of inequality. Inequality is a feature not a bug of freedom. We tolerate it because it creates opportunity for everybody.
Silicon Valley bank collapse and other regional banks crisis must to be mitigated. Depositors must be made whole. The only legitimate reason for FED is to offer insurance against bank failure contagion. We need regional banks. They take more idiosyncratic risks. That’s a good thing. But sometimes things go wrong. Reasons for bank failures 1/3 Bad credit decisions 2/3 shenanigans like giving founders loans against shares of startups and 3/3 maturity risk with Treasury portfolio. Depositors need to be made whole. Investors don't. What's important is that the financial system keeps functioning.
Discussing paper “Origin of the State. Land Productivity or Appropriability? by Omer Moav et.all. 1/3 Why did state emerge? What is state? What is taxation? 2/3 State emerged because they could tax. People chose certain cereals that need to be stored, increase flexibility of food supply but also enabled taxation. 3/3 What was first, state or more flexible production? Causality. State like everything else starts with ingenuity, creative ideas. It was human ingenuity to come up with idea of state that enabled more flexible food production and progress. Tesla is in the business of providing customer value and value to states. Interesting question: Tesla is in different jurisdictions with different institutional frameworks. Will Tesla develop differently in those areas or will those areas converge to Tesla’s needs. We believe as long as Tesla ads value to the states they will converge. Tesla delivers customer value and value to state.
Discussing “Next Year in Havana” by Chanel Cleeton. Freedom, Love and Hope. Cleeton’s writing is beautiful and makes it look easy. She tells the story of Cuba with fervor and tenderness of a people akin of having lost freedom and love but not hope. The most sorry thing about the Cuban revolution is what came after. When people tell you how to think and talk, it’s time to fight or leave. We must never forget that.
Discussing Tesla 2023 Investor Day. Problem Statement by Drew Baglino: 80% of global energy comes from fossil fuels and only one third produces work or heat. More granular formulation of Tesla's Mission Statement. 1/5 Car is data center on wheels. Proprietary controllers and power electronics. Integrate software and hardware from sensor suite to car to data center. All in one. 2/5 Drive Unit with permanent magnet and NO RARE Earths. This creates a new avenue of innovation. Use simulation and/or AI to innovate around power train and drive unit. 3/5 Storage + Power Electronics solves problem of how to bring renewable electrons to users. 4/4 Vertical integration crucial to accelerate Moore’s Law and lower total cost of ownership while increasing value 5/5 Vertical integration and building supply chain across Tiers. Tesla focusing on Tier 2 suppliers. Build and integrate supply chain for an electrification infrastructure. Three questions 1/4 App Store for Tesla platform ? 2/4 Why is Moore’s Law not penetrating car manufacturing faster ? 3/4 What are scientific breakthroughs you’d like to see like maybe superconductors, quantum simulation for better material design.. ? 4/4 Is there better way for eduction and/or recruitment to accelerate innovation?
Prelude to upcoming Tesla Investor Day. Name should be Tesla Mission Day. Investor day implies they’ll offer content for Wall Street analysts to fill in their models and sell tidbits to the buy-side. That's not what we expect. Two things we’d like to see. 1/2 Discussing power train technology such as magnetism and conductivity to improve performance. 2/2 Manufacturing efficiency. Ultimately this is an Investor Day as in investor in the Mission of Tesla.
Excerpt from “Love Story. A Memoir. Part 2. Thesis driven investing is often dangerous. Logic is a deceptive companion of a hedge fund manager. Certainly useful but often misleading. Boltzmann rules of gases is analogy to thesis driven investing. Probabilistic prediction of aggregate behavior. Is trajectory of molecules intrinsically probabilistic? Yes, because of Entanglement. Molecules don’t commute. Does trajectory of companies commute?
Discussing excerpts from “Love Story. A Memoir” by Krim Delko. Excerpt 1. Semantic gap in investing. Oil and Carlsberg in the summer of 2008. Logic is a dangerous companion in the hedge fund business. It’s useful but often deceptive. Logic - Reality = Semantic Gap.
Ten year treasury yields are rising. CPI and PPI reading fell higher than expected. Yield curve is less inverted. Good sign although short term turmoil in market due to higher longterm rates. Fed will be on alert longer than expected to eradicate real reason for inflation which is government complacency and waste. Discussing “Shackleton. A Biography” by Ranulph Fiennes. 1/4 Explorers in early 20th century were driven by ego and vanity. Products of their time. Or were they? 2/4 What drives people? Even today some are driven by ego and vanity, examples are Open AI rushing ChatGPT or Jeff Bezos attempting to go to Mars. 3/4 Think through the supply chain and innovate across the stack. 4/4 There were Norwegian whalers on South Georgia, an isolated island in the deep South Sea. Example of culture. Norway even today is pioneering marine exploration and extreme marine engineering projects.
Discussing “Alberto Giacometti” a biography by James Lord. Also discussing the movie “The Final Portrait” about Giacometti painting a portrait of a friend. Observations are theory laden. Giacometti struggled with this. His identity as an artist was formed around the attempt to overcome bias of seeing. How to express what is deep inside a piece, not just what you see? Like “Painted Word” by Tom Wolf. We see through words and form words through what we see. Art is a reciprocal process of seeing and forming theories. Repeat. Giacometti wanted to escape this bias and struggled with it all his life. We see through theory. Understanding is when what you see matches your theory.
Discussing capital allocation. 1/2 Like any other human institution capital allocation had to evolve through conjecture, try and error. We can always find better ideas to improve process. Trust-less trade. Blockchain could be next improved solution. 2/2 Raising capital from investors is like onion. You peel layers until you find the capital that is meant for you.
Two supply chain risks for Tesla. 1/2 China is large part of Lithium-Ion battery supply chain. That has to change. Biden Admin is working towards that goal. 2/2 Is there enough mining capacity to scale to TWh storage scale? Tesla is innovating across the supply chain to mitigate those risks. There is no such thing as scarcity of resources. Resources are a function of knowledge. Free markets are best way to assure adequate supply. China is not free market. Needs to be mitigated.
Inflation is not a monetary phenomenon. It’s driven by political, societal and economic factors. It’s about real stuff. Inflation can be cured. It’s the result of unforced policy errors. Obsession with monetary issues is detrimental.
Discussing our essay "Happy Customers are Always Right." Wall Street touts investment ideas. But more often than not those are just entertaining narratives. We dissect and critically analyze some of the most popular ones. Ideas matter. We identify two investment ideas. 1/2 EV adoption = Tesla adoption. 2/2 Microsoft is best positioned to make money with ChatGPT technology through applying co-pilot technology in software development.
EV adoption = Tesla adoption. There is no innate industry dynamic driving down cost of EVs. It’s Tesla and their vertical integration. Wright’s law works but only for Tesla. EVs are not like semiconductors, there is no innate law like Moore’s law. It’s more like Amazon Microsoft. Apple, Disney or Nantucket whaling. Ingenuity, risk and iteration driving down cost. Happy customers are always right.
Happy customers are always right. Microsoft is the way to make money with language models such as GPT because they are close to customer. GitHub Co-pilot is iteration platform to get better at co-pilot technology. Generative and interactive search. Search, LinkedIn, Browser are next.
Book discussion “The Passenger’ by Cormac McCarthy. Identify and Ideas. Both feed on each other. Ideas evolve in their their own world, we seize them, define them and put edges around them. Identity is fed by ideas. Do we own our identity? Yes. But we have to work for it. Let it not slip away. How do we seize our own identity? By deeds whether good or not. It’s the deeds that define our identity.
Discussing essay: "We Need Genuine Short Sellers. Not Imposters". Shorting and buying technology stocks are two sides of the same coin. They speak each other's language. The majority of self-proclaimed short sellers are neither. They are financial market harlequins.
Reaction to FOMC meeting. 2023 is the year of efficiency. Fed changes stance. Less worry about inflation because companies tightening employment conditions. Do more with less. Higher efficiency, higher productivity, less risk of inflation. Last shoe to drop in Federal government. Needs to cut expenses. Tighten budget. Link to your essay "The Anatomy of Disruption".
Discussing "The Last Kingdom" and "Twilight of the Æsir". Both cover transition of Northern Europe from tribal to Christian culture. Why was Christianity so successful. Like Bitcoin, voluntary adoption because it reinforces itself. In particular, it served the Kings to rule. Key difference between Viking multi god superstition and Christianity is there is something beyond the human in the human. Things like “my word” or "trust" are easier concepts to enforce in Christian culture. Truth seeking. Living in Reciprocity with nature as proxy for God.