Alvin's Newsletter: No. 18
Weekly newsletter on what I saw interesting in tech, venture capital and business.
📰 News
GOAT, the ‘hypebeast’ sneaker co., raises $100M: The hypebeast culture that started more than a decade ago, heightened with the rise of Instagram and influencers, has started to deliver unicorns dedicated to serving the culture. GOAT started with sneakers but now sells everything - hip. Other companies in the space - StockX (raised $110M last year at a $1B val), Grailed, VestiaireCollective, TheRealReal and Depop. This is the new world of luxury sales. Link
Nikola’s founder steps down after short-seller report: After a very weak response to the allegations in the Hindenburg report, Trevor Milton fell on his sword. The share price is down 50% since mid September and General Motors is now looking at how to make best of its investment. It looks like they will still be going ahead with the deal which will see them take an 11% stake in the company - for no cash or stock. [Paywall] Link
Evernote’s CEO looking to fix Evernote: Last week I wrote about Roam and where it may head. This week we have an interview with the Evernote CEO, Ian Small. It highlights the troubles a company can get into and what it takes to have any hope of getting out. For Evernote, it is still unclear and I would suggest, unlikely, that they get out. I imagine, apart from the technical debt, there would be cultural challenges to address, new blood to be added to the ranks (and out with some of the old) and a new direction to take. Sometimes it’s easier to tear it up and start over from the ground up. Link
"Silicon Valley is addicted to momentum," Evernote CEO Ian Small said, by way of explaining how his company had come to be, as he put it, stuck. "And to have momentum, you need to keep shipping things, and to keep shipping things, you need to keep pushing problems sometimes into the corner and look the other way. And eventually, the problem gets bigger than the room that you're in."
📚 Reading
Growth is the name of the game these days everywhere - both the private and public markets. A company is always (should always?) be looking for new growth to tap. But how to exactly think about growth? Here is an excellent article on ‘surfing S curves’. Another must read. Link
One reading of the Airbnb story is that they converged on the right S-curve. Their first S-curve, renting three airbeds to attendees of a design conference, was too shallow. Market saturation was a few transactions away. The next S-curve, a global product, was too steep. But the New York S-curve was just the right slope to be achievable and worth trying. (And “New York” might be too broad: going door-to-door means picking out neighborhoods, since NYC’s 3.2m households represent too many doors for even a very energetic founder to knock on.) But success in New York let them shift to another S-curve, dominating quirky-but-affordable travel. And from there, they could advance to their current steeper but more rewarding S-curve.
We are in an era of abundance. How do you thrive when anything and everything you want is probably out there and available for free? According to Alex, homestead it. Link
Of course, the effort you put in has to actually be valuable, and recognized as such by your peer group. So the optimal thing for you to do, whether you’re an open source software developer or a Twitter armchair analyst, is to figure out your specialty zone that’s simultaneously useful, but unique – and then homestead it. Establish and cultivate it, like a garden or a plot of land, that you’re tending for the communal benefit of everyone. People come to associate that little plot of land with you specifically, and think of you whenever they go near it.
The TikTok war rages on, now in the US court system. A lot has been said about the TikTok algorithm - China deeming it valuable enough to keep on domestic territory that it banned its export. Even so, Oracle and co. still believe TikTok is worth pursing. What makes the TikTok algorithm different to what came before it and why is it so profound - or not? A couple of reasons.
Typically, machine learning algorithms require a large corpus of data to train it on. To tell it what’s good, what’s not, what to push up and what might become a hit. This is even more important if you are a Chinese developer sitting in Shenzen trying to create something that a college kid in LA will use. TikTok didn’t have this so they focused their algo to learn in real-time from the user’s actions. How long you dwell on a particular video, wether you shared or liked, did you look at the creator, is it part of a series of videos with a particular sound track. All these factors allow the algo to learn on the fly and adjust at astounding speed to your particular fancy - in that moment, on that day.
When new content is created on TikTok, it will be seeded to different control groups to gauge how well it performs. The performance of that piece of content will form one of the variables inputed into the algo. This idea is also crucial to the mechanics of TikTok and one of its points of difference to a social network (as opposed to an interests network) like Instagram. It doesn’t matter how many followers one has, only that a piece of content you put out does well - that ultimately affects how far a video is pushed by the algorithm. Thereby allowing anyone to make the vaulted ‘for you page’ (FYP) on TikTok. In Instagram land - if you don’t have a gazillion followers, forget about your content getting any traction.
Eugene argues though that this isn’t really that ground breaking. What is ground breaking is combining the above algorithm together with the UX elements in the way TikTok has done that enables the feedback loops to work.
Read the article to deep-dive into the algo and what those UX elements are. Eugene is spot-on and super insightful. Well worth the time. Link
This, then, is the magic of the design of TikTok: it is a closed loop of feedback which inspires and enables the creation and viewing of videos on which its algorithm can be trained.
🦖 Entertaining & Interesting things
I’ve talked about a couple of frauds on this newsletter (Wirecard, Nikola the latest). I didn’t know there was the book on it. A guest post from the author of that book. If you want to avoid fraud - know your enemy. Link
Every other week we hear about cyberattacks somewhere in the world. We don’t typically hear about an attack that leads to a fatality. In Germany that’s what happened. To top it off, the hackers attacked the wrong target. Link
When I was growing up I used to eat fish sticks. They weren’t a thing until the 50’s. This is the story of the fish stick. Link
Where else but in this nation could one freeze processed whitefish into a brick, cut it up into deep-friable strips, and ship it to a landlocked region like Kansas for immediate consumption?
Super cool and nerdy dive into space tethers and what’s needed to make them work and why they might be viable. You have probably heard about space elevators, this is its twin brother you never heard of. If you are a nerd like me, you will like this. Link
🎧 Podcasts
The best podcast episodes last week according to Bosco Tan:
The science of living forever (a16z Podcast) - 28 mins: Scientifically prolonging life use to be reserved solely for the worlds of science fiction. Today however, there’s a growing industry discovering and commercialising longevity - in a chemical, bottle, tablet etc. It’s projected that at current bio-science progress, we are on the cusp of a human-ready breakthrough in the next 10 years. Exciting frontier. Link
What is a SPAC (The Information’s 411) - 16 mins: SPACs are the hottest topic on Wall Street at the moment. Everyone that’s anyone seems to have one, or is in the process of raising one. This episode is the 101 factsheet on what they are, where they came from, why they are all of a sudden in fashion and how it’s affecting companies that are looking to go public. Link
MBS and the future of Saudi Arabia (Hidden Forces) - 51 mins: MBS has been a controversial figure in global affairs whether out the front; his rise to power and his purging of dissidents, or in the background “pulling the strings”; the Khashoggi affair and the high profile investment in SoftBank’s fund. The new book “Blood and Oil” chronicles the entire MBS story. This episode is an interview with its authors. Link
Trumps taxes exposed (The Daily) - 31 mins: On the cultural interest spot this week (barely) is Trump’s taxes. The New York Times has spent a number of years amassing a tonne of material which starts to piece together the nature of Trump's finances. These findings seem to do two things. 1) Call to question Trump’s business acumen - especially how underwhelming they seem at his money-making apex during The Apprentice, and 2) Prove out his claims of being a tax law genius. Link
📹 TikToks
Don’t watch if you get scared easy. Link
Do less work. I want to be happy. From your man, Puff Daddy. Link
Bitter Springs, NT. Link
Calton Dance. Best. Link