crypto technology

The best tech investments of the last five years were not Apple or Bitcoin, but Tesla and Ethereum

At the twenty-fifth edition of this newsletter, I want to look across this dull news week at what has been the best-yielding investment in tech over the last five years. To my surprise, it was not Apple, Bitcoin or Nvidia, but Tesla. In the crypto world, Ethereum turned out to have risen twice as much as Bitcoin. Ok, one news fact did stand out this week: Tinder is introducing a $500-a-month subscription, for real enthusiasts.

If Tesla and Ethereum made a car together, it would look like this, according to Midjourney.

Tesla and Ethereum the big winners

Tesla rose as much as 1287% and Ethereum 611% over the last five years, against Nvidia 492%, Bitcoin 305% and Apple 210%. Meanwhile, the S&P 500, the classic benchmark, did 48%. War and inflation notwithstanding, saving has still proven far more expensive than index investing.

Tesla and Elon Musk I leave to Walter Isaacson, whose book on Musk is a huge hit. Rather, I look at Ethereum, precisely because the traditional media rarely, if ever, publish a decent analysis on this underrated platform.

But before we dive into the numbers and prices, it's important to review what Ethereum does and can do and how it differs from that blockchain brother from another mother, Bitcoin. For this description, I used ChatGPT and Gert-Jan Lasterie's standard work.

Ethereum is a public workshop

Imagine that the Internet is a big city. In that city you have a market for commerce, a library for information, a bank for money matters, and so on. Bitcoin is something like a special kind of gold; valuable and you can keep it, but otherwise you can't do much with it. The exchange rate varies greatly and so you won't be using it to pay for anything anytime soon.

Ethereum is something completely different, where a group of people got together at the initiative of Vitalik Buterin and said, "instead ofjust making a new kind of money or a different kind of gold, shall we put some kind of public workshop in the city where people can build all sorts of things?"

With Ethereum, you can create "smart contracts," which sounds a bit like magic contracts, which automatically execute themselves once certain conditions are met. So suppose you want to rent a house. Normally you would go to a real estate agent or housing association, show your ID, pay and sign paperwork.

Based on Ethereum, landlord and tenant can use a smart contract that says, "Whoever pays the digital key fee will automatically get the digital key to the house." That transaction takes place on the Internet, no middleman is needed, everything happens automatically based on the smart contract.

But it doesn't stop there. Ethereum is used to build so-called "decentralized applications," called dApps. These are programs that do not run on one central computer but are spread across many computers worldwide. This often makes them more secure and less susceptible to fraud or censorship.

The magic word is decentralized

There is also "DeFi" ("DieFai"), which stands for "Decentralized Finance. These are financial services such as loans or insurance that work on Ethereum through smart contracts, without the involvement of banks or other financial institutions. The 2021 NFT boom was also built on the Ethereum platform.

Unlike Bitcoin and Ripple, Ethereum is technically not a currency, but an open-source software platform for blockchain applications - with Ether (ETH) being the cryptocurrency used within the Ethereum network.

In short, Ethereum is special because it is much more than just a digital currency. It is a complete digital world where you can enter into all kinds of transactions and agreements without the need for anyone else.

It's like a new, smarter layer of the Internet. To join you only need ETH as a means of payment, similar to buying a festival coin when you go to festivals because that coin is accepted as the only means of payment.

Why is Ethereum risky from an investment standpoint?

So much for the utopian vision: a world computer with smart contracts. There is nothing wrong with that, and as an entrepreneur, I am a big fan of access to a development platform like Ethereum. I won't even rule out Ethereum's creators getting a Nobel Prize in economics one day.

But from an investment standpoint, let's look at a fundamental economic principle: scarcity - or in the case of Ethereum, the lack thereof. Every right-thinking person supports Ethereum's expansive vision. It wants to be the oil that drives the gears of Web3. But the oil supply is finite; Ethereum is not.

Bitcoin has its own counter-story. It is limited to twenty-one million Bitcoins, which means built-in scarcity. You don't have to be an economist to understand that scarcity drives demand, which in turn drives up the price.

But Ethereum is like a never-ending digital oil well. Great for powering the network and ensuring there is always enough, but not so great for the fundamental principle of supply and demand. If ETH becomes too abundant, its value may decline, causing the price per coin to fall. The infinite supply means that ETH becomes as common as tap water in developed countries: of course you need it, but you're not going to pay a premium for it.

Thus, the lack of a supply limit for Ethereum can be the Achilles heel for a stable developing price. Therefore, keep a sharp eye on it if you are considering investing in Ethereum after the following paragraphs, because the lack of a supply limit is not icing on the cake; it could be the whole cake, or even the whole pastry - in a country full of diabetics.

Spotlight 9: TSLA phenomenal, ETH rises twice as fast as Bitcoin

With 1287% increase in five years, Tesla deserves a spot in Spotlight 9.

The idea behind Spotlight 9, a name coined by ChatGPT for this column, was to briefly track weekly how the major tech investments were doing compared to the benchmark, the S&P 500. It remains simple: if an investment does not outperform the S&P 500 over the long term, why invest in it and not the S&P? Amazon is such a setback, up only 29% over the last five years versus +48% for the S&P 500.

Stock market sentiment is important because when it rains there, it trickles down throughout the tech world to the youngest startups. If there are no exits, no IPOs, that means less investment in larger tech companies that are not yet publicly traded and it affects the entire tech sector. Ultimately, it limits new innovations.

Meta out, Tesla in

Tesla was not in my Spotlight 9 list because I follow the five biggest tech companies weekly, ranked by market value. Those are Apple, Microsoft, Alphabet (Google), Microsoft and Meta (Facebook). Tesla falls just outside that, but it gets interesting: Meta is currently worth $769 billion and Tesla ... $767 billion.

Based on its performance over the last five years, I threw Meta out of Spotlight 9 and Tesla is in it as of today. Zuckerberg must be devastated and in Musk's house, Elon and the little x's are certainly running an algorithmically calculated polonaise. Let's hope Musk doesn't disappoint with Tesla or I'll have to make another picture.

No master forecasters

In addition to the five largest tech companies by market value, I also follow the two largest crypto currencies, Bitcoin and Ethereum. There is so little coverage of crypto in the traditional media, and I myself have so little interest in daily prices, that I had completely missed the fact that after all the highly exposed price declines of the last two years, Ethereum and Bitcoin have still proven to be very good investments for people who look a little further than a week, a month or a year.

There is hatred and envy in the crypto world between Bitcoin maximalists and altcoin lovers. That's something like a metalhead explaining to a rapper why his music is better. They are incomparable giants, with Bitcoin, as mentioned, being somewhat comparable to a popular, digital version of gold, while Ethereum is a widely used building block of Web3.

Both have some utility, but how that will be reflected in the price is a total guess. As far as I know, at least in September 2018, no one was predicting that Ethereum (+611%) would appreciate twice as much as Bitcoin (+305%).

Tinder's $500-a-month subscription plan

'Hate the game, don't hate the players' thought Tinder and introduced a $500 subscription. Per month.

I read this article and I could not read it without hearing a translation from Amsterdam-West in my head every five sentences. I translate those below back into language that will keep this email from ending up in your spam filter.

Let's start with this passage: "We know that there is a subset of highly engaged and active users who prioritize more effective and efficient ways to find connections," said Tinder Chief Product Officer Mark Van Ryswyk, "which is why we have been conducting extensive testing with this audience recently."

Translation: "We know that there is a horde of horny panters willing to pay unlimited money to us, as long as they have new victims be able to find loves."

Going forward: "The new plan announced Friday, called Tinder Select, was only offered to less than 1% of Tinder users who are among the app's most active, the company said. For nearly $6,000 a year, users will get access to new features, such as 'VIP' search, matching and conversation, that are not currently available with existing paid subscriptions."

Translation: "We don't know exactly how to do it legally yet, but we are going to give this group of addicts a chance to get their victims target audience, at the expense of then those customers of ours who only pay a few tens."

Another gem from the article: "Tinder parent company Match Group Inc. has experience with expensive subscriptions. In 2022, it bought The League, an invitation-only dating app aimed at "ambitious, career-oriented singles. The League has a VIP subscription that costs $1,000 a week. The company previously said the success of The League's expensive subscription caused Match Group to reconsider how it could appeal to "high-intention users on its other apps such as Tinder."

Conclusion: it is heartening that people today have the opportunity to find more potential partners and/or playmates than they used to find at the bus stop to the office or at the billiard bar. Butreh... "high intention users? We used to have very different designations for that kind of low-level guys and girls.

In conclusion

YouTuber and postdoctoral researcher Rob ter Horst of the CeMM Research Center for Molecular Medicine in Vienna tested the new Apple watches and made this fun and informative, science-based video about them. According to his resume, Ter Horst is "designer and research subject at the same time of an extensive N=1 study in the field of computational chemistry and bioinformatics.

Maybe nice if Ter Horst unleashed his scientific expertise and N=1 approach on that $500 subscription, went wild on Tinder for a month and published all the findings of his scientific research on YouTube?


Singapore F1 weekend is Asia's premier networking event

This week a thematic edition of my newsletter, from what is this week more than ever the sports and business epicenter of Asia: Singapore.

A Ferrari Formula One car in front of a backdrop of traditional Singaporean "shophouses. Image created with Midjourney.

F1 as a business magnet

In most countries, Formula One is primarily a spectacular sporting event, but in Singapore, the Grand Prix transforms into something much bigger than a race weekend; the city becomes a seven-day spectacle of networking events and business presentations.  

Because the track is right in the center, the city-state is buzzing with high-class seminars, exclusive dinners and investor meetings this week, against a backdrop of F1 cars racing along Marina Bay. Here, Formula One is not just a sport, but an engine for economic growth and innovation.

Singapore has invested significant sums to bring Formula One to the city-state. The first race was held in 2008 and its organization cost an estimated $150 million USD per year.

About 60% of this cost was borne by the Singapore government, while the remaining 40% was financed by the event's organizer, who was fortunate to have Singapore Airlines as the title sponsor - not entirely coincidentally, a company largely owned by Singapore's sovereign wealth fund Temasek.

Norway drills oil, Netherlands saves, Singapore invests

Temasek is an investment company, named after the name of the island before the British dropped by uninvited for two centuries, and is wholly owned by the Singapore government. Founded in 1974, Temasek has a diversified investment portfolio spanning various sectors such as financial services, telecom, healthcare, infrastructure, real estate and technology.

Interestingly, Temasek operates independently of the Singapore government in terms of its investment decisions, despite being a state-owned company. Singapore also has a second sovereign wealth fund called GIC, which is more risk averse and operates mainly as a passive investor with a longer investment horizon, plus another central pension fund (CPF). In total, the Singapore government thus has more than $1.6 trillion ($1,600 billion) in invested assets.

To put into perspective, the famed Norwegian pension fund (known as the Oil Fund) has "only" $1.4 trillion under management while Singapore is approaching the Dutch pension funds, collectively representing over $1.6 trillion in invested assets. Except that for their full piggy bank, the Norwegians had to pump out no less than 2% of the world's supply of dinosaur blood from the earth's crust, and the Netherlands has earned over four hundred billion in natural gas profits over the last sixty years, which has led to people in the northern province of Groningen still regularly suffering from earthquakes as a result.

The Netherlands, with 18 million people, has more than three times the population of Singapore, which has no natural resources unless you love swamps and mangroves, and has only been independent since 1965.

Singapore went past Israel, to quantum computing

This makes Singapore mostly similar to Israel, as the GDP of both countries is also similar (around 500 billion USD), only the GDP per capita is much higher in Singapore. Singapore learned well from Israel on how to turn a small country with no natural resources into an economically developed country, with a strong focus on good education.

What I am trying to make sense of for you with this interlude of socio-economic history lessons, is the structured way Singapore has organized its society and made it ready for the digital world.

The first period after independence in 1965 focused on trade and distribution. Still to this day, the port of Singapore is the second largest container port in the world after Shanghai, and Changi airport has been voted the best airport in the world 12 times. From out of the plane until into the cab, I usually manage within 15 minutes. Would Amsterdam AirportSchiphol have ever looked at Changi?

In the second phase, Singapore developed as the financial center of Southeast Asia, with over 200 banks serving consumers and businesses from the Asean region that has a population of nearly 700 million; by comparison, the European Union has a population of 450 million and the United States over 330 million. With that hinterland, Singapore's focus on logistics, trade and financial services made sense.

In what I see as the third phase, Singapore focused on building interests abroad and invested in the world's leading financial players. For example, Temasek bought stakes in BlackRock, Visa and Mastercard.

In its fourth phase, Temasek responded quickly to the huge growth in market value of the world's largest technology companies, buying significant stakes in Airbnb, Amazon, Zoom, Tencent, Palantir, Alibaba, Stripe and Nvidia, to name just a few.

We have now reached the fifth phase in which Singapore itself is seeking to develop global players. With a broadly supported industrial policy, which is always a risk because anyone, including scientists and governments, can be wrong in identifying promising sectors, an effort is being made to make targeted investments in promising startups.

As an associate of SGInnovate, the government fund that invests in deep tech companies, explained it to me, "We thought quantum computing was important and there are eight serious companies in that field in Singapore. We have invested in all eight.'

How do you get the right people?

Whether that approach works depends purely on the quality of the fund managers. It is impossible for other countries to blindly imitate Singapore's industrial policy and expect similar success. After all, do those countries manage to put the right people at the wheel? And how do you get the right people properly trained and motivated?

Education and healthcare are among the world's best, and for years Singapore has been voted the best place to do business. But above all, Singapore is pragmatic. I think the most striking example of this is the subsidies that can amount to tens of thousands of dollars for people who buy homes within four kilometers of their parents, or their married children. This makes people care for their parents faster, crucial with an aging population, and at the same time makes it easier for grandparents to look after their grandchildren. This reduces the pressure on care facilities, but of course requires a good relationship with your parents (in law).

The Chinese, Malay and Indian populations live together relatively harmoniously because the handling of racial differences, a major problem in many Western countries, has been handled in its own unique way: both in the composition of political parties and in housing construction, it is pragmatically but strictly determined that all ethnic groups are represented.

Thus, quotas are set by ethnic group by residential neighborhood and so, for example, Chinese children learn at an early age to get along with Malay and Indian neighbor children. It's hard to hate someone you used to play ball or tag with. Quoting by race and culture is a simple but effective approach that many Western countries could learn from. And would Israel have ever looked at Singapore?

Then there are the rewards. In Singapore, quality of performance is rewarded and government officials, especially those in high positions such as ministers, are among the best paid in the world. The idea is to attract top talent and minimize corruption by offering competitive salaries that can rival those in the private sector. A minister in Singapore can earn over SGD 1 million (USD 733,000) annually.

While it is not published what the salaries and bonuses are of the GIC and Temasek executives, it is known that compensation is market-based including performance bonuses for long-term results; no bonuses for simply having one good quarter.

The success is measurable

How well are these well-paid (semi) civil servants performing? The answer is: very well. The 20 year real rate of return of the most risk-free GIC is 4.6%, while Temasek's riskier investments have yielded as much as 14% a year since inception. That's considerably better than its benchmark, the S&P 500, which has averaged less than 10% per year over the past 20 years.

On Temasek's net portfolio value of $287 billion, that 4% performance difference equals a hefty $12 billion a year. 

Of course, it is not always a party, as Temasek lost 5% in value last year, including the infamous $275 million write-down on its stake in FTX that led to salary cuts for the investment managers involved, but that was still less than the 20% drop in the S&P 500.

Block 71 and Carousell

Temasek invests globally, but 54% of its portfolio still consists of companies headquartered in Singapore. It is a government push to develop more high-quality startups, because money invested domestically yields more at the bottom line. This includes looking beyond just the money to increase the quality of the entrepreneurs.

The entrance at Carousell in Block 71. For more images from my visit to Carousell and other events around F1 weekend, click here.

Last Thursday, I visited Siu Rui Quek, the equally energetic and affable founder and CEO of Carousell, a Singapore-based online marketplace that operates in nine countries.

Quek explained how effectively the Singapore government proceeded when a decision was made more than 10 years ago to "breed" more entrepreneurs. First, as a student at the National University (NUS) interested in starting a startup, Quek was sent to Silicon Valley for a year through a government-funded program.

There, he and other participants worked at successful tech companies such as Facebook, Google and Microsoft on the condition that they return to Singapore to complete their studies. At the same time, a run-down industrial site near the university was transformed into Block 71, a fine incubator for startups.

Quek started their second-hand marketplace there with two college friends, which has since grown into a unicorn, a company with a market value of more than a billion dollars. He is convinced that without the help of the government, he could never have gotten this far.

Over a billion in value of luxury items was sold per year through Carousell, upon which Quek decided to enter the luxury market segment himself. All items in this category are vetted before being offered on the site.

One of the investors in Carousell was EDBI, part of the Ministry of Economy. Their participation helped persuade other, mostly foreign investors, to invest in Carousell.

F1 week features hundreds of large and small events

Almost all startups showed up this week as the world came to Singapore for the Formula One race. Siu Rui Quek said he did not even have time to come to the circuit because he had too many appointments and events scheduled over the weekend.

But traditional parties were also very active. The week began with the Forbes Global CEO Conference, followed by the big crypto event Token 2049 and the Milken Institute Asia Summit. The city buzzed with people in suits, pantsuits and black t-shirts, the mix of the traditional financial world and the startup scene was almost visible in the streets.

At the prestigious Mandala Club on Saturday afternoon, venture capital fund Hustle Fund along with government agency Singapore Global Network (SGN) organized an event, sponsored by fintech startup Aspire, where entrepreneurs and investors mingled. Looking around at the crowded room, I wondered how many people would show up if something like this would be organized during F1 weekend in England, France or the US at 2 p.m. on a Saturday.

Max Verstappen had to win races in often spectacular fashion and attract a huge fan base before his home country of the Netherlands hosted another Formula One race after 35 years. In Singapore, the most expensive Ferraris usually drive slower than Dutch mothers on a cargo bike, but it didn't take a Singaporean racing driver to bring Formula One to Singapore. It was part of targeted policy.

With Formula One as its backdrop, Singapore shows that it is more than a hub for trade and finance. It is a testing ground for innovation and a melting pot of cultures. It makes this F1 weekend much more than a race; it is a snapshot of a nation constantly innovating and reinventing itself. It takes decades of so many moving parts for this policy to succeed that I don't expect other nations to be able to successfully imitate it. It requires courage, dedication and stamina, not qualities that the average politician in most other countries excels at.

I hope you enjoy the race today! Greetings from Singapore and see you next week.

AI technology

Apple loses $200 billion in two days after Chinese intervention

Even Lionel Messi couldn't help Apple score this week. Image created with Midjourney.

Not even Lionel Messi could help Apple this week. The week began happily when it was announced that the Argentine ball wizard's arrival in the MLS has resulted in one hundred and ten thousand new subscribers to Apple TV+, but that news was quickly forgotten when the Chinese government banned officials from using iPhones. Apple promptly lost $200 billion in stock market value and although it is comparing American apples to Chinese pear tea; that number is comparable to the gross national product of a medium-sized country. What is going on?

Apple v. Huawei is FC USA v. China United

To better understand the Chinese intervention in officials' phone use, we need to look a little further than an iPhone is long. At the Asean summit this week, China warned of the emergence of a new cold war, which was received by the delegations in attendance from Japan, South Korea and the Philippines, among others, as if someone walked in on a birthday, turned the heater up to the highest setting and then sighed, "hot huh guys, why always us?".

The Chinese government has long been displeased with the measures taken mainly by the US but also the Netherlands to deny China access to the latest technology to make chips. It was recently announced that the Chinese market is now the largest market in the world for Apple; 24% of all iPhones, i.e. 1 in 4 iPhones, are sold in China.

This week, therefore, was the perfect time for the Chinese government to strike back: Huawei launched the new Mate 60 Pro, the intended Chinese-made iPhone killer, not entirely coincidentally just before Apple introduces the new iPhone 15 in a few days at its ostentatiously titled Wonderlust event. What could be more fun for the Chinese government than to disrupt that American party with a ban on iPhone use by Chinese officials?

Apple runs into the Great Wall of China. Image created with Midjourney.

Apple lost 6% of its stock market value, a whopping $200 billion. The message China is sending with this is clear; block our access to Western markets and we will block the Chinese market for your products. If China can so easily ban the most sought-after product in the world, from the largest company in the world, from the most powerful country in the world, then obviously the same applies to any product from any company from any country. That's why most tech stocks fell this week, but more on that later.

China shines in ... Bavaria?

Traditionally, southern Germany is the beating technological heart of the German automobile industry. Stuttgart has been crowned with the Mercedes star, and Audi and BMW are as Bavarian as mugs of beer and drunk guys at Oktoberfest. But September became the month of the Chinese car in German automotive land: as many as 50 Chinese car brands presented themselves at the leading IAA Mobility car show in Munich.

In August, as many as 37% of all cars sold in China were electric, and those huge volumes and low-cost production capacity give Chinese automakers an unbeatable competitive advantage. According to a UBS estimate, Chinese automakers will double their global market share from 17% to 33% by 2030, with European companies suffering the biggest loss of market share.

It is numbers like these that the Chinese government dreams of in other advanced markets, such as the market for smartphones.

Midjourney turns down investors, Imbue raises $200 million

In the great geopolitical battle, it is nice to come across a company in Midjourney that is trying to find its own way in a completely organic way. Wonderful examples of what experts can create with Midjourney's photo creation tool are the Instagram accounts of Chaos Dreamland and David Szauder.

Some critics think their work is not art, but it reminds me of the rise of hip hop, when samples were first used to create new work. Venture capitalist Ben Evans wrote an excellent analysis on intellectual property and AI.

Midjourney still refuses to take money from investors, although they are beating down the door. Imbue, formerly known as Generally Intelligent (but that name was apparently too generic and not clever enough), on the other hand, raised $200 million from Nvidia and the CEOs of Cruise and Notion, among others.

Like all AI companies, Imbue has a wonderful mission: 'At Imbue, we develop AI systems that can reason and code, giving computers intelligence and human values, so they can help us achieve greater goals in the world.' History teaches us that you have to critically follow people who clamor to achieve greater goals in the world.

Claude v. Chat

Meanwhile, the better-known AI companies OpenAI and Anthropic have found themselves in direct competition. OpenAI is making $80 million in revenue per month with ChatGPT Plus, though growth in reach has been faltering for several months. Anthropic can't be left behind and launched Claude Pro, for $20 a month. I haven't been able to test Claude yet because the service is only available to users from the U.S., UK, Gibraltar and, seriously, St. Helena and the Falkland Islands (also called the Malvinas by world champions). With this, Claude proves that being intelligent and being smart are two different things. Why not Guernsey? And what about Claude in the Lofoten Islands?

Last post this week on funding and AI companies: the world's best-known business incubator, Y Combinator, held its famed Demo Days last week (where Airbnb, Dropbox and Coinbase once debuted), and over 65% of the chosen startups engaged in AI. The majority of Y Combinator's summer cohort, a total of 134 startups, build tools around AI, enabling healthcare claims automation, customer service automation, sales operations, coding and game design.

With any other incubator, you might think it's blindly riding on the hype, but Y Combinator's track record is too impressive for that: nearly 5% of their companies achieve acclaimed unicorn status (company value of more than $1 billion) and the total revenue of Y Combinator companies in 2022 was over $50 billion.  

Spotlight 9: Apple's Chinese problem depresses tech sector

Apple took a hit, but Nvidia also lost after its extreme rise this year.

It was interesting to see how different Wall Street analysts assessed Apple's problems in China. The prevailing opinion was that the Chinese moves show that even a company with a good relationship with the Chinese government, such as Apple, and a large presence in the world's second-largest economy is not immune to rising tensions between the two countries. And that depressed the share prices of leading tech companies.

However, there is also a current that believes Apple's share price drop was an overreaction by the markets. "We believe Apple's two-day -6% share price indicates that the market thinks the recent Chinese headlines will evolve into something broader," wrote an analyst at Morgen Stanley on Friday. "We think this is unlikely ... The share movement has been exaggerated." The entire tech world is hoping he is right.

In conclusion

At the end, one link to a topic that has nothing to do with technology, yet is relevant to every reader: 'My 95-year-old Japanese grandfather is a former cardiologist - his 8 'non-negotiables' for a long, happy life.' He blogs, uses social media to keep in touch with his family and takes naps - what a role model!

Happy Sunday, see you next week.

AI technology

Tech elite stuck in the desert at rained-out Burning Man

Burning Man 2023 wasn't a party. Image created with Midjourney.

I had a very different opening to my newsletter in mind, but the fact that the tech elite is stuck in the desert mud with their private jets at Burning Man is too much news for me to ignore. As one Burner sums it up in this sad video: Burning Man 2023 is screwed. In other news: OpenAI, maker of ChatGPT, is on its way to $1 billion in revenue.

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Burning Man is the Coachella for the tech industry

When I was a student at San Francisco State University deep in the last century, I regularly rode my scooter from campus back home past Baker Beach and China Beach. Campfires were often lit there by homeless people, hippies or groups of hipsters. It was the first time I realized that their clothing was so similar that even up close I could not tell the difference between "hipsters or homeless."

One such beach party got so out of hand that it was banned in the early 1990s and moved to the Nevada desert. Here the concept of the "Temporary Autonomous Zone" was realized - a city built from the ground up, where the usual social norms and commercial transactions were suspended in favor of a "gift economy." Sounds wonderful.

Burning Man has grown considerably over the years, attracting more than 70,000 participants from around the world in recent editions. In recent years, the area has grown into a veritable Black Rock City, a temporary city built for the event, designed as a series of concentric circles centered on "The Man," a large wooden effigy that is burned at the end of the festival. The city also features themed camps, art installations, workshops and a series of performances.

What Coachella is to the Los Angeles entertainment industry, Burning Man became to the Silicon Valley tech industry: a few hours' drive to a long weekend of escapism in the desert. This is what it looked like from the air earlier this week.

I've never been to Burning Man because I don't like the combination of fine sand, short showers and large groups of mostly drugged people who like to hug. But everyone I know who's been there had a fantastic time and so I'm as much a fan of Burning Man as I am of moon landings: I don't quite get it and gladly don't participate in it, but from a distance I enjoy seeing so many people having fun.

Alternative protest against formerly alternative festival

Rapid growth has drawn criticism for its environmental impact. Building a temporary city of 80,000 people in the desert is actually bad for the planet, Vox reported Wednesday as climate activists headed down the road toward Burning Man:

'All together, each Burning Man generates about 100,000 tons of carbon dioxide. That's more than about 22,000 gas-powered cars produce in a year. What began as a gathering on a beach in San Francisco has become a destination for celebrities and the ultra-rich, especially tech billionaires. That's why private jets have become a problem. There are now fancy camps, meals prepared by private chefs and VIP parties. Keep in mind that all of this is built just for the week-long festival at the end of summer and everything has to be taken down and removed afterward. One of the basic principles of Burning Man is "leave no trace," but even the event organizers were baffled by how much trash was left in the desert last year.


Last Monday, a small group of climate protesters parked a 2.5-meter trailer across the road, causing miles of congestion for participants on their way to Burning Man. The protesters demanded a ban on the use of private planes, single-use plastics, unnecessary propane burning and unlimited generator use.

The protest ended when a ranger rammed through the blockade with his pickup truck and, with weapon drawn, worked a woman to the ground. Looking at these images, my thoughts wandered to those fire making hippies on Baker Beach in San Francisco; how could something so relaxed and joyous get so out of control? What once began as  counterculture has become mainstream, then a new counterculture emerges to protest it. It is tiring because of its predictability.

Chris Rock leaves Burning Man hitchhiking in the back of a pickup truck. Image; @erichamiilton

Chris Rock and Diplo are out

So the vibe wasn't there from the start, but the situation worsened when the festival grounds were closed yesterday due to heavy rain by organizers, who called for conservation of water, food and fuel. Participants may be stuck for days as vehicles are stuck in the desert that has turned to mud.

A number of participants then decided to leave the site, on which a dead person had since been found, on foot. The famous angel investor Gil Penchina walked 8 miles through the mud until he could score a ride. Dj Diplo absolutely did not want to miss a gig last night and also went for a walk, only he was lucky enough to do so in the company of Chris Rock, who confessed to also having once started out as a DJ.

Rock sighed to Diplo, hitchhiking in an open pickup truck, "If I would have known DJs would ever make money, I would have never told a joke. Brazilian DJ Lukas Ruiz, better known as Vintage Culture, is still stuck in the desert and canceled several gigs via Instagram. The organization has since launched a "Wet Playa Survival Guide. The mix of celebrities, heavy rain and a photogenic desert is irresistible to the media, so for the next 48 hours Burning Man will dominate the news.

Brief other news:

OpenAI on its way to $1 billion in revenue

The Information reported this week that OpenAI, maker of ChatGPT, is well on its way to achieving one billion dollars in annual sales. That revenue is achieved primarily on companies that deploy ChatGPT and pay a license fee to OpenAI to do so. With the launch of ChatGPT Enterprise, OpenAI will be able to significantly increase revenue very quickly, because despite all the recent criticism of OpenAI, there does not seem to be a competing product on the market that can be so easily integrated by companies.

Venture capitalist Reid Hoffman downsizes role at Greylock

The LinkedIn co-founder is one of Silicon Valley's most influential AI enthusiasts. While it is not known what Hoffman will do next, the expectation is that he will delve even further into AI. This recent interview with Hoffman on AI is highly recommended. He calls AI "Amplification Intelligence," amplified intelligence.

Thousands of participants examined weaknesses in AI

For two and a half days in Las Vegas, thousands of participants - including 220 community college students and others from organizations traditionally kept out of the early stages of technological change from 18 U.S. states - engaged in leading AI models. Participants exchanged 164,208 messages in 17,469 conversations as they searched for bias, potential harm and security weaknesses in 21 challenges designed to expose the potential gaps in the trust and security of AI models. The challenge was this.

How do you talk to an AI?

Practical guide on how to achieve extraordinary results as an average person with a chatbot such as ChatGPT. Nice example: ' Ask chatbots to explain things using examples from your favorite novels. You could do the same with, say, Harry Potter or "Keeping Up With the Kardashians."

Bumble's CEO says AI will help you get more dates.

Let me know if it works, and I'll share the tips and experiences in this newsletter, with your photo and contact information if desired because I like to bring my community together.

AI fever turns Anguilla's ".ai" domain into a digital gold mine

The tiny Caribbean island may rake in 10% of its GDP from domain sales this year. Anguilla's success in selling AI domain names is bound to be viewed with great envy by the neighboring island with a less commercially attractive name to abbreviate, St. Maarten.

Back to the office or fired?

Amazon CEO Andy Jassy tells employees that it is "past time" to commit to the company's "return to office mandate" and that their jobs are at stake. I prefer remote work, but is it so strange for a company to ask employees to come to the office at least three days a week?

A venture capital firm has built an AI-powered pitch deck generator for startup founders - and is giving it away for free

I have not been able to test it yet because I am still on the waiting list, for which you can sign up here.

Spotlight 9: tech stocks are the hits of the week

It is impossible to come up with a nice chart of stocks after a picture of Chris Rock in the back of a pickup truck in the desert.

Hedge funds have record exposure to the seven largest tech stocks by market capitalization, according to data released Friday by Goldman Sachs, in a week after Nvidia shares hit an all-time high because of spectacular sales and earnings results.

"Hedge funds continue to embrace mega cap tech and the theme of artificial intelligence," Goldman Sachs' brokerage said in a note sent to a limited group of clients that was obtained by Reuters.

It is striking how last week Bitcoin and Ethereum, the main cryptoassets, fell while the rest of the market rose. Especially because they seemed to move along with the mainstream market for the rest of the year, especially that of tech stocks.

AI technology

Nvidia is the maker of golden shovels and pickaxes

Nvidia dominated the news in the technology world last week in a way reminiscent of Netscape's 1995 IPO. That legendary IPO heralded the start of the Internet era, just as the launch of the iPhone in 2007 marked the breakthrough of the smartphone. Similarly, we will one day look back on Nvidia's stunning Q2 results, which launched the world into the AI era. This was the big bang of artificial intelligence.

Compared to last year's second quarter, revenue doubled from $6.7 billion to $13.5 billion, while profits rose 843% (no typo), from $656 million to nearly $6.2 billion. The outlook for next year is even brighter. What lies behind these stunning numbers and why does the "shovel and pickaxe maker" Nvidia earn more than the digital gold diggers, the AI application makers?

He was the founder in 1993 and is still the CEO in 2023: Jensen Huang of Nvidia. Image created with Midjourney.

"A new computing era has begun. Companies worldwide are moving from general-purpose to accelerated computing and generative AI."

Jensen Huang, CEO Nvidia

"A new computing era has begun. Worldwide, companies are moving from general-purpose to accelerated computing and generative AI," said Jensen Huang, founder and CEO of NVIDIA in releasing his figures. Usually CEOs believe too much in themselves and the creation of their own success, but Huang is absolutely right.

That's why in this week's newsletter I don't pay attention to other newsworthy events, such as the announcement of chipmaker Arm's IPO that may be a precursor to a definitive revival in the technology sector after a year of mass layoffs, but try to make sense of Nvidia's development in the suddenly rapidly changing technology world.

Ghost valley

"Everyone seemed pretty gloomy, looking at each other and wondering why nothing exciting seemed to be happening in the Valley anymore." It could be a quote from sentiment in the technology sector before OpenAI launched Chat GPT late last year, but it is a quote from Netscape founder Marc Andreessen about the atmosphere he encountered when he moved to Silicon Valley in 1994.

The personal computer had broken through worldwide in the 1980s, Microsoft dominated that market in software, and there were a few big players in the traditional world of mainframe computers and networking. But nobody's heart was beating faster from companies like HP, Novell or my favorite company name, Digital. (What an inspiring brainstorming session it must have been where they came up with that name).  

The success of the free Netscape browser and subsequent IPO completely changed that sentiment. Suddenly, large companies were developing applications for the Internet and Internet startups were getting serious funding - eBay was founded less than a month after the Netscape IPO, Amazon went public two years later, and that was less than a year before Google launched, to name a few examples.

Nvidia's recent success seems to echo the Netscape IPO. At Nvidia, the sales and profits led to investor enthusiasm, but at Netscape in 1995, jubilation arose around the share price. That is a major difference... The expected introductory price was $14 but demand was so high that a last-minute decision was made to double the introductory price to $28, something that rarely, if ever, happens because the introductory price is determined after months of talks with investors worldwide.

Netscape closed the first day of trading at a price of $75, which meant that the company had left billions on the table with its still too-low introductory price and the first buyers were able to book record profits on the very first day. From Wall Street to Main Street, as it is so nicely phrased, everyone was reading in the newspaper the next day about that miraculous invisible phenomenon called the Internet. (Unfortunately, I don't have time to explain to readers under 35 what a newspaper is, but think of it as a pile of printed out homepages with very large banners that you read for free at the hairdresser's, excuse me, hair stylist's.)

Cisco no disco, but briefly the biggest

The clamor around Netscape stock quickly died down because of relatively modest revenue and profit growth, mainly due to fierce competition from Microsoft that culminated in an infamous lawsuit (in which, incidentally, to my surprise, an offer Microsoft had made me at my first company Planet Internet to switch browsers was entered into evidence by Netscape).

Meanwhile, almost unnoticed, another much less sexy company grew to become the most valuable company in the world: Cisco. Products from this maker of telecommunications equipment were used by virtually every telecom company in the world, which rushed to offer the Internet as a new service alongside telephony, as well as in corporate networks that were massively connecting to the Internet.

In March 2000, Cisco was the most valuable company in the world with a market value of more than $500 billion. Its P/E ratio was a staggering 196, meaning an investor was willing to pay $196 for $1 of the company's profits at that share price. The party did not last long, and two decades later Cisco is a fine company, but it is worth only half of that sky-high valuation of the early 2000s. By comparison, anyone who had bought Apple stock for a thousand dollars back then would now have made over a 20,000% return and makeover $200,000.

Is Nvidia the Netscape, Cisco or Apple of 2023?

The Netscape browser opened up information and commerce to a global audience. The greatest value, however, turned out to lie not in the creators of the infrastructure (Cisco) or the creators of the application layer (Netscape), but in the developers of applications on that enabling technology: first Yahoo and eBay, then Amazon and Google.

Similarly, Facebook, Whatsapp, Instagram and later Tiktok benefited from the smartphone breakthrough, especially after 2010 when the iPhone 3 appeared and Android enabled good licensing versions for Samsung and Chinese smartphone makers such as Huawei. That technology, combined with globally cheaper subscriptions and data traffic bundles, led to exploding social media usage.

From the market value of Meta (owner of Facebook, Instagram and Whatsapp) of over $700 billion, as well as the over $200 billion market value of ByteDance (owner of TikTok and Lemon8), you would think that the greatest value is again in applications. Were it not for the fact that Nvidia is already worth a whopping $1.1 trillion, $1100 billion.

Share prices since Jan. 1, 2023. Nvidia shares rose a whopping 221%! That is not only extreme compared to the S&P 500 which so far rose an excellent 15% on its own, but also compared to all other dominant technology companies.

Analyst Stephen Guilfoyle says of Nvidia:

"The business is not as good as gold, but much better. Cash flows are growing at an amazing rate. Costs and expenses are under control. The balance sheet is beautiful. While growth in the data center business is beyond what I thought possible not too long ago, gaming also seems to be back on track."

Several analysts and investors have now raised their expectations for Nvidia stock to above $550 and even $600, which would mean that Nvidia will be worth more than Amazon.

There are only five

Excluding Saudi state oil drillers Aramco, Nvidia is already currently one of only five companies in the world that has reached the $1 trillion (thousand billion) market value milestone - along with Apple, Amazon, Microsoft and Google's owner Alphabet - and the only one that is not a household name.

Founded in 1993, Nvidia became known primarily as a maker of graphics cards for high-end gaming computers; everyone has one of those nephews in the family who would come over to give you a sweaty hand when you visited, before quickly hobbling back to the attic to continue gaming on his PC with an Nvidia GeForce graphics card. That was also the image investors had of the company for years.

Under Huang's leadership, Nvidia quietly developed into a formidable competitor to giants such as Intel. "We saw early on, about a decade ago, that this way of making software could change everything. And we changed the company from the bottom up and sideways. Every chip we made was focused on artificial intelligence," Huang told CNBC.

Anyone looking superficially at Nvidia is quick to make the mistake of concluding that the company only makes chips and is very sensitive to competing chips as already announced by Nvidia's own customers, including Google, Microsoft and Amazon. Only it turns out that the lead Nvidia has built up is far less easy to catch up with than widely thought. As the New York Times concluded, Nvidia has developed a competitive moat around AI chips.

Keith Strier, Nvidia VP Worldwide AI, explained well on LinkedIn that Nvidia makes the entire infrastructure, not just the chips, and that those components are very scarce.

Therefore, orders are being placed by various companies and even countries for years ahead; previously I wrote about orders from the Chinese Internet giants and from the Arab world. The rumor is persistent that orders are being made for billions for chips that Nvidia has not yet announced, let alone has in production.

The scarcity of components and manufacturing capacity could be an Achilles heel for Nvidia. After all, manufacturing is outsourced entirely to TSMC, but not entirely coincidentally, TSMC also makes all of Apple' s chips which seems to have a preferred position.

Conclusion: Nvidia example of completely new business form

It can be argued that Nvidia has built a better competitive position than Cisco ever had and the margins are arguably much higher. While Nvidia is an enabling technology, it is far less easy to replace than, say, Netscape once was. But it is also not an extremely scalable company like Google or even Meta because it depends on hardware production.

To understand Nvidia and the AI craze, it is interesting to see how, for example, ChatGPT uses Nvidia. The company OpenAI, whose shareholders include Microsoft, developed ChatGPT and together with Microsoft' s cloud service , Azure, and Nvidia built the cluster on which ChatGPT runs. Quickly summarized: Microsoft's cloud service Azure uses Nvidia's famous H100 chips for this particular application in a data center and the application ChatGPT uses the service.

OpenAI has licensed use of ChatGPT to Microsoft, which uses the technology in its Bing search engine, among others. But Microsoft also makes its own AI chips that will eventually compete with Nvidia.

It is like slowly finding out that your uncle on your father's side is married to your mother's sister, only on a prenuptial agreement and not in community of property.

It is crucial to understand that the AI applications we see today are almost all based on Large Language Models (LLMs), a type of artificial intelligence models designed to understand and generate human-like text from large amounts of data on which it has been trained.

The PT in ChatGPT stands for Pre-Trained: ChatGPT uses deep learning to process and produce text in a coherent and contextually relevant way. Because of its size, which includes billions of parameters, it can handle a variety of tasks, from answering questions and writing essays to generating creative content. Only, and here it comes, that pre-training, feeding the system with data, requires such extreme computing power that can currently only be provided by Nvidia.

30,000 GPUs for ChatGPT

So when Hubspot, the tool I use to create this newsletter, announces, for example, an AI module claiming to be "Powered by OpenAI," not only Hubspot but also OpenAI earns from it, obviously Microsoft (because OpenAI uses Azure) and, above all, Nvidia. This kind of value chain will become commonplace in AI: specific applications developed on horizontal AI platforms like OpenAI, from which ultimately Nvidia always earns.

To complete the example of OpenAI with ChatGPT: only those involved know exactly how the system is put together, but the claim that no less than ten thousand Nvidia GPUs were used to make ChatGPT and another twenty thousand are needed to run nicely does not sound implausible. With a purchase price of $30,000, that's an order for a whopping $900 million for Nvidia.

What is unique about Nvidia's AI technology stack is that they are no longer motherboards or graphics cards that my nephew can pull right out of his PC, but software applications specifically designed for the capabilities of, say, Nvidia's flagship H100. Because depreciation on these types of systems is spread out over many years, it will be years before Nvidia is replaced - if any new, better technology comes to market than Nvidia offers, which does not seem likely at this time.

When Jensen Huang first used ChatGPT, he asked for a poem about Nvidia. So I asked for a poem about Nvidia, the H100 and revenue potential. This is the result.

In the realm of tech, where ambitions reside,
The H100 emerges, with potential untried.
Nvidia's beacon, shining so bright,
Promises profits, reaching a new height.
Markets await, their hopes taking flight,
For with this chip, the future's so right.
Nvidia stands poised, ready to soar,
With the H100, revenue's lore is in store.

Poem by ChatGPT about Nvidia and the H100

Next week another regular installment of my newsletter. Happy Sunday!

AI crypto NFTs technology

Ex-Google CEO Eric Schmidt is the man behind the biggest AI companies

It seemed like a quiet week on the technology front, until everything happened in the last few days. Former Google CEO Eric Schmidt announced a new nonprofit organization that hopes to solve the biggest scientific problems with AI, the stock price of Europe's fintech darling Adyen collapsed, crypto also took hits with a sharp drop in Bitcoin and XRP, a lawsuit was filed by disappointed Bored Ape NFT buyers against auction house Sotheby's and the fund with Arab oil billionaires makes $8 billion in profits on ... computer chips. At the last minute, a car from Croatia broke Tesla's records.

Bored Apes prices have dropped below $50,000, but readers of my newsletter can have this Midjourney-created sad ape for free.

Using AI to save the world?

Former Google CEO Eric Schmidt is building an ambitious new nonprofit organization to tackle major scientific challenges using artificial intelligence. Schmidt wants the new organization to attract top AI scientific talent to create breakthroughs in as many complex fields as possible, from drug discovery to materials science.

Schmidt unfolded his vision last month in an article in MIT Technology Review titled This is how AI will transform the way science gets done.

"With the advent of AI, science is about to become much more exciting - and in some ways unrecognizable. The reverberations of this shift will be felt far beyond the lab; it will affect us all," Schmidt wrote.

Previously, Schmidt invested in DeepMind (bought by Google), OpenAI, CloudMinds, Vicarious, Cogitai and Elemental Cognition. At least, so says the chatbot Pi from, another AI company Schmidt invested in. Inflection.AI is a San Francisco startup that develops conversational AI chatbots. Two months ago, the company raised as much as $1.3 billion in a funding round led by Schmidt, Bill Gates and Nvidia.

Long list of Schmidt's AI investments

Pi forgot to mention Anthropic, SandboxAQ, Upstart, Rebellion Defense, Urban Engines and Mistral, which I wrote about earlier, so the old-fashioned overview on Crunchbase seems more complete. The various AI technologies these companies are developing include chatbots, quantum computing, cloud-based systems and AI that learns like humans learn. The applications of these technologies are diverse and far-reaching. They range from drug discovery and robotics to translation and personal assistants.

Schmidt has become the world's leading investor in AI, not shying away from investing in companies that are each other's direct competitors. This may yet lead to problematic situations in the future, but for now, no company seems to mind and his money, knowledge and network are welcome everywhere.

Nobody is always lucky, and Schmidt also suffered a personal setback in the outer category of "first world problems" this week, when it turned out that the superyacht Alfa Nero he thought he had snapped up back in June is still not released to him. Fortunately, Schmidt has another boat to get through the summer on, the nearly half-century-old converted icebreaker Legend. I don't know Schmidt personally, but have a soft spot for someone who converts a 1954 icebreaker.

Spotlight 9: Adyen, Bitcoin and XRP down, Nvidia rises again

I usually end my newsletter with a quick look at the major public tech assets that I believe most strongly influence the tech world, in a column for which ChatGPT coined the name Spotlight 9. The share price drop experienced by Adyen and the crypto world in recent days deserves more attention this time. Nvidia, maker of the chips needed to run AI applications optimally, on the other hand, is experiencing heyday with yet another billion-dollar order, this time from the Arab world.

Nvidia shares mostly seem to be moving in exactly the opposite direction from most tech stocks, which suffered from an overall market correction.

Adyen plummets due to slowing sales growth

What happened. Adyen's share price took a huge hit this week, falling about 39%. The Amsterdam-based company presented quarterly figures with an unexpected slowdown in revenue growth and a drop in profits, which led to a wave of selling of the stock by investors.

Adyen shares recorded a decline Friday for the sixth consecutive session, marking the longest downward trend since Sept. 1, 2022, according to Dow Jones Market Data. In these six days, the price plunged by more than 45%, the largest six-day drop ever in Adyen shares.

Adyen deserves credit for not taking part in all the rounds of layoffs in the tech world and even attracting over 500 new employees, whom it would probably normally have had a harder time bringing on board in a more competitive job market. Management chose the long term over the short term, and that is to be commended.

But in particular, the decline in growth in the world's largest market, the United States, is a bad sign. Competition in the U.S. (including Stripe, Braintree, Fiserv and PayPal) offers a similar service at a lower price, according to Adyen CEO Pieter van der Does, implying that Adyen will structurally lose either market share or part of its profit margin.

Adyen is named after the Surinamese word for "again," after the founders were previously successful with the payment company Bibit. Hopefully management will succeed in reviving a payment company again, in fact for a third time. Adyen, adyen!

After China, Nvidia also scores in the Arab world

Just last week I wrote about the billion-dollar order placed by the Chinese Internet giants with Nvidia; this week the Financial Times reported that the Saudi government, through the highly respected King Abdullah University of Science and Technology(Kaust), has purchased at least 3,000 Nvidia H100 chips, worth about $40,000 each, according to the Financial Times. In short, a $1.2 billion order.

The order size of the United Arab Emirates' order is not known exactly, but it is known that it involves "thousands" of Nvidia GPUs for its own open-source large language model, Falcon, developed at the state-owned Institute of Technological Innovation in Masdar City in Abu Dhabi. Together, these orders again mean several billion in revenue for Nvidia.

The question remains as to what margin Nvidia is making on the very expensive H100 chips, and a fascinating report appeared on Friday about this very subject , showing that Nvidia is making almost 1000% gross margin on the H100. It is notable that this article talks about a retail price per H100 of $25,000 to $30,000 while the FT calculates with the $40,000 common in the market.

In any case, this conclusion about Nvidia seems justified: 'with expectations of the AI accelerator market being worth around $150 billion by 2027, there's seemingly nothing else in the future but green.' It's simple, any AI player can't do without Nvidia's chips.

Bitcoin sensitive to something old-fashioned: rising interest rates

Bitcoin prices dropped suddenly late Thursday after reports of hundreds of millions in sales, causing carnage in the futures and spot markets.

Bitcoin fell 11%, but remains about 60% above where it started this year, beating other well-performing assets such as technology stocks. But a host of headwinds - from rising bond yields to regulatory pressure and economic weakness in China - are undermining the appeal of cryptocurrencies.

For example, XRP fell Friday for the fifth day, down 12%, as the U.S. Securities and Exchange Commission asked a federal judge for permission to appeal the ruling that Ripple Labs' XRP token is not subject to securities laws when sold to the general public. Despite the drop of as much as 20% this week, XRP is still posting nearly 53% gains this calendar year.

Notable links

I end this week with links to a few things that caught my eye, in no particular order.

Sotheby's sued by ape buyers

That's a headline no one could have imagined roughly three years ago. Buyers of Bored Ape NFTs are suing Sotheby's because, the argument goes, Sotheby's sale for $24 million of Bored Apes to FTX gave Bored Ape NFTs "an air of legitimacy."

Sotheby's allegedly said the buyer was a traditional collector rather than what later turned out to be a rogue crypto exchange, giving other buyers an overly rosy view of the demand for Bored Apes. Yet buyers of Bored Apes who now complain about the value resemble people who bought a ticket to the movie Titanic and complained afterwards that they already knew the ending.


It is not to be expected that Justin Bieber would join the complainers, but very little fun has been had by the singer with his Bored Ape #3001. Bieber reportedly paid $1.3 million in ETH, but the monkey is currently worth only $39,000. Madonna and Steph Curry' s monkeys aren't doing much better. Fortunately, they can handle it.

Arm leads the way to stock market for Instacart and others

The Financial Times reports that some of Silicon Valley's largest private tech companies are dusting off long-delayed plans to take their shares public, with the upcoming IPO of chip designer Arm set to be a new gauge of market sentiment. Arm is expected to announce the IPO tomorrow, Monday, Aug. 21.

Instacart, software company Databricks and Socure, an identity verification startup, are among the other companies considered as candidates for an IPO, according to FT. Instacart's valuation is expected to be only a quarter of the valuation in its last private financing in 2021, which was around $40 billion.

It was announced yesterday that Softbank bought 25% of Arm shares from Vision Fund 1 at a valuation of $64 billion, roughly in the expected price range of the IPO. It is odd that such a large sale should occur just before the IPO, but Reuters reports the reason: the deal eliminates a possible dump of Arm shares after the IPO, as Vision Fund planned to monetize its stake soon after the IPO, while SoftBank has indicated it will remain a long-term strategic investor.

$8 billion profit

Softbank is actually buying back the shares, because in 2017 it sold these 25% shares of Arm for $8 billion to Vision Fund, whose major shareholders, the sovereign wealth funds of Saudi Arabia and Abu Dhabi, at a valuation of $64 billion, thus book a profit of no less than 100%: 25% of the shares for $16 billion minus the purchase price of $8 billion is still a pleasant $8 billion profit. The selling parties are the same countries that just placed the billion-dollar order with Nvidia, no doubt backed by their recent success with technology investments.

However, no one expects these IPOs to lead to a renewed bull market, but it does indicate that at least the stock market climate is not deteriorating further. So far this year, only $14 billion has been raised in IPOs on U.S. stock exchanges, compared with $241 billion currently in the record year 2021 for IPOs, according to data compiled by Bloomberg.

Food bank became tourist attraction

When a food bank is touted as a city's third tourist attraction, AI is quickly pointed to as the culprit. But the very "human surveillance" that compiles algorithmic content on MSN had somehow overlooked a list of tourist hotspots in which the food bank ranked number three. It is unclear how many tourists actually showed up at the food bank for a tour.

'You Should Kill Your Startup'

Couples Morin and Lessin's podcast "More or Less" discusses the biggest taboo in the startup world: when to give up and close the company. It's an unpopular topic and therefore deserves applause. It's not a podcast they recorded thinking "this one's going to be a hit".

Can't understand the dialogues on Netflix? You're not the only one.

Many people stream programs and movies with the subtitles always on - and not because it's cool, reports the New York Times. 'In big movie productions, professional sound mixers calibrate sound levels for traditional theaters with speaker systems that can deliver a wide range of sound, from spoken words to loud gunshots. But when you stream that content through an app on a TV, smartphone or tablet, the audio is "down-mixed" or compressed to send the sound through small, relatively weak speakers.

The solution: buy external speakers. For viewers on laptops or tablets, this is still the best test of various headphones showing that the most expensive models do not always offer the best sound.

The Rimac Nevera can go from 0 to 400 kilometers per hour and back to standstill in 24 seconds. Why, no one knows, but it's fun.

Marques Brownlee drove the fastest electric car in the world

The fastest electric car in the world comes from Zagreb, Croatia and is called the Rimac Nevera. The Nevera broke a special world record - the world record for breaking world records in one day (23). YouTuber Marques Brownlee drove the Nevera and this is what happened when he applied full throttle from a standstill.

The day before yesterday it was announced that the Rimac Nevera broke the Tesla Model S Plaid Track Pack electric car lap record at the legendary Nürburgring by a whopping 20 seconds. The Nevera's performance is downright absurd. The motors generate 1.4 megawatts of power, or 1914 horsepower and a whopping 2360 Newton meters of torque. The Dutchman in me is now thinking: what a big caravan could fit behind that! The Nevera accelerates from 0 to 100 kilometers per hour in just 1.74 seconds and has a top speed of 412 km/h. Can't get any faster, you'd think....

Car on dinosaur blood faster after all

How can a "regular" hybrid car with almost 900 HP less, which houses not only an electric motor but also an old-fashioned internal combustion engine running on dinosaur blood, the Mercedes-AMG ONE, still be 25 seconds faster than the Rimac Nevera? The answer is simple: cornering.

Every electric car owner does what Brownlee did in the video, which is press the gas pedal on a straight road. But the Nordschleife has 73 corners and the Nevera weighs 2150 kilograms, while the Mercedes-AMG ONE weighs "only" 1695 kilograms. Combined with the particularly efficient downforce (downward aerodynamic pressure) of the AMG ONE, ironically a quality that Mercedes' Formula One car has lacked for two years, the Nevera is simply too slow in the corners. Although slow is a relative term in this segment.

As an expert on the subject, since I am, after all, a former apprentice editor at the Dutch car show The Holy Cow and producer of the TV report on the 1987 Open Dutch Car Washing Championship, I recommend first watching the video of the Rimac Nevera on the Nordschleife and then seeing how the Mercedes-AMG ONE set the lap record.

AI crypto technology

Apple scores with Messi

This week there was no news that stood out everywhere, so I made a top 10 of things that caught my eye. The great little magician from Argentina is, of course, number one.

If Lionel Messi worked from home.
Image: Midjourney

1. Apple scores with Messi

No one will have failed to notice that Lionel Messi has been playing for Inter Miami, the club owned by Posh Spice's husband, for a few weeks now. But there is another owner, Jorge Mas, and he was retweeted (or rex-ed, what's that actually called since Twitter was renamed X?) by Apple CEO Tim Cook this week. The occasion was the doubling of subscribers to MLS League Pass, the pay subscription Apple offers worldwide to people who want to watch the U.S. soccer league.

Neither Apple nor the MLS disclose how many subscribers the service has, although as recently as last month it was suggested that the number was close to 1 million, before Messi's arrival. In any case, Apple is clearly pleased with Messi's impact on MLS Season Pass, because that's not how often Tim Cook retweets/rex-ed messages from people outside Apple.

You only have to buy Messi to be retweeted by Tim Cook

CNET analyzed Apple's strategy on streaming sports and is one of the first media outlets that seems to understand that the subscription to the MLS is an additional upsell; MLS matches and thus Messi's matches are not free for Apple TV+ subscribers. A monthly subscription to the MLS costs $12.99 or $49 for the rest of the season. It is extraordinary to read back now that as recently as April, there was laughter about the deal between Apple and the MLS.

Of course, it is odd that Messi is the only player in a team sport to benefit from the growth of subscribers to Apple TV+'s MLS subscription. The question is whether this will be replicated in other sports. Another question, of course, is how much Messi earns from each MLS subscriber and for how long; is it part of a subscriber's lifetime value or a flat fee per subscription?

There is plenty of speculation whether the Saudi league, which currently attracts any player who loves money, sand and shopping malls, will follow the same strategy as the MLS. That, of course, makes no sense: the MLS and its franchisees need money. The Saudis want to buy respect, charisma and reach and are even more likely to pay for worldwide broadcasts of their matches, rather than charge money for them.

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2. In Silicon Valley, everyone became Merlin the magician for a moment

'Forget AI. For a while, Silicon Valley was obsessed with floating bricks.' So headlined the Washington Post in a fine article about the craziness in recent weeks surrounding LK-99, the material hoped to be the room-temperature semiconductor that would change the entire world.

The article rightly states that the technology world is diligently looking for fundamental breakthroughs, such as AI, after a decade of few spectacular new applications became apparent. Hopefully, investment in companies working on carbon reduction and decarbonization will continue to increase.

Unfortunately, halfway through, the journalist briefly hits the mark: 'Cryptocurrencies and blockchain technology have been through several cycles of hype, but have yet to fundamentally change any sector except crime and money laundering. Technology designed to combat climate change, such as carbon capture and storage, has made no major progress for years.'

There is zero evidence that crime and money laundering have changed because of blockchain technology and cryptocurrencies. Zero. On the contrary: every transaction, while anonymous, is always visible on the blockchain, so the entire trail of transactions from a wallet is forever traceable to anyone on the Internet. Try that with the old-fashioned bank accounts through tax havens (Panama Papers, remember) or with the piles of cash of Pablo Escobar and consorts.

3. California is paradise and testing ground for self-driving cars

Following a state regulatory agency ruling, San Francisco will have robot cars on its streets 24/7. Good analysis explaining that this is a pivotal moment for the auto industry. Again from the Washington Post, which has excellent coverage of technology when you would rather expect that newspaper to focus on politics.

Once again, someone completely misses the point in this article, this time a mayor. " What will happen to our workforce if AI and driverless vehicles both come online at the same time? " she says. A bigger problem, of course, is that virtually no right-thinking person wants to be in politics by 2023, so we'll be stuck with mayors who talk about self-driving cars like retarded people talked about stagecoaches in 1910.

A populist politician's phony question has been the same for hundreds of years when confronted with innovations: 'But what will happen to the employment of the (choose your own preferred profession that no longer exists) chimney sweep/miner/video store worker?'

The answer is simple and has been the same for centuries: new occupations are emerging but hopefully advancing mechanization will eliminate heavy physical work and the work week can be further shortened to more time for fun things or self-development. There are people who got time to write a newsletter that way. No one benefits from further spreading the Chinese 9-9-6 culture: 9 to 9, 6 days a week.

The hope with self-driving cars, of course, is not that everyone will have their own self-driving car, but that transportation will be on demand; it is madness that the average car sits idle 95% of the time. Fewer cars means less CO2 emissions for car production and oh my goodness, this means unemployment for all the craftsmen in factories who currently screw antennas into the roofs of cars to receive FM radio.

4. Billionaires engaged in a race for and against AI

While technology experts are sounding the alarm about the pace at which artificial intelligence is evolving, philanthropists - including established foundations and technology billionaires - have responded with an increase in donations.

In the camp of the faithful include former Google top executive Eric Schmidt and founder of LinkedIn Reid Hoffman. In the other corner of the ring, for example, is Pierre Omidyar, founder of eBay, along with the Ford, MacArthur and Rockefeller Foundations. For those with doubts about this topic - and those doubts are very understandable and also justified - I again recommend this piece by Marc Andreessen. But AI and crypto are not scary, just as it was not scary that humans learned to read

The first half of this excellent podcast from colleagues of the aforementioned Marc Andreessen is about how AI could benefit from crypto, and the second half about how crypto could benefit from AI - but the common thread is the tension between centralization vs. decentralization.

This again touches on the point about whether cash or crypto is worse for crime: the arguments opponents use always end up with a centralized system, without actually analyzing the problem.

The podcast also discusses where the intersection of crypto and AI can bring about things that are not possible by either alone. Together, the fields of AI and crypto have major implications for how we live our lives every day; so this episode is for anyone curious, or already building in this sector.

5. PayPal with its own stablecoin

PayPal came out with its own crypto currency that is pegged in value to the dollar. From a financial standpoint, using stablecoins is not much different from using a gift card: you can use your dollars to buy stablecoins and then use those stablecoins to buy various cryptocurrencies or make other online purchases.

Downright funny was to see the reactions. Some think the PayPal stablecoin is more important than a Bitcoin ETF arguing that PayPal is uniquely positioned to solve the huge opportunity for fiat onboarding - they have the banking relationships, regulatory framework and infrastructure to sign up millions of dollars to millions of wallets. even calls PayPal the crypto leader for the next decade because it links 400 million customers to crypto. The question, of course, is how many of those 400 million ever use crypto. Those 400 million customers also have access to stamps, and how often does anyone moisten the back of such a sticky note?

PayPal's stablecoin is totally unimportant, says Bank of America but that name alone does not have the aura of total neutrality on this topic. He is often quoted in this newsletter and once again Michael Casey of Coindesk has the most thorough analysis: why the timing feels right.

I expect there will be great resistance from Washington to the PayPal stablecoin, because anything pegged to the dollar is, in the eyes of the average bureaucrat, not owned by the citizen, but by the state.

6. Worldcoin under increasing pressure

Speaking of citizen ownership, whose is identity? I've written about Worldcoin before because I think the idea of an anonymized affirmation of a human identity is important and fully endorsed. There is so much unnecessary fraud and deception on the Internet that an anonymized digital identity and reputation can be crucial. Suppose you buy something on eBay from someone who has done few transactions there but has an immaculate reputation on Etsy, Uber or on Airbnb, for example; then confirmation of such a good "portable" reputation would be extremely valuable for buyer and seller.

What Worldcoin is doing now is linking a human identity to an iris scan in exchange for obtaining free Worldcoin tokens. There is no useful application whatsoever as I describe above. It leads to harrowing scenes worldwide, such as in Kenya: 'Some people in line told local media they had traveled miles after friends said "free money" was being handed out. They admitted they didn't know why they had to scan their irises and where that information would go, but they just wanted the money.'

Surely someone with the intelligence of Sam Altman, the former top executive of business factory Y Combinator and founder of Open AI, should be able to couple that intelligence with the common sense to not want to do this with Worldcoin?

7. Nvidia gets $5 billion in orders from China

In June, I wrote that Nvidia's Keith Strier told the ATX Summit in Singapore that Nvidia has more orders than it can deliver, and that companies and even countries have been placing orders years in advance to ensure longer-term deliveries. Strier wrote about it himself:

'This is about compute, not just chips. AI requires a highly specialized compute infrastructure, a combination of hardware and software. Most importantly, the supply is finite. [...] NVIDIA GPUs (the chips, MF) are more than gold, they are the "rare earth elements" of AI. That is why the world's most advanced AI companies are raising capital to secure the supply of accelerated computing. Whether an enterprise or even a country, it is important to plan and budget for the computing power that will be needed to achieve and sustain leadership in AI.'

Strier was referring to this order, among others, as Baidu, Tencent, Alibaba and ByteDance (owner of TikTok and Lemon8) ordered for $5 billion, including $1 billion this year and $4 billion in 2024. There are countries and companies already trying to place orders with Nvidia for 2025 through 2028.

The Chinese companies are playing catch-up and are pulling out all the stops to continue their "old-fashioned" growth. ByteDance is trying to link TikTok with Lemon8 in an effort to boost usage of that app, and Alibaba, which along with Tencent Holdings and Baidu is responsible for the birth of China's Internet industry, is trying to persuade investors to support the policy of splitting the company into no less than six parts.

8. WeWork doesn't work, Zoom just does

Interest in WeWork has always completely passed me by; it always seemed like overpriced office space with moderately comfortable furniture. The absurd valuation to value a real estate marquee as a technology company came to a screeching halt around the failed IPO, and now the board is reporting, in part due to increased interest rates, that a bankruptcy of WeWork is not ruled out.

Meanwhile, Zoom is asking staff who live within 80 kilometers of the office to come to the office at least two days a week. A reasoned request, interpreted by the media as the end of working from home. It seems like some journalists don't speak to people; I hardly know anyone who works in an organization where working from home is possible, where the pre-pandemic work culture has been restored. It won't be every day, but working from home has become part of working.

9. The investor is on vacation

The investor is sitting on the beach.

Despite the billion-dollar order from China, Nvidia was the week's decliner, but that's not surprising after all the gains this year so far. Otherwise, it was doom and gloom for tech companies, so I thought it would be nice to look at what's happening at companies in the pre-IPO stage. This article on crowdfunding in Europe illustrates the increased interest in climate tech, in technology that combats climate change.

With the stock market climate continuing to allow few major IPOs in the coming months, it is especially interesting to follow which companies are being acquired rather than going public. With every company where a buyer knocks on the door, mild panic ensues. Therefore, this is an excellent article, explaining the steps to follow the moment a buyer comes forward.

10. A Steph Curry summer

Speaking of vacations; the summer hit of 2023 is obviously Roxy with "Anne-Fleur Vacation," but the one with the most extraordinary summer is undeniably basketball player Steph Curry. First he hit a hole in one at a charity tournament and last week he was on stage at his own Chase Center in San Francisco with the band Paramore. And the conclusion was: what a basketball this man can play.

Wishing all readers another Steph Curry summer, see you next week!

crypto technology

The new Internet hype is ... LK-99, a superconducting material?

When the five of the world's six largest companies publish their quarterly results, it is a major economic indicator and could be news. Unfortunately, instead of solid analysis, even the Financial Times and Washington Post preferred to publish uninspired opinion pieces about how boring the CEOs of Google, Microsoft and Apple are and how ostentatious and silly it is that Apple CEO Tim Cook always makes the v-sign in photos. Who cares, as long as he is not in every photo with his right arm extended?

Therefore, this week's news was the possible breakthrough of a superconducting material, LK-99. On Twitter, sorry, on X, the people who were experts on AI and mini-submarines earlier this year have been true alchemists since this week. Everyone was suddenly Merlin the magician.

LK-99 was the topic of conversation in the technology world last week
Image created with Midjourney

What exactly happened? Three Koreans published a paper on July 22 entitled "The first room-temperature  ambient-pressure superconductor." If their research findings are confirmed, it would at a minimum revolutionize the design of computers and consumer electronics, think iPhones with the computing power of a quantum computer, but space technology, medical technology and the way factories are designed in industry would also change forever.

After a year in which Meta, with $40 billion in the bank and 80,000 employees, underscored the tech world's idea vacuum with the launch of the app Threads, a bland spinoff of Twitter, many believers in the cult of technology went completely berserk over LK-99. As Wired described it:

'A return to a time of groundbreaking discoveries - the light bulb, the Manhattan Project, the Internet - where the impact of scientific discovery is tangible within the span of a human's earthly presence. "We're back," as one X-user put it.


That superconductor at room temperature should theoretically be possible, it has been debated and written about for decades, but the world has never seen it happen. In short, it would be a discovery on the level of time travel, interplanetary life and a movie in which Tom Cruise looks older than 35.

The UFOs of science?

Unfortunately, false claims are so common in this area of research that physicists joke about USOs-"unidentified superconducting objects"-a pun on UFOs. Nature came up with a cold shower:

'Advances in superconductivity are often touted for their potential practical impact on technologies such as computer chips and magnet trains, but Inna Vishik of the University of California at Davis points out that this excitement could be misplaced. 'Historically, advances in superconductivity have had enormous benefits for basic science, but little for everyday applications. There is no guarantee that a material that is superconducting at room temperature will be practically useful, Vishik says.

At the moment, LK-99 seems like a mirage. Still, even I can't help but watch videos like this one tracking how last week scientists worldwide are trying to replicate the Korean experiment, although I understand as little about producing LK-99 as I do about making the cruffin, the miraculous combination of a croissant and a muffin.

Cleantech is hot

If it turns out that the gentlemen behind LK-99 have actually made a scientific breakthrough, then (apart from a Nobel Prize) there is at least plenty of investor money waiting for them:

source: Crunchbase

Many of the busiest investors in cleantech also became more active in 2023, according to Crunchbase. This is notable given that overall venture capital funding has declined, indicating that these industry-focused investors see many opportunities, particularly in "climate tech," technology that combats climate change.

KPMG releases bold report on Bitcoin and ESG

KPMG and bold, so far you could only come across those two words in articles about their go-to ski trips. Still, KPMG deserves kudos for publishing research on the ESG aspects of Bitcoin, because it can really only get criticism. On the one hand, from crypto fans who will sigh that KPMG wants to be modern and hitch a ride on the cryptohype; on the other, from many traditional KPMG clients who will wonder "what's wrong with KPMG, why are they writing about Bitcoin?

The most striking passage concerns the part about the ecological aspect: ' Bitcoin miners can be a useful ally in the transition to more renewable energy sources and reduce emissions, despite significant energy consumption.' Surely you rarely hear that, Decrypt also found. The wait is on for 'certified green-mined' Bitcoins. Highly recommended: the report is only 11 pages, provides an excellent overview of the state of Bitcoin and ESG, and can be downloaded here.

Spotlight 9: Apple, Amazon, Meta and Alphabet all rated differently

Winner of the week was the company with the bluntest axe: Amazon

I wanted to do a long discourse on the difference in how analysts and investors rate companies, versus the reality of market position, competitive advantage and structural earnings potential. In summary, my argument boils down to the fact that there are so many pure speculators in the stock market influencing the market, that the short-term share price is barely related to long-term company value. It works better if I take a few concrete examples. First, Uber: the company made a profit for the first time in its existence, but its share price fell because revenue was lower than expected. Maybe it's just a smaller, but more profitable, company than analysts expected. A few other examples following last week's release of quarterly earnings.

Meta is not mega

Take Meta, the maker behind Whatsapp, Instagram and Facebook. Collapsed completely last year when revenue fell apparently unexpectedly for investors. This led to doom-mongering that the company had peaked and would decline long term, enough to justify the stock's extreme discount relative to the rest of the market. We are eight months on and investors seem to be overreacting in the opposite direction, pushing the stock up in response to last month's earnings improvement, in which revenues rose and operating expenses fell due to the company's drive for efficiency (read: mass layoffs), leading to an increase in earnings. Is that vision?

Amazon scores at least in the short term

Another good example is Amazon: CEO Andy Jassy gets compliments for cutting costs while increasing sales. Under his reign, as many as 27,000 jobs were eliminated, and few things make investors as happy, as other people losing their jobs. The results caused shares to rise 8.3% at the end of the day Friday to $139.57, the best single-day performance since November and the highest price for Amazon shares in nearly a year.

An interjection stated: "Amazon's cloud business, which normally provides the bulk of the company's operating profit, exceeded expectations and showed signs of stabilizing. And herein lies my objection to this kind of short-term jubilation. Because I can still remember the years when analysts complained about all the investment that founder and former CEO Jeff Bezos made in all of Amazon's cloud services. 'Not a core business for an e-commerce company,' the analysts shouted in chorus.

The reality is that AWS is not only Amazon's biggest profit maker, but also provides the e-commerce branch with an unbridgeable competitive advantage over everyone else without such a cloud platform to handle all transactions. You read nothing about that, it's mostly about the $12 billion Jeff Bezos got richer on Friday. There is virtually no attention to the very way Bezos became successful: by consistently putting long-term interests ahead of short-term profits. (For fans of serious analysis of cloud services, this is an outstanding multi-page article comparing the cloud services of Amazon, Microsoft and Alphabet).

Does profit count above growth at Apple?

It is always nice to see what strategy Warren Buffett, the oracle from Omaha, is using. Buffett has invested as much as $151 billion in Apple, which is still less than 6% of the company by the way. He is looking over years rather than months and weeks, and that seems to have worked out nicely for the man. Apple posted declining sales but higher profits for the third quarter in a row, which resulted in 2% stock price decline.

I never make predictions, but on this one I will make an exception, looking purely at Apple's products: forget the Apple Vision Pro, which is a product with a very long horizon, but look at the Mac owners switching to laptops with the new Apple chips, the expectations about the new iPhone 15, the services (iCloud, Apple TV etc) and the wearables, especially the Apple watches, and I think Apple will post significantly higher profits in the first and second quarter in any case, plus sales will start to rise again. I'm writing it down in the calendar for Apple's quarterly earnings in 2024. Curious to see how wrong I will be.

AI crypto technology

Worldcoin proves: people give away their eyeballs for a few coins

The technology industry is increasingly suffering from excessive attention to tech founders. Elon Musk continues to dominate the spotlight, whether he is reviving Twitter or tearing it down, depending on whom you ask. Still, the most significant news of the past week was the unveiling of Worldcoin. This project drew attention because of its shiny "orb," which scans the iris of new users, and because of the involvement of co-founder Sam Altman, also the CEO of OpenAI.

It was the week of Barbie and Oppenheimer, or Barbenheimer, and Worldcoin's Orb. Photo: created with Midjourney

Two months ago I wrote about Worldcoin and the company behind it called Tools for Humanity, which then presented itself on its 1-page website with the slogan "a technology company committed to a more just economic system" and raised as much as $115 million for the Worldcoin project.

The goal, the founders say, is to create a global identification system that will help reliably distinguish between humans and AI, in preparation for when intelligence is no longer a reliable indicator of being human. At Worldcoin, verification of humanity is ensured through the use of an Orb, a sphere: a biometric iris scanner.

Shiny happy orb people. Photo: Worldcoin

But according to Alex Blania, CEO and co-founder of Tools for Humanity and Worldcoin project leader, there is a bigger purpose than just identification as a human being:

'We seek universal access to the global economy, regardless of country or background, and accelerate the transition to an economic future where everyone on earth is welcome and benefits'

The definition of a pyramid scheme?

Who is not moved to tears by this noble endeavor? Who is against being welcome on earth? Coindesk visited Worldcoin's headquarters in Berlin and from this brilliant article, "Inside the Orb," the impression emerges that Altman and Blania possess a unique combination of talent, otherworldliness and opportunism.

So they talk about Worldcoin as a crucial step toward a Universal Basic Income (UBI) for the entire world population, because these men think big. 

But they are particularly vague when the question is asked who should then pay for that universal basic income for our planet. Altman says of this:

"The hope is that when people want to buy this token, because they believe this is the future and there will be an influx into this economy. New token buyers is how it gets paid for, eventually."

Sam Altman, co-founder Worldcoin

Aha, so the influx of new buyers funds the system. That rings a bell, and I asked ChatGPT, the product of Sam Altman's other company, OpenAI, what the definition of a pyramid scheme is. Here it is:

'A pyramid scheme is a business model in which members are recruited through a promise of payments or services for enrolling others in the system, rather than providing investments or selling products. If recruiting multiplies, recruiting soon becomes impossible and most members cannot benefit; pyramid systems are therefore unsustainable and often illegal.'

I'm not saying Worldcoin is a pyramid scheme. Only that ChatGPT says it looks a lot like one.

Free coins for your iris

A cult of personality is emerging around Sam Altman reminiscent of the golden years of Steve Jobs and Elon Musk. Entire articles are devoted tothe 400(!) companies in which Altman has invested.

Partly for this reason, people lined up in several places around the world last week to have their eyes scanned by Worldcoin's orb. The media cheerfully helped make the hype as big as possible, with service journalism like this article in India, "Sam Altman's Worldcoin is here: how to get your free coin.

Even the tweet in which Altman jubilates that every eight seconds someone has their iris scanned by Worldcoin was included in the article.

Because the system works stunningly simple: download the free Worldcoin app, scan your eyes at an orb, get a World ID and your Worldcoin app instantly receives 25 free Worldcoins; except in America, as Gizmodo experienced. But it's customer onboarding with a simplism and efficiency that would be the envy of a schoolyard drug dealer.

Critics have a point

Twitter would not be Twitter (oh no, it is also no longer Twitter but is now called X, but more on that later), if it were not for a number of astute critics who have analyzed Worldcoin well, such as here and here.

Ethereum founder and widely acclaimed ethicist within the blockchain industry Vitalik Buterin immediately warned of the possible, unintended, bad consequences of Worldcoin's approach:

'Risks include inevitable privacy breaches, further erosion of people's ability to surf the Internet anonymously, coercion by authoritarian governments and the potential impossibility of being simultaneously secure and decentralized.'

Vitalik Buterin, co-founder Ethereum

For now, let's believe Blania and Altman's promise that iris data will be immediately deleted from the orb and not stored. But how many fake orbs will be used by criminals to defraud consumers of their iris scan?  

In any case, the question is justified whether a centrally run company should undertake this kind of initiative. World ID is effectively a universal passport, why should it be developed by a commercial company?

Remember, for all the fancy promises and goals, this is a commercial organization and the founders and backers own 25% of all Worldcoin. That's a higher tax rate than VAT. Even stranger: from Asia, I cannot see the pages in the white paper that deal with these tokenomics at all, because they are shielded. A problem more people faced. Why are they shielding information from the same people who are allowed to have their eyes scanned?

Decrypt summed up Buterin's objections well, although the schematic objection Buterin shared in his blog post is also illuminating:

Vitalik Buterin's schematic representation of the problem

'Proof of Personhood' is relevant, but not in this way

Cybercrime will only increase in the age of AI, so there is a need for proof that you are dealing with a human being and not a computer program. Just not in the way Worldcoin is tackling the problem. Michael Casey of Coindesk puts it this way:

'The risk is not with the technology per se - we have known for years that AI is capable of destroying us. It is that if we concentrate control of these technologies with a handful of overly powerful companies motivated to use them as proprietary "black box" systems for profit, they will quickly move into dangerous, humanity-harming territory, just as the Web2 platforms did.

Still, there is at least one positive aspect that can emerge from the Worldcoin project. It draws attention to the need for some sort of proof of humanity, which may give impetus to the many interesting projects that seek to give people more control over their identity in the Web3/AI era.

The answer to proving and elevating authentic humanity could lie in capturing the "social graph" of our online connections, relationships, interactions and authorized credentials through decentralized identity models (DID) or initiatives such as the decentralized social networking protocol (DSNP) that is part of Project Liberty.

Or it could still lie in a biometric solution like what Worldcoin is working on, but hopefully with a more decentralized, less corporate structure. What is clear is that we need to do something.

Portable identity and reputation

Casey's line of thinking leads to a system of identification and reputation, where you can use services anonymously, but share your identity and reputation if you wish. My Uber score, for example, is 4.96, but if I want to book a room through Airbnb, I do so as a completely unknown individual.

This is why a landlord is the first to ask for a passport copy, while it would also be valuable for Airbnb and the landlord to know that at least as a passenger in an Uber, I did not demolish or vomit under the cab. Such a system where you as a user carry your online reputation with you and decide for yourself to share at a time you deem appropriate would be extremely useful in the digital economy.

Universal basic income for the world's population is so far-reaching that it should be introduced through normal democratic processes. Let's not leave that kind of major social issue to a few men from Berlin; historically that has not proven to be a happy combination.

Twitter becomes X

It can't have escaped anyone's notice, Elon Musk is turning Twitter into X. What a romantic he is, isn't he, to name his company after his youngest sonHe explains that in the coming months "your entire financial world can be orchestrated" from X. Because Musk wants to make Twitter a "super-app," an all-encompassing app that merges information, communication and transactions. Similar to China's highly successful WeChat. Musk wants to get rid of the hated ad model as soon as possible.

Musk will look eagerly at South Asian Grab and GoJek, which will allow users to not only order cabs (on cars or scooters), but also pay their bills and even hire personal shoppers to go to the store of your choice to do your shopping. Of course, with a margin for Grab and GoJek on each transaction.

Every second Musk spends on the overrated Twitter remains a waste of time and a waste of his talent. I still hope one day Musk gets angry about Alzheimer's, cancer and the mental health of humanity and uses his undeniable talents to solve those problems, for example with a biotech company. Musk has mastered development of software, hardware and mechanical innovations, how hard would biotech be for him? 

The informative podcast More or Less, from the couples Morin and Lessin, discussed Musk's plans for Twitter in detail this week. It's the only podcast I know of, by the way, in which two couples discuss a specific industry, noting that ex-Wall Street Journal reporter Jessica Lessin is the astute founder of the online trade magazine The Information and Dave Morin is an investor who previously started Path, the most beautiful app of a failed social network I've ever used.

Notable links this week

Bill Gates has a podcast

Speaking of notable podcasts: Bill Gates has started a podcast called Unconfuse Me, and the first edition featured actor Seth Rogen and his wife Lauren as guests. Apparently that's a trend, to appear as a married couple on a podcast. I can hear you thinking, "Bill Gates has a podcast with Seth Rogen, doesn't that sound like Kermit the Frog with Scooby Doo as a guest? It certainly sounds that way, but it turned into an unexpectedly candid conversation about Alzheimer's, home care and recreational drug use, among other topics. Playback at double speed is not recommended.

Barbenheimer does nearly $1.2 billion in a week, Oppenheimer breaks IMAX projectors

The box office success of Barbie and Oppenheimer is unexpectedly huge: Barbie is expected to end the weekend with sales of $750 million and Oppenheimer is approaching $400 million. Even more strikingly, I found that the 70 millimeter version of Oppenheimer in the IMAX is so complex that the film is sometimes out of sync with the sound and even literally breaks. So much for all the doomsday scenarios that "old-fashioned" cinemas would lose out in the streaming era. Good feature films are drawing more audiences to theaters than ever.

Barbenheimer, but made by AI

If Barbie and Oppenheimer were squeezed into one movie, this would be the trailer. I say it too often about AI applications, but it's incredible that this was created entirely by AI: image, sound, video. Above all, the speed at which these kinds of applications are developing is unparalleled. The last time I was so stunned by a technology on the Internet was over 25 years ago when George Michael presented video in a Web browser.

Spotlight 9: Party Q2 at Google and Facebook

Yes, I know they are actually called Alphabet and Meta these days, but admit it, who reads on when those names are in the headline? It was the week when the second quarter results were released so there was a lot of movement in the stock markets. This web page contains a short, handy overview of the results of the major tech companies.

Meta and Alphabet rise, Microsoft falls. Investing in the stock market thus seems like a sprint, not a marathon.

The short-sightedness in the stock markets was demonstrated for the umpteenth time this week. Alphabet and Meta made sharp price jumps, due to higher-than-expected sales while partly driven by currency differences. Granted, Alphabet made 28% more sales on cloud services and that will only increase in the AI era.

However, Meta lost a whopping $21 billion in 18 months on investments in Reality Labs, Meta's business unit that is doing something with all the buzzwords of the last two years, including Web3, Metaverse, AR, VR and anything with difficult glasses. Result: 10% share price gain. How is it possible?

Microsoft, which has taken a tremendously strong position in the field of AI by incorporating OpenAI into the Bing search engine *and* invested as much as $10 billion in OpenAI, a guaranteed hit, was not understood by investors because the investments in AI "do not lead to higher sales right away. Result: 2% decline.

The pink cloud is a schematic representation of my brain as I look at the stock market and see Meta rising, while Microsoft is falling. Photo: created with Midjourney

CNBC doesn't get it either and explains it some more:

'The growth in AI has the potential to drive Microsoft's two largest businesses: the public cloud Azure and the more traditional and market-leading productivity software Office.'


That is exactly how it is, but investors apparently had a horizon this week that ended with the Friday afternoon drinks.

Until next week, happy Sunday!

AI crypto technology

The journalist who became a billionaire as an investor, quits

This week a couple of human interest stories stood out. The richest Welshman, Sir Michael Moritz, who as a journalist at Time was once blacklisted by Steve Jobs, left Sequoia Capital after nearly 40 years. And while CEO Sam Altman traveled the earth meeting world leaders, OpenAI turned out to be led by Mira Murati, a virtually unknown 35-year-old Albanian woman.

Image: Midjourney. Prompt: man with gray hair walks away, San Francisco skyline in background.

The little kingdom

The first time I came across the name Michael Moritz was in 1992 when Frans Straver, with whom I would later found Planet Internet, and I were graduating together from the University of Amsterdam on the sexy subject of "success and failure factors of interactive media in the consumer market. At that time, only mustachioed accountants had computers and only the bigger drug dealers used cell phones.

If you were looking for a serious book about the computer industry, there was nowhere to turn but the American Book Center in Amsterdam. There we found the fantastic book, which by then was almost a decade old, by Moritz, entitled "The Little Kingdom," about how Steve Jobs developed the Mac at Apple in the early 1980s.

"So much of what has happened is connected to Apple and the story of this extraordinary company that I find that Apple's breadcrumbs have been strewn across my life's path," said Moritz, who regrets that he never settled his spat with Jobs before his death. The book planted the seed in Frans and me that it was possible for two young guys to set up a successful company in the technology world, something we had never considered until reading Moritz's book.

Of course, when I moved to America in the late 1990s for my next startup after Planet Internet, Moritz was the first investor on whose door I knocked. Tried to knock on the door actually, because I never got beyond the inbox of the intern of the assistant of the junior associate at Sequoia who kindly declined me. Later I understood that Sequoia, and Moritz in particular, received thousands of business plans a year during that dotcom boom but made only a few dozen investments.

From Airbnb to Zoom

Michael Moritz was born in Wales to Jewish parents who had fled the rise of the Nazis in Germany. He was stationed in San Francisco for many years as a Time journalist and wrote widely about the world of technology. Don Valentine, the founder of Sequoia and the man who invested in Apple, Atari, Cisco, Oracle and Electronic Arts, among others, saw something in the British journalist and offered him the chance to work as an investor.

Over the next 38 years Moritz worked for Sequoia, the investment company strung together successes. Under his reign, Sequoia invested in virtually every company whose apps we have on our phones or computers today, or which we use for work directly or indirectly, including Google, Dropbox, Linkedin, Yahoo, Airbnb, PayPal, Instagram, YouTube, Whatsapp, Nvidia, Zoom and OpenAI.

In one of his rare interviews, Moritz said:

"One of the things that is undervalued in our industry is how much you can learn from someone decades younger than you. Those are the people who might go on to do unusual things; they understand something very well, are independent thinkers and obviously smart and gifted."

Early this century, Moritz also initiated Sequoia's lucrative expansion into China. He was chairman of Sequoia from the mid-1990s until 2012, when he relinquished day-to-day management of the company due to "a rare medical condition that is treatable but incurable." Still, he remained a partner of Sequoia until his announced departure this week.

In recent years, Moritz apparently focused more on e-commerce and led Sequoia's investments in Stripe (estimated valuation $50 billion), Klarna ($6.7 billion), Instacart ($12 billion) and Getir ($6.5 billion). He will gradually transfer positions on the supervisory boards of those companies.

A hefty crank start

Forbes estimates Moritz's wealth at $5.2 billion, thanks largely to his holdings in Internet companies. Moritz and his wife donate most of it to charities, mainly through their own foundation, Crankstart. They are in quite a hurry to do so, judging by the report on the website:

"In 2022, we awarded $200 million in grants, 60 percent of which were to nonprofit organizations in the San Francisco Bay Area. The grants ranged in size from $1,000 to $18,500,000 and went to 363 organizations."

Other eye-catching donations included $20 million to the American civil rights movement ACLU, $50 million to his alma mater the University of Oxford, and no less than £75 million to the same university to spend on scholarships for children from low-income families. Moritz had not lost sight of the fact that he himself had once enjoyed a scholarship.

What I personally found remarkable was that Moritz is funding the famed literary Booker Prize through Crankstart for at least five years, after the previous sponsor pulled out. But unlike that sponsor, Moritz did not want to attach any name recognition to his donation because he and his wife believe that the Booker Prize is a prestigious award that should be associated with the name of the prize, not the name of the sponsor.

The similarities between Steve Jobs and Sir Alex Ferguson

In 2009, Moritz released a revised version of his book on Apple entitled "The Return to the Little Kingdom: Steve Jobs, the Creation of Apple and How It Changed the World. The book remains highly recommended for anyone interested in innovation and creativity.

To my surprise, Moritz, still a die-hard Manchester United fan despite having lived in San Francisco for nearly half a century, wrote a book on leadership with legendary manager Sir Alex Ferguson in 2015.

In an interview about that book, Moritz shared some observations about the similarities between Steve Jobs and Sir Alex:

"When it comes to leadership, I think there are similarities. In their own way, they are both perfectionists. With Sir Alex, I was looking for a way to explain what I think are the basic principles of good leadership. I don't think they are very different between Silicon Valley and the soccer field, and they are universally applicable. The problem with the principles of leadership is that they are pretty easy to list, but very difficult to apply.

Sir Alex, Steve, they both had the energy to consistently push, urge, persuade others toward a goal that they themselves envisioned. I think the big difference between management and leadership is that the leader can persuade people to do the impossible."

Time for a new book?

Things get even more interesting when Moritz shares his own investment criteria. "When I want to invest I start with a market opportunity, because if a company starts in a market that looks unchanging and doesn't look like it's going to grow, it's not going to be a great company. Furthermore, we are looking for people who are completely obsessed. People who love nothing more than to work on the product or service they have come up with."

In the Netherlands, many investors employ the archaic cliché "it's about the guy, not the tent"; but Moritz cites as the first criterion precisely a large market, prone to change. That's an interesting angle. A top entrepreneur in a small market is not so interesting in this view.

And that begs the question of whether Moritz, time and health permitting, would like to write a book for the first time sharing his own views on entrepreneurship, innovation and leadership, rather than writing about people like Jobs and Ferguson.

My favorite book for tech entrepreneurs is "The Hard Thing About Hard Things: Building a business when there are no easy answers' by former entrepreneur Ben Horowitz, now best known as co-founder of venture capital firm Andreessen Horowitz.

Horowitz is an exception, because just as many former top athletes turn out to be bad coaches, few successful entrepreneurs manage to develop into good investors. Let me stick to myself: when people ask me for advice on investing, I always reply that although I worked as an investor for many years, I never said I was good at it. That's why I became an entrepreneur again.

Moritz, now knighted Sir Michael, has no entrepreneurial experience whatsoever. Apparently, that was no impediment to achieving extreme success as an investor. It is high time someone with his amazing track record, huge network and sharp pen, shared his knowledge and experience in the form of a new book.

The driving force behind OpenAI is a 35-year-old Albanian woman

Founder and CEO of OpenAI Sam Altman visited as many as 22 countries in recent weeks including Israel, Jordan, Qatar, the United Arab Emirates, India, South Korea, Japan, Singapore, Indonesia and Australia. Altman met with students, venture capitalists and leaders including Indian Prime Minister Modi, South Korean President Yoon Suk Yeol and Israeli President Herzog. Earlier in his trip, Altman met with British Prime Minister Sunak, German Chancellor Scholz and French President Macron. (Remember, with dark brown shoes?)

The subject of all the conversations was the question: can AI be trusted, or are government measures needed? So it was instant news when Reuters saw Friday on the LinkedIn page of OpenAI's "Trust & Safety Leader" Dave Willner that he had left quietly after a year and a half. Willner talked about family reasons, which of course is possible.

But I also note that according to his LinkedIn profile, with 18 months of employment, Willner has already secured a sizable number of options in OpenAI, which at the estimated company valuation of $27 to $29 billion for OpenAI are worth enough that the Willner family's life would not be significantly improved if he stayed with the company for another year or so. After all, the difference in quality of life between earning 10,000 Euros or 20,000 Euros is far greater, than the difference between 10 million or 20 million in the bank.

Until a successor is found, Willner's team (apparently there is a Trust & Safety team at OpenAI) is managed by the CTO, Mira Murati. Who is this woman, who is still completely unknown on ChatGPT itself?

Mira Murati? Doesn't ring a bell, ChatGPT says of its own boss.

CEO Magazine came out with a portrait of Mira Murati last week. Although, portrait; from the lack of a posed photo and the absence of literal quotes from Murati, it may be concluded that she had not collaborated on the article.

Although Murati is unknown on her own ChatGPT, the competitor, Google Bard, does have some information about her:

"Mira Murati is the Chief Technology Officer of OpenAI. She is a brilliant engineer who has worked on several AI projects, including ChatGPT, Dall-E and Codex. She is also an advocate for the regulation of AI because she believes it is important to take precautions to prevent the misuse of AI.

Murati was born in Albania and studied mechanical engineering at Dartmouth College. She then worked as an intern at Goldman Sachs and Zodiac Aerospace before joining Tesla as Senior Product Manager of the Model X. In 2016, she joined Leap Motion. In 2018, she joined OpenAI and was promoted to CTO in 2021."

There are several things remarkable about this. First, Murati's description on Bard is almost literally identical to the one in the CEO Magazine article. That raises the question of which source had the original information and which source clumsily copied it? It's fodder for lawyers in the AI world, where real and fake or original and copy seem completely interchangeable.

Second, Murati must be something of a prodigy, because it is rare for someone with the study of mechanical engineering to make a career in software so quickly. One study is about how, for example, the Tesla X is put together, the other about the software that makes the car self-driving.

Third, it appears that Murati moved to Canada from Albania at the age of 16. I asked Bard if Murati moved alone, or with her parents. Bard replied that 'Murati and her husband Sokol fled to Canada with their two children in 1993.' But in 1993, Mira Murati was five years old, which is also on the early side in Albania to have already started a family. In short; there is still a lot to improve on Google's AI activities.

Murati and Moritz: America first

There is a striking parallel in the lives of Mira Murati and Michael Moritz. Both came to America from a small European country, where they had the opportunity to expand their knowledge at excellent universities and then to exploit their potential in top companies.

I am not saying that every Ethiopian is a potential top entrepreneur or that there is a brain surgeon hiding in every refugee from Aleppo, but in the month when a cabinet falls in the Netherlands over a few thousand additional immigrants a year, I do argue for a rational immigration policy. Europe is old, so is Asia; several continents are aging rapidly. At the same time, there are people in previously unexpected places who can contribute much to the world, if only they are given the chance.

Of course, my perspective is colored, because I too once came through an exchange and scholarship from Amsterdam to a university in San Francisco, where I first saw the Internet. Moritz and Murati came to the San Francisco Bay Area from Wales and Albania. But where in Europe or Asia would they have been as welcome as there? And where would their origins play such a minor role? What European or Asian venture capitalist would give a journalist a chance as an investor, or a young Albanian woman the technical leadership of a billion-dollar company like OpenAI? That should make entrepreneurs, voters and policymakers think.

Spotlight 9: Ripple continues to amaze, but for how long?

The chart is not upside down; there were only declines among the leading investments in the tech sector except for Ripple.

It was a week full of sadness and gloom in the tech corner of the stock markets. But where I expected a correction to Ripple's huge price jump after last week's court ruling, XRP remained fairly stable while the other major crypto currencies, Bitcoin and Ethereum, both fell.

So I downloaded from Coinmarketcap the XRP price data for the last 30 days and asked OpenAI's Code Interpreter to plot the price against trading volume. From there, this interesting graph rolled out:

The red line indicates the trading volume, the blue line the price.

Trading volume in XRP has declined dramatically over the last week, following a huge spike in the days immediately following the court ruling. The falling blue line representing the price now parallels the red line of falling trading volume.

That means the price can no longer be driven by increasing demand. Investors who believe in XRP are holding on. But not enough new buyers are entering the market at the current price to offset the number of sell orders. A further correction of XRP seems inevitable.

And bad news for crypto enthusiasts: anyone who bought XRP a year ago should certainly be happy with a 105% rise. But that's still a lot less than the 160% price jump Nvidia made in the last year, driven by the AI hype that requires strong processors.

Notable links this week

The White House on Friday invited representatives of seven leading companies in the AI field and announced a covenant of sorts with them, in which the companies pledged, among other things, to add digital watermarks to their systems. (So if all goes well, we'll soon know who had copied the text from whom about Mira Murati: Bard or CEO Magazine?)

The participating companies have been regular topics in this spot in recent weeks, namely Microsoft (with Bing), Google(Bard), OpenAI(ChatGPT), Anthropic(Claude), Inflection(Pi), Amazon and Meta(LLaMA).

In effect, Meta is thereby acknowledging OpenAI's lead and, by making its technology open source, hopes to attract so many developers from outside the company that it can still catch up with LLaMA 2. A smart strategy by Meta, which is distinctive from the closed AI platforms of OpenAI and Google.

It continues to be amazing how quickly AI applications are improving. After text and photos, now it's video's turn, and Twitter user Nathan Lands shared a nice overview.

Two weeks ago, I described my doubts about Mark Zuckerberg's jubilation about his new app Threads, the AliExpress version of Twitter. Granted, because of Instagram's installed base, hundreds of millions of people will try Threads. But the app is too sloppy, boring and predictable to generate much repeated use unless improvements are made to the app quickly.

This journalist explains in great detail all the shortcomings of Threads. A good point: why is there only an app for cell phones and Threads cannot be used on a computer, if the platform is about text messages? I wonder how long it will be before the first significant updates are released by Meta, because it would be good if a serious competitor to Twitter emerges.

Christopher Nolan and Hoyte van Hoytema literally and figuratively make great films

In all the digital opulence, film writer and director Christopher Nolan is a blessing. He filmed the masterpiece Oppenheimer on 70 millimeter IMAX film and does not use Computer Generated Images (CGI) in his films. This video shows how the film is literally pasted together from fifty-three rolls of film of three minutes and twenty-four seconds each. In total, the film, which has a duration of three hours and nine seconds, is 17.7 kilometers long and weighs 272 kilograms. That's another entertainment experience than watching Love Island on your iPhone.

Nolan finds CGI "too safe, the image does not seem to contain the threat of, say, a real explosion, however small.' He shoots on film because it most closely resembles the image the human eye perceives. That and more can be seen in this video in which Robert Downey Jr and Christopher Nolan answer the most frequently asked questions on the web about them.

For those of you who are going to see Oppenheimer in theaters next week; go to the IMAX and I'd love to hear how you liked it.

Happy Sunday!