Categories
AI crypto technology

Elon Musk launches Grok, the first product from his new company xAI

I asked Midjourney, "make an image that symbolizes two technologies colliding: AI and crypto." I quite like the result, although I don't know who is crypto and who is AI.

Imagine you have an extremely successful startup in 2023, like Sam Altman of OpenAI, and develop products like ChatGPT that many people around the world are excited about and Microsoft and investor Marc Andreessen are pumping billions into your company. Oddly enough, you don't sleep well, knowing that any moment Elon Musk could introduce a competitor of which two things are certain; first that he can cough up or arrange enough money to invest billions and second that he has the talent and perseverance to tinker with it until it becomes something good. And oh yes, you also know that that competitor's name will be something with an X.

Because in addition to Tesla (with the model series S 3 X Y, read those letters as a word), Space X and X (formerly Twitter), among others, Musk still has time left to launch Grok this weekend, the first product of his new AI company xAI . There was a time when Musk was an investor in Sam Altman's OpenAI, today it is hatred and envy between the gentlemen.

The universe has a character?

xAI's mission is to "understand the true nature of the universe," and that kind of talk creates obligations.

Unfortunately, the first version of Grok is still only accessible to users in the US. There is a waiting list, only it is still closed to me; perhaps registration for visitors from the US will be possible.

It's hard to judge a product based on a 1-page website, but what stands out among all the rhetoric is the focus on efficiency. It seems like xAI wants to try to generate maximum output with minimal "compute," minimizing the need to invest in expensive and barely available chips from Nvidia. 

xAI does not conceal, quite in Musk's style, who it sees as its main competitors: 

"On these benchmarks, Grok-1 displayed strong results, surpassing all other models in its compute class, including ChatGPT-3.5 and Inflection-1. It is only surpassed by models that were trained with a significantly larger amount of training data and compute resources like GPT-4. This showcases the rapid progress we are making at xAI in training LLMs with exceptional efficiency.."

A little further on, Claude, from Anthropic, is also briefly roasted and with that it is clear: it is game on for xAI against OpenAI (maker of ChatGPT),  Inflection (maker of chatbot Pi) and Anthropic (maker of Claude).

Meet Grok, the AI tool that screams "people, I'm something else!

Musk will enjoy the attention on Grok, as he's been struggling lately with a lot of hassle around X, which seems to be losing as many billions in revenue as letters in the company name a year after he took over Twitter, and privately things have been rather tumultuous, to say the least. This is not entirely unexpected, as the man apparently enjoys creating companies as much as offspring (now ten or eleven Muskies, the exact number varies by website).

Excellent timing from Musk

the result seems a promise to hold more meetings."

- New Scientist on Prime Minister Sunak's AI summit

The timing of the launch of xAi's first product is no coincidence. Musk attended the first UK AI Safety Summit this week. Prime Minister Sunak scored in his homeland as he succeeded in getting China and the U.S. to come to Britain, but Vice President Kamala Harris avoided the Chinese minister, and the final outcome of the big jamboree is summed up by New Scientist in the most British way possible: "the result seems to be a promise to hold more summits."

Tomorrow, Monday, Nov. 6, OpenAI is holding its first-ever DevDay, a moment to inspire and highlight developers. For Musk, reason enough to want to ruin this celebration of OpenAI as thoroughly as possible with his launch this weekend. Unfortunately, at the time of writing this piece, it is not yet clear who is the "select few" who will get access to xAI's first product, the AI assistant Grok, but apparently priority is being given to paying subscribers of X - that other X, that is, not xAI.  

Key Executive Order President Biden on AI

Unlike Prime Minister Sunak's mediocre Davos imitation, President Biden' s presidential order on AI presented Monday was a much more concrete starting point for serious policy. I think it's a good first step, but wonder why Biden does little to protect citizens' privacy.

Who controls how AI-systems are fed data, who has access to that data and how can disinformation be removed? The U.S. clearly lacks legislation in this case like GDPR in the European Union.

Biden demands that so-called "red teams" be used by AI developers, teams of experts who mimic the attack or exploitation capabilities of a potential adversary and attempt to attack a company or system. The results of these attacks should be shared with the government. The president also proposes the introduction of an AI watermark so that users can instantly recognize AI-generated material.

It is striking how the various media analyze from their own perspective. I find the most thorough analysis to be that of Anjana Susaria, professor of information systems at Michigan State University, and Scientific American's broader perspective is also very readable. In contrast, Crunchbase obviously looks at it primarily from an investor's perspective, while Brookings lets a parade of their smartest people loose but offers no overall conclusion.

I also found it remarkable that President Obama played a role in the creation of Biden's policy, whereas presidents usually have little concern for the opinions of their predecessors.

Open source AI models are promising

That developments in AI are happening many times faster than policymakers worldwide can keep up with is evidenced by the staggering numbers in this article on the success of Llama, Meta's somewhat open-source version of AI.

Another open source variant, that of France's Mistral, has achieved appealing results, and Mistral is currently looking for money. For more than a quarter of a billion, if possible. According to The Information, it's $300 million, and according to Business Insider, they won't spit on $400 million at Mistral either, should anyone want to invest in it at a valuation of, seriously, $2 billion. For a company that is six months old. Then again, Paris is also an expensive city.

AI cares about us

The latest AI news for this week: scientific research shows that the results produced by LLMs like ChatGPT improve significantly if you indicate fear, or feel pressured, when entering the prompt. Answers become more truthful and responsible. This would imply that AI cares about our feelings ... for how long?  

The most complicated thing about Sam Bankman-Fried was his hair

Talk about honest and responsible answers: Sam Bankman-Fried of crypto exchange FTX gave a pathetic performance in court, turning out to be a simple thief who managed to fool the world's top investors into thinking he was brilliant. There was much focus on his personal circumstances, especially his parents got a lot of attention, especially from the mainstream media. Reactions to the verdict seem to indicate that more regulation of the crypto sector from Washington is on the way.

Bankman-Fried and his colleagues stole billions from FTX customer funds, which they used to invest in startups, for political donations and for loans to themselves. The fact that this was a crypto exchange is irrelevant. What was once again proven, however, is the time-honored cryptocurrency cliché: not your keys, not your coins.

In other words, if others can access your assets, they are already no longer yours. Putting crypto on a central exchange is the opposite of exactly what blockchain can be; a decentralized network without a center, like a crypto exchange.

Kraken launches $200 million crypto investment fund

Despite all the headwinds for the sector, the US crypto exchange Kraken has raised a serious investment fund. Crypto is no longer the favored sector among venture capitalists; that is, of course, AI. Investment in crypto this year is four times lower than in 2022. The timing could actually turn out to be great, because the crypto markets are rebounding strongly and appear to hold.

99-year-old Charlie Munger hates vc's

Warren Buffett's right-hand man hopes to turn 100 years old on January 1 and is no fan of venture capitalists: "you don't want to make money by screwing your investors and that's what a lot of venture capitalists do." So much for my hope that you get milder as you get older. Munger says venture capital "can be a very legitimate business, if you do it right," and if you put the "right people" in positions of power.

But that is not currently the case, he says. "The people making the most money from venture capital are a lot like investment bankers. They say what new, popular area they're going to invest in," Munger said. However, "they're not great investors - they're not great at anything." Munger has a point, as the average return on venture capital over the last 20 years was 11.8%, compared to 12% for the Nasdaq Composite.

Munger and Buffett themselves are having a nice weekend, as they announced a few hours ago that Berkshire Hathaway posted 40% more operating profit in the third quarter than a year ago and is sitting on $157 billion in cash. The old friends, and I say that respectfully, are profiting from buying short-term, high-yield government bonds.

SPOTLIGHT 9: JUBILANT WEEK ON WALL STREET

Wall Street closes its best week of the year with even more gains.

I think this is unprecedented in the 31 weeks I've been producing this newsletter: the entire Spotlight 9 is up. Wars, bombings, global tensions, investors apparently don't care as long as they think the markets will go up.

These are those weeks when every with a full savings account wonders if it was smart to put so much into it with the horrendously low interest rate, especially corrected for inflation. So Buffett and Munger prefer to put it into short-term government bonds. AP sums up all the jubilation in a short, lucid article.

IN OTHER NEWS

Categories
AI technology

Is Bitcoin worth more than Tesla? And politicians worldwide struggle how to deal with AI.

Resurrected for the umpteenth time: Bitcoin had a record-breaking week.
Image taken with Midjourney.

Bitcoin is worth more than Tesla, Western politicians struggle with AI policies and Elon Musk wants to make banks obsolete with X, The Platform Formerly Known As Twitter (TPFKAT).

Bitcoin up 106% this year

Halfway through the week, the self-proclaimed Gaza experts were back to being crypto bros for a day and it was party time in crypto land as Bitcoin briefly crossed the $35,000 mark. The price has already risen 106% this year, leaving Bitcoin far ahead of the number two crypto, Ethereum; the leading blockchain-based development platform which rose "only" 49% this year.

Of the investments I follow in my completely arbitrary Spotlight 9, only the engine of the AI economy, Nvidia, outperformed Bitcoin this year: shares NVDA are up a whopping 183% so far in 2023. Meanwhile, Bitcoin's share price is hovering just above $34,000, but the price increase of over 13% over the past week is extraordinary.

The price rise was mainly due to the expectation that a Bitcoin ETF will be approved. So there was not even the approval of an ETF, but the expectation that one will be approved. (I wrote earlier about a Bitcoin ETF: It's like a weatherman saying, "tomorrow it could rain. That does require a change in the cloud cover first.')

Google is struggling to catch up in the AI race and published poor quarterly results. Bitcoin is its own parallel universe.
Graph created with Canva.

Bitcoin beats Tesla?

The unique combination of scarcity and tradability make Bitcoin a sought-after investment asset. Bitcoin is a scarce digital asset of which a maximum of 21 million will ever be made, and it is tradable 24 hours a day even from a cell phone. But Bitcoin's price is driven entirely by speculation and expectations. There is no underlying value, no company making anything on the basis of which future profits can be estimated.

There's nothing wrong with that per se, since people also invest in gold, trainers and whiskey; but of course we shouldn't start pretending that Bitcoin and corporations are comparable giants. Yet this week even the usually serious Coindesk went even further off track than a fifty-something at Amsterdam Dance Events on E by exuberantly headlining that "Bitcoin has overtaken the market value of Elon Musk's Tesla.

Crypto bros could also consider investing in sneakers, gold and whiskey.
Image created with Midjourney.

Indeed, at the current price, the value of all Bitcoins combined is over $700 billion, which is more than Tesla's market value (the price multiplied by the number of shares outstanding) of $650 billion. But Tesla has assets: it has patents, factories, staff, a sales network and a well-stocked order book. Bitcoin has the transparency of its blockchain and a value determined solely by supply and demand.

By the way, for Bitcoin fanatics, there is good reason to observe some modesty if they think Bitcoin is a better investment than Tesla. Here are the price gains over the last 5 years of Bitcoin compared to Nvidia, Ethereum and ... Tesla:

  • Bitcoin: 438%
  • Nvidia: 654%
  • Ethereum: 749%
  • Tesla: 798%

As I was typing this, it occurred to me that Elon Musk must keep track of this, and in my mind I can hear him chuckling.

Hamas did not get millions from crypto

Less funny was an article in the Wall Street Journal claiming that the sandblasted version of the SS had raised millions from crypto donations. It led to questions in the U.S. Congress while investigations showed that the report was total nonsense. The Wall Street Journal refused to retract the article and once again it appears that the low interest of serious media in the crypto world leads to poor reporting, misrepresentation and as a consequence poor policy making.  

Western leaders struggle with AI

Next week, President Biden and British Prime Minister Sunak are both making an effort to establish themselves as the most responsible world leaders on AI policy. Biden will do so by presenting an executive order on the use of AI and Sunak will hold a real world summit in a symbolic place.

Executive order of over 100 pages on AI

Someone who has read the Biden administration's long-awaited executive order on AI told VentureBeat that it is "the longest" he has ever seen, at more than 100 pages.

The presentation at the White House by President Biden is scheduled for Monday afternoon, during an event titled "Safe, Secure, and Trustworthy Artificial Intelligence." Choosing that name for an event about AI is as fitting as using "sociable, respectful and civilized" as a slogan for Twitter or "shy, sometimes petulant but always good-humored" for Hamas.   

Beautiful symbolism by the British

Next week, some 100 world leaders, tech bosses, academics and AI researchers will converge on England's Bletchley Park campus, once home to the codebreakers who played a crucial role during World War II. (Two movie tips on this topic: Enigma starring Kate Winslet, in the role of Kate Winslet but with glasses and set in World War II and The Imitation Game with a brilliant role by Benedict Cumberbatch as Alan Turing.)

'Their goal is to participate in discussions about how best to maximize the benefits of this powerful technology while minimizing the risks,' said the BBC in an article with the hysterical headline 'Can Rishi Sunak's big summit save us from AI nightmare?' Biden is not there, by the way; he is sending Vice President Kamala Harris. Of course, as a world leader, you're not going to hype someone else's AI summit by going there yourself. 

US and Singapore work on joint AI policy

Whereas the US and the UK excel mostly in one-liners and droll designations, Singapore earlier this year announced AI-Verify, a foundation with standardized tests for AI applications that helps companies and organizations use artificial intelligence (AI) "objectively and verifiably." Now Singapore and the U.S. will establish a joint group to promote transparency in AI implementations through technical and process audits.

That sounds boring, but is much more important than those meetings with politicians who don't even know the difference between AI and bad software. Because  standardized testing of AI applications makes it possible to assess the possibilities and dangers of AI in actual use. That will really benefit the world. I know the organizations that will determine and conduct these tests, NIST on behalf of the U.S. and IMDA on behalf of Singapore, and they are very capable. I have high expectations.

Google invests up to $2 billion into OpenAI rival Anthropic

Google 's parent company Alphabet has invested $500 million in artificial intelligence company Anthropic, rival to OpenAI (maker of ChatGPT) and has pledged to invest another $1.5 billion over time.

Google is already an investor in Anthropic, and the new investment should help Anthropic compete with OpenAI's ChatGPT, which is backed by Microsoft. Amazon said last month that it would invest up to $4 billion in Anthropic.

Thus a titanic battle seems to be brewing between two camps: on one side Anthropic, backed by Google and Amazon, and on the other side OpenAI, backed by Microsoft. Despite all the covenants, summits and press conferences by folks such as President Macron, Prime Minister Sunak and President Xi Jinping, the AI market seems to have become a party as American as Thanksgiving Day. Wait, bad example: as American as Fourth of July.

There is simply no other country where so many billions are being invested in the necessary development. Because development of AI does not require millions, as in the good old days, but tens of billions.

Energy consumption of AI a growing problem

"Powering AI can consume as much electricity as a small country."

Dutch researcher Alex de Vries published an interesting article on the growing energy consumption of AI applications. Previously, De Vries published similar analyses on Bitcoin on his site. His analysis aligns with my view that traditional air cooling has reached its limits, which is why I was so excited about iXora's liquid cooling last week.

Around the breakthrough of AI, I see exactly the same pattern as with the breakthrough of the Internet in the 1990s and a little later with mass acceptance of the cell phone. The core criticism is always, "but what does this mean for copyright/proliferation of terror/education of our blood children/our contact with the elderly. Take your pick.

I estimate that it will take at most two weeks for the Western media to realize that this De Vries is touching on a very click-worthy subject with this and start publishing semi-critical pieces on the energy use of AI.

Because if you don't understand much about an innovation, the best thing you can do as a journalist is to be very critical for safety's sake so you can always say later that you have always been skeptical.

Elon Musk owns Twitter for a year now

The Verge was sent audio recordings where Musk tells his team that Twitter, or X as he has dubbed it,will offer full banking services before the end of next year. Meanwhile, X introduced two new subscriptions in an effort to generate more revenue as ad revenue continues to decline.

That's one of four problems the BBC sees at X. It's hard to take that analysis seriously when the British broadcaster also posts this sentence: "What we know for sure is a lot of big names have left the platform over the last year, including Elton John and Gigi Hadid." What you see in this is that the BBC does not understand the order: if the audience leaves, the people who have something to sell also leave. And not the other way around.

Instagram, Snapchat and TikTok did not break through because celebrities were on them; those celebrities created accounts after their management understood that the platforms offered a free communication channel with a mass audience without the intervention of traditional media.

Finally, two special links

At a time when so many children in areas like the Middle East and Ukraine have no chance to live normal lives and reach their potential, it is particularly sad to see someone who seemed to have everything at a young age, like Matthew Perry, who sadly passed away much too soon yesterday, struggle for decades to make it to the next day.

We know Perry mostly as Chandler from Friends. In an old interview with Conan O'Brien, we see him as himself when he tells a hilarious anecdote.

Still, I want to end on a positive note. Developer Prabhjot Singh created a device on the bargain-priced Raspberry Pi that can convert sign language into speech and convert speech into sign language, using a robotic hand. With the device, anyone can communicate with people who only know sign language. In this video, Singh shows how it works. Unfortunately, the sound is poor, but the way it works is clear!

Categories
AI technology

iXora scores in Asia and Marc Andreessen remains positive

"I am at my core an optimist. Whether that comes from nature or nurture, I can't say. Part of being optimistic is keeping the head facing the sun and moving the feet forward." - Nelson Mandela

From music festivals to data centers

A few years ago I was made aware of Gunter Pauli's book The Blue Economy, in which he argues that a sustainable society and economic growth can indeed go hand in hand. I was so enthusiastic about his ideas that I e-mailed Pauli my compliments in my best German, to which he replied in flawless Dutch that he is Belgian - so fortunately used to a blunder.

In practice, it proves difficult to develop this type of profitable but sustainable business. Making a profit and saving the world at the same time turns out to be a particularly complex job. So when my friend Vincent Houwert, whom I had gotten to know through his hosting company True early this century, asked a few years back if I wanted to come see his new way of cooling servers, I was moderately enthusiastic, to say the least.

After selling True, Houwert wanted to relax for a while in Curaçao, where he developed a fascination with professional audio equipment for concerts and festivals where cooling proved a problem. He sought the advice of his friend Vincent Beek, who had years of experience in the international AV industry, and it was Job Witteman, founder of the Amsterdam Internet Exchange (AMS-IX) in the late 1990s, who advised the two Vincents to look at immersion cooling, and especially at the data center market rather than audio equipment.

Why I am not neutral about iXora

Immersion cooling, cooling computers using liquid instead of traditional air cooling with fans, is not at all new in itself. But in my experience, data centers are conservative companies, sort of a cross between real estate people and system administrators, who are averse to fooling around with large tanks full of liquid into which servers must be hoisted with robotic arms. And those are the mainstream immersion cooling solutions on the current market. Hence my initial skepticism about iXora.

Global interest in a Dutch invention

To my surprise, however, Houwert, Beek and Witteman turned out to have succeeded in applying immersion cooling in the standard 19-inch racks, leading to enormous energy savings of the energy-hungry servers; and they had even applied for and obtained a worldwide patent for it. I immediately saw a huge global market for the method used by iXora, in which the servers are placed vertically rather than horizontally in easily removable sealed cassettes, preventing fluid leakage and keeping the server easily accessible for maintenance.

Data centers do need to move to immersion cooling

Rapidly rising energy prices are only increasing the need for data centers to transition to immersion cooling. Because with the huge increase in streaming services, cloud-based software services and, above all, the meteoric development of high performance computing and AI applications such as ChatGPT, a transition from air cooling to immersion cooling is the only option: the next generation of computer chips is simply getting too hot to be cooled by air anymore.

Job Witteman became iXora's CEO and Vincent Beek the Head of Operations & Sales, while Vincent Houwert had to withdraw from the day-to-day operations due to illness and ultimately he sadly passed away. The technical brain within iXora was already on board in the person of Head of Engineering Erwin Bleeker, whom I got to know 15 years ago at True, before he started explaining how to put a server farm together at Dell 😉

That's why I'm not neutral about iXora: it's a product that promotes sustainability through massive energy savings, it covers a global market from the get-go, and it's run by people I know and trust. It seems decent to mention that here.

Why iXora is a worthwhile investment

I find a fascinating aspect about iXora the fact that the first product of a startup from the Netherlands is attracting worldwide attention. Last week iXora was present at trade shows in Silicon Valley and Utrecht, while I visited iXora during Singapore Technology Week at Data Centre World Asia, the leading data center trade show in Asia.

On a booth visit at iXora in Singapore with CEO Job Witteman (center) and Head of Operations & Sales Vincent Beek (right).

Once again, it turned out that months of reading and talking to experts cannot offer me the same insights as a few hours talking to potential customers and partners. iXora, despite its modest booth, was crowded with companies from Japan, China, South Korea, India, Australia and virtually all Asean countries.

Investment analysis of iXora

Based on all the feedback, I was able to draw several conclusions as to why iXora is a very interesting investment, which are too long to share in detail here. But here's the gist.

1. Huge market

As an investor, this remains the most important consideration; you may have invented the best mousetrap in the world, but if there are no buyers it won't work out for you in the end. Smarter people always talk about TAM, Total Addressable Market, and iXora has that covered. Hundreds of millions of servers are compatible with iXora, so this is a billion-dollar market.

2. Competitive advantage

  • Space optimization in data centers: iXora helps data centers optimize their space by eliminating air cooling (often half of the total floor space!) increasing capacity per square foot. In other words: more dollars revenue per square foot for the data center owner.
  • Energy efficiency: initial implementation results show that iXora can reduce energy consumption in data centers by up to 50%. Every penny saved on energy is extra profit for the customer. And reduces CO2 emissions!
  • Ease of use/barrier for customer acceptance: even the biggest klutz can change servers from iXora cassettes, because even I could do it in seconds.

3. Market access/strong partnerships

iXora has signed a global licensing agreement with Lubrizol, a subsidiary of Berkshire Hathaway, the company of legendary investor Warren Buffett. In one fell swoop, it has thus joined the ecosystem that includes Intel and Eaton, greatly increasing the likelihood of worldwide sales. In addition, iXora itself has already built significant traction and has a global pilot series planned for 2024 covering the U.S., Europe and Asia.

4. Scalable business model

Hardware companies often get caught up in expensive manufacturing and scale problems, which is why iXora decided to focus on high-value R&D and outsource manufacturing to specialized companies. I refer to this semi-shockingly as the Apple model, having Foxconn do the manufacturing of the iPhone. But the principle is identical.

5. Strong investment perspective:

As high-end computing requires more and more liquid cooling, iXora's customizable design offers great potential for long-term growth. I personally expect Nvidia servers to quickly fit into an iXora chassis for two reasons:

  • the form factor is not a problem, it is relatively easy to fit together Nvidia's most popular lines and a chassis from iXora
  • Nvidia's chips are very energy intensive and get very hot, so there is a strong need for immersion cooling

6. Valuation

The current asking price and valuation of iXora are considered reasonable, supported by solid insight into future revenues and profits.

iXora has already raised one million Euros from angel investors this year, but you can still participate and start from as little as 5,000 Euros. If you respond to this email or contact me on LinkedIn, I will gladly put you in touch with the founders Vincent and Job.

For those who would rather watch than read

Some people are less fond of reading and prefer to watch video, even if I'm in it, which is why I also made this 5-minute video sharing my observations. So much for iXora.

Churchill, Mandela and ... Andreessen?

Actually, I hate inspirational quotes, but I caught myself last week looking for tips and examples of people who kept faith in a better future during hard times. For example, I enjoyed reading back pieces from speeches by Winston Churchill, although it turned out that one of my favorite one-liners from his rich body of work probably did not come from him at all. Not everyone will experience this phrase as uplifting and positive either, but it gave me giggles and we all need to laugh in times like these:

"If I were married to you, I would put poison in your tea," Lady Astor once remarked to Churchill. "If I were married to you," he replied, "I would drink it."

Last week I said enough about the role social media played in the unrestricted distribution of hate messages by groups like Hamas. Cynicism is the easy option now, but it leads to nothing. Therefore, this week I choose to focus on positives. I focus on possible breakthroughs and opportunities that might otherwise go unnoticed.

The Techno-Optimist Manifesto

You have to be comfortable in your own skin to publish a piece with that title this week, but Marc Andreessen is an eternal optimist. The inventor of the web browser is now a top investor and publishes interesting thinking material more often, such as earlier this year his article against all the doomsday images about the future of artificial intelligence with the headline "Why AI Will Save the World.

Now Andreessen writes:

"Our civilization was built on technology. Our civilization is built on technology.

Technology is the glory of human ambition and achievement, the vanguard of progress, and the realization of our potential. For hundreds of years, we properly glorified this – until recently.

I am here to bring the good news. We can move forward to a much better way of living, and of being. We have the tools, the systems, the ideas. We have the will. It's time to raise the technology flag again. It's time to be Techno-Optimists."

"What does this do for the bathroom tissue industry?

If only I were as positive as Andreessen. Innovations rarely have the massive impact expected at launch. The brilliant marketer Mike Linton once said to me, "when a new innovation is attributed miraculous potential (think AI or a few years back quantum computing) I always think, 'how is this going to change the bathroom tissue industry?' Usually it's not too bad.'

It is always up to the individual how a new breakthrough is applied. One person uses a hammer to build a new bathroom for his elderly neighbor, another one knocks a random passerby off his bicycle with it. It will be no different with AI, I fear. But I feel reinforced in my fascination with innovations by Andreessen's techno-optimism. Hopefully that is true of many people who spend their working lives developing or applying innovations that move the world forward.

Spotlight 9: Nvidia and Tesla down sharply

It was doom and gloom in the stock market: only crypto rose while stock market darlings Tesla and Nvidia fell sharply.

The deep woes in the Middle East led to general malaise in the stock markets, with only the crypto currencies Bitcoin and Ethereum holding up. Tesla' s quarterly results proved a major disappointment, and Nvidia suffered under the U.S. government's announcement that it would block exports of certain Nvidia chips to China.

Founder and CEO of Nvidia Jensen Huang confessed this week that if he had known in advance how difficult it was going to be, he probably never would have started Nvidia:

"That's actually the superpower of an entrepreneur. They don't know how hard it is, and they just wonder, 'How hard can it be?' And to this day I imbibe, 'How hard can it be?' Because it has to be. You have to make yourself believe that it's not that hard, because it's much harder than you think. And if I could go back in time with today's knowledge and have to go through that whole journey all over again, I think it's too much. It's just too much."

A few years ago I was made aware of Gunter Pauli's book The Blue Economy, in which he argues that a sustainable society and economic growth can indeed go hand in hand. I was so enthusiastic about his ideas that I e-mailed Pauli my compliments in my best German, to which he replied in flawless Dutch that he is Belgian - so fortunately used to a blunder now and then.

It has been proven difficult to develop this type of profitable but sustainable business. Making a profit and saving the world at the same time turns out to be a particularly complex job. So when my friend Vincent Houwert, whom I had gotten to know through his hosting company True early this century, asked a few years back if I wanted to come see his new way of cooling servers, I was moderately enthusiastic, to say the least.

After selling True, Houwert wanted to relax for a while in Curaçao, where he developed a fascination with professional audio equipment for concerts and festivals where cooling proved a problem. He sought the advice of his friend Vincent Beek, who had years of experience in the international AV industry, and it was Job Witteman, founder of the Amsterdam Internet Exchange (AMS-IX) in the late 1990s, who advised the two Vincents to look at immersion cooling, and especially at the data center market rather than audio equipment.

Why I am not neutral about iXora

Immersion cooling, cooling computers using liquid instead of traditional air cooling with fans, is not at all new in itself. But in my experience, data centers are conservative companies, sort of a cross between real estate people and system administrators, who are averse to fooling around with large tanks full of liquid into which servers must be hoisted with robotic arms. And those are the mainstream immersion cooling solutions on the current market. Hence my initial skepticism about iXora.

In particular, immersing the server in a dielectric fluid as a cooling mechanism, releasing as a residual product only hot water that can also be used for heating applications, is attracting much interest worldwide.

To my surprise, however, Houwert, Beek and Witteman turned out to have succeeded in applying immersion cooling in the standard 19-inch racks, leading to enormous energy savings of the energy-hungry servers; and they had even applied for and obtained a worldwide patent for it. I immediately saw a huge global market for the method used by iXora, in which the servers are placed vertically rather than horizontally in easily removable sealed cassettes, preventing fluid leakage and keeping the server easily accessible for maintenance.

Data centers must migrate to immersion cooling

Rapidly rising energy prices are only increasing the need for data centers to transition to immersion cooling. Because with the huge increase in streaming services, cloud-based software services and, above all, the meteoric development of high performance computing and AI applications such as ChatGPT, a transition from air cooling to immersion cooling is the only option: the next generation of computer chips is simply getting too hot to be cooled by air anymore.

Job Witteman became iXora's CEO and Vincent Beek the Head of Operations & Sales, while Vincent Houwert had to withdraw from the day-to-day operations due to illness and ultimately he sadly passed away. The technical brain within iXora was already on board in the person of Head of Engineering Erwin Bleeker, whom I got to know 15 years ago at True, before he started explaining how to put a server farm together at Dell 😉

This is why I am not, as with Nvidia and Canva, for example, neutral about iXora: it is a product that promotes sustainability through huge energy savings, it covers a global market from its inception, and it is run by people I know and trust, which is why I also bought a few certificates in iXora's STAK (more on that later). It seems decent to mention that here.

Why iXora is a worthwhile investment

I find a fascinating aspect about iXora the fact that the first product of a startup from the Netherlands is attracting worldwide attention. Last week iXora was present at trade shows in Silicon Valley and Utrecht, while I visited iXora during Singapore Technology Week at Data Centre World Asia, the leading data center trade show in Asia.

Sexy business: on a booth visit at iXora in Singapore with CEO Job Witteman (center) and Head of Operations & Sales Vincent Beek (right).

Once again, it turned out that months of reading and talking to experts cannot offer me the same insights as a few hours talking to potential customers and partners. iXora, despite its modest booth, was crowded with companies from Japan, China, South Korea, India, Australia and virtually all Asean countries.

Based on all the feedback, I was able to draw several conclusions as to why iXora is a very interesting investment, which are too long to share in detail here. But here's the gist.

Investment analysis of iXora

1. Huge market

As an investor, this remains the most important consideration; you may have invented the best mousetrap in the world, but if there are no buyers it won't work out for you in the end. Smarter people always talk about TAM, Total Addressable Market, and iXora has that covered. Hundreds of millions of servers are compatible with iXora, so this is a billion-dollar market.

2. Competitive advantage

Briefly:

  • Space optimization in data centers: iXora helps data centers optimize their space by eliminating air cooling (often half of the total floor space!) increasing capacity per square foot. In other words: more dollars revenue per square foot for the data center owner.
  • Energy efficiency: initial implementation results show that iXora can reduce energy consumption in data centers by up to 50%. Every penny saved on energy is extra profit for the customer. And reduces CO2 emissions!
  • Ease of use/barrier for customer acceptance: even the biggest klutz can change servers from iXora cassettes, because even I could do it in seconds.

3. Market access/strong partnerships

iXora has signed a global licensing agreement with Lubrizol, a subsidiary of Berkshire Hathaway, the company of legendary investor Warren Buffett. With this, it has at a stroke joined the ecosystem that also includes Intel and Eaton, greatly increasing the likelihood of worldwide sales. With these partners, no copycat will soon dare violate iXora's patent by releasing a vulgar copy. In addition, iXora itself has already built significant traction and has a global pilot series planned for 2024 covering the U.S., Europe and Asia.

4. Scalable business model

Hardware companies often get caught up in expensive production and scaling problems, which is why iXora decided to focus on high-quality R&D. Production, sales and support are handled by the licensing partners, first and foremost Lubrizol.

5. Strong investment perspective:

As high-end computing requires more and more liquid cooling, iXora's customizable design offers great potential for long-term growth. I personally expect Nvidia servers to quickly fit into an iXora chassis for two reasons:

  • the form factor is not a problem, it is relatively easy to fit together Nvidia's most popular lines and a chassis from iXora
  • Nvidia's chips are very energy intensive and get very hot, so there is a strong need for immersion cooling

6. Valuation

The current ask and valuation of iXora are considered reasonable, supported by solid insight into future revenues and profits. The partnership with Lubrizol alone guarantees a minimum of tens of millions of dollars in revenue.

iXora has already raised one million Euros from angel investors this year, but you can still participate and start from as little as 5,000 Euros. If you respond to this email or contact me on LinkedIn, I will gladly put you in touch with the founders Vincent and Job.

For those who would rather watch than read

Some people are less fond of reading and prefer to watch video, even if I am in it, which is why I also made a 5-minute video sharing my reasons why I invested in iXora. The short video is available in Dutch and in English.

Finally, nice other tech optimism:

  • Basketball player starts $200 million venture capital fund. Four-time NBA champion Andre Iguodala knew more than a decade ago, when he signed with the Golden State Warriors, that he wanted to establish a network in the technology world in San Francisco to profit from after his career. That seems to be working out quite well.
  • Electric vertical takeoff plane gets certification. It looks like a joke: it's electric, can hang and comes from China, what's it called? EHang. Seriously. Looks very cool, wonder if it will be a success.
  • Repairing is the new cool. The Guardian sees a sustainable development in Amsterdam that gives short shrift to the fast fashion trend: it's becoming wholesale repair, rather than constantly buying new and throwing it away.  
Categories
technology

Hamas gets a helping hand from social media

It is not possible to write cheerfully about new innovations when the world is on fire. Especially not when the world's most widespread innovation of this century, social media, is being used by terrorists and imbeciles to spread hatred and prevent peace.

What is the most important story on Meta's news page?

Historian Yuval Noah Harari aptly summed up the misery on CNN: the goal of Hamas and related clubs is simple, namely, "to assasinate any chance of peace." Spreading their atrocities through social media is a deliberate tactic in doing so. The hatred and disgust evoked by the images will eradicate any sense of compassion, let alone willingness to compromise. Exactly the intention of Hamas.

It proved virtually impossible on Facebook, Instagram, TikTok, X and Youtube last week to avoid the topics of Israel and the Gaza Strip. This seems logical at first, were it not for the fact that I was continuously served messages from all sorts of people I do not follow at all. No matter what I clicked away and pushed away, the distasteful nonsense from Gaza experts, many of whom were self-proclaimed AI experts until last week and NFT insiders last year, kept flooding my timeline.

Facebook and TikTok respond only after warnings

It took until Friday for Western governments to issue warnings. The EU ordered Meta to do something about all the disinformation being poured out over the world via Facebook and Instagram. Zuckerberg, meanwhile, understands that you have to move then, just as someone running a red light always pretends to cross as fast as possible. TikTok received a similar warning, as did YouTube.

The statement Meta issued is so saltless and heartless that it must have been written by a bad AI application. But look especially at where Meta places that statement: small in the right-hand column. The most important place on a website, big in the middle with animated visual, is still dedicated to the boring chatbots that were already announced on Sept. 27.

Next time a Facebook livestream by Hamas terrorists wearing smart Ray Bans?

Zuckerberg was able to chat with Lex Fridman in a promotional podcast about his Metaverse efforts last month, but where was he last week when terrorists broadcast child murders over his networks? Sure, it's brave for a nerd to spar with professional cage fighters, but it takes real courage to go live on CNN to talk to Christiane Amanpour about your contribution to the spread of terrorist outrages.

Meta's news page pays more attention to the new Meta Smart Ray Bans, which allow live streaming from a camera in those glasses on Facebook and Instagram, than to what Meta will do against abuse by groups like Hamas.

If Zuckerberg doesn't intervene, the wait is on for a Hamas idiot (fighter is the wrong word for someone who kidnaps a girl at a music festival) with a fashionable 'Rebel Black Headliner Ray-Ban Meta' smart glass on his head committing mass murder; because it's easier to operate your Kalashnikov when you have your hands free while going live on Insta.

The business model of social media is free popular content

It's crude, but at its core, Hamas delivers what social media loves: lots of viewed free content. Meta's business model is to sell advertising through Facebook and Instagram to people who watch content for which Meta pays nothing. That's much more lucrative than all that cumbersome stuff from Disney or Netflix, who have to create expensive content.

At its core, Meta doesn't care what that content is, as long as they don't get hassled about it by advertisers. As Zuckerberg likes to say, "move fast and break things. The world has been able to see how that works out.

The problem is not new

Once a young Internet entrepreneur said:

"We are largely similar to the phone company. We only transmit information; we don't have a say about what is transmitted. We only select a little bit: if we passed on everything on the Internet, our computers would crash. And we also rejected a discussion group that did spread child pornography very clearly. But we could only tell that from the name of that group, because it would be impossible to read everything said in it."

That young Internet entrepreneur, that was me. And I said this in newspaper Trouw in November 1995, almost 30 years ago. I was 27 at the time and I sincerely believed that the operator of a network had no business meddling in the content that people transmitted over this network.

Not long after, several of our subscribers began distributing child pornography through newsgroups devoted to innocent topics such as bird watching or stamp collecting.

We had worked for years as communications science graduates to build an Internet provider that would provide Internet access to everyone in the Netherlands, allowing people to communicate and gain knowledge, but a certain group of subscribers decided to spread the worst imaginable misery through our network.

Filter freedom of speech

In all civilized countries there is a limit to freedom of speech somewhere. I didn't know then and I don't know now exactly where that line is, but we all know when it is crossed by miles.

We actively reported our own child pornography distributing subscribers to the vice police, which led to several criminal cases. It was the darkest period of my time as an entrepreneur and they were the worst things I have ever seen. I was deeply impressed by the commitment and professionalism the police showed in these cases. The detectives always looked immediately to see if the images were already known, so that hopefully there were no new victims. Fortunately, this was true in all cases.

With pain in our hearts, we closed access to many newsgroups, thus limiting both subscribers' access to information and their ability to disseminate information. The good people suffered from the bad people, because 99% of the messages could be classified as normal communications.

Therefore, I can well understand that Mark Zuckerberg and other entrepreneurs and executives who have worked hard to build their networks find it difficult to now have to limit and control what they have built. But global reach and influence comes with commensurate responsibility, to which Zuckerberg in particular seems blind.

No new glasses, but working filters

Meta, X, TikTok and YouTube should now not focus at all on developing technology that will make it even easier for everyone to distribute even more content, such as via an avatar in the Metaverse or with smart glasses with built-in cameras; the focus should be on regulating which users broadcast what content over their networks and who has access to viewing that content.

The same kind of algorithms that YouTube and Facebook use to see what content is going viral and promote it faster can also be used to estimate what content needs to be looked at more closely for objectionable substance. Good use of the lightning-fast developments in AI and text and image recognition should be able to limit spread of much misery.

Meta's market cap is over $800 billion and the company makes tens of billions in profits. That's more than enough budget to build functioning systems. The same is true for YouTube and TikTok, while the ailing X is surely able to get a loan from its owner Elon Musk.

Over the past week, children around the world have seen images on Instagram and TikTok that no one should ever see. Preventing that misery is what Zuckerberg, Musk and the other chiefs of social media should focus on.

Four years ago, Zuckerberg had a long conversation with Yuval Noah Harari. It would be good for them to talk again now. The value of democracy is at stake.If America (Meta, YouTube, X) has moral superiority over China (TikTok), now is the time to prove it.

Categories
AI technology

TikTok loses six billion dollars and according to ChatGPT, I'm a Pussycat Doll

Never trust information from AI platforms, because even though it is my dream: I am in this picture, but I am not (yet) a Pussycat Doll, despite the striking resemblance.

TikTok loses six billion sales due to Indonesian web shop ban

This week's most notable news was not the lawsuit against Sam Bankman-Fried, because that curly clearly stole as much money as he could from his customers seems clear, but the Indonesian government' s ban on TikTok's webshop. And according to ChatGPT, I am finally a member of the girl group The Pussycat Dolls.

Southeast Asia, an internationally still underrated market with over 675 million people, about half more than the EU, is one of the largest markets for TikTok with over 325 million users per month.

Indonesia has as many as 125 million TikTok users among its 278 million population. That includes six million sellers and millions more creators who make money by using TikTok Shop to promote products. TikTok is much more than a social media platform in Asia; it is an economic force.

Online retail in Indonesia has surged in recent years. The value of e-commerce sales has increased sixfold since 2018 and is estimated to reach $44 billion next year, according to the central bank.

While Indonesia’s e-commerce market is dominated by Shopee, Tokopedia, and Alibaba-backed Lazada, TikTok Shop had made significant inroads since launching in April 2021 and was reportedly on track to handle as much as six billion dollars in transactions in Indonesia this year, on which TikTok earns 5% commission, a whopping three hundred million dollars.

Until last Thursday afternoon, when TikTok had to shut down its web shop because the Indonesian government had given it an ultimatum last week. President Joko Widodo had previously indicated that TikTok's influence on Indonesia's economy was out of control and local retailers simply could not compete against TikTok.

Whereas the appearance of TikTok's CEO in the U.S. Congress still led to media reports worldwide, this form of government intervention went unnoticed by most of the world.

Anthropic wants to raise another $2 billion, now from Google again

Just last week I wrote about the four billion dollars Amazon is putting into Anthropic, the major competitor of OpenAI (maker of ChatGPT, about which more later), and this week it appears that Anthropic needs even more money: as much as two billion dollars.

The striking thing is that Anthropic wants to raise this money in part from Google, which previously invested three hundred million dollars in the company for a ten percent stake. Now Google would have to pay about tenfold for the same percentage. And this is especially painful because of what leaked out about the problems Google is having operationally to keep Anthropic, maker of Claude, up and running.

Google's loss is Amazon's gain

Last month, according to this article, a team of 50 people at Google Cloud worked weekends to fix an unstable Nvidia cluster that Anthropic has running there:

"To fix the faulty part of its service - an underperforming and unstable Nvidia H100 cluster - Google Cloud leadership initiated a seven-day-a-week sprint for the next month. The downside of not making it work, the senior engineer said, was "too great, especially for Anthropic, for Google Cloud and for Google."

Then this team was told that much earlier it had already been arranged that Amazon would invest four billion in Anthropic and that Amazon's cloud service AWS would become the "primary cloud provider for mission-critical workloads." In other words, Amazon would do all serious work and heavy lifting for Anthropic, and only some fringe stuff would remain with Google.

To top that off the news came this week that Google is a candidate to invest another two billion dollars in Anthropic. No one has to wonder what those seven-day-a-week sprinting Google engineers think about this.

Anthropic helps FTX creditors

Those watching with delight the immense valuations of the new generation of AI companies are the creditors of FTX that previously invested $500 million in Anthropic. Their hope is that the stake FTX holds in Anthropic will eventually offset much of the losses they have suffered so far from all the misery and theft at FTX.

Evil applications of technology

There was more very bad news on the technology front. First, a Replika chatbot appears to have encouraged a deranged man to assassinate Queen Elizabeth. It remains amazing that developers fail to see how their well-intentioned technology can be used by criminal or spineless characters.

A confused mind in the UK felt empowered by this kind of message from a chatbot

Then 23andMe, the U.S. biotechnology and genomics company that offers genetic testing services to customers who send a saliva sample to their labs and get back a pedigree and genetic report. The company confirmed this week that customer profiles offered on the Internet for $1 to $10 per profile actually came from their site.

It is likely that previously used passwords were used and 23andMe was not hacked, but factually that is irrelevant. Ars Technica aptly summarizes:

'On Friday, The Record and Bleeping Computer reported that one leaked database contained information for 1 million users of Ashkenazi descent, all of whom had opted into the DNA matching service. The Record said a second database contained 300,000 users of Chinese descent who had also opted out.

While there are benefits to storing genetic information online so people can trace their origins and locate relatives, there are obvious privacy risks. Even if a user chooses a strong password and uses two-factor authentication, as 23andMe has long recommended, their data can still be collected in scraping incidents as it recently confirmed. The only sure way to protect it from online theft is to not store it there in the first place."

So the hackers had a specific preference for selling data of Jewish and Chinese people. But this kind of data simply should not be stored online at all. Period.

Spotlight 9: focus on Canva

Tesla is the winner of the week, Ethereum the loser.

It was a positive week in the stock markets with Tesla passing Meta (Facebook) in market value, but I want to talk about a company that has a great chance of a successful IPO or a huge hit in a sale: Canva.

Forbes Australia has an excellent profile on this Melanie Perkins-led Australian-origin company, which this week launched the AI-powered Magic Studio.

Not long ago, InDesign was the software package that only professionals could use to create things, which any simple soul can now create with Canva. The proof? The above graphic, beautiful in ugliness but functional, I have been creating with Canva since the beginning of this newsletter.

There's even a spreadsheet behind it that Canva creates, in which I only have to enter Friday's closing prices. And just now I did some tinkering with the new feature that lets you simply generate videos based on text and images. What I make doesn't look like anything remotely acceptable yet, but I think this will be a very popular application.

Here is a brief look at the company's recent performance:

  • valuation: Canva is now valued by investors at nearly $40 billion.
  • revenue: The company is on track to achieve annual sales of $1.7 billion.
  • users: Canva has 150 million monthly users, of which 16 million are paying subscribers.
  • Profitable: Canva is profitable this year for the seventh consecutive year.

Canva is so clever, creatively, technically and financially, that Adobe or Microsoft is going to buy it for at least $50 billion. Adobe must hurry, or else it will be unable to pay Canva at all and could even be replaced by Canva.

Microsoft is the most natural buyer because Canva is the most fitting, Web-based extension of the Office suite. And Microsoft CEO Satya Nadella buys companies like a Frenchman buys croissants.

Quick takes on other news

David Perell had a long conversation with Marc Andreessen

The link goes to a tweet in which Perell summarizes the 19 key points from the conversation, and the full video is here. I have been a fan of Andreessen (creator of the first Web browser and top investor) for nearly 30 years because he continues to couple a tremendous wealth of knowledge and experience with curiosity and enthusiasm.

New General Motors CTO leaves after one month

You rarely hear this: someone who has worked at a company for years gets a new position there, gives an interview and the following week he is gone. Ex-CTO Gil Golan wanted GM to build its own batteries and that turned out to be a dead end for him, excuse the pun.

Nvidia competes with its own customers

Nvidia has its own cloud service, DGX Cloud, with servers located in the data centers of Microsoft, Oracle and Google. The Information reported this week that Nvidia is looking into building its own data centers, which would put it in direct competition with its biggest customers, who in turn are diligently trying to develop their own AI chips, Nvidia's core business. I've been trying to make a chart of the AI playing field with Canva for weeks, but when everyone in the space starts tinkering with each other's business, it gets tricky.

Rumor: Apple wants to buy Formula One broadcast rights

Because of Apple' s success with the MLS broadcast rights since Lionel Messi has been playing there, Apple is rumoured to be willing to pay  as much as $2 billion a year for Formula One's worldwide broadcast rights. This would be a gradual transition because there are still many long-term contracts with various broadcast rights holders around the world.

Business Insider tested ChatGPT's new features

An excellent overview of ChatGPT's new features, but I was particularly interested in the option that you can upload a photo and ask questions about it. To make it difficult for ChatGPT, I chose a photo from the summer of 2007 when I was trying to get ahead of a midlife crisis by scoring a late summer hit written by Arjen Lubach with a flower grower friend disguised as Mexican rappers.

I expected all kinds of replies, but not that ChatGPT  would conclude that we were members of American girl group The Pussycat Dolls. (It doesn't mean I'm not flattered.) In short, even if OpenAI would be valued north of$100 billion because of ChatGPT ; there is still a lot to improve in the world of AI.

Categories
AI crypto technology

Zuck boring in 3D, U2 incredible in the Sphere and Altman and Ive with the "iPhone for AI"?

What a week in tech: Mark Zuckerberg talked with Lex Fridman in 3D, U2 was incredible in the Sphere in Las Vegas, Sam Altman and Jony Ive could be working on an "iPhone for AI," Amazon is putting billions into AI, Spotify is translating podcasts into all kinds of languages and Taylor Swift was in a football stadium. And oh, I almost forgot: French authorities raided an Nvidia office.

The Sphere: Find U2 in this concert venue that feels like you're inside a giant virtual reality headset. Source: The Sphere on Instagram.

U2 opened the Sphere - and how!

First, the most striking images from last week. U2 on Friday opened the Sphere in Las Vegas, the spectacular event space that cost a whopping $2.3 billion. With a height of 112 meters and a maximum width of 157 meters, the Sphere has a total area of 81,300 square meters, making it the largest spherical building in the world.

Visitors to U2's opening concert seem unanimously enthusiastic about the Sphere on social media. Obviously, a cell phone does not offer a good impression of the experience of seeing thousands of square feet of screen around the band in 16K resolution , but even so, the images of Where The Streets Have No Name and With Or Without You were impressive. The sound also seemed to be outstanding, quite useful at a concert and yet often overlooked. My brother was there and is so excited that he immediately bought tickets for the final concert of U2's twenty-five-concert residency at the Sphere.

Three versions of Mark Zuckerberg and all three are emotionless. Eerily realistic. Source: Lex Fridman podcast.

Zuckerberg and Fridman were not exactly winning souls for the Metaverse

Lex Fridman once again had Meta chief Mark Zuckerberg as a guest on his podcast, and this time the conversation took place in an unusual way. Both wore the Quest Pro VR headset and were not in the same room, but hundreds of miles apart. Yet the conversation looked and felt lifelike. The picture quality exceeded my expectations.

At the same time, the gentlemen's podcast painfully exposed the Achilles' heel of this technology. Spending so much effort, time and money to create a realistic avatar of someone's face and then spend an hour schmoozing with each other is the digital version of shooting a mosquito with an F-35 or putting on a princess dress to drop your kid off at kindergarten: it can be done, but it's a tad over the top.

I do not get the impression that people are so eager for higher image quality from their video calls that they are willing to put on VR glasses. Meta's technology looks like a technology in search of an application. If Steven Schnaars wrote his phenomenal book "Megamistakes: Forecasting and the Myth of Rapid Technological Change" now rather than in 1987, he would certainly devote a chapter to the Metaverse aspirations of Zuckerberg, who keeps trying to make VR a common conversational experience, rather than being happy that it already provides a brilliant experience in online games, a billion-dollar industry.

The French invasion 

There were so many developments in the AI field this week that they seemed hard to pinpoint, until it was announced that French authorities on Tuesday had raided "a maker of graphics cards." And by that they did not mean those parchment scrolls that Napoleon marched toward Moscow with, but Nvidia's highly sought-after chipsets needed for the current generation of AI applications.

The official position is that European governments are trying to control the actions of Big Tech companies in thwarting competition. And let those Big Tech companies just happen to all be American; they are Apple, Meta, Google, Amazon and Microsoft, and as of this week, Nvidia may also count itself among this list of companies suspected by Europe.

It appears the French authorities may be looking for mischief in all the wrong places. In fact, the whole AI playfield has become much more complex than it seems, with all the players smilingly shaking hands and tripping each other up at the same time.

In AI you compete your customer and supplier to death

Seen from the "bottom up," AI is a whole separate industry. Nvidia is the undisputed king of shovels and pickaxes: Microsoft, Google and Amazon all buy billions worth of Nvidia chips for their cloud services.

But since those companies announced they wanted to reduce their dependence on Nvidia and are developing their own AI chips, Nvidia has begun investing in AI startups that compete directly with Microsoft, Google and Amazon. Nvidia is doing so partly with money and partly by putting these startups at the top of the customer list for its sought-after and scarce AI chips.

Nvidia's hope is that these startups, such as Coreweave and Lambda Lambs, take market share away from the big three so that Nvidia can continue to supply as many chips to this sector as possible.

Those who now think that Nvidia and, say, Google can drink each other's blood will have watched with raised eyebrows as Nvidia and Google recently jubilantly announced a new collaboration to improve Google Cloud.

Alphabet CEO Sundar Pichai even said less than three weeks ago that Google and Nvidia will still be working together a decade from now. Partnerships in AI are sort of like open marriages where you express that you love each other immensely, but leave your profile open on Tinder, always ready for the swipe.

The key question before European authorities is whether it is illegal for Nvidia to try to make their current customers' competitors more powerful. Expensively paid anti-trust lawyers are rubbing their manicured hands with delight.

It continues to rain AI billions

Amazon announced that it is investing as much as $4 billion in Anthropic for a minority stake, with the intention that Anthropic will use the cloud services of Amazon's AWS, the world's largest cloud provider. It's buying market share in a disguised way, but in a potentially smart way, because it's not out of the question that Amazon is going to make hefty profits on the shares in Anthropic.

Character.AI, a startup that offers chatbots that can mimic virtually anyone (one popular bot is Super Mario, including a very sad version of an Italian dialect), is in the process of raising hundreds of millions of dollars in new funding round that could value the company at more than $5 billion, according to insiders. Usually, those anonymous sources are the founders themselves, who thus put pressure on investors and semi-openly shop the deal around.

That $4 billion in Anthropic and $5 billion valuation of Character.ai are small beer for market leader OpenAI, which is seeking a $90 billion valuation in a deal in which executives sell some of their shares. This valuation is as much as three times higher than ... six months ago, when OpenAI raised $300 million on a valuation of $29 billion.

Entirely coincidentally, Mistral is launching its first model

I find it a bit suspicious that the raid by French authorities on Nvidia occurs the week that the French pride in AI, Mistral, presented its first model claiming that it outperformed one of Meta's smaller models, the Llama 2 13B. (By the way, can't anyone at Meta come up with better names than Llama 2 13B? Maybe Zuckerberg can ask someone on Fiverr for help.)

Naturally, Meta could not just let that happen and spread the word that Llama 2 Long AI (another delicious name) outperformed OpenAI's GPT 3.5 Turbo and Claude 2, Anthropic's product that just raised that $4 billion from Amazon.

'The AI race is weird'

The Information rightly concluded; "It makes me wonder what race all these companies think they are running. So far, it seems to be mostly about money and distribution. Technology seems to be coming together more and more, meaning that the winners are not necessarily those with the best technology, but those who figure out how to get the most money out of it.

And that race will certainly favor incumbents such as Google, Microsoft, Amazon and Meta, whose existing products already make billions. No wonder OpenAI is seriously considering building a device. If it continues like this, it will take a new wedge to really open the battle."

The "iPhone for AI"?

Indeed, the Financial Times reported Thursday that ChatGPT maker OpenAI is in advanced talks with legendary former Apple designer Jony Ive and SoftBank's Masayoshi Son to build the "iPhone of artificial intelligence," backed by more than $1 billion in funding from the Japanese conglomerate.

Jony Ive was Steve Jobs' favorite designer, spent more than two decades at Apple and led the design of the brightly colored iMacs that helped Apple rise from a near-death experience in the 1990s, as well as the design of the iPhone.

The news of the possible collaboration between Ive and Altman, funded by Son, was widely reported worldwide, but I missed reflections on what kind of device an "AI hardware device" should be. I can't imagine it, because smartphones have already become so powerful and have an installed base of billions.

ChatGPT more current and learning to see, listen and speak

In all the financial news, you would almost forget that major improvements to products are being introduced at lightning speed.

ChatGPT reported last week, "Voice and image give you more ways to use ChatGPT in your life. Snap a picture of a landmark while traveling and have a live conversation about what’s interesting about it. When you’re home, snap pictures of your fridge and pantry to figure out what’s for dinner (and ask follow up questions for a step by step recipe). After dinner, help your child with a math problem by taking a photo, circling the problem set, and having it share hints with both of you."

(I conclude from this that ChatGPT is not yet trained in the life of a childless man living in Singapore and Bali, where hawker centers, warungs and food delivery services dominate daily life.)

A major objection to ChatGPT was the lack of current data, as the model had previously only been trained with data through September 2021. It was announced this week that ChatGPT will become topical, meaning that some premium users will be able to ask the chatbot questions about current affairs and access news. OpenAI said the feature would soon be available to all users.

At the time of writing, Oct. 1, none of the listed features are available to me and ChatGPT's training data ends in January 2022. Hopefully this will change soon.

Spotlight 9: Ethereum wins again and is Microsoft underrated?

A volatile picture this week: Amazon, Apple and the S&P 500 fell, while Nvidia and Ethereum rose sharply.

It is downright striking how little serious coverage is given to the important blockchain development platform Ethereum, especially compared to the panting coverage of AI companies.

With all the hubbub surrounding AI, it does make sense that Wall Street is finally starting to see that Microsoft's stake in OpenAI could affect Microsoft stock.

For two reasons: first, purely financial, because if Microsoft actually owns 49% of OpenAI's shares, that stake currently represents a value of $44 billion. Out of Microsoft's $2.35 trillion ($2,350 billion) market value, that's less than 2%, but there are days when yours truly doesn't have it lying around.

In addition, OpenAI uses Microsoft's Azure platform so that, with OpenAI's billion-dollar spending on these cloud services, Microsoft is also earning heavily from OpenAI again.

Fortune reported in January that in exchange for the $10 billion investment in OpenAI, Microsoft also obtained the right to 75% of OpenAI's profits until it recouped those $10 billion; plus an additional $3 billion it had already invested in the company in previous years. Don't let the French authorities hear it or they'll be invading Microsoft's office for a morning coffee too - with croissant.

Quick takes on other news

Spotify is going to clone and translate podcasters' voices

The results are surprisingly good. For example, this is Lex Fridman in Spanish talking to Yuval Noah Harari, who suddenly sounds more like a Spanish flamenco dancer rather than an Israeli historian.

Crypto startup school A16Z open for spring

Renowned investment fund Andreessen Horowitz is opening the Crypto Startup School (CSS), a 12-week acceleration program in London for startups that offers expert guidance, capital and resources tailored to crypto founders.

Strange interview with the new Twitter CEO

Linda Yaccarino seemed frustrated and upset during an interview that was at times strange, uncertain and confrontational. Someday I'll get used to the fact that Twitter is now called X, but not yet.

Asian Games gold ticket: South Korea's Esports stars aim for medal success

With a gold medal in Street Fighter or FIFA, South Korean men have a chance to be exempted from military service. I searched to see if exemption was also given to winners of Grand Theft Auto, but alas. It would be a bit absurd if you could avoid military service by committing high-speed casualties in a mall in GTA.

A revelation about trees calls climate calculations into question

Scientists are learning more about "sesquiterpenes," vapors from trees that could make clouds, cooling the earth. "It's a feedback loop, the climate affects cloud formation, and the clouds affect the climate."

Skiff is an email service and collaboration tool with end-to-end encryption

A very striking, privacy-sensitive version of Google Cloud, with the best privacy statement I've seen: in plain human and lawyer language.

Taylor Swift knows a football player

If social media is to be believed, football player Travis Kelce is said to be reaping huge rewards from his liaison with La TayTay; Taylor Swift. I looked on his Instagram and Tiktok and saw an increase from less than half a million followers to 3.6 million, so it's not too wild. By comparison, Swift has 273 million followers. Funny, though: the meme where wives filmed their husbands telling hubby with a serious face that it was so sweet of Swift that she had put Superbowl winner "Kelce on the map". This man's dismay, combined with his self-control, is commendable.

Categories
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?

Categories
technology

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.

Categories
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.

Categories
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.

You are reading the web version of my free weekly newsletter about the technological, economic and social events that define our lives. You can subscribe for free here to receive the newsletter in your mailbox every Sunday.

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.

Vox

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 "back to business 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.