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AI crypto technology

'Minister' makes the Netherlands look utterly ridiculous in Asia

Asia Tech Summit 2023 in Singapore

'Be curious, not judgmental.' That's the message of my favorite Ted Lasso series. Mindful of that credo, I attended the Asia Tech Summit in Singapore this week, followed the launch of the Apple Vision Pro, the magic glasses of glasses, and tried to get to the bottom of the lawsuit filed by U.S. authorities against crypto exchanges Binance and Coinbase. Unfortunately, things already went wrong during the first hour of the Asia Tech Summit, in which Secretary of State Van Huffelen was overcome by an overdose of unfounded self-confidence. 

Dutch pride abroad, 'minister' of digitization Alexandra van Huffelen

The Asia Tech Summit is particularly interesting because it brings together business and government institutions, with the idea that both sides develop an understanding of the challenges facing the other. Singapore Finance Minister and incoming Prime Minister Lawrence Wong provided the kickoff, after which Kaja Kallas (Estonia's first female prime minister) and Jacinda Ardern (New Zealand's youngest ever prime minister) paved the way for the first substantive panel, on the opportunities and threats of AI. Participating in this was State Secretary Van Huffelen, along with the president of Microsoft Asia and Nvidia's board member who deals with AI.

As the only other Dutch speaker, I was above average in my interest in Ms. Van Huffelen, and Google learned that she had a typical resume for a Dutch administrator: having been an alderman (sustainability in Rotterdam), director of a semi-governmental body (GVB in Amsterdam) and as State Secretary of Finance, she had inherited the Supplement affair, from which it is difficult to judge from a distance how adequately she had handled this painful dossier.

Nothing wrong with that, I thought, in the spirit of Ted Lasso, stay positive! After all, with the Supplements affair still in the back of her mind, hopefully she had taken a ride in Singapore on the phenomenal subway (clean, fast, cheap and safe, only resembles the GVB subway from very distant places because it is also transportation on rails) and would surely show some humility and modesty? So I expected and hoped, but nothing could be further from the truth. The state, which for incomprehensible reasons is heralded abroad as Minister of Kingdom Relations and Digitalization, went in with a straight leg almost from the kickoff.

Strategic action plan

For those with a strong stomach, the entire session can be watched back here, but the gist is that Van Huffelen sees mostly threats in AI and noted disappointment at the very beginning that nothing more has been heard of the idea of stopping AI development for six months. This is especially strange because the Dutch cabinet produced a policy paper as early as 2019 under state secretary Keijzer of EZ, which mostly sang the praises of AI. Participating in that cabinet was D66, Van Huffelen's party, and she even joined it as state secretary in 2020. There is a NL AI Coalition(NL AIC), in which government, business and knowledge institutions work together, and there is an AINed foundation that may spend 204.5 million Euros of government money to stimulate AI in the Netherlands.

In 2019, a policymaker thought a baby wearing VR glasses from Lidl had something to do with AI

Van Huffelen did not say a word about this and pretended that AI is viewed exclusively with a critical eye in the Netherlands. Her substantive contribution can be summarized as a series of clichés that the citizen comes first (gosh) and should not be forgotten (boy) and that there is more to life than making a profit; the latter she must have learned from the tens of thousands of victims of the Supplements affair.

For me, the moment at the very beginning was crucial, when it became apparent that Van Huffelen is either particularly ignorant or particularly underhanded. A combination of the two I would not rule out after her performance. After 1 minute 50, Van Huffelen literally said:

" We have seen many problems with AI, I have seen that in my country, even the AI that the government used turned out to be very biased."

state secretary Alexandra van Huffelen

Excuse me, to dismiss the Supplements affair, which has ruined the lives of tens of thousands of people, in which over 2,000 children were placed out of their homes and on which the cabinet fell in which Van Huffelen, nota bene, was himself responsible for this dossier, as a result of AI, is downright disgraceful.

Therefore, this brief refresher for Ms. Van Huffelen, who seems to have no active memory of the Supplements affair:

  • until 2019, dual citizenship was a selection rule in the Tax Department. That is a policy decision made by *people*. These victims were extra checked, for years, without knowing it, and could not appeal the inclusion in this group of extra checked. This was Kafka for anyone with a foreign last name.
  • The Personal Data Authority concluded that the Tax Authority's processing was "unlawful, discriminatory and therefore improper" which constituted a serious violation of the AVG. The Dutch Tax Authority itself violated Dutch law! (It is therefore downright bizarre that as recently as January 17 of this year, this article was published on the Belastingdienst's site, reporting that everything went perfectly by the book).
  • Officials at the top of the Inland Revenue stopped benefits from people even though they knew they were entitled to them. Up to the highest level, it was decided to continue this unlawful approach for years .
  • Inland Revenue officials demanded punishment for executives, but none were punished.

In short, the Surcharge Affair is an accumulation of wrong and evil policy instructions. It has nothing, but nothing, to do with AI. Because AI is precisely about machine learning, computer programs that get smarter as more data is added to them. Whether the Surcharge Affair was in part due to institutional racism or racial profiling I leave to sociologists and activists, but in any case it was "just" the work of incompetent and scummy people.

Ms. Van Huffelen apparently wanted to score with party colleagues tens of thousands of miles away. Perhaps the next D66 newsletter will contain a glowing passage about how their state lectured the big bad Microsoft. In any case, it will be bonus points in certain circles if Van Huffelen aspires to a job in Brussels and wants to further profile herself as a fighter for civil rights against tech capitalism. After all, she certainly wanted to profile herself.

Ready steward at the Evening Walk

Each speaker received in advance an explanation of the dress code, "business casual (for gentlemen: suit, no tie). I don't know what her letter said, but I'm sure it wasn't "ready steward at the Evening Four. Van Huffelen's yellow dress and particularly ungainly appearance by Asian standards stood out more than her substantive contribution.

If someone in Asia makes a comment on a panel with which you disagree, you don't say, especially as a representative of a country, 'that is not true.' Then you say, for example, 'I have a different viewpoint.' Or: 'another way of looking at this, is xyz'. In the audience, people wondered aloud whether Van Huffelen was wearing a beach dress and whether she had confused her islands, because 'the yellow of Cory Aquino was in the Philippines, not Singapore.' An ill-mannered Dame Edna is not what you want to portray as the Netherlands in one of the largest global markets.

The most embarrassing moment, although I wonder if Ms. Van Huffelen caught it, was when a real minister, Josephine Teo of Singapore's Ministry of Communications and Information, announced the creation of the AI Verify Foundation. Not a policy paper without clear goals, but a foundation in which business and government jointly establish tests that companies and governments worldwide can use to test AI applications. Teo emphasized that AI is so important especially for small countries like Singapore because it can increase a country's efficiency and production without additional human labor. No question.

Quantum computing near, threatens cryptography

There were more interesting announcements at the Asian Tech Summit. First, Deputy Prime Minister Heng Swee Keat reported the creation of the National Quantum-Safe Network Plus (NQSN+). That's a mouthful and requires some explanation, this site reports:

'The National Quantum-Safe Network (NQSN+) focuses on establishing a national platform and testbed for a systematic build-out of quantum-safe communication technologies, by evaluating security and demonstrating the integration of quantum-safe applications, best practices and use cases.

The main goal is to deploy commercial quantum-secure technologies for trials with government agencies and private companies; to conduct in-depth evaluations of security systems; and to develop guidelines to support companies in adopting such technologies.'

Singapore aims to secure the crucial banking sector for the long term, hence the creation of this quantum-secure network. Indeed, the importance of quantum computing will grow rapidly in the coming years. The most engaging moment during the panel I participated in, on the future of Web 3.0, was when IBM Fellow Ray Harishankar explained (starting at 25.30) why quantum computing is crossing the path of the modern Internet and will be able to retroactively crack current cryptography.

Harishankar expects that between 2030 and 2035 quantum computers suitable for specific applications will become available. His message is as simple as it is ominous: to be ready for quantum computing in 2030, organizations must have their cryptography in order now because no password will soon be safe.

Singapore is collaborating on security and standardization with South Korea, which last month announced as much as $2.6 billion dollars to invest in quantum technology research. I already can't wait to hear what Secretary of State Van Huffelen has against quantum technology. 

Apple Vision Pro better device than expected, but for what?

What woman spends $3499 on ski goggles that mess up heur hair?

Apple finally announced the Apple Vision Pro, the first step toward a completely new form of computing. Marques Brownlee explained in this particularly good video what the Vision Pro excels at and where the challenges lie for Apple. I was surprised that the introductory price is still $500 higher than expected: $3499 is not the price buster of the month. For that, though, the Vision Pro is packed with high-quality sensors.

As an Apple fanboy, I was pleasantly surprised by the all-new interface: nothing keyboard and mouse, but delicate eye-tracking. Look at something and the glasses see it. Blinking becomes the new buying 😉 Even though it will probably take a decade for Apple headsets to generate a significant portion (more than 10%) of sales, it's great to see that Apple is finally trying something big and hard again and not spending billions on stock buybacks.

Zuckerberg responds

Mark Zuckerberg was smart enough to take extensive time (nearly 3 hours!) right after Apple's announcement to comment with Lex Fridman. He had a strong argument that the Apple Vision Pro seems to be made for solitary use and not for communication with others. For the Apple Vision Pro and its successors, that indeed seems like the next step, as users of the iPhone but even the Apple Watch use their devices primarily to communicate, in the case of the Apple Watch as a receiver.

The complete integration of the Apple ecosystem between Mac, iPhone, Apple watch and Vision Pro will be fascinating to follow. Over the next few years, it will be interesting to see what applications Apple develops to try to make the Vision Pro a mass-market product. I remain convinced that the biggest obstacle will be getting women excited about putting on a device that messes up their hair and makeup. Then the utility or fun of an Apple Vision Pro would have to be enormous.

Zuckerberg himself, meanwhile, has the greatest possible difficulty motivating and enthusing his people. The Washington Post reported that even before the latest round of layoffs in May, which brought the total number of layoffs at Meta to as many as 21,000 jobs, confidence in his leadership among staff had fallen to 26%. Even for a Dutch politician, that would be pathetically low.

Notable links

First, two reading tips for any person interested in AI and for "Minister" Van Huffelen:

  • Why AI will save the world. Netscape founder Marc Andreessen, particularly successful as an investor this century, explains in a lucid speech why AI has mostly positive aspects.

Further:

  • Interesting video in which Twitter founder Ev Williams talks about how he feels about Twitter under Elon Musk. An interview that gives the impression that the demise of his brainchild really hurts him.

Spotlight 9: The SEC goes wild on crypto exchanges

Sleepless week on stock markets, except for crypto exchanges

It was a soporific week in the stock markets, with the old school S&P 500 outperforming the tech funds. All the negativity about Bitcoin was apparently already priced in, as BTC barely dropped amid all the uproar over the announcement that the U.S. SEC has filed charges against Binance.

Last year I wrote about Binance's lack of commitment to combating money laundering. More surprising is the charge against Coinbase that the company sold shares without having the necessary licenses. In doing so, the SEC takes the position that at least some cryptocurrencies should be considered shares.

At the same time, it is not conclusively established that the SEC has the authority to pursue charges if elected representatives of the people are drafting legislation in the area the SEC is just now moving into. Former Wall Street Journal reporter Michael Casey, now the editorial boss at Coindesk, wrote a comprehensive analysis of the legal battle unfolding in the U.S. at the intersection of crypto and politics.

The shadow that the FTX debacle cast over the crypto sector has global repercussions. Also in Singapore, where unlike the Netherlands, failures do have consequences. Employees of sovereign wealth fund Temasek who invested in FTX and lost $275 million dollars (still less than one percent of invested assets) saw their salaries cut.

How much was not disclosed, but although investigations showed that all procedures had been followed, the fraud and theft by Bankman-Fried and consorts, Singapore's sovereign wealth fund managers was severely punished. I find this heavily punished, because in the end Bankman-Fried simply stole from his investors and customers, but maybe I am too Dutch and used to incompetent souls rolling from one cabinet to another.

Categories
AI technology

Does AI mean the end of the world for Do-It-Yourselfers?

'Reducing the risk of extinction from apple pie should be a global priority, alongside other societal-scale risks such as pandemics and nuclear wars.'

If this had been apple pie and not AI, the Journal would have opened with it.

Had that been the one-line statement made public last Tuesday by dozens of leaders in the field of AI (artificial intelligence, artificial intelligence), it would have been bigger world news than it is now. Only it did not mention apple pie as a threat to the world, but AI. That made the statement a lot harder for journalists to interpret, because AI is a kind of water of technology: it can be used to give people drinks, or waterboard them. The line between those is clear: It's about who decides to stop drinking.

The fear is that in the case of AI, the software itself decides when something happens. Or stops. I once started blogging and nowadays write this newsletter because it forces me to keep up with my field and then organize my thoughts publicly. So herewith my immodest attempt to put the latest developments in AI into a broader perspective.

Who are these people?

First, that statement last Tuesday, issued by the Center for AI Safety (CAIS, pronounced Kees) whose mission is "to reduce the risks of artificial intelligence on a societal scale. We learned from the Watergate scandal that the first thing you do is follow the flow of money, so where does Kees get the money? The Open Philanthropy Foundation donated over $5 million and is in turn funded by former Wall Street Journal reporter Cari Tuna and Dustin Moskovitz, one of the founders of Facebook. (You can guess for yourself whose piggy bank of that couple was turned over the most for this donation. Oh well, at least the money Facebook makes from selling out its users' privacy will be spent on something useful).

In Europe, tricky dossiers usually involve a covenant between government, industry and a party that policymakers describe as ''civil society'' in those kinds of papers that nobody reads. America is the land of the one-liner, so there they arrived at this chunky phrase: ''Reducing the risk of extinction from AI should be a global priority, alongside other social-scale risks such as pandemics and nuclear wars.''

And that was it, that's all there is in the 22-word statement. It led to rather vacuous media reports from which you can almost read the reporter's despair. Like "my goodness, do I now have to explain to what extent this statement is similar to Robert Oppenheimer's on the danger of nuclear weapons, or shall I just list the list of signatories? It became mostly the latter, of course, and you will recognize most of the names from previous newsletters. CNN bravely lists, "The statement was signed by prominent industry officials, including OpenAI CEO Sam Altman; the so-called "godfather" of AI, Geoffrey Hinton; top executives and researchers at Google DeepMind and Anthropic; Kevin Scott, chief technology officer of Microsoft; Bruce Schneier, the pioneer of Internet security and cryptography; climate advocate Bill McKibben; and musician Grimes.

Who didn't sign?

The latter is kind of funny, because Grimes is the baby mama of as far as we know the youngest son of Elon Musk, who is even named X Æ A-Xii because it is the elven spelling of the term AI. (Read that last sentence again and realize that this is a defenseless child.) The very name Elon Musk was missing from the signatories. Other people who conspicuously did not sign the statement, and whose names it seems to me would have made sense if CNN had inquired why, are Jeff Bezos (founder and chairman of Amazon's Supervisory Board), Sundar Pichai (CEO of Alphabet, Google's parent company, man of this brilliant speech), Andreessen Horowitz (the leading investor in technology companies), Mark Zuckerberg (CEO Meta, formerly known as Facebook, buyer of former competitors like Instagram and Whatsapp) and Peter Thiel (financier of, among others, LinkedIn, Yelp, Facebook and Palantir and through his Founders Fund also Airbn and Space X). And further missing are just about all players in the technology field from India, South Korea, Japan and China.  

All of these parties have the knowledge, clout and motivation to become a major player in the global market for AI applications. And they have not signed the no doubt well-intentioned declaration to take care that the world does not perish to AI. Of course, that doesn't mean that the chief bosses of the tech world will try to destroy the world with AI; after all, killing off the world's population would be bad for their quarterly numbers.

What about Bill Gates?

Microsoft co-founder Bill Gates publicly hopes that Amazon and Google will lose out to AI. Furthermore, he has little influence on the public debate about AI; it is no coincidence that CNN did not even mention Gates in the list of signatories and even Elon Musk's ex did. I place little value on the predictions about technology from the man who, in his November 1995 book The Road Ahead, called the Internet not the future, but a dirt road compared to the information super highway he himself would build in the form of MSN.

It remains incomprehensible to me that Gates does not provide more analysis on the business aspects of technology, but continues to muse on the social implications. Because precisely as an entrepreneur, he remains, in my view, unparalleled. His vision is brilliant when measured over say 24 months, not 24 years.

Remember from Bill Gates especially these two achievements:

  • IBM was looking for an operating system for their new product, the personal computer, in 1981; Gates had nothing on hand but bought the obscure Quick and Dirty Operating System (QDOS) from a small software maker for seventy-five thousand dollars, changed the name to MS-DOS (because the spotless IBM could not do anything with the word Dirty) and did not sell the software, but licensed it to IBM on a non-exclusive basis. That form of licensing was virtually unknown in the software world. Primarily on the basis of this one deal, Microsoft became the most valuable company and Gates the richest man in the world.
  • In 1995, Microsoft was the most powerful company in the technology world and Gates the world's richest man. Only, the whole image of Microsoft and Gates was focused on a world where computers barely worked together, let alone communicated together or enabled transactions. While Jeff Bezos was a few miles away building Amazon into an e-commerce machine and would follow in Gates' footsteps as the world's richest man, Gates wrote a memo to the top of Microsoft that would become known as "the Internet tidal wave. In fact, Gates said, "I was wrong. We need to make all our products Internet-capable.' I had never seen a CEO confess his own mistakes in such a way and have the entire corporation turned around and focused, in such a short time. Admitting that he had overlooked the Internet struck me as great. (And I was relieved, because my brainchild was called Planet Internet and it's not good to wake up every day thinking the world's richest man is saying your product sucks.)

His book The Road Ahead would come out six months later and already be dated upon publication. It was especially odd because Gates had so strongly emphasized the importance of the Internet in his memo. The Internet, Gates orated in his book, was built on antiquated technology and therefore too limited to transmit information, communications and transactions over it on a large scale.

What happened next was as hilarious as it was symbolic, because his book required a second version as quickly as his software did: just a month after the book was published, Gates began work on a second version, which appeared in October 1996 and was no less than 20,000 words longer, just as his software counted more and more lines of code. In the second version of the book, Gates made the Internet much more central.

The only thing I liked about The Road Ahead was that Gates had written it with then Microsoft CTO Nathan Myhrvold, a former world barbecue champion who had studied under Stephen Hawking. From Myhrvold, I would have liked to have read more.

Bill Gates is like a nerd version of Marco van Basten: a top player who is phenomenal as an analyst, but failing as a coach. I sincerely hope Bill Gates will write about applications of AI, about business models, opportunities and threats; about everything except what it will mean for society. And full disclosure: my opinion of Gates is independent of my own experiences with him and Microsoft in the browser war.

Impact, a Belgian employment agency for technicians, came up with this nice advertisement

Why is AI so promising and so dangerous?

Far more important than Gates' opinion on AI, I found this article about an officer in the U.S. Air Force who gave a reflection on a drone that went wild because of AI and wanted to kill its own driver. The first gasp was that this actually happened, but apparently it was just a scenario being discussed in the U.S. military. Thank goodness, because it is the ultimate Terminator nightmare when the monopoly of violence falls to computers.

While a huge technological achievement, even Nvidia's new supercomputer, which I wrote about last week, will not lead to a mass breakthrough of AI applications. Such computers are so expensive and complex that only a small number of companies have the capabilities to use them properly. Of course, it is a huge revenue generator for Nvidia, as Amazon, Microsoft, Meta and Google will gladly stock this computer en masse, but it is precisely open source AI that seems to be the definitive breakthrough of AI.

These are not my words, but this is according to a leaked internal Google document. According to the leaked document, the open source AI community is so active and highly developed, that as soon as more accessible development capabilities emerge, both OpenAI and Google are hopeless. While OpenAI and Google use "proprietary" LLMs (Large Language Models), the models in open source are actually ready for public use. This makes the group of global developers larger than the OpenAI and Google staffs, the thinking goes.

Hooray for QLoRA?

And now it appears those cheaper tools will be available within a year! Because it seems to be possible to develop AI applications on some out of the box gaming PCs. LLMs used to develop generative AI applications can normally only run on enormously powerful computers. That is the reason for the explosive price increases of the makers of such devices such as Nvidia and Marvell, which I wrote about last week. As one reader sent, "QLoRA completely changes the landscape. You can use the same 8x80GB on a single 48GB card. From an $8x15K piece of kit to a souped-up PC.'

Translated into slightly more normal Dutch: the fact that you can cram 96 billion 4-bit weights into 48GB (which is huge) means that AI development is now available to hobbyists. What normally costs a ton of equipment can now be done for a few thousand Euros. For enthusiasts: here the scientific article. And here the tweet predicting that within a year these computers will be commonplace.

AI for Do-It-Yourselfers

The question is what applications will be built if hobbyists, enthusiasts and rogues will have the ability to create AI applications. And the follow-up question is how to monitor and regulate this, if at all possible.

Finally for this piece on AI:

Notable links:

  • Artifact, from the founders of Instagram, is a personal news reader. Just downloaded, but not yet tested, with the slogan: "Finally, an AI-driven news feed with you in control. Because no startup can do without the word AI in its slogan in 2023. I'd love to hear readers' opinions, anonymity guaranteed.
  • Bold: a detailed forecast of the development of AI Singularity through 2029. Someone should check this annually for accuracy; I certainly forget.
  • Meta (Facebook's) wants every employee assigned to a particular branch to show up at the office at least three days a week starting in September. Unfortunately, it is not clear what percentage of employees this will apply to. It remains to be seen whether this will cause many talented employees to leave, as as many as 150,000 jobs were lost in the US tech sector this year alone.

Event of the week: ATxSummit Singapore

A not-so-subtle humblebrag: the creator of your Sunday tech newsletter is participating Tuesday in a panel on Web 3.0 beautifully titled "Everything, Everywhere, All at Once. It's part of the ATxSummit in Singapore, where "governments, businesses and knowledge centers gather to discuss the role of technology in our shared digital future.

27 recipients of an email about a panel in Singapore with four participants

People often ask what working in Singapore is like, and I usually answer that question with "intense. Everyone is professional, from a receptionist to a minister, focused and dedicated. At the same time, I worry about whether people are relaxing enough and not working too hard. See above screenshot of an email about the preliminary online meeting on our panel, which consists of only four participants and yet went out to 27 people. You'd think this would lead to a huge bureaucracy, but officials, for example, answer email inquiries substantively within three business days. Sometimes I begrudge everyone in Singapore a daddy or mommy day a week.

Since I will have access to a make-up artist, something that has been at the top of my wish list for years, I expect there will be a livestream that I will share through my accounts on Twitter, LinkedIn and Instagram. The panel will take place from 9 a.m. to 9:45 a.m. Dutch time. Advance warning: it's only for the connoisseur/lover of concepts like "participatory data" and "decentralization of identity.

Topping the Spotlight 9 inside: Nvidia

For years, the technology sector has been talking about a handful of dominant players: Alphabet (Google's parent company), Amazon, Apple, Facebook (now Meta) and Microsoft. Since this week, we can count Nvidia among them, which passed Meta in market value. For a while, Nvidia was even "a trillion dollar company," or worth more than a trillion: a thousand times a billion. (A billion in English is a billion and a trillion in English is a trillion. They are not the inventors of the useless inch and driving on the left for nothing).

Meta past in market value, 175% increase this year: Nvidia belongs in Spotlight 9

Therefore, in my completely arbitrary survey of key economic indicators for the tech world, my Spotlight 9, I threw out the Dow Jones Index and replaced it with Nvidia. After all, for the overall market, the S&P 500 is already in the list, for crypto the tokens Bitcoin and Ethereum, and that leaves no fewer than six indicators of stock market sentiment for the tech sector.

But beware: anyone who buys a share of Nvidia now does so at a P/E ratio of over 200! Compare that to Apple, with a P/E ratio of 30, and then I dare say it is unrealistic to expect Nvidia to grow more than six times as fast as Apple. In other words, Nvidia stock is extremely expensive, regardless of that AI-driven demand for GPUs and the new Nvidia supercomputer.

Speaking of Apple, I wrote, to the annoyance of a number of Apple employees who I thought I could count among my circle of friends until that article, about the long-awaited Apple mixed reality headset, probably called the Apple Reality Pro. This device, the first all-new device since the Apple Watch in 2015, is expected to be unveiled at WWDC on Monday. If it really is something special, I will write an extra edition of this newsletter on Tuesday morning. If not, thanks for your interest and see you next week.

Categories
AI crypto technology

$115 million for a 1-page website

The news in the tech world is completely dominated by AI, in a way that recalls the breakthrough of the World Wide Web in 1993 after the launch of the Mosaic browser and the period 15 years ago after the first iPhones and Android phones were introduced. The latter two (smartphones and the Internet) are the carrier for today's technological revolution, for that is what we must now call AI. And yet I found something else more striking last week: that OpenAI founder Sam Altman, with his other company Tools for Humanity, raised a whopping $115 million for the Worldcoin project. Because as a tech entrepreneur, since Steve Jobs and Elon Musk, you don't count with one billion-dollar company; you have to have at least two. And you meet with world leaders, apparently in brown shoes.

Lovely casual: jacket off for President Macron and Sam Altman wearing brown shoes under a dark suit. source: Twitter Macron

It is remarkable, to say the least, that Tools for Humanity, which presents itself on its 1-page website with the slogan "a technology company committed to a more just economic system," is raising as much as $115 million for the Worldcoin project. Because Worldcoin is an open-source protocol, or platform whose use is open to all, while further scrimping on funding startups in the crypto world. What does Worldcoin do?

"We seek universal access to the global economy, regardless of country or background, and accelerate the transition to an economic future that welcomes and benefits everyone on earth," according to the slogan on Worldcoin's website.

That's still pretty vague, but Alex Blania, CEO and co-founder of Tools for Humanity and Worldcoin project leader, clarifies it somewhat in the press release, "As we enter the era of AI, it is imperative that individuals be able to maintain their personal privacy while proving their humanity. In this way, we can ensure that everyone can realize the financial benefits of AI."

So AI again after all ... there's no escaping it. But Blania definitely has an important point: it is important that people can prove to be human in all kinds of transactions, without having to share personally identifiable data. At Worldcoin, verification of being human is ensured through the use of an Orb, a sphere: a biometric iris scanner. 

$115 million, but then you have something.

When Worldcoin was launched, it was not Worldcoin's intention to create its own hardware, but earlier this year it explained that there was no other way to prove that you were dealing with a living human being other than through the use of biometric measurement devices. Those interested in learning more about the reason for the large investment in Worldcoin can hear about it in this podcast with Spencer Bogart of Blockchain Capital. Those who want to download the Worldcoin app, click here.

Sam Altman on tour

Sam Altman is not only co-founder and chairman of the Supervisory Board of Tools for Humanity, the company behind Worldcoin, but most importantly founder and CEO of OpenAI, maker of the wildly popular ChatGPT and the company that raised $300 million for ... 1 percent of the company. In that role, Altman toured Europe last week, with President Macron, who has never seen a mirror he didn't like, being quick to invite Altman to the Elysee.

Once Macron vowed that France and Europe would not once again fall behind in new technology, but meanwhile Europe hardly plays a role in the AI battlefield. Europe is nice as an outlet, and Altman was savvy enough to mention that OpenAI will obediently abide by all European rules. Meanwhile, I wonder why the English establishment is still so fanatically against brown shoes under dark suits that the Guardian devoted an article to it.

Everything is AI right now

OK, so I tried this week; to not just write about AI. But it's not easy. Not only does Worldcoin appear to have been created primarily to prove humanity in the age of AI, but major crypto funds are removing the word crypto from their websites and suddenly focusing on AI as well. For example, Paradigm has been saying this since the beginning of this month: 'Paradigm is a research-driven technology investment firm.' Nothing wrong with that. But they used to say this: 'Paradigm backs disruptive crypto/Web3 companies.' That's akin to the cousin who introduced himself as a crypto expert and life coach at your aunt's birthday last year, but appeared on Mother's Day the other day in a t-shirt with ChatGPT on it and bragged around that he's been fistful of AI for years.

While investments in the technology world continue to decline globally, the AI sector is a magnet (or a bottomless pit?) for big money. Crunchbase counted as much as $20 billion in AI investments. Early last week, investors put $700 million into two AI startups - Builder.ai ($250 million) and Anthropic (a whopping $450 million) - and mid-week another $105 million into AI marketing platform Insider. In which I noticed that QIA, Qatar's state fund, invested in both Builder (from London) and Insider (from Istanbul). That won't sit well with Macron.

Among all the raving press releases about the millions being invested in AI, it is important to keep looking at applications of AI. Michiel Schoonhoven of NXTLI pointed me to this fascinating presentation by Sal Khan on TED, about how AI will not destroy education, but rather save it. And Microsoft announced that Windows 11 will be brimming with AI because Bing Chat will be integrated. I got flashbacks to Clippy, that talking yellow paperclip.

Notable links:

  • JP Morgan, it says, is introducing a ChatGPT-like service with investment tips, perhaps called IndexGPT. This service could make the personal investment advisor obsolete, but it is unimaginably difficult to get the right information into the system so automated good buy and sell advice generation will be a challenge for JP Morgan. This is going to be fascinating.
  • According to GeekWire, venture capital investments around Seattle, home to Microsoft and Amazon, among others, have dropped by as much as 79%. In the Netherlands, the drop would be only a third, and the suspicion is that this downward trend will continue sharply.
  • The Economist reports on mass layoffs in the tech sector, with an estimated, 120,000 people losing their jobs.
  • The Information came up with a map of cafes where investors often sit so you can attack them with a bad story during their almond milk cappu. Replace the word "investors" in that sentence with "young women" and it becomes clear how creepy these kinds of articles are.
  • Amazon has abandoned a significant part of its climate pledge and removed the blog post announcing the "Shipment Zero" initiative. Companies like to score with press releases, but in practice short-term profits are often preferred over a livable planet for the next generation.

Spotlight 9: GPU makers are winners of the week, maybe of the year?

The most important acronym in the tech and business world today is AI, but another acronym - GPU - is not far behind. GPU stands for Graphics Processing Units, the type of chips needed for AI applications. GPUs are optimized for training models for artificial intelligence and deep learning because they can perform multiple calculations simultaneously. The profit forecast of chip designer Nvidia, which makes GPUs for ChatGPT and the like, shows the rising demand for these types of chips , according to the Wall Street Journal.

'Nvidia said it expects to generate about $11 billion in revenue in the current fiscal quarter ending in July, up 64% from the same period last year. That figure, which CEO Jensen Huang said will be driven by demand for artificial intelligence software, would be $2.5 billion higher than Nvidia's previous record for quarterly revenue. Then there's the expected increase in earnings: Nvidia said gross margins will rise nearly 4 percentage points in the July quarter. Analysts expect the company's earnings per share to rise 30% over the next 12 months, compared with 6% for a basket of 11 other chip companies.'

And Nvidia's smaller competitor, Marvell, also benefited from investors' attempt to get their grabby hands on some of the AI fortune. Marvell's CEO came up with a striking prediction:

'Given the speed at which AI infrastructure is evolving, the technology is renewed within 18 to 24 months, compared to more than four years with standard infrastructure.'

In other words, we're going to earn ourselves crazy from this technology because it's going to be written off much faster by the customer.

7.6% price gain for Bitcoin is a joke compared to Marvell's 45% and Nvidia's 26% rise. It's still investing for those with a strong stomach.

Marvell shares rose as much as 45% over the past week, even more than Nvidia, which climbed 26%. Since January 1, Nvidia shares rose as much as 176%, compared to 25% for the Nasdaq. The GPU makers' results are especially extreme when compared to my 'traditional' Spotlight 9, which includes the largest tech companies, the two dominant crypto stocks and the Dow Jones and S&P 500 as representative of the largest companies. Even Bitcoin rose 'only' 7.6% this week. Plenty of Bitcoin fanatics will gloat that their favorite currency is not called BitcAIn.

Categories
AI NFT's technology

The Apple Vision Pro is going to fail and that's fine

Among all the news on AI, you would almost forget that in two weeks, Apple is expected to announce its first new device since the Apple Watch in 2015. It will be mixed reality glasses that could cost as much as $3,000 (three thousand!). All the omens are that the Apple Vision Pro will be a flop - a flop by Apple standards, that is. But that's not a bad thing at all. At least Apple is trying to develop something new again, and that's better than unimaginatively buying back its own shares for hundreds of billions, as it has in recent years. Apologies in advance for this long speech below, but I felt like it.

Beautiful render of the Apple headset by Marcus Kane, creator of beautiful renders and lucid analysis. Another stunning render was created by Denis Lukianenko.

What can Apple's ski goggles do?

The glasses, likely to be called Apple Reality, are expected to feature an internal screen for virtual reality, while outward-facing cameras will allow users to view the real world inside the headset with augmented reality overlays. This combination is known as mixed reality, or blended reality.

Angry tongues claim that the first pair of glasses Apple is expected to release late this year is a poor compromise between these two visions, with external video cameras thus capturing the environment and displaying it on the screen in front of the eyes when users switch the headset from VR mode to AR mode. In technical terms, video pass-through.

What does this mean in normal Dutch? Bassie (of Adriaan) would say that the glasses allow you to see the inside of your eyes. Because the first function is that of "regular" virtual reality glasses, giving you the experience of standing on stage next to Beyonce or at the top of Mount Everest. But the second function offers the user the chance to simply look through the glasses at the real world, in which mom asks if you've taken out the trash yet. Possibly supplemented by information projected over that sad reality (augmented reality), showing, for example, that the garbage truck won't arrive until the day after tomorrow and you can continue gaming in peace.

But for how many people are the potential applications actually relevant, informative or fun? The Wall Street Journal logically headlined: Can it be more than a nerd helmet? The expected primary applications of the Apple headset are FaceTime, Apple Fitness+ and gaming. Those are applications that already work well on computers, iPhones, gaming consoles and smart watches, such as the underrated Apple Watch.  

Is the Apple headset becoming serious business?

Among all the rumors about the Apple headset, I enjoyed the garbled listing of all the materials purchased by Apple, called the Bill of Materials. If correct, Apple has already spent $1500 on component purchases. More details here.

These expensive components are one reason that the much made comparison between the Apple Headset and the Apple iPod is completely flawed. Optimists point out that when the iPod was introduced in 2003, only 3 million MP3 players had been sold worldwide, compared to over 8 million VR headsets today. In other words, Apple is now entering a much larger, more mature market than back then with the iPod.

This ignores the fact that the first iPods cost $399 and $499 respectively in 2001, which for a device you use every day was expensive, but not insurmountable. Compare that to the whispered introductory price for the Apple Headset of $3,000 for a device you just don't use every day. A market for that kind of device in that price range does not exist and is not going to exist.

Apple hopes that like the iPod and iPhone previously, people will use the Headset for hours, if not continuously. But the applications to do so are lacking. That leaves you with nerds and gamers, and that seems like a great market. But not at these prices and especially not when there is little spectacular new content available. Before MP3 players, there was music. In fact, more music than ever before. The device feasted on the huge supply of pirated music that flooded the Internet via Napster, Limewire and Kazaa.

Because what is often forgotten is that MP3 players, including the iPod, benefited from the ability to listen to music by artists whose entire CDs you would never otherwise have bought. I am man enough to confess that How Do I Live by LeAnn Rimes was high on my iPod playlist for years, but I had never bought an entire CD of hers.

Content development for the entire VR/AR/XR market, on the other hand, is complex, expensive and time-consuming. The Apple Headset will have to run on legal content (read: no porn) and that costs money. So where the iPod was relatively cheap and played free content, the Apple Headset will be an expensive device with expensive content. And that suddenly reminded me of my graduate thesis and the huge failure of the Apple Newton.

In Search of the Holy Grail

The Apple Newton did just fine. As a bookend and dumbbell. Source: Ars Technica

Exactly thirty years ago, in 1993, Apple launched with much fanfare the Apple Newton, a handheld computer whose main asset was the possibility of handwriting recognition, which would make a keyboard unnecessary. That same year, Frans Straver and I graduated together on a study of success and failure factors of interactive media in the consumer market, entitled In Search of the Holy Grail. The conclusion after a year-long analysis of more than 600 scientific articles and pieces from the international trade press, was not shocking: interactive media that want to be successful in the consumer market must be cheap, easy to operate and preferably provide a hefty amount of erotic coziness.

In 1993, university professors asked how we had gotten this photo on the cover of our thesis. Video camera set on an old, painted flower pot. Idea of the brilliant photographer Morad Bouchakour.

Philips misread our conclusion and was kind enough to let us present the results at a conference in Ahoy. After I showed the picture showing that Philips' interactive compact disc player, the cd-i, would be mercilessly crushed between the PC at the top of the market and the game console at the bottom, Frans and I were thrown out before lunch.

What we ourselves and the brains at Philips overlooked at the time was that the Apple Newton suffered from exactly the same shortcoming as the CD-i: high price, no necessary new applications and no supply of pink content, as it was so nicely called at the time.

Wired published a great article 10 years ago about the failure of the Newton. CNET seems inspired by this and recently came out with this video in which it takes 8 minutes and 30 seconds to draw the parallel between the Apple Newton and the Apple Headset.

The best analysis I've come across so far on the chances for the Apple Headset is this video from the Wall Street Journal. Within Apple, there also seems to be division over the potential of the glasses, and executives are now keeping their appropriate distance from the project. Hopefully the tech gods will be merciful to whoever presents the Apple Headset on June 5. My guess is that it won't be CEO Tim Cook.  

Apple Headset will be a flop - by Apple standards

Reports are that Apple hopes to sell half a million to a million Headsets in the first year. Even if that market doubles every year for the next few years, which it won't, that's still change for Apple. Because that's the downside of a company heading for $500 billion in annual sales: it's unimaginably difficult at that scale to bring something new to market that has more impact on sales than, say, a marketing campaign for a new type of Airpods.

But I'd rather see a relative failure of a fundamentally new product, than more of those hopeless share repurchases that Apple has been peddling in recent years. Is there nothing better to invent, build or buy than spending $90 billion on share repurchases? That Headset isn't going to be it, but surely there will be products in development within Apple that can match the success of the... Apple Watch!

Because notice:

  • Apple had over 30% global market share in smart watches by 2022
  • that 30% market share led to as much as 60% revenue for Apple from every penny that went into the smart watch market (30% market share vs. 60% dollar share)
  • Apple will sell over 50 million Apple Watches this year
  • the annual growth rate of the smart watches market is nearly 20%
  • Apple has higher watch sales than the entire Swiss watch industry
  • Swatch Group, LVMH and Richemont collectively achieve lower watch sales than Apple
  • Rolex's annual sales are around $10 billion
  • Apple does not publish specific figures on Apple Watches sales, but with 50 million Apple Watches sold, Apple is at least twice the size of Rolex

Combined with the success of the Airpods, which, with the Apple Watches, fall under the Wearables division, with the emergence of the Services division, this leads to a dramatic change in the structure of revenue for Apple. See these excellent charts on Apple's revenue by product line and region over the years. Sales from Wearables now exceed those of the iPad and Mac. Apple is a computer company where revenue from traditional desktop and laptop computers is still only 8%.

It would make sense for Apple to organize revenue distribution differently, for example:

  1. computer hardware (Mac, iPad, Apple TV)
  2. services (Music, Movies, TV Shows, Apps, Books)
  3. wearables (Airpods, Watches, Headset)
  4. iPhone (you know)

I conclude about the Apple headset with the same consideration as when the Google Glass came out 10 years ago: over half the people on earth are women. Do you know one who will walk around with a device on her head all day, messing up her hairstyle?

News about AI

Notable links

Dutch photography marketplace Unveil unveils Early Access Card

  • Buyers of the Early Access Card (price under $100) will get access 24 hours earlier to purchase exclusive artwork through the Unveil platform.

Worldcoin raises $100 million via sale of tokens

  • The other startup by Sam Altman of OpenAI gives free tokens to people who have their iris scanned with a new device.

One million wallets hold at least 1 Bitcoin

  • It could be one person with a million wallets, but I don't think so.

ASML has no job openings for a week due to server maintenance

  • Holland's favorite tech company apparently has servers made of papier mâché.

Spotlight 9: Google again winner of the week

Alphabet stock was again the riser of the week and I have no idea why. Google is throwing generative AI at every product right now and experts say this is a very risky strategy for the company.

I can't possibly characterize the bizarre market right now any better than this article on Crunchbase:

"Suppose you would have invested $100 in a Nasdaq Composite Index fund at the height of the boom. That would have been on Nov. 19, 2021, when interest rates were low and technology stocks were very popular.

Today, that investment would be worth about $76. It's a disappointing return that reflects how technology ratings have steadily declined in recent quarters. But it could have been even worse.

Now imagine if, instead of the index fund, you had chosen a basket of promising, venture capital-backed startups founded in the past 15 years. You know, companies like Airbnb, Coinbase, Rivian and Uber.

Let's say you had invested at the market high point in November 2021. And let's say you bought a share of the startups that launched the 19 biggest IPOs of the past 10 years. If you had held on until now, every $100 you had invested would be worth about $32. That's a much steeper drop than the drop in the technology-focused Nasdaq Composite Index and points to the public's deeper disappointment in mostly unprofitable new market entrants."

Two conclusions: profits are currently considered more important than growth. And investing in tech stocks is and remains highly risky. Because even Apple does not score on every try.

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Categories
AI technology

Google unexpectedly rewarded, Twitter's velvet hammer and vc's step into climate tech

First of all, happy Mother's Day! All love wished to all mothers. It's been a strange week in tech. To summarize: the media world that relies mostly on advertising revenue is heading hard toward the abyss, Twitter has a velvet hammer, venture capital funding of startups is changing and Google is unexpectedly rewarded.

Google has been surpassed in terms of success with AI by OpenAI and its licensee and shareholder Microsoft, but Alphabet CEO Sundar Pichai thought he could mask this by mouthing the word AI dozens of times during the Google IO event received with little enthusiasm. It led to this hilarious video.

AI gives us this King Chuck, without misso, with stogie

Deconstruction in the media world

In the traditional media, Charles' coronation took center stage, put into perspective by the popular Australian YouTube comedian Ozzyman who, during his commentary, referred to "Chuck and the misso in the king mobile.

In the Internet world, the former queen of online advertising suddenly surfaced after a three-year absence: Marissa Mayer, former boss of Google Search and ex-CEO of Yahoo, was given plenty of space to promote her new startup Sunshine. Sunshine has the same claim as its (how is it possible?) even more boringly named competitor Contacts+: improving your address book and contact management. Both companies praise their smart contacts but Mayer is smart enough to tout her Sunshine Smart Contacts with ... AI. Coming up: "Sunshine Smart Contacts uses AI and other sophisticated technology. Just in case we thought they made the app with quill, bottle mail and wax crayons.

It is no coincidence that Mayer chose to skip advertising as a revenue source at Sunshine, even though it made up the majority of her revenue during her time at Google and Yahoo. It became clear once again last week that over-reliance on advertising revenue is the death knell for any media company not named Google or Meta when the impending bankruptcy of former media crown prince Vice came out.

The hipster shack where you couldn't get a job as an intern without a facial tattoo and coke addiction is for sale for $400 million while it was once valued at nearly $6 billion. Still, it's nice to read how someone who worked there for nearly a decade looks back fondly on his time at Vice.

David Pakman explained simply to the outstanding podcaster Lex Fridman why the McDonald's of the news media, Fox News, relies much less on advertising revenue: each cable company pays a per-connection fee for retransmission of the sewer channel.

That's the dream for Twitter from Elon Musk, who had high hopes for revenue potential from user revenue but got stuck in the blue checkmark fiasco. Given the mediocre revenue results from online advertising and Twitter in particular, it was surprising that he found Twitter's new CEO in the advertising world. 'Elon & and the problem for the velvet hammer' sounds like a Suske & Wiske title, but 'the velvet hammer' is Linda Yaccarino's nickname. One can already bet how many days it will take for the velvet hammer to give way under Musk's hard knocks.

Musk is trying to follow the example of Facebook, where for years the golden rule was that Zuck built the product and Sheryl Sandberg provided the revenue. Those who worked at Facebook ended up being on either team. That worked fine until last year, when results were disappointing and Meta shares completely collapsed. Sandberg had switched to the SB just before that.

Dutch VCs happily continued to invest in 2022

NFX partner James Currier briefly summarized for Techcrunch what three forms of defensible elements successful startups have in common:

  1. Network effects: your product becomes more valuable the more people use it.
  2. Embedding: Integrate your services so deeply that customers "can't rip them out."
  3. Data loops: Collect, process and act on real-time data.

Assuming Currier is right, it would be interesting to see which Dutch startups meet these criteria. According to De Nederlandse Vereniging van Participatiemaatschappijen (NVP), last year around 1 billion euros was invested in 411 Dutch startups. Only in 2021 was this amount higher, at 1.8 billion Euros. But that was an exceptional year in which Mollie, MessageBird and Bunq, among others, raised hundreds of million. The upward trend of recent years, especially in the number of investments, continued in 2022. From what I hear in the corridors, investments by Dutch VCs are falling sharply this year, but no research is available to show that.

It would be fascinating to study whether all the incubators of recent years in the Netherlands have led to more successful startups. The Techleap support platform is too short-lived and has too vague goals to be measurable, but I hear a lot of positive things about it from tech entrepreneurs. I was thinking about the role of incubators when it was announced that the Dutch company Instruqt raised as much as $15 million in its first round of investment after operating on its own for 5 years. Instruqt did not emerge from an incubator and this entire round was done by Blossom, a foreign vc. Kudos and Godspeed to Instruqt!

The largest IPOs of the past 10 years all below first-day price

source: Crunchbase

Meanwhile, the market is so bad that the biggest IPOs of the last 10 years have all underperformed after their first trading strike. Top investor Elad Gil says things are about to get much worse. Perhaps that's why it's not a miracle, but a natural progression, that a ChatGPT-based fictional investment fund is out performing Britain's most popular mutual funds. Perhaps investing is not a people business?

To create the fund, ChatGPT was asked to put together a portfolio of stocks that followed a set of investment principles drawn from leading funds. Despite two warnings that it "cannot give specific investment advice," this was quickly circumvented by saying this was just a theoretical exercise. ChatGPT ended up picking 38 stocks, with the top performers in the fund so far being Meta, up nearly 30%, Microsoft, up 20%, and Intel, up nearly 18%. But as I wrote last month, Meta stock is scoring relatively so high this year because it experienced a historic price drop last year. 

One sector that VCs do warm to is "climate prediction tech. It's not that KNMI will be the next unicorn, because it's about companies that develop technology that can make better climate predictions.

KNMI, the new unicorn?

Unfortunately, the very technology that the world needs most, carbon capture, is proving extraordinarily complex and therefore will not attract sufficient investors quickly enough. This is sad because it is clear that governments will fail to take meaningful action that will limit global warming in time. Carbon capture technology removes CO2 from the atmosphere.

Notable links:

  • Nearly a quarter million Apple - Goldman Sachs savings accounts opened in the first week, at this rate Apple will be America's largest savings bank within a year.
  • Rats in an experiment moved VR objects only with their minds. 
  • The highly informative newsletter from McKinsey's boardroom consultants is now online and available for free.

Spotlight 9: The winner of the week is ... Google?

Having the CEO call AI very often apparently has an effect on investors

I never pretend to understand anything about investing and look at tech prices like the Eredivisie: the level remains mediocre, but sometimes there are outliers among them and you still faithfully follow your own clubbie. This week, for example, Apple did not seem to exist, as the stock moved 0.048%. Not so. Google is under great pressure on every revenue source, especially the search engine may be totally outflanked by ChatGPT within a year, just as Google itself once overthrew Altavista and Excite. And ... Alphabet shares are rewarded with an 11.7% rise. It's as strange as Feyenoord becoming champions. Just kidding, congratulations 010! Very well deserved. 

Happy Mother's Day!

Categories
AI crypto technology

Web Summit in Rio and senior citizens on Bitcoin, AI and ESG goals

It was a week dominated by elderly gentlemen: the god of investing Warren Buffett (92) and his apostle Charlie Munger (99), President Joe Biden (80) and the youngster Geoffrey Hinton (75, now ex-Google). They were all relevant, for better or worse, in areas I look at with interest: AI, crypto and ESG targets. And reader Maurits Stuyver was at the Web Summit in Rio de Janeiro, with a very different audience.

Created with DALL-E: four elderly men with white hair walk past burning nuclear power plants, as an oil painting

Bitcoin tax is nonsensical

This week President Biden announced that his administration is considering imposing a tax on Bitcoin miners in the amount of 30% of their energy costs. I personally do not own Bitcoin due to energy use, but this is an example of the kind of ill-conceived legislation that makes climate legislation measures generate unnecessary resistance. There needs to be a general overhaul of the tax system so that businesses and citizens pay taxes not only based on sales, profits, wealth and income, but also on pollution and resource consumption.

My former shareholder and mentor Eckart Wintzen advocated a tax on "extracted value from the planet" back in the 1990s. That would make much more sense than just a tax on Bitcoin mining, diesel cars or nitrogen emissions. The thinking is too small and isolated, but I hardly read that anywhere in the responses to this populist proposal by Biden.

When I wanted to start writing about technology and innovation again last March, as I did on my weblog 20 years ago, I ran into the problem, reason why even traditional media rarely report meaningfully on crypto, that there is not enough independent journalism on crypto worldwide. So unless you dive deep into something yourself and research sources, you can cite virtually no other media.

One popular crypto news site is Cointelegraph, which sold a Middle East license to PR firm Luna, which has mostly crypto projects as clients. The best source in crypto is Coindesk, but with FTX trying to recover nearly $4 billion from now-bankrupt Genesis Global, it is embarrassing that Coindesk has to continually emphasize that it is a sister company of Genesis. Imagine if the NRC were to report on the bankruptcy of Imtech and in an interjection reported, "NRC is a sister company of Imtech, both companies are owned by ZBM, Soulless Belgian Media Company.

Even Coinmarketcap, the most widely used source of cryptocurrencies, is owned by crypto exchange Binance, although it would take eight paragraphs to explain that Coinmarketcap operates independently. The list of such strange relationships is endless in crypto.

I come to this because I still want to provide an analysis on the new European crypto legislation and the upcoming crypto regulations in the US. And how lacking then is serious, professional analysis that tests the intended legislation against reality.

Crypto law can be simple

Actually, it's simple: if a party manages money from customers, crypto or not, it has to meet the same strict requirements as regular banks. So a site where you can buy crypto and then hold those tokens for you, whether it's Bitcoin or a stable token, must ensure that your funds are not being tampered with. The custodian function must be sacrosanct. The same goes for security tokens, tokens that are actually a crypto version of a type of asset (e.g. stocks, real estate, bonds etc) and should be treated like other investment products.

But all other types of tokens, from utility tokens (tokens that allow you to buy one type of service or product, similar to a digital book token) to payment tokens (such as Ripple), constitute a whole new class and cannot be lumped together with other tokens just because they are all crypto tokens. Developers of DeFi platforms, where users themselves provide the market in a pool via a smart contract protocol and buy and sell independently in it, can never keep track of who is buying and selling what; because they are merely the authors of a smart contract that enables trading, nothing more.

At the core, I fear lawmakers are making the mistake of looking at appearance and then treating all crypto equally. That would be as silly as legally treating a love letter and a fake bomb threat equally if they are both sent by e-mail.  

The first Web Summit in Rio de Janeiro attracted over fifteen thousand visitors, mostly from Sao Paolo

Web Summit in Rio big success, for Warren Buffett it's wait and see

Reader of this newsletter Maurits Stuyver was one of the few Dutchmen among the fifteen thousand participants at the first Web Summit in Rio de Janeiro last week. Stuyver, who does serious business development for interesting companies, wrote a readable account of his findings in this market, which is often overlooked in Europe. One striking conclusion I found was the new resort to crypto that Stuyver deduced, fueled by the new banking crisis in America that I wrote about last month. It was also news to me that Brazil has a big focus on fintech companies.

Maurice Stuyver also makes it through life in Rio

An estimated thirty thousand visitors descended on the antithesis of Rio de Janeiro this weekend as Warren Buffett held his Berkshire Hathaway's annual shareholder meeting again in Omaha, Nebraska. Free after Susan Sarandon in Thelma & Louise: "it may not be the middle of nowhere, but you can see it from here.

Usually shareholders are as critical of Buffett as the crowd at the Arena is of the Toppers, but this time something is brewing. Big shareholders like Blackrock want Berkshire Hathaway to start contributing more to meeting ESG goals. I doubt Buffett and his associate Charlie Munger (99) care. Together they are 193 years old, it seems to me that makes you happy to still hear the alarm clock go off in the morning. In the wings, squeaky-clean Greg Abel (60) is ready to take over from the seniors.

Nice quote from Warren Buffett yesterday about Apple, of which Berkshire Hathaway owns 6%:

"Apple has a position with consumers where they're paying 1,500 bucks or whatever it may be for a phone. And the same people pay $35,000 for having a second car, and [if] they had to give up a second car or give up their iPhone, they give up their second car. I mean, it's an extraordinary product. We don't have anything like that that we owned 100% of, but we're very, very happy to have 5.6 or whatever-it-may-be percent, and we're delighted every 10th of a percent that goes up."

Warren Buffet on May 6, 2023, at the annual meeting of Berkshire Hathaway shareholders in Omaha, Nebraska
Created with DALL-E: scary robot takes over the world, sci-fi style.

Not the week of AI

It couldn't be missed: 'the Godfather of AI,' Geoffrey Hinton, left Google because he is concerned about the dangers AI has for the world. Or as CNN cosily summed it up, "AI may figure out how to kill people. And they then pulled out 4 minutes and 11 seconds for that at the 24-hour news channel. PBS did better with this report. The annoying thing about the doomsday scenario Hinton outlines is that if it ever turns out that he is right, it will be too late for humanity to do anything about it. Who wasn't thinking about Skynet and The Terminator this week?

The US Federal Trade Commission (FTC) issued a warning this week that AI can manipulate people to the point of making bad decisions. The Republican Party did not let that be said twice and produced this anti-Biden commercial, created entirely with AI.

Notable links:

  • Nearly half of YouTube viewing time in America takes place on TV. Where YouTube once began with muddled amateur videos in a resolution of 3 by 4 pixels, audiences are now watching on 4K televisions. The advertising world is following the viewers, affecting the traditional TV world. Still, YouTube's revenue fell again. Good for advertisers, bad for media operators.
  • Globally, investment in startups is falling dramatically. What unexpectedly turns out to be the most popular sector to invest in? It's not AI or crypto, but good old health care.
  • An interesting trend in venture capital is investment funds run by active CEOs and entrepreneurs. So not by former entrepreneurs, but CEOs who apparently have time to do a lucrative side job on the side. Of course, Americans have coined another wonderful term for this: dual threat CEOs.
  • One of those CEOs with an investment fund is Auren Hoffman of Safegraph, herself the author of an excellent monthly newsletter and one of the few tech CEOs who is openly Republican.
Bitcoin and Ethereum rise again and Apple scores, despite falling sales

Spotlight 9: crypto rises sharply, Apple follows

Apple released its quarterly earnings this week and almost casually announced that revenue will decline this year. Consequence: the stock skyrocketed. A closer look at the stock price shows that Apple shares are already up 39% this year. Granted, it's not yet up to the level Bitcoin (+77%) or Ethereum (+61%) is at this year, but for the investor with a less strong stomach, Apple remains attractive. For those who hear people jubilating about crypto again at birthdays should be aware that compared to a year ago, Bitcoin is up -19% and Ethereum as much as -28%. And Apple? Ten percent in the plus.

Apple has actually gone up $400 billion in value since my comparison with Philips two weeks ago, almost the gross national product of a country like Austria, to once again compare apples to potatoes. Analysts had expected worse numbers and the iPhone is selling better, especially in India.

It remains difficult for Apple to balance on the tenuous tightrope between multiple worlds and especially multiple continents. For example, the Financial Times published this piece arguing that Apple is now a Chinese company. Nonsense of course, easy shouting from the sidelines. Apple is the corporate version of a global citizen trying to develop himself within the norms and values of the countries where he lives and works.

Categories
AI crypto

Elon Musk and his exes. And Apple CEO Tim Cook lost AI top talent to Google, but strikes blow with savings accounts

This week, almost all tech news seemed to be about artificial intelligence. After all, major innovations in AI capture the imagination and are recognizable to all, whereas a breakthrough in biotechnology, for example, is often literally visible only through a microscope to a limited group of experts.

Why do you need $300 million when you just raised $10 billion?

When $300 million dollars is paid by top investors for just over one (1) percent of OpenAI, the company that is the creator of ChatGPT, it deserves extensive attention. Especially considering that Microsoft invested $10 billion (!) in OpenAI less than three months ago, having already put a billion into the company in 2019. That 11 billion surely hasn't run out yet, so the question arises as to why OpenAI held this additional round of investment.

The main reason OpenAI wants to have a strong relationship with some of the biggest tech investors in the world is the burgeoning battle for the AI market. The time is approaching when really big money is needed, think billions rather than millions, for a company to join the battle of giants such as Google, Apple, Microsoft and Amazon who are all competing in this market. After all, AI is too important for all players to ignore. In fact, for Google, the success of OpenAI is life-threatening. With shareholders behind it like Tiger Global, Sequoia Capital, Andreessen Horowitz, Thrive, K2 Global and Founders Fund (from Peter Thiel, the legendary investor in Facebook and Palantir, among others), OpenAI can now operate independently of partner Microsoft. With an estimated market value of $27 billion to $29 billion, OpenAI is already worth more right now than, to name a crossroad, companies like Spotify and vaccine maker BioNTech, companies that have also successfully capitalized on major developments.

This 'photo' was generated entirely with Midjourney and is eerily real

CEOs Tim Cook and Sundar Pichai fight over AI talent

Meanwhile, in the race for the best AI technology, Apple with Siri and Amazon with Alexa are far behind OpenAI. The Information reported this week that three of Apple's top programmers therefore made the move to Google, despite attempts by Apple CEO Tim Cook to retain them. The personal offer from Alphabet CEO Sundar Pichai, who is committed to catching up with OpenAI, was apparently irresistible. Would any CEO of a European publicly traded company ever have made a personal effort to attract programmers, or to retain them, as Cook and Pichai are doing? I suspect the European gentry, for they are almost all men, feel too big for that.

How difficult it is to make a good AI application proved Snapchat, which received a 1 for the "My AI" feature from users, urging them to remove it from the app. It was not Snap's week, which saw revenue drop after which the stock slumped 17%. Dropbox announced it was laying off 16% of its staff while investing heavily in attracting new AI developers. This indicates that it is difficult, if not impossible, to retrain programmers to become AI developers.

Elon Musk, his X's and his ex

The wait is on for Elon Musk to get involved in the AI war with a company, but he seems too busy trying to ruin Twitter. He does constantly criticize OpenAI and CEO Sam Altman since he sold his stake in OpenAI to Microsoft. It is remarkable, to say the least, that Musk, in an open letter, called for a sort of six-month moratorium in AI development, but in the meantime continues to work on funding his own AI startup, which he alternately calls TruthGPT (as with now unemployed chief Tucker Carlson) or X-AI. That X should normally be in there from Musk; he previously started X.com and, of course, SpaceX. It's lucky it's Tesla and not Texla. His latest son is named X Æ A-Xii (call sign: Bert). And the Æ is in the poor kid's name because it is the elven spelling of the term AI. Musk's baby mama, Canadian artist Grimes, stood out this week by giving permission to use her voice in AI-generated music: "I'll split 50% royalties on any successful AI generated song that uses my voice. Same deal as I would with any artist i collab with. Feel free to use my voice without penalty.' This is especially notable because there is concern that AI will make the entire profession of voice actors obsolete. It will be interesting to follow what the implications will be for singers.

The Apple Card with rounded corners, Steve Jobs wouldn't have wanted it any other way

Finally: Apple is going to make mincemeat of the banks and does it with ... Goldman Sachs?

It had been expected for years and last week it was here: Apple made its entrance into the banking world. Remarkable remains the choice of Goldman Sachs as a partner, because Apple hardly uses the Goldman brand but uses the prestigious bank mainly for the banking license and as a colorless and odorless handler of savings transactions, as a kind of white label. While Apple rarely, if ever, buys market share based on price, when it comes to savings accounts the high interest rate actually stands out: 4.15%, as much as 10 times higher than the US national average. 

What is typical of Apple, however, is its great ease of use. The first step is to apply for an Apple Card, a credit card, which unfortunately is only available in the US for now. All spending via that card will default to 1% to 3% of the purchase amount in the form of what Apple has called "Daily Cash," a balance that is calculated and credited daily. Those who then open a savings account from the Apple Wallet and link it to the Apple Card, an action of no more than a few clicks, will see Daily Cash credited to the savings account daily and automatically receive the high interest rate of 4.15%. The savings account is free, there is no minimum deposit and there are no penalties if balances are withdrawn from the savings account. It is also possible to transfer funds from other banks to the Apple-Goldman savings account.

And precisely the latter is a nightmare for traditional banks. Because while there are other, lesser-known banks, giving even higher savings rates, they are not trusted brands like Apple. The combination of Apple Card with Apple Pay and the Apple Wallet is so seamless and simple that it will be difficult for banks to compete. It seems plausible that European banks will launch a hefty lobby in Brussels, combined with legal action, to make it difficult for Apple to enter the European market in the same way it does in the US.

Event: Consensus 2023

Nearly fifteen thousand people attended the leading crypto event Consensus in Austin, Texas last week, and that doesn't include the types who are too stingy to buy a conference ticket because they think they already know everything and want to tell you that the best networking happens in the pub. The sounds from Austin were universally positive, especially about the quality of the projects that survived the crypto winter. I found the most notable contribution to Consensus, viewed from a distance because I wasn't there myself, to be the interview with journalist Brady Dale, whose book about Sam Bankman-Fried of FTX will soon be published. Dale emphatically points to decentralized finance, DeFi, as the main solution against fraud and mismanagement, precisely where there is no central party like a stock exchange like FTX. I also found it striking that Dale specifically mentions memecoin Dogecoin as a relevant crypto alongside Bitcoin and Ethereum:

'To me, Dogecoin is the chain that said, A story, a character, a concept can have a value, and if a community believes in that character and works together in a distributed way to make the idea bigger, the value of the concept will grow and so will its currency. Dogecoin has really made that clear. It's not just about DOGE, it's about that whole idea of collaboration around a concept, and that's why I'm betting Dogecoin will be the comeback kid of blockchains, again and again, in the near future.

- Brady Dale

Good links

  • Check out this link to some particularly practical prompts to use yourself at ChatGPT.
  • Startup funding is under severe pressure. These four charts show that, and in Miami, investment in startups actually fell more than 90%. Partly a result of the focus in that region on crypto startups, which were struggling.
  • In the Netherlands, more and more investors are asking startup founders not to pay themselves a salary. Here are five reasons why they should.
  • Unknown identifies nearly 1,000 Bitcoin wallets belonging to Russian secret services. Very clever.
  • The U.S. government is about to take over First Republic Bank. I wrote earlier this month about what kind of bank First Republic is. Or was?

Spotlight 9: Meta and Microsoft the big winners of the week

Meta and Microsoft as outliers after good quarterly results

Reader Raoul Kuiper rightly asked me why I did include Bitcoin in this portfolio when I don't own it myself because of its energy consumption and associated carbon emissions. By way of explanation, I created this fictitious Spotlight 9 portfolio to track sentiment in the tech world on a weekly basis. I think when, as happened last week, virtually all major tech companies plus the Dow Jones and S&P 500 are all in the minus, that is relevant to the entire world of technology and innovation. Bitcoin and Ethereum I included because those are the most widely held assets of the hundreds of millions of people investing in crypto worldwide. Of the Spotlight 9, I personally find Microsoft, Apple and Ethereum interesting. The projects and companies I find otherwise fascinating, such as Polygon (MATIC), are usually too small to have an impact on stock market sentiment and the economy and therefore not included in the Spotlight 9.

Amazon, Alphabet (Google), Microsoft and Meta published good quarterly earnings this week, and Microsoft and Meta in particular benefited. Microsoft is expected to benefit greatly from the integration of AI, based in part on technology from OpenAI, into various products and services. Zuckerberg explained to investors that Meta uses a lot of AI to better target their TikTok competitor Instagram Reels, and that struck a chord: Meta shares rose nearly 13% in the last 5 days.

It was, in short, in every way the week of AI.

Categories
AI technology

Amsterdam AI startup raises 50 million, Ajax wins only on Apple TV+

This is the web version of edition 3, April 23, 2023, of my weekly newsletter, subscribe here.

For a very brief moment over the past few days, Amsterdam took center stage in the online world, and it had nothing to do with Ajax. It made me think back to 2003, twenty years ago.

On Leidseplein in Amsterdam, a group of unknown American comedians stood on stage at Boom Chicago, the comedy theater that had to rely primarily on drunken tourists. In California, the first iLife suite, consisting of the cumbersome iTunes and iDVD, which allowed you to burn DVDs very slowly, was launched amid jeers by the moribund Apple. Steve Jobs was at the helm for over 5 years and on $6 billion in sales, Apple was loss-making.

Ted Lasso's unexpected star, Hannah Waddingham, gives bald men hope in the episode Sunflowers 

Anyone who would have predicted then that 20 years later a brilliant comedy show based on a cheap commercial created by these comedians would break all sorts of records on an Apple streaming service with as many as 52 Emmy Award nominations would have been instantly fooled. Ted Lasso, the brainchild of Boom Chicago alumni Jason Sudeikis, Brendan Hunt and Joe Kelly, won the Emmy Award for best comedy series two years in a row. Earlier, Apple TV+ was the first streaming service to win an Oscar for best film, with CODA, which led to strong growth in Apple TV+ subscribers.

It's comparing apples to potatoes, but it's nice to look at how another legendary company that preferred to make only hardware and no content fared during the same period: our own Philips, unlike Apple, did make a profit in 2003, even nearly €500 million on sales of €29 billion, almost five times the sales of Apple that year. Twenty years on, Philips is worth €15 billion on sales of €17 billion and Apple has a market value of €2.3 trillion. Forget all those zeros: that's 2,300 times a billion. Apple has become worth over 150 times as much as Philips in two decades and is on its way to annual sales of over $500 billion, $100 billion of which comes from its services division alone. Not bad for a company that, to the anger of Steve Jobs, was so bad at services that it couldn't yet provide a decent email service. Or does anyone still have a MobileMe address?

But I digress, because entirely in the spirit of Ted Lasso, I would like to be positive this Sunday. Last Wednesday's episode, Sunflowers, was the reason I was reminded of when the creative minds behind Ted Lasso lived in Amsterdam. Sunflowers is an hour-plus long paean from the creators to Amsterdam. Including André Hazes and even a snippet of Rob de Nijs. The only implausible moment of this episode was the beginning, Ajax's 5-0 victory in the Johan Cruijff Arena. When in reality Ajax's only scoring team was the media team, which unfurled a large banner at the pub in London where part of Ted Lasso is being shot.

Why is an Amsterdam "vector database" worth 200 million?

Bob van Luijt and Etienne Dilocker, co-founders of Weaviate

Who wouldn't laugh?

While all of Ted Lasso's protagonists in the Amsterdam episode experienced a direction-defining breakthrough, the same was true of a startup unknown to me that announced it had raised no less than $50 million in its third round of funding. Weaviate calls itself a "vector database" but as the last generation whose math wasn't in the required curriculum, I'm not helped by that. (I'm guessing the name stands for weav-iate, do something with weaving, and not for we-aviate, we fly). Searching for more information about Weaviate, until January still called SemI which does not provide more insight, I found this excellent explanation by CEO Bob van Luijt:

'First-generation database technology is often referred to by the acronym SQL [...] which are conceptually similar to spreadsheets or tables. In the 1980s, this technology was dominated by companies such as Oracle and Microsoft. The second wave of databases is called "NoSQL." These are the domain of companies like MongoDB (and Elastic, MF). They store data in different ways [...] but what they all have in common is that they are not relational tables. [...] The third wave of database technologies focuses on data that is first processed by a machine-learning model, where the AI models help process, store and search the data, as opposed to traditional ways.'

That's an excellent explanation, and it's smart to frame Weaviate this way. Without saying it, Van Luijt implies that Weaviate is solving a huge problem in a huge market, music to the ears of investors, referring to a number of industry peers whose "little ones" are even publicly traded and have a market value of $16 billion (MongoDB) and just under $6 billion (Elastic). Except that those are of the old generation, lisp Van Luijt actually says in passing, and Weaviate is better.

A few things strike me: 

  • $50 million on a $200 million valuation is a high amount for a relatively low valuation. That sounds absurd, but consider that a few weeks ago Character.ai raised $150 million on a valuation of over a billion. Still, this funding is a wise decision by Weaviate, because the fact remains that U.S. VCs invest less money in non-U.S. companies, and at lower valuations, than in U.S. companies. To stay in Ted Lasso spheres, an English Premier League club simply pays more for a player from another Premier League club, than for Jan Maas from the Eredivisie. (That character who always speaks the truth, however painfully at times, by the way, is named after Saskia Maas, the CEO and driving force behind Boom Chicago).
  • in total, Weaviate has now raised $67.7 million within three years, allowing the company to compete in the development of fundamental technology for an international market. What Weaviate is doing is similar to playing Champions League soccer with a Dutch club. Fortunately, Van Luijt et al. now have sufficient resources to attract good players. (This is the latest soccer comparison.)
  • ING already participated in the 2022 A round because it knew Weaviate, as a spin-out from ING Labs. It is commendable that a traditional major bank like ING made such a risky investment, provided the bank actually gets to work with Weaviate's technology. Otherwise, it is a normal venture capital investment, and those do not score better on average in the Netherlands than the AEX index. By the way, it's funny that Weaviate's name change has passed the administrator of ING Ventures' portfolio page by. There, the company is still simply called SemI.
  • Alex van Leeuwen participated in the seed round of Weaviate and in doing so made perhaps one of the best investments ever in the Netherlands. Investor Peter Thiel bought a 10% stake in Facebook in 2004 for $500,000 and sold his stake for a total of over $1 billion, as far as we know the best-yielding investment in venture capital. It may not be that happy (2000x) for Van Leeuwen, but I don't rule it out. Database companies, we've learned from those first- and second-generation oldies, can scale up quickly relatively easily without huge follow-on investments.

Fine links

  • The FD published this thorough article about Lightyear with the headline "How Holland's cuddly company went down by a hair. The disinterest of foreign technology investors in Lightyear (compare it to Weaviate) should have been a telling sign.
  • Master vlogger Casey Neistat intentionally made a terrible vlog based on a script written by ChatGPT4. His conclusion: AI lacks soul, lacks depth. I think ChatGPT4 mostly lacks context at this point, because not yet fed Casey's past, perspective and tone.
  • ChatGPT's CTO Greg Brockman gave this fascinating presentation on ChatGPT's capabilities, which go so much further than some "text and pictures" questions. The interview with TED founder Chris Anderson immediately following the presentation is also enlightening. Thanks to Michiel Schoonhoven of content marketing specialist NXTLI for the tip.

Spotlight 9

(ChatGPT4 coined this rubric name, see the p.s. below this newsletter).

Stock market sentiment determines much of our economy and in fact the tech sector is dominated by it. The idea behind this portfolio was simple. Say you want to invest, but don't want to buy and sell every day because that's time consuming and complicated and you can stand to lose a little; what do you buy? I chose the 5 biggest tech stocks (Amazon, Apple, Google/Alphabet, Meta and Microsoft) two index funds (S&P 500 and Dow Jones Index) and the two biggest cryptocurrencies (Bitcoin and Ethereum). Anyone who had made these nine purchases on Jan. 1 of this year, each for an equal amount, would have earned a return of 37.6% today. But compared to a year ago, the return is -8%. That's the nice thing about tracking a portfolio like this: the duration of the investment, your investment horizon, determines the definition of success. Those who look only at this week, in which only Amazon stands proudly, yearn for the old Silver Fleet account. Incidentally, the main reason Amazon shares rose seems to be the announcement that the company wants to play a prominent role in AI alongside Microsoft and Google, with Amazon Bedrock as its first asset. The setup of Bedrock is interesting because instead of developing everything itself, Amazon offers AWS customers the ability to use AI models from various vendors, including AWS itself.

For those more interested in AI, I recommend this conversation, started by NRC journalist Wouter van Noort who himself produces some of my favorite newsletters, Future Affairs and Transcend.

Happy Sunday,

-Michiel

The archive of past newsletters is here.

p.s. below the conversation with ChatGPT4 about the rubric name for tracking a small investment portfolio

Categories
crypto NFTs technology

Did Keanu Reeves walk through Amsterdam confused?

There are so many posts about AI that it is hard to find the relevant pieces, but they are certainly there. The Washington Post published this excellent article about the challenges in producing Critterz, the first film with 100% AI-generated characters now online. Filmmaker Chad Nelson says it took only a week to create his entire visual world, including all the characters and mystical forests, with Dall-E. When I read that OpenAI, the creator of Dall-E, had co-paid for the film, I did wonder about the honesty of Nelson's praise. It still feels a bit like falling into the trap of a clever content marketer from OpenAI.

Keanu Reeves previously expressed concerns about how movie studios will use AI to replace talent because, "corporations don't give a fuck about paying artists. Reeves has a point. Dall-E took this photo within seconds with the prompt: 'A distraught Keanu Reeves walking along an Amsterdam canal with his hair blowing in the wind, under a cloudy sky.' There is much to be said about this one-eyed Keanu and that green mailbox behind him, but no doubt a new profession will emerge, a hybrid of programmer and visual designer, using AI to its fullest potential to create virtual worlds indistinguishable from the real thing.

Meet the founders of Unveil

One company that focuses precisely on making the distinction between real and fake, or original and fake, is Amsterdam-based Unveil. Photographer Alexander Sporre started this NFT platform with his partners out of dissatisfaction with the way photography is handled in the NFT world. For collectors of NFTs, it is impractical to search among all the junk on OpenSea and other NFT marketplaces for valuable and unique finds. And if you think you have found something nice at all, you don't know if the work is original and how many of them have been made.

Using blockchain technology, Unveil solves this problem of authenticity and edition management for collectors, gallery owners and artists. The artist can choose to offer only a digital work (a DAB, Digital Artwork on the Blockchain) or a physical work of art (PAB, Physical Artwork on the Blockchain), or both. The MoMa in New York and the Centre Pompidou in Paris have now acquired NFTs, and the combination of physical and digital collecting is expected to take off.

I think Unveil is an example of a third generation marketplace, after the uncurated blind offering (think Marketplace) and the curated auction model (like Catawiki). Legendary investment firm Andreessen Horowitz (Facebook, Twitter, LinkedIn, Airbnb, Coinbase etc etc) recently wrote about it in the annual Marketplace 100 Report: 'from your kitchen to your closet, modern marketplaces do the filtering for you.'

Unveil launches publicly at the end of May, featuring exclusive NFT drops by a number of renowned photographers such as Thomas Albdorf, Bastiaan Woudt and Paul Cupido, each of whom have created their own interpretation of classic themes from Dutch art history: Still Life, Landscape and Portrait.

There is now an opportunity for a limited group of investors to invest in Unveil even before its public launch at the end of May. On May 9, the founders are organizing an investor event in Amsterdam to which the readers of this newsletter are invited. You can register here or make a phone appointment with the founders if you are unable to attend the event.

I am also investing in Unveil myself in this round, and my maxim is that you should think of an investment in a startup as money lost now that may come back one day - but hopefully more than you put in. Note that this is not investment advice and you are investing outside AFM supervision, there is no licensing and prospectus requirement. Alexander Sporre of Unveil is a highly respected former colleague of mine and I am a firm believer in the NFT market, so I am far from neutral.

Binance is more important than thought

The news that Binance in the U.S. is being investigated by the CFTC was a footnote in the Dutch media, which are increasingly dominated by visually appealing incidents such as a lighter on an Ajax head or tractors on a highway. That clicks better and is easier to write about than analyses on CFTC, AML, KYC and other boring coolos. I wrote at length last year about why Binance is rightly under fire. Bottom line: Binance is not doing enough to combat money laundering. But Binance, and its former rogue competitor FTX, are important for two reasons.

First of all, the traditional financial world now realizes that digital assets are not disappearing, no matter how much effort is made to keep them far from investors. Pioneers such as Binance, which introduced innovations at an unparalleled pace, are forerunners that hold up a mirror to the traditional big banks and demonstrate how continuous and rapid innovation is indeed possible in the financial world. That attracts a large group of mostly young, active investors worldwide that banks can only dream of. Those banks should look at what Binance does well in terms of products and services and link that clout to their own, stricter regulations.

Second, crypto investors should now realize that those three-letter abbreviations AML and KYC are important to them as well. It is simple: if the source of money, crypto or otherwise, cannot be proven, and if it is not clear who owns these assets, then there will soon be no payment link to traditional finance. Last week, some of Binance' s Australian operations were banned by the government. The Dutch players are much neater, but if the international crypto exchanges where active investors like to trade continue to operate so shady, soon any transfers to or from Binance and its competitors will be denied by banks. It will thus become impossible to buy a house with crypto profits, for example. This will then only be possible in dubious regions, but not everyone wants to live in Montenegro or Dubai.

Paris, Texas?

Although I firmly believe in digital assets and blockchain, until independent data is available that proves the energy source of mining, I will not invest in Bitcoin because of the associated CO2 emissions. Because I work with Bluenote in blockchain but exclusively in the area of sustainability, in terms of event attendance, I often hop on two paths.

The Sustainable Innovation Forum is taking place in Paris in early May. Just when the transition to a sustainable society is under pressure from the faltering global economy, this is an interesting event where, unfortunately, few digital assets will be discussed. Not even in the area of carbon trading. A week earlier in Austin, Texas, Consensus is organized by the leading crypto medium Coindesk. There, of course, there is plenty of focus on digital assets, but little on sustainability. It remains tricky.

Fine links

Zeeland girl Meltem Demirors
  • a special person: too few Dutch people follow Meltem Demirors, one of the most intelligent and original thinkers in the crypto world. She has spoken before the U.S. Congress about crypto, is the authoritative voice of reason about digital assets on CNBC and crazy about leather pants and strange memecoins. The daughter of Turkish parents, Demirors was born in ... Terneuzen, before moving to America at a young age. Become her 257,000th follower on Twitter and you won't regret it.
  • still a handy news source: Hacker News looks like a 1955 Albanian telex, but just checking the headlines always turns up something special. For example, I saw this this week via Hacker News: optimist with lots of spare time turns a Dyson hair dryer into an aircraft engine and cyclist smuggles six thousand SD cards into China *in.*
  • one of my favorite newsletters is that of legendary investor Fred Wilson. In it I read this week that his vc USV has invested in Noya, a startup developing technology the world needs: CO2 removal from the air, American-style called Direct Air Capture Technology. Sounds better anyway.

Geek Sentiment

Finally, a look at the major share prices in tech, where I compare Amazon, Apple, Google, Meta and Microsoft to the S&P 500, the Dow Jones Index, and Bitcoin and Ethereum as the most important gauges in the crypto world. Ethereum (ETH) is the winner of the week with over 10% rise.

It was not Bitcoin's week, although BTC topped $30,000 for the first time since last June. It always stings Bitcoin maximalists when an altcoin, particularly the leading development platform Ethereum, shows better returns as it did this week. But Bitcoin fanatics were especially outraged because the New York Times published a comprehensive study showing that 34 Bitcoin mining companies in the U.S. consume even more energy than 3 million households. Bitcoin fans correctly noted that the article misses the mark by blaming inefficient and vastly outdated energy subsidies on Bitcoin. But Bitcoin's absurd energy consumption is irrefutable. "They are adding hundreds of megawatts of new demand when we are already facing the need to rapidly cut fossil energy," said Jesse Jenkins, a Princeton professor who studies power grid emissions. "If you care about climate change," he added, "that's a problem." There's no pin in that.

I hope to get another newsletter up next week, but we found a sick puppy on the street the day before yesterday that we have taken in to care for and that is proving to be more time consuming than I thought. We are still looking for a name for the puppy, tips and suggestions are welcome! Also about the newsletter of course.

Have a great Sunday.

Sincerely,

Michiel Frackers

LinkedIn

Instagram 

Recent interview at BNR with Ben van der Burg and Herbert Blankesteijn

Categories
technology

Just the finest bank went bankrupt

It probably hasn't escaped your notice that there is a lot going on right now at the intersection of technology, economics and innovation. With the fall of Silicon Valley Bank, my favorite bank where I was once a customer, being the recent low point. But precisely because there are many great things going unexposed, I started a weekly newsletter about what has caught my eye in the tech world. Below is the content of the first newsletter, dated April 10, 2023.

You can subscribe to this weekly newsletter here.

Silicon Valley Bank was my favorite bank
What kind of banks are Silicon Valley Bank and First Republic? There has been much media coverage of Silicon Valley Bank's pike dive, with its counterpart, First Republic Bank, often mentioned in the same breath. But there are fundamental differences between these San Francisco Bay Area banks. Early this century, I was a very satisfied Silicon Valley Bank customer with a startup that later failed ingloriously. As soon as you were accepted as a client at a good law firm in San Francisco, the lawyer would normally grab the phone and call his relationship at Silicon Valley Bank. That's how we ended up in a far too small cubicle opposite a jovial account manager at Silicon Valley Bank the very same day our firm was founded. The work instruction there was clear: "any customer can be the next Apple or Microsoft, so even though 98% of companies don't survive the first five years, treat your customers as if they were that successful 2%. Every Dutch bank could learn from the way Silicon Valley Bank treated customers. SVB's failure also has nothing to do with creative accounting or strange products as in the banking crisis, but with treasury management failures and rising interest rates. In short: watching one's own pennies carefully. Already it appears that Silicon Valley Bank is being missed, for example in financing climate tech companies, the very startups needed to combat climate change.

First Republic does something very different
First Republic Bank, on the other hand, excels at lending money to founders and C-level management of successful startups. So not in lending money to startups, as Silicon Valley Bank did. People like Mark Zuckerberg were offered particularly low mortgages, for example. Why does a billionaire need a $6 million mortgage? Founders of successful companies prefer to hold on to all their shares as long as possible, as long as the prices are rising. So they borrow money from banks with shares in their own companies as collateral. For example, there is still a persistent rumor in Silicon Valley that Zuckerberg even borrowed a few billion, yes, billion, from First Republic, in part to finance his own charitable foundation. Rather pay a percent interest than sell shares that, until last year, rose many times faster than interest.
Spotlight: iXora immersion cooling

I often get asked which Dutch startups are interesting. That the driving solar car Lightyear received so much media attention made sense, because everyone understands what cars are and where the sun is, but there were two reasons why few professional investors believed in a solar-powered car.
First of all, it costs not millions but billions to set up a car company, let alone on a new energy source, see Tesla. No investor in the Netherlands puts the roulette ball on red or black at that kind of sum. Perhaps more importantly, a regular sized car cannot carry enough solar panels to provide enough propulsion, range and some geeky extras like headlights and brake lights with the current generation of solar panels. I like to be surprised but don't see Lightyear doing well.

Cooling is cool
One startup that did successfully develop a relevant product for a huge market is Ede-based iXora. The company led by CEO Job Witteman (founder and for years CEO of the Amsterdam Internet Exchange AMS-IX, I know him from his time before that at British Telecom) has developed a solution where data centers can save a lot of space and energy. iXora's liquid cooling technology eliminates the need for space- and energy-consuming air cooling (fans). Warren Buffett's company Lubrizol bought a worldwide license and it would not surprise me if iXora reaches unicorn status within three years (cliché alert!), or becomes worth more than a billion Euros. Because energy consumption of data centers must be reduced and it is in their best interest to cut costs and reduce CO2 emissions. iXora's solution is as simple as it is effective and can easily be fitted into standard data centers, which is why it seems logical that the company will eventually be acquired by a party such as Dell, for example, in order to be able to offer an iXora chassis to all its data center customers, as an extra box to check on the order form. Similar to how EMC once acquired VMWare and even took it public a few years later. A startup on its own could never reach that global customer base so quickly.

Friends & family investment round
iXora is currently holding an investment round and from 5,000 Euro you can participate. I'm not giving advice, but my maxim is that you should think of an investment in a startup as money that you are definitely losing now and that very possibly one day will come back - but hopefully a bit more than you put in. I do like this kind of low-stakes opportunity, usually the minimum entry point is many times higher. Note that this is not investment advice and you are investing outside AFM supervision, there is no licensing and prospectus requirement. And the founders of iXora are friends of mine, so I am far from neutral in this.
iXora HRM closed-1
The iXora HRM chassis can house multiple servers. HRM, by the way, does not stand for good old Personnel in a new guise, but for Hypotherm Rack Mount. It is so named because these liquid-cooled cabinets fit into standard 19″ racks common worldwide. This allows data centers to quickly fit them into their infrastructure, unlike competitors' open tanks full of liquid.

Good event calendar

Where are the events and conventions you absolutely must attend? That always remains tricky and I have felt at many a congress that I had ended up at the wrong party. That is why the event calendar of Luna PR from Dubai is so handy, it lists all the important congresses, parties and meetings in the field of crypto and Web 3. The sisters Nikita (CEO, right) and Nisheta (COO, left) Sachdev usually know where it is happening. 
Sachdev
Fine links
Are you also inundated by a glut of podcasts and newsletters? There are very few that I never skip. But the newsletter from former journalist, now investor, Om Malik I always read. Through Malik, I came upon this sharp analysis on why ChatGPT means the Gutenberg moment for software. Another recommendation: this article on the "give, to get back" model for AI startups. Also applicable for other companies that need user data to function better. And neat that the author mentions that he had used Chat GPT4 to write the article.
Geek Sentiment
Finally, a look at the major share prices in tech. Google is the winner of the week with 7.5% rise. Viewed from the beginning of this year, we don't yet have to tip our hat to Mark Zuckerberg, who just last year lost $30 billion in assets in one day, because his Meta is now up 76% after the annus horribilis 2022. And you don't hear much about it, but those who bought Bitcoin and Ethereum on Jan. 1 would also have experienced 69% and 56% increases by now:
frackersnerdsentiment7april2023
Next Week
Among other things: why the U.S. government's lawsuit against Binance is important for the future of crypto as part of the mainstream economy. I wrote about the ongoing problems at Binance exactly a year ago. And spotlight on Unveil, an Amsterdam-based startup focused on the intersection of two huge markets: the art world and the market for NFTs.