Weekend Briefing No. 261
Welcome to the weekend, and welcome to the year of the pig. I’m wishing you prosperity in this new year. In honor of the Chinese New Year, the first two stories in the briefing are China related.
200 MM – My favorite podcasting network Gimlet sold to Spotify this week for $200 MM. Good work Alex, Matt and team!
42,900 – Tesla slashed Model 3 prices for the second time this year. Tesla’s most affordable vehicle will now cost $42,900, thanks to the end of an expensive customer referral program.
33 – Rising temperatures in the Himalayas, home to most of the world’s tallest mountains, will melt at least 33% of the region’s glaciers by the end of the century even if the world’s most ambitious climate change targets are met, according to a report released Monday.
Influence via Infrastructure
Along the jungle-covered mountains of Laos, squads of Chinese engineers are drilling hundreds of tunnels and bridges to support a 260-mile railway, a $6 billion project that will eventually connect eight Asian countries. This project is a tiny part of the Chinese initiative, called One Belt, One Road, which looms on a scope and scale with little precedent in modern history, promising more than $1 trillion in infrastructure and spanning more than 60 countries. President Xi Jinping of China is rolling out a more audacious version of the Marshall Plan, America’s postwar reconstruction effort. He is literally and figuratively forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development in a quest to create deep economic connections and strong diplomatic relationships. The plan is to lead the new globalization 2.0 based on China’s influence via infrastructure. New York Times (16 minutes)
28 Tons of Mandarins
IBM has completed a trial of blockchain technology to track a shipment of mandarin oranges from China to Singapore. 28 tons of mandarin oranges were delivered ahead of Chinese New Year celebration on Feb. 5 (mandarin oranges are a symbol of prosperity, IBM explained). The main shipping document, the bill of lading, was recorded on a blockchain. This document serves as a proof of ownership of goods, as a receipt of goods and a contract of the shipment, and normally it’s mailed to all parties involved in the shipment, including banks providing trade financing. For the pilot, IBM created an electronic bill of lading, or e-BL, which helped reduce and speed up administrative processes “to just one second” as the document flow is automated, the company claims — while the standard paper-based procedure takes five to seven days. Along with saving time with the document processing, the trial showed that a blockchain-based electronic system can cut operating costs like electricity used for refrigerated cargo containers while they wait for collection at the port, storage costs and other expenses, IBM said. It also made for a better handling of information, providing a traceable and tamper-proof storage of records for the maritime shipment industry, where document fraud accounts for 40% of all fraud. Coindesk (3 minutes)
Village Capital has a unique approach to investing in entrepreneurs called “Peer-selected investment” is a collaborative due-diligence model that takes a bottom-up approach to investing. It shifts decision-making power away from investors and gives that power to entrepreneurs, to forecast which solutions and ventures are most promising. Are entrepreneurs effective at discerning the future revenue growth or capital attractiveness of their peers? And can they do so in a way that mitigates the bias that pervades traditional venture capital? Short answer: yes and yes. A recent study of the model showed that: 1) Entrepreneurs accurately evaluate the future commercial success of their peers. 2) Peer selection mitigates gender bias. 3) Peer-selected investment could be more effective at identifying future revenue performance, particularly for female-led companies. Village Capital (17 minutes)
Splitting the American Workforce
Automation is splitting the American labor force into two worlds. There is a small island of highly educated professionals making good wages at corporations like Intel or Boeing, which reap hundreds of thousands of dollars in profit per employee. That island sits in the middle of a sea of less educated workers who are stuck at businesses like hotels, restaurants and nursing homes that generate much smaller profits per employee and stay viable primarily by keeping wages low. For instance, the 58 most productive industries in Phoenix — where productivity ranges from $210,000 to $30 million per worker — employed only 162,000 people in 2017, 14,000 more than in 2010. Employment in the 58 industries with the lowest productivity, where it tops out at $65,000 per worker, grew 10 times as much over the period, to 673,000. The same is true across the national economy. Jobs grow in health care, social assistance, accommodation, food services, building administration and waste services. Not only are some of the tasks tough to automate, employers have little financial incentive to replace low-wage workers with machines. Economists are reassessing their belief that technological progress lifts all boats, and are beginning to worry about the new configuration of work. New York Times (11 minutes)
Over the past few decades, labor force participation has sharply dropped for men ages 20-34. This may be the result of a combination of factors: (i) a decrease in cost of access to media entertainment leisure, (ii) increases in both the availability and (iii) quality media entertainment leisure, and (iv) a decrease in the marginal signaling utility of (conspicuous) consumption goods for all but the highest earners. Thus, companies are unable to fill their positions via the usual mechanism of increasing wages. If you believe that economic productivity and growth are good, this presents a challenge. Here’s a radical idea - a tax on human attention or time spent consuming entertainment media as a way to stimulate productivity. Kortina (18 minutes)
Bees & Math
If math is the language of the universe, bees may have just uttered their first words. New research suggests these busybodies of the insect world are capable of addition and subtraction—using colors in the place of plus and minus symbols. Building on prior research that says the social insects can count to four and understand the concept of zero, researchers wanted to test the limits of what their tiny brains can do. Scientists trained 14 bees to link the colors blue and yellow to addition and subtraction, respectively. They placed the bees at the entrance of a Y-shaped maze, where they were shown several shapes in either yellow or blue. If the shapes were blue, bees got a reward if they went to the end of the maze with one more blue shape (the other end had one less blue shape); if the shapes were yellow, they got a reward if they went to the end of the maze with one less yellow shape. The testing worked the same way: Bees that “subtracted” one shape when they saw yellow, or “added” one shape when they saw blue were considered to have aced the test. The bees got the right answer 63% to 72% of the time, depending on the type of equation and the direction of the right answer—much better than random guesses would allow. Science (4 minutes)
These 4 questions can help multiply the efficiency of your time: 1) Can I eliminate this task? Anything that we say no to today creates more time for us tomorrow. 2) If I can’t eliminate this task, can I automate it? 3) Can it be delegated, or can I teach someone else how to do this? 4) Should I do this task now, or can I do it later? When you procrastinate on purpose, you’ll eventually decide whether to eliminate, automate or delegate the task, or you may find that it’s risen in significance, importance or urgency, compelling you to do it. TED (5 minutes)
From the Community
It is not that machines are going to replace chemists. It’s that the chemists who use machines will replace those that don’t. - Derek Lowe
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Photo by: Charles Forerunner