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Weekend Briefing No. 214
Welcome to the weekend. Hello from the Brooklyn Navy Yard. This weekend I’m participating in a global symposium discussing pressing legal and policy issues implicated by blockchain technologies. I love geeking out about this stuff.
112,000,000,000 – Jeff Bezos’s net worth jumped $39.2 billion over the last year to $112 billion, the fastest one-year increase in wealth ever. He outdid the previously biggest one-year increase held by Larry Ellison, whose net worth jumped $27.5 billion from 1999 to 2000.
700 – Building off the success of House of Cards, Stranger Things (and my favorites Peaky Blinders and Big Mouth); watch out for an avalanche of new content from Netflix next year. In 2018, Netflix is producing 700 original productions.
1 – WeWork started with smaller businesses (like our firm), but now the fastest growing part of its business is big corporate clients like MasterCard and Samsung who now comprise 25% of their business.
Everything is Amazing & We’re All Sad
By every metric we are living in the golden age of humanity. Why then is there is so much profound discontent, depression, drug abuse, despair, addiction, and loneliness in our advanced liberal societies? As we have slowly and surely attained more progress, we have lost something that undergirds all of it: meaning, cohesion, and a different, deeper kind of happiness than the satiation of all our earthly needs. We’ve forgotten the human flourishing that comes from a common idea of virtue, and a concept of virtue that is based on our nature. For most of the Ancients, freedom was freedom from our natural desires and material needs. It rested on a mastery of these deep, natural urges in favor of self-control, restraint, and education into virtue. It placed the community — the polis — ahead of the individual, and indeed could not conceive of the individual apart from the community into which he or she was born. They’d look at our freedom and see licentiousness, chaos, and slavery to desire. They’d predict misery not happiness to be the result. We are species built on tribe; yet we live increasingly alone in societies so vast and populous our ancestors would not recognize them; we are a species designed for scarcity and now live with unimaginable plenty; we are a species built on religious ritual to appease our existential angst, and yet we now live in a world where every individual has to create her own meaning from scratch; we are a species built for small-scale monocultural community and now live increasingly in multiracial, multicultural megacities. For our civilization, God is dead. Meaning is meaningless outside the satisfaction of our material wants and can become, at its very best, merely a form of awe at meaninglessness. We have no common concept of human flourishing apart from materialism, and therefore we stand alone. New York Magazine (18 minutes)
The city of Berkley is considering an Initial Coin Offering (ICO). The idea rests on the notion that smart contracts—blockchain-based computer programs that have fueled the rise of ICOs—can securely mediate the buying, selling, and trading of assets, including stocks and bonds. The current system for issuing municipal bonds has become byzantine and dependent on an array of middlemen who add costs and slow things down. It’s so expensive to issue a bond, in fact, that it’s essentially useless as a tool for funding a single small municipal project. Bartlett says a blockchain can eliminate much of that overhead and allow organizations to be more “targeted” in their fund-raising—for instance, by issuing bonds to finance a single community theater, a housing project, or the purchase of an ambulance. Blockchains can reduce the need for financial intermediaries, allowing for broader access to both sides of the market. MIT Technology Review (6 minutes)
Seed Stage Impact Investing
According to the 2017 Global Impact Investing Network, only 3% of all impact investment was allocated to seed stage companies. I work primarily with seed stage impact entrepreneurs, so this has always been a huge point of frustration. How can we make seed stage impact investing better? The SEED Conference is trying to answer that question. Featuring 60 speakers and 30 entrepreneurs across the two days of the conference. I am excited about the level of intimacy, the ‘do-tank’ mode that is going to be in play, as well as the sophistication of the folks coming together not just to share common practices but to get things done and attack at a systems level. The Weekend Briefing community gets a 30% discount by clicking on this link. (Sponsored)
A friendly legal tip for startups: don’t lie to your investors, it doesn’t end well. This week Securities and Exchange Commission today charged Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani with raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance. They deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood. In truth, Theranos’ proprietary analyzer could complete only a small number of tests. They also claimed that Theranos’ products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and that the company would generate more than $100 million in revenue in 2014. In truth, Theranos’ technology was never deployed by the U.S. Department of Defense and generated a little more than $100,000 in revenue from operations in 2014. Holmes was fined $500,000, stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years. “The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, Director of the SEC’s San Francisco Regional Office. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.” SEC (6 minutes)
My friend David Gelles at the New York Times had a conversation with Merk CEO Ken Frazier that I think is definitely worth a read if you’re interested in the soul of a company. Frazier runs a multi-billion dollar drug company, but he sees his pro bono work as a lawyer representing Bo Cochran - a man who was facing an execution date for a crime he did not commit – as the highlight of his career. More recently he gained public notoriety for stepping off President Trump’s advisory council. Very early on in his tenure as CEO, there was a lot of pressure put on pharmaceutical C.E.O.s to cut their research budgets. He made the decision that he wasn’t going to cut Merk’s R & D budget, which had some short-term negative consequences in terms of share price. The companies that cut that budget lost their way because they lost their soul. He believes that if he puts the needs of society first, the needs of shareholders will be met. Thus, profit & purpose can be in alignment. New York Times (7 minutes)
New Story, a non-profit that builds housing in the developing world, has a new invention: a massive 3D printer that will soon be able to extrude an entire four-room house for $4,000 in less than a day. “We thought, okay, what if the bottom billion weren’t the last ones to get this, but the first ones to get this?” says CEO Brett Hagler. “It made sense for us to try to leapfrog what’s happening domestically, because our homes are so simple.” The printer, set on tracks, squirts out the concrete material in layers to build floors and walls, which harden as it goes, to build a 600- to 800-square-foot single-story home, with two bedrooms, a kitchen, and a bathroom. The R&D that led to the 3D-printed house is rare in the nonprofit world. But New Story has a unique funding structure; donations from most donors go solely to construction costs, while a small group of larger donors funds other expenses–including the innovation process. Fast Company (8 minutes)
The Box that Changed the World
The shipping container might look like just a big metal box, but it might be the biggest innovation in the history of modern capitalism. Because they’re globally standardized, they drastically reduce loading and unloading times at ports, creating a quick, efficient flow of sneakers, flat-screen TVs, and everything else you can imagine. It opened up global labor markets, thereby drastically reducing the cost of goods globally. How did we get here? It took some outside-the-box thinking. In the early 1950s, trucking magnate Malcom McLean had an idea. Rather than unload and unpack cargo from trucks at port, then load and unload ships at piers—wouldn’t it be faster to just ship the entire truck? But that method would’ve wasted a lot of potential cargo space, just to account for the cab and chassis. So McLean thought … why not just ship the container? In the 20 years after the advent of the shipping container, there was a 790% increase in bilateral trade among industrialized countries. Today 90% of all goods are transported by container. Quartz (12 minutes)
“It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.” – Warren Buffett in response to 14-year-old Justin Fong’s request for life advice.
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