Sunday Finds + 3 Thoughts From Last Week
Podcast episodes on PTC and Digital Turbine
Welcome to Chit Chat Money’s Sunday Finds + 3 Thoughts From Last Week. In this newsletter you will find three topics I thought about last week, links to shows we’ve recently released, and links to some interesting articles, podcasts, and tweets. Check out the archive here.
Podcasts From Last Week:
Interview: Why Digital Turbine Is a Competitively Advantaged Ad Platform (Ticker: APPS)
Investing Power Hour #35: Why Isn’t SBF in Jail? JPM State of the Cloud, Housing Impact on Inflation
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1. Will the OpenAI Chatbots dethrone Google?
There has been a lot of chatter about these new robust AI chatting tools from companies like OpenAI. I am not going to pretend to know how they work, but they do seem pretty darn revolutionary (they are also quite fun, give it a try).
There has been a lot of chatter about the investing implications, with a lot of people saying this signals the end of Google (yes, that’s right):
I decided to ask Twitter whether they thought this was correct or not:
Most people disagreed and don’t think these language bots are a threat to Google Search for a few reasons:
Google’s business doesn’t make money on complicated queries, but instead on searches like “top hotels Mexico” and basic stuff like that where advertisers are clamoring for eyeballs.
Alphabet (Google parent) is already the leader in AI, and many people think they could spin up something like this fairly easily if they wanted to. Same with the other big tech companies.
There is more to Google’s dominance in search engines than the actual search engine. Don’t forget Android, Chrome, Drive, Gmail, YouTube, Maps, etc. These all create a moat for Google Search in various ways. A start-up cannot defeat this with one tool.
I think it comes down to one question: Are these AI tools full-blown products, or just features? I think they will be features, but ones that create incredible consumer surplus.
2. Two book recommendations on white-collar work
I recently read two books that give context to modern working.
The first was Bullshit Jobs: A Theory, by David Graeber. It outlines all the useless jobs that have arisen in the past 50 years with some pretty insane anecdotes. He gives multiple theories about the incentives that bring these jobs into place, as well as the consequences of giving people such useless work.
The second book was When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm, by Walt Bogdanich. More of an expose on the negative impacts consulting work can have on the world, it was enlightening to read about all the horrific things McKinsey has contributed to over the past 100 years. It will also make you quite angry and frustrated. How do they continue to get away with it?
With the rise of these new AI tools and Elon’s experiment with chopping Twitter’s workforce in half, it was peculiar timing to read these books. Spoiler: both problems are worse than you probably think they are.
If you pick up a copy of either of these books, leave the ego at the door. Your job may be useless. So what? You may work in a consulting-type gig. So what? That shouldn’t keep you from trying to view the world through the most factual lens possible.
3. Why Is SBF Not in Handcuffs?
I know, I know, the wheels of justice move slowly. But isn’t there enough evidence to book the man (not a kid, he’s 30) for a crime? What the hell is going on?
It’s strange that the whole finance industry seems to understand what SBF did and is aghast at the reaction from large media organizations and politicians.
Check out this thread if you harbor any doubts about what the mainstream reaction has been:
See you next week,
Brett
***Our fund, Arch Capital, may own securities discussed in this newsletter. Check our holdings page and read our full disclosure to learn more.***
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3 Good Reads
Playing the Status Game - Deep Fix
On my last trip to Piedmont Avenue, I parked my car directly across from Blue Bottle, a corporate establishment that never fails to lure me in. It was early. So early that I didn’t bother with the parking meter because the streets were empty, and I sometimes like to roll the dice with these things. There were only a few souls outside, Oaklanders beginning their usual morning routines: a woman walking her border terrier, a nurse hustling to the hospital down the block, a man down on his luck staring blankly at the foggy sky. I felt complicit in this love for the secret quiet of the morning, the way it always felt pregnant with possibility no matter what the day before might have brought.
AI is Coming For The Thought Leaders - The Atlantic
Consensus is part of a constellation of generative AI start-ups that promise to automate an array of tasks we’ve historically considered for humans only: reading, writing, summarizing, drawing, painting, image editing, audio editing, music writing, video-game designing, blueprinting, and more. Following my conversation with the Consensus founders, I felt thrilled by the technology’s potential, fascinated by the possibility that we could train computers to be extensions of our own mind, and a bit overcome by the scale of the implications.
Meta: Pain and Patience - Invariant
However, with conservative napkin math, I saw something much more palatable. There was no evidence of a user exodus, and it seemed that even with slowing user growth there were plenty of levers to pull to create long-term value. And I didn’t have to be precise. I believed the massive drop in share price more than accounted for people’s fears. This was a company led by a hungry, young founder and was still very profitable, with no debt and lots of cash on the balance sheet. And most people still seemed fixated on the Facebook platform and gave Instagram too little focus. Whatsapp and the rest of the business weren’t part of the dialogue. But more important was a thought I couldn’t shake.
1 Good Listen
Cullen Roche: Why Macro Matters - The Business Brew
Cullen Roche is the Founder of Discipline Funds. Discipline Funds is a low fee financial advisory and asset management firm. Prior to establishing his own business, Mr. Roche founded his own investment partnership in 2005 after working at Merrill Lynch Global Wealth Management where he helped oversee $500MM+ in assets under management. During the the 7 years running the partnership he was able to guide the small business to high risk adjusted returns with no negative full year returns during one of the most turbulent periods in stock market history.
Smart and Funny Tweets:
