Some time back I shared this with the members of the Intelsense advisory services.
Monday, 27 May 2019
Friday, 24 May 2019
Weekly Reading - Some Interesting Stuff
1) Finland is teaching school students how to identify
fake news (and we should follow suit)
As the trolling
ramped up in 2015, President Sauli Niinisto called on every Finn to take
responsibility for the fight against false information. A year later, Finland
brought in American experts to advise officials on how to recognize fake news,
understand why it goes viral and develop strategies to fight it. The education
system was also reformed to emphasize critical thinking.
“It’s not just a
government problem, the whole society has been targeted. We are doing our part,
but it’s everyone’s task to protect the Finnish democracy,” Toivanen said,
before adding: “The first line of defense is the kindergarten teacher.”
The students broke
off into groups, grabbing laptops and cell phones to investigate their chosen
topics – the idea is to inspire them to become digital detectives, like a
rebooted version of Sherlock Holmes for the post-Millennial generation.
Her class is the
embodiment of Finland’s critical thinking curriculum, which was revised in 2016
to prioritize the skills students need to spot the sort of disinformation that
has clouded recent election campaigns in the US and across Europe.
2) The slow building of the second iron curtain -
China and US fight it out with Huawei caught in the crosshairs
The worries about
Huawei have historically stemmed from the fact that the company’s founder, Ren
Zhengfei, was a technician for the People’s Liberation Army prior to founding
Huawei — not to mention the tens of billions of dollars the Chinese government has
invested in the company. Fears have been exacerbated in the wake of China’s
passage of its National Intelligence Law and other cybersecurity laws in 2017,
which, according to Lake, “compel corporations to assist in offensive
intelligence operations” instead of just requiring them to cooperate with law
enforcement on national security matters.
3) India starts spending meaningfully for solar energy
India's investments
in renewable sources are now outpacing those in fossil fuels. The falling costs
of bringing solar power online as well as favourable government policies have
seen solar’s star rise in recent years. At a time when other nations are curbing
coal use, India is bucking the trend and the vast majority of the country is
still powered by fossil fuels, mostly coal.
4) One of the oldest industries (meat industry) is
about to be disrupted by factory produced meat
In the foothills of
a mountain in a rural part of Japan northwest of Tokyo, a farm called Toriyama
painstakingly breeds and raises cattle to make Wagyu beef–delicately marbled
meat that sells for around $100 a pound. In a lab in San Francisco, food scientists
now plan to recreate Toriyama’s meat in a bioreactor.
The best way to deal
with the meat challenge is just to make better meat without all the issues
associated with killing animals today.” Those aren’t just issues of animal
ethics; the meat industry is also one of the world’s largest contributors to
climate change. The basic techniques aren’t new and have been used in medical
research for decades–for example, in tissue engineering of organs for drug
discovery. The company still has major challenges ahead. After researchers
figure out how to make cells grow quickly enough to address cost issues, it
will move its focus to flavor; the nutrients fed to the cells can be tweaked to
affect the taste of the meat.
5) How could auditors miss the issues in IL&FS?
There are a host of
allegations against the auditors, from missing out on the sprawling IL&FS
subsidiary empire and not highlighting the asset-liability mismatch on the
company’s books, to inappropriate valuation of assets, poor recognition of
non-performing assets (NPAs), and non-detection of circular rotation of funds
between group entities.
The glaring failures
prompted the government to set an example with this case. “Do the auditors work
for the management or for stakeholders. Can auditors blindly accept the version
of the management and rely on comfort from management?" asked a senior
SFIO officer.
Friday, 17 May 2019
Weekend Reading - Some Interesting Stuff
1) 4D printing can help objects transform based on
external stimuli
3D printing has
helped companies use that data and information to address some of these
demands, allowing them to customize product designs in ways that are difficult,
if not impossible, to replicate with conventional manufacturing. Considered an
extension of 3D printing, 4D printing has the potential to take customization a step further by enabling 3D-printed parts to transform their shape in response
to external stimuli such as heat, light, pressure, and humidity. In practical
terms, this means 4D-printed objects can theoretically react much more
dynamically, rather than remaining as rigid, solid structures. In the future,
it may be possible to envision a time when products created with 4D printing
can adapt and adjust to their surroundings, in addition to being customized to
fulfil user needs.
2) Utilizing a margin of safety can serve you well in
nearly any area of life
All information—no
matter how bulletproof it may seem—comes with some degree of error. The future
is uncertain and life always seems to get more complicated. A margin of
safety acts as a buffer against the unknown, the random, and the unseen.
The world is more
uncertain now than ever before. There is too much information for one person to
handle, too many moving pieces for one person to manage. This is why the
greatest benefit that a margin of safety provides might be reduced stress and
overwhelm. Nobody can predict the future, but there is a sense of quiet
confidence that comes over you when you know you are capable of handling the
uncertainties of life.
If your life is
designed only to handle the expected challenges, then it will fall apart as
soon as something unexpected happens to you. Always be stronger than you need
to be. Always leave room for the unexpected.
3) US-China Trade war can escalate and lead to long
term changes in supply chains
U.S. trade policies
that are not rooted in economic considerations but are driven by political
postures could prove costly for U.S. businesses and consumers, in addition to
eroding the country’s leverage in global trade.
If people start to
think this [trade war with China] is a lasting phenomenon, you could see
significant dislocations,” he added. “You could see companies relocating their
supply chains; in some cases, that’s going to be moving production into China
to avoid tariffs on goods exported from the U.S., and in some cases [it could
mean] moving sources out of China to countries that don’t face the tariffs that
China does – all that could be very disruptive.”
4) How Amazon Prime came to be one of the greatest
retail innovations ever
Amazon Prime
launched in February of 2005, was a first of its kind: For an upfront payment
of $79, customers were rewarded with all-you-can-eat two-day delivery on their
orders. At the time, Amazon charged customers $9.48 for two-day delivery,
meaning if you placed just nine of these orders in a year, Prime would pay for
itself.
With it, Amazon
single-handedly — and permanently — raised the bar for convenience in online
shopping. That, in turn, forever changed the types of products shoppers were
willing to buy online. Need a last-minute gift or nearing the end of a pack of
diapers? Amazon was now an alternative to the immediacy of brick-and-mortar
stores.
This is the story of
how the greatest retail innovation of the internet age was created, in the face
of sound logic and reason that suggested it might very well be disastrous. It’s
also a story of how a frankly bland idea — fast shipping — was powerful enough
to alter consumer psychology forever.
5) How experts make mistakes and how only some learn
from it
In Tetlock’s 20-year
study, both the broad foxes and the narrow hedgehogs were quick to let a
successful prediction reinforce their beliefs. But when an outcome took them by
surprise, foxes were much more likely to adjust their ideas. Hedgehogs barely
budged. (Hedgehogs knew “one big thing,” while the integrator foxes knew “many
little things.”) Some made authoritative predictions that turned out to be
wildly wrong—then updated their theories in the wrong direction. They
became even more convinced of the original beliefs that had led them astray.
The best forecasters, by contrast, view their own ideas as hypotheses in need
of testing. If they make a bet and lose, they embrace the logic of a loss just
as they would the reinforcement of a win. This is called, in a
word, learning.
Thursday, 9 May 2019
Weekend Reading - Some Interesting Stuff
1) Do nothing to achieve more
All of us have a
problem with busyness. But being busy and being successful are not one and the
same. But, doing less or nothing at all is easier said than done,
especially in a society that suffers from extreme busyness. Bill
Gates attributes much of Microsoft’s success to the big ideas and concepts he
stumbled upon while doing nothing.
On either Saturday
or Sunday, force yourself to step away from all forms of technology — a
practice known as a digital sabbath. Shut off your smartphone and hide it
in your closet. Power down the laptop and slide it under your bed. Give
your brain space to think by stepping away from the daily grind and doing
nothing. Your mind will have time to stumble upon new ideas and further process
old ones.
2) Can you do better by working 4 days-a-week?
A 4-day work-week is
being discussed by a lot of corporates and productivity experts. Here is one
company in Australia which has tried it.
A mid-week break
lets staff go to the gym, get on top of housework, look after young children,
schedule appointments, work on their start-up or just watch Netflix. Sometimes,
they’ll catch up on work. Sick days are down, staff satisfaction is up, says Blackham.
“You get that Monday feeling a couple of times a week.”
For employers,
shutting down mid-week gives “more bang for your buck”. he says. “The Wednesday
break means you return to Thursday fresh, and this is when people feel most
productive.”
Some start-ups
which have trialled the four day week in the US have had to return to five
day working after finding the day off made the company less competitive and
staff more stressed.
3) Is free good for you?
Technology companies
based in Seattle or Silicon Valley now account for five out of the five most
valuable companies in America.
Big Tech has, in
some sense, gotten “too big.” And in 2019, politicians are starting to listen.
The issue is
complicated by the fact that even though it’s convenient to shorthand
Microsoft, Google, Amazon, Apple, and Facebook as “Big Tech,” these five
companies are actually structured in very different ways.
Contemporary
antitrust law mostly cares about high prices. The standard, in other words,
isn’t that one company dominating a market is bad. It’s that it’s bad if a
company’s market domination leads to bad outcomes for consumers.
However, most of the
big tech is cheaper or provide better service to the end customer making them
difficult to prosecute. Google provides nearly all of its services for free.
Amazon makes shopping cheaper. Anti-trust needs to find out a balance between
low prices and utility to the customers.
4) We are killing the planet and ourselves; we just
don't realize it yet
Humans are
transforming Earth’s natural landscapes so dramatically that as many as one
million plant and animal species are now at risk of extinction, posing a dire
threat to ecosystems that people all over the world depend on for their
survival
Humans are producing
more food than ever, but land degradation is already harming agricultural
productivity on 23 percent of the planet’s land area.
Over the past 50
years, global biodiversity loss has primarily been driven by activities like
the clearing of forests for farmland, the expansion of roads and cities,
logging, hunting, overfishing, water pollution and the transport of invasive
species around the globe.
5) The food we eat is killing us
Health officials
around the world are struggling with the explosive rise of deadly
drug-resistant strains of the fungus Candida
auris, which prey on people with weakened immune systems. Worryingly,
their emergence may be tied to indiscriminate use of fungicides in agriculture
and food production.
Antibiotics are
applied on a massive scale in food production, pushing the rise of bacterial
drug resistance. A British government study published in 2016
estimated that, within 30 years, drug-resistant infections will be a bigger
killer than cancer, with some 10 million people dying from infections every
year.
“Food is no longer
valued for its ability to sustain life,” Walker concludes, “but only for its
ability to generate profits.”
Monday, 6 May 2019
Investing is an active game
Cornelius
Vanderbilt, known to his contemporaries as the Commodore, was once the richest
man in the world. He started his life at the bottom and worked his way up. His
business empire started with one passenger boat and he went on to own a large
steamboat business. Later he diversified into the railroad business and owned
the New York Central Railroad by 1867. He passed away in 1877, leaving more
than $100 million, which was more than the money that was held by the US Treasury
at that time). His last words to his family were, ''Keep the money
together.'' Even today, there is the Grand Central Terminal, a Vanderbilt
building still standing in New York City that carries the legacy of the great
businessman.
Interestingly,
within a period of 50 years, one of the direct descendants died bankrupt. The history of the Vanderbilt family is extremely instructive at many levels.
Other
than the obvious reasons of prudence in managing costs and expenses and living
within one's means, you also learn that no amount of wealth can be perpetuated
forever if the custodians do not value money. When you know that no new money
is going to come in then you need to value what you have much more. It does not
matter how much money you have to start with. Unless you save more than what
you earn, wealth will erode.
The
most logical action to take for enduring wealth is to invest in businesses
which earn high returns on capital and does not blow up doing so. Wealth
creation and wealth preservation are not mutually exclusive. The best way to
preserve wealth is to create it in the first place. Owning a business is the
best and most efficient way of doing so.
As
an investor, one useful way of thinking that I have used is to think of myself
as a person with a small bag of money who is going around allocating that to
different people in order to get a reasonable return. I visualize that I am
getting into a partnership with the promoter of the company for some time and
get a return from the business. If the business stops doing well after some
time, I take my money back and then get into a partnership with another
promoter.
This line of thought forces me to think about the quality of the
promoter whom I am partnering with, long-term dynamics of the business, the strategy
the business is following and also ensure I am tracking the progress of the
business. It also helps in preventing too many knee-jerk reactions to purely
market-related events.
This
means that even if I am invested in a very good company, I still need to
continuously monitor it to ensure that it is doing exactly what it had promised
and planned to do. If there are deviations, I need to understand why and what
actions are being taken to course-correct. Investing is not a passive game. We
have to be constantly vigilant and keep an eye out for what is happening.
Thursday, 2 May 2019
Weekend Reading - Some Interesting Stuff
Here are the top 5 articles I found interesting this week.
1) A look at BYD, the world's largest electric vehicle manufacturer
Founded in Shenzhen
in the mid-1990s as a manufacturer of batteries for brick-size cellphones and
digital cameras, BYD now has about a quarter-million employees and sells as
many as 30,000 pure EVs or plug-in hybrids in China every month, most of them
anything but status symbols. Its cheapest model, the e1, starts at 60,000 yuan
($8,950) after subsidies.
Last year, BYD
opened one of the world’s largest battery plants, a 10 million-square-foot
facility in Qinghai province, and in February it broke ground on another of
similar size.
China has adopted
EVs at a stunning pace. Thanks to generous government subsidies and municipal
regulations that make owning an internal combustion vehicle in many cities
inconvenient, expensive, or both, China accounts for more than half the world’s
purchases of electric cars. More EVs were sold in Shanghai last year than in
Germany, France, or the U.K.; the city of Hangzhou, smallish by Chinese
standards, had higher sales than all of Japan. Virtually all of Shenzhen’s
20,000 taxis are electric BYDs, compared with fewer than 20 of any make in New
York. More than 500,000 electric buses ply Chinese roads, compared with fewer
than 1,000 in the U.S.
2) Amazon is helping Indians take their products global
Indian sellers
exporting their wares on Amazon’s global marketplace rose to more than 50,000
in 2018, and together sold goods worth over $1 billion. By 2023, Amazon expects
this volume to rise to $5 billion. Launched with just a few hundred sellers in
May 2015, more than 50,000 Indian exporters are now part of the Amazon Global
Selling programme, offering more than 140 million made-in-India products to
Amazon customers in the US, UK, Australia, China, south-east Asia and other
overseas markets.
3) Can we use technology to break the vicious cycle of airconditioners and atmospheric heat
Use of the
energy-intensive air-conditioner causes emissions that contribute to higher
global temperatures, which means we’re all using AC more, producing more
emissions and more warming.
“If you cool
something, you heat something, and that heat goes into the cities.” Their use
exacerbates the heat island effect of cities—lots of concrete soaks
up lots of heat, which a city releases well after the sun sets.
Using technology
currently in development, AC units in skyscrapers and homes could get turned
into machines that pull carbon dioxide out of the atmosphere.
4) Water crisis and climate change are becoming scary, but is anyone looking to solve these issues
More than 600
million Indians face “acute water shortages,” according to a report last summer
by NITI Aayog. Seventy percent of the nation’s water supply is contaminated,
causing an estimated 200,000 deaths a year. Some 21 cities could run out of
groundwater as early as next year, including Bangalore and New Delhi, the
report found. Forty percent of the population, or more than 500 million people,
will have “no access to drinking water” by 2030. Climate change will surely
make the problem worse.
5) How Satya Nadella has led the transformation of Microsoft to regain its formal glory
Under Satya Nadella,
Microsoft has more subscribers than Netflix, more cloud computing revenue than
Google, and a near-trillion-dollar market cap. Microsoft cut funding to Windows
and built an enormous cloud computing business—with about $34 billion in revenue
over the past year—putting it ahead of Google and making progress in key areas
against the dominant player, Amazon Web Services.
Microsoft’s Office
collection of productivity software, formerly a one-off purchase is now a
cloud-based service boasting more than 214 million subscribers who pay around
$99 a year; it has more subscribers than Spotify and Amazon Prime combined.
For those on the path of the cycle "Fani", please stay safe.
Friday, 26 April 2019
Weekend Reading - Some Interesting Stuff
Today, everybody
talks about how much information is bombarding us. Imagine what it must have
been like after the printing press when people who had been totally devoid of
information had all of this information flooding them. The powers-that-be
rebelled against that. Shortly after the printing press was developed, a Swiss
scholar sat down and said, “I’m going to catalogue all of the books that have
been printed thus far.” He ended up warning of the harmful magnitude of books
and how it will create nothing but chaos. Well, that’s kind of like what we’re
experiencing today on the internet, isn’t it?
How streaming
content providers like Netflix and Amazon Prime Video is changing the game.
HBO is so successful
because it never had to cater to advertisers. It only had to cater to its
audience, who was paying them directly to not have ads. Amazon is more
audience-focused than advertiser-focused.
As Apple and Amazon compete
for a greater share of consumer dollars and attention, they also have a
particularly intimate business relationship: Apple is spending more than $30
million a month on Amazon’s cloud. At these rates, AWS would be picking up more
revenue from Apple than from several other companies,
including Adobe, Capital
One, Intuit, Lyft and Pinterest. People use more than 1
billion Apple devices each month, and accordingly, Apple has considerable
computing and storage requirements. The company is investing heavily to build
its own infrastructure: In January 2018, Apple announced plans to spend $10
billion on data centers in the U.S. within five years. In December, Apple said
it would spend $4.5 billion of that amount through 2019.
An EV with a daily
commuting distance of 30–40 km needs 6-8 kWh of energy, equivalent to the daily
power needs of a small household. If 80% of India adopts EVs, the total power
demand could touch 100 Terawatt-hour or about 5% of the total electricity demand
of India by 2030.
This presents unique
challenges for power utilities, which will need to increase production and
resolve the issue of too many people charging at the same time from a single
grid.
This additional
burden can be managed only by deploying intelligent tariff and pricing
solutions, with minimal network investment.
Another solution
deployed by states like Maharashtra is a variable tariff structure called time
of use (ToU). It means power tariffs will be cheaper at certain times of the
day when the demand is usually low.
Integrating power
generation from renewable sources with conventional grids in order to meet EVs’
demand is key. If India wants to see an effective reduction in pollution levels
through EVs, the sector cannot be seen in isolation.\A vehicle running on electricity
may be considered clean, but it is not really a zero-emission vehicle if the
power source is coal. India generates a majority—about 65%—of its energy demand
through coal.
When you speak, your
brain sends signals to your lips, tongue, jaw, and larynx, which work together
to produce the intended sounds. Now scientists in San Francisco say they’ve
tapped these brain signals to create a device capable of spitting out complete
phrases. The effort doesn’t pick up on abstract thought, but instead listens
for nerves firing as they tell your vocal organs to move. Previously,
researchers have used such motor signals from other parts of the brain to
control robotic arms.
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