What We’re Reading (Week Ending 11 January 2026) - 11 Jan 2026
Reading helps us learn about the world and it is a really important aspect of investing. The late Charlie Munger even went so far as to say that “I don’t think you can get to be a really good investor over a broad range without doing a massive amount of reading.” We (the co-founders of Compounder Fund) read widely across a range of topics, including investing, business, technology, and the world in general. We want to regularly share the best articles we’ve come across recently. Here they are (for the week ending 11 January 2026):
1. Ten things about Venezuela: on oil, geopolitics and drugs – Michael Cembalest
Venezuela is not a large part of the global oil production picture, at least not right now. The impact on global oil markets from the US invasion/arrest of Maduro should be minor…
…The US is still highly reliant on petroleum for 90% of transport energy consumption with the remainder mostly made up of natural gas and biomass, and for ~33% of industrial production (mostly high temperature heat and industrial feedstocks). The amounts of oil used for residential and commercial heating is pretty negligible, less than 10% of the respective totals…
…The oil intensity of GDP is gradually declining in most of the world. At some point, this ratio may drop low enough that disruptions in oil supplies will be less of an issue for growth and consumer spending…
…While US oil production is tilted towards light oil, US refining capacity is more even split among light, medium and heavier grades. Note how heavy and medium normalized oil production in Venezuela aligns better with US refining gaps…
…Venezuela also possesses largely untapped reserves of critical minerals like coltan (niobium-tantalum), rare earth elements (REEs), nickel, gold, bauxite and iron ore. The Orinoco Mining Arc, which spans 111,843 sq km, contains documented deposits of coltan (tantalum ore), cassiterite (tin ore), rare earth elements, bauxite, gold, and lithium reserves. Coltan is used for manufacturing tantalum capacitors used in advanced electronic systems, including military communications equipment, missile guidance computers and radar systems. Rare earth elements enable permanent magnets required for precision-guided munitions, aircraft actuators and electromagnetic systems. Cassiterite provides tin for solder in electronics assembly, including defense systems while bauxite feeds aluminum production for aerospace applications…
…Iran and Venezuela have exchanged oil, gold and infrastructure assistance using Iran’s Islamic Revolutionary Guard Corps and Hezbollah-linked front companies for money laundering and sanctions evasion…
…Over 120 Russian troops reportedly operate in Venezuela and lead the “Equator Task Force.” Russian advisers provide training across multiple domains including infantry, drone operations, special forces, military intelligence, signals intelligence, armor, aircraft, artillery and domestic surveillance
China has extensive ties with Venezuela; note the disproportionate amount of Chinese loans to Venezuela vs other Latin American countries (most of these loans were originated over a decade ago). China’s military connections with Venezuela involve arms sales (missiles, jets, naval vessels), defense cooperation and strategic support; it’s not clear what the benefit has been for Venezuela, at least based on last week.
2. Steam, Steel, and Infinite Minds – Ivan Zhao
My co-founder Simon was what we call a 10× programmer, but he rarely writes code these days. Walk by his desk and you’ll see him orchestrating three or four AI coding agents at once, and they don’t just type faster, they think, which together makes him a 30-40× engineer. He queues tasks before lunch or bed, letting them work while he’s away. He’s become a manager of infinite minds…
…With AI agents, someone like Simon has graduated from riding a bicycle to driving a car.
When will other types of knowledge workers get cars? Two problems must be solved.
First, context fragmentation. For coding, tools and context tend to live in one place: the IDE, the repo, the terminal. But general knowledge work is scattered across dozens of tools. Imagine an AI agent trying to draft a product brief: it needs to pull from Slack threads, a strategy doc, last quarter’s metrics in a dashboard, and institutional memory that lives only in someone’s head. Today, humans are the glue, stitching all that together with copy-paste and switching between browser tabs. Until that context is consolidated, agents will stay stuck in narrow use-cases.
The second missing ingredient is verifiability. Code has a magical property: you can verify it with tests and errors. Model makers use this to train AI to get better at coding (e.g. reinforcement learning). But how do you verify if a project is managed well, or if a strategy memo is any good? We haven’t yet found ways to improve models for general knowledge work. So humans still need to be in the loop to supervise, guide, and show what good looks like…
…Before steel, buildings in the 19th century had a limit of six or seven floors. Iron was strong but brittle and heavy; add more floors, and the structure collapsed under its own weight. Steel changed everything. It’s strong yet malleable. Frames could be lighter, walls thinner, and suddenly buildings could rise dozens of stories. New kinds of buildings became possible.
AI is steel for organizations. It has the potential to maintain context across workflows and surface decisions when needed without the noise. Human communication no longer has to be the load-bearing wall. The weekly two-hour alignment meeting becomes a five-minute async review. The executive decision that required three levels of approval might soon happen in minutes. Companies can scale, truly scale, without the degradation we’ve accepted as inevitable…
… At the beginning of the Industrial Revolution, early textile factories sat next to rivers and streams and were powered by waterwheels. When the steam engine arrived, factory owners initially swapped waterwheels for steam engines and kept everything else the same. Productivity gains were modest.
The real breakthrough came when factory owners realized they could decouple from water entirely. They built larger mills closer to workers, ports, and raw materials. And they redesigned their factories around steam engines (Later, when electricity came online, owners further decentralized away from a central power shaft and placed smaller engines around the factory for different machines.) Productivity exploded, and the Second Industrial Revolution really took off.
We’re still in the “swap out the waterwheel” phase. AI chatbots bolted onto existing tools. We haven’t reimagined what organizations look like when the old constraints dissolve and your company can run on infinite minds that work while you sleep.
3. Our Approach to the Future – Hirotaka Shimizu
Venture companies seeking to go public typically expand by increasing sales through their hard-earned business models. Once sales exceed the break-even point, they begin to generate profits. During this process, they develop the organizational structures, governance frameworks, and compliance systems required of listed companies, steadily advancing toward an IPO. Only a limited number of these companies, under favorable conditions, ultimately succeed in going public.
Yet many of those that do achieve an IPO, often after significant struggles and setbacks, find their growth peak around the time of listing. According to the Ministry of Economy, Trade and Industry’s March 2024 report, “Research on How Startups Can Continue to Grow after Listing,” market capitalization growth typically peaks in the first year after listing and then declines uniformly from the second year onward. In fact, although the Tokyo Stock Exchange (TSE) Growth Market is intended to function as a gateway to higher-tier markets, only about one quarter of listed companies successfully make such a transition. Most are unable to achieve their anticipated growth trajectory and remain on the Growth Market. This is why IPOs are sometimes called jokingly by the public as “the final goal” of venture companies. To address this issue, the TSE reportedly plans to revise its continued listing criteria for the Growth Market by requiring companies listed for five years or more to have a market capitalization of at least ¥10 billion, thereby encouraging stronger post-listing growth.
Now then, why does growth come to a halt? There must be a reason. In my view, many venture owners concentrate too much of their attention and energy on their hard-earned business models. Yet all business models, even highly unique ones, have a shelf life. Every business inevitably moves from a growth phase to a maturity phase, and eventually to a decline phase. Companies that push aggressively during the growth phase and succeed in going public often discover that the differentiation they once created has diminished by the time they reach maturity. Their once-unique business models are imitated by competitors, or they unavoidably face intensified competition from companies with adjacent business models. As a result, they find themselves in a red ocean. In addition, the company growth cycle itself is shortening as information and technology continue to advance. This trend is particularly evident among venture companies in B2B marketing and technology domains. Once they face such situations, developing a new business model becomes increasingly difficult. Furthermore, listed companies are required to disclose financial information on a quarterly basis. In my view, this requirement can also discourage new investment, given the potential impact on share prices. I suspect that the current framework functions as a kind of “trap” into which many companies that manage to go public eventually fall.
To avoid this outcome, companies must continually conceive and pursue new business models while their existing models are still in a growth phase. However, most business managers fail to direct their attention to this imperative. In my view, this is because they lack long-term, ambitious goals. If managers were to set long-term goals, they would recognize that such goals cannot be achieved through a single business model and would therefore feel a natural imperative to develop the next one. Companies should, in my opinion, pursue growth driven by long-term goals, such as missions, visions, principles, aspirations, and ambitions, rather than relying on business models. I believe that the continued pursuit of these goals ultimately enables sustained corporate growth.
4. Peace and prosperity in Venezuela will come from democracy, not oil – Ricardo Hausmann
But then, concern: just hours after the raid President Donald Trump declared that he would now “run” Venezuela. He talked much about oil but not at all about democracy other than to dismiss María Corina Machado, Nobel peace laureate and leader of the democratic opposition…
…Instead, Mr Trump made clear, America will work with the dictator’s own vice-president. He spoke as if he owned the country and its assets. Venezuelans will be recipients of his benevolence, not agents of their destiny.
Removing a dictator—especially if leaving his henchmen and -women in charge—is not the same as rebuilding a country. And there is much to rebuild. When Mr Maduro came to power in 2013, Venezuelans were four times richer than they are today. A disaster followed: the largest economic contraction ever recorded in peacetime, triggering the departure of 8m Venezuelans. Brutality, repression and corruption accompanied the catastrophe.
At its heart was a systematic dismantling of rights: property rights, independent courts and free elections. Speaking out became a crime. As rights vanished, so did security, investment, trust and the power to imagine. People stopped planning for the future because the future no longer belonged to them.
The lesson is simple: prosperity does not come from oil, decrees or even benevolent rulers, but from rights. Rights create private property and security. They allow people to invest, innovate and dream. Restore rights, and society can recover.
Venezuelans now need neither revenge nor Trumpian improvisation, but a return to freedom and peace. The technology for that has already been invented: democracy, which is not just about voting but is a system for aggregating preferences while protecting liberties. Democracy aligns political authority with social consent and is the formula for sustained prosperity. Venezuela enjoyed it for much of the latter part of the 20th century.
5. Trump’s Enormous C-Length Win over China – Collapse Intelligence Agency
When we talk about “Oil,” we are using a lazy bucket term. In reality, a barrel of oil is a soup of thousands of different molecules. Each geographic barrel is a unique fingerprint.
“C-Length” refers to the number of Carbon atoms chained together in a single molecule.
This is the fundamental biophysics of the economy. The length of the carbon chain determines State of Matter (Gas vs. Liquid vs. Solid) and Energy Density (how much work it can do).
Short Chains (C1–C4): Gases. They float away.
Medium Chains (C5–C12): Thin Liquids (Gasoline). They evaporate quickly.
Long Chains (C13–C20): Oily Liquids (Diesel/Jet). The “Goldilocks” zone for heavy work.
Very Long Chains (C50+): Solids (Asphalt).
The US/Venezuela/China trade war is essentially a fight over C20+ chains…
…To run a modern economy, you need a specific ratio of products: roughly 40% Gasoline, 30% Diesel, 10% Jet, 20% Industrial/Asphalt. This matches the general demand pattern of the economy.
But nature never gives you that exact ratio in the ground.
Scenario A: Refining Light Oil (US Shale – Mostly C5-C10)
You have too much Gasoline/Naphtha.
To make Diesel (C16), you have to mathematically glue molecules together.
Biophysics: It is energetically difficult and expensive to “Oligomerize” (fuse) small chains into big ones. You cannot efficiently run an industrial economy on shale oil alone because you can’t make enough Diesel/Jet fuel without massive waste.
Scenario B: Refining Heavy Oil (Venezuelan Orinoco – Rich in C20-C100)
You have huge long chains.
The Coker: You heat them up and “Chop” them. A C50 chain can be snapped into three C16 chains (Diesel).
Biophysics: It is thermodynamically efficient to “Crack” (break) a long chain into specific smaller pieces. This is why US Coking Refineries are the “Golden Key.” They take the cheapest feedstock (C50+ sludge) and turn it into the most valuable product (C16 Diesel)…
…The US possesses the “Holy Grail” of refining: Single-Site Deep Conversion.
US Advantage: A barrel of Orinoco sludge enters a Texas refinery and leaves as 80% High-Value Diesel/Jet and 20% solid Petcoke. It is processed in one location, efficiently.
Russian Flaw – The Mazut Glut: Russia cannot fully refine its own heavy barrels. Its refineries lack the depth of US “Coking” capacity.
Russia is forced to export massive volumes of Mazut (M-100)—a cheap, low-value heavy fuel oil—because they can’t crack it into diesel domestically. They have to ship this half-refined trash to buyers who can finish the job.
China: “Teapot” refineries in Shandong have effectively become the “Trash Cans” for the Eastern Bloc. They import Russian Mazut and Venezuelan Bitumen blend to crack it into diesel and asphalt.
The Eastern Bloc relies on shipping half-refined residue between countries to achieve what Texas does inside a single fence line. That creates a massive Thermodynamic Friction (shipping fuel oil is heavy and dirty) that the US avoids…
…Iranian Oil (Soroosh/Nowruz) and Russian Mazut: Heavy, but optimized for fuels (Energy).
Venezuelan Oil (Merey 16) and Canadian Tar Sands: The global gold standard for high-yield Bitumen (Asphalt).
China consumes massive amounts of asphalt for its ceaseless road/infrastructure construction. Losing Venezuelan supply implies a structural shortage of road-paving material.
With Venezuela (Orinoco) gone to the US, and Canada (Tar Sands) logically aligned with the US (despite mercantile friction), China has only one source left for heavy, complex oil: Iran.
The Bottleneck: This forces China into a single-point dependency. If the US/Israel acts against Iranian export terminals (Kharg Island), the Eastern Bloc has minimal access to the heavy oil required for their specific refinery configurations.
Russia can’t help: Russia produces “Urals” (Medium Sour), it’s true heavy oils are limited in production and export.
Canada via the TMX pipeline supplies 200 000 bpd. This is the bpd spoken for CHINA crude. TMX total is 800 – 900 thousand bpd. And this pipeline is MAXED out. China can’t get any more. TMX schedules are spoken for. Other consumers have contractual claim.
You can’t pave a road with Iranian Soroosh/Russian Heavy efficiently; you get less asphalt and more waste…
…By seizing Venezuelan Orinoco heavy oil, the US also effectively secures the highest-value feedstock for its specialized machine, forcing China to run its “Teapot” refineries on inferior or politically volatile alternatives. This heavy oil sludge can be more easily cracked into lower forms as needed for desired usage.
Heavy oils give US optionality in refining. It is more efficient to “chop” that it is to “glue.”
The US will very likely install governance and corporate structure that is supplicating to its national needs. It can begin to squeeze the Eastern Bloc slowly by reducing exports of Merey 16. Or it can simply increase prices. China was able to buy this sanctioned oil at discount.
Now the US controls this oil supply. It’s categorization is “Clean.” So China pays fair market prices for continuing their infrastructure construction.
The same way that China uses REE controls.
We can make an estimation that China currently relies upon Venezuelan bitumen for roughly 50% of its asphalt production needs.
Depending on the mood of the US administration, this is about to get very expensive or outright disappear from China’s procurement.
Whether by design or coincidence, the US now has a very real wartime advantage against China.
It’s likely the US does not recognize this fully. They just wanted China OUT.
Disclaimer: None of the information or analysis presented is intended to form the basis for any offer or recommendation. We currently have no vested interest in any companies mentioned. Holdings are subject to change at any time.
