What We’re Reading (Week Ending 08 November 2020) - 08 Nov 2020
Reading helps us learn about the world and it is a really important aspect of investing. The legendary Charlie Munger even goes 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 08 November 2020):
1. A Twitter thread on Jon Boorman’s final words – Jon Boorman
1) I’ve become very stoical in recent years which has made this much easier to process. I’ve had an absolutely glorious life. I sometimes feel I’ve had two or three
6)It’s a deep privilege to be able to say goodbye to people.
Deep privilege.
Constant family.
Countless friends…
7) Knowing that you will die is fairly innocuous, of course we all will. But when you know you face death within weeks/months, your perspective changes. There’s elements of that we should have in our daily lives…
9) I know I will die. I just know what will kill me. And roughly when.
So buy that coffee.
Have that ice cream.
And be nice.
2. How Discord (somewhat accidentally) invented the future of the internet – David Pierce
Citron learned to code because he wanted to make games, and after graduating set out to do just that. His first company started as a video game studio and even launched a game on the iPhone App Store’s first day in 2008. That petered out and eventually pivoted into a social network for gamers called OpenFeint, which Citron described as “essentially like Xbox Live for iPhones.” He sold that to the Japanese gaming giant Gree, then started another company, Hammer & Chisel, in 2012 “with the idea of building a new kind of gaming company, more around tablets and core multiplayer games.” It built a game called Fates Forever, an online multiplayer game that feels a lot like League of Legends. It also built voice and text chat into the game, so players could talk to each other while they played.
And then that extremely Silicon Valley thing happened: Citron and his team realized that the best thing about their game was the chat feature. (Not a great sign for the game, but you get the point.) This was circa 2014, when everyone was still using TeamSpeak or Skype and everyone still hated TeamSpeak or Skype. Citron and the Hammer & Chisel team knew they could do better and decided they wanted to try.
It was a painful transition. Hammer & Chisel shut down its game development team, laid off a third of the company, shifted a lot of people to new roles and spent about six months reorienting the company and its culture. It wasn’t obvious its new idea was going to work, either. “When we decided to go all in on Discord, we had maybe 10 users,” Citron said. There was one group playing League of Legends, one WoW guild and not much else. “We would show it to our friends, and they’d be like, ‘This is cool!’ and then they’d never use it.”
After talking to users and seeing the data, the team realized its problem: Discord was better than Skype, certainly, but it still wasn’t very good. Calls would fail; quality would waver. Why would people drop a tool they hated for another tool they’d learn to hate? The Discord team ended up completely rebuilding its voice technology three times in the first few months of the app’s life. Around the same time, it also launched a feature that let users moderate, ban and give roles and permissions to others in their server. That was when people who tested Discord started to immediately notice it was better. And tell their friends about it.
Discord now claims May 13, 2015, as its launch day, because that was the day strangers started really using the service. Someone posted about Discord in the Final Fantasy XIV subreddit, with a link to a Discord server where they could talk about a new expansion pack. Citron and his Discord co-founder, Stan Vishnevskiy, immediately jumped into the server, hopped into voice chat and started talking to anyone who showed up. The Redditors would go back, say “I just talked to the developers there, they’re pretty cool,” and send even more people to Discord. “That day,” Citron said, “we got a couple hundred registration[s]. That kind of kicked the snowball off the top of the mountain.”
3. I Have A Few Questions – Morgan Housel
Who has the right answers but I ignore because they’re not articulate?…
…Which of my current views would I disagree with if I were born in a different country or generation?
What do I desperately want to be true, so much that I think it’s true when it’s clearly not?…
…What looks unsustainable but is actually a new trend we haven’t accepted yet?
What has been true for decades that will stop working, but will drag along stubborn adherents because it had such a long track record of success?
Who do I think is smart but is actually full of it?
What do I ignore because it’s too painful to accept?
4. My Biggest Post-Election Market Questions – Ben Carlson
Does the stock market care about anything anymore? We are still in the midst of a global pandemic that is only getting worse, oil prices went negative in the spring and we just went through a contested presidential election.
And yet the S&P 500 is just 2% below all-time highs.
Yes, the stock market plunged nearly 35% during those tumultuous days of February and March but it still boggles the mind how much we’ve gone through this year and the stock market has given a collective shrug based on where we stand.
5. A Twitter thread on 100 lessons on investing – Anand Chokkavelu
1. Most of this list is dedicated to insight on stock picking, but know this: It’s darn hard to beat the market. 99% of people are best served steadily buying and holding low-cost index funds at the core of their portfolios — and I may be understating that 99% figure.
3. Being contrarian doesn’t mean just doing the opposite. The “contrarian” street-crosser gets run over by a truck.
12. Example No. 3: leveraged ETFs. Bastardized ETFs like the Direxion Daily Financial Bull 3X ($FAS) are another great way to lose money. Even if you guess right on direction, the mathematics of the daily reckoning mean these instruments are long-term losers.
30. Adding money to winners > Adding money to losers. This one’s hard. One way I try to remind myself: Every 10-bagger has to double first; Every total loss has to drop 50% first.
38. While price matters, it’s hard to overpay for a truly great growth company. Like in a marriage, the trick is to correctly identify one, build conviction by learning more quarter after quarter, and try to hold on through the inevitable tough times. (cont.)
57. Long-tail events (aka black swans), as explained in @nntaleb’s Incerto series, are by definition unpredictable. And brutal. Since life isn’t a Monte Carlo simulation, we should think hard about our true personal risk tolerances.
85. If you can learn quickly from your own mistakes, you’re ahead of the game. If you can learn quickly from others’ mistakes, you’ve won the game.
91. Downer alert: We like control, but we can’t control everything. Life and luck can (and will) trump investment plans. You can do everything right and still die penniless. All we can do is give ourselves a better chance to succeed.
100. Despite my best efforts to improve each day, I will repeatedly and thoroughly fail to heed these lessons. Let’s hope you’re better at No. 85 than I am.
6. Traffic fatality rates spiked during the pandemic – Joann Muller
There were fewer cars on the road last spring during the height of the pandemic, but traffic fatality rates increased 30% in the second quarter as evidence suggests drivers engaged in more risky behavior, federal officials say…
…Risky behavior, along with a potential reduction in law enforcement and safety messaging during the pandemic, could have contributed to increased fatality rates, NHTSA concluded.
7. The Wizard Of Apps: How Jeff Lawson Built Twilio Into The Mightiest Unicorn – Miguel Helft
About a year after Lawson and two friends founded Twilio in 2008, Lawson was invited to introduce it at a popular networking mixer called the SF New Tech Meetup. Rather than talk about an inherently difficult-to-explain technology, Lawson decided to let the Twilio software speak for itself. In front of a thousand people Lawson began telling his story while simultaneously coding a Twilio app—a simple conference line. In just a few minutes he opened an account and secured a phone number, and after writing a handful of lines of code that everyone in the room could understand, his conference line was up and running. Lawson then asked everyone to phone in, and just like that a mob of developers was on a giant conference call. Lawson then added some more code, and his app called everyone back to thank them for participating. As phones throughout the room began buzzing, the crowd went wild with enthusiasm. “He is the let-me-show-you-what-we-can-do type of exec,” says Byron Deeter, of Bessemer Venture Partners, an early backer who has become Twilio’s largest shareholder. “There’s no bravado and no ego, and that gives him a special charisma and authenticity.”
Lawson’s parlor trick did more than generate industry buzz. It epitomized a developer-centric business strategy that has fueled its growth. Twilio is exceedingly simple to use and charges no upfront fees, so programmers often use it to test an idea or product. Pretty soon that product scales and turns into a six- or seven-figure account that required no traditional sales process. “We onboard developers like consumers and let them spend like enterprises,” Lawson says. Like others that have embraced developer-driven marketing—Amazon for computing services, Stripe for payments, New Relic for analytics—Twilio benefits as companies increasingly turn to software for differentiation. “As that happens, and companies hire more developers, they come in with Twilio in their tool belt,” Lawson adds.
Disclaimer: None of the information or analysis presented is intended to form the basis for any offer or recommendation. Of all the companies mentioned in this article, we currently have a vested interest in Amazon.com and Twilio. Holdings are subject to change at any time.
