Closeness

on 21 April 2018

There’s a movie - I could google it if could be bothered - where a man pretends to be a woman’s husband and she has to ask him some questions to find out if he really knows her.

I don’t know why that scene stuck in my head many years ago, but it did. The things that make us really intimate, the things that mean we know each other deeply are not the obvious things. They’re not trivia. Not sexual. It’s not something you can guess or research.

All the people who have loved me would be able to tell you that I can’t tie my shoelaces. No-one who hasn’t loved me would know that - until I write this. I tie my shoelaces in a ridiculous way that doesn’t make any sense. And even when I tried to learn to do it correctly, I reverted back to the other way - a knot that doesn’t untie itself. There probably aren’t more than four or five people who know that.

There are a lot of things like that. We’ve loved and been loved, and it leaves a trace.

Distilling data

Distilling data

on 18 April 2018

Quite a few years back I explored opening a moonshine distillery in St Andrews. I’m not writing about about that today - although I do want to go on record saying that moonshine is the most iconic drink that no-one has ever tasted - and thus a massive opportunity.

The most important thing in early-stage development work, which is taking an idea from a prototype, is to work out what information you are dealing with and to structure a database around that.

Every website is really just an interface to a database. Facebook is a database of your friends, photos and messages. Google is a database of web pages. Working out the structure of this database and the relationships between things is something that has to be done very early.

Facebook is a great example of this. When Facebook started in 2005 or so, it was almost defined by a single database feature. You were friends with people and they were friends with you - but you couldn’t be friends with someone and them not be friends with you. Believe it or not, this was actually quite unique at the time.

Your friendships form what is known as a has and belongs to many relationship. You have many friends, and you also belong to many friends (ie. are a friend of them). To represent this you would make a list of People and a list of Friendships.

People

Bart
Ralph
Nelson
Lisa

Friendships

Person 1 Person 2
Bart Ralph
Lisa Bart
Ralph Lisa

In a real database we’d give every person an ID number because: 1. Numbers are much faster to deal with than text. 2. ID numbers don’t change - if Bart changed his name to Fartman then we’d need to update his name everywhere in our friendships list.

It’s important to note that to find who Lisa is friends with, we have to look at both columns.

I’ve gone off track into basic database theory here, so let’s get back to what I was writing about!

When I look at developing a system, I have to look at the business and basically work out how to fit the whole business into a spreadsheet like Excel.

To take an example, let’s say we’re building a database for a kindergarten. We’ll have sheets (table in database language) called Children, Classes, Teachers, Parents.

Like real life, the tricky bit comes in relationships.

Can a Child be in more than one class? Does a class have more than one teacher? Do teachers teach more than one class?

It’s pretty interesting stuff when you dive into it, but to really be successful you need to be something of an insider on the business or industry you are approaching. It’s just not possible to nail down a database structure as an outsider and I think this is why so many successful startups come from people making something to solve a problem they’ve encountered in their own industry.

Here’s a list of tables from Boxmove, a logistics company I co-founded.

Boxmove database

It’s constantly changing but that structure represents basically our entire operational business. Other non-core elements of the business like payroll and finance are managed in other databases that I’m thankful I don’t have to maintain.

Tesla looking a little cloudy

on 2 April 2018

I’m a big fan of Tesla. I think they’ve done a huge amount to lay the foundation for electric vehicles, which are on the cusp of being mainstream. In some ways, they’ve done what Apple did with the Apple II and Personal Computers - brought a technology from the bearded to the masses.

But people forget that after the Apple II, there was a time when Apple was considered irrelevant and the company came close to bankruptcy. Then the iPod came along and brought them back onto the forefront. So between producing the Apple II, which at the time was heralded, and today’s situation - being féted as one of the most innovative companies in the world, there was a a trough. A valley.

I think that situation is coming for Tesla sooner rather than later. And while I’m sure Elon Musk’s story will be told in breathless Hollywood movies in the future, that won’t save them from the liquidators.

There are a few reasons I’ve changed my views on this, and why I would not buy Tesla stock at current prices:

  • I’ve seen nothing positive about the SunCity and solar roof acquisitions for a while. And I don’t see accelerating adoption of PV panels on the ground.
  • The latest crash of a Tesla is very bad news. It’s now emerged that the car was on Autopilot, but more damagingly - this was a 38 year-old Apple Engineer. That’s bad on many levels - but mainly people assume that a 38-year-old engineer should be the very lowest risk driver of being killed by a self-driving car. This isn’t some reality star, snorting coke with the seat fully reclined. Then Tesla have openly (some might say defensively) blogged about the accident, and pissed off the NTSB whose investigation is ongoing. This incident is going to have wide repercussions.
  • Finances. Tesla are burning funds at a shocking rate still. They don’t seem to be producing the cars fast enough and inevitably interest-rates are going to rise above zero and it will be harder to finance this burn.
  • Other manufacturers are moving faster into electric vehicles than I expected. These companies can afford to subsidise the lessons of Electric Vehicle development with cashflow from their existing operations.
  • Tesla is far too expensive to be acquired by any existing company at its current valuation.

There are positives: self-driving is inevitable and coming sooner than we think. Tesla has a real fleet of vehicles out there logging data. Uber fucked up with their self-driving recently, and their reputation is not great.

Overall I think there’s a medium to strong chance that Tesla hits massive financial problems in the next two years and has to restructure in a way that affects ordinary stockholders.

The state of the world in my mind

on 27 March 2018

It’s been a long time since I wrote much, and it’s always interesting to look back on what I write here after a few years. So here comes a loosely coupled pile of thoughts around the economy, business, and the world situation.

Signal vs Noise

There’s a lot of noise in the news - it’s hard to make out what is important and what isn’t. Things that are just noise: #MeToo which is in the process of being overtaken by #DeleteFacebook, which will also go nowhere. There’s no fundamental changes here. Both of these things will be about as meaningful as Occupy Wallstreet was.

There’s signal in Brexit, Russia, The Wall, and Chinese trade tariffs - the world is becoming more closed. Maybe people see a cake that’s about to shrink, and they want to maintain their slice of it. Maybe political elites are running a divide-and-conquer strategy in the face of rising transparency and easier mobilization of right-minded people. I don’t know.

China

Global sentiment is turning against China. Our idea of offshoring low-skilled work to slaves in China and all being innovators and knowledge workers is not working. Chinese entrepreneurs, backed by the Chinese government, are wholesale ripping off anything they can. See for example the totally legal Lepin ripoffs of Lego Models - down to the exact brick, including the photocopied instruction manuals. Every industry has this problem.

I just spent a week in Germany with Europe tool manufacturers and they, frankly, can barely compete with Chinese companies paying slave wages, with no regard for health and safety and no care for the environment.

President Trump (a total cunt) has just announced tariffs on Chinese trade, and despite the initial backlash, this is going to happen across the world. Wealthy Chinese have been pulling money out of China as fast as they can and I’m certain that China is going to implode soon. I think Apple sees this and it’s part of the reason they are bringing manufacturing back to the US.

Financial crisis

Nothing fundamental has changed since the financial crisis of 2007/8. We’ve been sitting on record low interest rates for years and, inevitably that has forced up the price of any productive asset - property, stocks, early-stage investments.

Some form of correction is inevitable here.

Personal finance

I’m mystified by people’s financial situations. Tourism is booming - short breaks in cities. Particularly for young people. But young people should be feeling penniless - they have massively high rents to pay, huge student debt and I don’t believe salaries are all that great.

Premium everything

I’ve made this point many times, but I’m also bamboozled by the increase in average prices of things that people pay. For example, barbers. The average price for a haircut now seems to be £15 and there are more hipster ‘original’ barbers everywhere across the world. You would think that as people have less disposable cash they spend less on these things. Similar situation with expensive ‘handcrafted’ beer, pulled pork premium burgers, and coffee shops absolutely everywhere.

On the otherhand, I think it’s possible that people spend less on mid-range brands like Calvin Klein, Kickers etc. H&M, Zara etc. are eating that market at much lower prices.

The boom in tech stocks

Techs have been on a relentless tear for at least five years. It doesn’t matter whether advertising-driven (FB, Google, Twitter), consumer facing (Apple, Netflix, Spotify, Amazon), or business oriented (Microsoft, Adobe). They don’t have much in common besides technology - business models and industries are all different. I think this is mostly shifting fundamentals and therefore a long-term trend, and not a bubble. There’s also an element of these businesses, once cashflow-positive, being easy productive places to park cash.

Globalization

The only textbook I can remember from my 4 years studying International Relations is The Globalization of World Politics. At the time, globalization seemed inevitable, positive and unstoppable. We’ve clearly hit some speedbumps in the last year, and it seems that the problems that are causing those speedbumps are just being kicked down the road.

What happens when the majority of the world’s people are living shitty lives, while we in the West are in luxury. Some people want to welcome all comers with open arms, others want to close the doors and turn them all away. I think up to now the approach has been open borders and this is going to change.

Terrorism

I believe terrorism is being perceived as a diminishing threat. And since the power of terrorism comes from its perception, it is losing its power.

Russia

I think Russia is winning a bigger intelligence operation than anyone understands. Russia has a combination of an effective, active intelligence network, and mind-blowing amounts of hard cash. This is giving them influence everywhere. The US/UK/EU/Aus may be stronger on an electronic or military level, but Russia is on another level when it comes to honeypots, blackmail, assassination and multi-million dollar bribes.

There are countries, not just Russia, where corruption has gone so far that it is simply not possible for the regime to change. If the leadership lose their power then they, and their loved ones and friends, will be going to jail and losing everything. No person can allow this to happen to their family, and so these countries are becoming dictatorships. Not by design, but by necessity. They don’t really fit our idea of dictatorships - where some heavily-badged general storms a palm-tree lined palace and seizes power. These leaders were democratically elected and - in a world that has boomed for ten years - have presided over improving conditions for the populations. When the next bust comes, there will be a reckoning and I think we could see civil war in Europe, or preferably a Mugabe-type deal to ship some of these leaders off to Switzerland with immunity and a chunk of money.

Maybe this seems a bit gloomy but it’s really not. I don’t see big opportunity out there right now, and I think risk is higher than is generally accepted. Probably one of the reasons cryptocurrencies went so insane is that they are one of the few (possible) opportunities out there for people. Turbulence creates opportunity. There’s a lot of great stuff happening too - brilliant engineering, space exploration, genuinely great development.

I do see opportunity everywhere but I always have and that’s one of my biggest problems! That was a long post - I’m going for a beer!

Bitcoin dump

on 9 December 2017

It’s 17:43, according to the clock on the oven. I’m going to write for exactly 17 minutes about Bitcoin and then I’m going to publish. It will be disorganized, and completely unresearched.

The last few days have been insane in the markets. On Thursday evening I sat in a hotel room and watch the price of BTC jump from $15,000 to $19,000 in the space of about two hours. Coinbase and GDAX buckled under the strain and went down at least twice. And were shaky for the whole time. In the downtime I checked my earliest prediction where I said it was either predicted a ceiling of around $10k based on it being used for illicit uses. I also said there was a chance between ‘possible and likely’ that Bitcoin would fall to zero for technical reasons.

Bitcoin has not fallen to zero. It has exceeded my ceiling. As well as being used for illicit online transactions, it’s become a speculative tool, with the promise of mainstream adoption - though adoption for what seems unclear to me.

Bitcoin has become less and less useful - no-one buys anything with it while it’s on a surge like this one, the fees are prohibitively expensive at $3-20 a transaction at the time of writing. It’s hard to use if you don’t simply leave your money in an exchange (which is a huge mistake).

I’m an intelligent guy. I’ve been a programmer for at least 15 years. I worked in finance, I’ve invested on and off in shares for many years. I’ve followed Bitcoin, invested and used it since at least 2012 - maybe longer — and I’ll say this… I do not understand it completely, I don’t understand an enormous amount of cryptocurrency stuff. I’m suspicious of people who seem to profess to understand it all. At the same time, people I enormously respect, who are smarter than me, are behind cryptocurrencies.

What do I think? Well firstly, I think that Bitcoin is the most accessible speculative bubble for a lot of people. As it’s become more accessible, the price has risen. It’s now easier to buy some stake in BTC than any form of other security. I think in a big picture, there’s a lot of money washing around in the world looking for productive opportunities - we’re in an everything bubble. In that situation it makes sense that even the most cautious investor would allocate 5% of their investment to a high risk, high return asset class. I believe this has had some impact on BTC.

I think Cryptocurrencies are here to stay, and they are going to be a big thing. I believe they will change the world. But so far, Bitcoin hasn’t changed anything, and it has many shortcomings. So even if cryptocurrency becomes huge, that doesn’t necessarily mean that there’s any value in Bitcoin.

People talk of parallels between Bitcoin and Netscape in the early days of the web, but an investor in Netscape who held all the way would have lost everything because Netscape is worthless. And just because you held Netscape stock, didn’t make you more able to profit from, say, the rise of Google.

And not only that, but the entire landscape of investing changed over the dot-com era. From infrastructure, to social networks, to Software-as-a-Service and into marketplace businesses like Uber.

I don’t know where Bitcoin is headed. Futures trading begins tomorrow and there’s been relative calm today in the price. I can’t predict whether this pushes the price up or down. I certainly think that up to now it’s only been possible to take a long position on BTC, and from tomorrow it will be possible to short it.

I believe there’s a lot of murkiness in the pricing of BTC. At the moment my limits (which are relatively high) are around $20,000 per week of trading. That’s not a huge amount when compared against the current market cap. At it’s peak, I would only be able to sell 1 BTC and buy 1 BTC each week. This must have some form of impact on the market.

And some brief notes as I run out of time: - BTC is 99% in male hands - 99% of ICOs have been complete and total bullshit scams. My understanding is that the flow is generally ETH -> ICO, and I assume that the scammers on the receiving end of these billions of dollars of crypto assets are liquidating them, or are about to.
- Bitfinex is going to vaporize with everybody’s money, and Tether alongside it. - If the US government decides to regulate crypto markets, which is inevitable on some level, then the price will plummet. A huge driver thus far in the price has been the ability to buy BTC. When I acquired my first BTC I had to bounce through a convoluted mess of Linden Dollars and some other exchange just to get them. It was worth the hurdle.

Now you can just buy with a credit card.

My time is up.

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