When One App Rules Them All: The Case of WeChat and Mobile in China

An excellent overview of WeChat, which is championing the paradigm shift from the web, and the “web of apps”, towards messaging and the notification stream. In my opinion, the central linchpin to messaging is its command of identity. The platform’s value is huge because users trust WeChat with their personal contact information, payment information, and personal communication. This trust begets a high-value attention stream for the user, which reinforces the cycle of trust and value in WeChat the platform.

Over time, I predict the notification stream, identity conduits that we call devices, and cloud-native operating systems will become increasingly important. FaceBook wants to become a meta-OS that is device agnostic, while Apple elevates the physical device as the chief arbiter of identity. Expect devices to get better and better at securely recognizing who you are with minimal friction, and expect notifications to become the primary way that you interface with services.

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Bitcoin presentation at Goldman Sachs

21 Inc. Founder Balaji Srivinasan and Coin Center Executive Director Jerry Britto give a well-structured, succinct presentation on Bitcoin to Goldman Sachs. Of note is the fact that they believe Bitcoin is a protocol, not a currency, and that it is going to grow in underserved micropayment niche markets first as it establishes creditability to act as an internet of value transfer. Down the road, exciting applications such as near-instatantaneous settlement of very large amounts of value (e.g. millions of billion-dollar transactions per day) are entirely possible with sustainable security.

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Will Bitcoin Finally Bring Down The House Of Medici?

From Dan Morehead of Pantera Capital, writing for TechCrunch:

A typical international cross-border payment for a small-to-medium-sized business whose payments are typically on the order of $1,000 to $10,000 can take several days and cost up to 5 percent of the total transaction. Let’s pull back the curtain on the process.

  1. Before a business can make a large purchase from a supplier, the buyer provides a letter of credit from a financial institution to the supplier, which acts as a guarantee of payment. There is a non-trivial fee for acquiring this and it may take several days for a bank to produce.
  2. Once the letter of credit has been provided by, for example, a U.S. business looking to buy from a Brazilian supplier, the supplier sends an invoice for an amount due.
  3. The U.S. business initiates a money transfer at its primary bank for an amount greater than what is due on the invoice. This is in order to cover the many fees required along the payment’s journey.
  4. Over the course of several business days, the buyer’s bank first charges a money transfer initiation fee and eventually moves the money along to its U.S. correspondent bank.
  5. Once the payment hits the first correspondent bank, it grants the buyer’s primary bank a rebate — a finder’s fee of a sort to incentivize the perpetuation of the 600-year old process. This correspondent bank deducts yet another fee for processing the buyer’s payment and moves the buyer’s payment along to a second correspondent bank in Brazil. This relay takes another couple of business days to complete.
  6. Upon receiving the payment, the second correspondent bank converts the buyer’s USD-denominated payment into Brazilian reals with a foreign-exchange spread. While able to exchange currencies at a wholesale rate, savings from doing so are not passed on to the customer but withheld as additional profit for the correspondent bank. Another processing fee for the payment is taken by the second correspondent bank before the payment moves on to the supplier’s primary business bank. The currency exchange and subsequent relay of the payment take an additional couple of days to complete.
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Why financial firms are investigating bitcoin tech

Select quotes from a solid summary of Bitcoin and blockchains from CNBC:
  • Arguing that bitcoin’s underlying technology has the opportunity to improve settlement latency and system security for firms, Masters said the market for financial blockchain applications will ultimately be “measured in the trillions.”
  • In the past six months, “everybody realized that bitcoin’s more than a currency,” said Brian Kelly of Brian Kelly Capital. “Everybody had their ‘aha’ moment, and investors with many millions of dollars to spend are starting to see how it can be used.”
  • Now, more than a dozen big banks and tech firms have dived into the field, including Seagate,  Nasdaq,  Overstock, IBM, Samsung, UBS, Barclays, Banco Santander and Intel—to name a few.
  • Garzik, who now works full-time at Dunvegan Space Systems, predicted the myriad applications of the blockchain will eventually help form the infrastructure for a spate of new technologies, much like Transmission Control Protocol/Internet Protocol (TCP/IP)—the basic communication language of the Internet—does now. “You don’t have a conversation today about TCP/IP: This is the lowest layer of a money network,” he said. “You’re not going to say ‘Let’s adopt bitcoin,’ you’re going to say ‘Let’s use this money layer infrastructure.’ You’ll talk about the money web, or something of that nature, you won’t talk about the blockchain itself.”
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What Exactly is This Internet of Things?

I found this link from Benedict Evans’ Weekly Newsletter. Excellent information on the Internet-of-Things, which as this author states has become a catch-all term to include any small connected device with an analog component, be it a sensor or a switch.

However, the more I look at the combination of those simple things, the more complex the outcomes. There is not going to be a single operating system or platform to unify all of those devices. Instead, each industry or ecosystem is likely to have its own set of solutions. Just as we talk about “Healthcare Software” or “Human Resources Software”, we are likely to have a “Manufacturing IoT”, and an “Agricultural IoT”. Maybe Apple or Google will wrap up the “Home IoT”, but for everything else I think it is unlikely that we will find a one-size-fits-all solution that we can then label “The IoT”.

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The Rise (and Likely Fall) of the Talent Economy

A great article from the Harvard Business Review. I love analysis that focuses on incentive structures as the primary drivers of macro-shifts over time.

The income gap between creativity-intensive talent and routine-intensive labor is bad for social cohesion. The move from building value to trading value is bad for economic growth and performance. The increased stock market volatility is bad for retirement accounts and pension funds. So although it’s great that the proportion of creativity-intensive jobs is now nearly three times what it was a century ago, and terrific that the economy is so richly endowed with talent, that talent is being channeled into unproductive activities and egregious behaviors.

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Jon Huntsman on the Future of Global Trade

How will society respond to a world that richly rewards educated innovators while ignoring increased income inequality? The simple truth is that the growth of disruptive technologies isn’t likely to ensure many well-paying jobs. High-tech skills will be at a premium, empowering some, but many high-skill jobs will be increasingly done by automation.

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The War Against Cash

Sigh. Central governments have no business dictating and coercing individuals’ financial affairs. Yet that’s what we’re starting to see as governments turn to increasingly stringent ways to control and direct the flow of value in society to favor more risk.

Like chemotherapy, negative interest rates are a harsh medicine. It’s disorienting when people are paid to borrow and charged to save. “Over time, market disequilibria are dangerous,” G+ Economics Chief Economist Lena Komileva wrote to clients on April 21. Which side of the debate you fall on probably comes down to how much you trust government. On one side, there’s an argument to be made that cash has become what John Maynard Keynes once called gold: a barbarous relic. It thwarts monetary policy and makes life easy for criminals and tax evaders: Seventy-eight percent of the value of American currency is in $100 bills. On the other side, if you’re afraid that central banks are in a war against savers, or that the government will try to control your financial affairs, cash is your best defense. Taking it away “is a prescription for revolution,” Cecchetti says. The longer rates break on through to the other side, the more pressing these questions become.

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The Mission To Save The Internet By Rewiring It From The Name Up

Yet another example of the macro-trend of hierarchies to networks. Decentralization is more efficient, and as long as markets continue to chase efficiency (as they always have), more decentralization is inevitable over time.

Source: Motherboard via Van Jacobson
Source: Motherboard via Van Jacobson

What that means, in practice, could be big. An internet focused on the what, not the where, could be a more flexible internet, less likely to get clogged up as a steady stream of new devices join the party. An internet that no longer relies on the aging architecture known as TCP/IP could also be an internet with fewer of the middlemen that currently throttle speeds, gather our data, or control what can and can’t be seen.

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Africa’s Mobile-Sun Revolution

Could it be that solar power, potentially combined with large-scale batteries, will be the “grid” in developing markets, perhaps at least in the near future? I think so. At the very least, solar will prove enormously useful and beneficial and require effectively zero-dollar investments in infrastructure to dramatically improve lives. Solar combined with small-scale appliances, starting with mobile phones, provides an enormous increase in standard of living.

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The Great Unraveling of Globalization

I think Thomas Friedman really did hit the nail on the head when he described the 21st century world as “flat”, but we’re definitely starting to see evidence of a slowdown in globalization. The Washington Post provides a relatively comprehensive analysis that points to protectionism, rising costs in developing countries, and shifting demographic trends as the main culprits. A few quotes that stand out:

“In the past year, as many as 30 multinationals were placed under investigation — some were penalized and others raided — by Chinese government authorities for any number of dubious infractions. Among those in the crosshairs: drugmaker GlaxoSmithKline (corruption), Apple (inadequate warranties), Microsoft (monopolistic practices), and Audi, BMW and Daimler-Benz (price gouging). No surprise, then, that more than half of multinationals responding to a survey by the American Chamber of Commerce in China said that Chinese regulators “targeted” foreign firms and that laws and regulations favored domestic companies.”

“Multinationals are very nervous now, and they should be,” said Mark Leonard, co-founder of the European Council on Foreign Relations. In the past, only some sectors — mining, oil and gas, commodity companies — had to worry about geopolitics. Now companies that make fizzy drinks or handbags or chocolate are finding their supply chains, their markets, their operations completely blown apart by geopolitical risks and unfavorable treatment.”

“Well over half of all companies in China, Russia, Indonesia, Malaysia and Vietnam, to name a few, count their governments as stakeholders. These enterprises — in mining, telecom, banking, construction, manufacturing and even retail — receive preferential treatment in lending rates, government investment and subsidies with little accountability for their results. Armed with cheap money, undisturbed by impatient investors and inured from the threat of failure if they underperform, SOEs are often guilty of “overcapacity, inefficient cost control and slow industrial upgrading,” said analyst Li Jin of the China Enterprise Research Institute.”

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Take X and add AI

Taking X and adding AI will fundamentally disrupt a whole bunch of different industries — there are an awful lot of Xs out there. Computers will begin to perform all kinds of communication and visual inspection tasks faster, more cheaply and more accurately than their human forebears. All the examples I’ve given in this post are either happening right now, or will exist in the next 5 years.

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NYT: The Moral Bucket List

I frequently enjoy reading David Brooks’ work, and was fortunate enough to have met him when he came to speak at Davidson during the fall of my freshman year.

But if you live for external achievement, years pass and the deepest parts of you go unexplored and unstructured. You lack a moral vocabulary. It is easy to slip into a self-satisfied moral mediocrity. You grade yourself on a forgiving curve. You figure as long as you are not obviously hurting anybody and people seem to like you, you must be O.K. But you live with an unconscious boredom, separated from the deepest meaning of life and the highest moral joys. Gradually, a humiliating gap opens between your actual self and your desired self, between you and those incandescent souls you sometimes meet.

Commencement speakers are always telling young people to follow their passions. Be true to yourself. This is a vision of life that begins with self and ends with self. But people on the road to inner light do not find their vocations by asking, what do I want from life? They ask, what is life asking of me? How can I match my intrinsic talent with one of the world’s deep needs?

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On Inevitability & Pendula

In short: I think my argument is still essentially true, but it isn’t the whole story. I now believe that technology waves tend to go from closed to open and then back to closed again, with the dominant players becoming dominant based on their strength of network distribtion. In other words, you tend to go from propriety invention to Wild West open innovation and then things start to settle down again as a small number of players control the distribution of content on their own networks (nearly always based on the open set of technologies). These networks tend to be few in number, and overwhelmingly dominant in their control over how people experience technology and content. Think Google for search. Facebook & Twitter and now Snapchat for mobile.

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Bitcoin Vs. Wall Street: A Love-Hate Story

“First they ignore you, then they laugh at you, then they fight you, then you win”

Disintermediated value transfer and secure unilateral ownership. Individuals leveraging software to seek opportunities for investment of their value, only eating as much risk as they are comfortable with. Global transfer of value independent of the nation-state framework, legacy fiat limitations and aging regulatory regimes. Autonomous corporations that operate so long as they provide value. Smart contracts that reliably execute any form of financial derivative, plus perform any coordination function such as ownership, certificates, registration, identity.

Given banks’ dependence on the current value mediation paradigm to generate returns, I don’t see them being able to maintain current profits going forward. Financial services are ripe for margin compression. They will still be able to perform excellent research and diligence responsibilities, but they won’t act as gatekeepers or value middlemen anymore.

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We Can’t Let John Deere Destroy the Very Idea of Ownership

It’s official: John Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway. In a particularly spectacular display of corporate delusion, John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.

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