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Learning by Proxy

Learning by Proxy | Selling Air (India)

The world seems to be in suspended animation. After a year, that has taken a lot out of each one of us, everyone is just taking a breather. On the one hand, it felt like everything was forced to transform and change in 2020; on the other hand, did it really?

The year began in India with the NRC and CAA protests and now is ending with the farm protests. Things seem to be on an impasse but both sides have dug in their heels. 

The year began with impeachment in America and the uncertainty surrounding it; it ends with a hard-fought election and a loser who is unwilling to concede. Not to mention willing to hold the entire country hostage to put on a good show. 

While a Brexit deal has been apparently reached, people on neither side are entirely clear what it means. What it will mean for businesses and how it will affect the continent on the whole.

China was a black box. There was no information about the virus spread in China at the beginning of the year and here we are, still no clue what is going on.

But the wheel keeps turning.


Fly Away

Do you know how a billion dollars fly away from the Indian government every year? 

Air India

Before the First World War, airlines were meant to ferry mails. They were small, did not have too much range and had to be navigated by sight. The airlines, to make more money, started accommodating passengers. Four passengers and a lot of letter and parcels stuffed in the plane. 

Juan Trippe made it possible for people to travel, sans mail, on planes with the launch of the Pan American Airlines (PanAm). Towards the late 1920s flying by air started becoming fashionable, especially for the rich and famous. Airlines in the US outdid one another to ensure that they offered the best service, the best drinks, and the best food in their planes.

The story goes – A group of Texas International executives read about a plane crash in Mexico, the news report said that 90 people had died. The executives exclaimed, “90 people! We have only 60 seats in our planes!!! We need to find a way to put more people on the plane.” 

Till the 1950s almost all seats in a plane were first class. Chartered Airlines in America used to buy planes that were condemned by the mainstream airlines and fly at 50% fare. To compete with the chartered airlines, a group of American Airlines executives doodling in the board room drew a line and divided the plane in two. The front half would be the regular corporate fare and the back half would be half price coach seats without the food and the drinks. To this day, most airlines follow this layout.

It was in this climate that J.R.D. Tata founded Tata Airlines in 1932 with a contract from Imperial Airways to carry mail. The airlines spent time ferrying troops during the Second World War and resumed commercial operations thereafter as a public limited company under a new name – Air India. The Government of India acquired 49% of the company in 1948. In 1953, the government passed a law to acquire a majority stake in the company, although JRD Tata remained the chairman till 1977. 

After liberalisation, as more companies entered the competitive fray, Air India started to struggle and has since suffered a string of unprofitable years. The government has been trying to privatise the carrier for the past 20 years. There seems to be light at the end of the tunnel! 

Last week bids were submitted by three bidders to take over Air India. It is assumed that the winning bid will be that of Tata – Air Asia. In some ways, it would be poetic justice. The government and the people of the country have been haemorrhaging a Billion dollars each year to keep Air India alive.

There are a large number of reasons Air India has not been sold to date. The company has been saddled with billions of dollars in debt to finance the company. There are other structural issues as well.

As Air India is set to be privatised, there are increasing concerns among its employees over their fate once the private owner takes control of the loss-making airline. Amid these concerns, one of its employee unions, Air India Employees Union (AIEU), has written to the civil aviation minister, seeking an urgent appointment to discuss various pending staff issues, including provident funds, medical and welfare facilities.

Source: Hindustan Times

Many of the benefits that the employees currently enjoy are because the airline was founded in a different era, continued to be run by the government and has not been radically altered. These benefits will be the first to go under the chopping block. Employees want these benefits settled. 

The airline, on its part, has always maintained that the cut in salaries of pilots has been high due to non-operation of flights, as a substantial part of their salaries are allowances linked to flying.

All airlines had cut salaries of employees, including pilots, as COVID impacted earnings of airlines. Among airlines, market leader IndiGo has been the first among all airlines that has started the process of restoring the salaries of its employees, including pilots.

Source: Economic Times

Pilots have been protesting against pay cuts. With private hands, they can only expect more of the same, especially in a world where airlines have been heavily hit and do not know when they would get back to ‘business as usual’.

A group of Air India employees who have submitted an expression of interest (EOI) for the carrier should only do day-to-day work and not handle policy or strategic issues that may have a bearing on the airline’s disinvestment plans, according to an official order seen by PTI.

Source: Livemint

One of the bidders is the current Chairwoman of Air India and a group of 218 employees! The pilots want them to stay out of policy matters. I am wondering how did employees of the company manage to put together enough money to buy the company.

In the meantime, with an eye on this purchase, Tata which also owns Vistara is consolidating its position.

Prior to the transaction, AirAsia Berhad held a 49% stake in AirAsia India, while Tata Sons held 51%.

As part of the transaction, Tata Sons has the option to pick up AirAsia Berhad’s remaining 16.33% after the closure of the current transaction.

Source: Livemint

But there is a long way to go still for Air India.

“The Transaction Advisor will inform the qualified bidders by January 6 following which the bidders will be given access to virtual data room (VDR) of Air India,” an official said.

The share purchase pact will be shared with the bidders, following which financial bids would be invited, the official added.

“The transaction will be concluded only in next fiscal as we are expecting bidders to have a lot of queries once they get access to VDR and before they put in their financial bids,” the official told PTI.

Source: Livemint

Despite all this, the hope is that this time the transaction will go through. The government needs this inflow of capital especially since tax collection took a huge hit in 2020. Further, they would get rid of an asset that has only been consuming more money from the government every year. It would also go a long way in helping the government meet its disinvestment target.

The job of the government is not to run businesses but to regulate them. In the post-independence era, airlines were an industry considered to be of strategic importance. Also, having a ‘flag’ career was a matter of esteem, but the people of the country have paid a lot for this. 

Needling

The Sino-American relationship has seen better days. It seems to me that it is about to see worse days. Trump has been constantly tightening the screws on China with more and more taxes on products being imported from China. They have been working with Japan, Australia and India for defence co-operations and earlier in the year conducted war games in the Bay of Bengal. Now, they are passing a law which will take exception to China appointing a Dalai Lama for Tibet. 

Among the most significant amendments is that the TSPA makes it US policy to oppose attempts by Beijing to install its own Dalai Lama “in a manner inconsistent with Tibetan Buddhism in which the succession or identification of Tibetan Buddhist lamas, including the Dalai Lama, should occur without interference…”

Source: Indian Express

The only thing remaining is to recognise Taiwan as an independent country. In some ways, Tibet was the original sin. The first territory occupied by China and that behaviour has continued to extend to the South China Sea, Hong Kong and India. Remains to be seen how this plays out.

Differences

Perhaps the greatest similarity between America and Russia are – Trump and Putin – Lying Authoritarians. But the greatest difference is the press. While the ‘fake news’ was calling out Trump at every turn and making fun of him day in and day out; Putin successfully made it look like everything was fine in Russia. He even managed to move the theatre of attention outside of Russia by poisoning Navalny and making the press follow that trail. It came as a surprise then…

After months of questions over the true scale of the coronavirus pandemic in Russia and the efficacy of a Russian-developed vaccine, the state statistical agency in Moscow has announced new figures indicating that the death toll from Covid-19 is more than three times as high as officially reported.

From the start of the pandemic early this year, the health crisis has been enveloped and, say, critics, distorted by political calculations as President Vladimir V. Putin and Kremlin-controlled media outlets have repeatedly boasted of Russian successes in combating the virus and keeping the fatality rate relatively low.

Source: New York Times

The agency said that 230,000 more people had died in Russia making it number 2 in terms of fatalities across the globe. The surprise was not that this fact was hidden, the surprise is that it managed to find its way out!

Also, in another surprising turn of events.

In Wuhan, a city of 11 million people, official tallies put the number of coronavirus infections at just above 50,000, with 3,869 deaths. But blood samples taken from residents after the pandemic’s first wave reveal that the number of infections could be as high as 500,000 — 10 times higher than the official count.

Source: New York Times

Everyone knew this, the only surprise is that they allowed this data to be published.

Broken Heart

One of the toughest struggles that families of those needing organ transplantation need to suffer through is the wait. Waiting for a suitable organ donor to be available. In the case of the heart, often you need something unfortunate to happen to someone, for an organ to become available. In extreme cases, this has also resulted in various black market organ trades.

Shares in Carmat SA posted their biggest gain in more than seven years after the company got approval to sell the first-ever total artificial heart in Europe, the culmination of a 27-year effort that began with a pitch from a French cardiac surgeon to an aerospace company.

Source: Bloomberg

Europe approved the use of artificial heart in humans. This is a huge success and has the potential to change the lives of thousands of rich people. The rest will continue to wait or die, just as they used to. But over the next decade, the cost of this technology is certain to come down and it would become possible to save many more lives. 

It also portends the possibility to develop similar artificial organs such as kidney, pancreas, etc. In the long run, this will considerably increase the life expectancy of people. Further implies that we need to think about pensions and how to support people who live much longer lives.

Snapping up users

It was only a few years ago when the founder and CEO of the Snapchat commented on India. He said – India is such a poor country that the users from the country did not matter. Indians were upset. He was not wrong. Facebook has an ARPU of $40 in the USA and only $4 in India. Even though India represents the largest user base for Facebook in the world, it contributes a small portion of the company’s revenue.

Even so, Snapchat saw its shares shoot up thanks to the growth that they saw in India. In some ways, Snapchat should thank the Modi government for the ban on TikTok. 

Snapchat’s user base has grown 75% in the two years since it plateaued during a disastrous 2018. In that inauspicious year, the app began losing users, prompting a string of company executives to quit and elegies from both Fox News and Kylie Jenner. Snap Inc.’s stock price sank to $5 a share, down from the $17 it commanded during an ebullient 2017 IPO.

[…]

The lion’s share of Snapchat’s Rest of World growth appears to come from India, although Snap doesn’t officially report country-by-country data. The company did say, however, that it saw a 150% jump in Indian users between the third quarters of 2019 and 2020. India has reportedly supplanted the US as the biggest source of new Snapchat users on earth.

Source: Quartz

Poor or not, investors do chase vanity metrics and showing a 75% growth in 2 years for a listed company does make them look good. And for a share market that is has been moving in bizarre ways, this is still more reason to continue on that path.

Also

It is probably a sign of the times…Miranda Summers Lowe @MsummersloweHello 2020 👋🏼 December 24th 202015,369 Retweets58,476 Likes

Away from the earth, scientists are making greater strides – growing radish.World and Science @WorldAndScienceVery cool: Radish plants growing on the space station (Credit: NASA Johnson) December 28th 2020476 Retweets4,270 Likes

The argument against plastics was that we are killing sea creatures. NO. We are killing ourselves.Tony Fadell @tfadellMicroplastics were detected in human placentas. They were found in all placental areas: maternal, fetal & amniochorial membranes. Microplastics carry endocrine disrupting substances that cause long-term effects on human health. Plasticenta: First evidence of microplastics in human placentaMicroplastics are particles smaller than five millimeters deriving from the degradation of plastic objects present in the environment. Microplastics c…sciencedirect.com

December 27th 202020 Retweets66 Likes


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What we think, we become ~ Buddha

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Learning by Proxy

Learning by Proxy | Price of Data

Facebook did not buy WhatsApp or Instagram for the data but for the products that they had built. They brought a lot of the users to the products and now they are too powerful.

On the other hand, companies are getting bought only for the data that they have. Is that data worth the money going into it?

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Learning by Proxy

Learning by Proxy | COVID Climate

While climate change has been a topic of intense conversation, no world leader would have come anywhere close to forcing the kind of change that COVID has done. It also makes you wonder if nature knows how to protect itself. Snuff out the virus called Humans.

It is also causing industries to alter in unthinkable ways and the theatre business will never be the same again.

COVID a gift to the Climate

2020 started with a lockdown in China because of the widespread infection. China shuts down towards the end of January every year to celebrate the Chinese new year which usually occurs towards the first week of February. They extended their factory shut-down beyond the new year to ensure that people do not return to work and the virus can be controlled. And thus began the process of reducing global pollution this year.

If on the one hand, human activity led emissions have come down, on the other hand, 8.2 million acres of forest land was burnt in unprecedented fires across Western America. According to Wikipedia, this also destroyed 13887 building. That fire season has still not officially ended. Gusts of wind continue to blow this week and utility companies are still considering leaving Californians in the dark over the weekend to avoid fire.

Australian bushfires burnt through another 27.2 Million acres at the beginning of this year. A vast amount of it during the Australian summer from Nov 19 – Feb 20. This BBC report has some incredible analysis.

SpainFrance and Russia also saw thousands of acres burnt as a result of wildfires. The hills of Uttarakhand were ablaze in may in India and hundreds of acres of forest burned. 

Since we are on the subject of fires…

The fire broke out at the Ghazipur landfill site Tuesday night. Fire officials said cooling operations are on to control air pollution. A fire broke out at the Ghazipur landfill site Tuesday night, burning for almost 24 hours before firefighters could bring in under control. This comes even as the capital’s air quality worsened to severe on Wednesday.

[…]

According to a senior fire official, a part of the landfill was gutted at night and the fire soon spread to other parts but there was no damage to life or property. “Since the fire and smoke caused damage to the environment and health, a case has been registered against unknown persons to investigate the cause behind it,” said a senior police officer.

Source: Times of India

I mention all the fires because they put a lot of carbon emission back in the atmosphere. The Earth has become so warm that it is just burning up!

On the flip side, human contribution to climate change was reduced; substantially. Between March and July, several countries across the world were in partial or total lockdown. This included a lack of activity in industries that meant far lower contribution of green-house gases. Road transport was arrested completely in almost every part of the world for close to a month. Air travel took a nosedive. The move to telecommuting and video-conferences has also meant a huge drop in travel across the board reducing emission. 

People went back to cooking. This meant fewer things were eaten out of a packet. The packet did not have to be produced. The factory that put whatever it was into the packet did not produce as much and all in all, this reduced the carbon footprint. 

The fear of the virus meant that non-veg consumption went down across the world but more specifically in America. This led to a decline in cattle farming and therefore fewer methane farts!

Several circus shows such as Davos WEF were not put up, this meant we did not fly thousands of jets across the world so that a 2 days event could be held.

Also, it seems people are starting to re-use. The average cotton shirt we wear takes in about 1000 Litres of water to go from fibre to shirt. Once used, clothes are thrown away into landfills not because it cannot be worn but because it is old or out of fashion. 

A massive force is reshaping the fashion industry: secondhand clothing. According to a new report, the US secondhand clothing market is projected to more than triple in value in the next 10 years—from US$28 billion in 2019 to US$80 billion in 2029—in a US market currently worth $379 billion. In 2019, secondhand clothing expanded 21 times faster than conventional apparel retail did.

[…]

Less than 1% of materials used to make clothing are currently recycled to make new clothing, a $500 billion annual loss for the fashion industry. The textile industry produces more carbon emissions than the airline and maritime industries combined. And approximately 20% of water pollution across the globe is the result of wastewater from the production and finishing of textiles.

[…]

Our latest research supports this possibility. We interviewed young American women who regularly use digital platforms like Poshmark. They saw secondhand clothing as a way to access both cheap goods and ones they ordinarily could not afford. They did not see it as an alternative model of consumption or a way to decrease dependence on new clothing production.

Source: Quartz

Other under-currents can be witnessed.

EIA projected total US power demand will drop to 3,716 billion kilowatt-hours (kWh) in 2020 from 3,896 billion kWh in 2019 before rising to 3,753 billion kWh in 2021.

That compares with an all-time high of 4,003 billion kWh in 2018, according to federal data going back to 1949.

Source: Economic Times

First of all, it shows that electricity consumption has been declining since 2018 as it is. Let me just put that decline in perspective. America is expected to consume 3716 billion kWh of energy this year. If you do the maths, it amounts to a mere 3% decline. Nepal has an installed capacity of 733 MW which produces about 650 million kWh of electricity. The decline noted for America in 2020 alone can power Nepal more than twice over!

As of late summer, governments around the world had pledged $12.2 trillion of relief in response to the coronavirus pandemic. That’s around 15% of global GDP, three times larger than government spending put forward during and after the 2008-2009 global financial crisis and enough for every adult in the world to receive a $2,000 check.

[…]

Thus, taking into account the $1.1 trillion per year baked into the system already, the additional amount of clean energy investment needed to get on a 1.5°C track comes to just $0.3 trillion—or $300 billion—per year over the next five years.

[…]

Public funding appears to be available—for now—and given how massive this funding is, it provides a unique opportunity to catalyze the development, deployment, and dissemination of clean technologies during the next decade, an absolutely critical period in the fight against climate change.

Source: Quartz

To overcome the pandemic, every central bank has been printing money. This money can be put to use to re-focus economies in the right direction. Whether that is done or not will have to be seen.

The rural disruption that COVID has brought upon us has allowed us space and time to rethink. More important it has robbed the system of the inertia it had. It has upended a lot of existing practices and offers us an opportunity to pursue things differently. To use this as a point of inflexion and move towards sustainability. Obviously, there are several vested interests and the livelihoods of many at stake. It is rather easy to sit back and pontificate without having to figure out the practical challenges that this poses. Nevertheless, it is an opportunity.

Worst Hit

Movie theatres are usually mentioned when super-hit movies are released. This year, they have only been mentioned for the hit that they have taken in terms of business. Also, struggling to stay alive, producers have moved to Over The Top (OTT) services for the release for their movies. This would have been unthinkable blasphemy 11 months ago, no longer. 

The release of movies used to follow ‘Windowing’ to maximise returns. Windowing refers to the different window of release. The first 60-90 days went to theatres; then to television/OTT and then finally to CDs or Online purchase. Releasing them in these windows allowed each player to maximise the returns they got from the product.

Windowing be damned.

In another sign pointing toward where Hollywood is headed, Universal Pictures agreed to a deal with Cinemark—the second-biggest movie theatre chain in the US—to drastically shorten the time a film plays exclusively in theatres before it can be watched at home. The deal comes four months after Universal struck a similarly historic pact with AMC Theatres, the world’s largest cinema chain.

Under the agreement, all Universal films will play in Cinemark theatres for a minimum of 17 days (or three weekends) before the studio has the option to release some as digital rentals. After 17 days, a film’s shelf life in theatres—and its availability on-demand—will depend on its opening-weekend box-office totals.

Source: Quartz

Wonder Woman 1984, part of the DC Comics universe will release on HBO Max simultaneously. They don’t want to lose out of Christmas revenue just to keep the theatre chains happy. 

I heard the CMO of Asian paints a while back and he said our biggest problem is that we have no data about our customer. We have to just plan based on what the shopkeepers and distributors tell us. This was the same problem that production companies faced. The theatres owned the customers. Times Warner, Disney, and several other production houses are rolling out their streaming services, they can own their customers.

Some people still go to arcades to play video-games, but most people just buy a console and bring it home. It seems like theatres are headed that way. Theatres will have to work hard on improving the experience of the customer going forward if they want to stay relevant.

Digital Hit

Last week the Indian government made a very important change to the FDI policy as per the new policy, digital news media companies were brought under the FDI cap of 26%. This has been a sector that has had no regulation till now. 

The imposition of a 26 per cent limit on foreign direct investment in the digital media sector can hamper its growth potential, be a disincentive to incorporating companies in India, and lead to an unfair advantage for global players, said digital news companies and experts.

Source: Hindu Business Line

Media is playing a huge role in shaping the opinions of people and traditional new media has always had this limit. Given the importance of digital news media, it is only natural to extend this. I did not expect the repercussions to be this swift!

HuffPost India, the Indian web publication of the US-based digital media company, HuffPost, shut down on Tuesday after six years of operation, leaving the 12 journalists who worked there out of a job.

The closure is the first direct impact the Modi government’s new policy limiting foreign investment in digital media publications has had on the Indian media landscape. Under an official notification, FDI in digital media has been capped at 26% of equity. Media ventures with FDI beyond the limit have a year to disinvest. Until recently, there was no limit.

Source: The Wire

India = Google Lab

American companies are known for launching their latest products and features in the US before bringing it to the rest of the world. But for one company, that market has been fast seeing a shift. Google launched Android Pay, back in 2015, don’t be surprised if you have not heard of it, just a reflection of the disaster that it was. It was relaunched as Google pay in America and India in 2018.

Google Pay is already big in India with several thousand users. It uses the UPI system for money transfers, which is possible by providing the UPI code in the apps. One can scan the QR code as well and pay accordingly, besides using the usual method of sending it via by searching him/her in the contacts.

However, now the search giant is expanding the reach of its Pay service to new countries. This time it has brought Google Pay to 23 new countries and 24 new banks, as mentioned by Google in its dedicated page and reported by Android Police.

Source: Hindustan Times

Google has pushed its ad business to the limit and they are probably beginning to realise that they need to diversify. Especially with Anti-trust cases moving forward against them in the US. Also, the European Union starting to question many of their business practices. The French government has made Google agree to pay a portion of their ad revenue to French news publications since they populate their results with news links. The days of easy ad revenues are numbered. 

They are now coming with a new retail offering in India.

Tech giant Google is making a foray into airport retail with a tie-up with travel industry engagement platform Airbuy to make its services available across six airports in India.

Flyers can now use Google Pay at Airbuy app to book lounges and F&B. 

Founded in 2019 by a group of classmates at the Sloan School of Management, Massachusetts Institute of Technology, Airbuy aims to increase airport revenues and enhance the overall passenger’s shopping experience through advanced Machine Learning capabilities.

Source: Inc42

They have money. They just need to find new areas where they can deploy their products and leverage data. India seems to be the most benign policy landscape and hence the company is beginning to experiment in India and use the country as a lab to fine-tune their products before releasing it to the rest of the world.

This might also mean, many more jobs getting shipped to India!

mRNA

mRNA stands for Messenger RNA which is a single strand of the molecule of RNA that corresponds to the genetic sequence of a gene. It is read by the ribosome during protein synthesis. In layman terms, if you have seen a DNA helix, mRNA is like one side of the DNA helix. Since it is one-sided, it results in the development of the other half called the tRNA (transfer RNA) which is read by the Ribosome to produce the protein. 

The COVID vaccine by Pfizer and Moderna have announced use this technology. They have a very high degree of efficacy but require insanely low temperatures. They both use the same technique for drug discovery based on mRNA. This is perhaps the quickest any vaccine has been brought to market as well. Moderna is very excited because they call the mRNA a platform akin to a computer operating system on which many things can be developed.

Recognizing the broad potential of mRNA science, we set out to create an mRNA technology platform that functions very much like an operating system on a computer. It is designed so that it can plug and play interchangeably with different programs. In our case, the “program” or “app” is our mRNA drug – the unique mRNA sequence that codes for a protein.

Source: Moderna

Moderna is using the mRNA which has part of the Viral DNA code to synthesise the protein that is the virus and then have the immune system attack it. Since the mRNA is only one side of an RNA strand it is highly unstable hence the low-temperature requirement. 

Vaccine discovery will get faster in the coming years.

Also

Trump pardoned the TurkeyABC News @ABCRep. Adam Schiff on the president’s pardon of Michael Flynn: “Donald Trump has repeatedly abused the pardon power to reward friends and protect those who covered up for him.” abcn.ws/37dvco0

November 26th 2020172 Retweets1,079 Likes

Deep in the Utah desert, they found an impeccably crafted steel monolithNYT National News @NYTNationalThe monolith is 10 to 12 feet tall and appears to be made of stainless steel, put together by rivets and embedded deep into the rock. The authorities have no idea who installed it, or how long it’s been there. A Weird Monolith Is Found in the Utah DesertA metal monolith, planted firmly in the ground with no clear sign of where it came from or why it was there, was discovered at the base of a barren slot canyon in Utah’s Red Rock Country.nyti.ms

November 25th 20204 Retweets10 Likes

Punjab farmers have been protesting against the farm bill for over a month. They are now marching to Delhi to protest and the government does not want that.BloombergQuint @BloombergQuintHaryana police use teargas, water cannons to block Punjab farmers from going to Delhi. #FarmersProtest Follow more updates: bit.ly/33ePtsc

November 26th 202066 Retweets163 Likes


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What we think, we become ~ Buddha

Categories
Learning by Proxy

Learning by Proxy | Chips

Potato Chips, known as Crisps in England are thin slices of potatoes that are deep-fried. The earliest known recipe can be found in a book published in 1817 called The Cook’s Oracle by William Kitchiner. 

But that is not what this edition is about.

Technology dominates our life. Also, it plays an important role in everything we do. At the heart of that technology is a computer which we have come to call a Chip. 

The Chip

In 1960 William Shockley took the design of the transistor invented at the Bell Labs and left to Stanford with a business plan. Stanford at the time was giving away land next to the apple orchard to invite tech companies. Two of his proteges Robert Noyce and Michael Moore worked toward miniaturising the transistor. 

The first transistor

A transistor is a bipolar junction. An NPN junction, for example, has two negative poles and one positive pole. The genius of Robert Noyce was to figure out that you could dope (add impurity) silicon and create a Bipolar Junction. So imagine I take a 2 Cm X 2 Cm piece of silicon and cut four windows 1 Cm X 1 Cm each and add impurities in each window; effectively I have four transistors. Mr Noyce and Mr Moore went on to found a company called Integrated Electronics (Intel). They also figured how to make these windows smaller and smaller to squeeze more and more transistors on a chip; making them faster and faster. When a chip manufacturer says 10 nm process, they are referring to the size of the window.

A Silicon Chip

The ability to achieve a smaller window every 2-3 years is what we know today as the Moore’s Law and Andy Grove turned that into a business model.

That was the story of how silicon came to the valley.

The semiconductor business has two sides to it, design and fabrication. Intel was always vertically integrated and handled both sides of the business. But designing is high margin and high cost; whereas fabrication is a high investment and low margin business.

In the 1980s as more and more semiconductor companies were going fabless [not fabricating], Morris Chang, an engineer from Texas Instruments was wooed by Taiwan’s Industrial Technology Research Institute to join them. In 1987 Chang founded Taiwan Semiconductor Manufacturing Corporation (TSMC) as a pure fabrication company. Companies like ARM, Qualcomm, AMD, Nvidia could outsource their fabrication. TSMC would create scale and bring fabrication chops while they could focus on creating intellectual property.

Today TSMC is one of the largest fabricators in the world!

Not just that they have moved their fabrication capabilities forward faster than Intel has been able to. 

At TSMC’s 26th Technical Symposium, TSMC officially confirmed that its 5nm and 6nm processes are already in mass production. In addition, the company also announced that it will release a higher version of the 5nm process next year. Furthermore, TSMC officially confirmed that more advanced 2nm, 3nm, and 4nm is in development.

Source: GizChina

There is a computer in almost every device today. From your cellphone to your car, to even refrigerators and microwave ovens. While this represents the consumer side of things; chips are also essential for defence technologies, space, telecom and several other critical infrastructures without which our cities will come to a halt.

TSMC has a huge fabrication capacity located in China. This leads many to believe that everything is built in China. But…

China will import $300 billion of semiconductors for the third straight year, underscoring how the world’s No. 2 economy remains tied to America despite billions invested in local chip-making know-how.

Source: BloombergQuint

The US has been increasingly hostile towards China and especially Huawei which has helped put 4G across most of the world. Most if not all developed countries have banned the use of Huawei equipment for the 5G rollout. In addition to this, there have also been sanctions from the USA which has restricted businesses from engaging with the company. 

“Unfortunately, in the second round of U.S. sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said at a conference August 7th. “This year may be the last generation of Huawei Kirin high-end chips.” Huawei’s upcoming Mate 40 phone, scheduled for release in September, could be the last phone with a Kirin chip.

[…]

It also meant Google was barred from doing business with Huawei, preventing Huawei from being able to obtain an Android license and keeping Google apps off Huawei devices. The order used the International Emergency Economic Powers Act to justify the ban, and reads that “openness must be balanced by the need to protect our country against critical national security threats.”

Source: The Verge

For Huawei, it is a race against time to build an alternative solution. 

The Company that brought Silicon to the valley, Intel is is falling behind when it comes to designing. Last month they announced that their 7nm process is going to be released by 2022. In the meantime, TSMC is racing towards a 3nm process. Intel has always been able to hold themselves in a position of dominance but that dominance has been sliding and now it seems they might be spiralling out of control. The US government has given TSMC Billions to bring production capacity to the US to protect themselves. 

Which brings us to the next generation of telecom. 5G. Huawei is one of the largest suppliers of telecom infrastructure and across China, they have been rolling out 5G infrastructure. Till January they were also rolling out the infrastructure in the UK. The truth is nobody is holding the whole widget!

Huawei has already concluded that it won’t be able to use its chips designed in-house and on Friday Reuters reported that Taiwan-based chip designer MediaTek has requested U.S. permission to supply Huawei with chips once the new export rules go into effect in the middle of next month.

Source: Phone Arena

This battle for silicon is not over yet. Setting up fabrication in the US is one thing. Scaling it to cater to the needs of the US alone, we would be another thing. It may take a decade. 

This could result in 5G deployment being very slow outside of China. It can also result in production struggle for certain if not all, manufacturers while useful capacity lies unused in China. You may have heard of a win-win scenario, this is the classic lose-lose scenario.

The most likely outcome in a Classic Prisoner’s Dilemma.

As if computers in all of your devices and infrastructure was not enough, Elon Musk wants to put it in the human body.

Chip = Computer = Brain

A human brain is an interpretation machine. The human eye does not see colour. It responds to light and sends a set of electrical impulses which the brain interprets as colour. Evolution has meant the brain determined that there are certain colours or sounds that it does not need to interpret. This has resulted in humans having a limited ability to perceive.

Elon Musk wants to expand the scope while at the same time making it possible to use our brains to engage with machines. Creating a Brain-Machine interface. Neuralink, the company he founded showcased its product for the very first time. Our brains are awfully complicated and the human understanding of how it works is laughable.

Musk and Neuralink have plenty of speculation – you’ll be able to stream music directly to your implant and listen to it in your skull, for example – but the only concrete ability we’ve seen is the device interpreting brainwaves as beeps. And that’s something we can do with stick-on sensors right now.

The future could be bright for Neuralink, perhaps one day it’ll live up to its hype. But it’s doubtful whether that’ll happen in Musk’s lifetime. There’s nothing solid to support the idea that a simple implant can suddenly turn the human brain into an OS-accessible database ready for read/write functionality from a classical computer.

Source: The Next Web

In the meantime in India…

Intel engineers in Bengaluru, he says, have worked on its latest Foveros technology, where multiple silicon dies manufactured in different technologies are combined into a single product (Lakefield) using sophisticated interconnect and 3D stacking, redefining Moore’s law from 2D to 3D. The Qualcomm India team is working on world-leading Snapdragon mobile processors combining latest technologies in low power, processing speed, camera functions, AI/ML and a broad variety of interfaces like 5G, GPS and Navic. The AMD team has done a superb job with power optimisation techniques in the 7nm technology for Ryzen-4000 series. Similarly, very high-end work is being done by engineers at ARM, Texas Instruments, NXP, Micron, Xilinx, Western Digital, Mediatek and many other semiconductor giants, he says.

[…]

Indian fabless companies, Gupta says, struggle for funding. A fabless startup in India needs a $3 to $5 million investment and a minimum three-year gestation period. The country, he says, should create an environment to enable this. 

Source: Gadgets Now

Two weeks ago, I had mentioned how the government had announced an Rs. 4.3 Crore competition to encourage microprocessor development in India. 

Self-reliant indeed!

Apple – Energy – Manufacturing

Apple is one of the few companies in the world that has made a firm commitment to renewables. They ensured initially that all of their operations in the USA including their data centres ran of wind or solar power. They have been working hard to ensure that their entire supply chain is now running on renewable power. This is an example of corporate activism to effect change. 

TSMC bought up all the energy from a Danish wind farm because Apple wants to green its supply chain.

TSMC is an Apple supplier, one of 71 so far that have committed, at Apple’s urging, to procure all of their energy from renewable sources by 2030. Greening that supply chain is crucial to the consumer electronics giant’s goal, announced in July, to have a net-zero carbon footprint by 2030. Only about 1% of the company’s emissions—which in 2019 were about equal to those of Sri Lanka—come from its own stores and offices; almost all the rest are from the factories that produce its products.

Source: Quartz

Apple production plants are moving out of China. I am interested to see what this means for the Indian renewable energy market. It would be interesting to watch the energy markets at all the places where Winstrom and Foxconn are setting up sites.

Third World Beneficiaries

One of the greatest beneficiaries of the Trump Rule in America is the third world countries or NOT WESTERN countries. Before Trump whenever shit hit the roof, people from all countries would look towards America and try to immigrate. Now they see America, shake their heads and say let’s fix our own country. 

Disgusted with Lebanon’s corruption and seeing no future at home, he moved years ago to Dubai, where he worked in sales before returning on vacation last month.

But, he said, “When I saw the people, the crowd — not the government, not the police or anything — I’m proud to be Lebanese now, to be honest.”

New improvements had materialized at the gas station over the course of the day. Someone had welded together a metal rack to dispense the plastic rolls. Two tons of fresh vegetables had been distributed.

Sarah Barakat, 21, an architecture student overseeing the vegetables, said that she, too, planned to leave Lebanon for graduate studies.

“But I’m coming back as soon as I finish my master’s,” she said. “Who else is going to rebuild this city?”

Source: New York Times

In India, a lawyer tweeted criticising the former CJI. A case of contempt of court was against him built up. He refused to apologise stating that a false expression of regret “would amount to the contempt of my conscience.” The case started drawing attention and was amounting to a test of the freedom of expression.

Senior advocate Prashant Bhushan, who was found guilty of criminal contempt for two of his tweets, was on Monday let off with a token fine of Re 1 by the Supreme Court.

The bench, comprising Justices Arun Mishra, B R Gavai and Krishna Murari, directed the lawyer to deposit the amount by September 15, failing which he will attract a jail term of three months and debarment from law practice for three years.

Source: Indian Express

While a symbolic sentence, both sides won.

The Acquisition Reality Show

The Indian government announced a few weeks ago that it was going to ban 59 Chinese apps for security reasons. Of all the apps that were banned only one caused a stir – TikTok. Trump heard this during his daily briefing and thought, hmmm, here is a something I can turn into reality TV. What if I issue an order saying a Chinese app, which has content worse than reality TV, had to be sold to a US company within 45 days. Would help my campaign and keep the media occupied! Killing two birds with one stone.

Since then everyone from Microsoft to Oracle to Twitter to Disney and now Walmart is supposed to be bidding to buy. In the meantime, TikTok has sued the US government claiming that forcing it to sell would be unlawful. And then the Chinese government also joined the show!

China’s commerce ministry expanded its technology export controls (pdf, link in Chinese) to include a wide range of new advanced technologies ranging from drone manufacturing to artificial intelligence (AI). Among the new additions to the list, the most eye-catching entry is “data-based personalized information recommendation service”—or the kind of algorithm core to TikTok’s global success. That means its Chinese parent would need to seek government approval before it could reach a deal with foreign buyers, and could be forced to enter protracted discussions with authorities about what parts of the company are covered by the rules. ByteDance has said it will strictly abide by the rules.

Source: Quartz

China has been remarkably restrained, to say the least. Imagine they had been like Trump. They would have probably asked Apple to sell its China business to Xiaomi and get out. Apple would again be a 1 Trillion Dollar company today.

Nobody will acquire TikTok. But this reality show is sure to continue until the elections.

Also

Most of Northern USA will be swamped by the smoke emanating from the Californian forest fires. Maps

The problem is not electric cars, it is battery technology. A battery invented in the 1980s, commercialised by Sony in the 1990s because they had multi-million dollar machines sitting around idle, which could be put to use, to make the first Lithium-Ion batteries. Could a radioactive diamond powered battery offer a solution

Since my childhood, I was told that the Americans are sitting on vast Alaskan oil reserves and they are just waiting for the world to run out of oil. Trump opened up the Alaskan Wilderness to exploration and… Crickets. Nobody is interested.

You have come this far, so I assume you enjoyed reading this. If you are not subscribing but still want to know when Learning by Proxy drops; follow me on Twitter @viveksrn 

Signing off…

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Learning by Proxy

Learning by Proxy | Climate>COVID

COVID has had a huge impact on business in general. Some businesses have been heavily hurt while others not so much. Some are even thriving [healthcare, except in the US]. To me, this just seems like a glimpse of what is to come when the climate goes off the handle. Reminds of a cartoon.

COVID and Business

There has been much said about the hit that several industries have taken in the aftermath of COVID. The numbers are not offering proof and an insight into what has gone on. Businesses that need people to come out; entertainment, travel and hospitality, which apart from being real world are also discretionary expenses, which is a double whammy.

Flying Markets

Just for Context – Bombay Stock Exchange is almost back to its pre-COVID levels.

In stock markets, circuit breakers exist to avoid over steep rise or fall of share price in the stock exchange. When news breaks, often the markets do not wait to assimilate the impact of the news and react immediately. Circuit breakers stop trading in the stock if they are breached and give the market time to consider the impact before resuming. The markets have been so excited that the Bombay Stock Exchange has had to revise the circuit breakers for 647 companies from 5% to 20%.

BSE raised its circuit limits on as many as 647 stocks starting from Friday, including stocks such as Aavas Financiers, Adani Green Energy, Adani Transmission, Delta Corp, Centrum Capital, Eveready Industries and KPIT Technologies.

Source: Economic Times

Also, Dow Jones is back to its pre-COVID highs.

Let us see what the economy is like!

Cinema

I had mentioned in one of the earlier editions how PVR was seeking to tie-up with Swiggy to start delivering pop-corn! It is anticipated that the company would be reporting Zero revenue for the first quarter of 2020-21.

It’s expected to be a very weak quarter for India’s largest multiplex player PVR as theatres have remained shut for the entire Q1 and cinemas are expected to post near-zero revenues. The ET NOW poll estimates revenues to slump nearly 98% to Rs 20 cr and a loss of Rs 230cr for the quarter compared to a profit of Rs 16 cr last year. 

Source: Times Now

Aviation

While the cinemas have been closed completely, airlines have been flying in a spartan manner. International routes are still not open. It had already been reported that flight occupancy was down 95% in India. The revenue is equally down.

InterGlobe Aviation, IndiGo’s parent firm, on Wednesday, posted a net loss at Rs 2,844.3 crore for the quarter ended June 30. It had posted a net profit of Rs 1,203.1 crore in the corresponding quarter last year.

Revenue from operations plunged 91.9 per cent YoY to Rs 766.7 crore during the quarter under review. The operations of airline companies were heavily affected during the quarter due to government orders.

Source: Economic Times

Even internationally sales have been lower, not to the extent that it has been India. Looking at the data from Flightradar24 it is clear the number of flights flown is still 25% below pre-COVID levels.

Source: Flightradar24

Source: Flightradar24

No Flights, No Travel

Moving across the country is not easy right now. People are not travelling much and this also means they are not staying anywhere outside their home. Imagine the condition of a business that helps people book these flights and hotels.

Online travel agent (OTA) MakeMyTrip has recorded a 95.5% annual fall in its revenues in the first quarter of the financial year 2021 due to pandemic and resultant travel restrictions. The company made just $6.4 Mn versus $141.7 Mn in the quarter ended June 30, 2019.

Source: Inc42

Hotels are having a tough time in India. There is a mandate to not cross 33% occupancy by the government. The trouble is that the hotels are nowhere close to coming to 33% occupancy at the moment.

Tata Group backed Indian Hotels Company (IHCL) has posted an 86% drop in its revenue from operations for the quarter ended June 30.

The hospitality chain posted revenue from operations of Rs 144 crore for the quarter under review compared to revenue from operations of Rs 1020 crore for the corresponding period of the last fiscal. IHCL posted losses of Rs 313 crore for the quarter ended June 30, compared to a profit of Rs 5 crore for the same period last year.

Source: Economic Times

Stock markets were trading IHCL up 5% because they claimed to have cut costs down by 51%. The kind of times that we are living in.

Restaurants

Restaurants have been shut but for a long time. Without the delivery volumes, they would probably have been in the same boat as the cinemas. Despite this, restaurants that do not have a strong brand presence don’t seem to be doing too well.

According to the report released Wednesday, these restaurants are among the 83 per cent dine-outs that are currently non-operational. The remaining 43 per cent restaurants that are shut are likely to open as the situation improves.

“Out of the 83 per cent restaurants that are not open for business, 10 per cent restaurants have already shut down permanently… an additional 30 per cent restaurants might not reopen at all. The remaining 43 per cent, which are closed right now, are likely to open as the situation becomes better,” said the report.

The rest of the dining industry is operating at just 8 to 10 per cent of the gross merchandise value (GMV) from earlier levels pre-pandemic levels, it said.

Source: The Print

The idea of taking stock of many parts of the economy in this manner came up because Zomato had released a report card with some interesting insights. They work with many of the restaurants across cities and what they have been seeing is orders coming in from smaller cities. People are moving back to their hometown and bringing their city habits with them!

Real Estate

Real Estate is probably the hardest hit of all. Malls and other commercial buildings have been required to write off their rentals. Sales of property have slowed as the work from home trends seems to be certain to last months if not years. Many have taken to moving back to their hometowns. The bottom is falling out.

Realty firm Prestige Estates Projects has reported a 99 per cent decline in its consolidated net profit at Rs 1.6 crore for the quarter ended June on lower-income amid coronavirus pandemic. Its net profit stood at Rs 115.3 crore in the year-ago period.

Total income fell to Rs 1,296.3 crore in the first quarter of 2020-21 fiscal from Rs 1,567.4 crore in the corresponding period of the previous year, according to a regulatory filing.

Source: Economic Times

DLF, India’s largest real estate company saw its income fall by 65%.

Retail

The USA has seen a string of bankruptcy filings from various retailers with the pandemic exposing gaps in their operations. Amazon had already cut out gaping holes in their businesses. Already 26 Bankruptcies have been filed, you can find the list here.

India is doing no better.

Non-grocery categories have seen their businesses take huge losses and what is even worse is that with the ‘work from home’ trend, the demand is quickly shifting away from many of their products. Suitings companies have been struggling to find any demand for their clothing. Trent which runs Westside, which is not so much in the formal category also took a big hit.

When Trent Ltd announced its March quarter results (Q4FY20) in May, the initial signs of COVID-19 disruptions were visible. After all, stand-alone revenue growth had slowed to 8% in Q4FY20 from around 30% in the previous three quarters.

With the lockdown remaining in place for a good part of the June quarter, Q1FY21 results showed a much more pronounced impact of the pandemic crisis. Revenues fell 87% year-on-year to ₹96 Crore, below analysts’ estimates. The lockdown forced Trent to close its retail stores for a major part of the quarter.

Source: Mint

Healthcare

In India, hospitals have been doing quite well. They have also been using this occasion to scalp the patients and maximise their income. The stories that one gets to hear from anyone who has had the misfortune of having to visit a hospital are grim. Beds that would have normally cost Rs. 7000 a night are now being charged double.

Besides the one-time gain, Apollo Hospitals’ operational performance was strong, with revenue up 17% at ₹2,922 crores, while earnings before interest, tax, depreciation and amortisation (Ebitda) up 36% at 380.1 crores.

Standalone hospital business of the firm showed a 19% increase in revenue, while that from its pharmacy operations was up by a third.

Source: Mint

Climate

A system that moves between highs and lows is said to be showing volatility. The deviation that it shows from the mean is called Amplitude. If the amplitude is too high it can be catastrophic for the system. Every bridge moves a little up and down in the wind. It just cannot go beyond a certain amount, illustrated by the bridge below.

The climate of this planet has been undergoing a similar swing in recent times. The system might break! You would have often heard people say that we are – Killing the planet – No, we are not. The planet is not dying. 

We are.

California has been burning since last week and this has become a regular thing. There was a lightning storm that caused the parched earth to catch fire. The land was so dry, the fire spread incredibly fast. While the elections have been taking the spotlight, America has been suffering one of the worst droughts in history.

As the United States moves into the last weeks of climatological summer, one- third of the country is experiencing at least a moderate level of drought. Much of the West is approaching severe drought, and New England has been unusually dry and hot. An estimated 53 million people are living in drought-affected areas.

Source: NASA

On the other side of the world, rainfall has been at record levels. All the states on the Gangetic plains in India have been submerged. It started with Bangladesh getting flooded. Bangladesh floods every year just like California burns each year, so nobody noticed. After the flooding of Assam and West Bengal, the flooding is making its way to Uttar Pradesh and closing in on Delhi.

Millions have been forced to flee their homes in Bangladesh because of floods triggered by monsoon rains.

The flooding, which has affected almost one-third of the country, shows no sign of abating due to continuous rain.

Most of the country’s 16 rivers have overflowed – and according to local media reports, the torrential downpours have left at least 161 people dead.

Source: Sky News

According to a tweet by the chief minister’s office, posted on 18 August, the floods have affected 838 villages in these districts—which include Ambedkar Nagar, Azamgarh, Deoria, Gorakhpur, Kushinagar, Mau and Sant Kabir Nagar—and of these, 520 are submerged. In previous tweets, the CMO noted that multiple rivers, including the Ghaghara, were flowing at dangerous levels. 

Source: Caravan Magazine

In the meantime, the west coast has also been at the receiving end. Mumbai had to be shut down a couple of weeks ago due to torrential rainfall which left the city submerged. Again, Mumbai is a city is often underwater so people did not bother much, but then…

Seven people were killed in rain-related incidents in Gujarat over the weekend as intense spells caused flooding and water-logging, prompting the government to deploy 13 teams of the National Disaster Response Force in the state, officials said on Monday.

Source: The Wire

Further south, the states of Karnataka, Andhra Pradesh. Tamil Nadu and Kerala have also been receiving huge amounts of rain forcing them to release water from their dams. This causes villages downstream to get flooded since they are inundated with rain already.

Across the Bay, heavy rains are lashing Bangkok which is causing flooding and further scare of an increase.

Provinces in the lower part of the northern region are braced for flooding after downpours have submerged several areas for several days.

Chamnan Chuthing, director of the irrigation project in Phitsanulok, said on Sunday it was diverting water from the Yom River to tributary canals as it expected more water from the river to reach downstream provinces — first in Sukhothai and later Phitsanulok — by Sunday.

Source: Bangkok Post

Meanwhile in China

Water levels at China’s giant Three Gorges Dam on the Yangtze river are inching closer to their maximum after torrential rains raised inflows to a record high, official data showed on Friday.

Source: Reuters

There has been flooding around the dam in China – A video from Al Jazeera

Meanwhile in Africa

After long-running drought slashed their harvests, small-scale farmers in Lupane, western Zimbabwe, decided to switch away from irrigating their fields by flooding them, which wastes huge amounts of water.

Source: Deccan Herald

This is the majestic Victoria Falls, which spans nations.

This is as of December 2019

What do you think, when you think Afghanistan? Mountains, goats, Taliban, American turning another country into a shooting range, cold weather, snow, wonderful spring; but you never think floods. 

When the heavy rains came overnight, setting off flash floods in northern Afghanistan, the deluge quickly turned deadly and caught many residents off guard because they were sleeping.

On Wednesday, a hospital official said the floods had killed nearly 80 people and injured scores of others in Charikar, home to nearly 200,000 people and the capital of Parwan Province, just north of Kabul.

Source: New York Times

Now, this is not news collected from across time. This is all news from the last 3 weeks. As I write this the government of Indonesia has deployed the Army to prevent forest fires as drought peaks. Northern Turkey lost lives due to flash floods. While California is burning, Utah is flooded and Stanton is flooding. In the meantime, people in Californians are watching their homes burn as the fire scorches the land. Meanwhile, 2 hurricanes have made land in Louisiana and will rip through several states. Meanwhile, in Delhi, the Yamuna is at dangerous levels and there is a high likelihood of flooding.

Politicians have a way of confusing weather with climate, it is not the same. This GIF illustrates the difference.

The amplitude is increasing, slowly but surely. When will this system break? More importantly, what will that look like?

And you thought COVID was disruptive.

Assets and Loans

When the lockdown started, the first action that the RBI took was to infuse more liquidity to the lenders to avoid a collapse. The moratorium that was offered to help individual and businesses to tide through this period is about to come to an end on the 31st of August. The most optimistic estimates are that there will be Millions of defaulters. Indian banks have been struggling to reduce their NPAs for the past few years. There seems to be a plan.

The company says that the multi-year empanelment, renewed every five years, will leverage Quikr Realty’s builder relationships across 22 cities and 4800+ brokers in its network to oversee real estate e-auctions. Quikr says that the transaction mandate includes stressed properties worth more than INR 7,000 Cr.

“This is the second stint of empanelment of Quikr Realty by SEBI for valuation & liquidation of Stressed Assets. Quikr Realty’s earlier associations with SEBI included liquidation of Pearls Agrotech Corporation (PACL), Sahara and Unitech assets,” the company says. 

Source: Inc42

I would not surprised if RBI decides to empanel them to liquidate all of the asset-backed loans that go into stress.

Also

I have to thank Salma for sharing this insanely great ad by Mercedes Benz.

The moon waxes and wanes. Have you ever thought about how the earth waxes and wanes on the moon?

Signing off…

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Learning by Proxy

Learning by Proxy | Anger

I was watching the formula one race last weekend; it was a useless procession of cars. That sport has never been as boring as it is not. Despite having a commanding lead and having won by a huge margin, the victor could not even feign happiness for the others. Sports is not about enmity but an adversarial contest. I see this not only in Formula one but also in several other sports. Money has ruined sports!

In the aftermath of the World Trade Center attacks in 2001 as I was waiting at home for my semester to begin I used to endlessly watch CNN. There was an ad that would repeatedly play for the promotion of the 2002 Winter Olympics. I remembered it and wanted to share it with you.

You are my opponent, but not my enemy,

for your resistance gives me strength.

Your will gives me courage.

Your spirit ennobles me.

And, although I aim to defeat you, should I succeed,

I will not humiliate you, instead, I will honour you.

For without you, I am a lesser man.

Watch it here.

It should be true not just in sports, but also politics, business and every other sphere that we engage with one another in.

Where has that spirit gone?

Anger

When a lot of energy is suddenly released in the Earth’s atmosphere, the release of energy causes a shockwave that pushes the air molecules. The shockwave accelerates past sonic speed. As this happens it causes all the water vapour around it to condense, which we see as the mushroom-shaped cloud. It is true not just for nuclear explosions; but for all explosions of high magnitude. 

Most recently, we saw this in Beirut, Lebanon. The explosion became an emblem of governmental incompetence. To compound matters, the people saw the French President Emanuel Macron at the site of the devastation rather than the Lebanese Prime Minister. Lebanon has since been rocked by protests. Anger spewed out onto the streets; the government capitulated. 

The explosion has fueled outrage and protests against top political leaders and led to the resignation of the government Monday. The Cabinet is now in a caretaker capacity.

Parliament is due to discuss whether to extend the state of emergency in Beirut declared August 5 by the government before it resigned. The law requires parliamentary approval if the state of emergency lasts more than a week.

Source: Indian Express

Almost 6500 km south of Beirut, deep in the Indian Ocean, a Japanese vessel, the Wakashio which was en-route to South America, beached up and spilt out. Not crude oil but fuel oil which is the lowest grade of oil. In a place known for its bio-diversity, this has unleashed an environmental disaster. 

These were the two UNESCO Ramsar Protected sites of Blue Bay Marine Park, Pointe D’Esny Mangrove Forests, as well as the nature preserve of Ile aux Aigrettes that contained some of the rarest species in the country, such as Mauritius’ last remaining low lying ebony forests, not found on any other location on the island. 

[…]

Small organisms readily absorb an array of chemicals from spilt Heavy Fuel Oil. Once inside an organism’s tissues, when some of these chemicals interact with ultra-violet (UV) rays of sunlight, energy is released from the chemicals that cause damaging chemical reactions. These reactions lead to tissue death, with very small organisms falling apart. 

[…]

Whilst the entire world hopes for the best recovery of this critical habitat, it is important to start preparing for the worst. This is at least the lesson taught to the entire world from Covid-19, and from Heavy Fuel Oil spills around the world that continue to leak their deadly poison decades later.

Source: Forbes

The article referenced above has some devastating analysis of what the oil spill means for the region and its bio-diversity. But disbelief is fast turning into anger at Mauritius.

Thousands of volunteers pulled all-nighters gathering plastic bottles and skimming oil into barrels, while salons donated hair and children collected straw from fields to help soak up the oil. Mauritians abroad began social media campaigns to raise awareness, and hundreds of thousands of dollars were collected on fund-raising platforms.

[…]

“The reefs protect us from waves, and the seagrass belts and the mangrove play a critical role in absorbing carbon dioxide,” he said. With their roots covered in oil now, he said, “It’s a tragic story, which brings sorrow and anger.”

Source: New York Times

If you are interested in understanding the extent of the damage caused, I would recommend reading the article linked above.


Moving back 8700 Kms north, in the country of Belarus Presidential elections just took place. Belarus has had the same president since 1994. He won again by a landslide – 80% – according to “official results”. The opposition candidate left the country as soon as the results were announced. She vowed to protest peacefully against the results. 

The protests grew and the authorities inspired by the USA – sent the police out. Then inspired by China – over a 1000 protester were detained. This only made the protestors angrier.

Belarusian authorities have released about 1,000 people detained amid demonstrations contesting the results of the presidential election, in an attempt to assuage public anger against a brutal crackdown on peaceful protests.

Source: Tribune

and then…

President Putin is offering help. Sending in the Russian army!


In the neighbourhood, protests have been tearing through Bulgaria. The people, tired of corruption, have been out on the streets seeking a constitutional overhaul. But they want it done right!

Three-times premier Borissov promised to resign if lawmakers approved his call for the election of a grand national assembly tasked with voting on a new constitution that should improve the efficiency of the much-criticised judiciary among other changes.

But protesters, as well as opposition, left- and right-wing parties who support them, dismissed the proposal as a ploy by Borissov, who has dominated Bulgarian politics since 2009, to win time and stay in power.

Source: Reuters

Meanwhile, a place that is known for its cool beaches, drugs and sex – Thailand is seeing large protests. Like most other countries run by right-wing leaders, Thailand has not taken to dissidents too well. They have been putting them down with an iron fist.

At least 10,000 protesters, many first-time participants in political rallies, gathered in Bangkok on Sunday, demanding change in a country where military tanks have tended to shape politics more than the ballot box has.

[…]

A state of emergency instituted because of the coronavirus made the demonstration technically illegal, and every participant could have been arrested simply for showing up. The police stood by, however, some idling behind a Mercedes-Benz showroom.

Source: New York Times

Under normal circumstances, these incidents would not have resulted in such a sudden and intense anger. The current economic circumstances, combined with the fear and uncertainty sowed by a virus that we are struggling to fight has left very little patience in people to suffer foolishness silently. 

America has similarly been roiled in protests over Black Lives Matters for the last few months. Hong Kong over its sovereignty. India over the death of an actor – yes, we roll like that.

The Nuclear Reactor and the Nuclear Bomb are the same things in theory. The former operates in the narrow range of self-sustenance while the other goes far beyond. A societal equivalent would be a protest and a revolution. Will these protests go far beyond self-sustenance?

Epic Battle

A couple of editions ago, I had written about the antitrust hearing against the four large Tech companies in the US. App developers listed on the App Store dislike paying Apple the 30% commission that it takes. Especially, if the app developers are large companies. 

Trying to take advantage of the current situation [the hearings], Epic Games, one of the largest gaming companies in the world played with fire, using their most popular game – Fortnite. To turn the discussion into one of the consumers forced to pay more, Fortnite started offering its ‘V-Bucks’ at a discounted price on the app if the user picked a payment gateway outside the Apple eco-system. A clear violation of Apple policy, which they were aware of. Apple promptly removed the game from the store and Epic Games filed an antitrust case in the court. Google did the same citing the same violation.

Apple will terminate Epic’s inclusion in the Apple Developer Program, a membership that’s necessary to distribute apps on iOS devices or use Apple developer tools, if the company does not “cure your breaches” to the agreement within two weeks, according to a letter from Apple that was shared by Epic. Epic won’t be able to notarize Mac apps either, a process that could make installing Epic’s software more difficult or block it altogether. Apple requires that all apps are notarized before they can be run on newer versions of macOS, even if they’re distributed outside the App Store.

Source: Verge

Apple has decided to go thermonuclear with this one and ensure that Epic is not using this situation to milk more media scrutiny into this. Epic is no saint here. They pay the same 30% to Nintendo and other console makers – which they argue is a fair price. It is just that the income that they get from Apple users is far more. It would heavily buttress their bottom line if Apple is forced to reduce the commission. They are not going to be selling at a discount if Apple were to reduce their fee; they would just put it in their wallet.

In the anti-trust case, Epic Games is arguing that they should be allowed to run their own app store.

Sleight of Hand

When a magician tries to attract your attention towards a hand, you need to watch the other one.

Last year ended with protests disrupting life in Delhi. The government wanted to implement the controversial Citizenship Amendment Act. The protests lasted 101 days till the lockdown came into effect on the 24th March this year. Let alone that fact that nobody seems to be concerned with CAA anymore, 50 of the protestors who were at the Shaheen Bagh joined the BJP this week!

Delhi BJP president Adesh Gupta said over 100 people from the community had joined the party as they support the Prime Minister’s effort to reach out to every section of society and end triple talaq: “These people were influenced by BJP’s effort to reach out to everyone, and not use them as a vote bank. Today’s event shows that Muslims’ faith in the party has increased.”

Source: Indian Express

If Shaheen Bagh was the smokescreen, what was being hidden?

Flying High

I have often cited Swiggy as an example of how financially fraught the idea of scaling a people dependant business can be. Not in my wildest dreams would I have thought that India would be one of the first countries in the world to deploy drone fleets for delivery! 

A couple of years ago, India announced its first drone policy and there is a second version in the works. The first drone policy had something called the Digital Sky Platform which would be able to track every drone in the Indian sky. All drones would need to register on this platform before taking flight.

On August 15, when India celebrated its 74th Independence Day, the country’s drone policy silently took a giant leap. Now, over 70% of India’s landmass of 3.28 Mn sq Km is open for drones to operate. Under the Digital Sky plan, companies can now get single-window clearance for drones which comply with India’s ‘no permission, no take-off’ (NPNT) protocol to operate in areas demarcated as green and yellow zones.

Source: Inc42

As mentioned earlier, for many of the hyperlocal delivery startups which are reeling under the blow that COVID has delivered this is a godsend. They are not wasting a moment. Dunzo was the first one to jump on the bandwagon.

Dunzo, alongside Alternative Global India (AGI), claimed to have started a drone delivery trial last month. After Dunzo, Bengaluru-based B2B e-commerce startup ShopX has now collaborated with aerospace and robotics company Omnipresent, to kickstart its last-mile drone delivery trial from September 1.

Source: Inc42

For a country where according to statistics 19 Million have lost their jobs since April, this does not augur well. Over some time, this will cause further job losses for those who can ill-afford to lose their jobs.

Showing Love

What if someone professed a lot of love for you. Then took away your right to do what you liked and sent you to solitary confinement. Just the right metaphor to describe what we did to Jammu and Kashmir. After professing that the land was an integral part of India; we turned it into a Union Territory and cut off the Internet. Businesses suffered and startups that depended on the internet tried VPN and many other tricks before either moving out of the valley or giving up! Finally, the solitary confinement is over.

“High-speed mobile data services in the districts of Ganderbal (Kashmir) and Udhampur (Jammu) shall be restored forthwith, on a trial basis, while in rest of the districts, the Internet speed shall continue to be restricted to 2G only,” Principal Secretary (Home), Shaleen Kabra, said in an order. “While postpaid SIM cardholders shall be provided access to the Internet, these services shall not be made available on prepaid SIM cards unless verified as per norms applicable for post-paid connections,” the order added.

Source: Indian Express

There is a need to return normalcy to the Kashmir Valley and allow commerce to drive growth. This is the only thing that would cause the locals to strive for its continuity. If we play disruptors ourselves, we are playing right into the hands of the terrorists.

Silicon

A few weeks back, I had written about the investment being made by the US government to bring silicon fabrication back to the US. Given the strategic importance of chips and microprocessors in our electronics; the extent of its penetration in a variety of applications including defence; there is a need to safeguard it. The US is investing several Billion to create this capacity. 

India realises the same and is throwing open a challenge with prize money of USD 600,000.

In an official statement, Prasad said the challenge calls on innovators, startups and students to use microprocessors to develop various technology products. “This initiative is aimed at not only meeting India’s future requirements of strategic and industrial sectors but also has the potential to mitigate the issues of security, licensing, technology obsolescence and most crucially cutting dependency on imports.”

As part of the challenge, which will be conducted over 10 months, the government will offer financial support of INR 4.3 Cr at various stages of development of the hardware prototype. It will also support startups through an incubation programme.

Source: Inc42

A few years ago, I had met a group of Intel engineers who were seeking to start a company fabricating silicon in India. They told me, they would at least need USD 10 Million to get started. I told them to shift to the US, they did.

Also

Inflatable Scooter – It is important to reduce our ecological footprint, would an inflatable scooter be the way?

Speaking of smokescreen earlier, do you know what a real smokescreen looked like?

Slippers made out of Algae

Signing off…

Categories
Learning by Proxy

Learning by Proxy | Energy

This is one planet and so many things on this planet are shared by all of us. Our environment, the internet and so much more. Should nations take charge of these things individually or should some of them get regulated through a single authority?

Splinternet

After the Second World War, the American government was worried that an attack on the communications infrastructure might render their soldiers on the battlefield unable to communicate. DARPA wanted a decentralised communication network and the mandate was given to a bunch of researchers. They created the internet by connecting three universities by cable. 

Since its origins, the internet has been free and open. Everything was accessible to everyone so long as there was a cable that went there. Then China joined the internet bandwagon. They created a Chinese version of the internet which is highly censored. And companies that were willing to bow to the government for having unhindered access to the Chinese market – almost all Chinese – made it big there.

Now as these companies develop global ambitions and begin to venture beyond China in the current environment (refer to the China edition of Learning by Proxy) the entire world wants to push back. Also, it is perhaps the safest thing to push back on. China cannot retaliate in any way since they never let the other platforms in.

It began when Indian banned 59 Chinese apps to retaliate against border disputes. Now the US is joining the bandwagon.

The US state department announced today that it will expand its “Clean Network” initiative, first rolled out in April, to root out major Chinese tech products from the US system. The department said the move is aimed at guarding US citizens’ privacy and US companies’ sensitive information from “aggressive intrusions by malign actors.”

Source: Quartz

In the name of data security, almost all countries are moving in the direction of restricting or ruling what would be allowed and not allowed. The greater problem is that even when not acting out of nationalistic fervour, the priorities of different nations can be quite different when it comes to privacy and so on. Ben Evans had argued about the same issue in his blog.

These regulatory spheres are probably going to start bumping into each other. GDPR made it clear that rules would increasingly apply no matter where your servers are: if your users are in the EU, you have to obey EU rules, and for practical reasons that probably means you have to obey them for all of your users. CCPA effectively does the same in the USA, where California has increasingly become the national privacy regulator by default. An intriguing further step came from this case, in which an EU court held that Facebook must take down libellous content not just in Austria, where the case began, but globally. Meanwhile, the new Hong Kong security law appears to apply to behaviour by non-HK residents outside HK, which is truly extra-territorial. The obvious next question is what happens when an extraterritorial rule collides with a trade-off. What happens when the UK says you must do something and Germany says you must not?  

Source: Ben Evans

All this is creating a situation where the internet can no longer be the same for everyone in every country. Are there businesses where we need to arrive at a global standard and agree on the same thing? Four years back as the sharing economy was on the rise I had written a blog which is more relevant now than ever before.

The trouble with the law is that it is defined with a set of assumptions in mind. Every once in a while there is a change, a disruption, a paradigm shift, that uproots those set of assumptions completely.

[…]

The time has come when governments across the world begin to think about lawmaking as a service. Imbuing the process with greater speed and efficiency, taking the process online and making the process more participative. The steps should be taken now rather than waiting for a day when the government is disrupted.

Source

I was told at the time by a lawyer that the stability of policy is critical for businesses to thrive and the goalpost cannot keep shifting. Well by the looks of it, whether it is TikTok or numerous other services, the goalposts continue to shift either way. There are certain things that we share as a platform across the globe and we need to address them as a civilisation rather than individual nations. We have done that for space exploration, why not for things within the planet as well?

Energy Momentum

In 1880, it was prize money of 50,000 Francs from the French Government that formed the foundation of the Volta Laboratory. The Volta Bureau setup in 1893 still stands in Washington D.C. It was later renamed after the founder, Alexander Graham Bell, as the Bell Labs. In 1947, two scientists at the Bell Labs created the transistor. Their supervisor, William Shockley not only took credit for it but also was as awarded the Nobel Prize as one of the inventors. He left Bell and took some land and money from Stanford to set up Shockley Semiconductors. Some deceit and a couple of plot twists later in the summer of 1968, the world got Integrated Electronics. We call this company Intel.

In the last issue, I had mentioned Intel is fighting hard to die. The initial rise of Intel was supported by government contracts before they became the preferred supplier to computer manufacturers. It took 30 years for the invention to turn into a well-defined business.

In 2009, the Obama Government created a new body called the Advanced Research Project Agency-Energy (ARPA-E). ARPA-E had the explicit agenda of supporting new energy technologies, renewable energies, new battery technologies, advanced vehicles, power electronics, etc. One of the not so well-known beneficiaries of the ARPA-E support is Tesla, which got a loan of over half a billion dollars and successfully returned it as well. But often, thanks to the republicans, the company that is brought up is Solyndra, which lost half a billion.

Unlike Intel, where the science had been proved before the investors showed up with the cheques. With initiatives that ARPA-E supported, investors went and poured in the money as soon as these companies had received support. This disallowed them the slow incubation which would have allowed the science to become more robust before scale was forced.

Either way, you cannot hide good work.

The initiative forced a lot of thought about renewable energy and many countries, not just America started investing and competing in the area. Manufacturing scales rose, bringing costs down as a result of economies of scale. As competition rose, the costs moved down just as fast.

As a result…

During the first half of 2020, the world’s coal-generated power capacity shrank for the first time since at least the 1950s, according to the non-profit Global Energy Monitor. New plants haven’t entirely stopped coming online: The world added 18.3 GW of new coal-fired generation. But it retired plants capable of generating 21.2 GW, mostly in the US and Europe, cutting about 1% of total global capacity.

Source: Quartz

Currently, the US solar industry employs about 242,000 people and generates tens of billions of dollars of economic value. By the end of September 2019, the US had deployed over 2 million solar PV systems, totalling about 71,300 MW of solar capacity, and generating over 100 TWh of electricity (2019 total, est.). In 2018, solar generated about 1.5% of US electricity. Of all renewable energy generation, solar PV is expected to grow the fastest from now to 2050. Some solar-heavy grids, such as the California Independent System Operator have experienced times where over half of the demand was met by solar PV.

Source: Forbes

But not every country is headed in the same direction.

But we are seeing two energy worlds emerge. In China and India, coal plants still generate lots of jobs and electricity (as well as attract government subsidies). In industrialized countries, coal plants are closing down as the price of electricity from natural gas and renewables undercuts them, and climate regulations take hold. Net coal capacity would have been declining since 2018 without China, estimates Global Energy Monitor.

Source: Quartz

With the larger western countries moving in the direction of renewables, it is highly likely that the economics will soon tip over in favour of renewable energy. This will force India and China move in that direction if not for any other reason, just to save money and attract investments.

With commercial real estate completely out of action due to the shutdowns forced by the pandemic. The electricity consumption patterns are also changing.

The country’s coal imports registered a drop of 29.7 per cent to 48.84 million tonnes (MT) in the April-June period of the ongoing financial year, according to industry data.

[…]

“The weak trend in imports is in line with market expectation, given the continued high stockpile of coal in the system. The plunge in thermal power sector’s PLF (plant load factor) in the past couple of months and the sharp decline in cement output do not augur well for import demand in the coming month,” mjunction MD and CEO Vinaya Varma said.

Source: Business Standard

Solar is also finding new spaces in countries like India.

But one of the main challenges in building solar farms is finding the right place to do it. The land is relatively expensive in India and often has multiple owners, so the purchase of land involves many formalities. India’s high population density also puts pressure on the land, with an average of 464 people per square kilometre. Rooftop solar panels are one solution, but sunny space atop buildings is limited too.

In Gujarat, the answer has been to cover its canals with solar panels, as a solution that saves land, water and carbon emissions in one.

Source: BBC

While this is the state of electricity production, oil has taken a beating in the past few months. Some of the largest oil companies are looking toward renewables.

BP reported a $16.8 billion quarterly loss on Tuesday and cut its dividend in half — the first reduction since the Deepwater Horizon disaster a decade ago.

[…]

Mr Looney, though, was more specific in his investment goals, saying that he intended for BP in a decade to be investing around $5 billion a year in renewable energy like wind, solar and hydrogen, a clean-burning gas, about 10 times the current amount. BP’s capital spending is likely to be about $12 billion this year.

Source: New York Times

Even Shell is applying for tenders across Europe for renewable energy plants. Oil companies are some of the wealthiest and largest organisations on the planet. If they start moving towards renewable energy what hope does the coal syndicate have? Further, imagine the degree to which the cost of setting up renewables will fall if the scale increases.

2020 has been a year of enlightenment for oil companies. They have seen how swiftly things can change for them. With the rising demand for EV and the coalition against climate change, the writing is on the wall. They are reacting before they have no time left to.

World oil demand will tumble by 9.06 million barrels per day (bpd) this year, the Organization of the Petroleum Exporting Countries said in a monthly report, more than the 8.95 million bpd decline expected a month ago.

Source: Reuters

Having said that

Despite the steep fall in earnings, to $6.6 billion from $24.7 billion, the company said it would continue paying a quarterly dividend of $18.75 billion, almost three times its cash flow. Aramco is locked into paying such a large amount — $75 billion a year — because of commitments made in the run-up to its initial public offering on the Saudi Tadawul stock exchange.

Source: New York Times

With the decline of traditional energy businesses, all the new age carbon sequestration businesses are taking a hit. Almost all of these businesses had a model that involved making pollution generators pay for their sins. With the sin on decline…

The $1 billion systems, known as Petra Nova, was built in 2017 to catch CO2 from one unit of a coal plant near Houston. That plant is one of the dirtiest in Texas, both in terms of climate and air quality impacts, according to a Rice University study. Petra Nova was meant to cut the unit’s carbon footprint by about a third—roughly the equivalent of taking 300,000 cars off the road each year.

But on July 28, E&E News broke the story that the facility has been shuttered since May. And while the plant’s owners have said they plan to get it running again once the economy improves, Petra Nova’s shutdown exposes the weird market dynamics that could threaten the sustainability of carbon capture facilities in progress around the world.

Source: Quartz

Panic Buying

When the pandemic started in March, there were stories about how retailers were running out of stuff in their stores. There was a toilet paper emergency! The lockdowns came into place so suddenly, people did not know how to react. Amazon recorded greater sales last quarter than they did during last Christmas!

That means Amazon outdid the $87.4 billion in sales it recorded during the holidays last year when demand typically peaks before levelling out again. On the company’s earnings call yesterday, CFO Brian Olsavsky said it was “unheard of” to surpass those sales at this time of year—and then added that next quarter is also on track to surpass that level.

Source: Quartz

I think two things are happening. Jeff Bezos’ defence of Amazon being a small player because they don’t own 100% of retail is coming apart. With the pandemic, people are preferring to buy online rather than go to stores. Amazon has used every trick in the book to kill every other e-commerce competitor. There is no other legitimate competitor left!

The not so well to do in America have been receiving a $600 cheque. In many cases, I think this amount supersedes their normal income. More money in hand has meant more spending power, which in turn has implied greater sales for Amazon. Those cheques stopped on 1st August.

Now that retail is dying…

The e-commerce juggernaut has been in talks with Simon Property Group, the largest mall owner in the US, about turning some of the spaces occupied by its anchor department stores into distribution centres, according to the Wall Street Journal. The talks have focused on spaces held by JC Penney, which filed for bankruptcy in May, and Sears, which has struggled since its 2018 bankruptcy filing.

Source: Quartz

In this case, Amazon seems to be panic buying warehousing!

Shoot yourself in the foot and saw your hand off

The year that the USA decided to shove itself down the path of reducing their influence globally by electing Trump and turning itself into a joke, the UK decided to leave the European Union. 3 Prime Ministers and a lot of dilly-dallying later the Brexit will be complete on the 31st December 2020. The fact that the pandemic struck the same year is a little more than inconvenient. Britain was supposed to be in economic shambles without a deal with the EU as it is. Now they are in a recession.

The economy shrank 20.4% compared with the first three months of the year.

Household spending plunged as shops were ordered to close, while factory and construction output also fell.

Source: BBC

I am sure they are not looking forward to the new year!

Moving Away

A couple of weeks ago when I had written about China, I had mentioned about the China Vs Rest of the World dynamic that is developing. The one lessons most countries have learnt is that they never want to create an economic situation where they have all their eggs in one basket. In no other arena can be it be more obviously seen as in the case of manufacturing. Under pressure is Foxconn, a Taiwanese company which is responsible for a massive amount of electronics manufacturing. The chairman of the companies said China’s days are over.

“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Liu said, adding that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.”

Source: Bloomberg

Launchers

I have harboured a deep fascination for space since I was a child. With the rise of private space startups, I was fascinated at the opportunities that it opens up. At the same time, I was quite dismayed to find the Indian space ecosystem to be filled with pocket satellite makers. I heard about Skyroot a couple of years ago and upon reading about them made it a point to meet Pavan, the Founder & CEO, when I visited Hyderabad. A group of scientists who had quit their jobs at ISRO and decided to create India’s first private space launch startup.

Pavan was very agreeable and I spent a good hour speaking to him. They had found initial support from Mukesh Bansal of Myntra and Cult fame. I was thrilled to read that they completed their first test firing.

Indian aerospace startup Skyroot Aerospace successfully test-fired an upper-stage rocket engine, which is the third and fourth stage of a traditional multi-stage rocket, fired at high altitude and designed to operate with little or no atmospheric pressure. Skyroot has thus become the first Indian private company to demonstrate the capability of building an indigenous rocket engine. 

Source: Inc42

I suppose their cause was helped in a major way with the support that was announced for Private Space Companies as a part of the “Stimulus” package. They moved out of a legal grey area and this would have helped them a great deal.

I am thrilled, this will be the first space launch startup from India and I can’t wait to hear Elon Musk begin to weep and whine about it. Why? They will be way cheaper than SpaceX.

Nine Lives

They say a cat has nine lives. Looks like Kodak is a cat. Kodak is a company that is immediately associated with photography. The one thing that traditional photography involves a lot of is chemicals. Do you know another thing that has a lot of chemicals in it – Drugs. So Kodak is pivoting to become a pharmaceutical company. Also, because they got money for nothin’.

Last week, the US federal government announced a first-of-its-kind loan to Eastman Kodak, a US-based company once known for its leadership in the film photography industry. Kodak will be using the $765 million to begin producing components for generic drugs—specifically, active pharmaceutical ingredients (APIs), the chemicals that make a drug work.

Source: Quartz

Their share price jumped 15X before cooling off! And somehow the company got into trouble even before the loan came in – for?

Kodak’s manufacturing may be on hold, however, until the US Securities and Exchange Commission completes an investigation regarding the disclosure of the federal loan. Kodak offered its chief executive 2 million stock options on July 27—the same day it leaked details of the loan to reporters. The subsequent news reports and the official announcement, which Kodak made public on July 28, caused share prices to skyrocket.

Source: Quartz

Human greed!

Signing off…

Categories
Learning by Proxy

Learning by Proxy | Antitrust – Travel – Economy

Whenever the stock markets have reached historic peaks only one thing has followed – a humongous collapse. Most markets across the world are either past or flirting with historic highs. When will the bottom fall out? 

It is a little more complicated. Apple posted a record quarter, that too in the middle of the pandemic. Amazon is posting sales numbers that would be considered “too good” for Christmas.

I think it is panic buying and the demand caused by work from home. Christmas this year won’t be like Christmas.

When will the bottom fall out? My bet is January 2021, when do you think it will be?

There is a lot of ground to cover this week, let us dive in.

Antitrust

Two years ago, Scott Galloway wrote a book called ‘The Four’; which breaks down the extent to which Google, Facebook, Amazon and Apple had taken over our lives. If you are not into reading watch this video – 90 slides in 15 mins – from the DLD Conference. 

The four companies together are today worth about 4.25 Trillion or about 1.5 times the GDP of India. Being in that position of power is bound to result in some abuse. Acquisitions are their favourite weapon and Shares are their preferred ammunition; issue as many as it takes to absorb the nearest innovator. 

The CEOs were called in to appear before the congress. It did not go too well. Some of the evidence presented was damaging.

“If someone came to me with an idea for a website or a web service today, I would tell them to run. Run as far away from the web as possible,” said Celebrity Net Worth founder Brian Warner about Google, which he accused of scraping his information and presenting it as its own. “Launch a lawn care business or a dog-grooming business—something Google can’t take away as soon as he or she is thriving.”

[…]

Mark Zuckerberg had expressed an interest in buying the photo-sharing app. “Will he go into destroy mode if I say no?” Systrom asked. Cohler replied: “Probably.” This chat is one of several exchanges that shed light on the lead-up to Facebook’s $1 billion purchase of Instagram in April 2012.

Source: Wired

And

Google’s promotion of its own content on its search results, or how the price of a box of diapers changed after Amazon acquired the parent company of Diapers.com—but the true target was lack of accountability as an operating principle of these companies. And that has a particular bite during a period of global crisis, during which their digital tools have helped us endure trying circumstances while simultaneously promoting the kind of isolation and misunderstanding that can make emerging from them even harder.

Source: Wired

Not like Apple was faultless. While Apple is not in the data business, they do make app developers bend to their will on the app store and charge them 30% commission to sell on the app store. If you do not agree, you have to get the user to go to your website get an account and pay before coming back to use the app. The trouble is not even that; it is that Apple will not allow you to explain why it is such a pain to use the app as mentioned beautifully by John Gruber.

This was just round one and it is not over. I think the four of them would be mighty relieved that Elizabeth Warren is not the Democratic candidate or even being considered for VP. If this could happen with Republicans in power imagine if a Democrat is elected! 

Wednesday’s hearing was a major milestone for the House’s investigation, but far from the finale. Given the chaotic nature of the four-way hearing, it would be great to see separate one-on-one hearings with each CEO. But that’s unlikely. The next step is most likely the subcommittee’s final report, due out sometime in August or September. Wednesday’s hearing made clear that the report will have some real substance to it. Whether it will fire up the American public—or spur real governmental action—remains to be seen.

Source: Wired

Also, in case you are interested, you can go through all of the evidence that was submitted as part of the hearing at this link.

In the meantime, Facebook would like you to think that they are small fish.

Sure, Facebook is a big deal in social media, this thinking goes, but what about videoconferencing, telephones, birthday cards, backyard barbecues, kickball leagues, and friends who insist on playing matchmaker? They all connect people, too, and if you add up all that activity, surely Facebook makes up a more reasonable share of the market.

Source: Quartz

Also, Facebook has so many large competitors in oil and gas, banking, e-commerce, space travel and even tax collection – those fools call themselves the government. 

Travel no more

Travel is one of the largest industries that creates a lot of employment throughout the world. When you travel to a new city, you create jobs in transportation (airline, railways, bus, cabs), transportation infrastructure (airports, stations), hotels, restaurants (you may not Swiggy or Doordash in a new city), Museums, Guides, Tours, Souvenir shops. 

Tourism alone employs 100s of Millions globally, but if you were to include retail which is a certain beneficiary, probably a Billion jobs are at stake. And they are hurting…

India’s international borders have remained closed since March 22, while domestic travel has been limited since March 25 when the country went into a nationwide lockdown. 

[…]

“The sharp drop in the number of tourists and foreign visitors have already impacted millions of jobs in the hospitality and travel industry as many businesses are going through a severe cash crunch,” said Sudeep Kumar Sen, a spokesperson at HR firm TeamLease Services. “More than 50,000 tour operators have shut shop as there is no hope of revival anytime soon.”

Source: Quartz

When you think of large tourism markets, Africa is not the Continent that first comes to mind. But tourism is a massive employer in Africa and the industry has collapsed.

When the Covid-19 pandemic changed the world earlier this year many African countries were quick to react. Borders were closed and protocols from past or existing epidemics (TB, HIV, Ebola) were rolled out. Of the many industries hit by lockdowns, tourism—an industry that indirectly employs 24.6 million people across the continent (6.8% of total employment)—was hit particularly hard.

Source: Quartz

and nobody is being spared

Aside from obviously tourist-dependent businesses such as hotels, a number of retailers are feeling the effects. Among them are high-street fashion chains, luxury boutiques, watch and jewellery shops, and department stores such as France’s Printemps and Selfridges in the UK, says Vinod Paul, Planet’s head of business and market intelligence.

Source: Quartz

Also, there is no end in sight.

Keep Trying

If you keep trying to do something, you will eventually be successful.

Indian businesses were so resilient that a shock and awe demonetisation did not kill them. The introduction of GST was a source of pain for a lot of small businesses that were previously not on the tax regime. Even worse, making businesses operate with improper data. Last year, the government was still claiming that the GDP was growing at 6.7% only to revise it closer to 3% once the pandemic started. COVID did what all of these could not – went for the jugular. 

Hit by a stringent lockdown, 57% of micro-enterprises have zero cash reserves and 65% will have to turn to their personal savings for operational cost, the report further stated. Also, around two-thirds of them have reported a fall in orders, the report said. 

[…]

It’s clear that merely supporting MSMEs through an indirect route like the infusion of credit and equity isn’t enough. The Indian government needs to realise this if it wants to pull small and medium-sized businesses out of a deep and prolonged mess.

Source: Quartz

When the GST bill was signed into law, to push it through, the centre agreed to provide a 14% tax growth year over year for the first 5 years. It must have been a tightrope act already given that the GDP growth was not in line with what was being told. Given the current circumstances, the government is also broke! The centre has been falling behind on compensating the states and now the centre is throwing them under the bus. 

The impact of the virus and lockdown on the economy can be clearly seen in the GST collections, with the first-quarter revenues down 41 per cent over last year, despite signs of an improvement in June, when the lockdown was eased. This has impacted the Centre’s revenues as well as GST transfers to the States, which have fallen below the mandated 14 per cent annual growth rate as promised under the GST law for five years

Source: Business Line

The centre transferred the GST owed in March ’20 to the states in July. The states are already 4 months behind and are struggling to make payrolls. The attorney general has opined that there is no obligation under the law. The states have been asked to try and borrow from the markets.

Twitter 

I had argued a couple of weeks ago that no company should have the power to start a world war. Twitter does. 

Trump spews all kinds of nonsense on all platforms but it is from twitter that it is reported. Turns out that the hack that was run on twitter was the handiwork of teenagers who registered the Bitcoin wallet to their own name! This was not sophisticated sovereign hackers.

A 17-year-old, Graham Ivan Clark, was charged separately with 30 felonies in Hillsborough County, Florida, including 17 counts of communications fraud. Together, the criminal complaints filed in the cases offer a detailed portrait of the day everything went haywire—and how poorly the alleged attackers covered their tracks. All three are currently in custody.

Source: Wired

Guess what might have been possible if it was the Russians or the Chinese who were running the hack. Or perhaps a White Supremacist? Oh! 

On that note

Duke’s account “has been permanently suspended for Twitter Rules on hateful conduct,” a Twitter spokesperson said in a statement. Twitter’s policy, revised in March, prohibits posts that promote violence or threats of violence against people based on their religion, race or ethnic origin.

Source: CNET

Also, when the advertisers had started withdrawing ads from Facebook, Mark Zuckerberg had scoffed. Many outlets had reported that those brand spent only $10 Million a month. I had argued that 8 brands spending 10 Million a month would mean a Billion dollar hole in the topline.

Facebook and Twitter on Wednesday took extraordinary action against President Trump for spreading coronavirus misinformation after his official and campaign accounts broke their rules, respectively.

Facebook removed from Trump’s official account the post of a video clip from a Fox News interview in which he said children are “almost immune” from Covid-19. Twitter required his Team Trump campaign account to delete a tweet with the same video, blocking it from tweeting in the interim.

Source: Washington Post

Facebook is, after all, a company and capable of growing a conscience when kicked where it hurts.

Cross-Industry

Do you know a position that almost every company has?

Think.

Accountant.

There may be a lot of fancy names that they are called, but the position exists in every company. It looks like AI is something that almost all companies will end up having. I do not suppose this should come as a great deal of surprise. 

If AI had to have a tagline, it should be – Use this to reduce your salary bill. And what kind of capitalist would say – “Nah! I don’t want to do that.”

The list also includes 11 graduates who went to brick-and mortar-retailers Walmart and Target, nine who went to defense contractors Lockheed Martin, Northrop Grumman and Raytheon, and five who went to office supplier 3M, a conglomerate perhaps best known for making Post-it notes (and, more visibly during the pandemic, masks and respirators).

Source: Quartz

The Elephant turns into an Ant

A couple of weeks ago I had written about the Arm IPO that Softbank wants closed. Also, how the US government has been handing Billions to TSMC to get them to move their fabrication to the US and reduce the dependence on China. Exploiting Arm and TSMC has enabled Apple to leapfrog the industry and delivery products that its competitors can’t keep up with. Intel, on the other hand, has been struggling to ramp up newer processes. This has further moved Apple towards adopting Arm architecture for their laptops and computers as well. Given this, Intel’s announcement does not augur well for the company.

“The company’s 7nm-based CPU product timing is shifting approximately six months relative to prior expectations. The primary driver is the yield of Intel’s 7nm process, which based on recent data, is now trending approximately twelve months behind the company’s internal target.”

Source: Tom’s Hardware

Intel can’t afford this.

New Oil Order

In the 1970s there was the Oil Crisis. The Saudi’s refused to supply oil to the US and petrol pumps ran dry in the US. Henry Kissinger went to the Kingdom with an offer to put an air force base in exchange for energy security. America brought the only thing Americans continue to make in America – Weapons – to the middle east and the place has never been peaceful thereafter. They helped flame the Shia Vs Sunni fight and half a century later the region still burns.

Lately, Americans have sought to take energy security into their own hands and pushed shale oil extraction. This has resulted in the USA becoming a major oil producer and a thorn in the sides of Saudi Arabia and Russia. COVID was sort of a godsend. Oil prices crashed. Shale extraction requires prices to be north of USD 60 per barrel for it to be profitable.

The major oil producers have been tactfully adjusting supply to keep prices in a narrow range around USD 40 per barrel locking out American oil companies. This is causing much soul-searching.

One of the world’s largest oil companies just announced it would cut 40% of its oil production. During an investor presentation on Aug. 4, BP announced it would roll out the dramatic cuts over the next decade, while limiting future exploration for new sources of petroleum.

[…]

BP says it will invest as much as $5 billion annually in low-carbon technologies by 2030, a ten-fold increase over current levels. If implemented, the cuts put BP on track to bring oil production down to zero by 2043, according to energy engineering researcher Arvind Ravikumar of Harrisburg University of Science and Technology, well before the mid-century target established by the Paris climate accords. 

Source: Quartz

Exploring new lands

When explorers used to land on new land, they would set off with their machete to learn more about the land and find its riches. Would it not have been easier if they had choppers and could fly over the terrain and determine what was of interest and what was not? 

Our exploration of other planets has been akin to the former. We have sent rovers to the Moon and Mars. These can cover a limited surface area and are slow-moving. Would it not be easier to fly over the land and see it. We have done that through satellites traditionally. While satellites cover massive ground, they are not close enough and can only be so detailed. But what if we could fly a chopper and determine what was of interest? NASA is sending an experimental chopper to Mars!

Perseverance will boot up a mission to collect samples of Martian dirt that might have traces of ancient life so that they can be returned to Earth by another mission later this decade. It will also carry a payload, unlike anything that’s ever been boosted into space: a small autonomous helicopter called Ingenuity. Sometime next spring, probably in April, Ingenuity will spin up its rotor blades and become the first spacecraft to go airborne on Mars.

Source: WIRED

Also Read

Meat consumption in America has gone down for the first time in perhaps forever.

A misunderstanding between two brothers during the World War II bombing raid resulted in the Dassler Brothers Shoe Factory turning into two competing brands – Adidas and Puma. A thread.

Signing off…

Categories
Learning by Proxy

Learning by Proxy | China

This edition became insanely long. I going to have to take some of the stuff that happened this week and move it to the next edition. Something significant is afoot in China and its relationship with the rest of the world.

As a kid, I used to love cricket. Now and then there would be these matches where India would play a team that represented the Rest of the World. All without exception were exhibition matches, but there was a thrill associated with it. If we won, we got to beat the whole world in a single match. The best from every country.

China is increasingly taking a position where it looks like China (and some crook states) Vs the rest of the world (not that there are no crooks here). How it will end is anybody’s guess, but the tension is building.

The biggest participants of the first world war were France, Britain and Germany, but it started in Sarajevo with the assassination of Franz Ferdinand. The world is a tinderbox right now. A random spark can set it ablaze.

Shifting Sands

Japan was considered a manufacturer of cheap transistors in the 1960s. Their products were considered low quality. Fast forward to 1980s, getting a Sony was a mark of buying a high-quality product. China went through a similar cycle. Even a decade back Chinese products were considered cheap and low quality. The last decade has caused a huge pivot in perception. Along with that pivot, a lot of product manufacturing moved to China. 

Being at the epicentre of the manufacturing revolutions made Japan the economy it became. From the ruins of Hiroshima and Nagasaki emerged a nation that was revitalised and more powerful economically. The same happened with China, from being a hopelessly poor agrarian economy, they became the second-largest economy in the world. With the newfound power and money, there are new problems that are emerging.

Where does China end? (Physically)

China has always had a different interpretation of where its borders end. China seems to think all of the South China Sea belongs to it. The reason the South China sea is important is because of its strategic value to trade. The countries involved in this dispute include – Japan, Vietnam, Philippines, Malaysia, and Borneo. By extension of the fact that the US is responsible for the safety of Japan as per the treaty to end World War II, they are also involved.

Hong Kong has been burning for the past 2 years. China is not used to defiance by its citizens. Further, they cannot afford for this spark to spread to the mainland. A lot of money and power will be at stake if that does happen. Hence the clampdown on Hong Kong.

China has had border disputes with India for the past 60 years. They continue to claim that land on the Indian side. This has led to a war-like situation at the northern border. For China, Aksai Chin which they occupied over 60 years ago is important to keep their control over Xinjiang. The road from Tibet to Xinjiang passes through Aksai Chin.

The northern army commander, Lt Gen. Y.K. Joshi, on Saturday said the army would “continue all efforts to restore status quo ante along the LAC”, the statement assuming significance against the backdrop of the no-intrusion claim by Prime Minister Narendra Modi.

This is the first time an army commander has officially spoken about “restoring status quo ante” along the Line of Actual Control, which entails that the Chinese have occupied Indian territory.

Source: The Telegraph

They have also been having disputes with Bhutan

China is stepping up pressure on Bhutan to settle their bilateral border dispute. In addition to laying claim to more territory in Bhutan, Beijing has revived an old land swap deal that will require Thimphu to cede control over the territory to settle its border dispute with China.

Source: The Diplomat

Pandemic

There are a lot of tall buildings in China, but there is no Trump Tower in China. Also unlike Moscow, Beijing never wanted one. So Trump has been quite pissed with China right from the outset. Despite berating them for years, he did not have anything that he could really hold against China given the American dependence on China for manufacturing.

COVID-19 provided the perfect segue to turn against China and also get all of the “allies” to turn against China as well.

China made things worse

China had been giving away loans across Africa because Africa was seen as the next big thing. The idea was not to help them develop, the idea was to trap them in debt. This became obvious when they squeezed Sri Lanka for the port China had financed. Sri Lanka could not repay the debt and ended up handing over the port. There is a Wikipedia article on this – Debt trap diplomacy. 

The total loans outstanding from China come up to USD 600 Billion.

There is a global (especially western) push to forgive African Debt. This is deeply motivated by other considerations and China has said – No.

Also, when the pandemic began, and a lot of countries rushed supplies to China.

A total of 21 countries and the United Nations Children’s Fund have donated epidemic prevention and control supplies to China, a foreign ministry spokesperson said Wednesday.

Those countries are the Republic of Korea (ROK), Japan, Thailand, Malaysia, Indonesia, Kazakhstan, Pakistan, Germany, Britain, France, Italy, Hungary, Belarus, Turkey, Iran, the United Arab Emirates, Algeria, Egypt, Australia, New Zealand, as well as Trinidad and Tobago, spokesperson Hua Chunying said at an online press briefing.

Source: Xinhuanet

A couple of months later when those same countries needed supplies…

Countries’ procurement agents are fighting each other in China for access to the protective equipment that must play a key role in stemming the spread of the novel coronavirus, German Health Minister Jens Spahn said.

He was responding to a spate of reports of consignments of protective masks destined for European countries being bought up by United States officials, sometimes even as aeroplanes stood ready for departure on the tarmac.

Source: Reuters

Hanlon’s Razor – Do not ascribe to malice what can often be ascribed to incompetency. Even so, the mind looks for a more complex explanation.

In this context

Hong Kong is an important port through which a lot of capital moves. The Chinese take over of Hong Kong has hurt the financial interests of rich people in several countries. There is no better way to attract the ire of nations than hurt the rich. The policy, for now, seems to be to hurt China economically.

Huawei is a Chinese company which has played a crucial role in the development of telecom infrastructure across several countries. The next couple of years were supposed to be windfall years with the introduction of 5G. Hurting Huawei means hurting China. The UK which is going to embrace Brexit screaming and yelling at the end of this year fired the first shot!

Culture secretary Oliver Dowden told the House of Commons that UK mobile providers will be prevented from buying Huawei 5G equipment after December 31 under a revised telecommunications bill that the government will table for a vote in the fall. Dowden also announced that providers with Huawei kit in their networks must remove it by 2027.

Source: Quartz

Australia in the meantime is heavily dependant on the Chinese import of ore. Mining is a huge contributor to the Australian economy and China is the biggest trading partner. Even so, in a world that is rapidly changing, it is important to pick sides.

Australia has declared “there is no legal basis” to China’s territorial and maritime claims in the South China Sea, marking an escalation of recent tensions with Beijing and bringing Canberra further in line with Washington.

Source: The Guardian

India which is even more hopelessly dependent on China banned TikTok and 58 other apps. This is by far the most inconsequential push back. But you know how they say – an enemy of an enemy is a friend. Not only that, but there are also three Trump Towers in India.

The two countries have been working quietly to step up information sharing amid the tense military standoff between Indian and Chinese troops — it has been on for 11 weeks now — along the Line of Actual Control in Ladakh.

After US Secretary of State Michael R Pompeo spoke to External Affairs Minister S Jaishankar in the third week of June, at least two high-level phone conversations, the key to this cooperation, have taken place.

Source: Indian Express

and

India and the US are close to inking a “quick” trade deal, Commerce Minister Piyush Goyal said Tuesday, adding that the pact aims to get issues that have been pending over the past couple of years “out of the way”.

Source: Indian Express

The USA also has banned Huawei. In addition to that, there has been heavy rhetoric. That rhetoric translated into action finally. The US government forced the Chinese Consulate at Huston to shut down. Why? The claim was that espionage operations were being run from the consulate. The Chinese diplomats were burning files outside the consulate causing local emergency service to respond to the smoke. And then…

US officials prised open a small back door having previously tried to gain access via three other entrances. The consulate was ordered to close on Wednesday by the Trump administration which said it was seeking to protect American intellectual property.

Source: Express

And then

Beijing ordered the US embassy to close on Friday in a tit-for-tat move, after Washington instructed China’s consulate in Houston, Texas, to cease operations, claiming it had been involved in a US-wide Chinese espionage effort.

Source: CNN

From the perspective of manufacturing –

Entire nations and their governments are questioning their excessive dependence on Chinese manufacturing. Scores of companies have been instructed and have already started moving production to other countries. Production of strategic importance like pharmaceutical and electronics are being moved to home countries. TSMC, the largest contract chip manufacturer, was given Billions by the US government to set up production in Arizona.

A Gartner, Inc. survey of 260 global supply chain leaders in February and March 2020 found that 33% had moved sourcing and manufacturing activities out of China or plan to do so in the next two to three years. Survey results show that the COVID-19 pandemic is only one of several disruptions that have put global supply chains under pressure.

Source: Gartner

Reliance boss Mukesh Ambani, announcing the partnership at his company’s annual meeting last week, said Google would build an Android operating system (OS) to power a low-cost “4G or even 5G” smartphone that Reliance would design.

Source: Mint

Most importantly pharmaceuticals

But this grant was different. It went to a Richmond, Virginia-based public benefit company that was just seven months old. Before the pandemic, it hadn’t manufactured any drugs, although its founders were pharmaceutical veterans.

The company, named Phlow, isn’t tasked with making new drugs against Covid-19. Instead, its goal is to shore up the US supply of generic drugs.

Source: Quartz

Adding salt to injury

China’s economy had its first contraction in decades thanks to COVID. After a decline of 6.8% in the first quarter, the economy seems to be back to growth posting a 3.2% growth in the second quarter of the year.

China’s economy grew 3.2% in the second quarter following a record slump.

The world’s second-biggest economy saw a sharp decline in the first three months of the year during coronavirus lockdowns.

But figures released on Wednesday show China’s Gross Domestic Product (GDP) returned to growth between April to June.

Source: BBC

But here is the thing, Retail consumption is lower than it was pre-COVID. So internal consumption is low. Externally, every large economy, esp. the USA has been struggling with the effects of COVID. So the consumption is not coming from outside either; then how? It is a result of government spending. This was the original recipe that worked for China. But given that they are a much larger economy, with a highly developed infrastructure and a global economy which is stagnant at best; how long can they keep bankrolling it? Also, if the spending is on infrastructure what do they plan to build?

And the final nail in the coffin. China seems to be poised to have its own Lehman Brothers moment.

Losses at global banks are projected to soar by $926 billion to $2.1 trillion through 2021, according to Standard & Poors. Almost $400 billion of that increase is forecast to come from Chinese institutions, compared with a $360 billion increase for those in North America and Western Europe combined. While an impending wave of soured loans isn’t expected to cause a credit crisis, the forecast demonstrates the economic pain that’s anticipated from heightened unemployment and bankruptcies.

Source: Quartz

Fallout

The excessive nationalistic push at a time of great global economic instability is not helping China. If at all anything, it has helped galvanise opposition to the country. Even countries like Australia who are tied up in a lot of trade are pushing back.

The sands are shifting and we do not know where and how this will end. The one thing that is for certain is that many of the squabbling global powers – US, India, EU, Britain and Australia (mostly thanks to Trump) are seemingly uniting due to their hatred of China. In 6 months there might be a new president in America.

The sands are definitely shifting!

Indian Monsoon

Monsoon is very important for India because agriculture depends on it. This year the north-western branch of the monsoon has arrived with great fury. The winds carry moisture from the Bay of Bengal and move towards the north-east till they meet the Himalayas. From there they follow the Himalayas as the wind turns to move the clouds westwards delivering rains along the way. What started as heavy rains in Assam, turned into flooding and now has turned into a catastrophe.

“Since the first week of June, we are having no respite with wave after wave of flood that has wreaked havoc inside the Kaziranga National Park and Tiger Reserve,” said Kaziranga’s park director, P. Sivakumar. He said an animal that had drowned in a swollen river near the park on Saturday brought the death toll of the endangered rhinoceroses up to 10.

Source: New York Times

Now as the monsoon clouds move westwards, it’s claiming more victims. 

Floodwater entered one more district of Samastipur in Bihar and spread to more inundated areas, hitting half a million more population on Tuesday, even though no fresh casualty was reported and the count remained at 10, an official bulletin said.

According to the bulletin by the state Disaster Management Department, more than 5 lakh people were affected by floods on Tuesday alone, taking the tally of marooned people to 29.62 lakh in 12 districts of the state.

Source: NDTV

It remains to be seen how far this monsoon rage continues. UP, Haryana and Punjab are very important to the food production in the country and if flooded especially at this time, it could turn into an unmitigated disaster especially since the economy is already reeling.

When you see it

Donald Trump had expected to head into the elections with a great economy, unemployment at historic lows and a great platform. Instead, his Attorney General is being questioned on the hill, unemployment are at historic highs (only the great depression saw worse unemployment) and a GDP decline of 10%. The US economy has contracted by 1.8 Trillion dollars! Yes – perspective – add a Trillion to that – India’s GDP.

Gross domestic product — the broadest measure of goods and services produced — fell 9.5 per cent in the second quarter of the year, the Commerce Department said Thursday. On an annualized basis, the standard way of reporting quarterly economic data, G.D.P. fell at a rate of 32.9 per cent.

Source: New York Times

Another way to looking at it. The US economy lost a shade more than the Market Capitalisation of Apple (which posted blockbuster results last quarter). (~1.75 Trillion)

One of the stories last week was titled – Spending is back to normal for poor Americans—but not for rich ones

Research shows that when low-earning families lose income, they do substantially decrease how much they buy. So it’s not that poor Americans are going into credit card debt to keep up their spending. Rather, economists have found that the US government’s stimulus payments and enhanced unemployment insurance have kept many low-income families afloat.

Source: Quartz

To me, this fact only indicates how little the poor have for discretionary spending. They are surely not going to be buying anything that is not absolutely necessary when they are living on doles. Turns out their lives were the same as living on a 600 dollar cheque even before COVID!

Simply put, rich people spent 1.8 Trillion less.

No sooner was this data released, Trump tweeted that the elections needed to be postponed! To which Mitch McConnell said, “Never in the history of the country, through wars, depressions and the Civil War, have we ever not had a federally scheduled election on time, and we’ll find a way to do that again this Nov. 3,”

The illusion of democracy is the only thing America has going for itself. If that illusion falls apart, there would not be much that is different between America and Russia.

Raising Capital

Now that Mukesh Ambani and Reliance have tasted blood, they can’t stop coming up with fundraising ideas. A while ago, Amazon had bought up stakes in Kishore Biyani’s Future Retail, which had been saddled with debt. In the aftermath of Facebook, Microsoft, Google investments in Jio, Amazon felt left out. 

Jeff Bezos called Mukesh Ambani and said ‘aisa kyun bewafa?’ (why this unfaithfulness?). 

Mr Ambani promptly asked – you got money? 

Jeff said lots – I have so much money that the only way I can blow it up is building spacecraft and destroying Flipkart.

Mr Ambani – I might have something else you can blow it upon…

Rumours are that Amazon is going to buy 9.99% of Reliance Retail. Now some corporate juggling is taking place to bring Future group under the same umbrella.

Mukesh Ambani’s Reliance Industries Ltd will pay between Rs 24,000 crore and Rs 27,000 crore ($3.2-$3.6 Billion) to buy the Indian retail chains owned by Future Group 

Source: ToI

The Antitrust people are looking on the wrong side of the Atlantic. This is just wrong. The Confederation of All India Traders has been going to court and making a ruckus about Flipkart and Amazon, where are they when they have to fight?

Rise and fall of the OTT

Since we are talking about the Atlantic. Recently Apple acquired the Tom Hanks movie ‘Greyhound’; a World War II story from the middle of the Atlantic. The movie is said to have cost USD 50 Million. Given that the year is a bust and going to the theatre does not make any sense, Mr Hanks sold it to Apple. But what about movies that are made with budgets of hundreds of millions of dollars? No OTT player would buy it! What then?

Paramount Pictures announced yesterday it is delaying the releases of two highly anticipated blockbuster films again—this time until 2021. A Quiet Place: Part II will move from Sept. 4, 2020, to April 23, 2021, while Top Gun: Maverick will eject out of its Dec. 23 date and now land on July 2, 2021. Both films had already been postponed from their original release dates this summer.

Source: Quartz

Signing off…

Categories
Learning by Proxy

Learning by Proxy | Twitter – Innovation – Portland

Last week has been strange. Twitter was hacked – next level! There is a lot of other undercurrents, I plan to cover some of it next week.

There is a lot for this week to unpack. India is spiking with COVID, it will be long before we return to any semblance of normalcy. In the meantime, India seems to only have time to discuss Rajasthan politics!

Let us dive in.

Foxed! 

It would not be an understatement to say that Fox News created Donald Trump. Trump would have remained a nobody but for the support that Rupert Murdoch provided Trump. All of the rest of the conservative media put together does that exude the influence over Republicans that Fox does. It is also not a secret that the hand that makes you can break you!

The Republicans are fed up with Trump. I am sure some of them are even cursing themselves for not have voted to have him impeached in February. Mitch McConnell is the most hatable Republican I have known. The Kentucky senator is one of the biggest supporters of Trump. Even he said, his support for Dr Fauci was Absolute. Trump has been running a campaign against the one person in the White House who is an expert in epidemics. 

Trump is threatening to not sign the next stimulus bill if payroll tax cuts are not approved as a part of it. 

Last weekend, Chris Wallace of Fox News called out Trump on his lies and grilled him good. Could this be a change of stance on the part of Fox News? If Fox turns on Trump, Trump will get destroyed.

Wallace unveiled the results of a Fox News poll that showed Trump losing by eight points to the presumptive Democratic nominee, Joe Biden. Trump was also behind Biden on the response to the pandemic, on race relations and the economy. He trails in other polls too.

Source: The Guardian

Twitter Hack

Twitter got hacked last week. The hacker(s) used social engineering to gain access to an internal tool that allowed the hackers to reset password to verified accounts. Amongst others, they hacked the accounts of Bill Gates, Elon Musk, Barack Obama, Apple and others. The hackers asked the followers to transfer bitcoins to a wallet and said they would double the sum. The world we live in – some thought this was for real – and made the transfer!

If you remember Elon Musk had to step down from the board of Tesla for having tweeted that he was going to get the Saudi’s to purchase Tesla and take it private. The punishment did not fit the crime, it should have been worse. Still, the privileged boy wept about it. 

Donald Trump is used to making one policy announcement after the next using Twitter. Also, given how one crazy thing after the other is uttered by Trump; who is anyone going to disbelieve if he proclaimed war?

New York Times spoke to those who perpetrated the hack. It is incredible.

The hacker who received the message, using the screen name “lol,” decided over the next 24 hours that Kirk did not actually work for Twitter because he was too willing to damage the company. But Kirk did have access to Twitter’s most sensitive tools, which allowed him to take control of almost any Twitter account, including those of former President Barack Obama, Joseph R. Biden Jr., Elon Musk and many other celebrities.

Source: New York Times

More to the point, this is about the power tech companies have amassed. A private company getting hacked should not result in a stock-market meltdown or trigger a war. No private organisation should have this kind of power. You need to be hacking the government to cause nations to go to war, not some micro-blogging site.

There is a rule almost globally which does not allow a person to lie on an ad. This Wikipedia article only covers the laws in English speaking countries, but most countries have them. Somehow, this has not been applied to online advertising at all! 

Similarly, there should be a law on what political leaders can use such platforms to state. Should probably apply to all people in positions of power.

Turns out – it was an inside job!

Destroying Innovation

Think back to any startup that has had a sensible product which is actually capable of profitability, founded over the past 10 years. (Not WeWork, Theranos types) WhatsApp, Instagram, Siri, Zappos, Github – Do you know what is common amongst all of them?

Acquired!

I had written a white-paper a couple of years ago about the lack of an acquisition eco-system in India. This had resulted in many VCs not being able to exit their investments and make money because it’s either IPO or death. Someone I respect, told me I was wrong.

Silicon Valley technology companies do not let any company flourish. Armed with their bags of cash, they go in entice the VCs to force a sell-out. The founders have no say often. WhatsApp is the perfect example of a founder who was so upset with the way the product was being pushed post-acquisition. Brian Acton left a Billion dollars worth of Facebook stock on the table and walked away. 

Big tech’s buying spree is already being scrutinized by the US Federal Trade Commission, the EU, and Australia’s Competition and Consumer Commission. On Monday, the US Congress is up: Apple’s Tim Cook, Alphabet’s Sundar Pichai, Amazon’s Jeff Bezos, and Facebook’s Mark Zuckerberg are all scheduled to appear before the House Judiciary Antitrust Subcommittee.

These four companies’ US acquisitions alone have channelled $86 billion into the pockets of entrepreneurs, venture capitalists, early employees, and other startup investors. Billion-dollar buyouts motivate more tech founders to get started, but they can deter entrepreneurship as well. Albert Wenger, a managing partner at Union Square Ventures, has warned that the big tech companies have a “kill zone” around them, meaning startups that operate too closely to their businesses have no chance of success.

Source: Quartz

Facebook would not have been facebook if WhatsApp and Instagram had existed as competitors. Mark Zuckerberg would not be as arrogant.

Portland Street = Tiananmen Square

When the west wishes to deride China they always will bring up the picture of the one man that stood in front of the tank in Tiananmen Square.

Man in front of the tank

You tend to become what you hate the most, they say. America is having its Tiananmen moment. Not only that, but they are also having the worst of everything in recent history happen altogether! Federal Agents who have no business in local law enforcement have been sent out to Portland, Oregon to put down protests that have been ongoing for the past 60 days. This is also a leaf from Hitler’s playbook. Hitler had the Gestapo which was above the SS and had over-riding powers.

A woman sat naked with a mask and cap, defying the agents on Portland Street.

Woman of Portland

Tiananmen Square happened before the Internet and that image has endured. Imagine how long this one will.

A woman wearing nothing but a black face mask and a stocking cap strode toward a dozen heavily armed agents attired in camouflage fatigues, lined up across a downtown Portland street. The agents, dispatched by the Trump administration over vociferous objections of state and city officials, are part of a force that has fired projectiles at and detained activists protesting nightly since the killing of George Floyd by Minneapolis police May 25.

Source: Los Angeles Times

GPT 3

A few years ago, Elon Musk, the AI alarmist created an organisation that would work on the cutting edge of AI and create tools that would keep AI from being used for wrong. The organisation – OpenAI – has been publishing a whole host of algorithms and papers. The latest algorithm to be published is GPT 3 short for Generative Pre-training Transformer. It is a random sentence generator. It is fed with 175 Billion parameters OR everything written on the internet. That is a lot of data to be feeding on.

Ben Evans had once written a piece where he had compared a Machine Learning Algorithm to a dog. You know the dog did something but you do not know what it was thinking. 

Same with GPT 3. It is producing results that have left people mind-blown. If you can read the entire internet, you are bound to produce something useful. Not only that, but it is also programmable to interpret. Here are a few examples. 

Not only English it can also work on other languages – to the extent that there is data on the internet. 

Just when it starts to look like this is magic and AI can defeat humans it runs into something evolution has perfected. The brain.

While it seems this approach may lead directly to a general AI that can understand, reason and converse like a human, OpenAI warns that they may have run into fundamental scaling up problems, with GPT-3 requiring several thousand petaflop/s-days of compute, compared to tens of petaflop/s-days for the full GPT-2. It seems while we are closer, the breakthrough that will make all our jobs obsolete is still some distance away.

Source: Forbes

The human brain is the most power-efficient computer this world has seen. To run any algorithm with just as many processes simultaneously tremendous energy and compute power has to be available.

E-Commerce

Flipkart is seen as the company that brought e-commerce to India. They were constantly in pursuit of higher Gross Merchandise Value (GMV) because that was seen as the number connected to the valuation of the company. When Tiger Global came to India with the thesis – India is the next China, they did not take into account that China started with Alibaba, a B2B platform, not a B2C platform. 

Flipkart set all the wrong expectations – discounts and free home delivery. Even today the company is not profitable. Maybe not even relevant.

India’s Alibaba was IndiaMart and they went ahead with an IPO a year ago. They may not have a turnover comparable to Flipkart, but they do have one thing that Flipkart does not – profits. Even during a pandemic.

B2B e-commerce platform IndiaMART has posted over 64% increase in its net profit at INR 74.6 Cr in the first quarter of the financial year 2021, versus INR 44 Cr in the previous quarters. In terms of year-on-year growth, the listed company has registered a two-fold increase from INR 32 Cr. 

Source: Inc42

Hong Kong

For the longest time, Hong Kong has been the financial centre of Asia. Several International banks have been based out of Hong Kong and the easy movement of capital also encourages a lot of wealthy Chinese to park their money in the state. Singapore has been steadily eating away at the dominant position that Hong Kong holds. 

I saw an opinion suggesting Mumbai could replace Hong Kong as the financial capital of Asia.

“We are home to some of the large industrial houses (domestic and global) and top financial institutions. Our central bank is one of the most trusted regulators,” said Manjeet Kripalani, co-founder and executive director of Mumbai-based think-tank Gateway House. “Also, the city has the oldest stock exchange in the world and a commodity market in place.” The city can also boast of a huge port, she added, and is perfectly placed in terms of time zone between the east and west.

Source: Quartz

Jokes! The city is underwater every monsoon. That notwithstanding, India would need to undertake unprecedented tax reforms and make it easy for capital to move across borders to be able to get Mumbai to even hold a chance at hoping for a position similar to Hong Kong. 

Media

Media has been undergoing a huge change over the years. With the advent of the internet, newspapers were the first to take a hit. It was always known the ad dollars would slowly move away from traditional media but TV has been resilient. 

I got rid of Cable about 4 years ago. Before that, I would pay Rs. 7500 each year to Tata Sky. I would not have discovered Hotstar for a few more years but for a mess-up by Tata Sky. During their systems upgrade, they knocked out TV for a full month. They refused a refund. I started watching live sports on Hotstar and that was the end of that. I had no reason to go back to Tata Sky.

I never understood the reason Americans stuck around with cable and kept cursing it. I was told it was live sports but there should be an online option, why is it not there? Either way – the pandemic put all sports to bed and with it, looks like cable is going to go.

AT&T reported it lost another 886,000 cable and satellite TV subscribers in the second quarter of 2020. The telecommunications giant—the second-largest TV provider in the US behind only Comcast—lost about the same number of TV subscribers in the previous quarter. Its total subscriber base has eroded 18% in the last year alone.

Source: Quartz

On that note – PVR, the largest Multiplex chain in India is planning to start delivering popcorn through Swiggy!

Glass

The story goes, Steve Jobs called the board line of Corning Glass and asked them to put him through to the CEO. The operator politely told him, if he did not have an appointment she could not. Steve was pissed and told a common friend that Corning was all East Coast bullshit! Wendell Weeks, the CEO of Corning heard about this and called the board line at Apple – asked to speak with Steve Jobs. Obviously, they refused. He wrote back to Steve saying what had happened. The rest, as they say, is history.

Corning Glass has done for Apple just much as Apple has done as Corning. Apple put this small glass company from New York on the map and Apple was able to deliver a product that blew everyone’s mind. They are bringing something new to the market.

It takes about two years for Corning to develop each new generation of Gorilla Glass, the resilient material that graces a critical mass of iPhone and Android devices. That process has for several update cycles focused on protecting screens against drops, fending off shatters and cracks by boosting what’s known as compressive strength. The newly announced Gorilla Glass Victus, though, gives equal weight to prevent scratches. That’s harder than it sounds and more useful than you’d think.

Source: Wired

So, no more scratches.

Worth a read

If you want to know what we are fighting about in the Galwan Valley with the Chinese – This is an insanely great analysis by the New York Times

The Center for Climate Change Communication has published a handbook on how to discern between conspiracy theory and an actual conspiracy.


Signing off…