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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…

Categories
Learning by Proxy

Learning by Proxy | Visa – Jio – COVID after effects

Every Saturday, I publish this series called Learning by Proxy. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

Follow Up

Visa Ban

The USA has been busy disallowing Visa to several categories of people. Last week it hit students with a visa ban. Since the students would be required to attend classes online, why should they have to stay in the US? The universities sued the government from Boston to San Diego. The visa was the only thing that was going to get the students to pay tuition. Without it, the Universities would suffer revenue erosion!

The U-turn by the Trump administration comes following a nationwide outrage against its July 6 order and a series of lawsuits filed by a large number of educational institutions, led by the prestigious Harvard University and Massachusetts Institute of Technology (MIT), seeking a permanent injunctive relief to bar the Department of Homeland Security (DHS) and the US Immigration and Customs Enforcement (ICE) from enforcing the federal guidelines barring international students attending colleges and universities offering only online courses from staying in the country.

Source: Indian Express

After H1B and students, the next in line are members of the Communist Party of China. This is being considered as a retaliation to the change in the law in Hong Kong. 

The Trump administration is considering a sweeping ban on travel to the United States by members of the Chinese Communist Party and their families, according to people familiar with the proposal, a move that would almost certainly prompt retaliation against Americans seeking to enter or remain in China and exacerbate tensions between the two nations.

Source: New York Times

The share of non-citizens in the US has already fallen to new lows.

Just 6.2% of the people in households surveyed for the US’s monthly employment survey responded they were not US citizens in June 2020. This is the lowest share of non-citizens since 2000, and down from 6.8% in February.

Source: Quartz

All this while their passport has fallen out of favour with all but a few. These are the only countries to which a person bearing an American passport can travel to Visa-Free. Also, most of Europe would not allow them even if they had a Visa.


Jio Again

Reliance has managed to raise over 20 Billion dollars in the past couple of months. This culminated in the AGM where the Google – USD 4 Billion investment – was also announced.

During the Google For India event for 2020, Google and Alphabet CEO Sundar Pichai announced that the company will invest INR 75,000 Cr or approximately $10 Bn under the Google For India Digitization Fund for the Indian tech and startup ecosystem. The fund will be invested in businesses, social impact projects and towards supporting the Indian government’s digitisation efforts over the next 5-7 years.

Source: Inc42

This release by Google was an afterthought. They just wanted to put a spin that made it seem larger than just a Jio Investment. But that was all it was. The rest of the 6 Billion is probably expenses that will be undertaken either way over the next 5 – 7 years.

Have you seen a successful all-star team? Jio now counts Facebook, Google and Microsoft as shareholders. 

The company also announced a whole bevvy of products and services during their online AGM.

At Reliance’s Annual General Meet 2020 the company announced Google will invest Rs 33,737 cr for a 7.7% stake in Jio Platforms. Jio also revealed that the company is developing Jio TV Plus, Jio Glass, and more. The company also announced details on JioMart and Jio 5G solution.

Source: Indian Express

While it is one thing to build a product, it is another thing to be able to sell it and build an eco-system around it. While all this investment is in the anticipation that funding means success, it will not be that easy.

Even with Tik Tok banned in India, the aspiring apps are struggling to dominate the space. It takes a lot more than just making something to succeed. Google itself is no stranger to the concept. They rushed out Google Plus to compete with Facebook and promoted it on the most visited page on the internet and still failed. 

This is not over.


ARMing Softbank

In the 1980s a British company called Acorn along with VLSI and Apple created a chip design company called ARM. ARM stood for Advanced RISC Machines. RISC stands for Reduced Instruction Set Computer. This was conceived as a way of enabling low powered devices. Intel, by comparison, was offering CISC – Complex Instruction Set Computers which are more power-hungry. When Steve Jobs came back to Apple in 1997, he sold ARM and used the money to save the company. When he went back to Intel in 2005 asking them to build a low power chip for mobile devices they refused. Apple moved to the ARM design and the rest, as they say, is history. Intel missed the train and today every phone and tablet runs on ARM. Windows already has ARM PCs and Apple announced last month that they are going to move the Mac to ARM.

Unlike several of their disastrous investments, Softbank moved in and bought a majority stake in ARM in 2016. Now is the time for this investment to pay-off.

If it pursues a listing, the chip-design company could go public as soon as next year, said the people, who asked not to be identified because the deliberations are private. That would accelerate a timeline SoftBank Group Corp. founder Masayoshi Son laid out in 2018, estimating an initial share sale for Arm sometime around 2023, a goal repeated in October by Arm Chief Executive Officer Simon Segars.

Source: Bloomberg

The push to list ARM is in no small means driven by all of the other failures that the company has seen in its portfolio. 


COVID and Consequences

Escape Artist

Quarantine is a word that has become quite well enmeshed in our lexicon since the pandemic started. When you travel, you quarantine. If you come across someone infected, you quarantine. And then there are those, who try to escape quarantine. An Australian celebrity tried to escape quarantine and was fined. Fines for escaping quarantine are becoming commonplace. One of the states in the US which has a fine for escaping quarantine – Florida. Would you have thought?

When Australians return to Sydney from trips abroad, the government requires them to stay in a hotel for two weeks. But recently, there have been several reports of citizens attempting to break out of their quarantine at many Sydney hotels. One woman, an influencer who had recently returned from Paris, was fined AU$1,000 (US$694) for busting out via the hotel’s fire escape just a few days in; she might also face legal action for tampering with the sprinklers in the hotel room in which she was confined.

Source: Quartz

Real Estate

I have written about how real estate will not be the same once this pandemic is over. With the increasing ‘Work from Home’ schedule and the absence of the need to hang around cities, real estate is bound to change. There is one sector of real estate that is seeing spiking demand in India. With many people working from home, they are moving back to their home towns and emptying their houses in the city. Unable to shift out completely during the pandemic, they are putting their belongings in long term storage. 

In an extended work from home scenario, a growing proportion of the working population, primarily techies, are leaving the city and moving back to their hometowns, pushing up demand for storage houses, where household and office belongings are stocked securely for low rentals. 

Firms like Safe Storage, Storagians, StowNest Storage, Orange Safe Storage and MyRaksha, which provide the service, are witnessing a spike in the number of clients. 

Source: Times of India

Education

The one thing that is becoming increasingly clear to many parents working from home is that they did not need schools to educate children. They needed schools to be able to buy freedom from their children. The current situation makes it very unsafe for children to go to school. This is fast turning into a crisis. What is the way out?

American parents stand to lose even more productivity—and their minds—as more school districts like Los Angeles limit how many students will return to the classroom for the upcoming school year. This situation could weaken recovery efforts over the long term.

Source: Quartz

Finally

Garbage to Energy

Most of the garbage finds its way to the landfills. This garbage is often a source of various greenhouse gases. One of the gases that can be extracted from garbage is Hydrogen gas. A company is set out to turn all garbage into energy that could power homes and transport.

Most of the landfill gas at Puente Hills is captured by a network of subterranean pipes and used to generate enough clean electricity to power 70,000 homes. But Jean-Louis Kindler, the CEO and founder of a startup called Ways2H, still considers this letting our waste go to waste. If he has his way, we’ll not need landfills like Puente Hills. Instead, he wants to use the world’s trash as the raw feedstock to produce hydrogen, the perennial Fuel of the Future that could power our homes, planes, cars, and plane-cars. “There is so much waste available—plastic, municipal solid waste, medical waste,” says Kindler. “All the things we are struggling with the processing are loaded with hydrogen.”

Source: Wired

In the early 2000s, the world was at the precipice of a new kind of automobile. Companies in Japan and Germany were working on cars driven with Hydrogen Fuel Cell which would use liquid hydrogen as fuel and release water as the by-product. They would re-fueled just like our Petrol cars are – at a gas station. Do not require any new infrastructure. Have similar running range and are much more cleaner. 

At the same time, an internet entrepreneur who had recently sold his company invested in a company called Tesla. Armed with the loan from the US government, he set out to discredit Hydrogen Fuel cell technology. Ironically, he played the role of Edison, to save his investment. (Edison tormented Tesla and tried to prove Alternating Current would not work – we all use alternating current today) Under the guise of saving the planet, Elon Musk has created a Li-Ion Cell Garbage problem across the world. In any case, we will run out of it in the next 10 years. He hopes to be on Mars by then.

I hope we move to Hydrogen Fuel Cell.

Signing off…

Categories
Learning by Proxy

Learning by Proxy | Energy – Space – Xenophobia

Every Saturday, I publish this series called Learning by Proxy. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

I have changed the format this time to try and follow a thread across many stories. I hope people like it. Let me know.

Follow Up

Both parties – India and China are reported to be stepping back at the border. The satellite pictures don’t seem like that at all! Link

The USA, in the meantime, does not wish to lose access to the South China Sea. They sent a couple of destroyers into the South China Sea knowing fully well that the Chinese fleets were present in the area conducting exercises.

The carriers — the Ronald Reagan and the Nimitz — deployed “in support of a free and open Indo-Pacific,” according to a statement by the Navy’s Seventh Fleet. It said that the ships, which were accompanied by warships and aircraft, were conducting exercises to improve air defence and long-range missile strikes in “a rapidly evolving area of operations.”

Source: NYTimes

Playing with matches.

On COVID

COVID causes upper respiratory problems. But why? SARS-CoV-2 attaches itself to cells in the human body called ACE2 receptors. It happens to be present in abundance in the lungs. Hence the respiratory condition. ACE2 is also present in all other organs including the stomach, kidney, heart, and brain. Many patients suffer from diarrhoea and stomach upsets only to later discover that they are infected. The loss of the sense of smell is also because of the presence of ACE2 in the nose. Now, it turns out that many people infected by COVID-19 suffer from brain damage as well. ACE2?

Doctors may be missing signs of serious and potentially fatal brain disorders triggered by the coronavirus, as they emerge in mildly affected or recovering patients, scientists have warned.

Neurologists are on Wednesday publishing details of more than 40 UK Covid-19 patients whose complications ranged from brain inflammation and delirium to nerve damage and stroke. In some cases, the neurological problem was the patient’s first and main symptom.

Source: The Guardian

If these were the people who voted for Brexit, I suppose the damage might have been from before COVID.

The virus also seems to like men more than women and nobody knows why.

Energy

An achievement in power

The Indian Railways is an organisation that was created by the British to loot India more efficiently. Since then, India has made the railways an asset like none other. 59 years ago, the Indian railways embarked on an ambitious program to electrify the railways in the country. Today close to 99% of the railway lines are electrified and it has helped us shift away from Diesel to Coal.

Every once in a while a government organisation will do something in India that will make your chest swell with pride. A couple of years back Kochi became the first airport in the world to be 100% powered by solar energy. And now it is the turn of the railways!

According to details shared by Railway Minister Piyush Goyal, the pilot project of a 1.7-megawatt solar power plant has been set up by Indian Railways in collaboration with Bharat Heavy Electrical Limited (BHEL) on railway land. The solar power plant project has been set up at Bina Traction Sub Station. The 1.7-megawatt solar power plant can produce around 25 lakh units of energy annually and save about an amount of Rs 1.37 crore for Indian Railways every year.

According to the Railway Board Chairman, Indian Railways is planning to install solar power plants with a total capacity of 3 gigawatts, in the coming years. The power generated by these solar plants will directly feed the traction power for locomotives, he said. The tenders have already been invited for this project, however, it will take around two to three years to complete this project, he further stated.

Source: Financial Express

And immediately after achieving this milestone, another ministry decided to sabotage this plan. How will they get to 3GW, with Indian solar panels?

Shot in the foot

Also, India has moved in big ways towards solar power over the past decade. This was made possible in no small way by cheap Chinese Imports. Things got so bad for Indian manufacturers went begging to the government to do something about it, a few years ago. Now, thanks to the spat at the border, the Power Ministry has decided to ban all imports of power equipment from China.

It is not immediately clear if the Indian power producers who have already tied up with Chinese equipment suppliers will get a waiver or a carve-out from the latest decision. As much as 9,570 MW of the currently under-construction power plants — all from the private sector — have contracted with Chinese companies for supplying boilers, turbines and generators. Total under- construction capacity is 15,861 MW, of which 12,245 MW is in the private sector.

Source: Financial Express

This kind of thoughtless policy announcement has been the landmark of the Modi government.

Space

Satellite Market

One of the big expectations that drove the space entrepreneurs to take massive risks with other people’s money was the fact that several smaller countries will need satellites in space. Without the resources to develop their space program, they will hire private companies to launch. African countries have been launching satellites for weather prediction as well as resource mapping. Now, it is the turn of the Middle East – not to study earth, but Mars!

Sarah bint Yousif Al-Amiri knows what it’s like to build a spacecraft, but she’s never launched one to Mars—or during a global pandemic. As the deputy project manager for the United Arab Emirates’ first interplanetary mission—and the country’s minister of state for advanced sciences—the 33-year-old engineer has spent the past few years bouncing between Dubai and Boulder, Colorado, where a team of Emirati scientists have been busy building a robotic satellite meteorologist called Hope. These days, Al-Amiri is quarantining near the Tanegashima Space Center in Japan, where Hope is expected to depart on a seven-month journey to the Red Planet next week.

Source: Wired

Connecting the World

The Internet can change the fortunes of any place. Imagine not having access to the internet. There are several places in the world where it is not economically viable to provide internet. Alphabet, the parent company of Google has been experimenting with Project Loon for close to a decade now. The idea is to have stratospheric air balloons beam internet down onto the planet. The first deployment took place in Kenya.

A fleet of high-altitude balloons started delivering internet service to Kenya on Tuesday, extending online access to tens of thousands of people in the first-ever commercial deployment of the technology.

The balloons, which hover about 12 miles up in the stratosphere — well above commercial aeroplanes — will initially provide a 4G LTE network connection to a nearly 31,000-square-mile area across central and western Kenya, including the capital, Nairobi.

Source: NYTimes

Airtel in Space

Since we are on the topic of internet, space seems to be the frontier for delivering low latency high-speed internet. With Jio busy photocopying every app known to mankind, Airtel is beginning to look towards space. The company will be splurging a Billion dollars to buy a satellite constellation. Must seem like spending some pocket change given the liability the Supreme Court piled onto the company as spectrum charges last year. But visionary indeed.

Twenty years after launching mobile telephone services in India, Sunil Mittal took a giant leap to connect the next billion users through a constellation of satellites, possibly gaining a head-start in Indian telecom’s race towards 5G mobile networks. A consortium led by Bharti Enterprises has won 45% stake the bid for OneWeb, a bankrupt firm that makes satellites in the UK and the US. Bharti had bid jointly with the UK government for the auction. They would invest around $500 million each to acquire OneWeb, which had declared bankruptcy earlier this year.

Source: Inc42

Xenophobia

Who is a Kuwaiti?

There is a movie about the rescue missions that had to be attempted to bring Indians back when the Gulf War broke out. Many from India have made gulf home especially those from the southern state of Kerala. What happens when a country realises that 33% of its population are ex-pats from ONE single country?

The Indian community constitutes the largest ex-pat community in Kuwait, totalling 1.45 million, the report added. Over 8 lakh Indians could be forced out of Kuwait if a new bill on ex-pats is enacted into law, the Gulf News reported. The legal and legislative committee of Kuwait’s National Assembly has approved the draft ex-pat quota bill, according to which Indians should not exceed 15% of the population.

Source: Indian Express

To keep the population essentially Kuwaiti, they need to chase out people from other countries. How will they execute this plan?

Stupidity thy name is Trump Administration

With the surge in COVID cases, any remaining hope that the Universities could open in fall were dashed. That did not keep their audacity at bay. All Universities will deliver classes online – at the same tuition fee of ~ USD 50,000. I suppose they do realise the very same courses are available on Coursera for USD 39 – 79 a month. The Trump administration joined the party. After banning H1B for till the end of this year – because waiters gonna code; they announced that all students must go back if their courses are online!

The over 250,000 Indian students enrolled in US universities now run the risk of being sent packing. Some of these students have parents living in the US on H1B! Where do they go back?

The Donald Trump administration on July 6 tweaked an exemption that allowed foreign students to stay in the US even when most of their classes are being held online amid the Covid-19 pandemic.

Source: Quartz

Students are free money. Their parents are rich and expatriating foreign exchange to ensure their kids can get a great education. Not only that students are a huge source of consumption. They eat a lot, buy a lot and experience a lot. At a time when the economy is undergoing a slump, to chase them away, especially when your economy hardly adds any value to them – is just stupid. Not to mention – this will destroy the ability of the universities to attract overseas students in the coming years.

Promptly – Harvard and MIT sued.

“By threatening to force many F-1 students to withdraw from Harvard and MIT, Defendants have put both schools to an impossible choice: lose numerous students who bring immense benefits to the school or take steps to retain those students through in-person classes, even when those steps contradict each school’s judgment about how best to protect the health of the students, faculty, staff, and the entire university community.”

Source: Indian Express

When you can’t offer perks

Companies are well known for making it as easy as possible for parents to come in and slog 16 hour days. Provide foosball tables and the likes that you would not be able to use at all, unless you were going to stay at work till 11 P.M. While there was a sinister side to the childcare and other support of that nature offered, they were still perks. This helped bring some of the best talents to the organisation. When your employee is sitting at home, what perk can you offer? Fewer working days!

Data from jobs marketplace ZipRecruiter shows that in 2020, so far, the share of company job postings offering four-day workweeks is 69 for every 10,000 job postings. It’s a tiny number to be sure, but it’s up from 40 in 2019. Between 2015 and 2018, the share was fewer than 18 in 10,000 postings each year.

Pre-pandemic, companies offered condensed schedules largely to attract and retain talent that prized flexibility. In the current climate, a shorter workweek is one way for companies to cut costs without resorting to layoffs.

Source: Quartz

Finally…

Sue spammers as a service

Startups are in the business of turning tough human work into simple products. We all get spammed every day. Spam is unwanted; in some cases meant to cause harm. These companies should be sued. But I am sure, not a single person has the time to sue them. Now, a UK based startup – DoNotPay – has launched a service that will automatically unsubscribe you from Spam while at the same time going after the spammers. The company bills itself to be the world’s first robot lawyer.

If you use a mainstream email provider, it likely catches most of the obviously useless and potentially malicious spam you receive, like scammy prescription drug offers and unsolicited sex tips. But when it comes to the endless promo emails from retailers and newsletters you don’t remember signing up for, you’re mostly on your own. Now a new tool from DoNotPay, a suite of consumer advocacy services, offers a lifeline that will make it easier to unsubscribe from email lists in a privacy-conscious way. It’ll also try to earn you some cash along the way.

Source: Wired

Signing off…

Categories
Learning by Proxy

Learning by Proxy | Business of Politics and Politics of Business

Every Saturday, I publish this series called “Learning by Proxy”. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

Follow Up

It turns out the Indian and Chinese forces have been brawling at the border since September 2019 when the government decided to convert the Ladakh into a Union Territory. The current situation was just an escalation of the troubles that had been boiling over for a while. So – The government has kept this issue concealed from the people because they would not have wanted to be blamed for fomenting it.

In the past two months, there have been at least three clashes between Indian and Chinese soldiers in the Pangong Tso area. As seen in satellite images, the Chinese side has constructed pillboxes, shelters, breast-walls and bunkers at Finger 4, both on the bank and the ridge, where they have deployed troops in large numbers.

Source: Indian Express

Politics

Politics of Business

You know how companies owned by the Indian government, which have created an entire category, end up in a heap of losses. You need to look no further than aviation to see the shining example. Air India (né Tata Airlines) created the airline business in India. After the economy was opened up in 1990, many private airlines started to appear. The government, in its quest to ensure that cities other than metropolitans develop, created a rule forcing airlines to take up unprofitable routes to smaller cities and state capitals. Air India is a loss-making mess because it gets a disproportionate share of these routes.

Source: ET

Something similar is afoot with the telecom sector. When a company takes 50% of the market share in a country like India, it often comes with a fair amount of support. It is unprecedented in world history for a 50-year-old industry to be shattered by a new entrant in 5 years. Now, when the government employees themselves start pointing it out.

Employees of state-owned telco Bharat Sanchar Nigam Limited (BSNL) feel that the central government is favouring Mukesh Ambani-owned Reliance Jio in awarding state-funded projects to it, and denying opportunities to other players by creating an uneven playing field.

Jio was recently allocated INR 50K Cr worth government contract under the Universal Service Obligation Fund (USOF) to deploy 54 mobile towers in Ladakh’s rural areas. Moreover, impending restrictions on BSNL to extend telecom connectivity in the so-called left-wing extremism (LWE) affected villages are also denting the state-run telco’s already frail revenue numbers.

Source: Inc42

Let me put that in context – Jio Platforms has raised ONLY twice that amount through all of the fundraisings that it has undertaken in the last 3 months.

Good Old Fashioned Regime Change

When you think regime change, you think CIA. Americans have been great players of this game. Having said that, others have also learnt a thing or two along the way. Chinese aggression against India is well known. In one of my previous editions, I had mentioned the dire circumstances that Pakistan is in. This leaves other neighbours that can be encouraged to stew trouble. Of all countries, Nepal decided to change its map and declare Indian territory as a part of Nepal. Now, India seems to be creating trouble for the leadership of Nepal. The PM is Nepal has been asked to put up or shut up.

Prachanda said at the outset that Oli’s allegation against India was wrong. “Not India, it is me who is demanding your resignation. You must furnish proof of such irresponsible remarks,” Dahal is believed to have said.

Two days after Nepal Prime Minister K P Sharma Oli claimed that India was trying to topple his government with support from some politicians at home, party leaders, including three former prime ministers, Tuesday asked him to prove his allegations or quit.

Source: Indian Express

Economics

Economic War

There has been a call to boycott Chinese businesses and Chinese products for the past couple of weeks since the border clashes took place. At the same time, a lot of ink has been spilt trying to argue how impossible it would be to disengage economically from China. Further, it would be Indian manufacturers and Indian consumers who would be hurt by such moves. In the meantime, the Indian government has been putting its greatest weapon to work – Its bureaucracy. Chinese shipments have been delayed at the port of entry for “checking”. The Chinese have been returning the favour. This has caused a lot of trouble to both exporters as well as manufacturers in India. The next step seems to be apps that generate little to no revenue from India.

TikTok has been banned in India. The IT ministry has banned 59 Chinese-owned applications, including TikTok, ShareIt, UC Browser, Likee, WeChat, and Bigo Live. The Ministry stated they were “prejudicial to sovereignty and integrity of India, defence of India, the security of the state and public order.”

Source: Indian Express

Supply Chain

Over the last 30 years slowly and steadily more and more of the manufacturing base shifted to China. First, it was due to the lower cost. Off late it has been only about convenience. China has been behaving badly using the Pandemic as a distraction to push its nationalistic agenda. From the South China Sea, Hong Kong and even up to India the country has been pushing to expand.

There is no other way to hurt them but economically. The military engagement will not end well for anyone involved. But shifting supply chains is a decades-long process. The biggest risk is chip manufacturing which is necessary not only for the phone in your hand but also for defence applications. TSMC one of the largest contract manufacturers of silicon set up a plant recently in Arizona with federal funding. It can produce as many chips in a month as their plants in China can in a day!

China’s rising costs had companies looking to broaden their sourcing well before the trade war or coronavirus, but those events are increasing the urgency. In a recent survey of 260 global supply chain leaders across different industries and regions, research and advisory firm Gartner found 33% had already moved their sourcing or manufacturing out of China or planned to do so within the next three years.

Source: Quartz

Business

Under Pressure

Facebook has been under pressure ever since Twitter flagged the Trump tweet on mail-in ballots. The Chairman of the Board, Peter Thiel; whose data company Palantir played a role in the Trump victory, was one of the prominent supported of Candidate Trump. It came as little surprise that Facebook was willing to look the other way. But when your revenues streams get threatened, you cannot continue to look the other way.

Facebook has said that it will flag all “newsworthy” posts from politicians that break its rules, including those from President Donald Trump.

Separately, Facebook’s stock dropped more than 8 per cent, erasing roughly USD 50 billion from its market valuation, after the European company behind brands such as Ben & Jerry’s and Dove announced it would boycott Facebook ads through the end of the year over the amount of hate speech and divisive rhetoric on its platform. Later in the day, Coca-Cola also announced it joined the boycott for at least 30 days.

Source: News18

Some have argued that the USD 10 Million per month or so that most of these companies spent on Facebook was a drop in the bucket. But come to think of it – USD 10 Million across a year is USD 120 Million, and 10 such clients backing out would mean a loss of a billion dollars in revenue. Anybody else wants to lose a Billion dollars in revenue during this economy?

How does the medicine taste?

Dear Chinese Tech Company, for years your government protected you. They pretended to be extending a level playing field to all but they really were not. They made life so difficult that behemoths like Google and Amazon had to call it quits and leave the country. Agreed, it was mutually beneficial. China needed you guys to win so that a local company could be beaten into submission when it came time to censor. How does it feel to be fed the same medicine by another? Hurts?

DTH Dying with Cinema

OTT is going to be the undoubted winner of Lockdown 2020. Cinemas have been shuttered and by the looks of it, are going to have to wait for a long long time before things return to business as usual. On the other hand, DTH companies are also having a hard time. In India during 2019, DTH lost 2 Million subscribers. With the glut of streaming services who wants DTH anymore?

India lost 2 Mn direct-to-home (DTH) television subscribers in 2019, findings from the Indian Telecom Services Performance Indicator Report October-December 2019 published by the Telecom Regulatory Authority of India (TRAI) revealed. The segment ended the year with 69.98 Mn subscribers, down from 72.44 Mn in March the same year. 

Source: Inc42

Technology / Science

Zoox

A few years ago, being pressured about Uber drivers not being given the same benefits as an employee, founder and CEO Travis Kalanick pushed back. He said anyway, they will all be replaced by self-driving cars and caused a slight panic amongst the drivers. The firing of Travis, a bad IPO and several dozen lawsuits later, Uber is nowhere close to bringing self-driving cars to the roads.

So it came as quite a surprise that Amazon went ahead and acquired a self-driving car company. Amazon’s logistics needs to deliver in hours or days not minutes and hence self-drive would not be valuable to Amazon as much as it would to a cab company or food delivery company. Google, Tesla and a few dozen other companies have been pursuing self-drive. Apple is rumoured to be testing something of the sort as well! Remains to be seen what road Amazon takes.

The e-commerce giant said it had agreed to acquire Bay Area-based autonomous vehicle company Zoox, a deal reportedly worth more than $1 billion. (Amazon did not respond to questions.) Since its founding in 2014, Zoox has been known for its technical chops, its secretiveness, and its sky-high ambition.[…]

In 2018, it showed off its first prototype vehicles, which look like sensor-laden golf carts on steroids. The company has also been testing its software on more conventional-looking Toyota Highlanders in San Francisco, where it is learning to handle chaotic city streets.

Source: Wired

Brain

When you see you are not really seeing. Your brain in interpreting the electrical signals being generated by your eyes upon being subjected to light. The same is true of almost every organ. Therefore there is almost no objective reality in the world. It is all subject to how your brain chooses to interpret it. This was highlighted by the ‘Yanni’ / ‘Laurel’ sound recording a few years ago, where, part of the people heard one thing while the other another. Also, perhaps why some people like classical music while other rock.

Instead of presenting his lab animals with real chemicals, he went straight into their brains. Last week, Chong and his colleagues published a study in the journal Science showing that they’d worked out some of the details of just how the olfactory bulb represents odours—by making mice smell scents that don’t actually exist in the real world.

Source: Wired

Misc

This should probably not come under Miscellaneous but the other sections are covered.

China is increasingly being isolated. Almost no country can eradicate its dependence on China for the moment but all attempts are being made. Further, there is also a push to align against China.

China is livid after the US stepped in on Wednesday evening to delay a draft press statement condemning the terrorist attack at the Karachi Stock Exchange at the UN Security Council. 

The US was the second country after Germany to delay the statement, both silent expressions of solidarity with New Delhi, after the Pakistan foreign minister Shah Mehmood Qureshi and later PM Imran Khan blamed India for the attack. 

Source: Quartz

How many enemies can you make before your luck runs out?

Cash Free India

I am very proud of the fact that when it comes to transaction protocols, India has some of the best and most secure protocols. 4 years ago, NPCI launched the UPI which made it really easy for anybody to make microtransactions right from their bank accounts. This further resulted in greater penetration of banking and online transactions.

India has been a cash-heavy country but the demonetisation coupled with the introduction of several of these technologies has changed the way things work in the country. UPI hit almost 2 Billion transactions last month. This is significant because the economy is busy taking a dump in the toilet and this number reflects the greater dependence on online transactions.

The National Payments Corporation Of India (NPCI) said that the Unified Payments Interface (UPI) recorded 1.98 Bn transactions worth INR 2,06,950 Cr in June 2020.

Source: Inc42

Signing off…

Categories
Learning by Proxy

H1B – Language – E-Commerce | Learning by Proxy

Every Saturday, I publish this series called ‘Learning by Proxy’. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

Follow Up

Actions speak louder than words

The Indian government as well as the Chinese government as talking down the dispute. But…

The fresh build-up includes the new Apache attack helicopter which are “tank killers” with their Hellfire air-to-ground missiles and rockets, and Chinook heavy-lift choppers, capable of transporting howitzers and troops to forward high-altitude areas, being deployed in Ladakh. 

Source: Times of India

Politics

Penny less

The Indian government has been having as difficult a time as the people. The draconian lockdown destroyed livelihoods but at the same time, it also destroyed tax income. With a slowing global economy and cratering oil prices, the government increased taxes on petrol and diesel to ensure that not all was lost. In late April, out of Rs. 70, Rs 50 was going to the government as taxes. The oil prices have since rebounded, but taxes have not been reduced. This can result is the inflation of food products. For the first time in India, Diesel is more expensive than Petrol!

The 18th daily increase in rates since oil companies on June 7 restarted revising prices in line with costs after ending an 82-day hiatus in rate revision, has taken diesel prices to fresh highs. In 18 days, diesel price has gone up by Rs. 10.49 per litre. Petrol price had risen in the past 17 days by Rs. 8.5 a litre.

Source: Indian Express

Canadian Bliss

After having the Supreme Court throw the Executive Order, to force dreamers out, into the garbage bin, Donald Trump can celebrate a victory. He issued an order banning the issues of 4 classes of visas to the US including the often used H1B for bringing high calibre talent to work for US companies. While this makes it hard for many immigrants especially those working offshore assignments; it will probably accelerate investments in Canadian headquarters for many tech companies. Canada is hell-bent on wooing talent. One nation’s loss is another’s gain. 

The US administration on Tuesday said it was extending the 60-day ban on immigration and non-immigrant worker visas till the end of 2020. Popular work visas including the much-coveted H-1B and H-2B, and certain categories of H-4, J, and L visas shall also remain suspended until December 31, the White House said in a press note.

Source: Indian Express

Economics

Money Money Money

Stock markets have evolved a great deal over the last century and while there is a retail (individual) participation, it represents a small proportion of the trading. As of 2016, 5.5% represented the retail participation in forex markets. While the number may be higher in stock markets, it would not be exponentially so. As of June, 50% of the trades in Indonesia were retail traders. Robinhood in the US and Zerodha in India have also seen exponential growth. This also explains why markets are behaving like they are high on coke, seemingly divorced from economic reality. Markets are essentially replacing casinos! It does not end well.

When a market maker buys retail orders from a broker—called payment for order flow—it most likely handles those trades internally. As trades flow in from brokerage apps, corporate clients, and institutional traders, those orders are offset against each other. The market maker fills the orders at the best price that would have been available on an exchange and then, if all goes well, pockets the spread. It sends some of the profit to the broker.

Robinhood, for example, was paid about $45 million in March, more than twice what it got in January, for selling customer orders to professional trading companies like Citadel Securities, a sister firm to the hedge fund Citadel, and Virtu.

Source: Quartz

Space

There is huge potential for space business, it should be opened up for private investment and made easier. Having said that when something is highly regulated, almost to a fault and is loosened incredibly, you wonder if there are vested interests. Reliance has been infused with monies equivalent to India’s (actual) stimulus package. They are in the business of the Internet. Now, all assets of ISRO, satellites et al have been made available for private exploitation ostensibly to level the playing field. 

Space is expensive and it is never going to be a level playing field.

We will allow private players to benefit from Isro’s assets and give them a level-playing field to boost India’s space sector further,” she had said. Javadekar, while likening the reform to reforms brought in the power sector during the time of former prime minister Atal Bihari Vajpayee. 

Source: Times of India


Business

Language Barrier

In 2012, a thesis about India being the next China was written by some VC in America. On the back of this assumption, Billions were poured into the country. The American VCs did not know India but neither did Indian founders. 13% of India speaks English. Can you think of ONE successful consumer startup IPO in India over the past 10 years?

It took Flipkart 13 years to realise this. I suppose it is also driven by the fact that the only people that shop on Flipkart live in Tier-II cities and lower. I don’t know anyone in my circle you shops on Flipkart.

In a bid to expand its reach in Tier 2 and Tier 3 cities, e-commerce giant Flipkart, on Wednesday (June 24), announced that it has launched three new local languages onto its platform, which includes Tamil, Telugu and Kannada, besides Hindi and English.

Source: Inc42

E-Commerce Tentpole

One of the main tentpoles for the Facebook investment into Reliance was to leverage WhatsApp to dominate a whole bunch of industries. The lowest hanging fruit being e-commerce. This was further proved when Jio launched Jio Mart just days after the Facebook investment was closed – during the lockdown. If you are targeting grocery, warehousing and turn around time are key. What if you own all the major retail assets in the country? 

Reliance is making a bid to buy a majority stake in Future Group. This when Amazon has itself invested in the company. I don’t even know how this deal is even possible?!!

Note that Reliance is already India’s largest offline retailer, ending FY2020 with 28.7 million square feet of area operated. This includes the space of Jio stores. RIL’s large offline presence will get a meaningful boost with a deal with Future Group. At the end of December quarter, Future Retail had a retail area of 16.1 million square feet, whereas the measure for Future Lifestyle stood at 7.5 million square feet.

Source: LiveMint

Let the games begin – at CCI.


Technology / Science

Absorbing spit

The only people who spent a lot of time researching face masks before the pandemic were bank robbers. That has taken an about-turn since the pandemic started. Now interesting concepts are emerging. Different ways in which the face mask can be made more efficient. Concepts include:

Israeli startup Sonovia created tech—derived from research done at Israel’s Bar-Ilan University aimed at reducing disease spread in hospitals—that uses ultrasonic waves to mechanically insert nanoparticles of zinc oxide into textiles, including masks. The particles give off ions that the company says interact with the protein envelope surrounding the virus, deactivating it.

Source: Wired

Click the link, there are several other ideas in there. 

Intelligence but Artificial

If any of you have ever been subjected to a reCaptcha you would know how stupid AI can be. Countries, cops and military have been using facial recognition for a few years now. They have also been pushing the envelope of what the technology can do and the accuracy with which it can identify someone. But is it yet at a level where it can identify to convict/evidence? Image Recognition was used to convict in the USA only to later realise it made a mistake!

In January, Detroit police arrested and charged 42-year-old Robert Williams with stealing $4,000 in watches from a retail store 15 months earlier. Taken away in handcuffs in front of his two children, Williams was sent to an interrogation room where police presented him with their evidence: Facial-recognition software matched his driver’s license photo with surveillance footage from the night of the crime.

[…]

Williams spent the next 30 hours in custody before he was released on bail. With seemingly no other evidence of Williams’ involvement, police eventually dropped the charges. On Wednesday, Williams joined with the ACLU of Michigan to file a complaint against the Detroit Police Department, demanding they stop using the software in investigations.

Source: Wired

Misc

There was a huge furore about the Tabhligi Jamat and their congregation in March. The number of cases was a 4 digit numbers back then. Now, when we are adding 5 digit numbers every day. This!

Are we communal or are we communal?

Signing off…