August 4, 2020
what we are watching...
empowering you with insights and information from the edge of today’s headlines
Technology
Microsoft was able to pacify the Trump administration over the weekend, and they have until September 15 to close a deal to purchase TikTok’s US assets. Trump, however, claims to be collecting a “referral fee” of some sort for making the deal possible. We’d remind the President that US traditionally these are called corporate taxes.
It’s an interesting pivot for Microsoft which has spent the past decade switching from a consumer-focused (Windows) company to that of an enterprise-focused (Azure cloud). Microsoft retains some consumer brands that may fit into the TikTok ecosystem like Minecraft and LinkedIn (in theory, a social media platform).
TikTok was valued around $50B prior to the announcement, and Microsoft is said to be weighing buying the operations in the US, Canada, Australia and New Zealand. What is interesting is what will happen to TikTok’s algorithms — one of the most unique and compelling parts of the platform. This software serves up content to users randomly, that keeps them on the platform rather than the algorithms of Twitter and Facebook which use your contacts as a base.
We like Ben Thompson’s suggestion in Stratechery, if Microsoft really wants to go big and take over social media, it should go for broke, buy Snap and hire Evan Spiegel to run the new operations.
What we are curious about: You may have heard of deepfakes (AI that can create video of someone saying or doing something they actually haven’t). But now there is a new AI to be curious (or concerned about). The program is called GPT-3 and it is basically as massive autocomplete program. The program uses artificial general intelligence and aims to have the depth and flexibility of the human mind, at least when it comes to text. We’ve read several articles and emails written by the program, and they are shockingly true to form at least when it comes to the tone and context of the supposed writer. One interesting use case: a chatbot that acts like a historical figure — the program has “read” all of Einstein’s notes, theories and writings, so why not ask Einstein his thoughts on TikTok or pandemic hairdos.
What we are watching: In 2018, Amazon bought Ring (the smart doorbell company) as a means to expand their reach in smarthomes. Now Google is getting into the same sector by investing $450M in the home security company ADT. Google already owns Nest, the smart thermostat, and is expected to merge Nest’s and ADT’s home monitoring capabilities.
Musk without a muzzle: Elon Musk, the founder of Tesla and SpaceX, has been known to speak his mind, and often not for the betterment of his companies or society. This week a top official in Egypt personally invited Musk to visit the ancient pyramids in response to Musk’s tweet that aliens built them.
On a more positive note, Musk also reiterated his offer to open the licensing software for Tesla’s electric vehicle technology. While Tesla may be the most innovative when it comes to electric vehicles, as a car company it is struggling to create supply: in 2019 Tesla sold 370K cars vs 11M for Toyota. Major car companies are also struggling to create and build popular and efficient electric vehicles. While Tesla’s offer seems to be in the spirit of the open software movement, it also allows Tesla to be the supplier of batteries and powertrains, and can allow for the building of a more expansive charging infrastructure. Get ready for your next collab: Tesla x GM?
The SpaceX astronauts also seemed to have taken a cue from their prankster patron. The astronauts were strapped into Dragon awaiting egress for quite some time, as the crew performed safety checks. The astronauts had a satellite phone at their disposal, and they claimed to have made a few crank calls from the Gulf of Mexico. No word on who they called, but we hope they were channeling their inner Bart Simpson.
Finance
Traditionally, when we think of investing in the market, we look at an index fund that tracks the S&P500. But what if, like your coffee, you want to customize your market index — oat milk instead of cream, agave instead of sugar. Now you actually can, and it is called direct indexing. You can order up your own market index: keep the market exposure throw out the oil companies, for instance. Because of the proliferation of fractional shares it is easier to buy and create your own index. Instead of buying Vanguard’s fund (and paying its fees), you can buy shares in all the individual stocks within the index and replicate the performance for yourself.
Fractional purchasing is also taking on a whole new meaning and moving into other asset classes. Want to invest in a race horse or a Birkin bag but don’t have the money to purchase the collectible? You can now buy shares in alternative investments, although you can’t use them (this isn’t Rent the Runway or a time share). You can watch and trade your investment until the underlying asset is actually sold.
What we are watching: While the Congress continues to haggle over the next pandemic relief package, more than 100 top executives have sent a letter to Congress urging the lawmakers to pass long-term relief for small businesses. Howard Schultz, former chairman of Starbucks, spearheaded the campaign that calls for an updated PPP with loan forgiveness. Small businesses are having a particularly rough time during the pandemic, and according to Yelp, 55% of the businesses that were shuttered are expected to remain permanently closed.
Ready for some football: A group of investors including Dwayne “The Rock” Johnson has agreed to purchase the XFL for $15M. Johnson himself was a former football player before he joined the world of wrestling. And the XFL, owned by Vince McMahon, has gone through several iterations but declared bankruptcy earlier this year. Seems like a television match made in Hollywood with room for a powerslam.
Culture
Enjoying Window-Swap but need some more action. Try Drive & Listen, which takes dashcam videos from YouTube and pairs them up with local music channels, so you can experience local sounds and views while backseat driving from your couch.
This weekend was the one-year anniversary of the attack at the El Paso Walmart. To commemorate the victims, several artists created a floral installation: 23 life-sized human sculptures covered in moss and flowers. The sculptures will be on display throughout a local park, while in the parking lot of the Walmart itself, the “Great Candela” memorial has been installed as a “beacon of hope.”
— Lauren Eve Cantor
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