The Bold: April 11th, 2018
Good morning and happy Wednesday! To begin with, here is some exciting news: The Bold has officially hit 100 subscribers today. I am happy to see our community growing.
Out of all the stories we have covered so far in The Bold, today’s edition might be the best one we have done yet. For those who are interested in fashion and tenacity, then you will definitely find the story about this young billionaire female entrepreneur pretty interesting…
As always, jump to the sections that interest you. Each section is about 2 minutes long to read. Now here is the question of the week: How many experiments did Thomas Edison go through in order to invent the light bulb?
I can almost guarantee that this answer will surprise you. Check it out by going to the bottom of section 4). Now for the action:
1) The Digital Age
2) Blockchain, AI, and Cornell Shoutouts
3) The Quick Ten
4) Story of A Courageous Entrepreneur
The Digital Age
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Things can change quickly. For those that remember history class, around 1820 the Industrial Revolution was born. The world would forever be changed with the advent of steam engines and factories coming into existence. However we are now moving from a world based in the Industrial Age to one based in the Digital Age. Anyone in the startup world should know the two defining principles of this era. As laid out by well known VC Albert Wenger of Union Square Ventures, the two principles are zero marginal cost and universality of computation.
Principle 1: Zero Marginal Cost
Intro to Fixed and Marginal Costs: Any type of cost falls into one of two buckets: fixed cost or marginal cost. Lets say we have a pizza shop, then the fixed cost will be the costs that are always “constant” such as the rent. It does not matter how many customers order that good pizza (hopefully its good), the owner still has to pay the same rent. Other examples are salaries and insurance.
And then there is marginal cost. These costs DO change depending on how many people order that pizza. For example, one marginal cost is food. The more people who order pizza, the more money the owner needs to spend on food to make the pizza. Other examples are utilities such as electricity.
Marginal Cost in Digital Age: Traditionally, every business had marginal costs. At least until the digital age. Lets say your friend saw you eat the pizza, and now he wants to try his own slice. That requires paying the pizza store, which needs capital to create a new pizza. Yet how much does it cost someone to share a Youtube video? $0. In the digital age, we are now dealing with products who have a marginal cost of $0. No extra capital is needed. This new phenomena is unique to this age.
Businesses have never experienced a $0 marginal cost, which means whole new business models are now possible.
Principle 2: Universality of Computation
Planes: Here is a fascinating chart from Albert Wenger’s book:
For all of time humanity knew that flying was possible. I mean, birds existed back then too =). But it took the world until 1903 to figure out how to fly (thanks Wright brothers!) Just 55 years later from man’s first flight, there were passenger planes flying across the Atlantic.
The Brain: Mr. Wenger argues that the brain is similar to a machine in that it takes inputs (the senses) and produces outputs. Therefore similar to how humans quickly mastered flight, there is only a matter of time before humans master how to create computers that are as smart as us. He believes computers in the area of intelligence have just started on their exponential trajectory of improvement just like that of flight in 1903.
For those that believe this is impossible, it is important to note that just decades ago, some recognized CS professors used to believe that having a machine drive cars would be impossible. Now that concept is a $60+ billion industry and growing. Driving cars is just one example of the kinds of computation machines can do now.
So whether you believe Mr. Wenger in his theory that the brain is exactly like a machine, it is undeniable that computers are increasingly becoming more and more intelligent at a rapid pace. In the digital age, this new intelligence or “computation” will be universally available to every person on the planet through a smartphone or computer.
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For those who find this material interesting, here is Albert Wenger’s really brief book.
The Digital Age’s Impact on Politics
Russia in the Election: Last topic for this section, but an important one. How has the digital age impacted our politics? Check out this statistic: up to 15% of Twitter accounts are bots, and 9–10% of users accounts on Facebook are duplicates or fakes. So it is easy to make these fake accounts. Too easy.
Questionable actors, such as Russia, have trolls and bots. Trolls are accounts run by actual people that are trying to be disruptive. Bots are automated by these people and purposefully like content by the trolls to make that content seem popular.
So during the election, Russian trolls created FB pages and accounts that gained a following. Then using bots, they were able to amplify their message by getting more likes and shares on their content. This convinced actual people that the troll’s content was legit and good, when really these trolls just tried to pin us against each other. Hence fake news was born. But on a brighter note…
Blockchain, AI, and Cornell Shoutouts
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Important information to know about the Blockchain and AI industries:
Blockchain and AI News
Blockchain:
1) Rapid Cryptocurrency Price Drop: Remember that time when Bitcoin was talked about non-stop and predicted to reach $50K? Well, times have changed. The price, once at a high of $20K in December, has been on a steady decline to a price of $6,726. Many other cryptocurrencies have followed this path.
But many have not given up hope for Bitcoin. Famous value investor George Soros has started investing in Bitcoin.
2) Coinbase VC Fund: Cryptocurrency Venture Funds have been popping up at a fast rate. The most successful startup in cryptocurrency, Coinbase, has created its own VC fund. This fund will invest in crypto startups and coins.
Coinbase’s goal is to not only gain insight into possible competitors but also keep their ears close to the ground about movement in the industry.
3) Telegram Getting that Dough… $1.7 Billion: The trend of funding companies with billions based off a product yet to be fully proven to consumers still continues. After two pre-ICO sales, Telegram has got $1.7 billion in funding. Think that is enough? Telegram told the SEC that there might “be one or more subsequent offerings.”
The coin that Telegram is looking to create, TON, is supposed to be like Ethereum but wayyyy better. Lets see what happens.
AI:
1) Tech Giants in Battle for AI Talent: The tech giants made big moves this week because of AI. Take Microsoft, a company that for years rode the back of Window’s success but now has abandoned Windows. Instead, Microsoft has divided the company into two new major areas: 1) experience and devices and 2) AI platforms. The new leader Nadella is making big decisions.
Also Google Chief of search and AI, John Giannandrea, has left Google and now will be the head of AI for Apple. This move shows that the tech giants are competing over the best AI talent.
2) Microsoft AI Courses for the Public: For the current demands of the market, unfortunately not enough people have knowledge in AI to fill those roles. This week Microsoft made its AI classes available to anyone in the public. Originally meant to give its own employees an edge, the lack of people who knew this stuff compelled Microsoft to make these courses public.
Cornell Shoutouts
Usually this section contains stories about entrepreneurs, but this story is so amazing that I had to include it in this edition of The Bold.
Cornell Wrestling Champion: Meet Yianni Diakomihalis. He is a Cornell freshman who managed to become an NCAA champion in wrestling. As a freshman! But the story is just beginning. After his quarterfinal match, he found out that he tore the ACl in one of his knees. In this moment, what was his reaction?
“Mind over matter.” Then in the semifinal round, he faced the one opponent who managed to beat him in the entire regular season. But that did not matter, Yiannis managed to win both his semifinal and finals round to take the championship. Future goals? NCAA champ in 2019, then olympics in 2020. To read more, check out the article.
The Quick Ten
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Most Fascinating News of the Week
1) The Exponential View: One of the best newsletters I have been a part of. Highly recommend. Gives not only great articles, but also gives really interesting facts like that: a record number of woman running for house seats and “Black Panther” will end 35 year old Cinema Drought in Saudi Arabia. If your interested in technology, future trends, world news, and in-depth analysis of cool stuff, check this newsletter out. You won’t regret it.
Other Cool News I Found
2) BioTech Startup Creating Super-blood: Rubius Therapeutics, a biotech startup, has raised another $100 million. There is a lot of cash flowing into biotech startups, hopefully they succeed.
3) Mind Reading Machines Do Not Exist Yet. But this Does: Don’t worry, mind reading does not exist yet! By reading brave waves, this device was able to predict what sentences were heard.
4) FCC Approves SpaceX for Universal Internet: Verizon, AT&T, watch out. For the 60 million Americans who either do not have access to the internet or who cannot afford the internet, hopefully this move can begin to change things.
5) Elon Musk Sleeping on Tesla Floor: While SpaceX has been very successful, Tesla has encountered many problems with the production of its Model 3 car. In response, Elon is doing everything possible to help his car company. Also he said AI can lead to an immortal dictator in this documentary. Frankly, I believe him.
6) Most Funded AI Startup so Far in 2018: Pony.ai, a car company raised over $100 million. Represents a crazy trend of companies getting billions in funding without a proven product.
7) Tax Battle: Our last edition of the Bold talked about the trade war between U.S. and China. This article is an update, and no surprise these two titans are still going after it.
8) EU New Data Regulations: EU passed tougher rules on how companies can use data. Expect more terms of service and other warnings. If you wonder why, this source has the answers.
9) Major Cyber Attack on American City: Atlanta government systems were hacked by cyber punks, and were pressured to pay a ransom. These guys were clearly amateur because they asked for a sum that exceeded the amount that Atlanta could have used to just buy a new system.
This new development is unfortunate because it shows a vulnerability of our systems. In addition, this event shows the continued emergence of cyber crimes. I believe the future of warfare will continue to go in this direction, where the main parts of the battle are fought in the digital realm.
10) Random Historical Fact: After seeing Darkest Hour, I found out this crazy moment in history. Churchill saved England by leading them to victory against Germany in World War 2. Yet just months after saving his country and having an approval rating of 83%, he lost the immediate election following the war. How could this have happened? Check this article out.
Story of a Courageous Entrepreneur
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Hustle + Resourcefulness > Talent any day of the week. This statement is embodied by the creator of Spanx: Sara Blakely.
Sara Blakely
Her story is miraculous. In the beginning of her life, Blakely wanted to be a lawyer. Yet she failed the LSAT twice, so things changed. The Florida State graduate began her career going home to home, knocking on random strangers strangers, and selling fax machines. After years of selling these fax machines, she felt that her life was like being in the wrong movie, and asked herself “where is the director!” Determined to make a better life for herself, she wanted to create an idea that she could sell to millions.
While getting ready for a party, she realized the need to create a hidden undergarment that would make her clothes feel smooth and comfortable. She wanted to start a business, however she had no business, manufacturing, or fashion experience and only $5K saved from her job. But she had grit, and made the bold decision to bring her idea to life! However Blakely still worked in her job to get needed cash, so she spent nights and weekends making progress on her idea, called Spanx.
To build her idea, she needed a manufacturer. She took a whole week off from work, and traveled to North Carolina where she walked into countless manufacturer’s offices asking if her idea could be built. She had never met any of these men before, but just walked into their office with the belief of success. The plants were always run by men, so they did not understand her idea and rejected it. Finally after seeing many manufacturers, one finally agreed to helping her with the idea. He said her enthusiasm and confidence about the idea stuck with him, and convinced him to give her idea a chance.
Finally, she was able to make a product. Yet she still needed a patent and seller. To write the patent, she went to the bookstore, and by reading law books on patents taught herself how to write a patent. With patent in hand, Spanx needed now a store carry the product. Blakely cold-called Neiman Marcus and said, “Hi I’m Sarah Blakely, and I invented a product that is going to change the way your customers wear there clothes, and if you give me a few minutes of your time I will fly to Dallas and show you.”
She flew to Dallas, and Neiman Marcus agreed to carry her product in seven stores. This moment was Spanx’s first big success. For Blakely, this moment is when entrepreneurs make the biggest mistake. When you get your first success, she says that is when “the work begins.” She hustled in a big way, calling every person she knew, even people she had not spoken with since the 4th grade, and asked them to buy her product. Not only that, Blakely would go to each of the stores, and stay in those stores for nine hours straight convincing customers to buy some Spanx.
From her efforts, Spanx was growing. Blakely decided to take a risk and send the product to Oprah. Once Oprah tried the product, Spanx was picked as Oprah’s product of the year. This decision instantly put Spanx on the map, and in just two years reached $10 million in sales. Sarah Blakely still owns 100% of the company. When asked if she ever had doubts, she said no. After thinking about the idea for years, Spanx was so real to her that she had no doubt her company would come to life.
Answer to question of the week: Despite common thought, Thomas Edison never invented the light bulb. So the answer to the question is 0. Surprised? Humphry Davy invented the light bulb in 1802 but it was not efficient enough to be used. 77 years later, Edison created the first commercially viable light bulb. As an entrepreneur, this story shows that you do not need to invent a whole new product to make your venture successful, you can simply just improve the old enough for people to use it.
As Edison said in an interview, “I speak without exaggeration when I say that I have constructed three thousand different theories… Yet in only two cases did my…” theories prove to be true. Famously, Edison never looked at the bad attempts as failures, but as opportunities to learn and get closer to his goal.
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If you made it this far, thank you for taking the time to read this. You are awesome.
Hopefully you found one lesson or tidbit that you will now help you on your journey. It might have been a new perspective, a new strategy, or a new idea that you can now use to enhance your game.
Thanks again, and have a great couple of weeks!
“Happiness is when what you think, what you say, and what you do are in harmony.” — Gandhi
Take Care,
Justin
