The Bold: May 9th, 2018
Good afternoon and happy Wednesday! For those who are living in Ithaca, I hope you have been enjoying this sunny weather.
Since finals are coming up and this summer is going to be busy for me, the next edition of the Bold will come out two months from today. But I am hyped. This edition of The Bold is awesome, and covers two of the most influential people in America today.
In fact, earlier this week one of these men brought the attention of the entire financial world to Omaha, Nebraska, where he shared his insights about business and life. His name is … To learn about this man and his company, check out section 4).
Before we get into that, here is the question of the month: How many times would I need to fold a piece of paper for it to reach the moon? The answer is at the bottom of section 4).
As always, life is short. Never settle. Jump to the parts that you find interesting, and enjoy!
Now, to the action:
1) The World of Elon Musk
2) Blockchain, AI, and Cornell Shoutouts
3) The Quick Ten
4) Story of a Courageous Entrepreneur
The World of Elon Musk
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Some describe him as the “Thomas Edison of our generation.” Others call him crazy. You can decide. However it is undeniable that he has impacted our world in a big way. In this section, we are going to cover all of his current ventures, which will reveal where he believes the future is heading:
Tesla/ SolarCity (Ushering in Electric Cars):
Beginning: It was 2002, and Elon Musk just made millions from EBay buying one of his previous companies, PayPal. Looking for interesting companies to invest in, he discovered Tesla. Tesla was a small company that made electric cars. After leading its series A, he then gave more and more time and financial support to the company until he became the man in charge.
Once fully in charge, he wrote a 10 year vision for Tesla. Interestingly, most of his vision came true. However during this time, Tesla faced a near fatal experience during the 2008 crisis.
His Biggest Challenge: Tesla was running out of money. He used his remaining $35 million to keep Tesla. Think about this. He put ALL of his remaining money into Tesla. That takes guts, and a massive belief in Tesla’s vision.
But that was not enough. His company was literally hours away from defaulting on its debt until Daimler, the car company that owns Mercedes Benz, gave Tesla $50 Million for almost 10% of Tesla. Without Daimler stepping up, Tesla would not be around today. Daimler’s stake is now worth at least 2.5 billion, and Tesla is now worth $49 billion. Daimler made 50X of their original investment.
Current Dilemma: However recently Tesla has faced similar massive challenges. This article lays it all out in short and concise way. But the overview is simple. Many investors are worried that Tesla is burning cash so fast that it won’t have enough money to pay the bills by the end of 2018.
However whatever happens with Tesla, there is little doubt that Tesla has made a massive impact on the electric car industry. Tesla proved consumers appetite for electric cars, and inspired many other companies to create electric cars.
SpaceX (Bringing Us to Mars):
The Beginning: Yet just one company is not enough for Musk. During Tesla’s existence, he was also the CEO of SpaceX.
Lets first start at the beginning. What is SpaceX? They make powerful rockets. SpaceX’s mission is to enable humanity to expand from humanity from Earth to Mars. Musk’s passion for SpaceX comes from his belief that if Earth faces a fatal event such as a world war, it is important to have another option.
However, SpaceX also faced many challenges. Back in 2002, its first three launches did not go as planned, and cash was very low. With one more attempt left, if SpaceX did not succeed with its fourth launch, then SpaceX would have been gone. There would not have been enough money to continue SpaceX. Luckily SpaceX succeeded, and the company has taken flight ever since. Today SpaceX is worth about $21 billion.
Today: SpaceX has revolutionized rockets in many ways. First it was able to massively bring down the costs of rockets through clever engineering. In addition, it created the first reusable rocket. Before this invention, rockets used to always be thrown away after use, which made them very expensive. Many “experts” said such rockets were impossible.
Musk is a pioneer in the rocket industry, but others are looking to catch up. Jeff Bezos, the worlds richest man and founder of Amazon, has created a rocket company called Blue Origin. In fact, Bezos believes that Blue Origin is even more important to humanity than Amazon.
Other Ventures:
Hyperloop: In 2012, Musk released the design for a “hyperloop”, which is a train that levitates and travels incredibly fast. While most trains travel at 150mph, the hyperloop can go at 760mph. This design inspired many people to build such a train, including the famous entrepreneur Sir Richard Branson who has created a company called the Virgin Hyperloop One. Branson believes the hyperloop is going to connect the world, and plans to have one ready in Dubai within 3 years.
OpenAI: Elon Musk believes AI is humanity’s biggest threat. OpenAI is a research institute created by Musk to lead the world in AI development. All discoveries are made open to the public.
Neuralink: This company’s aim is to merge the human brain with the computer. Think Neo and the matrix. Recent efforts in this area have shown that by making certain electrical simulations to the brain, Parkinson’s could be ameliorated. This industry is at its beginning, and may be humanity’s most important. For those interested in this topic, check out this company.
Boring Company: This company is definitely not boring. Frustrated on the highway, Musk had an idea. Why not create underground tunnels for cars to travel through? With this idea, the Boring Company was born. Here is an awesome video of the company.
Whatever you believe of Musk, this is undeniable. He is an absolute visionary, and a man mission driven to help humanity. I have absolute respect and admiration for that. For those who want to read more about Elon Musk, this biography by Ashlee Vance is incredible.
Blockchain, AI, and Cornell Shoutouts
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Cool information to know about the Blockchain and AI industries:
Blockchain and AI News:
Blockchain:
1) From Zero to Billionaire, in Six Months: Meet Changpeng Zhao, also known as “CZ.” In 2014, he sold his house in Shanghai to put as much money as possible in Bitcoin. Before Bitcoin, he made a living by developing software for trading futures. After hearing about Bitcoin from a VC who he played poker with, he became obsessed with the space.
After a $15 million ICO, CZ’s Binance was created. Binance makes it easy to buy and sell cryptocurrencies, and leads global trading of Bitcoin. Binance took off, and six months later CZ is worth $1.2 billion. This rise in wealth shows how fast cryptocurrencies are emerging to prominence.
2) Cryptocurrencies on the Rise: After going to yearly lows last month, cryptocurrencies have mostly bounced back. Bitcoin’s price has risen 32% from last month, nearing a price of $10,000 USD.
3) Former SoFi CEO raise $50 mil for Figure: SoFi is a startup valued at $4 billion, and revolutionizing finance. SoFi’s co-founder and former CEO Mike Cagney resigned from SoFi last year, but he has been preparing his comeback with a startup called Figure. Using blockchain technology, Figure plans to approve home loans in minutes, instead of days. For such a well recognized person to pursue a blockchain based projects adds even more validity to the technology.
AI:
1) Sergey Brin Annual Letter: This year one of Google’s two co-founders, Sergey Brin, wrote an annual letter describing the important trends he sees in the world. One of the most important quotes is as follows: “The new spring in artificial intelligence is the most significant development in computing in my lifetime.” That is a big deal.
2) U.S. Twice as Good as China: As Russian President Putin has said, the nation that leads AI “will be the ruler the world.” Right now that race is between the US and China, but according to Oxford University it has not been much of a race. Even though China has laid out ambition plans to dominate AI by 2025, the study showed that the US is twice as strong as China in AI, especially in areas such as talent and hardware.
3) Rate of Improvement in AI: Over this past year, Stanford created DAWNBench, which is the first deep learning benchmark and competition that measures end to end performance of three common AI tasks. The results this year were beyond expected, with one benchmark improving by 477X! Yes, 477X in a single year.
This result not only shows the rate of development in AI, but also shows the power of open competitions.
Cornell Shoutouts:
This week’s shoutout is to every Cornell student. We are almost at the finish line for this year. Lets do our thing and make these last two weeks the best yet.
The Quick Ten
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Most Fascinating Thing I Found this Week
1) Why Need Your Fingers for Search? In MIT, there is a famous research lab called the MIT media lab. Touchpads, automated GPS instructions, and other technologies all began in this facility. 60 Minutes took the time to report on the labs most fascinating projects, which were mind-bending to see. These included exoskeletons, and climate controlled places that could produce any exotic plant in the world.
However one technology stood out even above those. There was a student who created a device that could listen to his thoughts, and then tell him the answers. Sound crazy? Check out the video.
Other Interesting News
2) FB Still Made Record Profit: Facebook has had a tough year, but that did not stop Zuck from dominating this quarter. Revenue grew 49%, and daily users grew 13%. What an unstoppable company.
3) China and Helmets: China’s companies are using helmets that could measure the emotional state of its workers. These companies have claimed that the use is just to better manage worker hours, but there are obviously some worrying implications of this technology.
4) Xiaomi: This company is about to possibly have the largest IPO of 2018. Who are they? In 2010, they began by selling awesome and cheap smartphones. However to continue its rapid growth, the company has expanded to other products, such as TVs and rivals to the Amazon echo. Through this expansion of products, Xiaomi is looking to become a major player in the large IOT market.
5) U.S. Behind Other Nations for Readiness in Automation: Automation for a whole host of tasks are coming. Even though America’s economy is currently thriving, one hopes we have the leaders who can place America in a position to thrive in the future as well.
6) The Man who is Revolutionizing VC: For those regular readers of The Bold, you have read about one of the greatest VC’s on the planet, Chamath Palihapitiya. This article lays out in detail one of Palihapitiya’s exciting current projects that could reshape venture capital as we know it.
7) CRISPR, 10000X Improvement: This rate of improvement is… fast. CRISPR is a technology with immense promise, and this development is another exciting moment in its journey.
8) U.S. Unemployment Reached 3.9%: The U.S. economy is doing phenomenal. Nine years since the financial crisis, and the economy is growing faster than ever. It is also important to note job openings increased to a record high 6.2 million. This stat is both good and bad. Good because it represents companies that are growing, but bad because it represents a massive skills gap.
9) California’s GDP > UK’s GDP: California now has the worlds fifth largest economy, behind US, China, Japan, and Germany. The growth came from Cali’s coastal cities: SF, San Jose, San Diego, and LA. And here are some other random stuff about GDP’s that I found interesting:
- Canada has a larger GDP than Russia.
- If Apple were a country, it would be the 17th largest country in the world in terms of economic value. It would surpass countries such as Turkey, and Switzerland.
10) Apple Earnings Report: Apple dominated its recent earnings report, with rapid growth not just in smartphone sales, but in products such as the Apple Watch. However besides the iPhone, Apple’s biggest and fastest growing product is services. Apple’s services grew 28% from last year. Many companies have seen there best growth through providing services.
In addition, Apple’s cash pile has grown to $285.1 billion. This cash pile is bigger than that of Germany and Spain combined!
Story of a Courageous Entrepreneur
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Hustle + Resourcefulness > Talent any day of the week. Given Berkshire Hathaway’s annual meeting this past weekend, our story this week will cover its founder, Warren Buffett.
Warren Buffett:
Warren Buffett, “the Oracle of Omaha”, was born in Omaha, Nebraska in the 1930’s. His parents were middle class, and his father was a stock broker as well as a four time Congressman. Buffett always had a clear love for business, and created multiple ventures in high school that ranged from delivering newspapers to owning pinball machines. After graduating from the University of Nebraska, he read a book that would change his life.
“The Intelligent Investor” by Benjamin Graham is known to be one of the greatest books in finance. Buffett says that this book set the foundation to his value investing approach. In fact, he admired Graham so much that he wanted to join Columbia Business School after learning that Graham was a professor there. Despite being one of the few students to get an A+ in his class, Graham still refused to take Buffett into his firm.
Once he graduated from Columbia, he worked for three years at his father’s company as an investment salesman. By the end of those three years, Graham finally accepted Buffett into his firm. After dedicating two years of hard work to help his mentor, he was ready to create his own firm. The Buffett Partnership Ltd was created in 1956, when Buffett was 25. He had about $1.57 million in today’s money to work with. This bold decision to start his own company would put Buffett on a path to be one of the worlds most powerful businessmen.
After twelve years, his partnerships was booming, and profits surpassing what even Buffett had expected. But by 1969, he abruptly ended the partnership. The reason will shock you. In the words of Buffett, “I am not attuned to this market environment, and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero.”
He ended the partnership because he thought he had no more good ideas ideas left! After returning the money to his investors, Buffett still remained the CEO and owner of a textile plant called Berkshire Hathaway. He decided to not sell Berkshire, and instead use it as a holding company that operates many other companies. This decision began the legend of Berkshire, and Berkshire today is worth over $490 billion. Below you can see how Buffett’s wealth has compounded over the years:
Here is a crazy fact. Warren believes his worst investment decision was… Berkshire Hathaway. He only bought Berkshire because the owner cheated him out of a deal. Buffett has said that if he initially just went into insurance companies and never bought Berkshire, due to compounding his company would be worth $200 billion more today.
Answer to the Question of the Month: 42 times. I know. Just by folding a piece of paper 42 times, it will reach the moon. Welcome to the power of exponential compounding. Exponential compounding just means that every year something is at least doubling. Why does this matter? Because many essential technologies in our lives today such as computing or solar panels are growing exponentially. The example of folding a piece of paper shows how powerful a technology can become once it grows at this speed.
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To those that read this, thank you! Hopefully you gained something of value. As I said at the top, our next edition will be out in a couple months.
Crush those finals, and have a fantastic start to the summer!
“You don’t choose your passions, your passions choose you.” — Jeff Bezos
Warmly,
Justin
