Ten interesting things we read this week

Image: Shutterstock

At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Digital Art (Making millions selling pixels), Communication (Persuading the unpersuadable), Social Media (Apple vs Facebook) and Economy (Why central banks love printing money).

 Here are the ten most interesting pieces that we read this week, ended March 6, 2021.

1)     ‘Beeple Mania’: How Mike Winkelmann Makes Millions Selling Pixels [Source: esquire.com] 
Mike Winkelmann who goes by the name Beeple on Instagram has 1.8mn followers! Beeple is an artist and he makes digital art—pixels on screens depicting bizarre, hilarious, disturbing, and sometimes grotesque images. In December, the first extensive auction of his art grossed $3.5 million in a single weekend. To understand how that piece of art sells for the price of a one-bedroom apartment in Brooklyn, one needs a brief primer on something called nonfungible tokens (NFTs) – digital goods that are bought and sold on emerging websites like Nifty Gateway, which hosted the Beeple auction. Nifty Gateway was founded in 2018 by Duncan Cock Foster, 26, and his twin brother, Griffin. Nifty Gateway mints a unique NFT, assigns it to a piece of digital art, and stores it forever in that company’s custodian wallet. Anyone with an Internet connection can log on and see who owns that piece.

Nifty Gateway was acquired in late 2019 by a more famous set of twins, Cameron and Tyler Winklevoss, best known as the guys who said Mark Zuckerberg stole their idea for Facebook. The Winklevii rode the cryptocurrency wave to the Bloomberg Billionaires Index and are bullish on NFTs. Despite the attention and his growing reach, Winkelmann never considered selling any of his work. Or rather, he didn’t really know how to sell it. This is a common problem. As John Crain, the cofounder of the NFT marketplace SuperRare, explained: “A lot of supertalented digital artists don’t fit the model for the contemporary art world. They don’t go to Art Basel. They’re active on GIF communities. They weren’t monetizing the work as fine art. They might have sold T-shirts on a Linktree.”

Winklemann’s auction for the weekend of December 11 was record-breaking. Much in the way a traditional auction house would, Winkelmann arranged to preview (by Zoom or FaceTime) the twenty or so pieces for about a dozen high-end collectors in the crypto art scene, including a mysterious buyer calling himself MetaKovan (who is rumored to be in Singapore) and another, a twenty-seven-year-old crypto baller named Tim Kang, the son of Korean immigrants who left his job at Deutsche Bank to go all-in on blockchain. In total, 21 pieces were auctioned, and 20 of those were purchased by one single buyer! That collector? The elusive MetaKovan. Kang succeeded in purchasing just one piece at auction, the finale—the complete collection, which he bought for $777,777, making it the most expensive NFT in history. Beeple promised to deliver the $777,777 prize to Kang personally, which seems appropriate considering how much the kid spent.

2)     Persuading the Unpersuadable [Source: HBR] 
In this article, Adam Grant, an organizational psychologist at Wharton and the author of Think Again: The Power of Knowing What You Don’t Know, talks about the importance of persuasion and how anyone can be persuaded. He shows how Steve Jobs was persuaded many a times by his team to develop some of the best products that Apple has come up with. To persuade bosses, here are few pointers that may come handy. Ask a Know-It-All to Explain How Things Work: The first barrier to changing someone’s view is arrogance. If you call out their ignorance directly, they may get defensive. A better approach is to let them recognize the gaps in their own understanding.

Let a Stubborn Person Seize the Reins: A second obstacle to changing people’s opinions is stubbornness. Intractable people see consistency and certainty as virtues. Once made up, their minds seem to be set in stone. But their views become more pliable if you hand them a chisel. Research shows that asking questions instead of giving answers can overcome people’s defensiveness. Find the Right Way to Praise a Narcissist: A third hurdle in the way of changing minds is narcissism. Narcissistic leaders believe they’re superior and special, and they don’t take kindly to being told they’re wrong. But with careful framing, you can coax them toward acknowledging that they’re flawed and fallible. The key is to praise people in an area different from the one in which you hope to change their minds.

Disagree with the Disagreeable: A final impediment to persuasion is disagreeableness, a trait often expressed through argumentativeness. Disagreeable people are determined to crush the competition, and when you urge them to reevaluate their strategy, that’s what you become. However, if you’re willing to stand up to them rather than back down, you can sometimes gain the upper hand. In a turbulent world, success depends not just on cognitive horsepower but also on cognitive flexibility. When leaders lack the wisdom to question their convictions, followers need the courage to persuade them to change their minds.

3)     Apple Vs. Facebook: What you need to know about Tim Cook and Mark Zuckerberg's battle [Source: inc.com] ()
Apple is known to have a strong take on privacy and is what can hurt Facebook’s revenue and change advertising on the platform for small businesses. Apple's new privacy feature in iOS 14 could have major consequences for Facebook's bottom line. Apple's new operating system, iOS 14, introduced in June, requires apps to ask users' permission to track them, which many users are likely to decline. Facebook said it could tank their Audience Network advertising by 50%. The company has claimed the move will hurt small business owners the most. They're more likely to rely on targeted social media advertising, especially during the coronavirus pandemic. In contrast, Apple is leaning on its reputation for protecting user privacy.

The have been spate of words exchanged between Apple and Facebook. Facebook and Apple both claim a moral high ground in this situation, one as a defender of consumer privacy and the other as a champion of small businesses against large monopolies. But each has its own antitrust troubles: Facebook faces a Federal Trade Commission lawsuit and Apple is looking at one from the European Union. And, on February 4, Senate Judiciary Chair Senator Amy Klobuchar from Minnesota introduced a major antitrust bill that could impact companies like Facebook, Apple, and Google.

According to Bloomberg, the history of Apple and Facebook sniping at each other publicly is a long one. In 2018, in the wake of the Cambridge Analytica data-breach scandal, Facebook faced backlash over the firm selling "psychological profiles" of voters in the U.S. and Britain. Tim Cook said on MSNBC he "wouldn't be in this situation." In response, during an interview with Vox, Mark Zuckerberg defended Facebook's funding model: "If you want to build a service which is not just serving rich people, then you need to have something that people can afford."

4)     Michael Mauboussin has a prescription for Reddit rally and an answer for why value investing is not working [Source: Economic Times] 
The whole world’s eyes were on Michael Mauboussin, Head of Consilient Research at Counterpoint Global – the investment management unit of Morgan Stanley, when he last year said luck is becoming more important in markets as ‘available alpha’ appears to be shrinking. Today, when he looks at the herd behaviour of retail investors on Wall Street, or the plight of traditional value investors who have faced a really protracted test of patience in financial markets, Mauboussin appears to be sensing the shifting sands in the financial markets. In this interview, Mauboussin tackles a host of issues, ranging from Reddit Wallstreetbets to Taper Tantrum fears and the recent challenges in value investing.

Talking about the herd behavior and the retail frenzy (GameStop), Mr. Mauboussin says, “I am not following it that closely. But a few things come to my mind. You have to be very clear about what you are doing as you participate in the stock market. Ben Graham many years back made that distinction, and I think it is very helpful, which is between investors and speculators. Investors are people who buy a percentage ownership of a company and think of themselves as business owners, and almost partners the company themselves. These are the people who would be comfortable if the stock exchange is closed for five years… A speculator is someone who is trying to anticipate whether the stock will go up or down.”

He also talks about the Robinhood generation and the free trading, the cheap online brokerage services. Are these things really sustainable? I do not understand enough about those businesses. Obviously, their economic model is based on selling that order flow to other firms. I do not know if it is a viable thing or not. I do think there are other brokerage firms like Schwab which are cutting their commissions. There are other ways that these firms can make money. So their business models do not rely solely on transactions.” He says. He further talks about the emerging markets and liquidity-driven rally.

5)     The holes in India’s plan to become a drug ingredient hotspot [Source: The Ken]
 On 24 February, the government promised Rs 15,000 crore ($2000 million) into a production linked incentive (PLI) scheme for pharmaceuticals. This comes after it initially announced Rs 10,000 crore ($1300 million) in July 2020, when the scheme was declared. The scheme, in essence, is supposed to bait pharma companies into producing raw materials domestically, so India can cut down on active pharmaceutical ingredients (API) being imported from China. Still, India remains extremely dependent on China for a large chunk of these essential ingredients. China accounted for 68% of India’s API imports in the year ending March 2020, according to data sourced from the Ministry of Commerce.

Covid was the wake-up call that brought about this push for independence. In February and March of last year, the Chinese markets were shut due to the pandemic. Bulk API consignments of Indian pharma companies and MNCs were stuck in Chinese ports due to travel restrictions. Without these crucial components, the entire drug manufacturing process came to a grinding halt. That’s when the Indian government announced an ambitious scheme, while discouraging the export of the APIs produced in India. The PLI scheme floated in July last year hit the wall. In February earlier this year, the parliamentary standing committee held the Department of Pharmaceuticals (DoP) accountable over the upsurge in cheap imports of APIs and drugs. And voila, the new (and diluted) version of the scheme came to be, which now allows companies to export.

Also, there are many other challenges. But, first, India needs to understand China’s strategy. Crucially, China supports its industry players upfront, and so India’s promise of postdated incentives means little to the likes of Aurobindo. And while Aurobindo has agreed to come on board, most big pharma companies have shied away from participating in PLI. The industry, for now, is in wait-and-watch mode. On 10 February, the Parliamentary Standing Committee on Commerce again raised concerns over heavy dependence on China for bulk drugs/APIs. While the finance ministry is keen on greenfield investments to extend subsidies, the standing committee chose to differ with this stance. It recommended that the benefits may be extended to existing API plants and those undergoing expansion. It recommended subsidy on interest rates and cheaper rates on gas/electricity, which is on par with competing countries. The implementation of this recommendation could make all the difference between the scheme’s success or failure.

6)     Rupert Murdoch at 90: Fox, succession and ‘one more big play’ [Source: Financial Times] 
“I’m a bit optimistic. I’ve got about another 175,000 hours to go,” the media mogul, Rupert Murdoch declared at a Variety event. “Maybe I can spend 75,000 productively at work. Or 70,000, say. So I’ve got to see that each one of those hours is well spent.” That clock ran out last month. But Murdoch, perhaps the last of the great continent-straddling press barons, is still steaming towards his 90th birthday on March 11. After many months sitting out the pandemic on his Oxfordshire estate, he was recently vaccinated and travelled to Los Angeles in mid-February, ready for more work.

Yet in his twilight years, the question of what happens to the Murdoch media dynasty still seems vexed as ever — a ceaseless family struggle. His children are at odds, not least over Fox News. Lachlan Murdoch, his elder son, is heir apparent. But the succession question somehow still remains open. A battle over the family trust, which holds the shares in News Corp and Fox, looms once Rupert Murdoch relinquishes his grip. None of the children have the votes to exert control alone. Friends say Murdoch does not think about his legacy and hates the word. “Let the chips fall where they will,” he once said. But one longtime Murdoch lieutenant sees his reticence reflecting another problem: the legacy “might fall apart the day after he goes”. “Who will hold it together except for Rupert?” he asks.

The question for old Murdoch acolytes is whether he still has the energy to recast his businesses around what Lachlan will ultimately want to run. Murdoch feels he still has time. His mother, Dame Elisabeth Murdoch, lived to 103 and health-conscious Murdoch has no intention of being short-changed. “I’m just not ready to stop, to die,” he once declared. Even today, Murdoch’s pension pot sits untouched, waiting for his “retirement”. The broadcaster Piers Morgan, a former Murdoch editor, fondly recalls a recent dinner with Murdoch and Joan Collins in Los Angeles. “She was 87. He was 89, and the combined energy levels, general vitality and refusal to be dimmed by old age was quite spectacular,” he says. “Every pore of [Murdoch’s] body is driven by ambition, adventure and entrepreneurial zeal,” he adds. “I would be astonished if there isn’t at least one more big play.”

7)     Why central banks love printing money [Source: Livemint] 
Since late 2008, central banks have cut interest rates, and printed and pumped a huge amount of money into the global financial system, in order to keep interest rates low in the hope of driving economic growth. At the same time governments have borrowed more and upped their expenditure to pump prime economic growth. The price to earnings ratio of the Dow Jones Industrial average, America’s most famous stock market index, stood at 31.47 as of 26 February. It was at 19.75, a year earlier. A similar story has played out through much of the rest of the world, including India. Clearly, stock prices have grown much faster than company earnings, thanks to liquidity.

On 27 August 2008, before the financial crisis had broken out, the total assets of the US Federal Reserve stood at $910 billion. As the crisis broke out, the Fed started printing money and buying government bonds and mortgages-backed securities, in order to pump in money into the financial system to drive down interest rates. This process was referred to as quantitative easing. In the last one year, the US Fed has printed and pumped more than $3 trillion into the financial system. The Bank of Japan, the Japanese central bank, has also carried out a massive amount of money printing since the financial crisis broke out. As of August 2008, its balance sheet size stood at 108.4 trillion yen. As of January 2021, it stands at 709.5 trillion yen.

Given unsuccessful attempts in the past to suck out a part of the money from the financial system, it is more than likely that central banks and governments will want to ensure it continues to remain flooded with money. This is governments signalling to the investors as well as the markets that the era of easy money will continue in the days to come. The funny thing is that investors hedging against inflation can lead to even higher inflation. As investors buy commodities, in order to neutralise inflation, the commodity prices can go up further and create more inflation.

8)     Lessons from Britain’s pandemic on promoting innovation [Source: The Economist] 
Innovation is crucial to productivity, and on this front Britain’s performance has lagged behind its competitors’ in recent years. Its low spending on R&D—less than three-quarters of the OECD average, as a share of GDP—argues for a boost. The government’s first move in boosting innovation was the announcement on February 19th of a plan for an Advanced Research and Invention Agency (ARIA), which is modelled on America’s Advanced Research Projects Agency. ARIA’s purpose is to fund high-risk, high-reward research, probably by directly funding exceptional scientists. But money is not all that matters. The successful translation of life-science research into treatments during the pandemic suggests some inexpensive measures that can also make a difference.

The rapidity with which Britain’s medical regulator moved during the pandemic is one reason the vaccine roll-out is racing through the population and drugs identified in Britain are saving lives around the world. Urgency is not unique to pandemics. Getting things done quickly can make an investment worthwhile and determine where an entrepreneur chooses as a base. Another useful measure that the government should use is its unique ability to overcome barriers. At the beginning of the pandemic covid-19 researchers were, for instance, unable to gain access to different strands of health-service data. The government eased restrictions on existing data and allowed researchers to ask people who had tested positive for covid-19 to join trials. Both were crucial to the effort.

A last principle is the value of connections between the government and the private sector. Kate Bingham, a venture capitalist who led the vaccine-procurement effort, understood how to deal with drug companies. Many of the civil servants working with her had commercial experience. The government’s closeness to business during the pandemic has been criticised, and perhaps some wasteful contracts were awarded to cronies. But without it, the vaccine effort would not have succeeded. Innovation took human beings from caves to computers.

9)     A new study says money really can buy happiness? Not exactly, says the author [Source: inc.com] 
A study out of Princeton showed that above $75,000, more money doesn't seem to have much impact on emotional well-being. But according to new research that old study is wrong. The new research, published in Proceedings of the National Academy of Sciences, carefully examined more than one million data points on tens of thousands of Americans and concluded that happiness rises steadily with income, with no noticeable cut off point at $75,000. Wharton researcher and study author Matthew Killingsworth claimed in a Penn Today interview that the true takeaway from his work is a lot more complex than just "money can buy happiness."

First, Killingsworth points out that, for the purposes of the study, increases in wealth were measured on a logarithmic scale. Killingsworth helpfully explains: "We would expect two people earning $25,000 and $50,000, respectively, to have the same difference in well-being as two people earning $100,000 and $200,000, respectively. In other words, proportional differences in income matter the same to everyone." That means each additional dollar doesn't matter the same to everyone. Second, while more money gives you more control over your life and therefore leads to greater happiness, obsessively chasing money itself as a goal isn't good for anyone's psychology. "Although money might be good for happiness, I found that people who equated money and success were less happy than those who didn't," Killingsworth notes.

He also found evidence of tradeoffs at the upper end of the income scale. High earners may have claimed to be happier both moment to moment and with their lives in general, but they also reported feeling far more stressed about time. Taking all this evidence together, Killingsworth hardly comes to the conclusion that, if your goal is a happy life, you should keep chasing more money indefinitely. So the next time someone quotes that outdated $75,000 figure to you, feel free to point them to this new research.

10)     Dr. John Malone joins for the 100th episode of KindredCast [Source: Youtube]
In this interview, Dr. John Malone, the legendary businessman, philanthropist and conservationist, who serves as Chairman of Liberty Media, Liberty Broadband, and Liberty Global, sits down with LionTree Founder and CEO Aryeh Bourkoff for a comprehensive discussion. The “cable cowboy” reflects back on an incredible career that has shaped the content and cable industries on a global scale. Dr. Malone also shares his thoughts on happiness in the midst of a pandemic, the state of play in the media and the frothy markets that we are seeing; he also shares his greatest hits and some very interesting misses throughout his career.

Talking about finding the next unicorns, he says that it all depends on the quality of the management. He believes that management is always the key to success. If one wants to invest in any company, he suggests starting it with the quality of the management. Talking about the best managers in the media business, he says Brian Roberts and Mike Fries are one of the best with team-building ability and the drive to push forward.

He further shares his views regarding government’s intervention in tech companies pertaining to privacy. Lastly, when asked whether Mr. Malone hasn’t met anyone whom he would like to meet, maybe in the media business or politics, he says, “Like everybody else, I am fascinated by Elon Musk. I think he is very creative. He is trying to solve all kinds of problems…You got to respect this guy”.