Ten interesting things we read this week

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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: Sports (ATP Chairman reflects on unprecedented 12 months and what lies ahead), Technology (AI and the future of US intelligence), Interview (Mastering the art of owning it), Travel (Death of the small travel agents in India) and Work Culture (The four-day week is coming soon).

 Here are the ten most interesting pieces that we read this week, ended March 20, 2021.

1)     ATP Chairman reflects on unprecedented 12 months & what lies ahead [Source: atptour.com]
In this interview, ATP Chairman Andrea Gaudenzi reflects on a period of unprecedented challenge for tennis, the state of play, and what lies ahead for the sport. Talking about the last year, he says that it has been a year that nobody could have predicted. “The vast majority of our time has been spent managing the crisis and overcoming the obstacles that are inherent to operating a global Tour during a pandemic. The circumstances have been extremely challenging, and everyone has suffered in some shape or form.” He also says how they had to make more decisions related to the Tour than were probably made in the last 10 years combined.

These decisions were related to from revising the FedEx ATP Rankings, managing the fluidity of the calendar, changing prize money levels and round by round distributions, tournament financial modelling, implementing health and safety measures, liaising with local authorities and obtaining international travel waivers, the list goes on. Players have been hit with significant prize money cuts since the resumption of the Tour in August. On this, he says, “Last year, the governing bodies delivered over US$20 million in support payments to players and tournaments in a ‘bottom up’ approach to help those most in need. ATP recently announced a support package including up to US$5.2 million for raising the minimum prize money levels at 250 and 500 events until the middle of the year.”

He also talks about the challenges pertaining to replicate the “NBA Bubble”. He says, “Historically, our events have relied disproportionately on ticket sales relative to most other major sports, and the pandemic has exposed that. It’s one of the main reasons our prize money levels have suffered. Even prior to the pandemic, we knew already that we must switch our focus to media and data, and COVID-19 has fast-tracked the need for change. I’m confident that if we do the right thing, we will be very well-placed as a sport and the value of our content will continue to grow into the future. But some changes are required for that to happen.” While the pandemic has put obvious strains on both sides of the membership and raised questions about the decision-making processes of the sport, this has prompted for a governance review. Looking ahead, sports bodies will have to innovate to keep the ball rolling.    

2)     The moment of reckoning: AI and the future of US intelligence [Source: hoover.org] 
Since 9/11, America’s intelligence agencies have become hardwired to fight terrorism. Today’s threat landscape, however, is changing dramatically, with a resurgence of great power competition and the rise of cyber threats enabling states and non-state actors to spy, steal, disrupt, destroy, and deceive across vast distances — all without firing a shot. For the U.S. to avoid the risks and maximize the opportunities of this technological era, policymakers need to act swiftly to ensure the Intelligence Community adapts, integrating AI into all of its processes in ways that augment human capabilities and reflect American values.

Advances in technology like artificial intelligence tend to be a double-edged sword for intelligence collection and analysis: They generate opportunities for gain while also exposing the nation to new risks. Exponential improvements in pattern recognition and the optimization of digital weapons that AI makes possible mean that the United States as well as its competitors and adversaries are able to make better decisions, faster. With data and threats moving at the speed of networks, intelligence must rely on AI to help humans keep up.

The CIA’s directorate for digital innovation, the National Geospatial-Intelligence Agency’s AI initiatives, and cloud-computing efforts at the National Security Agency all show promise, but these efforts by themselves are nowhere near enough to leverage the full potential of this breakthrough technology. Although there are new Pentagon units to harness technological innovation and bipartisan national commissions on cybersecurity and artificial intelligence, what’s needed now is a wholesale reimagining of intelligence for a new technological era that fully recognizes the scale of transformation. If American interests and values are to ultimately prevail, then the U.S. Intelligence Community needs to undertake a wide-ranging strategic effort to identify how AI can expand intelligence capabilities while safeguarding civil liberties and addressing Americans’ privacy concerns.

3)     Google Director Of Engineering: This is how fast the world will change in ten years [Source: medium.com] 
Will the pace of life keep accelerating? And if it does, what are the implications? What should we be doing now as knowledge workers to prepare for this future? The author of this article spent over 100 hours reading the top 10 books related to these questions across the disciplines of sociology, technology, physics, evolution, business, and systems theory. While each of these researchers provide a different perspective, they point to the same fundamental root cause…time is accelerating. At a fundamental level, life on earth must compete to stay alive. Predators and prey are in a never-ending race to evolve new abilities to avoid extinction. Rabbits that evolve longer ears to hear foxes survive more. Foxes that develop stronger legs to run faster catch more rabbits and don’t starve. And so on.

While human biology evolves so slowly we don’t notice, ideas (cultures, strategies, technologies, etc.) evolve so quickly, we can’t keep up. Idea evolution is like biological evolution on steroids. In other words, in a moment when many are already feeling overwhelmed by change, things are about to take off even faster. 20 years from now, the rate of change will be 4x what it is now. Things will keep accelerating from there, and in 40 years, it will be 16x (more on these numbers later). What does this mean? For many, 2020 felt like five years packed into one… Historic pandemic, historic social movement (Black Lives Matter), historic stimulus, historic wildfires, historic election, historic stock market high, and historic technology breakthroughs (Alphafold/GPT-3/Quantum Supremacy, etc.).

So how do we keep up with time? A few options emerge: 1) Follow the pace of the crowd: In other words, do what most people are doing (i.e. get a 9–5 job and do what’s expected of you). This is the least stressful option in the short-term, but you risk falling behind in the long-term. 2) Work harder than others: This helps you progress in your career faster, but you sacrifice time with family & friends along with personal health… not to mention that you risk losing out to people who are learning more than you. 3) Outlearn others and let your knowledge compound: Learning is the ultimate productivity hack. In other words, it provides the greatest leverage. It’s the tool that the greatest innovators and business thinkers of our time (Elon Musk, Jeff Bezos, Bill Gates, Warren Buffett, and others) use to get ahead.

4)     How Facebook got addicted to spreading misinformation [Source: MIT Technology Review] 
Stopping the spreading of false information has been the biggest challenge for Facebook, especially after the debacle of Cambridge Analytica. The author of this article interviewed many people from Facebook to get to the crux. Everyone was questioning Joaquin Quiñonero Candela, director of AI at Facebook. In the years since he’d formed his team following the Cambridge Analytica scandal, concerns about the spread of lies and hate speech on Facebook had only grown. In late 2018 the company admitted that this activity had helped fuel a genocidal anti-Muslim campaign in Myanmar for several years. In 2020 Facebook started belatedly taking action against Holocaust deniers, anti-vaxxers, and the conspiracy movement QAnon. All these dangerous falsehoods were metastasizing thanks to the AI capabilities Quiñonero had helped build.

Finally, Mike Schroepfer, Facebook’s chief technology officer, asked Quiñonero to start a team with a directive that was a little vague: to examine the societal impact of the company’s algorithms. The group named itself the Society and AI Lab (SAIL); last year it combined with another team working on issues of data privacy to form Responsible AI. Over the last two years, Quiñonero’s team has built out Isabel Kloumann’s, a research scientist, original tool, called Fairness Flow. It allows engineers to measure the accuracy of machine-learning models for different user groups. They can compare a face-detection model’s accuracy across different ages, genders, and skin tones, or a speech-recognition algorithm’s accuracy across different languages, dialects, and accents.

Fairness Flow also comes with a set of guidelines to help engineers understand what it means to train a “fair” model. One of the thornier problems with making algorithms fair is that there are different definitions of fairness, which can be mutually incompatible. Fairness Flow lists four definitions that engineers can use according to which suits their purpose best, such as whether a speech-recognition model recognizes all accents with equal accuracy or with a minimum threshold of accuracy. But testing algorithms for fairness is still largely optional at Facebook. None of the teams that work directly on Facebook’s news feed, ad service, or other products are required to do it. Pay incentives are still tied to engagement and growth metrics.

5)     Chris Sacca Unretired: The billionaire investor on Biden, crypto, NFTs and why he’s back investing in climate startups [Source: Forbes] 
In this interview, venture capitalist Chris Sacca talks about his first as well as second innings of being an investor. Talking about his biggest reason for retiring from start-up investing, he says, “Back in the early days of Y Combinator and before, there was something so damn refreshing about the wave of companies that were being started as a result of a bunch of roadblocks coming down. These new teams didn’t need big venture rounds anymore. It was all open source, cloud hosted, direct to user launches. Entrepreneurs back then kind of felt like pioneers. But as time went on, and founders became celebs, starting a company became the default plan for too many poseurs. At the same time, I just found myself unexcited about what was showing up in my inbox.”

He further talks about politics and how he once contemplated getting into it actively. And he shifted his focus on climate from politics. He says, “The reality is, I hate politics. In the past, I would help on the Obama campaigns and then, after he won, walk away for a few years. The political process is so damn indirect. Let’s try to convince a bunch of people to hopefully show up and choose someone that, fingers crossed, we can trust to advocate for stuff that helps those who need it most in a gridlocked Congress that hasn’t accomplished much since Republicans decided to exploit its arcane rules to pretty much block everything they can. For a startup person, all those layers are maddening.... In the background of all this, the climate crisis has been more obvious every single day. It used to be a little abstract. But now climate-driven storms, droughts, floods, famine, fires, mass migration, wars, are all happening in real-time. It’s not a theoretical idea anymore.”  

Talking about his investments till now, he says that he has invested in 40 companies till now. He says, “Geographically, this stuff is everywhere. Europe seems to have had a head start. Turns out graduating without a small country’s GDP worth of student loans on your back makes it easier to focus on building some cool shit. And huge European companies have tended to make it a bigger priority to buy cleaner products and services, so the markets there have evolved much faster. But we have teams in Fort Worth, Boulder, Gothenburg, London, Maine, Australia, Fresno, Singapore, Berlin, Squamish, Houston, Detroit, and probably a bunch of other places I can’t roll off the top of my head.” Lastly, he says that climate isn’t just some niche. It touches every single aspect of our lives. Hence, it needs to be taken seriously by all.

6)     Ruchir Sharma: By targeting house prices, New Zealand shows the way [Source: Financial Times] 
New Zealand was one of the first countries to call a lockdown as the pandemic started. The Kiwis have had many firsts. In 1989, New Zealand’s central bank was the first to commit to a specific target for consumer price inflation, then the biggest threat to the world economy. Unions and businesses howled, saying the move would kill growth and jobs. One property developer called for a rope on which to hang central bank chief Donald Brash. Brash, a former fruit farmer who had seen his uncle’s life savings destroyed by inflation, held firm. By signalling the bank’s seriousness, the target helped to lower the public’s self-fulfilling expectation of endless price rises. Over two years, inflation fell from 8% to 2%. The unpopular idea caught on. Soon, most central banks had adopted targets and this helped tame the global scourge of runaway prices for food, fuel and other consumer staples.

Today, a new scourge — asset price inflation — looms. And New Zealand has launched another counterattack. Home prices have risen steadily in the pandemic, and in 12 months through to the end of January were up 19% in New Zealand. The price of a typical Auckland home soared past $720,000, embarrassing Prime Minister Jacinda Ardern. A global political celebrity, the liberal Ardern was elected on a promise of affordable housing. Fed up, her government has ordered the central bank to add stabilising home prices to its remit, starting March 1. It is novel and healthy for a politician to recognise the unintended consequences of easy money. If this idea catches on, it could lead to greater financial and social stability worldwide.

Research looking back 140 years in 17 major nations has shown that before the second world war, only one in four recessions followed a bubble in housing or stocks. But as banking, particularly mortgage lending, grew to assume a pivotal role in modern economies, the dynamics changed. Since the war, more than two out of every three recessions followed a housing or stock bubble. Housing bubbles are the worst. Ardern’s move may not slow the housing boom soon, because supply-and-demand dynamics are too strong. But ordering the central bank to make housing price stability a higher priority is a start, and could inspire others to rethink the role easy money has played in driving financial instability. The challenge, to defuse bubbles before they become dangerous, is not as insurmountable as doubters believe. Research shows the key warning signs lie in the pace of increases in prices and debt.

7)     Be positively unstoppable: How to master the art of owning it [Source: London Real] 
In this interview, Diamond Dallas Page, a former World Championship Wrestling (WCW) heavyweight champion, actor, fitness expert and motivational speaker, talks about never giving up and being crazy enough to achieve your goal. He won the WCW world heavyweight title aged 43, becoming one of the oldest champions in history and is a man who’s made an entire career out of overcoming the odds. What’s his success mantra? It is his relentless work ethic, never say die attitude, unwavering self-belief and latent talent that culminated in him becoming one of the sports greatest stars, and in 2017 being inducted into the WWE Hall of Fame.

Not only wrestling, but he has had a fabulous career in acting as well, starring in 15 feature films and numerous documentaries. Also, he has made appearances in 18 video games, and his hugely successful book “Positively Unstoppable” encourages readers to eliminate excuses and take control of their lives. And now he has turned to yoga; his DDP YOGA Programme has become one of the leading fitness apps on the market and helped thousands to overcome injury, obesity, and other physical limitations.

He credits yoga and nutrition to have transformed his life. The app is developed based on his own experiences having battled serious injury that included a major spinal operation. Dallas credits yoga with transforming his life and supplementing his proactive and positive outlook, one that embraces change and seeks out opportunity. From war veterans to ageing former sportsmen and women or simply those just trying to lose weight, Dallas has created a method that suits all comers and of course his desire to be of service to the world.

8)     The death of the small travel agent [Source: Livemint] 
The travel and tourism industry has been hit hard by the pandemic. Most of the businesses in this industry in India have been generating zero revenues since last March. India has thousands of mom-and-pop travel companies spread across the country which employ millions of people. They come in different shapes. “Inbound" operators handle foreign tourists; “outbound" companies service Indians travelling abroad. Then, there are the pure-play domestic tour operators. Smaller companies handle just one piece of the puzzle, like transport, while the larger ones are responsible for the entire value chain— offering custom-built packages and scheduling reservations to delivering experiences.

Domestic travel, meanwhile, is gathering momentum, but domestic tourists hardly use traditional tour operators any longer. They book hotels and airlines through online travel agents such as MakeMyTrip. Neither do they use the coaches and cabs that tour operators run. In the post-pandemic world, well-heeled Indians have indulged in “drivecation", or a vacation where they drive on their own. Nevertheless, the pickup in domestic travel holds out hope that normalcy in other segments of the business—such as meetings, incentives, conferences and exhibitions (MICE)—will pick up too, thereby cushioning the industry’s slow turnaround. Caution, nonetheless, remains the key word.

“It is early days. People are spending again. But we are only measuring the domestic side where the unit values are lower than an international holiday," Madhavan Menon, chairman and managing director of Thomas Cook India Ltd, one of India’s larger travel services companies, said. “As an industry, anywhere between 30-40% of the 2019 domestic business is back. 2021 will be somewhere in the range of 50% of where we were in 2019, but 2022 hopefully will pick up significantly," he added. If India’s vaccination drive goes well, the first phase of international arrivals can begin between October and December. That would bring in much-needed cash that is necessary for operators to re-invest in their businesses, which remain in deep freeze. India’s attractiveness as a destination on the world travel circuit hinges in the balance.

9)     A high-pressure growth gamble [Source: Business Standard]
In this article, Akash Prakash of Amansa Capital writes how President Biden administration's mega-stimulus could set off a tug of war between growth and inflation and a churn in the markets. He says that Biden’s administration is focused on moving the US economy back into a high-pressure paradigm, where growth is above trend and unemployment below the natural rate. This is where the US economy was in the years before the pandemic, fuelled by the Trump tax cuts. Unemployment was at 3.5%. Advocates for a high-pressure economy point out that this setup is the best possible social programme.

If the White House can deliver a high-pressure economy through fiscal support, it is the Federal Reserve that will ultimately determine its sustainability. If the Fed were to hike rates, it is unlikely that high growth will sustain. Till now, Federal Reserve Chairman Jerome Powell has been dovish. He will not hike till end 2023. He has gone out of his way to try and calm markets and fears of early tapering. Mr. Powell seems to genuinely believe that the US economy can run hot for a period of time, and that because of structural issues there is a more limited linkage between low unemployment rates and inflation today than has been the case historically.

What is clear is that we will continue to see rotations. Value will trump growth, as has been ongoing for the past couple of months. Rising yields are corrosive for growth stocks, which rely disproportionately on future earnings expectations compared to value stocks where a greater proportion of the valuation is accounted for by near-term earnings. The second rotation is between the pandemic losers gaining at the expense of the pandemic winners. As markets factor in a re-opening of the economy as vaccines roll out and infections decline, sectors hurt by the lockdown are gaining. Both of these rotations have just begun, there is a lot more juice left in this trade. Positioning is still skewed to growth. Markets are stable, but there is a lot of churn internally, with big winners and losers. Stock picking will once again come to the fore as dispersion rises.

10)     Tell your boss the four-day week is coming soon [Source: Bloomberg] 
Weekends are something that all employees look forward to. It is those two days in the week that one can do whatever one wants to or loves to, besides the corporate or professional work. And with the lockdown, working hours have surged as the line between professional and personal life has become blurry. When the lockdown started early last year, a Berlin-based tech company Awin told everyone to sign off around lunchtime every Friday to ease into the weekend. The experiment was so successful—sales, employee engagement, and client satisfaction all rose—that in January, Awin decided to go a step further, rolling out a four-day week for the entire company with no cuts in salaries or benefits.

“We firmly believe that happy, engaged, and well-balanced employees produce much better work,” says Chief Executive Officer Adam Ross. They “find ways to work smarter, and they’re just as productive.” Awin is in the vanguard of a trend that’s getting increased attention worldwide. Jobs website ZipRecruiter says the share of postings that mention a four-day week has tripled in the past three years, to 62 per 10,000. Consumer-goods giant Unilever Plc in December started a yearlong trial of the idea for its New Zealand staff. Spain’s government is considering a proposal to subsidize companies that offer a four-day week.

Almost two-thirds of businesses with a four-day week report improved productivity, according to a study from the University of Reading. A group led by former U.K. Shadow Chancellor John McDonnell wrote a letter to leaders including Joe Biden, Boris Johnson, and Angela Merkel urging them to adopt a four-day week to save jobs, rethink working patterns, and reduce energy consumption. French carmaker Renault SA is giving about 13,000 staff Fridays off until mid-August while it seeks to cut costs as orders have slumped. There have been some teething issues for Awin, such as deciding who will be off when, requiring the finance department to stick around five days a week during the January reporting period, and ensuring that client requests coming in on Fridays get prompt attention. Awin will assess the results of the trial program this summer, but Ross says the experience has been so positive that he can’t imagine going back.