Tremendous

An angel investor's take on life and business

  • Palantir CEO Paid $1 Billion to Lose Money

    Palantir CEO Alex Karp earned compensation worth about $1.1 billion in 2020, primarily through equity awards granted shortly before his software company went public.

    More here.

    This company is losing $100 million a month and has never turned a profit in 18 years of existence. I know, I know, Amazon. But Amazon and Google turned a profit in 3-7 years. In my work investing in early stage tech startups, I routinely see even young companies that have reached the breakeven point. Why can’t Palantir?

    Palantir is losing $100 million a month and has never turned a profit in 18 years of existence. #palantir #stocks

    It’s no wonder that the CEO is able to pay himself so well. He and a couple other co-founders control the voting shares in the company even if they sell their shares. The votes each of their shares has rises whenever they sell, so they maintain control. This arrangement is so controversial they’re actually being sued for it as we speak.

    Palantir reminds me a lot of WeWork. Charismatic founder, heavily hyped tech company, nonexistent earnings, ironclad founder control, and excessive CEO pay. And we know how that turned out.

    Indeed, Karp seems to be cashing in as fast as he can while things are good:

    At the time of the New York Stock Exchange listing, Karp owned about $1 billion worth of Palantir stock. He’s since sold about $350 million worth at share prices ranging from $9.10 to $31.59, according to SEC filings.

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  • This is Where New York Ambushed Tony Soprano’s Right Hand Man

    “Gerry warned you Eli!”

    Dim streetlights reflect off wet pavement. In the background, a red neon sign flickers out. “Kay’s Spring Garden.” As Hesh Rabkin and his son-in-law Eli prepare to head home, a black Lexus suddenly pulls in front of them. In an instant, they’re surrounded by thugs banging on the car. Finally, a burning rag inserted into the fuel tank gets them out of the car, desperate to save their own lives.

    This classic scene in season 6 of The Sopranos ended with Eli in the hospital with severe injuries and after Gerry Torciano’s men attacked him for poaching Torciano’s loansharking customers. Even Hesh, Tony’s long-time confidant and business partner, got roughed up.

    This scene was filmed on Congress Street just off Central Avenue in Jersey City’s Heights neighborhood. I actually lived just 4 blocks away for two years. So what is this location like in real life?

    Kay’s Spring Garden is a real Chinese restaurant. I actually went past a couple of weeks ago, and it still looked exactly the same as it did in this Sopranos episode from 2006. It sits on Central Avenue, the main commercial street of Jersey City Heights. The stores on either side are different now: the flower shop has become a realtor, and Goehrig’s Bakery, long vacant, has become a high end cupcake shop.

    The Heights has historically been a neighborhood of immigrants. First the Germans, then Jews and Italians, and now Hispanic people, often from the Dominican Republic or Puerto Rico. When I moved there in 2015, it was just beginning to gentrify. Today, it’s a mix of immigrants and young professionals.

    Central Avenue is a charming street that I still love to walk down, even though I no longer live in the neighborhood. The bustle, the cute, family-run stores selling delicious food, the ambience, it can’t be beat!

    The way the neighborhood looks at night in The Sopranos is very accurate to reality. It’s dark, quiet, and deserted. You don’t see many people around. Until a black Lexus pulls in front of you…

    For more on The Sopranos and entertainment, check out these posts:

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  • Urban Combat: Lessons from Chechnya

    At its widest point, Russia spans nearly 5,000 miles from the Vistula Spit in the west to the Kuril Islands in the east. In 1994, its military numbered 1.4 million. It had a massive air force and heavily armed infantry, along with the latest technologies like guided missiles.

    Chechnya is a small, impoverished region about the size of Connecticut. It has been inhabited for over 40,000 years and been a part of many empires, from Persian to Russian to Soviet.

    In 1991, Chechnya declared independence from Russia. Reports of mistreatment of the Russian minority inflamed tensions with Russia, and Russia began to bomb the tiny breakaway republic on December 1st, 1994. (This same casus belli was used by Putin against Ukraine.)

    For 12 years over two separate wars, this tiny country held off the Russian colossus. How did they do it? As former Navy SEAL Commander Jocko Willink details in his excellent podcast, superior leadership and infantry tactics outweighed Russia’s seeming advantages.

    Russian soldiers encountered unexpectedly heavy resistance as the fighting moved to Grozny, the capital. The Russian soldiers had major air power behind them, while the Chechen air force had been quickly destroyed at the beginning of the war.

    But the Chechens neutralized Russia’s key advantage with a simple tactic: move closer. The air force couldn’t bomb the Chechens without bombing their own comrades as well. They bombed away anyhow, and many Russian soldiers died of friendly fire.

    Their air superiority neutralized, the Russian military’s shortcomings in more basic areas became evident. They didn’t have ladders to get into buildings, an essential urban combat tool. Their leaders micromanaged and worked at cross purposes.

    Chechens terrorized the Russians whenever they could. They put the heads of Russian soldiers on pikes for the survivors to see. Booby traps were everywhere (an echo of America’s experience in Vietnam and Iraq). Many Russian soldiers began to suffer mentally, and either became unable to fight or indiscriminate in their aggression, attacking civilians and driving the population to the insurgents.

    Maybe it all started when the Russian soldiers stopped shaving. This was the first breakdown in discipline. It was small, but noticeable. Later, soldiers stopped following rules about boiling drinking water, leading to massive outbreaks of illness.

    Eventually, Russian food supplies fell short. These tired soldiers, many of them teenagers, faced illness and hunger. The attacks from the Chechen rebels, many seasoned veterans of the USSR’s war against Afghanistan, were relentless.

    Facing a grim situation in Chechnya and declining support for the war at home, Russia declared a ceasefire in 1996 and soon signed a peace treaty. Chechnya would ultimately fall after a second, and much longer, war. But this band of ill equipped rebels held off Russia for years, an incredible feat.

    What did the Russian military learn from this, and what are the lessons for us? Here are a few key points:

    • Don’t count on airpower. Determined infantry wins wars.
    • Maintain discipline, even in small things.
    • Urban warfare is manpower intensive with high attrition. Be sure to have fresh troops available and an extensive mental health staff to deal with the psychological stresses of urban combat.
    • Get the civilian population on your side. Don’t hurt them. Respect their leaders and give your orders through them.

    This is a fascinating history lesson that can inform US policy and even our daily lives. Where are we letting our own discipline slip?

    Dig into these posts for more on history and the military:

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    Photo: “Chechnya/Чече́нская” by LOreBoNoSi is licensed under CC BY-NC-SA 2.0

  • Bitcoin Is Now Bigger Than Facebook

    As you cruise down the tree-lined road, the first thing you see is a giant thumbs up. You pull into the winding driveway and an endless panorama of multicolor buildings appears. This is the headquarters of the one of the most powerful companies on earth: Facebook, Inc.

    1.8 billion people use Facebook every day, and its profits last year totaled nearly $30 billion. It controls news and social relations across the globe.

    But all this is worth over $100 billion less than bitcoin. The total value of all bitcoin is $1 trillion. The total value of all Facebook stock trails far behind at $892 billion.

    Mark Zuckerberg invented Facebook, but no one really knows who invented bitcoin. Its creator called himself Satoshi Nakamoto, but he has never appeared in public and may not exist. “He” could even be several people working together.

    I find it interesting that despite all his entrepreneurial genius, what Zuckerberg has built is worth less than what was built by an extremely obscure man who may not even exist. There is no monument like the palatial Facebook headquarters to mark bitcoin’s ascendance, but ascended it has.

    I don’t invest in cryptocurrencies. Still, I can’t help but be impressed at what bitcoin has achieved. It reminds me of a quote from Godfather II:

    “Michael, we’re bigger than US Steel.”

    Hyman Roth

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  • Is this NJ’s Most Beautiful Spot?

    Our car wound into the hills along deserted roads. The scenery went from small towns to vast woods. We crunched down a gravel path to a secluded camp site along a lake. This was Stokes State Forest.

    This weekend, I went camping with some friends in this beautiful spot in northwestern New Jersey. I can heartily recommend it for its varied scenery and peaceful ambience. Here’s a quick rundown of what to expect if you visit:

    Location: About 70 miles northwest of New York City in the beautfiul Delaware Water Gap, just a few miles from the Pennsylvania border. If you’re in the NYC area, this is one of the more convenient campgrounds to visit.

    Scenery: The most varied I’ve seen yet, after having been to Harriman State Park and the Catskills in New York and the Pine Barrens in South Jersey. We saw small mountains, ponds, lakes, marshes, and plains all within a 5 mile hike!

    Wildlife: We saw squirrels, a beaver dam, and even a bald eagle circling above us! You’ll see a lot of signs warning about bears. Be sure not only food but anything aromatic like lotion, toothpaste etc. is inside your car or in a bear bag when you go to sleep. Don’t take chances.

    Amenities: There are water spigots with fresh, cold H2O everywhere. The nearest was about 50 feet from our camp site. There were also nice, clean bathrooms just a couple hundred feet away. The only available showers, however, were in the Lake Ocquittunk area, which was so far from our campsite we had to drive. This was a definitive negative, but at least the water was hot when we got there! The fire rings and the campsites in general are beat up from heavy use, but functional.

    Cost: $40 for two nights. Split between the three of us, it was negligible.

    Unexpected benefit: Compared to the Pine Barrens, where we often camp, Stokes State Forest has fewer ticks, which makes it a good summer camping spot.

    Watch out for: Fire bans. Because it had been windy the day we arrived, there was a fire ban that lasted most of the trip. This is a real problem: you don’t have a heat source or a way to cook. I’d strongly recommend bringing a butane camp stove. Ours is a Coleman and it’s great. It cost about $30.

    We sat around the fire (once the fire ban expired) and gobbled up pork chops, sausages, and s’mores. When nature called in the morning, I enjoyed a beautiful sunrise over the nearby lake.

    This is a beautiful spot! If you’re in the area, I encourage you to check it out!

    For more on camping and the outdoors, check out these posts:

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  • The New Black Wall Street: Young Black Investors are Piling Into Stocks

    A new survey finds that young black Americans now invest in stocks at the same rate as whites:

    In a year like no other, however, there is also evidence of growing engagement in the stock market by younger Black Americans, with 63 percent under the age of 40 now participating in the stock market, equal to their white counterparts. The closing of this gap among younger investors is being driven by new investors: three times as many Black investors as white investors (15% vs. 5%) report having invested in the market for the first time in 2020.

    Stocks are a major vehicle for wealth creation, and black Americans have long been less involved in the stock market than whites:

    A majority (61%) of non-Hispanic white households own some stock, compared with 31% of non-Hispanic black and 28% of Hispanic households. Median investments vary here as well: Among whites the median is about $51,000. By comparison, the median for black families is $12,000, and for Hispanic families it is just under $11,000.

    Behind this growth is a huge increase in the use of stock trading apps like Robinhood and Webull. Downloads in the last year are up 157% and 371% respectively. For all their faults in enabling speculation, these apps also seem to be opening up opportunity. The minimum investment in Vanguard’s S&P 500 index fund is $3,000, for example. This is far out of reach for many young people, particularly minorities. Meanwhile, Robinhood allows users to buy fractions of a share of stock for as little as $1. Webull has no minimum at all.

    I’m happy to see more people get an opportunity to be a part of this amazing capitalist wealth creation system of ours. More people benefiting from our system helps preserve it. And more people getting rich makes me smile.

    Have a great weekend everyone!

    Dig into these posts for more on markets:

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    Photo: Black Wall Street Durham, NC

  • In Norway, 60% of Cars Sold are Electric

    Norway’s electric car market is powering ahead, with most new cars registered in September either fully electric or hybrids.

    Electric cars accounted for 61.5% of the 15,552 cars registered that month in the country. When hybrids are included, the total jumps up to 89%.

    The new Volkswagen ID.3 was the bestselling car, with 12.8% of sales, followed by the Tesla Model 3 and the Polestar 2.

    Globally, too, we could be on track for an electric car breakthrough as battery technology gets less expensive. The cost of a lithium-ion battery pack for an electric car fell 87% from 2010 to 2019, according to research by BloombergNEF.

    More here.

    In the US, by contrast, only 2% of new car registrations are electric.

    So why is Norway leading the world while the US, a major producer of electric vehicles, straggles far behind? Are Norwegians just a lot more environmentally conscious?

    Well, not exactly. Norway currently has big tax incentives for buying an electric car as opposed to an internal combustion one. Those incentives are set to be pared back this year, but will still provide a tax advantage for electrics. US tax incentives are less generous, which is one major factor behind slower adoption.

    Another factor: gas costs the equivalent of about $8 a gallon in Norway, compared to about $2.75 in my neighborhood in New Jersey.

    High gas prices and huge tax incentives mean that Norwegians don’t have to be environmentalists to choose an electric car. They just have to be frugal.

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    Photo: “IMG46347-2” by odd.bakken is licensed under CC BY-NC-SA 2.0

  • To Replace Gold, Bitcoin Needs a Massive Increase in Transaction Capacity

    Bitcoin is often referred to as “digital gold.” A major attraction of the cryptocurrency is its fixed supply and lack of connection to fiat money like the US dollar. But unlike gold, bitcoin has no storage costs and is hard to steal. Given these facts, bitcoin could be poised to replace gold as a store of value and inflation hedge.

    But it faces one huge hurdle in doing so: the bitcoin system can only process seven transactions per second:

    As a piece of global financial infrastructure, the Bitcoin network is hobbled by severely limited capacity. The worldwide network of miners can process a maximum of only seven transactions a second, and today the rate is running at around five, according to de Vries’s estimates. In comparison, Visa can process up to 65,000 payments per second. Hence, any spike in the volume of payments or transfers causes a backlog.

    De Vries adds that Bitcoin performs poorly at the checkout counter. If you were to buy $100 in groceries using Bitcoin, it may take an hour to receive adequate confirmation.

    Not only does this make bitcoin unsuited to processing daily transactions like grocery trips, it may even limit its use as a store of value. There are currently $22 billion in bitcoin transactions per day, and transactions already take a long time to settle.

    Gold does $146 billion in transactions daily. To match that, bitcoin would have to increase its transaction throughput approximately five fold (if the current $22 billion in transactions represents 5/7ths of possible volume). Is that feasible when trades already settle so slowly?

    And what if bitcoin becomes a lot more widely held? It’s very difficult to determine the number of bitcoin holders, but some estimates put the number at around 100 million people out of a world population of over 7 billion. That’s a ton of new potential bitcoin buyers, but the currency is likely to struggle to accomodate them given its low transaction bandwidth.

    In all, this rapidly growing currency faces some significant barriers to wide adoption as a store of value like gold. I’m curious to see what workarounds blockchain developers come up with to meet these challenges.

    Dig into these posts for more on bitcoin:

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    Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0

  • Filming a TV Show in NYC in a Pandemic

    EMT’s jump into a vintage ambulance and speed off past NYPD Chevy Caprices. The backdrop: a spooky, mostly disused hospital on the fringes of New York City. Two menacing men in flat-top fades and thick gold chains saunter toward the entrance.

    This is the world I spent yesterday in, as a background actor (also known as an extra) playing an EMT for a popular cable show. Background acting is a fun hobby I picked up in late 2019, but I hadn’t done a gig since the beginning of COVID. But now I’m fully vaccinated and back in the game.

    So what’s it like to film a television show in New York City in the middle of a pandemic? First, be prepared to get COVID tested a lot, even if you’re vaccinated. I took a COVID test 10 days before the shoot, a rapid test at the fitting one week out, another test 4 days out, and yet another rapid test as soon as I arrived on set.

    But that’s not all. You have to fill out an online form about symptoms and travel every day you come in. Even on the shoot day, you wear a mask at all times unless you’re on camera or eating.

    Even with these changes, filming is a lot of fun! I wore an elaborate costume that had been tailored to fit me personally. The tailor even sewed “EMT New York City” patches onto the uniform. I was rather honored to have such a fuss made over me, despite being just a background actor.

    I had the opportunity to ride in a 1982 Ford ambulance like this one, which was fascinating! My fellow EMT, who was also a trained stunt driver, took the wheel. I also got to see circa 1990 NYPD squad cars on the set, which is a rare opportunity.

    The episode was set in 1991 and we filmed in a remote part of New York City. I can’t get into specifics on the show until it airs later this year, but I was incredibly impressed at the very real little world they had created. Two characters had Timberland boots, thick gold necklaces, and tall, fade-style Afros cut specially for the scene. The cars were picture perfect. There’s something about seeing a little world where the past has been recreated, and becoming a part of it, that’s quite thrilling.

    In all, with the many tests and fitting and elaborate setup, I was only actually on camera for maybe 90 minutes. That footage will later be cut down to probably just a few seconds. The amount of work that goes into making a perfect scene that may last just an instant is incredible.

    I look forward to being a part of lots of other interesting shows soon!

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    Photos:

    “VFS Film Production: ‘Milligan’s Stew’” by vancouverfilmschool is licensed under CC BY 2.0

    “1982 Ford F-100 ambulance” by sv1ambo is licensed under CC BY 2.0

  • Christopher Moltisanti Hit Rock Bottom at This Diner

    “Wanna follow me to that dive on Sip and JFK?”

    Julianna Skiff, The Sopranos

    So begins the romance between mobster Christopher Moltisanti and Julianna Skiff in season 6 of The Sopranos. The troubled pair meet at an AA meeting. Soon they’re having an extramarital affair that spirals into a return to heroin addiction.

    Their romance begins and ends at the VIP Diner in Jersey City, NJ. Being a big fan of this episode and the show in general, I took a little trip there yesterday. The diner is exactly as it appeared on the show in 2007, and indeed seems not to have changed at all since at least the 1970’s.

    The restaurant was nearly empty when I entered in the late afternoon. I sat at a weathered booth near the window and enjoyed a coffee and newspaper. Cocooned in a nearby booth, Christopher tells Julianna about his entry to the mafia and they reflect on their return to heroin use at the end of episode 12.

    As they leave the restaurant and head for an AA meeting, Julianna already senses that their relationship is over. It was interesting to walk down those same steps as I headed home.

    Enjoying a coffee in the same spot where these great scenes happened was a lot of fun! If you’re in the area, I’d recommend popping in.

    Bonus location: the hair salon across the street was used for a scene in season 1, episode 9, where Bobbi Sanfilippo discusses Uncle Junior’s “talents” with her pedicurist. Through the window, you can see the VIP Diner across the street.

    It appeared to have been heavily remodeled and didn’t look much like the beauty parlor in the episode, but it was still interesting to see it! I actually looked at an apartment in this building a couple of years ago without realizing it was a Sopranos shooting location!

    Dig into these posts for more on The Sopranos and entertainment:

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