🔮 Twitter hell; choking China; wind wins; jumping genes ++ #396

“Whatever Twitter’s issues are, they are not engineering problems… it isn’t clear to me that [Elon] would be a natural steward of the firm.”

Hi, I’m Azeem Azhar. I convene Exponential View to help us understand how our societies and political economy will change under the force of rapidly accelerating technologies.

In today’s edition:

• Autonomy as a faster horse

• Choking China (again)

• The end of fossil fuels

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Mea culpa

I faceplanted last week in Charts of the Week. When talking about the effect of the Renminbi’s decline on Chinese exports, I said this would hurt exports. Of course, the declining currency will lower the cost of Chinese exports in dollar terms, potentially increasing demand. What a massive howler, for which I am solely responsible. Total brain freeze. We’ve corrected this in the archive.

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The near future

🐦 Elon’s Twitter hell
As I wrote in EV#368: “Whatever Twitter’s issues are, they are not engineering problems… it isn’t clear to me that [Elon] would be a natural steward of the firm”: different skill sets are needed. Many of the decisions Twitter makes, ultimately around policing content and user behaviour, are the core of what large-scale platforms are. This is what keeps users coming back, gets new users on board and has advertisers paying.

The troll problem is pernicious. Research shows that just 0.1% of users drive 38% of personal attacks (at least on Reddit) and toxic behaviour left unmoderated sets the standard for the entire community. Perhaps Musk has realised how complex this is: he is already setting up a content moderation committee to advise on account reinstatements.

As Nilay Patel writes: “Content moderation is … the thing that defines the user experience¹. [All social platforms] try to incentivize good stuff, disincentivize bad stuff, and delete the really bad stuff... Welcome to hell.”

Why this matters: Twitter has underperformed as a company over the past decade. It has risen by less than 2.5% a year since IPO. Musk likely won’t want to destroy his $44bn investment by worsening the user experience, tanking the audience and scaring off advertisers². This will leave him the choice of navigating “hell” or finding a miraculous way of reengineering the product that better manages the trade-offs of competing stakeholders, from audiences, to advertisers, to trolls, to political factions, in hundreds of diffrent countries. Good luck!

The flubbing of autonomy
😶‍🌫️ Ford’s autonomous vehicle unit, Argo.AI, has shut down resulting in a $2.7bn impairment for the venerable car firm. Argo was pursuing Level 4 and 5 autonomy, as Ford intends to focus on advanced driver assistance (aka L2 and L3). (Worth reading autonomous vehicle analyst, Eric Niedermeyer’s observations: “We just feel betrayed because we don’t have magic chauffeurs for the cars we own, the hardest automation problem ever.” I looked at autonomy in EV a couple of weeks ago.

Why this matters: Autonomous passenger cars are a faster horse. The future of transport, like so many technologies, is less about magic than about miniturisation and modularity. The computing industry didn’t grow because mainframes became more powerful, it grew because we made micro-computers. The transport industry won’t get larger with more powerful vehicles either. Micromobility is the new paradigm. Autonomy is just a feature. 

📱Choking China and the coming chip chaos
After the savage economic restrictions on China’s chip industry, further restrictions in the domains of artificial intelligence and biotechnology could await in the wings. (Good Twitter thread here.) China is already cut off from accessing the most sophisticated semiconductors (anything below a 14nm node, 2015 technology), the most advanced chips might be out of reach. Paul Triolo makes the case that

these are preemptive controls on technology that is inherently dual-use, but could be used to make products that could be used to make other products that could be used in systems that could be used to design advanced weapons.

I am sceptical about whether China could “catch-up” in semiconductors. It isn’t just TSMC’s expertise or the unique capabilities of ASML and its high-end lasers. Modern chips depend entirely on automated design software, sectors dominated by American firms Mentor, Cadence and Synopsys. The full semiconductor supply chain is complex, covering dozens of countries and segments. But China is not well represented across it. Copying these extant technologies and methods will always keep China behind. Perhaps a scientific breakthrough could allow a leap forward. 

(Rhodium Group’s analysis on the impact of controls is worth reading. Also strongly recommend reading Steve Blank’s explainer on the semiconductor ecosystem. Also, solid AT Kearney Report on the global ecosystem.)

Why this matters: Chip makers will need to continue to diversify assets away from Taiwan and Korea, to tackle the risk of a furious China venting militarily. Nations that don’t have something to offer in advanced computing, so they can bring something to the table, need to up-their-ante. 

Dept of our climate future

In every Sunday edition, we track key metrics that tell us a little about our shared climate future. Our member, Marshall Kirkpatrick, takes the time to curate a view of our current climate status in this segment every week, and you can read Marshall’s curation below.

One thing to know about our climate future this week: It’s a big month for wind
The US government announced it will hold the country’s first auction for commercial-scale floating wind generation and it’s going to be big. At 4.5 GW of energy production, enough for 1.5 million homes, the facilities could top the UK’s world-leading Dogger Bank, at 3.6 GW and counting.  The city of Chaozhou, China announced it’s going to start building wind facilities 10x larger still, at 43.3 GW. In Europe, a new report finds that since the Russian invasion of Ukraine began, 19 EU countries have set new records for use of wind and solar power, bringing the European total to 24% wind and solar power generation. The head of the International Energy Association says the war-induced energy crisis and world-wide investments in renewables represent “a turning point in the history of energy and we will see a much more secure and cleaner energy future.” With such winds blowing literally and metaphorically, we can all take inspiration from the $35B Danish energy firm Ørsted, who announced a 5 year partnership with the World Wide Fund for Nature (WWF) to take action aimed at making offshore wind a biodiversity net-positive. Let’s transform this world to be even richer than we found it.

Funding for adaptation: Breakthrough Energy Ventures, the $2.2B venture fund founded by Bill Gates, is expanding its focus beyond climate change mitigation to include funding for adaptation. 

True transformation: AXIS Capital has become the first North American insurance firm to require any new energy projects it insures to obtain the Free, Prior and Informed Consent (FPIC) of impacted Indigenous communities, the same standard Tesla says it expects of all its suppliers.

Taxing farm externalities: Starting in 2025, the world’s largest dairy exporter, New Zealand, will require farmers to pay a regulated price for their greenhouse gas emissions; alternatively, some food production methods are already net-positive for the planet.

Market data

Fossil fuel consumption will peak by 2025, according to the IEA.

$550bn was wiped off tech firms this week.

Services now make up 21.3% of Apple’s $90bn quarterly revenue.

Despite controls, more than $220bn in cryptocurrency was traded in China in the year to July.

Shanghai to LA freight rates have fallen to below their long-term pre-pandemic level.

The monthly mortgage payment for a median sized house has risen 48% in a year.

Short morsels to appear smart while moving to Mastodon

🗣️A Meta AI has managed to translate Hokkien, an unwritten Taiwanese language. 

🚗Car safety technologies might not really make driving much safer. 

👑Twitter is losing its most active users. Except one of them who took over as Chief Twit.

⚔️New Zealand and Uber’s battle for drivers’ status.

🐝A study about bees shows that animals - including us - might naturally count things from left to right.

☁️Google Cloud’s entry into Web3.

🧬Genes can jump (pun intended) from snakes to frogs.

End note

I keep coming back to this issue about American controls on China’s access to advanced technology. It is too important in the context of how we understand the next 20 years. I’m going to keep digging while I make up my mind.

Cheers,
Azeem 

🥨 P.S. Meet up with our Chantal Smith and a small group of EV members in Berlin on November 6. Register here.

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What you’re up to – notes from EV readers

Bruce Hardie and Michael Ross’s book The Customer-Base Audit is coming out on November 1st. (I’ve had a chance to read this and it is very clear and insightful. Recommended if marketing, customer acquisition or general commercial strategy is your bailiwick.)

Nikos Makris and his team at Kaya, a climate-focused consultancy, are hiring an executive assistant and finance controller.

Sakib Dadi and his team at Bessemer Venture Partners wrote an article about how thermal storage can help fight climate change.

Adam Oskwarek and his team at Zopeful are running a short survey about climate at work.

Mike Zelkind is starting to sell vertically-farmed strawberries in Cincinnati. I spoke with Mike about the future of vertical farming on the podcast some time ago.

To share your projects and updates, fill out your details here. Because of space constraints, we prioritise updates from paying members and startups I have invested in. (You can become the former by subscribing, if you have not already, and the latter by getting an intro to me via a trusted contact.)

1. Overtly right-wing social networks, with softer moderation policies, like Parler and Truth Social lay claim to 1% of the active audience of Twitter.

2. General Motors has already suspended advertising on Twitter while it evaluates the company's new direction.