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

In today’s edition:

EU energy imports from the US have caught up with Russia for the first time.
Some call it “bonkers”, but could the OpenAI capped return model be the future of how deep tech gets funded?
Consumers in the US get a big win as John Deere concedes to right-to-repair request.

📢 Two announcements before we get going…

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Two, we are hiring a full-time researcher on a 6-month contract to work with us on a new media project we’ll launch in Q2. If you think you’re the one — APPLY. If you know someone brilliant, refer them to marija@exponentialview.co.

Sunday chart: Resilience or luck?

It’s astonishing how quickly the EU has managed to shift its energy system. In 2021, over 50% of Germany’s gas imports came from Russia. Since August 2022, imports from Russia have been… zero. For the first time, US imports of gas to Europe have caught up with Russian imports. A warmer winter in Europe has also curbed gas demand.

Source: Joey Politano

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Key reads

Venture re-imagined
Investments from Microsoft and VCs into OpenAI may mark a paradigm shift in how deep tech gets funded. In an insightful primer about the deal, this Fortune article outlines the deal structure. It is a curious ones, due to OpenAI’s structure, Microsoft and other investors will be paid out through profits. In Microsoft’s case, the $13bn it will have invested in total could return as much as $92bn. This sounds like a lot, but considering how early Microsoft backed OpenAI would be a lowish return for the risk taken, in my view. This could leave OpenAI — as a non-profit with capped returns — earning 100% of future profit distribution after investors get paid out.

Pete @nonmayorpete

From @FortuneMagazine / @jeremyakahn

It’s a deal structure that two lawyers told me this week they had never seen before in VC dealmaking, and that one venture capitalist described as “really bonkers.” — as per The Information.

I spoke with Sam Altman, OpenAI’s boss, about the economics of a capped return structure a couple of years ago — I highly recommend you listen to it.

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China’s U-turn
Chinese officials have ended a two-year campaign to “rectify” some of the country’s largest technology companies, which wiped off billions of their value. This doesn’t seem to be an isolated case of China’s leadership changing its tune, however. As we wrote in COTW#101, the country’s youth is facing record unemployment, and Covid restrictions weighted heavy on the economy and populace. With a loyalist politburo behind him, Xi Jinping is looking to implement pro-growth policies and fix ties with Europe.

See also:

Analysis of China’s program which fosters the return of PhD’s who got their education abroad shows that returnees “published more papers after their return than did their peers who stayed abroad. The productivity bump can be explained by returnees’ access to greater funding and an abundant research workforce”,
China will introduce new regulation to curb generative AI tools in an attempt to battle deep fakes.

Market data

Biotech now contributes up to 5% of the US economy. This broad sector is growing at roughly 20% per annum, fas faster than GDP as a whole.

Shipping container costs from China to USA are now $1400, a return to pre-pandemic prices. This marks a 93% price decline from peak pandemic costs.

New global energy storage installations are forecast to double 2022 volumes in 2023.

A win for EU self-sufficiency. Sweden has discovered over 1 million tons of rare earth oxides, making it the 9th largest country by known rare earth reserves.

Short morsels to appear smart at dinner parties

✨ Uncovering the secrets of innovation. Via EV member Victoria Carr

🤓 Nonequilibrium thermodynamics underpin how AI generates art. See also, why biology is the most powerful way to transform the physical world using AI.

👶🏻 Is aging driven by DNA damage-induced changes to the epigenome? On this topic, listen to my conversation with Professor David Sinclair.

🏠 3D-printing homes. With floors.

🚜 John Deere finally concedes to giving farmers the right to repair their own tractors and the computer systems within them, following a multi-year battle.

💨 At 236m in diameter, Vestas debuts the world’s highest output wind turbine, rated at 15MW. (A modern gas-powered station might be rated about 800-900MW.)

Exponential knowledge community

🗓️ We are hosting four online sessions for members of Exponential View in Q1.

On January 26, I am hosting a private briefing on trends that will shape 2023. RSVP: briefing on January 26, 9-10am GMT or briefing on January 26, 4-5pm GMT.
On February 22 and March 29, we are hosting a Members Mixer — an online event during which you’ll have a chance to meaningfully connect with EV members from across the world. RSVP: mixer on February 22 and mixer on March 29. Members of our private Slack group have priority to join, so if you’re not there yet, apply now.

*The events are open only to members of Exponential View with an annual subscription.*

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What members are up to:

Robbie Stamp launches HappenedHere, a new history podcast about our shared and embodied past. The first episode features Stephen Fry and Dame Joanna Lumley.

Gil Kazimirov and Jess DeBakey launch Mind Your Business, a podcast about the industry of behavioural health.

Claudia Chwalisz reflects on 2022 and the journey to launch DemocracyNext — inspired by a conversation she had with another EV member, Matyas Kovacs.

James Loudon interviewed another EV member Ramona Liberoff about circular change and her work leading PACE (Platform for Accelerating the Circular Economy).

Share what you’re up to here.

End note

I’m on my way to World Economist Forum’s Annual Meeting at Davos, where I’ll discuss seven risk horizons: 1) democratic legitimacy, 2) deep tech capital winter, 3) 2023 markets adjusting, 4) AI as (un)reliable infrastructure, 5) electrifying everything, 6) breakthrough tech used as military and strategic weapon, 7) catalytic government. Let me know if you’ll be there — my diary is rammed but we might be able to find a moment to connect.

A

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Exponential View by Azeem Azhar

🔮 The EU's energy shift; financing Open AI…