1/ Why the 1990s bubbles are so hard to understand is that they were the outcome of interacting complex adaptive systems resulting in a lollapalooza:

"The key issue is you can’t really understand the whole system by simply looking at individual parts." hbr.org/2011/09/embrac…
2/ "When you see something occur in a complex adaptive system, your mind is going to create a narrative to explain what happened—even though cause and effect are not comprehensible in that kind of system. Hindsight’s a beautiful thing."

I can do this about the Internet bubble.
3/ One spark causing one phenomenon underlying the dotcom part of a lollapalooza occurred in 1993 when it was finally legal to use a business application on the Internet. This change in the law caused people like Jim Clark to invest in firms like Netscape. 25iq.com/2018/03/03/bus…
4/ At the same time the factors @stevesi describes in this essay …rdcoresoftware.learningbyshipping.com/p/025-trapped were happening.

From the link:

"By the end of 1993, it it seemed not only was everything free, but everything was in beta and was developed by students at a university somewhere."
5/ Also in 1993 Metropolitan Fiber Systems (MFS) went public. The value created by this CLEC attracted more capital and that was accelerated by MFS' acquisition of UUnet in 1996, resulting in floods of copycats. When Worldcom then bought MFS for $14B even more investors piled in.
6/ Many people involved in the telecom and dotcom bubbles look back through a particular lens that they favor. One person may focus on the behavior of investment bankers and another may focus on private equity investors. Complex adaptive systems aren't explainable in that way.
7/ Working in the middle of 1990s telecom and dotcom bubbles was hella fun. It wasn't boring and if you didn't learn from it, you weren't paying attention. If you think you can explain the bubbles with a linear narrative, you didn't experience what I did. It was a lollapalooza.

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More from @trengriffin

11 Jul
1/ You find a lamp and after you rub it a genie appears and offers you one of two businesses:

1. Business A generates $10,000 in "earnings" each month;

Or

2. Business B generates $10,000 in "free cash flow" each month?

Would you select Business A or Business B?
2/ Cash flow rather than reported earnings is what determines value for an investor. You can't spend someone's opinion that a business generated an accounting profit. Earnings are only a clue about future cash flows. That and other clues about cash flow can be misleading or not.
3/ Why do so many investors focus on earnings rather than free cash flow ?

"convenient availability, single-number simplicity, auditors provide presumed authority and a shortcut, freeing investors from the need to assess long-term cash-flow prospects." expectationsinvesting.com/pdf/earnings.p…
Read 7 tweets
5 Jul
The 1993 to 2001 period in history isn't simple to explain. I'm not guessing since I was actually there. The era involved many simultaneous phenomena interacting to create a lollapalooza. If I had to select one triggering event it was creation of the commercial internet in 1993.
The triggering phenomena that created the commercial internet in 1993 were chips appearing in devices, running software and connected by wired and wireless networks. When this happened, many new ways to create value were possible and the process of sorting that out was exuberant.
People creating new value based on chips in devices connected by networks continues today ~ thirty years later. There's still a lot of exuberance as the efforts of businesses get sorted out. What's different? Central banks did not take interest rates to zero and beyond in 2001.
Read 4 tweets
3 Jul
1/ "Our goal at SpaceX is not to go bankrupt," Elon Musk said at Mobile World Congress in Barcelona.

The most unknown and fundamental challenge with space-based businesses is economic. A survivable business model is a core element of product market fit. google.com/amp/s/amp.cnn.…
2/ There's only one geostationary orbit, and that is over the equator at 36,000 kilometers. By contrast, SpaceX satellites orbit at about 500 kilometers. Everything in space (almost) involves tread offs. Close means better propagation but it's hard to offer committed data rates.
3/ With the combination of a high minimum vertical angle to low Earth orbit satellites--to overcome blocking and signal problems with Ka or Ku bands--and the low altitude, geometry takes over, and a constellation of hundreds of satellites is required to continuously cover Earth.
Read 10 tweets
30 Jun
1/ Buffett: "We learned a long time ago that you can't make a good deal with a bad person. Just forget it. Now, if you think you can draw up a contract that, that is going to work against a bad person, they're gonna win. They probably enjoy litigation." cnbc.com/2021/06/29/cnb…
2/ Buffett: "The bad guys win. They know more games. They may lose eventually. but it's no way to spend your life."

This interview was recorded after the annual meeting in May and only really covered new ground on Archegos. I need to read it to be able to summarize it for you.
3/ I've tried to make it seem like Buffett and Munger are on Twitter through me since it's educational for some people.

Why do I do this? It just happened as I saw people misinterpret.

If you think they are going to say something new every time in every comment, get serious.
Read 6 tweets
29 Jun
1/ Teledesic didn't go bankrupt as Elon claimed at Mobile World Congress today. The board of the company decided it could not be financed with an attractive outcome at that time and hundreds of millions of dollars of capital was returned to shareholders. 25iq.com/2016/07/23/a-d…
2/ Elon is just misinformed and I assume zeto ill intent on his part.

Teledesic cleared regulatory and other hurdles that make Starlink, OneWeb and Kuiper possible today. The Teledesic peak accomplishment was in 1995 at the WRC where the ITU allocation for NGSO FSS was obtained.
3/ What did Elon Musk say at MWC today? The link to his session is here: Listen carefully to what Starlink is designed for, especially who the target customers are and how capacity is distributed. The biggest challenge is creating a successful business.
Read 8 tweets
26 Jun
1/ A orders chips. Supplier says "supply is getting tight." A triples order to store them in a warehouse. Supplier tells other customers supply is even tighter. They order extra chips. Quickly there are more chips in warehouses than toilet paper in garages during the pandemic.
2/ Intel's Gelsinger: "I don’t expect the chip industry is back to a healthy supply-demand situation until ’23. For a variety of industries, I think it’s still getting worse before it gets better.”

Are chips in warehouses the prime cause of the shortage? No. Demand is higher.
3/ "Software eating the world" means rising demand for chips.

I'm skeptical that this increase in chip demand is "transitory."

Fabs and backhoes don't increase with Moore's law. hartenstein.de/EIS2/Nathans_L…
Read 10 tweets

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