- Jen Wieczner of NYMag profiles Arthur Hayes, who is both a successful crypto entrepreneur and a successful chronicler of the crypto market—his blog is required reading. Hayes was an early adopter in crypto, doing international arbitrage in 2013, and has been an early adopter in other ways, spending some time under house arrest for ignoring anti-money laundering laws. Hayes is clearly a high-variance person with a flair for taking risk and getting attention. This is exactly the set of character traits that works exceptionally well early in an industry's existence, but the payoff gets negative once "risk tolerance" means a light touch on the compliance side and once "attention" comes from the Southern District of New York.
- Guillaume Blanc in Works in Progress writes about France's fertility transition in the 18th century. It's a wonderful data-driven piece that links together evidence from family trees on when and where fertility declined with data on wills to show that the decline was linked to an increasingly secular outlook. It's interesting to note that around the same time Malthus was looking at demographics from a purely material lens—how much wheat, how many mouths?—France was demonstrating a separate set of potential influences.
- Nilay Patel interviews the CEO of radio and podcasting company iHeartMedia. (iHeartMedia is the corporate ancestor of Clear Channel Communications, which used to be a bigger bogeyman in media discourse.) It's a fun piece on media economics, and a great case study in the fact that media companies can use their audience attention to monetize directly, or to shift audiences towards other media properties that monetize better. iHeartMedia can instantly make a podcast famous by running ads for it on their radio stations, and can use more granular podcast data to target radio ads to more receptive audiences. In some businesses, the point at which the business clearly won't grow again is decades before the point where it can't produce profits and accelerate the growth of some other, more promising category.
- Michelle Celarier profiles short seller Nate Koppikar in Institutional Investor. He has a fairly top-down approach, looking for broadly overheating industries and then narrowing the search down to the most overpriced or poorly-run companies within them. For example, right now he's using Kim Kardashian's entry into private equity as a sign that the industry is due to decelerate. (How well that backtests depends on whether or not you shorted tech when Ashton Kutcher started a VC fund in 2010.) One way he summarizes his view: "I think the important thing in our investment philosophy is: No one is special and no one does anything that differently." This is a very good heuristic! (In fact, it's a great one for personal decisions: any time I'm tempted to try something with a high failure right, I ask myself what I know that the other people trying it don't, and if there isn't an immediate answer, that's a good reason to reconsider trying.) On the other hand, it's just a heuristic, and some companies really are special. That's one reason short selling is hard; the very best companies often look overvalued the whole way up.
- And on a completely different note, the Anarchomicon Substack has a wild piece about the game theory of prison gangs, and introduces the concept of "Cocytarchy," or rule of the damned. The core idea is that street gangs expect members to go to prison, and prison gangs can kill those gang's members once they're inside. Meanwhile, there's no available way for gangs on the outside to retaliate. This is an incredibly dark concept, and perhaps the best possible illustration that some people in the world are motivated purely by power, not by any standard of living that power can bring.
- And in this week's Capital Gains, an explainer of unit economics. Breaking a company's economics down into the relevant strategic "atoms" is an essential part of analyzing it, and is a good reflection of how companies think internally. But it's not always easy. Subscribe here to get a weekly explainer on finance, economics, and corporate strategy.
- Twelve Years of Turbulence: The Inside Story of American Airlines' Battle for Survival: One function of the airline industry is to trick otherwise sensible managers into working in a field where basically all interesting news or important historical developments are bad for business, there are numerous entities that have leverage to capture upside (unions, aircraft manufacturers, credit card partners), and the result is a business that has struggled to produce long-term returns for shareholders. But it does produce interesting stories; this book is a memoir written by American Airlines' general counsel, who gets to witness every body-blow the airline faces up close. Because it's by a lawyer, it sometimes veers off into legal issues—one dramatic high point is the question of whether New York law or admiralty law is appropriate for a case where an American Airlines plane malfunctioned near water but ended up crashing in Queens. The book gets deep into some of the legal and financial negotiations airlines have, but in a capital-intensive industry where labor relations aren't always great, those negotiations are big contributors to overall outcomes.
A Word From Our Sponsors
This newsletter is brought to you by Tegus, your modern research launchpad.
Investors waste too much time looking for actionable information across disconnected sources. Tegus streamlines the information you need to move quickly with conviction and make better decisions. With access to the largest transcript library, expert calls with no markups, driveable financial models, and searchable SEC filings, you’ll be the smartest expert in the room.
Right now, readers of The Diff can trial the Tegus platform for free.
- Drop in any links or comments of interest to Diff readers.
- We'll be writing about a media conglomerate in the next few weeks. Diversified media businesses have made a few fortunes over time (News Corp, Viacom, Metromedia, and Liberty Media all got owners onto the Forbes 400). But media companies also have a tendency to do value-destructive M&A.
Companies in the Diff network are actively looking for talent. A sampling of current open roles:
- A company building zero-knowledge proof-based tools to enable novel financial arrangements—yes, there are times when "just use the blockchain" doesn't mean "let's use a much slower database"—is looking for a senior engineer with a research bent. Ideal experience includes demonstrations of extraordinary coding and/or math ability. (NYC or San Diego preferred, remote also a possibility.)
- A company building ML-powered tools to accelerate developer productivity is looking for a mathematician. (Washington DC area)
- A profitable AI startup is looking for ML engineers to help build new services to help small companies accelerate their growth. (SF)
- A well funded early stage startup founded by two SpaceX engineers is building the software stack for hardware companies. They're looking for a backend engineer who can build services that quickly process large amounts of data. (Los Angeles)
- A crypto infrastructure company is looking for a senior backend engineer, ideally with Python and Typescript experience. (NYC or remote)
Even if you don't see an exact match for your skills and interests right now, we're happy to talk early so we can let you know if a good opportunity comes up.
If you’re at a company that's looking for talent, we should talk! Diff Jobs works with companies across fintech, hard tech, consumer software, enterprise software, and other areas—any company where finding unusually effective people is a top priority.