Category: business

Twitter Spaces: the future of audio content

Audio based content on the internet like podcasts are episode based series that a users can listen to at a time of their choosing.

The structure of audio content may have a number of variations, the most common being interviews, storytelling, memoir and more.

At their best, podcast conversations tend to flow more naturally than old school news or television interviews, giving people the time (normally an hour or more) to discuss topics in-depth without interruption.

This format enables people to have lengthy, thought-out conversations, exploring nuances on all sides of a given topic.

Audio consumable content is growing in popularity

According to Oberlo, over 500 million people listen to podcasts in 2022, close to double that of 2019.

Similarly, search traffic on Google for the word “podcast” has slowly trended upwards since pre-2009.

chart showing the growth in number of people searching for the word "podcast" from 2009 to 2022
Growth in interest over time, “podcast” search results via Google Trends.

While the popularity of podcasting and audio content in general is increasing, there’s a new format on the scene that is slowly grabbing large numbers of users attention.

Specifically, Twitter Spaces is the internet’s next iteration of audio consumable contact.

Twitter Spaces improves upon podcasting’s content model

Similar to podcasting, Twitter Spaces facilitates conversations, interviews, and discussions to happen and flow naturally.

However, in traditional podcasting, the conversation happens behind closed doors where a group of people record a conversation and then publish it to an audience afterwards for later listening.

On Twitter Spaces, this audio model is improved in two critical ways:

Twitter Spaces enable live, real-time conversations

Podcasts normally don’t happen live.

Twitter Spaces happen real-time, in the moment.

The candid, off the cuff, and unedited nature of Twitter Spaces makes them feel more authentic.

While Twitter spaces can also be recorded and released for future listening on Spotify or even just re-listened to on Twitter for a few days,

The fact that Twitter Spaces happens live in an open format allows for that live stream style discussion to happen between the audience and the speakers.

This includes real time feedback from the audience via Tweets, emojis, and replies.

Twitter Spaces enables open discussion where new speakers can jump in and leave freely

Podcast conversations happen between a smaller number of guests, where new individuals are not able to freely join the conversation.

However, the format of Twitter Spaces allows new members to join into the conversation in real time.

If someone in the audience has a unique perspective or hot-take on an idea being discussed, that person can request to get on stage and share their thoughts.

As new guests are invited up to the stage, this can add new insights and diverse perspectives into the conversation.

How to Host a Podcast or Twitter Space: Beginner’s Guide

After hosting a few Twitter Spaces myself, here are a few things I wish I new when I got started.

Twitter Spaces are very similar to Podcasts, however, the communication model is much newer.

The two key differences between Podcasting and Twitter Spaces is that they happen in front of a live audience, and second, is that you can have up to 10 speakers on stage contributing to the conversation.

A lot of the skills that make traditional Podcast hosts successful are likely transferrable to Twitter Spaces, however, there are a few key differences.

Starting the conversation

Have some sort of structured introduction planned out.

Ask people about stuff you see in their bio.

Thank people for jumping on.

The dead space while waiting for people to jump on during the first few minutes after going live on your spaces is a good time to talk about:

  • context / background for the conversation
  • welcoming people in
  • thanking people for joining
  • inviting speakers up
  • tweeting out the link
  • DM’ing co-hosts and speakers to remind them to jump in
  • reviewing the purpose and vision for the Space
  • reminding people of the open and inclusive nature of the conversation
  • as well as anything else you might want people to know.

Find or Build a community

Authentic community and genuine followings on social media takes work.

However, find a community that in some way feels involved in your success and actually wants to join twitter spaces that are hosted.

Find a great Co-host

In my case, after making a few posts in the community Discords, I received a few direct messages about the excitement from the community.

I don’t think I originally planned on having a co-host but it worked out well.

Two things stood out: Jrocki was taking action from the get-go, and even put together a POAP for our pilot Twitter Spaces.

Unfortunately this process is not easily repeated.

Guest Scheduling – One at a Time

One guest at a time is better than trying to have multiple unrelated people on at once.

While multiple speakers can contribute to the conversation, we can’t go from topic to topic without the conversation losing structure and focus.

When you invite a guest on, they need to be able to have time to voice their thoughts and info about their project. When you invite multiple people on, guests may feel like they are not getting their opporutnity to speak

With guests, you need to establish focus… Having many speakers is an innovative approach to podcasting, but it must feel organic and they must be on the same page.

Prepare

Be curious, be interested in other people. Cultivate curiosity for as many unique interests as possible, and let that curiosity come through when talking to other speakers.

Ask specific questions.

Do some preparation – look them up and find other stuff they have talked about. Find answers they have given, and ask about something specific.

Dig deep. Find the content your interviewee has produced or been involved with that doesn’t have tons of views. Maybe they share specific ideas on something not commonly talked about? Use this as a jumping off point.

For example, if the interviewer has had multiple podcast appearances in the past, perhaps they share different stories or anecdotes on each one.

Spend time think of questions and discussion topics but don’t be afraid to diverge if the story gets rich. Which brings up the next point…

No plans, just vibes

Research and preparation aside, it i ismportant to have time to riff and allow speakers to let the conversation flow.

Time to vibe is important.

If you find the conversations topics at the beginning naturally tend toward something silly, I believe that’s actually a good thing.

We’re all humans here, and social media should be fun and entertaining at the end of the day.

For example, at the beginning of the recent Shell Protocol space, the speakers started talking about mayonnaise of all things. Regardless of how you feel about the pale condiment, it was pretty funny and actually learned a few things – namely, that the mayonnaise in Belgium is waaay better than what we have in the United States.

This feels similar to the “ice breaker” games that some corporate jobs have employees do on their first day. However, I was never a big fan of those formalized ice breakers. Letting it flow informally feels more natural.

Inclusiveness

Encourage inclusivity and open discussion. Let conversations topics go out on tangents if the speakers are engaged and contributing to the conversation. At the end of the day, the goal is to make sure everyone enjoys the conversation.

As long as all speakers treat people with respect, everyone should feel comfortable sharing their opinions and diverse ideas.

People join Twitter spaces from all over the world

Be considerate for time zones globally. Mention the time zone you are in, show empathy to global community that some people may have to listen to the recording later or are jumping in at obscure hours for them.

Shut up and listen

As the host, be willing to stay quiet and let people talk!

If you are interviewing someone about their project or endeavors, don’t be afraid of the awkward pauses… allowing some space between words will encourage the other person to talk more, share more insights, and ultimately make for a better interview for the audience.

When someone is talking, actively listen. Don’t try to think of the next question while they are talking.

Questions and Answers

Asking good questions, along with topic selection, is the difference between a boring show and an interesting show.

When you ask a question, make sure to be as concise and direct as possible.

  • Poorly-phrased question: “what are your future plans with the OptiPunks? Do you have anything like… i don’t even know what you could do but…”
    • Again, its a bad habit ramble on unnecessarily after asking your initial question.
  • More effective and concise question: instead, just stop talking after you ask the question, something like this: “what are your future plans with the punks?”

When some one asks a question and you as the host can’t immediately think of a great answer, this is a great opportunity to open up the question to other speakers that are up on stage, as well as your co-host. This does a few things – first, it shows that you are humble enough to admit that you don’t know everything. Second, it helps get other people involved in the conversation to help have diverse perspectives, ensuring that you as the host don’t just monopolize the conversation.

After re-listening to the first two episodes from the Twitter Spaces I hosted, a few times when I gave answers, it felt like I initially rambled a bit and went slightly off topic. Even if I tried to bring what I am saying back around and relate it to the original question, going off on a tangent can be somewhat distracting and might confuse both listeners as well as other speakers

Sometimes i say something and then say a disclaimer after like “i dont know tho” – dont do this

Position statements for the perspective of listeners.

In the case of our spaces, since we cover user-ready blockchain dapps, every statement I make sure be catered toward the perspective of a potential user of a given app, as the listeners are likely prospective users.

Relate what you are saying to how others can benefit from it.

Eliminate the Ego, Avoid talking about yourself

For example, re-listening to myself, I noticed it sounds a bit off when I talk about my own experiences using the apps without focusing on how other users might also interact with the app.

On one of the first Spaces I hosted, I said something along the lines of “maybe I’ll be eligible for the next Optimism airdrop who knows”.

This statement sounds bad because its self-seeking, as opposed to sharing statements about how a user/listener can gain value from the Optimism ecosystem.

Instead, I could talk about how users in general that were not eligible for first airdrop still have a chance for other OP token airdrops, and share a bit about the Optimism phased approach to airdrops.

This approach would increase the value that listeners get by listening to the conversation.

I talk too much about things I can do in web3 like

At one point, during episode 1, I was talking to Bodo about the voting process for public goods funding within OptiPunks. This is another opportunity to talk about how users in general that own an OptiPunk can actually vote as well. Its just a less self-centered way of speaking, and will likely create a more entertaining and educational conversation.

Showing support for project founders

Founders don’t need you to be the second pitch-person for their project.

For example, when you learn about something new such as a new project or protocol, instead if saying “I’ll have to check that out”, say something like “great to know – so anyone that has gets involved with ____ project is eligible to do ____.”

If someone talks about one of their initiatives or a project they are building, you can show support for that person by being the person jump on board and say something like “oh that’s so cool, I just followed that project and will look into minting one!”.

In this scenario, the listeners don’t need you to be the second person pitching them on the project, as the founder has just done so.

You can show support for the other speaker by taking the role of being somebody that is excited about the project, which will likely make other people want to follow your lead get involved too.

I host a weekly Twitter Space — join me on Twitter, and be a part of the next conversation!

How effective are solar panels in northern latitudes?

Solar panels are more effective in colder weather.

…wait, really?

Yes, really. But first, the basics…

How latitude affects efficiency of solar panels

Solar energy is not equally distributed across the Earth.

Although plenty of northern regions get a lot of sun, it would seem that in general, solar panels are less effective the further north you go.

Why is this?

Angle of solar impact

The Southern Hemisphere receives more energy during December (southern summer) than the Northern Hemisphere does in June (northern summer) because Earth’s orbit is tilted. [8]

Optimal Solar Panel Tilt Angle Calculator - SolarSena
source: SolarSena

One factor influencing solar radiation intensity is the angle of impact. For harvesting solar energy from cells, the optimal angular impact is 90 degrees perpendicular.

In northern latitudes, because because the angle of impact is less direct than it is at the equator, it is spread over a greater surface area and therefore you get a less concentrated energy output per unit area.

And unfortunately, this also means that solar panels are less effective during the months that Earth is tilted away from the Sun, during the winter months.

To make up for this, solar panels are often tilted based on the location on Earth as well as time of year.

The angular tilt of solar panels to maximize efficiency is greater the further north you go as well.

In addition to the sun’s rays being spread over a wider surface area, there is a second factor that latitude influences.

Absorption scattering of UV rays

As we see in Figure 1 below, the distance that solar radiation must travel through the atmosphere is further.

A wider band of atmosphere through which the rays pass means there is more absorption scattering of sunlight in the atmosphere.

UV rays comes into contact with the nitrogen, oxygen, carbon dioxide, and other gases in the atmosphere over a wider area, so more is absorbed.

Figure 1: source, hong kong obervatory

Because a large amount of UV rays have been scattered and absorbed, they are less intense once they reach Earth’s surface

The combination of absorption scattering in the atmosphere as well as the angle of impact suggest that in general, we would expect solar panels to be less efficient during the winter time in each respective hemisphere.

Climate conditions affect solar cell performance more than expected
Figure 2: deltaPR on the y-axis represents change in Performance Ratio throughout the months of the year (summer, fall, winter, spring). PR measures how effectively the photovoltaic panels convert sunlight into energy. [3] photo/gift from phys.org [2].

However, as mentioned at the beginning of this post, there is a third factor that influences solar panel efficiency – temperature.

Solar panel efficiency in cold temperatures

Yes, cold weather does increase the efficiency of solar cells, if everything else is constant. [9]

This means that cold weather (with sunshine) are the ideal conditions for solar cells.

The reason is that low temperatures decrease the solar cells’ internal energy leakage.

In cold temperatures, electrons are less active. At higher temperatures, electrons are more active.

With lower electron activity, energy can be stored and moved across wires and batteries more efficiently. [1]

According to phys.org, solar cell efficiency decreases by 0.3% for each temperature degree increased. [1]

This means that a warmer region, while perhaps sunnier, is not necessarily going to be an optimum place for solar energy generation.

This is good news for the northern regions of Earth.

While northern latitudes may be at a disadvantage for reasons based on the first two factors mentioned the earlier section of this post, we can make the case for solar energy in cold, sunny places!

Of course, snow and ice can be a problem for solar panels, and attempting to scrape it off could damage or break the components.

If the ice is translucent, the solar panels may be able to generate a continued output of energy.

Solar in Germany

Germany is the leading country in Europe for solar deployments.

Germany is further North than most people realize. Berlin, Germany occupies the latitudinal region of 52 degrees N (Berlin).

Climate Zones Map Scheme Vector Illustration Equatorial Tropical Polar  Subtropical Stock Vector Image by ©Vector.Plus #419957486
Figure 3: Earth’s climate regions based on latitude.

By comparison, the latitude of Calgary, Canada is around 51 degrees N.

It is inspiring to see a country as far north as Germany have so much success with solar, and Germany should perhaps serve as a model for other nations.

If a northern, Temperate country like Germany can prove the viability of solar, surely countries further south can too, with even greater ease.

Still, we’re not at 100% sustainable energy yet.

In order to meet 100% of its electricity needs with solar, Germany would need to significantly increase its solar photovoltaic capacity to between 303 GW and 446 GW.

Given the three factors covered above that impact solar panel efficiency, equatorial areas are not necessarily going to be the only places (or even the best) where solar will work.

Conclusion

Eventually, the world will need to transition to 100% sustainable energy. We cannot survive off of fossil fuels and coal forever, as these reserves will eventually run out.

This post isn’t meant to provide a more realistic approach and help people understand how solar can help while supplementing other energy sources in order to maximize the amount of sustainable energy for the grid. It should be mentioned that wind, nuclear energy, hydroelectric, and more could also help transition the world to sustainable energy.

For example, as solar is added to the grid, it reduces the net demand for electricity in the middle part of the day (when the sun is most radiant).

Figure 4: Based on data over a 72 hour period, solar energy is able to account for a the largest portion of energy demand during the middle of the day, when the sun is most intense. [6]

And if we assume there is no storage of excess energy during peak hours, solar output during the night is pretty much zero.

Perhaps off-grid regions of the world, such as research bases in Antarctica or remote areas of Alaska, could fulfill their own power demands via solar systems during the summer. [7]

For now, perhaps solar energy could be a viable way to reduce diesel, at least during the daytime.

With improvements in battery technology paired with a greater number of solar panels across the globe, perhaps humans can one day capture and store enough solar energy that we can sustain our energy requirements all hours of the day and night.

And if land is abundant, as it is in the United States, perhaps the most reasonable way to increase the percentage of renewable energy that we consume is to simply build more solar panels.

Sources

  1. https://phys.org/news/2018-03-solar-cells-nordic-climate.html
  2. https://phys.org/news/2017-12-climate-conditions-affect-solar-cell.html
  3. PR aka Performance Ratio for photovoltaic performance https://www.nrel.gov/docs/fy13osti/57991.pdf
  4. hong kong observatory http://www.hko.gov.hk/en/education/edu06nature/ele_srad.htm#
  5. https://renewablesnow.com/news/germany-needs-up-to-446-gw-of-solar-pv-to-achieve-100-renewables-750437/
  6. https://www.nrel.gov/docs/fy13osti/57582.pdf
  7. https://www.energytrend.com/news/20180411-12257.html
  8. http://www.geo.mtu.edu/KeweenawGeoheritage/MiTEP_ESI-2/Solar_energy_and_latitude.html
  9. https://www.researchgate.net/figure/Solar-cell-efficiency-vs-Temperature-plotted-for-the-two-cells-with-trap-densities-of_fig7_237824433

Why platform and infrastructure products make great businesses

not investing advice, obviously…

Across every industry, investing in platforms and infrastructure is a proven area for substantial, secure returns.

Here’s what that looks like:

What to we mean by platform, infrastructure, and application?

Infrastructure: Infrastructure is like tools and equipment. Infrastructure tools are what enable more things to happen, or be built.

During westward expansion and the California gold rush, infrastructure companies – those that made the picks and the gear – were the most profitable entity.

Think about the companies building the mining gear and equipment, transportation such as railroads, and those that laid the groundwork.

Although individual applications may fail, infrastructure create economies and positive feedback loops, lowering costs of those tools so that more people can do the thing or embark on the journey and hence enable them to thrive.

Infrastructure doesn’t go away in the near-term.

Although it may become less popular (and can be quite un-sexy), infrastructure continues to exist long after the applications taken root.

Infrastructure continues to thrive, as well as evolve with the industry.

Platform: the platform is the base of which something is built.

In software, this hardware and software architecture that acts as foundation or base upon which other applications, processes, or technologies are developed. [1]

Similar to infrastructure, platforms tend to survive for the long term.

Think about it – the foundation of buildings like those at Gobekli Tepe from over 11,000 years ago still exist.

While the remains of everything else is gone, the platforms on which buildings, homes, and churches were built has not been demolished.

Application: applications are businesses that use both tools and existing foundations. Whereas platforms and infrastructure serves application developers, applications serve the end consumer, the individual.

Application businesses can be wildly successful too, no doubt.

The best and most long-term successful application businesses transition into being a platform and infrastructure business.

Because applications are more risky, the most successful companies search for any opportunity to pivot and become a long-term monolithic, ossified entity in the industry.

Infrastructure can be compared with the analogy of a garden. The dirt, the fertilizer, the water, all the tools and equipment used to build, grow, and maintain a garden.

The applications are like seeds… in an ideal world, every seed will grow to become a mature plant or a bush or a tree.

And as we know, not all seeds will grow to become flowers.

Some seedlings will die, just like some applications never make it big time. This is why applications are riskier than infrastructure… just look at how many apps there are in the iOS app store.

The apps we hear about are the successful ones – but there are millions that never survive and their story is all but forgotten.

As the few seedlings become flowers, the garden grows stronger and more valuable.

WHY platform and infrastructure products make great businesses:

As we covered, infrastructure is the tools that enable future products to be created.

These tools can often be sold or licensed to other businesses.

Businesses that sell products or services business products tend to make great companies because their customers (other successful businesses) typically have a large budget and are willing to pay a lot for a good product or service.

As more products are created, the infrastructure becomes fine tuned and improves over time to better need the needs of application developers, gardeners, etc.

The infrastructure is what leads the direction of the industry as it evolves into the future. New types of infrastructure allow innovation to happen.

The infrastructure defines what can be done, how cheap it will be, etc. It is the launchpad and defines the starting point for future apps.

Sooner or later, many companies and projects depend upon this infrastructure to meet their needs. In the best case, people simply can’t survive without it.

Examples of Platforms and Infrastructure in Businesses

Platforms for Mobile Apps:

We’ve talked about the Apple App Store so let’s dive deeper.

Apple knows and understand that what they built was first and foremost a tool and a platform.

Apple fights tooth and nail to try to maintain their position as the defacto industry platform for apps.

Apple makes a significant portion of revenue from its App Store serving as the platform from which iOS apps are built.

Google Play exhibits a similar model, as does Facebook with their robust suite of apps built into their website.

Regardless of the debates on whether or not this is an ethical practice (yes, debates exist, and result in many lawsuits).

The fact that developers are willing to build applications in these places is telling of the value that platforms bring.

Programming Language

Another example of infrastructure is a programming language.

Oracle owns the open-source programming language called Java. Although its old today, at one time it was the hottest thing.

But Oracle couldn’t directly sell the rights to use the programming language… aside from being counter productive, it would also

What Oracle did was build on top of Java. Oracle built platforms and tools that use Java so that developers and businesspeople that are already familiar with the Java language would be more likely to want to purchase Oracle software.

Marketplaces

Marketplace platforms enable thousands of people with products or service to reach prospective customers.

However, these platforms are more profitable and generate more revenue than even the highest earning individual on any given marketplace.

Take OpenSea, for example.

NFTs are the hottest thing recently in the world of Blockchain and web3. But the companies and individuals making the real money are the ones that power the NFT craze.

OpenSea is the #1 website where people can buy and list NFTs for sale. The owners of OpenSea make a percentage of every single NFT that sells.

And given that any single product could have up to hundreds of ETH worth of NFTs traded over the span of a few days, OpenSea is likely SUPER profitable.

We can also look at more traditional internet companies to use as examples.

Etsy enables artists to list their creations online and sell them.

Ebay lets people sell used goods and collectible items (usually non-new stuff or collectibles).

Amazon started out as a book marketplace, but now anyone can sell pretty much anything.

Airbnb lets people list their house or apartment for rent.

Do you think the users on these platforms are making a lot of money? Perhaps some of them are.

But I guarantee you that Etsy, Ebay, Amazon, and Airbnb make way more money than any individual seller makes.

This is the platform effect.

While these platforms likely sustain hundreds and thousands of individual sells and allow them to make a respectable income, the platform that is the marketplace itself is the single most profitable entity in the entire picture.

Tesla:

The robotic factories that build the cars are infrastructure that the company will one day be able to license out to others manufacturing companies.

The manufacturing platform that Tesla has built is arguably their most valuable asset. The tools and technology and the skillset needed to build electric cars at scale are more difficult to build than the car itself.

But the value of building this infrastructure around the product itself means that the company doesn’t have to focus as much on every single car that it makes… the robots do 80% of it for them.

The company can then dedicate resources to working ON the business, instead of IN the business. This enables Tesla to focus on the end-to-end electrical power grid.

This includes installing charging stations across the world so that future customers have a way to easily charge their car in any city or town.

It includes developing the dojo supercomputer to enable artificial intelligence and neural network training and data costs to drop dramatically.

sources:

  1. Software platforms https://www.geeksforgeeks.org/types-of-software-platforms/
  2. Transportation during the gold rush https://publishing.cdlib.org/ucpressebooks/view?docId=ft758007r3&chunk.id=d0e10615&toc.id=d0e10615&brand=ucpress
  3. Ruins and Remains of Gobekli Tepe https://www.smithsonianmag.com/history/gobekli-tepe-the-worlds-first-temple-83613665/

According to 400-year data, we’re in a housing bubble

The underlying problem: cost of housing seems extremely high in many places.

Data taken over 400 years (since the year 1620) show that housing prices are in fact extremely high right now.

The price data has been adjusted for inflation, which means it is calibrated so that the value of 1 dollar is absolute across the 400 year dataset.

Figure 1: Here’s a link to the source if you want to draw your own conclusions.

Although the study is focused on real estate prices in Amsterdam, Netherlands, I will primarily focus on home prices in the United States, and perhaps this should be viewed as a shortcoming of this blog post.

The current state, factors affecting housing:

Record low mortgage rates mean more people are incentivized to purchase homes. Those of us that have purchased homes today are locking in a 30-year rate around 3%, which is good. If the Fed raises rates, then home prices may come down naturally, but the total amount that consumers pay per month (principle + interest) won’t change much.

Migration out of metropolitan areas, to tier 2 and tier 3 cities – due to the COVID-19 pandemic as well as the trend towards remote work means that housing cost in cities should go down, while prices in suburbs should go up.

However, people are starting to move back to the cities. Millenials that moved in with their parents during covid may be ready to leave, etc.

Long-term trends include:

  • more people renting homes
  • lower testosterone in males and thus lower fertility rate
  • women are more career oriented so having few kids
  • ultimately people are getting married later, which means they are having even fewer kids.
  • moving more and less stable

So what’s causing higher home costs?

I’m not sure what the ultimate cause is, but here are a few possible explanations. This of course may be wrong… but I’m going to give it a go. Feedback is encouraged.

Inflation?

The graph in Figure 1 above is adjusted for inflation, so I actually don’t believe inflation is the cause of house prices increasing. Nor do I think inflation will really impact the housing market directly over the foreseeable future.

The ones most harmed by inflation seem to be people who hold large amounts of cash, and this is a separate matter.

What about deflation?

While not directly related to housing, discussing inflationary risk should be combined with the possibility of deflationary risk as well.

There are of course people like Cathie Wood that actual think deflation is a greater risk than inflation, and that’s a whole nother story.

Ms. Wood’s reasoning behind deflationary risk is the rapid acceleration of emerging technologies which she believes will drive costs lower. She certainly makes a solid argument.

Is there a housing shortage?

Some say that a housing shortage is driving costs skyward. Based on simple rules of supply and demand, this is worth looking into further.

However, given the free-market economy in which we live (both US and Netherlands), would this not incentivize more homes to be built?

Wouldn’t construction companies be having a ball in this world?

The answer is maybe, but it is complicated.

The cause behind the housing shortage, that I’ve read, is that construction sharply declined after the 2008-2009 financial crisis, which has resulted in a lagging long-term housing shortage, although construction rates have increased since then.

Figure 2: source: https://calculatedrisk.substack.com/p/the-rapid-increase-in-rents

Notice the low rate of construction between 2007 and 2014 in the graph above. This period of low home construction may be the origin of the lag, which could be partially responsible for today’s shortage.

And while there is technically a shortage of inventory, I’m not so sure the shortage is as dramatic as everyone says. While the inventory shortage may be real, I do not believe that the severity of inventory shortage is the primary cause for the current state of housing market.

I’m not convinced that new home construction and increasing inventory will really solve the underlying problem.

As explained in this blog post on this MathBabe blog post, increases in inventory don’t necessarily mean that more people get their own house. Vacant homes are a real risk here, as stated regarding the 2008-2009 financial crisis: “the boom in housing supply gave way to a boom in foreclosures, leading many empty houses to be held by banks for years.”

Is population increase making the housing shortage worse?

The argument that population is continuing to increase which is causing a housing shortage is 100% false.

Population growth (at least in the United States – see link here) is severely stagnating and risk of population collapse over the next few generations is not out of the question. But again, this is

Given these facts, I do not believe housing prices are going up due to housing shortage.

How about a housing bubble?

Are we even in a housing bubble? According to the Calculated Risk blog post, the answer is no, we’re not in a bubble.

However, the blog post linked above suggests prices might decline a bit, on the basis that the Case-Shiller house price index (based on the ratio of income to house price) is somewhat inflated right now, as it was before the financial crisis of 2008-2009.

I feel the arguments presented in the Calculated Risk blog post are well presented and credible, and that we are not in a bubble right now.

I will not duplicate what the post explains, but I do recommend reading it.

Wealth Inequality

I believe we have a situation where wealthier individuals who own a home have realized the savvy financial play that landlording brings, and have purchased their second or third or even fourth homes – whether for vacation or as rental property, or some combination of the two (i.e. Airbnb).

There are a few reasons for this. Financially, it is generally smarter to own than to rent, so people that can afford to will usually choose to own.

Second, given the high cost of capital gains taxes, homeowners are disincentivized from ever selling real estate once they acquire it. They may transfer equity to another property, but by and large people who buy a home tend to remain homeowners forever.

Once you’re a homeowner, people usually never go back to renting for the rest of their lives.

One might wonder how lowering the capital gains tax rate would affect this, but regardless – that would not solve the underlying problem.

Anyways, we have a trend where wealthier people, maybe the top 20% or 30% of people in terms of net worth, own more than one house, while poorer people do not own houses and cannot afford to buy a house. The most severe manifestation of this problem is when poor people also cannot afford to rent.

Starrygordon from mathbabe.org posted the following comment, which I believe is worth a read:

starrygordon from mathbabe.org (link)
June 4, 2021 at 11:37 am
It has been the practice of the Federal government for many years to, in effect, print money and give it to rich people. Since ‘money’ is now actually credit, and since credit is denied to the not-rich, not too much inflation has occurred in the ‘real’ (not-rich-people’s) economy; instead, the new funny money has gone to inflate rich people’s asset prices — stock market, collectibles, luxury goods, credentializing education, politicians and political influence, and so on. The two worlds could get along in parallel as long as the not-rich ate their potatoes in silence. However, there is a cross-over point: real estate. The rich like real estate as an asset, an abstract form of wealth, but even the not-rich have to live somewhere, hence, as rich people’s assets inflate, they drive up not-rich people’s house and rental prices. The not-rich get a little of the funny money through lowered mortgage rates, but that’s about all. As a result, we observe a shortage of, not housing, but affordable housing, and an increase in homelessness. The conditions will continue until the present arrangement is changed or collapses.

The picture painted by starrygordon seems pretty close to reality, in my opinion. Starrygordon explains it quite well when they say that we’re not seeing a housing shortage, but a shortage of affordable housing.

However, there are alternate ideas and quite convincing data that might signal otherwise…

For example, the Calculated Risk blog post makes the argument – backed by data, that housing actually might not be that unaffordable after all. This is based on the fact that mortgage interest rates are extremely low right now.

What do you think?

Monopolistic Ownership?

The infamous moniker “you’ll own nothing and be happy” published by the World economic forum, while dystopian, may actually have some merit.

And while the scenario of wealth inequality painted above is related to Monopolistic Ownership, there are a few differences.

Parsing Parcel Data to Understand Properties, Parks, and Prices |  UrbanFootprint
Parcels in Manhattan, NYC. Source: Urban Footprint

The key worry is for me is that, imagine if a single company just bought all the land in a city.

I’m talking every single parcel. Look at the picture of Manhattan in the photo on the right and imagine every square centimeter of land in Manhattan was owned by a single person or company.

A business or organization that did this could undoubtedly control the price of rent, and more.

Thus, they could charge whatever they knew people could afford.

Not what people are happy paying – but MORE than people want to pay, just at the edge of unaffordability to the point where people can technically afford to live there, but just barely scrape to get by.

As Peter Thiel has described in his book Zero to One, great businesses should try to create monopolies for themselves.

Although monopolies are bad for society (and technically illegal), a business is incentivized to try to get as close to a monopoly as possible.

And this is exactly what large investment companies seem to be doing.

Huge investment companies are buying up all the most important houses. This includes hedge funds like BlackRock.

These monopolistic ownerships are largely occuring in the big cities and large metropolitan areas.

The countryside and rural land has yet to be monopolized.

How much is rural land worth?

Given that affordable housing seems the be the real issue here, one might argue that people can and should simply move the the suburbs or the country, and find lower costs of housing.

I mean, the remote economy is enabling this after all.

And people are largely doing moving out of major cities.

But will this always be possible? Will we always have beautiful rural vacant land available to buy in the united states?

And what happens when companies like Blackrock buy up and own ALL the land in the United States?

Is this even possible?

Let’s run a few numbers:

First, there are 2.43 billion acres of land in the United States – that’s 2,430,000,000.

Let’s assume that the majority of the land in the united states is rural land, and let’s price it based on the price of agricultural land, at $3160 per acre.

If we price out all the land in the United States at that estimate, multiply 2.43 billion by $3160 per acre, then we get an estimate for how much all the rural non-city land is worth in the United States.

Based on the number estimates, this is around $7.6 trillion, or $7,678,800,000,000.

Given that there are companies in the US with a market cap over $1 trillion, (Apple, for example coming in at a whopping $2.91 T) it is certainly plausible that a large company could begin to buy up more and more and more rural land, or even control portions of the United States real estate market.

This wouldn’t only to impact Manhattan real estate and beachfront property. This could result in some type of dystopian price fixing outside of cities, expanding into the countryside as well.

Government intervention

While the issue is complicated, I do not believe the solution is greater government intervention. I think too much government involvement tends to do more long term harm than good, and we want to avoid this as a free society.

Governments should continue to do what they do best, and act like referees on the playing field. Keeping the game fair, preventing monopolies, keeping the country safe, etc.

As explained in the Gold Observer’s blog post, long term effects of too much government intervention tend to be negative, regardless of how helpful it might seem over the short term:

“In response to the crisis governments came to the rescue to bail out banks and support the economy—which increased government debt. The housing bubble was not allowed to fully deflate.” – Gold Observer post

It is unfortunate that we can’t simply let the free market economy run through the natural up and down cycles that will inevitably happen.

The government unfortunately always seems to get involved, bail out the banks, stimulate the economy, etc.

The short term effects of these practices might seem ok or even good to some people, but the long term effects mean that the United States has ended up worse off in the end.

Another example is economic stimulus during the COVID-19 pandemic. Printing so much money is causing long term inflation which unfortunately seems to do more long term damage.

Conclusion – will home prices rise forever?

Will house prices continue to go up, or will we see prices eventually start to go down?

As covered in this post, I think it is a combination of things. I don’t have the answer and don’t claim to. Please think about some of the data points I’ve presented, and consider what some solutions might be and how the future is likely to play out.

What I will say is that construction is increasing. Inventory will soon mean that the economies of supply and demand are better matched so that the people that need homes can purchase them.

While this may do some good, I do not believe this will completely solve the problem.

Wealth inequality is certainly the main cause for concern. For example, as inventory rises, what’s stopping wealthy people from acquiring a 2nd, 3rd, or 4th home, and then renting it out to lower-income individuals?

This is a scenario that might play out, which wouldn’t help the housing costs go down at all.

Only time will tell.

If you took the time to read this, please reach out to me on Twitter – I almost always respond and I’d love to hear what other people think.

Where am I right / wrong? What did I miss?

Cheers, and happy 2022.

Sources:

Calculated Risk blog: https://www.calculatedriskblog.com/?m=1

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MathBabe

Gold Observer

32 Simple Rules for Investing

Not investment advice – not financial advice. Never invest money that you can’t afford to lose. Every investment is risky. You can lose what you put in!

What should you look for when investing in exponential technologies?

There are a few simple considerations that can help you make better decisions when investing in emerging tech – whether that’s angel investing, buying crypto, NFTs, or even growth stocks.

It goes without saying, but this is not investing advice… do your own research.

When you are not an accredited investor, the difficulty in acquiring equity in a private company much more difficult, but these principles apply to any investment one might make.

You are forming hypotheses and betting on what will happen in the future. Try to buy the future at a discount.

Embrace a long-term mindset

  1. Focus on long-term fundamentals — invest with a 10-year time horizon.
  2. There are many short-term investors out there. Unfortunately, I don’t have insight into the day to day or even quarter over quarter changes in market conditions. Because of this, trading and short term investing is not and never will be a strategy that I follow.
  3. With emerging technologies, quarter over quarter performance is not important. The company’s potential to impact the future is what truly matters. Anticipate how the future might be dramatically different from the present, and find companies building products that will help bring civilization towards that future.
  4. Find the teams and the communities that are doing the right things the right way for the right reasons, not just to maximize short term financial upside.
    • Leadership is important because a lot of this comes from the top, leadership defines this culture of doing the right thing and building long term value over short term (unsustainable) gains.
    • Vitalik and Elon embody this. Steve Jobs embodied this.

Buy infrastructure: invest in tools

Cranes and tractors must come before buildings and skyscrapers.

  1. Before applications of a new technology can thrive, the infrastructure and platforms must be in place.
    • All good buildings start with a great foundation.
  2. Invest in the tools that developers are using to build applications.
  3. Invest in the platforms and infrastructure. In computer technology of the 90’s, this looks like data centers, servers, and hardware.
    • In bitcoin and blockchain, this looks like Ethereum, Tezos, or perhaps anything that enables the creation of decentralized applications (dapps).

Curate your own information

Some people call this “do your own research” aka DYOR. The point is, no one can tell you where to invest. You have to figure that out for yourself. Before we dive into this section, I’d like to share a quote I’ve saved:

Nobody knows the way. Try to figure it out. Forget school and experts. Figure it out yourself.

  1. Follow ideas from the smartest people in the world. This means following the developers, engineers, and the people that are actually building emerging technologies.
  2. Search for information from these people that is not mainstream. Dig into developer forums, comment sections, infrequently viewed threads, niche podcasts, etc. Ask this question: Where are the users? Where is the innovation?
  3. You can find developer communities on Reddit, Discord, Twitter, and more.
  4. Find the influential minds without a lot of followers.
  5. In addition, follow the big, influential people in our society that are known to be contrarian thinkers. For example, here are a few of the people I follow. (meaning, read their blogs, podcast appearances, interviews, etc.)
    • Elon Musk, Michael Burry, Cathie Wood, Peter Thiel, Vitalik Buterin, Warren Buffet, Charlie Munger, Ray Dalio, Tim Ferriss, Mark Zuckerberg, Kevin Rose.
    • Yes, you are becoming a bit of a tech-culture anthropologist.
  6. Focus on a profitable industry.
  7. Invest in founders-led companies that also have a long-term vision, and plan on running the company for the coming decades.
    • If the founder of the company is still the CEO, that is a good sign.
  8. Form qualitative hypotheses based on every data point that you can find.
    • I say qualitative because its impossible to know how big when dealing with exponential potential.
    • Investing in the future is more qualitative than quantitative. Both types of data have their place. I haven’t found a good way to use quantitative data to form quantitative predictions yet. Quantitative data serves the role of predicting where things are headed. You can more accurately predict directional movements, buts it is almost impossible to know when and how far.

General investment thoughts:

  1. Traditional investors tend to look to the past to determine chances of future success. When investing in emerging tech companies that have 1000X potential, ignore this strategy. Focus on whether or not the team will be able to deliver on their mission, and whether or not their hypothesis is correct.
  2. Ignore news related to regulation, laws, data privacy, etc. Although a relevant cause for concern, these problems are all very much solvable and do not hinder the company’s ability to grow and remain profitable.
  3. Dollar cost averaging is overrated. On truly exceptional investments we’re looking for, the earlier, the better.
    • The value of encouraging people to “dollar cost average” is if they only have so much to invest at any given time, like in the case of getting paid a salary every two weeks and investing 10% of it in your retirement accounts.
  4. Swing seldom, swing heavy.
  5. Although making a big swing early on is the goal, don’t be afraid to buy the dip. On those truly great investments… buying on the upward trend can never hurt.
    • Yes, this is slightly against what I said about dollar cost averaging.
    • Examples: Ethereum between 2016 – 2021, or Tesla between 2018-2021
  6. Listen to everyone’s opinion, but be careful which ideas you subscribe to.
  7. Is the company investing in growing the business, or are hoarding cash? For public companies, look on the 10-k annual report, compare net change in cash over time.
  8. When investing in exponential technologies, one of the biggest mistakes you can make is selling too early. Reasons to sell include – fundamentals changing or re-allocation to better opportunities. Additionally, if you end up deciding to sell an investment, consider keeping 10% of the holdings as a “just in case is 1000X’s” bet.

Old school investing wisdom that rings true:

  1. Rule Number 1: Don’t ever lose money.
  2. Always follow Rule Number 1.
  3. Only invest what you can afford to lose.
  4. Be willing to watch your investment go to zero.
  5. You only need one big win to make up for a hundred poor plays.
  6. The best time to sell a stock is never.
  7. Only invest in things that you understand.
  8. Understand the utility of tax-favorable retirement accounts, and use them to your advantage. That’s why they were invented – for you to benefit from as a citizen. HSA, Roth IRA, 401K, etc.
  9. A person only needs 1 or 2 big wins in their lifetime to be set for life.
  10. Don’t be afraid to wait. The money isn’t made in the buying
  11. Borrow ideas from everyone that is smarter than you. Some investing advice contradicts itself. Become comfortable with the mental eustress of cognitive dissonance.

These are just my strategies that I have used to try and identify tech trends before everyone else.

Airport Hacks I Have Known and Loved

Business professionals end up flying more than expected

Air travel ends up being a big part of the day to day experience of busy professionals.

As I’ve posted specifically about the future of air travel before, at espressoinsight.com, I generally attempt to cover the future of business and emerging technology. To minimize travel stress and maximize comfort, it is important to know how to optimize your experience as a passenger.

Moving to Oahu, Hawaii meant flights between the island and mainland became a regularity.

As taxing on my personal budget as this has been, taking a minimum of a 5+ hour flight everytime I want to go anywhere off-island meant that I quickly adapted to quick a few tricks of the trade of air travel.

I hope these are helpful – not necessarily to hack the system, but simply to make the flying experience more enjoyable.

Airport Hack #1: Boarding time

Oftentimes, when the planes are not at full capacity, you will be able to have your choice of seating if you are last to board the plane. Flying during pandemic times with a large percentage of empty flights is just glorious.

The best seats in first class and even the ones that aren’t quite first class but are still premium seats are often open.

As a bonus, you can opt to find a seat by the window or aisle to your choosing, and may even be lucky enough to get a whole row to yourself as I have a few times.

(add photo).

Boarding late on my flight from San Francisco to Honolulu, more than half of first class was completely open, as well as many seats in the premium / upgraded section, where I was able to find an entire free row.

Words of advice: Even if first class is open (the ones with the lounge chairs and private rooms / pods etc), avoid sitting in first class, though, because the flight attendants will often keep a seating chart to greet first class by name, which would be a dead giveaway for you, in which case you may be asked to move.

Airport Hack #2: Optimizing carry-on luggage

Depending on your ticket, you might not be allowed more than one personal item, meaning no bringing an extra carry on. If this is the case, there is a way to sneak an extra bag on if you absolutely need to.

On personal items and carry ons: Not all of us are minimalists, sometimes we have a lot of stuff to bring with us.

Let’s be honest – bringing extra stuff on the plane isn’t going to hurt anyone. There’s always plenty of room – and even if there weren’t, the gate attendants will start offering people a “free checked bag” directly at the gate, so there’s always a solution.

The bag rules are the airlines’ way of encouraging customers to upgrade their tickets and spend more money.

Heck, I’ve brought my guitar on the plane and stuck it in an overhead bin with absolutely no issues whatsoever. When carrying on such a large item, keep an eye out for bin space anywhere on the plane. You don’t necessarily have to use the bins directly above your seat, just find a spot that will fit your instrument and remember where you put it!

However, to ensure the overhead bin space isn’t full, consider trying to get in line to boared sooner rather than later (yes, this optimizing for Airport Hack #2 goes is the opposite strategy of Airport Hack #1).

Here’s what you do: opt for a small-ish duffel bag and a backpack, and don’t jam-pack them too full. When you walk to the gate and scan your ticket, arrange your backpack so that it is on top of your duffel with the straps of the straps of the duffel wrapped around the backpack.

(show photo here).

Voila, you have technically “consolidated” your two bags into one, and may carry on in peace! To avoid any hassles from the gatekeepers, walk up to the gate attendant with the bags in your left hand, low and at your side, with a big smile and friendly greeting, and scan your ticket / ID with your left hand exclusively.

Airport Hack #3: Masks

Mask hacks: Masks are important an a necessity on all airlines currently, however, often, masks can become uncomfortable when worn for 5+ hours on a flight because they pull on your ears.

An easy fix for this is to bend the metal nose bridge so it squeezes and affixes the mask to your face, allowing the mask to remain in place without the need of the ear-loops. Unhooking your ear loops and balancing the gently pinched mask onto your nose, I have even used a small piece of tape to keep it in place. You be the judge on what’s most comfortable, but I’ve found that it can be nice to give my ears a break from being pulled forward.

Additional options are to find a mask that has looser ear loops so that it is less tight on your face.

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Cholodny-Went: Mental Models To Know #1

The Cholodny-Went Model is an theory in biology from the 1920s that describes how light energy on part of a plant will stimulate growth of the entire plant by producing and transporting a hormone (called auxin), to other parts of the plant that don’t get the benefit of direct light exposure. This is how root systems are grown, as well as leaves and branches on the lower areas of the plant.

The Cholodny-Went theory is valuable because it serves as a model for processes in any realm – human life, business, industry, education, etc. that result in indirect improvements in other areas.

The model is a good example of how positive stimulus in even a small area can have a large positive impact on something that might be seemingly unrelated.

How can this be applied to life and business?

Self improvement: Apply the Cholodny-Went model to improve your life by realizing that certain behaviors and actions can have an indirect positive (or negative) effect on other areas of your life.

Hiring: Good employees are hard to come by. But if you can get hiring done right, the rest of your business will excel in multiple areas as a result. A company is simply made up of the people multiplied by the systems in place that allow those people to be productive. It is a simple principle: having more intelligent and skilled employees means that your company will do better.

Steve Jobs has discussed how getting “A-players” together results in future hiring becoming a self-policing phenomena where they only want to hire other A-players to work with. By hiring a few A-players at a company and allowing them to work together, a company will likely not only have more productive employees, but also impact future hiring by enabling

Exercise: Doing squats might seem like solely a leg exercise, but the effect of doing this simple workout may indirectly help stimulate hypertrophy (muscle growth) throughout the human body. Squats are so intense and require so much physical exertion that they help increase testosterone throughout the body. Leg workouts are known to have this effect as well, but squats have the greatest effect [2]. This indirectly helps you build muscle and strength in your upper body, core, and other areas. The simple act of exercise does more than improve your life physically. The act of doing hard things and pushing yourself may improve your mental and stress levels in other areas of your life.

Product development: Elon Musk has a common business mantra that goes “focus on making the product great”. By applying the Cholodny-Went principle here, we can begin to understand why Elon believes so fervently in this statement. By improving the product, this has a down-stream positive impact on other areas of the company:

  • Lower customer support cost: A better product means that the customer support team has an easier job, with fewer bugs and customer issues to solve.
  • Lower marketing budget: A better product also means that news may spread by word of mouth, so the company needs to do less in the way of advertising.
  • Better finances: a great product will be one that customers are excited to buy. If customers love the product, they will buy more of them, so the company will be more profitable.

Learning: The world of knowledge is seemingly infinite. One of my favorite instagram accounts shares a large amount of Charlie Munger Quotes.

Using the Cholodny-Went model in your own life

There are many ways the Cholodny-Went model may be applied to life and business.

As CMQ investing has discussed on his substack page, using various models when thinking about problems can help you make better decisions.

Leave a comment and share a few areas where you can apply the Cholodny-Went model to improve your own life!

Sources:

  1. https://www.cell.com/current-biology/pdf/S0960-9822(02)70780-X.pdf
  2. Hormonal Response to Leg Exercise: https://pubmed.ncbi.nlm.nih.gov/24276305/

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Tesla Accelerates Sustainable Energy

How will Tesla enable sustainable transportation?

disclaimer: written by a TSLA shareholder. Opinion. Not investment advice. Do your own research. All information here comes from publicly available sources or is speculation / guessing. Please fact check this blog post. (going overboard on the disclaimer after a particularly funny reddit comment).

Tesla has distinguished themselves as a company that builds both software as well as physical products and hardware.

One of the few companies whose mission appears to be sustainability over profit, they continue to innovate and create the best technology, forcing other players in the market to try to keep up.

Tesla’s Big Goals:

Tesla’s number one mission is to accelerate the transition to sustainable energy. Tesla is progressing in a few main areas to achieve this goal:

  1. produce more affordable electric vehicles
  2. build systems for energy storage
  3. be the best at manufacturing

The CEO of Tesla, Elon Musk, has stated how he believes “you have to have a goal”. Following his earlier statement, Elon kept his word – the company’s goals were concisely outlined during the Tesla battery day event this past September.

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Goal 1: Tesla building Affordable Electric Vehicles

Today, less than 1% of the cars on earth (the “global fleet”) are electric. To increase this, Tesla will build a car that anyone can afford. Tesla has announced plans to build a $25,000 electric car.

With what started as a luxury, high-end car, Tesla is working towards reaching economies of scale to move towards high volume production of a car for the mass market.

Once Tesla reaches full-scale manufacturing and production, Tesla wants to produce and sell 20 million cars per year, enough to replace 1% of the gasoline cars with electric vehicles.

To achieve these numbers, Tesla must increase production of their cars by 40X compared to their 2020 manufacturing numbers.

The center controls are completely touch-screen. source: Tesla

Elon has hypothesized that internal combustion engine industry WILL NOT EXIST in the future, aside from perhaps in museums and hobbyists.

Autonomy & self-driving cars:

Creating self-driving cars is not directly related to reducing carbon emissions, yet it does provide a few solutions that will make buying a Tesla an extremely attractive purchase:

  1. Safety. Autopilot, designed to avoid collisions, has the potential to save the lives of at least 40,000 people per year that die in automobile fatalities. With traditional automobiles, accident probability is 2.1 collisions per million miles. With Tesla autopilot, the probability is 0.3 collisions per million miles.
  2. Entertainment will be important in the car once human attention is no longer just being used to drive. This could include video games (the vehicles already have a number of games available), socialization, reading, working, etc.

It is hard to say just how valuable autonomy is to each customer, but the parameters are as follows: Since autonomy is valuable to cars at an individual level, the value of autonomy for Tesla = value of each car * value of autonomy per vehicle.

Full-self-driving technology BETA version feels like it is close to being released to the market after seeing a few of the CEO’s recent tweets on the subject.

source: Twitter

If the FSV features help the company sell more cars, then the company is that much closer to achieving its mission of an automobile economy based on sustainable energy.

Goal 2: Energy Storage – Tesla Batteries, etc.

To be truly sustainable, energy must be accessible and affordable to everyone. Tesla plans to make vehicles and grid batteries that cost less. This includes reducing the cost of energy per kilowatt hour by one half.

Tesla is working to change the trajectory of the curve of cost per kilowatt hour of energy, pushing the cost lower, shown as the red line. source: Tesla Battery day.

At Tesla battery day, the heads of the company mentioned that reducing the cost per kilowatt hour of batteries is not happening fast enough. This was demonstrated by showing the curve of cost per kilowatt hour of batteries and the slow rate of improvement. Its flattening out, as shown in the photo above.

Battery design:

Tesla is al re-engineering the battery cell design, manufacturing, and production processes to create more affordable cells.

Tab-less batteries. source: Tesla Battery Day
  • Tesla batteries are cylindrical, and newer versions are larger (bigger cylinder cells cost less)
  • Tab length in batteries: older batteries had tabs located at anode and cathode ends, which added to the distance an electron has to travel through a battery. Tesla got rid of tabs, so the electron only has to travel a shorter distance, making them more efficient.
  • Battery filler is not only flame retardant, and it is a structural adhesive. Glues cells to the top and bottom of the sheet.
  • Battery cells are load-bearing, made of steel, dual-purpose as the structure of the car itself. (see below)
The image shows how larger battery cells (blue cylinders) in the bottom image are more efficiently packed into the car. Older design at the top has a large amount of wasted space, shown in red. source: Tesla Battery Day
  • Anode: Tesla uses silicon instead of graphite (graphite is carbon based) for the anode. Silicon is the 2nd most abundant element on Earth, present in Earth’s crust as silicon dioxide, commonly known as sand). Stores 9x more lithium than graphite. Problem with silicon is that it expands in the cells. They use raw metallurgical silicon and design batteries to be able account for expansion.
  • Cathode: the cathode holds the lithium and retains its structure. Nickel is the cheapest and has the highest energy density, but Nickel presents challenges with chemical stability. Cobalt is more expensive, yet more stable than Nickel. For the most energy intensive batteries (like the semi-truck or the cyber-truck) they will use full nickel. The goal is maximizing nickel and gradually removing cobalt from battery manufacturing. The company has added coatings and dopants to stabilize nickel in the batteries. Cathode materials are purchased and priced based on the London metal exchange (LME).
  • Lithium: lithium is plentiful in the US, Tesla already has access to enough for every car (once they are building 20M+ per year). The company mines clay containing lithium in areas of the US where the ground has high concentrations. They extract the lithium via an environmentally friendly process involving table salt NaCl. After mixing it with salt and water, the lithium is extracted because lithium bonds extremely strongly to Cl-. The lithium effectively knocks off the sodium atoms, and we are left with LiCl salt, which the company can use for their battery manufacturing.
  • The company will eventually recycle materials in the used batteries to make new batteries.

Goal 3: Manufacturing

In addition to the number one goal of accelerating the adoption of sustainable energy, Tesla wants to be the best at manufacturing. Elon stated Tesla needs to be “better than anyone at manufacturing”. The company has created a vertically-integrated car from the ground up. They build everything in house, outsourcing little of the process.

The remarkable thing being built by Tesla is actually not the car, but how. The way the company built the car, with heavily automated robotic factories is impressive.

Tesla is building 4 types of products for consumers:

  • Energy generation (solar panels / solar roof)
  • Energy storage (Tesla Powercell) – customers want the freedom to charge at home. The Tesla Powercell product allows people to do so.
  • Electric vehicles (cars and trucks)
  • Automated factories. The company has engineered machines to build the car, supporting the creation of each product. While these three products are very much in the foreground, the importance of the robotic factory in the background has given Tesla a wide competitive advantage that will be extremely difficult to copy.

Factories

  • Sustainable factories include car factories built with solar.
  • Factory close to consumers (on each continent) shortens the supply chain, quicker delivery to customers. Factory in Fremont California, Nevada, Austin TX, Berlin, Shanghai China.
    • Tesla is the only American car company with manufacturing facilities in China.
  • Largest casting machine ever to make the front and rear casting in one piece.
source: Tesla Battery Day

Engineering

The ability to do more with less is an important strategy in engineering for elegance.

The company focuses more on metrics within the context of product improvements and manufacturing than purely financial areas. As of Battery day, the company reported:

  • Reducing number of parts in the car: now 370 fewer parts.
  • Reducing floorspace required in the factory by 35%.
    • Ensuring each cubic meter of the factory floor does useful work.
  • Stop using cobalt in batteries, mainly use nickel now.
  • Materials engineering the frame of the car: Developed their own high-strength casting alloy of aluminum that does not require coating or heat treatment. (Heat treatment historically causes alloys to lose shape)
  • Shortening the supply chain for resources: Reducing miles traveled by materials that end up in cathode by 80%.
  • 10% mass reduction in the car.
  • 14% range increase
  • “Electric energy costs are half those of diesel. With fewer systems to maintain, the Tesla Semi provides $200,000+ in fuel savings and a two-year payback period.” – Tesla.com
Tesla Semi-truck rendering source: Tesla

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Sources:

  1. Tesla Battery Day presentation Deck: https://tesla-share.thron.com/content/?id=96ea71cf-8fda-4648-a62c-753af436c3b6&pkey=S1dbei4
  2. http://www.ev-volumes.com/
  3. IHS
  4. OICA
  5. https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
  6. https://www.tesla.com/blog/master-plan-part-deux
  7. Tesla website
  8. TSLA 10k / annual report
  9. twitter

Top 4 Ways to Invest in Space Tech Companies

Human understanding of the universe in its unimaginable infiniteness only has room to grow.

Exploring unknown reaches of outer space will only accelerate in the coming years.

Space technology will improve exponentially. Space industry global revenue is expected to reach $1 trillion by 2040. [1]

The relatively untapped arena of outer space provides investment opportunities for not only large financiers, but small investors as well.

How to invest in space exploration

In an effort to keep track of the space tech market, Espresso Insight produced a compiled list of over 200 organizations building space exploration technologies. Get the Space 200 list below.

the Space 200 Download (its free)

4 ways you can invest in space technology companies:

1. Angel Invest

Become an angel investor and fund private companies and pre-IPO startups.

Platforms like Forge provide retail investors a gateway to pre-IPO companies.

space tech investing
source: NASA

Many space tech companies on the 2020 Espresso Space 200 are private companies and raising or have raised venture capital in the past.

2. Exchange Traded Funds

Another option is investing in an Exchange Traded Fund focused on space exploration.

A few popular ETFs that focus on space tech include:

  • ARK Innovation ETF (ARKK)
  • SPDR S&P Kensho Final Frontiers ETF (ROKT)
  • Procure Space ETF (UFO)

All of these ETFs may be purchased from TD Ameritrade, for example.

3. Indirect Investing

Invest in publicly traded companies that have stake in space.

Google’s parent company, Alphabet, for example, has invested in SpaceX.

By buying shares of Google, you are indirectly gaining exposure to SpaceX.

4. Publicly Traded Businesses

There are a good number of publicly traded companies that provide products and services directly related to aerospace, rockets, and futuristic space exploration.

Investing in these publicly traded companies is a good way to gain exposure to a larger more established organization that’s also doing exciting things building space exploration systems and technology.

There are quite a few of these on the 2020 Espresso Space 200, but a few are listed below.

  • Boeing Co. (NYSE: BA)
  • Lockheed Martin Corporation (NYSE: LMT)
  • Northrup Grumman Corporation (NYSE: NOC)

sources:

  1. morganstanley.com/ideas/investing-in-space