Gianfranco's Best of March 2024 Reading List

Welcome to the March 2024 edition of my monthly reading list.

This month, I've curated my favorite essays I read this month across Meaningful Retrospection, Artificial Intelligence, Finance and Economics, Society and Technology, Fintech, and Web3.

Meaningful Retrospection

• The Birds and the Wasteland (Alchemy of Art) - Read more

  • Excerpt: “We are performing for an audience of one. … If you think, 'I don’t like it but someone else will,' you are not making art for yourself. You’ve found yourself in the business of commerce, which is fine; it just may not be art.”

• The State of Culture, 2024 (The Honest Broker by Ted Gioia) - Read more

  • Excerpt: “The more addicts rely on these stimuli, the less pleasure they receive. At a certain point, this cycle creates anhedonia—the complete absence of enjoyment in an experience supposedly pursued for pleasure. … addicts still pursue the stimulus, but more to avoid the pain of dopamine deprivation.”

Artificial Intelligence

• Aggregator’s AI Risk (Stratechery by Ben Thompson) - Read more

  • Excerpt: “This, I would note, has always been the weakness of the Aggregator model: Aggregators’ competitive positions are entrenched by regulation, and supplier strikes have no impact because supply is commoditized; the power comes from demand, which is to say demand has the ultimate power. Users deciding to go somewhere else is the only thing that can bring an Aggregator down — or at least significantly impair their margins (timing, as ever, to be determined).”

• AI Has Killed the Traditional SaaS GTM Playbook (Felicis) - Read more

  • Excerpt: “The exorbitant costs of building AI software—from renting GPUs, talent shortages, sky-high salaries, and API costs—stress the need to achieve positive momentum or risk running out of funds. Meanwhile, given the abundance of alternative competing options, early adopters’ patience wanes quickly. Combatting these pressures, founders constantly have to showcase their product’s differentiated improvements, and even that may not be enough. To breakthrough, AI startups have to build their brand loudly.”

• Captain’s Log: the irreducible weirdness of prompting AIs (One Useful Thing by Ethan Mollick) - Read more

  • Excerpt: " If you look at some of those prompts, you will see they vary widely in style and approach, rather than following a single template. To understand why, I want to ask you a question: What is the most effective way to prompt Meta’s open source Llama 2 AI to do math accurately? Take a moment to try to guess. Whatever you guessed, I can say with confidence that you are wrong. The right answer is to pretend to be in a Star Trek episode or a political thriller, depending on how many math questions you want the AI to answer.”

• I, Cyborg: Using Co-Intelligence (One Useful Thing by Ethan Mollick) - Read more

  • Excerpt: “I do a lot of writing, and think I am a much better writer than any current AI system. All the evidence we have is that the most advanced LLMs write better than most people, but worse than good writers. From an assignment where I had my students “cheat” by writing essays by prompting the AI, I learned that good prompting can improve the quality of AI writing more than many people think, but it still can’t get you to the top 1%, or even top 20%, of human performance.”

• 8 Google Employees Invented Modern AI. Here’s the Inside Story (Wired) - Read more

  • Excerpt: “Transformers did not instantly take over the world, or even Google. Kaiser recalls that around the time of the paper’s publication, Shazeer proposed to Google executives that the company abandon the entire search index and train a huge network with transformers—basically to transform how Google organizes information. At that point, even Kaiser considered the idea ridiculous. Now the conventional wisdom is that it’s a matter of time.”

Finance and Economics

• Plentiful, high-paying jobs in the age of AI (Noahpinion) - Read more

  • Excerpt: “Imagine a venture capitalist (let’s call him “Marc”) who is an almost inhumanly fast typist. He’ll still hire a secretary to draft letters for him, though, because even if that secretary is a slower typist than him, Marc can generate more value using his time to do something other than drafting letters. So he ends up paying someone else to do something that he’s actually better at.”

• The Wealth Effect (The Diff) - Read more

  • Excerpt: “For policymakers, this helps explain the mystery of why monetary policy works. A 25 basis point change in rates ripples through the economy, immediately affecting floating-rate obligations, gradually affecting the rates banks pay on deposits, and only hitting fixed-rate debt when people decide that the difference of 25 basis points is evidence that they really ought to borrow. The big exception is housing, where people can and do rapidly refinance when rates decline, and then promptly adjust their spending in response.”

• How Companies Age Gracefully (The Diff) - Read more

  • Excerpt: “Some of those goals will last a long time, especially if they're defined broadly—American Express and Wells Fargo still move money around, just not by stagecoach—but in some cases, the purpose will no longer matter and there won't be any reason to keep those valuable resources stuck together in a suboptimal way.”

Fintech

• CardsFTW #99: A Huge Merchant Settlement Lands - Read more

  • Excerpt: “We all know that banks are very good at keeping the money that they want on hand: If you squeeze one part of the balloon, another part of the balloon will pop. The ability of banks to generate revenue in parts of their business is why when we limited interchange on debit cards under the Dodd-Frank Act Durbin Amendment, we saw the near disappearance of free checking.”

Investing in Early Stage Startups

• A Framework: Turning Services into AI (Arcxhived) - Read more

  • Excerpt: “It’s also worth considering why AI has been an almost instant productivity driver for software engineering. Two key reasons stand out: first, the workflow is conducive to a text-based, linear interface; second, a substantial portion of the field's knowledge is publicly accessible. We can use these as additional criteria for productizability. Some services are inherently non-linear and complex in nature. Take strategy or innovation consulting for instance. They thrive on the dynamic, often unpredictable dance of frequent, iterative collaboration with the client’s executive team, making it a tough service to package as AI.”

• How to do founder reference checks (Signature Block) - Read more

  • Excerpt: “While understanding the market opportunity, business model, and technological innovation is essential, the character and capabilities of the founder leading the startup are equally, if not more, critical. When done well, references provide insights into a founder's past track record and future potential. It takes additional effort but can provide valuable intel to shape a portfolio.”

• Dangerous language in startups (MTB Notes)- Read more

  • Excerpt: ““X for Y” is one such pattern. It’ll be nostalgic for anyone who was in startups in the early 2010s. Every time you refreshed TechCrunch there was another funding announcement about the “Uber for power tools” or “Airbnb for RVs” or “Linkedin for blue collar workers”.

Science and Technology

• Defending the Status Quo is not Environmentalism ($, Noahpinion) - Read more

  • Excerpt: “On the other side are faux-environmentalists for whom “the environment” means the small pieces of nature that they experience in their day-to-day lives — the blue sky outside their windows, the lush green lawns in their neighborhood, the open space near their houses. And they want to protect that “environment” by freezing the status quo of the physical world around them. That requires preventing the construction of buildings that might block their views or pave over nearby lawns, solar plants that might mar the view on their hiking trails, and so on.”