Longreads + Open Thread

China, Chips, ByteDance Philosophy, Hacks, Payments

Longreads

  • Jordan Schneider of ChinaTalk interviews Matt Klein and Adam Tooze about China's growth and many other topics. It's great context for understanding China's growth since 1978, including how much of that growth was because the country was doing poorly (in most measurable senses) and how much was because, for a poor country, China was still doing some things well (education, literacy, public health). And don't miss the section on how China was not the last East Asian economy to start modernizing its economy, in the late 70s, but one of the first under the nationalists.

  • The Verge has another excellent interview, this time on the chip shortage. This interview ads a lot of texture to discussions of the chip shortage. In a way, that's a fantastically over-broad term, like referring to the "stuff shortage" or the "people shortage." He also points out that while some of the chip shortage is due to consumption growth, and some is due to the aftereffects of Covid, there's also a helping of bad luck from factory fires and the Texas blizzard.

  • From Kevin Xu at Interconnected: ByteDance founder Zhang Yiming’s Last Speech. It's not a discussion of corporate strategy or the future of communications, but is an interesting look at what kind of philosophical thoughts occur to someone who made the world's biggest entertainment platforms.

  • From Fast Companyhow Microsoft handled the SolarWinds hack. It brings up some interesting questions of scale: SolarWinds was the company that got hacked, but Microsoft had a lot more market cap riding on the outcome of the hack. It's another instance of big tech companies capturing enough of the value they touch that they have a direct economic incentive to care about externalities.

  • Protocolinterviews David Marcus about Facebook's payments ambitions. The most striking analogy: "We used to pay $1 a minute for an international call, or 25 to 15 cents a text message. And then the internet happened, and over-the-top apps were created — messaging apps like Messenger and WhatsApp — and that enabled billions of people to communicate in an unlimited way with a $25 Android smartphone, no matter where you are... We believe we can do that for money..." Customers, merchants, amounts, and transaction terms can all be represented as bits. And bits are basically free to send (which is great for tech companies' margins) but also free to copy (which is tough for their margins—especially if the bits being copied are illicitly obtained payment credentials). FB is already in the business of taking maximal advantage from bits' cheapness and inducing as much artificial scarcity in some of them already, so it's developed the high-level competence for a payment company already, and is now trying to implement the details.

Open Thread

  • Drop in any links or books of interest to Diff readers.

  • There are two kinds of companies that think about the long term. There are some large companies that can bet on the future looking very much like the past. (Eventually, it's their fate to be owned by either Berkshire or a PE firm.) But there are other companies that gear their business around ways the world will change a few years out. This is a big bet, and can be an expensive one; if you're living in the future but the rest of the world is living in the past, you're paying full rent on both locations. Which companies and managers seem to have the most skill at doing this?

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