Tidbits #88 – Taiwan Aftermath, Jobs, Tiffany Pendants, Small Nuclear Reactors + More

Hello, hello! 👋🏻👋🏻

Welcome back to another edition of Tidbits covering all the recent things worth talking about in business, media, and technology.

🗺 World Affairs + Geopolitics

#1 – China Tests Taiwan Defense Zone, Cuts Off US Military Talks

China continued its most provocative military drills in decades on Friday and cut off defense talks with the US, as relations between the world’s biggest economies deteriorate in the wake of House Speaker Nancy Pelosi’s trip to Taiwan.

A day after likely firing missiles over the island of 23 million people, China sent warships across the Taiwan Strait’s median line. The People’s Liberation Army also sent waves of warplanes across the US-defined boundary, Taiwan’s Defense Ministry said, the third straight day of such flights since Pelosi’s visit.

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In addition to halting talks with the US on defense, China announced it would cancel a dialogue with military leaders and halt discussions on climate change — one area where the two nations had found common ground in recent years.
Source: Bloomberg

Pelosi’s visit to Taiwan earlier in the week elicited a very strong response from China.

In life, every participant has their own reasons for their own actions. I’m sure both Pelosi and China view their actions as quite justified. I’m not here to lay blame, but only to humbly observe that both Pelosi and China’s actions serve to drive a stronger wedge into the US / China relationship. I have not been optimistic about where the relationship has been going for a long time, but actions like these simply incinerate trust.

All relationships are built on trust. And these actions simply show that neither side can trust the other. From the West’s side (both US and Europe), such shows of military might are not good for building trust. And from China’s side, watching a high ranking US official ignore diplomatic pressure to block the trip is not good for building trust.

I think this is the straw that breaks the camel’s back.

The other interesting bit on this is how China also called off discussions on climate change. And China’s largest battery manufacturer, CATL, delayed announcing plans for plants in the US. The US and the world are currently highly dependent on China for EV batteries…I’m sure the US is now deeply wondering if they can entrust their whole climate agenda to China.

Too many straws on this camel’s back.

#2 – The US Is Ready To Block China’s Access To Advanced Chip Design Software

The U.S. is poised to implement new export restrictions on a specific type of software used to design semiconductors utilizing a next-generation technology that is vital for producing the most advanced AI chips, Protocol has learned, in an effort to target Chinese chipmakers.

The Biden administration has been weighing a potential ban for months, but has elected to order the Commerce Department to issue a new rule that will effectively block the export of chip design software that’s required to make chips with an emerging technology called gate all around, according to a person familiar with the administration’s plans.

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Chip design software companies count China as a significant customer. Cadence derived 13% of its revenue from Chinese sources in its fiscal second quarter, according to a recent quarterly filing with the SEC. Synopsys disclosed that, also during its fiscal second quarter, 17% of its revenue came from China. However, it isn’t clear from those SEC filings how much of Cadence’s or Synopsys’ revenues comes from software that’s used for chips with gate-all-around technology, which is very new.
Source: Protocol

So just to keep it all clear: The US has sanctioned a number of leading downstream tech firms in China including Huawei, which prevents US tech suppliers and most foreign tech suppliers from working with them. This includes preventing companies like TSMC from manufacturing chips for them. The US has also blocked the export of critical equipment necessary for China to learn how to manufacture leading edge chips on their own. In the meantime, many China chip design firms are popping up and making some headway (relying on lagging edge manufacturing domestically or leading edge manufacturing abroad), but still mostly designing chips on US chip design software. And now that is also being tightened.

🛡 Defense and Cybersecurity

#3 – Why Matthew Prince Thinks AWS Is Cloudflare’s Biggest Security Rival

If you fast-forward 10 years from now, I’m not sure that there are stand-alone security players. And so I actually think that the Zscalers and Palo Altos are more likely to get absorbed into [the platforms of] the larger cloud providers. Or they’ll replicate that functionality themselves. That’s not going to happen in the short-term.

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I think in 10 years, you will see more and more of what is traditionally thought of as the cybersecurity space get absorbed by cloud providers. So when we think about who we are competing with, [yes] we always compete with Zscaler and Palo Alto. But really, who we think we’re competing with over the long-term is AWS. I think the companies that are able to take cybersecurity and do it well — and build out a true cloud platform themselves — will dwarf anything that we’re seeing in the cybersecurity space today.
Source: Protocol

Interesting interview from one of the most interesting visionaries today.

🤑 Economics + Markets

#4 – Massive Jobs Surprise: US Economy Added 528,000 Jobs In July

The US economy has now regained all jobs lost during the pandemic, after a blowout July jobs report that showed a gain of 528,000 jobs, according to data released Friday by the Bureau of Labor Statistics.

The massive monthly gain was more than double the 250,000 that economists were expecting, according to Refinitiv.

The unemployment rate ticked down to 3.5% after holding at 3.6% for the past four months. The July jobless rate matched the half-century low last seen in February 2020.

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The labor force participation rate ticked down to 62.1% from June’s 62.2%, its third decline in as many months.
Source: CNN

Very strong jobs report…which probably means the Fed is under pressure to keep pushing rates higher.

Despite the significant gains in jobs, the demand for jobs remains even higher. And against this backdrop, the labor force participation rate is ticking down…more and more people simply don’t want to work for whatever reason.

Also note that more than half of those job gains were part-time.

👻 Cryptocurrencies + NFTs

#5 – BlackRock Teams Up With Coinbase in Crypto Market Expansion

BlackRock Inc. is partnering with Coinbase Global Inc. to make it easier for institutional investors to manage and trade Bitcoin, taking the world’s largest asset manager into a cryptocurrency market hammered by plunging prices and government investigations.

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Top BlackRock clients will be able to use its Aladdin investment-management system to oversee their exposure to Bitcoin along with other portfolio assets such as stocks and bonds, and to facilitate financing and trading on Coinbase’s exchange, according to a statement Thursday. The focus of the partnership with Coinbase, the biggest US crypto-trading platform, “will initially be on Bitcoin,” BlackRock said.

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“Our institutional clients are increasingly interested in gaining exposure to digital-asset markets and are focused on how to efficiently manage the operational life cycle of these assets,” Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships, said in the statement.

Institutional investors accounted for about three-quarters of the $309 billion in trading volume on Coinbase in the first quarter, the company disclosed in May. Coinbase clients include hedge funds, corporate treasuries and asset managers.
Source: Bloomberg

Extends Wall Street’s control over crypto. Crypto’s popular conception as “David” against the Goliaths of Wall Street and government has been an illusion for quite some time now. For anyone paying attention, crypto is more centralized and corporate than even the fiat world.

Still, this is not a bad thing. Anyone can make money no matter how the world is structure…you just need to know the rules and understand how the system works. This is true in fiat world, and it is true in crypto, too.

#6 – Tiffany Offers Bejeweled Pendants Of CryptoPunks NFTs

On Aug. 5, iconic luxury goods brand Tiffany & Co. will begin offering 250 digital passes/non-fungible tokens (NFTs) that can be redeemed for one-of-a-kind pendants inspired by CryptoPunks NFTs.

The pendants — which come with NFT digital artwork resembling the final jewelry design — are going for 30 Ethereum each, or about $51,000 at this writing.

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CryptoPunk owners who buy NFTiffs can opt to hold them as collectible NFTs or have them “transformed into a bespoke pendant handcrafted by Tiffany & Co. artisans” (example above), according to the website linked to Tiffany’s tweet.

Tiffany & Co. designers will select appropriate gemstones and enamel colors to translate the 87 attributes and 159 colors that appear across the CryptoPunk NFTs into physical pendants.
Source: MediaPost

So…you can convert your NFT into a physical object, but then your NFT goes away. Wonder how many people will choose to convert.

The marketing says Tiffany is selling an NFT.

But the reality says you are buying an infinite duration option to turn your colorful receipt into gold, diamond, and gemstones. And, interestingly, my gut says most people buying this won’t want to exercise the option! And Tiffany collects a nice option premium in the process for options that may never get exercised.

🔋 Energy

#7 – US Regulators Will Certify First Small Nuclear Reactor Design

On Friday, the Nuclear Regulatory Commission (NRC) announced that it would be issuing a certification to a new nuclear reactor design, making it just the seventh that has been approved for use in the US. But in some ways, it’s a first: The design, from a company called NuScale, is a small modular reactor that can be constructed at a central facility and then moved to the site where it will be operated.

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Small modular reactors have been promoted as avoiding many of the problems that have made large nuclear plants exceedingly expensive to build. They’re small enough that they can be assembled on a factory floor and then shipped to the site where they will operate, eliminating many of the challenges of custom on-site construction. In addition, they’re structured in a way to allow passive safety, where no operator actions are necessary to shut the reactor down if problems occur.
Source: ArsTechnica

Could be a big deal.

As a much smaller scale reactor that can be manufactured in a centralized, standardized way, this could be a major step towards more economically-feasible and widely available nuclear power.

The world would be a very different place if we could each consume 10x more power without releasing 10x more carbon into the air. 10x more energy could mean 10x more Work towards anything.

💬 Media + Games

#8 – TikTok Begins Pilot Testing HTML5 Mini-Games With A Handful Of Partners

TikTok wants to determine its users’ appetite for mobile gaming with the launch of “mini-games” that can be played inside the social video app and discovered through creators’ videos. TechCrunch learned and has now confirmed TikTok’s new gaming pilot quietly launched just weeks ago with a variety of new partners, including game developers Vodoo, Nitro Games, FRVR, Aim Lab and Lotum.

The launch follows reports earlier this year that the social video app maker was looking to expand into HTML5 gaming after first testing the waters with gaming giant Zynga last November. The two companies had then teamed up to launch a TikTok exclusive title, Disco Loco 3D, which was similar to Zynga’s successful game (by way of acquisition) High Heels.

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TikTok told us these new mini-games are a separate effort from the games being developed for TikTok LIVE, which allow creators to interact with fans when livestreaming.
Source: TechCrunch

First step towards being more of a platform. TikTok is following down a path that Facebook once went down during its browser days (but later aborted as the company focused on its mobile app and advertising). Snap has also gone down the mini-game route, likely by learning from key investor Tencent.

#9 – Can Snap Bounce Back — And Change Live Music’s Future?

This April, at the annual Snap Partner Summit, Live Nation and Snap announced they had signed a four-year deal to bring custom AR to festivals and concerts, with help from Snap’s creative studio Arcadia, which launched last October. In May, the two companies unveiled the partnership at Las Vegas’ Electric Daisy Carnival, promoted by Live Nation subsidiary Insomniac. As promised, the partnership showed how AR could make festivals more fun, but also more navigable for attendees. One Snapchat Lens showed neon-colored daisies sprouting from the ground, while more practical tools included the interactive map AR Compass and the Friend FindAR Lens, launched at EDC in beta, which helps fans pinpoint their relative location from friends using visual aids like rainbow-lit AR pathways.

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These technological advances have opened new revenue possibilities. As Chernett says, a core part of Live Nation’s business is selling media sponsors experiential areas that take up physical real estate. “What my promoters quickly realized is [AR] isn’t going to take up any space. We’re just trying to create a utility to help your fans have a better experience and some fun entertainment — and we’re going to do it all here,” he says, holding up his iPhone. “I’ve had to educate my sales team because it’s like, now we have the sky. This is a whole new piece of real estate, literally. So it has forced us to think differently because [we can tell] our sponsors, ‘You got this, but you didn’t buy the sky.’ ”
Source: Billboard

💰 Fintech

#10 – Mercado Pago Is Starting To Operate In The Corporate Benefits Sector

Mercado Pago Benefits allows companies to pay for employee labor rights or benefits on one platform and gives employees the possibility to manage these benefits directly in the Mercado Pago app. This amount can be used in the debit function in all areas that accept the Mercado Pago Visa card – that is, in the millions of establishments spread across the country that are in the company -enabled benefit categories – and allows also you enjoy the benefits. of the Vai de Visa program.

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For executives, Mercado Pago Benefits makes a difference by consolidating balances of benefits into one platform. “For companies, it favors better resource management and increases selection options by expanding the network of affiliated establishments. At the same time, it simplifies the HR registration task of companies and reduces the costs in place ”, Tulio explained.
Source: Newsfounded

Interesting wedge into corporate spend.

#11 – JPMorgan Is Building a Giant Travel Agency

For the past 18 months, the nation’s biggest bank has been assembling the pieces to launch a full-service travel business where customers can plan and book trips ranging from a simple domestic flight to an extravagant safari.

It bought a booking system, a restaurant review company and a luxury travel agent. It is building its own airport lounges and a force of thousands of travel agents. A new website will launch in the coming months.

Travel has become one of the most important spending categories for banks and credit card issuers, and JPMorgan wants a bigger piece of it. The bank hopes to turn those traveling customers into lifelong Chase fans, drawing in more of their spending and other financial needs.

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The idea is for JPMorgan to control the entire shopping and buying experience for a purchase customers are passionate about. Automobiles and homes might be next, executives said.
Source: WSJ

We’ve discussed before how payments is migrating to platforms and verticals. Payments is better when it is closer to the customer, especially in a world where data and identity are becoming more and more important.

This leaves banks and traditional financial companies in a dangerous position. Payments as a standalone capability is increasingly commoditized. Banks historically held most of the data that allowed them to make better lending / credit decisions than others, but even that moat is eroding away.

One way to fight back is to become like the enemies that are doing them in. Hence, Chase is now becoming a vertically integrated travel company so that their payments capabilities can sit as close to the customer and purchases as possible.

This is exactly what we envisioned when we discussed how The Empire Strikes Back in Tidbits #44.

🛍 Commerce

#12 – Amazon Launches Same-Day Delivery From Some Brick-And-Mortar Retail Brands

Amazon said Monday it’s adding a handful of brick-and-mortar retail brands to its same-day delivery offering for Prime members.

To start, Amazon is offering same-day delivery from apparel stores PacSun, Diesel and Superdry, as well as vitamin retailer GNC, in 10 cities across the U.S. The service is free for Prime members when they spend $25 or more, or $2.99 if they spend less than $25, Amazon said.

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Consumers are increasingly demanding faster delivery speeds from online retailers, as evidenced by the explosion of ultrafast grocery platforms in the last year. Retailers have also jumped on the trend by partnering with on-demand delivery providers such as DoorDash, Uber’s Postmates, Instacart, UPS’ Roadie, as well as Target’s Shipt. The partnerships mean that consumers can often get a new t-shirt or dress in a matter of hours.

With the new partnership, retailers will fulfill orders from inventory in their stores, and a Flex delivery driver will pick them up from the retailer. Doing so allows Amazon to get online purchases to shoppers’ doorsteps even faster.
Source: CNBC

Amazon is wielding their logistics advantage as an incredible weapon. First, they went after payment / checkout buttons by bundling payments with Prime logistics. Now they are completely opening up the logistics network to 3rd party merchants. My guess is many merchants that don’t already sell on Amazon may be reluctant to choose Amazon if alternatives are available.