Battery Technology Changed the World, Death of a Flywheel, and More!

Hello and happy Sunday!

We’ve got five original articles, and a Succession review for you this week. Let’s get into it!

Death of a Flywheel

Amazon and Berkshire Hathaway face a unique crisis: they're too successful. With skyrocketing valuations and revenues, these giants struggle to find opportunities for meaningful growth.

In this insightful piece, Evan Armstrong explores the "scaled-out problem" faced by both companies and the contrasting approaches they take to tackle it. As their growth plateaus, Amazon bets on empowering thousands of people with small experiments, while Berkshire relies on Warren Buffett's large bets. Will one strategy prove more successful, or is there a deeper lesson to be learned from these corporate behemoths? Dive into the article to discover their challenges and approaches to the scaled-out problem.

Read

AI and the Future of Programming

Dan Shipper / Chain of Thought

Is programming still relevant in an AI-driven world? Replit co-founder Amjad Masad thinks so. In an interview with Dan Shipper, Masad shares his belief that programming skills are becoming even more important as AI tools augment rather than automate programming tasks.

As the founder of a web-based development environment valued at $1.6B, Masad knows a thing or two about the future of programming and competing against tech giants like Microsoft. Learn about his plan for Replit's success and his insights on how startups can leverage bundling and vertical integration to make their mark in the AI space.

Read

Battery Technology Changed the World...and Then It Stalled

Batteries power the technology that surrounds us, yet their evolution has seemingly stalled. Anna-Sofia Lesiv dives into the history of batteries, explores the challenges of building better ones, and discusses how revolutionary battery improvements are essential in our transition to renewable energy.

She examines the importance of energy density, safety, and cost in battery development and highlights the work of companies striving to innovate in the field. As the world moves toward renewable energy, advancing battery technology is crucial. Read this article to learn why.

Read

A Better Argument for Working Less

Frederick Winslow Taylor invented scientific management and revolutionized work culture, but his legacy may be holding us back from a healthier work-life balance. Simone Stolzoff delves into the history of Taylor's obsession with maximizing efficiency and its impact on modern work.

While four-day workweek experiments show increased productivity, the real benefit of working less is not just about higher output—it's about becoming better people, enjoying active leisure, and finding meaning outside of work.

Read

The Boy Who Cried Unicorn

Nathan Baschez reflects on the accuracy of his past predictions, examining his hits and misses while analyzing his lessons learned. In this candid exploration, he revisits five predictions he made in 2020, grading each one's success and discussing the factors that led to his conclusions. From Quibi's downfall to the challenges faced by Roam, Nathan shares valuable insights into the unpredictable world of business forecasting and the importance of staying grounded in reality.

Read

---

Succession Episode 5 Review

Hey there! As a fun addition to the Sunday Digest, Evan will be writing a mini-review for the final season of Succession. Each review will discuss the themes, writing, and dynamics of the show. 

My grand theory of Succession is that it is a mirror of reality but in Succsion World, executives are way funnier. This latest episode, once again, reinforced that belief. Episode Five had the Roy Squad traverse over to Norway to meet with the GoJo team to hammer out deal terms for their acquisition. 

Over the last week, I’ve had conversations with people about this episode where they ask, “Is this really how deals are done?” Yes, yes they are. Again, this is a smarter, sexier version of reality but it happens all the time. Rather than focus on the dramaturgical sensibilities of the writers or the exquisite camerawork, I thought it might be fun to nitpick on how they portrayed a deal negotiation: 

Location: Part of the show's charm is that they’ll fly the whole crew out to some grand location and then have the majority of the episode take place in a conference room. This time they pushed this effect to its extreme by having the negotiations for the acquisition happen in rooms with stunning views, and in the episode’s climax, a literal mountaintop. Most of the time they are at the Juvet Hotel, which you may recognize from the film Ex Machina. 

This does happen in real life. Everyone likes being pampered, and rich people enjoy it most of all, so these negotiations typically take place somewhere nice. If the deal is between two lower profile firms, the typical is a Four Seasons or a Ritz Carlton. However, for the biggest deals in the world, privacy, not luxury, is most important. For example, in the Twitter acquisition, Bret Taylor and Elon met in an out of the way Airbnb to hash out terms. 

Valuation: As the team is flying out to Norway, Kendall and Roman are “death-wrestling with ogres” to which Shiv replies, “You’re looking at documents.” This is also very real. Before every deal meeting everyone is memorizing forecasts, key revenue levers, valuations, multiples, comps etc. You want to be comfortable debating forecasts and revenue potential because that effects the valuation. It is the world’s most stressful homework. Bankers and lawyers are allowed into the room for these negotiations because executives do not like doing homework and will pay Goldman Sachs $20M to do it for them. 

Kill list: This one is…not true. There will be a kill list in the case of an acquisition with senior leaders almost always being the first to go. Marketing, sales, finance, and admin staff are usually next on the chopping block. However, I have never seen a deal where this happens before the acquisition occurs. Gerri getting access to who is on death’s row before the deal is signed? Almost certainly never happens. I understand why the show included it to add spice, but unfortunately, this one is wrong :( 

Bluster and backing out: In the best part of the episode, Roman explodes at Mattson and tells him that they will drag the deal out and kill it. This my friends, would be a no-no. Executives have a fiduciary responsibility to maximize shareholder value. Killing a deal because you hate the acquirer does not free your from this legal obligation. The kids know they are in the wrong, but they are just used to being immune from consequences. As Roman puts it, “If a deal collapses in the woods and no one hears it, is it an SEC violation?”

This also happens all the time. One of the biggest takeaways I’ve had from watching Elon these last 5 years is that the SEC is kind of a made up government agency. They’ll take on mid-level executives for open and shut insider trading, but the truly powerful appear to be able to get away with anything. If you are willing to counter-sue and drag everything out forever, then the SEC is hesitant to really go after titans of industry. Would Kendall and Roman be sued? Maybe. But the consequences would be so minor relative to their wealth that they wouldn’t even care. 

The business nerd in me is deeply excited for these next episodes (I hope they review stock vesting schedules and retention packages) but once again, Succession delivers.