Ten interesting things we read this week

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At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Capitalism (Lessons from the East India Company), Digital (A new business model is emerging in podcasting), Investing (Large fund houses need to take the lead in sustainable investing), Technology (Why tech CEOs should not be making policies), and Physics (In a mysterious pattern, math and nature converge).

Here are the ten most interesting pieces that we read this week, ended September 13, 2019.

1) Lessons for capitalism from the East India Company [Source: Financial Times]
Everybody knows how one company (the East India Company [EIC]), along with the British Government, looted India. And this piece throws light on it; from how it began to how they took control of a massive country like India. Even one of the company’s directors once said that the EIC was an empire within an empire. Its private armies were larger than those of almost all nation-states and its power encircled the globe. The EIC remains history’s most ominous warning about the potential for the abuse of corporate power — and the insidious means by which the interests of shareholders can seemingly become those of the state.

For just as the lobbying of the Anglo-Persian Oil Company was able to bring down the government in Iran and United Fruit that of Guatemala in the 1950s; just as ITT lobbied to bring down Salvador Allende’s Chile in the 1970s and just as ExxonMobil has lobbied the US more recently to protect its interests in Indonesia, Iraq and Afghanistan, so the EIC was able to call in the British navy to enhance its power in India in the 18th century. Just as Facebook today can employ Nick Clegg, the former UK deputy prime minister, so the EIC was able to buy the services of Lord Cornwallis, who surrendered Yorktown to Washington. The EIC, in other words, was not just the world’s first great multinational corporation, it was also the first to run amok and show how large companies can become more powerful, and sometimes more dangerous, than nations or even empires.

The 400-year-old question of how to cope with the power and perils of large multinational corporations remains today unanswered: it is not clear how a nation state, especially a fragile or impoverished one, can adequately protect itself and its citizens from corporate aggression. Thankfully there is no modern equivalent of the EIC. Corporations have frequently conspired to make weak governments fall but no modern corporation claims sovereignty over any nation. Neither ExxonMobil nor Shell possesses regiments of infantry, cavalry and artillery, though both have a small army of private security guards. Four hundred and twenty years after its founding, with a corporate mogul sitting in the White House, attempting to use his dollars to buy whole nations, and with a former chief executive of ExxonMobil recently serving as secretary of state, the story of the East India Company has never been more current.  

2) A burst of clues to South Asians’ genetic ancestry [Source: The Atlantic]
Everyone knows about the Indus Valley Civilization, or at least has heard about it. The Indus Valley civilization, also known as the Harappan civilization, flourished 4,000 years ago in what is now India and Pakistan. It surpassed its contemporaries, Mesopotamia and ancient Egypt, in size. Its trade routes stretched thousands of miles. It had agriculture and planned cities and sewage systems. And then, it disappeared. “The Indus Valley civilization has been an enigma for South Asians. We read about it in our textbooks,” says Priya Moorjani, a computational biologist at the University of California at Berkeley. “The end of the civilization was quite mysterious.” No one alive today is sure who the people of the Indus Valley civilization were or where they went.

Two studies were carried out to understand the Indus Valley civilization and entire history of people in South and Central Asia. The study showed that South Asians today descended from a mix of local hunter-gatherers, Iranian-related groups, and steppe pastoralists who came by way of Central Asia. The second study focuses on just a single genome from the Indus Valley civilization: I6113, a woman who died more than 4,000 years ago. Her skeleton was the only one—out of more than 100 samples the researchers tested from 10 different Indus Valley–civilization sites—that yielded ancient DNA, but even then it was contaminated and of poor quality.

What’s intriguing about I6113’s DNA is what she lacks: any of the steppe ancestry that is widespread in contemporary South Asians. Instead, she appeared to have a mix of Southeast Asian hunter-gatherer and Iranian-related ancestry. The two studies piece together a history of how the people of the Indus Valley civilization are related to South Asians today. Ancient DNA has captured the public imagination precisely because it promises an answer to questions like Where did we come from? and Who are we?—questions that also have deep political undercurrents. To sequence I6113’s DNA is to draw genetic connections between an ancient civilization and the people who live in the region today, to add fuel to arguments about who can lay claim to a cultural inheritance.   

3) Howard Stern is getting ripped off [Source: Medium]
In 2005, Howard Stern shocked the world by leaving terrestrial radio and accepting a $500 million dollar deal to move his show to Sirius satellite radio. In 2015, he renewed with a 5-year deal for $90 million per year. People were blown away by the numbers. Had he been a CEO receiving the same pay, he would have qualified as the third highest paid CEO in America in 2014. As of today, Howard is getting seriously ripped off. Why? The short answer is subscription podcasting.

After the author of this piece did some research, he was stunned by this business model. While their revenues were still small, subscription podcasting has many of the same characteristics of a SaaS software business with none of the downsides. The transition from advertising to a subscription model is going to make podcasters billions of dollars and mint a ton of millionaires. Maybe even billionaires. Warren Buffett talks about how competitive moats and pricing power are the keys to a great business. By moat, he means that the business has something that protects it from competitors. Competitive moats can come in many shapes and sizes, but one of the most powerful moats is a strong brand.

In podcasting, the host is the brand. If you love Howard Stern, you can’t replace him with a cheaper alternative. Joe Rogan (another podcaster) and Howard Stern are like Coke, except with even higher profit margins. There’s literally no substitute for them. The only risk to the “moat” is them getting hit by a bus. As long as that doesn’t happen, they have one of the world’s greatest businesses, practically immune to disruption.

4) Stars of the fringe get a new stream of life [Source: Livemint]
The online web streaming services and over-the-top (OTT) platforms like Netflix, Amazon Prime, Zee5 and others have provided new life to some of the actors, producers and directors. It has allowed the writers and directors to chart into new territories which were unexplored. “I’m very happy with the addition of Web series to my calendar because I used to sit without work for long periods of time earlier," said actor Ranvir Shorey, known for critically acclaimed performances in films like Titli, Sonchiriya and A Death In The Gunj. “As far as the casting in films go, there is a lot of politics, backbiting and marketing involved, which I’m not great at," he added.

According to Asia on Demand, a report by economic and strategy advisory AlphaBeta Advisors, globally, video-on-demand operators spent around $21 billion in 2017 and this could more than double by 2022. While Asia accounted for only around $2.7 billion in content spending in 2017, this could rise to $10.1 billion by 2022. When producer Ashi Dua was ready with her anthology Lust Stories, she realized that the audience for a film like hers would not be found in a theatre. “So, instead of spreading my wings to places in India where people may or may not appreciate content like this, we decided to go ahead with a platform that is tailor-made for it. And I’m thrilled with the response we got from across the world, which I’m not sure we would have gotten theatrically," Dua said.

Netflix India reported a marginal profit of ₹20.2 lakh in 2017-18, according to filings with the Registrar of Companies. Given the fact that the market is at a nascent stage and competition is intense, most players, including foreign entities with deep pockets like Netflix and Amazon, are not even looking at returns. The attempt is to just keep head above water, for now. Dia Mirza, who played the lead in ZEE5’s Kaafir, said the digital platform has really given women the opportunity to shine within narratives. “We’re not reduced to mantle pieces. Stories are now being driven by and for very strong women. That, for me, has been, the most liberating aspect of the digital medium," said Mirza. The best part besides the absence of any need to cater to a theatre-going audience is that there is no attempt to appease the censor board either on the Web.

5) There’s need for large fund houses to take the lead on sustainable investing [Source: Livemint]
The ESG investing is slowly but steadily gaining traction. In this piece, Navneet Munot, executive director and chief investment officer, SBI Funds Management Pvt. Ltd., throws light on why ESG investing is very crucial. Even as India is growing faster than most other economies, it is still a $2,000 per capita country and is yet to catch up meaningfully in the income ladder. In the process, the resource intensity of consumption is bound to rise. If history is any guide, ignoring the sustainability aspect can be damaging. 

Some of the policy developments in India too, such as Delhi’s experiment with odd-even cars, move towards BS-VI compliance and now electric vehicles, plastic ban in Maharashtra, plant closures in Karnataka around Bellandur lake were in response to rising pollution. On the governance front, multiple instances of auditor resignations, excessive leverage, questionable “related party transactions" and accounting issues have recently come to the fore. Such issues may remain unattended for years. But once brought to the surface, it erodes the economic value of the businesses at one go. To sum up, investors can ignore ESG issues at their own peril.

Talking about index performance, the Nifty 100 ESG index has outperformed Nifty 100 index across time periods. Mr. Munot says that as part of the ESG framework, they look at around 50 parameters across the governance, environmental and social aspects, with the emphasis being in that sequence. These include energy and water consumption, carbon emissions, use of renewable energy, waste management, long-term impact of companies, products and business on environment and society, supply chain, relationship with workers, government and local community, among others. The relative importance of these parameters differs across sectors. He feels that asset managers should pull up their values-based socks as the need to invest with an eye on environmental, social and governance issues will only get stronger.

6) The loom and the thresher: Lessons in technological worker displacement [Source: Medium] 
In 1830, in England, around 14% of the population was reliant on public charity compared to ~4% in 2019. This can mostly be chalked up to two colossal technological innovations: the power loom (and other textile-making technologies) and the threshing machine. Despite the nearly 200-year time difference, the impact, reaction to, and management of these technologies has many parallels to the present-day issues surrounding AI — both are issues of labor-saving technologies that could make entire industries obsolete. The author of this piece pored over several documents on technical job displacement in the first industrial revolution and came up with a list of 10 lessons.

The author elaborates on each of the lessons and some of these lessons include: 1) How major technological advancements can come in the wake of seemingly frivolous things. 2) People are what they repeatedly do. Losing what they repeatedly do is a loss of identity. 3) If desperate enough, an eroded middle class can become a mob. 4) Evidence-based policies should be based on real evidence. 5) Preparing and training people based on future forecasts has its shortcomings.

The best we can do is to learn from the past and anticipate some of the human responses to AI. Technologists and policymakers can see what they want to see in stories from the past. Hopefully in the future, we will be better able to separate the wheat from the chaff when taking cues from history.

7) Why is Joe Rogan so popular? [Source: The Atlantic]
He has interviewed Elon Musk (Business tycoon), Kevin Hart (actor and comedian), David Sinclair (an expert on the biology of aging and emerging research on treating it like a disease), and Chuck Palahniuk (author of many bestsellers), besides many others. He is driven, inexhaustible, and an honest-to-goodness autodidact. He lives his life like there’s no tomorrow. He’s a freak of nature, and most of his fans cannot, in fact, be just like him. But still the author of this piece, Devin Gordon, tried to experience Joe Rogan, in some form or fashion, every day for six weeks, through the Joe Rogan Experience.

The Joe Rogan Experience has been the No. 2 most-downloaded podcast on iTunes for two years running. Rogan’s second Netflix comedy special, Strange Times, dropped last year. His interview last fall with Elon Musk has been viewed more than 24 million times on YouTube, and his YouTube channel, PowerfulJRE, has 6 million subscribers. An indifferently received episode will tend to get somewhere around 1 million views. Mr. Gordon feels that in order to get at the truth of Joe’s beliefs, you have to ignore what he says and watch what he does. Rogan likes to say that he’s voted for a Democrat in every presidential election—aside from a brief ill-advised fling with Gary Johnson—and that he despises Trump.

Mr. Gordon’s Joe Rogan experience ended because he became tired of it. He says that Joe never shuts up. He talks and talks and talks. He doesn’t seem to grasp that not every thought inside his brain needs to be said out loud. It doesn’t occur to him to consider whether his contributions have value. He just speaks his mind. He just whips it out and drops it on the table. Also, Joe Rogan lives every day like it’s his last, which Mr. Gordon feels that’s impossible for him.

8) Palantir CEO: I’m a tech CEO, and I don’t think tech CEOs should be making policy [Source: Washington Post]
Companies and innovators in Silicon Valley have immense, almost monopolistic power. But, what happens when these people try to impose their moral framework on America? That’s the question Alex Karp, chief executive of Palantir tries to answer in this piece. Google earned millions of dollars working on Project Maven, an artificial-intelligence and machine-learning effort funded by the Defense Department with the potential to improve the military’s drone accuracy and capabilities. Some of the company’s workers objected — no problem there. But then Google executives backed away from the mission. The U.S. Marine serves; the Silicon Valley executives walk. This is wrong.

Palantir was founded after 9/11, with a commitment to help those on the front line use data analytics to protect the United States while putting in place privacy protections others thought impossible to achieve. The company is full of complex thinkers. They have divergent views on every issue and certainly on issues related to immigration enforcement. Mr. Karp feels that the immigration policy is not a software challenge; it’s a political one (even though he is the son of two civil rights activists). The solution lies with the political and judiciary system, not with Silicon Valley’s C-suite.  
 
Mr. Karp is deeply sympathetic to the people who are concerned about the use of software platforms in immigration policy. Every week or so, a small group holds a rally outside Palantir’s office. What is worrisome is not their protests, but that some Silicon Valley companies are taking the power to decide these issues away from elected officials and judges and giving it to themselves. As per the author this is not the way it should be, because they weigh their beliefs along with their complex business interests, both domestically and globally, and then make decisions that impact the safety and security of our country. This is not the way consequential policy decisions should be made. No company should have to work for the government. Basically, the elected representatives and judges need to take the decisions, and not the engineers running global businesses.
 
9) In mysterious pattern, math and nature converge [Source: Quanta Magazine]
In Cuernavaca, Mexico, a “spy” network makes the decentralized bus system more efficient. As a consequence, the departure times of buses exhibit a ubiquitous pattern known as “universality.” Scientists now believe the widespread phenomenon, known as “universality,” stems from an underlying connection to mathematics, and it is helping them to model complex systems from the Internet to Earth’s climate. The pattern was first discovered in nature in the 1950s in the energy spectrum of the uranium nucleus, a behemoth with hundreds of moving parts that quivers and stretches in infinitely many ways, producing an endless sequence of energy levels.

“Why so many physical systems behave like random matrices is still a mystery,” said Horng-Tzer Yau, a mathematician at Harvard University. “But in the past three years, we have made a very important step in our understanding.” By investigating the “universality” phenomenon in random matrices, researchers have developed a better sense of why it arises elsewhere — and how it can be used. Universality is thought to arise when a system is very complex, consisting of many parts that strongly interact with each other to generate a spectrum. The pattern emerges in the spectrum of a random matrix, for example, because the matrix elements all enter into the calculation of that spectrum.

Scientists are yet to develop an intuitive understanding of why this particular random-yet-regular pattern, and not some other pattern, emerges for complex systems. “We only know it from calculations,” Vu said. Another mystery is what it has to do with the Riemann zeta function, whose spectrum of zeros exhibits universality. Solving this mystery would have “big implications” for finally understanding the distribution of the primes, said Paul Bourgade, a mathematician at Harvard.

10) How time stopped circling and percolating and started running on tracks [Source: aeon]
The idea of ‘time’ has undergone a transformation. Outside Europe, much of the world followed an assortment of rules and understandings about what time meant. In India, various Hindu almanacs offered an extraordinarily complex division of time, one ensconced within the other – from microseconds used for rituals to the vast cosmological epochs to describe the Universe and space itself. To the Lakota Indians in the Americas, time included hours born from the movement of the Moon; October to them was ‘the Moon of the Falling Leaves’, as the author Jay Griffiths writes in her book Pip Pip: A Sideways Look at Time (1999).

By the mid-19th century, the revolution of railroads, connecting distant parts of Europe and the United States, made it clear that cities and towns were all keeping their own time. The larger the country’s geography, the greater the disarray. In North America alone, there were at least 75 time standards. In 1884, thanks to the efforts of the Scottish-Canadian engineer Sandford Fleming, the International Meridian Conference in Washington, DC attempted to rationalise time – for the whole world. There would now be one ‘world time’ with 24 time zones.

By mid-20th century, the standardisation of time was key to postcolonial nation-building. North Korea, for example, has over the past decade switched its time back and forth by half an hour to reflect either estrangement or reconciliation with its cousin in the South. By contrast, India – which spans over 3,000 kilometres, and thus different parts of the country experience sunrise with nearly two-hour differences – has stoically refused to enact more than one time zone. Greek philosopher Heraclitus once said, ‘You can not step twice into the same river.’ More than a millennium later, St. Augustine grappled with time in a more personal, even confessional manner: he knew what time was but, when he tried to describe it, he could not. Another millennium passed, and the French philosopher Michel Serres wrote that ‘time doesn’t flow, it percolates’.