Subsea Internet Cables are a Miracle
PLUS: Apple's Monopoly, Monster Beverage, Asian Work Culture, WarnerBros vs. Harry Potter.
Thanks for subscribing to SatPost.
Today, is a round-up of good reads, listens and watches from the past month including:
Big Tech & Subsea Internet Infrastructure
Monster Beverage = Top Stock Since 1994
Why Asian Business Folk Rely on Alcohol
WarnerBros Needs Harry Potter
Apple's Monopoly Lawsuit
And them fire memes (including Memecoins)
Big Tech & Subsea Internet Infrastructure
Almost all intercontinental internet traffic goes through submarine cables.
This is a robust system with numerous redundancies including over 540 subsea cables and a fleet of 60 repair shops on standby.
Subsea cable projects have historically been financed by a consortium of global telecommunications firms but Big Tech has jumped into the fray in the past decade to ensure internet access for its various services, per The Economist:
GOOGLE invested in 25 cables (and owns 12 outright), with its first sea cable program going back to 2008.
META invested in 15 cables (owns 1 outright).
MICROSOFT partly owns 4 cable.
The importance of internet access also means that governments are very involved. There are two main companies laying the cables and their competition for contracts has become a geopolitical flashpoint. One is based in the USA (SubCon) while the other is in China (HMN Tech). HMN was formerly “Huawei Marine Networks” and “Huawei” is — as you news hounds probably remember — the Chinese telecom and networking giant that was slapped with massive sanctions and fines by the US government in recent years.
A recent example of this high-stakes beef is the South East Asia–Middle East–Western Europe 6 (SeaMeWe-6) undersea cable. HMN Tech was set to win the bid for a 12,000 mile project that connects 12 countries between France and Singapore. However, the US government intervened and SubCon won the bid with a $600m proposal (which was more expensive than HMN’s bid of $500m HMN).
The SeaMeWe-6 is an extension of a global system that has already laid 1.4 million km of underwater internet cables. Of the 540+ cables, one gets cut every three days and the most common causes are shark bites, anchor drops and deep-sea fish trawlers.
“Trung, cmon. There’s no way that a shark is biting these cables.”
Oh it happens…like in Vietnam in 2015 (actual photo).
If you’re into dorky technical stuff, watch this dope subsea repair video.
Even with all the redundancies in 2024, we can’t take access for granted.
Large parts of West and Central Africa has been without cable for the past two weeks after several subsea cables failed.
Meanwhile, remote locations are always at risk. Example: a volcano erupted near Tonga in 2022 and a mudslide damaged the only nearby cable. It took 5 weeks for the cable to be fixed. My internet-addicted brain would have melted after 5 hours of no online access…or I would be lifted to a peaceful state of Nirvana. Who knows? Fortunately, Starlink was able to provide internet access with free terminals.
Situations like Tonga are a prime example of the usefulness of SpaceX's global satellite internet system (as Elon highlights in a tweet I wrote about this topic):
In 1996, author Neal Stephenson wrote a classic 42,000-word article for Wired magazine on the multi-billion dollar gold rush to lay cable for the internet (“Mother Earth, Mother Board”). Stephenson travelled around the world for a year on the project and delved deep into the history of undersea cables which highlights the technological achievement:
“Wires warp cyberspace in the same way wormholes warp physical space: the two points at opposite ends of a wire are, for informational purposes, the same point, even if they are on opposite sides of the planet. The cyberspace-warping power of wires, therefore, changes the geometry of the world of commerce and politics and ideas that we live in. The financial districts of New York, London, and Tokyo, linked by thousands of wires, are much closer to each other than, say, the Bronx is to Manhattan.
Today this is all quite familiar, but in the 19th century, when the first feeble bits struggled down the first undersea cable joining the Old World to the New, it must have made people's hair stand up on end in more than just the purely electrical sense—it must have seemed supernatural. Perhaps this sort of feeling explains why when Samuel Morse stretched a wire between Washington and Baltimore in 1844, the first message he sent with his code was "What hath God wrought!” […]
“[In the 2nd half of the 1800s] undersea cables, and long-distance communications in general, became the highest of high tech, with many of the same connotations as rocket science or nuclear physics or brain surgery would acquire in later decades.” […]
“[Laying undersea cables] probably looked like it was going to be easy. Insulated telegraph wires strung from pole to pole worked just as one might expect, and so, assuming that watertight insulation could be found, similar wires laid under the ocean should work just as well. The insulation was soon found in the form of gutta-percha. Very long gutta-percha-insulated wires were built. They worked fine when laid out on the factory floor and tested. But when immersed in water they worked poorly, if at all. The problem was that water, unlike air, is an electrical conductor, which is to say that charged particles are free to move around in it. When a pulse of electrons moves down an immersed cable, it repels electrons in the surrounding seawater, creating a positively charged pulse in the water outside. These two charged regions interact with each other in such a way as to smear out the original pulse moving down the wire”
AT&T’s famed research arm — Bell Labs — had to crack physics, chemistry, materials science, electrical engineering and countless other difficult challenges to transport telegraph, voice, images and data over long distances.
It’s honestly a miracle (one that I use everyday to make absolutely useless memes).
Monster Beverage = Top Stock Since 1994
Monster Beverage has been the top-performing stock in the past 30 years.
What started as a California juice company in the 1930s has now become the second largest energy drink seller in the world, after a company that rhymes with "Bed Pull".
The beverage company launched its first energy drink in the mid-1990s and changed its name from Hansen's Natural to Monster Beverage in 2012 after the energy drink became its top-revenue generator (Monster's positioning relative to Red Bull is very solid: it is priced the same but with twice the liquid volume).
In 2015, Monster entered into a smart partnership with Coca-Cola:
Coca-Cola acquired a 16.67% stake for $2B
They exchanged drink portfolios: Monster received Coca-Cola’s energy drinks (Nos, Relentless etc) while Coca-Cola received Monster’s juices (Hansen, Peace Tea etc)
Monster became the exclusive energy drink sold through Coca-Cola’s global distribution
Per this 9-minute video breakdown from CNBC, Coca-Cola now owns 20% of the ~$60B energy drink company (worth $12B, for a gain of $10B on its initial investment).
A $1,000 investment in Monster in 1994 would be worth ~$2,000,000 today.
Here are the top 5 stock performers over that span (ballpark figures):
Monster Beverage (+200,509%)
NVR (+71, 598%)
Apple (+55, 912%)
Cooper Companies (+48, 925%)
Ross Stores (+32, 736%)
While I much prefer sugar-free Red Bull, I have settled for Monster on so many occasions in desperate need of that caffeine hit (damn you Coca-Cola and your distribution monopoly in certain gas station chains).
Why Asian Business Folk Rely on Alcohol
Speaking of drinking, I used to imbibe regularly for work while living in Vietnam.
Drinking at dinners and bars after work is a commonality in the country and other parts of East Asia (China, South Korea, Japan, Taiwan). This is objectively unhealthy but was always a “thing people did”.
Why is it part of the culture? Alice Evans wrote an interesting piece on how East Asia’s societal structure — which values nuance in communication and avoids confrontation (compared to the West) — leads to regular alcohol consumption for business:
Collective harmony and hierarchy are strongly idealised across East Asia. Communication is thus implicit and indirect. Conflict aversion and emotional suppression make it harder to learn what someone else really thinks. So what’s the solution?
Alcohol reduces people’s inhibitions. This promotes social bonding and information-sharing. As argued in Edward Slingerland’s book “Drunk”, it benefits businesses!
The work norm is unfair to female employees, many of whom understandably opt out of “guy co-workers night out”. Every part of the article seems plausible and it has a lot of interesting tables like this one explaining how different countries deal with confrontation and debate.
WarnerBros needs Harry Potter
The Wall Street Journal has a long read on WarnerBros. and Harry Potter author J.K. Rowling. The lucrative relationship has been strained in recent years due to Rowling’s outspoken stance on women’s and trans rights. Many of the Potter film actors refused to interact with Rowling and executives within the organization are split on how to fight the PR battle.
Enter David Zaslav, who became CEO of WarnerBros. Discovery after the merger of the two firms formed an entertainment juggernaut. The company's streaming ambition — the Max app — needs hits, and Zaslav is wooing Rowling to ensure that the Potter IP isn't compromised (and he really needs hits because the stock is down 50%+ in the past year).
Some notable details from the article:
The Harry Potter film franchise was massive : “Warner adapted Rowling’s Harry Potter books into eight movies. Seven of them are among the studio’s 25 highest-grossing films of all time. All told, the series collected nearly $8 billion at the global box office before ending in 2011.”
Rowling is one of WarnerBros 3 key creative relationships: “[Rowling is part of] Warner’s ‘A+ talent’ crew, a group that included only two other members: Clint Eastwood and Steven Spielberg. But now, Eastwood is 93 years old. Spielberg made his last two movies at other studios. Rowling appears to be the last one left.”
Rowling has extensive control on the IP: “George Lucas had allowed writers to expand the Star Wars universe with novels and TV series years after he’d finished directing the films. Jurassic Park and Batman have been revisited by different writers and directors time and again. Harry Potter, by contrast, had a creator who didn’t want to lose any control. No detail was too small [for Rowling]…Warner executives knew she had the right to kill the projects should she choose to do so. That veto power stemmed from Rowling’s request in the early 2000s to grant her authority over ‘non-author written sequels,’ legalese for the kind of prequels and spinoffs that the studio wanted to explore with writers other than Rowling.”
Last year, Warner released a Potter video game (Hogwart’s Legacy), which became one of the fastest-selling games ever (with 24m units sold and $1b+ in total sales). At the same time, Potter Theme Parks are firing on all cylinders in the US (with locations in Florida and California), a new park recently opened in Germany with another planned for Abu Dhabi.
WarnerBros. is able to create content based on the original films without Rowling’s permission, but Zaslav doesn’t want to piss off the architect. He pitched her on creating a tentpole Potter TV show — like Game of Thrones style at $20m per episode or $250m season to produce — and it is slated to premiere in 2026 (it will probably crush).
FOR MORE ON THE TOPIC: Check out The Witch Trials of J.K. Rowling, an interesting 7-part podcast series about Rowling’s trans controversies (including interviews with the author and other people that were involved).
Today’s SatPost is brought to you by Bearly.AI
Why are you seeing this ad?
Because I co-founded an AI-powered research app and my technical partner is doing all the real work while I make dumb jokes and offer coupons.
We just added Claude Opus, a powerful new AI language model for querying, summarizing and editing large text documents (or help with your code, which I can't do but you might find helpful).
Use code BEARLY1 for a free month of the Bearly AI Pro Plan and try Claude Opus.
Links and Memes
Some other baller links:
Hollywood’s Most Powerful Person? The Town podcast has a fun episode on the top 10 biggest hitters in entertainment based on the premise of “who would you return a phone call from first?”: Bob Iger (Disney), Ted Sarandos (Netflix), Brian Roberts (Comcast) and Taylor Swift (repeat on my Spotify right now) are on the list among others.
***
Neuralink: The implantable brain–computer interface company founded by Elon just announced the first human patient to use the chip. Noland Arbaugh — a 29-year old who became a quadriplegic after a diving accident — did a livestream where he played chess by moving a cursor around with his mind (he says it was like “the force”). The video is a must-watch and it is an incredible achievement.
***
US government vs. Apple: The US government hit Apple with its long-awaited anti-trust lawsuit. The DOJ says the iPhone is a monopoly and highlights 5 key claims per this solid Hacker News summary (user Fripplebubby):
1. "Super Apps": Apple has restrictions on what they allow on the App Store as far as "Super Apps", which are apps that might offer a wide variety of different services (specifically, an app which has several "mini programs" within it, like apps within an app). In China, WeChat does many different things, for example, from messaging to payments. This complaint alleges that Apple makes it difficult or impossible to offer this kind of app on their platform. Apple itself offers a "super app" of course, which is the Apple ecosystem of apps.
2. Cloud streaming apps: Similar to "super apps", the document alleges that Apple restricts apps which might stream different apps directly to the phone (like video games). It seems there are several roadblocks that Apple has added that make these kinds of apps difficult to release and promote - and of course, Apple offers their own gaming subscription service called Apple Arcade which might be threatened by such a service.
3. 3. Messaging interoperability (blue vs. green bubbles): Probably most people are familiar with this already, how messages between (for example) iOS and Android devices do not share the same feature-set. Probably most people are familiar with this already, how messages between (for example) iOS and Android devices do not share the same feature-set.
4. Smartwatches: Other smart watches than the Apple Watch exist, but the document alleges that Apple restricts the functionality that these devices have access to so that they are less useful than the Apple Watch. Also, the Apple Watch itself does not offer compatibility with Android.
5. Digital wallets: It is claimed that Apple restricts the APIs available so that only Apple Pay can implement "tap to pay" on iOS. In addition to lock-in, note that Apple also collects fees from banks for using Apple Pay, so they get direct financial benefit in addition to the more nebulous benefit of enhancing the Apple platform.
The interesting part of the lawsuit is that it doesn’t focus on Apple’s much-maligned 30% App Store fee (which has been the subject of many lawsuits in recent years and Apple has been forced to loosen its App Store grip). My brief perusal of internet coverage says this lawsuit doesn’t have a clear win. Rather, it looks like a broad-shot against Apple to keep its anti-competitive practices — specifically around locking users into the Apple ecosystem — at a minimum.
For Apple’s part, it’s value prop for decades has been a combination of hardware and software. A lot of customers want the tight combination. What Apple needs to cut out is the stuff that clearly degrades user experience (like forcing people to leave the Kindle app to buy new books…which was always such an insane user experience).
***
Hermes was also hit with an anti-trust lawsuit: As I wrote about in “How Hermes Sells Time”, the ~$250B fashion giant won’t sell Birkin or Kelly bags direct. Rather, a customer has to buy a number of ancillary items first to be eligible. A new class-action lawsuit is charging that this requirement of buying ancillary items before you can buy a Birkin is a form of “tying”, which violates anti-competitive law.
Hermes’ key mechanism to make sure its sales associate follow the rules is by the compensation scheme: employees only make commission on accessories and ancillary bags (1.5%-3%) but none on Birkin/Kelly Bags. Ergo, they are very incentivized to have customers work up the product ladder.
While I once took the LSAT, I’m obviously not a lawyer and have no idea if Hermes will lose this lawsuit. Either way, it’s a great example of Charlie Munger’s famed quote, “show me the incentive and I’ll tell you the outcome.”
***
The Most Thought-Provoking Thing I Read Last Week: In 2016, Google’s AlphaGo — its powerful AI model that learned to play Go on its own — beat the world champion Lee Sedol. Google recently interviewed Sedol and it is deeeeep. He calls Go a form of art and says that if he knew that AI would one day solve the game, he wouldn’t have become a pro player.
Photographer Jingha Zhang wrote a thoughtful essay on why Sedol’s revelation is heartbreaking while others note that: 1) chess players have long dealt with AI being better (but this hasn’t diminished interest in the game because people want to see other humans play); and 2) many Go players are using AI to create moves that never otherwise could be invented (aka humans are still using Go for creativity and making “art”).
…and here them fire posts:
The current wildest corner of the crypto bull cycle is Memecoins. People are using the Solana blockchain — which is faster and has lower transaction fees than Ethereum — to spin up coins that are accruing value mostly based on how good of a meme they are. Most readers will be familiar with classic Memecoins such as Dogecoin, but the latest cycle has also brought about some politically-themed ones that have reached market caps of over $50 million, riffing on Joe Biden (jeo boden), Justin Trudeau (jester turdeau), and Elizabeth Warren (elizabeth whoren).
It’s absurd. Everyone involved knows it’s absurd. But people are still making money by guessing if the meme will last or go mainstream. The absurdity reached new levels of absurdity last week with Slerf, a coin based on a sloth character. The team behind Slerf raised $10m in a pre-sale and then accidentally destroyed half of the supply of coins (it was literally a fat finger mistake). People lost out on the funds they put in and the Slerf team held a very long Twitter Spaces to apologize profusely. The fiasco garnered so much attention that Slerf blew up and its market cap hit $600m.
Jeremy Arnold explains it all in this thread with a key insight: “This mistake [of burning the coins] was very good for attention, and attention is the true value of any memecoin. So the obvious thing happened and the new tokens that were released shot up around 5,000%.”
I hold zero Slerf and none of this is investment advice. However, I did make this joke tweet which was then re-posted by the official Slerf account (people in the replies noted that the Slerf account re-posting TrungTPhan was a bearish signal and that the Memecoin has already peaked…but shockingly the market cap is still ~$300m as of this writing).
