God Must Be Doing Cocaine
w.304 | Geography of Ambition, Taxpayers Migrating, and End of Services
Dear Friends,
High Oil Prices? Yeah. Rising Inflation? Probably. Longer Conflict? I guess. I hope to have more to say on this in a week or two, but, right now, the only observation is that I don’t think there is a concrete or credible plan to ‘finish the job’ in Iran.
The world is in a constant state of change. Still, some weeks are bigger than others. It feels like we are in the midst of a swing, realignment, and awakening. How it will land and develop, and on what time period, is impossible to predict with confidence, never mind certainty.
Today's Contents:
Sensible Investing: Geography of Ambition, Taxpayers Migrating, End of Services
Weeklies: Selfie & Song
Sensible Investing: Trends
The geography of ambition is shifting, not just the technology
‘Did SXSW Flourish or Flop?’ Is A Reasonable Question.
As someone who did not have, and has never had, a badge for the conference itself, I attend the smaller side events to listen. This year, the verdict on the conference itself was mixed. Maybe because the convention center is under construction, and everything was spread out. Maybe because it’s lost its mojo. I don’t know.
What is clear, however, independent of the conference, is that Austin is on an undeniable rise. Particularly in hard tech, defense tech, and American resilience sectors. From Elon announcing Terafab (his Musk-verse joint initiative to build chips) at the old power station to Travis Kalanick (ex-Uber) announcing his relocation to Austin to build his next company, Atoms (physical autonomy in the real world) and being able to ‘jetski to the office.’
Getting AI engineers to move from the Bay Area is hard. Maybe impossible. Getting hardware engineers, deep tech scientists, and supply chain experts from all over the US to move to Austin is much, much easier, and that appears to be in play.
Trendline Tracking: Taxpayers are voting with their feet. I’m including these charts as interesting data released this week for geographic mobility trends of people moving to states (and countries!) with lower taxes, lower cost of living, and greater ease of doing business. This government data is dated (from IRS 2022-2023), but imagine what it is today or will be next year with the Washington State income tax and the talk of removing QSBS in New York State. The movement of wealth is real, and Austin (and Texas) are the clear beneficiaries.
The end of services? Naw. The inefficiency is the point.
There are lots of articles about how AI will disrupt consulting and professional services, including this viral X article: “Services: The New Software.” OMG. Everyone has been saying this forever. And, yes, there will be greater efficiency with greater software adoption - but people will never truly go away. If it were working and truly deflationary, we’d be seeing accounting and legal fees go down, but they still seem to be going up. Or, I need to be a much better negotiator.
I was talking to a friend and an education-industry contact who has a new role at an independent public charity focused on helping young people thrive (or something like that). This person told me they were about to hire a consulting firm for several hundred thousand dollars to advise on their impact measurement framework. I told them that Claude and I could knock this thing out in 20 minutes, probably at a higher quality. They agreed that this was obviously true, but, of course, the contract and the work would proceed as negotiated.
Most people don’t actually want to be efficient or get the work done. And we all know the dozens of reasons for this. That’s why a leader with a clear mandate can get so much done: the courage (and systematic ability) to confront people and push things forward quickly is rare.
Or these sectors just won’t exist anymore when they are truly automated or agentic. For example, in the article it cites healthcare revenue cycle ($50-80B outsourced in US). Anyone who has spent even a minute in this space, professionally or personally, knows the frustrations. What used to be a reasonable clinician-to-clinician judgement conversation about patient care is now a knife fight in a hornet's nest with countless layers of admin, navigating insurance, compliance, and regulations. If and when the agents come for the space, it will probably collapse into nothing, or the inefficiency will move elsewhere.
The inefficiency is the point.
Now, will AI come from the most incompetent and inefficient employees? Yeah. Hard to justify the extra cost, and you won’t be able to support your margins otherwise.
Looking forward to that deflationary era…
Weeklies: Selfie & Song
Selfie: KF meet up in ATX, Deploying Agents in Cannabis & 3D Printing Homes
It was nice to meet up with a bunch of my old friends and batchmates from Kauffman Fellows, a fellowship for investors in the innovation economy. Claire is a native Austinite, is still investing (you’ve met her in DSw.243), and is very active in KF, while Jason and Geoffrey are both operators and rarer sightings.
Geoffrey See is working on verticalizing cannabis operations and driving efficiency with agents across the businesses. It’s more of a roll-up strategy. He’s Singaporean but always an international man of mystery who spent a long time running entrepreneurship programs in North Korea. Yes, you read that right. He has interesting ideas about potential mineral deals that could be struck in the region.
Jason Portnoy is an original member of the PayPal Mafia, the founding CFO of Palantir, and a founder of his own fund. He’s currently the President of ICON, a leading ATX company that builds houses and structures using 3D printing robots. Super cool stuff and the OG in the Austin hardtech ecosystem.
I greatly appreciate Jason’s absolute intensity from self-reflection to workplace achievement. He’s recently started writing online again and is worth a follow (here). His latest - Unreasonable Success Requires Unreasonable Standards - is pure Jason and the raw, real truth.
Song: God Must Be Doing Cocaine
Here on YouTube.
A few years ago, I met a Grammy award-winning producer named Yung Spielberg, who was an early pioneer in AI & Music. He’s done the intro music for several famous podcasts, notably All-In. This song was his absolute favorite in recent years.
It embodies a certain Gen Z/millennial theme of emotional emptiness, disillusionment, and the world out of control.
“God Must Be Doing Cocaine” by Charlotte Lawrence
Robots are learning
And we can't keep pace
Feels like we'll all be replaced
Gets wild ideas
When he stays up late
God must be doing cocaineThanks for reading, friends. Please always be in touch.
As always,
Katelyn