No. 61: Frank Capitalism | India’s Elections | Amazon AI

Growing the Pie

I’ve spent the past week crafting words about this memo. After a fantastic meeting earlier today, I’ll just speak plainly. For us to have the responsible capitalism Howard Marks calls for in this piece, we have got to get to the point where we have a frank conversation about how the U.S. economic pie got so massive and how we’re in a place where it divvies up so unequally.

Our modern capitalistic society didn’t emerge from a vacuum. The foundations that set the stage for this thing trace back the beginning of this country. Over the course of history, slavery, the rollback of Reconstruction, redlining, and more messed with what the invisible hand of the market should have handled as the smartest, most talented, and hardest working folks competed for their share of the pie. We are where are today, but you can’t point to the faults of the populist left’s resentment towards capitalism without doing a thorough examination of why that could be. We won’t get responsible capitalism that way. 

INDIA ELECTIONS 2019: India elections: All you need to know

Nearly 900 million people are eligible to vote in India’s elections which began last week and outpace several of the largest democracies in the world combined. In order to manage the scale of the elections and ensure their success, today is the first of seven election days that will that will wrap up next month.

While tedious, the approach might have been helpful to Nigeria’s elections during which voters had to endure a last minute call to delay the vote. With the mix of the country’s size and security challenges in some areas, perhaps breaking the election up into easier digestible pieces may have helped.

I’m curious to see what turnout looks like for India’s elections in comparison to Nigeria’s shockingly low one.

2018 Letter to Shareholders

The most important part of Amazon’s shareholders letter in my opinion is the following section:

We’re also plunging into helping companies harness Machine Learning. We’ve been working on this for a long time, and, as with other important advances, our initial attempts to externalize some of our early internal Machine Learning tools were failures. It took years of wandering – experimentation, iteration, and refinement, as well as valuable insights from our customers – to enable us to find SageMaker, which launched just 18 months ago. SageMaker removes the heavy lifting, complexity, and guesswork from each step of the machine learning process – democratizing AI. Today, thousands of customers are building machine learning models on top of AWS with SageMaker. We continue to enhance the service, including by adding new reinforcement learning capabilities. Reinforcement learning has a steep learning curve and many moving parts, which has largely put it out of reach of all but the most well-funded and technical organizations, until now. None of this would be possible without a culture of curiosity and a willingness to try totally new things on behalf of customers. And customers are responding to our customer-centric wandering and listening – AWS is now a $30 billion annual run rate business and growing fast.

Amazon has turned different parts of its business inside out in order to remove bottlenecks and get assists from customers in accelerating the development of its technology. Jeff Bezos points out the results of that in the first section of the letter – third-party sales have gone from $0.1 billion to $160 billion between 1999 and 2018. None of us can fully appreciate that. Now, layer the exponential power of AI on top of Amazon’s ability to build a country from nothing, and go sit in a corner with a Tastykake and RC Cola as Coach Merritt used to say. Twenty years from now, we’ll be using Amazon One-Thought to order items and six years away from knowing whether Ray Kurzweil was right about artificial intelligence hitting go-mode. What a time to be alive. Are we ready?

Mother Ghana is Struggling

My neck hurts after shaking my head while reading this Economist piece on Ghana’s economic woes. Some highlights:

  • Public debt could reach 70 percent this year
  • The Ghana Cedi has lost over 99 percent of its value to the dollar (Keep in mind Ghana switched from the New Cedi to the Ghana Cedi)
  • Since 1966, Ghana has sought IMF help 16 times

Elections are coming up next year, so we will probably see more spending. President Mahama has a lot of work on his hands in the lead-up. I imagine he will cite progress made on addressing power issues and the exploding budget, and that he should be re-elected to continue righting the ship.

Elections are a lot of work. Perhaps, the better move would be to not seek re-election, double down and get reforms right over the next 18 months, and hand off an improving situation to his successor.

No. 21: Lessons From a Zambian Poultry Entrepreneur

Sydney Musonda with his first batch of chickens

Never have I been so excited about chickens! Earlier this year in Uganda, I and Sydney Musonda developed a business model for a chicken farm he would run in Zambia. He spent the next five months pursuing financing for his venture and secured funding in November. To date, he has purchased 205 day-old chicks and secured a facility to house them. He will be ready to make his first sales at the end of January.

Sydney and I recently caught up on his venture and our conversation reinforced two things concerning entrepreneurship. The first is that the external environment, both political and macroeconomic, will always make things challenging for entrepreneurs. The second is that entrepreneurs can leverage these kinds of challenges to grow their confidence, brand, and business model.

During the five months Sydney spent pursuing funding, he had a difficult time getting potential investors to buy into his idea. He got a significant amount of great feedback on his model, yet the investors he approached were having difficulty with their finances and were concerned about the political environment in Zambia at the time, it being an election year.

Zambia is one of the better performing economies on the African continent, with its current $16.19 billion GDP projected to grow at an average rate of 6.9 percent between now and 2015, though the country is still trying to make sure that growth is inclusive. Like most of the world though, the economic crisis in the European Union is surely having an impact Zambia’s economy as well.

The country seems to have transitioned well to President Michael Sata’s administration and Patriotic Front party after President Rupiah Banda’s three-year term and the Movement for Multi-Party Democracy’s 20-year control of power. In the months leading up to the election, there was tension on the ground. Sydney shared that one of the banks was taken over by the Zambian government showing that their concern was not completely unfounded.

Despite the challenges he faced, Sydney says that his confidence continued to grow pitch after pitch. He was able to glean advice from the investors he approached and found the feedback helpful in refining his model. In the face of his disappointments, he did not give up and finally secured his funding.

Sydney is launching his business at what seems to be a promising period in Zambia’s poultry industry. Mathews Ngosa, President of Poultry Association of Zambia, noted that Zambia’s poultry industry closed at 2011, having produced 40 million broiler chickens and 2.1 million layers. He projects production growth to land between 20-25 percent, a marked difference from the 40 percent reduction in growth the country experienced in 2009, and an increase from the 17.5 percent growth in 2010.

I look forward to watching Sydney grow his business. The energy in his voice was so infectious as we spoke, and I am really excited that he has progressed this far with his venture. I am sure he will face further challenges considering that his venture is still young but I think his tenacity will help him drive the business forward.