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Circle of Competence Issue #64


"The march of technology is that of the natural being replaced by the efficiently synthetic." - Chris Ip


I've been leaning fairly heavily towards tech related pieces lately, mostly because it is the industry du jour that is in the news the most - from privacy issues to communist vs. capitalist run tech companies to valuation bubbles. I am hoping to bring a little more balance into the newsletter in the next few weeks.

Shady numbers and bad business: inside the e-sports bubble (Kotaku)

Charlie Munger made the point once that it is essential to know how to kill ideas if you want to become wiser. This piece on how the e-sports industry may be experiencing bubble-like symptoms and capital flows represents such a situation - I've been under the impression for quite some time that e-sports' viewership had far surpassed that of some of the most beloved American sports, but it seems that it just ain't so. According to this piece, there is no standardized 'Nielsen's' ratings for e-sports - yet - and the way that 'views' are counted is dubious at best. I won't get into how they differ from Nielsen's standard '6 consecutive minutes' definition, but suffice it to say that they are almost certainly inflated. Not only are viewership numbers potentially inflated, but the economic returns to most of the professional e-sports teams and leagues and arenas have been borderline break even to negative. While the economics may not be extremely positive around the formation of leagues and teams, the bottom line is that gaming is growing into the mainstream. How the business models evolve into sustainable enterprises will be the main question going forward, because as it stands currently, there is more money flowing into the teams/arenas/leagues than is flowing out.

Huawei's rise is littered with accusations of theft and dubious ethics (WSJ)

Ben Thompson and James Allworth on the implications of a Sino-US tech and trade cold war (Stratechery)