August 2023 - Nuclear Fear, Founder Naivety & Buffett's Bet
This month, we discuss the challenge of having the right mindset in a start-up, some post-Oppenheimer feelings around nuclear fear and Buffett's return to housing.
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Quote of the Month: “What we learn from history is that people don’t learn from history.” - Warren Buffett
Our Challenge of the Month - Having the Right Mindset:
One of the most challenging things about building and running a start-up is having the right mindset.
There is a necessity to be optimistic enough to keep going even when things go wrong, while also maintaining radical doubt in every assumption you make in order to stay alive.
In my opinion, there is a degree of naivety and ignorance that is essential for a founder. Every piece of history and data tells you that starting a company is a terrible financial decision, and you are almost certainly destined to fail.
To do so knowing this, you have to be an optimist (or at the very least, an idiot).
Equally important, is ruthless pragmatism. It is true that only the paranoid survive in a start-up. The ability to understand human bias and seek the truth in every situation is an underrated and difficult skill to develop, particularly for first-time founders. Without it, you will likely fail.
Optimism drives the vision within a start-up. It acquires customers, brings on investors and builds a team that is all pulling together in the same direction.
Radical doubt leads to great decision-making, and is essential for product development or forecasting into the future.
This balancing act is made easier at Bounce as Rónán & I naturally perform a ‘good cop, bad cop’ routine when evaluating ideas, strategies and decisions.
My disposition is to push the narrative of ‘what if’, with the aim of transferring enthusiasm and energy into the positive outcome. Rónán questions every assumption we have to avoid relying on biassed information to validate a decision.
By combining these perspectives, we increase our chances of pursuing the right path.
As the years have gone on, we have both developed the ability to flip-flop between optimism and radical doubt. This is important, as the only thing that is inevitable in a start-up is pain.
Some weeks, my excitement is palpable and all I can do is think about how everything will continue going well. In these weeks, I need Rónán to question everything.
Other weeks, I’m frustrated and doubting every piece of information we have to make a decision. In these weeks, I need Rónán to sell me the dream.
Building a company will be longer and harder than you can ever imagine, and having someone who can play the necessary opposing role on any given day is what leads to better outcomes, and brings you back to a mindset in equilibrium.
Our Trend of the Month - Nuclear Fear:
Like many, I recently saw the incredible film, Oppenheimer. It was a strange feeling leaving the theatre - nuclear angst palpable amongst moviegoers.
This was hardly surprising given a common theme throughout the film was the “non zero” chance that a singular nuclear detonation could trigger a cascading series of explosions ultimately leading to the destruction of earth!
It turns out the "Trinity Test” was of little concern (as reported by the Washington Post here) and much like other nuclear reporting, the movie plays on viewers' inherent nuclear fear.
Upon reflection, although making for good entertainment, this portrayal turned to frustration and acted as a reminder for the anti-nuclear worldview of many.
As such, this month, our aim is to dispel some of the anti-nuclear messaging and once more pedal the pro-nuclear agenda.
Safety:
Like many of the risks with nuclear, they are over-emphasised by mainstream media as, quite frankly, it sells. But in reality nuclear power is a safe, reliable source of energy.
Air pollution resulting from carbon emissions is a far greater killer than any nuclear plant disaster - leading to c.7 million deaths annually.
Yet, often we are anchored on the disasters at Chernobyl and Fukushima. Zooming out from these undeniably tragic events, in the grand scheme of things, they are grossly overrepresented, and actually compare favourably with other industrial accidents.
According to a UN report the Chernobyl incident led to 50 direct attributable deaths (potentially roughly 3x this amount may or may not occur due to thyroid cancer).
At Fukushima, of the tragic 20,000 deaths arising from the earthquake, no deaths were attributed to radiation release. Whereas public perception paints a different picture.
Waste:
Similarly, there has not been a single documented death from storing civilian nuclear waste ever. Chris Keefer highlights the storage process incredibly well here, showing how humans are incredibly good at making dangerous things safe.
For instance, take the infinitely more complex process of aviation - c.4.5Bn passengers travelled in 2019 leading to 289 deaths - storing a stationary small massed waste should be manageable.
This becomes more true given nuclear waste gets exponentially less radioactive over time, within 40 years radioactivity declines is 99.99%.
In fact, solar produces 300x more waste than Nuclear.
Climate change is top of many people’s agenda currently, but an objective assessment of how the grid should look going forward, often does not occur.
Intellectually honest readers, seeking a data-centric argument, should check out Michael Shellenberger’s Ted Talk here.
Time will tell, but eliminating our nuclear fear will be a necessary adjustment to effectively tackle global warming. Who knows, but those who fear nuclear energy in the future just may be likened to the electricity-fearists from 1889.
Start-Up / Founder of the Month - Eoin Hinchy & Thomas Kinsella from Tines:
I don’t believe anyone can or should set up their own business, but I’m always fascinated by founders who suddenly throw themselves into the arena after a long stint in the corporate world.
The ability to understand a problem deeply within your current role, and take yourself out of that comfort zone to create a solution is unique.
That is how Tines was started, a global no-code automation platform that has raised $100m in five years since its launch.
This story of ingenuity is as incredible as any I’ve heard. Started in 2018 by Eoin Hinchy & Thomas Kinsella out of a small office in Rathmines, they had been in cybersecurity for 10+ years before going out on their own.
They built their company exactly the way they wanted to, obsessing over the speed at which they could build and respond to client feedback. They raised millions without a pitch deck, and shipped their first product after just eight weeks of building.
Their story is expertly told by Eoin in this interview with Gary Fox, and is one every founder should listen to.
Their values are publicly displayed on their website and have been in the DNA of the company since day one, which you will hear about in the above podcast and are seen below.
Yet another example of Irish founders smashing it on a global scale, doing it their own way.
Investment / Fundraise in Focus - Buffett Buys Builders:
Berkshire Hathaway has recently taken stakes in homebuilders: DR Horton, Lenmar and NVR. With mortgage rates doubling in the past year and a half, the costs of financing a home have increased, and are now at their highest levels in decades.
This means that existing homeowners have locked down mortgages at lower rates, meaning they are very unlikely to sell their existing home and move into a newer property with higher mortgage repayments.
For illustration, take a $300k house with a 2.5% vs. 8% mortgage, both require a $60k down payment but the associated monthly payment rises from $948 to $1,761!
As such, with house inventory at record lows, demand will likely need to be serviced through new inventory from home builders.
Similar issues have been experienced across Europe, detailed in this great article from the Financial Times here.
Irish readers in particular will be acutely aware of the lack of affordable housing, especially as during Covid, Ireland experienced the biggest “Boomerang Effect” i.e. the % of people returning home to live with their parents.
With home prices sky high and now mortgage rates to match, getting on the property ladder is becoming a fantasy for many, but in the shorter term perhaps homebuilders and Berkshire are positioned well to capitalise.
Content Corner:
UPS Drivers to be Paid $170k: Drivers afforded attractive new package here
Central Banks Demanding Gold: Gold was demanded by central banks at the highest levels in H1 2023 since data started being collected in 2000.
Weight Loss Drug: Wegovy could prevent 1.5 million heart attacks over 10 years here
The Mom Test: A brilliant book for founders, by Rob Fitzpatrick, that explains how to find the truth in customer conversations and stop wasting time when building here.
The Future of Home Ownership in Ireland? Ex-Huckletree founder, Andrew Lynch, has launched his new start-up ‘Homely’ aiming to bridge the gap between renting and home ownership here.
The Story of LVMH: A deep look into the incredible LVMH story, detailed by the Acquired Podcast here - it’s long, but well worth it.
Building a Career you Love: A speech by legendary investor Bill Gurley, most applicable to aspiring entrepreneurs and investors.
How to Validate your B2B Start-Up Idea: A part of a series of newsletters from Lenny Rachitsky here, with insights into validating your idea and getting off the ground (see Lenny’s Newsletter here for other great content)
The Most Powerful Paradoxes in Life: Another simple, thought-provoking series of messages by Sahil Bloom here.
Thought Provoking Graphics:
Trying to comprehend the difference in wealth, by the height of stacked $100 bills.
It appears some of the second-order effects of lockdowns and school closures are playing out.
Obesity rates in US vs Europe
Despite Europe bing on fire this summer, it appears these levels are nothing of historical note.
Meme Corner: