"Isn't it astonishing that all these secrets have been preserved for so many years just so we could discover them." - Orville Wright
Dear Readers,
It is a historical curiosity that the first flying machine was successfully developed by Messrs. Orville and Wilbur Wright. Indeed, neither of the two brothers attended college or had any formal engineering training. They came from a working-class family with no privileged access to elite universities' libraries or labs, and had no large source of funds to draw from apart from the mediocre profits of their bicycling business. They were not the only ones attempting to extend homo sapiens' dominion of nature to include the skies as well. At the very same time as them, a hyper-connected, government-funded, professionally trained university Professor, Samuel Langley, was also working on a prototype. Only his failed, and the Wright brothers' succeeded.
The theories abound as to what exactly led the humble Wright brothers to succeed against all odds, and in the process etch their names into world history. One of the most popular explanations, beautifully presented in this Scientific American article, is that it was their insatiable curiosity that was to be the magic ingredient. Orville Wright himself explained in an interview that "the greatest thing in our favor was growing up in a family where there was always much encouragement to intellectual curiosity. If my father had not been the kind who encouraged his children to pursue intellectual interests without any thought of profit, our early curiosity about flying would have been nipped too early to bear fruit."
Whereas Mr. Langley's motivation came from the potential fame and fortune that would result, the Wright brothers' motivation was centered on the potential impact their work could have on mankind. In a wonderful talk, the author Simon Sinek draws from this story, and from other great personalities, as he provides a theory for what makes certain leaders great and able to move mountains. He puts his finger on the following notion: people don't buy what you do, they buy why you do it. From this realization he develops his popular Golden Circle theory, which implores leaders, and companies, to "Start with Why."
So, let us start this week's newsletter with our 'why'. We have been clear about our passion for technology and the Metaverse's potential impact. Our specific goal for this project is not, you will have noticed, writing click-bait content, and maximizing ad revenue and readership at all costs. Rather, our raison d'être is to accelerate the development and deployment of technological innovations. This goal forms the backbone of our ongoing work, and any future evolution. We look forward to continuing on this journey together as we relentlessly pursue it.
With persistent inflation in the United States, another significant fed funds rate increase is expected soon. In this context, the 10-year US Treasury yields passed the 4% mark this week, the first time they have done so since the 2008 Financial Crisis, driven by the expectation of these continued interest rate increases. The consequence is a still sluggish stock market, with many watchers hoping (and perhaps praying at this stage) that the turnaround, which could begin when inflation shows signs of abating, is near. Meanwhile, our beloved tech sector continues to be bearing the brunt of the global economic slowdown. The turbulent past few years, however, have taught us all the importance, and value, of resilience.
Please note that inclusion in the above chart is neither an implicit nor an explicit investment recommendation in any way.
Last week, Meta introduced its updated headset, branded the Meta Quest Pro, at the firm's Connect event. This new headset presents serious upgrades over the Quest 2 thanks to significantly enhanced graphics (a result of its integration of QUALCOMM's Snapdragon chips), new cameras with eye-tracking tech, and more sensitive controllers. It also comes with a hefty price tag of $1500, almost four times the $400 price of its predecessor, and a limited 1–2-hour battery life.
In its attempt to build the Metaverse and popularize its adoption, Meta seems to be making a slight pivot to the professional community, with a product aimed more at it than average consumers. This can be easily understood, as the developers of applications, universes, and other features are a key constituency of theirs that they must lure while still having an early-mover advantage over Apple.
The difficulty is that the global economic context, and Meta's own financial situation, as we have explained before, is worsening, and patience for long-winded, and cash-burning, processes, is wearing thin. This week, Bloomberg indicated that its internal model predicted a 100% chance of recession in the next 12 months, which will exacerbate the pressures facing Meta executives who will have to answer increasingly frustrated shareholders about why they are continuing to invest in a 5–10-year long project when its revenues and profits are degenerating today.
When Mr. Zuckerberg announced his intention to rebrand the company from Facebook to Meta, on October 28, 2021, we were in the midst of a historic boom market. This date coincides almost perfectly with both Meta's stock level and the NASDAQ index being at all-time highs. At that time, investors could, albeit reluctantly, swallow the notion of Mr. Zuckerberg making a bold, multibillion-dollar investment in redefining the internet because continued growth in the core business could balance out the gargantuan costs this project would engender, and perhaps set the company on a path to long-term success.
Almost a year later, with the NASDAQ having fallen 30%, and Meta's stock a whopping 60%, the barrage of criticism is incessant, the negative headlines unending, and the pressure on Mr. Zuckerberg to reverse course and reconsider the path he veered onto is reaching new, astounding heights. We wonder aloud whether, during the predictably difficult months ahead, Mr. Zuckerberg will be able to withstand these pressures, retain the confidence of his Board and shareholders and pursue his vision, or change course. The future of the internet, not just of Meta, may well depend on that decision.
Quantum technology and computing is transforming from being a subject that merely attracts curiosity and mystery to one that attracts the attention and dollars of investment professionals. As the above chart shows, the years 2020 and 2021 stand out as inflection points in the story of quantum technology. It perhaps is no coincidence that this year's Nobel Prize in Physics was awarded to pioneers in the field, Alan Aspect, John F. Clauser, and Anton Zeilinger.
Their work focused on the confirmation of a phenomenon known as 'quantum entanglement,' otherwise referred to by Albert Einstein as "spooky action at a distance." The understanding of quantum entanglement has been considered critical in the development and deployment of quantum computing. Increased investments in the field reflect the fact that the deployment of this revolutionary technology is getting less distant.
We hope you enjoyed this newsletter. Don’t hesitate to write to us at team@metaobservations.com to pursue the conversation.
We’re in the midst of earnings season, always an interesting time. We’re keeping watch for anything of note that could be of interest to us.
Thanks for reading and sharing,
The team at MetaObservations.
Disclaimer: This newsletter is distributed for general informational and educational purposes only and the opinions expressed therein are not intended to constitute investment advice.
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