Hello Interconnected Readers:
Next week is both Thanksgiving week in the US and my birthday week. (Programming note: I will not publish my usual Thursday deep dive analysis due to the holiday.)
[If you’d like to skip ahead to the six news stories and commentaries – three from English language sources, three from Chinese language sources -- here are this issue’s items:
- “SEC Pursues Plan Requiring Chinese Firms to Use Auditors Overseen by U.S.” (English Source: Wall Street Journal)
- “Chinese Self-Driving Startups Plus and Hesai Considering Going Public” (English Source: The Information)
- “The once obscure, derided financial product that just might transform deep tech venture capital” (English Source: Lux Capital blog)
- “Alibaba Cloud’s Difficult ‘Peak’” (Chinese Source: Leiphone)
- “Ant’s Fallout Unfinished; Alibaba Getting Class Action Lawsuit Across the Ocean” (Chinese Source: Interface News)
- “Escape from Foxconn: Left 18 times, but had no choice but to return” (Chinese Source: Phoenix Weekly Financials)]
I have never been a big birthday celebration person. Living in the US and having it generally overlap with Thanksgiving helps me simply wrap my birthday anonymously inside a big national holiday. I’m not sure why though. Perhaps it’s my natural shyness, immigrant self-consciousness, or overall aversion to attention-seeking in spite of its transactional utility from time to time.
Instead of birthday, I’ve been thinking a lot more about birthplace. I find it more deterministic in pondering how a person’s life eventually gets lived. Birthday seems to be overemphasized, while birthplace is overlooked.
I thought about my maternal grandfather. He was born in 1934 and died of cancer in 2014. Growing up, my memory of him was mostly of his bad temper. In 2013, I took a gap year between leaving the White House and starting law school. I was planning on doing some cool, entrepreneurial stuff (and I did some of it), but I also ended up spending a lot of time with my maternal grandparents in my hometown of Shenyang -- my birthplace. Grandpa and I hung out a bunch. In between marathon mahjong sessions and watching TV dramas, he would tell me bits and pieces about his life that I never knew and few others knew.
His birthplace was a town in Anhui province that, historically, had a reputation for producing scholars and academics. He started college when he was 16, which was unheard of, and became one of the first few academics to be sent to the US to study. For him, it was UPenn. His field was genetics. He reveled in details of him and his other fellow study abroad friends taking a road trip once from Philly to Florida in a beat-up old car. He didn’t know how to drive, so he was in charge of directions and entertainment.
Because of his raw intellectual horsepower, he also spoke his mind a lot, during a time and at a place where that type of behavior got you into serious trouble. He didn’t share all the gory details, but for a period, he was made to scoop feces in public as a form of punishment and shaming. He ended up becoming a tenured professor at our city’s medical university and founded its genetics department. For a while, he also led the university’s external affairs as a Vice Dean, so he traveled a lot on scholarly exchanges, primarily to Japan, Germany, and Russia, during a time when few Chinese traveled abroad. There were rumors that he would’ve become Dean, the top job, if he didn’t speak up so much when he was younger. He probably would’ve been a Senator or something, if he was born somewhere (anywhere) in the US.
He was already battling cancer in 2013 when we were hanging out. In between cooking, teasing my grandma, and fooling around (he loves pranks), he would tell me his hope for me -- be some kind of bridge or linkage between cultures, particularly between the US and China. How he came up with this hope, I don’t know for sure. Perhaps he wanted me to continue laying down the bricks of connection and exchange he started doing at UPenn.
He is the spiritual reason why I write Interconnected.
I love reading biographies. I’m currently working on “Jesse Livermore Boy Plunger” by Tom Rubython, the definitive biography of one of the most famous stock traders in American history. I’m not done with the book yet, but I suspect that Jesse’s birthplace and station -- the accidental third son of a poor farming family in a well-off, blue-collared town of Acton in Massachusetts -- had some influence on his precociousness, talent in “reading the tape”, tendency to gamble big, and eventual tragic ending (suicide).
While the birthdays of most people are readily available with a quick Google search, their birthplaces, and the story behind those places, are much harder to find. Maybe that’s why we don’t think about it as much, though I’m sure when Warren Buffett talks about the “Ovarian lottery”, he’s thinking about both the time and place.
Later in this issue, you will see a story I share about the life of workers at Foxconn, many of whom leave the factory due to its grueling work environment but return later, multiple times. For many Chinese born where they did, being uneducated and unskilled, working at Foxconn is a top choice to make a living and support a family.
I will be pondering the deterministic influence of birthplace a lot during my birthday week.
The news summary below covers the period between November 16 - 22, 2020 of six news stories – three from English language sources, three from Chinese language sources. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.
Before you go on, please check out last week's deep dive post: "Building a Bilingual Newsletter: 2020 Edition"
“SEC Pursues Plan Requiring Chinese Firms to Use Auditors Overseen by U.S.” (English Source: Wall Street Journal)
My Thoughts: This new regulation by the SEC is a reasonable action, especially in the absence of further progress on the Holding Foreign Companies Accountable Act from Congress. The Act had a lot of momentum earlier this year. Now, it’s completely stalled as Congress could barely get its act together to pass another coronavirus relief bill during Trump’s lame duck period. It's anybody’s guess what will happen to this bill when Biden becomes president, but the spirit of it -- holding Chinese companies listed in the US to the same accounting auditing standards as all other foreign companies -- seems completely justified. As I noted in “Wall Street Blunts the ‘Delisting’ Hype”, I don’t think any regulatory change, from either Congress or the SEC, would force all Chinese companies to delist. There are ethical, ambitious entrepreneurs from China (and everywhere) who would welcome such scrutiny, because their mission is to build a global, world-changing business and would crave the trustworthiness that comes with meeting a higher standard. And the ones who do have problematic financial practices and shady connections will delist. It’s a self-selecting process.
“Chinese Self-Driving Startups Plus and Hesai Considering Going Public” (English Source: The Information)
My Thoughts: A group of highly valued, pre-revenue (or barely any revenue) self-driving startups from China is trying to go public. The one piece of information that caught my eyes was that two of the three startups profiled in this article, Plus and TuSimple, are considering SPAC (special purpose acquisition company) as a possible avenue. I’m still learning about SPACs, so I have no opinion worth sharing on the vehicle itself. I did make an observation, again in “Wall Street Blunts the ‘Delisting’ Hype”, that SPAC’s recent rise is mostly an American phenomenon, and there are plenty of private companies in the US to target. Thus it will be a long time, if ever, before American SPACs look for foreign companies to take public. What I overlooked was that Chinese funds can raise SPACs too, such is the case with the CITIC Capital Acquisition Corp. Money is cheap, everywhere.
“The once obscure, derided financial product that just might transform deep tech venture capital” (English Source: Lux Capital blog)
My Thoughts: I found this blog post by Peter Hébert, who co-founded the VC firm Lux Capital, quite useful in my learning about SPACs. Aside from the self-promoting element of the post (Lux raised its own $345 million healthtech-focused SPAC), he provided an interesting historical angle: analogizing the rise of “junk bonds” from the 1960s that fueled the leveraged buyout kind of private equity to the re-engineering of SPACs that is now fueling late-stage VC-backed companies to go public. Peter made a nuanced argument in that SPACs aren’t for all types of company, but can be a good option for “deep-tech” companies, where the technology is potentially revolutionary, requires a long timespan, and may generate little revenue for many years before the technology matures with market demand. That’s why his firm’s SPAC is focused on healthtech. Many others are focused on space tech, electric vehicles or biotech. I would put self-driving technology in this “deep-tech” category too. Of course, there are successfully listed SPACs that targeted gaming and fantasy sports -- hardly “deep tech.”
“Alibaba Cloud’s Difficult ‘Peak’” (Chinese Source: Leiphone)
My thoughts: Every Singles’ Day, as others wait for topline GMV from Taobao and Tmall, I wait for the peak transactions per second processed on Alibaba Cloud. This year, the peak traffic is an astounding 583,000 transactions/second -- reached 26 seconds after midnight on November 11, according to this article. Not all transactions are created equal in infrastructure technology. A transaction can be as simple as an INSERT/UPDATE/DELETE operation in a single database, or wrapped up in many transactions behind the scenes, like shopper’s account, warehouse inventory, loyalty program, delivery logistics, and payment processing. One transaction on Taobao is definitely not the simple kind. After the first line of code was written in the Spring of 2009, Alibaba Cloud has come a long way. It’s now fully cloud-native -- meaning all workloads are fully containerized and likely managed on Kubernetes. The business unit now generates about 10% of Alibaba Group’s total revenue, placing it solidly in second place within the company. To put that in context, AWS generates about 12% of Amazon’s total revenue. One of my earliest posts on Interconnected was titled “Alibaba Cloud: The Ignored Cloud.” The peak traffic “report card” from this year’s Singles Day strengthens my opinion that Alibaba Cloud, as a business and a technology stack, is underappreciated. (If you are interested a English version of this whole article, go check out Jeff Ding’s translation.)
“Ant’s Fallout Unfinished; Alibaba Getting Class Action Lawsuit Across the Ocean” (Chinese Source: Interface News)
My thoughts: While Alibaba Cloud is “crushing it”, the aftermaths of Ant Group’s suspended IPO continue to reverberate. One of the consequences is a looming class action lawsuit from investors, who were set to make a killing on the IPO and by being invested in Alibaba as another way to be exposed to Ant. Neither route panned out. Alibaba’s stock price had the largest single day drop in five years when the Ant IPO suspension was announced. In “Jack Ma, P2P Lending, Responsibility, Legacy”, I shared my relatively positive view of the whole ordeal -- positive from the vantage point of Ma and Alibaba. But should he have given these investors a heads up before giving that fiery speech though? Probably.
“Escape from Foxconn: Left 18 times, but had no choice but to return” (Chinese Source: Phoenix Weekly Financials)
My thoughts: This is a detailed and humanizing exposé of the workers in Foxconn. A short commentary here doesn’t do its justice, so I will likely write a longer post later. For many uneducated and unskilled people in China, working at Foxconn is still a good option to make a living and support a family, despite its grueling shifts and environment. In fact, Foxconn is a top choice for many. As one of the workers interviewed in this article shared, he stuck with Foxconn for more than a decade, because it at least pays its workers on time and doesn’t have a habit of owing salary. This same worker, being a veteran of the factory, has also honed his efficiency so much that he only goes to the bathroom twice during his 10-hour shift. The human experiences of workers at a place like Foxconn is also worth thinking about in the context of America’s own path to regaining some advanced manufacturing capabilities. This dilemma was captured well in the documentary, “American Factory”, and “Foxconn workers” even made their own brief appearance in American pop culture in this Saturday Night Live skit in 2013, talking about the iPhone 5. Not much has changed since then.
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- “美国证券交易委员会（SEC）推行要求中国公司使用美国监管的审计师政策”（英文来源: 华尔街日报）
- “中国无人驾驶创业公司Plus和禾赛科技考虑上市”（英文来源: The Information）
- “这个曾经无人理睬、被人嘲笑的金融产品，恰恰可能改变深科技创投的现状”（英文来源: Lux Capital博客)
- “阿里云难『触顶』” (中文来源: 雷锋网）
- “蚂蚁余波未散：阿里大洋彼岸遭遇集体诉讼” (中文来源: 界面新闻）
- “逃离富士康：离开18次，最终还是无奈进厂” (中文来源: 凤凰Weekly财经）】
2013年我们在一起的时候，他已经在和癌症抗争了。在做饭、逗我姥姥、和调皮捣蛋的间隙（他很喜欢恶作剧），姥爷会告诉我他对我的期望 -- 做文化之间的桥梁或纽带，尤其是中美之间的。他为什么有这种期望，我并不清楚。也许他希望我能继续他在UPenn时开始搭建的桥梁。
我喜欢读传记。我这些天正在读Tom Rubython写的《Jesse Livermore Boy Plunger》，是美国历史上最著名的“股神”之一的权威传记。书我还没看完，但我在想Jesse的出生地和家境 -- 他是马萨诸塞州一个富裕蓝领的小镇里一个贫穷的农民家庭中意外生的第三个孩子 -- 这对他的早熟、看股价走向的天赋、喜欢豪赌的倾向以及最终的个人悲剧（自杀）也许都有一定的影响。
虽然大多数人的生日在谷歌上一搜就能查到，但他们的出生地，以及这些地点背后的故事，却很难找。也许这就是我们不怎么去想它的原因，不过我相信当巴菲特说起 "Ovarian Lottery "的时候，他想到的一定不仅是时间，还有地点。
我的想法: 美国证券交易委员会的这一新举动是个合理的行动，尤其在国会没有继续推《外国公司责任法案》的情况下。该法案在今年早期势头很猛，但现在已经完全停滞不前。国会在特朗普政府即将被替换的lame duck期间，也无法合作通过新一套疫情救济。谁也不知道拜登上台后，这个法案提议会有什么后果，但它的基本精髓 -- 让在美国上市的中国公司与所有其他外国公司一样遵守同样的会计审计标准 -- 是完全有道理的。正如我在《华尔街钝化 "退市 "》一文中所指出的，我不认为这种监管改变会迫使所有中国公司退市。中国（以及世界各地）有许多有道德、有抱负的企业家会欢迎这种审查，因为他们的使命是建立一个全球化的、能改变世界的公司，他们会渴望更高的监管标准能为市场带来的诚信。而那些确实有问题的、不道德的、有见不得人的黑幕关系的公司自己就会退市。这是一个自我选择的过程。
“中国无人驾驶创业公司Plus和禾赛科技考虑上市”（英文来源: The Information）
我的想法: 一批来自中国的高估值、无营收（或几乎没有任何营收）的无人驾驶创业公司正在尝试上市。有一条信息引起了我的注意，那就是本文介绍的三家公司里，有两家Plus和TuSimple正在考虑用SPAC (special purpose acquisition company) 作为上市可能的途径之一。我个人还在研究SPAC，所以对这种“壳”本身没什么值得分享的看法。我同在《华尔街钝化 "退市 "》一文中分享了另一个观点，即SPAC最近的崛起主要是在美国市场的现象，在美国有很多未上市的企业是SPAC的目标。离美国SPAC需要找外国公司上市的那一天还要很久，甚至永远不会发生。而我忽略的是，中国基金也可以募集自己的SPAC，比如中信资本的收购公司就是如此。钱很便宜，到处都是。
“这个曾经无人理睬、被人嘲笑的金融产品，恰恰可能改变深科技创投的现状”（英文来源: Lux Capital博客)
我的想法：这篇风投基金Lux Capital的联合创始人Peter Hébert 写的博文对我对SPACs的研究和了解非常有帮助。除了文章中的自我宣传成分以外（Lux自己募集了一个3.45亿美元专注于健康科技的SPAC），他讲述了个很有意思的历史视角：将20世纪60年代兴起的 "垃圾债券"（junk bonds）后来推动的杠杆收购类私募股权投资的兴起，来与SPACs最近的重新设计推动的VC投资的后期公司上市来做比较。Peter提出了一个值得思考的观点，即SPACs并不适合所有类型的公司，但对于 "深科技 "公司来说，SPACs可能是个好选择，因为这些公司的技术潜力巨大，但需要很长的时间，而且可能在技术随着市场需求成熟之前的很多年里都不会有什么收入。这就是为什么他的基金的SPAC专注于健康科技的原因。其他SPACs许多也专注于航天科技、电动汽车或生物科技。把无人驾驶技术归入“深科技”这一类也是合理的。当然，也有些很成功的SPAC上市，针对的行业是游戏和体育娱乐 -- 这离"深科技"还挺远的。
“阿里云难『触顶』” (中文来源: 雷锋网）
我的想法: 每逢双十一，当别人等待淘宝和天猫的GMV总额时，我等的是阿里云流量洪峰时每秒处理了多少笔交易。今年的流量峰值是惊人的每秒58.3万笔交易，根据这篇文章，是在11月11日午夜后26秒达到的。在基础设施技术中，并不是所有的“交易”都是一样的。一笔交易可以简单到仅仅是在单个数据库中做一次INSERT/UPDATE/DELETE的操作，也可以复杂到一笔交易背后需要许多其他交易的发生，比如购物者的账户、仓库库存、加分绩点、配送物流和支付处理。淘宝的一笔交易绝对不是简单的那种。自从在2009年春天写下第一行代码后，阿里云已经走过了很长的一段路。它现在完全是云原生 -- 即所有的负载都是完全容器化，用像Kubernetes这种科技在管理。该业务现在的收入约占阿里巴巴集团总收入的10%，稳居公司内部第二位。怎么看这个比例呢？AWS的收入约占亚马逊总收入的12%。我在《互联》上最早的一篇文章就是《被遗忘的阿里云》。今年双十一流量峰值的 "成绩单" 更加巩固了我的观点：阿里云，不管是以一套业务还是一门技术来看，都还没有得到应有的重视。（如果您对整篇文章的英文版感兴趣，建议读Jeff Ding的翻译。）
“蚂蚁余波未散：阿里大洋彼岸遭遇集体诉讼” (中文来源: 界面新闻）
“逃离富士康：离开18次，最终还是无奈进厂” (中文来源: 凤凰Weekly财经）
我的想法: 这篇文章对富士康工人的生活和视角做了详细的分析，也很人性化。在这里做简短的评论都对它不太公平了，所以我可能以后会再写篇更深入的文章。在中国对于许多没受多少教育，也没技术的人来说，在富士康打工，尽管工作的班次时间和环境都很艰苦，但仍然是个谋生养家的好选择。富士康甚至是很多人的首选。正如本文采访的一位工人分享的那样，他坚持在富士康工作了十几年，因为富士康起码会按时给工人发工资，没有拖欠工资的问题。同样是这位工人，作为工厂的老员工，也把工作效率做到了“极致”，一个长达10个小时的班次中只上两次厕所。在美国自己重振一些先进制造业能力的道路上，富士康工人的经历也是值得思考的。这种冲突在纪录片《美国工厂》中得到了很好的体现，"富士康工人" 甚至在2013年的这条关于iPhone5的Saturday Night Live喜剧段子中，在美国大众文化里也短暂地“露面”了。但从那以后，似乎什么都没有改变。