Tech Brew Ride Home - Thu. 12/29 – Someone Tell Zuck About This ABBA Avatar Concert

Episode Date: December 29, 2022

Wait, why are Alameda-linked wallets coming back to life all of the sudden? If you do things with a DAO that are technically allowed by the DAO, can that still be market manipulation? What if Amazon or somebody else created an ESPN for the streaming era? The most successful publicly traded tech stock of this miserable year. And somebody tell Mark Zuckerberg about what you can really do with modern avatar technology. Links: Alameda Research wallets swap several crypto tokens for bitcoin (The Block) U.S. charges fraud in Mango crypto manipulation case (Reuters) Crypto Trader’s Fraud Charges Show DeFi Isn’t Outside the Law (Bloomberg) Amazon Has Discussed a Stand-Alone Sports App as Andy Jassy Doubles Down on Prime Video (The Information) Tech stocks got whacked in 2022 — but one server maker soared almost 90%, beating all its peers (CNBC) ABBA’s successful avatar show in London offers a glimpse at a daring new direction for live music (CNBC) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the final episode of the Tech meme right home for 2022. I'm Brian McCullough today. Wait, why are Alameda linked wallets coming back to life all the sudden? If you do things with a Dow that are technically allowed by the Dow, can that still be market manipulation? What if Amazon or somebody

else created an ESPN for the streaming era, the most successful publicly traded stock of this miserable year? And somebody tell Mark Zuckerberg about what you can really do with modern avatar technology. Here's what you miss today in the world. of tech. Would you look at that? Wallets linked to Alameda Research, that SBF-related trading firm, suddenly came back to life, trading Lido, Polygon, Uniswap, and other tokens for Ether and USDT before swapping those out for Bitcoin, taking their holdings to 47.6 Bitcoin. No word on who might be behind this activity, but of course, people have theories, quoting the block. Crypto-slooth Zach XBT identified four Bitcoin wallets where the funds are being consolidated.

Data from blockchain shows these wallets hold a combined total of 47.6 BTC, which is currently worth about $800,000. These fund movements came within days of former FTX CEO Sam Bankman-Freed's release on bail. As previously reported by the block, Bankman Freed secured a $250 million bail bond package. The pattern of these fund movements has drawn speculation from the crypto community. The entity controlling the wallets has used mixers like Change Now and Fixed Float to move the funds. Cryptomixing services are used to obfuscate the flow of cryptocurrencies by making it difficult to identify the owners of the tokens and the origins of the funds being transferred. They do so by mixing different transfer inputs and outputs. This is also not the first mysterious

fund transfer from FTX and Alameda since the site. Saga began. Tocans worth $352 million were mysteriously removed from FTX coffers right after the exchange filed for bankruptcy in November. This alleged hack is currently the subject of a U.S. Department of Justice Investigation, end quote. So, given how lax we now know the internal controls of the systems at FTX and Alameda seemed to be, is this some rogue ex-employee, perhaps being opportunistic. As just mentioned, half a billion dollars has already been siphoned off by that alleged hacker after the bankruptcy, but there is still, I believe, half a billion dollars in assets currently sitting in various FTX and Alameda linked wallets. Or another possibility, quoting

at IMDC investor on Twitter, it's impossible to say who it is at the moment, but I was stunned to see SBF using a laptop in the airport photo. You don't need to know much about crypto to understand that such criminals accused of extreme fraud should not be allowed to have access to internet-connected devices, end quote. This is actually another new one, but it's an interesting one. The U.S. has apparently arrested and charged a man with commodities fraud and manipulation for attempting to steal around $110 million back in October by rigging DFI platform. Mango Markets, if you follow crypto Twitter, you might have seen some tweets related to this

incident. Quoting Reuters, according to a complaint made public on Tuesday in Manhattan federal court, Averham Eisenberg's trades in futures related to Mango's crypto MNGO enabled him to withdraw $110 million in cryptocurrencies from other investors' deposits with no apparent intention to repay the funds. Mango is a decentralized cryptocurrency exchange run by Mango Dow that lets investors lend, borrow, swap, and use leverage to trade cryptocurrency assets. The December 23rd complaint signed by FBI Special Agent Brandon Rax said Eisenberg on October 11th used two accounts to concurrently buy and sell futures based on the relative values of MNGO and the stable coin, USD coin, also known as USDC.

By being on both sides of the transaction, Eisenberg artificially inflated the price of MNGO relative to USDA, allowing him to borrow and then withdraw $110 million of different cryptocurrencies, the complaint said. Mango soon began negotiations with Eisenberg and reached a settlement to recoup $67 million. All mango deposits will be made whole with token holders who vote for the settlement agreeing not to pursue any criminal investigations or freezing of funds once the tokens are sent back. A community post said at the time, Eisenberg claimed responsibility for the trading, the complaint said, and tweeted on October 15th that, quote, the exchange this took place on, mango markets became insolvent, end

quote. He also tweeted, quote, I believe all of our actions were legal open market actions using the protocol as designed, even if the development team did not fully anticipate all the consequences of setting parameters the way they are, end quote. Which, I mean, that's an interesting angle, right? Were any of the rules of the Dow broken? Were any laws broken? Were any laws broken here. Well, maybe it doesn't matter, quoting Bloomberg. Eisenberg has been highlighting his escapades to more than 40,000 followers on Twitter all the while saying he's putting pressure on the fledgling defy industry to implement better risk controls. Many of the strategies he uses, such as generating trades to inflate the price of a cryptocurrency and then borrowing against the now

higher-valued asset, are typically viewed as manipulation in traditional markets and a crime. The decentralized autonomous organization or Dow that runs Mango eventually agreed to let Eisenberg keep almost half of the more than $100 million in assets he pocketed in exchange for releasing the rest of the funds. Meanwhile, the self-declared exploiter of Mango Markets was convinced that he hadn't done anything wrong. In claiming innocence, Eisenberg was likely tapping into the Code is law ethos of Defi, a belief that the ultimate authority in crypto is the pieces of computer code that underlay most projects. If the code allows for a trade to be implemented,

for instance, it is the law as far as crypto believers are concerned, or so goes the theory. There is an objective opinion that code is law with decentralized finance. Steve Woborall, chief security officer and co-founder of blockchain security startup Halborn wrote in a statement, one can argue that the mango hacker Avram Eisenberg was just using the environment and the smart contract rules to play the game, end quote. I'm a trader trying to make money, but I also point out issues I think should be fixed and advocate for them. Eisenberg wrote in a message to Bloomberg News in the days following the exploit. But Tom Schmidt, partner at Digital Asset Venture Capital firm Dragonfly, said that Eisenberg and his way of promoting his trades is not in the spirit of that ethos.

Fraud is fraud, Schmidt said. I think people mistake code is law for code is above the law, end quote. There is a difference between what is regulated and what is legal. Neil Kamar, partner at Wilkie Farr and Gallagher, LLP, said in a phone interview, just because it's not regulated, doesn't mean that you could do any activity you want, he added, and, quote, government can still pursue fraud and manipulation, end quote. A source is telling the information that Amazon is working on a standalone app for watching sports, decluttering the sports content out of the Amazon Prime Video app.

Andy Jassy recently reaffirmed Amazon's video ambitions, so this made me think, with a lot of the major tech platforms seemingly going all in on sports streaming all of the sudden, what if somebody really doubled down and tried to spin up a brand, an ESPN for the streaming era, like a Netflix-like app, but just for sports? Seems like an obviously good idea. Quote, Amazon has discussed doing a standalone app for watching sports content, people briefed on the conversations told the information. The move comes as CEO Andy Jassy doubles down on the company's streaming ambitions. While one of these people said the company hasn't made a decision about whether to proceed on the effort, the discussion suggests Amazon

could be thinking about new ways to squeeze revenue out of the billions of dollars in deals. It is inked to stream live sports events, which so far it is mostly included in the standard prime membership. Jassie recently highlighted streaming rights for live sports in particular as a place he'll likely keep spending even as Amazon steps up its efforts to cut costs in other areas of its business. A self-contained sports app would declutter Amazon's main prime video app and better highlight the company's sports offerings, which include exclusive rights to the NFL's Thursday night football franchise, as well as some Premier League soccer matches in the UK and Yankees baseball games in the New York region. Amazon also recently made a big push into sports talk shows,

launching a lineup in November that turns out 60 hours of content per week. The discussion comes as Amazon has been spending heavily on sports streaming rights, including a reported $1 billion annually over 10 years for Thursday night football. Streaming executives say this could all point toward Amazon launching a separate streaming tier. Amazon has already hiked prices for its prime subscriptions this year, citing higher shipping and labor costs as well as new services and content for subscribers. But a new tier would be a significant break from Prime Video's role as a driver of Prime subscriptions and e-commerce sales unless Amazon were to offer the sports package exclusively as an add-on

to the standard version of Prime. Amazon has already dabbled in tiered pricing with an add-on subscription pass, allowing Prime subscribers to watch Liga Un soccer games in France. Amazon currently offers Prime Video-only subscriptions in many of the nearly two dozen countries where it operates e-commerce sites, including the U.S., but it does. does not prominently market them. Instead, it emphasizes full prime subscriptions, which costs more than video-only memberships, and also include fast shipping for orders from Amazon's retail sites and other benefits. But one former streaming industry executive told the information

Amazon would have to set up a separate tier and charge extra if it's going to invest billions more dollars in sports. The company could, for instance, offer any standalone tier to existing prime subscribers at a discount to what non-prime subscribers would pay. After all, because Prime Video is an international service, Amazon will likely have to offer sports to subscribers around the world, and that means buying the rights to each country's local sports leagues, the cost of which adds up. Creating a standalone tier in sports is a tough business, another streaming industry executive said, because it requires a focus on customer acquisition, marketing, and retaining subscribers. And the economic benefit to Amazon would be tiny compared to

the nearly $470 billion in net revenue it had in 2021. Jassy, speaking at a deal book conference last month, had signaled his commitment to predecessor Jeff Bezos' vision of building video into a key pillar of Amazon that helps drive the retail business. But he also flagged the opportunity to build a standalone video business, noting it would have, quote, very attractive economics, end quote. It wasn't that long ago that you might remember I had listeners help me cobble together a stock screener to help me identify publicly traded tech companies that seem to be breaking out, having success that might be flying under my radar at least. Of course, given the bloodbath of

2022, that seems like a quaint idea now. But in the spirit of that effort, real quick, what was the best performing tech stock of the year? Turns out it was 29-year-old server maker Super Micro, whose shares have soared more than 89% year-to-date, taking its market cap from $2.4 billion to $4.4 billion, and thus outperforming all U.S. tech companies valued at $1 billion or more this year. So what's the story here? Quoting CNBC. Supermicro manufactures, computers, and sells them the companies, which use them as servers for websites, data storage, and applications like artificial intelligence algorithms. In the low-margin server business, Supermicro competes with Dell, IBM, and Hewlett-Packard Enterprise, as well as lesser-known players such as

China's InSper. According to estimates from the next platform, Super Micro had about 2.6% of the market in 2021. Super Micro has sought to differentiate itself in the market by allowing customers to more easily customize their computers. That makes for a more profitable offering than off-the-shelf servers. Manufacturing servers involves putting many different parts together. Super Micro starts with one of its own motherboards, plugs in a processor from Intel or AMD, or a graphics processor from Nvidia, and adds a power supply, RAM, networking, and whatever other parts the computer might need. Super Micro will sell the client the motherboard, a fully assembled server, or an entire rack of servers. The strategy has been working. Super Micro reported 46% growth in its fiscal 2022, which ended in June, to $5.2 billion in revenue.

earnings per share climbed to $5.32 in 2022 from $2.9.201 and then $1.60 the year before that. The stock is actually just simply mirroring the EPS increases we've seen over the two years, said Nahal Chokshi, an analyst at Northland Capital Markets, who recommends buying the stock. Chokshi has a price target of $165 by far the highest among five analysts tracked by FACTSET. Chokshi said that Supermicro's profitability and growth have been strong enough that it might deserve a larger multiple. Yet even with this year's rally, the stock is only trading at 8.6 times earnings over the next 12 months, which is lower than its five-year average of 9.5, according to Faxet. For the past 12 months, it trades at 10.1 times earnings down from a five-year average of 17.8.

There still hasn't been multiple expansion, Chokshi said. A lot of investors, including myself, find that befuddling because this is a name, that has historically generated 20 plus percent revenue and EPS growth that's trading at only 10 times earnings, end quote. Super micro shares started rising in July and continued going up in August after the company's annual earnings report. They soared another 30% in November after Super Micro showed a nearly 80% increase in year-over-year sales for the September quarter to $1.85 billion, end quote. Finally today and finally this year, a look at Abba Voyage, the hit London concert, which is actually performed by 3D digital avatars of the band Abba, created from motion

capture, as its producers are planning a global expansion and an expansion to lots of other content. Quoting CNBC, before the launch of Abba Voyage, the London concert performed by 3D digital avatars of the iconic Swedish band, member Bjorn Olveyas said they hoped audiences would, quote, feel that they've gone through something that they've never seen before, end quote. Following its May 27th debut, much of the reaction from domestic and international critics, fans and industry professionals, has been rapturous. Other than the team involved, no one really knew how they would integrate an avatar-based performance.

Sarah Cox, director of live event technical consultancy, Neutral Human, told CNBC, that blew me away as someone working on real-time graphics. My jaw hit the floor. You look around and people are really buying into the idea that Abba, are there, end quote. Demand has been strong. The show's run has been extended to November

2023 and could well go beyond that. And the team has confirmed it aims to take the show around the world. It also expects other shows to begin following the same model. Quote, the tech itself isn't new, but the way in which we've used it and scale and barriers we've broken down are new.

I'm sure others will follow and are planning to follow, said producer Svana Gisla. That could absolutely be the case somewhere like Las Vegas. where some shows run around the clock with rotating crews, she added. We have live musicians, so we keep our band and do seven shows over five days a week, but you could roll around the clock. Vegas will quickly adopt this style of entertainment and do Elvis or the Beatles, end quote.

Voyage's venue, dubbed the Abba Arena, was built specifically for the show on a site in Stratford in East London, with its 3,000-person capacity comprising a standing pit, tiered seats along three sides with no restricted views, and higher-priced private dance booths, as well as space for the extensive kit positioned in the roof, and what Crater's White Voids say is the largest permanent kinetic lighting installation in the world. It was also designed for flexibility. It was constructed on a one-meter-raised platform without breaking ground and could be disassembled and reconstructed elsewhere or stay in place and host another show in the future. The show was in the works for five years and had a $174.9 million budget funded by global investors.

It needs to get around 3 million people through its doors to break even, according to Gisla, and the average ticket price is 75 pounds. After choosing their set list and making other creative decisions, the ABBA members did five weeks of performance in motion capture suits. Hundreds of visual effects artists then worked on the show for two years, led by the London branch of Industrial Light and Magic, a visual effects company founded by George Lucas. While not meeting the technical definition of a hologram, which uses laser beams to construct an object with depth, the visual effects team projected a 2D image onto an angled piece of glass, which was itself projected onto a Mylar screen, creating a 3D effect. The Voyage team is tight-lipped about exactly how their show works, but previously confirmed it is not a laser-based hologram either. It involves 65 million pixel screens, which give the impression of the band performance.

life size on stage in 3D in real time, with traditional style concert screens showing close-ups and different views on either side. Its servers are being pushed, quote, to the absolute extreme, to render the images without lag, Gisla said, such that they are shaking through some transitions. She also acknowledged that the 10-meter-high side screens are, quote, very unforgiving on detail, and there are improvements that could be made. But she added, with real-time render speeds becoming quicker, quote, Benny and Jorn could be sitting in a chair at home connected to their avatar, updating them to talk about last night's football result to the audience. That will come, end quote. Consultant Sarah Cox said the kind of processing and motion capture technology used by Voyage

is still prohibitively expensive for most productions, but believes it is a, quote, brand new format that will be replicated time and again, particularly somewhere like Las Vegas. In immersive venue could host multiple shows, and then the cost comes down because you have the technology stack, the venue, and all the money goes into creating the avatar and virtual experience, and tweaking the programming. Posthumously, you could put artists back on stage. Ethically, you may or may not have a view on that, said Giesla. But having Abba partake in this is, I can say this is an ABBA concert. Abba made the decisions, chose what to wear, chose their set list, Abba made this show, end quote. For an artist like Elvis, with an extensive

visual and audio archive, you could create an accurate replica, but without the input that makes this show feel so tangible, she said. For Cox, live shows that provide a shared experience like Abba Voyage hold a greater appeal than headset-based virtual experiences, though there will certainly be more of those available in the future. Both AR and VR are spreading in the worlds of gaming, events, sports, theater, and beyond, end quote. So I tried to think of some sort of clever pun using ABBA lyrics to suggest that something, something the metaverse is already here, but I've failed you, dear listener, as I simply do not have enough familiarity with ABA lyrics. Yes, as I just said, this is the final podcast of 2022, which by definition means

this is also the final podcast of the week. I'm taking tomorrow off. I'm also taking Monday off, as that is when New Year's is officially observed here in the States. So talk to you again on Tuesday, January 3rd. Happy New Year, everybody. Talk to you next week. Next year.