E2212
Nvidia GTC, Okta hack, and updates on geopolitics, energy markets, and semiconductors...
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Howard Marks on International Relations (geopolitical risk, decoupling, etc)
TLDR;
Marks makes the case that Europe’s blunder (dependency on Russian oil) is playing out in the US as we speak, except instead of energy, our dependency is semiconductors.
Just as Europe allowed its energy dependence to increase due to its desire to be more green, US businesses came to rely on material, components, and finished goods from abroad to remain price-competitive and deliver greater profits.
…
And after many decades of globalization and cost minimization, I think we're about to find investment opportunities in the swing toward reliable supply.
Check out the memo, or listen to it here…
Nvidia GTC
GTC is happening right now! I highly recommend checking out the keynote… it’s an hour and 40 minutes so get yourself a coffee and enjoy…
Okta Hack
Cyber security SaaS company, Okta [$OKTA] was in the news this week due to a hack by LAPSUS$. This is a big deal because Okta provides authentication for many businesses. LAPSUS$ posted screenshots demonstrating that they were not only able to gain access to Okta’s systems, but also their customers.
The screenshots showed someone logged into Okta systems with the list of various apps they could then access from that position, and a Slack that appears to belong to Okta. Some of the screenshots also showed someone in the process of resetting a password belonging to a specific employee at cybersecurity firm Cloudflare, and another appeared to show access to a panel associated with the firm too. Those images suggest that the hackers were potential trying to leverage their access to Okta to gain access to Cloudflare assets, which provides infrastructure and security services to millions of websites.
In response, Cloudflare Founder/CEO Matthew Prince indicated that they are considering alternative solutions.
The cyber security risk factor for cyber security software companies is generally under-estimated and the tweet above exemplifies that risk. When a hack occurs, customers often rip out the hacked solution and replace it with something deemed ‘safer’. Okta made the sale based on their easy to implement solution, they will lose the client because the perceived risk of keeping Okta is higher than the cost of replacing them with an alternative solution. For more on cyber security and identity and access management in particular, check out these previous debriefs…
Is Neon supply a risk to the global semiconductor industry?
TLDR; not really. For more, check out this article…
Supplemental Data
1 SuperCompounders
2 Macro
3 Energy
4 Tech
Cloud Multiples - Check out the most recent edition of Clouded Judgement for the latest SaaS multiples.
Semiconductors
Semiconductor Industry Association Global Billings Report
Bureau of Economic Analysis Semiconductor Import / Export
Cryptocurrency
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