Weekly reading – 17th September 2022

What I wrote last week

Relocation from Vietnam to the US with a cat

Business

JPMorgan Chase acquires payments fintech Renovite to help it battle Stripe and Block. Incumbent financial institutions are sparing no coins to invest in their technology stacks. Capital One has always touted itself as a technology company. JPMorgan Chase has plowed so much money into fintech that the long-time CEO Jamie Dimon is under pressure to justify the investments. But that’s the name of the game. Any company that wants to compete in finance in the future will need to put money where its mouth is

Goldman’s Apple Card business has a surprising subprime problem. Given the lack of disclosure from either Goldman Sachs and Apple on earnings calls, it’s helpful to finally to see some performance metrics of the Apple Card portfolio. The headlines are that more than 25% of the overall outstandings is from folks with FICO lower than 660 and the loss rates are among the highest in the industry. The article did well to note that Apple Card is a young business; therefore, its loss rates may not be fully comparable to other fully established ones. I’d also love to learn about the share of balance from Apple purchases. My theory is that since a lot of people use the Apple Card to break their payment into installments, the lower FICO crowd is responsible for the bulk of such payment plans’ balance. Is that necessarily a good thing? I don’t know. But if these “bad apples” are barred from holding an Apple Card ever again, whoever is left will be good loyal customers.

Apple’s Next Big Thing: A Business Model Change. Apple’s executive team doesn’t get enough credit for their long-term vision, the ability to pivot & execute and their relentless patience.

($) How a CEO Rescued a Big Bet on Big Oil; ‘There Were a Lot of Doubters’. Vicki Hollub sounds quite a businesswoman, an operator and an executive!

How to blow $85 million in 11 months: The inside story of Airlift’s crash. Another one on a long list of examples of how companies collapse due to the “move fast and break things” mantra.

($) Instagram Stumbles in Push to Mimic TikTok, Internal Documents Show. If I were Meta investors, I would be worried. The company commits huge investments, HUGEEEEEEE, to the Metaverse, a concept championed by the CEO which, in my opinion, is very very far from reality and of course, monetization. Its business model built upon surveillance tracking is under pressure from Apple’s privacy-centric, though controversial, policies. Meanwhile, Reels, which is one of the highest priorities, is no match against TikTok. According to the Chief Operating Officer of Instagram, Reel’s differentiation comes from the ease of sharing content. I mean, that’s a very weak point. “Instagram users cumulatively are spending 17.6 million hours a day watching Reels, less than one-tenth of the 197.8 million hours TikTok users spend each day on that platform, according to a document reviewed by The Wall Street Journal that summarizes internal Meta research. The internal document showed that nearly one-third of Reels videos are created on another platform, usually TikTok, and include a watermark or border identifying them as such. Meta said it “downranks” these videos, meaning it shows them to smaller audiences to reduce the incentives for those that post them, but they continue to proliferate. For Reels users, the result is that often they are shown videos recycled from another, more popular platform. The portion of Instagram users who think the company “cares about” them fell from nearly 70% in 2019 to roughly 20% earlier this summer. On the question of whether the product was “good for the world,” the score fell from more than 60% in 2019 to slightly over 45%.”

Other stuff I find interesting

Good enough. On Twitter and business websites, you see all kinds of people trying to predict the performance of a stock or a business. Some do it with a breath-taking degree of condescension and over-confidence. At work, the phrase “data-driven” which refers to the practice of using historical data to back up a course of action is just overused and bores me to death. Instead, I like what Morgan proposed. Make all the predicting and forecasting good enough and then spend the unused bandwidth on something else. I don’t know, like understanding the industry, the customers or what is holding the company back and fixing it.

Three Big Things: The Most Important Forces Shaping the World. A great perspective by Morgan Housel

Shanghai emerges as China’s semiconductor highland. “In total, the market size of Shanghai’s semiconductor industry reached 250 billion yuan (US$36.95 billion) in 2021, or about a quarter of China’s total, according to Wu. The city has attracted over one thousand key industry players and over 40 per cent of the country’s chip talent, Wu added. Shanghai’s relative success in cultivating a big local semiconductor industry has been partly helped by the city’s preferential policies. To attract semiconductor businesses, talent and investors to the city, the Shanghai authority has rolled out a series of preferential measures, from government subsidies to tax breaks. Even during the city’s draconian lockdown in April and May, the local authority gave priority to semiconductor businesses to resume their production and operations as soon as possible.”

The Oldest Restaurant in Kabul: Where Tradition Trumps Rockets. “During the four decades of war that Afghanistan has been through, the Broot family never left the country. They kept their restaurant open and continued serving chainakito the hungry people of Kabul as rockets rained on their neighborhood, bombs exploded, and regimes changed.

Discipline is Destiny: 25 Habits That Will Guarantee You Success

Stats

Indonesia, Brazil, Ghana and Suriname accounted for 80% of tropical forest loss due to industrial mining between 2000 and 2019

Top-Ranked US Colleges All Cost More Than $55,000 a Year. BEFORE room and board.

U.S. mortgage interest rates top 6% for first time since 2008

Source: Twitter

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