What I Wrote Last Week
Business
The Spend, Spend, Spend Strategy Behind Temu’s Rapid Ascent in America. Temu and Shein are willing to spend millions of dollars in advertising to grab market share. Once they establish themselves and have a customer base, they will turn around and seek to improve margin with ads, lower acquisition costs and higher margin products/services. This will benefit the likes of Google and Facebook, but put pressure on other retailers. I don’t think they will be able to challenge Amazon. Apparel is an important area, but Amazon sells a lot more stuff and more importantly, it has a fulfillment moat that few can rival.
What Happens When TikTok Is Your Marketing Department. “According to Star Brands, which began tracking online mentions of The Pink Stuff a year and a half ago, the hashtags have consistently been viewed by roughly 20 million people every week. Sales have quadrupled since 2018 to about $125 million a year, a modest sum compared with giants in this space, like Clorox, which has annual revenues that exceed $7 billion. But nobody at the company’s headquarters in Leeds thought this number possible a few years ago. The factory now runs three Pink Stuff lines, all day long, with a work force that has more than doubled. The product is now sold in 55 countries and available at Walmart, Home Depot and Amazon. Marketing experts say that puts The Pink Stuff in a precarious spot. When the fortunes of a formerly unknown product are made by social media, they are at the mercy of forces that can be monitored but not managed.”
“The Practice Of Value Investing”, by Li Lu. A great post by Li Lu and a useful reminder once in a while.
The Insatiable Ambition of LeBron James. It’s smart of athletes to leverage their wealth and fame. In fact, I applaud their efforts to go outside of their comfort zone. An athlete’s career is limited. Father Time always wins. And the risk of a career-ending injury cannot be disputed. What I like the most about athlete businessmen and businesswomen these days is that they maintain their performance while exceling in business. That’s no joke.
How the Big Airlines Beat the Budget Guys at Their Own Game. When the big airlines are willing to get into the mud and compete on bare bone offers for consumers, it becomes too difficult for the budget airlines to operate competitively. The big players can make money from other means such as credit card programs, business and first class seats and international flights. These are not readily available to the smaller players. And after the acquisition of Spirit by JetBlue was blocked by a federal judge, any hope of consolidation for bigger market share and operating leverage is even slimmer.
Other Stuff I Find Interesting
Denver Is Furious That Washington Can’t Fix the Border. “This city of 713,000 people has absorbed nearly 40,000 migrants in a little over a year, more per capita than any other U.S. city. It is second only to New York in the total number of foreigners who have arrived since 2022. Denver has spent more than $42 million in the past year to house and feed the new arrivals. Public schools have ballooned by more than 3,000 students, creating a budget shortfall of roughly $17.5 million. The city’s safety-net hospital has seen at least 9,000 migrant patients in the past year, costing at least $10 million in unreimbursed care. Officials estimate the city’s costs could rise to as much as $180 million this year as migrants continue to arrive. Without additional federal help, Johnston said, nearly every city department is likely to face a 15% budget cut, and sheltering and feeding operations will become the city’s second- or third-largest expense after public safety. Officials are drawing up proposals for savings to offset spending on migrants.”
Investors in Airbnb arbitrage business allege they were defrauded in scheme promising ‘higher returns than the stock market’. I didn’t know there was such a business or fraud. But apparently it does exist and that is only possible because people want to get rich fast and they want to get rich cutting corners. The rule of thumb is that it’s not easy to make money and if it is advertised to be easy or have “minimal to no risk”, RUN! AirBnb is collateral damage in this case and it is a real business risk that they should strive to mitigate.
Chinese EV sellers found a loophole to export cars around the world. The Chinese are resourceful and ingenious. I am not surprised that they found a loophole to export cars around the world
The Great Salt Lake Is Full of Lithium. A Startup Wants to Harvest It. Lithium is a critical mineral that plays an important role in battery technology. Anything that can help the US extract more without losing valuable water should always be supported.
Realtors Are in Crisis—and Home Buyers Could Be the Winners. Sunlight is the best disinfectant. The realtor industry has avoided scrutiny for a long time. I am not saying real estate agents offer no value. But there should be a real debate and investigation into the possibility of malpractice and whether home buyers and sellers suffer for the benefit of a few agents.
Stats
Hollywood Made 14% Fewer Shows in 2023
The 2024 Super Bowl drew 123 million viewers, the most in the show’s history
The cost of owning a car increased by 20% compared to 2023
In 2023, 13% of new US iPhone buyers report that they’ve switched from Android
Minh Quang Duong 
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