The push to grow the…mind-twistingly complex Bundles by Disney

Disney recently announced a slate of price increases for their products: Disney+, ESPN+ and Hulu. Specifically, Disney+ will cost $10.99/month starting this December, up from $7.99. Next month October 2022, Hulu subscribers will pay $7.99 and $14.99 for the ads-supported and premium plans, up from $6.99 and $12.99 respectively. Meanwhile, ESPN+ users already saw the largest increase (percentage wise) as plans that used to cost $6.99 are now worth $9.99.

In addition, there will be a new ads-supported plan for Disney+ in December 2022 which will cost the same as the old premium Disney+ ($7.99). Due to all of the upgrades and additions, Disney also updates their bundles and it’s…unnecessarily complicated. Here is what it looks like

There are a couple of things worth discussing from this recent update from the iconic company. A couple of years ago, Disney set an ambitious goal in subscriber count and profitability for Disney+, as follows:

  • Disney+: 230 – 260 million subscribers with Disney+ Hotstar making up 30-40% of the base and profitability by FY2024
  • Hulu: 50 – 60 million subscribers by FY2024 and profitability by FY2023
  • ESPN+: 20 – 30 million subscribers by FY2024 and profitability by FY2023

Here is where the company was as of the end of the last reported quarter (Q3 FY2022):

  • Disney+: 152 million subscribers with Hotstar making up 38%. The service added less than 10 million new subscribers per quarter
  • Hulu: 46.2 million subscribers, adding less than 1 million new subscribers every quarter
  • ESPN+: 22.8 million subscribers

As the numbers show, ESPN+ is the only service that looks like it’s going to deliver as promised. There is no guarantee that the subscriber count will stay at this level in 2 years, but ESPN+ does earn the benefit of the doubt. Unfortunately for Disney, the other services are likely going to miss the subscriber target at this pace, given the intense competition and churn. And that is why Disney is pushing HARD on bundles at the moment.

First, the above graphic shows how aggressively Disney sells bundles at discount. Second, the emphasis on the Disney Bundle is all over their digital properties. Go to any of the three services’ websites and you will be hit in the face with the call to get the Bundle. The reason behind such aggressiveness in Marketing is that Disney counts every Bundle subscriber as a paid subscriber to each of the service included in the Bundle. In layman’s terms, if you subscribe to a bundle featuring all three services, you are counted as a paid subscriber in all three. That’s why Disney is so invested in pushing their Bundles, because they are running out of time to meet the subscriber goal for Hulu and Disney+.

It is not lost on me that a bundle is a great way to keep churn low. Subscribers that use all three platforms are more inclined to stick around than those that only pay for one. Plus, the prices of the Bundles are very competitive. HBO Without Ads costs $14.99/month while Netflix Premium, the only plan with 4K on Netflix, stands at $19.99/month. Compared to these alternatives, Disney Bundle 4 above looks pretty attractive, especially if you are a family with different interests.

Even though I see the rationale behind their Marketing push of the Bundles, I have a couple of concerns. First, I do expect more ambiguity regarding Disney’s reported numbers. Like, if someone subscribes to a bundle with all three services, how is Disney going to slice and dice the revenue among them and what would be the impact on each service’s Average Revenue Per User and profitability? How much of ARPU and profitability comes from advertising revenue? Would Disney disclose the role of Bundles next year and beyond? We won’t get that much clarity and we will have to trust Disney on whatever they elect to disclose, but if you are an equity analyst, good luck with your forecast!

Second, the number of individual and Bundle plans is really dizzying and unnecessarily complex. Just look at how many consumers have to look, analyze and ultimate choose. Choice overload can be a real issue here. I wonder why Disney feels the need to keep Bundle #3 and #6 on the graphic above. To make matters worse, the company currently has an intro offer that artificially lowers the price of some plans, mostly Bundles, in the next three months before the real levels take effect. That’s just too much complexity for consumers and if they complain about being tricked into paying more, I do see why that can be the case.

Can an unsuspecting casual viewer know easily that this plan has ads on Hulu and prices will increase to $75/month soon?

Personally, I’d love for Disney to display all the individual plans’ prices on their websites so that consumers can do the maths and calculate the savings themselves. Right now, consumers have to go to three separate websites or an Investor Relation page to see how much they would have to pay for Disney+, ESPN+ and Hulu individually. That’s not customer-friendly at all!

Weekly reading – 24th September 2022

Business

The small town that saved its only grocery store — by buying it. A fascinating look into grocery stores in rural areas and the monumental challenges that these stores have to face.

Why Toyota – the world’s largest automaker – isn’t all-in on electric vehicles. In my opinion, given the lack of infrastructure and adoption of electric vehicles at the moment, prudence by Toyota totally makes sense. Their conservative stance doesn’t necessarily mean that they won’t invest when the right time comes. Of course, Toyota’s bet could put them on the back foot, but who is to say that aggressive investments by Toyota’s competitors are without risks and totally justified? Some other manufacturers vowed to have all EVs in 10 years, but these vows aren’t binding in any sense. As a result, what matters to shareholders is what is best for the business, not meaningless promises. If being prudent benefits shareholders, Toyota’s management should stick to their guns.

Siting bank branches. An interesting post on bank branches. To be honest, as someone who works in the banking industry, I learned something new.

($) Professor Behind $12 Billion Empire Fuels China’s Tech Rise. “Li was among the first Chinese to study in the US before returning to teach in Hong Kong’s pre-eminent technology university. From there, he’s groomed a generation of entrepreneurs and set up an incubation academy, funding or nurturing promising players in robotics and artificial intelligence valued at almost $12 billion.

Made on YouTube: supporting the next wave of creative entrepreneurs. YouTube attracts digital creators with new initiatives, including a revenue-share scheme and more access to a music catalog to create long-form videos.

dunnhumby Retailer Preference Index: Special Inflation Edition 2022. This RPI score measures how well retailers meet consumer needs and strengthen the emotional bond with shoppers. My favorite place to shop, Aldi, is the 2nd best retailer (I wrote about Aldi before), while Trader’s Joe and Lidl follow closely behind. If I were among the executives at Walmart, I would not be pleased when reading this report. Walmart prides itself at a low price retailer, but it came in at 16th and 17th place in this ranking. It’s worth noting that the bond forged during a difficult time like right now should last for a long time.

($) The Sneaky Genius of Apple’s AirPods Empire. “Apple doesn’t disclose sales of its headphones—its quarterly filings lump AirPods in with its watches, home speakers, and other accessories—but outside analysts say it sold 120 million or so pairs in 2021. IDC and Bloomberg Intelligence estimates suggest that AirPods account for roughly half of sales of what Apple calls “Wearables, Home and Accessories,” its fastest- growing line of business. From 2016 to 2021, sales in this category rose by 245%, to $38 billion. Piper Sandler Cos., the investment bank, estimates that 3 in 4 US teens own AirPods. Apple has set the standard for wireless headphones and turned a free pack-in accessory into a $200 must-buy. Of course, AirPods aren’t really a standalone product. They’re an extension of Cook’s larger project: a mutually dependent ecosystem of hardware, software, and services that keeps customers spending more all the time“.

Other stuff I found interesting

Guide to F1. A cool website that will ease beginners into the world of F1 with an overview of the sport’s history, cheat sheet and explanations on key terminologies.

We Spoke With the Last Person Standing in the Floppy Disk Business. The world is such a fascination because of people like him.

I enjoy John Gruber’s writing, especially when it comes to Apple. His latest review on iPhone 14 and iPhone 14 Pro is masterful.

How Europe Stumbled Into an Energy Catastrophe. “They’re burning coal like they never have in Germany. So — climate what? I mean, does Germany actually care about climate change? If it cared about climate change, I guess Germans would all shiver instead of burning coal. Climate change is going to happen over multiple decades in a century. The war is here. The war is before us. There’s no such thing as the unicorn buffet where we have no trade-offs and every decision is a good one. It’s unthinkable that Germany would still be debating whether they should keep the nuclear power plants on. It’s unthinkable that Germany would be debating whether or not to go turn back on the ones they just turned off. And we keep saying, How much pain do you need to suffer before you reacquaint yourself with reality?

Stats

U.S. retail sales expected to grow 7.1%* this holiday season

Transactions on Zelle exceeded the 5-billion mark

Visa Tap-to-Pay Hits 1 Billion Transit Transactions

Amazon Prime averaged 13 million viewers for its debut live stream of “Thursday Night Football,” 

Source: Bloomberg

Meta continues its push to monetize WhatsApp

Per Meta yesterday:

New integration will help businesses build experiences to chat with customers on WhatsApp, while being able to manage communication directly from the Salesforce platform.

We want more people to benefit from faster, richer interactions, and we continue to invest in ways to make it quick and easy for businesses to get up and running on WhatsApp. Today we’re taking a big step in making our WhatsApp Cloud API’s powerful capabilities easily available to all Salesforce customers globally, through a new partnership that will enable these businesses to offer new experiences right on WhatsApp and easily manage these across Salesforce Customer 360 applications.

Earlier this year, Meta launched a cloud-based API that would help businesses of all size get started on WhatsApp quickly. The idea is that this new API will lower the technological barriers to entry and enable organizations to connect with their customers as frictionless as possible. In this sense, the partnership with Salesforce is a natural evolution. Salesforce has a lot of big customers that operate at an enormous scale. By making WhatsApp Cloud API a native integration into Salesforce, Meta wants Salesforce customers on their WhatsApp Business platform and leverages these companies’ scale to accelerate the usage of WhatsApp Business.

What’s in it for WhatsApp and Meta? Well, WhatsApp Business has a conversation-based pricing model. The first 1,000 conversations every month are free. Past that point, companies are charged per conversation, depending on who initiated the chat. Conversations initiated by users look to be about 30-40% cheaper than those initiated by businesses. Here is how Meta defines a conversation:

All conversations are measured in fixed 24-hour sessions. A conversation starts when the first business message in a conversation is delivered, either initiated by the business or in reply to a user message. Businesses and users can exchange any number of messages, including template messages, within a 24 hour conversation session without incurring additional charges. Each 24 hour conversation session results in a single charge

As part of the push into eCommerce, Meta sees big potential in business messaging. In April 2021, the company revealed that businesses using WhatsApp API sent over 100 million messages per day in 2020. In July 2022, there were 1 billion users that message a business every week across Messenger, Instagram and WhatsApp. Meta also disclosed that click-to-message is already a multi-billion dollar business for them. Therefore, I expect to see more integrations similar to the one with Salesforce in the future as Meta continues to scale their business messaging. Capitalism forbids leaving money on the table, you know.

However, I do think that there is a subtle yet important difference in how users view WhatsApp, Messenger and Instagram. All of these apps are what people use to stay in touch with friends and family. That’s the primary use case. The feeling of safety and privacy that enable such a use case is paramount. With Messenger and Instagram, there is a natural concession from users that they know they are tracked in the background and ads is acceptable since this is Meta we are talking about. With WhatsApp, it’s different. The brand positioning of WhatsApp is built on privacy. It’s fine for users to chat with a business that they are engaging with. But I suspect that it wouldn’t feel comfortable to see ads blasting on your screen based on previous conversations and purchases. Meta already rolls out ads on WhatsApp. I don’t know what they see with internal data, but as an end user, I would not use WhatsApp for eCommerce if I saw even one ads from them. They should tread carefully, when it comes to combining ads and eCommerce on WhatsApp.

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

Relocation from Vietnam to the US with a cat

Here is a summary of how my wife relocated from Vietnam to Omaha, Nebraska with a cat. If you are looking to do something similar, this may be useful to you.

H4 Visa

As spouse of an H1B holder, my wife is eligible for an H4 visa. The State Department currently allows issuance of multiple visa types without an interview by the end of 2022, provided that all the requirements are met. My wife’s case fell into that category and there was no required interview. That was awesome because if she had had one, it would have pushed her arrival to much much later this year or even next year.

We submitted everything that was asked and, on top of that, materials to show that our marriage is true and genuine, such as pre-wedding photos, wedding photos, wedding invites and receipts. I’d recommend that the primary H1B holder should share with spouse a letter to prove their employment, the latest paystubs, all the tax returns while in the US and a copy of I797. Better be careful than sorry. Once you get denied, mail-in visa applications will likely not be available to you again.

About three weeks after we sent our application, the status of my wife’s visa application was “Administrative Processing”. If you have applied for an American visa, you know this is a hugely annoying feature of that process. The term “Administrative Processing” can mean anything. It can mean that your application is approved and your visa will soon be issued. Or it can mean that they need more evidence and will reach out shortly. Worse, it can also mean that you are out of luck and will hear of your denial in a day or two. Without any clarification, and usually there is not, applicants have no choice but to wait in fear and anxiety. That’s what we did. But luckily, the best case scenario happened to us and my wife got her visa.

Unfortunately, the visa is just permission to approach the border. Whether you gain admission is entirely up to the Customs and Border agents. My wife carried all the documents she used to apply for the visa, plus my most up-to-date paystubs. The agent that she met asked to see only my i797, but I would not be surprised if others asked for different materials. Only after she passed the Customs check did I breathe a sigh of relief.

Book a flight for the cat

There are multiple airlines that fly from Vietnam to the US. Even though they all allow pets, they have different policies as to where the pets will stay and what the fees will be. Vietnam Airlines, for instance, allows pets on cabin for a fee of $400 as long as 1/ the carrier has to be sturdy; 2/ the combined weight of the carrier and the cat cannot exceed 6kgs; 3/ the carrier cannot exceed their dimension limitations. Airlines such as ANA or Cathay only fly pets in the cargo at around $300 per animal.

If your trip involves more than one airline, you are obligated to contact all airlines individually regarding your pet and pay fees accordingly. Some, if not all, operators impose a quota on the number of pets on an aircraft. Availability is on a first-come-first-serve basis. Customers won’t know such availability at the time of booking as airline staff won’t process any request for pets without a confirmation or booking number. Luckily, most airlines have a policy of free cancellation within 24 hours of booking. Take advantage of it, contact your airline promptly and act accordingly.

Knowing that the pet fee on international flights is much higher than that on domestic flights and striving to avoid dealing with more than one airline, we booked a direct flight from Vietnam to the US and chose Southwest Airlines for domestic trips. At the moment, Vietnam Airlines is the only carrier with direct connection from Ho Chi Minh City to San Francisco. There are a couple of things you may want to know before flying with this carrier, though. First of all, those flying with pets will be seated on the last row so that other passengers won’t be disturbed. Second, either the pilot or the lead flight attendant will decide at the check-in counter, at their discretion, whether a cat can sit in cabin or in cargo. Honestly, who loves that kind of uncertainty?

The flights with Southwest were more straightforward. Once we had the booking confirmation, we called them to reserve space for our cat, but the official check-in could only happen at the counter before the flight. Southwest mandates that a pet must stay in its carrier at all times during flight and the carrier must fit in the space under the seat. Our pet’s carrier was allowed in the cabin but deemed oversized. One of the attendants had a spare Southwest-branded and approved carrier for which he could have charged me $95. But the good man didn’t and I am very thankful for his generosity.

After about 30 exhausting hours of transportation and anxiety, our little family got home. Our cat puked a lot during landing and take-off, and the poor boy was completely worn out. Hence, when traveling with pets, I’d suggest that you minimize the number of flights as much as possible.

Preparation for pets before migrating to the US

It’s very important to check the health regulations concerning the importation of pets into the US. Different rules apply to different animals. Here is what the CDC has to say, as of this writing, about the importation of cats

A general certificate of health is not required by CDC for entry of pet cats into the United States, although some airlines or states may require them. However, pet cats are subject to inspection at ports of entry and may be denied entry into the United States if they have evidence of an infectious disease that can be transmitted to humans. If a cat appears to be ill, further examination by a licensed veterinarian at the owner’s expense might be required at the port of entry.

Cats are not required to have proof of rabies vaccination for importation into the United States. However, some states require vaccination of cats for rabies, so it is a good idea to check with state and local health authorities at your final destination.

Because there are no complex requirements by the CDC, our preparation for our cat included essential vaccinations, a microchip and all the related documents. We also bought a cat harness so that he would not run away when he had to leave the carrier upon security check. There was also an absorbent pad to make the cat more comfortable in the carrier as well as for hygiene purposes. What I wish we had done is to tape the carrier’s handle with a piece of cloth. The immigration line at SFO was long and there was no luggage cart. My wife couldn’t carry the 6-kg carrier for a long time. Her hand got all red and a bit swollen because the carrier handle was uncomfortably small. Therefore, do yourself a favor by increasing the contact area between the handle and your hand with a piece of cloth. You’ll need it!

Relocation to another country is stressful enough. Doing it with your beloved pet complicates everything even more. I hope that our story shared above will be helpful to someone looking to do the same thing.

Weekly reading – 10th September 2022

What I wrote last week

Apple is gaining share in advertising; Disney is contemplating an Amazon Prime like subscription

Business

The optimal amount of fraud is non-zero. A great post on fraud as an unavoidable risk of doing business

How Capital One Became A Leading Digital Bank. Some folks say that Capital One’s rise as one of the premier credit card issuers results from its robust data analytics. That may be true, but it’s still just a surface-level observation. What really drives Capital One’s growth is their investment in infrastructure & talent, as well as smart design of process to utilize such resources. In this article, you’ll see their CIO discuss this topic at length. As someone who works in the credit card industry, I admire what they have done and can really see why they are successful.

($) Amazon Is Still Trying to Digest Whole Foods. Integrating any multi-billion acquisition is always a challenge, but the task is even more daunting when the acquirer has to divert focus and resources to its own grocery effort. To that end, it’s impossible for outsiders to judge whether this move has been a success so far since Amazon doesn’t break out Whole Foods’ individual performance. Asking Amazon’s executives for their evaluation is similar to asking a barber if you need a haircut. It’s always going to be biased opinions.

The Facebook button is disappearing from websites as consumers demand better privacy. In the past, Facebook log-in button was all over the Internet. It was convenient and people weren’t aware of how Facebook did surveillance tracking over them. Now, the public knows and they don’t trust Facebook. The lack of trust leads to low usage as well as causes websites to be concerned about being collateral damage. As a consequence, websites don’t want anything to do with the then popular blue button. This is a prime example of how Facebook’s bad reputation is biting them in the behind and unfortunately for them it will not be the last as long as their business model is advertising based on surveillance tracking. “According to his company’s data, out of a sample of 10,000 sign-ins, 42.7% of users signed in with Google, 26.5% used Apple, 20.1% signed in via email and just 10.7% used Facebook.”

What’s SAP?

The Long Tail: The Internet and the Business of Niche

Other stuff I find interesting

Less is more agile. I agree with a lot of points that this article brought up. The traditional Waterfall method of delivering software had downsides which were especially exposed when software became increasingly complex. Only when technology got sufficiently sophisticated did we come up with a new methodology that is more efficient and allows us to incorporate changes faster. That’s Agile. But at the end of the day, Agile is just a tool and how useful it is depends a lot on who is using it and for what purposes. It’s NOT helpful to blindly follow what the coaches that have no knowledge of your organization’s culture or business say. It’s NOT helpful either to keep preaching the benefits of Agile while ignoring its downsides and what it demands from practitioners. What works for some won’t work for others. Just be mindful of what you sign up to.

I Worked at Capital One for Five Years. This Is How We Justified Piling Debt on Poor Customers. Consumer loan issuers do address real consumer needs. Health emergencies, family tragedy, desire to investment, etc. Sudden need for capital infusion. However, these issuers make most money from interest income, meaning that they WANT you to pay interest and not to default. That’s clearly not in line with the best interest of borrowers. Capital One, in this case, is just an example.

Bones: Why Utah’s desert is a paleontologist’s playground. “Only a very tiny percentage of species that ever existed on Earth have been fossilized,” according to the U.S. Geological Survey. Of those that have, only a fraction have been discovered. That’s in part due to accessibility; many fossils are likely buried so deeply that they’re unreachable. But it’s also because paleontology, as a science, remains fairly new. This particular site, now known as T2, is the confirmed resting place of a tyrannosaur, which may be the first complete adult specimen of an incredibly rare species. And the fact that it lies under 10 feet of ancient sandstone conglomerate in the Utah desert is no coincidence. Utah has been known as a paleontological treasure chest since the late 19th century. In fact, the Utah History Encyclopedia says the state boasts a “prolific fossil record that spans the entire ‘Age of Dinosaurs.’”

European cities look to phase out cars in ‘transportation revolution’. “Across the continent, urban centers are restricting cars from entering certain parts of cities as well as imposing new fees. In Paris, which holds car-free Sundays, only newer, less-polluting diesel and gasoline-powered cars can travel into “low-emission zones” across the city; by 2030, only electric or hydrogen will be able to enter the French capital at all. In Norway, where 78% of new vehicles are electric, Oslo eliminated most on-street parking spots in the city’s core. The medieval Belgian city of Ghent limits vehicles in the city center by offering free shuttles from low-priced car parks on its periphery. Drivers heading into London during business hours must pay congestion fees of $17 a day and further entry fees of $15 simply to enter “ultra-low-emission zones”; in some parts of the city, cars will soon be forbidden altogether.”

History of Labor Day

Vietnam’s Mu Cang Chai in ripe rice season a feast for the eyes. Beautiful as it is, this part of Vietnam is quite dangerous to get to. Some folks already lost their life because of treacherous roads and conditions. One of my friends nearly lost hers a few months ago. Definitely not for conservative and risk-adverse folks like myself, but I would love for the world to see my country and what we have to offer.

Stats

“Lord of the Rings: The Rings of Power” series drew more than 25 million viewers worldwide on its first day

China Accounts for 36% of Global Peanut Output

Apple TV+ allegedly surpasses 6% of the global market share

Source: Recurrentauto

Apple is gaining share in the ads world; Disney is contemplating an Amazon Prime like subscription

Apple is gaining share in the ads world

Per CNBC

According to a study published Tuesday by Appsumer, Apple is gaining momentum in digital ads, while Google and Facebook appear to be losing steam.

The research, based on an analysis of the online ad budgets of over 100 different consumer app companies, found that Apple’s ad business has benefited from the company’s major iOS privacy update in 2021, which made it more difficult for companies like Facebook to track users across the Internet.

In terms of overall app developer spend on online advertising, referred to as share of wallet, Google remains at the top, with 34%. Facebook is second at 28%, followed by Apple at 15%. Amazon wasn’t listed because it’s not a platform for developers.

“One of the things that’s quite interesting is the ATT measurement limitations that are kind of put on the wider network doesn’t exist in the same way for Apple,” Lais said. “So you could say Apple has slightly more visibility or an advantage across the other channels on iOS.”

As a shareholder, I am glad that the management team has found another sizable stream of income, especially one with a high margin like advertising. With more than 1.8 billion devices in its installed base which was reported in January 2022, the real estate on the App Store and some of Apple’s native apps is highly valuable to advertisers. Which developers or brands don’t want to talk to iOS customers known to be wealthier than Android counterparts? Financial Times reported that Apple’s ads business is expected to reach $30 billion in revenue and double its workforce by 2026. Given what advertising has done for Amazon so far, such expectation has some truth in it.

But the rise of Apple Ads also raise some concerns for me. First, ads are intrusive. Folks usually say that this is one of the main reasons why we can access free content on the Internet, but consumers won’t care. Some will annoyedly question why they still see sponsored content in some Apple native apps even though they are already subscribers. Personally, I wouldn’t enjoy that. As a result, if Apple decides to push the ads loads on their platform, they will need to be mindful of the user experience and carefully safeguard it.

In the same token, I am concerned about the impact that ads have on how users search for apps on iOS devices. Let’s say that you want to look for a meditation app on the App Store. Will the first results be the ones with the best user reviews and ranking? Or will they be supplanted by advertising apps? One of the criticisms leveled at Amazon is that they favor advertising merchants in their search results instead of giving shoppers what the actual best products are. I can see the same scenario is awaiting Apple.

Furthermore, the more Apple benefits from its ads business, the more likely it will have increasing scrutiny from lawmakers around the world. Critics of the company strongly argue that its privacy-centric initiatives like ATT are nothing other than schemes that are designed to enrich Apple and cripple competitors like Facebook. To be fair, I can see where skeptics are coming from. However, if you view this issue through the lens of direct customer relationship, Apple has every right to strengthen the relationship with its customers. It just happens that they manage to find a way to make money while doing so. Nonetheless, lawmakers do not always think critically and act reasonably. They have their own agendas to further, donating organizations to care for and voters to answer to. If there is enough outcry, there will be more hearings and regulations focused on the market power that Apple wields.

Knowing Apple, I don’t expect official figures on the size of its ads business any time soon. The media coverage of Apple; however, will surely have things to say about this ads business.

Disney is contemplating an Amazon Prime like subscription

Per WSJ

Walt Disney is exploring a membership program that could offer discounts or special perks to encourage customers to spend more on its streaming services, theme parks, resorts and merchandise, according to people familiar with the discussions.

The program would be somewhat akin to Amazon Prime, which offers advantages such as free shipping, discounts at Whole Foods and a complementary streaming video service for a monthly or annual fee, the people said. Internally, some executives have referred to Disney’s initiative as “Disney Prime,” although that won’t be the name of the program, one of the people said.

Disney already has a special program for superfans, the D23 Official Fan Club, which costs $99.99 to $129.99 a year and comes with access to exclusive events and merchandise. That program offered members a discounted three-year subscription to Disney+ in 2019. A new membership program would be different in that it would be targeted at more casual Disney fans and customers.

As an early step to better link Disney products and services, Disney is working to enable subscribers to its Disney+ streaming service to buy merchandise such as T-shirts, themed accessories and children’s costumes associated with some of its shows by scanning a QR code on the service that links to the Shop Disney website, people familiar with the plan said.

Barring any new details, I am very skeptical of this Disney Prime plan simply because Disney is very different from Amazon and I don’t believe the former can create the same magic as the latter did with their world-famous subscription. What makes people like Amazon Prime so much that they are willing to pay $140/year? It’s not Prime Video or Amazon Music credits. They are valuable in increasing Prime’s stickiness. The primary hook is the convenience in shopping experience (deliver and return), a gigantic variety of items to shop and special deals.

Unfortunately, Disney has no asset resembling Amazon’s eCommerce ecosystem. Disney Parks are so expensive that fans will not make regular visits. Plus, since they are only available in California and Florida, how would Disney convince customers from the rest of the country to visit regularly enough to pay for a subscription? Trips to Disney Resort, Hotels or Cruise are one-off purchases, rather than repeaters. The company already has paid plans for their media content in ESPN+, ESPN, Hulu and Disney+ and their merchandise is not something that customers will order regularly. Seriously, how many Avenger-themed shirts do you think you would order every year? Even if you planned to buy one of those shirts every 6 months, would you buy a monthly or yearly subscription just to have $5 off?

Furthermore, I don’t think Disney should or could build an eCommerce site like Amazon, either. It’s not in their circle of competence. It’s expensive and it’s extremely difficult. Any such attempt would destroy shareholder value and damage the company. And if they don’t have anything that can entice consumers to subscribe, especially when this plan is geared toward casual fans, how can Disney Prime succeed? To the company’s defense, they did say that Disney Prime was just one of the ideas on the table. I hope that they have better ideas because I struggle to see how this one will succeed.

Weekly reading – 3rd September 2022

What I wrote last week

Two tips on personal finance

Business

($) Disney’s New Pricing Magic: More Profit From Fewer Park Visitors. As a shareholder, I am more concerned than happy after reading this article. Annual pass-holders are loyal customers and should be valued. Instead, the recent changes signal to them that money is more important than the long-standing relationship forged with the company. Disney’s theme parks are unique and hold precious memories in a lot of folks, but there is a price for everything. At some point, customers will realize that however fond some memories are, it’s just too expensive to bring the whole family there. I hope Disney executives wake up today, read this piece and take some actions before any revolting can happen.

Where Amazon is heading in health after the Amazon Care failure. Amazon is known for running lots of experiments and tinkering till they find a solution that actually works. Amazon Care is an example of that. They realized that they were not able to venture into healthcare by themselves. Hence, a string of acquisitions ensued, namely Signify Health and One Medical. There are risks still with this strategy, though. Cultural conflict between acquired companies, and even between them and Amazon. Difference in data infrastructure. Market cannibalization. It’s just the start of a multi-year and likely very expensive project.

Cash is king for EV makers as soaring battery prices drive up vehicle production costs. A good round-up of EV makers

($) Starbucks Is Rethinking Almost Everything, Including How to Make Frappuccinos. What seems to be a straightforward operation at a Starbucks store may be more complex than you think. Read this piece to learn more how Starbucks is adjusting to changing tastes and responding to complaints from baristas

Be good-argument-driven, not data-driven. Data is your prisoner. If you are motivated enough and if you torture the prisoner enough, it will say whatever you want it to say. Whether it’s intentional misrepresentation of data or incapability to analyze data properly (no apples-to-apples comparison, for example), it’s easier to preach “data-driven” than implement it. Too much of anything can’t be a good thing. There must always be balance. There is indeed a place for data, but since it’s just a tool, its effectiveness hinges a lot on how we use that tool.

Medium’s new CEO on the company’s journalism mistakes, bundle economics, and life after Ev Williams. I used to like Medium a lot. So I can’t help but feel like the company missed a gigantic opportunity to strengthen its advantages and grab market share. Now, it’s too late for Medium to rectify its mistakes.

Zenly is still hugely popular, so why’s Snap shutting it down? It’s sensible to reduce headcount when Snap already gets its hands on Zenly’s technology. It’s also difficult to argue against avoiding cannibalization between the potential Snap Map and Zenly. What should be questioned is whether this plan will come to fruition or will be a massive write-down. Why do I say so? Snap introduced a mini drone not long ago only for it to abandon the plan completely later to be more focused. In case you haven’t noticed, Snap’s latest forecast is disappointing and what investors don’t know is how this $250 million acquisition can help the company move forward

Going Private: How to Succeed in Store-Brand Sector.In the past, retailers could rely more on the in-store environment to promote their store brands. Today, in our omnichannel world, consumers can find a product anywhere, so retailers must have an online presence for their brands. FMI’s report notes that there’s an opportunity for more retailers to tie their loyalty programs to their private brands — particularly when it comes to the online side of the business. Only a third of shoppers using their grocery store’s loyalty program said that they receive extra points for purchasing store brands. This is a way for retailers to promote more online private-brand purchases including the use of digital coupons.

Other stuff I find interesting

The Godfather of South Korea’s Chip Industry. “His experience at Fairchild solidified his belief, first inspired by his father, that a true “engineer’s mind” requires practical skill as much as theoretical knowledge. In addition to performing experiments, he made a habit of reading internal technical reports and memos that he found at the company library, some of which he later brought to KAIST and used as teaching material.

Live cheap or live expensive: The choice is yours in Ho Chi Minh City. As a Vietnamese, it’s interesting to me read about expat life in Vietnam. I have my reservation on the $10 daily budget on food for him and his wife (and a beer). Having lived in the US since 2016, I am not too familiar with electricity bills in different areas of Saigon (a local name of Ho Chi Minh City) either. But he made a good point that it’s important to live close to where you work. The traffic in the city is egregious. Even a 5km commute which is like peanuts in the US can take a lot of time and cause so much frustration that a little bit more rent to help you avoid that is worth it.

The Midwit Trap. “An intelligent person will know that there is no correlation between the simplicity of a solution and the sophistication of the reasoning that led to it”

Why A4? – The Mathematical Beauty of Paper Size

Stats

July U.S. eGrocery sales climb 17% versus year ago to $7.8 billion

According to Edison Research, 35% of adults in America own a smart speaker (their sample size of about 1,200 subjects gives me a little concern)

Average transaction price of new vehicles in the U.S. was up 11.8% year-over-year in July 2022

Roads that need repairing in Nebraska cost each driver $461 per year

iOS US market share hits all-time high and exceeds 50% for the first time

Two tips that will help your financial planning

Plan future expenses

To ensure that your financial planning is set up properly, it’s NOT enough to consider only current expenses. It’s very important to take into account for future expenses, particularly those that you know will appear.

Let’s run a simple scenario as an example. For simplicity sake, imagine your after-tax take-home income, from both you and your spouse, is $100,000 a year. You expect to get two promotions in 2025 and 2028, which will increase your income by 15% and 10% from the year before respectively. Except those two years, your income will grow on average by 3% every year till you retire. Regarding current and future expenses, here are the big items:

  • Your current monthly expense is $4,000. The natural increase in this expense line item is 2% a year, unless specified otherwise.
  • You plan to have two children. One born in 2025 and the other in 2028. It will cost approximately $20,000 to deliver each kid.
  • The first kid will see the monthly expense grow to $5,500 and the second will push it to $7,000.
  • The estimated amount that you want to give them for college tuition fee is $100,000 each by 2043, when they are 18 years old. Hence, the combined college fund will total $200,000 by 2043.
  • You and your spouse understand that unfortunate events can happen to anyone. As a result, you both want to set aside 10% of your annual take-home income for emergencies.
  • For investments, you budget it at 20% of your annual income.
  • Life is short. You want to see the world and travel. Hence, travel will take 5%, if possible.
  • Whatever left will go to the disposable fund that can be used for any purposes.

Using the information above, here is what the numbers look like every year between 2023 and 2035

If you notice, I am pretty conservative with the income estimate. Growing the top line, as long as other expenses don’t grow proportionately, will bring more flexibility, freedom and choice. This is why folks want a higher salary or have a side gig. One source of income isn’t sufficient to sustain various financial needs. Also, I don’t include the fund for retirement which can be $2 million for person. The exclusion is driven by the fact that our 401K already comes out of our paycheck prior to the scenario and that the Emergency, Investment, Travel and Disposable Fund, if unused, can all be funneled into retirement.

Regardless, it’s obvious that the paycheck now doesn’t seem very big any more, does it? If it’s not possible to grow income sustainably, then there must be restrictions on the number of financial needs and there must be also compromises. That fancy car that you dream about, that new TV and furniture set that you crave or that yearly trip to Europe that you brag about, they need to be either axed or paid for by money slated either for emergencies or investments. It all comes down to preferences and willingness to compromise. But without an exercise like this, a normal person with little adequate personal finance awareness would get themselves deep into debt or make decisions that would not leave much margin for accidents.

Nobody knows what their future holds. Hence, the point of this exercise is not to be 100% accurate. Rather, it’s about putting more thoughts on one’s financial status and life priorities, which is ultimately what all this boils down to.

The 2x Rule

I “stole” this tip from a book called Just Keep Buying: Proven Ways To Save Money And Build Your Wealth. Essentially, this rule dictates that anytime I want to splash money on something, I must put the same amount of money on investing (most likely an index). This simple tip is a brilliant way to tamp down my urge to spend impulsively or too discretionally. It creates a moment of doubt in your mind and makes you wonder how much you want the item at hand and whether you are willing to pay double for it. For example,I have told my wife numerous times in the past year that I wanted to buy new Apple gadgets, but the thought of having to put the same amount in investing deterred me and made me realize that I didn’t need those new toys that much. The end result is that I am still using a 10-year-old Mac and a 3-year-old iPhone.

Personal finance, as the name may already give it away, is very personal. What works for me may not work for you. These tools are helpful, but their usefulness depends on how you use them, whether you do so religiously and what your life circumstances are. Mike Tyson said it best: everyone has a plan till they get punched in the face. Nonetheless, it’s better to be prepared to some extent than to be caught completely off guard.

Weekly reading – 27th August 2022

What I wrote last week

Do as I do

Should you stay at a job for more than 2 years, no matter what?

Business

($) Amazon Adds Revenue Streams as Holiday Season Approaches. I wrote a bit about Amazon’s influence on US-based merchants. Let’s say if these merchants manage to sell 10,000 items per minute on Amazon, the increase in fees will result in an extra $5 million per day for Amazon or approximately around $375 million for the quarter. It’s not insignificant, even for a firm that big. I am curious to see the reaction from sellers. On one hand, nobody likes to see costs rise. On the other hand, can these sellers afford to leave Amazon?

How Amazon’s DSP program has created $26 billion in revenue for owners. Amazon has more than 3,000 delivery partners around the world. It may not sound like a lot, but I don’t imagine it’s easy to figure out the kinks of running a complex delivery system involving the internal operation and that of external partners. VRIO is about finding and cultivating Valuable, Rare, Inimitable and Organized capabilities or resources. This can be Amazon’s one of many such capabilities.

($) Instacart Revenue Growth Accelerates Ahead of Planned IPO. Now is not a great IPO environment for Instacart. Growth yet unprofitable companies have seen their stocks plummet in the past 10 months. It’s very likely that Instacart will be another name in that group. A quick comparison of the quarter ending 30th June 2022 between DoorDash’s publicly reported numbers and Instacart’s numbers reported in this piece – Booking volume: $13 billion for DoorDash vs $7.1 billion for Instacart; Revenue: $1.6 billion for DoorDash vs $621 million for Instacart.

Consumers Are 19% More Likely to Complete a Purchase with Venmo Over Traditional Payment Methods. Venmo is incredibly popular among end users, especially the younger crowds. To merchants, Venmo can be a value add as well. “In another study of more than 300 thousand U.S. consumers and an analysis of more than 3.4 million transactions,1 we found that Venmo users shop over 2 times more frequently than the average shopper and are 19% more likely to make repeat purchases. ” How PayPal monetizes Venmo will play a crucial role in the company’s future.

Secret ‘Batgirl’ Screenings Hit the Warner Bros Lot. Putting away content that took hours and millions of dollars to create just for tax write-down purposes seems a bit extreme.

Amazon bought Whole Foods five years ago for $13.7 billion. Here’s what’s changed at the high-end grocer. One frustrating aspect of following Amazon is that the company doesn’t break out Whole Foods’ financials. It’s almost impossible to gauge the success of this expensive acquisition. Nonetheless, it’s good to read through the operational changes since then.

Microsoft employees love Figma, and it’s testing the company’s cozy relationship with Adobe. Usually, an upcoming challenger is more popular among small companies while the incumbents are favored by big corporations. In the case of Figma, it’s widely popular at a giant shop like Microsoft. It’s good for them, but a warning for Adobe

WhatsApp grocery shopping is already huge in Brazil. One startup wants to take it over. An intriguing concept to use Whatsapp groups for e-Commerce. Trela manages multiple Whatsapp groups, posts weekly deals in the groups so that users can place orders as well as manages orders and deliveries. Merchants save time. Users get informed of the deals and can buy goods conveniently. What concerns me are the management of groups and scalability. First, Whatsapp groups are limited to 256 users. A medium-sized city will require like more than 100 groups. What about a big city then? How does Trela manage the groups, the communication and the orders? Second, people move from one city to another. How does Trela manage the changes? What if somebody leaves the old group but can’t find a spot in any new group?

Other stuff I find interesting

Deep Time Sickness. An interesting long read on Mexico, its history of earthquakes and the consequences.

Fleeing Putin, Russian tech workers find a home in Armenia. Reading this article, I cannot help but feel that Russia is living off only its natural resources and former glory. The brain drain will deplete the country of valuable human capital and innovation; something that is not easily reversed.

France is now offering a €4,000 e-bike subsidy to people who trade in their car. The initiative sounds great on paper: stimulate exercise, encourage folks to ditch cars for e-bikes. The 2nd-order effect will be more space for cities and outdoor activities for everybody. I am sure there will be scientific research into how much this initiative benefits the country and cities and I really look forward to reading such research.

The utterly delightful site dedicated to classifying plastic bread tags. Such a quirky hobby

For Japanese Uber delivery drivers, gig work is working. “The word “freedom” crops up when talking to Tokyo’s delivery drivers. Their full-time employment alternative, after all, is likely an all-consuming office job, involving long, draining hours and a demanding work culture; part-time at a bar or convenience store, they’d face fixed shifts and constant supervision. While the gig worker industry has come under fire around the world for years of shrinking wages and poor conditions, Japan’s experience, so far, is different; in stark contrast to global lawsuits, protests, and strike action, Japan’s workers, by and large, appear content with the rare flexibility their jobs provide. A recent Japanese study, the first of its kind, surveyed roughly 14,000 delivery drivers from major companies across the country. While most of the workers were new entrants — around 60% have been working less than a year, and the vast majority worked 40 hours or less — 63% said they were “satisfied” with their work; 82% reported that they would like to stay in their jobs “for a while” or “forever.”

Stats

35% of Venmo customers are between 18 and 29 years old, versus 23% across the US

‘House of the Dragon’ draws nearly 10 million viewers

Bank of America Clients’ 1 Billion Digital Logins in July 2022