I came across a video clip showing how farming is automated in China. It’s not widely adopted yet, but I don’t think the day when that happens is too far away from now.
This is how farming is done in Vietnam
Admittedly, even though there must be innovation in agriculture in Vietnam and technology is used to some extent, the photo above illustrates the current inferior technique adopted in my hometown.
Imagine the difference in efficiency and value created between the automated method and the manual laborious one.
If you are one of the workers who don’t own land and who is hired to work others’ land, automation isn’t good news for you. Your job is threatened. Nonetheless, if you are in the agriculture business, automation is a boon improving efficiency and lowering costs. If you are an end user consuming agricultural goods, automation can bring the prices down.
If we look at it from a collective standpoint, technology or automation in particular, in the majority of cases, should bring net benefits to the society. Innovation and advancements come from standards continuously being raised, I believe.
I came across Simplify a few days ago upon reading an article on Fast Company. It is a Chrome extension that helps clean up your Gmail interface. Instead of looking at unnecessary features, buttons and logos, Simplify helps clean up the interface to make it look better. Here is what Gmail normally looks
Here is how it looks on mine
If you click on the icon on the top left, the interface will be even more minimalist
My experience with the extension has been very pleasant so far. The mailbox looks a lot less busy with the removal of features that I haven’t used much or at all. Plus, whenever you have inbound emails, the layout won’t look to command attention as much as the original ordinary Gmail outlook, as you can see below
Another nice thing about Simplify is that it is not serving ads or collecting any analytics, in addition to being free.
If you like a minimalist design and a cool free product, give it a try and show the creator some appreciation by endorsing him like I am doing now.
Yesterday, Slack filed to go public. In this post, I am laying out what I learned from reading the document
In the three months ending 31st January, 2019, there are more than 10 million Daily Active Users; 500,000 register developers; 450,000 third-party applications; 50 million collective usage hours; 1 billion messages sent
There are more than 500,000 organizations on free subscription and 88,000 paid customers, including 65 companies of the Fortune 100. Slack’s competitors include Facebook (Hangouts), Google (Workplace) and Microsoft (Teams). Even though Microsoft announced that there are 500,000 organizations using the service, including 91 of the Fortune 100, it’s tricky to form an apple-to-apple comparison. Teams can be used either free-of-charge or part of a paid Office 365 plan. There is no detail yet on what makes up the 500,000 figure.
Annual revenue was recorded at $105.2 million, $220.5 million, and $400.6 million in fiscal years 2017, 2018, and 2019 respectively
Out of the total revenue, international revenue represents 34%, 34% and 36% in 2017, 2018 and 2019 respectively
In fiscal years 2017, 2018, and 2019, approximately 22%, 32%, and 40%, respectively, of the annual revenue was generated from Paid Customers >$100,000.
In the fiscal year ended 31st January, 2019, 8% of the annual revenue came from customers who used the free plan prior, down from 10% a year before
“More than 90% of Paid Customers used a third-party application or custom integration in the week ended January 31, 2019”
Impressive Growth of Paid Customers >$100,000
The CAGR of Paid Customers whose ARR is bigger than $100,000 is impressive. So is the CAGR of the revenue, gross profit and calculated billings. Though Slack hasn’t made money from its operations, the loss has contracted through the quarters at the rate of 7.50%. Net Dollar Retention Rate has slowed down.
When looked at from an annual basis, the growth of the Paid Customer > $100,000 is even more impressive.
Cost of Revenue
From the Annual CAGR chart, the scale of economies seems a bit clearer as expenses don’t grow at the same clip as revenue and gross profit. In terms of breakdown of revenue, Operating Loss as % of Revenue has been decreasing quite rapidly, along with R&D and Sales & Marketing. For the last two years, most of the improvement in Operating Loss came from R&D spending as % of Revenue. There is not much more that can be said about it definitely. Perhaps, Slack feels that there is enough investment and sufficient talent in R&D, meaning that it is not necessary to waste valuable dollars.
Reliance on AWS and Ramifications
For instance, Slack currently only utilizes AWS data centers located in the United States but certain organizations, or categories of organizations, may limit their adoption or use of Slack unless we also utilize local AWS data centers, such as data centers in Europe, Asia, and Latin America.
For example, Russia and China are among a number of countries that have recently blocked certain online services, including AWS, which hosts Slack, making it very difficult for such services to access those markets.
From 2018 to 2023, Slack commits to spend $50 million each year on AWS
It’s going to be a direct listing
It means a less expensive process for Slack. The current stockholders are not under a contractual lock-up agreement. If enough stocks are sold when or shortly after Slack goes public, it may cause the price to contract.
They have negative free cash flow in all, but one quarter
I came across two cool videos on Bloomberg YouTube channel on Rwanda, a country in East Africa. The first video is about how Kigali in Rwanda is nowadays. It’s surprising and cool to learn about a city where there is no plastic bag, coffee is good, cleanliness is prioritized and economy is throwing.
The second video is about how drones produced by Zipline, an American country, are used to aid doctors and patients in Rwanda. As the road infrastructure in the country is in so bad a shape that it’s challenging at times for doctors and hospitals to procure blood. The drones alleviate such a problem. This is one of the best examples of how technology can be used to save lives. The part where the drones are stopped and grounded is awesome. Such precision.
Its filing is packed with a lot of information. Below are my take-aways so far from reading it
It’s doing a lot of things
Apart from the ride-hailing business that it has been known for, Uber also offers Uber Eats, Uber Freights and New Mobility, including e-bikes, e-scooters. Additionally, it has been investing in autonomous driving cars as well.
In the quarter ended December 31, 2018, the average wait time for a rider to be picked up by a Driver was five minutes.
The rapid growth and scale of our Ridesharing products, which to date have accounted for virtually all of our Personal Mobility offering, demonstrates the size of our opportunity:
• Revenue derived from our Ridesharing products grew from $3.5 billion in 2016 to $9.2 billion in 2018.
• Gross Bookings derived from our Ridesharing products grew from $18.8 billion in 2016 to $41.5 billion in 2018.
• Consumers traveled approximately 26 billion miles on our platform in 2018.
Our Uber Eatsoffering allows consumers to search for and discover local restaurants, order a meal at the touch of a button, and have the meal delivered reliably and quickly. We launched our Uber Eats app just over three years ago, and we believe that Uber Eats has grown to be the largest meal delivery platform in the world outside of China based on Gross Bookings. For the quarter ended December 31, 2018, the average delivery time was approximately 30 minutes.
Of the 91 million MAPCs on our platform, over 15 million received a meal using Uber Eats in the quarter ended December 31, 2018, tapping into our network of more than 220,000 restaurants in over 500 cities globally.
We serve shippers ranging from small- and medium-sized businesses to global enterprises by enabling them to create and tender shipments with a few clicks, secure capacity on demand with upfront pricing, and track those shipments in real-time from pickup to delivery. We believe that all of these factors represent significant efficiency improvements over traditional freight brokerage providers. Since Uber Freight’s public launch in the United States in May 2017, we have contracted with over 36,000 carriers that in aggregate have more than 400,000 drivers and have served over 1,000 shippers, including global enterprises such as Anheuser-Busch InBev, Niagara, Land O’Lakes, and Colgate-Palmolive. Uber Freight has grown to over $125 million in revenue for the quarter ended December 31, 2018
Impressive growth has slowed down
Really impressive growth, but a further look reveals that the growth seems to slow down
Their market map indicates that there is not much room for further horizontal expansion. What Uber can do is to dig deeper in each market to gain more market share. Uber said that as of the quarter ended December 31st, 2018, 74% of their trips and 52% of their Gross Bookings were from outside of the US.
It hasn’t made money operationally yet
Operationally, Uber hasn’t made any money. A positive sign is that their revenue grew faster than their operating loss. In 2018, their operating loss was more or less at the same level as it was in 2016 even though revenue grew significantly in the same period
Regulations, Regulations, Regulations
Throughout the filing, regulatory challenges are repeatedly mentioned and for a good reason. Uber’s struggle with authority bodies around the world has been well documented. Below is what Uber said specifically how regulations restrict their ride-sharing operations in a few countries
We plan to grow our current SAM by expanding further into our six near-term priority countries, Argentina, Germany, Italy, Japan, South Korea, and Spain, where our ability to grow our Ridesharing operations to scale is currently and may continue to be limited by significant regulatory restrictions
In 2018, we derived 24% of our Ridesharing Gross Bookings from five metropolitan areas – Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil. Over the same period, we generated 15% of our Ridesharing Gross Bookings from trips that either started or were completed at an airport, and we expect this percentage to increase in the future.
If some regulations are imposed in those important markets or around airports, however likely or unlikely, it may meaningfully affect Uber’s revenue.
Another aspect related to laws is how Uber classifies its drivers. Here is what it said specifically on the matter
Our business would be adversely affected if Drivers were classified as employees instead of independent contractors
If politicians in the markets where Uber has operations decide to force the company to treat its drivers as employees and give them minimum wage, it may be an issue
The first of the norms Uber laid out in “How We Approach The Future” section reads: “We do the right thing. Period”. Not really surprising, but a welcoming sign from a company that endured a public backlash symbolized by the hashtag #DeleteUber not so long ago.
In the filing, Uber promises to “release a transparency report, which will provide the public with data related to reports of sexual assaults and other safety incidents claimed to have occurred on our platform in the United States.” this year. Another welcoming sign.
Furthermore, unlike other tech companies, Uber won’t have dual share structure which is implemented to give the founders, usually, more voting rights. For example, Mark Zuckerberg has more than half of the voting rights at Facebook.
Their stakes in strategic partnerships
In August 2016, we completed the sale of our operations in China to Didi in exchange for an approximate 18.8% interest in Didi, which, based on our current information, we estimate to be 15.4% as of September 30, 2018. In February 2018, we consummated a joint venture with Yandex whereby we and Yandex each contributed our operations in Russia/CIS to a joint venture which we refer to as the Yandex.Taxi joint venture. We received a 38.0% interest in the Yandex.Taxi joint venture at the closing of the transaction, which, based on our currently available information, we estimate to be 38.0% as of December 31, 2018. In March 2018, we completed the sale of our operations in Southeast Asia to Grab in exchange for a 30.0% interest in Grab, which, based on our currently available information, we estimate to be 23.2% as of December 31, 2018. We measure our interest in each of our minority-owned affiliates based on the outstanding shares of capital stock on an as-converted basis but without taking into account securities exercisable or exchangeable for shares of capital stock or its equivalent (including outstanding vested or unvested stock-based awards and any reserved but unissued stock-based awards under any equity incentive plan of our minority-owned affiliates).
Its business deals with Google
According to the filing, Uber paid Google from Jan 1, 2016 through December 31, 2018, $631 million, $70 million and $58 million for Marketing & Advertising (Ads), technology infrastructure & enterprise services (which I believe is Google Cloud Platform), and Google Maps respectively.
On Monday, Apple introduced its in-house credit card called Apple Card. Since it’s not available yet and the details are quite numerous, you can read more in these two articles on TechCrunch and The Verge or watch the presentation yourself here. I’ll just lay out my thoughts on the card below
I am convinced that Apple Card will attract a lot of sign-ups. After all, it’s Apple. The application process is reportedly straightforward and easy (we’ll see soon in the upcoming months). You can apply for the card from your Wallet app and the card will be shipped to you. If you use an iPhone 6 or later and are a fan of Apple, you will likely want to try your hands on the beautiful-looking titanium card for free, as long as you qualify for one. Plus, there are millions of installed iPhone 6 or later out there. So getting folks to sign up won’t be an issue. What about the usage for Apple Card? For consumers to use the Card, Apple has to give them a reason to, an incentive.
Security & Privacy
Security & Privacy is a big sell from Apple and it’s no different in this case. Apple Card comes without the stuff that makes credit card fraud possible from the physical card perspective. Plus, the way Apple sets it up makes credit card fraud significantly more difficult
Because of the way it is set up, every purchase with Apple Card requires biometric identification aside from purchases with the physical card. In the case of a non-Apple Pay transaction online — you must get your card number from the app and that is unlocked via Touch ID or Face ID, so biometrics are still in the path. And, for Apple Pay transactions, they are authenticated at the time of transaction. I personally think it would be cool to optionally require a confirmation from your phone to let a charge go through as well, but that is likely a v2 situation.
In other words, somebody needs to steal your card, your phone and either your thumb(s) or your face to make an unauthorized purchase.
Apple claimed that it wouldn’t know anything about consumer purchases using Apple Card. Plus, Goldman Sachs won’t sell data to marketers. If you care about privacy, it is attractive. Now that I work in the credit card industry, I can tell you that the level of privacy intrusion by banks is crazy. It is entirely possible to track the location of a cardholder to a store, know whether a purchase is made and if a purchase is not made, use the user data to run ads offline and online to motivate spending. If Apple and Goldman Sachs can do what they claim, this is an appealing feature, but I doubt it will be the dominant one.
According to Apple, you won’t be charged with late fees or penalty fees. You will just incur interest on your late payments. A nice feature, but from my perspective, it is not a hugely attractive one, especially if you are like me who isn’t late on credit card payments. After all, late payments will affect your credit score and consequently future APRs.
Pretty in line with the industry standard. Nothing special about this as far as I am concerned
Visibility into purchase details
Apple claimed that users could see more details on what a purchase was and where it happened from the Wallet app, instead of the user-unfriendly lines you see from your balance statement or mobile app. Once again, a nice feature that won’t be a dominant one.
Above is the cash back policy for Apple Card and Apple Pay. 3% on Apple-related purchases is nice, but it is not a daily event, given how expensive Apple items are. 1% cash back with the physical card is nothing special. It’s even less attractive than many credit cards out there on the market. The interesting one is Apple Pay
Because other credit cards offer two percent cash back or more on certain categories only, two percent cash back on every category by Apple Pay is more beneficial to users. According to Apple, Apple Pay will be available in 40+ countries at the end of this year. The number of merchants that accept Apple Pay is impressively high in some countries. Here is what Apple reported on the presentation
There are cases in which Apple Pay will not be competitive. For instance, if you have a card that gives back 4% cash back on dining, it sure is a better alternative than Apple Pay, even if Apple Pay is an available option. Or if you have a co-branded credit card such as a hotel or airline co-branded credit card, there is a switching cost as you want to increase your rewards points.
But using a physical credit card isn’t as convenient as a contactless option such as Apple Pay, nor is it as secure. So which payment option works in a situation depends on what situation that is and what kind of credit card user you are. If you care a lot about rewards and cash back, as well as have the time and mental fortitude to remember all the details, using multiple cards is the way to go. Nonetheless, if you are like me, a “one guy, one card” type, I would prefer something simple and easy to use/remember. Then I can see the appeal of Apple Pay. Contactless, fast, secure and decent cash back.
A push for Apple Pay
I believe that Apple Card is another push for Apple Pay to make it the “iPhone” equivalent of payment methods. Since Apple Pay is not ubiquitously available, the Card offers the connection between Apple Pay and merchants who don’t accept the service yet. If you use the Card, you’ll earn cash back that can be, in turn, used for Apple Pay. As explained above, Apple Pay can seem to be an attractive payment method to a certain type of users. According to Apple, they are on their track to meet the goal of 10 billion transactions on Apple Pay this year. If you are already satisfied with Apple Pay, I suspect that you will get more hooked when Apple Card is launched.
It makes sense to push for Apple Pay as I think Apple will earn more revenue from the service than the Card. After all, whatever revenue from the Card will have to be split with Goldman Sachs as well.
To recap, I think that this is a push for Apple Pay from Apple, an attempt to thread a delicate line between getting into the financial world and not suffering from the regulatory headaches that come with actually getting in there. Personally, I don’t think it is a “winner takes all” situation. I suspect that users will carry multiple options around and that each type of credit card user will display different levels of love towards Apple Pay and Card. I am excited about the future updates from Apple for the Card, regarding features and benefits. After all, this is just their first iteration.
On Monday, Apple announced their “Netflix for news” or “Netflix for magazines” at the moment. They call it Apple News +. With $9.99/month, you have unlimited access to hundreds of magazines and several participating news outlets such as LA Times, Wall Street Journals, The Skimm or TechCrunch. Notable absences from Apple News+ are The Washington Post and NewYork Times
As common practice in the subscription world, the 1st month of Apple News+ is free. Once a user subscribes, the subscription is free for all family members. I never share any Apple services with my family members, so I am interested in how all that sharing with family members works and how they can avoid heavy scammers.
Apple claimed that they used “on-device intelligence” to suggest articles based on readers’ behavior. That way, Apple doesn’t know what users read. Additionally, advertisers won’t know what users read either, or at least that’s what Apple claimed.
From the demo, content on Apple News+ follows a specific format that is easy on the eyes and visually attractive. According to Macstories, out of 251 participating magazines, 125 are using Apple News Format, compared to 126 are still sticking to the old PDF format. Here are a couple of looks
Though the app allows browsing by alphabet and categories, some choices are not easy to find.
In fact, I needed to go to “Following” tab at the bottom, searched for Los Angeles Times to find the outlet. Then, I had to “follow” the LA Times to have it featured on my feed. If you want to look for TechCrunch or The Skimm, the search function in the following is probably the fastest way.
Does it make sense for popular news outlets to work with Apple?
With regard to revenue sharing, Apple reportedly seeks to keep 50% of the revenue from Apple News+ subscriptions while the other half is shared between the partners based on how much time is spent on each partner’s content. Partnering with Apple will potentially give publishers exposure to at least millions of Apple device owners, for now before Apple may decide to make the service available on Android. Publishers hope that their quality content and free marketing boost by being presented at an Apple event will catapult their digital business. On the other hand, there is also a “I already subscribed to Apple News+” risk from existing subscribers. In other words, if a user can access the same content while paying $9.99/month, why would he or she pay $39/month for WSJ, as an example?
Reportedly, even though publishers can’t have customer data, they will know what content is being read and can offer specific deals like newsletter. Plus, adhering to the new format championed by Apple requires an investment of time and effort. WSJ hires 50 more staff just for the partnership with Apple.
For the LA Times, it is understandable why they accepted the risk. The paper has 150,000 digital subscribers as of 15th March 2019. Compared to the 3 million digital-only subscribers and 4 million in total boasted by New York Times, or 1.71 million by the WSJ, the number is meagre. Hence, I can see the upside can justify the cannibalization risk. The same sentiment can be argued for the magazines. I don’t have the numbers for magazines, but I can’t imagine that their digital business is as big as LA Times or WSJ.
As for the WSJ, the math is more interesting. The WSJ has more to lose than the LA Times, but it is reported that users on Apple News + have access to only 3 days worth of archive. As an avid reader of the WSJ myself, it can be a challenge. I usually have to go back to articles even several weeks old for information. I guess that the management at the WSJ is betting that the avid readers will keep subscribing and the new revenue will flow in from extra consumption and new users.
It would be so interesting to see 6 months or a year from now whether partnership with Apple truly brings net benefits to the currently participating publishers. If it does, it will put the publishers that opt out right now, in an awkward position. Continue to stay out and risk losing more digital business or opt in?
What about readers?
I think the obvious winners here are the users. If you are an avid reader of even just a couple of magazines and news outlets, the deal is financially attractive. Some may argue that a normal user would never subscribe to that many publishers. Well, a normal Netflix user would never be able to consume all of their content library either. We are in the world of instant gratification and endless choice. I don’t see the difference here. Plus, you don’t have to worry about your data being collected by publishers as it would when you consume content on the web. Additionally, reading content in the new Apple News Format is a pleasant experience. I have an iPhone 5S and I liked what I saw. I can imagine the experience would be better on a bigger screen like newer iPhones and iPads. Finally, family members can use your subscriptions for free! At least for now!
In short, I find the launch of Apple News exciting. If there is one company that can pull this off, I can’t think of another one, except Apple. It has 900 million installed iPhones and 1.4 billion devices, a dedicated fan base, a household name and control over the iOS. The upcoming months will be interesting as I can’t wait to see the impact the new service has on the partnering publishers and how the result will change the dynamic between Apple and the opted out publishers. How would a competing service on Android look? Hope we can have some more color on the service at the upcoming earning call by Apple.