Weekly reading – 25th September 2021

What I wrote last week

Is BNPL replacing credit cards?

My thoughts on Visa’s new benefits for U.S Signature/Infinite cardholders

Articles on Business

When to Buy Now, Pay Later, and When to Just Pay Now. “Affirm doesn’t report payments on its four biweekly payment zero-interest loans, it said, or when consumers are offered a three-month payment option with no interest. Afterpay doesn’t work with credit bureaus at all. Sezzle Up explicitly informs users that it will report on-time payments to Equifax and TransUnion. Affirm doesn’t charge late fees, but late or partial payments can hurt your credit score, and may prevent you from using the service in the future. Sezzle Up also reports delinquencies. Klarna and Afterpay revoke access to their platform until payment is made. Both companies also charge late fees, tacked onto your next payment. Afterpay charges $8, or 25%, of the purchase, whichever is less, while Klarna charges a maximum $7, or no more than 25%, of the past due amount. Klarna said it will contact users to collect payment before charging a late fee.

This delivery app went above and beyond for its workers. Then Uber took over. Cornershop’s original operating model was more beneficial and friendly towards workers. After the acquisition, life became more challenging for drivers. It remains to be seen whether the regulation in Chile will allow workers to unionize and force Uber to recognize drivers as full-time employees. This is a classic case of conflicting interests between gig companies and drivers as well as of the important role that governments play in this conversation.

Why the University of Florida gets a ~$20m cut of Gatorade profits every year. A fascinating story on a wildly popular drink.

The Most Important iPhone Ever. “What makes the iPhone and perhaps Apple special is that it seems to deliver things that nobody asks for but then everybody wants while eschewing overshooting a performance dimension that a few demand but most won’t use. The tragedy of overservice and disruption is that if you don’t shift the definition of performance eventually you run out of demand at the top of the performance curve. That opens you up to “good enough” competition from below. Instead you need to re-define the notion of performance: compete on a new basis, reset expectations. That the iPhone can find new dimensions of performance and hence demand is effectively a solution to the innovator’s dilemma.”

PayPal Introduces Customers to the Next Digital Payments Era with the New PayPal App. “The new PayPal app will introduce new features including PayPal Savings, a new high yield savings account provided by Synchrony Bank, alongside new in-app shopping tools that will enable customers to earn rewards redeemable for cash back or PayPal shopping credit and uncover deals with hundreds of merchants. Additionally, the new app offers PayPal customers a single place to manage their bill payments, get paid up to two days earlier with the new Direct Deposit feature provided through one of our bank partners, earn rewards and manage gift cards, send and receive money to friends, family and businesses, pay with QR codes for purchases and redeem rewards in-store, access and manage credit, Buy Now, Pay Later services, buy, hold and sell crypto, as well as support causes and charities they care about.”

Other stuff

The tangled history of mRNA vaccines

Stats that may interest you

“One in five consumers made a purchase using a “buy now, pay later” service within the last 12 months.

One in six consumers who made a buy now, pay later service purchase regret doing so, commonly citing high interest rates, a lack of options to build credit, or making unnecessary or unaffordable purchases.”

There have been 47 startup venture deals in Africa in 2021 so far with the average deal size of $21 million

CPC on Amazon ads is $1.27 in August 2021, up from 86 cents from a year ago, according to a survey

31% of online grocery shoppers use PayPal, according to a new study by ACI Worldwide and PYMNTS

Fuel Wasted Due to U.S. Traffic Congestion in 2020 Cut in Half from 2019 to 2020

14% of U.S consumers said they switched to an iPhone from another operating system in the last two years, a report said

Weekly reading – 18th September 2021

What I wrote last week

The importance of reading footnotes

Interesting articles on Business

Facebook Says Its Rules Apply to All. Company Documents Reveal a Secret Elite That’s Exempt. The sentence “we’re not going what we say publicly we are” can be applied to any company to some extent. The problem for Facebook is that the trust-eroding incidents happen way too often for a company with grandiose ambitions. Facebook wants us to trust them and use some of the new services for Facebook Pay, but how can trust be formed when stuff like this happens? I am sure this won’t be the last time that Facebook got a PR black eye.

Intuit Agrees to Buy Mailchimp for About $12 Billion. “Mailchimp, established in 2001, is based in Atlanta and is still owned by founders Ben Chestnut and Dan Kurzius, according to its website. The company, which hasn’t taken any outside funding, began as a web-design agency and ran an email-marketing service on the side that later became its focus. Today it also offers other digital-ad services and customer-relationship- management tools. Already popular among small businesses, Mailchimp became something of a household name in 2014, when it advertised on the first season of the hit podcast “Serial.” The company now serves 2.4 million monthly active users, including 800,000 paying customers. Half of its customers are outside the U.S. It had about $800 million in annual revenue last year, a 20% rise from the year earlier.”

Square Offers Sellers and Consumers a New Checkout Experience with Cash App Pay. It’s a natural progression in my opinion. Square is competing with PayPal to be the Super App for consumer financial needs as well as the go-to partner for commerce. PayPal has enabled payments by QR Code and mobile wallet for a while. Now, Square and Cash App have it too.

Facebook Knows Instagram Is Toxic for Teen Girls, Company Documents Show. “For the past three years, Facebook has been conducting studies into how its photo-sharing app affects its millions of young users. Repeatedly, the company’s researchers found that Instagram is harmful for a sizable percentage of them, most notably teenage girls. Expanding its base of young users is vital to the company’s more than $100 billion in annual revenue, and it doesn’t want to jeopardize their engagement with the platform. The features that Instagram identifies as most harmful to teens appear to be at the platform’s core. The research has been reviewed by top Facebook executives, and was cited in a 2020 presentation given to Mr. Zuckerberg, according to the documents.” Guess what Facebook chose to do? Nothing. Absolutely nothing.

Adobe jumps into e-commerce payments business in challenge to Shopify. The race to be the force that powers eCommerce features some of the biggest firms in the world: Amazon, Walmart, Shopify, PayPal, Adobe and Square. If you notice, the first three have fulfillment capabilities. PayPal bought Happy Returns. So it’s only a matter of time the latter three build out their own fulfillment muscle.

Amazon Is Doing It. So Is Walmart. Why Retail Loves ‘Buy Now, Pay Later.’ “Shoppers spend more at Macy’s when they use installment plans offered through Klarna Bank AB, Macy’s CEO Jeff Gennette said on a recent earnings call. Klarna also is helping the retailer attract younger customers, he said. A desire to boost loan approvals was among the reasons Walmart in 2018 decided to end its decadeslong credit-card partnership with Synchrony Financial. Citigroup Inc. saw a sevenfold increase in the dollar amount of credit-card purchases converted to installment loans in July, compared with the same month a year prior, said Gonzalo Luchetti, head of Citigroup’s U.S. consumer bank.”

Other stuff I find interesting

One Woman’s Mission to Rewrite Nazi History on Wikipedia. I hope down the line, years from now, there will be folks who come across what Ksenia Coffman did and be thankful that she did. Same way as I do today.

What Makes Work Meaningful — Or Meaningless

Stats

“Close to half of all new U.S. gun buyers since the beginning of 2019 have been women”

55% of shoppers start their 2021 holiday season shopping before Thanksgiving

Source: JungleScout

Weekly reading – 11th September 2021

What I wrote last week

I did a quick review to show which remittance services you may want to use to transfer money to Vietnam or India

My reservation on PYMNT’s study on Apple Pay’s usage in stores

Interesting articles on Business

Why the global chip shortage is making it so hard to buy a PS5. In the silicon manufacturing process, for the most advanced tool inside a fab, typically you’ll have hundreds of different tools. Actually in a large fab, like one you might see at TSMC (Taiwan Semiconductor Manufacturing Company), you’ll have thousands of these tools. And these tools are big machines that process these wafers and do various things. And most tools cost, starting with a couple of million dollars, to the most expensive tools are in excess of 150 million euros. In Asia, they’ll build these things in a year. They’ll move in equipment in the second year, get it qualified, running, by the end of the year. In the US, or in the West, it takes a lot longer, because we don’t have the same mentality they have in Asia. We’re going to do all the permitting, all the hearings, and all that stuff. So it wouldn’t surprise me if it took 50 percent longer to twice as long. Now, let me tell you why that’s a problem. Because to your second question, a modern fab these days, one of the closer-to-leading-edge ones will cost you $10 billion-plus for the smallest efficient scale, and a really efficient scale will probably cost you closer to $20 billion. Think about how much depreciation that can generate. In Asia, the mentality is every day, every hour this thing isn’t running costs me tens of thousands, hundreds of thousands, sometimes millions of dollars. I’ve been in Asia on Christmas Day, and there are people out there with jackhammers and pouring concrete because it was like, “Man, every minute this thing gets done sooner, we can start generating cash.” We do not have that mentality in the West.”

Companies Need More Workers. Why Do They Reject Millions of Résumés? A gap on a resume should not be used to disqualify a candidate immediately. Many need to take a break, whether it was because a family member was sick or it was for their mental health. A less-than-stellar historical record shouldn’t disqualify a candidate either. We all make mistakes and we all deserve chances. Plus, if someone has the necessary skills, does it matter where they got those skills? Does it matter if they don’t have a degree? We use software to evaluate hundreds, if not thousands, of applications a year. It’s understandable. But I do believe that we can write better software to accommodate hiring needs and give people chances.

The surprisingly big business of Library E-books

PayPal To Acquire Paidy. PayPal agreed to acquire Paidy, a BNPL provider in Japan, for $2.7 billion in cash. Paidy reportedly has 700,000 merchants and more than 6 million users. As PayPal itself already has more than 400 million users, this acquisition isn’t likely about inflating the user base. The second reason is likely capabilities. Paidy, which shoppers can use without creating an account first or using a credit card, has a proprietary machine learning models to evaluate credit worthiness of consumers. In other Asian countries, it’s not uncommon for shoppers to pay cash on deliveries for online orders. Perhaps this is something that PayPal wants to replicate in other Asian markets.

Australia’s Top Court Finds Media Companies Liable for Other People’s Facebook Comments. The Court’s argument is that media companies post articles to stimulate conversations and engagement through comments. Hence, they should be liable for such comments. I don’t think that line of reasoning totally lacks solid grounds. I mean, a company’s Facebook page is essentially its property where it has the ability to curate (with Facebook’s help, of course) and it should have some responsibility for defamatory comments taking place there.

Source: CNBC

Stuff that I found interesting

This wildly reinvented wind turbine generates five times more energy than its competitors. This proposal, if materialized, can generate power for up to 100,000 households with one station while reducing the waste that is usually seen with the traditional turbines.

A great series on the study of obesity

Stats that may interest you

Mobile transactions in Vietnam are expected to increase by 300% between 2021 and 2025

Apple has around 52% to 57% of the mobile game transactions market (page 138)

Even though Apple doesn’t have a separate P&L for its line businesses, the Court found that the App Store’s operating margin is approximately 75% (page 145)

Weekly reading – 4th September 2021

What I wrote last week

Important investing lessons that I learned

Business

Google Pay team reportedly in major upheaval after botched app revamp. 92% of mobile wallet transactions in the U.S in 2020 were on Apple Pay. If I were an Executive at Google, I’d question why a firm with limitless resources, world-class engineering and ownership of Android couldn’t get Google Pay to be an equal competitor to Apple Pay. One can argue that Apple should have some credit with popularizing Apple Pay. If the driving force were the Cupertino-based company’s dominance and monopoly, why wouldn’t Google replicate that success with its own digital wallet?

How one woman helped build the #AppleToo movement at tech’s most secretive company. I never want to read about anybody being mistreated at their workplace. This #AppleToo movement is no exception. I am very disheartened to read about a group of folks being mistreated and disrespected, especially at a company that I long admire for other reasons.

PayPal is exploring a stock-trading platform for U.S. customers. It came as no surprise to me that PayPal is planning to launch a stock-trading feature. The ambition to be the Super App for consumers’ financial needs has been in full swing for a while. The company is putting the pieces of the puzzle together and this is one of them.

Affirm Holdings’ Moat: Why World’s Largest Retailers Want Affirm. I don’t necessarily agree with everything said in this piece, but that doesn’t mean it doesn’t have some good points.

Why Marta Ortega Pérez Is the Secret to Zara’s Success. This is one of the more interesting points in the article: Every morning after dropping off her son at school, Ortega Pérez gathers with the company’s CFO, Miguel Díaz, and other top staff around an industrial table out on the open floor to review global rankings for such bestselling pieces as a minimalist black spaghetti-strap summer dress, or a rococo printed pajama-style blouse with matching shorts. Orders heading to stores are constantly adjusted, an anomaly in an industry that typically plans merchandise drops well in advance. (Zara’s operations are supported by an in-house technology product team that uses  Netflix as a measuring stick for both consumer-facing and back-of-house innovations, including a mock fulfillment center floor set up to study the movements of a box-moving robot.)

To appease Japan Fair Trade Commission, Apple agreed to relax its anti-steering rules for Reader apps globally. What it means is that the likes of Spotify and Netflix should be able to sell digital goods to consumers without paying commission to Apple by adding a link to an outside webpage. Historically, Apple was vehemently against this, but the regulatory pressure has been piling up around the world so I guess this is Apple’s pre-emptive action to hopefully get some relief. I have seen some developers skeptical of how this change in policy will actually pan out. I mean, they have reasons to, but given the resources and clout at Apple’s disposal, this is a great step for developers. For consumers, this remains to be seen. One of the selling points of the App Store is that consumers feel safe whenever they make a purchase. Since Reader apps can now direct consumers to outside the App Store, it will depend on who will make the determination as to which app can qualify for the new policy. There remains a possibility that some developers with a harmful agenda can camouflage their app as a Reader App and commit fraud.

Apple Plans Blood-Pressure Measure, Wrist Thermometer in Apple Watch. Apple’s positioning of the Apple Watch is very smart. It’s not trying to compete with normal watches whose main function is to tell time or luxury watches whose main value is the bragging rights. By focusing on the watch wearers’ health, Apple sticks to its core value of providing hardware that is personal to consumers and its strengths, mainly the combination of hardware & software as well as its ecosystem.

How Disney and Scarlett Johansson Reached the Point of No Return. The legal debacle with Scarlett Johansson is unfortunate and worrying as it foreshadows what could be in store for Disney in the future if they didn’t learn from this lesson. According to the article, it could have been avoided, yet here we are. Plus, the pandemic, the interconnectedness of Marvel storylines, the pressure on the bottom line and the priority status imposed on Disney+ make release distribution a delicate matter. While Black Widow brought in $60 million in extra revenue and profit from the Premier Access, Kevin Feige, the Marvel boss, wasn’t happy about it. Putting “Black Widow” on Disney+ conflicted with Mr. Feige’s tiered approach—creating TV shows that complement movies on the big screen. He resisted plans for the movie’s simultaneous release, in part because he didn’t like the idea of having one of Marvel’s few female-driven movies demoted to the at-home streaming service, said people familiar with his thinking.

Other stuff I found interesting

Indonesia, More Majestic Than Ever by Boat. I have never been to Indonesia, but I’d love to. And of course, by boat, if possible.

These charts show which states will get the most money from Biden’s infrastructure bill. Regardless of the criticisms of this bill, I am pleased to see more investments in the embarrassing and decaying infrastructure in this country.

Can ‘smart thinking’ books really give you the edge? Makes you really think about it

Stats that may interest you

Vietnam saw $16 billion in remittance in 2020

52% of young adults in America lived with parents in 2020. The figure jumped to 71% for people aged 18 – 24

Cash accounted for 78% of transactions at Point of Sale in the EU in 2020

YouTube Music hit 50 million subscribers, up from 30 million reported in October 2020

Weekly reading – 28th August 2021

What I wrote last week

My review of three books: 1/ Stray reflections; 2/ An ugly truth and 3/ Obviously awesome

Business

Facebook says post that cast doubt on covid-19 vaccine was most popular on the platform from January through March. The fact that this article was published on a Saturday means that Facebook doesn’t want too many people to see it. I honestly can see the bull case for Facebook. However, it will be remiss to not mention the monumental challenge of content moderation that the company has to face. Because when false information runs rampage on its platforms, it may affect the engagement of users; which in turn can adversely affect advertising that is Facebook’s bread and butter.

Why You Can’t Find Everything You Want at Grocery Stores. Retailers are suffering from supply shortages; which is exacerbated by higher-than-expected demand. But if these hiccups are overcome, it means that there will be a growing retail segment in the coming months and by extension, likely, a healthy economy.

Diem: A Dream Deferred? Facebook has a lot going to their advantage: almost limitless resources, four of the most popular social networks in the world, 1/3 of the global population are its users, a money printing machine that is growing at a scary clip. But there are a couple of challenges that Facebook will have a hard time to overcome. First, it’s content moderation. Should I say: content moderation without pissing off anybody. As you can see, the task sounds almost impossible. When you moderate content by people with vastly different ideologies, you are almost certain to upset somebody. Facebook doesn’t have the luxury of having upset users or lawmakers. Hence, it’s not a problem that Facebook will easily solve. Second, public trust. The company has been around for almost 20 years and it has not garnered a lot of trust. As long as it continues to rely on advertising, capturing data and more importantly be embroiled in misinformation, the public trust will likely continue to evade them. As the article from Coindesk pointed out, trust is paramount in the payments/finance world. How on Earth would Facebook succeed in it?

The Digital Payment Giant That Adds Up. Merchants are going down the omni-channel route that allows shoppers to shop in multiple ways. This will be the key to Adyen’s growth. I like the fact that they prefer building in-house and maintaining the one-ness of their platform to acquiring capabilities from other companies through M&A and bundling different tech stacks into one. Working at a company that suffers from systems not talking to each other, I know first-hand how that could become a significant problem in no time. In addition, I really look forward to Adyen coming to the U.S with a banking license. I am not sure the folks at Marqeta share my enthusiasm.

Buying a bank turned LendingClub around. Now the fintech industry is watching. It requires a lot of work and preparation to get a banking license. The benefits of owning a charter; however, include less dependency and more control over your own fate, margin and operations.

What I found interesting

Inside Afghanistan’s cryptocurrency underground as the country plunges into turmoil. One can argue that cryptocurrency can be a savior in crises like what is going on in Afghanistan. The thing is that if something requires there to be a crisis to drive adoption, I am not sure that something is as good or revolutionary as some may think.

An immense mystery older than Stonehenge. It’s profoundly impressive to me that prehistoric people could transport stones that weighed tons to the top of a hill 6000 years ago. Think about that for a second. They must not have had all the tools that we came up with up hundreds of years later. It’s just extraordinary. If I ever have enough money and time, Gobekli Tepe, Machu Picchu, Egypt and Greece are where I wish to go.

Bigger vehicles are directly resulting in more deaths of people walking. Take a trip to Europe and you’ll see how absurdly big vehicles in the U.S are compared to those in Europe. And the implications aren’t necessarily positive. I’d argue that it’s considerably better to have smaller vehicles or fewer vehicles on the roads.

European Sleeper Trains Make a Comeback. I really wish that Americans would share the same enthusiasm about travelling by train as Europeans do. Personally, I enjoyed the train ride from Chicago to Omaha. If there were a reliable Wifi, I’d take trains every single time over flights and especially driving.

Apparently, there is a 2021 Global Crypto Adoption Index and Vietnam is ranked as #1. Below are the two reasons that experts say are why Vietnam’s adoption is so high. I am not sure how I should feel about it. On one hand, this index is not negative in nature. Hence, the #1 ranking certainly feels good. On the other hand, the alleged reason that young people don’t know what to do with ETF is alarming. That implies a lack of understanding in investing and a tendency to gamble in cryptocurrencies.

“We heard from experts that people in Vietnam have a history of gambling, and the young, tech-savvy people don’t have much to do with their funds in terms of investing in a traditional ETF, both of which drive crypto adoption,”

Source: CNBC

Stats that may interest you

In 2019, 70% of music in Japan was consumed via CDs

eCommerce made up 13.3% of total retail sales in the U.S in the 2nd quarter of 2021, indicating that the Covid effect has tapered off

46% of retail BNPL shoppers didn’t use their credit cards because they wanted to avoid high interest rates

The U.S online lottery ticket market will reach $2.3 billion by the end of 2021, a 25% YoY growth

Weekly reading – 21st August 2021

What I wrote last week

I came across a couple of posts from Afghanistan veterans on their experience there

My notes from the 2021 Debit Issuer Study

My thoughts on recent developments from PayPal

Business

Inside HBO Max’s Scramble to Fix Its Glitchy App. In the streaming world, the user experience is critical in keeping customers engaged and the churn down. HBO Max fumbled the ball terribly with their confusing brands, products and messaging in the beginning. I don’t think I am a dumbass, but I didn’t even know the difference between HBO, HBO Max or HBO Now. Then, they out together an app that was littered with bugs as summarized in the article. The reason, as reported, is that they merged the two legacy apps that were built for different purposes. One was built to offer ad-free content while the other featured commercials. It is not a surprise that bugs happened. What is a surprise is that an institution like HBO or Warner Media let it happen in the first place.

Amazon Plans to Open Large Retail Locations Akin to Department Stores. This move may be Amazon’s attempt to copy what other retailers like Target do. They fulfill online orders from their network of stores. It takes a lot of stores to cover the country and logistics management to figure out the inventory and the actual shipping. We’ll see.

Walmart’s e-commerce business is set to hit $75B in sales this year

Paying With a Credit Card? That’s Going to Cost You. If this trend is legit and merchants continue with the surcharge (which is not an uncommon practice in Vietnam), it and the growing popularity of BNPL will have adverse effect on credit card spend. Remember: BNPL is mostly funded through debit cards

How the Apple lobbying machine took on Georgia, and won. Apple is my largest position. However, I found the whole lobbying issue troubling. It’s nothing different from companies writing bills and lawmakers enacting such bills.

What I found interesting

‘Likes’ and ‘shares’ teach people to express more outrage online

China Passes One of the World’s Strictest Data-Privacy Laws

Another excellent post by Morgan Housel. In light of what happened in Afghanistan today, I can’t help but think about what small events in the past could have prevented this war in the beginning and what would happen to the people of Afghanistan in the future after the U.S pulled out

One is to base your predictions on how people behave vs. specific events. Predicting what the world will look like in, say, 2050, is just impossible. But predicting that people will still respond to greed, fear, opportunity, exploitation, risk, uncertainty, tribal affiliations and social persuasion in the same way is a bet I’d take.

Another – made so starkly in the last year and a half – is that no matter what the world looks like today, and what seems obvious today, everything can change tomorrow because of some tiny accident no one’s thinking about. Events, like money, compound. And the central feature of compounding is that it’s never intuitive how big something can grow from a small beginning.

Source: Collaborative Fund

Stats that may interest you

50% of surveyed Americans have no problem with false information online

Target’s Circle Rewards Program reaches 100 million subscribers

Weekly reading – 14th August 2021

What I wrote last week

I wrote about Square’s acquisition of Afterpay

Business

In the Streaming Wars, Sony Stands on the Sidelines. I think for the short term, it makes sense for Sony to adopt a zig-when-everyone-else-zags strategy as building a streaming service is not Sony’s strength. Of course, no strategy is risk-free. If the big streamers can create content on their own and don’t need Sony any more, the iconic Japanese firm will be in deep trouble. It is a big bet from Sony, but as the market stands today, I don’t think the company has too many options left.

Rappi’s poor service opens the door for competition, but users aren’t leaving yet. Two things from this article struck me: 1/ even though they were horrible incidents with services and customer support, there hasn’t been a customer exodus from Rappi yet. 2/ RappiPay is the most profitable and fastest growing part of the company. If the challenging delivery gig doesn’t work out for the company, it can pivot to be a full blown fintech.

Amazon’s $1.5 billion air cargo hub starts operations. In the arms race to compete with other retailers or eCommerce platforms like Shopify, solidifying or even adding to their advantage in infrastructure and last-mile delivery is the right move for Amazon. Just look at the price tag of the cargo hub. If anyone wants to compete with Amazon on this front, that’s at least what they should expect to spend. And it’s a tall order for many companies. With that being said, having another cargo hub doesn’t guarantee success, so it will be interesting to follow this market in the near future.

Excerpt: How Google bought Android—according to folks in the room. The founders of Google, especially Larry, do seem to have excellent foresight in acquiring Android. I look forward to this book.

What I found interesting

John Gruber’s excellent post on Apple’s new “Child Safety” measures. The nuances and details laid out by John are very enlightening and important in understanding what Apple is doing here.

Reality has a surprising amount of detail. The devil is in the details

Archaeologists discover 4,000-year-old ancient city in Iraqi desert. Imagine you see now something that existed 4,000 years ago. That must be a surreal feeling.

Believing In Yourself is Overrated. This is Better. I am not really a fan of the “fake it till you make it” mentality. So I am very glad that Ryan Holiday wrote about it since he is far more eloquent than I can ever be. In short, the more effort you put in something, the more confident you are in yourself

Stats that may interest you

Momo has 60% of Vietnam’s mobile payments market

Amazon has 11% of the U.S ads market

Amazon spent $6.2 billion on video and music content in the first 6 months of 2021. To put it in perspective, Netflix spent a tad lower than $8 billion on content in the same period

Weekly reading – 7th August 2021

What I wrote last week

I wrote about why credit card issuers should try to get into consumer digital wallets

Business

Pearson bets on direct-to-student subscription shift. I am never a fan of publishers like Pearson for a simple reason: books are murderously expensive in the U.S. In addition to the sky-high tuition fees, students have to pay easily a few hundred dollars or a thousand dollars a semester for books alone. There are ways to go around that challenge, but sometimes these guys work with professors and students are left with no choice, but to make a big splash on books. Pearson seems to be aware of the unsustainability of their current model. By going straight to students, they can establish a direct relationship and avoid relying too much on educational institutions. $15/month means students can pay $75/semester for access to all the books required. However, there are other publishers on the market. If students must get books from multiple sources, it can dilute the appeal of this new service from Pearson. I really look forward to seeing how this strategic move will pan out in the future.

Apple Is Now an Antifragile Company. A nice article on how shrewd Apple is when it comes to securing its chip supply while other struggle. I feel that not enough has been said about what a great job Apple’s management team has been doing. It takes a great deal of discipline to use billions of cash wisely quarter after quarter. The executives also have the foresight to develop their own chip M1 to keep more control of their fate and avoid being in the mercy of Intel. Additionally, the decision to make forward orders in bulk in advance has proven to superior. While others cite the struggle with chip supply as the reason for their relative subdued performance, Apple still posted strong results.

Music labels split over Spotify’s push to promote songs for lower royalties. I haven’t used the Discovery Mode yet, so I don’t know what it is like. I did have a less than stellar experience with the Spotify app; which I haven’t used for a long time. It’s not user-friendly at all. And if what is reported in the article is true, as a shareholder, I’ll be very disappointed. Sacrificing the user experience and the integrity of an algorithm like that over lower royalties and higher margin isn’t in the long-term best interest for the company, in my view.

Disney, WarnerMedia and NBCUniversal wrestle with balancing the value of cable networks and streaming services. I don’t think streaming is the best place for a newcomer with one cash cow to enter. The likes of Apple can arrive late at the part and compete because they have enormous resources and streaming isn’t their top 5 or 7 revenue stream.

The Verge interview with YouTube Chief Product Officer.

5 charts show Amazon’s growing logistics network as it puts inventory closer to consumers. Some great data and information, but I don’t think Amazon is playing the same game as Walmart. Operating huge stores with a lot of SKUs is not Amazon’s strength, at least compared to Walmart, for now. I don’t think it’s wise for Amazon to get into that arena. What I think Amazon is plowing money into is the last mile delivery. If groceries are what needs delivering, they are building out Amazon Go shops and can leverage Whole Foods footprint. However, if we are talking about non-grocery items, then Amazon is taking a very different approach to Walmart and staying at what Amazon has been great at: an online store with great customer services and unrivaled last-mile delivery network

What I found interesting

U.S. generates more plastic trash than any other nation. The amount of plastic bags in supermarkets in the U.S such as Target or Walmart staggered me. I don’t understand why they don’t implement policies that encourage shoppers to bring their own bags or boxes like Aldi does. At Aldi, you have to bring your own bag unless you are willing to pay for one every single time. I don’t think shoppers are bothered by that. If the likes of Target and Walmart can join the fight against unnecessary use of plastic, it’ll be a huge step forward given the reach and size of these retailers.

London’s Crossrail Is a $21 Billion Test of Virtual Modeling. Technology is mind-blowing. So is human imagination

Stats that may interest you

Luggage sales are up more than 460% year over year (Q1 2021)  on Amazon while swimwear sales have more than doubled year over year as of March and April 2021

From 2006 to 2021 per-capita volume consumption of juice and nectars in the U.S. declined 36%

Weekly reading – 31st July 2021

What I wrote last week

I wrote down a few thoughts on Netflix

Business

A great Business Breakdown episode on Petco. If you are not too familiar with the company or the pet supply industry, it’ll be worth your one hour.

Singapore Airlines Doubles Down on the E-Commerce Trend by Carriers. “In November, Singapore Airlines [SIA] CEO Choon Phong Goh described Pelago during an investor call as “a brand new business that’s been set up within SIA” with a goal of “extending the SIA experience from the skies to the ground. While airlines have upsold passengers on extras for years, what’s new is the hands-on approach to sourcing and marketing the content instead of using affiliate deals.”

Beijing orders Tencent to end exclusive music licensing deals in a first for the country. I am very reluctant to invest in Chinese companies precisely because of this.

Finance Chiefs Are Still Trying to Replace Excel With New Tools. Excel is a very powerful tool and we are not completely working without it at least in the next two decades. However, the over-reliance on Excel is damaging in a sense that it prevents companies from upgrading internal tools that can provide better collaboration and data interoperability. I am speaking from experience because that’s one of my personal frustrations at work.

How Gap’s new loyalty program ties together its multiple brands. I visited both Gap and Banana Republic recently. I couldn’t recall a nice experience in terms of finding out information about the rewards program. I suspect it is due to the staggered roll-out of the new rewards program and Omaha, Nebraska isn’t high on the priority list. Nonetheless, consolidating multiple rewards programs, making it simple for customer to understand and offering real values sound like music to my ear. Their offerings are still not best in class. For their sake, I hope they continue to upgrade the rewards benefits.

Reebok got the better of Nike 30 years ago but fell into oblivion. This is the story of how Rebook’s fall from grace happened. The article put a lot of emphasis on Adidas’ mismanagement of Reebook. That happens all the time. Executives promise the sun and moon in M&A, but failures are more common than many care to admit. I don’t know whether without Adidas, Reebok would have still been able to compete with Nike. That’s far from certain. Anyway, another business case study that many can draw lessons from.

Apple makes its M1 Mac case to enterprises. One of my bull cases for Apple is its potential in the enterprise market. Apple’s hardware is well-positioned to really attack this. Up to now, I don’t see a whole lot reported on its market share or Apple’s concrete strategy to go into this space. There is a lot of TAM to tap into here.

A nice profile piece on Bessemer Venture Partners. I like them because they seem very grounded, thoughtful and prudent with other people’s money. There are some firms that, in my opinion, tend to be too optimistic, to the point of being delusional in some deals. Plus, Bessemer publishes their investment memos that I like to read a lot. You can still be wildly successful while being different from the majority.

What I found interesting

Finland ends homelessness and provides shelter for all in need. Some food for thoughts for folks in America: is having the richest companies and individuals along side with grave inequality represented by a lot of homeless people better than a bit less wealth yet greater equality? As a reminder, Finland’s GDP Per Capita is higher than America’s

World’s cheapest energy storage will be an iron-air battery. The startup claimed that their revolutionary battery would cost only 1/10 as much as lithium batteries do. If that’s true, it will be huge.

Beneath Istanbul, Archaeologists Explore An Ancient City’s Byzantine Basements

What growing avocados in Sicily tells us about climate change and the future of food. Simply both fascinating and scary at the same time, if you ask me

Stats that may interest you

In 2020, craft brewers in the U.S produced around 23.1 million barrels, the lowest quantity in the last five years

Apple TV+ has 3% market share

Weekly reading – 24th July 2021

What I wrote last week

My review of From Junk To Gold

Business

An excerpt from an upcoming book on what went wrong with WeWork. This should be talked about in business schools as one of the examples of why egos and delusional ambition can lead to disasters. These guys are richer than many many people on Earth and have more money than most folks can earn in a lifetime. Nonetheless, it’s staggering to see their silly actions.

The Verge has an interesting interview with Mark Zuckerberg. The interview touches upon a lot of things but there are two that I want to quickly highlight here. Mark talks about how people shouldn’t expect that there is no transgression on his company’s platforms. That is always bound to happen. Instead, what people should expect is that Facebook is there to police the platform when it happens and puts in place integrity systems to deter bad demeanor. Secondly, I think the idea of interoperability is great, but not 100% perfect. That’s just how it is in life. There are always advantages and disadvantages to everything. Apple’s business model doesn’t involve interoperability that these guys advocate for, but in terms of net benefits to the society, has Apple been a positive force? I’d say so.

If you are not familiar with BNPL market, here is a good BNPL industry report

FICO Score’s Hold on the Credit Market Is Slipping. Not great news for the parent company of FICO score.

Grab taps Adyen to extend BNPL offering across Southeast Asia

What I found interesting

Master’s Degrees Are the Second Biggest Scam in Higher Education. My experience is that Master’s Degrees often still hold values because hiring companies value them. There are some exceptional programs that are worth the investment, but many aren’t. It’s crazy to think that so many people got into a huge debt to get something that is far less valuable

Giant tsunami from dino-killing asteroid impact revealed in fossilized ‘megaripples’. I can’t even bring myself to imagine what a 1-mile high tsunami looks like. It’s simply impossibly terrifying.

Lost world revealed by human, Neanderthal relics washed up on North Sea beaches

Stats that may interest you

20% of Americans think the U.S government uses Covid-vaccines to plant a microchip in their bodies. Use this info however you want

Lifetime emissions for an EV in Europe are between 66 and 69 percent lower compared to that of a gas-guzzling vehicle, the analysis found. In the US, an EV produces between 60 to 68 percent fewer emissions. In China, which uses more coal, an EV results in between 37 to 45 percent fewer emissions. In India, it’s between 19 to 34 percent lower.

Source: The Verge