Weekly reading – 22nd April 2023

What I wrote last week

Make Something Wonderful – Steve Jobs In His Own Words

Apple Savings


($) The Unexpected Reason Apple Is Dominating the U.S. Smartphone Market. It’s very hard to pinpoint one reason why Apple dominates. It’s a list of factors. But I like the fact that the article mentioned how Apple worked to retain customers within its walled garden. Support old phones, retain customers, milk service revenue and incentivize customers to upgrade with new capabilities. The company understands that once a customer leaves the ecosystem, they may need to wait 1-2 years before they can get that customer back. It’d be lost revenue.

Tim Cook on shaping the future of Apple. One of the best profiles that I have read on Tim Cook. Folks are so obsessed with Steve Jobs (rightfully so) that they don’t realize how important and great Tim Cook is to Apple. As a shareholder myself, I am not ready for the day when this man decides to retire. It will be a big blow to the company and shareholders. Not only because of his world-class management skills, but also because of the person he is and the values he brings.

($) The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire. An interesting read on succession plan and parenting in business. It makes sense that Bernard Arnault gives his children assignments at some companies in his empire and closely watches how they are doing. After all, if they can’t run a child company, how would they run an entire empire? I also find it inspiring how Bernard strives to be rational and still wants to learn at an old age. According to the article, he once pulled out a mathematics textbook on a plane to refresh his memory. He also said this about the education that he received from Polytechnique: “It is above all a program that gives you a rational mindset, which allows you to analyze a situation or a problem very quickly”.

Ford F-150 Lightning fire footage highlights a growing EV risk. Even though this is a freak incident, there is no denying that the authorities and manufacturers must address the safety issues while pushing the adoption of EVs.

($) When Apple Comes Calling, ‘It’s the Kiss of Death’. I understand that business is cut-throat. Any company has to find a way to beat the competition to avoid being eaten. It sounds unfair that Apple uses its limitless resources to lure talents to their home turf. Don’t get me wrong, I don’t like the sound of that either, but from a legal perspective, how can it be ruled illegal? Should there be a law that prohibits big companies from recruiting from smaller ones? It doesn’t seem feasible or sensible to me either. I; however, do think that lawmakers should look into whether Apple abuses its position as the platform owner to access others’ technologies to gain unfair advantage or even violate copyrights.

($) Will Apple take a big bite out of the banks?A former Apple executive says the company’s cost of acquiring new customers for Apple Card was “laughably lower than every other credit card company” because it had so many distribution channels. Apple also has another, longer-term advantage of iPhone user data — which could potentially be used to assess credit risk more comprehensively than a traditional Fico score.” The report confirmed some of the things that I long suspected. The marketing appeal of Apple and the distribution channels at their disposal make their cost per account competitive. In addition, even though online credit card applications are riskier than pre-approved direct mail ones with data from the bureaus, Apple has an advantage that they can leverage first-party data to battle fraud and lower risks. Much as I like to conjecture stuff about business, I don’t know if I believe Apple will bypass banks and the networks.

Other stuff I find interesting

How Tokyo Became an Anti-Car Paradise. Tokyo puts down a lot of deterrents to discourage citizens to own cars. Need to own a parking lot approved by the local police to buy a car? Checked! An expensive inspection every two years that gets more expensive over time? Checked! Have no street parking or make it super pricey? Checked! Make the streets unfriendly to cars? Checked as well! Just a fascinating look at a fascinating city.

Purdue University goes all-in on Apple Wallet student IDs, will no longer issue physical cards. Apple is low-key and patiently making the Wallet app an indispensable element of their products. Consumers can use the apps to hold their driver license, state ID, student ID, many kinds of passes and tickets and cards. Soon, the Wallet app will replace physical wallets with more convenience and infinitely more capacity.

Why Does a Plastic-Wrapped Turkey Sandwich Cost $15 at the Airport? It’s infuriating that an agency charged with controlling prices at airports and bound by laws to be transparent does neither of those things. Great job by Hell Gate to raise this issue and doggedly hold the Port Authority accountable.

($) Just 2 Minutes of Walking After a Meal Is Surprisingly Good for You. “All seven studies showed that just a few minutes of light-intensity walking after a meal were enough to significantly improve blood sugar levels compared to, say, sitting at a desk or plopping down on the couch. When participants went for a short walk, their blood sugar levels rose and fell more gradually. Although light walking at any time is good for your health, a short walk within 60 to 90 minutes of eating a meal can be especially useful in minimizing blood sugar spikes, as that is when blood sugar levels tend to peak.


26% of alcohol buyers purchase beer, wine and spirits

Alcohol saw 6.3% increase in prices due to inflation, half of the inflation in food & beverages in total

Better-for-you beverage (low ABV) totalled around $8.3 billion in sales in the US in 2022

Apple Savings

Per the company’s press release

Starting today, Apple Card users can choose to grow their Daily Cash rewards with a Savings account from Goldman Sachs, which offers a high-yield APY of 4.15 percent. — a rate that’s more than 10 times the national average. With no fees, no minimum deposits, and no minimum balance requirements, users can easily set up and manage their Savings account directly from Apple Card in Wallet.

The service’s APY attracted a lot of headlines and rightfully so. At 4.15% with no minimum, this APY dwarfs everything that incumbent banks have to offer (less than 0.1%), making Apple Savings an enticing investment option to consumers. But Apple Savings is more than just a high-yield savings account:

  • The sign-up is very fast and smooth. It took me less than a minute to create an account and transfer funds in. I am not confident the same can be said about the process at other banks or Treasury Direct, where you buy Treasury Bonds.
  • While several fintech startups offer high-interest savings accounts, they do not have the brand name and recognition as Apple. Trust me, that’s a real issue in consumers’ mind. They want their money safe. Fearing that fintech startups may not be around in the near future deters consumers from banking with them.

As interest rates are forecast to stay elevated for a while, banks now have a choice: keep their insultingly low APY and watch deposits go to Apple Savings or raise their interest rates accordingly. Given the appeal of Apple and the sentiment I have seen on Twitter, I won’t be surprised if tens of millions of dollars have already been parked in Apple Savings in the last two days. I hope that a few months from now, WSJ or other business news outlets will report some juicy numbers from “people with knowledge of the matter” because I don’t expect to hear truthful disclosures on this issue from bank executives. But if we see an increase in rates from the banks a few weeks from now, that means the banks are bleeding deposits meaningfully.

What’s in it for Apple?

The answer is: another Apple-style banking service for the ecosystem. To apply for and use Apple Savings, users must have the Wallet app and own an Apple Card. In other words, Apple Savings users are already Apple power users and they just sink a little bit deeper into the ecosystem. That’s exactly what Apple wants. The deeper the engagement, the more unlikely someone will leave the Apple orbit.

Apple is known for offering nice user experience and easy-to-understand/use products/services. This is no exception. From the application process in the Wallet app to the way that deposits can be made and withdrawn, Apple Savings looks to be another on-brand service from the iconic company.

Once a Savings account is set up, all future Daily Cash earned by the user will be automatically deposited into the account. The Daily Cash destination can also be changed at any time, and there’s no limit on how much Daily Cash users can earn. To build on their savings even further, users can deposit additional funds into their Savings account through a linked bank account, or from their Apple Cash balance.

Users will also have access to an easy-to-use Savings dashboard in Wallet, where they can conveniently track their account balance and interest earned over time. Users can also withdraw funds at any time through the Savings dashboard by transferring them to a linked bank account or to their Apple Cash card, with no fees.4

All of this happens without Apple going through the pain to be a bank. That’s just smart business. It’s not in Apple’s DNA to be a bank. It’s not their strength. It’s not what they do. Plus, standing up a bank and operating one is no mean feat. In addition to normal banking operations, there requires a lot of work to battle fraud and stay compliant with numerous regulations. The partnership with Goldman Sachs saves Apple from those headaches and expenses.

What’s in it for Goldman Sachs?

To be able to make loans, a bank must prove that they have the funds to do so. So the bank either has to accumulate deposits on their own or borrow from the Feds at a cost. As interest rates go up, the cost, called Cost of Funds, goes up as well.

With Apple Savings, consumer deposits are parked on Goldman Sachs’ balance sheet. They pay a high APY right now, but it’s much lower than the interest rates that they impose on their loans to others. For context, while Apple Savings pays 4.15%, Apple Card charges interest rates that range from 15.74% to 26.74%. Goldman is certainly interested in that delta in interest and wants to dole out as many loans as possible. To do that, they need more deposits and that’s where Apple Savings comes in. It’s banking 101.

In the account agreement document, there is a provision allowing Goldman Sachs to change APY at any time. When the Fed lowers their rates, don’t expect the APY of Apple Savings to stay at 4.15%. Even when savings interest rates drop, I think Goldman Sachs will still benefit from this service. Here’s why:

Anyone wishing to get an Apple Savings account must own an Apple Card, which yields 1-3% rewards, depending on how and where transactions take place. Apple Card rewards are shown in Apple Daily Cash, which accrues absolutely NO interest. Consumers who want to earn more interest will have to transfer the funds to their desired destination. The process requires two things: a couple of days and a fund that is sizeable enough. Would you come in your Wallet app once a week and transfer $2.25 there to your checking account? Yeah, me neither.

In the press release two days ago, Apple said that any future Daily Cash will be automatically deposited in Apple Savings account, unless users intentionally change the setting. As mentioned above, I don’t think consumers will frequently take funds out of the Apple ecosystem. Even if an individual customer has a small fund, ten of thousands of users will make a significant contribution to Goldman Sachs’ deposits and balance sheet.

Furthermore, Apple Savings is also an acquisition play for Goldman Sachs and Apple. Making the Savings application contingent on owning an Apple Card will drive the credit card sign-ups. Once in a while, I see Apple run a bonus offer of $75 for new Card users. So, you can see that from this perspective, the benefit that Apple Savings brings is not trivial.

Goldman Sachs recently had to scale down their consumer banking ambition. Overnight growth usually comes with outrageous expenses. And the plan to venture into retail banking came at probably the worst possible time. But with patience and the right execution, the partnership with Apple can help Goldman build a consumer brand to replace the distant, cold-blooded corporate image that the investment bank is associated with. After all, marketing is the strength of only one company in this partnership and it’s not Goldman’s.

That’s why partnering with the ultimate consumer brand in Apple makes sense. Users of Apple Card and Apple Savings will grow to associate Goldman as a consumer bank more. On the flip side of it, Goldman Sachs must also pull their marketing weight and not rely too much on Apple. The risk of being overshadowed by Apple is palpable. And the bank must also learn how to do effective consumer marketing on their own. It’s better to own a capability than to borrow it.

Make Something Wonderful – Steve Jobs In His Own Words

The new Steve Jobs book called “Make Something Wonderful – Steve Jobs In His Own Words” was dropped last week. The book is a wonderful collection of photos of the man as well as emails, quotes and speeches that he delivered over the years, all nicely assembled and delivered by the Steve Jobs Archive. Interested readers can order for free on iBooks or head to stevejobsarchive.com.

I am always a fan of Steve Jobs for what he achieved, his wisdom and the clarity of his thinking. As a businessman, he founded Apple with Steve Wozniak and achieved incredible success together before Jobs got fired from his own company. Undeterred, he founded Next and Pixar. These companies’ own triumph fatefully led to Steve returning to the top job at Apple. At the time, Apple was on the brink of collapse. Steve not only saved the company, but also laid a foundation for the unprecedented success that Apple would have, even after his death. Some of the business lessons mentioned in the book are:

  • Hire people that are smarter than you. In fact, the higher up you are on a corporate ladder, the more important this task is.
  • Manage by values. In other words, surround yourself with people who want to achieve the same thing as you and get the hell out of their way. Otherwise, why would you hire smart people?
  • Be relentless about making products as good as they can be.
  • Even in the corporate setting, communicate from the inside out. Communicate your values

I know that some folks decried his decision to abandon one of his children earlier in her life. He deserved the criticism. But nobody is perfect and even if he made a horrible mistake, we can still take lessons from one of the best thinkers and businessmen in history. Here are a few excerpts that stood out to me:

“Just a bunch of little things: wine labels, paintings in galleries. Just simple things. Not anything real profound, just lots and lots of little things. I don’t think my taste in aesthetics is that much different than a lot of other people’s. The difference is that I just get to be really stubborn about making things as good as we all know they can be. That’s the only difference.”

“Well, things get more refined as you make mistakes. I’ve had a chance to make a lot of mistakes. Your aesthetics get better as you make mistakes. But the real big thing is: if you’re going to make something, it doesn’t take any more energy—and rarely does it take more money—to make it really great. All it takes is a little more time. Not that much more. And a willingness to do so, a willingness to persevere until it’s really great.”

“So to be a creative person, you need to “feed” or “invest” in yourself by exploring uncharted paths that are outside the realm of your past experience. Seek out new dimensions of yourself—especially those that carry a romantic scent.

But one has no way of knowing which of these paths will lead anywhere in advance. That’s the wonderful thing about it, in a way. The only thing one can do is to believe that some of what you follow with your heart will indeed come back to make your life much richer. And it will. And you will gain an ever firmer trust in your instincts and intuition.”

“Think of your life as a rainbow arcing across the horizon of this world. You appear, have a chance to blaze in the sky, then you disappear.

The two endpoints of everyone’s rainbow are birth and death. We all experience both completely alone. And yet, most people of your age have not thought about these events very much, much less even seen them in others. How many of you have seen the birth of another human? It is a miracle. And how many of you have witnessed the death of a human? It is a mystery beyond our comprehension. No human alive knows what happens to “us” upon or after our death. Some believe this, others that, but no one really knows at all.

Again, most people of your age have not thought about these events very much, and it’s as if we shelter you from them, afraid that the thought of mortality will somehow wound you. For me it’s the opposite: to know my arc will fall makes me want to blaze while I am in the sky. Not for others, but for myself, for the trail I know I am leaving.”

“I grow little of the food I eat, and of the little I do grow I did not breed or perfect the seeds.

I do not make any of my own clothing.

I speak a language I did not invent or refine.

I did not discover the mathematics I use.

I am protected by freedoms and laws I did not conceive of or legislate, and do not enforce or adjudicate.

I am moved by music I did not create myself.

When I needed medical attention, I was helpless to help myself survive.

I did not invent the transistor, the microprocessor, object oriented programming, or most of the technology I work with.

I love and admire my species, living and dead, and am totally dependent on them for my life and well being.”

“He called it management by values. What that means is you find people that want the same things you want, and then just get the hell out of their way. The way I describe it is, let’s say we’re all going to take a trip together. The first thing is to figure out where we all want to go. The worst thing is if we all decide we want to go to different places. You can never manage it. [Pointing] You want to go to New Orleans. You want to go somewhere else. I want to go to San Francisco. You want to go to San Diego.”

“And so, what happened at Apple was that Apple’s goals used to be to make the best personal computers in the world. And then the second goal was to make a profit so we could keep on doing number one. Right?

What happened was that, for a time, those got reversed: “We want to make a bunch of money, and so, OK, to do that, we’re going to have to make some good personal computers.” But it didn’t work. It never works. And so things start to fall apart.

Those subtle changes in values can mean everything. The higher up in the organization they are, the more pervasive influence they have. So if you want to preserve something, what you want to do is have a good enough place to go, that’s got a long enough focal length that it will survive over time, that everybody agrees on—and not codify how you’re going to get there. So that each generation can argue anew about the best way to get to San Diego, and they’re not just taking your footsteps on how you got there. You see what I’m saying? But all the people want to go to the[…]”

“Again, you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path. And that will make all the difference.”

“You never achieve what you want without falling on your face a few times.”

“We are what we repeatedly do. Excellence, then, is not an act, but a habit. – Aristotle”

Weekly reading – 15th April 2023

What I wrote last week

3 CEOs that gain truths on the ground by being hands-on



Meta’s job cuts are gutting customer service, leaving influencers and businesses with nobody to call. Content creators and influences become increasingly important to platforms such as TikTok, Reels or YouTube Short. Yet, Facebook dismissed critical customer support staff during recent layoffs, leaving this clientele’s needs and cry for help unattended. It’s even more bizarre when WSJ reported that there are many recruiters at the company getting paid more than $190,000 a year for absolutely no output.

Before embarking on a brand redesign, consider the following. As the old adage goes, if it is not broken, don’t fix it.

Meta Verified requires users to use their legal names. What a mess! Facebook has a lot of immigrant employees. That’s why I am surprised that nobody tells the ones in charge that it’s common for immigrants to have their real names mixed up when they arrive in the US. Specifically, middle names become first names and first names become middle names. How would these immigrants feel using their Facebook to interact with friends and family back home? And there is a privacy concern for those that want their identify protected. Plus, why on Earth would anyone pay for Meta Verified again?

CEO Andy Jassy’s 2022 Letter to Shareholders. Some good nuggets on Amazon, how it’s being run and key themes such as AI, supply chain, grocery and AWS

Basecamp wasted $300,000 on billboards in Boston. Kudos to DHH for being transparent about this and sharing their marketing lesson. It’s not common at all for companies to raise their hands and say that one of their marketing campaigns went wrong. In my experience, it happens at every company. The key is how each company reacts to the disappointment.

Other stuff I find interesting

($) American manufacturing jobs comeback. Companies are furiously investing in US based factories. Their goal is to control their destiny and be more responsive to changing consumer demands. To me, that makes sense. China is the factory of the world, but the relation between the two countries makes it too big a risk. The supply chain crisis in the last two years is still likely on the mind of executives. Factoring all the risks into the calculation, they must think that it’s a sensible gamble to manufacture in the US

Ben Affleck on ‘Air,’ New CEO Gig and Those Memes: “I Am Who I Am”. Quite an honest conversation with Ben Affleck. You learn a bit about the actor/director, but also the film industry.

($) A Barcode Unlocks Indonesia’s Billion-Dollar Informal Economy. “Indonesia is now a distant first place in Southeast Asia both in the use of e-wallets and QR payments. Indonesia’s young population and pervasive mobile-phone use helped QR become the perfect springboard for it to leave cash behind. That’s true at least in major cities. For the easternmost islands, central bank officers must brave seas and drive armored trucks for days to distribute cash. This year, they will give out about 3 trillion rupiah of new bills to 85 islands so people there can transact as old cash tends to tear or stain. Bank Indonesia expects broader QR use to reduce the need for their grueling cash journeys.”

($) The U.S. Cracked a $3.4 Billion Crypto Heist—and Bitcoin’s Anonymity. A fascinating tale of how law enforcement cracked a wire fraud case involving cryptocurrency


“Merchants paid $126.4 billion in processing fees for credit cards in 2022”

US residents use about 1.24% of their daily wages to consume power

The average monthly payment for a new car has soared to a record $777, nearly doubling from late 2019“. Absolutely insane.

Medicare drug negotiation provision would have saved the U.S. $26.5 billion

Digital ad revenue in the U.S. rose 10.8% year-over-year in 2022

Ad spend on TikTok in the US grew by 30% YoY in March 2023

Almost 19% of cars registered in 2022 are 8-11 years old. Source: WSJ


What is Visa+? How does it work?

A couple of days ago, Visa introduced a new service aimed to facilitate payments between different payment apps. Per the press release:

Visa announced it is partnering with PayPal and Venmo to pilot Visa+, an innovative service that aims to help individuals move money quickly and securely between different person-to-person (P2P) digital payment apps. Later this year, Venmo and PayPal users in the US will be able to start moving money seamlessly between the two platforms.

Visa+ will not require users to have a Visa card; instead, by setting up a personalized payment address linked to their Venmo or PayPal account, individuals using either app will be able to receive and send payments quickly and securely between the platforms.

As part of a joint effort to build interoperability across payment platforms, Visa partners DailyPay, i2c, TabaPay and Western Union, will also integrate Visa+ within their platforms. Through this collaboration, Visa+ will expand its reach and enable more use cases, including gig, creator and marketplace payouts. Participating digital wallets, neo-banks and other payment apps, reaching millions of US users, will be able to enable interoperability through Visa+.

This is how Visa+ works. Users of participating apps will see an option to set up their Visa+ paynames. These names will be unique and work across the Visa+ ecosystem. Let’s say: I pick Nebraskan2023 as my Visa+ payname on PayPal. My friends who are Venmo users can send money to me on PayPal from their Venmo accounts using that payname. On the other hand, I can send money to then from my PayPal account to their Venmo’s as well. My PayPal balance will reflect the money sent to me and by me. It’s that simple.

How Visa+ works
Source: Visa

From Visa perspective

In my opinion, it’s all about enabling more flows on Visa rails and making more money. When a small business disburses pay to its employees, it can take place on non-Visa rails, something that the network can usually do little about. With Visa+, they now can direct some of those flows back onto the Visa ecosystem. If a small business’ owner decides to pay workers from his PayPal balance or balance of his checking account at a neobank using Visa+, the payout will be on Visa rails. If a marketplace platform uses Visa+ to pay gig workers or content creators, that’ll be on Visa rails too. With names like Uber, AirBnb or TikTok, you can see the potential size of these flows. It can be hundreds of billions of dollars.

For the kind of transactions between payment apps, Visa charges the institution initiating transactions between $0.025 and $0.01 per transaction. In the beginning, it’s likely going to be immaterial to Visa’s bottom line, but who’s to say what it could be in the future when the service attracts more partners and is available in more countries? And like I said above, when Visa expands the use cases, their benefit can grow multifolds.

To make Visa+ work, the network needs to solve a chick-and-egg problem. Partners only join when they recognize the value that Visa+ brings to consumers. Consumers will only use the service when there is utility, especially beyond just exchanging money between payment apps. Take PayPal and Venmo as an example. These two platforms allow Visa+ users to use the funds on their PayPal or Venmo balance at the stores with PayPal or Venmo Debit Card or on a website through PayPal checkout. That’s extra utility that Power PayPal/Venmo users may like.

From partner perspective

For fintech platforms, it is really helpful to maintain and grow deposits. Take PayPal as an example. The more users maintain balance on their PayPal account, the more likely these users will use PayPal to transfer money or make payments. Plus, PayPal can earn interests on these deposits and incur lower expenses on transactions, compared to those facilitated through a debit or credit card.

For those that already signed up to partner with Visa, their intention is to use Visa+ to increase consumer balance and platform usage. For those that have not signed up yet, with notable exclusions including Cash App and Apple Wallet, the question becomes: is Visa+ a net benefit? Let’s pick on Cash App a little bit here. Becoming part of the new service means that Cash App power users will be less likely to sign up for PayPal. But using the same logic, participation also means that PayPal users will be less inclined to use Cash App. I don’t know which way this issue is going to go. But given Cash App’s popularity, their absence at the launch may mean that they considered joining Visa+ not beneficial enough.

From incumbent banks perspective

Given the way Visa+ works and how much payment apps want to keep money within their walled gardens, banks’ deposits will take a hit. Zelle is likely to be affected too. I doubt the impact will be sizeable at first, but bank executives may want to watch this space. The more value payment apps offer consumers and the bigger the Visa+ ecosystem, the bigger the hit to their deposits will be.

3 CEOs That Keep Their Hands Dirty For Hard-earned Insights

I am not talking about startup CEOs. Those guys are supposed to get their hands dirty to scale. What I am talking about are CEOs that still keep their feet and ears on the ground to find the truth, even when their companies are already mature.


As the world was returning to normal after the historic pandemic, Dara Khosrowshahi, CEO of Uber, realized that his company had a driver supply shortage that could threaten the future of his company. Due to stay-at-home orders, drivers needed to find another way to maximize their earnings. Without drivers, the whole experience on Uber app would have deteriorated and Uber’s business would have suffered. In addition to offering financial incentives to lure back drivers, Dara signed up as a courier himself and ferried folks and delivery orders around San Francisco. The goal? To understand what else the company could do for drivers. The plan worked as the CEO uncovered the following shortcomings:

  • The old onboarding process for drivers was clunky and unfriendly.
  • Drivers were punished for not taking the trip whose destination and fare were uncertain.
  • Drivers were at times confused about where to pick up food at partner merchants.
  • The app combined two separate deliveries at one merchant, but didn’t inform the assigned courier

Naturally, no competent CEO would have let these issues go unaddressed. Dara instructed his team to introduce fixes with urgency. As a result, Uber is now friendlier to drivers, recovered faster post-pandemic and is in a much stronger position than its rival Lyft. Per WSJ:

Driver Danny Jacob dumped Lyft after Uber introduced pay and destinations disclosure in Chicago in September. He said the ability to see where he was going and the value of the ride was liberating, and Uber kept him busier because he could switch between rides and food delivery. 

Driver engagement at Lyft dropped after Uber’s summer rollout, according to people close to Lyft. The company’s product managers scrambled to match Uber’s changes, replicating many features months later. 

I recently took a ride to Omaha Airport with a Somalian driver. I asked him about two features recently introduced lately by Uber: Reserve rides and the ability to see the route and fare of a trip in advance. The driver said that while the former wasn’t as particularly helpful, the latter was the best feature that Uber has ever introduced and made his life so much better. Dara pushed his team to move up the timeline on the feature. Had he not had that frustrating experience himself as a driver, who is to say when Uber would have had that rollout.

Fun fact: Dara has completed over 100 trips himself so far.


Laxman Narasimhan officially took over the CEO role of Starbucks in March this year. He and his predecessor, Howard Schultz, spent a lot of time discussing future priorities for the iconic company. They agreed that Starbucks must be more disciplined in cost management and efficient if they are to expand the store network.

To that end, Laxman dedicated months to familiarizing himself with the operations by becoming a certified barista and working for several hours a month at different stores. His goal is to understand better the pain points of baristas and how to streamline the ship. The new CEO already identified two issues. One is that Starbucks has a variety of cups and lids; which makes the job of a barista difficult and supply chain more complex and expensive. The other is that baristas are usually overwhelmed by the rush hours in the morning.

Dick’s Sporting Goods

Ed Stack, former CEO of Dick’s Sporting Goods, is the son of Dick Stack, the founder of the company. Ed’s father used to tell him:

“If you had a visitor there, you wouldn’t keep doing what you’re doing. You’d drop it to say hello and make him feel at home.”

Source: It’s how we play the game

Ed carried that mentality throughout his career. He made a habit of walking the stores every month and talking to store managers. His goal was to listen to the managers’ concerns as well as to learn what customers saw and said.

From one of those store visits, a manager in Baltimore mentioned to Ed that kids went to his store asking about a brand called Under Armour. Ed had never heard about this brand before, but decided to place an order and run a test in a few stores. Under Armour merchandise flew off the shelves, prompting the retailer to move the apparel brand to more prominent sections. From there, the relationship blossomed as Under Armour contributed meaningfully to Dick’s bottom line. Had there not been the fateful visit, who’s to tell that Under Armour would have ended up in Dick’s stores?

Weekly reading – 8th April 2023

What I wrote last week

10 ways credit card issuers optimize profitability

Business lessons from Apple. Patience & Perseverance


A CEO’s tactical guide to driving profitable growth. A handy list for companies that want to fine-tune the operations and optimize for profitability.

The Five Waves of Fintech. A very good 30,000-foot overview of the fintech landscape.

Silicon Valley Bank’s risk model flashed red. The executives changed it. It’s just mind-blowing to see the extent to which Silicon Valley Bank’s executives mis-managed their company in order to please Wall Street. The risk model indicated that their cash flows would drop by 27% after a 2% drop in interest rates. In the past 12 months, the interest rates went up by 400-500 basis points! And of course, the management changed the model to stop the red flags. Worse, the guy that orchestrated the move was credited and awarded for that. These people deserve jail time.

Google to cut down on employee laptops, services and staplers for ‘multi-year’ savings. Expense management is a real business need, even for the likes of Google. There is nothing wrong with cutting unnecessary fat on the company’s books. Be more selective about who will get a Mac and replace it with cheaper Chromebooks? That’s fine by me. Require higher authorization for certain expenses? Makes sense. Close some facilities on sites when employees are not there? I don’t see anything wrong with that. What I find amusing is the stapler episode. Come on now, how much could they save by being that petty and taking away staplers at print stations? Most of the time, I don’t even use the print stations at my company. And I would like to remind everybody that Google made $60 billion in net profit in 2022. $60 billion.

($) Apple Wants to Solve One of Music’s Biggest Problems. “Everyone who listens to Beethoven as much as they jam to Beyoncé knows it is basically impossible to find the perfect recording of your favorite violinist playing in the best concert hall with the ideal conductor. The world’s richest company released a sleek new product this week that was years in the making and had to meet its exacting standards before it was ready to be used by millions of people. But it wasn’t a phone, a gadget or an AI chatbot. The latest innovation from Apple was a better way of listening to classical music.” This is classic Apple. Identify an area where they can make a difference and solve a problem. Then either build capability in-house or acquire a small startup and diligently work on the problem. Iterate. Repeat. No bold claims about changing the world. No nonsense.

Spotify shows how the live audio boom has gone bust. It’s fair to say that making a business or investment decision based on what is trending likely leads to mistakes and failure. Spotify is another example of that.

Inside Amazon Studios: Big Swings Hampered by Confusion and Frustration. A super interesting piece looking at the inner workings of Amazon Studios. The launch of Thursday Night Football produced “the biggest three hours for U.S. Prime sign ups ever in the history of Amazon.”, but the company had to compensate advertisers because of the shortfall in viewership. The article detailed how the confusion over priorities, direction and organization at the Studios made collaboration with talent difficult.

Other stuff I find interesting

(S) How Disney Dodged Ron DeSantis and Kept Control of Its Florida Land. I have to say that while I don’t support a company having too much power, I took pleasure in reading that Disney’s executives pulled a fast one over DeSantis. Keeping corporations in check is the right thing to do, but it’s troubling to enact laws for revenge and retaliation.

Mental liquidity. “Visa founder Dee Hock had a great saying: “A belief is not dangerous until it turns absolute.” That’s when you start ignoring information that might require you to update your beliefs. It might sound crazy, but I think a good rule of thumb is that your strongest convictions have the highest chance of being wrong or incomplete, if only because they are the hardest beliefs to challenge, update, and abandon when necessary.

The Finnish Secret to Happiness? Knowing When You Have Enough. Happiness has more to do with being content than a massive financial success. We all know it. We just struggle to put it to work.

($) America Has Too Much Parking. Really. My wife and I are constantly baffled at how much space we give away for parking here in the US. The amount of land reserved for parking at a strip mall would rarely ever be found in Ho Chi Minh City, Vietnam, where I come from. I get the need to accommodate the culture of driving here in the US, but how often is a parking area full? Or does it mostly sit unoccupied?

How tiny, cheap smart speakers unlocked the rise of digital payments in India. Fintech companies come up with a way to accommodate the need of some merchants in India and to make money. They provide devices that read out loud receipts. Merchants that can’t read nor write will know what is being sold without ignoring current customers. The subscriptions from these sound boxes help fintech startups, infamous for their inability to make money, generate more margin. I love reading articles about this.


The average American drove 4% fewer miles in 2022 than in 2019

The Rings of Power had a 37 percent domestic completion rate (customers who watched the entire series)

Six biggest credit card issuers in the US spent $68 billion on rewards and related costs in 2022, up 43% from 2019

Business lessons from Apple. Patience & Perseverance.

We’re all told that patience and perseverance play an important role in our life. Well, they do in business too. Today, I’d like to talk quickly about how Apple, a company with unlimited resources, still relies on patience and grit to bring their products and services to life.

Apple Watch

Apple introduced the first Apple Watch in April 2015. At launch, the product faced plenty of skepticisms over its value propositions, as well as criticisms regarding various features. Although Apple did deserve some of those negative sentiments, the company continued to work hard on all aspects of Apple Watch over the last eight years and ultimately transformed it. The battery life is at least 24 hours on one charge now. The software is significantly better. The interface looks bigger. More importantly, they pivoted Apple Watch to focus on consumer health and safety. Positioning the Watch as a health monitoring gadget unlocked two important benefits to Apple. First, the target population includes not only young tech-savvy consumers, but also health-conscious elderly citizens. Per WSJ:

Wearable devices for tracking health and fitness are the hottest technology among older adults, according to leaders at several aging-tech organizations and companies. The AARP says 28% of older Americans own a wearable and 77% of those people use it daily.

Trish Macvaugh, a 76-year-old Willow Valley resident, began swimming competitively three years ago. She uses her Apple Watch Series 6 to log her heart rate and more particular stats, too. There’s her “swolf” score, the number of strokes taken plus the time it takes to swim a certain length, and her “VO2 max,” the maximum amount of oxygen she takes in during intense exercise.

For tech advice, she turns to fellow resident Susan Culbertson, a 76-year-old retired computer-software trainer. Last fall, Ms. Culbertson created classes at Willow Valley to teach others how to use Apple products. The classes have gotten so popular, they’ve occasionally run out of seats for people in the conference room where they take place.

Second, the pivot elevated Apple Watch to a whole new level that folks no longer consider it a simple device that sends notifications. Think about it this way: No other product on the market has the positioning that Apple Watch has – a high-end timepiece that also provides excellent health monitoring services and comes with an ecosystem. That little market niche is enough to generate billions of dollars in annual revenue for the company.

While Apple Watch is undoubtedly a resounding success, Apple did NOT strike gold at its first try. It took years and a lot of hard work behind the scenes to get there. Even for the most valuable company in the US with unfathomable resources at its disposal.

Apple Maps

Would you believe it if I told you this was Apple Maps in 2012?

Source: The Verge

The embarrassing episode was so disastrous that Apple had to issue a rare public apology. Back then, a lot of people cast serious doubt over the outlook of Apple Maps and whether it could be a competitive alternative to Google Maps. Frankly, after such a horrible display by Apple despite having limitless resources, I don’t blame the critics. I’d have the same reservation.

Nonetheless, Apple Maps today is a vastly improved version compared to its predecessor. The service is so good now that the website Tom’s Guide found it to be superior to Google Maps in Interface, Map Design and especially privacy while being competitive in other aspects. I have been using exclusively Apple Maps since 2019 and had no trouble with it. While my wife and I were in Washington DC last month, we used Apple Maps to navigate and use the public transportation without any hiccup.

Apple Maps has a long way to go before catching up with Google Maps. And I doubt that it ever will. Simply because Apple doesn’t collect data like Google does and Apple Maps is only available on iOS devices. With that being said, being where Apple Maps is now can be considered a success. A success that overcame a nasty public embarrassment and took years to arrive.

Apple Pay

Apple Pay came to the market in 2014, even though work on the service started about a year before that. Nine years later, here is where Apple Pay stands:

  • It makes up 6% of in-store purchases
  • A lot of merchants select Apple Pay as a checkout option due to its seamless experience, fraud protection and popularity.
  • It’s available in 76 countries all over the world

iOS devices are present in almost every country in the world, but Apple Pay is only in about one-thirds of the world. Even that already makes the service arguably the most popular digital wallet out there. Such a success, though, didn’t come over night. There are regulations involved in this type of payment services. There are technical issues that must be solved. Plus, you can’t convince merchants to put Apple Pay on the checkout if it isn’t used by consumers. And consumers won’t develop a habit of using it unless it’s on a lot of merchants’ checkout. Success looks easy, but the work behind it takes more than just a household brand name and ads.

If a company like Apple still needs to grind for success, I don’t see how it should be different for smaller businesses or individuals like us.

10 Ways Credit Card Issuers Optimize Profitability

Because my daily job is related to credit card, today I will pull back the curtain a bit and talk about 10 areas where a credit card issuer can do to either maximize revenue or reduce expenses. This list is by no means complete. Rather, it includes the main tactics that I have come to know or worked on myself. If you’re curious about some insider knowledge, read on!

APR Optimization

A credit card is an unsecured loan. For every one dollar in past-due balance, the higher APR, the more revenue an issuer makes. A go-to APR usually consists of a Prime rate and a margin rate. When interest rates stay elevated like they are now, they increase the Prime rate and as a result, the go-to APR.

Some credit card portfolios use fixed pricing, offering the same APR to every customer regardless of the risk profile. Other portfolios opt for variable pricing that adjusts APR based on a customer’s credit history. In an inflationary environment like what we are experiencing now, variable pricing is the better option for revenue management.

Though increasing APR can help grow the top line, issuers need to be mindful that high APRs can turn off customers.

BT Fee

A common tactic in the credit card industry is to allow customers to transfer outstanding balance from another issuer at 0% APR for a certain period of time. Though interest-free, these Balance Transfer (BT) offers carry a fee of 3% – 5% of the BT volume. An increase of 1% in BT fee can result in a significant lift in revenue. Again, issuers must be mindful that increasing the BT fee rate too much can make their card less competitive in this fragmented market.

Reduce The Size Of Direct Mail

Direct Mail is still the primary acquisition channel for a lot of issuers. At high volume, this channel presents an area primed for expense optimization. Even a reduction of one page from the mail package can mean thousands of dollars in savings, if an issuer mails like 20 million pieces a month, a figure that is not uncommon in this industry. Hence, Marketing can work with Compliance and see what can be cut from a mail package while staying compliant with all regulations.

Many Direct Mail prospects apply online. In other words, after retrieving the piece from their mailbox, these prospects go to an issuer’s website, key in the access code and apply. The begs the question: is it necessary to include a paper application and a pre-paid envelope? Removing such elements means a reduction in postage and paper expenses. However, issuers must try to avoid disregarding senior prospects who may appreciate the option of a paper application.

Paperless Statements

Issuers can persuade customers to opt for e-statements instead of paper statements. Fewer papers mean lower expenses.

Interchange Optimization

Before we talk about interchange optimization, if you need a refresher on interchange, click here. Major card networks like Visa or Mastercard have multiple plastic tiers (it’s actually BIN tiers, but I call it plastic tiers so that I won’t confuse anyone) for both consumer and commercial accounts. Higher tiers come with higher interchange rates which bring in more interchange revenue for issuers. For instance, the same $100 purchase may produce $1.8 in interchange for Visa Classic, but for Visa Signature, it may bring in $2 in interchange. The difference is small, but if a portfolio generates billions of dollars in spend, interchange optimization can result in a serious lift in revenue.

Instant Issues

In some cases, customers can receive functional credit cards instantaneously after approval. We call them instant issues. Instant issues usually happen at a bank branch (like a Bank of America or Chase branch) or a partner’s store (such as a Target or Best Buy). To an issuer, an instant issue costs less than an ordinary plastic that needs to be printed and sent via the post office. Therefore, instant issues can save an issuer some Embossing expenses.

Informed Delivery

Informed Delivery sends us a notification in our email on what mails we are going to get every day. To improve the feature, USPS works with ferocious mailers like credit card issuers and courts their support in exchange for a discount on postage. As of this writing, I do know that the discount is still going on. From an issuer point of view, informed delivery doesn’t increase response rates in a direct mail campaign, but it does help reduce the postage expense.

Plastic Management

Depending on materials and design, the production cost can vary from one card to another. For instance, a metal card is more expensive than a plastic one. A complex design costs more than a monochromatic version. Some issuers even let customers design their own cards (DYC); which can lead to higher expenses to accommodate customized requests. Halting the DYC program or curbing on complex designs can help lower expenses.

Increase Deposits

Credit card issuers have to borrow money from the Federal Reserve in order to lend to consumers. The cost of borrowing that money is called Cost of Funds (COF). The higher the interest rates, the higher the COF. To minimize that expense, issuers must raise as much money on their own and borrow as little as possible. That’s why you see that in this environment, banks race to accumulate as many deposits as they can, even if they have to pay consumers higher interests than they usually do. It’ll still be cheaper than borrowing from the Fed.

Reactivate Dormant Accounts

Issuers want their accounts to be as active as possible. When an account spends, its issuer receives interchange revenue. When an account revolves, its issuer generates interest income and late fees. Hence, issuers run trigger campaigns once in a while to reactivate accounts that don’t register any activity for a while. Also, the old adage that it’s cheaper to retain a customer than to acquire a new one still rings true in this case.

An example of a Limited-Time Offer (LTO) to reactive accounts. Source: Visa

Weekly reading – 1st April 2023

What I wrote last week

Travel to DC


($) Social Media Platforms Are Asking Users for Money. They Probably Don’t Mean You. Charging power users makes sense. It’s impossible in my mind that social media can charge ordinary users while they can only make money when their platforms are accessible to many. The problem is that the current benefits don’t justify a subscription. Even if the benefits are good enough to warrant a recurring payment, the platform operators need to thread the needle carefully. Content creators are sought after. Platforms incentivize creators to generate exclusive content. If charged too high, what would stop creators from uprooting their content and bringing it to another?

JPMorgan Chase buys data platform for startups in push to serve venture capital investors. JPMorgan Chase is showing that it’s serious about becoming a key player in the venture capital game. There is already a matchmaking platform in place for investors and entrepreneurs. The acquisition of aumni brings in a data analytics platform for venture firms. In addition, there is also Global Shares, a startup specialized in managing employee stock grants. The behemoth bank is ready to open its wallet to bring in critical capabilities from the outside. The end game? My GUESS is that JPMorgan Chase wants to be the commercial bank for these startups, to nurture the relationship till they become public names and to house the enormous sum of deposits that can fuel the lending side.

How to hire a CFO and build a finance team. “Seasoned chief financial officers (CFOs) help a business ramp toward IPO, optimize treasury management, and even navigate major external crises, as we’ve seen with recent collapse of Silicon Valley Bank. But it’s not always clear when and how to find the right finance leader. 

($) Uber Eats to Take Down Thousands of Virtual Brands to Declutter the App. As a shareholder, I am happy to see Uber take this action. It’s not cheap for the company to acquire and retain customers. Hence, it’s imperative to make the user experience on the app as smooth and great as possible. Removing bogus listings that erode the consumer trust is a low hanging fruit and a good start.

Other stuff I find interesting

There’s a ‘Subterranean Galapagos’ Deep Inside the Earth. “There is a vast biosphere deep underground that is nearly twice as big as Earth’s oceans and contains some 23 billion tons of organisms.”

What happens when you subsidize EVs but not charging stations. The adoption of EVs hinges on how fast the installation of the charing network takes place. And I have a nagging feeling that Chinese companies, not their peers from the Western world, will take advantage of the situation

Charlie Munger in Conversation with Todd Combs. “I think the people who tend to get the best results are these fanatics who just keep searching for the great businesses. And the best of them don’t expect to find 10 or 20 or 30. They find one or two. And that’s the right way to do it — but all you need are one or two.”

M-Pesa has been huge for Kenya’s economy — and for scammers. The rule of thumb when looking at news reports on fintech startups is that you should inquire about losses, delinquency and fraud, in addition to the shiny objects like revenue or growth


99% of Warren Buffett’s net worth came after he turned 50

Private jet pollution in Europe has skyrocketed 855% since the pandemic. For a region that always sounds committed to the fight against climate change, this is hypocritical.

The value of venture deals on e-Commerce startups was $8.8 billion in 2022, a marked drop from $12.6 billion in 2021

Source: Twitter