Weekly reading – 13th March 2021

What I wrote last week

My thoughts on Square’s acquisition of Credit Karma’s tax unit

My review of the book Think Again: The Power Of Knowing What You Don’t Know

Business

An interview with Elliot Turner on Twitter. Lots of good stuff in here.

Octahedron Capital publishes a super interesting presentation every quarter, compiling quotes from executives

A very interesting piece on how Jeff Bezos approached design. I love the anecdote on how Amazon’s logo came into beings.

How Salesforce became Silicon Valley’s best late-stage tech investor. Salesforce is a prime example that you should care more about Operating Income than Net Income if you want to evaluate a company’s operations

A great post on the importance of reinvesting in a business. As the saying goes, it’s one thing to get to the top of the mountain, it’s another to stay there.

A great conversation between The Verge and Twitter’s Head of Consumer Product. The company announced some very interesting product developments in the pipeline. As a fan of the platform, I can’t wait to see what unfolds next

Postmates added $70 million in revenue and saved $3 million in network fees with Stripe

Neil Cybart published a new article on the importance of Apple’s retail stores

A very telling piece on how Facebook’s internal effort to curb misinformation using AI was punted by Zuckerberg’s desire for growth

What I found interesting

Apple Gave Us an Exclusive Look Inside Its Next-Generation Fitness+ Studio

Tesla told California DMV that its future autonomous vehicles wouldn’t be fully autonomous. What else is new?

WSJ’s profile on Manchester United star forward, Marcus Rashford. If you are not familiar with football (yeah, the real football where the ball touches feet more than hands), Manchester United is one of the richest and biggest clubs in the world. It has a reputation of playing home-grown talent and actually has been fielding at least one academy player every game for the last few decades. Marcus Rashford is the latest biggest home-grown star that came out of the famed academy. Inspired by his difficult childhood, Rashford took on the British government last year, in a campaign aimed at providing school meals to children during Covid-19. The government listened and hundreds of kids were fed because Marcus Rashford had the will to do what his reputation enabled him to.

Corporate logos are changing with the time

A look into the cyber-surveillance world of Israel

Stats that you may find interesting

Costco edged by Amazon and Apple to lead all brands in customer satisfaction

India leads the world in IPv6 adoption rate at 63%

Disney+ has more than 100 million subscribers. Though the count is impressive, comparing it with Netflix’s subscriber base, either now or when it first started, may require a lot of unpacking. The consumer attitude towards streaming is different now than it was when Netflix began to stream its content online. The mix of subscriber base is also different. Disney+ has 30% of its subscribers. Nothing inherent bad about it, but to have an apple-to-apple comparison, one must figure out whether Netflix has the same composition. Plus, the streaming competition 10 years ago for Netflix might be much less fierce than the current landscape.

If you need more evidence as to how different a GOP government and a Democratic government are, here it is. One proposed a law that benefits low-income folks (Democrats) while the other passed a law that put more money in the pocket of the richest.

Source: TPC

Weekly reading – 30th January 2021

What I wrote last week

What I like about Apple Fitness+

Business

An excellent write-up on the state of news outlets or local journalism in America. It’s astounding that half of the local news outlets are now owned by private equity, hedge funds or other investment firms

SoftBank’s plan to sell Arm to NVIDIA is hitting antitrust wall around the world

Brexit has major implications. Whether the net benefits are positive or not remains to be seen, but this new development doesn’t seem to benefit consumers: Mastercard is hiking fees

AirBnb conducted a new survey that said: One in five want their destination to be within driving distance of home. Not a very good sign for airlines

N26 got 7 million customers

Apple published a document that outlines its imminent privacy policies

Some notable data from a letter from YouTube CEO

Over the last three years, we’ve paid more than $30 billion to creators, artists, and media companies.

YouTube Gaming had 100 billion hours of content in 2020

Our Music and Premium Subscriptions have been growing quickly, reaching more than 30 million paid Members in the third quarter of last year.

Source: YouTube

Technology

A glimpse into JPMorgan Chase’s $12 billion annual tech budget. There are quite some interesting features that the interviewee shared

CB Insights has a write-up on 40 companies that are working on autonomous vehicles

A long but great list of big ideas from ARK

What I found interesting

How homogeneous is Japan

What does the night sky look like on Mars?

A French-Vietnamese woman is fighting for justice for victims of war crimes. It’s crazy that US and Korean veterans received compensations from chemical companies because their products which were used in the Vietnam War had life-altering effects. Yet, Vietnamese victims have not received any.

What I find is that it is often these kinds of multiple small mispriced insights that overtime compound to form a business which is very defensible and very difficult to replicate. The discovery of those multiple small insights really requires a bottom-up organic idiosyncratic investment process.

Source: Interview with Mark Walker from Tollymore Investment Partners

What I like about Apple Fitness+

Apple Fitness+ is a new service from Apple that is dedicated to helping customers work out more. The service is paired exclusively with Apple Watch, meaning that you need at least an Apple Watch 3 to use it. You can read more about Apple Fitness+ here. The normal subscription is $10/month. Like every other subscription, there is a one-month trial for new users. There is also an option of buying the service through a bigger bundle Apple One. Here is my experience with the service.

I used my free month in December and got hooked. I like the service enough to pay $10 for this month, a move that I don’t do very often. As many of you can relate, I don’t enjoy getting changed, preparing my clothes & a towel, driving to a gym and driving back. Now that the cold and slipper winter is upon us and we’re still in the middle of a pandemic, I have even less motivation to jump through those hoops just for a workout, no matter how important regular exercising is. With Apple Fitness+, I can work out in my living room and even my bedroom whenever I feel like. So that’s a plus.

There are other ways to work out at home without Apple Fitness+ and $10/month. I even wrote about a channel called The Body Coach TV that I really like. What other benefits does Apple Fitness+ offer? Choices! In addition to different workouts, there are clips of different lengths; which adds to the variety that helps spice things up. There are days when I am in a mood for a 30-minute HIIT, and there are days when I only have energy for a 10-min yoga, a 10-min core and a 10-min stretching & breathing. Make no mistakes. Exercise is often repetitive and boring. Our energy level isn’t at a high level every; therefore, we need all the help that we can get to exercise regularly.

Apple Fitness+: New online exercise service for Apple Watch | Macworld
Source: MacWorld

Having different types of exercises under one app is also valuable. I used to finish a 20-min HIIT and spend several minutes on YouTube trying to find a breathing and stretching clip that I liked. With Apple Fitness+, it usually takes me about 5-10 seconds. What they call “mindful cooldown” lies in the app with different clips that last from 5 to 10 mins and different trainers. I do think that this is a subtle strength of Apple Fitness+. We measure how many clicks it takes for a customer to finish a banking application. The same mentality should be applied here. Apple Fitness+ brings down the friction that stands between users and more exercises. These mindful cooldowns or yoga don’t burn as much energy as HIIT, but together with other types of exercises, they spur users to move more, close rings and in turn, get more motivated to get a workout in the next day. The rings on the phone act similarly to a list of tasks. The more rings you close, the better and motivated you feel to do it again the next day. Even when your energy level is low, you can still close rings with lighter exercises and keep the momentum alive.

Another thing I like about Apple Fitness+ is the setup. As a guy living alone in my apartment during a pandemic, I crave for a sense of community though I don’t desperately seek out people to meet. While I train with Apple Fitness+, for about 30-40 minutes a day, I get that bit of sense of community with the trainers. The number of trainers is limited to three; which is enough to make users feel that they have companions in a meaningful way. So far I have enjoyed the music curated and played in the clips. The curators know when to up the beat and when to give us silence, especially during the meditation periods.

Which brings me to what I like the most about it. I have started my days in the last few weeks with some yoga, stretching and meditation on Apple Fitness+ and I feel really great. I feel connected to my mind and body more through these exercises. As somebody who reads a lot and tends to work on a lot of things at the same time. I often catch myself unfocused and distracted in the busy world. These few minutes of connecting with my mind and body make me feel different and relaxed to the point that I really look forward to the next workout. Of course, I can search YouTube for free clips, but as I mentioned, I haven’t found anything that can offer consistency in style and variety in content like Apple Fitness+.

All in all, I don’t think that there is anything ground breaking about Apple Fitness+. If you look for some never-been-done-before reasons to like it, there is none. What makes it appealing to me is a combination of little things put nicely together to create a pleasant user experience. Pleasant enough to make me shell out $10/month.

Weekly readings – 19th September 2020

What I wrote

I reviewed a few books such as: The Anatomy of The Swipe, Tape Sucks, The Motley Fool Investment Guide, 7 Powers: The Foundation of Business Strategy

I put down some thoughts on Apple Fitness+ and Apple One

Business

A deep dive analysis into Snowflake

A study on the effect of Wikipedia on businesses

Our estimates show that adding about 2,000 characters (approximately two paragraphs) of text and one photo to a city’s Wikipedia page increased the number of nights spent in this city by about 9% during the tourist season compared to cities in the control group.6 The effect comes mostly from pages that were initially relatively incomplete. In particular, the treatment increases hotel stays by about 33% in cities which initially had very short pages in a particular language, while there was no effect on city-language combinations where the pages were well developed.

Technology

A review of Microsoft Duo by WSJ. It’s quite concerning that a $1,400 phone has a subpar camera and a buggy software

What I found interesting

A brief profile by BBC of Freiburg, a green and futuristic city in Germany

An interactive map of the Earth some 240 million years ago

A damning memo of a Facebook employee on how the leadership turned a blind eye on election manipulations. She wrote “I have blood on my hands”

The US is almost at the bottom among advanced countries when it comes to well-being of children

The Three Year Rule: How To Stay Motivated Working On A Long-Term Project

A WSJ profile on Trevor Noah and his journey from South Africa to America

According to Census, Asians had the highest median income in the US in 2019 and foreign born folks grew median income at a faster rate than native-borns

Brief thoughts on Apple One & Apple Fitness+

Yesterday, Apple held an event to announce updates on their hardware, software and services. Everything related to Apple should be widely covered. You can read about the event on the news. I just want to share my thoughts on the two notable services: Apple One and Apple Fitness+

Apple Fitness+

It’s a fitness subscription that resides inside the Fitness app and is built for Apple Watch. Essentially, if you’re wearing an Apple Watch and have a screen that can show various workouts developed by Apple, you can see health and exercise data while sweating and hustling through the physical torture :D. According to Apple, there are workouts for everyone, including Cycling, Treadmill, Rowing, HIIT, Strength, Yoga, Dance, Core, and Mindful Cooldown. Each workout is accompanied by curated music, but you can also add your own tunes from Apple Music. Apple claimed that machine learning on device would use your previous workouts as well as health data to personalize suggestions for you. All the data would not leave your devices.

Apple Fitness+ home screen on iPhone 11 Pro.
Figure 1 – Apple Fitness+. Source: Apple
Figure 2 – Apple Fitness+. Source: Apple

Apple Fitness+ will be available at the end of the year in the US, Australia, Ireland, the U, Canada and New Zealand. A subscription will cost $9.99/month or $79.99/year with one month trial and can be shared with up to five people. To gain access to Apple Fitness+, customers need Apple Watch Series 3 or later.

Now, I have seen a lot of comparison with Peloton since the service was announced. Let’s take a look at whom each should be for

Whom it is for
Apple Fitness+ 1/ Those who own an Apple Watch Series 3 or later
2/ Those who don’t want to spend at least $1,400 for a piece of equipment and a subscription on top of that just for workout
3/ Those who don’t have a lot of interior space for a bike or a tread
4/ Those who travel quite a lot and can’t carry equipment
5/ Those who prefer working out without equipment
6/ Those who want to incorporate health data always on Apple devices with workouts
Peloton1/ Those who don’t own an Apple Watch Series 3 or later (Obviously!)
2/ Those who are serious enough about fitness to make a sizable investment in a Peloton bike/tread
3/ Families whose multiple members want to share the same account and bike/tread
4/ Those who have enough space for a bike/tread
5/ Those who stay home often enough

For those who already owned a Peloton machine and subscription, I don’t imagine they will sign up for Apple Fitness+. The sunk cost of a Peloton bike/tread is so high that consumers will try to milk as much out of it as possible. Hence, Peloton shouldn’t have to worry about that. While Apple has many fans, it also has as many, if not more, critics. As Apple Fitness requires an Apple Watch, Peloton shouldn’t worry much about this segment of the market, either. It’s inconceivable to think a non-Apple person would invest in a Watch and iPhone (who has the former without the latter?) just for this fitness subscription.

What should worry Peloton is potential customers who own Apple devices and don’t have a Peloton subscription. To those who are interested in fitness enough to spend $10/month, but not as much to spend $1,400+ for a bike, Apple Fitness+ should be much more appealing as the barriers to entry are much lower. Sure enough, a $350 Apple Watch is still a significant investment, but if historical product rollouts by Apple are nothing but an indication, they will add more health-related functions to their Watches to make them more attractive. Case in point. The new Apple Watch will be able to monitor oxygen level in blood. Hence, compared to a big and expensive bike from Peloton, a combination of a Watch and Fitness+ should be an enticing alternative.

With that being said, I do think the market is big enough for these two players. The hardware requirement limits Apple in the same way as it does Peloton. But if a non-Apple phone or smart watch manufacturer jumps into the fitness market and offers the same service, it can spell trouble for Peloton because in that case, the manufacturer wouldn’t be limited by the hardware requirement any more.

Apple One

This is one of the badly kept secrets. On Tuesday, Apple announced its long anticipated umbrella subscription bundle called Apple One. Basically, an Apple One subscription offers consumers access to multiple Apple services such as iCloud, Apple Arcade, Apple Music, Apple TV+, Apple Fitness+ and Apple News+. Below are the tiers and prices

Figure 3: Apple One Tiers. Source: Apple

A bundle is to encourage consumers to use more individual services, usually at a discount. Apple One is no exception. If you buy services individually and add them all up together, Apple One offers a great value for money. Morgan Stanley had a great summary below

Image
Figure 4 – How much money is saved with Apple One. Source: Ben Bajarin

Premier offers an astounding 45% discount and if your family is already using most, if not all, of the included services, Premier tier is a no-brainer. Additionally, it’s worth pointing out that customers with Apple Card will get 3% cash back from Apple One, on top of the already incredible discount.

What gets me excited about a bundle like this is what lays ahead. If you think about it, I believe that Apple must have had this vision for a while. First they rolled out iCloud. Then Apple Music. Then Apple News+, Apple Arcade, Apple TV+ and Apple Fitness+. There is no way that Apple will stop here. I am confident that they already have something in the pipeline already. It won’t surprise me if they add more and more services to their flagship bundle and make it the Amazon Prime of Apple Services. A few options I can think of:

  • Apple Care?
  • A service related to books as they already have iBooks
  • Something related to cars as iPhone can replace car keys for the new BMW already

Apple is known for incremental yet effective progress over time, proven by its approach to hardware and software. So don’t be surprised that it is taking the same path here with Apple One

Disclaimer: I own Apple stocks in my portfolio.