Weekly reading – 23rd January 2021

What I wrote last week

A few simple tips to save money that I have from personal experience

I wrote about the debate on whether social media should censor Trump

Business

Internal deliberations at Twitter over whether they should ban Trump

Checkout.com vs Adyen

If you aren’t too familiar with Fintech, this article is a good place to start

A piece on a16z and its media-savvy founder

Apple TV+ is said to have only 3% of the market in which Netflix still remains the leader

21% of Chime’s revenue per user as of June 2020 came from ATM fees for out-of-network withdrawals

Nintendo – capitalizing on nostalgia

A survey shows that Apple may have a problem with Apple TV+ churn on its hands

A profile of the CEO of Edwards Lifesciences

The Story of a Cap Table: Affirm

Technology

The Myth of The Infrastructure Phase. Such an interesting read on the development of applications and infrastructure

The insider story of PDFs

What I found interesting

A beautiful beautiful letter on living a life worth living

Nikkei Asia has a nice piece on Covid-19 as an opportunity for Vietnam, given how the country has masterfully managed the crisis so far

Why cats love catnips

Axios has an 8-part (till now) series of great reporting on Trump and his post-election madness

Review of The Banker and Defending Jacob

It has been a while since I took time on a weekend to watch some movies and series. I saw The Banker and Defending Jacob today on Apple TV+ and wanted to share a few thoughts

The Banker

The movie is about two black men who wanted to take down the racism and segregation in the real estate and banking industries in America several decades ago. By their entrepreneurship, determination and talent, they managed to own a sizable fortune from their real estate business in California. After the success, Bernard Garrett set his sight on helping black people in his hometown Texas access capital which could, in turn, change their life. To do so, Bernard and his partner Joe Morris and Matt Steiner bought a bank in Texas. Since having colored folks as owners of a bank threatened its existence, Bernard and Joe did their work behind the scene with Matt as the front man. They started to make loans to the black community, true to their mission. The entire operation was put in jeopardy by a jealous and racist minor owner who was the son of the previous owner. The trio were put in a congressional hearing chaired by a Senator with a racist agenda. They were offered immunity deals to say what they were asked to say or they could speak their mind and go to prison. Truth was spoken, immunity deal was granted and a revolutionary law was passed to make banking fairer.

Working at a bank, I have come across laws that require equal access to capital a few times. Everything we do from issuing credit cards to lending out money has to be legal. Even if we want to use an attribute provided by our partner to make targeting more efficient, the attribute has to be investigated by our Compliance to make sure that there is no discrimination. It’s tedious and bureaucratic, but it’s necessary. Watching this movie brought me a new level of appreciation for some of the banking laws.

I enjoyed the movie and the story it told.

Defending Jacob

This is a new series from Apple starring Chris Evans. It’s about a Deputy Attorney District in a county in Massachusetts named Andrew Barber. One day, a high school student who went to the same school as his son was found dead in a park two blocks from their home. The tight-knit community was on edge. Andrew was charged with leading the investigation. The dead student was stabbed to death. Later, the investigation uncovered that his son bought a knife two weeks prior to the murder and was seen bullied by the victim. Andrew was taken off the case and his family’s world was turned upside down.

Only three episodes of the series have been aired so far, but they have been pretty nice. The drama is getting more exciting by each episode. The plot was set up to reveal more explosive twists later. I enjoyed watching the actors playing the Barbers bring out the struggle that their family had to go through. I think Chris did a good job. It’s refreshing to see him outside of his iconic role as Captain America. I suspect his son was dead, but don’t mind waiting for a few episode to find out.

Disclaimer: I own Apple stocks in my portfolio

Apple’s multi-sided game

There were quite some surprises unveiled at Apple Event today:

  • Apple Arcade: $4.99/month for a whole family
  • Apple TV+: $4.99/month for a whole family and free if you buy a new iPhone, iPad, Apple TV or Mac
  • Price cuts for devices such as iPhone and Apple Watch Series 3

For a company notorious for ripping off consumers, a notoriety that they earn to a large extent, undercutting competitors and lowering prices for their high-end products are unusual. However, it may make sense in the game that Apple is playing.

Formerly relying on hardware, especially iPhones, for their revenue, Apple has been transitioning to be more of a service company. They have been pushing hard on the service part, including but not limited to Apple Pay, iCloud, Apple Card, Apple News+, Apple Arcade, Apple Care. However, to sell these services, they first need to find a way to put hardware into humans’ hands.

In return, hardware would be just boring pieces of metal without great user experience that comes from the operating system and ecosystem, including apps and services. There is no shortage of alternatives to expensive products that Apple offers. To really convince a consumer to dole out a significant amount, they need to present compelling reasons. Hence, the gradual updates to operating systems and a slew of services.

But Apple can’t do everything alone. They need partners. They need content partners such as publishers, game companies and producers as well as strategic partners like Goldman Sachs. These partners, I guess, are interested in the reach that Apple has through its installed base. By working with Apple, they hope to leverage the media coverage that Apple enjoys and get to many customers as quickly as possible.

By lowering entry prices for Arcade and offering TV+ on a very attractive term, I suspect that Apple wants to expand the subscriber base quickly from the existing user pool. The bigger the subscriber base, the more leverage Apple will have with content and strategic partners, whose future creations in turn will increase the appeal of Apple’s services.

By lowering hardware’s prices, there may as well be other reasons and I am so speculating here, Apple wants to lure non-Apple users and expand its user pool. It’s a two-pronged approach to grow the ecosystem.

It’s truly remarkable to me how a company this size can keep adapting to the changing landscape of the business environments to be competitive in a highly competitive industry. Some folks say Apple isn’t taking risks. But any strategic mistake by omission or commission may result in at least two years behind competitors and billions in market valuation. Others complain that the Cupertino-based company is no longer innovating. It’s tricky to tell if it’s completely true or false. But it’s worth remembering that Wearables & Accessories, including Watch and Airpods, generated $5.5 billion in revenue in 90 days last quarter while the main products still remain sticky to consumers.

As a student of business, I admire the company. No company is flawless, but it’s amazing what Apple has been able to do to navigate through competition and constantly changing business environments.

Disclaimer: I do own Apple stocks in my humbly small portfolio.