Weekly reading – 25th December 2021

This is the last post of the Weekly reading series in 2021. Hope you have enjoyed it!

What I wrote last week

I wrote about VRIO, a business strategy framework that can help analyze a company’s competitive advantages

Get to know Affirm

Business

Spider-Man: No Way Home’ Swoops In With a Pandemic-Record Opening. The global gross of $257 million during opening weekend is the 3rd highest of all time. Remember that this is the 27th movie in the Marvel Universe Cinematic and it’s achieved during a global pandemic. Disney’s ability to draw viewers and make great content consistently is just extraordinary. However, it creates a conundrum for the company. Putting content in theaters will haul in a truckload of money and boost the top and bottom line. That also means Disney+, the flagship streamer, will have to wait for at least a certain amount of time to feature the hottest movies, diminishing its power to attract subscribers. Unfortunately for the iconic company, Wall Streets cares a lot about Disney+ subscriber count. Hence, the management team will have their hands full in the next year or two finding the right balance in terms of content distribution

Amazon’s grocery battle isn’t what you think. As an Amazon shareholder, I’d prefer the company owning the software powering stores to operating physical grocery shops. The reason is simple. Grocery is a low-margin business and the competition is fierce. Even if Amazon manages to operate cashier-less stores, chances are that they won’t reach the scale of Costco or Walmart to compete in unit economics. Owning the software powering other stores; however, is profitable. A few retailers already tested out Amazon Go technology. Now, Amazon just needs to prove their worth and scale it to make this another great and profitable business

Bob Iger Makes His Disney Exit as a Titan of Transformation. Bob Iger will go down in history as one of the best CEOs ever. His work transformed Disney and put it in the position that it is now. I like his book The Ride of a Lifetime too.

How Shopify Outfoxed Amazon to Become the Everywhere Store. “In late 2015, in one of Bezos’ periodic purges of underachieving businesses, he agreed to close Webstore. Then, in a rare strategic mistake that’s likely to go down in the annals of corporate blunders, Amazon sent its customers to Shopify and proclaimed publicly that the Canadian company was its preferred partner for the Webstore diaspora. In exchange, Shopify agreed to offer Amazon Pay to its merchants and let them easily list their products on Amazon’s marketplace. Shopify also paid Amazon $1 million—a financial arrangement that’s never been previously reported. Bezos and his colleagues believed that supporting small retailers and their online shops was never going to be a large, profitable business. They were wrong—small online retailers generated about $153 billion in sales in 2020, according to AMI Partners. “Shopify made us look like fools,” says the former Amazon executive.”

6th Annual Grocery Tech Trends Study. “74% of grocers report that the tight labor market is a major obstacle that will drive their retail technology investment over the next 18 months. More than half (54%) of grocers are increasing their year-over-year tech spend, with a focus on advancing digital and mobile capabilities, analytics-driven decision-making, personalized marketing, and click-and-collect.”

A great profile of the CEO of Automattic, the company that runs WordPress.com. “After we hung up our first Zoom call, Mullenweg sent me an email with the subject line “Freedom is central.” The body was a quote from Albert Camus, which worked as an explanation for just about everything Mullenweg believes in, fights for and plans to spend the rest of his life working on: “The only way to deal with an unfree world is to become so absolutely free that your very existence is an act of rebellion.”

The global semiconductor value chain. Today, I started my research into the world of semi-conductor and this is an excellent resource.

Stuff that I found interesting

Himalayan Glaciers Are Melting at Furious Rate, New Study Shows. “Glaciers across the Himalayas are melting at an extraordinary rate, with new research showing that the vast ice sheets there shrank 10 times faster in the past 40 years than during the previous seven centuries.”

Hospital Prices Are Unpredictable. One Type of Health Coverage Often Gets the Worst Rates. I said it before and I’ll say it again, the way that we have to live in fear of getting healthcare in this country is a disgrace

TikTok is the most visited domain in 2021, even more than Google.com. That’s impressive

Stats

YouTube TV is alleged to have more than 4 million subscribers

0.01% of bitcoin holders controls 27% of the currency in circulation

ACH made up 20% of non-cash payments in the U.S in 2020

Image
Source: Michael Batnick

Weekly reading – 16th October 2021

What I wrote last week

Cardless – The startup behind the Boston Celtics, Manchester United and Cleveland Cavaliers credit cards

The virtual tour of Son Doong Cave by National Geographic

Good reads on Business

Semi-Annual Letter to Partners by the DMZ Partners Investment Management. It contains some great nuggets of wisdom with regard to investment and business

Next Act for Apple Veteran Ron Johnson Is Taking Home-Delivery Startup Public. Ron Johnson’s story is proof that even established names can fail. After making his name at Apple, you can argue that he failed at J.C Penney. Now he is working on another startup poised to go public via SPAC. I have to admit, though, that his startup doesn’t sound really exciting or appealing to me.

Bob Iger’s Long Goodbye. “The thing about Hollywood is, you can behave badly, you can be rude, you can make duds, but the thing you cannot do is fuck with people’s money,” says a producer with business at Disney. “You just don’t do that and hide behind technology as the reason why.” It’s really hard to come to a conclusion on whether Chapek is the right person for the job. In his defense, he was dealt with a very bad hand: his predecessor is one of the best CEOs the world has ever seen and his reign started with Covid-19. However, I am not pleased with his handling of the legal scuffle with Scarlett Johansson. That, along with the departures of key creative executives, shows that people’s skepticism of how he works with Hollywood is not entirely imaginary.

Disney’s shift to streaming puts ESPN in awkward position of clinging to the past. “ESPN probably won’t consider a direct-to-consumer service until the pay-TV bundle falls below 50 million U.S. households, according to people familiar with the company’s plans. Disney makes more money from cable subscribers than any other company, and that’s solely because of ESPN. ESPN and sister network ESPN2 charge nearly $10 per month combined, according to research firm Kagan, a unit of S&P Global Market Intelligence. The reverse is true for ESPN. Swapping an ESPN subscriber for an ESPN+ customer, who contributes average revenue of less than $5 per month, is a significant loss for Disney. ESPN+ is a streaming service with limited content.”

The Nasty Logistics of Returning Your Too-Small Pants. “The average brick-and-mortar store has a return rate in the single digits, but online, the average rate is somewhere between 15 and 30 percent. That kind of fraud accounts for 5 to 10 percent of returns. Many retailers don’t allow any opened product to be resold as new. Brick-and-mortar stores have sometimes skirted that policy; products that are returned directly to the place where they were sold can be deemed close enough to new and sold again. But even if mailed-in products come back in pristine, unused condition—say, because you ordered two sizes of the same bra and the first one you tried on fit fine—the odds that things returned to a sorting facility will simply be transferred to that business’s inventory aren’t great, and in some cases, they’re virtually zero.”

Amazon copied products and rigged search results to promote its own brands, documents show. “The documents reveal how Amazon’s private-brands team in India secretly exploited internal data from Amazon.in to copy products sold by other companies, and then offered them on its platform. The employees also stoked sales of Amazon private-brand products by rigging Amazon’s search results so that the company’s products would appear, as one 2016 strategy report for India put it, “in the first 2 or three … search results” when customers were shopping on Amazon.in.” The fact that they mine sellers’ data and offer their own private labels isn’t new in the retail world. What I suspect will get Amazon into trouble with lawmakers is the rigging of search results.

EA Sports Is Planning for a FIFA Without FIFA. “Sales of the game, which releases an updated edition every year, have surpassed $20 billion over the past two decades for its California-based maker, Electronic Arts. But FIFA has cashed in as well: Its licensing agreement has grown to become the organization’s single-most valuable commercial agreement, now worth about $150 million per year.”

All That Zaz: With Warner Bros. Discovery Merger, David Zaslav Is Angling to Become America’s King of Content. “I asked him before he had to jump off our Zoom for a parade of meetings with producers and agents and talent and other Hollywood folk. Is there yet another megadeal up his sleeve? Will Warner Bros. Discovery need to get bigger still? “I think this deal will be the first sentence of my obituary,” he said, “that Discovery merged into Warner.” And the second sentence? “It soared.”

After a year of missteps, Ikea’s e-commerce business appears to be heading in the right direction. You may think that retailers naturally realize the value of eCommerce and the role that physical stores can play in the fulfillment game. In reality, it takes a once-in-a-generation pandemic for retailers to come to terms with this point. IKEA is one of them. As big and iconic as they are

Other interesting stuff

This 24-year-old dropped out of Columbia to build a $140 million underwear brand. Another example of the American dream right there

Love, Hope, and Worry in Drought-Ridden Page, Arizona

GreenForges digs deep to farm underground. ““I stumbled upon a paper that was analyzing how much food production capacity can we do in cities using rooftop greenhouses,” he said. “It’s a relatively low number; we’re talking 2 to 5% range for the cities of 2050. No one was asking the question, ‘Can we grow underground?’”.

Stats

As of October 2021, only 5% of Twitch users made more than $1,000 in 2021

Thailand has 28 million daily digital transactions as of October 2021, up from 7 million in 2019 and 14.5 million in 2020

“There are over 50 million retirees in the United States and, by 2035, there will be 72 million retirees”

One single mobile device infected with malware costs an organization an average of nearly $10,000, per Apple.

Weekly readings – 9th November 2019

Three Big Things: The Most Important Forces Shaping the World

Venture Capital Pioneer Kept Entrepreneurs’ Egos in Check

Microsoft Japan’s experiment with 3-day weekend boosts worker productivity by 40 percent

The father of the modern frozen food industry

Nokia’s collapse turned a sleepy town in Finland into an internet wonderland

Apple TV, Apple TV, Apple TV, and Apple TV+. I have to say Apple could and should have done better with all these silly names

Apple Watch Forced Fitbit to Sell Itself

Remember the Uber self-driving car that killed a woman crossing the street? The AI had no clue about jaywalkers

How Google Edged Out Rivals and Built the World’s Dominant Ad Machine: A Visual Guide

AirPods Pro review – within earshot of perfection

Less than Half of Google Searches Now Result in a Click

A deep dive into Internet censorship in Russia

Bob Iger Takes the Gloves Off for Disney’s Streaming Debut

Weekly readings – 19th October 2019

Amazon published their official position on a few social issues

Global electric car sales and market share, 2013-18

Source: IEA

The poor in America pay a higher tax rate than the rich. I guess the tax cut is doing what it is supposed to? (I am being sarcastic)

TurboTax’s decade-long war to prevent Americans from filing taxes online for free. I was angry when I read this article. Billions of hours and dollars are wasted every year on filing taxes and only a handful of people benefit at the expense of millions

To buy a phone in China, a face scan will be required as of 1st December 2019

Bob Iger’s massive bet on Disney’s future.

Sleep Deprivation Shuts Down Production of Essential Brain Proteins. The sleep deprivation pandemic is real in our society and there doesn’t seem to be signs of its abating.

How Amazon is redefining the expensive and wasteful process of returns

Boeing lead pilot warned about flight-control system tied to 737 Max crashes, then told regulators to delete it from manuals. Frankly, this is just disgusting. Boeing is one of the two plane manufacturers that dominate the sky and it still has this kind of behavior

Book: The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company

Admittedly, before reading this book, I already had vested interest in Disney. I am fascinated by the transformation that the company has been going through and I own its stock in my humble portfolio. Nonetheless, it is one of those books that I have read with more focus than I have others.

The book offers interesting insights into the transformation Disney had to go through to revive its Animations and fend off the disruption in the Entertainment industry. Through the words of Bob Iger, the delicacy of M&A negotiations is put on display, including prices paid for companies, the process to get the sellers to sell and the politics that come with acquisitions. To a fan of business strategies and technology, it’s fascinating to read.

One of the things I like about the book is the relationship between Bob Iger and the late great Steve Jobs. Bob repeatedly mentioned his admiration and love for Steve, even long after the late co-founder of Apple died. If you live your live so well that people fondly remember you long after you die and that you change lives while you live, it’s a life magnificently lived. Almost 10 years since his death, Steve is still an inspiration to me.

Bob’s account is an example of how patience and hard work can be rewarding in the long run. He used to be a guy grabbing coffee for Frank Sinatra. In his 50s and 60s, he ran one of the most iconic and influential companies in the world. He also gives away his leadership lessons which I will quote below.

All in all, if you are looking for an easy and good read, you won’t be disappointed with this one.

Decades after I stopped working for Roone, I watched a documentary, Jiro Dreams of Sushi, about a master sushi chef from Tokyo named Jiro Ono, whose restaurant has three Michelin stars and is one of the most sought-after reservations in the world. In the film, he is his late eighties and still trying to perfect his art. He is described by some as being the living embodiment of the Japanese word shokunin, which is “the endless pursuit of perfection for some greater good”

When Iron Man 2 came out, Steve took his son to see it and called me the next day. “I took Reed to see Iron Man 2 last night” he said “It sucked”

“Well thank you. It’s done about $75 million in business. It’s going to do a huge number this weekend. I don’t take your criticism lightly, Steve, but it’s a success and you’re not the audience” (I knew Iron Man 2 was nobody’s ida of an Oscar winner, but I just couldn’t let him feel he was right all of the time

Later, after we’d closed the deal, Ike told me that he’d still had his doubts and the call from Steve made a big difference to him. “He said you were true to your word” Ike said. I was grateful that Steve was willing to do it as a friend, really, more than as the most influential member of our board. Every one in a while, I would say to him, “I have to ask you this, you’re our largest shareholder” and he would always respond, “You can’t think of me as that. That’s insulting. I’m just a good friend”

After the funeral, Laurene came up to me and said, “I’ve never told my side of that story.” She described Steve coming home that night. “We had dinner and then the kids left the dinner table, and I said to Steve, ‘So did you tell him?’ ‘I told him’. And I said, ‘Can we trust him?’ ” we were standing there with Steve’s grave behind us, and Laurene, who’d just buried her husband, gave me a gift that I’ve thought about nearly every day since. I’ve certainly thought of Steve every day. “I asked him if we could trust you” Laurene said. “And Steve said, ‘I love that guy’ “

No matter who become or what we accomplish, we still feel that we’re essentially the kid we were at some simpler time long ago. Somehow that’s the trick of leadership, too, I think, to hold on to that awareness of yourself even as the world tells you how powerful and important you are. The moment you start to believe it all too much, the moment you look yourself in the mirror and see a title emblazoned on your forehead, you’ve lost your way. That may be the hardest but also the most necessary lesson to keep in mind, that wherever you are along the path, you’re the same person you’ve always been

Value ability more than experience, and put people in roles that require more of them than they know they have in them

“Avoid getting into the business of manufacturing trombone oil. You may become the greatest trombone-oil manufacturer in the world, but in the end, the world only consumes a few quarts of trombone oil a year!” He was telling me not to invest in small projects that would sap my and the company’s resources and not give much back.

At its essence, good leadership isn’t about being indispensable; it’s about helping others be prepared to step into your shoes – giving them access to your own decision-making, identifying the skills they need to develop and helping them improve, and sometimes being honest with them about why they’re not ready for the next step up

Technological advancements will eventually make older business models obsolete. You can either bemoan that and try with all your might to protect the status quo, or you can work hard to understand and embrace it with more enthusiasm and creativity than your competitors.

Weekly readings – 28th Sep 2019

Bike crash left Spokane man unconscious, so his Apple Watch called 911. One of those examples that will catapult the value and appeal of Apple Watch to a new height.

The Slow-Burning Success of Disney’s Bob Iger. I love the part where the article’s author talked about Bob’s work ethic and ability to keep his ego in check

The Milky Way Has Giant Bubbles at Its Center

7 Things You Didn’t Know About Plastic (and Recycling)

A Taxonomy of Moats

WeWork and Counterfeit Capitalism