Weekly readings – 22nd February 2020

The Merits of Bottoms Up Investing

I admit that I was initially fond of Lambda, but there has been growing coverage of the challenges that the startup faces and of what the company really is about. Here is one of the most damning articles: THE HIGH COST OF A FREE CODING BOOTCAMP

The Ride-Hail Utopia That Got Stuck in Traffic

Student debt in the US reached $1.6 trillion, yet graduates are having the hardest time ever to find employment

Unemployment among Americans aged between 22 and 27 who recently earned a Bachelor’s degree or higher was 3.9% in December — about 0.3 percentage point above the rate for all workers.

Source: Bloomberg

What Can the Stock Market Tell Us About the T-Mobile/Sprint Merger?

In light of the Coronavirus, here is how WHO advises us to wear a mask

Masayoshi Son and SoftBank struck again, this time with Oyo. Given the magnitude of capital involved, it’s incredulous to read this kind of shocking articles.

There were missteps at Oyo from the start. The Japan hotel team, led by a transplant from India named Prasun Choudhary, figured they could get to as many as 75,000 rooms in the first year, which would put them ahead of the Apa Hotels chain in the No. 1 spot. But they took as their starting point an inflated addressable market of 1.6 million rooms based on numbers from the local tourism authority: They included campgrounds, bed-and-breakfasts and pay-by-the-hour love hotels, which weren’t part of Oyo’s business plan, according to people involved at the time.

Oyo Life, the apartment rentals business led by another Indian lieutenant called Kavikrut (who like many Indians goes by one name), set the goal of 1 million rooms in part because it was a stunning, round number that would exceed the capacity of the Japan market leader, the people said. That was the target that caught Son’s attention in March.

The unpredictable economics of pawn shops

An interesting report by PwC on the consumer preference in the streaming battle

An interesting read on a software startup that helps coffee farmers

How Saudi Arabia Infiltrated Twitter

a16z compiled a report on Top 100 Marketplace startups

What is the proper way to drink whisky?

How to write usefully

An amazing piece of innovation from F1 Mercedes team that is an immensely ominous sign for their rivals

Vietnam – Raging Growth on Fragile Foundations

I am about to conclude a short vacation trip to my hometown in Vietnam. Coming back to Saigon, or more officially and formally known as Ho Chi Minh City, after two years away is an eye-opening. Areas that used to be abandoned are now inhabited. New businesses pop up in town, ranging from speakeasy bars, restaurants to a new airline. Incumbents are trying to reinvent themselves to stay competitive, as in the case of Grab. The city is littered with construction bonkers, even in the business area and main attraction site such as Ben Thanh Market. Changes seem to take place over night in arguably the New York of Vietnam, but they seem to be on fragile foundations

Infrastructure

If you are in Saigon, it won’t take you long to see the old and largely insufficient infrastructure that is being used by more than 10 million inhabitants. Streets most of which were built decades ago are now too small to accommodate the number of citizens that only increase over time. Big buses and a rise in car ownership worsen the situation. The streets across the city, especially in the downtown area, are almost undrivable between 7am and 8pm. It creates so much inefficiency when the time taken to travel a certain distance in this city is a lot more than what it should have been.

I was traveling to Hanoi, the capital, from Saigon last week. I arrived at the airport at 4am for a 5:30am flight, thinking that it would have been a breeze through the check-in and security. How wrong was I! The airport in Saigon has long been running way above its capacity. Funding for a new airport was just recently approved, yet the project has been in discussion for years. It won’t be another 5 years at least until Saigon can have a new terminal.

Public health

Ever since I touched down in Saigon, I have been warned about the hygiene of the food here. There is an accepted truth around here that unless you eat at fancy and pricey establishments, the food is likely drugged and doesn’t meet the hygiene standards, ranging from sugarcane juice, beef, pork or fruits. The number of cancer cases in Vietnam has been alarmingly increasing over the year. Is it just a coincidence or is there some correlation or connection between the lack of hygiene in the food and the explosion of cancer cases?

Another challenge that the city has to face is air pollution. There is virtually no regulation on the exhaust from scooters or vehicles in Vietnam. As the city is packed with folks, scooters and cars, the air is increasingly contaminated. Here is what it looks like around 8am from an airplane. I am pretty confident that it wasn’t fog

Skill labor

I’ll let the following excerpt speak about the quality of skill labor and education in Vietnam

Vietnam is 11th out of 12 Asian countries in a World Bank ranking of quality of human resources with 3.79 points out of 10.

South Korea tops with 6.91 points followed by India with 5.76 and Malaysia with 5.59, Chung Ngoc Que Chi of the Ho Chi Minh City Technical and Economic College listed these numbers in a presentation at a forum on enhancing Vietnamese workers’ skills held in Hanoi on Friday and Saturday.

She also cited a survey by the World Bank and the Central Institute for Economic Management (CIEM) of 350 businesses in production and services in Hanoi, HCMC and neighboring provinces, which showed that 66 percent of businesses employed foreign laborers and 36 percent of domestic businesses were dissatisfied with the quality of education and training of Vietnamese human resources.

Chi said Vietnam suffers in terms of both quality and quantity, with shortcomings in foreign language and IT skills and ability to use technologies. She blamed it on the large gap between the country’s vocational education and the market’s requirements, and called for forging close ties between schools and businesses for training.

Source: VnExpress

In my opinion, public infrastructure, public health and education are some of the core foundations of a country. So far, what I have seen on this trip hasn’t given me cause for optimism on these counts. We have a lot to do as a nation.

Colleges and Co. ripping off students

Huffington Post ran a very good investigative piece on how colleges and OPMs, the entities that help colleges run their online courses, rip off students. It’s quite long, but I guarantee that if you are interested in education in America, have a read.

Education should be free

It is no surprise at all that Americans are not satisfied with the education system and increasingly prefer acquiring skills in some other ways than going to college. The student debt in America reaches $1.5 trillion, only behind mortgage in America. It’s an insane phenomenon. Why are students saddled with debt by the thing that is supposed to help them get a better life? According to the article, when colleges had a chance to solve the issue by offering online courses and degrees, they chose their pockets over students.

How is it even possible that a university at #8 offers a similar online degree at almost a tenth of what universities at lower ranks offer? If Georgia Tech can break even at $7,000, what could justify the outrageous difference other than too much greed from the universities and OPMs?

I believe wholeheartedly that education, along with healthcare, should be free for citizens. It would lead to a lot of significant ramifications in policies, laws, and the society. Yet, if other developed countries can do so, why can’t America?

Is the reputation of the university worth the debt?

When I was a kid, my dream was to go to Harvard or an Ivy League school. I don’t know if I can, but if admission to a school like that means that I will be drown in debt, given that I know I won’t be good enough for a 100% scholarship, I won’t go there. I believe that education isn’t equal to schooling. If you study when others party, work when others slack off on the weekends, you can still have success and a good life. I am sure anyone of us met a person or have a friend who succeeds with hard work and no Ivy League degree.

We need regulations

Here is what the article mentioned about regulations over online education in the US:

Kaplan Higher Education never really recovered from the combination of business missteps and the intense public scrutiny of the for-profit industry in the late 2000s. In April 2017, Donald Graham announced that Kaplan University was being sold for $1 to Purdue University, Indiana’s public land grant college. It sounded like Purdue had picked up a distressed asset and turned it into a public concern. But that’s not exactly what happened.

What Purdue really did was create a separate organization, eventually named Purdue University Global. It was granted a highly unusual legal status by the Indiana legislature, in which it is simultaneously considered a nonprofit institution immune from Bob Shireman’s for-profit regulations and a private institution immune to public records requests.

It sounds impossibly convoluted, but it’s actually quite simple. Grand Canyon put all of its academic operations into a nonprofit that serves as a conduit for federal financial aid. (Last year, Grand Canyon received over $760 million from federal student loans, the most of any college or university nationwide.) The nonprofit university is also able to avoid local property taxes and for-profit regulations, not to mention the industry’s toxic reputation. But most of the profits eventually end up in the same place—with LOPE, a $5 billion corporation. Grand Canyon University is “not non-profit in any meaningful legal sense,” wrote Brian Galle, a former attorney in the tax enforcement policy section of the Justice Department, in a letter to the Department of Education

The person in charge of higher education at the department is Diane Auer Jones, a onetime official in George W. Bush’s Department of Education who worked for some of the most powerful operators in the previous for-profit scandals. [6] Before entering the administration, Jones operated a company associated with the private student loan industry and the main trade organization of for-profit colleges. Previously, she was the chief external affairs officer for the Career Education Corporation, which dealt with multiple lawsuits and government investigations during her tenure.Soon after starting at the department, Jones promptly threw out all of the regulatory work that her predecessors and career staff had been developing and began rushing through new versions that she wrote all on her own, according to a staffer currently working for Jones. “The political staff are writing the regulations in secret and the policy staff are kept in the dark,” the staffer says. (The Department of Education didn’t respond to a request for comment.)

Jones’ proposed rules, released in January, amount to a sweeping deregulation of higher education. They include abolishing a rule that prevents colleges from outsourcing more than half of a program to outside companies—for example, OPMs—and a rule that bans federal aid to programs where students don’t interact with an instructor. “We’re talking about basic questions here, like the amount of student learning we should expect and what the faculty role is,” says James Kvaal, an Obama White House official who is now president of the Institute for College Access and Success. “The prospect of removing any federal guardrails at all is really scary.”

What else can protect citizens from profiteers and crooked organizations besides regulations? Sadly, this doesn’t seem to be the case here.

No, it’s not capitalism

The article’s title is “the creeping capitalist takeover of higher education”. I have to clarify before ending this post that in my opinion, this is crony capitalism, not pure capitalism. Greed is good, but toxic and excessive greed isn’t. If you participate in a free market, follow the laws and succeed with your talent and effort, there is nothing with that. But if you skirt the laws, bend the rules and make money on others’ backs and lives, it is no longer capitalism.

Tool: Repl.it

I recently and fortunately came across a very interesting tool called Repl.it. Here is what it brings to the table:

Usually, the normal steps in programming include writing code in a text editor such as Pycharm or Eclipse, uploading to a repository such as GitHub and pushing it to a PaaS like Heroku or PythonAnywhere. However, even a text editor such as Pycharm requires some installation and housekeeping that can seem daunting to beginners.

Repl.it lowers that entry barrier. It allows coding in many popular languages right from a browser. Below is a quick code I wrote to have a dropdown menu from 1 to 49:

repl

All it takes is Internet, a browser and one-minute sign-up.

As of now, Repl.it seems to be focused on students. It’s free and its premium packages are very student-friendly. The Classroom Pro package is only $1/student/month. I think coding is fun and Repl.it seems to be highly useful in making coding accessible.

I am not an investor in the tool or one of its employees. Just a fan. I am glad that the startup recently raised some funding from the VCs.

What should be taught more at schools

After years of being at school, I cannot wait to graduate in a few months’ time. Looking back at my academic career so far, even though schools offer some values, most of the courses can now be learned online provided that one has the will and the discipline to learn. What stands out more to me is what schools don’t teach. Here are some lessons that I feel are missing at schools, but play an important role in one’s life and career

Personal finance

I cannot stress enough how important this is. I have seen and known people get thousands of dollars in student loans for education. Then, get more debt in car loans to buy that new car that will be worth significantly less a few years from now. When a new car arrives in your home, it comes with parking fees, gas expenses and insurance. Consequently, monthly expenses rise and savings become even smaller.

On top of that, some gather whatever savings are left to make a down payment for a house and will still have to make installments on a regular basis. A monthly paycheck, after tax, will be used to pay for critical expenses such as rent, food and gas. What is left is used to pay for interests and some outstanding debt. In the end, there is almost no savings. I once read a report recently that many Americans cannot make a $400 emergency payment. Here is a simple breakdown of monthly income and expenses. It is for illustration purpose only. The relative size of the components is different in reality.

Income and Expenses

I didn’t take into account expenses such as bars, celebrations, birthday gifts, wedding gifts, books, travel, shopping, that broken Macbook charger, that flat tire, that media subscription you appreciate so much and others that add values to our lives.

What if something terrible happens and you are hospitalized? How will you pay for the hefty medical bills? It is impossible to assume that you won’t get sick even once for years. It’s practically unsustainable to cross-finger and hope that no severe accident such as car accidents will not happen ever. One of my classmates was hit in a car accident through no fault of her own simply because a person ran the red lights to make it to a Black Friday sale!

There is no shortage of studies and media coverage on pay day loans – a quick way to get your hands on cash, but at the expense of extremely high interest. Life will quickly become just a constant loop of being stuck to your job and paying off debts. If you don’t like the current job, you won’t be able to change jobs or quit because of the debt burden. You don’t have much margin of error or freedom to enjoy life. The lack of freedom to make choices is highly devastating.

Communication

Too cliché? Nah, it is really relevant based on what I have seen so far. . I have seen a lot of PowerPoint decks made by experienced professionals that are littered with text without visuals. As data is taking the world by storm, the ability to convey insights from data is important as well. How could anyone understand anything from highly complex Excel sheets?

The ability to present and communicate effectively is very crucial in one’s career. However, I think that point is missing at schools.

Writing is thinking

It’s easy to sit down, think of an idea and feel that it’s the best idea that has ever been thought of. Unfortunately, it is not true, most of the time. There are a lot of gaps in our thinking unless we write it down on a Word document or a sheet of paper. When we write, we can think more about the points being made, the gaps in logic, evidence to back the logic up and the way to present it. It’s true that students have to write a lot of papers. They; however, have little idea on WHY they have to write papers except for grades.

Reading

It’s all in the books. I am not in a position to tell what one should read. One should just read to see where it is going and what areas one is interested in. Let’s say if a person reads constantly and improves by 1% every month, starting from a base ability value of 100, here is how the person will grow after a while

Ability value

After 4 years, you’ll grow by more than 50% and become twice as good as when you started after 7 years.

Titles, fame or wealth doesn’t always equal to being right

Being logical and having a good idea are not exclusive to fame, authority, fame or wealth. CEOs make mistakes and are dismissed all the time. Crypto fans would be happy to recall that Jamie Dimon – CEO of JP Morgan – dismissed the value of cryptocurrency at first and made a 180 turn to embrace it. I once heard a classmate publicly claim in class that he regretted not mirroring Warren Buffett’s investments. He is a legendary investor, but he is not immune to mistakes nor he is right all the time.

My point is that it’s important to stay vigilant and look at ideas for their merits, not for the fame, titles or wealth of the person who proposed them.

I believe that graduates would be much better prepared for life and career post education if these lessons were emphasized more at school.