Weekly reading – 16th July 2022

Business

Don’t Read History for Lessons. It’s true that history is one of, if not, the best teachers that we can have. The problem is that it’s often context-dependent and we have to be careful when using history for lessons. This post explains why

($) Netflix Seeks to Renegotiate Deals to Show Ads Next to Popular Shows. “When Netflix wanted to offer customers the ability to download content, it had to renegotiate its licensing agreements with outside suppliers. The price tag for download rights was an additional 10% to 15% of the agreement, one studio executive said. In discussions with content providers, Netflix has declined to provide details on its advertising plans, including where it will place commercials, what content will be on the platform or what it will charge consumers for the service, studio executives said. Entertainment-industry attorney John Berlinski said if Netflix doesn’t have an explicit agreement allowing it to place ads in and around content, it could face risks in doing so. Since top talent and producers often get a share of profits from successful shows, they will be keenly interested in whether studios collect bigger paychecks from Netflix after amending their deals.”

VW creates new company and enters global battery business. This is another signal that electric vehicles will be the future. VW believes so and puts money where their mouth is with a €20 billion investment in a battery company. A strategic investment to control their fate as much as possible. Plus, the US already crossed the critical point of mass adoption a couple of weeks ago.

($) Big-Name Investors Pour Billions Into Clean Hydrogen Projects. “The newest wager is on a Nebraska startup trying to upend the burgeoning industry of clean hydrogen with a process that uses natural gas but traps carbon by producing an ingredient vital for everyday products like car tires.” Monolith is the name of the startup. On their website, they have a simple demonstration of the process. It looks super interesting and a real boost to our fight against climate change. I’d love to learn more about how they source the natural gas required for this process and how that’d affect the net outcome on our environment.

A really great episode on Rolex. I didn’t know that Rolex was managed by a non-profit organization. It’s also mind-blowing the length Rolex goes to protect their brand integrity and products.

How peak events like Prime Day helped Amazon navigate the pandemic. A look into how Amazon does forecasting. It is hard.

Lessons from History: The 1990s Semiconductor Cycle(s)

A wonderful talk by Howard Marks at Goldman Sachs

Other things I find interesting

In Sri Lanka, Organic Farming Went Catastrophically Wrong. An example of when an ill-conceived and poorly-thought-out policy led to an economic and social disaster

Lifestyles. Another banger post from Morgan Housel. “I have no idea how to find the perfect balance between internal and external benchmarks. But I know there’s a strong social pull toward external measures – chasing a path someone else set, whether you enjoy it or not. Social media makes it ten times more powerful. But I also know there’s a strong natural desire for internal measures – being independent, following your quirky habits, and doing what you want, when you want, with whom you want. That’s what people actually want. Last year I had dinner with a financial advisor who has a client that gets angry when hearing about portfolio returns or benchmarks. None of that matters to the client; All he cares about is whether he has enough money to keep traveling with his wife. That’s his sole benchmark. “Everyone else can stress out about outperforming each other,” he says. “I just like Europe.”

Stats

The US is the latest country to pass what’s become a critical EV tipping point: 5% of new car sales powered only by electricity.

June U.S. eGrocery sales total $7.2 billion

Prime members purchased more than 300 million items worldwide this year

Source: awealthofcommonsense

Weekly reading – 4th December 2021

What I wrote last week

I shared my research on real-time payments

Good reads on Business

Glass bottle shortage leaves US distillers high and dry. The supply chain challenges still persist. While the demand for spirits and wines in the U.S continues to be strong, the task of finding glass bottles becomes more challenging and expensive. One glass supplier considers more than quadrupled the price of a container. That kind of price increase will make your next bottle fairly more pricey.

The new memo by Howard Marks: The Winds of Change. Howard touches on many topics from politics, regulations to macro economics. Have a read and if you have time, read his other memos too.

The Rising Tide of Semiconductor Cost. The technological advances we made in chip design and production are not going to make chips cheaper any time soon.

Amazon Builds Out Network to Speed Delivery, Handle Holiday Crunch. “As of mid-November, more than 98% of parcels that arrived at Amazon’s delivery centers, which typically are in close proximity to packages’ final destinations, were being delivered the next day, according to estimates from research firm ShipMatrix Inc. At the same time, some items like household products and sporting goods were showing delivery windows of a few days, ShipMatrix said, emphasizing Amazon’s message to shop early.” As Amazon continues to invest aggressively in its warehouse and delivery network, it’s more likely that the company will raise the bar, making the next day or same day delivery a norm. When that happens, other retailers will have a hard time catching up. Replicating the same recipe requires a lot of capital, time and expertise. I think the more Amazon succeeds in raising the bar, the better the market will be for delivery services like Instacart, Uber or DoorDash

Ghost Kitchens Are Proving to Be a Messy Business, as Reef Global Shows. “Since the summer, local officials in New York City, Houston, Detroit and Chicago have suspended operations at some or all of Reef’s fleets of trailers for violating regulations, totaling more than 25 closures. Many of the suspensions were for kitchens that were operating without permits, while others were for failing to tow the trailers to a central commissary every day, a requirement for food trucks in many cities. Utility hookups routinely take months longer than expected, requiring expensive generators and water deliveries, according to former Reef managers. Food waste is a consistent problem, as is a broader labor shortage in the food-service sector that has sent its cooks’ wages soaring.

Payments are eating the world. A very interesting report by JPMorgan Chase on the state of payments

Oct 2021: U.S. Online Grocery Sales Stabilize at $8.1 Billion. This study of online grocery sales in the U.S is interesting. It claims that 50% of U.S households bought groceries online. The average order placed by an active customer is 2.6 per month and the average value for order is $70. That’s almost $200 in online groceries, more than what I expected.

Amazon charges sellers fees that are high enough to offset losses from Prime, a new report says. Amazon can exert this much control over sellers because it can bring consumers to the table. Sellers may not be pleased with how Amazon squeezes them, but if they want to rely on the eCommerce platform for reach and sales, they have to deal with its shenanigans too.

Stuff that I found interesting

How the Ancient Romans Went to the Bathroom. “Despite the lack of toilet paper, toilet-goers did wipe. That’s what the mysterious shallow gutter was for. The Romans cleaned their behinds with sea sponges attached to a stick, and the gutter supplied clean flowing water to dip the sponges in. This soft, gentle tool was called a tersorium, which literally meant “a wiping thing.”

Stats

A new paper estimates that 67% – 76% of new Covid infections in Germany in October 2021 came from the unvaccinated

Shopify merchants around the world recorded $2.9 billion in Black Friday sales

Black Friday 2021 sales in the U.S dropped from $9 billion in 2020 to $8.9 billion this year

Cyber Monday online sales in the U.S hit $7.1 billion in 2021, down from $10.8 billion last year

More than 17 million UK customers have now used a buy now pay later 

The U.S generates 42 million metric ton in trash a year, more than all EU nations combined

Weekly reading – 16th Jan 2021

What I wrote last week

The Costco Model

Business

The latest memo from Howard Marks, just like his previous, doesn’t disappoint. He mentioned all the common senses in his memo which a lot of analysts and investors don’t seem to remember, myself included.

An informative interview by Patrick on an expert in the food industry

Neil struck it again with a sensible post on Apple’s share buyback

Visa’s new study on worldwide contactless payments after Covid

Bill Gates: America’s Top Farmland Owner

Second Measure looked at retention rate for different cohorts of Disney+ subscribers. I have quite a few questions here. How much of the bundle base came from the 3-year subscriptions sold at D23? Does the Prime Video include Prime Subscription which automatically includes Video?

Technology

You will soon be able to unlock your BMW with an iPhone in your pocket

Apple’s M1 chip can help you train models faster

DuckDuckGo is hovering around 100 million users/a day now

What I found interesting

What it’s like to go through a dramatic career change

If you are a left-wing protester, you’re 3x more likely to be forcefully confronted by the police in the US. My guess is that except from the aggressive looters, left-wing protesters are peaceful and give an impression to the police that they can use force against the protesters. Right-wing protesters appear more aggressive and intimidating. Plus, I wonder if the results are skewed because there are more states with the GOP-controlled local authorities than those with Dems-controlled authorities.

Dire Wolves Were Not Really Wolves

European Union gave citizens the “right to repair

This video clip is about how much Swedes trust their government and believe that their high taxes are in their benefits through free healthcare, education, great infrastructure and a great living standard. It can’t be more different from the US. Here, every time social benefits are mentioned, a lot of people can’t call them “socialists” or “communists” fast enough. It’s super fascinating to see people increasingly pay more taxes (as %) compared to billionaires and are convinced that a little bit of saving on taxes every month is worth having a low living standard and paying a lot of money for everything else. There is a natural and inherent distrust in the government that is the root of so many problems around here

Trump’s coup attempt of 2020-21, like other failed coup attempts, is a warning for those who care about the rule of law and a lesson for those who do not. His pre-fascism revealed a possibility for American politics. For a coup to work in 2024, the breakers will require something that Trump never quite had: an angry minority, organized for nationwide violence, ready to add intimidation to an election. Four years of amplifying a big lie just might get them this. To claim that the other side stole an election is to promise to steal one yourself. It is also to claim that the other side deserves to be punished.

When that violence comes, the breakers will have to react. If they embrace it, they become the fascist faction. The Republican Party will be divided, at least for a time. One can of course imagine a dismal reunification: A breaker candidate loses a narrow presidential election in November 2024 and cries fraud, the Republicans win both houses of Congress and rioters in the street, educated by four years of the big lie, demand what they see as justice. Would the gamers stand on principle if those were the circumstances of Jan. 6, 2025?

Source: The New York Times

Weekly readings – 16th May 2020

A scathing critique of AWS from this engineer

Related to the link above, this is quite a blog post from someone who used to work at Amazon and was working at Google at the time of the writing

Content, Cars, and Comparisons in the “Streaming Wars”. Matthew Ball’s essays are always great to read

The secrets behind the runaway success of Apple’s AirPods

How Morning Brew grew to $13m in revenue with 33 employees

Vauban Architecture: The Foundation of Central and Northern Vietnam’s Citadels

The latest memo from Howard Marks

How the most prized degree in India became the most worthless

WeChat Surveillance Explained

If Landlords Get Wiped Out, Wall Street Wins, Not Renters

All applications used at GitLab

Chicago Will Now Require Food Delivery Apps to Disclose Itemized Cost Breakdown. You can protect restaurants or you can protect delivery apps. In this case, I don’t think you can do both. I am glad Chicago went with restaurants

Source: Crunchbase

How Khan Academy Successfully Handled 2.5x Traffic in a Week

The faded beauty of abandoned cars across Europe and the US

“Visa saw an 18% rise in U.S. digital commerce spending during the month of April, excluding the travel category, as face-to-face transactions fell 45%”

From Boston to Saigon: A Coronavirus Quarantine Diary

Lessons From Slovakia—Where Leaders Wear Masks

Senate Votes to Allow FBI to Look at Your Web Browsing History Without a Warrant. I’d argue that this is a bridge too far into user privacy

Next time if you want to support local restaurants by ordering on delivery services like Grubhub or DoorDash, you may want to do a bit of research on how those services treat restaurant partners. Here is an example

Weekly readings – 5th April 2020

Colonial-era Nile river treaties are to blame for the unresolved dispute over Ethiopia’s dam

Lessons from Italy’s Response to Coronavirus

Covid-19 impact on retail

How Apple is working from home

Source: Visual Capitalist

Phone companies are required to take measures to combat robocalls

Howard Marks’ new note

Why Germany’s Coronavirus Death Rate Is Far Lower Than In Other Countries

Work from home productivity data

A story of how Microsoft struggled to get Skype to be competitive in the communication app world

How WHO Became China’s Coronavirus Accomplice

Google released Community Mobility Reports of areas and countries around the world as folks are staying home amid the threat of Covid-19

Weekly readings – 5th October 2019

Grab Accounts for 73% of Ride-Share Trips in First Half of 2019 in Vietnam.

Retailer Adoption of Apple Pay Quickens. Since I was able to use Apple Pay on my phone, I have been using it as the first payment method, even in a city as small as Omaha. I have been a pretty happy user ever since.

Source: Loup Ventures

Comparison of smart digital assistants by Loup Ventures

Meet the Women Leading Netflix Into the Streaming Wars

The man who built his own Lamborghini

Dog-walking startup Wag raised $300 million to unleash growth. Then things got messy. SoftBank doesn’t seem to be the Midas that some hyped it to be with its massive checkbook, does it?

Latest memo from Howard Marks: On the Other Hand

Researchers Discover the Tallest Known Tree in the Amazon

Measuring Apple’s Content Distribution Arm

WeWork Used These Documents To Convince Investors It’s Worth Billions. A long but good article on the accounting jujitsu that WeWork employed

Weekly Readings – 6th April 2019

The Enormous Numbers Behind Amazon’s Market Reach. A nice overview of where Amazon stands in various industries with visuals. 42% of the book retailing market, 45% of the E-commerce space, 32% of the cloud computing market, 35% of the online apparel area. From a business strategy and execution standpoint, Amazon is a remarkable success.

Death by a Thousand Clicks: Where Electronic Health Records Went Wrong. An astonishing and remarkable (long) read on Electronic Health Records in America. I urge you to have a read if you stumble upon this post of mine. Despite throwing billions of dollars at the nationwide EHR effort since President Obama’s first tenure, America has had little to show for it. I’ll let the former Vice President – Joe Biden share his story: “I was stunned when my son for a year was battling Stage 4 glioblastoma,” said Biden. “I couldn’t get his records. I’m the Vice President of the United States of America … It was an absolute nightmare. It was ridiculous, absolutely ridiculous, that we’re in that circumstance.”

Digital India. A very interesting report by McKinsey on the digital landscape in India. Sneak peek below

By McKinsey

Howard Marks’ latest memo. As insightful and enlightening as always.

Amazon’s Rise in Ad Searches Dents Google’s Dominance. Amazon as an advertising giant is here. Established ads agency such as WPP or Omnicom reportedly spent a good chunk amount of money on Amazon ads on behalf of their clients.

Lyft stock down by 12% and some thoughts on investing

After popping up 8% on the first day of its IPO last Friday, Lyft’s stock dropped by almost 12% today. That’s what I find baffling about the stock market. How much of the business could change in the span of 4 days? I haven’t encountered news that could justify the drop of that size. What changed? Will it go further down tomorrow? Or will it shoot back up again? And by how much? I literally have zero idea.

Charlie Munger once said that if you want to make money by buying low, you have to know when to sell high and it’s hard. Given what I have seen so hard, he is right. You don’t know when it is “high” enough to satisfy your own greed. Some may say that determining an intrinsic value of business by discounted cash flow (DCF) will be helpful in knowing when to buy and when to sell. That’s true, but DCF itself isn’t an easy and straightforward practice. It’s really hard. Here in this clip (around 6:50), Charle (not sure if he was 100% serious) mentioned that he never once saw Warren Buffett do a DCF. Plus, a renowned expert in valuation, Aswath Damodaran, admitted that he missed the mark way off when he tried to value Uber in 2014. I once participated in an M&A competition with three of my close friends. In the course leading up to the contest and the contest itself, we had to do quite a few valuation with DCFs. The method involves a lot of assumptions and it’s more art than science. Each company requires a different approach and almost no valuation is the same. If an expert such as Professor Damodaran struggled to get it right, what are the odds of ordinary folks nailing it? My money is on the “not very high” bet.

I don’t know a perfect method in investing, but I agree with Warren Buffett that buying or selling on prices is not investing. I’d recommend these two books if you are interested in life advice and investing. Poor Charlie’s Almanack and The Most Important Thing: Uncommon Sense for The Thoughtful Investor. If you have time, read more from Charlie Munger. He is really a wealth of wisdom. Plus, you can read financial reports (SEC filings of the companies) or S-1 if companies are filing to go public and subscribe to Seekingalpha.com or Yahoo.com to read the transcript of their earning calls. Plenty of useful information can be had from such sources.

I have my own reasons to invest in the companies in my small portfolio and if I go bust, at least I will learn a ton about business and go out on my own terms.

Weekly Readings – 23rd March 2019

Chi Dung’s R collection. This guy’s work is impressive. If you are interested in R, take a look.

The Big Brexit Short. I really like this kind of investigative videos by Bloomberg. I honestly don’t follow Brexit enough. Hence, it’s good to know about this potential scheme. I highly recommend you check out Bloomberg’s Youtube channel. Treasure trove of good information.

What the hell is going on. A very long, yet informative study on how the switch from information scarcity to information abundance affects business, education and politics.

On the Hunt for Japan’s Elaborate, Colorful Manhole Covers. An interesting story on a beautiful aspect of Japan’s culture.

How India conquered YouTube. I find the article fascinating and informative. A good overview of Youtube’s popularity in India and the media consumption behavior in the country.

Howard Marks’ memos. His excellent and insightful memos are praised and read by Warren Buffets and many investors.

I found two links here and here that are very helpful in understanding the subscription model.

Nine Reasons Why Disney+ Will Succeed (And Why Four Criticisms are Overhyped). A fair and detailed piece on Disney+, Disney’s upcoming streaming service. I cannot wait to try the service myself

Inside AirBnb’s “Guerrilla War” against Local Governments. A very good article on how AirBnb fought local governments in the US to avoid taxes and restrictions that the local lawmakers sought to put on them. I am a believer in the fact that if the law allows you to avoid taxes, you have every right to not pay taxes and stay competitive. However, fighting hard to stop new laws (laws always play catch-up with the business world) intended to make AirBnb pay taxes is a bit too far. Loss of taxes strips a local government of necessary revenue to fund projects that will benefit citizens. If your business earns millions of dollars in revenue and profit, what’s the reason for not paying taxes? Simply by “being a platform”?

Pinterest S-1. The photo bookmarking company filed to go public.

Video: Howard Marks interview with Tim Ferriss

The stock markets are crashing now. For quite obvious reasons. Tariffs, trade wars, the government shutdown that has no signs of being abated soon. Markets don’t like uncertainty, chaos or unpredictability.

The S&P500 has gone down by 15% since October. Apple has lost 38% of its market capitalization in the same time frame. My phone has repeatedly received notifications on the 52-week lows of the stocks in my portfolio for the past few weeks.

The knives have started falling. Should you stand still and try to catch the falling knives?

I listened to the interview between Tim Ferriss and Howard Marks, the author of the book: The Most Important Thing: Uncommon Sense for The Thoughtful Investor; which I highly recommend.

Howard argued that it is only when the knives are falling are people terrified and do the bargains show up. If we wait till the dust settles, the bargain will be gone. But when should one start buying to take advantage of the downturn? It’s up to one’s skills. Howard also cautioned that buying during the downturn isn’t enough to guarantee returns. Investors have to be right first and if investors want to outperform the markets and everyone else, they must have insights that no one has or the 2nd layer of thoughts.

If you are interested in investing and business, it is a great interview with a lot of insights. Have a listen while driving or working out or cleaning your place. It’s worth your time.