Weekly reading – 22nd October 2022

What I wrote last week

Apple’s pricing strategy

Business

Kroger has to win over Wall Street and Washington on its Albertsons deal – here’s how it plans to do that. It’s entirely plausible that there are operational synergies between the two companies. For instance, instead of having two purchasing departments of 1000 people, the combined company may only need 750 after the acquisition. The combined forces can likely result in more bargaining power and lower item expenses. What I seriously doubt are 1/ whether the two companies can gel together culturally and 2/ whether they have the capability to pull off advertising. Cultural mismatch is among the biggest reasons why acquisitions or mergers fail. The bigger a transaction, the bigger this risk. Regarding advertising, yes, it is a high-margin business. But these two grocers hardly have experience in delivering the kind of advertising that can convince investors that splurging out $25 billion is the best use of their capital. We’ll see.

($) Even After $100 Billion, Self-Driving Cars Are Going Nowhere. “Our driverless future is starting to look so distant that even some of its most fervent believers have turned apostate. Chief among them is Anthony Levandowski, the engineer who more or less created the model for self-driving research and was, for more than a decade, the field’s biggest star. Now he’s running a startup that’s developing autonomous trucks for industrial sites, and he says that for the foreseeable future, that’s about as much complexity as any driverless vehicle will be able to handle. Self-driving companies have fallen back on shortcuts. In lieu of putting more cars on the road for longer, they run simulations inside giant data centers, add those “drives” to their total mile counts, and use them to make claims about safety. Simulations might help with some well-defined scenarios such as left turns, but they can’t manufacture edge cases.

World’s top chip equipment suppliers halt business with China. The measures sound draconian, but in order to stop China from growing its semiconductor industry, I believe this is what it takes. At least, it will bring the Asian country to the negotiation table

Shein and the Tech Cold War. If you heard about Shein but don’t know much about the company, read this!

NFL Sunday Ticket still up for grabs as Apple pushes for flexibility with game rights. As an Apple shareholder, I do think Apple is doing the right thing by holding its grounds. Apple TV+ is still a minor player in the streaming market and likely unprofitable at this point. Tacking on an NFL package that costs arms and legs wouldn’t make it a profit center overnight. Hence, there needs to be a strong business case for Apple to shell out the kind of money that NFL is demanding. If there is no win-win solution, I’d rather see Apple leave the negotiation.

Apple freezes plan to use China’s YMTC chips amid political pressure. One of the most valuable companies in the world put on hold a product plan which it has been working on for years because of geopolitical conflicts between the US and China.

($) Coming Soon on Netflix: A New Netflix. Content released in batches, instead of the binge model. Focus more on quality instead of quantity. Crackdown on password sharing. A new ads-supported tier. A significant change in culture. A new Netflix is starting to form. Bears will say that because Netflix is doing all the things it said it would never do, that’s a sign of a company in decline. Bulls will argue that the new changes will allow Netflix to compete in a hyper-competitive streaming market. Either way, the company is unlikely to regain its former valuation or the “darling of Wall Street” position that it once held

Is the Uber, Lyft and gig economy battle over workers nearing its end game? It is unreasonable to force companies to pay full-time compensation to workers who want the flexibility of the gig model. Regulators on the left love to enact rules to protect workers’ interest. The intention is great, but they need to find a common ground here. Right or wrong, the fact remains that many workers love the freedom that the gig model offers. Any new regulation needs to take that into account. Plus, additional expenses will eventually be passed onto consumers. Unlikely there is competition as the biggest players like DoorDash, Uber or Instacart will have the scale advantage over smaller companies.

Exclusive: Amazon’s attrition costs $8 billion annually according to leaked documents. And it gets worse. A damning report on employee attrition problem at Amazon. It paints a picture of a company that has serious control issues. Andy Jassy’s reign has been littered with challenges so far. Stock rout, slow growth, miscalculated planning in terms of hiring and warehouse capacity, departure of experienced veterans and leaders, and now this. I am a fan of Amazon and a shareholder myself, but this really gives me some food for thought on the outlook of the company

Source: Twitter

Other stuff I find interesting

New York seems to have a weed store on every corner. None of them are legal. A fascinating read on the unnecessarily complicated situation regarding the legality of marijuana selling and buying in New York.

Why high speed rail hasn’t caught on. The economics of high speed rail (HSR), the bumpiness of the Earth, the technical challenges of building and maintaining safe trains are the main factors why HSR is not yet popping up in many countries

Minerva Lithium uses absorbent material to change the way we extract lithium. The tech here looks very promising, given the importance of lithium in how we advance technologies and how harmful the extraction of lithium is environmentally

Stats

Almost 25% of the world’s sea bed has been mapped

75% of the Time We Spend With Our Kids in Our Lifetime Will Be Spent​By Age 12

As of Q3 2022, Apple Pay captures 44% of in-store mobile wallet transactions

How Americans spend their money
Source: Visual Capitalist

Weekly reading – 6th August 2022

What I wrote last week

Apple Q3 FY2022 Earnings

AWS, what a business!

Even with a loss of $2.6 billion, Uber had a great quarter

Business

($) America’s New Energy Crisis. A worrying report on the state of the energy supply in the US. Demand continues rise and unfortunately, so do oil prices. Projects to produce green alternatives take a long time to be completed and integrated into the national grid. “As U.S. power supplies tighten, developers are struggling to build these projects quickly enough to offset closures of older plants, in part because of supply-chain snarls. Another reason: It takes longer to approve their connections to the existing electricity grid. Such new requests neared 3,500 last year compared with roughly 1,000 in 2015, according to research from the Lawrence Berkeley National Laboratory. Typical time needed to complete technical studies needed for that grid approval is now more than three years, up from less than two in 2015. One renewable-energy developer, Recurrent Energy, filed more than 20 of these grid-connection requests last year in California, a state that needs more clean power to replace several gas-fired power plants as well as a nuclear plant slated for retirement in the coming years. It took the company seven years to get approval and construct a separate battery storage project in that state.”

($) JPMorgan Is Building a Giant Travel Agency. “It bought a booking system, a restaurant review company and a luxury travel agent. It is building its own airport lounges and a force of thousands of travel agents. A new website will launch in the coming months. JPMorgan estimates that its customers account for one of every three dollars spent on leisure travel in the U.S., though those customers book only a tiny amount on the Ultimate Rewards website. With the new offerings, JPMorgan executives believe the bank could capture $15 billion in bookings in 2025, five times what it handled before the recent buildup. That would make it the third-biggest travel agent in the country, based on 2021 volumes, according to industry publication Travel Weekly. The plan has risks. Travel-rewards giveaways have proved expensive for JPMorgan and other banks, and they haven’t always led to the lasting relationships the banks hoped for. JPMorgan also has important corporate partnerships with airlines and hotels that expect the bank to send customers their way. Some of those partners have already complained about the success of Sapphire taking away customers from their cards. The bank is already seeing early signs of that luxury demand. The average price Chase customers are paying for hotels is more than double the industry average, the bank said.”

From legroom to airfare: How JetBlue’s takeover of Spirit could change air travel. If you don’t know how expensive it is to travel domestically in the US, take a trip to Europe and try to fly within the continent. I was really shocked the first time I booked a domestic flight here. I am still shocked sometimes nowadays. There is competition between major airlines, but prices are still high because there is no regulatory pressure on a handful of airlines that fly customers. I don’t know if this merger will help anything. Having another major may drive air fares down. But it could as well join the fun and charge a lot.

US, Japan reaching for a 2-nm chip breakthrough. The race to secure semiconductor supply for the future amidst the political threat from China is more intense than ever. I don’t think China, regardless of whether Xi will be in charge, will give up Taiwan, home to TSMC. It’s not only because TSMC is THE fab of the most advanced chips in the world, but it’s also because China believes Taiwan belongs to them and has no rights to independence. Any nation’s leader will not fulfill their duty if they don’t think about hedging this risk. US and Japan are doing the right thing here. Better late than never.

Ad tracking rules could become much stricter in Europe; Apple’s ATT vindicated. Companies that rely on ads dollars should really pay attention. “This is the single, most important, unambiguous interpretation of GDPR so far. It backs up the approach of Apple.

($) Netflix Is Scrambling to Learn the Ad Business It Long Disdained. “One of Netflix’s goals was to secure a big “minimum guarantee”—a promise that it would get a large influx of ad revenue to limit its financial risk, say people familiar with the discussions. Netflix also hunted for a senior leader with advertising expertise, mindful that it knew little about the business of selling ads. The company approached at least two top Comcast executives for a senior role while the partnership negotiations were continuing with their employer, angering the top brass at the cable giant, some of the people said. Mr. Hastings has set lofty financial ambitions for the ad business. He and other company executives have told investors and ad industry executives privately in recent months that Netflix will eventually be able to charge advertisers about $80 for every 1,000 views of an ad by helping them target specific audience segments, people familiar with the discussions said. That would put Netflix among the most expensive destinations for ads, alongside top NFL television programming. Creating an advertising-supported tier isn’t the only about-face the company is making in its quest to revive growth. After years of treating password-sharing by customers as a marginal problem—Mr. Hastings said in 2016 he loved the practice—Netflix plans to begin charging households a sharing fee sometime in 2023.

Chip Makers Have a Message for Car Makers: Your Turn to Pay. The ever-growing demand for chips turns the negotiation tables around. Chip manufacturers now command more bargaining power than they ever have. Car producers have no choice but either put up or shut up. As every car company is now racing to bring electric vehicles and trucks to the market, they won’t shut up.

Other stuff I find interesting

Some wonderful photos of my country taken by an award-winning photographer

US regulators will certify first small nuclear reactor design. I understand that there are concerns over safety and nuclear waste, but nuclear is perhaps the best tool at our disposal to generate clean energy at scale to accommodate the ever increasing demand. I wonder how and/or if this step would help increase the use of nuclear power

Who Is Collecting Data from Your Car? An eye-opening read on the vehicle data world

Tails, You Win. Now that I think about it. Love is just pure dumb luck. The person that you fall in love with happen to love you back. If you manage to fall in love and spend the rest of your life with the same person, creating happy moments and sharing wonderful children and grandchildren, that’s as taily as tails get.

Biden wants an industrial renaissance. He can’t do it without immigration reform. As an immigrant myself, I can tell you that if I had known what I do now, I would not have come to the US. The immigration process here is very talent-unfriendly. The country pours billions of investments into technology, yet the immigration system is antiquated and undoes all the good that such investments bring. To secure the future of the US, the government needs to massively and quickly reform its immigration

Hidden menace: Massive methane leaks speed up climate change. It’s horrifying to learn that we are pumping an incredible amount of this polluter into the air while knowing that it can speed up climate change significantly.

The U.S. made a breakthrough battery discovery — then gave the technology to China. I could hardly believe what I read. A promising battery technology took a dozen US scientists, 6 years and millions of taxpayers’ money to be developed. Then, the Department of Energy transferred the technology to a company based in China where it is currently further developed and produced

Stats

HALF of the nation’s clean power is generated by nuclear energy

Gen Z has led all generations in terms of 30-59 day credit card delinquency this year, according to Vantage Score

OnlyFans has 200 million registered users

Globally, only 9% of plastic waste is recycled while 22% is mismanaged

Weekly reading – 30th July 2022

What I wrote last week

Book review: Soul In The Game: The Art Of A Meaningful Life

I adopted the Mediterranean Diet

Take-aways from Netflix’s Q2 FY2022

Business

($) Bed Bath & Beyond Followed a Winning Playbook—and Lost. The urge to change strategy and sell private labels quickly while ignoring the required changes to the existing infrastructure hurt Bed Bath & Beyond. They didn’t have time to design, build and market their private label brands properly. And there is Covid, which makes the situation worse for the big box retailer. Its website is antiquated and doesn’t offer pick-up option for customers. The latest reminder that a strategy may be sound, but execution matters

How the Durbin Amendment sparked fintech innovation. In case you wonder how smaller banks compete and how fintech startups can offer rewards, even on debit cards. A good primer on the Durbin Amendment

($) Jack Ma Plans to Cede Control of Ant Group. It’s interesting to read how Jack Ma structures the ownership of his voting rights and shares at Ant Group. Essentially, two companies control a hair higher than 50% of Ant Group shares. Jack Ma controls the voting rights of such two companies while sharing the share pool equally with two executives from Ant Group. Jack already planned to step away completely from the company he founded for years, but delayed the decision so that the IPO could go smoothly. His debacle with the Chinese government took care of that. It’s, again, amazing what little an unfathomably rich and powerful guy like Jack can do to the Chinese government.

How Big Tech Runs Tech Projects and the Curious Absence of Scrum. A very interesting post on scrum and by extension, project as well as resource management. One common mistake that I often see, especially from people without experience with scrum before, is that scrum and agile is this magic bullet to increase productivity and efficiency. Like any tool, yes, it theoretically can, but it has to be used in the right way. As you can see in the post, it’s not for every company. Even at the right companies that need it, scrum and agile need to be implemented properly. I am personally going through the painful experience of seeing it implemented improperly at my company. Sure, it doesn’t cost companies any additional resources. What it does cost is employee morale and trust in the leadership

Dollar General eyes bigger presence in health care. Dollar General is associated with low prices and smaller store sizes. The fact that they add fresh produce and health care to their line-up makes a fascinating business case to follow up.

A thread on how a Web3 startup that received $365 million in investments has $6,500 in monthly revenue. Yeah that wasn’t a typo

Other stuff I find interesting

In Remote Alaska, Meal Planning Is Everything. The rugged nature of Alaska is strangely appealing to me. I somehow wish that I could spend some time living there

Stats

Venture funding in Chinese startups in Q2 2022 fell to $9.1 billion, a whopping decline from $32.1 billion in Q4 2021

It costs only 4 cents for a 1GB of mobile data in Israel, compared to $5.6 in the US

Online sales during Prime Day 2022 hit almost $12 billion

Source: Bank of America

Take-aways from Netflix Q2 FY2022 Earnings

Overall

Netflix recorded a tad below $8 billion in revenue, a 9% growth in revenue compared to the same period a year ago. It’s scarcely believable that a company formerly selling DVDs pivoted to online streaming and is now generating $32 billion in annual income. Because of some one-time expenses and the adverse impact from unfavorable exchange rates, Netflix’s operating margin was about 20%, down from 25.2% in Q2 FY2021. The company lost 1 million subscribers globally, an improvement over the loss of 2 million subscribers as forecast 90 days ago. Free Cash flow (FC) in the quarter tallied up to $13 million, significantly higher than -$175 million in FCA recorded in Q2 FY2021. These results were received well by investors as the stock has been up since the announcement.

Figure 1 – Regional breakdown. Source: Netflix

Subscriber loss in US and Canada

Netflix losing 1 million subscribers globally deserves some headlines, but I think it’s more telling that they lost 1.3 million in the most lucrative market UCAN (US and Canada). Such a decline is biggest in the last 5 years, if not ever. Even though the loss in UCAN was offset by the growth in APAC, Netflix is trading some of the most profitable members for some of the least. This happened despite the resounding success of Stranger Things Season 4. Needless to say, it is not what either the management or investors want to see.

Figure 2 – Netflix Subscriber Add and Average Revenue Per Membership in UCAN

The loss of subscribers in UCAN seems to coincide with the growth in subscription fees. Regular price hikes, coupled with inconsistency in content delivery, definitely impacts churn. I don’t think Netflix will lower their prices, especially when they are going to launch an ads-supported tier next year. While the company forecasts a net add of 1 million subscribers for Q3, who is to say that the losing streak in UCAN will abate? Are we going to see another slide in 3 months’ time?

The missing Net Add chart and the use of dubious data

Netflix used to have a chart (Figure 3) showing net adds by year. 2020 was really impressive due to the stay-at-home orders across the country. 2021 was lower than 2018 and 2019 due to the pull-forward effect. This chart was seen last in Q4 2021 earnings. Since then, it has been missing. The company doesn’t want investors to look at the net adds in the first two quarters of 2022.

Figure 3 – This Net Add chart has not been seen in two quarters’ earnings. Source: Netflix

I get that. Any company wants to put their best foot forward in earnings as long as the information is accurate. Withholding some unfavorable data is a common practice. What is funny; however, is that Netflix uses cumulative engagement on Twitter as a metric to show how dominant Stranger Things 4 was, against Obi-Wan Kenobi and Top Gun. I don’t know about you, but I’d take Top Gun’s $1.3 billion in box office any day of the week and twice on weekend, over some ambiguous engagement metrics. This is NOT the first time Netflix uses some misleading data in their letters. Back in January 2020, they turned to Google Trends data to demonstrate that their Witcher series was more popular than Mandalorian, Jack Ryan or the Morning Show. The key here is that Witcher is a popular game as well. Without isolating the category that keyword is in, it’s not fair to compare Witcher to the unique name of other shows. I explained here in more details.

Figure 4 – Netflix used Google Trends data misleadingly to appear more popular than others. Source: Netflix

Occurrences like these lost some of my confidence in the company

Ads-supported tier and the binge model

I have to give credit to Netflix’s management. They stuck their guns with the binge model (releasing all episodes at once instead of dripping one per week) despite what many claim contributes to the lack of engagement around their content. Their stock has been hammered hard in the last few months. I am sure that spurred a lot of meetings at the highest level. Still, they chose to be who they are and what they are known for. I can only give them props for that.

However, this binge model puts a lot of pressure on Netflix to deliver quality content consistently and regularly to reduce churn. Series like Sex Education, Stranger Things or Ozark released all at once certainly will draw subscribers, But to keep them on the platform, given Netflix being the most expensive streamer out there, is another matter. They will need great content every month. I watched The Gray Man, which is Netflix’s most expensive film ever and has arguably the most advertising from the company. The flick stars some of the most famous actors such as Chris Evans, Ryan Gosling and Ana de Armas, and the directors of Avengers: End Game. The action is definitely entertaining, but the plot leaves so much to be desired. That’s the pattern with Netflix. I don’t think that they are as good as Apple or HBO in producing original content. That’d be fine if their price point was not the highest or if they didn’t follow the binge model. But because it is and they do, it makes me quite bearish on the company.

An ads-supported tier will help Netflix expand the clientele and appeal to those low-income households that consider Netflix a luxury. Folks that are on the fence about leaving the streamer can instead choose the new tier so that they can preserve access while paying less. The benefits of this plan are straightforward, but how Netflix will execute it is a totally different matter. Key questions are:

  • What will the ads look like? How will they affect the customer experience?
  • How will Netflix enhance the targeting while protecting customers’ privacy?
  • How long will it take for the company to fine-tune all the workflow details and become well-versed in the world of advertising?
  • Are the ads going to help brands drive awareness only? If there is a call to action and such action leads to a website outside of Netflix’s domains, will Netflix be able to report reliable attribution?

Originally, I was concerned about Netflix and its ability to delivery content consistently. Not just any content. Great content that can get viewers hooked. Then, I was drawn into taking a very small position on the company because I mistakenly followed some on Twitter and didn’t believe my own intuition. Till now, I am still concerned about Netflix’s outlook as an exclusive SVOD company. Their venture into the advertising world is exciting, but it poses a lot of questions and frankly uncertainty. Until such questions and certainty are squared away, I will stay away from this stock.

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 June 2022

What I wrote last week

Book Review: Trillion Dollar Triage

How Walmart Is Betting On Stores To Catch Amazon In E-Commerce

Business

Amazon Briefing: One year into Andy Jassy’s tenure, sellers see subtle strategic shifts. Under Bezos, Amazon was maniacal about being consumer-oriented. Using the iron grip on consumers, especially Prime members, Amazon managed to exert their bargaining power on merchants. According to the article, there are already subtle changes under Jassy regarding how to work with merchants. Merchants have more dialogue with senior folks from Amazon, but they are expected to spend more on ads and prove their unit economics value to Amazon. The push to grow ads revenue may have one important downstream effect: if shoppers are bombarded with sponsored items instead of what are best for them, there is no telling how that could damage Amazon and loosen their grip on prized Prime members

The first act of the streaming wars saga is over — Netflix’s fall from grace has ushered in the pivotal second act. The first phase is to establish presence. Now, all these streamers need to figure out some tough questions. First, how can they make money while spending a lot of money on content? Streaming is an arms race. You need great content all the time to acquire and retain subscribers. But investors’ patience is wearing thin. They want to see profits. Hence, streamers have a tough balancing act on hands. Secondly, ads or no ads? Disney+ and Netflix are planning to go live with ads-supported plans later this year. However, ads is not a trivial business. There is also a question of consumer experience. Additionally, expanding internationally or not expanding? An international expansion requires extra investments in marketing and content. If you go to India without local content at a dirt cheap price, you won’t win the battle. But this goes back to the first question. If a streamer spends too much on content and marketing, how can it turn profits? All in all, such an interesting space to keep an eye on

Facing Inflation-Weary Shoppers, Grocers Fight Price Increases. As inflation keeps rising, consumers turn to private labels instead of more expensive national brands. Private labels give grocers a higher margin, but the key here is to keep customers happy while resisting the pressure from vendors. Those who can make shoppers happy in tough times like this may get the permanent business in the long run. For me, Aldi has been my go-to grocer for a long time with their highly competitive grocery prices.

Bull Market Rhymes. “I don’t think investors are actually forgetful.  Rather, knowledge of history and the appropriateness of prudence sit on one side of the balance, and the dream of getting rich sits on the other.  The latter always wins.  Memory, prudence, realism, and risk aversion would only get in the way of that dream.  For this reason, reasonable concerns are regularly dismissed when bull markets get going. “

Spotify Podcasters Are Making $18,000 a Month With Nothing But White Noise. Who would have thought that white noise could be a lucrative podcast category?

Other stuff I find interesting

Sun-Starved Sweden Turns to Solar to Fill Power Void. It’s intriguing that Sweden shut down two nuclear plants and relies on solar power for electricity despite lacking sunlight for a long period of time in a year.

While Electric Vehicles Proliferate, Charging Stations Lag Behind. There are 93,000 public charging stations in the country, but it’s estimated that we need 1.2 million more. That’s how much we are lagging behind. The governments, local or federal, need to take a lead in this and perhaps losses too in the beginning to encourage more purchase and usage of electric vehicles.

90% of Women in India Are Shut Out of the Workforce. I have to say that this is an eye-opening yet disappointing read. I 100% support gender equality. To me, there is absolutely no reason why female can’t work or receive the same level of treatment as men do. Hence, it’s insane to think that only 10% of women in a country with 1.3 billion people in population are working. How much more productivity could be unlocked if women could work?

AC Milan’s ‘Mind Room’: The story behind an innovative psychology lab. Fascinating!

Here’s why you shouldn’t miss ‘bột chiên’ while in Ho Chi Minh City. It’s one of my all-time favorite dishes in Vietnam and Saigon. You don’t experience the local cuisine until you try it

Stats

Disney+ Hotstar Hits 5 Million Subscribers in Indonesia

App Store stopped nearly $1.5 billion in fraudulent transactions in 2021

Safari reached one billion worldwide users

Source: Federal Reserve Bank of San Francisco

Weekly reading – 21st May 2022

What I wrote last week

Want to do something? Do it right away!

Business

What Happened When a Wall Street Investment Giant Moved to Nashville. AllianceBerstein uprooted its headquarters from New York to Nashville, Tennessee to save $80 million a year. The move has been smooth so far, but the interesting thing here is how some large corporations, once exclusive to mega cities on the coasts, are open to moving to smaller towns. My colleague mentioned his college mates got great job offers from an investment firm in Arkansas. Boise in Idaho attracts interest from tech workers too. Snowflake already moved its headquarters to Montana. It’ll be interesting to watch what this trend will do to real estate.

A great podcast with Ted Weschler, a lieutenant of Warren Buffett. Listening to him bolsters my belief that to even have a chance at being good in investing, you need to read a lot, especially what other folks don’t, to create and connect the dots.

Marriott Rolls Out Media Network That Lets Brands Reach Travelers on Its Apps and TV Screens. I really wonder how this will actually work. The first requirement is that Marriott needs to profile and segment customers such as travel enthusiasts, cooking lovers or pet owners, so that their ads can be targeted. Then, it’s a matter of scale. In a 500-room hotel or resort, how many are actually pet owners at the same time? This makes me think that at least in the beginning, the ads won’t be targeted. Also, how would Marriott measure the effectiveness of the ads? Guests will likely just look at the screens and…move on. This service will aid brand awareness, but tracking conversion will be tricky.

Mastercard launches tech that lets you pay with your face or hand in stores. We’re still a long way from having this sort of technology ubiquitous. What intrigues me when I think about this is when governments around the world can have a unified database that recognizes folks based on biometrics. The amount of red tape and administrative work can be reduced significantly.

There’s a New Media Mogul Tearing Up Hollywood: ‘Zas Is Not Particularly Patient’. The new boss at Warner Media is bringing discipline, work ethic and a new culture to the company. A pretty interesting read on Zas.

The Algorithm is a Lie. A very smart take on Netflix and the long-standing assumption that Netflix is great at mining data for actionable insights.

Other stuff I find interesting

Innovative Fish Farms Aim to Feed the Planet, Save Jobs and Clean Up an Industry’s Dirty Reputation. A super interesting read on what is being done to protect the fishing industry in Maine.

Germany Declares Crypto Gains Tax-Free After 1 Year — Even if Used for Staking, Lending. Other securities can still be taxed after one year of holding, but crypto currencies aren’t in Germany. I wonder how Germans think about this since I assume stock holders outnumber crypto investors.

Take a look inside the Finnish bunkers capable of withstanding a nuclear attack. Today, the Finnish Parliament approved the application to join NATO. Putin threatened to retaliate, but seriously, what did he expect the people of Finland to do after watching what he did to Ukraine?

An interesting read on MOBI and EPUB book format. I love Kindle, but their previous requirement that users must use MOBI format was super annoying. So I am glad that they accept Epub now.

Stats

“The median pay package for chief executives of the biggest U.S. companies reached $14.7 million in 2021”

Pollutions accounted for one out of every six deaths globally in 2019

11.3 million guns were manufactured in the US in 2020. I had to look at the figure one more time to actually believe it. 11.3 million, I mean why do you need that many?

Grab has 30.9 million monthly users as of May 2022

65% of Disney+ subscribers said Movies were the top reason to subscribe

Weekly reading – 30th April 2022

What I wrote last week

Thoughts on Buy With Prime

Business

Starbucks Is Having an Identity Crisis. Can Howard Schultz Fix It? 70% of Starbuck’s orders are to-go. The popularity of their mobile app is magnificent, yet it goes against the identity that Howard Schultz envisioned when he bought the brand. He wanted Starbucks to be the 3rd place that people frequent in addition to work and home. Starbucks needs to decide on its future identity and positioning. Because if most orders are picked up at drive-through, what the hell are the stores for?

Will Ford’s new truck finally make Americans buy electric? “Surveys, both by the company and independent analysts, have found that customers for the F-150 are typically younger, richer, more urban than the truck’s traditional mainstream buyer – and in many cases have never owned a truck before. Like the rest of the industry, the company is contending with shortages of key computer processing chips, batteries and other materials that have held back production – and challenged the company’s effort to keep the starting price at about $40,000 (£31,500)”. It doesn’t sound very easy, does it?

Netflix’s Battle for Asian Subscribers Pits It Against Rich Rivals, Hundreds of Local Upstarts. The challenge for Netflix in Asia is multiple-fold. First, it has to keep the subscription prices low while needing to spend millions of dollars on local original content. Second, its competition is nothing but fierce and they are willing to keep the prices low to retain customers. Some such as Disney or Amazon are willing to splash a big sum on sports such as IPL to woo local viewers in India. Netflix hasn’t shown interest in following suit so far. The company once thought invincible at least in the streaming world doesn’t look invincible, does it?

Kard, a fintech that helps credit card issuers build custom reward programs by brands. “The company works with roughly 30 issuers today, representing 10 million consumers, Mackinnon said. It helps process about 60 million transactions per month, and has seen revenue grow 10x over the past year, according to Mackinnon, though he declined to share a specific revenue figure. He describes the business as a two-sided marketplace for rewards, with merchant partnerships on the supply side and card issuers on the demand side. For issuers, the API is powerful because it “connects them to merchants, brands, retailers that essentially are the funding vehicle for any of their rewards,”

Netflix’s Big Wake-Up Call: The Power Clash Behind the Crash. Cindy Holland seems to be the one person who wants to steer Netflix to adopt Apple TV+’s strategy. Nobody can guarantee that if Cindy hadn’t left, Netflix wouldn’t be in where they are today. She could have stayed and Netflix could have been just as bad or worse. But it’s baffling to let go the relationship-building wizard that forged a bond with the studios and not find a replacement. I have to say, though, that when Netflix was dominating the streaming market and a darling of Wall Street, you didn’t get to read these pieces. You were served with articles on how great Netflix and its culture were. As soon as the company’s fortune plummeted, critical reporting show up like mushrooms after rain.

Vietnam’s VinFast takes the EV battle to Tesla with U.S. push. The pace of development at Vinfast fits the culture of quick results and brand ambition at Vingroup. That’s how they always do things. That approach doesn’t necessarily come with the best quality of products or services. Hence, the question becomes: do they think up a thorough plan to penetrate and dominate the EV market in the US? Every car maker in the world wants to succeed in the US. It’s home to Tesla, which has an enormous scale advantage. It’s home to Ford, which is always a familiar brand in the mind of Americans. There are always Volswagen, Hyundai, Kia, Subaru, Toyota, Mazda etc…Such a list of world-famous brands indicate nothing but fierce competition. The first movers also have great scale advantage. List cars at too high a price and Vinfast won’t make enough sale. List them too low and the company wont have any profit. Whether Vinfast can weather the initial storm to reach critical mass remains a giant question mark.

Inside the first suburban Amazon Go store. I have a nagging feeling that Amazon is playing a really long game here and soon enough in the future they will become a major grocery chain

Other stuff I find interesting

Why didn’t our ancient ancestors get cavities? It is a very interesting theory that our transition to agriculture is the likely cause of our cavities

Women and girls have to pay for water with their body and dignity. The struggle people in poor countries around the world has to face makes it even more incredulous whenever folks in the US complain about trivial problems. I don’t know like having to wear a mask during Covid or taking life-saving vaccines.

Stats

According to the founder of TSMC, it costs 50% more to produce the same chips in the US than in Taiwan

80% of US consumers use BNPL to avoid credit cards, according to Experian

According to Mastercard, global first-party fraud which refers to a legitimate online purchase being disputed after the fact amounts to $50 billion

Online retail sales in India is estimated to reach $85.5 billion in 2025

Banks and credit unions pulled in more than $15 billion in overdraft and related fees in 2019 and $12 billion in late credit card fees in 2020

Google Pay has 150 million users across 40 countries, as of April 2022

Weekly reading – 26th February 2022

What I wrote last week

Travel during Covid, from the US to Vietnam with a transit at Haneda Airport in Japan

Business

Some Companies Ditch Annual Raises and Review Worker Pay More Often. I support the review of pay and performance more often than just once a year. The practice will enable workers to make adjustments more timely and get rewarded for their hard work faster. What’s there not to like?

Craft Beer Snobs Suddenly Love the Humble Lager. “Lagers, which range from the bright yellow pilsner to the darker, full-bodied Märzen, are produced at low temperatures. The slow fermentation and refrigeration process reduces the speed of yeast activity during conditioning, creating a crisp flavor and brilliant color. But keeping the beer in tanks for the weeks it takes to make a lager costs more time and money. Lagers are the most popular style of beer on the U.S. market, according to an analysis by Allied Market Research.”

Inside Peloton’s epic run of bungled calls and bad luck. Epic indeed. It’s a major red flag that a Board of Directors had to tell its CEO to take his ambitious claims down a notch.

Netflix struggles with ambitions in India. I don’t know if Netflix’s alleged 5.5 million subscribers in India is correct, but its struggle to fight Amazon Prime and Disney is widely reported. There is a reason why Netflix cut its prices in India by 60%. According to Financial Times, the company’s struggle stems from the failure to localize its strategy and cater to the India consumers. Time will tell if Netflix will become more competitive in such an important market. “According to one industry veteran, Netflix’s approach “was more like, ‘I have built the plumbing for the whole world, I just need to turn on the tap in India,’ instead of having an India strategy”.

Berkshire Hathaway’s 2021 annual letter. “Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.”

On the Origin of the iPhone

Boeing outsourced $9-per-hour engineers in India to write the software for Boeing 737. If pushed too far, the urge to generate as big a bottom line as possible can mean a world of harm to a company, including human lives. What happened to Boeing and its 737’s deadly crashes are a perfect example of that. I am not saying that $9-per-hour engineers aren’t technically good. The use of these low-pay contractors may not be THE reason for the crashes. It surely adds to the disturbing reports on Boeing’s less than ideal due diligence in manufacturing 737s.

Other stuff I find interesting

Inside Pornhub. An interesting look inside one of the most popular porn sites on the Net as well as the content moderation issue.

USPS is deploying gasoline-powered delivery fleet in a snub to the Biden’s administration’s effort to reduce carbon emissions. It’s a mystery to me that Louis DeJoy is still the CEO of USPS

The digestible Ukraine explainer you’ve been waiting for. Treat it as a starter, not a comprehensive read on the subject. Regardless, it’s mind-blowing that we are at risk of having World War III when the pandemic is still wrecking havoc around the world

Why did renewables become so cheap so fast? A pretty interesting piece on the prices of energy from different sources as well as some alleged reasons for the price movements.

Stats

“Global Consumer Spending in Top 100 Subscription Apps Climbed 41% to $18.3 Billion in 2021”

Apple is the top brand in the US, according to a survey of more than 13,500 consumers by prophet

Ethiopia will spend 5.6% of its gross domestic product, or $6 billion, each year until 2030 to counter the impact of floods, climate-driven diseases, hailstorms and wildfires

Source: Techcrunch

Weekly readings – 12th February 2022

What I wrote last week

Thoughts on PayPal’s latest earnings

Apple’s next growth opportunity. Disney’s streamers showed resilience. ESPN+ achieved its FY2024 target

Business

Stream big: how Netflix changed the TV landscape in 10 years. I don’t deny that Netflix revolutionized the streaming industry or that it has the scale advantages. What I disagree with Netflix bulls or fans on is the alleged invincibility. The latest earnings call was a disappointment, sending the stock down by 20%. For the first time, the management team vaguely admitted competition which includes rivals with deep pockets and additional services that can help “subsidize” these rivals’ streamers. So far, Netflix has been successful, but it’s not a lock that they will continue to be the market leader in the near future.

‘Spider-Man: No Way Home’ could have hit $2 billion at the global box office if it were released in China. Movies without a release date in the most populous country in the world leave a lot of dollars on the table. It will be interesting to see producers strike a balance between freedom to cast whoever they want or craft whatever story they want to tell and the need to appease China. A big payday from a release in the country is something worth thinking about.

New Airline Bets You’ll Stop in Alaska for a Cheaper Flight to Asia. Personally, I look forward to the launch of Northern Pacific and flights to Asia through Alaska. I have never been there and tickets can be cheaper. So why not?

Deep Dive: Xiaomi. More than just cheap phones

How Alexandre Arnault Is Shaking Things Up at Tiffany & Co. An interesting profile of one of the Arnault children. He seems to have more than just the right last name

A $6 Billion Wipeout Was an Omen for Food Delivery Stocks. At this point, I feel like it’s irresponsible to invest in food delivery startups or publicly traded firms that do not have the scale. While it’s already tough for the established incumbents to run their business in the black, it’s an order of magnitude harder for those without scale. And if you haven’t noticed, the market isn’t looking kindly on unprofitable companies in a cut-throat market like food delivery.

Stuff I found interesting

Where Is There More Lithium to Power Cars and Phones? Beneath a California Lake. “In the U.S. hunt for lithium, an essential component of the batteries that power electric vehicles and cellphones, one big untapped source might be bubbling under a giant lake in Southern California. The U.S. currently imports almost all of its lithium, but research shows large reserves in underground geothermal brines—a scalding hot soup of minerals, metals and saltwater. The catch: Extracting lithium from such a source at commercial scale is untested.”

House Passes $350 Billion Competitiveness Bill, but Senate Fight Looms. Read this article and you’ll see how broken Washington is. The country really needs leadership, assistance and regulation to compete on strategic fronts. Yet, these lawmakers are prioritizing tribal politics instead of putting the country first.

EV Charging Network Will Target Interstate Highways. “Dotting the interstate-highway corridors with charging stations is considered a priority because it will give EV motorists confidence that they can take long-distance trips without trouble recharging. Stations will have to be installed every 50 miles, no more than one mile off the interstate, according to a guidance memo by the Federal Highway Administration. And stations will have to have at least 600 kilowatts of total capacity, with ports for at least four cars that can simultaneously deliver at least 150 kilowatts each. The stations also have to be accessible to the general public, or to fleet operators from more than one company. The locations can include privately owned parking lots if they are open to the general public.”

Germany’s Covid Boomtown Stumbles Over Its Newfound Riches. Progressive politicians want companies to pay more taxes; which companies do not want to do. Folks just want stable jobs and to be taken care of by the tax money they pay. Marburg is another example of how hard it is to strike a balance and keep everyone happy

Stats

International students earned nearly half of the master’s and PhD STEM degrees in the US in 2019

90% of Uber’s earners work fewer than 40 hours per week and 60% work fewer than 20 hours per week (Investor Day 2022)

46% of Uber’s gross bookings in Q4 2021 came from customers engaged both with Mobility and Delivery. These customers made up only 17% of Uber’s customers base (Investor Day 2022)

10% of all first time riders to Uber in 2021 came to a 2-wheeler or a 3-wheeler trip (Investor Day 2022)