Weekly readings – 15th February 2020

An interesting piece on Lyft vs Uber

An argument for the challenges that Google is facing

This is what a hearing should be. Not the kind that has taken place lately

Spotify is evolving

Oklahoma State’s new identity. In my opinion, the new logo doesn’t look bad at all

This article sheds some light on the secretive S team at Amazon

The government’s revenue depends significantly on the tax receipts from citizens and corporations. So the revenue projection depends much on the assumptions of economic growth which seem too optimistic. It’s important to take into account the feasibility of these assumptions; which the media may not capture fully or an average citizen cares enough about

Weekly readings – 24th August 2019

Spotify’s pitch to podcasters: valuable listener data

Netherlands’ Building Ages. How cool is this? It must have taken quite some time and effort to build this map.

OuiWork? The quick case for WeWork as an actually disruptive business

Apple Targets Apple TV+ Launch in November, Weighs $9.99 Price After Free Trial

Where Top US Banks Are Betting On Fintech

Manufacturers Want to Quit China for Vietnam. They’re Finding It Impossible

Apple’s New TV Strategy Might Just Work

MoviePass database exposes 161 million records. Much as I am grateful to MoviePass, perhaps it’s time for the company to be shut down

Starbucks, monetary superpower. Let me give you a notable quote to get an idea of what this article is about

Starbucks has around $1.6 billion in stored value card liabilities outstanding. This represents the sum of all physical gift cards held in customer’s wallets as well as the digital value of electronic balances held in the Starbucks Mobile App.* It amounts to ~6% of all of the company’s liabilities. 

This is a pretty incredible number. Stored value card liabilities are the money that you, oh loyal Starbucks customer, use to buy coffee. What you might not realize is that these balances  simultaneously function as a loan to Starbucks. Starbucks doesn’t pay any interest on balances held in the Starbucks app or gift cards. You, the loyal customer, are providing the company with free debt. 

Now bigger than eBay, Shopify sets its sights on Amazon

Inside India’s Messy Electric Vehicle Revolution

Spotify Earnings

Spotify reported some good results earlier today for their 2Q 2019

Important metrics all improved YoY, including user base and financial growth. Gross Margin for Premium and Ad-Supported is 27.2% and 15.8% respectively. Average Revenue Per User is 4.86 euros. Compared to the previous 2nd quarters, here is where the current one stands

Every metric’s growth, except that of Premium Subscribers and Total MAUs, slowed compared to a year ago.

In terms of Gross Margin, while that of Premium stays relatively stable, Ad-Supported’s fluctuates quarterly.

QuarterPremium Gross Margin Ad-Supported Gross Margin
Q1 201714.00%-18.00%
Q2 201724.10%13.60%
Q3 201722.90%17.00%
Q4 201726.76%21.35%
Q1 201826.00%12.70%
Q2 201826.90%16.30%
Q3 201826.10%18.60%
Q4 201827.30%22.10%
Q1 201925.90%11.10%
Q2 201927.20%15.80%

Though Average Revenue Per User does fluctuate, this quarter’s is lower than that of the previous two 2Qs. I suspect that Spotify will pursue the Netflix’s playbook by growing their user base, whether it’s Premium or Free Trial. A large user base will help make each investment in content (podcast) relatively cheaper (a fixed cost is divided by a growing denominator). A sizable base will make Spotify more attractive as a partner to content producers and advertisers. Spotify differs from Netflix in a sense that they are already offering ads while the video streamer is still true to their focus on videos.

QuarterAverage Revenue Per User
Q1 20175.46
Q2 20175.69
Q3 20175.50
Q4 20175.69
Q1 20184.72
Q2 20184.89
Q3 20184.73
Q4 20184.89
Q1 20194.71
Q2 20194.86

Disclaimer: I have Spotify stocks in my personal portfolio

Weekly readings – 30th March 2019

What even is AirBnb anymore? Questions that AirBnb will face ahead of its IPO and after.

2018 Theme Report. An informative study on the theatrical and home entertainment market environment in 2018.

How Kirkland Signature powers Costco’s success. A nice coverage on the signature private label of Costco.

2019 State of the Cloud. A framework to look at cloud businesses by folks at Bessemer Venture Partners.

The 2019 Drunk Shopping Census. An interesting piece on drunk folks’ purchase behavior. It must be tough for one to recall back the purchases made when drunk when one participates in the survey. The folks at The Hustle are good with words and sometimes have pretty good content. Give them a follow if you want daily email with overview of what happens in business and tech.

AirPods. I totally agree with the author of this post. AirPods are truly a massive success. Since I bought them last May, I have used them at least 6-7 hours a day every day. Sometimes, I don’t even feel that they are in my ears. Convenience goes up significantly. The sound may be not as good as power users of wireless headphones would want, but it is good enough for average users like myself. The design is just right. You can exercise without worrying about losing them. (Follow Horace Deliu if you are a fan of micro-mobility and Apple)

The State of Online Travel Agencies – 2019. A good overview of Online Travel Agencies’ performance last year.

How Spotify & Discover Weekly Earns Me $400 / Month. A specific and personal example of how Spotify helps obscure artists get paid for their work. This is why I love Spotify.

Apple’s abuse of power

When I jogged down my thought on Senator Warren’s plan to break up Apple, I was wrong when I put:

 I also fail to recall an instance where Apple released a certain product/service and abused its power to favor the product/service.

I failed indeed as it turned out, Apple has, to Spotify.

Spotify has filed an antitrust complaint against Apple, citing its abuse of power to favor its Apple Music. It also launched a website to detail the abusive power of the iPhone maker.

I am still of opinion that there are expenses involved in running AppStore such as security patches, payment, language translation, fraud prevention, and so on. These expenses can be considered justification of the 30% revenue tax imposed by Apple, though it’s not unreasonable to say that it’s a bit too high. Nonetheless, it creates unfair advantages for Apple when the tax is imposed on apps that compete with Apple’s own such as Apple Music as in the case of Spotify. Worse, Apple threw restrictions at Spotify in order to reduce competition for Apple Music as detailed in the website above.

I am genuinely disappointed in myself for the inaccurate statement I made. I still think Senator Warren’s call to break up Apple from AppStore is impractical and over-reaching. However, they do need to answer for the abusive behavior like they have shown to Spotify and should take actions in similar cases moving forward to ensure a fair competition to apps makers.

Lesson learned for me.