Weekly reading – 4th February 2023

What I wrote last week

Banks plan to compete with Apple Pay & PayPal

X1+, a credit card for when things go wrong on travel

Business

Understanding Tesla’s operating leverage. A good post on how Tesla managed to increase its operating margin while vehicles prices dropped

($) Americans Are Gobbling Up Takeout Food. Restaurants Bet That Won’t Change. Quite an interesting trend in the restaurant industry. I have no idea how it will go because my personal experience is conflicted. My wife and I are often marveled at the long line in front of every Chick-fil-A store that we pass by. On the other hand, I saw fast food stores with no line, no car in the parking slot and very few diners. Takeout may increase sales for restaurants, as long as they survive

Aldi, H-E-B among growth leaders in 2022: Report. “Small-format stores are cheaper to build and require less land or space to buy or lease. This allows access to more markets than a larger-format store would. Furthermore, as retailers continue to invest heavily in e-commerce, these smaller stores can act as fulfillment centers for online orders.

($) Bed Bath & Beyond Used to Be Great. These Two Are Why. Bed Bath & Beyond’s founders serve as an example of honesty, authenticity, frugality and customer orientation. They are not afraid to admit their own mistake, including not realizing the potential of the Internet. At first, when the company’s budget was tiny, the two men used cardboard boxes as trash bins and still make sure both sides of scrap paper are used. I also found it awesome that they finally learned to let go of their creation after being pushed out.

TikTok is driving an offline lift in sales for some brands. Very helpful and interesting examples of how TikTok is helping brands drive sales.

Other stuff I found interesting

First use of Apple Emergency SOS in B.C. may have saved two lives. Apple’s innovation is increasingly proven valuable in real-life crises. Even one of these cases is even worth working on

($) Japan, Netherlands Agree to Limit Exports of Chip-Making Equipment to China. A great triumph for the Biden administration in hampering China’s ambition in this critical area. Without the most advanced materials and technologies from ASML, Nikon and other important manufacturers, China won’t be able to scale their semiconductor operations and bridge the gap to the US

($) The U.S. Consumer Is Starting to Freak Out. Signs of the troubling times to come are here

The highest rail route in northern Europe. “Connecting Norway’s stylish capital with its most picturesque city, the 496km, 39-station Oslo-Bergen railway is one of the world’s most beautiful train journeys.”

The Antidote to Envy. Understanding yourself is the best way to avoid envy

Package Deal: In 1915, Coca-Cola had many imitators. Then it designed a patented bottle nobody could copy. The origin story of the iconic Coca Cola bottle is a fascinating one.

Stats

Mount Olympus on Mars is the tallest mountain in the Solar System, three times as tall as Mount Everest

Customers loaded $3.3 billion onto Starbucks gift cards during the quarter ending December 31, 2022

Mount Washington in New Hampshire experienced wind chill at -108 Fahrenheit degrees or -78 Celsius degrees. Lowest ever recorded in the US

Source: JLL Research
Source: 9to5Mac

Weekly reading – 28th January 2023

What I wrote last week

Layoffs, accountability and leadership

Book Review: Deep: Freediving, Renegade Science And What The Ocean Tells Us About Ourselves

Business

This letter from Patient Capital on Google is a great primer on the giant tech company. While I agree with the tenet that Search is the cash cow for now and YouTube/Waymo/Cloud offers future growth, I don’t see any coverage on the threats: competition, organizational challenges and regulatory scrutiny

Amazon’s drone delivery unit hit with layoffs just as 10-year-old project finally launches. There is no guarantee that drone delivery program will be a game changer for Amazon. Even that possibility is in jeopardy as Amazon laid off hundreds of employees, including many in Prime Air, which operates the program.

Bad batteries, software glitches: VinFast’s EV drivers say they feel like guinea pigs. Despite grandiose promises, ambitious goals and loud announcements, drivers encountered serious software glitches and faulty batteries with VinFast’s EVs. As a Vietnamese, I am happy to see a national brand take it to the world stage, in an industry that Vietnam has never excelled in. The problem is that the one company that has the vision and resources to do it is not known for sustainable growth. The company tends to throw money at a problem, scaling operations up at a breakneck speed without much regard for details. It stood up resorts touted to be luxurious in less than a year. As you may imagine, such properties are not up to par in terms of quality. It’s not rare to hear complaints about how VinGroup’s residential projects deteriorated only after a few years. That’s why I was not surprised to read about their problems with EVs. I never imagine it easy to sell EVs, but the field is very competitive. What evidence is there to prove that VinGroup has the core competencies to compete and win on a global scale?

How the Spotify layoffs impact its podcasting business. It makes sense that Spotify is trying to make its podcasting business leaner and more efficient. However, there are two concerns that stand out from this article for me. The first is that Spotify replaced the head of content, who has a lot of experience and Hollywood connections, with an operations guy. That doesn’t instill much confidence in a shareholder like myself. The second is that Spotify hasn’t been able to incorporate the tech stacks of all the companies it acquired. That leaves synergies and saved expenses on the table. What’s the holdup?

Meta Embraces AI as Facebook, Instagram Help Drive a Rebound. “Indeed, for all of Meta’s efforts to rebrand itself, the core Facebook “Blue” app remains its workhorse. While outside financial analysts have generally estimated that Instagram accounts for between 40% to 50% of the company’s ad revenue, internal statistics viewed by the Journal show that Instagram generates a little more than 30%—and it isn’t rapidly catching up. Making money on Reels remains an additional hurdle. The video feature’s rapid takeoff created a near-term problem: Because ads in Reels videos don’t currently sell for as much as those sold against regular posts and stories, Reels’ growing share of content consumption was denting ad revenue. To protect the company’s earnings, the company cut back on promoting Reels, which lowered watch time by 12%.”

The oral history of how Priceline acquired Booking.com. Expedia made one of the biggest mistakes in the travel industry’s history by not purchasing Booking.com when they had a chance. In fairness, the business models were quite different, but the price to pay is too high

Other stuff I find interesting

Somebody was kind enough to compile and share a 140-slide deck on France’s tech landscape

Inside CNET’s AI-powered SEO money machine. “Under the two-year-old management of a private equity company called Red Ventures, CNET’s editorial staff has often been left wondering: was this story written by AI or a co-worker? Even today, they’re still not sure. “I don’t lay any blame at CNET’s or its masthead’s feet,” one former staffer says. “This is all due to the machinations of the greater Red Ventures machine, and its desire to squeeze blood from a stone.”

($) Little-Known Surveillance Program Captures Money Transfers Between U.S. and More Than 20 Countries. “Hundreds of federal, state and local U.S. law-enforcement agencies have access without court oversight to a database of more than 150 million money transfers between people in the U.S. and in more than 20 countries, according to internal program documents and an investigation by Sen. Ron Wyden.” I don’t dispute the role of monitoring money transfers overseas in tackling crimes and terrorism. It’s a legitimate purpose. However, it’s very disturbing when every law enforcement agency can gain access to citizens’ sensitive data without a court order. Is data even anonymized? That’s just gross negligence and governmental overreach

Welcome to Hillstone, America’s Favorite Restaurant. “It’s never going to win a James Beard Award. Or try to wow you with its foam experiments or ingredients you’ve never heard of. But it is the best-run, most-loved, relentlessly respected restaurant in America. And, oh yeah, Danny Meyer, David Chang, and Shaq all agree. Welcome to Hillstone.”

Seaweed researchers find bright future for underwater crop. It’s fascinating to learn that seaweed could help reduce carbon emissions and fight climate change.

Stats

Axios’s subscription service, launched in Jan 2022, garnered 3,000 subscribers and $2 million in revenue in the first year

7% of US households used a new streaming service in Q4’22

“Global venture funding reached $415.1B in 2022, marking a 35% drop from a record 2021.”

Source: Twitter

Weekly reading – 21st January 2023

What I wrote last week

Goldman Sachs Credit Card Portfolio – Apple Card

Business

SHORT-TERM vs LONG-TERM. Nick Sleep’s letters and insights are always valuable. Many companies claim to be all about long-term, but their actions scream the opposite. The list of characteristics by Nick (by no means are they complete) should help analysts see whether a company is about long-term growth or short-term wins. It is also a good checklist for executives whenever they want to evaluate their business.

Google Cloud Introduces Shelf Inventory AI Tool for Retailers. The premise of this technology sounds very interesting. Less human labor and more automation as well as data analytics. However, as the article indicates, it’s tricky to put this technology in practice. The first challenge is to perfect the algorithm. Given time, this should be feasible. The bigger challenge is cost. Imagine arming a Walmart Supercenter with cameras that can scan every aisle, level and product.

The Art and Science of Spending Money. As always, great writing and a lot of wisdom from Morgan Housel. This quote stood out from the rest for me: “Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don’t love.”

Chick-fil-A franchise disclosure document. This may be a dry read, but this document shares the core details of Chick-fil-A’s standard franchise agreement. For instance, while the initial down payment is just $10,000, a franchisee will have to pay quite a lot of fees which can push the total investment to north of $2 million. Furthermore, readers can learn that Chick-fil-A earned almost $5.8 billion in revenue in 2021 and around $1.1 billion in profit. The net margin of 18% is much lower than the 32% that McDonald’s posted in 2021. That implies there is a significant difference between the two models.

Disney defended itself and Bob Iger against an activist investor Nelson Peltz. File it under a “business schools need to teach this” folder

Behind Disney’s Activist Investor Battle: A Marvel Mogul’s Revenge Play. A juicy article on the internal political struggle at Disney. As an investor, I am concerned about the turmoil at the top at Disney. Any company of the size and complexity of Disney must have steady and competent leadership to navigate treacherous macro-conditions and weather the fierce competition in the media industry. There has been anything but that at the iconic company since early 2020. Given that Bob Iger only has a two-year contract, this will not be solved any time soon.

Inside Elon Musk’s “extremely hardcore” Twitter. Musk has done tremendous damage to his reputation and image with the whole Twitter saga. And oh, it’s just merely started

Whole Foods charts a new course. There is nothing described in the article that convinces me Whole Foods will be in a stronger position 5 years from now. Enabling shoppers to return Zappos stuff in store? That’s just like Kohl’s. An apprenticeship to learn butchering? Yeah, that’s going to be tremendously popular. What about 3,000 local products in store? Well, it’s going to relate so much to shoppers who will have to pay a lot more just so they can feel more local.

Other stuff I find interesting

Mexico’s subway drivers depend on WhatsApp to keep the trains running. It’s both fascinating and horrifying that train workers in Mexico rely on their phones and particularly Whatsapp to keep the trains running

Lessons from the Streets of Tokyo. To copy the approach that Tokyo takes to build streets, a city in America needs to have a solid public infrastructure. Otherwise, narrow streets wouldn’t be able to handle thousands of people, especially in rush hour.

Kale, Brussels sprouts, cauliflower, and cabbage are all varieties of a single magical plant species. I did not know about this. Fascinating!

How Much Income Do You Need to Be Rich? “We all live our lives relative to our expectations. This is true in our relationships, in our careers, and in our finances. So, if we want to feel rich, we only have two options—earn more or expect less. The choice is yours. Because, ultimately, your income doesn’t determine how rich you are, your desires do.

Stats

Each frame of the CGI scenes in Avatar’s sequel took 47 hours to render

British people withdrew money 30.2 million times from ATMs in 2022. The average withdrawal amount was 105 pounds

Source: Cleanenergywire

Weekly reading – 14th January 2023

What I wrote last week

Nike & Netflix partner

Business

The British are coming: Fleet Street’s ‘digital landgrab’ on US news sector. A fascinating piece on UK news outlets finding opportunity in the US. It’s all about finding more eyeballs and the huge ads market that the US has to offer. According to the article, UK newspapers either choose to be tabloidy or position themselves as a place where readers can get news neutrally. It’ll be interesting to watch the competition between the likes of TMZ and the tabloids from the UK pan out. In terms of being neutral news outlets, I have serious doubts over how one can stay neutral for a long time. Then, what’s the differentiation? What can British newspapers have to compete with the American incumbents?

The rise and fall of 15-minute delivery startups, an oral history. These 15-minute delivery startups never had a chance to succeed in my opinion. The unit economics is unfeasible. The cost of completing last-mile delivery is always high. So is the cost of subsidizing user activities or delivery drivers in the beginning. Throw competition, an unfavorable environment and low level of stickiness in the mix and you have a perfect recipe for a business that is destined to fail.

David Zaslav’s Rocky Ride as Hollywood’s Newest Czar. As CEO of a media giant like Warner Bros Discovery, David Zaslav is always going to get negative pieces like this one. And let’s face it: he may very well fail to overcome the current challenges. Investors put a premium on profitability AND growth. One is no longer enough. But to achieve both requires a lot of time, investments and execution; a luxury that the CEO doesn’t have because of the mountain of debt on the books. The combined entity is so big and complex that even to get two different organizations and cultures to gel is a monumental task. The changes that Zaslav made may not come to fruition, but being decisive is probably the only way any executive can succeed in this case.

OK, 2022 was a disaster for Tesla. What next?Now, some of you may have views about the sustainability of Tesla’s regulatory export credits, the value of their energy business, the prospects for an insurance business, the likelihood of reaching Level 4 or even Level 5 autonomous driving technology (and before anyone else does), or even the Teslabot. Some of these may be worth something, or all of them may be worth nothing. This certainly adds a wild card to the valuation of Tesla. But the main driver will probably remain the automotive business.”

How much Netflix can the world absorb? A long profile on Bela Bajaria, Netflix’s Global Head of Television. I wonder if this piece is supposed to support the executive in a time when the “be everything at everywhere” strategy at Netflix seems to run into trouble.

Other stuff I find interesting

Robberies at bank branches and ATMs in Denmark in 2022 dropped to zero due to the move to a cashless society.

India is learning to love electric vehicles — but they’re not cars. A quick look at EV vehicles in India. Similar to the US, India needs to overhaul the infrastructure, subsidizes EV purchases and needs to find a way to lower the manufacturing costs. The difference between the two countries? US favors electric cards while India is all about electric two-wheelers

Here’s how many EV chargers the US has – and how many it needs. The US currently has about 163,000 charging ports. To meet the demand of EV vehicles expected to be on the road by 2030, there must be A LOT more charging ports installed across the country.

Stats

Cash made up 59% of POS transactions and 42% of POS volume in EU in 2022

New York City welcomed more than 56 million visitors in 2022

The number of Mastodon active users dropped to 1.8 million in early January 2023, down from 2.5 million in early December 2022

Black founders raised just 1% of all VC funds in 2022

Dutch people are the most physically active in the world. They spend on average almost 13 hours a week exercising

Consumers spent $167 billion on mobile apps in 2022

Developers earned $60 billion from the App Store in 2022. Apple Fitness+ now has more than 3,500 workout and meditation sessions

Weekly reading – 7th January 2023

What I wrote last week

Book Review: A.P. Giannini: The Man With The Midas Touch

Legacy Systems Can Cost Businesses Dearly

Business

How digital helps businesses serve ice cream and smiles 24/7. “Smart freezer cabinets are currently being piloted. These can capture products that are out of stock in the cabinet and send a push message to the store that suggests a quantity that can be ordered and sent automatically, drastically reducing the chance of their running out of stock. The pilot saw 1,200 trade customers offered the opportunity to make orders through a virtual sales rep via WhatsApp at any time of the day. Once the order was placed, a team at the distribution hub got it prepared in an average of 60 minutes. It was then delivered in backpacks with special cooling zones in less than four hours – a system that guaranteed product stability.”

‘They’ve gone too far’: How Spotify dug a giant hole — and how it can dig itself out. The piece pains a pessimistic outlook on Spotify’s future and it does have some valid points. The company generates almost $10 billion in annual revenue, but it hasn’t turned profitable so far. The competition is getting fiercer and fiercer every year. Spotify may have some bargaining power as a major industry player, but the label companies still have a lot of sway. It makes sense in theory to create a library of podcast content and sell podcast ads. But it’s the execution that counts and right now, some analysts and investors are not buying Spotify’s ability to execute. If they couldn’t turn a profit when the tide was high, how would they do so when the tide is retreating out?

($) Facebook Wanted Out of Politics. It Was Messier Than Anyone Expected. Facebook did try to limit the virality of some content, even more than anybody thought. I never thought that the company put that much effort into suppressing toxic yet viral content. However, Facebook was a little too late. The damage was already done. They never got rid of the image of being politically toxic. Their work on the newsfeed still didn’t address what happened within Facebook Groups. More importantly, any attempt to moderate content contradicts Facebook’s business model which hinges on engagement and ads revenue. “Views of civic content in newsfeed fell by nearly a third, internal data showed. With the company no longer amplifying posts it predicted were most likely to draw lots of replies, comments on civic posts dropped by two-thirds. Anger reactions fell by more than half on civic content, and nearly a quarter platform-wide. Bullying, inaccurate information and graphic violence fell, too.”

Apple Fitness+ unveils new offerings for the new year. My wife and I pay $84 a year for access to Apple Fitness+ and I can tell you that it’s one of the best investments we make. We exercise almost every day and there is a variety of workouts that keep us interested. With Kickboxing and a new meditation theme, consumers will have more workout options and Fitness+ content library keeps growing. I can’t think of another company that has a fitness IP this size and a popular fitness gadget like Apple Watch. This, of course, doesn’t happen overnight. It takes patience and vision. Software drives hardware sales and hardware is the tool that makes consumer lives better.

Other stuff I found interesting

Micromobility in Limbo: Takeaways from Paris and LA. Scooters are good and should be used for short trips. Cities that want to reduce car traffic must revamp their public transportation systems to accommodate longer trips. Any scooter startup that banks on and advertises the prospect of their services replacing cars deserves a rude awakening and no support from city governments.

(S) Tourism and Manufacturing Fight for the Future of Power in Europe. I get that renewables play an important role in our fight against climate change. It’s even more important for Europe to reduce its reliance on energy from Russia after it invaded Ukraine. But I do think that wind turbines don’t need to be built around historical landmarks or areas that source most of their revenue from tourism. And it is particularly baffling when local officials admit that turbines could be built in areas far away from the lands where there is protest.

How a vanished Ice Age lake shaped the past and present of Missoula, Montana. It is mind-blowing how much the climate changed over the last hundreds of years and how much our life today was shaped by it.

Meet the most powerful Uber driver in India. Salauddin has a computer science degree, drove for Uber and nowadays spends his time as a union leader for gig workers in India. What an interesting arc!

How New Lines Magazine built a home for long-form international reporting. I hadn’t heard about this magazine before, but now I have and the first couple of long articles that I read did not disappoint

Stats

Total holiday spend grew nearly 7% in 2022

150 million users are using Google TV and Android TV

Amazon Prime Video averaged 9.6 million viewers for its first season as exclusive rights holder to the NFL’s “Thursday Night Football” package.

Online holiday shopping topped $211 billion between 11/1/2022 and 12/31/2022

Source: CDC

Weekly reading – 31st December 2022

This is the last post of 2022. If you come across this little blog of mine or have been following, thanks and I wish you and your loved ones a great holiday.

What I wrote last week

My 2022

Business

Direct-to-clinician—How product-led growth is changing healthcare and life sciences. A really nice write-up on how the Direct-to-Clinician model is changing the healthcare landscape and powering startups that specialize in the field

The ABCs of health tech: key metrics to know and grow your business. These metrics and formulas are also used in other industries, not just healthcare. Hence, it’s helpful to have a list like this

Podcasting could be in for a rocky 2023. An interesting data point in the article: an ad agency executive claimed that only 5% of its client base submitted an advertising budget for 2023. The figure does seem unusually low, but given the uncertainty of the economy, I get where they are coming from. With that being said, I think this will be positive news to incumbent ads platforms like Google, Facebook or Amazon, just to name a few. They provide a sense of security that brands will get something for their bucks. Podcasting ads have potential, but at the moment, I don’t think they are there yet.

Are discount grocers outpacing traditional operators? I am a frequent shopper at Aldi in Omaha. I can attest that there have been more shoppers lately than in the past. The appeal of discount grocers is very simple: fewer items yet prices are hard to beat. In the time of inflation when everything is still more expensive, shoppers look for bargains. That’s exactly what these discount brands offer. They also benefit from a growing acceptance of private labels from shoppers. Private labels used to be stigmatized with low quality. That’s no longer the case. Even high-income households shop private labels nowadays which make up the majority of hard discounters’ inventory. Will these discount brands replace big box retailers? I don’t think so. But the likes of Walmart or Target will have to sell to shoppers in a different way and face pressures on margin.

The fintech reckoning is upon us. Here’s what to expect next year. Despite all the hype, rarely do I see a neobank or a fintech startup with meaningful market share, profitability and a sustainable growth trajectory. In the meantime, incumbent banks keep generating more profits and invest in their own capabilities to ensure feature parity with smaller competitors. Interest rates will persist at the current level for a few more months. Funding is more expensive to come by. The market will likely remain pessimistic next year. Investors put a premium on profitability, not growth. I expect that a lot of fintech startups will be acquired in the near future, mainly for talents and Intellectual Property. Their revenue and market share will be too small to mean anything.

($) How Southwest Airlines Melted Down. “Airline executives and labor leaders point to inadequate technology systems, in particular SkySolver, as one reason why a brutal winter storm turned into a debacle. SkySolver was overwhelmed by the scale of the task of sorting out which pilots and flight attendants could work which flights, Southwest executives said. Crew schedulers instead had to comb through records by hand. Upgrading Southwest’s technology has been a yearslong endeavor. Before it grew from a small player to a national and then international airline, Southwest didn’t need the same kinds of commercial platforms that rivals used, and developed many of its own systems instead. As Southwest grew and took on more complicated operations, such as flying outside the U.S., that has changed. SkySolver, an off-the-shelf piece of software that Southwest has customized and updated, was nearing the end of its life, the airline said.” The airline’s pilots and flight attendants have said outdated technology is part of the reason Southwest has struggled to rebound after upsets. Last year, a severe storm and an air-traffic control slowdown in Florida set off a chain reaction that rippled through Southwest’s network for several days. The airline canceled flights in a disruption that ended up costing $75 million.” There is another Reddit thread on the same issue. In the digital world we live in, companies live and die by IT infrastructure. Regarding Southwest, it’s remarkable that they let it come to this point even though the antiquated systems have been called out for a while.

Other stuff I find interesting

How cellphones transformed life at a women’s prison in Argentina. Most of our daily activities are online; which makes the lack of cellphones crippling to inmates. Although they are in prison for a reason, it doesn’t mean that they don’t deserve the right to access life essentials like we all do. I am happy for those inmates to have a little life brought back to them

Online shopping in the middle of the ocean. A practical look into how difficult online shipping is in remote areas such as Haiti or French Polynesia and how local companies are filling the gap left by giants like Amazon

($) Putin, Isolated and Distrustful, Leans on Handful of Hard-Line Advisers. What the article describes is concerning. Putin has unquestioned power in Russia, yet he is surrounded by hard liners that don’t have the courage to give him true facts and intelligence. Worse, some factions in the Russian government are willing to tap into Putin’s desire to restore Russia to what it once was, in order to advance their career regardless of consequences. The war in Ukraine is an example. And from what goes on in the article, it may not be the last example.

Stats

Salesforce predicts that holiday shopping returns this year will increase by 57% year over year

Gartner forecasts that global IT spending will reach $4.7 trillion in 2023

3 out of 4 developers surveyed by StackOverflow use Visual Studio as the preferred Integrated Development Environment

Vietnam GDP grows 8.02% in 2022; fastest expansion in 25 years

Weekly reading – 24th December 2022

Business

Fortnite Video Game Maker Epic Games to Pay More Than Half a Billion Dollars over FTC Allegations of Privacy Violations and Unwanted Charges. This announcement is devastating to Epic Games. Two record-breaking settlements in the history of the FTC that amount to more than half a billion dollars unquestionably hurts. Not only financially but also legally and reputationally. Epic Games has been involved in legal battles against Apple, claiming to fight for developers. Instead, they were caught red-handed. This case shows that Apple has a point in centralizing payments in order to protect consumers, especially minors. I am not saying Apple is perfect. Far from it. But in this case, Epic Games is the worst company on the market that brings an antitrust lawsuit against Apple. Apple lawyers cannot have a better start of the week.

($) Supply Chains Upended by Covid Are Back to Normal. “Goods are moving around the world again and reaching companies and consumers, despite some production snarls and Covid outbreaks inside China. Gone are the weekslong backlogs of cargo ships at large ports. Ocean shipping rates have plunged below prepandemic levels. “It’s obvious that freight rates peaked and began to normalize, driven by falling demand and an easing supply-chain congestion,” said Soren Skou, chief executive of Maersk. In November, the shipping company lowered its 2023 forecast for container demand—a proxy for global trade. It now expects a decline from 2% to 4%, from a maximum decline of 1% previously.

How Mastodon is scaling amid the Twitter exodus. It is fascinating that Mastodon has 2.5 million monthly active users yet is maintained as a non-profit organization by one person only

The Blackstone of Innovation. A quick overview of the Venture Capital business. I’d recommend the Venture Deals book if you were interested in the VC world and key terms that are often mentioned on the news.

Why YouTube spent the money on NFL Sunday Ticket. YouTube wants content creators to spend more time creating content for Shorts. The more content, the more eyeballs and hence the more advertising revenue. Platforms are fighting one another fiercely to keep creators and generate quality content. Even though this deal is not cheap, it does seem to serve YouTube in more than just one way

Invisible asymptotes. At a certain point, every company will have a ceiling that caps its growth curve if there is no change in strategy. Such a ceiling is called invisible asymptote. Eugene Wei wrote a great post on invisible asymptotes of some of the biggest tech names out there.

A fascinating Twitter thread on perfume ads

Other stuff I find interesting

#WorldCup on Twitter: The G.O.A.T.

($) Many Hospitals Get Big Drug Discounts. That Doesn’t Mean Markdowns for Patients.Under the program, hospitals buy drugs at reduced prices and sell them to patients and their insurers for much more, often at facilities in affluent communities. One participant is the Cleveland Clinic’s flagship hospital, which reported $1.35 billion in net income last year. The hospital doesn’t admit enough Medicaid and low-income Medicare patients to qualify for low-cost drugs under the program’s original requirements. But a quirk in federal law allowed the hospital to qualify as a “rural referral center,” despite its location near the center of Cleveland. Despite the benefits, the program hasn’t resulted in new drug discounts for low-income Cleveland Clinic patients, nor has it caused the hospital to increase the financial assistance it offers to those who can’t afford care. The charity care the main hospital writes off represents less than 2% of its patient revenue, according to a Wall Street Journal analysis of hospital Medicare filings.” How much patients would benefit if the government could look into loopholes like this and close them?

TikTok Spied On Forbes Journalists. This is very devastating to TikTok and concerning for everybody else. I deleted my TikTok app a long time ago and never regret it even for one second. Stories that surfaced recently show that TikTok gathers a lot of data on user and engages in surveillance tracking. The US government already bans TikTok on government devices. But why stops there? Why not outlawing the service throughout the US? In that case, it would badly decimate TikTok’s ads business and could probably bankrupt the company. That’s not to mention the EU that is even less forgiving on this kind of surveillance than the US. Honestly, I don’t see a way back for TikTok.

The Secret To Better Habits in 2023. A great timely read

Unpacking India’s growth, geopolitics, technology and superpower potential. “I asked him to make the strongest case he could against the growth story. He set the stage by saying India is a vast and diverse country. There is no other democracy of this size and heterogeneity in both a social as well as geographical sense. Rajeev has held a view that the Western countries want India to do well enough to be an attractive market for their own companies but that they may not actually want India to keep building economic capabilities because, with economic size and capacity, India could become more competitive in the foreign policy realm in particular.

Stats

The EU will grant €1.13bn to tech startups in 2023. Still it doesn’t seem enough in the grand scheme of things

World Cup Final Draws Record 16.8 Million Viewers for Fox

Amazon Fresh is currently operating 44 stores

Servers cost Twitter $1.5 billion a year

Weekly reading – 17th December 2022

Business

How Walmart is pursuing omnichannel profitability. Automation can indeed help retailers like Walmart pursue profitability. Increased productivity and lower labor costs are the key main drivers, However, it should be pointed out that Amazon has been using automation in their fulfillment centers for years and look at what happened to their eCommerce site. Last quarter, their profitability mostly came from AWS and their US operations suffered a loss. Walmart may have a few short-term wins, but in the long run, will the gains from automation persist?

The global microchip race: Europe’s bid to catch up. Even though the US and Taiwan are the two prominent names when it comes to chip design and manufacturing, Europe has the potential to catch up. It is home to a handful of companies that are indispensable to the industry such as Carl Zeiss SMT, ASML or Trumpf. Without them, ASML would not be able to produce extreme ultraviolet lithography (EUV) machines; TSMC would not have the equipment to manufacture cutting-edge chips; the likes of Apple would be constrained technologically and consumers would be deprived of the latest advances. However, Europe doesn’t own other pieces of the chip value chain nor does it set aside enough capital to compete with other countries. Most importantly, there is a shortage of skilled labor. Europe can address that problem by aggressively wooing talent and taking advantage of the terrible immigration policies of the US that don’t seem to get better any time soon. The question is: will they?

What the Kroger-Albertsons merger means for their private label portfolio. Putting Kroger’s private labels in Albertsons stores and vice versa is an interesting idea, but it would also come at a cost. What makes private labels valuable to retailers is the exclusivity. Breaking that exclusivity may lead to cannibalization of store revenue and perhaps some unintended and unforeseen consequences. What I am interested in is the bargaining power that the combined company would have over suppliers for their private labels. A roster of private labels worth $40 billion in annual revenue must command a lot of respect.

Bob Iger vs. Bob Chapek: Inside the Disney Coup. Great reporting into the frayed relationship between Chapek and the CFO as well as that between Chapek and Iger. Hiring is hard. The fact that Chapek was Iger’s pick and he personally wrote a public recommendation for him just for Iger to be disappointed at his successor is high-profile evidence of that. Moreover, Christine took a lot of risks by pitching Iger on the prospect of returning to the CEO spot and taking the idea to the board. But she did so reportedly from the place of love. You have to love the place you work for enough to rush to a return from a battle with cancer while caring for a sick spouse. Last but not least, I do think the board and Iger himself have to take responsibility for the mess that Disney has been through.

Visa to invest $5 billion in Africa in the next 5 years. There are half a billion people that are unbanked in the continent. Africa is also home to the youngest population on Earth. The growth prospect is limitless. And that’s why Visa commits this amount to tap into that growth. Apparently, their rival Mastercard shares the same feeling

Other stuff I find interesting

($) California Long Ruled U.S. Shipping. Importers Are Drifting East. “The hierarchy of U.S. ports is getting shaken up. Companies across many industries are rethinking how and where they ship goods after years of relying heavily on the western U.S. as an entry point, betting that ports in the East and the South can save them time and money while reducing risk. The share of all U.S. containerized cargo handled by Los Angeles and a neighboring port in Long Beach fell through the first 10 months of the year to a combined 25% as measured by weight, according to census data analyzed by Jason Miller, interim chair of Michigan State University’s supply chain management department. That was their lowest level in nearly two decades, down from a height of 33%

New Zealand bans young people from buying cigarettes for life. I honestly cannot think of a good reason to smoke cigarettes. The argument that small convenience stores would go bankrupt due to lost cigarette revenue should not stop a government from looking out for its citizens.

TikTok’s Secret Sauce. An interesting theory but there doesn’t seem to be a lot of evidence to back up.

Stats

US Vegetable Prices Soar Nearly 40%

Only a quarter of US iPhones are sold through Apple

Nov. ’22 U.S. eGrocery Sales Total $7.7 Billion, a 10% Drop Versus Year Ago

Source: unctad.org

Weekly reading – 10th December 2022

Business

Who will be Disney’s next CEO? Here are the top contenders to succeed Bob Iger. Disney is a textbook case of a company’s failure to make succession right. Bob Chapek was fired unceremoniously after a bit more than 2 years on the job. Bob Iger is back for what seems to be like the 100th time. None of the internal candidates mentioned in the article seem to have the skillset that emulates that of Bob Iger. The ones that do were passed over for the CEO job. If they weren’t picked then, why would they be this time around after 3 years away from the company?

TSMC to up Arizona investment to $40 billion with second semiconductor chip plant. This TSMC plant is the largest foreign investment in Arizona and one of the largest in the US history. Once completed, it will have enough capacity for chip demand in the US and produce the most cutting-edge chips (3 and 4 nanometers). In my view, this is a great move. TSMC can bring supply closer to the largest market in the world and reduce the geographical risk of being close to China. The US will house a strategic investment on its soil and also decrease its exposure to a take-over of Taiwan by China. Additionally, this will bring hundreds of jobs to Arizona and the US

In-store bakery is becoming a consumer magnet. “In-store bakery is becoming increasingly attractive to consumers, according to a new report. A whopping 95% of shoppers consume products from the department at least occasionally and 63% do so weekly, according to the “Power of In-Store Bakery 2022” report, published by the Food Marketing Institute (FMI). Among the shoppers who visit the in-store bakery weekly are Millennials (35%), urban dwellers (42%); large households of three or more persons (49%); and households with an income of at least $120,000, the report says.”

Disney’s CEO drama explained, with Julia Alexander. Julia Alexander is the Twitter account that I go to for anything media-related. This is a great interview and there are a lot of important nuances that media coverage on Disney and the Bobs missed

($) Former Apple Executive Says Company Blundered by Firing Him After TikTok Video. This should be a good case to be discussed in Ethics and Business Management classes. Apple was in a “I’ll be damned if I do, and I’ll be damned if I don’t” situation. Tony Blevins played an integral role in the Apple empire and to be frank, there was an argument to be made that his firing was too harsh. On the other hand, as he held a high-level position, the expectation on him was much higher. How would Apple maintain the culture if employees thought they were partial to Tony because he was higher up on the food chain?

Other stuff I find interesting

Why wind energy isn’t living up to its pollution-preventing potential. Wind energy has become increasingly important across the US, making up 10% of the country’s electricity mix today. A new research has proven that wind energy is linked to improved air quality, but such benefits are not the same to different communities. “Only 32 percent of those benefits reached low-income communities. And just 29 percent reached racial and ethnic minority populations. People of color are 3.6 times more likely to live in counties with multiple failing air pollution grades. Low-income communities in the US have also been consistently exposed to more particulate pollution than more affluent neighborhoods.”

($) Where Does All the Cardboard Come From? I Had to Know. A long interesting piece on the cardboard economy. “Cardboard manufacturers broke production records in 2021, and they’ve been breaking them basically every quarter since. By 2025, according to one estimate, the size of the international market for corrugated packaging will reach $205 billion, commensurate with the gross domestic product of New Zealand or Greece. In 2020, for example, the world’s paper and cardboard factories produced an estimated 400-million-plus metric tons of product; by 2032, analysts have predicted, that number will rocket to 1.6 billion metric tons, the weight of 16,000 aircraft carriers. Safe to say that never in human history have we relied on one kind of mass-produced packaging material for so much, and certainly not at such scale. “

A $100 Billion Lesson In Why Building Public Transportation Is So Expensive in the US. Pete Buttegig and The Department of Transportation should look at this article and take appropriate actions to address what I consider a national embarrassment.

Face to face with ancient Egyptians. Scientists use technologies to craft ancient Egyptians’ portraits based on mummies. Fascinating!

Uruguay is plotting to poach Argentina’s tech sector. “As the infrastructure of cities from Bali to Mexico City creaks under the strain of new digital-nomad arrivals, Uruguay’s luring of Argentines is different. Uruguay, whose population hasn’t grown significantly in 30 years, has opted to leverage its own labor shortage — which, for years, has contributed to holding back its burgeoning tech scene — with the economic upheavals of neighboring Argentina. Between 2020 and 2021, more than 21,415 Argentines applied for permanent or temporary residency in Uruguay, six times more than the requests accumulated in the previous two years combined. Starting in mid-2020, Uruguay’s center-right government extended tax breaks for foreign earners living in the country, and lowered residency requirements. Software companies pay no income taxes. “

Nigeria limits ATM withdrawals to boost digital payments. “The central bank has sent out a circular to lenders cutting the daily cash machine withdrawal limit from 150,000 naira to 20,000 naira, according to Bloomberg. Weekly cash withdrawal limits of 100,000 naira for people and 500,000 naira for corporations have also been set. The limit is the latest effort by Nigeria to discourage cash usage. The country is set to redesign high-value notes and is giving people until January to switch out their old paper money.

Stats

US-based small businesses had $1 billion in sales on Amazon between Thanksgiving and Cyber Monday

According to an EU-funded survey, one in four 16-19-year-olds in Europe engaged in online trolling last year

In 2021, U.S. corn was worth over $86 billion

Source: Science.org

Weekly reading – 3rd December 2022

What I wrote last week

My notes from the 2022 McKinsey Global Payments Report

Business

($) Adidas Top Executives Discussed Risk of Staff’s ‘Direct Exposure’ to Kanye West Years Ago. This mismanagement and scandal raise a serious red flag on Adidas. The influence of Kanye West impacts the company’s financials so much that it put up with the artist’s horrible and childish behavior for so long. Despite repeated complaints from employees. Is it really worth putting an iconic brand through the mud?

($) Why America Doesn’t Have Enough EV Charging Stations. “The government is pouring billions of dollars into developing a national highway charging network. But businesses aren’t sure how they will make money, and the nascent industry looks messy. Utility companies and gas stations are at war with each other over who will own and operate EV chargers. Rural states say some charging stations could operate at a loss for a decade or more. New companies that provide charging gear and services are contending with the equipment’s spotty reliability. The network’s build-out has a chicken-or-egg quality: EV advocates say many drivers will only be comfortable purchasing vehicles if rapid charging is as easy as using a pump at a gas station. Yet businesses interested in offering charging say they can’t make money until more EVs are on the road. Around 1% of U.S. drivers own EVs, but wait lists are growing and auto makers including General Motors Co. and Ford Motor Co. are expecting EV sales to keep rising. Wisconsin’s Dairyland Power Cooperative told the Biden administration in August that sparsely used chargers in the northern part of the state would likely “operate at a loss for years” and that rural areas need flexibility in planning. Maine officials said the operation of some sites may need government subsidies because they won’t turn a profit for a decade. Wyoming estimates that no rural charging station built to the requirements the federal government expects—four chargers placed every 50 miles along highways—would be profitable until the 2040s.”

It’s not your imagination: Shopping on Amazon has gotten worse. The article is a serious warning to Amazon, its executives and shareholders. It reflects my experience with the website lately. Search results are no longer authentic. Most are driven by ads. Items are delivered improperly. Wait times get longer. Prices are no longer competitive. It’s a far cry from what it was 2 or 3 years ago. Once consumers leave, what’s left for Amazon to hold on to?

($) Apple Makes Plans to Move Production Out of China. Trade wars and the unrest in China are making it difficult for Apple to continue to rely on the supply chain network in the country. It is not a surprise that Apple is hedging its bets by moving some production to other countries, but I don’t expect to see the fruits of this effort any time soon. Apple will have to find a country where it’s more stable and friendly to do business; to find partners that have the human and technology capital to handle the workload; to work out the logistics part to link every piece of the supply chain jigsaw. That’s not easy by any means

Source: The Transcript
Cumulative Gross Merchandise Volume Processed By Shopify During Black Friday. Source: Tobi Lutke

Other stuff I find interesting

($) It’s Public Land. But the Public Can’t Reach It. Before reading this piece, I didn’t know that there were acres of public lands that could not be reached because they were surrounded by petty private land owners. In fact, there are 15 million acres of federal and state land that is “landlocked” by private properties. This phenomenon begs the questions: who gets to go where and how do citizens get to public land without being charged of trespassing?

The dirty road to clean energy: how China’s electric vehicle boom is ravaging the environment. People praise electric vehicles for their impact on climate change because they are not emitting carbon dioxide. Well, these EVs require batteries which force us to destroy the environment to build. When we tally up everything we do to get EVs on the roads, are they still a net positive to our life and environment? That argument looks shaky now

New energy storage technologies hold key to renewable transition. “Long duration energy storage (LDES) generally refers to any form of technology that can store energy for multiple hours, days, even weeks or months, and then provide that energy when and if needed. It is a technology that is essential if the world is to increase the proportion of renewable energy, given it is an inherently intermittent source. The Long Duration Energy Storage Council, launched last year at COP26, reckons that, by 2040, LDES capacity needs to increase to between eight and 15 times its current level — taking it to 1.5-2.5 terawatts (85-140 terawatt hours)— to enable a cost-optimal net zero energy system.

Apple’s iPhone 14 Emergency SOS via Satellite Feature Saves Stranded Man in Alaska. Saving one life is already worth having this feature in my opinion.

Stats

2022 Black Friday sales exceeded $9 billion

Harvard Business Review has 220,000 subscribers who pay for print and digital access, half of which are digital readers only

By 2027, data centres will consume 31% of Ireland’s electricity

An estimated 37 per cent of the world’s population – or 2.9 billion people – have still never used the Internet.

Death from road accidents, per million people from OECD countries. Source: NYTimes
Black Americans are most likely to live alone. Source: NYTimes