Curated Insights 2018.11.16

The Experience Economy

What makes this possible is the paradigm shift I just described: consumers are always connected, which means reaching them is dramatically cheaper than it used to be. Even seemingly basic channels like email are very effective at driving surveys that show exactly how consumers are feeling immediately after interacting with a company or buying their product.

This gives an entirely new level of insight to management: while ERP showed what was happening in the main office, and CRM what was happening in offices all over the world, experience management promises the ability to understand what is happening with customers directly. It is a perfect example of business using new technology and paradigms to their advantage.

To win in the experience economy there are two pieces to the puzzle. SAP has the first one: operational data, or what we call O-data, from the systems that run companies. Our applications portfolio is end-to-end, from demand chain to supply chain. The second piece of the puzzle is owned by Qualtrics. Experience data, or, X-data. This is actual feedback in real-time from actual people. How they’re engaging with a company’s brand. Are they satisfied with the customer experience that was offered. Is the product doing what they expected? What do they feel about the direction of their employer?

Think of it this way: the O-data tells you what happened, the X-data tells you why it happened. At present, there is not technology company that brings these two worlds together. In particular, this exposes the structural weaknesses of CRM offerings, which are still back-office focused. Experience management is about helping every person outside of companies influence every person inside a company. So SAP and Qualtrics will do just that: the strategic value of this announcement is rivaled only by the business value.

Inside John Malone’s world

“Malone has long been focused on economic return,” says Vijay Jayant, an analyst with Evercore ISI. “He’s not an empire builder for the sake of owning assets. His strategy has worked out well for the people sitting on the same side of the table as him—the shareholders in his companies.”

Warren Buffett is often a point of comparison. Among the major differences is that Malone favors creating pure-play companies, while Buffett keeps everything under one roof at Berkshire Hathaway. Malone is comfortable with financial leverage, while Buffett shuns it. “Our businesses are rationally levered with cheap money,” Malone says. “It creates a higher return on equity for our investors. There’s no reason to think the leopard will change its spots.”

Here’s Malone’s take: “We’re not out there competing to buy Red Hat for $35 billion, but we have always been an opportunistic company. We try to position ourselves so that we can take advantage of opportunities through timely investments, good management, and synergies with our existing businesses.”

His method of control through supervoting stock is ingenious. He leverages relatively small economic stakes in Liberty companies—all fall below 10%—with a total value of about $5 billion into an influential voice or effective control of virtually all of them through ownership of supervoting stock. The beauty of Malone’s approach is illustrated by Liberty Broadband, which holds a 20.6% stake in Charter. Malone’s stake in Liberty Broadband of less than 4%, worth about $500 million, gives him a strong voice at Charter—a company with a market value of $75 billion—and effective veto power over important strategic decisions.

Why technology favors tyranny

Even if some societies remain ostensibly democratic, the increasing efficiency of algorithms will still shift more and more authority from individual humans to networked machines. We might willingly give up more and more authority over our lives because we will learn from experience to trust the algorithms more than our own feelings, eventually losing our ability to make many decisions for ourselves. Just think of the way that, within a mere two decades, billions of people have come to entrust Google’s search algorithm with one of the most important tasks of all: finding relevant and trustworthy information. As we rely more on Google for answers, our ability to locate information independently diminishes. Already today, “truth” is defined by the top results of a Google search. This process has likewise affected our physical abilities, such as navigating space. People ask Google not just to find information but also to guide them around. Self-driving cars and AI physicians would represent further erosion: While these innovations would put truckers and human doctors out of work, their larger import lies in the continuing transfer of authority and responsibility to machines.

Lethal bacteria help power kidney drug to beat 1-in-1,000 odds

Doctors believe they’ve found an answer for patients like Romero in a protein that is produced by lethal bacteria. The protein, which temporarily wipes out antibodies, was crafted into an experimental drug called imlifidase to give donated organs a fighting chance against the immune system’s defenses. Developer Hansa Medical AB says imlifidase could make transplants possible for about 35,000 U.S. patients who currently have poor odds, and increase matches for others.

Trends & time lapses

The most common age in the U.S. right now is 27. In fact, by 2020, the 10 most common ages in the U.S. will all be 35 and under. A wave of young people will be saving, investing, and buying houses in the coming years. This fits with my theory that baby boomers will not destroy the stock market as they retire en masse because millennials actually outnumber them now.

The housing market will always have its ups and downs but based purely on this demographic data my inclination would be to conclude real estate across the country will continue to rise in the coming decades as millennials begin settling down and starting families. That will put some massive pressure on the housing market where supply is relatively constrained following the real estate boom and bust of the 2000s.

The relative stability of the United States as the largest economy in the world is impressive. People have been calling for a downfall of the American empire for some time now but the U.S. has a lot of built-in advantages — a diversified, dynamic economy, a vibrant technology industry, a better demographic profile than the rest of the developed world, diversity and immigration (people still want to come live here), and our increasing role as a big player in the energy space to name a few.

When things get wild

There are three legal investment strategies: You can be smarter than others. You can be luckier than others. Or you can be more patient than others. Know your edge and how hard it is to maintain.

If investing were all about math, mathematicians would be rich. If it were all about history, historians would be rich. If it were all about economics, economists would be rich. If it were all about psychology, psychologists would be rich. In reality it’s a mix of many disciplines, but some of the brightest people specialize in one topic and can’t see the world through another lens.

Your lifetime results as an investor will be mostly determined by what you do during wild times.

How this all happened

People measure their well being against their peers. And for most of the 1945-1980 period, people had a lot of what looked like peers to compare themselves to. Many people – most people – lived lives that were either equal or at least fathomable to those around them. The idea that people’s lives equalized as much as their incomes is an important point of this story we’ll come back to.

Quantitative easing both prevented economic collapse and boosted asset prices, a boon for those who owned them – mostly rich people. The Fed backstopped corporate debt in 2008. That helped those who owned their debt – mostly rich people.

Tax cuts over the last 20 years have predominantly gone to those with higher incomes. People with higher incomes send their kids to the best colleges. Those kids can go on to earn higher incomes and invest in corporate debt that will be backstopped by the Fed, own stocks that will be supported by various government policies, and so on. Economist Bhashkar Mazumder has shown that incomes among brothers are more correlated than height or weight. If you are rich and tall, your brother is more likely to also be rich than he is tall.

None of these things are problems in and of themselves, which is why they stay in place. But they’re symptomatic of the bigger thing that’s happened since the early 1980s: The economy works better for some people than others. Success isn’t as meritocratic as it used to be and, when success is granted, is rewarded with higher gains than in previous eras.

How do you help a grieving friend?

Cheering people up, telling them to be strong and persevere, helping them move on…it doesn’t actually work. It’s kind of a puzzle. It seems counterintuitive, but the way to help someone feel better is to let them be in pain.

Grief… happens upon you, it’s bigger than you. There is a humility that you have to step into, where you surrender to being moved through the landscape of grief by grief itself. And it has its own timeframe, it has its own itinerary with you, it has its own power over you, and it will come when it comes. And when it comes, it’s a bow-down. It’s a carve-out. And it comes when it wants to, and it carves you out — it comes in the middle of the night, comes in the middle of the day, comes in the middle of a meeting, comes in the middle of a meal. It arrives — it’s this tremendously forceful arrival and it cannot be resisted without you suffering more… The posture that you take is you hit your knees in absolute humility and you let it rock you until it is done with you. And it will be done with you, eventually. And when it is done, it will leave. But to stiffen, to resist, and to fight it is to hurt yourself.

Curated Insights 2018.09.14

Risk, uncertainty and ignorance in investing and business – Lessons from Richard Zeckhauser

People feel that 50% is magical and they don’t like to do things where they don’t have 50% odds. I know that is not a good idea, so I am willing to make some bets where you say it is 20% likely to work but you get a big pay-off if it works, and only has a small cost if it does not. I will take that gamble. Most successful investments in new companies are where the odds are against you but, if you succeed, you will succeed in a big way.” “David Ricardo made a fortune buying bonds from the British government four days in advance of the Battle of Waterloo. He was not a military analyst, and even if he were, he had no basis to compute the odds of Napoleon’s defeat or victory, or hard-to-identify ambiguous outcomes. Thus, he was investing in the unknown and the unknowable. Still, he knew that competition was thin, that the seller was eager, and that his windfall pounds should Napoleon lose would be worth much more than the pounds he’d lose should Napoleon win. Ricardo knew a good bet when he saw it.

…in any probabilistic exercise: the frequency of correctness does not matter; it is the magnitude of correctness that matters…. even though Ruth struck out a lot, he was one of baseball’s greatest hitters…. Internalizing this lesson, on the other hand, is difficult because it runs against human nature in a very fundamental way… The Babe Ruth effect is hard to internalize because people are generally predisposed to avoid losses. …What is interesting and perhaps surprising is that the great funds lose money more often than good funds do. The best VCs funds truly do exemplify the Babe Ruth effect: they swing hard, and either hit big or miss big. You can’t have grand slams without a lot of strikeouts.

Risk, which is a situation where probabilities are well defined, is much less important than uncertainty. Casinos, which rely on dice, cards and mechanical devices, and insurance companies, blessed with vast stockpiles of data, have good reason to think about risk. But most of us have to worry about risk only if we are foolish enough to dally at those casinos or to buy lottery cards….” “Uncertainty, not risk, is the difficulty regularly before us. That is, we can identify the states of the world, but not their probabilities.” “We should now understand that many phenomena that were often defined as involving risk – notably those in the financial sphere before 2008 – actually involve uncertainty.” “Ignorance arises in a situation where some potential states of the world cannot be identified. Ignorance is an important phenomenon, I would argue, ranking alongside uncertainty and above risk. Ignorance achieves its importance, not only by being widespread, but also by involving outcomes of great consequence.” “There is no way that one can sensibly assign probabilities to the unknown states of the world. Just as traditional finance theory hits the wall when it encounters uncertainty, modern decision theory hits the wall when addressing the world of ignorance.


Hank Paulson says the financial crisis could have been ‘much worse’

While Bear Stearns’ failure in normal markets would not hurt the U.S. economy, we believed that the system was too fragile and fear-driven to take a Bear Stearns bankruptcy. To those who argue that Bear Stearns created moral hazard and contributed to the Lehman failure, I believe just the opposite—that it allowed us to dodge a bullet and avoid a devastating chain reaction.

If Bear had failed, the hedge funds would have turned on Lehman with a vengeance. Lehman would have failed almost immediately and the result would have been much worse than Lehman’s September failure, which occurred after we had stabilized Fannie Mae and Freddie Mac and Bank of Americaacquired Merrill Lynch. I would hate to imagine what would have happened if this whole thing started before we’d stabilized Fannie and Freddie.

An interview with Tim Geithner on this topic was done recently at the Yale School of Management and he speaks much more authoritatively on the limits of the Fed powers than I, but here goes. While our responses may have looked inconsistent, Ben, Tim, and I were united in our commitment to prevent the failure of any systemically important financial institution. But we had a balkanized, outdated regulatory system without sufficient oversight or visibility into a large part of the modern financial system and without the necessary emergency powers to inject capital, guarantee liabilities, or wind down a non-banking institution. So we did whatever we could on a case-by-case basis.

For Lehman, we had no buyer and we needed one with the willingness and capacity to guarantee its liabilities. Without one, a permissible Fed loan would not have been sufficient or effective to stop a run. To do that, the Fed would have had to inject capital or guarantee liabilities and they had no power to do so. Now, here’s the point that I think a lot of people miss: In the midst of a panic, market participants make their own judgments and a Fed loan to meet a liquidity shortfall wouldn’t prevent a failure if they believed Lehman wasn’t viable or solvent. And no one believed they were.

AIG is a cautionary tale. We should not have let our financial regulatory system fail to keep up with modern financial markets. No single regulator had oversight visibility or adequate powers to deal with AIG. Its insurance companies were regulated at the state level, its holding company was like a giant hedge fund sitting on top of the insurance companies, and it was regulated by the ineffective Office of Thrift Supervision, which also regulated—get this—Countrywide, WaMu, IndyMac, GE Capital. They all selected their regulator. So you get the picture, it’s regulatory arbitrage.

And I’m concerned that some of the tools we effectively used to stave off disaster have now been eliminated by Congress. These include the ability of Treasury to use its exchange stabilization fund to guarantee the money market funds, the emergency lending authority the Fed used to avoid the failure of Bear and AIG, and the FDIC’s guarantee of bank liabilities on a systemwide basis, which was critical.

The global smartphone supply chain needs an upgrade

At the peak in October 2017, smartphone components accounted for over 33% of exports from Taiwan, 17% of those from Malaysia and 16% from Singapore. Smartphones comprise 6% of Chinese exports. Memory chips flow from South Korea and Vietnam; system chips from Malaysia, Taiwan and elsewhere; and displays from Japan and South Korea. Rich-world firms, such as Qualcomm, sell licences to use their intellectual property (IP). The parts are then assembled, mainly by armies of Chinese workers.

Apple and 13 of its chip suppliers earn over 90% of the total pool of profits from the Apple system. Meanwhile the tail of other firms doing more basic activities must pay for most workers, inventories and fixed assets (see chart). So they have in aggregate a weak return on equity, of 9%, and a net profit margin of just 2%. Their earnings have not risen for five years. They include assemblers such as Taiwan’s Hon Hai and niche component makers, some of which are visibly struggling. On August 22nd AAC Technologies, a specialist in making phones vibrate, said its second-quarter profits fell by 39% compared with the previous year.

Apple, Samsung and most semiconductor makers could ride out such tensions, with their high margins and cash-laden balance-sheets. But the long chain of other suppliers could not, given their razor-thin margins, big working-capital balances and fixed costs. Tariffs could push them into the red. Of the 132 firms, 52% would be loss-making if costs rose by just 5%. And a ZTE-style cessation of trade would be disastrous. If revenues dried up and the 132 firms continued to pay their own suppliers, short-term debts and wages, 28% of them would run out of cash within 100 days.

If you are running a big firm in the smartphone complex, you should be reimagining things in preparation for a less open world. In a decade, on its current trajectory, the industry will be smaller, with suppliers forced to consolidate and to automate production. It may also be organised in national silos, with production, IP, profits and jobs distributed more evenly around the world. Firms will need to adapt—or be swiped away.

The story of Box: A unicorn’s journey to public success

The early days of Box’s selling file sharing and collaboration have largely been replaced by big corporate wins. One measure of Box’s success is its penetration of the Fortune 500—from 52% in the second quarter of 2016 to 69% in the same quarter of fiscal 2019. About 58% of Box’s total revenue comes from enterprises of 2,000 employees or more.

In Box’s recently completed fiscal quarter, it closed 50 deals of more than $100,000, compared with 40 a year ago; 11 deals of more than $500,000, versus eight a year ago; and two deals of more than $1 million, compared with four a year ago. It expects a strong pipeline of seven-figure deals in the back half of this year.

But in encouraging its salespeople to pursue bigger deals, Box increasingly faces competition from deeper-pocketed competitors in a total addressable market pegged at $45 billion, based on market research by Gartner and IDC.

Soccer fans, your team is coming after you

At the time of its 2012 initial public offering, Man United counted 659 million fans worldwide. Analysts estimate the team’s revenue this year will be about 587 million pounds ($763 million) — just $1.16 per supporter. Twitter Inc. has just 338 million active monthly users, yet enjoys revenue of $2.4 billion and a market value of $27 billion.

Digital marketing provides the opportunity for teams to put themselves in the middle of the sale of a service or product. It’s not simply about using a website or an app to sell fans more jerseys or baseball caps. It’s about turning the team into a platform, a way of connecting brands to customers, in the same way as Facebook Inc. and Alphabet Inc. already do.

Much in the way that price-comparison websites charge insurers or credit card companies for connecting them to customers, a sports team could, for example, offer its own exclusive video content with another provider’s mobile phone contract and take a cut of the proceeds. If that meant each fan were to spend just one more dollar a year with the club, it would provide a significant boost to sales.


Alibaba-backed apparel-sharing company YCloset brings sharing economy to a new level

Founded in December 2015, YCloset charges a monthly membership fee of 499 yuan and allows female users to rent unlimited clothes and accessories country-wide. Furthermore, users can choose to buy the apparel if they like to and prices fluctuate according to the rent count. Thus far, 75% of the income comes from membership fees and the remaining comes from sales of clothing. YCloset positions itself as a company that offers affordable luxury, professional and designer brand clothing. The company hopes to have the top famous brand to drive the long-tail brands.

In terms of business model, YCloset gradually shifted from one-time supplier purchase to brand partnerships with clothing companies. Brand partnerships allow revenue sharing between YCloset and their partners. To these clothing companies, YCloset gave them a new revenue, at the same time, they may get consumer insights from the data YCloset collects. In the future, YCloset will have joint marketing campaigns with the brands and assist in incubating new brands.

Autonomous delivery robots could lower the cost of last mile delivery by 20-fold

Last mile delivery – the delivery of goods from distribution hubs to the consumer – is the most expensive leg of logistics because it does not submit to economies of scale. The cost per last mile delivery today is $1.60 via human drivers but could drop precipitously to $0.06 as autonomous delivery robots proliferate.

Autonomous delivery robots are roughly seven times more efficient than electric vehicles on a mile per kilowatt basis. The major costs for autonomous delivery robots are hardware, electricity, and remote operators. Unlike in electric vehicles, the battery is not the largest cost component in slow moving robots. Air resistance is a function of velocity squared, suggesting that a robot traveling at four miles per hour loses much less energy than a car traveling at highway speeds to air resistance. As a result, rolling robots do not require large batteries, lowering both hardware and electricity costs relative to more traditional electric vehicles.

If rolling robots enable last mile delivery for $0.06 per mile, artificial intelligence could be advanced enough to improve their unit economics. A remote operator responsible for controlling robots in difficult or confusing situations probably will oversee roughly 100 robots, accounting for more than half of the cost per mile, as shown below. As autonomous capability improves, remote operators should be able to manage larger fleets of robots, bringing down the costs per robot.


Hospitals are fed up with drug companies, so they’re starting their own

A group of major American hospitals, battered by price spikes on old drugs and long-lasting shortages of critical medicines, has launched a mission-driven, not-for-profit generic drug company, Civica Rx, to take some control over the drug supply. Backed by seven large health systems and three philanthropic groups, the new venture will be led by an industry insider who refuses to draw a salary. The company will focus initially on establishing price transparency and stable supplies for 14 generic drugs used in hospitals, without pressure from shareholders to issue dividends or push a stock price higher.


Harvard Business School professor: Half of American colleges will be bankrupt in 10 to 15 years

There are over 4,000 colleges and universities in the United States, but Harvard Business School professor Clayton Christensen says that half are bound for bankruptcy in the next few decades. Christensen and co-author Henry Eyring analyze the future of traditional universities, and conclude that online education will become a more cost-effective way for students to receive an education, effectively undermining the business models of traditional institutions and running them out of business.

Christensen is not alone in thinking that online educational resources will cause traditional colleges and universities to close. The U.S. Department of Education and Moody’s Investors Service project that in the coming years, closure rates of small colleges and universities will triple, and mergers will double.

More than 90 per cent of Chinese teens access the internet through mobile phones, says report

The proportion of Chinese children under 10 years old who use the internet – which was only 56 per cent in 2010 – reached 68 per cent last year. More than 90 per cent of Chinese minors, those aged up to 18, can now access the internet through mobile phone and over 64 per cent of primary school kids have their own smartphones. Nearly 85 per cent of Chinese minors use WeChat, compared to only 48 per cent five years ago, but Chinese juveniles are still more fond of QQ, while Chinese adults prefer WeChat as a social app.

Regional Notes 2018.05.18

Japan seeks private sector’s help with blowout health costs

Faced with an aging crisis that’s projected to push up heath-care spending by more than 50 percent in the decade through 2025, the economy ministry is leading efforts for local governments to draw on the expertise of private companies.

The focus in Japan is preventive medicine, which could in time cut trillions of yen from government spending, according to Shinichiro Okazaki, an official overseeing the effort at the economy ministry in Tokyo. The nation’s annual health-care spending is forecast to reach 54 trillion yen ($500 billion) in 2025, according to the health ministry.


Short-term transitional issues expected in shift back to SST

“GST as you know covers everyone, retailers and traders. On the other hand, sales tax only covers manufacturers while services tax covers certain prescribed services such as professional services, so there must be a thought process on the transition to SST. Also there are still GST issues hanging around such as liabilities to be settled, so having transitional rules in place is going to be a challenge, and it is not something that can be done overnight.”

Meanwhile, there is the issue of how the government would make up for the shortfall in revenue with the abolishment of GST. Last year alone, some RM44 billion was collected in GST revenue. SST, according to chairman of the board of trustees of the Malaysian Tax Research Foundation SM Thanneermalai, used to only contribute about RM17 billion to the government’s coffers before GST came into force on April 1, 2015.

“That, to some extent, resulted in discontent for many, particularly in the B40 group, who were not previously taxpayers from the outset. Despite the fact that there are a multitude of exempt and zero-rated items, GST still translates into a significant amount for the B40 through its impact on prices, so the abolishment is most certainly a boon for this group of Malaysians. But it is left to be determined if the abolishment of GST will result in retail prices being adjusted downwards and in what manner and form.”


Malaysia sees favorable growth outlook as policy risks mount

The government must still outline how it will raise enough revenue to fill the GST gap in order to keep the budget deficit under control. The Finance Ministry said on Thursday the move will be “cushioned by specific revenue and expenditures that shall be announced soon,” with plans also to re-introduce a sales-and-services tax.

A revenue squeeze may prompt the government to cut back on spending, while a review of infrastructure projects could put a halt on construction, curbing growth in the economy. “It’s encouraging to see that the new government is already taking action to try and rationalize unnecessary and unproductive government expenditure,” said Goh. “We think that would actually help in keeping the fiscal balance in check.”

The gridlocked streets of Manila have become the latest battleground for Grab, despite the fact that it controls more than 90 percent of the ride-hailing market in the Philippines. With just 35,000 vehicles on its app to service as many as 600,000 requests a day, Grab has struggled to keep up with demand in areas like Manila, where an estimated 19 percent of commuters use ride-hailing, nearly double the average in other Southeast Asian capitals, according to Boston Consulting Group Inc. The challenge has created an opening for startups like Hype Transport Systems Inc. and Ipara Technologies and Solutions Inc., both of which plan to start services this month.

A Saudi-backed Asia refinery is going to be a fuel juggernaut

“The immediate impact from RAPID will lead to more Malaysian exports of diesel and jet fuel, while also reducing the need to import as much gasoline,” said Joe Willis, a senior research analyst for refining and oil products at Wood Mackenzie Ltd. in Singapore. “For middle distillates, Johor is conveniently located next to the Singapore storage hub.”

The RAPID project, operated by Malaysia’s state-owned Petroliam Nasional Bhd, known as Petronas, is due to start operations in 2019 with 300,000 barrels a day of crude-processing capacity. That’s a massive increase for the Southeast Asian country, which has a total 660,000 barrels of daily capacity now, according to Willis.

Still, Chin is hopeful the overall impact will be limited in the long-run. When RAPID reaches full utilization in early 2020, Asian refiners will be scrambling to meet a bump in appetite for the fuel as maritime rules that start in 2020 push shippers to replace dirtier fuels with cleaner ones like diesel, Chin said.

“With new mega refineries starting up in China and Saudi Arabia by the first quarter next year, there could be a brief window of weakness in diesel cracks before IMO effects kick in,” he said, referring to the upcoming maritime regulations to be implemented by the International Maritime Organization.


Willowglen sees challenging year ahead

“This year, I am not too sure, it could be quite a testing year. We should be all right in the longer term, [but] in the immediate term, there [could be] not much improvement compared [with] last year, it could be even worse.” This is due mainly to issues in project execution and delaying of awards from clients who are still resolving technical issues, especially those that are infrastructure-related.

While more than 70% of its revenue was contributed by its primary market of Singapore, with the balance coming from Malaysia, the group said it will continue its exploration of business opportunities elsewhere, especially in Vietnam, where it commenced operations a year ago. He assured that the group will not exit the Indonesian market — where it is involved in trading as well as the provision of hardware and software consulting services — but instead work on restrategising operations there to improve efficiency.

Curated Insights 2018.04.01

Amazon is already reshaping health care

All three of the biggest U.S. PBMs will be tied to three of the country’s biggest insurers. CVS, Express Scripts, and UnitedHealth process more than 70 percent of all U.S. prescriptions. Post-merger, three companies will insure more than 90 million people in some capacity, process more than 3.5 billion prescription claims, and generate more than $500 billion in revenue.

The merging companies have claimed huge cost savings will flow to consumers from these deals, but I’m skeptical. Research suggests costs can actually end up rising in some cases of health-care consolidation. Less competition means more pricing power for the companies that remain. Markets with more insurers have lower premiums, while prices rise when hospitals buy physician groups. Though these are vertical deals, they will add to the market power of major players in already heavily consolidated industries, which seems like a recipe for monopolistic behavior.

Regulation could protect Facebook, not punish it

If the government instituted new rules for tech platforms collecting persona information going forward, it could effectively lock in Facebook’s lead in the data race. If it becomes more cumbersome to gather this kind of data, no competitor might ever amass an index of psychographic profiles and social graphs able to rival Facebook’s.

We’ve already seen that first-time download rates aren’t plummeting for Facebook, its App Store ranking has actually increased since the Cambridge Analytica scandal broke, and blue chip advertisers aren’t bailing, according to BuzzFeed. But Facebook relies on the perception of its benevolent mission to recruit top talent in Silicon Valley and beyond.


Facebook knows literally everything about you

But my favorite thing is probably peer-to-peer payments. In some countries, you can pay back your friends using Messenger. It’s free! You just have to add your card to the app. It turns out that Facebook also buys data about your offline purchases. The next time you pay for a burrito with your credit card, Facebook will learn about this transaction and match this credit card number with the one you added in Messenger. In other words, Messenger is a great Trojan horse designed to learn everything about you.

There’s one last hope. And that hope is GDPR. Many of the misleading things that are currently happening at Facebook will have to change. You can’t force people to opt in like in Messenger. Data collection should be minimized to essential features. And Facebook will have to explain why it needs all this data to its users. If Facebook doesn’t comply, the company will have to pay up to 4 percent of its global annual turnover. But that doesn’t stop you from actively reclaiming your online privacy right now.


How Facebook helps shady advertisers pollute the internet

Those who were caught and banned found that this was only a minor setback—they just opened new Facebook accounts under different names. Some affiliates would buy clean profiles from “farmers,” spending as much as $1,000 per. Others would rent accounts from strangers or cut deals with underhanded advertising agencies to find other solutions.

Affiliates say Facebook has sent mixed signals over the years. Their accounts would get banned, but company salespeople would also come to their meetups and parties and encourage them to buy more ads. Two former Facebook employees who worked in the Toronto sales office said it was common knowledge there that some of their best clients were affiliates who used deception. Still, the sources said, salespeople were instructed to push them to spend more, and the rep who handled the dirtiest accounts had a quota of tens of millions of dollars per quarter.

How Alibaba and Tencent became Asia’s biggest dealmakers

The reach of Tencent and Alibaba in their home market dwarfs that of the big tech groups in the US. While the latter accounts for less than 5 per cent of all venture capital flows in their home market, Alibaba and Tencent account for 40-50 per cent of venture capital flows in mainland China, according to data from McKinsey.

The downside is that their new investors might have different agendas than simply the financial performance of the new companies. The risk is that Alibaba and Tencent might be willing to sacrifice their interests in the companies they back if their own goals shift.

But he worries that entrepreneurs might also be forced to prematurely choose sides in the rivalry between the competing ecosystems of one or the other internet giants in ways that can leave a young company exposed.


SoftBank Vision Fund CEO explains plan to build the biggest network of tech companies in the world

The fund aims to be the largest shareholder in 100 technology companies around the world after it has finished investing all of its money, he said. The goal is to create the biggest ecosystem of tech companies in the world.

Part of the strategy will include investments strategically moving operations beyond their home markets and into other countries, where they can be linked with other holdings in the fund, Misra said. The fund will actively push many of its investments to work with each other, creating a web of companies controlled, or heavily influenced, by SoftBank and its CEO Masayoshi Son, Misra said.

Dropbox and Box were never competitors

Vast majority of Dropbox’s combined business and consumer revenue of more than a $1 billion came from consumers. Dropbox has always offered an attractive consumer storage tool. “Dropbox is primarily a consumer company with 500 million users, [with] only about 300,000 teams using their business offering.” For now though, even with this business push, Pelz-Sharpe points out that most of Dropbox’s business customers are small teams of 3 or more people with a dash of larger implementations. “Nor are people building much on top of Dropbox in the way of business applications – it remains primarily a very efficient file sharing system,” he explained.

This in contrast to Box, which has been working primarily with large enterprise companies for years to solve much more complex problems around content. Aaron Levie from Box said he’s absolutely rooting for Dropbox, but they have always been going after different markets, since Box decide to go enterprise about two years into its existence. “We are fundamentally building two very different companies. Both are large markets. While there is no limit to the scale they could become, we have built a very different business around how do you serve [large companies] and deal with unstructured company data — and it’s a very different product set [from Dropbox],” Levie told TechCrunch.


Micron: You don’t know how big this memory stuff is, says Instinet

DRAM and NAND storage have become the choke point in system level performance across multiple applications; cloud vendors, for example, are boosting memory content to speed up performance. These cloud companies are very sophisticated about hardware architecture. Vendors are spending tremendous amounts of capital to reduce wait times in servers. This means maximizing the amount of memory around the processor and greater use of NAND flash.

Robots could replace surgeons in the battle against cancer

Moll says he focused on lung cancer for two reasons. It’s the deadliest cancer, killing 1.7 million people a year globally, according to the World Health Organization. (That’s double the next-highest total, for liver cancer.) And it’s the perfect proving ground, he says, for medical robots.

No medical regulator in the world has approved fully robotic surgery, so for now surgeons who sign up for Auris’s pilot program will drive the bot. The doctor guides the scope through the lung, starting in the trachea, with a video screen to help navigate. A camera view is on the screen’s left side, and a CT-scan-created map and turn-by-turn directions are on the right. Auris tracks the probe’s precise location, in part, by comparing data from the camera view to the 3D map, and by using an electromagnetic sensor that works a bit like a miniature GPS. The idea is to collect data after every surgery and feed it back into the navigation software, improving it over time.

Say goodbye to the information age: it’s all about reputation now

We are experiencing a fundamental paradigm shift in our relationship to knowledge. From the ‘information age’, we are moving towards the ‘reputation age’, in which information will have value only if it is already filtered, evaluated and commented upon by others. Seen in this light, reputation has become a central pillar of collective intelligence today.

Curated Insights 2018.03.04

The #1 reason Facebook won’t ever change

Google’s core DNA is search and engineering, though some would say engineering that is driven by the economics of search, which makes it hard for the company to see the world through any other lens. Apple’s lens is that of product, design, and experience. This allows it to make great phones and to put emphasis on privacy, but makes it hard for them to build data-informed services.

Facebook’s DNA is that of a social platform addicted to growth and engagement. At its very core, every policy, every decision, every strategy is based on growth (at any cost) and engagement (at any cost). More growth and more engagement means more data — which means the company can make more advertising dollars, which gives it a nosebleed valuation on the stock market, which in turn allows it to remain competitive and stay ahead of its rivals.

Facebook’s challenge is that their most lucrative market — the US and Canada — are saturated. And to keep making money in these markets — already a ridiculous $27 in ARPU for the last three months of 2017 — they need us to give more time and attention to them. This is a crisis situation for Facebook because it doesn’t make as much money from markets outside of the US and Canada. For the same three months, it made $2.54 in ARPU in Asia-Pacific, $1.86 in rest of the world, and $8.86 in Europe.


Netflix

And if you’re dependent upon advertising you’re done. The public will not sit for it, only the cheapest individuals will endure ads, and then the ads don’t work on them, because they’re so damn tight. No, the people advertisers want to reach are the spenders, which is why everybody’s now advertising on Amazon, check it out, that’s where the dollars change hands.

So the networks and other ad-supported channels are on life support. They’re dependent upon hits, which come and go, and what do I always say…DISTRIBUTION IS KING!

So, just having good content is not enough, you’re reinventing the wheel every season, you’re only as good as your last hit.

As for HBO… That’s a dying model. If the outlet were smart, they’d band together with Hulu or another player and release all episodes on the same day. People don’t like to wait, appointment viewing is passe. We want it all and we want it NOW!

As for Hulu, forget about it, it doesn’t have critical mass, and unlike Netflix, it’s only in America. Sure, the “Handmaid’s Tale” burnished the outlet’s image, but Netflix has more than that, “Narcos,” Stranger Things,” 13 Reasons Why,” “Wormwood”… A record company can’t survive on one act, you need a steady flow of product, which Netflix has. And it’s a virtuous circle, they keep adding subscribers to the point they’ve got more money and they spend it on the best creators! So they end up with the lion’s share of the viewers. Which is why Fox wanted out, why it sold to Disney.

Nobody wants to let Google win the war for maps all over again

The companies working on maps for autonomous vehicles are taking two different approaches. One aims to create complete high-definition maps that will let the driverless cars of the future navigate all on their own; another creates maps piece-by-piece, using sensors in today’s vehicles that will allow cars to gradually automate more and more parts of driving.

Alphabet is trying both approaches. A team inside Google is working on a 3-D mapping project that it may license to automakers, according to four people familiar with its plans, which have not previously been reported. This mapping service is different than the high-definition maps that Waymo, another Alphabet unit, is creating for its autonomous vehicles.

Mobileye argues that it’s more efficient and cost-effective to let the cars we’re driving today see what’s ahead. In January, the Intel Corp. unit announced a “low-bandwidth” mapping effort, with its front-facing camera and chip sensor that it plans to place in 2 million cars this year. The idea is to get cars to view such things as lane markers, traffic signals and road boundaries, letting them automate some driving. Mobileye says this will take less computing horsepower than building a comprehensive HD map of the roads would.

Hidden profits in the prescription drug supply chain

Analysts at Bernstein tried to get a better picture of how profitable these companies are by excluding the cost of the drugs that are included in their revenue. The analysts compared the rate at which gross profit converts into earnings before interest, taxes, depreciation and amortization for pharmacy-benefits managers and other pieces of the drug supply chain, including drug distributors, insurers and pharmacies.

By this analysis, pharmacy-benefit managers are exceptionally profitable; 85% of their gross profit converted into Ebitda over the past two years. Drug distributors converted 46% of their gross profit, while health insurers and pharmacies achieved about 30%.


Sergio Marchionne’s final lap

Few people in automotive history have as impressive a legacy of wealth creation as the 65-year-old Marchionne: Henry Ford, Billy Durant, Karl Benz and Kiichiro Toyoda among them. But those titans were like the industry’s farmers — cultivating businesses from scratch and nurturing them into today’s automaking giants. Marchionne, in contrast, has been the fireman — running into the ruins of once-great companies, putting out the flames and rebuilding something better than before.

“In 2004, when you were first introduced to the auto industry, a lot of people were thinking, ‘Who the hell is this guy?’ Right? I was one of them, frankly,” Morgan Stanley analyst Adam Jonas told Marchionne during FCA’s Jan. 25 quarterly call with analysts. “We hadn’t seen anything like you. You took $2 billion, roughly, and you’ve turned it into around $72 billion, and more important than that, there are many hundreds of thousands of families across many nations that are better off because of you and your team.”

In 2009, Marchionne inherited a mess. Daimler and later Cerberus Capital had largely failed to invest in necessary product improvements or modernize the company’s industrial footprint. Morale among employees who had survived constant cost-cutting, including several rounds of layoffs, and then the bankruptcy could not have been lower. Marchionne offered the automaker’s disheartened employees a path back to potential health — one that demanded long hours, hard work, humility and sacrifice. The employees accepted the challenge. They set to work fixing many of the things that had gone so wrong with Chrysler and its products — improving quality, overhauling 16 vehicles in 19 months, banning rat-gray interiors and fixing manufacturing plants. Their level of commitment and dedication to restore the company to some semblance of health continually surprised Marchionne.


Didi Chuxing took on Uber and won. Now it’s taking on the world

With 400m registered customers in more than 400 Chinese cities, it delivers 25m rides a day, roughly twice as many as Uber and all the other global sharing apps combined. In the future, Liu imagines an even larger purpose, as Didi uses big data and machine learning to fix the many problems that snarl-up urban areas. “When you redesign the transportation system, you basically redesign the whole city,” Liu says. “You redefine how people should live.”

AI currently matches thousands of riders and drivers each minute, as part of a decision-making platform the company calls “Didi Brain”. This already predicts where riders are likely to want cars 15 minutes ahead of time, guessing right 85 per cent of the time. As it seeks out more patterns, Zhang says, the system will see forward an hour, or even a full day, using reinforcement learning, a powerful AI technique in which computers learn via experimentation, much as a child might use trial and error.

But for Didi, machine learning helps solve more basic problems, like traffic signals. “They’re sometimes manually operated every 90 seconds by someone sitting in a room,” Liu says. In the eastern city of Jinan, Didi algorithms now power “smart” traffic lights, which optimise patterns based on real-time car data, cutting congestion by ten per cent. Similar projects are under way in dozens of cities, along with plans to improve traffic lane management and bus systems.


Dyson bets on electric cars to shake up industry

Dyson has worked extensively on lightweight materials, leading several people to speculate the first vehicle may be substantially comprised of plastics rather than metals, something usually reserved for high-end supercars. This would make the cars lighter — important because of the weight of electric batteries — but also allowing for more inventive designs. When announcing the project last September, Sir James said the first car would look “quite different” to any currently on the market.

Dyson aims to lean less heavily on suppliers than traditional carmakers, partly because of a penchant for making components in house, and partly because electric cars contain substantially fewer bits than their combustion engine counterparts. The group already produces electric motors, which turn the wheels, as well as battery cells in-house, and is investing heavily in software development, an increasingly important part of modern cars.


SpaceX joins race to make web truly worldwide

If successful, however, SpaceX has said it plans to start launching its first commercial satellites next year, with a constellation of more than 11,000 circling the earth in low-earth orbit by the time the network is complete in 2024.

The satellite trial points to an impending space race that has drawn in powerful backers. Google, which once looked at developing its own satellite-based network, became one of SpaceX’s biggest backers when it led a $1bn investment round three years ago. Meanwhile, SoftBank and Richard Branson are among the backers of OneWeb, a European rival that hopes to start providing broadband internet next year.


Driverless cars: mapping the trouble ahead

“Everyone is trying to develop their own in-house HD map solution to meet their self-driving needs, and that doesn’t scale,” says Mr Wu of DeepMap. “It’s all reinventing the wheel, and that’s wasting a lot of resources. That will probably be one of the reasons to block self-driving cars from becoming a commodity.” Because companies do not share mapping data and use different standards, they must create new maps for each new city that they plan to enter. “It will delay the deployment in certain geographies,” Mr Wang says.

Willem Strijbosch, head of autonomous driving at TomTom, says the maps needed for driverless cars are different from the current map applications because they will need to “serve a safety critical function”, rather than just being used for navigation. “Another change is that you can no longer use GPS as your only means of localisation in the map,” he adds, because the global positioning system is not precise enough for self-driving cars.


Eyes in the sky: a revolution in satellite technology

Farmers can use the imagery to estimate crop yields around the world, investors are counting the number of oil storage tanks in China and estimating consumption trends, while human rights campaigners have used it to map the flight of the Rohingya population from Myanmar. On a daily basis, we can now study the shrinkage of glaciers, the expansion of cities, the deforestation of remote wildernesses and the devastation of armed conflict in intense detail.

“Seeing the whole Earth as a single entity is not new,” says Martin Rees, Britain’s astronomer royal. “But what is happening now is that we are monitoring it on a daily basis at high resolution. Satellites have enough resolution to observe every big tree in the world every day.”

Planet now has a fleet of 190 satellites in orbit, including 13 SkySat satellites. That network provides a steady feed of imagery — more than 1.3 million photographs a day — that can be combined with other data streams to create a comprehensive “space data processing platform”. The company includes feeds from the Sentinel satellites, which operate as part of the EU’s Copernicus programme, and the US Landsat 8 satellite, adding infrared and radar capability.

Over the past two years, Planet has sold its data services to hundreds of customers in about 100 different countries, including the US, UK and German governments and big companies such as Bayer, Monsanto and Wilbur-Ellis. Planet says it has strict ethical guidelines and vets its customers as best it can to ensure that sensitive images do not end up in the wrong hands.

The number

Dr. Edward Deming once said that the numbers that best define a company are two factors that do not appear on any financial statement. These factors are the value of a satisfied customer and the value of a dissatisfied customer. These factors must be multiplied by every other number in a financial statement in order to assess the prospects of the business. A high satisfaction leads to repeat purchases and referrals, growing the business; while a low satisfaction leads to ending relationships and a repulsion of potential new customers. These numbers determine everything about the future and nobody quite knows what they are.

Stocks are more similar to bonds than you think

The table demonstrates that stocks have done an admirable job diversifying negative returns in bonds over time, showing losses only in three out of the 16 different times that bonds had down years. The spread between the two averaged more than 16 percent. It should also be comforting to those who practice diversification that even when both have fallen in the same year, bonds typically don’t get crushed like stocks do and instead tend to only show minor losses.

Companies pay workers to get savvier with money

Carrie Leana, a professor of organizations and management at University of Pittsburgh, said participants reported significant declines in their financial worry and increases in both their physical and psychological health.

To tackle this, companies are using incentives to boost participation in financial-wellness programs. These typically combine financial education with customized advice delivered by mobile apps and human advisers. The goal: to teach employees basic money-management skills and remind them—via text messages, emails or one-on-one meetings—to stick to budgets, pay bills and save more for everything from emergencies to retirement.

“We know that stress is the No. 1 cause of health-related issues, and the No. 1 cause of stress is money,” said SunTrust CEO William Rogers Jr. “If we can attack financial stress, we can improve our employees’ physical well-being as well.”

Curated Insights 2018.02.18

Amazon’s latest ambition: To be a major hospital supplier

The pilot is customized for the hospital system’s catalog of supplies, the official said, allowing employees to compare prices the system negotiates with its distributors against those in the Amazon Business marketplace. In response to questions about these efforts, Amazon said it is building technology to serve health-care customers, and seeking to sell hospitals on a “marketplace concept” that differs from typical hospital purchasing, which is conducted through contracts with distributors and manufacturers.

So far, some hospitals have been reluctant to buy supplies from Amazon Business, for reasons including lack of options and lack of control over purchases and shipping, which hospitals closely safeguard to ensure prompt arrival of goods.

Hospitals typically contract for assurances that products will be available and delivered securely, she said. “It’s a little different than being out of a size 6 dress. I can’t be out of a six French catheter,” said Ms. McCready, who oversees the hospital system’s $3 billion annual budget for supplies, contract services and pharmaceuticals. Ensuring continuity of product supply is also crucial, said Donna Drummond, Northwell’s senior vice president of consolidated business services. When doctors and nurses reach for a familiar product, they know its specifications. Jumping online to look for the best deal could disrupt that continuity, she said. Northwell is “not ready to move from our current model,” Ms. Drummond said, but added: “We are open to a competitive market.”

Fees and administration, marketing and shipping costs account for an estimated 20% to 30% of health-care supply costs, according to a November research report by Citigroup Global Markets Inc. “There’s a lot of people with fingers in the pie,” said Rob Austin, an associate director with Navigant Consulting Inc. and former hospital supply-chain executive. “There is a huge opportunity.”


Amazon threat has Maersk racing to stop clients becoming rivals

It’s not just a question of a smooth delivery, said Skou. Giant retailers like Amazon also want better information about shipments to manage supply chains as effectively as possible. Maersk is rolling out a new digitization strategy to modernize an industry in which bookings often still take place by phone. Last month, it formed a joint venture with IBM to develop the use of blockchain technology to manage and track cross-border trade.

“The ability of Maersk to understand the market and integrate with a big company like Amazon is very clever,” Benito said. “They realize that Amazon can be a disruptor, so it’s better to try and work together.”

How delivery apps like Seamless and Uber Eats may put your favorite restaurant out of business

In 2016, delivery transactions made up about seven per cent of total U.S. restaurant sales. In a research report published last June, analysts at Morgan Stanley predicted that that number could eventually reach forty per cent of all restaurant sales, and an even higher percentage in urban areas and among casual restaurants, where delivery is concentrated. Companies like GrubHub maintain that the revenue they bring restaurants is “incremental”—the cherry on top, so to speak, of whatever sales the place would have done on its own. They also argue that delivery orders are a form of marketing, exposing potential new customers who might convert to lucrative in-restaurant patrons. The problem is that as consumers use services like Uber Eats and Seamless for a greater share of their meals, delivery orders are beginning to replace some restaurants’ core business instead of complementing it. (In the Morgan Stanley survey, forty-three per cent of delivery patrons said that a meal they ordered in was replacing one they would have otherwise eaten at a restaurant.) And, as delivery orders replace profitable takeout or sit-down sales with less profitable ones—ostensibly giving restaurants business but effectively taking it away—the “incremental” argument no longer holds. “It’s total bullshit, and you can quote me on that,” Justin Rosenberg, the C.E.O. of the Philadelphia-based fast-casual chain Honeygrow, told me. “I’ve spoken to C.F.O.s of bigger fast-casuals, and they’ve said the same thing.”

It’s worth noting that, even while charging restaurants steep rates, most delivery platforms are not yet profitable, either. Their hope is that order volumes will one day become high enough—and couriers will deliver enough orders per hour—to push them into the black.


Airbnb reportedly built an internal hedge fund that makes $5 million per month

According to Bloomberg, Tosi “quietly built a hedge fund within the company’s finance department. He used a portion of capital from the balance sheet to buy stocks, currencies, and fixed-income securities, mimicking the treasury fund he ran at Blackstone. The side project represented 30 percent of the company’s cash flow last year and made about $5 million a month for Airbnb, the people said.”

New DNA nanorobots successfully target and kill off cancerous tumors

“Using tumor-bearing mouse models, we demonstrate that intravenously injected DNA nanorobots deliver thrombin specifically to tumor-associated blood vessels and induce intravascular thrombosis, resulting in tumor necrosis and inhibition of tumor growth,” the paper explains.

DNA nanorobots are a somewhat new concept for drug delivery. They work by getting programmed DNA to fold into itself like origami and then deploying it like a tiny machine, ready for action.

Saving for old age: the global story (part II)

This country for old men and women would have had 222m people in it, assuming it was launched at the end of 2015. Assume all Chinese move there on their 60th birthday, and by 2025 you would expect the population of Oldland to be 300m.

It is well known that savings rates in China are already high. If greater portions of these savings are shifted into a funded pensions infrastructure which looks anything like that of the US, this would boost demand for the kinds of assets pension funds usually buy: stocks and bonds.

It may already be happening. The Willis Towers Watson report states that China has the fastest compound annual growth rate of pension assets over the past five years, at 18 per cent. The second highest, at 13 per cent, is South Korea. The third is Hong Kong, at 10 per cent (HK also has the fastest 10 year growth rate — there is no such figure for China).

Audio boom: how podcasters make a living

The defining year for podcasting was perhaps 2014, when NPR launched Serial, a true-crime series that became a global phenomenon and the fastest podcast to reach 5m downloads on iTunes. It triggered a wave of wannabes. That year, Apple installed the podcast app into its operating system — suddenly iPhones had podcasts on the home screen. Today there are more than 500,000 active shows on iTunes, including content in more than 100 languages.

In 2006, only 22 per cent of Americans had heard the term “podcasting”, according to Edison Research and Triton Digital. Last year it was 60 per cent. Thirty-one per cent of 25- to 54-year-olds said they had listened to a podcast in the past month compared with 16 per cent four years earlier. Networks such as Gimlet, or the crowdfunded Radiotopia, have helped to professionalise podcasts by attracting large audiences and advertising revenues.


An ‘iceberg’ of unseen crimes: Many cyber offenses go unreported

To many criminologists, academics and law enforcement leaders, crimes like car theft are anachronisms in a modern era in which the internet’s virtual superhighways have supplanted brick-and-mortar streets as the scenes for muggings, prostitution rings or commercial burglaries. They see dips in traditional violence and larceny as offset by a twin phenomenon: A surge in the evolving crimes of the digital era, and the fact that they are not fully captured in law enforcement’s reporting systems.

The wealth of Sapiens

True wealth is not money. It’s the option to buy what you truly need. If money can’t buy what you need, you’re on even footing with the poorest person out there. Wealth is a society where you can trust complete strangers with your child’s life. Wealth is having friends, colleagues and family who support you. Who take care of the things you can’t, without hesitation. Wealthy is when strangers rent you cars for 1-way trips at 3am over the internet.

Company Notes 2018.01.19

Sasbadi Q1 FY2018 Results

The higher revenue recorded by the Digital & Network Marketing Division ws due to our network marketing/direct sales business continuing to gain momentum. The higher revenue recorded by the Print Publishing Division was due to better performance arising from more timely publishing and introduction of new titles to the market coupled with higher revenue from new textbook contracts with the MoE.

edotco Malaysia eyes higher market share

edotco, a 62.4%-owned subsidiary of Axiata Group Bhd, owns about 4,000 telecommunication towers and manages another 5,000 towers for its customers in Malaysia through its wholly-owned unit edotco Malaysia Sdn Bhd.

According to a 2016 industry report by TowerXchange, edotco Malaysia had the third-largest tower count in the country, at 3,600 as at end-2014, after YTL Communications Sdn Bhd’s 5,000 towers and Maxis Bhd’s 3,800 towers. DiGi.Com Bhd, which ranked fourth in the report at the time, had 3,400 towers, followed by the combined portfolio of 3,200 towers owned by 14 state-backed tower companies (towercos).

Suresh said the Malaysian telecom tower industry has been growing consistently at a pace of between 1,000 and 2,000 towers per year. “In the last few years, this pace of industry growth was probably okay. But given the increasing investment in 4G by [mobile network] operators, perhaps it can accelerate a little bit over the next one or two years. Data growth is really driving the change, basically customers want more and more what we call ‘infill’ to boost capacity on top of existing coverage. These infills or towers as we call them could be a lamp pole, a camouflaged structure or maybe a signboard. In Kuala Lumpur we can only [affix new small cell antennas] on lamp posts or street furniture now, and no longer build a tower,” he added.


BCM eyes earnings growth

Cypress supplies medical devices to 220 pharmacy retail outlets, 48 medical equipment dealers and two wholesale medical equipment dealers, with notable names like Caring Pharmacy, Multicare Health Pharmacy, and RedCap Pharmacy.

The acquisition of Cypress also comes with a profit guarantee of RM600,000 for the first year.

Being in the distribution space, BCM Alliance is subjected to risks of short-term contracts. For example, distribution agreements and service contracts generally have short tenures, averaging at one to two years. However, BCM Alliance banks on its track record, having been a long term distribution partner to several brands, with some partnerships established for 14 to 15 years, like Hitachi Medical.

Additionally, under the Medical Device Act 2012 (Act 737), clients who purchase medical devices from distributors are mandated to seek after sales services from the same distributor. Hence, BCM Alliance is further protected from competition by third party service providers and is ensured of renewed service contracts. “This act is enforced beginning January 2018, and also applies to the trade of certified and registered medical devices. This weeds out the sale of substandard and uncertified medical devices, particularly in the pharmacy market,” says Liaw.


Battersea Power Station stake sold as part of $2.2 billion deal

Surveys identified “significantly worse” asbestos risk in the power station building and the cost of removing it was “substantially higher than originally envisaged”, the developer said in a separate letter to the borough council last year. The complexity of restoring the chimneys and additional foundation works also increased costs, it said.

Construction work on the building is due for completion in 2020 and about a quarter of the space will be leased to Apple. Most of the 250 apartments included in the property have already been sold.

Stronger ringgit a boon to healthcare sector

The strengthening ringgit is also a boon. “For the past few quarters, the operating costs for healthcare providers have shot up due to the higher US dollar against the ringgit, which has left healthcare operators with higher cost for medical consumables. Therefore, with the improving ringgit, we opine this will help stabilise an otherwise increasing cost of operations for healthcare providers,” said MIDF Research.

Should this government-backed national health insurance system become a reality in Malaysia, private healthcare operators in the country are poised for a major step-up in revenues and profits, according to AmInvestment Bank Research’s Ng. “Under a national health insurance system, theoretically, citizens can choose between seeking treatments in a public or private hospital. While a patient seeking treatment in a private hospital will still incur a higher cost versus a public hospital, the general price differential between the two hospitals should narrow,” he said.

“The local private healthcare sector has an added catalyst, that is, medical tourism backed by its highly competitive medical charges and hospitalisation costs [versus those in developed countries], a generally English-speaking population as well as various incentives provided by the government,” it added.

Curated Insights 2018.01.07

The $100 billion venture capital bomb

Son must deploy $20 billion, or a fifth of the fund, every year for the next five years to meet investors’ terms and their expectations in a market that many already consider overvalued.

Son explained to Hauser that there was a big new wave of computing coming — the sixth, in Hauser’s estimation, following on from the mainframe, the minicomputer, the workstation, the PC, and mobile. This next wave would automate processes in industrial manufacturing and on consumer devices. Son said Arm could uniquely capitalize on this new order as the leading processor manufacturer behind the Internet of things.

“This is the company,” Son said in a televised interview. “No one can live on the earth without chips — it’s in cars, refrigerators, everywhere. So if chips are the things everyone needs, and one company has a 99 percent market share, there must be a barrier. They’re not monetizing well enough. But if I own it, we can monetize it much better. I think the company is going to be more valuable than Google.”

Aside from its 95 percent domination of smartphones, Arm has 34 percent of the global processors market. There are currently 110 billion Arm processors in the world. The company has forecast a total of one trillion by 2035. As the applications get more advanced — be that a car, a washing machine, or a drone — they demand smarter processors, which are more expensive to produce in-house. “We price our fee at a tenth of the cost of what it would cost to develop it yourself,” Thornton notes. “So when you’re staring down the barrel of $100 billion and ten years to develop that processor yourself, we can say it will cost $10 billion from us and you can have it instantly. This is why we have expanded so rapidly over 20 years. One by one, design team by design team, we will become the processor of choice in those markets.”

“Arm Holdings has an insight into the future. When Arm makes a contract with a new business venture, providing the Internet of things for automobiles or farming, Arm will know what is in the pipeline for the Internet of things two years ahead.” SoftBank, in turn, gets a head start on funding companies for a market that doesn’t yet exist.

Analysts say SoftBank, which declined to comment for this article, is at work on vertical integration: Foxconn builds devices, Arm supplies the chips, and SoftBank-owned Sprint and OneWeb, an Internet satellite company, operate the networks on which the devices run. Vision Fund portfolio companies will reap the benefits of these partnerships. SoftBank sits in the middle, introducing high-growth prospects from the fund to one another and to the infrastructure on which their success rides.

Units of time are the new currency

Buffett’s not wrong, but technology has changed the nature of competition. While businesses were once considered only as valuable as the dividends they paid out, the “impenetrable” moats that let companies spit off excess cash are dwindling. A moat today is simply a temporary buffer that helps a company get ahead of the next innovation cycle. When you compound time, you’re creating and recreating value faster than the current innovation cycle.

This is the formula for compounding time into a utility and beyond: 1) Reduce friction for your customers and yourself. Use the time you save to build your utility. 2) Compound time by investing in the ecosystem and getting other companies to integrate with your product. Other companies will integrate with you to save themselves time, building on top of your platform and giving you time to invest in the next great business. 3) Buy other people’s time to defend your utility and stay relevant. Smartly acquiring new products helps you maintain your utility.

Jeff Bezos: “All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.” While this created more work in the short-term, it broke Amazon down into hundreds of micro-services that communicated via APIs. By making all services accessible via API, Amazon drastically reduced the time it took to deploy new features and functionality.

Google’s machine-learning algorithms are reportedly five to seven years ahead of the competition. By keeping TensorFlow to itself, Google would have maintained its lead time — similar to how moats are created by stockpiling assets. But by taking the opposite approach and giving TensorFlow away for free, Google created a utility.

Building a traditional moat will be antithetical to building a great business. The only way to survive is to extract the core of your business and spread it out to compound returns on time. First, you have to save time for your customers and even yourself. Then, you have to invest it forward by co-operating with other products in your ecosystem. Finally, you have to acquire new innovation to maintain your lead.


Why has Waymo taken so long to commercialize autonomous taxis?

To estimate the rate at which passengers will tolerate autonomous taxi errors, we analyzed the manually driven car statistics to set the hurdle. On average human driven cars break down roughly once every 50,000 miles and crash once every 240,000 miles,2 thus offering perspective on acceptable tolerance rates for autonomous vehicle SIFs and UFs.

Supporting this hypothesis, its cars seem to have had difficulty making left turns. One possible explanation is that it has chosen not to vertically-integrate, outsourcing vehicle production to partners like Fiat Chrysler and then taking engineering shortcuts by integrating its sensor suite into a product manufactured away from its controls. In contrast, Tesla’s and Cruise Automation’s (GM) manufacturing operations are vertically-integrated, which could become an important source of competitive advantage.

We are skeptical of that negative conclusion for a number of reasons. Today, Waymo probably is trying to maximize its failure rate to identify faults and root them out. Some stretches of road are trickier and some intersections more difficult to navigate than others.

Getting my fix of Starbucks

SBUX has been successful engendering loyalty from its customers as well- Starbucks Rewards has 13.3mm members in the US and an incredible 36% of all dollars tendered in the stores is transacted through the loyalty program (US Company operated stores).

In the US- the average new SBUX location generates revenue of $1.5mm (average unit volume or AUV) and generates a year 1 store profit margin of 34% or $510k. Based on an average store investment of $700k in the US, this results in an ROI of ~75%. Compare this to a McDonalds with an ROI of ~30%, an average fast casual operator at ~40% or even Chipotle (at its peak before the food illness issues) at ~70%. This means that the average SBUX store earns back its investment a third of the way into its second year – very compelling unit economics. The math likely changes with higher investments in Reserve stores and premium Roasteries in the coming years but if these seek to elevate the overall SBUX experience and thus drive pricing power through the entire system, it’s the right move for the long term.

Starbucks is a well-positioned company led by a smart management team playing “the long game”. While store growth in more mature markets and continuing competition in premium coffee may be a drag to future growth, Starbucks benefits from a moat in the form of a strong brand and a loyal, repeat customer that can be extended into more markets and into more than just coffee. And I believe that this moat is sustainable under the right leadership team that understands that Starbucks delivers an experience that extends far beyond just selling coffee. The sustainability of the moat is predicated on continued investment to elevate the store experience and thus drive pricing power. Management has demonstrated a willingness and enthusiasm to invest and has ample runway to do so while also rewarding shareholders with share repurchases.

How big tech is going after your health care

Now, as consumers, medical centers and insurers increasingly embrace health-tracking apps, tech companies want a bigger share of the more than $3 trillion spent annually on health care in the United States, too. The Apple Heart Study reflects that intensified effort.

Each tech company is taking its own approach, betting that its core business strengths could ultimately improve people’s health — or at least make health care more efficient. Apple, for example, has focused on its consumer products, Microsoft on online storage and analytics services, and Alphabet, Google’s parent company, on data.

Last year, Facebook made it more appealing for pharmaceutical companies to advertise their medicines on the platform by introducing a rolling scroll feature where drug makers can list their drug’s side effects in an ad. Such risk disclosures are required by federal drug marketing rules.


Western Digital, Nvidia on board with ‘RISC-V,’ so pay attention, says Benchmark

Any investor interested in learning how adoption of RISC-V stands to disrupt the CISC and RISC processor domains, including discrete processors and/or processor IP (cores and architectures) embedded within simple MCUs as well as advanced ASICs. Additionally, RISC-V stands to disrupt R&D development roadmaps for merchant and captive SoC companies. For example, if Western Digital truly intends to adopt RISC-V in storage products, Marvell will need to reconsider usage of Arm cores. This could lower the upfront licensing and royalty costs for Marvell; however, it may require a revamping of Marvell’s storage controller design flow. Processor IP companies such as Arm Holdings, Synopsys, Cadence Design, Imagination Tech and even CEVA, Inc. could see an impact.

China removes 1,400 baby formula products from shelves

The regulations, effective Jan. 1, require factories making formula to register those products with China’s Food and Drug Administration and pass safety inspections. Plants are limited to working with three brands, and those brands can make only three different products each. China’s FDA has approved 940 infant-formula products from 129 factories so far, the agency said. That compares with more than 2,300 formulations available to parents before Jan. 1.

That vaulted Nestle, Danone and Reckitt Benckiser Group Plc into the top spots in the $20 billion market, according to Euromonitor International.

Capturing those families will be crucial. With the relaxation of China’s one-child policy, Reckitt Benckiser anticipates about 20 million babies being born annually, which could trigger an annual growth rate of at least 7 percent in the infant-formula category during the next five years, said Patty O’Hayer, a spokeswoman. The company bought Mead Johnson for $16.6 billion last year, and its Enfa and Enfinitas brands were approved for sale. Asia generated half of the Enfa lineup’s $3.7 billion in sales for 2016.

The Paris-based company wants to deploy technology such as laser printing to make tampering more difficult and QR codes to ensure traceability of a product back to the factory — moves intended to assure Chinese parents concerned about food safety.

Cancer deaths fall to lowest rate in decades

While a number of breakthrough, high-cost drugs have improved the outlook for people with some deadly cancers, the biggest cause of the decrease in deaths is that Americans are smoking less. The report found decreased smoking rates, and improved detection and treatment, have led to sharp declines in the rate of lung, breast, prostate and colorectal cancer deaths.

How blockchain technology is redefining trust

‘Regulators will like that blockchain-based transactions can achieve greater transparency and traceability– an “immutable audit trail”,’ Masters says. In other words, it could help eliminate the kinds of fraud that come from cooking the books.

How do typical loans work? A bank assesses the credit score of an individual or business and decides whether to lend money. The blockchain could become the source to check the creditworthiness of any potential borrower, thereby facilitating more and more peer‑​to‑​peer financing.

Consider traditional accounting, a multi-billion industry largely dominated by the ‘big four’ audit firms, Deloitte, KPMG, Ernst & Young, and PwC. The digital distributed ledger could transparently report the financial transactions of an organization in real time, reducing the need for traditional accounting practices. And that is why most major players in the financial industry are busy investing significant resources into blockchain solutions. They have to embrace this new paradigm to ensure it works for, not against, them.

In the patent, Goldman describes SETLcoin as having the potential to guarantee ”nearly instantaneous execution and settlement“ for trades. It would mean all the capital the bank is required to keep in reserve, to hedge against the risk of transactions if they don’t settle, would be freed up.

The blockchain raises a key human question: How much should we pay to trust one another? In the past year, I’ve paid my bank interest and fees, some hidden, to verify accounts and balances so that I could make payments to strangers. I’ve spent thousands of dollars on lawyers to draw up contracts because I am not quite sure how another person will behave (and to sort out a few incidents where trust broke down). I’ve paid my insurance company to oversee the risk around my health, car, home, and even life. I’ve paid an accountant to reconcile an auditing issue. I’ve paid an estate agent tens of thousands of dollars essentially to stand between me, the prospective buyer, and the current owner to buy a house. It would seem we pay a lot for people to lord over our lives and double-check what’s happening. All these ‘trusted intermediaries’ are part of the world of institutional trust that is now being deeply questioned.

Today, it is circa 1993 for blockchain technologies. Even though most people barely know what the blockchain is, a decade or so from now it will be like the internet: We’ll wonder how society ever functioned without it. The internet transformed how we share information and connect; the blockchain will transform how we exchange value and whom we trust.


Bitcoin-is-Worse-is-Better

It’s not the decentralized aspect of Bitcoin, it’s how Bitcoin is decentralized: a cryptographer would have difficulty coming up with Bitcoin because the mechanism is so ugly and there are so many elegant features he wants in it. A cryptographer’s taste is for cryptosystems optimized for efficiency and theorems; it is not for systems optimized for virulence, for their sociological appeal. Centralized systems are natural solutions because they are easy, like the integers are easy; but like the integers are but a vanishingly small subset of the reals, so too are centralized systems a tiny subset of decentralized ones. It may be that Bitcoin’s greatest virtue is not its deflation, nor its microtransactions, but its viral distributed nature; it can wait for its opportunity. If you sit by the bank of the river long enough, you can watch the bodies of your enemies float by.

Gyms ditch machines to make space for free weights

In recent years the 420-location chain has scaled back cardio and weight machines to 50% of floor space from about 66%. The gym devotes the other half of floor space to free weights and functional training, which includes things like kettlebell swings and body-weight exercises with TRX suspension straps. It has also expanded its studio group-exercise classes.

“I prefer to do classes, because the teacher pushes me farther than I would push myself,” she says. “I get bored on cardio machines or on the weight machines.”

The shift away from machines is even more pronounced overseas. In 54 gyms of varying price levels in the U.K., members’ time spent on cardio machines dropped 7% between 2013 and this year, even as the total number of gym visits increased, according to an analysis from Edinburgh-based tracking firm GYMetrix.

The Remarkable Early Years of Warren Buffett (Part 1)

The risks of buying a home that’s too big

“The biggest house isn’t necessarily the best house or even the best investment. An older, smaller home with a shorter commute, bigger lot or greater remodel potential may appreciate more. In fact, many fancy new homes can lose value quickly if a developer builds newer homes nearby, while older areas may have more enduring land value.”

“You want enough space to live comfortably, but you don’t want to heat, clean and pay taxes on space you aren’t utilizing.”

Long-term returns. The money saved in buying a right-size home could pay dividends in the future—literally. A $20,000 savings each year over the life of a 30-year mortgage could result in a nearly $1.2 million nest egg if invested in a stock market portfolio earning 4% a year, Ms. Adam says. The annual savings, when compounded over time, is likely to exceed the appreciation in your home’s value over the term of the mortgage.

Curated Insights 2017.11.19

Winners and losers In the patent wars between Amazon, Google, Facebook, Apple, and Microsoft

Google: The full stack AI company

A startup might achieve a breakthrough in an AI vertical, but reaching hundreds of millions of users could take years. The same breakthrough in Google’s hands could be “turned on” for a billion users overnight. Users benefit immediately, while Google’s products become sticker and more valuable.

Google is already seeing a similar benefit. While competitors are using off the shelf processors for deep learning, Google’s TPU provides higher throughout, reduced latency and, perhaps most importantly, reduced power consumption. Because data center construction is Google’s largest capital spending line item and power its highest operating cost, the TPU meaningfully reduces both Google’s capex and opex.

Google’s AI efforts have built a fully integrated company that spans algorithms, data, hardware, and cloud services. This approach helps funnel the world-class AI of Google’s consumer products to its enterprise offerings, providing Google Cloud with a competitive edge. Bringing chip design in-house increases Google’s AI moat by improving performance, lowering latency, and reducing cost. Perhaps most critically, vertical integration enhances its organizational agility: Google can steer all parts of its organization to bring a new product or service to market. Consequently, Google’s AI will be at the forefront of the innovation for years to come.


How Facebook figures out everyone you’ve ever met

Shadow contact information has been a known feature of Facebook for a few years now. But most users remain unaware of its reach and power. Because shadow-profile connections happen inside Facebook’s algorithmic black box, people can’t see how deep the data-mining of their lives truly is, until an uncanny recommendation pops up.

Facebook doesn’t like, and doesn’t use, the term “shadow profiles.” It doesn’t like the term because it sounds like Facebook creates hidden profiles for people who haven’t joined the network, which Facebook says it doesn’t do. The existence of shadow contact information came to light in 2013 after Facebook admitted it had discovered and fixed “a bug.” The bug was that when a user downloaded their Facebook file, it included not just their friends’ visible contact information, but also their friends’ shadow contact information.

It’s what the sociologist danah boyd calls “networked privacy”: All the people who know you and who choose to share their contacts with Facebook are making it easier for Facebook to make connections you may not want it to make. Shadow profile data powers Facebook’s effort to connect as many people as possible, in as many ways as possible. The company’s ability to perceive the threads connecting its billion-plus users around the globe led it to announce last year that it’s not six degrees that separate one person from another—it’s just three and a half.

“Mobile phone numbers are even better than social security numbers for identifying people,” said security technologist Bruce Schneier by email. “People give them out all the time, and they’re strongly linked to identity.”


Will Amazon disrupt healthcare?

Amazon is exceptional at developing formulas to increase efficiency and decrease waste — two vital elements sorely lacking in the current healthcare paradigm.

Baby boomers may be tethered to their in-person interactions with physicians and pharmacists, but millennials are not. They are Amazon’s target audience.

Amazon has several key advantages in a world of personalized medicine — loads of storage space because of its AWS business, sophisticated predictive algorithms, and long-standing, data-rich relationships with millions of “patients”.


How Netflix works: the (hugely simplified) complex stuff that happens every time you hit Play

Netflix estimates that it uses around 700 microservices to control each of the many parts of what makes up the entire Netflix service…And that’s the tip of the iceberg. Netflix engineers can make changes to any part of the application and can introduce new changes rapidly while ensuring that nothing else in the entire service breaks down.

Turns out that Netflix and Amazon’s partnership turned out to be a huge win-win situation for both companies. Netflix turned out to be AWS’s most advanced customers, pushing all of their capabilities to the maximum and constantly innovating upon how they can use the different servers AWS provided for various purposes — to run microservices, to store movies, to handle internet traffic — to their own leverage. AWS in turn improved their systems to allow Netflix to take massive loads on their servers, as well as make their use of different AWS products more flexible, and used the expertise gained to serve the needs of thousands of other corporate customers. AWS proudly touts Netflix as it’s top customer, and Netflix can rapidly improve their services and yet keep it stable because of AWS.


People watch Netflix unabashedly at work (and in public toilets, too)

About 67% of people now watch movies and TV shows in public, according to an online survey it commissioned of 37,000 adults around the world. The most popular public places to stream are on planes, buses, or commuting, the survey found. But 26% of respondents also said they’ve binged shows and movies at work. People in the US were more likely to stream from the office, while users around the world were more likely to stream during their commutes.

For Netflix, mobile still makes up a small chunk of overall viewing. Netflix said it was about 10% as of 2016. But the company also said half of its users stream from a smartphone during any given month. Its audience is now around 110 million subscribers worldwide.


Will traditional auto makers steal the future from Tesla?

Even if electric cars take off in the early to mid-2020s when their cost is likely to be comparable to gas- and diesel-powered vehicles, Garschina thinks the major global auto makers will still dominate the business. Credit Suisse auto analyst Daniel Schwarz recently wrote that auto makers would emerge as winners from simpler, less capital-intensive production of electric vehicles over the next 10 years.

Investors might not be giving the auto industry credit for manufacturing skills honed over decades. As Tesla has found, mass-producing automobiles isn’t easy; the company continues to lose money and grapple with production woes. “The more we learn about new technologies, the clearer it becomes that the key auto makers won’t be disrupted overnight,” says Arndt Ellinghorst, a European auto analyst with Evercore ISI.

Morgan Stanley has estimated that it could take $2.7 trillion of infrastructure investment by 2040 to support a global electric fleet, including 473 million home chargers and seven million super-charging stations. It’s unclear where all that money will come from. The additional need for electricity would be equivalent to current U.S. demand.


These hot restaurants aren’t on maps, only in apps

Virtual restaurants, with their low overhead, are allowing restaurateurs to shift away from the capital-intensive model that kills 60% of new restaurants in their first five years toward something decidedly more techy.

By far the biggest company in the app-driven food-on-demand space is Grubhub. It is so invested in virtual restaurants that two years ago it lent one of its own customers, Green Summit Group, $1 million to expand. Green Summit, which launched in 2013, has kitchens throughout New York City, Todd Millman, its co-founder, says. There might be up to 10 different “restaurants” In a single kitchen. Though they appear on Grubhub as separate establishments, each with a distinct cuisine, all the food might be prepared in the same kitchen by the same staff.

In San Jose, Grubhub competitor DoorDash has built out its own kitchen space. There is one tenant so far, a pizzeria called the Star. (More are on the way, DoorDash says.) To save on rent, DoorDash built the facility in a disused portion of the Santa Clara County Fairgrounds. One month in, the Star’s savings have been notable, says Ben Seabury, chief operating officer of the 1100 Group, which owns the virtual restaurant. Typically, 30 cents of every dollar that comes into one of his restaurants goes to labor, says Mr. Seabury. But without waiters, bartenders and dishwashers, that cost is just 10 cents on the dollar—and even less when demand is high.

Virtual restaurants tap into a larger trend: Americans’ increasing aversion to cooking for themselves. For the first time ever in 2016, Americans spent more at eating and drinking establishments than on groceries, according to U.S. Census data. The food-delivery market is a small slice of that sector: It is only $30 billion in 2017, but Morgan Stanley estimates it could balloon to $220 billion within a few years.

 

Digitizing cash transactions could become quite profitable

Turning financial data into an asset is an early stage opportunity. On a global basis, more than 80% of transactions still occur in cash. Indeed, companies and, at some point, consumers have yet to digitize more than 1.4 trillion transactions per year, roughly equivalent to the number of Google searches per year. Our research indicates that the information associated with digital cash transactions could generate approximately $100 billion of revenue per year.

While we believe that disrupting and digitizing cash transactions represents a large “fintech” opportunity, the benefits are unlikely to accrue to the traditional financial services industry, as it lacks the requisite innovation agility, cost structure, and technical abilities to access and exploit it. Instead, innovative technology companies like Amazon, Google, Facebook, and Tencent that already are transforming big data into big revenue, probably will capitalize on this opportunity.

Companies with the ability to develop deep and dynamic insights into consumer purchasing behavior will be in the best position to capitalize on this $100 billion revenue opportunity. Square, Tencent, Facebook, Amazon, and Alibaba are building the most precise consumer profiles, enabling them to offer value added services like capital loans and insurance either now or in the not-to-distant future. We believe these companies are building significant moats, or barriers to entry, with “value loops” generating more data from their consumers and building products that take increasing share in the marketplace.


Hasbro sets its sights on Mattel

Hasbro has held up relatively well. Chief Executive Brian Goldner has forged close ties to Hollywood, where the company is producing movies and is a favored partner for creating toys tied to films. In recent years, Hasbro won the coveted license for Walt Disney Co.’s Disney Princess characters and has long made toys tied to the media company’s “Star Wars” franchise. Hasbro is also more advanced in telling stories and creating content around its large brands, including a string of feature-length films for its Transformers franchise and more-recent launches like a My Little Pony movie.

Both Hasbro and Mattel were stung by the Toys “R” Us bankruptcy, which threw a major sales channel into turmoil and prompted them to stall deliveries to the retailer, but Mattel’s problems run deeper. The new regime laid out a plan that would keep the company in turnaround mode for a few more years as it tries to fix problems that it blamed on past management. Those included a proliferation of new toys with little staying power that heaped additional costs and complexity onto Mattel’s supply network.

A bigger concern was that a tie-up could trigger change-of-control clauses in the numerous licensing agreements with the likes of Disney, Nickelodeon and others.

Free games fuel $370 billion stock rally – and fears of a crash

In free-to-play games, 2% of players typically generate around 50% of revenue, according to consultancy Yokozuna Data. High-rollers often spend at least $500 per month. Today, the industry generates $100 billion in revenue with about 70 percent coming from in-game goods and services, according to Goldman Sachs Group Inc.

The industry is exploring dark territory. Last month, an Activision Blizzard Inc. patent surfaced which described how machine learning could be used to entice players to spend more. For example, a player could be paired with a teammate who owns a special paid item, and then encourage the player to buy it too.


It’s amazingly cheap to acquire a fleet of Airbus jets

Bill Franke’s airlines are generally fast-growing and profitable, in part because of low expenses and using the latest fuel-efficient jets. All three have exclusively adopted the A320 jet family for cost reasons too, as it makes it easy to swap flight crews and maintenance is less complicated.

Instead of buying jets outright, Frontier, Wizz and Volaris use sale-and-leasebacks. This makes financial sense. One industry observer says the cost of lease finance might be half that of funding an aircraft with equity because of the flood of cheap capital, much of it Chinese. By avoiding ownership, airlines also sidestep residual value risk. If a plane’s value falls, that’s the leasing company’s problem, not Franke’s.


Bob Lutz: Everyone will have 5 years to get their car off the road or sell it for scrap

We don’t need public acceptance of autonomous vehicles at first. All we need is acceptance by the big fleets: Uber, Lyft, FedEx, UPS, the U.S. Postal Service, utility companies, delivery services. Amazon will probably buy a slew of them. These fleet owners will account for several million vehicles a year. Every few months they will order 100,000 low-end modules, 100,000 medium and 100,000 high-end. The low-cost provider that delivers the specification will get the business.

These transportation companies will be able to order modules of various sizes — short ones, medium ones, long ones, even pickup modules. But the performance will be the same for all because nobody will be passing anybody else on the highway. That is the death knell for companies such as BMW, Mercedes-Benz and Audi. That kind of performance is not going to count anymore.

Car dealers will continue to exist as a fringe business for people who want personalized modules or who buy reproduction vintage Ferraris or reproduction Formula 3 cars. Automotive sport — using the cars for fun — will survive, just not on public highways. And like racehorse breeders, there will be manufacturers of race cars and sports cars and off-road vehicles. But it will be a cottage industry. The era of the human-driven automobile, its repair facilities, its dealerships, the media surrounding it — all will be gone in 20 years.


Sean Stannard-Stockton interview: Shifting competitive landscapes

Today, if you log-on to Amazon and type in what you’re looking for – not a brand name, but a type of product – the #1 ranked item, regardless of brand, is likely to have thousands of reviews. If those reviews are say 4 or 4 ½ stars or better – with reviews from thousands of people, most consumers will happily purchase the item, no matter what the brand is. In this case, Amazon has effectively not just become a logistics provider, not just made shipping easy, not just benefitted from network effects, but it has inserted its own brand into the purchasing behavior – and so the consumer says, ”I trust Amazon and Amazon’s reviews so much that I don’t need to spend time searching or depending on a brand name, I can simply purchase the product no matter what its brand is.”

 

U.S. to dominate oil markets after biggest boom in world history

By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union, the agency said in its annual World Energy Outlook. The boom will turn the U.S., still among the biggest oil importers, into a net exporter of fossil fuels.

Reflecting the expected flood of supply, the agency cut its forecasts for oil prices to $83 a barrel for 2025 from $101 previously, and to $111 for 2040 from $125 before.

 

I always used that as a metaphor for businesses. The customers pour in the Tender Vittles and in the U.S., when you had a union, they would fight and spill the whole bowl of Tender Vittles. In the end, no one could eat anymore. I looked at U.A.W. “It’s insane, they’re going to kill their company.” Sure enough, they damn near did. General Motors was almost bankrupt. In Germany, the unions have representatives on the board of the company. Yes, they say, “The first thing” — that this bowl of Tender Vittles — “we have to make sure that the bowl is there. We can fight all we want, but don’t spill the bowl.” You don’t destroy your company. That was not the attitude of Anglo-Saxon unions, either in England or the U.S.


Countries with the most farmland

The USDA now estimates that there is 15%-20% more farmland on earth than we expected. That’s 250 to 350 million more hectacres! With this addition, the USDA estimates there’s 1.87 Billion acres of farmland on earth.

In terms of total net cropland, this new study declares India as number 1.

 

 

Electric cars’ green image blackens beneath the bonnet

The Earth’s ozone hole is shrinking and is the smallest it has been since 1988

Warmer-than-usual weather conditions in the stratosphere are to thank for the shrinkage since 2016, as the warmer air helped fend off chemicals like chlorine and bromine that eat away at the ozone layer, scientists said. But the hole’s overall reduction can be traced to global efforts since the mid-1980s to ban the emission of ozone-depleting chemicals.

In June, scientists identified a possible threat to the recovery, believing dichloromethane — an industrial chemical with the power to destroy ozone — doubled in the atmosphere over the past 10 years. If its concentrations keep growing, it could delay the Antarctic ozone layer’s return to normal by up to 30 years, according to the study published in the journal Nature Communications.


How much is the Great Barrier Reef worth? Economists just figured it out

It came up with a value of A$56 billion ($43 billion) based on an asset supporting tens of thousands of jobs and which contributes A$6.4 billion to the economy. “Valuing nature in monetary terms can effectively inform policy settings and help industry, government, the scientific community and the wider public understand the contribution of the environment, or in this case the Great Barrier Reef, to the economy and society,’’ the Deloitte report said. “The tight and unforgiving deadline the Great Barrier Reef is up against necessitates an understanding of its true value to know what kind of policy action is required in response.’’


Why do we love pets? An expert explains.

In his latest book, Bradshaw argues that our fascination with pets is not because they’re useful, nor even because they’re cute, and certainly not because they’ll make us live longer. Instead, he writes, pet-keeping is an intrinsic part of human nature, one rooted deeply in our own species’ evolution.

People with animals, or as simply described as having a friendly dog with them, instantly become more trustworthy in the eyes of the person who’s encountering that person or having that person described to them.

The idea that simply getting a pet is going to make you happy and de-stress you is not going to work if you don’t do the homework about what the animal needs.

Both dogs and cats are carnivores — the cat is a very strict carnivore. The idea that we can continue to essentially farm the world in a way that provides enough meat for dogs and cats to eat, let alone humans, is probably not sustainable. Whether it will be possible for people to continue to keep these animals, or what kinds of substitutes they find if it does become impossible, I think is going to be fascinating, if somewhat painful for the people involved.

 

Why $450 Million for this painting isn’t crazy

Would 7.5 million people a year pay an average of 9 euros to visit the Louvre if La Gioconda, as the painting is sometimes called, weren’t there? If just a million of them passed on it, the museum would lose the entire amount paid for “Salvator Mundi” over 50 years.

It’s difficult to imagine anyone hoping to make much of a profit on a resale after paying such an outrageous price. But building a museum’s pitch for visitors around it could be a way to make economic sense out of the deal.

Company Notes 2017.09.22

Scientex Q4 FY2017 Results

…the startup cost for its biaxially oriented polypropylene (“BOPP”) and cast polypropylene (“CPP”) plants as well as lower product margins due to penetrative pricing.

The new stretch film manufacturing facility in Phoenix, Arizona in the United States is expected to have a commercial rollout by first quarter of calendar year 2018. It forms part of the pivotal and strategic move by the Group to be close to its customers and its sources of raw materials as well as access to other new customers in the region.

With the commissioning of its BOPP and CPP plants as well as the increased capacity of its Ipoh plants, the Group’s strategy is to focus on volume based converter market within Southeast Asia and Asia Pacific regions by developing sales networks with new distributors and wholesalers. The Group is confident that by optimising the production output, the operation costs will be better managed, hence improving its operational margins.


Adventa Q3 FY2017 Results

The revenue generation is still insignificant in comparison with the other businesses but the quantum of improvement in revenue (increased by 1,023%) is encouraging. The long period of regulatory approvals in the different countries weigh down revenue growth. The number of treatments is expected to increase sharply upon completion of the required approvals.


Haio Enterprise Q1 FY2018 Results

The overwhelming response from its newly launched fashion wear –Hijabs during the quarter had added on to the revenue. Wider usage of social media and marketing digital platform efficiently have facilitated the leaders to reach out to younger group of entrepreneurs. Hence, the new members recruitment which increased by more than 40% as compared to preceding year’s corresponding quarter had also contributed higher sales for the division.

The MLM division will continue to collaborate with a well known local designer to roll out more fashion wear and related products, and other trendy lifestyle range of products.

Elsoft sees slower earnings growth for 2017

The slowdown in demand was due to lower orders from smart devices as there is no new development in terms of technical specifications in the light emitting diode (LED) flash used in 2016 versus 2017.

“However, we are in a niche market; we design the equipment specifically made for our customers. We are a niche player. Our margin is higher, so we have to work harder in the second half.”

Elsoft is also developing a solution for depth sensing or 3D sensing, an infrared sensing and emitter for the smart devices and automotive segments. It also plans to add value to its automated test equipment (ATE) products by tying up with a mechanical design company.

“We are good at electronics and software but lagging in mechanical design. The ATE segment features two areas, the tester and the machine. Even though we are doing both now, I feel our machine is not good enough. If we can sell a product that is good in every part, then it’s excellent. We want to offer better solution for our customers. We want the ‘okay’ segment to be better.”


Warisan TC’s travel arm goes online

“The good thing is that we have been in the [tourism] business for the past 55 years, and we are not a small player in Malaysia when it comes to corporate travels. So we want to [leverage on] our existing customer base. Imagine a client with 3,000 employees — we want to approach their staff to use our services when it comes to leisure travel as well.”

“We are different from other players in the sense that our bundled products have more value as compared to buying them individually. So consumers can get more value when they buy everything together and they only have to deal with Mayflower Online for peace of mind on their whole trip — that is our goal. We are not looking to just be a [pure] marketplace where we have to rely on agents to come in and contribute the products. We offer our own products and we take ownership of them to take care of the customers. We’re not just a platform where we are not sure who the suppliers are or how their services are like.”


E&O to sell five more non-core assets

The five non-core assets, E&O managing director Kok Tuck Cheong said, are the Straits Quay Mall, properties in Gertak Sanggul, Kemensah Heights, The Peak, and the retail space of its 80%-tenanted St Mary project. According to E&O’s latest annual report, the aforementioned properties’ net book values totalled approximately RM546 million as at March 31, 2017.

“Keeping a mall is not necessarily our core business,” Kok said, giving confirmation of rumours of the group’s plan to dispose of its seven-year-old, loss-making Straits Quay Mall in Penang.


Columbia Asia: Our business model can keep healthcare costs lower

“When you build big hospitals, you end up incurring a lot of structural costs, maintenance costs, utility bills, manpower costs and so on. All that is a cost that has to be transferred somewhere. The question is where does it get transferred to? The patients’ bills,” said Tan, adding that patients’ claims from insurers would then inflate costs.

Tan said another way to control costs is in cutting down the average length of stay of a patient, which he believes Columbia Asia has achieved with better and more efficient care of patients, citing increased technological use as a main driver of this efficiency. “There’s a tendency [for hospitals] to have a key performance indicator that talks about filling up its occupancy rate. So, if you don’t have enough patients walking in, you tend to keep current patients longer, when, in actual fact, they should be at home with their families. From a hospital’s perspective, when you keep them longer, you incur extra costs.”

“[Inflation] is not [necessarily] about whether your panadol is 10 sen or 20 sen, it’s about how you manage your patients effectively and efficiently. And, we like to believe that we [show a good example in providing] effective and efficient healthcare,” said Tan.

Govt incentives needed to protect margins — Rehda

“Our margins are becoming smaller and smaller. I was talking about 17% to 18% last year. Now, a lot of developers are talking below 15% or 16% [gross profit margin]. Margins are being sqeezed.”

For example, steel prices in Malaysia and Thailand are similar, at about RM1,700 per tonne. But no thanks to the levy imposed by the government, Malaysian contractors are paying up to RM2,800 per tonne.


BNM hits out at rigid interpretation of economic indicators

Citing Moody’s External Vulnerability Indicator — a measure of short-term external debt by remaining maturity over reserves — which was used in the article, BNM said: “These short-term external debts are not a material risk.

“Most of it is accounted [for] by the banking sector, reflecting banks’ operations. Correspondingly, banks have placements abroad to mitigate currency and maturity mismatches,” the bank added.

BNM said short-term debt included inter-company loans which the bank said are subject to “flexible and concessionary terms”, as well as trade credits which “are usually backed by export earnings, which do not entail a claim on international reserves”.


GST collection could exceed RM42b target, says customs director-general

“For example, one of the requirements for GST is service providers need to have a place of supply, or a permanent establishment in Malaysia, and if their place of supply is elsewhere other than Malaysia, it becomes a bit difficult to tax, so we are looking into this. To tell you the truth nobody really knows how big the monster is out there, once we amend the law and look at the details we will know, it runs into several billions. We will be in consultation with industry players on this, and we hope to be able to [table] the amendment at the next parliamentary seating,” said Subromaniam.

Subromaniam shared that at present, there are 453,000 companies that have registered for GST. Out of this number, approximately 100,000 companies were small scale companies which had annual turnover of less than RM500,000, but had registered for GST voluntarily. These companies had registered so that they can claim input taxes, and also the bigger companies tend to not want to deal with [smaller companies] that have not registered for GST,” he said.