I usually start off each Tidbits with some overarching theme relative to what’s going on in the world in order to make sense of it all or themes that I believe people should spend more time thinking about…
Hope you’re all enjoying the long weekend. If you have a significant other, hopefully you were able to do / enjoy something nice together for Valentine’s Day. For all my Asian readers, happy lunar new year! And for all my American readers, happy President’s Day!
Here’s a selection of what I found most interesting recently. I started experimenting with some design changes in recent editions of Tidbits…the design changes don’t come through all that well via WordPress’ default email feature, and I’m not confident I will figure out a better alternative to the default email feature soon. May be better to read directly in the browser while I continue to experiment.… Read the rest “Tidbits #20 – Finish Line in Sight”
This felt necessary not only because the Paper Portfolio launched with a (largest) 7% position in Sea but because Capital Flywheels had not seen a company as exciting and mis-priced as Sea since…Shopify in 2016, Apple in 2014, or Facebook in 2012.… Read the rest “Sea – Monster in the Making”
The recent Wework debacle seems to have opened up a bit of soul-searching within tech companies and among investors. Cynics are largely looking for ways to say, “I told you so,” with the main conclusion being we have somehow gone full circle back to the cash-burning bubble experienced back in 2000.
During November, the paper portfolio outperformed the S&P500 by 0.92%. This number, however, masks the underlying strength of the portfolio since ~40% of the value is still allocated to cash. The stock-only portion of the portfolio outperformed the S&P500 by 3.89% with significant strength across almost all holdings except for Uber, Match, and Activision Blizzard.
According to Wikipedia, Ali Baba opens the mouth of a treasure cave using the magical phrase “open sesame” in the story of “Ali Baba and the Forty Thieves”.
In similar ways, our Alibaba has been making incredible progress in opening a multitude of modern treasure caves…
Caves such as…
Single’s Day. Just a few days ago, Alibaba announced >$38 billion of GMV for their Single’s Day shopping festival (note that the RMB has weakened over the past year, which further obscures the incredible growth in riches they continue to find in this Single’s Day cave).… Read the rest “Open Sesame”
Every tech/internet company today that has accumulated immense market power seems to have done it using two simple strategies: 1) Leverage a successful core customer base or asset to attack an adjacent market, and 2) Using a loss leader to encourage adoption.
Shopify announced quarterly results yesterday and raised guidance. Although the market appeared to be more short-sighted and reacted poorly largely because the results were “good but not good enough”, the company continues to execute well on its long term vision.
I have just a couple of links below centered around e-commerce that I found highly interesting and think worth your time.
I think the narrative around Amazon is starting to shift, not just from a regulatory perspective, but from a dominance perspective. Betting against Amazon has been a loser’s bet, but I think betting that Amazon needs to evolve is a clear one.… Read the rest “Amazon’s Shifting Narrative”
Looks like I’ve neglected to post in quite a while.
The past year has certainly been a blur with both market and geopolitical disruptions domestically and abroad. What started out as my good intention to take the market disruption as an opportunity to do more work on a number of companies I’ve long admired (largely within e-commerce and internet space), quickly lengthened into a years-long journey exploring new areas/industries such as payments, SaaS software, and biotechnology.… Read the rest “Alibaba Ramping Up Efforts in the US?”
When people think about ecommerce today, they likely think about ecommerce along the lines of C2C (consumer-to-consumer), B2C (business-to-consumer), or B2B (business-to-business) – in other words, classification by type of buyers and sellers.
As detailed in my recent post, Amazon has built up quite a formidable competitive advantage through Fulfillment by Amazon (FBA). Not just on the demand side, which every happy Prime subscriber is already familiar with, but also on the supply side.
In that post I concluded the following:
Fulfillment is clearly beneficial on the demand side, but has a lot of supply side advantages as well.
Amazon has clearly become an absolute juggernaut. There are likely only a handful of companies today that have the resource and scale to compete with Amazon directly. But most of the companies that do have the resources to compete generally don’t operate ecommerce platforms, leaving the field mostly wide open for Amazon to continue to grow unabated.
I wish I had spent more time analyzing Amazon in earnest years ago. But late is better than never. I’ll console myself with the fact that e-commerce penetration in the US is still <10% of all retail sales…and relative to that statistic, even the word “late” seems a bit premature.
Having spent a number of months learning more about Amazon’s history, assets, business model(s), and philosophy, one thing I’ve realized is that Fulfillment by Amazon (FBA) affords the company immense advantages on the supply side that I think are largely glossed over in mainstream media and investor dialogue.… Read the rest “Supply Side Advantages of Fulfillment (by Amazon)”
Lately, there’s been no shortage of positive coverage on Amazon – and for good reasons. The vast majority of retail is struggling with declining same-store-sales, yet, Amazon continues to post a torrid pace of growth despite its size. In FY16, Amazon grew North America segment sales by 25%, and that growth came at the expense of the rest of the retail industry.… Read the rest “Amazon’s Capital Market Dependence”