Alvin's Newsletter: No. 23
Weekly newsletter on what I saw interesting in tech, venture capital and business.
📰 News
Leaving this blank as I didn’t find anything note-worthy to write about that came up last week. All quiet on the western front as the US is in full election mode.
📚 Reading
The largest IPO in history got pulled at the 11th hour by the Chinese and Jack Ma. Not many in the west know much about Ant itself so here is a primer - even if the IPO is moot for the moment. Link
The IPO is so massive—this reflects the fact that Ant touches nearly every aspect of Chinese financial life, especially for China’s 250 million unbanked citizens. It is also unique in the sense that Ant chose to list in China rather than in Hong Kong or the US.
A history lesson on insurance and what makes one of the newest comers, Root, different to the ‘old way’. Root went public last week at $27 - trading underwater at $22 today.
Taken to its extreme, individual risk profiling undermines the very need for insurance. If accidents can be predicted before they happen, they become uninsurable—like an insurance underwriter’s Minority Report. More realistically, predictive analytics could lead to materially higher rates for riskier consumers, making insurance unaffordable for them. Insurance was built upon the recognition of the irreducible opacity of individuals; behavioural data offers to lift that opacity.
Satya Nadella’s turn-around of Microsoft is a remarkable story. Where others such as IBM and Oracle failed - Microsoft and Satya didn’t. He talks about this in his book, Hit Refresh. Although the book is mostly about what makes him him, as opposed to about Microsoft. It is what makes him him that makes that turn-around happen. So it is still a great read. A flavour of it is here. [Paywall] Link
Until 2014 Microsoft had five different business areas. Most of the profit came from three of them: Windows, its Office software (spreadsheets, word-processing, PowerPoint and the like) and programs to run the servers used in data centres and corporate networks. Entertainment and devices, including the xbox, made a bit of money. Online services such as the Bing search engine and msn web portal did not.
Mr Nadella reconfigured this structure. Today Microsoft’s 20 or so businesses fall into three big buckets: cloud, productivity software and business processes, and personal computing. Each contains one of the lucrative stalwarts—servers, Office and Windows—alongside lots of others such as Surface pcs and digital whiteboards, or Dynamics business software.
From HBR, How Apple is organised internally. Very interesting and unique amongst companies of this size. Then again, Apple is a different kind of company. Link
Apple’s functional organization is rare, if not unique, among very large companies. It flies in the face of prevailing management theory that companies should be reorganized into divisions and business units as they become large. But something vital gets lost in a shift to business units: the alignment of decision rights with expertise.
The 101 guide to becoming a VC. Link
🦖 Entertaining & Interesting things
Drones and the capital that was put in a few years ago have been in their trough of sorrows of late. No real breakouts. Some green shoots emerging with it being used by farmers for spraying. Link
NY Government report into how Twitter was hacked a few months ago. Hackers took over verified high profile accounts of people like Elon Musk, Jeff Bezos and Kim Kardashian and tweeted messages to transfer crypto to double their money. Link
For all you chilli fans - a device to measure the how hot a chilli is. For your phone. Link
Filters have been a huge part of apps such as Snapchat, Insta and now TikTok. Adobe Photoshop isn’t missing out. They are now using AI to help touch-up/modify photos. Quite astonishing what you can do. Link
How a guy starts a company selling ‘secure’ mobile phones and helps the underworld. Particularly relevant to Australian’s as it is reported that these phones were used as part of bikie murders. Law enforcement and even the ASD couldn’t break the encryption. Link
🎧 Podcasts
The best podcast episodes last week according to Bosco Tan:
The unlikely Kodak moment (Thrilling Tales of Modern Capitalism) - 31 mins: The Kodak story is classic innovator’s dilemma. Once dominant, the company shelved its own invention (digital camera) to maintain its profitable film business. Today, a shell of its former self, a lifeline came from the Trump Government - a loan to make pharmaceuticals. The stock soared and then the Government pulled the loan. Plenty of questions everywhere. Link
Forensic accounting and Chinese big-tech (Odd Lots) - 56 mins: On the eve of the delayed Ant Financial IPO, this episode interviews a forensic accountant who’s job has been to decipher the murky world of valuing Chinese tech companies. While the episode is a bit technical, it does offer insight as to why establishing true and fair value is so difficult. Link
The legalisation of weed (Business Casual) - 42 Mins: The recreational use of marijuana is likely to be legal across the US at some point in the near future. However who are the players that would likely end up capturing the value? This episode interviews the managing director of Casa Verde Capital to unwrap all the industry dynamics and how it might eventually shape up, particularly given regional differences across the US. Link
California decides on the gig economy (The Journal) - 15 mins: Lots of US election content on the pod-waves this week. However this is a unique story in that California will also decide alongside the President - prop 22. A ballot proposition on how companies would classify gig workers. The ruling is likely give precedent and has huge implications for businesses like Uber, Lyft and Doordash. Link
📹 TikToks
Mascot taken out by security. Link
Best halloween costume. Link
Magnetic fields and light. Link
Careful surfers. Link
Are you repping? Link