Alvin's Newsletter: No. 28
Weekly newsletter on what I saw interesting in tech, venture capital and business.
📰 News
Why Salesforce bought Slack: As the dust settles on the Slack acquisition, there has been much commentary on the motivations driving it. Some of the big takeaways.
For at least the last 5 quarters, large (>$100K) customer acquisitions have been declining from a high of 70% to now 30% of all customer acquisition. This is prime territory for Microsoft Teams as the bundle with Office. This is due in-part to the bottom-up sales approach of Slack vs Microsoft’s top-down. Top-down works much more efficiently as you move up-market to enterprise.
And hence, this is where Salesforce can bring some firepower. They are a top-down sales driven function with a large existing customer base to deploy Slack out to. On top of that - they can run a similar bundling strategy that Microsoft is deploying with their Teams product.For Salesforce it gives them the opposite of the above. In and of-itself this isn’t that consequential but the effects of that approach are. Slack has been able to become a central nervous system to companies using it. Developers have also poured in and created an eco-system of apps and plugins to make the experience quite connected with systems across the organisation. This is what Salesforce values.
Given some of the conditions that led to Slack’s acquisition, Nikhil’s observation that Dropbox is next is absolutely spot-on. Link Link2
The Slack-Salesforce acquisition is in some ways the ultimate hedge on the future of enterprise software. If top-down enterprise distribution remains core to success in the enterprise, this is a win for Slack. If bottoms-up distribution can continue to scale in annual contract values (ACVs) and becomes the default way to buy enterprise software in the coming decades, this is a win for Salesforce.
Wish S1 teardown: The latest in my coverage of S1 tear-downs. Wish seems to be akin to the gaming company Zynga. They have been able to arbitrage on ad’s -> sales, especially on Facebook. Very similar to the playbook that Zynga ran. The issue with these arbitrages is that they close out over time and become less efficient/non-existent. The trick with every arbitrage is to find the next one before the current one closes. Link
The future doesn’t look great. Wish has rising customer acquisition costs. Their gross profitability is falling because a government subsidy on shipping is disappearing. It’s also not totally clear that a lot of people actually like their product.
It’s like Wish is running a government-subsidized non-profit dedicated to the noble cause of learning the most effective growth hacks on Facebook Ads. Instead of trading their stock, I might suggest reaching out to members of their marketing team and paying them lots of money to come work for you.
GM pulls plug on Nikola: Nikola is at ‘peak-unravelling’ now. GG to its vapor-ware. Link
GM is backing away from an agreement to take a stake in electric automaker Nikola Corp., marking the collapse of a deal that has been problematic since it was announced just two months ago.
Nikola shares fell nearly 25% on Monday.
📚 Reading
Disruption happening in the MBA sector: Interesting movements at the top-end of education. Some democratisation happening. Link
How do I know? Students at many top schools agree to something called Grade Nondisclosure, an honor code pact between students not to disclose their GPAs to anyone. This disincentivizes students from trying too hard at the whole school thing. Students would rather foster a spirit of cooperation than one of competition, and leave space for the real reasons they enrolled: to make friends and to get a job.
The missing the rogue-traders: We haven’t seen a contemporary of Nick Leeson or Alan Bond for a decade or so. Where did they all go? Link
The great rogue trading scandals occurred during a period of growing complexity in financial markets, which managers couldn’t keep up with. The pace of “innovation” in financial markets has since slowed down. More trading is going onto exchanges, more derivatives are being centrally cleared, less illiquid instruments are being traded.
Historical returns by asset class: Great chart. US large caps in the last decade have been the winner. Link
Raising a seed round in India: Link
“Raising venture capital is the easiest thing a startup founder is ever going to do.” — Marc Andreessen, a16z & Netscape.
1 year look back of early stage investing: Link
The solo venture capitalist vs partnerships: Link
What matters most for a partnership is the strength of the partnership itself. A group that’s aligned on principles and values, but complementary in skills and experiences can be a great partnership. When each partner has an individual brand, has distinct superpowers, pulls her or his weight equally, and reinforces the brand and superpowers of the firm as a result, the partnership has a chance to outcompete even the best solo capitalists.
🦖 Entertaining & Interesting things
Starlink ‘Dishy McFlatface’ teardown: SpaceX have begun rolling out their Starlink internet service and customers are starting to get their satellite dishes. Someone broke it down and what’s inside seems reminiscent of Tesla. Lot’s of tech inside to make it work - not just a dumb satellite dish on the roof. Elon doing Elon. Link
It appears that the antenna is a self-contained computer of sorts, complete with ARM processor and RAM to run the software that aims the phased array. Speaking of which, it should come as no surprise to find that not only are the ICs that drive the dizzying array of antenna elements the most numerous components on the PCB, but that they appear to be some kind of custom silicon designed specifically for SpaceX.
Vertical farms outperform flat farms: Incredible reported efficiencies in comparison to traditional farming. Getting this commercially viable and scalable would mean huge shifts across a whole range of areas. Trade and geo-politics being one that is top of mind here in Aus. Link
According to Nate Storey, the future of farms is vertical. It’s also indoors, can be placed anywhere on the planet, is heavily integrated with robots and AI, and produces better fruits and vegetables while using 95% less water and 99% less land.
Scientists develop electric skin: More improvements in the robotics space. Next decade will be interesting. Link
A material that mimics human skin in? stretchability, strength, and sensitivity could be used to collect biological data in real-time. Electronic skin, or e-skin, may play an important role in upcoming next-generation personalized medicine, prosthetics, AI, and soft robotics.
Micro-plastics found on Everest: Thinking about this - this is probably the worst type of pollution. Extremely difficult to capture and clean - relative to air or water based. Now coming to you from Everest. Link
The tiny plastic fibres were found within a few hundred metres of the top of the 8,850-metre mountain, at a spot known as the balcony. Microplastics were found in all the snow samples collected from 11 locations on Everest, ranging from 5,300 metres to 8,440 metres high.
We found a fossil galaxy within our own: Link
The proposed fossil galaxy may have collided with the Milky Way ten billion years ago, when our galaxy was still in its infancy. Astronomers named it Heracles, after the ancient Greek hero who received the gift of immortality when the Milky Way was created.
Japanese convenience stores: If you have been to Japan, you would have noticed the convenience store is everywhere. In Australia - you would be hard pressed to find one. A look into the differing cultures that make this be. Link
Everything is uniform, nothing is local and everything is delivered by road. The typical convenience store gets deliveries of ready-made food three times a day. The rest of the food – non-perishables, milk and bread – is delivered once every 24 hours.
🎧 Podcasts
The best podcast episodes last week according to Bosco Tan:
Slack + Salesforce, DeepMind and other topics (All-In Podcast) - 92 mins: By far the best group chat podcast around. Two major topics covered. First the guys talk about the Slack and Salesforce deal (from no less than early Slack investors, and the former founder of Yammer). Next they cover the Alphabet DeepMinds AlphaFold breakthrough - AI to predict atomic protein structures. What this means for medical research and bio-warfare. Link
The longest tail of monetising fame (Sway) - 28 mins: Did you know Seinfeld’s Soup Nazi makes six figures in revenue from making shoutout videos? This is the economy created by the celebrity marketplace Cameo. Kara sits down with its founder and talks about the history of the company, its controversies and most importantly the long-tail economics of celebrity. Link
Do Digital Ads Work? (Freakonomics Radio) - 48 mins: Companies spend lots of money on ads, Google and Facebook are two of the biggest companies in the world because of digital ad revenues. Freakonomics is doing a series on if ads actually work. Part 1 uncovered the fact that traditional (ie TV) advertising isn’t too effective. So is digital any better? Link
The story of Kellogg (Brought to you by… ) - 40 mins: Almost a similar story to Adidas vs Puma, Kellogg shares this story of brotherly competition. The brothers Kellogg invented cereal - one was a businessman and another a physician. They however hated each other. So which brother are the cereal boxes actually named after? Link
📹 TikToks
How to cook in a hotel room. #covid Link
A Lufthansa 747. Not in an emergency. Maybe. Link
Megatron making fun of people. Link
Jay Pharoah and his impression game. Link
‘Gonna sit gangster’. Link