Colm Farrell

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On May 2, 2020, Colm Farrell commented on Formula 1: Speeding towards esports success? :

Thanks for your comment! To your point around sponsors/advertisers – F1 gave access to the virtual races at no cost to their existing sponsors and advertisers, which seems to have at least satisfied these groups at least in the short-term. I do wonder what will happen later in the year if more physical races don’t go ahead – i.e., will sponsors/advertisers grow restless? It guess it will depend on what ROI they get on virtual races. I saw your post on NASCAR, it looks like they followed a similar strategy to F1 with their sponsors/advertisers!

Good point around the audience sizes. Per Figure 1 in the article, if there are c.470M TV viewers per year for F1 and 22 Grand Prix races, then that implies that each race gets c.20M viewers on average. So the numbers they’ve seen of c.5-6M viewers are good, but still can’t match the physical races! But, of course, if the physical races are rescheduled for later this year – then the esports numbers would be incremental.

On May 2, 2020, Colm Farrell commented on Formula 1: Speeding towards esports success? :

Interesting first point! I don’t think F1 esports will ever be able to achieve the popularity of the tournaments that you mentioned. But I still believe there is a place for F1 in specialized esports – particularly as it has a physical version (i.e., physical races) in contrast to PUBG and DoTA. If your a teenager interested in car racing of any kind, then this would be the perfect esport for you.

I really like your point around the allure of the mechanical engineering. I don’t think virtual races will ever be able to replicate this. But perhaps they can try to build elements of this into the game over time – i.e., allow for very intricate customization of in-game vehicles – which could help satisfy more technical fans. This may take a number of years of game iteration to fully achieve though!

P.S. – the prize money in the tournaments you linked have made me question my career choices

On May 1, 2020, Colm Farrell commented on Milk Bar continues to bring joy during the pandemic :

Full Disclosure: I’m a big fan of Milk Bar’s Birthday Cake. Thank you for writing about this!

It’s great to see how Milk bar has pivoted during the pandemic. I’m not surprised that their ecommerce business is doing so well. As you mentioned, it seems they have relied on the capabilities and infrastructure of their on-demand delivery partners (e.g., Uber Eats) – which is a quick way for them to scale. I just did a quick search on their website, and it seems they are also running delivery of personalized orders via FedEx too.

Do you think this e-commerce demand will last after the pandemic? I actually believe it will for the personalized orders. It’s far easier to order a personalized birthday cake online in advance – as long as the quality is the same. I wonder could the pandemic result in a faster way for Milk Bar to scale: by opening small, kitchen-only locations in multiple cities to reduce the delivery times for online orders. Time will tell!

On May 1, 2020, Colm Farrell commented on Nike: Just do it. Differently! :

Interesting post! Thank you for sharing.

I hadn’t heard of a lot of these initiatives – including the Living Room Cup, which is a great way for Nike to maintain engagement with its customers during the pandemic. Nike clearly is now generating far more data, via these digital channels, than they were before. I wonder how well equipped Nike is to take advantage of this data? It seems they have been building up their analytics capability over the past few years – with the acquisitions of data analytics companies Zodiac and Celect – so they’re probably well-positioned.

I also wonder how they can maintain this data capture in a post-coronavirus world – I would love to see them use their digital ecosystem to support the in-store shopping experience (e.g., to instantly check stock). Given the acceleration in adoption of their digital ecosystem, due to coronavirus, the business-case for developing these features has become even stronger!

On May 1, 2020, Colm Farrell commented on The Mickey in the Digital Middle :

Interesting article! Thank you for sharing.

I agree Disney’s diversification has helped them manage this crisis. If you haven’t already, I’d recommend reading Bob Iger’s book “Ride of a Lifetime” – where he summarizes the vision he had for Disney+ many years ago and the steps they took to make that happen (mainly around acquisition of content with Marvel etc.).

I like your suggestion of adding other digital offerings to the Disney+ platform. I’d also suggest that Disney could add ‘virtual park rides’ and a ‘virtual park parade’ to the Disney+ platform. Of course, the current pandemic could make producing this content difficult, even if the parks are empty. But some individuals have already started to fill this void (see article below). If Disney did this, it would help to bring the magic into people’s homes and ultimately improve their Disney+ retention.

Article: https://www.cbsnews.com/news/youtube-channel-offers-virtual-rides-on-major-disney-universal-studios-attractions/

On April 21, 2020, Colm Farrell commented on (Z)estimating iBuying opportunities for Zillow :

Very interesting post. I’m actually using Zillow a lot at the moment (in searching for a place to rent)!

It’s clear that “Zestimate” is a major competitive advantage for Zillow. The reduction in error rate is evidence that Zillow has done an excellent job in refining the engine over time.

However, I’m actually more concerned about the “Instant Offers” service. Am I right in saying that this cuts out traditional real estate agents? I wonder what their response would be to this move – they may start discouraging clients from listing on Zillow, as they would lose the commission on any iBuy transactions. This could start to damage the platform as real estate agents are likely the main “gatekeepers” to new listings.

Initially, I was also concerned that this service was liable to fraud – i.e., people posting fake homes to try get a payoff. But from the “Instant Offers” FAQ, it seems like the last step is an in-person home evaluation (link below). Given monetary amounts, I can’t imagine that Zillow will ever try to do an “Instant Offer” without a final human-evaluation step!

Link: https://www.zillow.com/z/offers/faq/

On April 21, 2020, Colm Farrell commented on Airbnb – using AI to evaluate if a guest is trustworthy :

Thanks for sharing – this is really interesting.

I don’t think that Airbnb should pursue this type of AI as I would find scanning of social media to be highly intrusive! It would make me wary of using Airbnb, as I wouldn’t know where my data is stored, or who has access to it. To me, this initiative would prioritize the experience of hosts at the expense of guests.

I believe there are less intrusive ways for Airbnb to achieve a similar outcome. For example, they could use facial biometrics to verify identities. At the below link, it seems like some, but not all, Airbnb customers are asked to take a picture of their ID and themselves. Airbnb could make this mandatory using a service like Onfido – which is used by many FinTechs and requires you to take a selfie with your ID, with your face visible, to verify your identity. To supplement this, Airbnb could actively monitor customer reviews and seek to follow-up with hosts for greater detail on problem guests.

Links:
https://www.airbnb.com/help/article/1237/how-does-it-work-when-airbnb-verifies-your-identity
https://onfido.com/us/biometric-verification/

On April 20, 2020, Colm Farrell commented on Stitch Fix: Your Personal Shopper :

Interesting post, thank you!

I was intrigued to learn that Stitch Fix still have a human connection as the last step in their process. Do you think Stitch Fix will ever have a “machine-only” option, where you have no human connection but the price is cheaper? They certainly have the wealth of data to make this a reality – especially for long-time customers.

I would rather pay <$5 for the recommendation engine to pick the right clothes vs. $20 for a human. But maybe that's just me – I appreciate that some people would always require a 'human-touch' and may even get attached to their stylist. To make a machine-only option a reality, Stitch Fix would need more parameters to check the outcomes, which may make the system more complicated (e.g., checking to make sure you are not sending people shorts during the winter in Boston..).

On April 20, 2020, Colm Farrell commented on Walmart: Using machine learning to reduce food waste :

On your first point: I don’t believe Walmart is using Eden for anything related to direct-to-consumer grocery deliveries yet. Interesting point around the fraud reduction – I would how big a problem that is for grocers with a significant online presence?

Great second point! I wondered the same, but wasn’t able to find an answer (it seems Walmart is being relatively secretive with Eden). I would imagine that if the algorithm uses the USDA standards as parameters, then the model shouldn’t assess aesthetics (see below for link to example standards for an apple). Thanks for suggesting the Wonky Food Company, it actually reminds me of Tesco’s “Perfectly Imperfect” range in the UK, which is another great waste reduction initiative.

Links:
https://www.ams.usda.gov/grades-standards/apple-grades-standards

On March 24, 2020, Colm Farrell commented on Hello Alfred: automating the on-demand economy :

^Small typo above but the platform won’t let me correct. Start of last paragraph should read: “Do you think they could have started out as B2B2C?”

On March 24, 2020, Colm Farrell commented on A “Plaid”form worth paying (a lot) for :

Interesting post – thank you for sharing!

To @ulumna’s comment above, the impact of the acquisition on Plaid’s relationship with the banks is interesting. Visa has given themselves back-door access to bank customers transaction data via Plaid, which is data Visa may not already have had (e.g., if banks used Mastercard). As a result, we could see more-and-more banks restricting Plaid’s data access to limit this data sharing. If this happens, the cross-side network effects will start to deteriorate. Perhaps Plaid/Visa could share some revenue with banks to stop this from happening? This would be a small price to pay for access to this data.

Some interesting thoughts on this towards the end of this article: https://www.forbes.com/sites/ronshevlin/2020/01/20/whats-visa-going-to-do-with-plaid/#207728123559

On March 24, 2020, Colm Farrell commented on ClassPass: Uncertain future for boutique fitness platform 
 :

Interesting post – thanks for sharing!

I’m a long-time ClassPass customer – and the disintermediation risk you mentioned resonates with me. I frequently buy classes directly from a studio as either: 1) I’ve hit the monthly limit via ClassPass or 2) the times / instructors available on ClassPass are inferior. As a result, I’m not overly optimistic about ClassPass’ future prospects either.

However, I actually didn’t even know about the on-demand ‘ClassPass Go’ service – I just checked my app and found it there! This could be a way that ClassPass improves its defensibility. If they can make this a social experience – such that multiple friends can log-on and do an on-demand class together via video call, then this may enhance the same-side network effects. The on-demand classes have a low marginal cost – so leveraging them to create network effects could be a route forward for ClassPass.

On March 24, 2020, Colm Farrell commented on Hello Alfred: automating the on-demand economy :

Interesting post – thank you!

Hello Alfred made a interesting move from B2C to B2B2C. It seems as if their business model has now become far more sustainable. From your post, it seems like this move has largely prevented multi-homing – i.e., building tenants now have limited additional options, as Hello Alfred has an exclusivity agreement with their landlord. All-in-all, this seems like a win-win move that has allowed them to both create and capture value. They have created value for new customers by offering the service without membership fees. They have captured value from suppliers/vendors, as they have greater scale and more negotiating power.

Do you think they have started out as B2B2C? My take: probably not. With B2C, they were able to have direct access to experiment with and learn from customers – thereby improving their product. With B2B2C, this experimentation and learning becomes far harder as you have less direct customer access.

On February 11, 2020, Colm Farrell commented on Monzo: A digital offering that has traditional UK banks scrambling :

I think the regulatory environment plays a huge role! The UK has had increasingly attractive regulatory environment for FinTechs – as the UK government is trying to promote competition via initiatives like Open Banking, where banks need to share data with any new entrants. In contrast, the US regulatory system for financial services is far stricter: if I want to start a bank I need to get 50 state-banking licences, which takes a lot of time and resources. This is why Monzo had to find a partner bank for its US launch (see article below)!

Article: https://www.theverge.com/2019/6/13/18677298/monzo-bank-us-launch-date-availability

On February 11, 2020, Colm Farrell commented on Monzo: A digital offering that has traditional UK banks scrambling :

Totally agree on the international transfers. I would love a future where I could transfer money between my UK Monzo account and my US Monzo account without friction (and getting the best possible rate on conversion). I wonder would they be willing to that though given the FX risk. The other alternative is to partner with someone like Transferwise.

Would love to talk about Monzo more!

On February 11, 2020, Colm Farrell commented on Monzo: A digital offering that has traditional UK banks scrambling :

Good point on adoption with older generations!

I believe Monzo can tailor their digital solution to suit some of these people, while still maintaining their digital model. As an example, I read that Monzo are partnering with ‘PayPoint’, which has locations in convenience stores across the UK, to provide cash depositing services (article below). This offering would be helpful for older generations that would typically go to bank branches to deposit cash. However, it’s true that some older people will still never trust a digital bank!

Article: https://monzo.com/blog/2018/11/21/deposit-cash

On February 11, 2020, Colm Farrell commented on Amazon continues to dominate – from bookshelves to refrigerators :

Interesting post – thank you!

I actually got my first Amazon grocery delivery last weekend, so a lot of these reasons resonate with me. In particular, the convenience was phenomenal. I was able to select a 2 hour slot for my food and track its progress in the Amazon app. In contrast, when I used services like Hello Fresh, I would be given a 5-6 hour delivery slot.

However, I do want to question one point – do you really think Amazon’s existing data helps to optimize grocery inventory? I’m not convinced that data on my purchasing habits of clothes, gadgets etc. is predictive of my grocery shopping. As a result, I believe Amazon will have a learning curve to learn from the grocery data they are collecting. Perhaps they could use data from Whole Foods stores to help predict inventory? I recall being asked if I had Prime membership last time I was in Whole Foods – so I suspect the Whole Foods acquisition is also paying dividends on the insights they are getting from this data!

On February 11, 2020, Colm Farrell commented on Plaid: A $5.3 Billion Winner :

Great article!

Plaid is really a fantastic Fin-Tech success story. From your article, it seems as if Plaid exhibits cross-side network effects. You have banks and financial products providers (i.e., FinTechs) on either side. Financial product providers choose Plaid because they have a long-list of compatible banks – which maximizes their potential users. For the remaining reluctant banks, they are almost forced to work with Plaid – or risk alienating their customers who want to use these financial products with their bank account. These network effects seem to have been part of Plaid’s ‘secret sauce’ over the past few years.

To @ssingayapally’s comment above: I believe the main benefit of Visa’s acquisition of Plaid is distribution. Visa’s network will give them a tremendous ability to roll out Plaid’s services globally quickly. This may work better in some geographies than others – because of the trend towards open banking you mentioned. But open banking is still very juvenile: even in the UK, where open banking launched recently, there are major issues with the rollout. Even though they are required to comply, banks are dragging their feet and trying to resist sharing their data – so it will still take a significant amount of time before it can match Plaid’s API.

On February 11, 2020, Colm Farrell commented on A Storm is Coming for Blizzard Entertainment :

Very interesting article!

Blizzard seems to be a great example of a company that has rested on its laurels for too long. As a teenager, I used to play WoW and it was a fantastic game at the time. But customers grow up and games become outdated – you need to innovate with original titles to attract the next generation of gamers.

I do wonder what the industry structure will look like in 5-10 years. Will Apple and Google be able to successfully move into content creation themselves? If they did, this would be almost a exact parallel to Netflix – who first started by distributing content from other studios, before moving into content creation. To do that, they would need to access the top creative talent – which Google already seems to be doing in Montreal, a gaming talent hotspot (see article below). My opinion is Apple and Google will succeed, but it will take far longer – given most blockbuster original games take 4+ years to develop. Either way, the future doesn’t look bright for Blizzard.

Reference Article:
https://toronto.citynews.ca/2019/12/08/google-taps-into-montreals-rich-gaming-industry-for-stadia-content/