Very interesting analysis, Nicholas!
You talked a lot about the underutilized fixed assets that Disney will have to contend with in this pandemic (cruise ships, hotels, theme parks, etc.), and how streaming services and VR can help subsidize those unprofitable properties in the near-term.
One aspect that I worry about is supply of live TV/movie content at this time, particularly for their broadcast networks. Production studios have been shuttered and the ability to physically bring together actors and crew to make a film is likely to be gone for some time. I think Disney’s disproportionate focus on animated and CGI-enabled entertainment gives it a leg up to keep making content for its viewers to watch, but is that enough?
This is so interesting, Leo! I always thought of GoPuff as a convenience store for tech-savvy teens, but it’s fascinating that now older shoppers are turning to the app to have their essentials delivered during COVID-19.
One thought I had is whether GoPuff can successfully serve these two different types of customers over the long term. Like Lemonade with their HENRY target market, having a specific focus on one user segment can allow a product to more successfully and sustainably meet that user’s needs in an excellent way. I would expect that the assortment, price-pack architecture, delivery time, and service requirements vary dramatically across generations… Is GoPuff really well positioned to serve both? And if it tries to, how does it stand up to Amazon?
Gives me lots of “food for thought”!! 🙂
Thanks for your post, Jona! As I know you’re a big fitness fan, I had to get your take on Classpass and its business model’s survival during this time. 🙂
I agree with Leo’s concerns about disintermediation risk over time, if Classpass decides to monetize streaming options. Their platform was notoriously criticized for extracting a ton of margin from already-strapped mom-and-pop fitness studios… Similar to Groupon, critics argued that ClassPass charged unsustainably low prices to customers, didn’t create repeat business for studios, and ended up capturing more value than it created.
Can they successfully capture value from these partners if the pandemic drags on for another 18 months? I think most fitness studio owners – once Classpass shows them how to create digitally-optimized streaming content) would prefer to post their videos for free on YouTube (and generate ad revenue) or MindBodyOnline (a ClassPass competitor). It’s interesting to think about.
James, thanks for sharing a little about this interesting company!
I completely agree with your concerns about the “black box” nature of Quantified’s approach. It sounded to me like there are two separate ways the tech can be used – coaching (for personal improvement) and evaluation. In the case of coaching, I’m less worried… but the ethical implications of evaluating a human being using AI are dubious.
For example, a company using Quantified to analyze a job candidate’s skill level purely from an AI-generated “QC” score raises some serious questions. As you rightly point out, algorithms are only as good as the data they learn from, and if there is bias in the training data (e.g., 99% of “100 Fortune C-Suite Leaders” are men), then scoring can be similarly biased (e.g., against women communicators).
I love this post (and Spotify). I agree with the tweet you shared – Spotify so reliably nails it with my Discover Weekly that I’m always left feeling both grateful and a little creeped out.
My biggest question about Spotify is not value creation, but rather value capture. They made a profit for the first time in Q1 2019 (after 13 years of burning cash). Almost all of that is revenue-sharing on its subscription fees with music labels. Do you think there’s an angle for Spotify to monetize the powerful data and tools it has built for record labels, on top of the cut it takes from subscriber income? If, for example, it could tell a record label exactly what kind of artist is likely to be a chart-topper, wouldn’t that be worth a lot? Right now, it seems like the AI features are a freebie on top of the streaming platform, even though that’s the most defensible competitive advantage Spotify has. As you point out – Apple and Amazon could quickly cut streaming prices below marginal cost, in which case Spotify can’t stay profitable with just subscriber revenue alone.
This is so cool! Thanks for sharing this company.
My question is around value capture. How effectively is AiFi capturing the cost savings and improved throughput that it creates for retailers? How is it pricing its service? I wouldn’t be surprised if they lost money on sales of the NanoStore offering and the SimStore, but it might be worth it if these technologies give them more user data to train the computer vision algorithms for a the turnkey platform. Platform as a Service (PaaS) businesses are definitely doing well from a value capture and valuation/funding perspective.
Overall, I love the idea of a completely AI-powered store without employees (though it does seem a little creepy!). Will be interesting to see how the model evolves.
This is super interesting – I hadn’t heard of Glovo before! It seems to me that it’s a classic example of a clustered network (meaning they only get network effects within local markets/cities and don’t benefit from global scale).
While in London this winter break, I visited the Deliveroo offices and it was interesting to hear one of their head strategists say that their expansion strategy was to “be the UberEats of the UK”. Basically, they knew they could copy the business model of other food-delivery platform businesses succeeding in the US, scale up faster in London/Manchester markets, and gain a network-size advantage over their US-based rivals. I wonder if Glovo can sustain itself more successfully by only focusing on 1-2 markets where it has reached critical mass locally, so it isn’t forced to wage battle in so many different markets at once (to James’ point about Rappi in Colombia).
Cool post, Rocio!
When I was reading your assessment of MasterClass, I was wondering who its true competitors are and whether theplatform could eventually become commoditized. MOOCs are an obvious type of competition, but other potential competitors include TEDx, YouTube, and subscription streaming services like Hulu and Netflix since they also compete for viewer’s attention and media spend.
While I agree that most MOOCs are not as successful/value creating as MasterClass, I wonder if a platform with larger user-base scale like YouTube could crush MasterClass if it took a step in this direction. They could easily afford to pay a high-profile creator $100k plus 30% ad revenue sharing, and potentially offer celebrities a higher revenue given how big their user bases are. Is MasterClass considering making their contracts exclusive to prevent multihoming?
I agree with PZ’s comment about multi-homing risk and private label concerns. I see clearly how ASOS creates value for shoppers, but I’m not convinced it truly creates value for vendors in the current business model… And the move to private label makes them a direct competitor to their vendors.
In my opinoion, ASOS still seems to function largely like a traditional retailer (curating a collection of merchandise across brands). What makes a fashion brand more likely to sell via ASOS than via its own e-commerce site? This concern is particularly relevant since setting up an e-commerce presence can be done in a low-investment way, using third-party platforms like Shopify and fulfillment solutions like FBA (Fulfillment by Amazon).
Very interesting company, Lill!
I agree with you that SMT has been wise in not trying to attack traditional broadcasters, but rather to slowly make themselves indispensable partners to these powerful networks. Their tech creates value for the entire system, and it seems like they’ve been able to capture that in profitability (certainly not always the case with disruptive media start-ups!).
That said, I wonder if they will still sustain an advantage in a context where more people watch sports via YouTube TV or Amazon Prime. Do you think SMT’s tech will be as valuable to players like Google, whose engineers could surely replicate SMT’s graphics no sweat? Particularly as the world gets more excited about e-sports, I worry that Twitch (owned by Amazon) already has much more advanced capabilities. Let’s see if SMT can keep up the pace of innovation to stay relevant.
I loved this post, Leah! (Not just because I’m a Starbucks junkie and heavy user of the app.)
One thing that I think about whenever I use mobile ordering is the way my experience has changed in the store – I spend less time on the transaction, keep my headphones in, and don’t have to interact with anyone behind the counter. This is a huge positive for me (e.g., when I’m in a rush) and probably makes me lower cost-to-serve for Starbucks, but I wonder does the presence of in-and-out customers like me make non-mobile users’ experience worse? Are they served more slowly? Do they no longer enjoy lingering over a book in Sbux’s “third place” when there’s a constant stream of mobile customers with headphones in, coming and going? Maybe this is why Starbucks is doubling down on its Reserve Roastery high-end concept, to segment out the grab-and-go types like me from the coffee shop experience-seekers.
To generalize, it seems that greater investment in/growth of digital channels can negatively impact traditional channels if not addressed proactively.