How does the 20K/yr cost compare with the cost to educate a child in the USA? Will the state governments pay for this?
Also, does ALT school have “substantial” benefits for the “majority” of students or only for special needs students? Also can the benefits be achieved without correcting the other social problems that also lead to under-performance of students e.g. lack of discipline, poverty and unstable homes? The data would be very noisy. In fact i would argue that it would be almost impossible to emiprically verify if ALT school works or does not work due to all the other factors that contribute to educational achievement.
Do you see this disrupting the US school system or just the special needs segment? And what are the alternatives? Is this better than getting education at home or private school? What does it do to the social aspect of schooling? Dont kids begin learning how to compromise and operate in society through interacting with others in school? Will this make kids more individualistic and maybe even a little spoilt and selfish?
This is very interesting but it is also an analysis that could very easily deliver a wrong conclusion due to not taking into account the many cyclical factors that affect credit
It would be interesting to see how far back the data goes and how many years (and cycles) of observations the conclusions are based off. The thing with credit (subprime and prime) is that it is very cyclical and we are currently in one of the best credit cycles in 100 years. Will the same conclusions be true if we looked at 1990s or pre-crisis 2000s data. Do the same conclusions hold, when the fed raises interest rates. How bout when unemployment is away from full employment? Do demographic considerations change the answer? Are the conclusions the same for Millenials and Baby boomers? How about the role of the regulator? Are recent consumer protection legislations reflected in the data?
Very interesting but needs to be interpreted carefully
This is very interesting! but I wonder how the business scales from here? Is this the classic example of a very niche business that tops out at <$2M in revenue? Also what are the barriers to entry in this business? What is stopping bloomberg from trying to replicate what the company is doing? Should they just try and exit to Bloomberg or Thompson Reuters while they are ahead?
Also, I am not sure how much of a trend in the fundamentals of a given commodity can be captured through analyzing Cargo ships – is this tool only useful for very specific comodities? Or does the company have to partner with a lot of other data sources to paint the full picture of any the trends in any given commodity? If they are reliant on bloomberg and others, what does that mean for the company's value capture potential?
Great post! I think the main take-away for me is that easy tasks / tasks that are not innovative should not be crowdsourced. Nasa should have named their room. Mountain Dew should have picked a name for their Soda. The crowd should only be tapped for the highly complex jobs that the company cannot do itself
I don’t think the potential for crowdsourcing LPs would be attractive to large / Midcap P/E for two reasons. Firstly, funds like to chose their LPs and typically want to say that the LP network adds value and differentiates the firm. Crowdsourcing LPs removes this benefit. Additionally, LPs are often relied upon for co-investments. In situations in which speed of calling co-investment is crucial, a fragmented LP base can prove to be a liability
Thanks for this post. Its super interesting! I’ve used GLG in my past work and I’d challenge you that it is not “truly” crowdsourcing.
The first reason that drives me to say that GLG is not really crowdsourcing is the fact that the buyer has to select which expert he wants to speak to based on reviewing resumes. In a real crowdsourcing strategy the buyer does not typically dictate who can contribute i.e. contributions are accepted from all who submit them
Secondly, GLG does not lend itself to situations in which the buyer doesn’t already have an idea of the questions he/ she needs answered i.e. you cannot brainstorm with GLG; you must know which questions to ask. Supporting this point is the fact that billing is hourly. If you don’t know what to ask the costs become prohibitive
GLG is more like consulting than like crowdsourcing
I worry about the sustainability of both sides of this two sided network. Is there a risk that the kids would leave the platform when they become semi-pro athletes i.e. they join a school or college team? Or if they don’t go pro, how long will they stay on before switching to a regular gym? I don’t think the market for hobbyists and sports enthusiasts, that hire and pay private coaches, is large.
On the coaching side, doesn’t this feel like a “stop gap”/ part time job? Will the coaches leave the platform when they find a full time job that satisfies them? e.g. coaching a high school team? For the adult customer there is significant competition from gyms and neighborhood sports clubs that play a social role in addition to providing the desired exercise. I think this company will remain small
I think that Relayrides will struggle to be successful. I don’t see any opportunities in the high end of the market (luxury segment) and I see significant barriers to success in the budget segment as well.
Luxury, “non-price sensitive”, renters will not bear all the risks and uncertainties of renting a car from a stranger. These risks include quality assurance and safety, third party insurance liability and lack of breakdown / roadside assistance. Additionally, there is no lack of supply of luxury vehicles at the incumbents; you can get virtually any luxury vehicle you want. We have also seen how this price segment has responded to Airbnb; Airbnb has been successful at selling to budget travelers not the luxury segment. Why would you stay in a high end AirBnB instead of the Ritz?
The budget car rental market is highly dependent on deals and is dependent on corporate partnerships. Budget car rentals are frequently bundled with flights and hotels and purchased through credit card rewards programs. I doubt that Hotels, Airlines and Credit Card reward programs will work with Relayrides. I think this lack of deals makes Relayrides far less attractive than incumbent budget rentals.
Maybe the only segment that Relyrides can target is the “non-consuming” segment i.e. people who do not currently rent. They could do this by listing very old cars at very low prices. I do not know how low the prices can get because incumbents already have deals as low as $15 a day. Will anybody rent their personal car to a stranger for less than $15? I am very skeptical about this company’s ability to compete……..
I agree that Spotify creates a lot of value by aggregating the songs that are “trending” and deliverying playlists that are popular in a given region. But I disagree that routine music consumption is a social activity. Music consumption is a social activity only when people are together like during parties or hangouts. I am a big user of the “private session” button in Spotify that hides my activity from my network on Facebook. Additionally, a majority of my friends are on both Facebook and Spotify and I do not receive a large stream of songs that my network is listening to. This tells me that others are also using the “private session” button . I argue that majority of the music we consume is actually private; we listen to different things when we feel certain ways and when we are with different people. We don’t necessarily want to tell the world how we are feeling or what we are doing all the time. This is a key difference between Facebook and Spotify. In Facebook, I put on my profile only the information I want to share with my network and nothing else. The equivalent of this on Spotify would be creating a playlist to share with friends. This I think is way more cumbersome and involved than simply posting pictures on Facebook. For these reasons, I doubt that Spotify will be able to achieve the network effects that Facebook and others have achieved.
Thanks for this IR. I agree with most of this but I don’t think that the Order and Pay app will drive margin improvement by strengthening inventory management. What I think you are saying is that the Order and Pay app will provide the company with better visibility into demand and through that drive improvements in inventory planning. I think this is incorrect because demand for Starbucks coffee is still likely to remain highly opportunistic and unplanned. While people would be able to digitally enter orders, the sequence of these orders will be just as variable as if people just randomly walked into the shop. Unless you believe people consistently buy coffees at the same time and same location every day and can hence plan in advance?
What are the barriers to entry in this industry? How did Hinge get so many users / who did they take the users from (Match.com?) Why do you think Tinder will continue to outperform Hinge and others? Is commoditization a problem?
Interesting article Jose. I am very skeptical about Saida’s ability to compete in the mobile micro-finance space in Africa primarily due to competition from the incumbent telcom providers. The major telcom providers in Africa e.g. Safaricom in Kenya and Airtel and MTN on a more pan-African basis provide mobile money transfer services to customers and have been doing so for several years now. In fact in Kenya, Safaricom’s “M-Pesa” service is the primary bank account for most of the un-banked population. These Telcos have already tried to extend micro-finance loans to their customers and have faced intense regulatory push bank instigated by the banks that are keen to defend their markets. Finally, how will Saida fund these loans? and do you think they will be able to maintain adequate asset quality? Having worked in Africa, I cannot name a single institution that managed to run an unsecured micro-finance lending operation successfully without some kind of assistance from the government. Look up “M-Pesa” in Kenya and “Letshego” in Botswana. These are major competitors that Saida will have to deal with
Thanks for the comment Tien. I totally agree with you that digital is not disintermediating recruiting firms such as Michael Paige. One thing to add is that this is a two way market and the preferences, culture and temperament of the individual potential recruits matter just as much as the requirements of the hiring firm. Over periods of time, recruiters come to serve as trusted career advisers to the candidates and place them in roles that are they are likely to succeed in. I have been placed 3 times by recruiters in different roles over the last 6 years and the best advice I have gotten are about the jobs I shouldn’t take based on corporate culture and fit. Recruiters also serve as a great yet free source of reliable information about the job market (you can get some of the information online but you can’t trust it. For example, would you accept a salary offer based of numbers from Glassdoor?!). Questions like what is market compensation for a given role? What other perks, incentives and non-cash remuneration should I be expecting? How about non-competes and severance? Even basic yet critical information like what kind of job market is this can be easily answered with the help of a recruiter. Just imagine quitting your job in a market such as the 2009 -2011 job market in which hedge funds and private equity funds were hardly hiring? A good recruiter can save you from such mistakes.
I don’t think digital disintermediates recruiters but rather complements the highly personal work they do