GTaylor

GTaylor

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GTaylor

I agree that GameStop’s days are numbered. They are being squeezed on both sides of their business model by competitors better suited to deliver. In the physical game space, Amazon offers release-day delivery for new titles and competitive prices to GameStop. Even more damaging for GameStop, though, is the trend toward digital downloads, which come directly from the platform holder (Microsoft, Sony, Nintendo, or Valve). With the higher margins from digital direct sales, the platform holders have effectively cut out GameStop as a channel partner in the digital distribution space. Personally, I don’t see how GameStop can overcome being removed from the digital distribution channel, as more and more of the industry trends in that direction.

GTaylor

While I agree AI may reduce the number of junior-level accountants require to perform an audit, I don’t think the need for them will ever be eliminated. I envision the AI taking up the bulk of the grunt work, as you identified above, but junior accountants still being needed to review the work of the AI. I think a human element will always at least in part be required for an audit. In the Enron scandal, for example, a lot of the related-party transactions were legal in a strict interpretation of the accounting rules that governed them, but their purpose was misrepresented so as to hide losses at Enron. While AI (at the present) can help reduce the burden of determining whether or not a transaction is legal, I think we have a ways to go before AI will be able to determine of the transaction properly and fairly represents the underlying economic reality without human judgement.

GTaylor
On November 20, 2016, GTaylor commented on The Battle of the Books: Should Barnes & Noble Concede? :

While I don’t think paper books will ever completely die out due to the “experience” they offer, I do worry that they will become more of a specialty item for book enthusiasts as tablets and e-readers become more and more ubiquitous. My concern for Barnes & Noble is that as paper books lose share to their downloadable companions, it simply won’t be profitable to operate large physical locations dedicated purely to bookselling, especially as services like Amazon have made it incredibly easy to order both physical and digital books online.

GTaylor
On November 20, 2016, GTaylor commented on Uber’s Bet on Self-Driving Car :

While I think the technology is fascinating, I also wonder about the economic impacts it may have. As you noted, car ownership will become burdensome in relation to use of self driving vehicles, which may punish those living in rural areas that don’t have the population density to support a fleet of autonomous vehicles. Additionally, autonomous vehicles may eliminate a large number of jobs in the transportation and freight industries, leading to further economic impacts and perhaps more exaggerated income inequality as low-income jobs are removed from the economy.

GTaylor
On November 20, 2016, GTaylor commented on H&R Block: A Taxing Fall from Grace :

I would be curious to see the operating margins from H&RB and Turbo-tax. I would assume in such a seasonal business as tax-preparation, a SaaS platform has a very strong advantage in that it can easily scale with the seasonality of the industry. H&RB, on the other hand, is left holding leases for expensive real estate storefronts that don’t see much use outside of the three months prior to tax season. I imagine H&RB could generate higher margin by moving toward the SaaS model, but as the blog stated may lose market share in the segment of the population that wants a brick and mortar solution at tax time.

GTaylor
On November 20, 2016, GTaylor commented on GS Bank: Goldman Sachs’ Online Retail Banking Business :

GS’s move into retail reminds me quite a bit of USAA’s operating model. USAA has almost no physical branches, no ATM network, but unlike GS provides a full suite of online banking services to customers. While a bank like USAA has proven it can succeed without offline support, I think GS will certainly need to provide more robust services to attract away customers from their current bank.

GTaylor
On November 5, 2016, GTaylor commented on The dilemma of Kansai Electric Power Company :

Nuclear energy is a fascinating aspect of the conversation on climate change. While it is a very clean, sustainable source of energy, it also has catastrophic, though rare, consequences when it fails. As a result, it is understandably a highly controversial solution to carbon emissions from traditional power generation. I would be curious to see if KEPCO’s move to a combined-cycle and a liquid natural gas power plant have been able to overcome the deficit from the 11 nuclear reactors removed from the power grid, or if KEPCO has had to rely on increased use of traditional fossil fuel plants, increasing its carbon emissions. Nuclear power seems to be a high risk, high reward proposition. I wonder at what point climate change will become severe enough that the trade-off makes sense to most people.

GTaylor
On November 5, 2016, GTaylor commented on Whole Foods – Natural & Organic. Sustainable? :

Whole Foods is in an interesting position, as this blog identifies, in which its brand image is very closely linked with environmentally-friendly causes such as reduction in greenhouse gasses, and is also in a position to potentially profit from global warming. With global temperatures rising, Whole Foods may be able to capitalize on its customer value proposition by providing more locally sourced foods from the longer growing seasons that come with elevated temperatures. It will be interesting to see how the company behaves moving forward, as its economic interests are somewhat misaligned with its brand image.

GTaylor
On November 5, 2016, GTaylor commented on AI helps data center to stay cool and keeps energy bills low :

Interesting article – it raises the question if AI control of climate systems could be applied to other industries to reduce their energy usage. For example, could an AI system control the air conditioning and light level in a large office building more precisely than human operators, leading to an increase of occupant comfort while simultaneously decreasing the building’s energy consumption? While the impact of such a system to total energy consumption may be low, if the technology became cheap enough to implement, it could have a huge impact when aggregated across all large buildings, and that is just one application.

GTaylor

I found it interesting that so much of TWE’s response is focused on adapting to climate change rather than mitigating it. Moving to cooler climates and growing berry varieties more resilient to hotter weather seems that it will fundamentally change the types and tastes of wines it currently produces. It raises an interesting question about agency problems in climate change. Those industries and companies whose operations are most affected by climate change (for example, vineyards) may not have significant control over green house gas emissions, which are driven primarily by completely different industries. Because of this principal-agent problem, where those contributing most to global warming are not those most affected, further government regulation may be necessary to protect my wine habit!

GTaylor

Despite the recent decline in the carbon emissions market and Mercuria’s exit from large-scale emissions trading earlier this year, Mercuria’s experiment with carbon emissions trading successfully shows that green house gas reduction can be commoditized and traded on open exchanges. This is an important proof of concept, and model for future government and international regulation to prevent climate change. By allowing the trading of reduction credits, governing bodies essentially minimize the so-called “dead-weight loss” that occurs when inefficient companies and efficient companies are required to reduce emissions by the same amount. Instead, those companies that can reduce emissions cheaply will reduce more, and sell credits to those who cannot. Importantly, a system such as this minimizes the burden on the total economy, minimizing the economic loss that will accompany efforts to reduce emissions.