Super cool post! I had no idea that the logistics industry provided such a huge TAM.
When I was covering telcos in a previous job we’d always shake our heads when telcos tried to step away from the core business as rent-seeking “pipe owners” and poured money into the latest iteration of value-added services. Those efforts almost always fell flat.
That said, what’s refreshing about this move Verizon’s made is 1. it doesn’t pit them directly against monster tech companies (e.g. Facebook / Google / Apple / Amazon) and 2. they’ve acquired their way into being a meaningful player in the space (25%) vs. essentially funding a startup venture. I’m really interested to see where this goes!
One thing we always used to say about investing in media businesses at one of my previous jobs was that “content is king”. HBO definitely scores high on this; the reason *anyone* is willing to shell out for HBO Now is because their programming quality really is that good, and it just keeps on coming. John Oliver’s “Last Week Tonight” strikes me as a great example.
Going OTT for HBO is going to be tough if they can only provide original programming–Netflix and Prime both have massive libraries in addition to their original programming; as cord-cutters increasingly rely on those video streaming services for a growing share of their non-original content consumption, the fact that HBO only provides original programming is only going to become more glaring.
I would be fascinated to see a Venn diagram including Netflix / HBO Go / HBO Now subscribers and to see how that analysis would bear out in decisions to license content vs. continue to rely on their own platform.
This business model is fascinating to me. EdTech has typically been heralded as the end of Baumol’s Cost Disease vis a vis education, enabling you to effectively drive *up* the student:teacher ratio without sacrificing learning outcomes.
These guys appear to have taken the opposite approach, which is to double down on both human and technological inputs, ostensibly raising educational outcomes beyond anything that would be available in any other model today. It also has meant raising the price, so at $30k this model definitely isn’t going to be school for the masses. Interested to see, though, if this somehow serves as a vanguard to see which particular applications of technology and hybrid models of teacher-guided tech based learning will be applicable to more economical educational models.
I wonder if some of the erosion in Costco memberships has come from their openness to integrating with folks like Amazon Fresh and Google Express. I use both Google Express and have a Costco membership–I sometimes question my decision to get the Costco membership because Google Express allows me to buy non-perishable items from Costco without a membership. Perhaps other people are using that as justification for severing their membership?
That said, some of Costco’s best items IMO are it’s perishables–greek yogurt, spinach, etc. I would love to use a pickup offering as it would allow continued access to perishables and since the sheer size of the store means assembling a shopping cart can take a sweet eternity. 🙂
On the other hand, I wonder why Sam’s Club makes such a heavy emphasis on perishables, given that by nature unless you’re buying for a big group/family perishables are some of the most difficult things for consumers to purchase and economically use in bulk. Perhaps they see that more as their online differentiator, so it’s more a question of positioning?
Now that meditation has gone digital I think we can spike the ball and go home :).
Seriously, though, I thought this was a really interesting service. It incorporates almost all of the things that make digital services scalable (it’s an app with automated inputs), sticky (streak tracking and social aspects), and high-value (high degree of customization to customer personal needs and pacing).
My concern with this would be that there are aspects to meditation that may not be particularly convertible to digital–that said, the all-time 4.5 star rating the app has in the Apple App Store suggests that users take no issue with it :). One thing I thought was really interesting working with gaming companies while I worked for Facebook was that as apps reached a certain scale, those digitally native-companies with digitally native products would increasingly turn to physical gatherings to drive affinity and create community among their users. I wonder if Headspace will make the same move as they continue to scale up and what those events will look like.
This article actually rings personally for me. Just before moving back to the States, I’d purchased a stroller on Alibaba for pickup at my hotel when I was swinging through Beijing. It got mis-sorted into the wrong shipping partner warehouse, and as a result, I wasn’t able to get my stroller before leaving and had to pay the hotel to ship it to the States (still cheaper than buying one here!! 🙂 ).
At that time, and as a I read your blog post, I wonder why Alibaba still continues to work with external logistics partners instead of trying to build out their own logistics service in the way that JD.com has. It’s certainly not because Alibaba lacks cash–maybe they consider it too margin dilutive? Maybe there are logistics considerations Alibaba has at 50%+ of daily shipping volume that JD.com doesn’t have?
In any case, super cool to see how Alibaba has moved to reduce variability among their shipping partners. China definitely has the most impressive eCommerce market in the world; the rest of us have a lot to learn it!
I worked at Facebook before coming to HBS and absolutely loved using it in work situations. The groups we used for different projects and teams became living conversations around different projects. While my personal experience doesn’t really jive with Hanley’s quote (emails and Facebook groups are only as hierarchical as the people looped in them, IMO), I did find Facebook was a way better way to sort and access information from concurrent teams, projects, and conversations.
As far as the culture is concerned, on the one hand, I definitely felt like the groups were a great way for us to remain involved in each other’s work lives (e.g. commenting on slides / videos of teammates presenting at industry events) and as a result people had a better sense for what teammates were up to and how the team was doing.
On the other hand, I don’t think Workplace is the nearly the full package of Facebook’s culture. Facebook’s company values are inculcated with a depth and consistency (via multiple orientations, flying all employees to HQ, making company values criteria for 360 reviews, etc) that I’ve not seen elsewhere. Honestly, I don’t know how you’d even begin to start exporting that. Much of Facebook’s culture stems from Zuck, who has the voting power, growth, and margins to create that culture in ways that very few individuals in the business world can at the companies they lead.
One of the issues unique to Miami versus, say, New York or Amsterdam, is the underground geology. Miami is situated on top of a ton of limestone, a highly porous rock, which means that as sea levels rise, dams can only do so much. The ocean water will easily seep through the ground and start to appear everywhere.
To the point of Christine’s reply above, there are many differing perspectives on how much longer Miami Beach will last, but barring game-changing innovations in the future, there is strong consensus around the endpoint.
That’s a great point. One of the issues that came up as I researched for this was around whether anyone would be willing to insure these properties in the future. With sea levels coming from below and huge storms coming from above, it’s remains to be seen who will be willing to take that risk and at what price.
As far as the new developments are concerned, you’d think that anyone building in Miami Beach today would have water levels and hurricane damage front of mind–yet from what I read in writing this article, it’s been a total afterthought. Since developers and even many buyers expect to have exited their investments within the next several years, after which point it will be sold to another buyer with a short investment horizon, there is a shocking market failure in producing structuresthat are actually well positioned to handle these climate issues that are already coming to bear.
Living in Singapore the last five years, this issue was very much front of mind for me (especially around Sep-Nov, during the burning season). The peat fires in Kalimantan and Sumatera especially would end up in smoke getting blown across the ocean and over our city. We’d wring our hands about it and point fingers at Indonesia, saying they needed to clamp down on these deplorable practices.
Indonesia would point back at Singapore; many of the companies syndicating the palm oil grown on the cleared land were headquarted or listed in–you guessed it–Singapore! If Singapore *really* cared about the smog, they had plenty of things they could do on the demand side. Everyone was just as conniving and complicit as the next person, with blame conveniently diffused by the complicated supply chain you diagrammed in your post
At the end of the day, as much of a nuisance as the smog was to Singapore, the people who were hurt the most by far were Indonesians themselves. A bloomberg article I read (http://www.bloomberg.com/news/articles/2016-09-19/study-estimates-100-000-premature-deaths-from-indonesia-haze) attributed as much as 100k premature Indonesian deaths to the haze.
One thing I really liked about your post is that you attributed the pollution problem to the method by which land is cleared vs. the palm oil itself. When reading about this crisis, I recall finding that palm is actually the most water and land efficient way to produce vegetable oil–if you were to ban palm, that basically shifts production to less efficient oil sources. Land will still be cleared, and tons of water will still be used. Those calling for ban on products containing palm oil are well-intentioned but misdirected.
How likely do you think it is that Jokowi’s ban on clearing more land will actually be enforced? I remember during the last dry season (a particularly bad one) the central government in Indonesia said they weren’t in a position to have much influence on this local problem. The government in Sumatera said they didn’t have the funding and firefighting resources, even as small fires turned into huge ones that lasted for weeks on end.
Both this post and Cami’s post on Levi’s make me think of the IKEA case–with such huge commodity needs, why don’t they give a shot at vertically integrating their supply chain and leasing their own palm plantations? Unlikely demand for CPG goods and the palm oil in them will go down any time soon…
China’s energy and resource situation is perhaps the most nuanced I’ve heard of. I remember reading so much in the States about China being a huge polluter. Then I started spending a lot more time there on business trips and saw how many people owned electric vehicles, how businesses and consumers used climate control in their cars and buildings, how much more resource efficient China’s average house is, and realized that on a per capita basis, China actually used much, much less energy than they would if they adopted US habits.
On the other hand, I remember reading a few years back that China burns as much coal as the rest of the world combined! The explanation I’d heard was 1. that China has practically limitless amounts of it (especially the stuff that burns dirty) and 2. that there is a national value of resource independence to whatever extent possible. China prefers to grow it’s own food (hence the huge south>north water diversion projects) and use it’s own coal for energy before looking outside it’s borders for more.
Is the popular discontent with pollution starting to put pressure on this value? In other words, do you see more discourse calling for a change in energy mix, even if that means China imports more of its energy?
As a big levi’s fan, it warms my heart to see this is front of mind for them.
I wonder, what is it about BCI farmers that leads to them using less water? Is it simply more responsible irrigation? Do they use more resilient strains of cotton?
Some of my favorite levis are ones that blend in other fibers–like elastane–that actually make the jeans more comfortable. I wonder, what does that do to the durability and water footprint of those jeans? Is cotton the lesser of all evils when it comes to fabrics, or would changing their blend to more synthetics / other fibers be better?
To me, water shortages are perhaps the scariest of climate change / resource shortage issues I know of.
Cap-and-trade agreements have made certain carbon emission reduction technologies more viable,
Tax credits make solar and wind more viable;
Is there anything being done about water that could boost adoption for a system like this?
Interesting read! I remember watching a documentary on Netflix a while back called “Cowspiracy” that talked about the relative input-intensity of producing beef. As you can guess by the name, it was a bit heavy-handed :).
But both that and your post have left me wondering as a consumer how to choose my proteins. What is the carbon footprint and resource intensity, per gram, of different protein sources? And how much do the methods–such as changing microbiomes, backpacks, etc affect the math on that? Do cows become more viable relative to, say, goats when you use these new technologies? I feel like I’ve spent quite a bit of time scouring the web in the past and haven’t really found a satisfactory source, but in the future I wonder if that kind of data won’t become as important to consumers as the nutrition facts on the back label of their foods.