Rishi Taparia - Issue #52
This week we celebrate a year of weekly issues! We take a look at Walmart’s baby offering, Burberry’s fire, Square taking the Capital show on the road, Chinese student’s heading home, Pinduoduo’s meteoric rise and more. Enjoy!
Commerce
Walmart unveils expanded baby offering
Babies are big business (as I am very quickly learning…). With the closure of Toys R’ Us and Babies R’ Us, Walmart sees an opening and this week rolled out a new, online baby offering that follows a revamped in-store experience. With over 30,000 items (babies really don’t need that much stuff…really) it’s yet another place for parents or soon to be parents to spend countless hours and dollars, debating the merits of one pacifier versus the other.
Mayor Rahm Emanuel to let aspiring chefs, retailers to test concepts in vacant storefront
Pop-up fever is hitting Chicago. In an interesting move by the Mayor of Chicago, the city of Chicago will now grant business licenses on a monthly or yearly basis. The goal is to help restaurants and retailers primarily test ideas without the bureaucratic overhead and costs, while at the same time reinvigorate struggling neighborhood commercial strips that have gone vacant. I’m curious to see how this plays out (particularly given it’s campaign season in Chicago and politicians are known to come up with innovative ideas right in time for elections, only to drop them soon after).
Burberry burns bags, clothes and perfume worth millions
That’s one way to ensure you don’t lose brand value. The fashion firm destroyed £28m of unwanted stock last year in a bid to protect its brand, burning product in what has to be one of the more fashionable fires around.
FinTech
Square partners with eBay to expand small-business lending
Square Capital is taking its show on the road. Arguably the most successful part of Square’s business, the lending arm will now be made available to eBay merchants looking to scale their business with capital infusions ranging from $500 - $100,000. It will test the robustness of the company’s risk models and whether they can maintain their low loss rates despite not having the same access to data as they do with Square merchants. The demand for Square product exists within the capital markets but, to Square’s credit, they have not increased the supply by loosening the requirements for merchants to access Capital. If they can prove their models work off Square you can be sure this will be a source of major growth for the company.
Stripe Issuing
Stripe is getting into the issuing game…sort of. This week the company launched their Stripe Issuing product, an API that enables companies / developers to create their own virtual or physical credit cards. A direct competitor to Marqeta and Shift, it’s important to note that Stripe is not becoming an issuer and underwriting the credit risk. Instead, they are simply making the process of leveraging the card rails easier. For Stripe, owning both the acquiring and issuing on the same platform will allow them to take further advantage of interchange economics that leads to some major opportunities moving forward.
SoftBank, Yahoo Japan and Paytm make mobile payments mammoth
Softbank, Yahoo Japan and Paytm have partnered to take on the Japanese market. The (unlikely?) trio will team up to bring digital payments tech from Paytm into Japan where cashless payments remain a paltry 20%. The surprise for me here is that it is Paytm that’s being brought in compared to Ant Financial’s. Maybe I shouldn’t be that surprised - China and Japan have a long and tumultuous relationship and perhaps it was easier to bring in an Indian company’s tech stack (that just so happens to mirror a Chinese company’s, but don’t tell Japan!)
How Software Ate the Point of Sale
A good look at the history cash registers and payment terminals, the evolution of the space and the pains that merchants feel when trying to do something as simple as execute a loyalty program.
Technology
Pinduoduo shares leap 35% on New York debut
$0 to $30bn in 3 years. That’s the story of Pinduoduo, a Chinese shopping platform started by an ex-Google engineer that directly competes with Alibaba and JD (the company just so happens to have been backed by Tencent), that before this email you most likely haven’t heard of. Going after a customer base that “have yet to fully embrace e-commerce, residing in poorer, lower-tier cities”, the company has taken advantage of its ties with Tencent to leverage WeChat, connecting buyers and sellers and make group purchases. It’s often called the Groupon of China, but I think the platform is far more robust and the numbers, well, are just insane.
Random Tidbits
How Chinese students who return home after studying abroad succeed – and why they don’t
If there had to be a single indicator that describes the sentiment toward an economy and its prospects, I’d argue that % of students returning home from studying abroad is a pretty good one. Based on that metric, the hype about China seems to be quite real.
1987: 5% return rate
2007: 30.6% return rate
2017: 79% return rate
Now, nuance is everything and when looking into survey results of students who have returned the picture is not as rosy (65% felt they didn’t know enough about the job market, difficulties abroad drove 27% back) but it’s still an amazing change over the last 30 years.
Real World vs. Book Knowledge
Morgan Housel at Collaborative consistently puts out great content. His latest piece on the difference between real world knowledge vs. book knowledge is no different.
Book knowledge is the study of how something either should work, or has historically worked, when viewed in a lab or observed within a big, average group. It’s very useful because it lets us see the patterns that aren’t always intuitive in your day-to-day life. Formulas, data, hard science. Real-world knowledge is the study, often learned subconsciously, of things that book knowledge either hasn’t figured out yet, or is too nuanced to summarize on paper. The hidden subtleties of psychology, preference, sociology, politics.
How You Know
Along the same lines as Housel, I re-read this 2014 essay from Paul Graham on how you know that you’re learning anything.
I’ve read Villehardouin’s chronicle of the Fourth Crusade at least two times, maybe three. And yet if I had to write down everything I remember from it, I doubt it would amount to much more than a page. Multiply this times several hundred, and I get an uneasy feeling when I look at my bookshelves. What use is it to read all these books if I remember so little from them?
Worth a read, if only to calm the mind when turning pages or scrolling down screens, knowing that rote memorization is not required.
Thank you: This issue marks one year’s worth of this weekly newsletter. It started out as a way for me to summarize my thoughts on a piece and force some self curation I thought may be helpful for others interested in similar spaces and industries. Based on the feedback I’ve gotten, it seems to be satisfying my initial thesis! Thank you for reading. I’ll do my best to keep it interesting and informative. As always, please let me know what I can do to improve and make it a more valuable read.
Best,
Rishi
Quote I’m thinking about: “At times our own light goes out and is rekindled by a spark from another person. Each of us has cause to think with deep gratitude of those who have lighted the flame within us.” – Albert Schweitzer