Rishi Taparia - Issue #57
This week we look at how Alibaba manages its business differently, Coca Cola big bet on coffee, Berkshire’s investment in Paytm, India’s pushback on international tech, Joel Embiid’s path to the NBA, John McCain through the eyes of David Foster Wallace and more. Enjoy, and for those if you in the US, have a great Labor Day!
Commerce
Everything Alibaba Does Differently — and Better
An insightful (at times repetitive) HBR article by Ming Zheng, EVP at Alibaba, looking at what makes digital first companies like Google, Facebook and yes, Alibaba, successful. While none of the insights are ‘new’ per se, the way he structures the piece and provides concrete examples of differences between how Alibaba and Ant Financial do things versus how they were typically done help drive home the message.
Step 1: “Datafy” every customer exchange.
Step 2: “Software” every activity.
Step 3: Get data flowing.
Step 4: Apply the algorithms.
(Bonus step 5: The leader’s role needs to be different)
Worth a read and (if you’re like me) distribution to your team. The make it sound so easy…
Coke Makes $5.1 Billion Bet on Coffee Market With Costa Deal
Coca-Cola coffee? This week the king of soft drinks got into the highly competitive world of coffee, spending a pretty penny on UK coffee giant Costa (510,000,000,000 pennies to be exact…) The move may seem off brand until one considers the changing tastes of consumers, moving away from sugary drinks to sparkling water and coffee. Let’s just hope for all our sakes that the acquisition leads to a different outcome than Coca-Cola Blak.
Lululemon plans 40 more stores by year's end
Athleisure giant Lululemon has had its fair share of issues this year, including a CEO scandal that led to a rather abrupt ouster and Sephora USA chief stepping into the top job as of last week. gone through. Despite all that, the brand seems to have found its footing driving major foot traffic into their stores and seeing increased sales. Now, they are planning on opening up 40 more stores with a redone experience that more closely mirrors online.
FinTech
Google and Mastercard Cut a Secret Ad Deal to Track Retail Sales
Big news this week in the way of Google getting smart on advertising and leveraging credit card data from Mastercard to help close the loop on efficacy. Naturally there was an uproar around privacy focused on the notion that “People don’t expect what they buy physically in a store to be linked to what they are buying online”. I’m of the view that the distinction between online and offline experiences will erode, and in fact people expect what they buy in store and what they buy online to be viewed together. The more experiences that remove friction out of the system the better, and getting introduced to new, more relevant products via an understanding of spend will be commonplace. Over time the value in payments will not be interchange but data, and companies positioned to deliver customer value through that data will win.
Berkshire Hathaway confirms investment in Paytm parent One97 Communications
The Oracle of Omaha is turning into the Buddha of Bangalore? Sort of. Berkshire Hathaway, the storied firm founded by Warren Buffett, this week announced in investment in Indian payments unicorn Paytm. Unique because this marks the firm’s first foray into the ‘fintech unicorn’. This investment, which apparently only took one meeting and 2 phone calls to close, is expected to help Paytm strengthen its market leadership against Flipkart-owned PhonePe and Google’s Tez, and what is likely to be competition from Facebook owned WhatsApp, as well as Xiaomi Pay.
Amazon Pay acquires personal assistant platform Tapzo
Amazon buying a personal assistant startup wouldn’t normally make big news but what’s interesting here is that it’s specifically noted that Amazon Pay acquired Tapzo. This signals a move to improve and widen the scope of the payments offering, which makes sense in concept. Very curious to see how this plays out in terms of consumer offering.
Airlines Cash In on Loyalty Credit Cards
“Loyalty, loyalty, loyalty” raps Kendrick Lamar. Airlines have taken heed, inundating (read: spamming) customers with credit-card offers and it seems to be working. American Airlines did $1.7bn in revenue in Q2 from their loyalty cards program, up 7% Q-o-Q. Last year non-fare revenue including loyalty and things like bag fees made up 11% of total revenue for airlines globally, up from 5% in 2010 (which probably explains why we are so much more frustrated flying these days…). It’s amazing what people will do for that extra shot at a free flight or upgrade.
Counterfeit fraud at U.S. chip-enabled merchants down 75%
Visa released stats this week that show EMV penetration continues to expand in the US, with the number of EMV enabled merchants reportedly sitting at 3.1m as of the end of June, up 400k from the end of December. Slow and steady apparently wins the race, just in time for the next payment type to come around…QR code maybe?
Technology
Left for your enjoyment.
India Pushes Back Against Tech ‘Colonization’ by Internet Giants
Indian politicians and bureaucrats, like those around the world, are becoming increasingly uncomfortable with US tech companies’ dominance in the market. Indian politicians, like those around the world (including in the US), are also seemingly envious of the power that the Chinese government has over its citizens.
As India sets the new rules of the game, it is seeking inspiration from China. Although India does not want to go as far as China, which has cut off its internet from the global one, officials admire Beijing’s tight control over citizens’ data
This makes for an interesting environment to operate in for companies with global aspirations. It’s all about aligned incentives.
Microsoft to Require Its Suppliers, Contractors to Give Paid Family Leave
Large companies are starting to mandate their contractors and suppliers follow some of the benefits and policies FTEs of the organization receive, despite increased costs associated with service. Microsoft announced this week it will soon require its suppliers and contractors to provide at least 12 weeks of paid time off to new parents.
Random Tidbits
It's Story Time
An incredibly entertaining, at times laugh out loud, read by Joel Embiid, superstar NBA center for the Philadelphia 76ers, talking about his journey to the NBA from Cameroon. Worth a few minutes if you are looking for something to smile about!
“The Wind Cave”
Some exquisite writing by famed Japanese writer Haruki Murakami, adapted from his upcoming novel “Killing Commendatore”, about a older brother dealing with the loss of his younger sister. I’m also including the New Yorker interview with the author about the story.
There are three types of emotional wounds: those that heal quickly, those that take a long time to heal, and those that remain with you until you die. I think one of the major roles of fiction is to explore as deeply and in as much detail as possible the wounds that remain. Because those are the scars that, for better or for worse, define and shape a person’s life. And stories—effective stories, that is—can pinpoint where a wound lies, define its boundaries (often, the wounded person isn’t actually aware that it exists), and work to heal it.
David Foster Wallace on John McCain: ‘The Weasel, Twelve Monkeys and the Shrub’
John McCain passed away last weekend the days that followed have been full of tributes and praise for a man who, by an overwhelming majority of accounts, upheld the very best of American values. This profile was written by the late author David Foster Wallace in 2000, and while ‘ancient’ in the up to the second breaking news cycle of today, is not only a magnificent piece of writing, but one of the best looks at John McCain I’ve read.
Quote I’m Thinking About: Facts that challenge such basic assumptions—and thereby threaten people’s livelihood and self-esteem—are simply not absorbed. - Daniel Kahneman