Rishi Taparia - Issue #65
This week we look at retailers’ use of facial-recognition technology, China Union Pay’s continued dominance as a payment scheme, Bytedance’s monster fundraise, Amazon’s ad business, the politics of the Silicon Valley, screen time for kids and more. Enjoy!
Commerce
Retailers Are Using Facial-Recognition Technology Too
Discussions regarding facial recognition technology often take an Orwellian turn, the lack of privacy and fear of governments watching and controlling their citizens habits and behaviors quickly coming to the forefront with the Chinese government’s use of facial recognition and a social credit system as the oft cited example. But what about private businesses and their use of the technology? In the US, use of facial recognition technology is actually quite unregulated (Europe’s adoption of GDPR having recently changed the approach in that region). According to this piece, retailers are using the technology en masse.
…most stores, from bodegas to shopping malls, already have most of the technology in place to start tracking customers: not just the scores of security cameras in an average big-box store, but also the cameras inside digital signs and kiosks, which show whether shoppers are paying attention to ads.
Should customers be informed that a ‘physical cookie’ is being created for them?
Amazon’s ad business is both alluring and dangerous
Amazon’s Q3 earnings were lackluster from a sales perspective, but in the middle of all the commotion and a major share price drop, was an important bright spot - ads. Their ad business grew to $2.5b in revenue in the quarter and with margins that are rumored to be as high as 75%, is quite the cash cow. According to research, over 8% of views on Amazon product pages came from ads, up from 4% a year ago. Should Amazon become reliant upon this revenue stream, the user experience will deteriorate. They will need to find that fine line and do it quickly, or risk killing their best feature yet - efficient commerce.
FinTech
UnionPay maintains its position as the world’s largest card scheme
New research out this week on card penetration with some tremendous stats:
15 billion payment cards in circulation globally (up 6% y-o-y)
China UnionPay is still the world’s largest card scheme with 44% of the global cards are on the scheme (Visa is 21%, Mastercard is 16%)
The Chinese government regulatory environment will only serve to improve the CUP penetration in country as banks are now largely only issuing CUP branded cards (previously V and MC cards were co-branded CUP)
The $10 Billion Tussle Over Walmart’s Credit Cards
Store credit cards have traditionally a very profitable part of a bank’s business. However, with store cards seeing increasingly shrinking share of wallet, banks need to rethink their strategy. No one is feeling that more than Synchrony Financial, the largest issuer of store cards in the country. Some insight into their negotiations with Walmart, and how they lost out to Capital One.
Technology
Your startup is not your baby
The comparison between building a company and raising a child is made often, and for good reason. The reality: your startup is not your baby. The level of attachment and approach to decision making shouldn’t come close.
Bytedance Is Said to Secure Funding at Record $75 Billion Value
We have a new mega startup (if you can call it that), this time unsurprisingly, out of China (this article calls it the most highly valued privately backed startup but I believe that’s inaccurate since Ant Financial is private and is worth 2x but that’s besides the point). Bytedance, maker of an AI driven news aggregator Toutiao (think AI driven Buzzfeed, customized for your own tastes to the point where headlines will be adjusted on a person by person basis) and Tik Tok, a content site focused on short form video similar to Dubsmash. The company is said to have done $2.6bn in revenue last year, going to $7.2bn this year, and has similar levels of user engagement as Tencent’s WeChat.
Steven Pinker: AI in the Age of Reason
Steven Pinker and Lex Fridman discuss AI and why Pinker thinks that the perceived existential threats that AI bring are largely overblown.
Threat number 1: AI takeover - just as we subjugated animals, if we build something more advanced than us, it will subjugate us. Pinker argues this this confuses intelligence with a will to power, and there is no reason to believe that a machine built for problem solving would have this in mind..
Threat number 2: Collateral damage - AI will perform an assigned goal so well (curing cancer for example), that it will destroy humans (the way to cure all cancer is for there to be no humans). This assumes that humans will be so brilliant that we will be able to create a system that can cure cancer, but won’t specify what we mean when we say “cure". It also assumes that the system will be so smart that it will cure cancer, so idiotic that it can’t figure out that what we mean is not killing everyone
A fascinating conversation.
The Changing Political Economy of the Silicon Valley with Reid Hoffman
A wide ranging conversation between Azeem Azhar and Reid Hoffman that touches on rapid scaling, the need for cognitive diversity at companies and how governments and tech companies can work more closely together.
Silicon Valley is this cocky teenager. […] As we grow from a teenager to adult, we need to say: “We have a lot of power and influence and we need to be responsible stewards of that power and influence; not just retrospectively but also proactively.”
Random Tidbits
A Dark Consensus About Screens and Kids Begins to Emerge in Silicon Valley
Two articles (this and the below) on screen time for kids. As adults we are constantly on our devices, connected and plugged in whenever we want. Kids these days are going to be ‘digital natives’, growing up with as opposed to transitioning to this way of life. Increasingly it looks like parents are taking a no screen time policy and enforcing it very strictly (see below).
Silicon Valley Nannies Are Phone Police for Kids
Making sure kids aren’t spending time in front of screens is serious business.
The nanny spotters, the nanny spies,” said Ms. Perkins, the UrbanSitter C.E.O. “They’re self-appointed, but at least every day there’s a post in one of the forums.”
The posts follow a pattern: A parent will take a photo of a child accompanied by an adult who is perceived to be not paying enough attention, upload it to one of the private social networks like San Francisco’s Main Street Mamas, home to thousands of members, and ask: “Is this your nanny?”
Why can't more than four people have a conversation at once?
Apparently there is may be a reason that after you get more than 4 people at a table, engaging in conversation becomes a lot more cumbersome. Our conversational skills may have evolutionary roots - no one wants to feel left out.
What if, the researchers argue, there was an evolutionary advantage to not being “outnumbered” in a conversational group? The physical danger of being an isolated outcast is clear: exclusion from society in early human history could easily be a death sentence, and even most observed cases of lethal chimpanzee violence have happened when aggressive groups encounter a lone chimp.
Quote I’m thinking about: “There are heroes and schmucks in all worlds. The most important thing is whether you are willing to engage in moral struggle against yourself.” - David Brooks