Rishi Taparia - Issue #79
This week we explore Stripe’s most recent fundraise and what it means for the economic downturn, Apple’s retail boss and her views on the future of retail, the technology that predicts polar vortexes (and other weather events), the geographic impact of climate change and more. Enjoy!
FinTech
Stripe raises $100 million from Tiger Global at $22.5 billion valuation
Stripe knows something we don’t know. Well, in reality Stripe probably knows a lot of things we don’t know, but in particular, something about the impending economic downturn. This week Stripe raised an additional $100 million from investment firm Tiger Global Management boosting its valuation to $22.5 billion. Good for them right? Slightly strange given they just raised $245m at a $20bn valuation late last year, with this round being led by the same existing investor who led their last round. Who knows, Tiger could have seen numbers and said, “Ok look, I know we just got married but can we renew our vows again because it was so much fun the first time?” However, a few weeks ago in a seemingly innocuous press release Stripe also announced a partnership with Funding Circle, bringing the UK based lender who went public last year on as a ’financing partner’. This implies that Stripe is now NOT (yet) getting into the lending business themselves. Unlike rival Square who has seen their share price run up massively thanks to the success of Square Capital, Stripe is actively taking steps to stay out of that business. Stripe has all the pieces they need to build what one can only imagine would be a solid lending business - a captive customer base, risk models, money movement capability and access to the capital markets - and yet are choosing to leave it (and the lucrative business that comes along with it) to others. That, coupled with the additional capital, seems too coincidental. Which gets us back to the start - Stripe knows something we don’t. It will be wise to pay attention.
UK fintech shuts US operation to save Chinese deal
In any big breakup friends of the couple are forced to choose sides, usually going with the ‘original friend’. Unless of course the other person happens to be cooler and more fun to hang out with, in which case it’s “see you later old friend, I like your ex better.” In the on again off again trade war between China and the US, companies are too forced to choose sides, and in this case it is all about the money. WorldFirst, a British money transfer business, has “abruptly closed its US operation in an attempt to avoid having its planned £700m takeover by China’s Ant Financial derailed by American regulators”. After US regulators blocked Ant Financial’s takeover of Moneygram which led to a collapse of the Moneygram stock (it’s down 83% in the last year), who can blame them. Companies wanting to do business with China are going to have to tread very lightly and think long and hard about which side they want to choose in this little spat. One wrong move and you could end up off the dinner invite list all together.
Consumers’ Move Away From Cash Purchases Boosts Visa Profits
Life is still good as a payment network. Visa reported strong earnings this week, driven by growth in payments volume as more consumers use cards to make purchases. It did warn that political uncertainties could affect consumer spending, but that’s just because they had to. The reality is payments is relatively recession proof. People will always need to spend money and for now, they’re still doing it on Visa.
Commerce
Retail is broken. Apple's Angela Ahrendts has a plan
A terrific profile on Angela Ahrendts from Vogue. After turning round the fortunes of Burberry, Angela Ahrendts joined Apple and is five years into reimagining Apple’s bricks-and-mortar presence - no small feat considering Apple has been so far ahead of the curve on retail already. Following on to Steve Job’s vision of retail - “Your job is not to sell, your job is to enrich their lives and always through the lens of education” - Ahrendts is now focused not on the aesthetic of the store, but what the space itself means. She’s also focused on technology, trying to ensure learnings are shared across stores in more real time.
At 506 stores around the world, Apple staff start their day with an app called Hello, which briefs them on the most important “need to knows” of the day, often featuring videos from Ahrendts and her team. A second app, Loop, functions as an internal social network where staff can share learnings with each other. “Someone might be selling more phones than anybody else and we ask them to share that on a 20-second video on Loop,” Ahrendts explains. “We use auto-translate and everybody in the world can see what Tom in Regent Street is doing. It’s a huge unlock, just getting all the stores to talk to one another.”
From dead mall to Amazon warehouse: Here's how shuttered retail stores are getting a new life
So long retail, hello manufacturing and logistics. A study conducted by commercial real estate giant CBRE found two dozen examples of properties across the country that were once home to retailers but now have turned — or are in the process of being turned — into industrial centers. Since 2016, at these 24 locations, 7.9 million square feet of retail space has been converted into 10.9 million square feet of industrial space. Everyone is looking for more storage and warehouse space, with UPS and FedEx in particular actively growing and expanding after monster earnings, in no small part thanks to increased ecommerce spend. Your Amazon boxes, coming to a mall near you?
How the Amazon effect is disrupting e-commerce logistics
Amazon is the rising tide that is simultaneously lifting and sinking many boats. Inbal Axelrod, co-founder and CMO at MyRouteOnline, explains how retailers must gear up and prepare for more shift and change in the market with a core component - logistics and services - needing to be focused on more than most.
Technology
Polar Vortex 2019: Why Forecasts Are So Accurate Now
Parts of the US experienced shockingly cold temperatures this week, with poor souls having to brave temperatures as low as -60 degrees F. The remarkable part about this is it was accurately predicted. The polar vortex is just the latest example of how reliable five-day forecasts have become thanks to a combination of technology, models, satellites and dedicated meteorologists.
Frozen Lake Michigan. Source: @DavidPFunk
How Do You Count Every Solar Panel in the U.S.? Machine Learning and a Billion Satellite Images
Algorithms for counting solar? Solar adoption has seen a tremendous uptick over the last 10 years thanks to the cost of install having dropped by more than 70% and recent utility-scale pricing being competitive with all other forms of generation. However, the true numbers of solar installs have long been estimates. Now, Stanford’s DeepSolar project uses an algorithm to examine satellite images and identify solar installations and to the surprise of many, the actual number is higher than estimates projected.
Alphabet's Verily has been working on health-tracking shoes to measure movement, weight and falls
Shoes that can do more than help you jump higher? Alphabet’s Verily has pitched potential retail partners on the health-tracking shoes, which are still early in development. The broader trend of technology getting more intimate and embedded is one to pay attention to, particularly as the cost of manufacturing has come down. Don’t be surprised if one day you get an alert on your phone from an old hoodie telling you to put it on because it misses you.
Random Tidbits
Inventing the Future: My Interview With Lux Capital’s Josh Wolfe
An insightful conversation between Shane Parrish of Farnam Street and Josh Wolfe of Lux Capital. I’ve admired Josh and the Lux team’s approach to investing and theses development, and in this discussion he talks about how he finds and evaluates ideas, randomness and opportunity, managing risk and being a parent.
How the geography of climate damage could make the politics less polarizing
Climate change is going to affect everyone, and is likely to be the defining problem of this generation. Unfortunately a lot of the discussion is not about solutions but about whether it’s really a problem, with one political party a bit slower to come up the curve on climate than the other. A report out by the Brookings Institute this week on the geographic impact of climate change around the country will hopefully help drive the debate in a more positive way. Tl;dr - red states are likely to be more severely impacted by changing climates.
Good Things Happen in Book Stores
An ode to bookstores, “a haven and a lighthouse guiding us beyond the catastrophes and discord of our daily lives.”
Quote I’m thinking about: “Do not waste energy, but convert it into a more useful form.” - Wilhelm Ostwald