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On April 30, 2018, JSG commented on Wayfair – A Zillion Things Home :

Thank you for the post! I’m curious as to whether the unit economics of its 1P services are and will ever be profitable. As it moves towards TV advertising, my worry is the Company is dumping tons of money to acquire new customers. Furthermore, the inventory costs are expensive, esp for unprofitable companies that dont have access to the cheapest forms of financing. So far the market has turned a blind eye to Wayfair’s cash burn, but investor mood can change quickly.

Unless they can feasibly use technology to improve their cost structure, I’m super bearish on Western Union. Their bread and butter business is charging hefty fees on remittances and their core advantage was a network of retail outlets and agents across the US and partners around the world to get cash from one family member to another. That system is fine in a cash based economy, but is becoming increasingly cumbersome as digital payments take hold in emerging markets. Furthermore, a chain of retail outlets is expensive. Western Union charges high fees since they need to cover rent and labor overhead. Meanwhile, new fintech players like Transferwise are able to offer cash transfer services for a fraction of the price since their operations are 100% online.

On April 30, 2018, JSG commented on Goldman Sachs – A Technology Company? :

Thank you for your post! I think tools like Zephyr are useful for clients but to continue to win mandates, Goldman needs highly reputable senior bankers with deep relationships. For this reason, I believe the advisory role is less susceptible to automation than sales and trading. However, I can envision a much leaner Investment Banking staff as a result of these tools. The skills that make a “good” analyst vs. a managing partner are very different, so firms need to adjust their model to better groom the next generation of leaders.

On April 9, 2018, JSG commented on Gap Inc.: Bridging the Gap between Data & Fashion? :

Thanks for the post! For GAP to catch up to Zara it’ll need a more creative product development approach, but also a complete operational makeover. What makes Zara Zara is the Company’s operational capabilities – high level of domestic sourcing, first rate logistics infrastructure, and retail execution led by empowered store managers. Zara restocks stores once a week and can get a product to market in two weeks, while Gap is stuck on the old 2 fashion cycles a year model.

On April 9, 2018, JSG commented on Tinder romance algorithm: just keep swiping :

I wonder what type of constraints Tinder places in their matching algorithm to increase the “liquidity” of their platform – i.e. the chances that a person responds yes to having received a swipe. Its a little controversial but Match.com changed its algorithm to show profiles that matched the attractiveness of its users, so as to prevent the more “attractive” members from leaving the platform and therefore creating negative network effects. Their research actually shows that customer satisfaction levels increased. However, given Tinder’s transactional approach to dating, I’m not sure whether those constraints would product the same effects.

On April 9, 2018, JSG commented on Winning the Super Data Bowl: Eagles Fly on 4th-Downs :

With regards to the question on why teams forego the data and continue to punt, Malcolm Galdwell had an interesting podcast when he explored why more bad free throw shooters in the NBA don’t take granny shots (statistically it is a better free throw form). The answer came down to the threshold framework. Low threshold teams like the Eagles are less influenced by the crowd and are thus first to adopt technology that goes against conventional wisdom. The higher threshold teams will follow suit and the chances they do increases with each new adopter. I do think the league will eventually converge to the Eagles way, but the pattern of when teams do should tell us a lot about their organization philosophy.

On March 26, 2018, JSG commented on Crowdsourcing for Cash – Cryptocurrency Mining :

Great article! Another example of a company that leverages both blockchain and distributed excess storage capacity is Filecoin which ICOd in September of last year for $257mm. They are essentially a dropbox that allows you to store files on personal computers that form part of the blockchain.

On March 26, 2018, JSG commented on Amazon reviews: Loved, but also to be trusted? :

Interesting read and I guess it makes sense that an entire market is emerging for independent review sites that consumers place greater trust in. Specifically, “The Sweet Home” is one such review site, which does extensive product reviews on many products sold in Amazon’s marketplace. The company was acquired by the NYT and in the press release the newspaper cited the ïntegrity of Sweet Home’s approach as a fit with their own journalistic standards.

On March 26, 2018, JSG commented on Wikipedia: The Ultimate Crowdsourced Knowledge Tool :

Thanks for the post! I think we all have a space in our hearts for Wikipedia. I thought your point on Wikipedia having to take a more active role curating content interesting. The initial plan to allow unrestricted editing may have encouraged early participation levels, but you can see a scenario where it leads to negative network effects – if quality decreases as quantity increases. Opting to place more controls was the right move.

Thanks for the post! I see the larger investments in original content a strategic necessity and one that makes more sense with content creators such as Disney defecting. Interestingly, the more netflix invests in original content, the less it becomes a true “platform” and it starts to resemble a media company with online only distribution, i.e. its becoming a pipeline business like Amazon growing its retail operations. My big question for Netflix is what the maintenance expenses really are, since the company keeps spending tons of money to grow users. The market so far is treating these expenses like “growth” capex, but if it turns out to be maintenance, it becomes a much less attractive business.

On March 4, 2018, JSG commented on 2U: The Education Platform That Got It Right :

Thanks for the post! I find their strategy of charging the student side of the platform counter intuitive and potentially brilliant. Like you mention, the pain of coffing up some money actually encourages students to follow through on their commitment and that is reflected in higher retention rates. Im curious whether they are targeting international students or institutions. For international schools, their content creation strength is an appealling value proposition considering how far behind they are from US based schools. Also, with so many international students coming to the US, often paying full price tuition, demand should be strong for a remote offering.

On March 4, 2018, JSG commented on Lending Club: Platform Success but P2P failure? :

Interesting article and a shame that retail investors in the US are missing out on an opportunity. Meanwhile, the UK, EU and Asia Pacific p2p lending markets are retail investor driven and companies such as Kiva are attracting retail investors in Latin America. I think that is largerly due to fewer regulatory barriers for non accredited investors for those markets. While retail investors in the U.S. arent participating directly, they may still be getting some exposure through institutional holdings.

Great post! Wonder if they’ve made any inroads into emerging markets. Speaking for Brazil’s case – the volatility of energy prices due to swings in water reservoir levels (hydro power is the main power source) – is a major headache for businesses and one that is set to worsen with climate change. I can also see the government backing their entry, which always makes things easier for breaking into a LatAm market.

On February 1, 2018, JSG commented on A community digitally comes together to save Community :

Thanks Pasha. Really interesting to see through your example how content creation is being democratized. Ditto Ross’ point, its interesting how a difference of 7-10 years could have such a drastic difference of outcomes between Community and Arrested Development – another show raved by the critics that through poor slotting and marketing never got the full appreciation of audiences. AD was cancelled but eventually revived on Netlix.

Thanks for the interesting article. One of the views on the Amazon vs. Walmart battle is that Amazon is cornering the urban, middle/upper income class while Walmart will continue to dominate rural areas. I see these added in store initiatives in a way as doubling down on that hypothesis. They have also recently purchased a couple of traditional e-commerce companies – Bonobos and Jet – so they havent completely ceded the opportunity to Amazon.