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I think these are all great points and address them individually:

– The tariff’s are in place to “even the playing” field to account for the Chinese government subsidies. The assumption is that the Company is losing money by selling products “below cost,” and is only an economically viable entity given these subsidies. If the Company were to move to the US, it could still produce at an economically viable price, but it’s costs would be similar to what the “effective” rate is after the tariff enforcement. As a result, the government subsidies would be non-existent and the Company would have successfully circumvented the tariffs.

– The Company operates very lean at the moment, and by outsourcing critical components of the supply-chain, it would definitely erode margin versus more fully, vertically integrated competitors. However, the market in the US is currently a duopoly, and as a result, pricing still leaves a legitimate margin, which would normally compress given another competitor entering the domestic manufacturing market.

– Outsourced manufacturing for this product, while difficult at first, would be relatively easy given the type of equipment is common throughout the “contract manufacturing” market and has multiple purposes. I recommend an outsourced strategy, at the initial stage, to test the market temperament in the US and trial an asset-light model to see if the margin is there to make it worthwhile to invest in a fully-owned, vertically integrated play.

– As it pertains to the regulatory framework, this actually benefits the Company. The largest state for highway miles and public funding is the state of Texas. Texas has a law in place that does not allow for patent protected products to be put up for bid or used on public projects. This actually hurts the largest player in the industry, which has by far the best-product, but is limited in it’s deployment in a number of key states. As a result, a lower quality substitute, biaxial geogrid, has far greater market adoption and usage.

– While I agree that the idea of protectionist behavior is a reasonable discussion, the tariff’s themselves “protect” domestic employers and manufacturers from competing on an “unfair-cost” basis with entities that are subsidized by foreign governments. Bostd ended up with a higher effective rate than several other competitors, but was lower than the broader market. The reason for doing so is because by testifying and providing a response to the petitioners, they were able to prove that they were losing less money than what was applied to the broader market, such as competitors that did not respond.

Is it safe for Sovcomflot to make a significant up-front investment in vessel construction, taking advantage of acceleration in the loss of Arctic ice?

Based upon the information in the text and sources you have referenced, I believe that the Sovcomflot should undertake the up-front investment in vessel construction. However, I would recommend, given the long lead times to build LNG capable carriers that the investment should be scaled back from the 15 vessels it is currently undergoing. In addition, I should note that I assume that the Russian government will be rational about this investment, instead of plowing billions of dollars of government funding with non-traditional/industry operating motives.

Or should Sovcomflot be prepared to modify its level of commitment on LNG project in anticipation of new shipping laws addressing navigational safety and global warming, possibly imposed by international organizations such as International Maritime Organization (IMO)?

I think that the vessels should be outfitted with the ability to adapt to potential changes in shipping laws. While adding in this functionality may be difficult, I would recommend that Sovcomflot conduct full diligence on expected changes in the industry and invest in providing fitting capabilities for any potential changes that can be expected within a 30 year window (assuming that is the useful life of the vessels).

On November 28, 2017, HR commented on GameOver for GameStop? :

One, this is a fascinating approach for a nerdy topic. I think GS could use someone like you heading up Corporate Strategy.

Are there examples of distributors that, like GameStop, have been disintermediated by their suppliers + customers?
I think every retailer that has been impacted by Amazon would fall under this, but Blockbuster would be the most obvious example.

Are there examples of retailers that have successfully found alternative uses for their retail footprints?
The fact that they do not own their retail footprint and that is is located in mall/strip mall environments, which are experiencing gradual reduction in headcounts makes this a tough trend to reverse. I’m grasping at straws here, but how about movie theaters changing their revenue mix from being based upon ticket revenue to being concessions and advert focused?

What other ways can GameStop pivot to remain relevant with its customer base?
How about becoming the training academy for eSports teams? It could organize local leagues, akin to Little League, and hone the talent in a European soccer or LatAm baseball “academy” style.

On November 28, 2017, HR commented on Rent the Runway: A Trendsetter Behind the Scenes Too :

Fascinating topic and given the complexity that “fast fashion” has brought to the supply-chain, having the infrastructure in place to react is critical to sustainable success. During your post, you referenced servicing from a retail locations. Did you propose doing this as the Company gained scale or in highly-populated metropolitan areas where the Company has an incumbent presence? Currently, one of the Company’s largest fixed cost is it’s leasing operation in Manhattan. While profitable growth may not be nearly as relevant in the era where a Company with de-minimis assets and little profitability can be valued at 10x revenue, it should be considered to what is the best source of growth for the Company’s multi-facted strategy moving forward.

Would you prefer having an Amazon model, with DCs located outside dense, highly populated areas, with shipments to the retail footprint within the city, or having an retail/DC located in epicenter of the fashion district?

As it pertains to your first question, RTR is essentially a logistics company. The tangible asset side (re: used inventory) of the equation has little to no liquidation value. This Company is an asset rental business that just happens to operate in the fashion industry, however user engagement is very attractive and market penetration is low. As the Company expands into selling fashion items to consumers, which it already has, an inevitably the private label discussion comes up, I don’t see how you would not invest in upgrading the technology side. The Company was not created to only be a rental business for high-end fashion, and in order to succeed at mastering it’s first offering and prove out market viability, it has to invest in order to raise additional capital and become the business it will ultimately become.

On November 28, 2017, HR commented on Cuba Libre: Airbnb’s Approach to Diplomacy in Cuba :

I have traveled Cuba and stayed in the three most common choices: (i) casa particulares, (ii) Airbnb, and (iii) government owned hotels. While I would rank my stays in that particular order, I would say that given the environment in Cuba, this is tough topic. In an ideal world, this is never an issue, but here we are.

I’m not entirely sure what the outstanding questions are. Do you think there’s a potential issue with raising someone’s income by more than 10x from the currently government subsidized wages ? If so, who’s responsibility is it to educate the citizens of Cuba on how to handle the influx in cash? If you’ve visited Cuba, you know there is a paper trail and every dollar is stringently accounted for, which can force Western Union to be the usurious lender of last resort. On a positive note, maybe Airbnb has led to a more economic peer to peer lending environment down there!

For the author, your footnote 7 references an AirBnb website which uses this link ( Given this, even when taking into account a 77% increase in US tourism, US tourists accounted for less than five percent of all tourists in 2016. By AirBnb entering the market, are they increasing market prices and squeezing out the largest base of tourists in Cuba, Russians, and Canadians? Is it possible that by AirBnb entering the market, they are causing more harm to the local economy in citizens, and instead profiteering from a “humanity” based mission?

On November 28, 2017, HR commented on Hubble Contacts in an Era of Isolationism :

I would be remiss if I didn’t think that the sole supplier strategy was a risky proposition to begin with. Potential tariff’s aside, I think that exploring a dual-vendor/sourcing strategy would be key. I understand the qualification process is stringent, but at some point, St. Shine would reach capacity and there would need to be another vendor.

Perhaps this would be the right time to raise a round of outside funding and vertically integrate, building a facility in Mexico or Puerto Rico. The costly macciadora laws that had prevented Mexico from gaining manufacturing jobs have subsided as tax code experts have found ways to minimize value leakage and Puerto Rico is the fifth largest area in the world for pharmaceutical manufacturing. There are significant corporate tax benefits to being a Puerto Rican domiciled company versus even a Delaware domiciled company. In addition, pharma jobs on the island have been fleeting in recent years given the “brain drain” to the mainland and unemployment is at a relative high. I would highly recommend evaluating the Puerto Rican route, as it seems to be a good fit to the proposed issue, however the cost of labor issue might still be a problem.

On November 28, 2017, HR commented on US Isolationism Takes Flight to Ground Bombardier :

Under U.S. laws, this clearly falls under the ITCs definition of “dumping,” which in a few words can mean two things (i) imports that are sold in the United States at less than Fair Value or (ii) which benefit subsidies provided through foreign government programs. This case clearly validates both, per your article, and in addition, under the same definition, there is no reference to a “competitive” product under the filing complaint, but just that the petitioner is an “industry participant”.

On another note, the “innovative upstart,” Bombardier had over $16 billion in revenue (USD). To be fair, the Company has been exploring divestitures for the past few years and is liquidity constrained. The Canadian government was making an investment from having one of it’s largest national employers file for insolvency should it not have made those investments. However, if the Canadian government allowed the Company’s aircraft subsidiary to file for bankruptcy, the subsidies by Canadian and Quebec would not have fallen under “dumping” statues. Now to address the underlying issue, the situation is completely messed up. This as an industry issue, as it is industry standard to under-project costs in order to win contracts. The Company did not properly project cash flows and needed help from the Canadian government, given their credit documents, they could not take a “rescue loan,” and were forced to take equity.

Under all of these assumptions: Why didn’t the Canadian government try to find an equitable solution, instead of forcing the U.S. government’s hand? Anti-dumping laws were already getting more stringent several years ago. Should Canada get a pass on complying with U.S. International trade laws?