John Smith

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On November 30, 2017, John Smith commented on The Drowning Power Grid: CenterPoint’s Plight to Keep the Lights On :

Interesting read. I wonder whether there’s a way to quantify the amount of lost economic activity due to power outages from these superstorms, and then use that figure as a negotiating tool when trying to convince local governments to help underwrite the capital projects necessary to flood-proof the substations. I also wonder whether alternative power sources, like solar for example, can play a role in reducing the reliance on certain substations in general. If alternatives can help diversify sources of energy in times of crisis, I wonder whether the correct approach involves both proactively fortifying existing infrastructure while encouraging new, flood resistant sources of energy. Finally, what shocks me after reading the article is the scale of devastation that arises from a relatively small percentage of the substations flooding (<10%) — imagine what would happen if far more substations were effected!

On November 30, 2017, John Smith commented on Smaller Engines Fuel Future Growth :

Great read. I think this is a particularly interesting strategic decision because it requires selling a new value proposition to the consumer — environmental friendliness — and hoping that this value will offset some of the concerns about this being a first-time engine. When you think about a plane’s critical task/customer promise, I have to believe that it’s getting passengers to their destination safely, quickly and enjoyably. To the extent this engine can do all those things, perhaps the eco-friendliness of the engine will be a sales catalyst — but if the fact that this is a first-time engine casts doubt on the fundamental customer promise around safety and reliability, I wonder whether this decision will fall flat.

Very interesting read. One question that I have is what Amazon’s entrance into this market will mean for drug prices. If Amazon thinks the potential prize for “winning” at prescription drug distribution is big enough, what’s to keep them from effectively subsidizing prescriptions and bleeding traditional pharmacies out of the market, or at least out of the online market? I agree with other commentators that CVS would be wise to focus on a more holistic approach to healthcare and wellness, and that by owning patient care more generally, they can potentially fend off the challenge. My personal, broader view is that this transition to online drug delivery will be slow to materialize, as it may require a generational shift in buying habits; older people who make up the majority of prescription demand may be slow to trust Amazon to deliver their drugs, whereas younger patients may find that proposition less frightening.


The article raises really interesting questions about how digitalization will effect the future of fast casual dining. One area that might be interesting to think about is how digitalization is going to fundamentally change the physical footprint of restaurants. That is, how do your space needs change when your customers order via kiosks and your bottleneck shifts to the kitchen? Do you need larger kitchens? Increased waiting areas? How do you manage the flow of people and what design changes will be necessary to existing layouts?

For delivery orders, I think it’s worth asking whether you need the retail store at all. Should you produce those orders in the retail store, or does it make more sense to produce those meals off-location in cheaper real estate? The retail location originally served as the place where the business could meet its customer, but now that digital technology can enable that meeting, it makes sense that the real estate needs — and the dramatic costs associated with them — will change. I’d venture to guess that many digitally-enabled, fast casual restaurants will open up commissary type locations that only produce food for delivery; why should they continue to pay high retail rents when they can produce the same food on the second floor of a drab building?

While I think you’re right that Patheon should educate customers on the benefits of manufacturing APIs domestically, if they are serious about investing in increasing domestic capacity, they also need to engage with regulatory and governmental bodies in an effort to encourage domestic production from the “top down”. Patheon could frame the production of APIs domestically as a “national security” issue in that a nation needs to be able to produce the drugs necessary to provide for its populace. By actively lobbying the government and appealing to their nationalist sentiments, Patheon could help facilitate the potential domestic production market opportunity instead of waiting and hoping that it will materialize. Like an activist investor, they need to help “catalyze” the change that they want to see in order to create value and justify their investment in increased capacity.

On November 30, 2017, John Smith commented on Nike Tries to Outrun Nationalism :

After reading the post, I wonder about how countries (and especially China) will think about a given company’s nationality in the event of a trade war. That is, is Nike an American company because it’s based in Oregon, or can you make the argument that if the majority of their manufacturing is overseas, they are really a global company. The answer to that question is important, because the tariffs you’re worried about could be levied against Nike regardless of where they manufacture; isolationism could convince countries that they need to protect domestic companies over American ones, regardless of where the American company is manufacturing its goods. Moving production to a given country, then, doesn’t necessarily solve Nike’s concerns about isolationism and potential trade wars — they could be penalized regardless of their place of production.