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Nice post, Yassine. I agree with you that while I love services like Spotify as a consumer, digital music seems to be a super difficult business. Do you think that these companies can really survive as standalone services? I tend to think that Spotify probably could as the market leader, but I don’t really see much room for other players. I see the value that Apple Music could potentially create for Apple’s hardware business, as one could argue that it could increase user engagement with Apple’s high-margin devices (including its new Beats headphones) and increase sales. When I start to think about players like Pandora (which is losing popularity in the US and has limited geographic presence due to licensing restrictions) though, I have a hard time understanding how most of these services compete head-on vs. Spotify. It’d be interesting to see how services like SoundCloud grow and perform financially, as they seem to be more differentiated and target a different market / use case.

On November 20, 2016, ksong commented on Under Armour: Playing the Digital Game :

Great post, Margaret! I had no idea that Under Armour owned services like MapMyFitness and MyFitnessPal. It’s great to see that the company is making a push towards digital.

I’d be interesting to see Under Armour’s estimated sales figures for their wristband tracker, wifi-enabled scale, and heart rate-monitoring earbuds. I suspect that they haven’t been all that successful, and I wonder if they should move away from making some of the hardware. If I think about the wristband tracker market for example, there are so many competitors (and none of them are all that differentiated). Is Under Armour really creating a better experience for users? It’s a tough business with low margins, and we’ve seen players like Nike and Microsoft exit this category in recent years. In the short-term, I would instead like to see the company shift its focus to creating great apps and services that it can push out across all devices.

In the long run, I agree with you that “smart” clothing could be a huge opportunity for Under Armour. I wonder what types of related investments Nike is making and whether Under Armour should more aggressively pursue acquisitions in the space. I think the risk is that there’s a lot of uncertainty in terms of how the market will look in a few years, but it looks like some analysts expect smart clothing to be one of the fastest growing wearables categories. [1]

[1] http://www.androidheadlines.com/2016/06/idc-smart-clothing-eyewear-gain-market-share-2020.html

On November 20, 2016, ksong commented on Behind Moneyball 2.0 Stands STATS :

Thanks for the article. I agree with some of Tarran’s points above. While the STATs data is valuable, how much of a competitive advantage does it give teams if the entire league has access to the database? The Golden State Warrriors became one of the first teams to adopt SportVU (before the rest of the league), and you could make the argument the Warriors were able to get ahead of the curve (by becoming more skilled at analyzing the data). But once the entire league joins in and each team has dedicated personnel for conducting this type of analysis, I’d argue that the service becomes less valuable.

I wonder if there are other ways that STATS can continue to differentiate itself. I know that a lot of teams these days are opting into other wearable devices and services to train their players (e.g., monitors from Catapult Sports that detect pressure in players’ ankles and knees, sensor-equipped sleep masks to help combat jet lag). [1] Could STATS look to acquire any of these types of companies or perhaps partner with them so that they can integrate their data more seamlessly? Another idea is for STATS to partner with a company like Twitter (which now has broadcasting deals with the NFL) so Twitter can create a more differentiated viewing experience for its viewers.

[1] https://www.cnet.com/news/golden-state-warriors-use-their-tech-advantage/

On November 20, 2016, ksong commented on Topps Baseball Cards: A 25-Year Digital Rollercoaster :

Awesome article, Brian. As someone who was really into baseball cards as a kid, it was super interesting to read about how Topps is looking to transform itself! The BUNT 2014 sales numbers on the App Store are pretty impressive, but I wonder how they break out across demographics. Is BUNT just capturing revenue from older users (people who used to love baseball cards as kids), or are they actually engaging the younger population as well? I know that baseball is becoming much less popular among kids today, so I wonder how many kids are actually interested in this type of digital product. [1] Have the NFL and NHL apps had similar success?

I’m somewhat skeptical that Topps can survive this type of digital transformation alone, and I think they need to look more aggressively into partnerships. Since Topps doesn’t own any sort of differentiated IP and instead relies on the leagues and players, it is hard for them to transform itself rapidly the way that a product like Pokemon has over the years. Could Topps look to partner with companies like Electronic Arts or Take-Two Interactive in order to provide some sort of integrated video game-trading card product?

[1] http://www.wsj.com/articles/why-baseball-is-losing-children-1432136172

Great article, David! I wrote my post on M-Pesa as well, but specifically on its impact on Kenya and Safaricom. I thought that your perspective on why the service is failing to pick up in other countries was very interesting.

I agree with you that the next biggest thing for Safaricom in Kenya is for it to open up its APIs for third-party developer integration, and the company has taken the right first steps in doing so. I’d argue that the company needs to be much more aggressive in this. There still seems to be some concerns about how seamless the integration process really is for developers, and that’s preventing some developers from working with M-Pesa. [1] It’ll be interesting to see how this all plays out.

I like your list of the reasons why M-Pesa (and similar mobile payment services) are failing to gain traction in other markets, and I think the interesting thing is that you need to assess the reasons on a country-by-country basis. I don’t think that Vodafone can necessarily replicate the success of Safaricom by using the same playbook as in Kenya, and I’d argue that at a high level this is probably the biggest reasons for its failure. For example, at M-Pesa’s launch in South Africa, roughly ~70% of the populations already had bank accounts, and a lot of alternative mobile payment services already existed. [2] First of all, I’m not sure it even made sense for Vodafone to launch M-Pesa in this type of environment, but even if it were to do so it should’ve focused more on setting up a broader infrastructure of retail agents. At launch, there were only 6,000 agents in South Africa; given that the financial institutions were more mature in this market, I think that Vodafone needed a broader reach to create real value for users. Across countries, especially in areas with more developed financial institutions, working with regulators will also be very important. I agree with you that Safaricom faced extremely favorable (and unique) regulatory conditions in Kenya.

[1] https://www.cgap.org/blog/just-how-open-safaricom%E2%80%99s-open-api
[2] http://qz.com/467887/why-south-africas-largest-mobile-network-vodacom-failed-to-grow-mpesa/

On November 7, 2016, ksong commented on Chocolate Challenged at the Origin :

Zach, thanks for the awesome post. I did my project on Starbucks, and it looks like the cocoa and coffee industries are facing a lot of the same issues in terms of climate change!

One thing I’d add is that Barry Callebaut seems to be taking the approach of collaborating with a lot of the other players in the supply chain, not just directly with the farmers (e.g., with Mondelez, Mars, Nestle): http://www.confectionerynews.com/Markets/Mondelez-Mars-and-Nestle-back-sustainable-cocoa-program. I wonder if, by pooling their resources together, these companies can set and achieve more aggressive sustainability goals. In the coffee industry, for comparison, it’s primarily Starbucks setting the tone–working 1-on-1 with the farmers, building its own farm in Costa Rica (used for R&D on new hybrid coffee plants), etc. Based on Brian’s post on Hershey, though, it seems that there’s some skepticism around how serious some of the large chocolate manufacturers are in terms of long-term sustainability (at the expense of short-term profits). Would be great to hear how each of you guys think your respective companies fit into the broader cocoa supply chain.

On November 6, 2016, ksong commented on Climate Change and the Future of General Mills :

Roanna, thanks for the post! A few thoughts:

I know that almost every company nowadays has its own “sustainability initiative,” but General Mills actually seems to be setting legitimate targets–which was great to see. I’m not sure if you saw, but there was a recent independent report by Oxfam International that claimed that General Mills’ GHG emission targets are based on credible methodologies and that the company’s sustainability plans are indeed achievable. [1] The report concluded the same about Kellogg’s aggressive sustainability initiatives (by 2050, planning to cut its own and suppliers’ emissions by 65% and 50% respectively). [1]

Given that Kellogg’s seems to be making very similar investments, I would argue that General Mills should focus more on supporting its suppliers vs. utilizing resources to educate end users. I appreciate your point about consumers being willing to pay more for environmentally-friendly products, but I wonder how well these dynamics apply to commoditized products like cereal. Regardless, even with the admirable steps that General Mills is taking, I don’t think that consumers would necessarily “vote with their dollars” for General Mills if the other major players are moving in the same direction.

[1] https://hbr.org/2016/06/how-general-mills-and-kellogg-are-tackling-greenhouse-gas-emissions

On November 6, 2016, ksong commented on “Fake snow”: longer ski season, but at what cost? :

Thanks for the post. This seems to be a super tough challenge that ski resorts are facing. It’s great to hear that some of these resorts are investing in various green initiatives, and hopefully these efforts will help mitigate some of the environmental risks in the long-term.

In the short-term, however, I wonder if ski resorts need to instead rely more on innovative business models and marketing tactics to help consumers stayed engaged with the sport (despite poor snow quality, shorter seasons, etc.). These steps may need to be taken for the resorts to remain in business, and perhaps they can even hedge against the risk of shorter ski seasons by diversifying further (e.g., using their facilities for other types of activities).

On November 6, 2016, ksong commented on Coca-Cola: Keep Your Soda Cold (Sustainably) :

You discussed how the preservation of natural resources should be a top priority for Coca Cola, and I totally agree that hedging raw material price spikes with futures makes a ton of sense for the company in the short-term.

In the long-term though, I think that Coca Cola needs to work closely with suppliers. I would argue that they need to help farmers implement more sustainable farming practice, invest further on research and development of disease-resistant crops, etc. Because Coca Cola is such a diversified company with hundreds of different product types (and partners), I could see this being a challenge. It looks like the company is already taking steps to working with the farming community (http://www.coca-colacompany.com/coca-cola-unbottled/cop21-series–climate-talks-should-include-crops), but I wonder what is the best way to go about these initiatives. How should they think about prioritizing certain partners, crops, and product types?

On November 6, 2016, ksong commented on BMW’s Hydrogen Fueled Future :

It would be interesting to understand in further detail the fully-burdened environmental impact of hydrogen fueled vehicles, and how exactly BMW is thinking about them (vs. electric cars). I know that people like Elon Musk have been extremely critical of hydrogen cars in the past (pointing to the low efficiencies associated with splitting water, compressing or liquefying hydrogen, etc.). Here’s a clip of Elon Musk commenting on hydrogen cars: https://www.youtube.com/watch?v=Y_e7rA4fBAo

The 2020 timeline you noted above doesn’t seem very ambitious, and I wonder whether this is partly due to the fact that BMW is splitting its resources between electric and hydrogen vehicles. Perhaps the company is better off just focusing solely on electric vehicles, a space that seems to have more consumer momentum.