Nick G

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On November 20, 2016, Nick G commented on Royal Caribbean: Digitization on the High Seas :

Building on Jake’s point re commercializing technology, the robotic bartender has incredible potential to disrupt the on-land hospitality industry. Although the technology no doubt was developed at sea because of high labor costs and small spaces available, I see no reason why you couldn’t expand the robot into every bar, pub and nightclub in the world and remove a bottleneck that is a huge pain at bars I’ve been to all over the world. The capital cost to bar owners would repay itself likely within a year, as they don’t have to pay staff (let alone staff on late night and weekend penalty rates).

It poses an interesting question for how Royal Caribbean could benefit from this innovation, given that (after all) they aren’t a robotics company and presumably they didn’t invent the technology in-house. One option would be to partner with the robotics company in offering their ships as the basis for a trial, but taking a minority equity stake in the robotics company (or, even better, purchase an option to own the equity of the supplier contingent on a successful pilot). This way they could share in the upside for using their ships and customers as part of the technological innovation testing process.

On November 20, 2016, Nick G commented on 23andMe and You! :

Thank you for the article on this important topic. The blog post is a bit one-sided in painting a picture of what 23andme does, so there are a few points I’d like to clarify and hopefully get your view on.

In terms of their service, 23andme doesn’t actually sequence the whole genome in their $199 product–rather, they sequence common genetic variants to inform your ‘carrier status’, along with some other non-disease causing traits and ethnographic studies. This is commonly confused with genetic diagnosis in the eyes of the public, thus the disclaimer found on 23andme’s website (in very small, faint gray font right at the bottom!).

“Our tests cannot determine if you have two copies of the genetic variant. The tests are not intended to diagnose a disease, or tell you anything about your risk for developing a disease in the future. On their own, carrier status tests are not intended to tell you anything about the health of your fetus, or your newborn child’s risk of developing a particular disease later in life.”

The reason this distinction is important is that direct-to-consumer genetic testing has huge potential to create anxiety and confusion in patients due to incidental findings, and the lack of access to a genetic counselor or clinical geneticist. Your blog post describes that needing to see a physician was a negative aspect before 23andme’s product was launched, but the consensus of doctors, advocacy groups for patients with genetic diseases, and nearly all genetic health companies (23andme included) is that you need professional advice in interpreting these reports, and ideally in considering the pros and cons before getting testing.

Some situations that you aren’t likely to see on 23andme’s website are:
1. A patient finding out they are at risk of a genetic disease they weren’t aware of, but are then required to disclose this to insurance companies as a pre-existing condition (and suffer high premiums as a result)
2. A patient who finds out they have a severe genetic disease with onset later in life (e.g. Huntington’s disease), when they may not have wanted to know this in the first instance (given the disease is incurable), OR even if they did want to know their status, their parent may not want to know that (and by getting diagnosed, they automatically diagnose their parent against their will given the hereditary nature of the disease)
3. The fact that their carrier screening covers most, but not all, genetic variants that can cause the diseases. So you have 23andme patients who purchased their test for cystic fibrosis, got the “all clear”, and went on to have a child with cystic fibrosis.

Like all new DTC technologies, there are some ‘caveat emptor’ factors that should at least be considered before rushing headlong into adoption. Other Silicon Valley providers like Color Genomics have done a much better job of integrating genetic counselling into their technology platform, and largely as a result have avoided the warning letter of the FDA.

On November 20, 2016, Nick G commented on Descartes Labs: Predicting Farmer’s Fortunes from Space :

Thanks for the interesting article! I agree that to most benefit the world, Descartes should continue the democratization of its insights as it has done so to date. It is interesting to wonder, though, what Descartes should do if its goal is to maximize profits. For the past few decades, USDA reports have moved billions of dollars of trades on the Chicago Mercantile Exchange due to the price sensitivity this information has on agricultural commodities (for a funny picture of what this looks like in orange juice, see this scene from Eddie Murphy’s 1983 film Trading Places – ). If Descartes has more accurate information than the USDA, there would be many commodity-focused hedge funds that would buy Descartes, make its information proprietary, then trade on these insights (both on physical and financial markets). Through leverage and use of derivatives products, there are billions of dollars of profits to be made (in fact, I’m certain there is a hedge-fund-meets-Rocket-Internet play here to copy Descartes technology for other markets outside of corn, like dairy or soy).

The two paths of action aren’t mutually exclusive, of course. Descartes could make its information freely available, only after taking positions in commodity markets, then use its profits to reinvest in growth in future frontiers in earth observation.

On November 20, 2016, Nick G commented on Rest Devices Inc. – Will They Deliver Nursery 2.0? :

Thanks for the insightful post, ConcernedCitizen. I wonder how much this technology goes towards actually solving the issue you describe? The main reason parents need to know their baby’s movement and breathing is to avoid the risk of Sudden Infant Death Syndrome, but given the nature of SIDS I’m not yet convinced that this is enough of a solution to reach commercial viability.

Firstly, SIDS is rare. You would need to sell thousands of these devices to prevent one death from SIDS, assuming this device was 100% effective in prevention. Convincing parents of this need might be tricky, particularly when there are many more low-cost, common-sense interventions to prevent causes of childhood death that are far more likely (e.g. drowning in a bathtub, when children won’t be wearing their sensors!).

Second, SIDS is overwhelmingly concentrated in people from low socioeconomic backgrounds. Risk factors are alcohol and drug use during pregnancy, poor prenatal care, tobacco exposure after birth and mothers younger than 20. I’m not sure this target market would have the means or awareness to purchase an IoT solution.

Third, SIDS usually occurs at night when parents are asleep. Does the hardware you describe sound an alarm loud enough to wake parents up, if the sensors say that the baby is no longer moving? If, on the other hand, it behaves like a FitBit as a recording device, I don’t think it would do much to prevent SIDS if it did occur.

That said, I’m confident that if not this technology, then future iterations of technology, will provide value to parents and make a real difference in reducing SIDS and causes of early childhood death.

Given the problem you describe in the introduction (only 84% of PCPs use EHRs in the US), I’m not sure if I agree with the opportunity to move into the hospital space. As others have noted, this is a very competitive, mature market and the type of functionality a hospital EHR system requires is very different to what is needed in primary care.

I would think adjacencies to primary care would be a far more attractive growth direction for athena. What about extending functionality to get end-to-end integration for a patient with chronic disease? E.g. someone with diabetes sees a dietician, an endocrinologist, a podiatrist, a cardiologist, a pharmacist, a wound care nurse as well as a PCP–all out of hospital. I would be interested in seeing the EHR penetration of these areas of healthcare and weighing up the attractiveness of this growth direction vs that of hospitals.

On November 7, 2016, Nick G commented on Ski Resorts: Melting Away :

Thanks for an informative (and scary) article, it’s easy to see why climate change is an issue keeping ski industry execs awake at night. That said, I’m not convinced by the quote you provide from Porter Fox. He doesn’t offer any explanation as to why artificial snow is a stop gap measure, and my experience in Australia would suggest otherwise. More than 80% of the snow in Thredbo or Perisher, Victoria is artificially produced, and the cost of this is passed on to customers through expensive ski passes (up to $200 a day). Given the luxury nature of skiing and its target market, customers have been willing to pay these prices for the past two decades, and Australian ski resorts are quite profitable (Perisher, for example, was purchased by Vail Ski Resorts last year for $136m).

Compared to alternatives (like switching from skiing to yoga or ziplining, or re-building resorts at higher altitudes), artificial snow seems like the best available option for both resorts and skiers.

Thank you for a very informative article! Regarding the opening of the the Northeast Passage, I wonder how much of the time and money saved can be captured by Maersk? I presume that shipping today is priced based on some combination of weight/volume multiplied by the duration/cost of the journey. If there is a shorter journey through the Arctic Circle, do you think customers would expect Maersk to pass this saving onto them in its entirety? Given the commodity-like nature of shipping, I see this is as a risk. If it is a risk, is there a way to minimize it by establishing some sort of proprietary advantage that locks out competitors (e.g. special ice-breaking super-tankers, or special berthing rights at ports in the Arctic Circle)?

On November 7, 2016, Nick G commented on Is Australian Wine Going the Way of the Tasmanian Tiger? :

Andrew, it breaks my heart to think that I won’t be able to enjoy my South Australian shiraz or cab sav in a decade or two’s time. In addition to the very compelling solutions you offered, I can suggest two more:
(1) Stockpile shiraz now. With careful selection of the right vintner and vintage, it should only accumulate in value! I’m less concerned about whether my grandchildren can drink shiraz, as long as I have a lifetime supply for myself then I’m happy.
(2) On a slightly more serious note, there should be opportunity for TWE to diversify its geographic holdings into cooler regions (e.g. Tasmania or New Zealand) where grapes suited to dryer, warmer environments could thrive. Tasmania already has a wine industry in its early stages, and as an early investor, TWE could leverage the strength of its brands to build this industry over the next 10-20 years.

On November 7, 2016, Nick G commented on Nutella, Why U No Last Forever? :

Thank you for letting me know that my Nutella consumption has contributed to palm oil deforestation (and likely the death of several orangutans). I agree that changing the product mix isn’t feasible, but given the fact that Nutella has 25% of the market for hazelnuts, do you see a role for vertical integration in the supply chain? I see a few parallels to our TOM case on Ikea and sustainable wood. What’s different here is that hazelnuts may be viable in the future where they aren’t today, due to climate change, which (as you say) is a great opportunity for Nutella to diversify the geography of their supply chain.

On November 7, 2016, Nick G commented on Rising Temperatures Lead to Rise in Insurance Claims :

Riley, thank you for your fascinating post. It’s interesting to draw parallels with the natural disaster insurance industry and the US health insurance industry before the Affordable Care Act (‘Obamacare’) came into effect: namely, that insurance companies can simply deny coverage to residents who are in disaster-prone areas. This has always been the case to some extent (e.g. if you live in a low-lying floodplain, you’re unlikely to get flood insurance), but my question is twofold:
(1) To what extent is the issue for insurance companies just the fact that their actuarial models are ‘out-of-whack’ with the effect that climate change has on increasing the frequency of natural disasters? Currently they would be based on historical data, but if (hypothetically) they were accurate, then insurance companies should be able to manage the risk by either increasing premiums or denying coverage (as the US health insurance industry did for many years before the ACA). Accurately predicting the frequency of natural disasters (e.g. with best-in-class climate modelling) could become a source of competitive advantage for insurance companies who crack this, and even allow them to increase their profitability over time.
(2) Given the possibility for (1), do you see a role for regulation (similar to the ACA) for natural disaster relief? Is it appropriate for governments to mandate coverage for at-risk individuals (even though doing so would risk making the insurance company insolvent)? Similar to arguments made about the ACA and healthy people cross-subsidizing the healthcare cost of unhealthy people, would maintaining equitable coverage for insurance risk of people living in low-risk areas subsidizing others’ choice to live in high risk areas?