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On November 26, 2017, Zeya commented on Cuba Libre: Airbnb’s Approach to Diplomacy in Cuba :

I agree that Airbnb should double down on Cuba. The tourism benefit potential for both the Cuban hosts and revenue for Airbnb is too large to forgo. Americans have always circumvented the travel restrictions to Cuba by booking flights through Canada, and Canada itself has always provided a steady stream of tourists to Cuba. In this sense, there is already sufficient market demand for Airbnb to be operating in Cuba. By doubling down on growth and being loud about promoting global connectedness, Airbnb has the upside of free publicity. Furthermore, if regulators actually decided to prosecute Airbnb’s operations in Cuba, Airbnb could pursue a workaround such as running its Cuba operations out of a separate legal entity incorporated in another county, ie, Airbnb Canada.

On a more facetious note, Airbnb’s growth to date has been fueled by standing up to regulators, employing lobbyists, and breaking laws outright. Continuing to operate and grow in Cuba in light of Trump’s isolationist policies is simply in the modus operandi of Airbnb.

I like GM’s move to partner with Ford and Fiat-Chrysler to lobby against NAFTA changes. Washington needs to understand that eliminating NAFTA would actually lead to American jobs being lost in the long term by making the American automotive companies uncompetitive, even if investments create jobs in the short term. Despite President Trump’s stance, lawmakers in Washington on both sides of the aisle can rationally arrive at the same conclusion.

To your question of whether GM should continue to operate in Mexico in the event that NAFTA dissolves, I say yes. GM should bear the costs of the incremental tariffs in the short term. As quickly as NAFTA can dissolve, a future administration in Washington can just as easily re-embrace the notion of free trade, and I believe that to be a likely scenario in the long term.

The questions you pose at the end encapsulate what I think is the crux of the future of Artic shipping: international politics and regulations. If I were Sovcomflot, I’d be wary of doubling down on investing in vessel production. The opportunity to increasingly use the Artic as a shipping route is being noticed by many nations, including China and the US, in addition to Russia.

Scientists and the Arctic indigenous communities have pushed back that the increased use of Artic shipping routes will require good governance, detailed navigation charts, sufficient ports, effective oil spill cleanup technology, and timely search and rescue responses. They note that cleaning up oil spills in waters partially covered by ice is more complex than open water spills.

It seems likely that as commercial interest increases, organizations such as the United Nations, NATO, and the aforementioned International Maritime Organization will impose governance structures and regulations. In additional to international governance, shipping companies may be subject to environmental regulations of individual countries. With Russia, China, and the US in the mix, we can expect negotiations around these issues to be heated and there is a high degree of uncertainty in terms of how the resulting regulations will impact companies hoping to exploit this new opportunity.

Potential fallout: https://e360.yale.edu/features/cargo_shipping_in_the_arctic_declining_sea_ice

I really buy into the idea that meal kits like Blue Apron are a great way to reduce food waste in the agricultural supply chain. The newly formed Business Ideas for Generational Shifts club at HBS recently had a discussion on the inefficiencies of the legacy grocery shopping experience. For working professionals, buying groceries in large quantities, such as a gallon of milk or a pound of salmon, is wasteful because a working professional can’t consume all the produce before it expires. Meal kits are a great way to solve this problem by controlling for portion sizes.

One paradox I see with the Blue Apron business model is that it’s a subscription service with relatively moderate minimum delivery volumes. A customer is required to order at least three 2-person meals each week. For a single working professional, this is probably too much food, and even for a dual income, no kids household, work trips and last-minute evening events could result in meal kits not being used, which leads them to be wasted. To truly embrace waste minimization, Blue Apron should offer more flexibility in delivery cadences for its customer. It’s interesting to note that Blue Apron’s customer retention has been low: an estimated 72% of customers churn within six months. More flexibility would likely also help with customer retention. This can also lower the impact of transportation and refrigeration.

Another interesting move would be to acquire Imperfect Produce, vertically integrating them into the supply chain. Blue Apron would also be able to expand its product offerings by selling the imperfect produce directly to customers. This would give Imperfect Produce a much broader reach, as Blue Apron has a more expansive distribution network.

Pricing: https://www.blueapron.com/pages/pricing
Retention issues: http://www.slate.com/blogs/business_insider/2017/06/30/blue_apron_customer_retention_low.html

On November 26, 2017, Zeya commented on L.L.BEAN: DIGITALIZING AND THRIVING :

I think L.L.Bean has their work cut out for them. The challenge of embedding other functions such as finance, procurement, and marketing into the digitalized supply chain can’t be understated. Information needs to flow cleanly within the company, and not cause miscommunication or redundant efforts such as multiple forecasts. This will be especially important as the company plans on integrating its enterprise resource planning infrastructure with supply chain decisions.

Furthermore, L.L.Bean is tasked with making sure suppliers embrace, rather than resist, the disruption of the supply chain digitalization. L.L.Bean must clearly convey the benefits to its suppliers. For instance, suppliers can benefit from being able to use the data to inform fabric requirements and reduce lead time of purchase orders. They can then get an early read on market trends before committing to styles and sizes.

As L.L.Bean grows its e-commerce channel, evolving from being primarily a catalog retailer, it can borrow many lessons from other retails chains that have had to tackle supply chain digitalization before them. A few years ago, The GAP made a push to use big data to streamline their inventory management and offer increased personalization to the shopping experience. Zara has long been known as supply chain experts in the retail space, and they embraced supply chain digitalization by using social media feeds and website click data to inform demand, and IOT and GPS data to inform supply.

Gap: https://risnews.com/gap-gets-personal-big-data
Zara: https://www.forbes.com/sites/kevinomarah/2016/03/09/zara-uses-supply-chain-to-win-again/

I agree that the idea of decentralized file storage has its merits, but I would push back on the notion of large tech companies such as AWS, Google, or Dropbox being the primary beneficiaries or users of the technology.

Security and privacy are already the utmost concerns for all major technology companies that house their user data. For example, Dropbox uses AES 256-bit encryption, which is the gold standard for security encryption today. Furthermore, the internal anti-hacking product security teams at major companies are more competent and have more manpower than those at startups like Sia or FileCoin. Regarding privacy, all major companies publish privacy and transparency reports that show their commitment to protecting user data, especially in response to government data requests. The Electronic Frontier Foundation publishes an annual report that shows major tech companies like Dropbox, Facebook, and Google all following industry best practices, and all scoring at last 4/5 on their rubric.

On the point of matching supply and demand, the costs of oversupply become trivialized with Moore’s Law, the idea that the number of transistors that can be fit on a computer chip will double every 18 months. In practice, unit storage costs at companies that build their own data centers effectively halve every 18 months. Thus, these major players need to forecast supply only directionally correctly to continuously reap these cost savings over time. Companies like Dropbox go as far as producing their own hardware and creating custom programming languages to ultra-optimize the efficiency of their servers to capture unit cost savings.

Regarding service levels, the companies that build their own data centers already design sufficient redundancies to provide 99.9999%+ uptime (“six nines”), as well as survive natural disasters, which are being constantly simulated. To the extent that distributed networks are still reliant on the service levels of major internet service providers, their service levels cannot practically exceed six nines of uptime, so there’s no guarantee that decentralized file storage would have more robust reliability.

In summary, it’s more likely that smaller startups who lack the scale and resources to capture the benefits of building their own data centers are the ones who will benefit from decentralized file storage technology, as opposed to major file storage players such as AWS or Dropbox.

Electonic Frontier Foundation report: https://www.eff.org/who-has-your-back-2017
Cloud storage costs: https://www.cnet.com/news/google-on-cloud-storage-pricing-follow-moores-law/
Dropbox’s tech blog post on building its own data center: https://blogs.dropbox.com/tech/2016/05/inside-the-magic-pocket/
Service reliability levels: http://vinciconsulting.com/blog/-/blogs/%E2%80%9Cthe-table-of-nines%E2%80%9D-and-high-availability