Sunday Snapshots (11/15/20) – The Republic and the Empire, WSJ's Woes, and the 2020 State of the Delivery Apps

In which I write another issue from New York City

Nov 15, 2020

Hey everyone,
Greetings from New York City!

Every time I’m here, I feel the most at home. While there has definitely been an exodus of 20 somethings from the city, I can still feel the same energy when crossing a crosswalk. There’s a camaraderie, a rugged light-heartedness that comes from the shared identity of being in this city. It’s the lighthearted joke about helping a stranger with their steps for the day as I snag the last Citi bike. It’s the out-of-print books at Strands. And yes, it’s the Saravana Bhavan dosas on Diwali eve. It’s always good to be back.

In this issue of Snapshots, I want to explore:

What the Roman Republic was like
WSJ’s 2020 Internal Report
State of the Delivery Apps, Q4 2020
Stripe Press, Digital Nomads, and the streaming wars in India

Book of the week

What an amazing story – from Republic to Empire. From ashes to ashes – with plenty of legacy left behind. Tom Holland’s Rubicon expertly weaves the story of how this great Republic descended into authoritarianism under its own weight.

If you want a quick summary of this timeline, check out this great video narrated by L̶o̶g̶a̶n̶ ̶R̶o̶y̶ Brain Cox:

But the book goes much deeper into the dynamics of how these changes came about – from

Here were some of my favorite excerpts from the book:

On the execution of populists (named the Gracchi brothers) hell bent on reform that would have lead to greater political rights for the common people and greater shared prosperity:

Here, then, was one final paradox. A system that encouraged a gnawing hunger for prestige in its citizens, that seethed with their vaunting rivalries, that generated a dynamism so aggressive that it had overwhelmed all who came against it, also bred paralysis. This was the true tragedy of the Gracchi. Yes, they had been concerned with their own glory—they were Roman, after all—but they had also been genuinely passionate in their desire to improve the lot of their fellow citizens. The careers of both brothers had been bold attempts to grapple with Rome’s manifold and glaring problems. To that extent, the Gracchi had died as martyrs to their ideals. Yet there were few of their fellow noblemen who would have found that a reassuring thought. In the Republic there was no distinguishing between political goals and personal ambitions. Influence came through power, power through influence. The fate of the Gracchi had conclusively proved that any attempt to impose root and branch reforms on the Republic would be interpreted as tyranny. Programs of radical change, no matter how idealistic their inspiration, would inevitably disintegrate into internecine rivalries. By demonstrating this to the point of destruction, the Gracchi had ultimately stymied the very reforms for which they had died. The tribunes who followed them would be more careful in the causes they adopted. Social revolution would remain on permanent hold.

While the Roman’s did conduct many conquests abroad, it was always a “field for glory”:

As far as Roman magistrates were concerned, abroad remained what it had always been: a field for the winning of glory. While plunder was never to be sniffed at, honor remained the truest measure of both a city and a man. By holding to this ideal, the members of the Roman aristocracy could reassure themselves that they remained true to the traditions of their rugged forefathers, even as they reveled in the sway of their command. As long as the effete monarchs of Asia sent their embassies crawling to learn the every whim of the Senate, as long as the desert nomads of Africa reined in their savagery at the merest frown of a legionary commander, as long as the wild barbarians of Gaul dreaded to challenge the unconquerable might of the Republic, then Rome was content. Respect was all the tribute she demanded and required.

What fascinated me the most was how this the sneering for expansion-for-expansion’s sake was conveniently replaced by expansion on the basis for “spreading of Roman values” when appropriate financial incentives – chiefly the introduction of taxes – fell in place:

A debtor might be offered loans at ruinous rates and then, once he had been leeched of everything he owned, enslaved. Far distant in Rome, what did the shareholders of the great corporations care for the suffering they imposed? Cities were no longer sacked; they were bled to death instead.

I highly recommend the book if you’re interested in that period but have always found most material about it boring. This is patently not boring.

Long read of the week

WSJ’s Internal Report: The Content Review

In this internal report by the WSJ, you see the dynamics and trials of a modern news corporation at play.

Some of these dynamics:

A highly loyal core customer base that is not likely to churn, which makes it difficult for the company to focus their resources on them since subsequent business growth will come from new subscribers – in another example of complexity convection
Highly correlated new subscriber rates and churn rates
Issues with top of funnel growth as they try to increase conversion rates
An average age of 49 (down from 56 four years ago)

Here are the recommendations that the report offers:

Leaning more into the 2 way journalism model where the subject matter experts are the ones offering a story. This leads to greater proprietary access and breaking stories before other news outlets.
Leaning more into community conversations with unique formats like curated “letters to the editor” in a video-based format

If they need a tip on where to focus first, here’s one for them: Make a consistent log in experience where I don’t have to enter my credentials every time I want to read an article I came across elsewhere.

Business move of the week

State of the delivery apps, Q4 2020

This is the start of a much longer piece that I want to write before the end of the year, but I thought it would be useful to put some initial thoughts down here first.

Delivery apps got the dream of a tailwind this year with increased liquidity on all three sides of their marketplaces:

Increased customer demand came as a result of varying degrees of indoor and outdoor dining restrictions due to public health and safety concerns due to COVID-19
Increased restaurant supply came as a result of the same dynamics. Even restaurants that were previously opposed to these platforms had to kowtow to there something onerous terms.
Increase driver supply came as result of heightened unemployment (the tragically, now iconic “uptick” on the front page of NYT) and people struggling to meet ends meet started driving for supplemental – and in many cases primary – income.

With the Doordash IPO looming and Uber stock scraping all-high times ($48.40 as of today) despite their rides business crumbling, it seems that the public markets have given these apps a pass. The path of profitability story for everyone has to pushed back a few quarters at least.

The market of public opinion has also given them a wide berth – the passage of Prop 22 means that gig workers are exempt from being classified as full time workers in the state of California. That would have been a nasty set of dominos for these businesses.

So with the doomed Uber/Grubhub merger, Doordash has a clear lead in this network effects-based business, but when the switching costs are so low, I’m not sure how much that matters beyond driver liquidity. Here too, there is a threshold of “good enough” where increased liquidity brings diminishing marginal returns. But hilarity has no need for liquidity.

Uber Eats has one clear advantage – increased driver supply from its “core” business of rideshare means it can pool resources together. It’s not clear to me how this has been leveraged either to capture market share or to increase bottomline margins.

There are some dark horse entrants – Chowbus is late to party but picking up early wins, white labeling services like Lunchbox are providing a tempting alternative, and platforms like Tock are innovating for the traditional restaurant industry.

The state of the delivery apps looks as exciting as ever. It’s perhaps the only remnant of B.C. – before COVID – time.

Odds and ends of the week

Three great articles this week:

The Promise of Stripe Press: Everyone who visits my place for the first time asks me about the pastel/fluorescent book covers on my shelf. All of these are of course books published by Stripe Press. This much-needed article outlines the history and growth of the financial juggernaut’s publishing arm.
The Digital Nomads Did Not Prepare for This: This was making the rounds in group chats and Twitter last week. There is something deeply cosmopolitan, no-roots-anywhere vibe to this story. A fascinating read for sure.
Who Wins the War for Streaming in India?: I’ve always maintained that the strongest part of America’s hegemony is it’s cultural capital. From the January 5th, 2020 edition of Snapshots:
There's been a lot of talk about America's decline as a superpower. It's only fair – you'd be hard pressed to find such hegemonic rule after the post-WW1 British Empire. After a rise comes a fall. But I think most of these fears are overblown. The United States remains the best place in the world to create a great life. Adding to this wealth creation engine is its greatest export – America culture. Culture that now has the tailwind of the internet. Every single one of my cousins watches Friends and Big Bang Theory. 13,000 kilometers away, they are getting a piece of America. That alone is reason enough to be bullish on the country.
Not surprisingly, the streaming platforms that dominate overseas will shape these dynamics. An interesting read from a couple of years ago on the specific dynamics in India surrounding this.

That wraps up this week’s newsletter. You can check out the previous issues here.

If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.

Until next Sunday,
Sid