Sunday Snapshots (19th April, 2020)
How Asia Works, Amazon's 2019 shareholder letter, Stripe and Fast, Airbnb online experiences, and Letters of last resort
Hey everyone,
Greetings from Evanston!
I hope you and your family are safe.
One of the things I’ve shied away from is to ask you to share this newsletter with others. It makes me feel uneasy, uncomfortable, and feels too sales-y. But the more time I spend writing Snapshots, the more it occurs to me how this is not just a side project but the main intellectual driving force in my life.
I’ve heard from readers that it is valuable for them too:
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These messages invariably make my day. They also convince me that there are other readers just like you out there – curious, intelligence, and engaged. I need your help to bring them into the Snapshots community.
So today, I’m putting my ask front and center:
If you enjoy or get value from Snapshots:
Forward this e-mail to friends and telling them to subscribe,
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With that out of the way, let’s get what I want to share this week:
How the world’s most dynamic economic region operates
How Amazon is dealing with COVID-19
What is Fast and why did Stripe invest in them
My first Airbnb online experience
What letters of last resort mean
And more!
Book of the week
The study of history prevents us from making mistakes made in the past and allows us to take a less treacherous path to success – shortcuts, if you will. Airbnb CEO Brian Chesky said in a feature on him, “If you pick the right source, you can fast forward.”
Joe Studwell’s How Asia Works intends to be such a source. It is a treatise on how to not fall prey to groupthink and how important domestic policy is for success in international markets, which predicates overall economic growth in our globalized world – all through the lens of Asian economies.
Broadly speaking, there are two kinds of economic markets in the world today — markets based on efficiency and markets based on development. Studwell argues that the most successful examples of economic development in east Asia, notably Japan, Korea and Taiwan, were a hybrid of the two. These are known as “Capitalist Developmental States”, a term coined by Chalmers Johnson, who was a professor at the University of California in San Diego. The path that these countries took suggests that miraculous development to the tune of gross GDP growth of ~6–10% per annum requires a policy prescription with three arrows – household farming, protectionism in industry and delayed financial deregulation, each suited to the local context and timed to perfection.
If this sounds interesting, check out all of my notes on the book on my blog.
How Asia Works is a compelling work in its entirety. Studwell weaves together a narrative that is hard to ignore and has impressed the likes of Bill Gates. I highly recommend the book to anyone with an interest in the region.
Long read of the week
Amazon’s 2019 Shareholder Letter
You know, I was really looking forward to Jeff Bezos providing the next set of business maxims in his 2019 annual shareholder letter that journalists would copy and repeat a thousand times until it was drilled into all of our heads. It would also been an easy writing session for me this week as I simply summarized some version of “it remains Day 1” or “our customers are divinely-discontent” or “it’s all about the long term.”
But alas, just like everything else, COVID-19 has snatched away such simple comforts that we used to take for granted.
Instead, the letter is one big flex on how Amazon is leveraging its scale to be on the frontlines of the COVID-19 crisis.
Some highlights from the letter:
We’ve removed over half a million offers from our stores due to COVID-based price gouging, and we’ve suspended more than 6,000 selling accounts globally for violating our fair-pricing policies.
We increased our minimum wage through the end of April by $2 per hour in the U.S., $2 per hour in Canada, £2 per hour in the UK, and €2 per hour in many European countries. And we are paying associates double our regular rate for any overtime worked—a minimum of $34 an hour—an increase from time and a half. These wage increases will cost more than $500 million, just through the end of April, and likely more than that over time. While we recognize this is expensive, we believe it’s the right thing to do under the circumstances. We also established the Amazon Relief Fund—with an initial $25 million in funding—to support our independent delivery service partners and their drivers, Amazon Flex participants, and temporary employees under financial distress.
In March, we opened 100,000 new positions across our fulfillment and delivery network. Earlier this week, after successfully filling those roles, we announced we were creating another 75,000 jobs to respond to customer demand. These new hires are helping customers who depend on us to meet their critical needs. We know that many people around the world have suffered financially as jobs are lost or furloughed. We are happy to have them on our teams until things return to normal and either their former employer can bring them back or new jobs become available.
There doesn’t seem to be any force that can stop this 800-pound Gorilla. I recommend you read the letter in its entirety to get a better sense of the shear power the company has in our economy. Then read my summary of the best way to approach curtailing this power.
Business move of the week
Stripe leads $20M Series A for Fast.co
Stripe is a well-known payment processing platform that powers everyone from a Goliath like Amazon to a hobbyist selling custom postcards online. Even if you’ve never heard from them, there’s a good chance you’ve interacted with their platform indirectly.
They recently led the investment into a new company, Fast, which allows for easy one-click checkouts across the internet. With experienced operators like co-founder and COO Allison Barr Allen and the amazing backstory of co-founder and CEO Domm Holland, Fast has plenty of gas in its experience and capital tanks.
I recently listened to an episode featuring Allison on the Worth podcast (co-created by Snapshots reader Ethan) about what Fast is and where it is going. Here were my main takeaways:
Payments and Identity: You might ask yourself, why do we need another payment company. Haven’t Apple Pay, Shopify Pay, and Amazon Pay, PayPal etc. cornered this market already? In part, yes. But Fast aims to unify payment and identity to provide a better customer experience. For example, while you might be able to use Apple Pay to pay for a new pair of shoes, you don’t get automatically enrolled in their loyalty program. It’s too much work to keep track of all your login info and remain secure. Sign in with Google and Facebook can help you log in, but they don’t have your payment information. Password managers are band-aid solutions as they don’t actually combine your identity and payment under one umbrella. Fast brings it all together.
First customer: If you’re building a company today, you cannot help but take some lessons from the now-mentioned-multiple-times-in-this-newsletter behemoth Amazon. One of the core lessons from Amazon is to be your own first customer. For example, Amazon Web Services (AWS) was first started as a way to manage and maintain the e-commerce store. Then it was rolled out to other companies. Amazon fulfillment network was first used by Amazon to directly sell their own inventory. Then it was rolled out to third-party sellers.
Fast is copying this move. They launched a swag store where you can sign up for their service and get used to the process. This will allow them to iron out the bugs in their platform. They will first serve themselves, become really good at it, and then roll it out to third-parties like large retailers and Shopify stores.
Stripe as an investor: This is where Stripe comes in. While becoming their own first customer will help them improve their product, they have to ultimately expand. Payments is also a highly regulated industry. Stripe has done the hard work of building relationships with regulatory and compliance entities. Fast gets to plug into this pre-existing network. Stripe gets the payment processing fees from all the transactions made through Fast. Win-win.
Fast is an interesting company to look out for. I’m especially curious as to how they counteract Apple’s efforts in the area with the potential “merger” of Sign in with Apple and Apple Pay. With retailers are wary of Amazon and others, they have a more positive outlook on Apple’s effort as they know that all of Apple’s efforts are geared towards a stronger iOS lock-in. Their moves in this area could be more customer-friendly.
Side note: Definitely check out some of the other episodes of the Worth podcast. I’ve really enjoyed going through the archives.
Random corner of the week
I took part in my first Airbnb online experience this week on how to make better coffee. It was $4 for an hour of instruction. The host was engaging and generous with his time. It was pretty good bang for my buck.
I learned the subtleties of over and under extraction, how temperature and ground size affect the extraction process, and how to get the perfect texture. I know I might sound one of those hipster snobs, but it was one of those things which made me appreciate how complex a seemingly innocuous part of my morning routine was. Thanks to Ricardo for the amazing instruction!
If this sounds interesting, check out the class that I did or any of the other Airbnb online experiences.
Movie of the week
Sometime last year, I learned about thing called a Letters of last resort. It is written by the current UK Prime Minister to captains of nuclear submarines in the British Navy. They are stored in the captain’s cabin and are only to be opened in the event of a presumed nuclear attack on the United Kingdom which neutralized the current government. These letters would then be the last official directive from the Prime Minister. They typically outline the counter-response and what to do once the counter-response is executed as it is possible that the submariners on board are the last remaining UK citizens in the world.
Grim, I know. But the extremes of the human condition are the most interesting.
This extreme of the human condition is exactly what the movie The Wolf’s Call – or Le chant du loup as it was originally titled in French – deals with. I won’t spoil anything, but I will say that is one of the best action thriller movies I’ve seen in the last year without being Fast and Furious style over the top (low bar I know).
Meal of the year?
The one thing I miss the most in the post-COVID world is having meals with others. This was the last meal I had at a restaurant (Gaijin in West Loop) before everything closed down. It might have been my last meal at a restaurant for the year. After all this is over, I can’t wait to go back – my gratitude at the simple act of eating out having increased ten-fold.
That wraps up this week’s newsletter. 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