📘 This Week I Learnt Edition 13
Interstellar Trade, Sequels, Agua, Rare Earth Metals and more
Hello👋🏻
Welcome to the “This Week I Learnt” (TWIL) Newsletter. Hope you’re doing well.
Happy to announce a new sub-series “Tales from the Fortune 500” as part of each edition bringing you pioneering strategies from the Fortune 500 series of companies.
I’ve got some interesting stories that I came across this week. Hope you enjoy it!
On Issue #13: 🧮 👕 🔋 👵🏻 🧑🏫 💧 🌌
Interstellar Trade, Rare Earth Metals, The World's Ageing, "Agua", Netflix and Merch, China's crackdown on ed-tech and Algorithms IRL: Explore vs Exploit
Sit back, relax and read on 📚
📘The TWIL Billboard
🧮 (1) Explore vs Exploit Ft. Movies
Among the ten highest-grossing movies of 1981, only 2 were sequels. In 1991, it was 3. In 2001, it was 5. And in 2011, 8 of the top ten highest-grossing films were sequels. From a studio’s perspective, a sequel is a movie with a guaranteed fan base: a cash cow, a sure thing, an exploit. After every exploit comes another explore. Marvel’s Loki series anyone?
👕 (2) Netflix’s Merch Madness
On another instalment of everyone offering everything, Netflix launched its online merchandise store in the US offering clothing lines of a few anime shows and Stranger Things and Money Heist soon. While the subscription model makes the product more accessible, there is a need to up-sell. What’s next? Ordering Netflix show themed takeout? :o
🔋 (3) Biden Betters Battery Bottlenecks
Today’s mineral supply comes up short on what’s needed to electrify and decarbonize the energy sector. Rare Earth Metals like Li, Ni & Co are directly correlated with the ability to meet eco-targets. Yet, supply-demand imbalances result in prices surging. Enter the “Supply Chain Resilience Program”. Reduce dependence, improve tech, build resilience
👵🏻 (4) Senior Planet
The global population will enter a sustained decline for the first time in history post-2050. In Japan today, adult diapers outsell baby diapers. A planet with fewer people could ease pressure on resources, slow climate change and reduce household burdens for women. But would lead to increased pressures on young people in this transient period.
🧑🏫 (5) China Is Cracking Down on After-school tutors
China’s private education companies have for years been the darlings of investors from New York to Shanghai, building a $100B industry in the world’s largest and arguably most competitive schooling system. That ends now. The Chinese Govt’s regulatory clampdown on tutoring comes just moments before many multi-billion $ ed-tech IPOs list. Hmm.
💧 (6) “Agua” | Sensationalism trumps fact
One G.O.A.T. One word. One swift move. “$4B wiped off Coca Cola’s market cap”. Ronaldo’s move to replace the Coke bottle with a water bottle reverberated through popular media more than wall street. Fluctuation of 2% on a $240 Billion is 1) Normal week-to-week 2) It is notional, Coke lost $0 in reality. A welcome message, unwelcome sensationalism
🌌 (7) Theory of Interstellar Trade
How should interest rates on goods in transit be computed when the goods travel at close to the speed of light? Time preference has no meaning with time being dilated. Krugman says, in the future, given a free market, spaceship fuel costs will be the primary determinant of interest rates. The less the fuel cost, the less the interest rate, and vice versa
⭐Tales from the Fortune 500:
Walmart (WMT): The high cost of low price
For a company whose annual revenue ($524B) is 2.5% of the GDP of The United States of America, WMT does quite well for itself. The 58-year history of the company has seen numerous pivots and innovations but has thrived on the backbone of one hallmark strategy: Every-Day-Low-price (EDLP) vs competitor Hi-Lo strategy.
Most people will buy generic good X for price Y even when WMT is selling it for less as most retailers use what’s called the Hi-Lo strategy. This involves nothing more intricate than selling most products at a high price while temporarily lowering others to lure in shoppers. Hi-Lo takes into account the purchasing power of its target audience and then fixes prices.
EDLP rather counter-intuitively only looks inward. How low can we go? Consistent low prices at razor-thin margins (think every unicorn ever but +ve margins). In time, that volume would permit economics of scale, and a level of bargaining power that would enable WMT to remake the supply sector and the retail landscape, to suit its own schemes.
WMT started out against the K-Mart and Sears behemoths. Switch to present where WMT revenues stand at 20x of K-Mart and 40x of Sears.
♠️Every Goliath was once a David
My curated reading List for the Week: 📚📚📚
AP News on the economics of Girl Scout Cookies in the Pandemic
The Conversation on Ghana’s tryst with value addition on Chocolate
New York Times on the ramifications of Global Population Shrinking
That’s all for today! As always lookout for the next issue on Friday!
Until then. Stay safe. See you soon 👋🏻
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