lenS & thoughtS – Page 18

一个非主流的消费观

觉得有一套消费理念很有趣，用两篇blog来梳理一下

买东西 = 把钱换种方式存起来

买东西不等于传统意义上的消费，或者花掉。比如买一个包，那只是把cash变成了另一种asset。更好理解的是买个房子，假设全款100w买的，那就是cash减去100w，同时fixed asset加了一栏100w的房屋。

按此来推算，打八折买一个1w的包，cash减去8000块，asset的包那栏要加上1w，这是瞬间赚了2000！（equity部分净增加2000）。

这样计算的另一个问题是需要考虑deprecation，即折旧。用得快的化妆品即使先变成了asset也很快被减值。但类似包这样的asset，只要不扔，折旧是很小的。使用者可以在心里给asset安排一个使用寿命，如果每年使用次数很少，甚至不用，实际上每年几乎可以没有“减值”的感觉。一个实际使用1年的asset可以在使用者心中拉成10年。

这样的消费理念计价时不需要完全参考成本。事实上，现在越来越多的例子是asset有一个浮动的market price（非label price/price tag），当消费者逐渐接受，那asset value是要随时根据市场做调整。典型例子，yeezy和AJ。在这样的市场下，depreciation短期内远不如market price的波动明显，那鞋在market里涨价就是赚。

A Fundamental Pitfall In Sports

So human beings won’t evolve fast within 20-50 years, without any genetic engineering.

As we are reaching our limits, it would be very hard to break any records – for those sports that measures speed, height, strength, etc.

But that is what we are all expecting (as audience) and what keeps the sports industry exciting and growing.

So those sports have become increasingly dependent on “outside helps” – including those (e.g. certain drugs) banned by the overseeing committee.

Therefore, there will be increasingly possible that future sports will be driven more by technology development and the supervising body will be more “tolerant”.

What is more, there is always a blurring line between “allowed medication” and “forbidden techniques”.

I will be very interested to see how this conflict/problem will be solved/mitigated.

WeChat: More Than Messaging And Payment (3)

WeChat is also gradually upgrading itself as an entrance to internet.

Scanning a QR code is as common as using WeChat.

Businesses are using QR codes as the beginning of a customer relation; government departments/agencies are using QR codes as a way to provide/introduce/reserve many services.

And most of these websites or alternatives or websites are happening in Tencent’s ecosystem/domain. (or Alibaba/Baidu/JD/Toutiao/Weibo/Meituan’s domain)

Few people are creating their own website nowadays in China. For example, when we can find a restaurant’s website in US, usually in China we find it on WeChat/Ele(alibaba)/Meituan/Dianping(Meituan).

And when people are used to it, search engines are going to give away their position as the entrance of internet.

And when people forget how to type a web address, internet is more disconnected and is just comprised of a few closed bubbles – not exciting.

WeChat: More Than Messaging And Payment (1)

It’s time to talk about WeChat’s development after I have spent more than two month catching up in China.

This series will try to summarize several things WeChat has already been doing great and what it could possibly do in the foreseeable future.

First of all, restaurant mini-programs/official account.

The most significant feature to me is probably the ability to order on a digital menu via a QR code. All you need to do is to seat down and scan the code (with the information of table number usually) that is sticked on the table. One can totally make an order and wait for food without any help from the restaurant (saving lots of labor and waiting time). In addition, since everyone on this table can scan the code, they will share the same page and see each other’s ordering, which is extremely helpful as they are mostly shared plates.

What is more, usually it also makes users to follow the restaurant’s official account in WeChat in a very smooth way. Sometimes it’s mandatory. It is particularly beneficial for restaurant chains (and milk tea / coffee chains) that have multiple locations and marketing campaigns.

Then, depending on the frequency of customer’s visits, chains usually have their membership system in WeChat official accounts or mini-programs. That way, an WeChat account is essentially a Facebook or gmail account in the US. Complex reward and membership programs can be implemented in WeChat by chains, such as McDonald’s.

Besides ordering, WeChat provides a way for consumers to take a number to wait for a table before arriving at the restaurant.

The booking/waiting environment is a little different here in China. While booking a table at a specific time is common in the US, restaurants in China mostly only have a queue system. Most people will need to go to the restaurant first, take a number and wait for an hour or more in prime time. This is actually good for the shopping mall as people need to stay here longer, either generating other purchases or making the mall look more popular.

Also, on WeChat one can order ahead, which is especially helpful in beverage chains like Hey Tea. Hey Tea has long been “featuring” its super long line to order. As Starbucks in China just announced its order-ahead-and-pick-up feature “Fei Kuai” in a few cities this summer, its competitors have been able to do this at least one year earlier on WeChat.

Not to mention the payment step, which WeChat has been doing for years.

Teva Pharmaceotical (3): Decline in Copaxone

Teva Copaxone Sales | Source: Teva quarterly reports

New Dosage by Teva

Teva has been preparing for the entry of generics with a new dosage of three-times-a-week.

In May 2013, Teva announced FDA acceptance of sNDA for Copaxone 40mg/ 1mL, a higher concentration dose of COPAXONE® that offers a less frequent three times a week dosing regimen.

Teva received the approval in January 2014 as previously mention in Copaxone’s history.

In 2015 first quarterly report, Teva said Copaxone® 40 mg/mL accounted for 66% of total Copaxone® prescriptions in the U.S. And the US sales decline compared with 2014 Q1 mainly reflects unusually strong sales in the first quarter of 2014 due to inventory stocking in connection with the launch of Copaxone® 40 mg/mL in January 2014.

First Generic

First generic of Copaxone, Glatopa, was proved in April 16, 2015.

The approval is for glatiramer acetate in 20 mg/ml daily injections.

Glatopa was developed by Momenta Pharmaceuticals and marketed by Sandoz, a Novartis company.

One month later, the Sandoz launched the drug in the US.

First 40mg/ml Generic Approval

In October 2017, Mylan received the long-waited approval for both dosage versions. Mylan also confirmed the launch in US one day after.

Shares in the Israeli company (Teva) were down 13% this morning – many were not expecting the FDA verdict until next year. Umer Raffat at Evercore ISI attempted to quantify the damage: earlier than expected loss of revenues could result in an annualised $480m to $640m being shaved from consensus operating profit estimates, he believes. [EvaluatePharma]

It’s a major lift for Mylan, whose anticipated 20-mg knockoff of the multiple sclerosis star has been conspicuously missing for years. A team of Novartis’ Sandoz and Momenta zoomed ahead with an April 2015 approval of their own version, Glatopa, which last year helped Sandoz’s biopharmaceuticals unit grow 25% to $772 million in sales. [FiercePharma]

According to the FDA approval letter, Mylan was one of the first applicants to submit a substantially complete ANDA for Glatiramer Acetate Injection, 40 mg/mL, containing a Paragraph IV certification. Therefore, Mylan and other first filers may be eligible for 180 days of generic drug exclusivity but FDA has not made a formal determination on exclusivity at this time.

Notably, the approval for Mylan comes a day after the FDA commissioner, Scott Gottlieb, released draft guidance to help speed the approval of complex generics like Copaxone. If any were needed, this earlier than expected green light provides further evidence that the US regulator is determined in its efforts to smooth the path to market for a wider range of copycat medicines.

Shared Bikes In China (3)

Those who can raise money are raising big

When most bike-sharing startups are facing difficulties on the capital market, the ones who had more prestigious backers seemed fine, namely ofo and mobike.

Series D

mobike raised $215 million Series D led by Tencent in January, with Ctrip and Huazhu joining as new investors; Foxconn and Temasek also came onboard later, adding at least another $85 million (the round aka “friends of Sequoia China and Hillhouse”)

ofo came with a $450 million Series D led by DST in March (the round aka “Didi’s investors”); in April, ofo also took some money from Ant Financial while collaborating in 0 deposits for users who have credit scores (Sesame scores) over 650.

Unique Angles?

This was the first time Ali officially invested in this field. I guess they felt the valuation was too high. While Tencent had mobike and Didi had ofo, Ali needed to find its unique angle and set its footprint in the space. Sesame scores is one of Ant Financial’s unique offering in the market place; yet ofo might be the first time users felt the tangible benefits of high Sesame scores.

Tencent had its unique angle as well: Mini-programs 小程序 in WeChat. mobike launched its mini-program in February 2017.

Meanwhile, Didi integrated ofo’s service into its app in April 2017.

(Besides, there are battles between payments, cloud computing, data and traffic)

Series E

The crazy financing has made ofo and mobike the clear winners at that time. I guess most investors believed that who had the most money would win the game.

ofo has Didi which is big, but mobike’s Tencent is one of the deepest pockets in China. When Ant Financial only provided a minority funding to ofo (as Didi was the biggest investor), some may felt that Ali was still not determined to join the race – then mobike would win.

mobike raised $600 million Series E in June, led by Tencent, valued at $2.4 billion pre-money.

Now, if ofo didn’t get Ali on board, it would almost certainly be outgrown, despite its entrance into 100 cities in May was one month earlier than mobike (June).

Not surprisingly, ofo came with $700 million Series E in July, led by Alibaba, valued at $2.3 billion pre-money.

Meanwhile, both companies were aiming to enter into 200 cities globally.

When mobike and ofo sucked up nearly all the resources in the space, other startups were falling rapidly (see the previous post).

However, the financing activities won’t help to eliminate many problems come with those station-free bikes.

to be continued…

Shared Bikes In China (2)

Cash and Deposits

At first, nearly all bike-sharing startups take deposits, usually ranging from ¥99 to ¥299.

The deposits are hard cash for startups; they are like life-time membership fees if the companies survive and users keep using the apps.

To put it another way, deposits are indefinite free borrowings.

Deposits and investors’ money are fundamentally different (in accounting), but both are actually (viewed as) cash sitting in the bank for startups.

Some may compare this model with gym memberships. When users pay upfront, gyms use the cash in expansion and operation.

Just invest (or borrow) and open one gym first, then one can use the membership fees collected to subsidize the opening of the second gym.. bike-sharing companies can use the deposits collected in one city to subsidize the expansion into the next city, to pay back any loans, to pay employees’ salaries…

Then comes the problems… for those startups that are not well-funded.

Closures in 2017

In June 2017, the first startup, Wukong Bicycle 悟空单车, announced to stop its operation.

Started in Chongqing, Wukong Bicycle has another layer of to collect operation cash – “operation partners” who would pay Wukong Bicycle an upfront fee to claim profits for a certain number of shared bikes. To be honest, “operation partners” are not treated as partners as Wukong can profit from selling bikes to them and management fees. Its “alternative fund raising” was a little concerning.

By the summer of 2017, more reports about the closure of bike-sharing companies ignited the concerns from users. When users were asking their deposits back, the real cash crunch came/intensified.

In November of 2017, it was reported that most of the bike-sharing startups have problems with their deposits. [60多家共享单车停运用户押金之痛难解 – 证券日报]

The largest of them (in 2017) was bluegogo 小蓝单车, which had raised ¥400 million. It started as a supplier for bike-sharing companies but then decided to enter the race. It had achieved a No.3 position in the space but things (financing) went south in June 2017.

As mentioned previously, it was acquired by Didi at the beginning of 2018.

Not a coincidence, an even broader problem in China emerged in 2017: P2P financing.

Meanwhile, the top-tier companies seemed to live well with millions of dollars raised on the capital markets.

Many required 0 deposits to entice users (and accelerated the failures of smaller players that reply on deposits).

Actually, China Consumers Association (CCA) encouraged bike-sharing companies to charge 0 deposits in December 2017.

to be continued..

Shared Bikes In China (1)

A History

ofo

The battle between 70+ bike-share startups (or the battle between their colors) could be traced back to the summer of 2014, when ofo (wikipedia) was started by students at the Peking University in Beijing.

ofo initially focused on bicycle tourism before deciding on bicycle sharing. At first, it was only doing campus bike sharing. In May 2015, the team appropriated the investment fund for purchasing new bicycles and enticing PKU students to partake in bicycle sharing. [PKU news] [¥9 million seed/angel]

Shared bikes became crazy in 2016. ofo took off in 2016 with ¥15 million Series A in January led by GSR Ventures 金沙江创投 and followed by Dongfang Hongdao 东方弘道, then Series A+ of ¥10 million in April and Series B of “tens of millions” USD led by Matrix China 经纬中国 in June.

Yet the fund raising didn’t stop there. ofo raised another $130 million led by Didi (C-1), Coatue (C-2), and funds affiliated with Xiaomi (C-2) in October 2016, officially marching into city businesses instead of focusing on universities.

mobike

Two major differences were separating ofo and its main competitor mobike at the beginning stage: 1) mobike focused on cities from day 1 while ofo was for universities at first 2) the locks

The first generation of ofo bikes has an unchanged passcode sent to users while mobike’s are unlocked by wireless communications between the phone, servers and the bike. mobike also uses GPS from the beginning.

See the source image — mobike 1st Gen. | Source: eastday.com

Nowadays, shared bike companies are using similar product (lock) strategies for safety, management and data. [read more about smart lock technologies involved]

mobike raised its Series A of $3 million in October 2015 led by Joy Capital 愉悦资本, Series B of $10 million in August 2016 led by Panda Capital 熊猫资本, Series C of $100 million in September led by Warburg Pincus and Hillhouse Capital.

By the 2016 holiday season..

both ofo and mobike finished with their Series C with nine figures, while many other startups were just launching their services and raised their Series A, including bluegogo which would became the third largest service provider before went bankrupt and later acquired by Didi.

Image result for bluegogo — Source: crunchbase

At that time, another startup Hellobike 哈罗单车 which would be threatening to the first-movers, was also just preparing to launch its bikes (started with 2nd/3rd tier cities) and just finished its Series A with GGV.

Image result for hellobike — Source: crunchbase

The frequency of fund raising is probably the most remarkable part of the history (to me).

I actually wish that something similar won’t be happening again…

Businesses, investors, users/citizens and regulators all need some time to really think over.

For bike-sharing startups, they were going to feel something different in 2017…

to be continued…

Hupu And Toutiao (ByteDance)

Today Toutiao acquired 30% of Hupu for ¥1.26 billion, valuing it at ¥4.2 billion.

Formed in 2004, Hupu provides marketing planning, sports events marketing and management, as well as events management. It also operates businesses such as offline eSports events, e-commerce and gaming co-operation. It owns Hupu.com, the sports site with the most page views in China, a retail site for trending sports gear, and the app for Shihuo.cn. More than 30 million users had registered on its websites and apps as of March. [yicaiglobal]

A History

Hupu has been active in the capital market for a while.

It was pursuing an IPO in 2016 on the Chinese stock market with a revenue of ¥200 million in 2015.

[Hupu IPO Prospectus]

Before its IPO efforts, Hupu finished its Series C of ¥100 million in 2014 led by Greenwoods (景林) and Series D of ¥240 million in 2015 led by Guirenniao.

Then in 2017, Hupu’s IPO didn’t go through as planned..

..which led to a round of ¥618 million led by CICC (also the underwriter for Hupu’s IPO).

Toutiao + Hupu

Ways to cooperate:

1. ads – precisely targeting a community with above-average purchasing power and distinguished tastes & shopping categories/habits
2. video – Hupu’s sports video capabilities/rights/viewers will have synergies with Toutiao’s video infrastructure and recommendations; plus, Hupu will be one of Toutiao’s efforts to march into sporting business
3. e-commerce: direct sale, and with the help from ads and video; Douyin’s video can lead to shopping on Hupu’s e-commerce platforms

China’s Fresh Produce E-commerce (2)

previous post – China’s Fresh Produce E-commerce (1)

Second Round

The two words that characterize the second (current) model is “front warehouse” (前置仓).

By managing more distributed front warehouses (mostly in cities), the fresh produces e-commerce companies can usually deliver within 2 hours after an order is placed.

The model could be exemplified by the current focus of Hema (盒马鲜生) and MissFresh (每日优鲜). The difference – Hema’s warehouses are also consumer-facing stores; MissFresh’s warehouses are expanding much faster and many have no “experience store” functions.

Hema is financed within Alibaba (consolidated in earnings reports) and MissFresh has raised several hundred millions from Tencent.

Hema

Hou Yi (侯毅), the CEO and founder of Hema, worked for JD.com and in charge of JD logistics, prior to joining Alibaba. He has rotated to the O2O (online to offline department) and was the founder of the predecessor of JD Daojia (京东到家), JD’s delivery team. It has been rumored that firstly HOU proposed to Richard Liu, the CEO and founder of JD.com, about the idea of Hema; unfortunately, LIU did not approve that idea at that time. Later HOU approached ZHANG You (张勇), the CEO of Alibaba Group, and get offered to join Alibaba and try out his idea. [equalocean]

Since its beginning in 2016, Hema has now expanded into 130 stores in 19 cities as of March 2019.

Tmall’s fresh stores have also been consolidated into Hema’s operations, announced in December 2018. (meanwhile, JD’s fresh produces team was combined with 7-fresh in the same month)

Its operation summary compared with competitors provided by EqualOcean.

MissFresh

Jan 2017, Series C, $100 million led by Lenovo Capital

Sep 2017, Series C+, $230 million led by Tiger Global and Genesis Capital

Dec 2017, Series D, said to be $500 million; another report said $200 million to spin off 便利购 (the unmanned shelves)

Sep 2018, Series E, $450 million led by 高盛（GSIP）、腾讯、时代资本、Davis Selected Advisers

Tencent has invested four times so far.

Its core competitiveness lies in its front warehouse network, inventory management system and local community operation. MissFresh has an average duration of inventory of 2.5 days.

MissFresh is targeting gross margin at ~20% in the long-term while maintaining an operating margin at 10-15%.

So we can see that attempts are made to locate “warehouses” closer to consumers and to shorten the waiting time to ~30min.

Alongside the 1st and the 2nd rounds, there is another attempt – not necessarily new but will take some time to stabilize, if possible) – to combine 1) mainline logistics, 2) city delivery networks, 3) front-warehouses + community stores, all facilitated by digitalized and AI-driven systems.