Category: personal_noteS

Healthy Beverages Going Mainstream

La Croix may or may not be a one-time thing, but consumers’ tastes are shifting towards beverages that have less sugar and looks more healthy.

Image result for la croix
Source: today.com
Annual Sales (in millions) of La Croix’ Parent Company National Beverage | Source: GuruFocus.com

The overall market of carbonated & flavored bottled water is steadily growing.

Source: Quartz, Euromonitor

Established companies are preparing for the shift, which started decades ago when obesity became a thing in the US.

Source: Preventing Childhood Obesity: Health in the Balance (nap.edu)

Diet Coke was introduced almost 100 years after the original coke (1886 -> 1982). Coke Zero was introduced in 2005.

The pursuit for “healthy”, “organic” and “natural” has never stopped.

In 2008, The Coca-Cola Company purchased a 40% stake in Honest Tea at $43 million, and acquired the company in 2011.

Source: honesttea.com

Coca-cola also invested in ZICO Coconut water in 2009, and purchased a majority stake in ZICO Coconut water in 2012.

Source: zico.com

In 2017, Coke Zero has become Coke Zero Sugar with minor modifications (taste more like original coke).

Source: coca-colacompany.com

Meanwhile, Pepsi Co has made a series of investments and acquisitions. The most recent move is to buy SodaStream for $3.2 billion.

Image result for soda stream
Source: sodastream.com

I feel like consumers’ tastes in China need to catch-up…. at least a certain percentage of people should look for heathy brands. There is no well-recognized Chinese brand in this category (at least to me).

Middlemen’s Hard Time… PBMs

It has been more than a month since the 7 major drug manufacturers’ CEOs testified before the congress on February 26.

One of the “problems” that pharma CEOs complained about was pharmacy benefit managers (PBMs) or the middleman problem.

In a healthcare system involving drugmakers, PBMs, pharmacies, insurers, patients, etc., one of the premises behind CVS’s $70 billion acquisition of Aetna and Cigna’s $54 billion acquisition of Express Scripts might actually make them vulnerable in front of regulators: their bargain power.

CVS Health, Cigna, McKesson, Rite Aid, Walgreens… companies with relatively large exposure between pharmaceutical companies and patients/payers are having a very hard time.

Source: Author, Yahoo Finance

What’s ahead – on March 13, the same committee (Senate Finance Committee) said it has called 5 major PBMs to testify on April 3 (tomorrow…)

    • Cigna
    • CVS
    • Humana
    • OptumRx
    • Prime Therapeutics

They must have been prepared.

Stay stunned.

An Excerpt From Bad Blood

I have talked about this as the most exciting part of Bad Blood with friends several times that I would like to read the original wording again and share it here.

“Meanwhile, behind the scenes, Holmes was trying another avenue to quash the story. In March, a month after I had started digging into the company, Theranos had closed another round of funding. Unbeknownst to me, the lead investor was Rupert Murdoch, the Australian-born media mogul who controlled the Journal’s parent company, News Corporation. Of the more than $430 million Theranos had raised in this last round, $125 million had come from Murdoch. That made him the company’s biggest investor.”

“By the time Mike Siconolfi and I had our conversation about the ancient art of Sicilian fishing in late July, Holmes had had three private meetings with Murdoch. The latest had taken place earlier that month, when she’d hosted him in Palo Alto and showed him the miniLab. During the visit, she’d raised my story, telling him the information I had gathered was false and would do great damage to Theranos if it was published. Murdoch had demurred, saying he trusted the paper’s editors to handle the matter fairly.

In late September, as we were getting close to publication, Holmes met with Murdoch a fourth time in his office on the eighth floor of the News Corporation building in Midtown Manhattan. My desk in the Journal’s newsroom was just three floors below, but I had no idea she was on the premises. She brought up my story with renewed urgency, hoping Murdoch would offer to kill it. Once again, despite the substantial investment he had at stake, he declined to intervene.”

– John Carreyrou. “Bad Blood.”

Besides other considerations, the “nonaction” by Mr. Murdoch is simply thrilling and kind of rare these days.

Lyft On Nasdaq

The first of a series of tech IPOs – Lyft debuted on Nasdaq today. With its stock priced at $72, Lyft is offering 32,500,000 shares of its Class A common stock, plus up to an additional 4,875,000 shares (raised $351 million in total).

The market cap excludes things like RSUs to be issued: 1) 77,390,807 shares of our Class A common stock reserved for future issuance under our equity compensation plans 2) 31,605,338 shares of our Class A common stock subject to RSUs outstanding, but for which the time-based vesting condition was not satisfied as of December 31, 2018 (including 15,065,349 shares of our Class A common stock subject to RSUs granted after December 31, 2018) 3) 7,037,379 shares of our Class A common stock issuable upon the exercise of options to purchase shares of our Class A common stock outstanding as of December 31, 2018 (weighted average $4.74 exercise price)

New Foreign Investment Law, Boao Forum for Asia 2019 And China Development Forum 2019

Following the closing (March 15) of National People’s Congress (NPC)’ 2019 annual meeting in Beijing, two important annual forums were held – China Development Forum 2019 (March and Boao Forum for Asia 2019

One of the major progress made during NPC’s annual meeting is the approval of the new foreign investment law #中华人民共和国外商投资法 (original link here)

The law was first introduced as a draft in 2015 and will come into effect on January 1, 2020.

The new foreign investment law will replace the “three foreign capital laws” – Law on Sino-Foreign Equity Joint Ventures #中外合资经营企业法, Law on Foreign-Capital Enterprises #外资企业法 and Law on Sino-Foreign Cooperative Joint Ventures #中外合作经营企业法, which were introduced in 1979, 1986 and 1988 respectively. They were updated along the way but structural/fundamental changes won’t be easy. (you can’t expect a law to be efficient and perfect after 30-40 years.. in a fast-changing environment)

China Development Forum is more focused on China. And of course, the newly-passed foreign investment law was discussed and introduced to all the CEOs/managements from foreign companies among others.

Again, on Boao Forum For Asia, Premier Li Keqiang reemphasized the plan to make detailed regulations to enforce the effective implementation of the foreign investment law.

Updates:

Recently adjusted (cut) government subsidies for electric EV in China

EV is probably one of the most mature new market. It is still something new for most families, but it seems to me that the global EV technology readiness is pretty much similar to that of iPhone in 2013-2015 (iPhone 5S – iPhone 6S).

The industry is more likely to make incremental improvements over the next decade. It won’t be easy in terms of technological progress; it will also need much more effort/thinking in terms of commercial strategies.

One of the latest sign is the most recent subsidy cut for “new energy vehicles”, dated March 26 in Beijing #财建〔2019〕138号.

The reduction in subsidies has been outlined as early as April 2015 #财建〔2015〕134号, in which 1. the subsidies for 2016 was announced and 2. projected that certain vehicles’ 2017-2018 subsidies shall be 20% lower & 3. 2019-2020 subsidies shall be 40% lower, among other things.

2017－2020年除燃料电池汽车外其他车型补助标准适当退坡，其中：2017－2018年补助标准在2016年基础上下降20%，2019－2020年补助标准在2016年基础上下降40%。

#财建〔2015〕134号

Here is the list of updates in the following years:

#财建〔2016〕958号 – Announced Dec 30, 2016; Effective Jan 1, 2017

#财建〔2018〕18号 – Announced Feb 12, 2018; Effective Feb 12, 2018; Grace Period till Jun 11, 2018, during which passengers would follow the previous program x 40%, trucks would follow the previous program x 70%, fuel cells would follow the previous program

#财建〔2019〕138号 – Announced Mar 26, 2019; Effective Mar 26, 2019; Grace Period till Jun 25, 2019, during which vehicles unqualified for 2019 standard shall follow previous program x 10%, qualified for 2019 standard shall follow previous program x 60%, policies for fuel cells and buses will announce separately

A summary of national government (not including regional) subsidy base for battery electric vehicles

More restrictions are added in 2018 and 2019, especially in terms of technical standards.

Smaller EV manufacturers with little R&D resources will need to restructure or pivot. Profitability will be an issue for many companies; but a needed test to form a mature market that can run itself and benefit most stakeholders.

An Eventful Tuesday: Tech Companies Stealing Each Other’s Thunder

Many tech-related announcements/events is happening on March 19. Coincidence? or a colluded effort to steal someone’s thunder…

So we have…

Apple announcing several updates on its hardwares, from iPad yesterday to today’s iMac.

And Facebook (Instagram) + PayPal collaboration bringing the next-level integration of social medial + e-commerce. [also mentioned in what’s next in retailing in China] The collaboration won’t be limited to Instagram and will be part of Facebook’s push to payments while Facebook Pay in its messenger app is not doing well enough. And for PayPal, this is a major victory to reinforce its presence in online payments and business collaboration.

And Google unveiled its upcoming gaming-streaming service, Stadia, on the Game Developers Conference today. Originally announced as Project Stream, it will compete directly with Microsoft, Nintendo, Apple and others in the future battleground of gaming: cloud. [Video, Project Stream]

Meanwhile, Jeff Bezos is hosting an exclusive hard-tech party in Palm Spring called MARS, focusing on robots and other cutting-edge engineering demos.

Pokemon GO Rises Again

It seems to some that the Pokemon GO fever was in 2016-ish and has lost the momentum.

It seems to me though, the game has never been dead and might be the first AR mobile game platform with a massive user base [and to introduce a new way of social interaction/entertainment]

Actually the company behind the game, Niantic, just raised $245 million at a nearly $4 billion valuation in January.

So what is new for Pokémon GO if it is not dead.

Social features.

1. Pokémon GO introduces friends features that can send daily gifts to each other and trade pokemons. Making friends and leveling up the friendship level will earn lots of exp. In September 2018, Niantic said “more than 113 million Friend connections have been made and 2.2 billion Gifts have been sent to friends” since the end of June (in two month total)

2. Gym system reworked to encourage team play (June 2017) + raid boss introduced at gym (July 2017). Gyms are where trainers use Pokémon’s to defend/attack and essentially defending a gym will need more legitimate teamwork. (Less of a broken gym system before) The raid system is a smart design. Legendary Pokémon raids reengaged many players. The most recent Rayquaza raid is high expected (should give Pokémon Go some good statistics to show growth/relevance).

3. Battle system. Although introduced before, it was improved recently. All skill sets now have two numbers: damage in gyms and damage in battle. It will be much more raiser to design a balanced battle system now. And that will be the basis of Pokémon tournament/E-sport.

4. AR photos. The system is working well and has a lot more features to add. I could imagine many fun photos can be taken with Pokémon’s in real world settings. Also, taking a selfie with legendary Pokémon’s will give a sense of achievement and more purpose of playing. Moreover, it could be fun with multiple players/pokemons at the same place and more natural interactions implemented.

Strong IP is such a valuable asset.

Pokemon GO park (like a Disneyland, smaller) would be very doable. It might be the first AR park to be built. More fun in the park with AR glasses and phones.

Some more social community events could be designed. It has already incorporated events that celebrate holidays around the world. Pokémon GO could be a lifestyle. (A healthy one in terms of all the walking)

Boeing…

Twin Accidents

  1. On October 29, 2018, Lion Air Flight 610, a 737 MAX 8 registration PK-LQP, crashed into the Java Sea 13 minutes after takeoff, killing all 189 passengers and crew.
  2. On March 10, 2019, Ethiopian Airlines Flight 302, a 737 MAX 8 registration ET-AVJ, crashed approximately 6 minutes after takeoff, killing all 149 passengers and 8 crew members on board.

Countries Ordered Grounding

  • On March 11, 2019, China was the first country to order all 96 of its 737 MAX aircraft grounded
  • On March 12, 2019, Europe and India join wave of countries grounding the 737 Max
  • On March 13, 2019, U.S. regulators joined the global chorus by grounding the plane
Source: bbc.com

Undelivered Orders

Boeing produces 52 aircraft per month and its newest version, the MAX, represents the lion’s share of production, although Boeing declined to break out exact numbers. [oann.com]

As of January 2019, Boeing had 5,011 firm orders from 78 identified customers for the 737 MAX. The top three identified airline customers for the 737 MAX are Southwest Airlines with 280 orders, Flydubai with 251 orders, and Lion Air with 201 orders. [Wikipedia]

Source: Wikipedia

The order book for its 737 Max is worth more than $600 billion according to Bloomberg.

Boeing’s stock closed at $422.54 per share before the accident and closed at $377.14 per share on March 11. ( -10.74%, after 3 days and all major markets grounded the plane)

With its 564.99M shares outstanding, the market value decreased by ~$25.8 billion. It seems that investors are more optimistic than I thought. With immediate delivery delayed/cancelled, the order value should shrink by a lot (50% discount * 10% profit * $600 billion = $30 billion; 2018 total net income ~$10 billion), plus the future loss of revenue on maintenance, loss of orders/bargain power due to the trust/brand damage.

Airlines may just switch to Boeing’s other aircrafts tho.

 

Tech Companies = Governments

This will be a large topic and won’t be easy to discuss in a systematic way. I will write down some thoughts in bullet points and revisit later.

  • The idea has occurred to me several times. Essentially, government is an organization and so does a company. Although organizations have different scopes, different formats of running, there must be some similarities.
  • We usually say companies are to maximize shareholders’ value (short-run and long-run). But when the long-run is long enough, we shall see something interesting: the companies are paying extreme attention to building an ecosystem, to maintaining a healthy community/marketplace, to maximizing users’ satisfaction, etc.
  • Tech companies very much rely on users’ opinion. They listen to users. Users have the option to walk away just like immigration. Tech companies need users’ inputs/choices to build apps they use, to maintain the virtual world they live. The self-governance is impressive, especially in blockchain-based applications that users can decide/vote.
  • Tech companies are responsible to protect users from malware or harmful contents/users. They can block an IP address or a user account just like putting someone into prison. They can reject his/her entrance into the community.
  • Tech companies have their own rules or bottom lines that act as laws/judges, with the help of self-governance.
  • There are many free services as long as you are one of its users (or citizens)
  • They provide infrastructures and ways to interact (emails, postal services, freeways)
  • Users pay taxes such as data. In other cases, users share what they earned through tech companies (e.g. marketplace organizers by them)