The payments wars in Japan are heating up and one of the battlegrounds is convenience store coffee.

“Coffee? What does that have to do with payments?” I’m glad you asked.

Convenience stores are low net margin businesses, which sell some high gross margin goods/services but a lot of low ones, and have high fixed costs and a low ticket size. The typical transaction is under 500 yen ($5) and many are about $1.

They need repeat custom.

A few years ago, all of the chains had a good idea for increasing frequency of use: make a minor capital investment in automatic coffee machines. Sell access to them for the price of a cup / ice; customers self-serve with the machine.

The price point is $1 to about $2.

Coffee quickly became one of the most frequently repurchased items at convenience stores, in no small part because it’s the one thing they can sell which is phameceutically habit forming but totally unregulated. (Just telling it like it is.)

But the coffee is not very defensible

The problem, such that it is, is that competing chains are everywhere and *all* of them serve Thoroughly Adequate Coffee at similar prices, so you’re back into the brutal economics of “Who is 3 meters closer to 40 customers at 1 office?”

Enter payment apps.

1/ My most popular tweets of 2020 by month (thread)

January:

A reminder of @morganhousel cash strategy.

For every $1,000 in cash:

More: ⬇️⬇️⬇️⬇️⬇️

2/ February

If you've truly found the next $AMZN, $AAPL, or $NFLX and can hold for years, it's nearly impossible to overpay.

But finding them is hard.

3/ March

Millennials have seen tech crash, 2008, and now #COVID19

I'm worried that many of them will swear off the stock market -- the greatest wealth-building device ever -- for life.

4/ April

Want to see the checklists used by

Buffet
Dalio
Fischer
Graham
Greenblatt
Klarman
Marks
Munger

and

5/ May

When the P/E ratio is:

Useless (Stage 1, 4) - $MDB, $SHOP, $PINS, $GME, $JCP

Semi-useful (Stage 2) - $TTD, $NFLX

Useful! (Stage 3) - $MSFT, $AAPL, $V

In determining valuation

1/

Get a cup of coffee.

In this thread, we'll cover *State Quantities* and *Flow Quantities*.

This mental model can help us analyze many different entities -- from complex engineering systems to publicly traded companies.

2/

A "State Quantity" is something that's associated with a *specific point in time*.

For example, the number of followers a Twitter account has is a state quantity. This number can go up and down over time. But at any one *specific* time point, it's fixed.

3/

Similarly, the amount of cash a company has is a state quantity.

This cash balance can also rise and fall over time.

But pick any one *specific* time point -- and the company can only have one *specific* cash balance at that time point.

4/

By contrast, a "Flow Quantity" is something that's associated with a time *interval* rather than a time *point*.

For example, the number of followers gained by a Twitter account is a flow quantity. It's meaningful only when we specify a time interval (eg, the last 30 days).

5/

A simple analogy is that a State Quantity is like a photo -- a snapshot at a particular *point* in time.

But a Flow Quantity is like a video -- a record of events that take place during a particular time *interval*.

Wiley buys Hindawi -- a $298 million acquisition for GBP 25 million in annual APC revenues -- in bid to expand open-access platforms @pbasken

I'm really fascinated by several things about this acquisition. 1. One could posit that APC business models in structural decline as they are replaced by transformative agreements. Will Hindawi titles be folded into Wiley TA's or offered as a separate "pure publish" model?

2. Seems that there is little concern about geopolitical risk: "Wiley…saw value in Hindawi’s strong position in Asia, the world’s largest and fastest growing academic publishing market…“Hindawi’s significant footprint in in China is a major benefit from that perspective”"

3. It seems some in the academic community continue to be "alarmed" when, after taking advantage of private capital to fund commercial start-ups for open access services (bepress; SSRN; now Hindawi), that capital looks to sell in search of returns. As if this is a surprise!

4. Most interesting will be to see how this expansion of Wiley's OA portfolio and platforms/workflows/services can connect with its important businesses in support of society publishing.

!!Decode/Thread (12/31/20)

Well this could be the LAST Decode/Thread of the Year ...

... Have a Happy and Safe New Years Eve ...

...

🤔 Thread: More of the wrong thing is less
(or, how I stepped off the hamster wheel)

I’m going to share a personal story with hope that it inspires at least one person to re-examine their definition of success 👇

Through hard work and an unfair share of luck, I’ve done some cool “bucket list” things in my career:

✅Raised VC from the worlds’ top firms
✅Helped build 100’s of millions in revenue from nothing
✅Rang the bell at the NYSE
✅Met & did deals with billionaires & business icons

These are things I dreamed about when I was young and I treasure some of the memories. But when they finally happened I felt surprisingly unfulfilled. I was scoring lots of points but didn’t feel like I was winning.

Then a few years ago during a board meeting I had a moment of clarity. I looked around the table at 10 people, all absurdly successful by financial measures. There wasn’t a single person I wanted to emulate. Most were unhealthy and several had told me that they were unhappy.

Within months I walked away from from a 7-figure salary, moved my family to Boulder, & haven’t looked back. Don’t get me wrong, I’m a capitalist & like money as much as anyone. But for me it's not the thing, and *more of the wrong thing is less*.

This year has been quite something.

But let's try to pick some of the most clownish stories this year had to offer.

Here's to 2020's end of year thread 1/50

Have you got a license for that opinion?

2/50

At least academics remain the same.

3/50

And Sweden didn't change

4/50

Don't have much to say about this one

5/50

1/ A lot of people ask me how Bleacher Report found our first writers when we were tiny and had no funding.

So here's a thread on all the things we tried, what worked best, and lessons on growing a community from scratch:

2/ When we first started B/R, all the articles were written by my co-founders, our friends, and me.

This led to some hilariously bad takes. Like this article where I panned the SF Giants for drafting future World Series MVP Madison Bumgarner.

3/ When we were ready to start building our community, we started with word of mouth. We drafted an email pitching our concept. It went out to everyone we knew, asking them to share it with anyone who would be interested.

This got us maybe a few dozen signups.

From the email:

4/ With only a handful of members, we needed to make the community feel more active.

So we faked it til we made it.

Our team created multiple accounts and posted using different fake names. This created the sense of more activity and encouraged new members to join in.

5/ Later, I learned that the founders of Reddit did the same thing early on.

Sometimes the solution to the "chicken and the egg" problem of building community is to create the illusion of more chickens (or

GS Tactical Fund Flows 2021 - some interesting tidbits:

We are set up to see a massive wave of inflows [in 2021]. The “January Effect” will be exceptionally strong this year. Investors are looking to buy the dips, but they remain shallow as there is competition for dip alpha.

Global stocks are now worth equal to 116% of Global GDP, the highest level since 2007.

AAIIBEAR Index “Da Bears” just logged a reading of sub 22.00, the lowest reading since January 2nd. The Bulls logged their longest euphoria reading since January 2018. Euphoria is high.

The month of January see’s a 37% of yearly inflows as a result of 401k and asset allocation rebalancing. Can see financial advisors recommending a portfolio shift back into equities given the current defensive allocation.

Over the last 25 yrs, 25bps of AUM of new money comes into the market each January. This is a big number on $20 Trillion worth of fund assets. This would be about +$50B worth of buy demand, and 2021 could see at least double this year.

The Nasdaq hit its 55th record close of the year on Monday and has gained almost 44% this year. There may be some FOMO.

This flow of funds shift will get exacerbated this year given the heavy positioning in money markets and bonds, aka TINA, or lack of alternatives.

1/ Mission Statements 🧵

I used to think mission statements were just corporate fluff

False words that companies created for HR reasons

I've slowly changed my mind about them

They are THE BEST stakeholder alignment & decision-making tool ever

EVER!

Need convincing? ⬇️⬇️⬇️⬇️

2/ What is a mission statement?

At its core, a mission statement should answer this question:

*****Why does the company exist?*****

A profound question that is easy to overlook!

3/ When used properly

Mission Statements should guide ALL of the actions of the organization

It's like a company's North Star

If an activity doesn’t advance the mission,

it should be discarded!

If an activity does advance the mission,

it should be adopted!

4/ A Mission and a Vision statement are different

Mission: WHY the company exists

Vision: What the company/world looks like if the company is successful

Both important, but they are NOT interchangeable

5/ The reason I used to think mission statements didn't matter

is because the vast majority of companies/CEOs

don't believe they matter!

Most companies SUCK at creating & communicating them!

Why should employees/shareholders care about a mission

if the company/CEO doesn't?

Next 10 years in FinTech.

The Fintech tsunami is happening, and there is no way back.

Long thread 🧵👇🏼

1) In 2030, the largest “bank” in the world will not-be-a-bank.🏦 Think- Square, Stripe, Affirm, AntFin, PayPal, etc. Many large asset categories are still untouched by Fintechs, and once that starts to happen, several new ~$100BN - $500BN 💰 companies will be created.

2) Major economies will have low or no-Cash 💵; primarily due to ‘digitization-of everything’, and CBDC. Major central banks will transition to a digital currency paradigm, where national currencies will compete on features (like software does) as well as economics.

3) Credit Bureaus will become redundant. The 'spending-to-income-habits' indicator will overtake credit score. In the new decade: How responsibly one spends the money will become a stronger indicator of creditworthiness than all bureau data scores.

4) Algorithms— built into MoneyOS — will automatically refinance debt to the lowest possible rate, triggering massive compression in profit pools for banks. These “Systems of Intelligence” companies will create massive value.

This interview from @OSchiffey has great quotes that directly refute the nonsense that many privacy advocates spout about how the death of cross-site tracking will help ad-supported publishers on the open web. https://t.co/bj1gWPKOei 1/

The interview is with a senior leader at a major global ad agency. Someone who actually knows what advertisers are talking about, where they are directing their spending, and what the future trends will be. Not a privacy advocate who knows nothing about the advertising market 2/

First, privacy advocates spread misinformation and bad research data that ITP hasn't hurt publisher revenue and/or hasn't affected advertiser spending. And yet here is an unequivocal answer as to the impact of ITP on advertiser spending. 3/

The agency exec also clearly shares the opinion that the end of 3PC will push money away from the open web, exactly what privacy advocates claim won't happen. 4/

She also talks about how context matters, but so does audience. Audience targeting is effectively dead without 3PC and non-Chrome browsers are doing nothing to change this. 5/

Possibly the greatest NBER abstract ever written.

The Great Man theory of history.... turns out to have some pretty strong statistical support.

School closures had NO EFFECT (precise null!) on socioeconomic outcomes and future schooling behavior during the 1918 pandemic.

The authors note that school closures were not as long back then.

But also school calendars were far shorter. So idk how it shakes out.

Informing men about the odds their wife will die in childbirth reduces fertility, increases marital satisfaction, and reduces mismatch in fertility preferences within couples (in Zambia).

🚨🚨🚚🚛🚨🚨email from Robert Hardy @RobHardyFR8 whose Customs Clearance Consortium is part of govt’s £200m scheme for GB-NI border warns of “huge shortage” of customs agents. Via @SJAMcBride /1

https://t.co/WoLWdI8LoF

He adds: “Export from GB with import to Ireland [is] amongst the most complicated...We expect heavy volumes at Dover from tonight as GB exports start to ramp up and many transporters do not have transit and EU clearance in place.” ...remember @BrandonLewis ‘no border’ tweet 🙄/2

He then warns - as @RHARichardB had warned - that the issue is companies providing poorly cleansed/matched data...and announces CCC doesn’t have capacity to raise docs in mainland EU/3

This is example of what Biz needs to do when moving agri foods - hauliers and vets tell me there is still no solution from Defra/Daera on how to do multiple pickups that require export health certificates at each stop (not uncommon) /4

In the next week or two we’ll see how these issue play into supply chains - and the issue that trucks flow in a cycle, GB-NI/IE-GB...so you need enough returning to keep the flow going. /5

1/ There are a lot of investment sayings that get repeated by individual & professional investors alike.

One I hear parroted over and over again is a variation of “high stock valuations are fine since interest rates are low”.

But did you ever stop and ask, “Is that true”?

2/ This thread was inspired by a tweet poll I did a few years ago, in which I asked, would you still own stocks if they reached 10-year price to earnings (CAPE) ratio valuation multiples of 50-, or 100-times earnings.

3/ And I was shocked, but most said they would still own stocks at 50, and many (a third!) said they would own them at essentially any price (100).

4/ This had me scratching my head as it sounds totally insane.

Most investors use a value approach when it comes to buying assets like cars, houses, etc.

How long would you spend before buying that new 80-inch TV? (OK maybe less now with @wirecutter)

5/ But time spent to think about investing your life savings?

Many are just willing to clickautoinvest into stocks at any valuation level.

Historically investing in stocks at sky-high multiples is a horrible, terrible, no good idea.

The Review: The festive fixtures - A thread

Hi everyone, welcome to the latest edition of “The Review” where I look at the blanks, doubles and the new fixture rescheduling in detail:

#FPL #FPLCommunity @OfficialFPL

(Data taken from @FFScout and @FFH_HQ with consent)

Before I start, I'd like to make a small request. I post about FPL on my Instagram too, so if you have an Instagram account, follow up here!

Q: How do we tackle the next three GWs?

Given the unfortunate and untimely postponements of last GW, a lot of FPL managers were left deflated. For luck to have the final say was always going to be infuriating – given the amount of planning that goes into...

... each GW, particularly the amount of work being put into all kinds of strategies by FPL managers of late. Just a slight point I’d like to make here, your frustration is only natural but it’s worth noting that a lot of gains are still to be made in the season so try and keep...

... your heads up as we head into the most crucial stage of the season. Last evening, the Premier League announced that Burnley v Man United will be played in GW 18, meaning that Man United and Burnley no longer have any blank coming up. Bruno Fernandes is highly owned, so...