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.
Payment apps have finally made loyalty points and bulk ticket (回数券) purchases fast enough the convenience stores, which have strict throughout budgets measured in seconds per customer, can offer them across a chain.

And since booze and tobacco can’t meaningfully be used...
Duh duh duh The Coffee Payment War.

Family Mart has a closed loop store value app called Family Pay. It is a barcode based payment and does basically what you expect it to.

It is also a coupon platform, and will sell you an anywhere-in-chain “11 drinks for price of 10.”
The UX of actually redeeming them is a little weird; you have to select the ticket out of your book prior to checking out. But it gives you a great reason to use Family Mart for all your coffee, even if you have to walk 2 minutes longer than a 7/11 closer to your home/office/etc.
7/11 comes at it from a different angle; they gamify coupons. If you buy 10 coffee, you get a coupon for one coffee for free (or equivalent discount).

App tracks progress. 6 more to go!

(I cropped the screen to avoid giving you a barcode that would let anyone snatch my coffee.)
A fun payments wrinkle: one reason chains don’t love coupon books/“buy 10 get 11” historically is that it throws off their internal funds flows if they are franchised. You’d think purchases and redemptions are approximately symmetrical but they are often not.
This tends to “drain cash” from the redemption heavy franchisees, who (because they are in a business of picking up pennies) hate this and complain to corporate over trivial money.

Automating all of this and having funds flow go Corp -> franchisee not F>C>F ameliorated problem.
Think of it as a happy bit of efficiency introduced into the world by computers being utterly not bored by the prospect of tracking 40 million coffees a day in Japan individually, which is A Task even by Japanese logistics standards.
There have, of course, been a lot of presentations in Tokyo with the punchline:

“You know what would make this process even better? ... A blockchain.”

(*sigh* Seriously.)
Fun question left as an exercise to the reader: why does Starbucks have an entirely different offering in the US (and Japan, where it is broadly similar) for their closed-loop stored value?

More from Patrick McKenzie

So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.

The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.

This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.

The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."

This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.
I like this heuristic, and have a few which are similar in intent to it:

Hiring efficiency:

How long does it take, measured from initial expression of interest through offer of employment signed, for a typical candidate cold inbounding to the company?

What is the *theoretical minimum* for *any* candidate?

How long does it take, as a developer newly hired at the company:

* To get a fully credentialed machine issued to you
* To get a fully functional development environment on that machine which could push code to production immediately
* To solo ship one material quanta of work

How long does it take, from first idea floated to "It's on the Internet", to create a piece of marketing collateral.

(For bonus points: break down by ambitiousness / form factor.)

How many people have to say yes to do something which is clearly worth doing which costs $5,000 / $15,000 / $250,000 and has never been done before.

More from Finance

💥This is a story about a supermarket chain.
- One of the largest employers in the U.S. (~193,000 employees)
- ~$38 B in revenue
- 1200+ locations in 7 states
- Employee owned with majority shares still owned by the Jenkins family members
It’s called PUBLIX

I deleted an earlier tweet because I started to quickly. Forgive me for jumping the gun.
It was about a story that came out today in the WSJ about a big Trump Donor helping fund the #EllipseRally in D.C.
Great reporting by @rebeccaballhaus @shalini @AlexandraBerzon
Here’s that story

The donor who gave the money to help fund the #EllipseRally in DC that led to domestic terrorists storming the capital was Julie Ansley Jenkins Fancelli.
Julie gave $300,000 to help fund that rally.
But this THREAD is also about PUBLIX.

Julie is the daughter of George Jenkins, the original founder of PUBLIX. It began as one store in 1930 and grew to what it is today, despite the Great Depression and World Wars.
But that’s another story.

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Parece muito abstrato o conceito de RESISTÊNCIA. Então, nessa thread vou listar iniciativas que tornam essa resistência concreta. Você pode participar, compartilhar, ajudar, pedir ajuda, doar, RESISTIR.
(Se tiver sugestões me avisa que vou incluindo!)
RT, pfv!
Várias organizações se juntaram pra e tocar essa campanha imensa de financiamento coletivo pra apoiar grupos que acolhem pessoas que sofrem violência, intolerância, racismo, homofobia, transfobia e todo tipo de preconceito. #NiguémFicaPraTrás!
A ACODE é um grupo que usa o inbox do Facebook e do Instagram pra responder aos casos de violência política no Brasil. Participam da iniciativa: @AllOut, @defemde, Casa1, DIVAM, @conectas e ativistas do Brasil todo.

A @AllOut está se preparando pra lançar a All Out Brasil pra intensificar a luta por direitos, dignidade e segurança para todas as pessoas LGBT+ do Brasil.

Tive que quebrar a thread.
Ela continua aqui:
(EXCERPT) PROOF OF COLLUSION drops in 3 weeks. Here's the second set of excerpts from this 450-page, 1,650-endnote book. 4 more excerpts will be released each Monday until the book's November 13 release. I hope you'll RETWEET and consider preordering here:

2/ For those who missed the first set of excerpts from PROOF OF COLLUSION, they can be seen in the tweet below—click on the link to see the tweet. For the link to preorder PROOF OF COLLUSION, see my currently pinned tweet or the link in my Twitter profile.

PS/ To see a larger, more readily readable version of any of these excerpts, right-click and download the picture to your desktop. Then open the file and it will be much larger and easier to read.

BONUS FACT/ In the last excerpt, I refer to "any aide with whom Trump shared the classified intelligence he received in the [August 17, 2016] briefing." Well you might wonder—who did he share it with? Answer: we don't know.

But we DO know who was WITH HIM at the briefing: FLYNN.

BONUS FACT 2/ According to Mother Jones and Washington Post reporting, then, we know Flynn attended the August 17, 2016 briefing at which Trump was informed of Russian aggression, and THEREAFTER—but BEFORE the election—engaged in clandestine contacts with the Russian ambassador.
The Beatles wrote “Yesterday” in less than a minute.

Led Zeppelin wrote “Rock And Roll” in 30 minutes.

The White Stripes, “Seven Nation Army”, 10 min during a soundcheck.

The Rolling Stones, “I Can’t Get No Satisfaction”, 40min.

Making a startup in 24 hours is perfectly fine.

I worked on my first startup for 2.5years. It was an events app. Sunk in cost and expectations were so high, that I had to close it, despite getting consistent revenue.

In comparison, I wrote @CryptoJobsList in 2 days. And it's way more meaningful than what I've been doing in my events startup for 2.5 years.

When I let go of my engineering ego and let go of expectations that I need to raise capital and hustle for 4+ years — I started lauching fast and interating fast without any expectations — then I started coming up with something truly meaningful and useful ✨

12 startups in 12 months by @levelsio
24 hour startup by @thepatwalls
— are great challenges that make you focus on the end product value, iterate fast and see what sticks and ruthlessly kill what does not work.