Reading
across disciplines is one of the best ways to improve our investment acumen.
Here is a summary of some of the best articles I read this week.
1) Forget 5G, China is starting to look at 6G!!
The world has barely
started using 5G, the latest generation of wireless connectivity, but China is
already looking ahead to 6G. 5G and 6G refer to the fifth and sixth generation
of mobile wireless networks. While 5G is known to have data transmission speeds
at least 10 times greater than 4G, rolled out in 2009, it’s too early to say
what 6G could be, or what sorts of technologies it would advance. By officially
announcing the development of 6G technology, China could cause more
consternation in the US national security community over China’s tech
capabilities—and lead to more scrutiny of Huawei. While the ministry did not
name any of the companies involved with the development of 6G, it’s a fair
guess that a national tech champion like Huawei would be on that list.
2) The side-effects of a SoftBank funded economy
Last year, a hospitality start-up called Oyo told
that it would turn the Four Sight into a flagship hotel for corporate
customers. It guaranteed monthly payments whether the rooms were booked or not,
as long as he rebranded the property with Oyo’s name and sold the rooms
exclusively through its site.
But corporate guests did not materialize, and Oyo
stopped making the payments. Now he is on the verge of eviction.
Many of the young
companies used SoftBank’s cash to dangle incentives and other payments to
quickly attract as many workers as they could. But when they failed to make a
profit and SoftBank changed its tune on growth, the companies often slashed or
reneged on those same incentives.
SoftBank’s Vision Fund is an emblem of a broader
phenomenon known as “overcapitalization” — essentially, too much
cash. Venture funds inundated start-ups with more than $207 billion last
year, or almost twice the amount invested globally during the dot-com peak in
2000, according to CB Insights, a firm that tracks private companies.
Flush with the cash, entrepreneurs operated with scant
oversight and little regard for profit. All the while, SoftBank and other
investors have valued these start-ups at inflated levels, leading to an
overheated system filled with unsound businesses.
3) Google to launch Cache - a effort to expand their
payments business to banking
Google is
teaming up with two banks, Citigroup and the Stanford Federal Credit Union, to
begin offering a “smart checking” account next year.
For a new product or
service to succeed, it has to offer something new and shiny enough to motivate
consumers to leave their existing provider.
As people grow more
wary of entrusting their personal data to tech companies, persuading them to
hand their checking account over to a partnership involving Google may be a
hard sell. And customers typically switch bank accounts only when they’re
offered something financially valuable, like lower fees, more attractive
rewards for spending or higher interest rates. Google and its partners haven’t
commented on what kind of terms they might offer.
4) TikTok is taking over India's social media scene
In just two years,
TikTok has become India’s most downloaded app. It’s shaping a new youth culture
in which millions of young people—in big cities and small villages alike—are
trying to be TikTok’s next big star. The results are both magical and nightmarish.
More than half of
India’s 1.3 billion people are under the age of 25, and more than 500
million Indians use the internet today, thanks to the growing penetration
of cheap smartphones and mobile data. But not all of them can express
themselves through neatly worded tweets or self-deprecating captions on
Instagram posts. In fact, a large section of India’s first-time internet
users—some of them illiterate, others speaking in local dialects—find
navigating video-based platforms easier. From 2012 to 2018, the time spent by
an Indian watching online videos grew from an average of 2 minutes a day to 52
minutes a day, according to a report by the media agency Zenith.
5) Hiring from tier-2 / tier-3 colleges
When building up his
team Jack preferred hiring people a notch or two below the top performers in
their schools. The college elite, Jack explained, would easily get frustrated
when they encountered the difficulties of the real world.
Graduates from tier
2 or tier 3 schools have a hunger to over-compensate for what they perceive
they lack. They have seen their counterparts from larger cities with
‘privileges’ and they want to achieve all that and more. Therefore, they are
far more driven.
New entrepreneurs
told me about a lesser-known problem with good students, especially those who
have been top performers since kindergarten: They don’t know what it is to
fail. To build something truly big, a start-up founder needs a team that can
handle failure.
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