Scooters: The Next Big Thing Will Be a Toy… and Acquired.

 

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Courtesy of CBInsights.

 

Most people regard scooters as fun and playful, a toy. Scooters are now the latest disruptive innovation redefining first and last mile travel.

Ride-sharing transformed societal expectations of mobility by replacing taxis. Today, there is an increasing demand for more efficient modalities to mobility besides cars. Urban migration makes cities more congested. Climate change makes society more conscious of energy consumption. Short-distance travel already accounts for 60% of trips in the United States. So, scooters address dynamic customer and environmental needs in transportation.

Most investors see the opportunity. The battery costs for electric vehicles have fallen. GPS, mobile payments, and networking technologies are commoditized products. As a result, scooter companies can scale with attractive unit economics. Scooters are high-frequency products—and viral, achieving adoption with low acquisition costs. The real world virality feature is one of the primary reasons why the valuations of Scooter companies like Lime and Bird has soared.

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Leading versus Lagging Indicators.

Leading and lagging indicators are two types of measurements used when assessing performance in a business or organisation. A leading indicator is a predictive measurement, for example; the percentage of people wearing hard hats on a building site is a leading safety indicator. A lagging indicator is an output measurement, for example; the number of accidents on a building site is a lagging safety indicator. The difference between the two is a leading indicator can influence change and a lagging indicator can only record what has happened.

-IntraFocus

I was thinking about what Chamath Palihapitiya said regarding capital as a lagging indicator for progress.  As I spend time with more companies, I have realized it’s so important to differentiate between the two.

Reconfiguring Intellectual Property on the Blockchain.

I recently read Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Glen Weyl and Eric Posner. They acknowledge the problems in today’s free markets and the need for a reconceptualization of markets. Weyl and Posner believe that instead of reigning in markets, institutions should expand it.

Radical Markets argues for new mechanisms to reduce the negative externalities of the market economy by better aligning incentives between individual good and the collective: to create a market that fosters truly free and open competition.

I respect the book’s skepticism of conventional wisdom around liberal reform. However, I find their views around monopolies and property rights reductionist, impractical and incorrect. Static monopolies are bad, but creative monopolies are good.

Weyl and Posner miss this differentiation because they believe the market economy displaced the moral economy. Institutions sought to fix the problems of the market economy through planned economies, which has been insufficient and created more problems. However, the moral economy never went away, but instead became embedded within the market economy.

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A Checkup on the Consumer Healthcare Opportunity.

Healthcare is being redefined by the consumer, particularly as Americans shift to high deductible plans. New models and venues of care are emerging to serve customers better. This has spawned companies like Hims, Modern Fertility, and Ro. Major DTC Healthcare companies have leveraged telemedicine services, data and machine learning, medical-grade wearables, and subscription models to better serve new customer needs. 

The consumer healthcare opportunity is compelling. Total U.S. healthcare spending is $3.5 trillion annually. Most healthcare products have naturally high retention and margin structures; Pfizer enjoys EBITDA margins of 35-45%. Patients are now customers, so latent demand exists in most status quotes. These developments coincide with changing consumer consciousness with wellness. Healthcare is no longer just sick care, but preventative care. 

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Financial Alchemy.

I was asked by somebody on what are the five books that have most influenced how I think about financial markets. They change frequently but my number one will likely never leave the list.

  1. The Alchemy of Finance by George Soros.

  2. Antifragile: Things that Gain from Disorder by Nicholas Nassim Taleb.

  3. Poor Charlie’s Almanac: The Wit and Wisdom of Charlie Munger by Charlie T. Munger.

  4. Inside the House of Money: Top Hedge Fund Trades on Profitting in Global Markets by Steven Drobny.

  5. The New Market Wizards by Jack D. Schwager.