"This is to have succeeded."

Published: Thu 10 January 2019

Just saw the news of Jeff Bezos' divorce on TV. This made me feel quite sad. As a complete outsider, I wouldn't really know what's going on behind the scenes but I always thought the marriage between an avid book reader and an novelist would last forever.

I thougth of a tweet Bezos sent last May. It's a quote from Emerson which Bezos printed out and put onto his fridge so he can look at it everyday.

To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty; to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch, or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded."


Detention figures, state-building and decline in smartphone shipments

Published: Wed 09 January 2019

Where Did the One Million Figure for Detentions in Xinjiang’s Camps Come From?:

The first estimate, from Adrian Zenz, a social scientist at the European School of Culture & Theology, is based on an accounting of the detention camp populations totalling some 892,000 individuals in 68 Xinjiang counties as of the Spring of 2018.

...

The second estimate comes from the Washington, D.C.-based nonprofit Chinese Human Rights Defenders (CHRD). Between mid-2017 and mid-2018, CHRD interviewed eight ethnic Uighurs located in eight different villages in southern Xinjiang. Each person gave their own estimate of the number of people detained in their village, which CHRD used to surmise a detention rate for each village. These village detention rates ranged from 8 to 20 percent, averaging out to 12.8 percent across all eight villages. Just as Zenz did, CHRD “conservatively” rounded down to reach a 10 percent estimated detention rate.

When State-Building Hinders Growth: The Legacy of China's Confucian Bureaucracy:

Do countries with a long history of state-building fare better in the long run? Recent work has shown that earlier state-building may lead to higher levels of present-day growth. By contrast, I use a natural experiment to show that the regions of China with over a thousand years of sustained exposure to state-building are significantly poorer today. The mechanism of persistence, I argue, was the introduction of a civil service exam based on knowledge of Confucian classics, which strengthened the social prestige of the civil service and weakened the prestige of commerce. A thousand years later, the regions of China where the Confucian bureaucracy was first introduced have a more educated population and more Confucian temples, but lower levels of wealth. The paper contributes to an important debate on the Great Divergence, highlighting how political institutions interact with culture to cause long-run patterns of growth.

This is a neat article with some interesting data points. I love to believe in the conclusion but I think the author has the cause and effect sequence wrong.

I think the poorer parts of China tend to be flatter, share common langauge, thus easier to rule through a central state. But because of their location, they are too far away from the coast to benefit from international trades. The wealthier parts tend to have poor transportation system, more cut-off from the central state and, without a better choice, had to rely more on trade, thus enjoying the fruits from doing so.

China smartphone shipments seen down 12-15.5 percent last year: market data:

shipments dropped 15.5 percent to roughly 390 million units for the year, with a 17 percent slump in December.

The Chinese smartphone market, the world’s largest, could shrink another 3 percent this year, Canalys said, in what would be a third straight year of declines. Smartphone shipments in the country had fallen 4 percent in 2017.


How the economic machine works by Ray Dalio

Published: Tue 08 January 2019

I finally found time to sit down and watch Ray Dalio's famous 30 minutes How The Economic Machine Works video. It's totally different from the classic Econ 101 but it feels more practical and seems to explain the world economy better and in a simpler way.

Things I learned:


Four factors that might end outsourcing

Published: Mon 07 January 2019

Many of my friends were shocked when they heard that our photo printing business made everything in New Zealand instead of China. People couldn't believe that, with all of our automation, we can provide the same service in New Zealand 25% cheaper than getting them done in Shanghai --- this doesn't even include the international shipping cost yet.

The common belief is that outsourcing is an inevitable trend. Small countries like New Zealand can't do anything about it, except just following along and hoping for the best.

I disagree. I have the evidence to believe that there are certain types of businesses that'd be better off manufacturing in New Zealand, to stay close to their market.

Bloomberg recently published a long opinion piece on this topic called Your Clothes Could Be Made in the USA Again. The article has done an excellent job describing the key factors that are causing apparel production jobs to move back to local markets or neighbouring countries (Like Mexico for the US).

Here are the four key reasons for brands to make the move.

  1. Stress their heritage and increase control over supply chains.

    Burberry and other British fashion labels have moved some of their production as “Made in England” became attractive to luxury buyers after an import boom in the 1990s and early 2000s. Hugo Bosss, the German fashion label, has started selling a “Made in Germany” collection, produced completely (except for some fabrics) in Metzingen, the company’s corporate seat.

  2. Speed beats marginal cost advantage and basic compliance is upgraded to an integrated sustainability strategy.

    Failure to respond to demand for an item consumers have seen on Instagram may mean huge volumes of unsold clothing. Unable to tell consumers what they should wear, producers must treat short lead times as the No. 1 priority. Fast fashion is giving way to ultra-fast fashion, as practiced by online retailers such as Boohoo, Asos and Lesara. This doesn’t work well with shipping from Asia: Delivery to big Western markets takes about 30 days by sea.

  3. Shortened lead time increases gross profit margin.

    But as lead times gain importance, shortening them compensates for some of the labor cost disadvantage by increasing the share of clothes sold at the full price. Raising it by 6.1 percent for a garment that takes 60 minutes to produce would justify the transfer of production from China to the U.S., McKinsey calculated.

  4. Automation and robotics drive down production cost.

    Automation can drive down the cost in Western countries. Now, sewing a pair of jeans takes an average of 19 minutes, more than half of the total production time. McKinsey and RWTH Aachen figure robotics can cut that time by 40 percent to 90 percent. At another important step, distressing the jeans, technology exists to cut the time necessary from about 20 minutes to 90 seconds: Levi’s does it with lasers.


Steve Jobs and Apple's previous earnings warning

Published: Sun 06 January 2019

Just like the previous two days, I'm handcopying a piece of writing today.

This one is a letter from Steve Jobs. It's so tightly crafted that it's almost beautiful. (Source: Daring fireball.)

Apple today announced that it expects to generate revenues of about $1.4 billion to $1.45 billion in the June quarter, down from previous guidance of about $1.6 billion. The lower-than-expected revenues are primarily due to soft demand in the consumer and creative markets such as advertising and publishing. Geographically, revenue shortfall is expected to be offset significantly by higher-than-expected gross margins primarily due to lower costs of some components. Accordingly, the Company has revised its earnings guidance from $.08 to $.10 per diluted share, compared to previous guidance of $.11 or slightly higher.

"Like others in our industry, we are experiencing a slowdown in sales this quarter. As a result, we're going to miss our revenue projections by around 10%, resulting in slightly lower profits," said Steve Jobs, Apple's CEO. "We've got some amazing new products in development, so we're excited about the year ahead. As one of the few companies currently making a profit in the PC business, we remain very optimistic about Apple's prospects for long-term growth".

Here is John Gruber's commentary on the writing.

Look at the tight construction of that message from Apple in 2002. First paragraph: put out the numbers. Second paragraph: it’s an industry-wide problem, but Apple has “amazing new products” coming. And then the kicker, the dagger: “As one of the few companies currently making a profit in the PC business…”.

We’ve got some short term bad news but don’t worry, we have this.” And… out. Short and sweet. Rip off the bad news Band-Aid, express quiet confidence that Apple is in great shape, and that’s it. Message over.


How to get rich without getting lucky

Published: Sat 05 January 2019

Another day. Another tweetstorm. This time by @naval:

Just like yesterday, I'm handcopying the full thread here as a way to appreciate and understand it better.

Key concepts: specific knowledge (proprietary knowledge is what I prefer to call it), leverage, accountability, and judgement.

  1. Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
  2. Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
  3. Ignore people playing status games. They gain status by attacking people playing wealth creation games.
  4. You're not going to get rich renting out your time. You must own equity --- a piece of a business --- to gain your financial freedom.
  5. You'll get rich by giving society what it wants but does not yet know how to get. At scale.
  6. Pick an industry where you can play long term games with long term people.
  7. The internet has massively broadened the possible space of careers. Most people haven't figured this out yet.
  8. Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
  9. Pick business partners with high intelligence, energy, and, above all, integrity.
  10. Don't partner with cynics and pessimists. Their beliefs are self-fulfilling.
  11. Learn to sell. Learn to build. If you can do both, you will be unstoppable.
  12. Arm yourself with specific knowledge, accountability, and leverage
  13. Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
  14. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
  15. Building specific knowledge will feel like play to you but will look like work to others.
  16. When specific knowledge is taught, it's through apprenticeships, not schools.
  17. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
  18. Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
  19. The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon. (AD: Trump? Really?)
  20. "Give me a leverl long enough, and a place to stand, and I will move the earth." - Archimedes.
  21. Fortune require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
  22. Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgement.
  23. Labour means people working for you. It's the oldest and most fought-over form of leverage. Labour leverage will impress your parents, but don't waste your life chasing it.
  24. Capital and labour are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
  25. Code and media are permissionless leverage. They're the leverage behind the newly rich. You can create software and media that works for you while you sleep.
  26. An army of robots is freely available --- it's just packed in data centres for heat and space efficiency. Use it.
  27. If you can't code, write books and blogs, record videos and podcasts.
  28. Leverage is a force multiplier for your judgement.
  29. Judgement requires experience, but can be built faster by learning foundational skills.
  30. There is no skill called "business". Avoid business magazines and business classes.
  31. Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
  32. Reading is faster than listening. Doing is faster than watching. (AD: what the hell does this mean? Spend less time socialising and more time reading? Just do it mentality?)
  33. You should be too busy to "do coffee", while still keeping an uncluttered calendar.
  34. Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
  35. Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
  36. Become the best in the world at what you do. Keep refining what you do until this is true.
  37. There are no get rich quick schemes. That's just someone else getting rich off you.
  38. Apply specific knowledge, with leverage and good judgement, and eventually you will get what you deserve.
  39. When you're finally wealthy, you'll realise that it wasn't what you were seeking in the first place. But that's for another day. (AD: This is pretty fruastrating way to end a thoughtful thread. )

"Apple just need to lower their price"

Published: Fri 04 January 2019

This full thread is from @stevesi. Steven Sinofsky is one of the best strategic thinkers and this thread talks about the topics I blogged yesterday.

  1. What's the typical way for a luxury brand to broaden its appearl.
  2. How does a platform make money?
  3. How does players on a platform make their money?
  4. How has Apple avoided been bogged down by the partners?

(I'm re-typing everything again so I get to appreciate his points better. Steven, or twitter, owns his tweets. Not me. )

  1. Apple has long known it is missing the boat on providing low priced phones --- strategic mistake to cede "low end" to Android. Or raised prices too much/soon. Then it must be an easy answer to just lower prices or make low priced phones. Ack! Harder than it looks.
  2. Pricing is much more sophisticated than this. Pricing not only says who can afford your product but also establishes a brand, determines channel & more. Many say Apple is a luxury brand; certainly they focused on that.
  3. PC v Mac really showed the weakness in appealing to luxury brand in a volume driven market. High prices were the undoing of the Mac from the very early days. Going back to 1990, height of Apple, PCs sold at 10X the Mac run rate. But Macs had much higher margins per device.
  4. While available software was a big part of that 10X, reality was that a Mac computer also cost substantially more than a PC, and depending on configuration was often 2X the price. Everyone knew. Apple/Jobs refused to license Mac System enabling cheaper Macs (one approach).
  5. PC strategy was low everyday prices for PCs. BUT there was a catch or three --- really important to think about relative to iPhones pricing. PCs were made up of hardware, OS, chips. To have low prices Intel and Microsoft benefited from an ecosystem that "raced to the bottom".
  6. Intel and Microsoft held on to most of the profits in selling PCs (and MS w/Office). The retailers and PC makers had very slim (to zero) margins for two decades. Often PC hardware seemed like a suckers bet.
  7. The first key to having low priced offerings is that you have to have a set of partners who are willing to compete on thin margins in order to bring the product to market. Very tough for one player to be the high margin and low margin players. Race yourself to the bottom?
  8. The second key thing PCs benefitted from was a channel that allowed distribution by price maintaining price walls - business PCs could be expensive/sold direct (ThinkPad); consumer PCs sold as a bundles with high margin components useless as business PCs. (Dell's Inspiron and Optiplex etc.)
  9. Buying a PC was a complex navigation through model line selected by segment (Big Business direct, SMB, individual, Education, Government). Then each form factor was "good, better, best". Byzantine. That's how you offer low prices and avoid everyone paying and have some margin.
  10. Plus that is where crapware comes from --- those partners need some way to make margin. Adding software, selling screen real-estate, and so on are the only tools remain that allow for partners to make something when hardware and OS are fixed.
  11. This is how business always does premium+low priced offers, eg clothing where brands stand for luxury but aspire to mass market. Brands like Calvin Klein, Ralph Laruen, Armani w/ topi tier labels (like Purple) at select channels or direct. BUT also have mass market/discount.
  12. Each of those distribution points is a different label, different quality, and so on. No retailer that carries Purple will carry Sport or RL. They might want to but they won't be allowed to --- distribution constraint that is carefully managed.
  13. So when people say Apple needs a cheaper phone there are many questions to answer beyond the "get over yourself" luxury brand issue. What is distribution constraint? What partner absorbs some cost to leave margin? What is the branding?
  14. Easy question --- would a cheap phone be sold and supported in Apple stores side by side? How would the rest of the customers feel about more crowds and tougher appointments competing with people who paid half as much? Sell one phone against another --- how?
  15. This doesn't even have to be a product question which most people jump to --- sure remove fancy camera, memory, storage,e tc. But these are all hardware items that competitive products will simply add and market against --- "buy our android phone with portrait mode".
  16. Apple is constrained by software because apps need to work on all devices --- something that Apple has stretched further than Windows ever did (watch to phone to tablet, and soon Mac). ISVs/devs will never embrae API differences at different price points.
  17. Consumers bemoan Windows 10 Home, Pro, Enterprise. Insane energy goes into trying to have features that don't fragment developers and OEMs (drivers, etc) and can be deployed efficiently while alos maintaining price differentiation. That's literally the entire Windows business.
  18. The levers available to do cheaper products are not all available to Apple. Those that simply say they have a pricing problem need to solve for the product, the distribution, the branding, and more.
  19. Big companies become enormously consternated over brand value props, channel conflicts, and so on. Where Apple avoided all of these was owning them all. The downside of owning them all is this limits responding to the challenges.
  20. At Microsoft we always reminded ourselves that you don't sell 300M of something at one every day low price. Most all energy was to maintain price floor. AMAZINGLY Apple managed to sell over 200M of something per year at pretty much one every day high price, then increased price.
  21. Anyone that thinks Apple is unaware of the challenge and has not sketched out ideas, tested them, and thought about them immensely is crazy. Literally this consumes a company or at least has been the past year.
  22. Example --- I can't count how many times Windows/Office toyed with "lite" versions. Fewer features cost less. DUH! Imaging such product and everyone wants it. How do you market it? What brand is it? How much revenue do you forgo? Is it freemium? trialware? annoying?
  23. Literally the constant drumbeat from the press, partners, channel was that PCs were too expensive, Windows or Office too expensive. No matter what the price was. Also Intel hearing the same. Magic for Intel/MS was getting others to cave --- who caves for Apple?
  24. I once ran the numbers on selling just one SKU of Office rather than the seemingly infinite number. It was literally billions of dollars of lost revenue immediately and more over time --- leaving revenue on table PLUS alienating customers at both high end and low end.
  25. What does all these mean? Apple may or may not have a "pricing" or "price point" or "structural"/secular challenge. For sure just releasing a cheap phone doesn't make all better. All takes place in context of lots of cheap/bad competitive phones. Lots to consider.

Platform wins by turning everyone into commodity sellers

Published: Thu 03 January 2019

The Verge recently ran a featured story on the risks of operating in Amazon's Marketplace.

Amazon's Marketplace is an e-commerce platform where 6 million sellers compete against each other to fulfil your orders. Near two third of the items sold on Amazon are sold by these third-party sellers.

It turns out that some sellers use Amazon's own rules against each other, devising intricate schemes to get their rivals suspended. Once suspended from the platform, sellers find themselves in a bewildering appeals system.

To quote the story:

“You have manipulated product reviews on our site,” an email from Amazon read. “This is against our policies. As a result, you may no longer sell on Amazon.com, and your listings have been removed from our site.”

A rival had framed Plansky for buying five-star reviews, a high crime in the world of Amazon. The funds in his account were immediately frozen, and his listings were shut down. Getting his store back would take him on a surreal weeks-long journey through Amazon’s bureaucracy, one that began with the click of a button at the bottom of his suspension message that read “appeal decision.”

A sad situation to find yourself in as a small business owner. Plansky certainly had my sympathy. But sadly this is to be expected.

I understand that selling through other people's platform saves tons of money from marketing, giving a young business a headstart at the beginning. But building one's entire distribution channel on top of Amazon is willfully ignoring the basic rule at play here.

The platform wins by making everyone else a replaceable commodity.

Generally speaking, there are two kinds of businesses: value creation and arbitrage.

Value creation sets out to make a difference, and the primary way to win is to create something new that people didn't know they want it.

Arbitrage is to focus on the things people know they want and identify the suboptimal market opportunities and buy-low-sell-high.

Value creation makes something new and demands a premium. It wins through exclusivity. Arbitrage removes any inefficiency in the market and drives the cost down and makes the products available to a broader audience.

The platforms win by making all sellers play the arbitrage game. It's a volume based market. It's a race to the bottom" game. Not a value creation one. As a business owner, it's our responsibility to know which game we are playing and deal with our hands well.


Two kinds of doubt, guesstimate, prediction, Fira and flat design is bad

Published: Wed 02 January 2019

A few great links/tools I found in the last a few days.

What's the difference between second guessing and re-evaluating?:

The former is questioning a decision without material new information. The latter is revisiting a decision after material new information has been obtained. It is second guessing which is destructive for morale, because it calls into question not just the decision but also undermines the legitimacy of the decision making process itself.

Re-evaluating on the other hand is healthy but requires a good decision making process. In particular, there has to be a relatively clear way of assessing whether something is in fact material new information.

Guesstimate: Exceptionally designed and fresh tool for making estimations. If nothing else, do check out the screencast on the web page. It's mind blowing stuff.

Guesstimate is a tool for performing estimates using monte carlo experiments. It can be used similarly to excel, but provides the option of providing ranges and distributions as values instead of individual points. Other metrics can do mathematical operations on these cells/metrics. After each new input is added or changed, a set of 5000 samples is randomly generated from each input and goes through the specified operations to produce confidence intervals in the output.

What happened in 2018 and What's going to happen in 2019: Eroded trust in institutions and technology, dicey US, messy Brexit and sluggish China predicates a difficult macro business and political environment. Technology, riding the transition wave from industry age to information age, will continue to grow.

In 2018, we saw social media usage in the US flatten out and possibly even start to decline a bit.And the usage of screen time management apps, like Screentime on iOS, is surging. We know we are addicted to tech, we don’t want to be, and we are working on getting sober.

...

All of this lost trust is challenging for big tech, and the tech sector in general, but is also a huge opportunity for new companies and new technologies that can offer different products and business models that we can trust more, or don’t need to trust.

...

This loss of trust in 2018 was not limited to the tech sector. In the US, and also in many places around the world, we are losing trust in our institutions and our elected officials.

...

I expect the combination of higher rates, uncertainty in Washington, and storm clouds globally (which we will get to soon) will cause business leaders in the US to become more cautious on hiring and investment. Consumers will make essentially the same calculations. And that will lead to a weaker economy in the US in 2019.

...

The startup/tech economy is somewhat immune to macro trends. Many startups and big tech companies were able to grow and expand their businesses during the last financial downturn in 2008 and 2009. Some very important tech companies were even started in those years.

...

The tech/startup economy is driven first and foremost by technical and creative (ie business model) innovation. And that is not impacted by the macro environment.

So I expect that we will continue to see big tech invest and grow their businesses and do well in 2019.

However, I do think a difficult macro business and political environment in the US will lead investors to take a more cautious stance in 2019.

...

But all of that is going to happen at the margin. I expect 2019 to be another solid year for the tech/startup sector as we are in a possibly century-long conversion from an industrial economy to an information economy and the tailwinds for tech/startup vs the rest of the economy remain in place and strong.

FiraCode: Fonts designed by programmers for programmers. I have just switched all my dev environment to this new font.

Programmers use a lot of symbols, often encoded with several characters. For the human brain, sequences like ->, <= or := are single logical tokens, even if they take two or three characters on the screen. Your eye spends a non-zero amount of energy to scan, parse and join multiple characters into a single logical one. Ideally, all programming languages should be designed with full-fledged Unicode symbols for operators, but that’s not the case yet.

Flat Design vs. Traditional Design: I've never been a big fan of Material design from Google or the Metro style from Microsoft. Apparently it takes twice amount of cognitive load for people to use these flat design interfaces! Twice!

In the past few years flat user interface design has become the predominating visual style of operating systems, websites and mobile apps. Although flat design has been widely criticized by HCI and usability experts, empirical research on flat design is still scarce. We present the results of an experimental comparative study of visual search effectiveness on traditional and flat designs. The following types of visual search tasks were examined: (1) search for a target word in text; (2) search for a target icon in a matrix of icons; (3) search for clickable objects on webpages. Time and accuracy parameters of the visual search, as well as oculomotor activity, were measured. The results show that a search in flat text mode (compared with the traditional mode) is associated with higher cognitive load. A search for flat icons takes twice as long as for realistic icons and is also characterized by higher cognitive load. Identifying clickable objects on flat web pages requires more time and is characterised by a significantly greater number of errors. Our results suggest replacing the flat style user interfaces with interfaces based on the design principles developed over decades of research and practice of HCI and usability engineering.


Hello 2019

Published: Tue 01 January 2019

Waking up this morning, I felt energised. There was a strong sense of excitement1 in the air. The kind I felt when I was about to embark on a new and unknown journey. It was the same excitement when I boarded a two-day train ride to go to a university that's 2000km away. Or when Zephyr and I decided to leave China and spend a year travelling when I turned 30.

I'm energised by the new leverages I have. In 2019, I will have a team and a modest amount of capital I get to use. I finally have the resources to execute the plans. It'll be so much fun to work closely with a team again, especially when their experiences and career paths are so diverse. The last two years has been a slow burn. I could see that I had hit a plateau. I was running at full throttle, but life stayed in the same place. The more the business grew, the more tasks I needed to do, the less concentration time I have, the less I learned and the less productive I became. It was a draining experience that I'm glad it's over.

I'm energised by the product I will work on. I have been in and out the personal photo space for 12 years now. I feel I have learned a tremendous amount, not only on the technology side of what's possible but also a deeper understanding of the human emotional needs photo print products fulfil. With the rest of the business in capable hands, I will finally have the space to explore the problem domain again and give it my best shot. To build something I'd be proud of2.

I'm also energised by the opportunities for personal growth. I used to spend most of my time playing with different technologies and under-developed my social and interpersonal skills. So in 2019, I'm looking forward to learning from the amazing people I work with. Of their expertise. And how they communicate. I can't wait to read a long list of books that'll certainly broaden my horizon. And lastly, I am looking forward to the daily meditation and blog post exercise.

So 2019, here we come.


  1. Yes, there was also a drop of pressure to perform, a pinch of anxity and a small touch of fear of failure. But the excitement surprised me as it was so vivid and so young. 

  2. Something that's so insanely great that it would make millions of families' lives better. 


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