Weekend insights with Jerry and Liza

On the drop shipping market segment

Drop shipping segments – homogenous or differentiated products.

Africa e-commerce is a strong trend.

Value of a software company is how deeply it goes into implementing support for a use case.

Fund raising and valuation

The story and business case determines how valuable a company will become.

There are more investors chasing after limited number of experienced founders. This explains the reason for ultra high valuation.

PR and personal network helps generate warm introduction to VCs

Investors are biased towards founders who graduated from prestigious universities

The best founders are those who are willing to slog working on the same problem day after day without giving up.

On human resourcing

Engineers from second or third tier universities tend to be better hires. They have less feelings of entitlement and are more likely to have background of hardships and struggles.

The sales process:

  • Step one: generate sales lead list – GetData.IO’s core competency in web scraping means we do not need to by databases but just find websites where leads exists. Hunter.IO is a good service for resolving email addresses of companies
  • Step two: outreach – AB testing outreach email messages
    • GDPR dictates that only work emails are allowed for such campaigns
    • Utilize Calendarly to schedule meetings
    • At this point emails to closing rate is around 1%
    • Find iteration that drive opens, reads and appointment scheduling
    • Figure out the email cadence
    • Once that has been locked down start automating it using sales automaton tools like
      • PersistIQ
      • SalesLoft
  • Step 3: follow up conversation
    • Craft up sales script to close through iteration
    • Find out all the different variation of rejections
    • Learn how to manage them
  • Step 4: closing
    • Learn about actual enterprise problem
    • Learn about budget
    • Find a price level that works.
  • Step 5: Onboarding
    • Deploy success team to onboard the customers
    • Successfully onboarded customers will be more likely to retain and less likely to churn.

Industrial benchmarks for cold emails

  • email open rate: 15%
  • open to click through rate: 2%
  • landing page to booking a meeting: 5%
  • book a meeting from cold lead: 0.0015%
  • USD0.03 per lead = USD100 to book a meeting ( 0.01 / 0.0015% )
  • Versus Google = (USD1 CPC / 5% ) = USD20 to book a meeting

GDPR does not allow use of personal emails for cold email campaign.

Lead generation process

  • Buy databases to fill the top of the funnel for cold email campaigns.
  • Buy ads to fill up the funnel from Google and Facebook

An evening of insights with the Hutters

The optimized route for a startup is to first deploy a small skeleton crew to focus on mining for the insights on human behavior with cheap experiments that will support a viable business model before raising money and scaling up the operations.

Big organizations tend to forget the insights that lead to the founding of the company. That is how large companies get disrupted by new entrants who “rediscover” them.

If there is a company out there that is solving a problem you are trying to find a solution for but you cannot think of it off the top of your head, they might as well have been dead.

What you think might work will usually not. It is only when you land up in a promising domain and start mining for insights in that domain do you start finding ones that are useful for building a company with.

Screenwriting is probably the only occupation where you can envision how all the moving pieces fits together while you are lying in bed. Writing a business plan is a very useless undertaking because unless you have tested your business model to get actual market response, you will not know if it would work or not work. This is much of other inductive processes where much of the building blocks required to work are out there in the environment yet know and to be discovered.

Do not be fixated on what should but be instead embrace on what is and work for there when it comes to human nature.

Humans are motivated beyond pain and pleasure.

No one has considered hyperlinks themselves as important data elements.

It is usually the simplest actions backed by the most fundamental insights that drives the largest consumer adoption.

People feel that sense of accomplishment when they gather stuff thanks to our hunter gathering roots. They might not even need it at the end of the day.

Social book marking just died when most of their operators pivoted away from the central idea in 2005

  • Stumble upon
  • Digg
  • Reddit
  • Pintrest
  • Trello

The mass adoption of Slack and Quip might be a great channel for growing such an idea again but for the enterprise space.

The success of YouTube can be speculated to be due to:

  • In baked flash media code into browsers
  • Increase in bandwidth
  • Delaying the payment of royalty fees and taking down of copyrighted contents
  • They got sold for 1.2billion but paid of 750million in terms of royalties

Mark Cuban is a fake billionaire for selling Real networks to AOL which eventually got shut down after six months. Reason for Real Network being empty is because while it looking really impressive on the outside, it did not capture any of the user behaviors.

People only build shared reality with others they consider part of their own tribe. They might interact with others who are not considered part of their own tribe but will not go about building a shared reality with them. This is how echo chambers happen.

Related readings

  • Tory Higgins, “Beyond Pleasure and Pain: How Motivation Works”
  • Tory Higgins, “Shared Reality”

Observations at the heart of Permian basin

Office for the day. A proxy of view into the heart of the Permian basin as I get my car wheels aligned

The level of auto traffic along the Cedar Street, Pecos Texas is a very clear proxy on the health status of the US Oil industry.

Factors negatively impacting economic activities in the area:

  • US Elections: Oil companies operating in area put activities on hold awaiting for forthcoming mandate
  • Holidays: Demand for oil drops
  • COVID pandemic: Demand for oil drops

Responsiveness of lagging indicators:

  • Lag time between events and lagging indicators within the region is typically 24 hours
  • Layoffs can happen within 24 hours of environment triggers
  • Rapid hiring can happen within 24 hours of environment trigger
  • On occasions, rapid hiring and layoffs could happen simultaneously in different sectors

Qualitative background:

On mornings during times of Economic boom in the Oil industry, the Pilot center across the street could be observe lined with trucks rushing to fuel up as they go about transporting out their cargo to their destinations.

On such days, the empty parking lot in front of Custom Mufflers Tire Repair center could be seen filled up with trucks getting their wheels serviced.

With the election of President Biden, a bill was past that totally stopped all oil and gas related activities in New Mexico. This has resulted in the damping of traffic heading north along Cedar Street for the foreseeable future.

 

Observed second and third order impact of GameStop frenzy on market stability

Investment Funds market exposure strategies can be categorized primarily into three types.

Type 1: Long only strategy: funds that buy and hold positions.

Type 2: Short only strategy: funds that primarily borrow and short shares

Type 3: Market neutral strategy: funds that hold half their position in long and half their positions in short attempting to gain from some form of arbitrage between performers and losers.

To increase profit funds would typically be leveraged. Levels of leverage is dependent on how aggressive each individual fund is. Long Term Capital Management for example, a fund that went bankrupt in 1998, was leveraged up to 20X for some of its positions.

During a recent frenzy co-ordinated efforts by Redditers bid up prices of stock symbols like GameStop and AMC. From a fund management perspective, funds belonging to Type 2 and Type 3 were heavily impacted by this black swan event. As losses in their short positions mounted, many received margin calls from their lenders.

It is likely that Type 3 unwinded the bulk of their long positions to cover their margin calls. This had the net impact of driving down share prices of other unrelated stock symbols as observed in the US Equities sell off chart above.

Depressed share prices due to the unwinding of long positions by Type 3 lead to a follow on cascading effect where Type 1 had to unwind their leveraged long position.

This large scale unwinding activity could be inferred from the inverted yield curve observed on 31st Jan 2021. This inversion could also be interpreted as funds opting to maintain liquidity levels by moving heavily into positions like short term US Treasury and cash as they await for the market gyration to settle.

The last time the yield curve was observed to be extremely inverted was on 26th Feb 2020, during the initial onset of the COVID-19, pandemic as illustrated below

That was rectified when the Federal reserve lowered interest rates to 0% and started quantitative easing on 13th March 2020.

Observations of a trucker from the trucking community

  • Beliefs and behavioral profile
    • doesn’t believe in paying for an apartment
    • strong desire to be free
    • lives out of his truck
      • has bed
      • microwave
      • heater
      • storage
    • stopped over at truck stops when he used up his daily miles
    • gets to shower for free at pilot truck stops because of the amount of fuel he purchases
    • World view
      • References EpochTimes as a news source. Distrust CNN
      • Trump supporter – sees him as the only president that is not drawing a salary for his work.
      • Believes Democrats want to turn the country socialist by controlling the media and its messaging hence concludes the media is rigged
      • Further believes Democrats want to ban guns so as to exert more control over its people like a policed state
      • Believes in the ownership of guns to as a means to counter balance the power of the state to prevent involuntary drafting likes those imposed upon the people by the Confederates during the American civil war
  • Truck stops
    • Pilot Travel center
      • sells a lot of the equipment needed by truckers
      • showering facilities
      • internet and resting facilities
  • Technology usage:
    • Truckers have their own social network which is ran on Garmin.com
    • they text each other using the app
    • the app also tracks where they drove
  • Federal Law restrictions
    • Truckers hour limits by
      • 70 hours of driving per week
      • 11 hours of driving per day
      • 14 hours of working time per day which includes loading time
    • Yearly health checkup is required to operate a truck
    • Speed and alignments during operations after actively monitored by the Federal government through an onboard Qualcomm system
  • Technical details
    • A typical truck runs at 7.7 miles per galleon
    • weight
      • back axles 18000 pounds
      • front axles 18000 pounds
      • fully loaded truck 80,000 pounds
    • 3 separate braking system
      • regular brakes using air
      • parking brakes
      • emergency brakes  which will damage the axles if used abruptly
  • Trucking economic
    • A brand new trucks cost around USD150,000
      • Truckers can enter into a lease to own agreement with the trucking company to eventually own their truck.
        • typical monthly installment is around USD500 to USD1,000
        • installment payment accrues based on miles driven USD0.15/mile
        • a truck which has accrued 300,000 miles will sell for USD50,000. Value of the truck is depreciated at USD0.33/mile
    • operating profit and loss
      • Trucking contract typically paid revenue of approximately USD2/mile
      • Gross margin from a truckers point of view for an assignment is around 50%
      • net profit should be around 25% of that
      • Example:
        • Long haul job for 500 miles
          • revenue USD1000
          • variable expenses USD 500
            • gasoline
            • tolls
            • loading fees
            • etc
            • trucking company dues
          • amortized fixed monthly expenses USD 250
            • insurance
    • assignment details
      • when operating with truck leased from company, assignments are provided by company. Company takes 50% cut in exchange
      • if own truck, can take assignment from a trucking company which has cargo to be hauled
      • can opt to generate lead to assemble own cargo to be hauled.

Weapons of Math destruction by Cathy O’Neil

Weapons of Math Destruction

Key take aways

  • Human values like justice and mercy is hard if not impossible to encode as rules
  • Data scientist use proxies as an approximate gauge for the existence of values. These are inherently inaccurate if not downright wrong
  • While using of race as a feature to determine if loan should be approve is obviously racist, the use zip codes though not obvious is equally racist since race tends to segregate around geographical territories
  • Models are increasingly used to across various domains to help increase the speed of decision making. This increases the negative impact of badly designed models will have on humans
  • A feedback is necessary to ensure continuous correction of badly design models – transparency of how your credit score is calculated
  • Regulations are necessary on the use of models as companies driven by quarterly reporting requirements of shareholders are primarily be focused on the bottom line

 

A weird 2020 when 2008 repeated itself metaphorically

Unfortunately my earlier prediction of wildfire spreading from the US west coast as far as inland as Montana is once again spot on.

https://www.nifc.gov/fireInfo/nfn.htm

Give the long amount of time I spent in the woods in these sections conducting my hobo experiments, I could have easily became one of the 33.

https://www.usatoday.com/story/news/nation/2020/09/13/western-wildfires-monday-forecast-california-oregon-washington/5786311002/

I had a hunch that this year was going to be weird when I landed on the wrong side of the Lotte building during the 2020 new years count down in Seoul only to manage at catching the last 5 seconds of the fireworks after making a dash for it.

Things really started getting weird when COVID broke out in Europe and it seem to be always just 1-2 days behind me as I traversed the cities of Eastern Europe. And that saga came to a climatic end when I scuttled my way back to Singapore just hours before borders shutdown around the world.

Also not to forget mention me cutting all my long positions in oil hours just a day before it experienced its largest crashed in 30 years.

This weirdness got compounded when I started making my way overland eastwards and entire sections of the route I took got shrouded in inferno just a few days after my departure.

I wonder when I do eventually make my way back eastwards end of this year would I past through on the way back be flooded shortly after my departure…

It does remind me of 2008 when I slowly made my way westwards overland from Asia to Europe. Shortly after my departure from Szechuan the earthquake, broke out. This was followed by the Tibetan riots shortly after my departure from the Tibetan highlands and finally the Uighur riots shortly after I crossed the border from XinJiang into Kazakstan.

Chat with Quynh on trading

News sources utilized

  • Zacks
  • Motley Fools

Buy rumors and sell on news

  • rumors are not official news but signals that a news might be coming soon
  • continuous upwards movement of share price for few days means news might be announced soon
  • once news is out share price will adjust based on actual numbers

Buy on over reaction to bad news and sell on recovery

  • There is usually overreaction

The dichotomy between privacy and health

1984: Big Brother is Watching

Across multiple literature, its been stated privacy versus health will be one of the primary dichotomy societies around the world will need to juggle with as technological advances are made in the fields of artificial intelligence, communications (surveillance) and medical science (genetic research).
 
What is surprising was the rate at which the Corona pandemic catalyzed this change. In light of this, it is fascinating to observe how different societies position along the spectrum. Some societies has opted for surveillance to the maximum extend possible with current technology while others opted for its polar opposite going to the extend of staging mass protests against it use. 
 

Related readings:

  • The AI Economy, Roger Bootler
  • To Be a Machine, Mark O’Connell
  • Irrational Exuberance, Shiller, Robert J.
  • Life 3.0: Being Human in the Age of Artificial Intelligence, Max Tegmark
  • Mind Children The Future of Robot, Hans Moravec
  • The Singularity Is Near, Ray Kurzweil
  • 1984, George Orwell