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Microsoft goes 'All in' on AI; How Hyundai got so cool?; China started decoupling 6-8 years ago
TikTok will never be safe, Aviation is having its momentum and 6% of your customers can bring -100m EUR in losses.
After 15 years of work experience and research, I am finally launching this fall my first book: Business Strategies. Building Sustainable Models with Artificial Intelligence and Digital Platforms.
The book will have three chapters covering theory, frameworks, and case studies.
I consider that what happened after the pandemic meant not only broken habits but also new business models. (including aggregators joining new markets)
Now everyone speaks about Chat GPT (generative AI) and whether or not it will impact 300 million white-collar jobs. So, a chapter dedicated to AI looked like the right way to end the book.
Looking forward to the official launch…somewhere in October 😎
Onto the update:
Microsoft it’s all in!
Here are my thoughts on this from the 10th of February #onStrategy newsletter:
"Some analysts think that an AI bubble is building, but others think that everyone will have an AI copilot. Maybe we will have both."
When you decide to invest billions of dollars in something new with limited proven value you cannot stop there. You have to continue and this is actually happening at Microsoft’s Build 2023 conference: AI in everything.
1/ Their biggest announcement was that Windows 11 is getting an AI Copilot. Finally, it’s worth buying a PC laptop instead of a Mac. Windows + AI = a new platform.
After Apple’s ATT implementation META & co lost tens of billions in revenue because they didn’t have a platform. Meta realized that and invested in the last years over $40 bn in Reality Labs to develop their own platform around a headset. They haven’t succeeded yet!
2/ Having an AI who can scan all your files, emails and other apps and provide you answers and deliverables with some words it’s real magic. Everyone becomes a power user.
3/ Who can compete with this moat? Probably Google, but not sure at the same quality. Apple is totally lost on AI, for the moment, and their focus is on the headset they will release in June.
4/ If you are a SaaS company and you are not integrated with Microsoft, prepare to become irrelevant.
5/ All GPT-4 plugins will be suitable for Windows too. This is the exact strategy of an aggregator trying to commoditize its supplier. (btw, OpenAI is doing this too)
6/ Microsoft knows it has a platform on its hands and it advertises it accordingly, like a historic milestone, as can be seen below:
Go watch the entire presentation. LINK
TikTok, security and elections
Bloomberg has announced that the company is working with Oracle to review its code source. Now, here are the real worries:
1/ It’s only about the US user’s data, not of those from EU
2/ The algorithm can be changed overnight with zero or limited solutions for Oracle. What can they do? Well, from influencing elections (most of Gen Z take their news from Twitter) to pushing different agendas (ie. no labor camps on the Uighur minority, etc)
3/ The app is a danger on your device because it has access to other apps and data about you.
So, what’s happening now is that it's buying some time. LINK
Bill Gates thinks AI will kill search
“You will never go to a search site again, you will never go to a productivity site, you’ll never go to Amazon again”. - Bill Gates (23 March 2023)
1/ Generic search will not be killed but might become irrelevant.
2/ Microsoft doesn’t care if it will not make (too) much money with Chat GPT, but will be more than happy if it can make Google suffer.
3/ All asking and receiving more or less the same results will be boring (e.g. tell me and rank the best summer destinations for a city break in Italy). LINK
Netflix continues the crackdown on passwords.
1/ The company announced in Romania that the Premium plan is designed for one house, not for people living in different houses. You either stick to your house, or you will pay 2,9 EUR for each account.
2/ Depending on the impact we might have an Ad tier. LINK
Aviation and its challenges
I’m spending my week in Paris with the INDE MBA students visiting leading companies and taking classes from top lecturers.
Mr. Michel Abboud (from Air France) was invited to give a presentation on long-term business growth.
1/If you are not a resilient company you will not survive
2/ Crises come and go, so you must take each opportunity
3/ New business models are arising and making a significant part of the revenue (e.g. private aviation)
4/ Cost management doesn't always mean automation and cost cutting, but also rethinking the roles in your organization
5/ Partnering to compete is a must. Operating in a joint venture will unlock new routes and additional revenue
6/ Artificial Intelligence (ie. LLMs) will have a significant impact in the dynamic pricing strategy
7/ Air France is flying fewer planes today vs. 2019 but generates the same revenue. The premiumization of services is happening here too.
I have flown Air France to Paris and I was really impressed by the quality of the service and the airplane. Well done!
The 5 stages of Social Media
Last week I gave a presentation to a group of students from Sapienza University, who visited our university for the Foresight project.
Given the strategy context of Italian companies, the mention of Social Media was inevitable, so I had to rely on the ideas of Sam Lessin, a former Facebook executive, in describing the stages/waves of Social media.
🚀 The Evolution of Social Media: From People Magazine to AI-Driven Content
🔍 Stage 1: The Pre-Internet 'People Magazine' Era
Remember when People Magazine (Bravo, Cosmopolitan) ruled the world of entertainment news? It was the go-to source for celebrity updates and gossip. Nobody really liked the magazines but there was no real alternative. But then came the Internet, and everything changed.
💥 Stage 2: Content from 'Your Friends' Kills People Magazine
Social media platforms emerged, enabling us to connect with friends and share our lives online. Suddenly, we didn't need People Magazine to keep up with our loved ones' latest adventures. We became the creators and curators of our own content.
🌟 Stage 3: Kardashians/Professional 'Friends' Kill Real Friends
As social media evolved, influencers and celebrities gained immense popularity. The rise of the Kardashians and professional 'friends' shifted the focus from genuine connections to aspirational lifestyles. This is when we realized that most of our friends and relatives are boring. We found ourselves immersed in a world where virtual friendships held greater influence than real-life connections.
🔄 Stage 4: Algorithmic Everyone Kills Kardashians
Algorithms stepped onto the scene, tailoring our social media experiences to our preferences. The era of personalized content dawned, leading to a democratization of influence. Everyone became a potential content creator, and algorithms served us content based on our interests, surpassing the impact of even the most prominent celebrities.
⚡ Stage 5: The Next Frontier - Pure-AI Content Beats 'Algorithmic Everyone'
Now, we stand on the cusp of a new era. The rise of pure AI content promises to redefine social media once again. With the power of artificial intelligence, content creation will reach unprecedented levels of sophistication and personalization. AI-driven algorithms will learn our preferences, anticipate our needs, and generate hyper-relevant content, surpassing anything we've experienced before. (e.g. Stable Diffusion, DALE-E and MidJourney). Here, META is best positioned to build a moat.
BCG released their 2023 top of the most innovative companies. I don’t like their methodology but at least the outcome it’s pretty ok. LINK
China bans Micron.
What does it mean? LINK
1/ This is a retaliatory measure for Huawei.
2/ Micron makes only 10% of its revenue in China
3/ China voluntarily started decoupling from Western technology…6-8 years ago. They are at least a decade behind top-edge chips and technology (ie. ASLM machinery)
4/ Being a top player means competing with the others in top sectors: from automotive to chips.
5/ Noah Smith says that labor-intensive manufacturing is relocating south-east Asia, heavier stuff in Eastern Europe and Mexico, while chips to South Korea and Japan. LINK
“How Did Hyundai Get So Cool?” - The Wall Street Journal
My 2 cents: Hyundai’s rebirth is due to its transition to EVs, where there are other competitive advantages. Design alone was not enough. LINK
Knowledge Partner: EY Romania
EY study: Employees prioritize life-changing international work experiences:
93% of employees say working internationally would "change their lives"
88% of employers believe mobility can help address the global talent shortage
Only 47% of companies currently have a coherent mobility policy to meet the growing demand for flexible working. Read the full study (in Romanian).
AI and moats
CB Insights has an interesting report on AI funding. Not much money is flowing because nobody knows where the moat is ... .yet. LINK
Who made the most U.S. unicorn acquisitions since 1997? The aggregators, of course. LINK
Global Economics Intelligence executive summary (April 2023)
1/ Inflation remains high
2/ Global growth projections to 2.8% for 2023 - ok-ish zone
3/ The US banking system is nervous
4/ Services continue to be in high demand. LINK
Youtube generated $40bn in revenue in 2022. My two cents is that Youtube TV will be the most used go-to channel in the near future. LINK
2022 App Store Transparency Report
1/ 650m weekly visitors, downloading 750m apps weekly, redownloading 1.5bn weekly, and installing 41bn app updates weekly:
2/ China ordered the most app removals
3/ Gaming apps are the most removed category. LINK
Returns can kill your business
6% of Asos’s “bad customers” brought a hit of -$100m. Amazon had this problem and ended the Prime contracts of those customers. LINK
China overtakes the United States in contributing to research in the Nature Index. LINK
The beauty market in 2023: A special State of Fashion report. LINK
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Patent trolls are those buying patents with copyright infringements made by others and suiting them. It seems this is a big industry and the US judges are targeting this industry. LINK
On complex company websites
Interesting thread on how IBM reorganised their website. (hint! They deleted close to 80% of the marketing footprint). The result? Traffic, conversion and all our experience and NPS metrics are up. LINK
The math behind the logos. LINK
Ray’s Dalio investment portfolio. LINK
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