Strategy

BMW sales recovered in the fourth quarter as supply chain issues ease. There are several points to make on the company’s strategy:

1/ The overall profit margin has improved (ie. fewer cars, higher prices - of course) LINK

2/ The Chinese market represents the highest market share for BMW sales, 33.6% in 2021, and increasing yearly. This is a major vulnerability for the company if a China - US war breaks out (over Taiwan); by the way, only 14.6% of sales go to the USA. LINK

3/ Being too reliant on the Chinese supply chain proved its limits. The company will try to move partial production from China to Eastern Europe

4/ BMW had a partnership with Apple from Day 1 for the Apple Car. It was a little bit odd to see them not being on the list of Apple’s partners in 2022. I guess they are working on their own device, but hiring software engineers which can’t be paid compared to what Google/Apple is paying is a real problem in Germany. Below you can see a difference between Apple Car and what BMW shipped on Series 3 (its most sold car)

In the meantime, at CES 2023 LG announced the introduction of displays and solutions for the automotive industry. Small fish become big fish. LINK

Interest rates will remain high and inflation will likely drop below 2% in 2025. So, it is always time to build.

Jack Raines @Jack_Raines

We lived in an era of near-zero interest rates where we could have borrowed virtually unlimited money to fund cool stuff like high-speed rail networks, cancer treatments, and nuclear reactors. Instead we got the metaverse and monkey JPEGs.

Evan Armstrong has put a list of the interests rated when these companies were founded. LINK

Apple is now allowing authors to convert their books into audio using text-to-speech with the help of AI. The company surprised everyone last month when they announced that they have successfully incorporated Stable Diffusion on their operating system (macOS and iOS). Everything will be done in the future on an Apple device due to their powerful chips, while doubling down on privacy and security. BOOKS, STABLE DIFFUSION

AI Breakfast @AiBreakfast

🎧 AI-read audiobooks are about to explode. Apple is now allowing authors to convert their books into audio using text-to-speech, and the audio quality is insane: Here's some samples from Apple. Details below ↓

Again Apple, which is reportedly working on a chip for WIFI, Bluetooth and Cellular Modem in a bid to replace Qualcomm and Broadway. To understand this move we need to go to Clayton Christensen’s theory, from The Innovator’s Solution:

When there is a performance gap — when product functionality and reliability are not yet good enough to address the needs of customers in a given tier of the market — companies must compete by making the best possible products. In the race to do this, firms that build their products around proprietary, interdependent architectures enjoy an important competitive advantage against competitors whose product architectures are modular, because the standardization inherent in modularity takes too many degrees of design freedom away from engineers, and they cannot not optimize performance. LINK

Partly for Tesla’s stock drop is also no customer brand loyalty: “Nearly 80% of people who bought Kia’s electric crossover since it went on sale early this year traded in something other than a Kia”. Most of the EVs that I have seen in Europe in 2022 were not Tesla’s. LINK

Inflation and less “work from home” means loads of headaches for subscription box companies (ie. bankruptcy, consolidation etc) LINK

Most trips in Europe are less than 3 KM. Micromobility will solve most of the commuting (& parking) problems. Cake’s first e-bike can go over 350 KMs before needing a charge. LINK

RAM 1500 is now electric. Watch out, Cybertruck & Rivian! LINK

BioNTech says it will start cancer vaccine trials in September. mRNA technology can be the key to solving one of humanity's main health problems. LINK

The Corporate Hitchhiker’s Guide to the Metaverse, from BCG. The fashion (luxury) companies are already experimenting with avatars, NFTs etc…everything that can bring them a chunk of the $65bn market. LINK

Data

One in five US workers is bound by a noncompete clause, which restricts them from freely switching jobs, lowering wages and undermining fair competition. LINK

The world is becoming less disruptive. LINK

Messari’s crypto report for 2023. Most of you know by know that I am short on crypto, but bullish on the blockchain technology and their future usage (including infrastructure) LINK

OpenSea chief seeks to distance NFTs from the crypto crisis. LINK

Bloomberg finally realised that a recession is imminent…with September 2023. Meanwhile, the World Bank has cut its growth outlook for the global economy from 3% to 1.7% for 2023. Bloomberg, World Bank

Europe and Israel have produced 344 startups that have reached a billion dollar valuation or exit (ie. 🦄), after receiving venture capital backing. LINK

“The End of the Affair” report from JP Morgan. LINK

Most of mergers fail, but that doesn’t mean that you can try:

EVs take 55% of the German auto market in December. LINK

China will build 150 new nuclear reactors worth $440bn in the next 15 years. LINK

Alphabet’s Income Statement in two words: CASH MACHINE

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Outside interest

A student has developed an app that gets accurate in plagiarism with Chat GPT. LINK

Sleep peer pressure is coming to your iPhone:

Someone asked AI to turn each country into a villain. LINK

Kyoto University allows students to wear whatever they want for the graduation ceremony. LINK

The Khmer language has 74 characters, which is almost impossible to write on a smartphone. Half of Facebook Messenger’s Voice comes from Cambodia. LINK

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Newsletter #5: on BMW, Apple and start-ups