Taoism is a philosophy of China, which celebrates 3 treasures, compassion, humility and frugality. Around the 9th Century, Taoists wanted to prepare a material for medicinal purposes, but also something that could be the elixir of life (something that grants eternal life or immortality). Predictably they couldn’t create it. In all these experiments they finally ended up creating another substance. Gunpowder. Now that is also probably the first ever known instance of irony. Irony is all around us in so many different ways and too many times, outcomes and expected outcomes are diametrically opposite. For example the team with the two best batsmen in the world, never wins the IPL. A news journalist who made news through sensationalism, gets dragged out of his own home. The most advanced country in the world takes four to five days to count votes. And all this in ONE WEEK.
So today we talk about Irony is business, economics and strategy. A respected politician who has always stood his ground at the center of the political spectrum, has to move left after decades to win an election. When America banned one Chinese company, the most benefited party was another Chinese Party. As a Chinese company went towards an IPO, to become the biggest financial institution in the world, its own government stopped it. As California went to vote on workers benefits, the workers voted that they don’t need those benefits. And we end with the story of WeWork and the irony of its Founder.
It is a strange world, but there are patterns. Today we tug at the strings and I hope you too will see the logic and beauty of irony in business and global economics.
1. Biden even in the Obama era was always the incremental politician. Just always get a little better, take one step in the right direction. The problem is Americans needed a revolution. And to give credit to a man who has been around for a long time, he did find a way to accomodate a semblance of big change in his manifesto and in his speeches. The median age of Americans is 38, the median age of their politicians in 65. The disconnect is plainly visible. This article is on public demand as many of you told me to write about the elections. As America welcomes its new president, today I found an article on the new president and the atmosphere in which he takes over, within his party and within his country. The New Yorker is one of my favorite places to read profiles and this is a special one.
2. Huawei has had a very very bad year even compared to the rest of us. First Mr Trump came down on the company, and then few other countries followed suit. The entire scare was created about the telecom and network equipment. But, Huawei also had a very strong B2C segment in terms of smartphones where it was the third biggest seller of smartphones (behind Samsung and Apple) selling roughly 50 million smartphones in a quarter. The noise also has had a huge impact on this segment and it is just getting worse. The question is who benefits. Is it Samsung and Apple. No. It is Xiaomi. For long unable to find success in the western markets, Xiaomi has finally managed to grab this opportunity. It produced more than 47 million smartphones this year and is set to overtake Huawei next quarter. Even when Mr Trump banned the Chinese, he just helped another compatriot. Now that’s what I call irony!
3. The World’s Biggest IPO was supposed to be the final stamp of Chinese supremacy as Ant Financial would have overtaken JP Morgan, the world’s biggest bank in terms of value. Now, in the world of Chinese supremacy, being large doesn’t mean being free of control of the state machinery. Mr. Jack Ma this time was flying too close to the sun and Beijing can’t have that. One other point was that Ant Financial would become bigger than ICBC, the state controlled bank. I looked at various articles on this as I have been following Ant very closely, and in fact had written about it a few weeks back in this very newsletter. The article that follows probably is the best version of the events, as compared to some other publications.
4. I don’t get shocked too fast. In the current world I count that as a plus. Because the way to approach any news is that there is more beyond the headlines and in fact more beyond the article itself. But truly, this was news that shocked me. The biggest barrier to Uber and Lyft the world over was the definition of the gig worker, should drivers be treated as employees. The entire business model of the gig economy seemed dependent on this vote in the state of California where people were voting for their own rights. In my own naivety I was in fact trying to do calculations on how Uber would work after drivers were categorized as employees. But well, California voted that it was happy with the status quo. Backed by a strong marketing campaign. Imagine the irony that all these people have voted to say no to health benefits, employee benefits and have preferred to stay as contractors. We now have precedence for a decision which for the tech and gig economy is as significant as the next US president.
4. Adam Neumann, has had the best deal not in the history of tech or startups but in the history of mankind. He went across to extremely rich VC firms and had told them that he would spend lots of their money and he would be expecting payment to spend that money. That is an okay deal. But then over time it got proven that he simply wasted too much money. In return he asked for some billions to leave the company. Looking past the irony, it is important to understand an ecosystem that supports anything like this. The concept of risk and fraud are sometimes used very close to each other. I am all for going big, taking bold bets on risks, which if they pay off can change businesses or people’s fortunes (for example Space X and so many others). But this looks to be quite different. Do read this article. Economic bubbles form too many times from herd mentality. We should never let bubbles form for purely one organisation’s selfish motives or in some cases for the riches of one individual.
Hope you had fun reading!