Fedex, Salesforce, Health-Tech, Credit Algos and Cars24
Till I watched the Queen’s Gambit, I had a passing interest in Chess, rediscovered every few years leading to a few videos on openings and a few matches till the board went back into the shelf for another couple of years. I certainly like the rest of the world (see the graph below) rediscovered my love for the game after watching the Queen’s Gambit. (If you haven’t watched it, do watch it. Some stories are universally beautiful). But in a blatant oversimplification I learnt that the most beautiful games are the ones where white sacrifices a queen or an important piece to win the match.Since Chess is supposed to be a representation of the world, I went about searching for the Queen’s Gambit and other such sacrifices in the business world.
In the first story we look at probably the most accurate representation, where FedEx has sacrificed its most successful consumer and readied its pieces for the battle royale of shipping. In it’s long walk, Salesforce has acquired a pawn and is looking to make a queen out of it as it makes another effort to dethrone Microsoft as the King of software. Big Tech has made the best AI to play chess but the one game that they haven’t been able to win is one of Digital Health. We look at what Apple, Amazon and Google need to do to establish themselves in the field. Like in Chess where the development of pieces is more important than the actual attack, technology needs to be readied before it is deployed to solve the big problems of our world. In areas like loan disbursement and renting, the tech is ready but the algorithms are flawed and sometimes such releases push you back rather than forward. My last story for the week is about a recently minted Unicorn and how it has moved beyond all the ambiguities of regulations and macro-economics to arrive on the fast lane. In this search for stories, my love for the game actually increased because almost every business strategy I have studied or known of can be found in the game of chess.
So, Let’s play !
1. FedEx is a brilliant example of sacrificing a piece to maintain advantage. It sacrificed its most successful customer Amazon and announced that it would no longer be working with it. I realised that at all times, everywhere someone in the world is trying to stand up to Amazon and compete in some territory. If you take a moment to stop and ponder, you would understand the scale of it. For example a month back it was Amazon vs. Reliance in India. It is now Amazon vs. FedEx in the US. But this is a story I have been following for a very long time. Essentially, your biggest partnership is your biggest cost centre. At a scale and size of Amazon, what happens when Amazon opens its own shipping services. But the beauty of this is that this time Amazon is not disrupting an industry. It is going toe-to-toe with the company that has been the innovator in the category. The story is exciting because my bet is probably Amazon won’t win so easily and FedEx has shown this pandemic that no matter what happens it is up for a fight.
2. In the world of Software, there is one King. And to be clear it was and is Microsoft. The longest prince in waiting outside of Buckhimgham Palace has to be Salesforce. It is a company that has managed to stay innovative, jump over the high waves, but never really taken off so successfully that it could defeat or dethrone Microsoft. This year for Microsoft has been the year of Teams as it has driven user and revenue growth, but Salesforce is taking another shot. Salesforce and Slack are at least in my head the two ends of the narrow tech spectrum. There is a possibility that Slack will help SF gain new users for its heritage SAAS products and finally give a running to Microsoft. We will have to see, but Microsoft you can be sure is not slacking 🙂
3. If I talk to you about Digital medicine and “health-tech” you would get the drift of the industry in 2020. Digital prescriptions became mainstay in a lot of countries. Because of the pandemic what really took off is digital consultation with doctors as people were afraid to visit hospitals. There was the online pharmacy business which made waves as Amazon entered etc. But that is a little passe now. The question to think about is that Big Tech has been trying for years to get into the health care business. Why haven’t they succeeded? There are two concepts you need to look at. First, the health care sector is a big business with strong regulation and massive incumbents. Second is that ads for data models won’t work. Another beautiful model I found in health tech was Verily. In his model patients are charged not for using a product/service, but charged when their health improves. I don’t think in the history of medical science you would find something that beautiful for lack of a better word.
4. Most credit, loan, rental and financial decisions would soon be made by algorithms. Unlike 5-6 years back there wouldn’t be humans available as readily to understand flaws and make assumptions. Infact once you release the product on the market, the loan executive doesn’t know how the algorithm decided you were not suitable. And this is not the future but the present in some developed countries. So now there are reports on how to identify the flaws in every algorithm being used in the US. I find that ridiculous. Love the tech adoption, but I think tech readiness is a precursor to adoption and not the other way around. The sacrifice of established ways must be for a purpose and not herd mentality.
5. This last story of the week is about Cars24, a recently turned Unicorn that deals primarily in the used cars segment. The reason this story comes here is that their journey over the last 5 years is almost a succinct summary of the Indian economy and its ups and downs. There is a resilience that was required to survive such events. Another point which intrigued me was the comparison to Maruti, Tru Value, the incumbent in the sector and probably the company with the best knowledge of consumer behaviour in India. A good story to read, because I too believe that in the near future the sector will heat up and Cars24 has made a strong start.
Hope you had fun reading.