(#97) Social Media is not shoppable, but it drives most of the shopping decisions
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Today’s Insights:
From the PLUS version (paid):
On to the update:
Strategy
Apple’s new plan: take over your house
Having failed with Apple Car, Vision Pro, and other initiatives Apple has realized that they focus on the place where the smartphone is not a leading product: the house.
Here is their plan, according to Mark Gurman from Bloomberg:
1/ Apple aims to dominate the smart home market by integrating its devices and software throughout the home. This involves developing a new homeOS operating system and introducing smart displays that can act as affordable, multi-functional screens for streaming, videoconferencing, and managing household tasks. The goal is to provide a seamless experience across various Apple devices, similar to how its ecosystem works for personal devices like iPhones and MacBooks.
2/ A significant aspect of Apple's smart home strategy is the use of AI through its new Apple Intelligence platform. This platform will enhance automation, allow precise control of home devices, and offer advanced features like recognizing individuals interacting with the system. The integration of AI is meant to boost the functionality of Apple’s smart home products, making them more responsive and intuitive.
3/ To better compete with Amazon and Google, Apple plans to ensure compatibility with other brands' smart home accessories through the Matter protocol. This strategic shift from a closed ecosystem to one that supports multiple platforms is crucial for expanding Apple’s footprint in the smart home market, offering users more flexibility and encouraging broader adoption of its smart home solutions. LINK
Hydrogen cars are dead
Hydrogen cars, once seen as the future of clean automotive technology, struggled to gain widespread adoption for several reasons:
1/ Firstly, the infrastructure required for hydrogen fueling stations was expensive and difficult to scale. Unlike electric vehicles, which can be charged at home or through an expanding public network of chargers, hydrogen cars needed specialized refueling stations, which were slow to develop, especially outside of select areas in Japan, the US, and Europe.
2/ Secondly, the cost of hydrogen production and storage remained high, making hydrogen cars expensive both to produce and operate. The process of extracting hydrogen, typically through natural gas, is energy-intensive and has a larger carbon footprint than originally anticipated. This undercuts their green credentials compared to electric vehicles, which are increasingly powered by renewable energy sources.
3/ Lastly, hydrogen cars faced stiff competition from electric vehicles, which have advanced significantly in recent years. The global automotive market has embraced EVs due to falling battery prices, a better-developed charging network, and strong consumer interest. The mass adoption of affordable EVs, especially from China and Europe, has overshadowed the development of hydrogen technology, leading to its marginalization in the automotive sector. LINK
Communicating for each generation
Three ideas from the graph above:
1/ Gen Z (born between 1997-2012) is the primary user base for Snapchat, where they make up 52.3% of the platform's total U.S. users. They are also the leading demographic on TikTok, representing 43.8% of users. This indicates a strong preference for visual, short-form content and instant communication among the younger generation.
2/ Millennials are prominent on LinkedIn and Instagram
Millennials (born between 1981-1996) are significant users of professional networking and lifestyle platforms, dominating LinkedIn with 35.8% of its user base. They also represent 36.1% of Instagram’s total users, showing their engagement in platforms that blend personal, lifestyle, and professional content.
3/ Older generations favor Facebook and WhatsApp
Baby Boomers (born between 1946-1964) and older generations are particularly active on Facebook and WhatsApp. Facebook has 18.5% of Baby Boomer users, while WhatsApp also attracts 11.9% from this group. These platforms appeal to older generations due to their user-friendly communication features, enabling connection with family and friends across different generations, and ease to use. LINK
Artificial Intelligence
The true risks of AI Ilya Sutskever, OpenAI’s former Chief Scientist, had a TED Talk one year go where he presented two threats to AGI (Artificial General Intelligence):
These are the risks everyone is talking about. LINK
AI just helped someone sue their landlord without a lawyer. LINK
How to build AI Agents. LINK
AI energy usage means a rebirth of nuclear energy. Here is a map of the Electricity Value Chain. LINK
Things Happen
Stripe acquired crypto start-up Bridge. LINK
A closer look at the wireless charging in Tesla’s Robotaxi. LINK
[Documents] TikTok can become addictive after just 35 minutes. LINK
SpaceX requested FCC approval for Starlink's 2nd generation of satellites. LINK
China’s overproducing of lithium has one scope: to eliminate rivals. LINK
Hacked robot vacuums across the USA started yelling slurs. LINK
France’s budget plans: cost costs and temporary higher taxes on 440 companies. LINK
Industry reports
Just invest in the US market
Apple Vision Pro apps. Lesson: with 3rd party developers or maybe a ‘killer app’ is hard for a tech product to take off. LINK
The Economist: “Putin’s plan to defeat the dollar”. Hint! It will never happen in a BRICS country because that will mean not controlling it anymore. LINK
Curiosity corner
China and Russia are forming (together with Iran and North Korea) the new axe of evil. LINK
Nabeel S. Qureshi’s reflection on working at Palantir. LINK
Matt from WordPress about DHH from Basecamp. LINK
The Dark Ages were visible also at the Louvre. LINK
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Strategy (Plus)
LVMH is affected by the ongoing economic instability
Here are five key conclusions from Jean-Jacques Guiony's remarks during the LVMH Q3 2024 earnings call:
1/ The global luxury market, including Mainland China, is facing economic difficulties, leading to a softening demand for luxury goods. Consumer confidence in China is back to the low levels seen during the COVID-19 pandemic, making it unlikely for discretionary spending to expand in the near term.
2/ While most clusters within Fashion & Leather Goods remained flat or declined slightly, Louis Vuitton performed slightly above the average, and Dior slightly below. This suggests that key brands still maintain resilience despite overall market softness.
3/Guiony emphasized that LVMH has implemented price increases over the years, partly in response to inflationary pressures. However, he noted that comparing current prices to those from 2019 is difficult due to significant changes in product offerings. Nonetheless, he defended the price increases, suggesting that they have helped mitigate declines in profitability.
4/ Despite the challenges, Guiony reiterated LVMH’s commitment to innovation and maintaining the brand’s luxury positioning. He argued against making drastic changes to the product range in response to short-term market fluctuations, emphasizing the importance of staying true to what has made LVMH successful over the years.
5/ LVMH views the current downturn as cyclical rather than structural. Guiony expressed confidence in the recovery of the luxury market, particularly with the expected resurgence of the Chinese upper middle class, which LVMH has historically relied on for growth. He emphasized that, despite the uncertainties, LVMH is prepared to adapt to market conditions. LINK
TikTok is helping its creators to manufacture their own products
Why? Well, at least three reasons:
1/ TikTok is expanding its role from being just a content-sharing platform to becoming a full-fledged e-commerce player. By helping creators develop and sell their own products, TikTok is positioning itself as a key player in the growing creator economy, allowing it to capture more value from the massive creator-led content market.
2/ By providing creators with tools to build their own brands and revenue streams, TikTok fosters deeper loyalty within its creator community. Offering product development services and e-commerce infrastructure enhances the platform’s value proposition, making creators more dependent on TikTok not just for exposure but also for monetization. This could help TikTok compete more effectively with other platforms like Instagram and YouTube, which are also vying for top creators.
3/ Social commerce, where products are sold directly via social media platforms, has been growing rapidly. TikTok has seen success with its e-commerce initiatives, particularly in China through its sister app Douyin. By replicating this strategy in other markets, TikTok is capitalizing on its entertainment-driven user base to drive product sales, which is a natural progression from its content-first approach.
4/ Finally, the more the app is interconnected with the West the harder will be to ban it. LINK
ASML reached peak EUV lithography
Here are three key conclusions from ASML's earnings report:
1/ ASML's Q3 2024 bookings fell significantly short of expectations, reporting €2.6 billion compared to the €5.39 billion analysts had estimated. This stark miss caused ASML's shares to plunge by 16%, the largest drop in over 26 years, highlighting the semiconductor industry's current volatility.
2/ The broader semiconductor industry is experiencing a challenging period, with mixed demand across sectors. While there is strong demand for artificial intelligence accelerators, areas like automotive and industrial chips are facing a slump due to excess inventory. This uneven demand has impacted orders for ASML's advanced chip-making machines.
3/ ASML's business has been further complicated by geopolitical tensions and regulatory restrictions, particularly involving China. Although China remains ASML's largest market, contributing 47% of Q3 sales, new export controls and potential future restrictions are expected to weigh heavily on the company's future growth in the region
4/ TMSC started to refurbish its N5 nodes instead of building them from scratch, which led to lower-than-expected orders.
The future looks a little pessimistic for ASLM, regardless that they are making better machinery and more expensive. LINK
Europe
Financial Times: “Europe can still birth the occasional unicorn”
Europe struggles to produce more unicorns for several reasons, beyond the financial cycles and current market trends:
1/Unlike the U.S. or China, Europe is not a single, unified market. The continent is divided by different languages, regulatory frameworks, and cultures, making it harder for startups to scale quickly. While the European Union provides some level of integration, each country still has unique business environments and consumer behaviors, which slows down the growth potential for startups compared to their U.S. or Chinese counterparts.
2/ European venture capital tends to be more conservative compared to the U.S., where investors are more willing to fund high-risk, high-reward ventures. European investors often prioritize profitability and sustainability over rapid scaling, which can stifle startups that require large amounts of capital to achieve unicorn status. This cautious approach limits the opportunities for rapid valuation growth.
3/ While Europe has strong sectors like fintech (e.g., Revolut and Monzo), it lags in other high-growth areas such as artificial intelligence, biotech, and e-commerce. These sectors have produced numerous unicorns in the U.S. and China, where innovation ecosystems are better supported by governments, private investment, and academic institutions. Europe's less aggressive focus on these cutting-edge technologies has limited its ability to create a broader range of unicorns. LINK
Start-up of the week: OpenAI
Some numbers about OpenAI: its latest round of $6,6 evaluated the company at $156 bn. Not bad, including that this year they expect to make above $3.7 bn in revenue, with a loss of $5 bn. It has 350m users, while only 10m are paying for a subscription.
According to The Information, OpenAI anticipates reaching profitability by 2029, aiming for $100 billion in revenue, though this would come with $44 billion in cumulative losses along the way. The only challenge that I see is the one that the models are becoming more commoditized. We’ll how much advanced is Chat GPT vs. the industry once we see ChatGPT 5 at work. The Information, Axios,
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