Dear friends,
In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those.
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💡Must-read
👉 Coupang: The Art of Obsession (ReadtheGeneralist)
Member obsession and attention to detail:
➡️ We should never forget it! Member obsession is what makes us win.
It's written on the Coupang manual how to knock on the door, meaning that it's clearly written and documented on a very thick document that you don't have to bang on the door, so you have a very precise, described, and documented way of addressing a customer.
If you have a kid, I'm not going to ring the doorbell because it's going to wake the baby.
➡️ Incredible attention to detail. How do we get there in our member experience? In our sales process?
Verticalization:
The end-to-end value proposition sets them apart so much from anybody else.
Coupang has vertically integrated most of its logistics; that's allowed the company to offer best-in-class delivery with the nuances shown above and created a brand known for its thoughtfulness.
In short, Coupang is a logistical marvel that has raised the bar in terms of speed and sustainability. The company delivers millions of SKUs packaged in reusable, eco-friendly bags, powered by a massive network of employee drivers.
➡️ Verticalization to offer an experience that is significantly better.
Go-to-market:
➡️ Smart way to enter the market. What can we learn from it?
As a Service:
Considering how big of a force this logistics network is, it is no surprise that Coupang has plans to make these logistics services available to third parties—including other e-commerce players.
Coupang wants its competitors to accept its natural monopoly as the logistical backbone of the country's commerce.
➡️ I think that is really the approach of Alan as a Service.
Business model:
The company is the largest player in Korea, with over 200,000 merchants on its marketplace.
Coupang provides a full-stack solution for merchants looking to start and run their business, from store setup to final delivery.
Coupang makes money predominantly by selling consumer items online. To run through its business lines:
E-commerce sales of third-party goods
E-commerce sales of first-party goods
Coupang Eats
Rocket WOW membership
Fulfillment & Logistics by Coupang (merchant offering similar to FBA)
SaaS offerings for merchants, including advertising and myStore
➡️ Several business lines as in our 2030 plan.
➡️ Interesting to see a low margin business and how they increased it.
🏯 Building a company
👉 Stewart Butterfield - We Don’t Sell Saddles Here (Join Colossus)
No one's coming in with an enormous amount of excess intent, the way that they might if they were looking for a ticket for a specific Justin Bieber concert. But if they're looking for a ticket for a specific Justin Bieber concert, it doesn't really matter how bad Ticketmaster's website is.
When they come to our website, they don't really know what they want exactly. They have enough of an idea that they thought this was worth checking out, and the non-specificity and the bare minimum threshold of intent means that we have to work extra hard and really put things in their terms.
➡️ I think we are in the same situation for our website.
No one has the time or attention to learn an enormous amount just to figure out what your product is.
This idea of a core action in software products. So, something that you're going to ask the customer to do over and over again.
➡️ I like that notion of core action and making it really easy to figure it out from our website.
➡️ I like the definition of the category.
I have put an enormous effort over the course of many years, with limited success, into getting product managers and designers to understand that it's fine to be wrong. Being wrong is just the process of getting to the right answer.
There are a number of things that lead up to this position where people feel like their job is to be right on the first try and being right on the first try is more or less impossible unless you do something that really doesn't matter.
➡️ About moving fast, making decisions and learning from them.
In the early days of Flickr, one of the things that made us successful was we had APIs for everything.
You could just do anything you wanted and that excited people and they experimented. A handful of apps that people created out of the APIs, I think had genuine popularity and were useful, but mostly, it just created a community of enthusiasts. In the case of Slack, it created 2,000 apps in the app directory and something like 900,000 custom integrations that are actively used by a customer.
➡️ How to empower more developers sooner than later?
👉 Dave Ambrose - Wix: The Internet Storefront (Join Colossus)
Wix built their own app market. It's called the Wix App Market. And there, there are thousands of developers that have hundreds of thousands of applications, where if you don't know how to code, which a lot of small businesses often don't, Wix App Market makes it really easy to then say, "Okay, I can choose different integrations in terms of the app ecosystem." And the benefit of that for Wix allows them to control the experience.
➡️ I’m still wondering about what we could do for developers :).
Wix had effectively a viral video that went around to WordPress users and saying, "Hey, WordPress users and WordPress customers, I'm really sorry, but my experience is not great." The video talked about this person who was WordPress, and he was dressed in a suit sitting behind a desk, and it was almost like a got you video. You would open it if you're a WordPress user or a WordPress developer and say, "Listen, I'm a WordPress and I failed you. Here are all the reasons I failed you." What we ended up finding out and articles get written about it is it was actually Wix who made the video, it wasn't WordPress that made the video.
➡️ I found this and this answer’s video. Interesting how they fight.
The second thing that I also learned from Wix is building a product that is really complex behind the scenes but also making it really simple in terms of the onboarding experience is a competitive advantage.
For Wix, their time to value or their magic number is really within three minutes or four minutes that you build your first website.
➡️ What is our “time to value” for our members when they install the app? How do we make sure they have something magical when they open their account so they remember us?
🗞In the news
📱Technology
👉 Swan raises $18.7 million to provide embedded banking services (TechCrunch)
The company provides a banking-as-a-service platform for other products and services.
For instance, you can leverage Swan’s API to generate accounts and cards using API calls.
When it comes to account creation, each account comes with its own IBAN.
Swan clients can choose to design their own interface on top of Swan’s data.
When it comes to cards, Swan lets you generate both virtual and physical cards. They work with Apple Pay and Google Pay. Swan customers can limit some features, such as ATM withdrawals, or they can let their customers control their cards directly.
👉 The Information AM: Google tax (The Information)
Google’s advertising business sells 11 billion online ad units per day and takes “a very high tax” of up to 42% of money spent on digital ads, a coalition of states alleged in a newly antitrust lawsuit against the company. Its cut is double to quadruple what competitors charge, the suit says.
A Google spokesperson said the lawsuit was “riddled with inaccuracies”.
👉 Payments Company Stripe is kick-starting market for carbon removal (WSJ)
The payments company has formed a partnership with Deep Science Ventures, a London investment firm that specializes in building technology companies from the ground up. DSV will recruit scientists to develop ways to remove carbon dioxide from the atmosphere. If they come up with viable concepts, Stripe will be their first customer. It will pay DSV startups $500,000 each up front to capture and store carbon, then a further $1 million if they meet performance milestones.
It isn’t alone in trying to move the industry forward. Microsoft Corp., e-commerce platform Shopify Inc. and reinsurance giant Swiss Re, among others, are also paying tech startups to remove carbon from the atmosphere.
Stripe’s carbon-removal procurement is led by Ryan Orbuch, who was a product manager before focusing on climate, and the team’s projects are vetted by a panel of industry experts.
Stripe Climate, a tool introduced in October 2020, lets Stripe’s customers divert a percentage of revenue to the carbon-removal pot.
➡️ What would be an Alan climate service?
👉 An Interview with Mark Zuckerberg about the Metaverse (Stratechery)
The first job is getting the foundational technology to work. Then after that, our next goal from a business perspective is increasing the GDP of the metaverse as much as possible, because that way you can have, and hopefully by the end of the decade, hundreds of billions of dollars of digital commerce and digital goods and digital clothing and experiences and all of that. And I think the best way to increase the GDP of the metaverse is to have the fees be as low as possible and as favorable as possible to creators.
🏥 Healthcare
👉 Kyle Wailes - SmileDirectClub: Closing the Gap with Affordability (JoinColossus)
Product:
The product itself: ultimately is a clear aligner, and the objective that we're trying to do is straighten your teeth.
We would ship that directly to your home. You could do the impression which is effectively a mold, a 3D potty that you would get in a dental office, but we'll ship to your house. You would do the mold, ship it back to us.
➡️ At-home testing is powerful.
I think the difference on our side is that with the power of our teledentistry platform, we're enabling you to interface with your doctor remotely.
We can treat about 90% of the cases that are coming to us.
➡️ Interesting stat about telemedicine for orthodontic.
Business metrics:
Democratizing access to orthodontic care, (...) leveraging our teledentistry (...) but also more cost-effective as well because we're removing what we call "the three times markup".
SmileDirect charges how much? $1,950.
Invisalign would sell on average, say $1200 to $1,300 somewhere in that range. And there's different prices depending on the product that you would ultimately buy, but that price is what they're selling to the orthodontist. The ortho then is going to turn that around, mark it up at least three times and sell that back to the consumer.
85% gross margin.
➡️ Impressive gross margin.
Delight & verticalization:
What we're providing to the consumer is a 3D rendering of how their teeth are going to move throughout treatment. And so it shows them from where you are today, go out on average four to six months to the end of treatment, and here's how your teeth are going to move at every single stage throughout treatment.
Then we're going to manufacture the aligners. We do that 100% internally today as we're fully vertically integrated. We're going to ship the aligners all at once directly to the consumer. Then they would use our teledentistry platform. We have a mobile app that they would interact with.
➡️ What is the cost of orthodontia for us?
So initially we were an impression kit only business. And what we found is as we started to open Smile shops, we saw a material lift in just overall conversion that was happening.
How complicated this business is? It's an extremely complex business. If you think about the manufacturing aspect of it, for us today, we're making millions of clear aligners a month. Every single one is a little bit different. And let's say you've got, on average, 30 different aligners throughout the course of your treatment, if you switch to your next one, as part of your treatment, and it doesn't fit, you're going to be extremely upset.
It's an incredibly complex backend and vertically integrated model.
Distribution:
We're giving dental practitioners the opportunity to sell SmileDirectClub, but do it in a way where they do the initial scan, they upload all that information. So the assessment, the oral pictures, the scan itself, they upload all of that into our teledentistry platform. But then our doctor network takes over the process from there.
You've got to convince them to say, "Clear aligners are better than brackets and wires." But you've also got to win over the dentist as well, or the ortho.
👉 HTN_ Weekly Health Tech Reads 10_3 (Health Tech Nerds)
The Rock Health team published a report on the women's health market, and as one would expect from Rock, it features a good market map of startup activity, broken down into eight sectors where they're seeing the most activity. Link.
👉 Amazon’s healthcare ambitions have a new target: your home (FastCompany)
Amazon announced a new version of its wrist wearable called the Halo View. (...) It displays health metrics including heart rate, skin temperature, and blood oxygen levels.
Amazon is rolling out a whole array of fitness content to go along with its wearable. (...) it has hundreds of video classes.
The wearable has a nutrition component as well. Halo Nutrition will offer 500 recipes for an array of diets.
Of course, Amazon offers a way to order ingredients for its recipes directly through Whole Foods.
Amazon has also lowered the price to $80 for the Halo View (as compared with $100 for the original). Its forthcoming nutrition and fitness programs will be $4 per month. Halo View will come with a full year of membership.
Most of Amazon’s health launches focus on senior care. Alexa Together, a new $19-per-month subscription service, provides users with 24/7 access to an emergency help line they can summon with the sound of their voice.
It also has a remote-assist feature, so that family members can easily provide tech support for their older family member by helping them set up personal reminders, enable hands-free calling, and link up their favorite music service.
The company recently announced that it would be taking its employee telehealth program Amazon Care nationwide. It also has a prescription drug-delivery engine called Amazon Pharmacy and Pillpack, which not only delivers medications, but organizes daily drug regimens.
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