Amazon's cashier-less tech arriving at Terminal 2, Gate B7
Hey Snackers,
California wants NCAA athletes to start getting paid post-practice, pre-class, for endorsement deals (think Peyton Manning in Papa John's commercials, but sophomore year).
Investors were busy celebrating the market's best first-3-quarters-to-start-a-year since 1997 as September wrapped itself up.
Happy 4th quarter.
Alphabet's self-driving car company loses 40% of its value (but is still worth over $100B)
50% lower price than Uber, 100% less driver... That's the service Waymo wants to offer in the next few years. The self-driving car unit of Alphabet leads the race to offer up futuristic, no small talk, tip-unnecessary transport of the future. But Morgan Stanley just downgraded what the bank thinks Waymo is worth: From $175B to $105B.
Discounted cash flow modeling... Young bankers learn to wield the valuation method like it's the Patronas charm. Morgan Stanley tossed Waymo's numbers into some spreadsheets to determine how much profit Alphabet will make the next couple decades. They decided Waymo's self-driving dreams could experience less revenue and more costs than previously thought for 2 reasons:
- It's taking too long. Waymo missed targets to roll out a commercial robo-taxi service, currently still testing them out in Arizona (Waymo sticks its software into Chrysler minivans).
- Humans are expensive. Waymo will have a backup human safety driver behind the wheel for a while before it's safe enough for those minivans to cruise sans-driver.
Don't ever forget this: Google is an ad company... but it's moving to diversify. Google actually made 87% of its revenue last quarter by infiltrating your Google search, Youtube, Google Maps, and Gmail with online ads. Saving the world wasn't a revenue source. But it's got a breed of young businesses it hopes can become healthy profit puppies someday:
- Transport "Other Bets" (that's what Alphabet calls them): Waymo for humans and Wing to drone-deliver packages.
- Other "Other Bets": Google Fiber (internet/phone service) and Verily (health data).
Amazon's targeting airports, baseball stadiums, and movie theaters with cashier-less "Go" tech
1 bucket of popcorn, 1 large DP, and don't miss the previews... CNBC reported that Amazon is in talks with airport convenience stores (CIBO Markets), movie theaters (Regal Theaters), and stadiums to license its Amazon Go cashier-less tech. Scan your phone when you enter, take what you want, leave — your Prime account gets charged, you don't miss the touchdown.
Amazon is the master of customer adoption... This tech is freaky (we've tried it). Cameras and sensors are all up in your space (and humans aren't). But Amazon's rolling this out to customers thoughtfully and gradually, first to those most-likely to adopt:
- Early adopters: Amazon's got 16 of its own "Go" stores, visited by city-dwellers eager to brag to friends about the lack of lines.
- People in a rush: If your flight already started boarding, you'll love not waiting 10 minutes in line for a pack of gum.
- Mainstream: Amazon could add thousands of "No-Go" stores (that's what we're calling non-Amazon stores using Amazon Go tech), making friends out of would-be retail competitors. Amazon wants hundreds of these by 2020.
Software is way more profitable than physical stuff... Amazon's ecommerce operation ships a massive 10B products per year. But its way-smaller Amazon Web Services is the profit puppy, making over 50% of company profits through cloud services. Two tech companies in today's Snacks are following similar strategies:
- Driver brains: Waymo is selling its self-driving software to carmakers (but not actually making cars itself).
- Cashier brains: Amazon could sell human-less cashier and payment software to retailers (but not actually making stores itself).
RV legend Thor Industries surges 16% on international camping
Bold name... Thor Industries is more camping than glamping as the biggest RV-maker on Earth. It boasts a team of recreational vehicle brands that sound like desperate Eagle Scout nicknames: Bison, Jayco, Buccaneer, Keystone. Leading the fleet is Insta-worthy throwback Airstream. But here's the name that drove its overall sales up 23% last quarter: Erwin Hymer.
- Thor splurged $2B on the German RV brand earlier this year.
- Now Hymer's helped Thor push RV'ing across the pond deeper into Europe.
Camping is the new ironic Millennial thing... We're teased for juice cleanses, but our generation powered RV sales to record highs in 2017 getting heavy traffic to National Parks. That snagged entrepreneur attention: Outdoorsy ("Airbnb for your RV") and Hipcamp (private campsite booking site) solved camp problems totally unrelated to toilet paper. But in 2017, US RV sales peaked and Thor stock is down 65% ever since.
When US sales slow, look to emerging markets... That's what soda companies did, candy companies have done, and Thor is now doing. Thor's new German RV-maker, Hymer, happens to have a joint venture with a Chinese RV company and pursues Southeast Asia. Now Thor can reach millions of middle class Chinese who are down-to-backpack as American ex-RVers return to their cities. Emerging markets = Emerging campers
What else we’re Snackin’
- Out: Forever 21 files for bankruptcy — and it could signal the end of fast fashion (fyi, 2nd-hand fashion will be bigger within a decade)
- Over: WeWork officially withdrew its IPO paperwork as it begins a period of financial mindfulness and reflection
- Overheard: Spotify now lets you mix podcasts in with your music playlists
- Snatched: Verizon is buying up all the cool tech from a virtual reality startup
- See ya: BP's CEO is reportedly retiring really soon — he oversaw the $65B the British oil company shelled out for its Gulf of Mexico mess a decade ago
Tuesday
- Earnings from Stitch Fix
- The 70th anniversary of the founding of the People's Republic of China
Disclosure: Authors of this Snacks own shares of Amazon and Beyond Meat
Correction: In Friday's newsletter, we mentioned that Match Group was getting sued by the FTC for misleading ads from Tinder, which Match owns. The ads weren't from Tinder, they were from Match.com. The corrected article is here.
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