Softbank’s potential investment in Uber

Regarding Softbank’s potential investment in Uber over the weekend, Mergermarket’s research editor Elizabeth Lim has commented below about the deal:  

• Sunday’s news of SoftBank’s bid with a consortium for a significant stake in Uber shows the company’s continued effort to be the king of high-profile start-ups.
• SoftBank also owns stakes in other ride-sharing startups around the globe, including Brazil’s 99Taxis, China’s Didi Chuxing, and India’s Ola, though it does not currently have a stake in Uber’s main competitor in the US, Lyft.
• To date this year, the company has engaged in a record 29 transactions, almost 5x the number for the whole of last year, and with only one transaction having lapsed – a US$1.8 billion attempt to acquire Luxembourg - based satellite provider Intelsat in the first half of the year.
• SoftBank’s buys have been fairly representative of a market share grab taking place throughout the industry, and have ranged from medical testing start-ups (Guardant Health) to budding autonomous vehicle companies (Nauto) to artificial intelligence (Appier; Petuum) and robotics firms (Boston Dynamics; Schaft) to co-working spaces (WeWork). Investments have especially picked up following the Vision Fund’s formation and close with US$93 billion.
• Deals that have closed over just the last few months have included such ventures as a US$250 million bid with Accel for popular messaging platform Slack, a US$114 million bid with Qualcomm Ventures for autonomous robot company Brain Corporation, a bid as part of a consortium of sponsors for an undisclosed consideration of indoor farming start-up Plenty, and the full-on acquisition of US cyberdefense company Cybereason, also for an undisclosed consideration, among many others.
• Most of SoftBank’s bids have been as part of various consortia – altogether, they have taken stakes in companies worth a combined US$25 billion so far this year, with no sign of letting up on that momentum.
• Uber has attempted to move past its recent woes by resolving certain issues within its board, which paved the way for this investment to take place. With plans for an IPO in 2019, SoftBank's stake buy and two new board seats signal a move forward finally for the ride sharing company.

ICICI bank launch India’s first voice base remittance service

ICICI Bank, India's largest private sector bank by consolidated assets, today announced the launch of India's first voice-based international remittance service to enable non-resident Indians (NRIs) to send money to any bank in India.

With this new feature in the ICICI Bank's Money2India app, an NRI customer can instantly initiate a remittance to his/her existing payees in India with just a simple voice command to Apple's virtual voice assistant, Siri, on his/her Apple iPhone / iPad.

A first-of-its kind cross border remittance service by a bank in the country, it improves customer's convenience significantly as it replaces a five-step process, which was required to initiate a remittance to India earlier.

--

Alex Lew, CFA 

UOB hackathon 2017

Modular architecture: Control vs. Openness

A firm seeks to attract different partners to design and develop new components outside a platform core.

These firm's innovation activities influence each other by being reciprocal and recursive. Thus, the innovation is the demand side based.

Firm needs to have the capability to create new uses of its services and platform. Just think of Amazon who was a bookstore in the beginning, but now sells basically everything.

Today's platform market has become a dynamic mashup of unforeseen dependencies among content, devices, networks, and partners. PayPal exemplifies this change. The payment service uses a sophisticated digital platform seamlessly to integrate with websites from which music, videos, movies, application, magazines and books can be purchased.

On one hand, the platform provider seeks to maximize innovation through open innovation and layer module architecture. But on the other hand, the platform provider seeks to keep some parts of the platform under strict control. So, every layer in the digital platform include designed rules, data control and govern the platform and its components.

Network effects tends to lead to concentrated markets

Consumers prefer credit cards accepted by more merchants, while merchants prefer credit cards carried by more consumers.

An additional customer on demand side of the market will add value to the other side of the same market. In another example, more gamers on Steam platform will increase the value of game content manufacturers. More merchants accepting American Express increases the value for American Express cardholders.

This eventually leads to concentrated markets. This is why network effects typically lead to giants – Wechat, Facebook, Twitter. 

Productivity through outsourcing

Outsource outsource outsource. At your job, don't be the one who soaks up bullshit work from bosses

Many executives also spend too much time on operational details, such as the best flight to take or the seating plan at a corporate dinner. Such tasks should be delegated, if possible, to an executive assistant. Of course, the boss must be able to rely on this person to get the tasks done correctly, quickly, and politely. Once confidence is established, he or she should go to great lengths to support and retain such an assistant, who is crucial to being productive.

--

Alex Lew, CFA 

Porter’s strategy

Strategy is about choosing what NOT to do. Strategy is not just about creating nice slides. Good companies ponder daily their business mix. 

(An extract from Jeff's article)

Finally, simplification was all about reallocating resources to fund more growth and identify and solve customers' problems better. When companies are slow, it is typically a sign that their costs are in the wrong place. One of the reasons big companies fail is that they don't think they can afford something and aren't willing to free up the resources to make bold moves. We are investing heavily in making GE a digital industrial company. Last year we put about $4 billion into developing our analytics software and machine-learning capabilities and another $2 billion into building a leadership position in additive-manufacturing equipment and services—an emerging field that is going to revolutionize manufacturing. We had to run leaner in other places to make those investments.

--

Alex Lew, CFA 

Bitcoin consensus and stakeholders

Bitcoin required consensus

Consensus of rules – which kind of block exists

Consensus of history

Consensus that coins are valuable – who owns the coins

These consensuses provide incentives for bitcoins mining. Bitcoin relies on consensus, it relies on agreement by the participants and that that consensus is a fragile and interdependent thing.

Who are the stakeholders?

Miners write history, make the blocks, record transactions. Investors decide if the bitcoin has any value. Merchants and users influence its acceptance.

FAQ: Why is blockchain attractive?

Beauty of blockchain lies in common agreement

Everyone can agree upon a single published block chain that is the agreed upon history which transactions have happened.

People can agree which transactions are valid and which transactions have actually occurred.

Ability to assign IDs to things in a decentralized way.

This means there is no need for central authority. No one has the final say unlike cash, where central banks decide the volume of money.

FAQ: How do we know if a blockchain transaction is valid?

4 premise to check for transaction validity

• First, if the consumed coins are valid, that is they really were created in previous transactions. 
• Second, that the consumed coins were not already consumed in some previous transaction, this is not a double-spend.
• Third, that the total value of the coins that come out of this transaction is equal to the total value of the coins that went in. 
• And finally that the transaction is validly signed by the owners of all of the consumed coins. 

FAQ: Who guards the creation of bitcoin?

A crypto currency transaction is always valid. This is so because the user said so. He puts it in the block's history, signs it and this has to be valid.

The beauty of cryptocurrency is here - there is no need to worry if someone is entitled to create coins. Anything that's placed in the history and signed, is valid. This is where the efficiencies of transactions are derived.

Is Tencent raising its game with its credit score system?

All eyes are now on Tencent’s credit score system. But what exactly does this mean for Tencent and its nemesis, Alibaba?

Tencent’s credit score system is stealing the limelight even as onlookers anticipate Alibaba’s monthly update of its Sesame Credit. Tencent is granting some of its users access to its credit score system in the run-up to “8.8 cashless days.” This is Tencent’s latest bid to get a slice of China’s US$5.5 trillion mobile payments market.

Only QQ super members are eligible to view their credit score for the time being. This means users must pay at least 20 yuan to view their credit score. Tencent’s strategy is similar to Alibaba’s Sesame Credit back in 2015.

Accessing Tencent’s credit score is an obscure process. Users must first take note of the “Tencent credit” public number. After selecting “my credit”, users will need to enter the name and identity number. The corresponding credit score then appears; it lies within the range of 300 to 850.

This is just another chapter in the intense battle between Alibaba and Tencent

Tencent and Alibaba have been in a longstanding dispute over payment matters. But Alibaba is advancing much faster when it comes to the credit score system. In January 2015, Ant Financial Services (蚂蚁金服) officially launched the Sesame Credit score. Over the years, it has access to more services – accommodation, travel, consumption, and loans. These rapid changes make many users pay attention to Sesame Credit’s monthly updates.

Tencent has been going all out to promote WeChat payment and QQ wallet. But it has been relatively cautious when it comes to personal credit. As early as 2015, Tencent has become one of the first batches of personal credit licensing units in the Central Bank. Its credit score system’s official website has been inactive for several years.

Tencent’s credit inquiry has been kept on such low profile allegedly thanks to “Pony” Ma Huateng.

“Isn’t such product buying and selling of personal data?” Ma retorted when he was approached by the person-in-charge of the Tencent’s credit inquiry. Ma then demanded that the distribution of the product be stopped for “protecting user’s privacy.”

Ma’s views appear to have changed. In his speech at last year’s Tencent Cloud summit, he mentioned that “Tencent will keep a long-term record of every user’s credit” to protect the rights and interests of its partners.

The absence of a credit system has always been an obstacle to WeChat’s expansion in China. Establishing an in-house credit scoring system is an imperative.

Chinese consumers are more concerned about the actual utility of Tencent’s credit score system

A user’s credit score is broken down into five categories – social index, safety index, wealth index, performance index, and consumption index. These criteria are similar to Sesame Credit’s.

Tencent and Alibaba have their own characteristics and advantages when formulating their own credit systems. Alibaba’s credit data is mainly based on the large number of e-commerce transactions and the addition of financial products such as Yu’ebao (余额宝), which is more heavily weighted towards data from Internet finance.

Alibaba is less adroit when it comes to social networking features. Alibaba has worked hard over the years but the results are not always satisfactory. The latest incident was the “Circles” event. Alipay attracted an uproar when it intended to use the Sesame Credit to enter the high-end dating market. Alipay then pivoted back to focus on payment mode and finance.

Social networking is Tencent’s natural niche thanks to QQ and WeChat. WeChat has nearly 900 million monthly active users while QQ has more than 860 million monthly active users. This can provide a large number of continuous and traceable user behaviour data for Tencent. In its introduction page, Tencent credit mentioned that the user's friendships and his circle of friends are also a factor in measuring one’s credit score.

Tencent does not have the same electronic business platform that Tmall and Taobao have. These platforms can help obtain consumption data. The evaluation of the user’s consumption index mainly comes from Tencent mobile QQ, WeChat payment, and shopping behaviour. Tencent may have access to JD.com’s consumption data thanks to QQ’s and WeChat’s connections with the e-commerce company. This means greater prospect of opening up “small credit” with JD.com.

An average user is more concerned about the practicalities of the credit score. Tencent’s credit score system has limited application for the moment as it is launched not too long ago. Aside from micro credit loan products and Everbright Bank credit card application, other functions such as mobile phone repair and car insurance instalment payment are not the average user’s concern. “Mobike deposits” are capturing substantial attention even though nothing concrete has been unveiled.

How Tencent’s credit score system can sharpen its competitive edge remains up in the air

Bike-sharing companies, including Ofo and BlueGogo, have introduced the Sesame Credit to waive off deposit fees. Mobike is unlikely to tap on the Sesame Credit thanks to Tencent. Mobike’s 299 yuan security deposit continues to draw heavy criticism. Users stand to gain if their accumulated points could leverage on Tencent credit to waive off deposit fee.

Tencent credit score can also be increased through supplementary work and education information. This is not too different from Alibaba’s Sesame Credit. But Tencent risks attracting the lawbreakers’ attention as its application scenarios expand in the future. Ant Financial once refuted the “swiping scores” claim by insisting that the so-called “gaining points” method is implausible. Tencent risks facing the same fate; it must be ready for this.

Tencent and Alibaba are waging a new battle in the credit score scene. But it remains uncertain whether Tencent, who has a slower start than Alibaba, can still wield the similar counter attack move it did with its WeChat payment years ago.