Friday Nov.20, 2020

💰 Google goes full Venmo+

_TJ Maxx's national treasure hunt_
_TJ Maxx's national treasure hunt_

Hey Snackers,

A massive sculpture of a whale tail called "Saved by the Whale's Tail" literally saved a train from falling 30 feet off its raised track. Who's working on the "2021 Will Be Better" sculpture?

Stocks closed higher yesterday, despite more COVID surges. NYC schools are shutting down again, and CA is implementing a nearly state-wide curfew.

Pay

Google goes full Venmo+, turning Pay into a franken-app for money

New app, who dis?... Google Pay just went from something you use when you forget your credit card to a padded money app. Five years after launching, Pay has a whopping ~150M users in 30 countries. The revamped app rolled out in the US this week. It's a three-tab story:

  • Pay: Tap-to-pay, peer-to-peer payments, and searchable transaction history. Google says it won't sell data or share it for ad targeting.
  • Explore: Shows rewards and discounts at shops. If you allow Pay to analyze your transactions, it'll also show personalized offers. Because Google doesn't know enough.
  • Insights: Lets you connect your bank accounts for a spending overview, like Mint. You can even let Pay crawl your Gmail and Google Photos to find receipts (techy, not creepy).

But wait, there's more... In order to make sure it's in direct competition with every other money app: Google said it'll partner with banks to offer online checking and savings accounts in 2021. But the focus is Venmo-style payments and bill-splitting — Google's betting the "network effect" of peer-to-peer will take Pay to the next level.

Financial apps want all of you... Google Pay wants to achieve "all-in-one" app status, and so do other fintechs. They start with one thing, then expand.

  • Venmo started with peer-to-peer, now it has a debit card.
  • Cash App started with peer-to-peer, now it does investing.
  • Robinhood started with investing, now it has Cash Management (disclosure: Robinhood Snacks is owned by... Robinhood).
  • Chase started with banking, now it shows your credit journey.
Hunt

Anti-online rebel TJ Maxx launches an ecommerce platform

Finding a $30 Michael Kors bag... under a pile of prom dresses. Discount legend TJX is the company behind the "affordable splurge" trifecta: TJ Maxx, Marshalls, HomeGoods. In June, TJX's CEO made a bold corona-conomy statement: "Nothing will change." He said TJX would continue to pass on ramping up online shopping, which made up just 2% of its sales.

  • TJX was set on not using ecommerce. It even shut down its websites while stores were closed. Fast-forward to November...
  • TJX is launching an ecommerce platform for HomeGoods, since store traffic is slow. But it's not dropping its rebellious anti-ecommerce persona...

Treasure Hunt = still #1... TJX's CEO says customers still want to "feel the fabric" (beautiful). The new site is meant to complement and encourage in-store shopping. Shoppers love the "treasure hunt" — the joyful feeling of accomplishment after finding a $40 James Perse sweater after hours of rifling. The HomeGoods site is an extra way to ride the "House Hype" wave.

For some, ecommerce is a "nice-to-have"... for others — like Lululemon — it's a make-or-break necessity. TJX's same-store sales dipped only 5% last quarter, despite it having basically no online presence. It made $867M in profit — more than it earned in the same quarter last year, and way more than the $887M it lost when stores were closed. Ross is also ecommerce-avoidant, and it crushed earnings expectations last quarter.

What else we’re Snackin’

  • Gal: Wonder Woman 1984 will be released on HBO Max the same day that it hits theaters on December 25th.
  • Oh: Google's YouTube will run ads on some smaller creators' videos without giving them any of the ad $$$.
  • Thonking: The NFL and Visa will host a cashless Super Bowl in Tampa with "reverse ATMs" — put in cash, get a card.
  • Game: Gaming company Roblox dropped its IPO filing yesterday, revealing that sales soared 91% last quarter.
  • Electric: GM says it has decided not to spin off its EV business — for a while, some investors thought it might.
  • Buzzed: BuzzFeed agreed to acquire Verizon’s HuffPost, consolidating two of the larger players in digital media.

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Friday

Disclosure: Authors of this Snacks own shares of Google

ID: 1420948

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Power

World out of balance: It costs the US 3¢ to make 1 penny

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For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

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Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

Tech

Meta’s not telling where it got its AI training data

Today Meta unleashed its ChatGPT competitor, Meta AI, across its apps and as a standalone. The company boasts that it is running on its latest, greatest AI model, Llama 3, which was trained on “data of the highest quality”! A dataset seven times larger than Llama2! And includes 4 times more code!

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

Today’s earnings: Who’s making money edition

Here are some some notable numbers out this morning, as earnings season gathers steam. Thursday’s main event will be Netflix after the close of trading. (Keep an eye on its advertising business.) But until then...

7.13%

The 30-year fixed rate mortgage is back above 7%, according to weekly numbers from the Mortgage Bankers Association, the highest level in four months. High borrowing costs are creating havoc for would-be buyers, as affordability lingers at the low levels not seen consistently since the late 1980s.

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Business

Amazon’s spy ops on rivals: shell companies, printed docs, and a fake Japanese streetwear brand

Some companies check out rivals’ websites, stores and public filings to stay abreast of the competition. Amazon made its own fake shell company and brands, transacted hundreds of thousands of dollars per year undercover on competitors’ platforms, and kept its intel operation a secret for nearly a decade even from others at Amazon, according to a fascinating investigation by the Wall Street Journal.

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Crypto
Jack Morse
4/17/24

Worldcoin pivots to the blockchain… with a 'humans only' discount

Worldcoin, the “proof of personhood” crypto project launched by OpenAI’s Sam Altman, said it plans to launch its own ethereum layer-2 (L2) blockchain dubbed World Chain. The pitch: a blockchain where it’s both easier and cheaper for people to transact than bots.

Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

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