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Commentary on The Capital Markets- Category [Company Specific]
2017-06-21 09:09 by Karl Denninger
in Company Specific , 778 references
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Yes, the CEO is gone.

That should be good, not bad, right?

Wrong, and it has nothing to do with the CEO leaving.  It in fact has everything to do with the change in their app to "allow" in-app tipping.

Why would this be bad rather than good?

Because Uber has drivers rating riders, and unlike a hailed taxi you're not anonymous; you are identified and the driver can refuse you as a customer based on previous "ratings."

The combination of these two factors will result in tips effectively becoming mandatory, especially in high-taxi-cost, high-traffic areas.

Since there is no way to prove whether a poor rating for a rider is deserved or not there is no check and balance available or possible on the coercive abuse of such ratings to extract tips from riders and the coercive implied pressure now and will forevermore exist.

Some have pointed out that while the tip is "in-app" the driver has to rate to end the trip first.  While that may blunt the impact (in that it makes blatant coercion difficult) if you think drivers won't "softly" urge tipping -- and perhaps push back against negative responses by riders -- you're nuts.

It'll take a while before this destroys the desire of customers to use the platform but it will happen and it will be unrecoverable, because since UBER has "allowed" in-app tips removing them will now engender a driver revolt.

"In-app" tips were basically a sop to drivers for Uber reducing rates and thus driver compensation.  The problem is that if Uber is reducing rates it's to increase usage and when you add tips back there goes the reduction from the user's perspective, effectively canceling it out.  This will in turn force a further reducing in rates (and thus payouts to drivers!)

When I go out to eat the "expected" tip for good service is part of the price.  A restaurant that adopts a "no tips allowed" policy can charge a bit more for their food and the hit to my wallet from eating there is the same as one that "encourages" tips but charges a bit less; all-in after tip it's the same money.  This is no different.

Pick how you want to die Uber, but die you shall.

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2017-06-16 09:37 by Karl Denninger
in Company Specific , 677 references
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Now this is an amusing deal.

The entire grocery industry is getting monkey-fisted this morning, with losses of anywhere from 5-12+% (Kroger getting it the worst.)

Cramer is, of course, a spittle-tossing lunatic.

The truth is likely to be something else entirely.

Whole Foods has been called whole paycheck for a good long time, and with good reason.  Whole Foods has always been a high cost producer and I have some interesting insights on some of the corporate culture side of things there.  There is zero correlation between how Amazon treats its worker drones (e.g. warehouse employees at all levels) and how Whole Foods treats theirs.

Amazon is ridiculously overpaying for the company (~$42 is, I believe, the deal price, which is ~30% over the closing price yesterday) which is the usual practice for M&A like this.

Let's add one other thing to this: Amazon just made themselves a sales tax collector everywhere since they now have "nexus" in essentially ALL states.  This has not been true (although it's been creeping in one state at a time) but it just went "all 50 at once" for them and is going to result in increased prices for everything Amazon sells, not just groceries.

I'll give you a prediction here: Whole Foods, under Amazon, either loses the only edge it has, which is the "yuppie" factor or it tries to maintain it and margins collapse at Amazon as a whole due to the spend on integration.

My 2-minute analysis?

Bezos just took his walk on water Wall Street treatment and flushed it down the toilet.

Amazon is going to choke on this one folks but now you know why Amazon was handing out EBT reduced price Prime.  They're going to gouge the hell out of EBT card holders at their "newfound" grocery stores.

Bottom line: This is going to, in retrospect, look like the value destruction on the scale of the AOL/Time-Warner deal. 

PS: If you work at Whole Foods you can pass one of these, right?  WFM doesn't currently drug-test everyone -- Amazon does.  Welcome to Amerika associates....

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2017-06-12 07:00 by Karl Denninger
in Company Specific , 1435 references
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If you weren't outraged before you certainly have reason to be now -- both at Amazon and the press.

First, Amazon.  They're now "offering" to anyone on welfare reduced-price "Prime" memberships.  

Let's cut this down to size: There is utterly nothing that "Prime" offers that one can today, or should be able to now or in the future, buy with "food stamps" (electronic or not.)  Prime's "pantry" items are all, by definition (sorry folks, truly fresh food that is not laden with sugars and hydrogenated oils doesn't ship well!) high carb trash.

A big part of the reason we have a monstrous obesity epidemic in this country, especially among poor people, is that we stopped handing out literal government cheese (and eggs, meats, etc) as "food assistance" and went first to coupons and then to what are effectively prepaid debit cards.  Yes, there are "some" restrictions (e.g. no booze purchases, etc) but if you look at what's in a typical EBT shopper's cart you will find things that will both make you fat and diabetic.

True "government cheese", when it was how food assistance was distributed, was both nutritious and did not promote obesity and metabolic dysfunction.

Amazon today cannot take an EBT card.  But they are lobbying to be allowed to, and if they are permitted to do so that will simply make the obesity and diabetes problem worse among the poor.  Unless you support abusing poor people that standing alone is enough to cancel your PRIME membership and tell Amazon to **** off.

But it's not standing alone.  In addition by definition you are subsidizing poor people when you buy a membership and someone else gets the same thing at a lower price.  It's the same deal with colleges; your kid pays full price because you're not poor and the kid next to yours gets the same thing but pays less - or nothing.  Who do you think paid his tuition?  Your kid did.

Do you support this?  Well, in the case of college the government effectively forces this transfer program today -- that is, they force the theft of your (or your kid's) money, including forcing him or her into debt.

But in this case you have a means of pushing back -- hard.

Discontinue your Prime membership and tell Amazon to **** off.

If you're a Conservative you either do exactly that today or you are not a conservative -- you're a closet liberal redistribution supporter and you're confirming that by your VOLUNTARY action.

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2017-06-07 07:00 by Karl Denninger
in Company Specific , 178 references
[Comments enabled]  

Ok, it's not "really" BlackBerry's phone -- TCL makes it.

Nonetheless, one of my big beefs over the last few years is that it's virtually impossible to replace a battery in these devices.  The manufacturers glue the phone together, they glue the back on, and in many cases the only access is through the front which means you have to violate the glue on the screen assembly and manage to disassemble half the device -- which is made with "designed to be inserted once" connectors -- to get to it.

Well, TCL just changed the game.  There are now multiple reports of people being able to trivially remove the back of the KeyOne; it just snaps on (and off.)  One found out accidentally when he adhered one of those "sticky phone mount" things to the back of his phone, gave it a rap when it was mounted, and the back came off.

Ok, ok, that's a bad way to find out.  But it exposed the fact that the battery is easily accessible for swap and it's in a clearly-visible locating tray, which means as long as you can get them as replacements when yours wears out it's going to be trivially easy to change it.

There are both GSM and CDMA variants of the device as well.  The CDMA ones have not yet shipped, but will within a couple of weeks.  The GSM ones sold out instantly on the 31st of May, but there are more coming.

Not only do early reviews say that the KeyOne has unbeatable battery life and an excellent camera now it appears that the usual "planned obsolescence" games that manufacturers play are not present -- to the degree possible -- in that device.

I'm not in the market for a new phone right now and thus short of someone sending me a unit for review there isn't one forthcoming, but when I am.... it's on the short list.  I really like my DTEK60, but the ability to actually swap a battery when it wears out is one of those things that will keep you from having to toss a perfectly good unit that simply no longer holds a charge.

I like it.

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