Talibs Newsletter - #80
📱Hinge's rise & pivot, 💵Netflix vs Theatres & 🚗 Used Car prices went bonkers
Hi Everybody
I know I’ve been very delayed on this newsletter; I took a long extended break from writing and focused my attention to my side hustles & some extended reading on my book list.
There are some really interesting podcasts / interviews I’ve heard in the last little while (some are old but very relevant with current times.
Vaccine Wars: Moderna vs Pfizer (Thanks Abba!)
Joe Rogan with Abby Martin (Journalist who has written many things against American imperialism/capitalistic society)
Let me know on your thoughts on any of these.
What I’m listening to
Tweet that made me go hmmm..
How i Built this: Hinge
This is an incredible episode about Justin McLeod, CEO/Founder of Hinge. The podcast takes a few different facets that I found super interesting
📱What is Hinge? Hinge is a dating app which bills itself as an "only dating app" that emphasizes long-term connections between users.
↩️ The App was initially designed as the usual right swipe/left swipe phenomenal that took over the world early on.
🎉 The App hosted a party as a last resort in 2015 to attract significant users to the app; the party had over 3000 people, 20 bartenders and an open bar (This cost the company around $25K)
💏 The party was a bet creating an online dating service surrounding your friends and friends of friends banking on users being comfortable enough to use it & tell their friends about it. (now we excessively check their linkedin, facebook, instagram, google to get some sort of trust before we meet anyone on a dating app)
💸 However the app made the biggest pivot in 2018 when they sold 51% of the company to Match.com and evolved from the right swipe mentality to focus more on longer term meaningful relationships. They eventually sold 100% to match group in 2020.
💌 Personal Story: I won’t ruin the story here but this a significant portion of the podcast but its incredible how his own relationship has guided how Hinge transformed themselves into being a different company than Tinder/Bumble. There was an episode of Modern Love (Season 2 : Episode 2) that is based on the founders real love story.
💭 My Thoughts: The podcast was entertaining and quite long; the podcast encapsulates the founders love story and the founders story of starting an app/pivoting and then pivoting again. I am always impressed by the perseverance of startup founders when no one knows about the product and they are unable to get momentum.
Article 2:
🎦 WSJ: Zack Snyder’s ‘Army of the Dead’ and Other Netflix Movies Turn Up in Theaters
TLDR: Netflix reached an agreement with Cinemark (3rd largest theatre company in US) to show their films two weeks before it reaches streaming.
⌛️ Pre Covid Rules? There were rules pre-covid, theatre chains & studios had this 90 day rule which mandated that movies be shown exclusively in movie theatres for 90 days before being allowed to be released elsewhere (streaming, dvd? , blu ray).
⏲️ In 2015 - there was pressure on the industry due to shrinking dvd sales, rise in digital competitors and lowered attendance to adjust that 90 day model. Paramount came up with the model below.
💵 This graph was taken in 2015; when Paramount agreed with AMC & Cineplex on a rule that expedited the home viewing experience once the movies played in just 300 theatres. It wasn’t based on set weeks but an ~ number of weeks depending on popularity of the movie itself.
This was only 6 years ago - they were worried about DVD sales - I don’t even know where to find a DVD player now.
🎞️Netflix: Netflix only wanted to release certain movies in theatres so that they would be eligible for awards such as Oscars and only a handful of theatre companies were willing to accommodate this. They were able to show their Oscar eligible movies on smaller theatres throughout the US over the years before making a splash with Cinemark recently.
🎦Cinemark: The 3rd largest cinema chain in the US, Cinemark showed Army of the dead on a total of 600 screens before it premiered on Netflix. Further, Netflix has asked theatres not to release box-office figures so we’ll never know how well it actually did.
🔫Army of the Dead: Netflix agreed to take a smaller cut of ticket sales than major studios typically receive; usually large studios (Disney/Universal) would have around 65% of ticket sales on its bigger releases.
Pandemic Pivot: CEO of Cinemark, Mark Zoradi has had to change his mindset significantly to capture any possible revenue due to the pandemic.
September 2019: “We can’t have a different deal for Netflix than we have for all the other major studios,”
May 2021: “We’re thrilled to provide our moviegoers the chance to see this movie in our theaters before it’s available to stream.”
💭 My Thoughts: I see this type of release as more of a test for Netflix than an actual distribution strategy; Netflix has long favoured owning the entire distribution chain and this distribution agreement will allow them to test the waters before they go and purchase large theatres for Netflix only productions.
Remember - the price of popcorn at a theatre has over 90% profit margins so there is money to be made in masses here. I can see us heading to a Netflix only theatre just to watch the new episode of Orange is the new black or Bridgerton (although I think that show is absolute trash but the masses love it)
Article 3
🚗 The Slate: Why Used Car Prices Went Absolutely Insane Last Month
🚨 TLDR: The cost of used car prices increased by 10% month over month due to the shortage of semi conductor chips, rental market exodus, lack of re-possessions and increased stimulus.
🔦How is this measured? The US Bureau of labour statistics posts a monthly report outlining the consumer price index between multiple industries. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8% in April on a seasonally adjusted basis after rising 0.6% in March.
💱 How much did the index for used cars increase by? The index for used cars & trucks rose by 10% in April which was the largest 1 month truck increase since they began tracking it in 1953. Check the Economic report here
Why do they increase?
⚡️Shortage of Semi Conductor Chips
Global automakers have been struggling with production due to a shortage of semiconductors which has forced them to shut down productions. This has made it difficult for dealers to keep their car lots stocked. This has pushed prices for new car markets and pushed shoppers towards preowned vehicles. Used car sales hit 3.4 million in April - up 58% from a year ago (which is fair because last year was an anomaly)
🧳 Rental Car Exodus:
Rental car companies usually sell millions of old cars back to dealers each year as they refresh their inventory. This is not happening as many rental companies sold off a huge chunk of their cars to raise cash to survive the pandemic. They’re now dealing with a shortage which has sent rental prices soaring high. ($300 per day for a kia…Whaaat🤯)
🏦 Re-possession Market
Fewer cars are being repossessed than usual; likely due to the aid from the government has provided families to help them through the pandemic. We’ve seen a significant amount of credit card debt being paid down and as well we’ve seen lower amount of delinquent auto loan balances. This is unfortunate for dealers as they buy repossessed cars at auction to resell them.
💭 My Thoughts: This was an interesting graph and when you dig into the data provided by the US bureau of Labour; you can definitely see where the panic come about inflation numbers. The fact that used car numbers are calculated within the broad inflationary increase was eye opening and allowed us to see the inflationary increase less the used car sales. I wonder how expensive rental cars would be when travel opens back up this summer - watch out for those spike prices or see if you can utilize your points to pay that high sum up when you decide to travel.
📚Books of 2021
Here are my books to read/finish for the next while
Completed
Educated by Tara Westover (9/10)
Loonshots by Safia Bahchall (8/10)
Range - David Epstein (8/10)
American Dirt by Jeannine Cummings (9/10) [fiction]
We The North - Doug Smith (8/10) - Nice history from a Raptors beat writer
Promised Land - Barack Obama (8/10) - Great perspective; audio book recommended
Tanking to the Top - Yaron Weltzman (7/10) (Philadelphia 76ers “The Process”)
The Color of Money: Black Banks and the Racial Wealth Gap (8/10)
House of Debt - Atif Mian (8/10) (2021)
Nine Lives of Pakistan - Declan Walsh (8/10) - Recap of Pakistani history (2021)
Originals - Adam Grant (9/10) (2021)
The future is faster than you think - Peter Diamandis (7/10)
If you’re looking for books to get, I would suggest checking out bookdepository.com or thriftbooks.com (both are cheaper than amazon at times)