ALBANY, N.Y. (AP) — New York is poised to join a growing number of states that have legalized marijuana after state lawmakers reached a deal to allow sales of the drug for recreational use. The agreement reached Saturday would expand the state’s existing medical marijuana program and set up a licensing and taxation system for […]
Reading Time: 8minutes Following up on my previous post on Lemonade (where I outlined the bull case for the company), in this post I will do the opposite. I’ll discuss the bear case and play devil’s advocate to some of the bull arguments. Readers can then make up their minds on whether this company is a worthy addition …
The global market of 3D ICs was valued at US$ 7,521.4 Mn in 2019 and is forecasted to reach a value of US$ 38,252.9 Mn by 2027 at a CAGR of 22.5% between 2020 and 2027. The basic definition for 3D ICs is logic over the logic that is connected through TSV. This includes a
As I am sure every supply chain professional and logistician is doing now, I am spending quite a bit of time thinking about the overall supply chain in the United States and wondering if it is truly set up to service the Country in a time of national emergency. We heard the Governor of NY today in his press conference say that the states are basically bidding against each other to get needed (and scarce) health care supplies. Rather than going where they are most needed they appear to be going to the highest bidder.
We have also heard the President tell the states this is substantially a state problem and the feds are there to help and backstop. Finally, we are hearing about the shear lack of ventilators and hospital beds when (just a few weeks ago it was "should") a pandemic hit the United States. All of this makes me wonder if this is truly the best way to deal with a national emergency.
By now many of you have also seen the incredible Ted talk Bill Gates gave back in 2015 where he essentially predicted this COVID-19 outbreak. While not predicting this one in particular, Mr. Gates did say something like this would happen. I highly encourage you to watch this:
Here are some key points from the talk (March of 2015):
The next big crisis will be from "microbes" not "missiles".
We have insulated ourselves from huge war catastrophes (i.e. a nuclear war or another world war) because we have spent a trillion dollars plus on national defense and the infrastructure required to defend the United States.
We have a military which can scale up dramatically in a short time to fight or deter a war.
We should model our fight against microbes after the structure of the military. You have a permanent "active" force and you have a large "reserve" force which can be called up and which actively practices, trains. and stays functional.
When I saw him say this I was absolutely floored. When I was in the Army in Germany we used to practice going to our "General Defensive Position (GDP)" and we would periodically go visit the warehouses set up all over Europe with stockpiles of tanks, trucks etc. We would start them up, move them, practice deploying them etc. and we would do that in conjunction with our reserve forces. We called it "REFORGER" which stood for "Return of Forces to Germany". It was all a preparation for scaling up the military in Germany to over 1 million soldiers if the war started. Similiar exercises were done in Korea and other places.
So, the question I am thinking about now is if it is time to have a "Reserve Supply Chain Force"? This would be something you would sign up for just like the military reserves. You would have a role / rank, you would go and practice once a month on the weekend, you would do a 2 week summer training and you would be available to be called up if the government activated the reserves. We would have needs for coordination with civilian industry, you would run a huge reserve of trucks, trailers and drivers and you would work for a leader of this organization.
If your civilian job was in an "Essential industry or company" you may get activated but stay embedded in that company to coordinate all the work.
There are a lot of details to work out but perhaps we need this force that can work in the complex civilian world of supply chain and tie it to the needs of a pandemic so we can scale up the supply chain and distribution / logistics network very quickly. What would this accomplish:
It would allow us to scale up almost instantaneously. Get the expertise in place, get the trucks / trailers along with drivers and immediately establish the infrastructure for leadership.
It would prioritize the loading of the nation's supply chain after huge "air in the pipe" is created (Think the run on TP). This could be done in conjunction with FEMA.
It would allow us to train so we are ready right away. By being trained we don't take months to just figure out "how things work".
Finally, it would establish a professional "corps" which is qualified, ready and willing to get called up as needed.
In the end, we have the model on how to build an infrastructure to fight a huge event which comes up on us like a black swan. The model is the military and the reserves. We should follow it. Perhaps CSCMP can help with this and build out the model.
Softening market conditions and rising uncertainty in global trade and economy have impacted semiconductor spending from the world’s top OEMs, currently facing the steepest decline in over a decade. Worldwide spending from semiconductor OEMs will amount to just $316.6 billion in 2019, which is down 7% from 2018. The recent decline came after two years […]
While I personally was unable to attend the annual Freightwaves Transparency19 conference this year I did watch a lot of the clips and I was fascinated by the shear volume of "Freight-tech"(I will abbreviate FT) companies coming out of the woodwork to help shippers ship product. We are in the "golden age" of FT launches, venture capital money and potentially IPOs.
Or, as the title stated, has Uber and Lyft killed the dream? More on that later but first, let's remind ourselves "how business works".
An entrepreneur comes up with a great idea and tries to get it to scale with a series of private fundings. Venture capitalists get in early, generally get seats on the board and hope for an eventual big pay day when the company is either sold or goes public. The company is built to scale (meaning it is generating cash - hopefully - or has a path to be cash flow positive. Then, the early owners need to take money out of the company for a variety of reasons by going public or selling. Here are the reasons they may want to extract money:
Family wealth planning - they generally have a lot of their wealth in the company and they need some back.
Pay Employees - Many early stage company employees are paid with options and they eventually want and need that money. This is a warning to many employees who get in too late in the game. If your options are valued right before the IPO then a lot of the time you are under water when it goes public (as are many Uber and Lyft employees).
All the juice is squeezed and the VC people want out. - Venture capitalists do not hold companies and eventually they want their money back. Once they believe they have "squeezed all the juice out of they idea they will want to exit.
Now, let's get back to Uber and Lyft and while I did not read the S-1 for the Lyft before it went public I did read the S-1 of Uber (skip the glitz slides and read the words) and it caused me to ask the question: "Who the hell would invest in this company"? Let's look at what the S-1 (The S-1 is a required SEC filing before the company goes public and it generally is the first time you get to see their financials - it is required reading if you are going to invest in IPOs) taught us:
Uber has lost over $3Bl in the last three years. And that is if you count a gain on divestiture and "other investments". If you look at just operations, in the last three years Uber has lost almost $10bl.
They continually discuss incentives paid to the drivers and to the customers. They are paying on both sides of the transaction.
There is very little path to profitability. They "sold" the IPO to the retail investor at exactly the right time (for them.
Now, what are the learnings from e-commerce? What we are starting to see is the "bricks and clicks" (Especially Wal-Mart) is the model to win. Unfortunately, Wal-Mart took far too long to "get in the game" and it may be too late. But, if Wal-Mart had responded back in 2013 as I had suggested when I wrote The Battle for Retail Sales is Really The Battle of Supply Chains, they would have killed it. Once Wal-Mart woke up I welcomed them back in 2017 in the article, "Welcome Back Wal-Mart. We Missed You Over the Last 5 Years".
Which brings me to J.B. Hunt and their work with Box and J.B. HUNT360. That is the winning formula! It is the "Bricks and Clicks" of the freight world. Like retail, eventually everything gets down to assets. Someone needs to build stores and warehouses in retail and in freight someone needs to own the boxes, trucks and have drivers. J.B. Hunt is showing they learned the lesson of Wal-Mart (Don't cede any ground to the tech guys), they jumped in early, they disrupted their own business and they are now the leader in this space for the asset players.
What will come of all this? I believe J.B. Hunt will continue to drive their leadership position further and the asset guys, to catch up, will have to buy a number of these FT companies. Which means the VC population will get what they want but the asset guys will pay a huge premium for not getting in early.
So, let me summarize:
Too much money chasing too few ideas... the "new" ideas are starting to be "me too's" (How many apps can have a competitive algorithm just to find an available truck)?
The FT VC population will want to sell.
The Asset guys will find out they are getting killed by the "trucks and clicks" model of J.B. Hunt and this will drive them to pay exorbitant prices to get the tech quick to catch up.
JBHunt, by innovating early and fast will win this game big just like they did with intermodal.
Finally, in the UBER S-1 we get our first public glance of UBER Freight and I am amazed at how small it is. Now that UBER is public we will get to see more and more of their financials. They believe the industry is moving to an "On-Demand" industry. I find this hard to believe as big shippers need predictable freight and solutions like the J.B. HUNT 360Box where you get access to trailer pools. I could be wrong, but I do not see a huge future for this.
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