The Tech Strategy Podcast

This week’s podcast is about network effects. And I argue they are actually three effects at the same time. Plus some stuff about So-Young's marketplace for services.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.The 3-4 types of effects with network effects are:Competitive AdvantageBarrier to EntryOther Competitive Advantages such as switching costs.FlywheelHere is the article I mentioned:16 Ways to Measure Network EffectsRelated podcasts and articles are:7 Reasons Digital Platforms Fail (Jeff’s Asia Tech Class – Daily Lesson / Update)From the Concept Library, concepts for this article are:B2B Customer View: Necessary, Strategic vs. CriticalPlatforms: Marketplaces for Products and ServicesNetwork EffectsFrom the Company Library, companies for this article are:So-Young InternationalThis is part of Learning Goals: Level 7, with a focus on:35: Competitive Advantage and Digital CompetitionI write and speak about digital China and Asia’s latest tech trends.I also run Asia Tech Strategy, a podcast and subscription newsletter on the strategies of China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

This week’s podcast is about some of the bigger strategic initiatives at WeChat. Specifically mini programs, search, mini games and WeChat Work.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.Related podcasts and articles are:WeChat, TikTok and Capturing the Consumer Mind in a Digital Age (Jeff’s Asia Tech Class – Podcast 36)WeChat Work and Why Enterprise Tools Will Be Very Different in Mobile-First ChinaFrom the Concept Library, concepts for this article are:Complementary PlatformsDigital Competition PyramidFrom the Company Library, companies for this article are:WeChatTencentThis is part of Learning Goals: Level 7, with a focus on:35: Competitive Advantage and Digital Competition I write and speak about digital China and Asia’s latest tech trends.I also run Jeff’s Asia Tech Class, a podcast and subscription newsletter on the strategies of China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

This week’s podcast is my third on the well-known 7 Powers framework by Hamilton Helmer. I go through the last 4 of his 7 powers.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.His fundamental equation of value is:Value = M0*g*s*m = market scale * powerM0 is Market at time zero. g is growth. This is about targeting big and growing market opportunities.S is long-term persistent market share. How much of it you haveM is long term persistent margins. (operational margins after cost of capital)You can also do potential value = market scale * power.His break-down of branding is that it evokes positive emotion, leading to increased willingness to pay.Affective valence. Built-up associations that elicit good feeling that are distinct from the objective value of the good.Uncertainty reduction. Peace of mind because confidence the product will be as expected.A brand requires lengthy period of time with reinforcing actions (hysteresis). Legacy brands tend to be powerful. Hard to replicate in short term. Or with copycats.His break-down of cornered (or scarce) resource is that it must be sufficiently potent to drive high-potential, persistent differential margins (m>>0), with operational excellence spanning the gap between potential and actual. He has five screening tests for cornered resource:Idiosyncratic. Such as a brain trust with repeated success over time.Non-arbitraged. If a firm gains preferential access to a coveted resource but also pays a price that fully arbitrages out the rents attributable to this resource – then doesn’t matter.Transferable. If resources creates value at one company, but cannot if transferred to another, then it is not good. Probably has an essential complement.Ongoing.Sufficient. It must be complete enough to continue producing differential returns assuming operational excellence.Related podcasts and articles are:4 Problems with Hamilton Helmer’s 7 Powers (Jeff’s Asia Tech Class – Podcast 62)Economies of Scale and Switching Costs According to 7 Powers (Jeff’s Asia Tech Class – Podcast 64)From the Concept Library, concepts for this article are:Competitive Advantage: Share of Consumer MindCompetitive Advantage: Surplus Margin Leader in Network EffectsCompetitive Advantage: Proprietary technologyCompetitive Advantage: Process Advantage and Learning AdvantagesCompetitive Advantage: Scarce ResourceFrom the Company Library, companies for this article are:None ---------I write and speak about digital China and Asia’s latest tech trends.Support the show

Hamilton Helmer, author of the 7 Powers framework, discusses economies of scale and switching costs. He breaks down market scale, growth, long-term market share, and margins. Exploring fixed costs, distribution network density, and learning economies. Switching costs include financial, procedural, and relational costs. Emphasizing the strategic impact on industry dynamics and the role in successful business strategies.

This week’s podcast is on the well-known 5 Forces framework by Michael Porter. I go through some of its limitations and where I think it works best.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.Michael Porter's 5 Forces:Bargaining power of suppliersBargaining power of buyersThreat of SubstitutesBarriers to entry / threat of potential entrantsDegree of existing competitive rivalryRole of complements?My 4 problems with this are:It doesn’t work for dynamic and non-classical strategy terrains.It doesn’t work for platforms and ecosystems.It doesn’t work with SMILE marathon dimensions, particularly innovation.The addition of complements doesn’t really cover the emergence of a connected, digital world.Related podcasts and articles are:4 Problems with Hamilton Helmer’s 7 Powers (Jeff’s Asia Tech Class – Podcast 62)From the Concept Library, concepts for this article are:5 ForcesInnovation4 Terrains and Strategies (BCG): Predictable vs. MalleableSMILE MarathonFrom the Company Library, companies for this article are:None———-I write and speak about digital China and Asia’s latest tech trends.I also run Jeff’s Asia Tech Class, a podcast and subscription newsletter on the strategies of China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

This week’s podcast is on the well-known 7 Powers framework by Hamilton Helmer. I go through some of its limitations and where I think it works best.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.Hamilton Helmer's fundamental equation for value creation and captureValue = M0*g*s*m = market scale * powerM0 is market size at time zero. This is about targeting big and growing market opportunities.S is long-term persistent market share.m is long term persistent margins (operational margins after cost of capital).Hamilton Helmer's 7 Powers:Scale EconomiesNetwork EconomiesCounter PositioningSwitching CostsBrandingCornered ResourceProcess PowerFrom the Concept Library, concepts for this article are:7 PowersCompetitive Advantage4 Terrains and Strategies (BCG): Predictable vs. MalleableSMILE MarathonFrom the Company Library, companies for this article are:NetflixThis is part of Learning Goals: Level 7, with a focus on:35: Competitive Advantage——–I write and speak about digital China and Asia’s latest tech trends.I also run Jeff’s Asia Tech Class, a podcast and subscription newsletter on the strategies of China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

This week’s podcast is on Ant Financial vs. Square. And has an introduction to the inside vs. outside view and base rates.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.Key question: What will drive Square's growth?Metrics for base rates:Sales growthGross profitability (gross profits / assets)Operating leverage. Change in operating profits relative to change in sales.Operating profit marginEarnings growthCFROIRelated podcasts and articles:How Ant Financial / Ant Group is Revolutionizing Finance (1 of 3) (Jeff’s Asia Tech Class – Podcast 47)Ant Financial and the Sustained Innovation Trap of Network Effects (3 of 3) (Jeff’s Asia Tech Class – Podcast 49)From the Concept Library, concepts for this article are:External vs. Internal ViewRegression to the Mean (average / base rates, rate of regression)Payment PlatformsMarketplace PlatformsComplementary PlatformsFrom the Company Library, companies for this article are:Ant Financial / Group / AlipaySquareThis is part of Learning Goals: Level 5, with a focus on:19: Basics of Ant Financial / Alipay and Payment Platforms——–I write and speak about digital China and Asia’s latest tech trends.I also run Jeff’s Asia Tech Class, a podcast and subscription newsletter for investors in China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

Tesla vs. Nio and why first mover advantage is not as awesome as everyone thinks. At least not in tech.You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.Advantages of first mover in tech can include:Bigger advantages:Temporary supply-demand imbalanceIncreasing returns to scaleSwitching costsNetwork effectsLearning effectsSmaller advantages:Brand loyaltyTechnological leadershipScarce assets in techDisadvantages of first mover in tech can include:High failure rateR&D expenses on successful and unsuccessful tech.Cost of building production processes and complementary goods not available in the marketCost and difficulty of developing suppliers and distribution channels.Cost and difficulty of building consumer awareness and educationAvailability of enabling technologies and infrastructureUncertainty of customer requirementsRelated podcasts and articles:Introduction to Innovation, Elon and Android’s Dominant Design. (Jeff’s Asia Tech Class – Podcast 58)Concepts for this class.Increasing Returns to Tech AdoptionFirst Mover Advantages and Disadvantages.Path DependencyResource Based CompetitionCore CompetencySupply-Demand ImbalanceCompanies for this class:TeslaNioThis is part of Learning Goals: Level 7, with a focus on:#32: Innovation, Adaptation and Resilience as Competitive Strategy——–I write and speak about digital China and Asia’s latest tech trends.I also run Jeff’s Asia Tech Class, a podcast and subscription newsletter for investors in China / Asia tech companies.This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show

The podcast dives into Airbnb's struggles in Asia, emphasizing misguided valuation methods. It contrasts the company's performance in North America and Europe with challenges in Asia's competitive landscape. The rising middle-class families in Asia are transforming travel habits, impacting the hospitality industry. Chinese tourism emerges as a game changer, revealing missed opportunities for Airbnb. The discussion highlights fierce competition from local giants like Ctrip and Meituan, showcasing the shifting dynamics of the market.

This week’s podcast is on innovation, which often is discussed in fuzzy terms. I present some of the better language used to discuss this topic. And I present some frameworks from McKinsey and Professor Melissa Schilling (NYU). You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.The slides mentioned are below.Related podcasts and articles:Forget the “Alibaba Ecosystem”. It’s About Collaboration-Based Industries and Business Models. (Jeff’s Asia Tech Class – Podcast 56)Alibaba, Android and The Emerging Art of Ecosystem Management. (Jeff’s Asia Tech Class – Podcast 57)This is part of Learning Goals: Level 7, with a focus on:#32: Innovation, Adaptation and Resilience as Competitive StrategyConcepts for this class.SMILE Marathon: Sustained InnovationDominant Design and Architectural vs. Component InnovationS-Curves for Tech Performance vs. Tech DiffusionIncreasing Returns to Tech AdoptionLearning Effects and Learning CurveNetwork EffectsPath DependencyCompanies for this class:Android———-I write, speak and consult about how to win (and not lose) in digital strategy and transformation.I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.Support the show