The Tech Strategy Podcast

Latest Episodes:

Why Revenue Scale and Operating Leverage Are Different for Software vs. AI. (69) Feb 14, 2021

Show notes

This week’s podcast is about revenue scale and operating leverage in traditional companies vs. software vs. AI. And these things can be really different. Especially software vs. AI.
You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.
Here are the three factors I mentioned that interact for operating leverage:

Revenue
Operating profits
Economic value creation (i.e., vs capital)

Here are the books I mentioned:

Related podcasts and articles are:

From the Concept Library, concepts for this article are:

Valuation (Question 3): Operating Leverage
Valuation (Question 3): Revenue Scale and Growth
SMILE Marathon: AI/ ML

From the Company Library, companies for this article are:

This is part of Learning Goals: Level 7, with a focus on:

34: 9 Questions

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I 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

Is Roblox Going to Be the Next TikTok? Plus the Kuaishou IPO. (68) Feb 07, 2021

Show notes

This week’s podcast is about Roblox and the question of whether this media type will really take off. And I argue this is an interesting evolution of the audience-builder platform.
You can listen to this podcast here or at iTunes, Google Podcasts and Himalaya.
Here is the article I mentioned:

ByteDance vs. Kuaishou: Innovator vs. Fast Follower Strategies for the China Attention Market (Asia Tech Strategy – Daily Update)

Related 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:

Platforms: Audience-Builders

From the Company Library, companies for this article are:

Roblox
Kuaishou

This is part of Learning Goals: Level 4, with a focus on:

12: Basics of Tiktok / Douyin and Audience-Builder Platforms

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I 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

The 3 Real Effects of Network Effects. Plus So-Young's Cool Marketplace. (67) Jan 31, 2021

Show notes

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 Advantage
Barrier to Entry
Other Competitive Advantages such as switching costs.
Flywheel

Here is the article I mentioned:

16 Ways to Measure Network Effects

Related 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. Critical
Platforms: Marketplaces for Products and Services
Network Effects

From the Company Library, companies for this article are:

So-Young International

This 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 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

Pay Attention to the Potential Value of WeChat Mini Programs. (66) Jan 24, 2021

Show notes

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:

From the Concept Library, concepts for this article are:

Complementary Platforms
Digital Competition Pyramid

From the Company Library, companies for this article are:

WeChat
Tencent

This 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

The Difference Between Competitive Advantages and 7 Powers (65) Jan 17, 2021

Show notes

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 * power

M0 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 have
M 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:

From the Concept Library, concepts for this article are:

Competitive Advantage: Share of Consumer Mind
Competitive Advantage: Surplus Margin Leader in Network Effects
Competitive Advantage: Proprietary technology
Competitive Advantage: Process Advantage and Learning Advantages
Competitive Advantage: Scarce Resource

From the Company Library, companies for this article are:

None

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I write and speak about digital China and Asia’s latest tech trends.

Support the show

Economies of Scale and Switching Costs According to 7 Powers (64) Jan 10, 2021

Show notes

This week’s podcast is more on the well-known 7 Powers framework by Hamilton Helmer. I go through three 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 * power

M0 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 have
M is long term persistent margins. (operational margins after cost of capital)
You can also do potential value = market scale * power.

His break-down of economies of scale is:

Fixed costs
Distribution network density
Learning Economies (don't agree)
Purchasing Economies
Volume / area relationships (cool but I never use this)

His break-down of switching costs is:

Financial switching costs
Procedural switching costs
Relational switching costs

I also cited the 4 terrains from BCG: See here
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:

Competitive Advantage: Economies of Scale
Surplus Margin Leader
Competitive Advantage: Switching Costs
Counter-Positioning

From the Company Library, companies for this article are:

None

This is part of Learning Goals: Level 4, with a focus on:

15: Didi and Switching Costs

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I write and speak about digital China and Asia’s latest tech trends.
I also run 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

4 Problems with Michael Porter's 5 Forces (63) Jan 03, 2021

Show notes

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 suppliers
Bargaining power of buyers
Threat of Substitutes
Barriers to entry / threat of potential entrants
Degree of existing competitive rivalry
Role 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 Forces
Innovation
4 Terrains and Strategies (BCG): Predictable vs. Malleable
SMILE Marathon

From 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

4 Problems with Hamilton Helmer’s 7 Powers (62) Dec 27, 2020

Show notes

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 capture
Value = M0*g*s*m = market scale * power

M0 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 Economies
Network Economies
Counter Positioning
Switching Costs
Branding
Cornered Resource
Process Power

From the Concept Library, concepts for this article are:

7 Powers
Competitive Advantage
4 Terrains and Strategies (BCG): Predictable vs. Malleable
SMILE Marathon

From the Company Library, companies for this article are:

Netflix

This 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

What Ant Financial Tells Us About the Future of Square. Plus, Why The External View Is So Hard in Digital. (61) Dec 20, 2020

Show notes

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 growth
Gross profitability (gross profits / assets)
Operating leverage. Change in operating profits relative to change in sales.
Operating profit margin
Earnings growth
CFROI

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