(#68) Shein is ready to IPO; Disrupting Adobe; The Top 100 Gen AI consumer apps
How 8 Google employees invented Modern AI
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Today’s menu
Shein is ready to IPO
Disrupting Adobe. Case study: Canva
How 8 Google employees invented Modern AI
The Top 100 Gen AI consumer apps
How companies are using generative AI
Strategy
Shein makes $2bn in profits in 2023 for $45bn GMV
Here is what I was writing about them in December 2022. Nothing has changed:
1/ Ultra-fast supply chain. Shein’s supply chain is incredibly fast, allowing for rapid production and distribution of new styles, faster than competitors like Zara and H&M.( = 14 days from design to production)
2/ Data-driven design. Shein relies heavily on data analytics to predict trends and consumer preferences, which helps in creating highly demanded products. They order batches of 50-100 items based on search behavior. In comparison, Zara and H&M order batches of 100k items.
3/ Vast product range (ie. SKUs) – around 5-10k new SKUs per month vs. year at Zara and H&M
4/ Agile manufacturing network. The company works with a network of agile with 400k manufacturers in a way that their ERP systems are interconnected and Shein knows in real time if a plant can make the order or not. On top of that, if the manufacturer loses these bids from Shein (on price) it gets lower classified and afterward expelled from the bidding process.
5/ Cost-Effectiveness. Each SKU costs between 1-5 Yuan to produce, forced due to slave labor in Xinjiang.
6/ Targeting younger demographics. Shein has a strong focus on younger consumers, tailoring its marketing and product designs to appeal to Gen Z and younger millennials. It’s already Top of mind in the USA.
7/ Strong online presence. Unlike Zara and H&M which also rely on physical stores, Shein is primarily an online retailer, which reduces overhead costs and allocates all this money to ads (ie. customer acquisition costs)
8/ Effective use of Social Media. Shein excels in leveraging social media for marketing, using platforms like Instagram and TikTok effectively. Their app is now copying TikTok in many regards.
9/ Responsive to fashion trends. The brand quickly responds to global fashion trends, often introducing new styles faster than Zara and H&M. They use vocational educators to conduct online and on-the-phone research/interviews instead of sending the designers to Milano/Paris Fashion Week. This is a big deal because it shortens the production time.
10/ Catering to niche markets. Shein offers products for niche markets and specific fashion subcultures, which are not always addressed by Zara and H&M
Shein is ready for the long-expected IPO. Financial Times, My post
Is Intel Back?
One of the advanced chip losers in the last decade was Intel. Partly, due to bad tech decisions. Now, instead of trying to catch up on 5nm chip productions, or 3 nm they just went straight to 2nm with a chip called 14-A, by buying the next generation of machinery.
The road to becoming again a top world-class foundry needs dedicated machinery from ASLM, a company established in The Netherlands, one that they already got for $380 million and lasted six months to be installed. I remain bullish on Intel due to their ability to do high-end chips and access to technology. Intel, ASML
Disrupting Adobe. Case study: Canva
1/ Canva, the Australian-based graphic design giant, has significantly enhanced its competitive stance against Adobe by acquiring the Affinity suite of creative software, known for its popularity among Mac users. This strategic acquisition not only marks a significant expansion in Canva's suite of professional tools but also underlines its ambitious growth trajectory, being priced at $26 billion in its latest share sale.
2/ The acquisition brings under Canva's wing the entire 90-person team from Serif, the UK-based startup behind Affinity's admired portfolio of photo-editing, publishing, and illustration software, further bolstering Canva's offerings with tools that have been featured in Apple presentations of creative products.
3/ This development is pivotal for Canva as it looks to solidify its position as a formidable competitor to Adobe (and Figma, I would say), especially in offering a comprehensive range of online workspace solutions augmented by artificial intelligence. Adobe, on the other hand, has seen a downturn in its share value following a failed $20 billion acquisition of Figma, despite introducing AI features across its products.
4/ Canva's aggressive expansion, underscored by its recent acquisitions in Europe, including Kaleido.ai, Pexels, and Pixabay, and the establishment of its European headquarters in London. With over 175 million users and a revenue surpassing $2.1 billion, Canva's growth trajectory is further emphasized by the addition of over 90 million new users in the last 18 months, driven by new AI features, positioning it as a key player in the global digital design landscape. LINK
How 8 Google employees invented Modern AI
In the spring of 2017, a group of eight Google researchers published a groundbreaking paper titled "Attention Is All You Need," introducing the concept of transformers to the world of artificial intelligence (AI). This paper marked a pivotal moment in AI development, proposing a new architecture that significantly diverged from the prevailing neural network models by employing a mechanism called self-attention, allowing for more efficient and effective processing of information. The innovation behind transformers has since become the foundation for a host of advanced AI applications, including language models like ChatGPT, and image generators such as Dall-E and Midjourney, revolutionizing the field and sparking a wave of enthusiasm and research across the globe.
The story behind the creation of the transformer model is one of serendipity, collaboration, and intense dedication. Jakob Uszkoreit, a key figure among the researchers, had been exploring the potential of self-attention as a more powerful alternative to recurrent neural networks, which struggled with processing longer sequences of data. This idea initially met with skepticism, gradually gained traction among his colleagues, leading to a concerted effort to develop what would eventually become known as the transformer model. Their collaboration culminated in a frenzied rush to finalize their findings for submission to a prestigious AI conference, despite the conventional wisdom of the time and the vast computational challenges involved. The authors' decision to list their names in random order with an "Equal contributor" footnote underscored the collective nature of their effort, a detail that reflects the transformative impact of their work on the AI community and beyond.
Since its introduction, the transformer model has not only accelerated advancements in AI but has also led to significant shifts in the tech industry, with all eight authors leaving Google to pursue ventures based on the technology they helped create. Their departure underscores a broader narrative about innovation, collaboration, and the challenges established companies face in fully capitalizing on disruptive technologies. Meanwhile, the AI landscape continues to evolve rapidly, with new startups and established players alike building upon the transformer model to push the boundaries of what's possible, illustrating the profound and lasting impact of the research initiated by this group of Google employees. Wired, Paper
DEI must DIE
In recent years, McKinsey has published no fewer than four studies suggesting a beneficial link between DEI (Diversity, Equity, and Inclusion) practices and corporate performance.
However, a paper unveiled today in the Economics Journal Watch indicates that these findings are not reproducible:
“Our inability to [replicate] their results suggests that ... they should not be relied on to support the view that US publicly traded firms can expect to deliver improved financial performance if they increase the racial/ethnic diversity of their executives.'' LINK
Artificial Intelligence
How companies are using generative AI
Generative AI experienced a meteoric rise in the consumer sector in 2023, swiftly surpassing a billion dollars in consumer spending, and is poised for even greater success within the enterprise market in 2024. Despite initial skepticism regarding its applicability and profitability in enterprise settings, recent interactions with Fortune 500 and top enterprise leaders have revealed a significant shift in perspective. Enterprises are not only nearly tripling their budgets for generative AI but are also expanding its applications and transitioning more projects from experimental stages to full production.
This trend presents a lucrative opportunity for AI startups, especially those focused on addressing the strategic needs and pain points of enterprises while transitioning from service-heavy models to scalable products.
To aid founders in tapping into this burgeoning market, Andreeseen Horowitz identified some key trends, including understanding enterprise budgets, concerns, and strategic plans for deploying generative AI, based on insights gathered from leading enterprise executives. LINK
AI boom
Global stock markets have witnessed their strongest first-quarter performance in five years, propelled by the immense optimism surrounding artificial intelligence (AI) and a resilient US economy, despite moderated expectations for swift interest rate cuts.
The MSCI index, representing global stocks, saw a 7.7% increase, the most significant since 2019, with stocks outperforming bonds by a wide margin for the first time since 2020. This surge is partly attributed to the remarkable performance of companies like Nvidia, which added over $1 trillion to its market value in just three months, accounting for a substantial portion of the total gains in global stock markets during the period.
Moreover, the rally, initially tech-driven and centered on Wall Street, gradually spread to other regions, with European and Japanese equities beginning to outperform the US. Notably, Japan's Topix index soared by 16.2% in 2024, nearing its all-time high from 1989.
This broadening of market gains reflects a growing confidence in the global economic outlook, with a majority of investors not expecting a US recession in the next 12 months and anticipating a rise in global corporate profits. LINK
Hume AI revealed EVI, the first conversational AI with emotional intelligence. LINK
What's next for AI agentic workflows with Andrew Ng. LINK
Long life to LLMs. LINK
Data
The Top 100 Gen AI consumer apps. LINK
Is the New York Times a gaming company, looking at customer time spent?
Germany should get serious about productivity growth
In recent years, the rate of productivity growth in Germany has decreased by half. According to a study conducted by the McKinsey Global Institute, productivity growth in Germany stood at 1.6% from 1997 to 2007 but fell to 0.8% from 2012 to 2019. This downturn is attributed to persistently low net investment compared to international standards. Investment in Germany fell to less than 2% of GDP not just following the global financial crisis but also after the dot-com bubble burst, and it has failed to show significant recovery despite a surge in employment growth.
Additionally, Germany has not seen as much benefit from the robust productivity gains observed in the services and retail sectors. Moreover, the rapidly expanding information and communication technology (ICT) sector is relatively small in Germany compared to other countries. LINK
Things Happen
A Hedge Fund that’s also a newspaper. Part 1, Part 2
The rise of the super-commuter. LINK
What’s wrong with Apple? LINK
How ASML took over the chipmaking chessboard. LINK
The Russian and Chinese governments are hacking foreign politicians to manipulate policies. China, Russia
Outside interest
Blackberry-like 'Clicks' Keyboard is gaining more and more popularity among iPhone users. LINK
Samsung’s amazing selfie in Spain. LINK
Norwegian commander-in-chief Eirik Kristoffersen predicts that the West had “two, maybe three years” to prepare for war with Russia. The Telegraph, Jason Bolzano
A detailed analysis of the Havana Syndrome on the US Stuff in Cuba. LINK
This is an interesting thread about the Comanche, the most brutal and feared American Indian horse warriors. LINK
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