Best of SatPost (First Half of 2024)
PLUS: Solar Industry, LVMH Real Estate, Delta Airlines is Winning.
Thanks for subscribing to SatPost.
Many of you readers are probably on vacation. This is my last e-mail send before summer break. SatPost will be off for July and I'll be back in your inboxes come August. Your boy has family trips planned and will be working on some longer-term projects (side note: I'm addicted to X, so you can still find me posting on that app).
Today is a quick round-up of my most popular articles in 1H 2024.
Oh, and there are still links and memes including:
Solar Power’s Incredible Rise
Delta Airlines is Winning
…and them fire posts (including iPhone hacks)
I appreciate all you readers.
If I’ve ever made you laugh, say “huh, interesting” or think “wow, Trung has awful takes”…I would love for you to share any of the following articles with friends or family that might like them.
Without further ado, here are the 6 most popular SatPost articles from the first half of 2024 based on views (and general vibes from the e-mail responses I received):
How did Hermès reach the pinnacle of luxury?
Here are some concepts that would appear in an Hermès word-cloud: Craftsmanship. Highest-Quality Materials. Heritage. Managed Supply. Creating Desire.
Hermès is a fan of the word “time”.
Axel Dumas — the current CEO and Executive Chair of Hermès and a 6th generation member of the Hermès-Dumas family — says that “what we do at Hermès is sell time.”
This sentiment echoes a statement made by his uncle and former Hermès CEO Jean-Louis Dumas: “Time is our greatest weapon”.
The desire for engagement drives quirky behavior across all social media. Take a look at the gym thirst traps on Instagram. The bizarre thumbnails on YouTube. The cringe-worthy humblebrags on LinkedIn. And the guaranteed-to-cause-injury challenges on TikTok.
It's difficult to resist engaging in this wacky behavior due to the expert design of these apps. Never forget that these platforms are run by the smartest and best-paid behavioral psychologists, UX/UI designers, and software engineers in the world.
Starbucks used to be a “Third Place” that was a community hub where people could hang out. The interiors were nice and baristas interacted with their customers. The transition to mobile orders and grab ‘n go meant that store ambience mattered less. Customers cared about “how fast can I get out?” vs. “how long can I enjoy my time here?”.
Somewhat ironically, everyone rushing to mobile orders for convenience creates long wait times. This added volume turns the work of a barista from that of a quasi-artisan into a McDonald’s-like assembly line worker. Even as the product commoditized and independent coffee shops offered the old Starbucks vibe, the current Starbucks keeps charging premium prices. Sir, I need caffeine in my dome immediately. Why am I paying $6 for a Grande Iced Coffee that I have to wait 13 minutes to get when I could grab a Red Bull from 7-11 in 2 seconds?
Further, product innovation is no longer about improving the coffee but dreaming up ridiculous new drinks that look nice on the App and appeal to younger demos on social.
8 Lessons from Curb Your Enthusiasm
Larry’s comedic batteries are so depleted by the end of a season that he needs time off. When the show is on, Larry works non-stop for at least seven straight months as a writer, actor and editor.
He literally decides every single frame for the show based on all the different takes (and unlike network TV, every single take of a scene is different). A single frame is 1/30th of a second on air (and the average episode is ~28 minutes).
But who is Disneyland really for? If novelty is key for forming dense memories as we age, then going to Disneyland actually seems more impactful for adults.
While my son enjoyed this trip to Disneyland, I need trips like it to slow down (the perception of) time.
Jerry Seinfeld, Ichiro Suzuki and the Pursuit of Mastery
Seinfeld once told ABC News, “I'm obsessed with Ichiro. He's one of my favorite players. If I could be any athlete, that's the guy.”
Ichiro took a particularly extreme path to mastery. He made huge sacrifices in time and friendships. It’s not for everyone. However, some form of the path Ichiro took is available for anyone to excel in their chosen field.
“I'm not a big guy,” Ichiro — who is 5'11 and 175lbs — said while reflecting on his career. “And hopefully kids could look at me and see that I'm not muscular and not physically imposing, that I'm just a regular guy. So if somebody with a regular body can get into the record books, kids can look at that. That would make me happy.”
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Here were some banger X posts from the first half of the year:
And, finally, this 80-second El Risitas clip about Google Gemini launch.
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Links + Memes
“The Sun Has Won” was the theme of last week’s cover story from The Economist, which breaks down the rapid rise of solar power in the past decade: by 2040, solar is projected to be the primary source of human energy use (it’ll be perfect for re-charging the Apple Watch I never use).
The article is packed with interesting stats:
$500B spent on buying and installing solar panels in 2024 (nearly same “sum being put into upstream oil and gas”)
Solar on track to produce “more electricity than all the world’s nuclear power plants in 2026, than its wind turbines in 2027, than its dams in 2028, its gas-fired power plants in 2030 and its coal-fired ones in 2032”
Since the 1960s…the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000”
Two decades ago, “it took the world a whole year to install a gigawatt of solar-power capacity (1gw is a billion watts, or a thousandth of a terawatt); in 2010, it took a month; in 2016, a week. In 2023 there were single days which saw a gigawatt of installation worldwide.”
The abundance of solar energy faces obstacles around how the existing electricity grid will incorporate it:
Cheap, plentiful, acceptable energy which is emissions-free at the point of generation; it might seem that the climate crisis is solved. There is a catch, though—in fact, two. Consumers want to be able to draw power at night. And the grids to which they look for it work on the basis of a “merit order”: everyone supplying the grid at a given time is paid the price needed to attract the marginal supplier of power.
This becomes terribly inconvenient when very low-cost power from solar (or wind) becomes a large factor in electricity supply. When there is a lot of solar power on a grid the price of electricity in the middle of the day can fall to zero, or below. Solar-rich grids in Spain, Portugal, Germany, France, California and Texas have all experienced negative wholesale power prices in recent months. Eventually all markets which install plentiful solar can expect something similar, which makes the potential profits of further solar investment in such markets seem limited.
But there are ways around those limits. They include long-distance connections; storage (especially batteries); increasing overall demand; and the innovation low prices always encourage.
But the opportunities of abundant solar are massive including: 1) a lot of A/C for Sub-Saharan African that will support economic development (which needs 2TW of new solar just for Africa to reach India level of electricity use); 2) devices to filter air continuously (which reduces the spread of airborne diseases); 3) carbon removal; and 4) saltwater desalination.
The caveat with these projections are that they are…errr…projections. But the caveat to the caveat is that experts have continuously underestimated the pace of solar installation for the past decade (see below).
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Delta Airlines is Winning: Delta Airlines opened its Delta One Lounge in New York’s JFK Airport earlier in the week. The 40,000 square foot space looks very very baller and is the latest move by Delta to cement its status as America’s “premium” airline. It's probably the nicest lounge in North America now.
Of course, everything is relative. Delta isn’t in the same luxury-league as the top Asian or Middle Eastern carriers but it has completed an impressive turnaround in the past decade and the Delta One lounge is the latest feather in the cap, per CNBC.
Lucrative AmEx relationship: The Delta SkyMiles AmEx has brought American Express’ high-earning customers into Delta’s fold. These customers are so valuable to AmEx that the credit card company paid Delta ~$7B last year for the partnership.
Most profitable US carrier: Delta’s premium position and high-paying customers helped it achieve a profit margin of 9%, which is top in the country and nearly double United (5%).
Premium revenue growth: ~50% of Delta $58B revenue is from its loyalty business, premium cabins and other streams (and these segments are growing faster than the economy/coach class business lines).
VC Alex Immerman has interesting details on the economics of the AmEx/Delta deal:
Half of Delta's profits come from its Amex partnership, and it's a win for Amex too. Co-brand credit card partnerships can work. Delta is as much a fintech as an airline. Its Amex co-brand credit card spend is approaching 1% of US GDP.
Amex pays Delta 4% of credit card spend, $7b revenue (which converts at 40% free cash flow margin!)... how is this sustainable? Interchange is only 2-3% spend, but Amex earns net interest income on nearly $30b balances (~10% on amount not paid off each month) along with annual fees, service fees, etc.
Unlike the Bilt-Wells Fargo dynamic [a very unprofitable relationship for Wells], these revenue streams more than offset the costs so Amex earns a healthy profit too and happily calls Delta its largest strategic partner. The hardest part of building a financial services business oriented? Distribution. Delta is the #5 US ecommerce retailer and Amex is willing to pay up to reach its high value customer base.
Delta is now worth double United ($31B vs. $16B). Here is a good thread on the Delta One Lounge’s exclusive amenities. The 515-seat setup is meant for Delta’s top spenders (select business and first-class cabins), which means you definitely won’t be seeing me there. But I will be loitering in front with my re-fillable Stanley cup and tupperware for leftover Union Square pastries that exiting guests can’t finish.
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Do you raw-dog airline flights? Speaking of air travel, the most viral article this week was from Kate Lindsay at GQ about “men who are ‘rawdogging’ flights — no entertainment, no headphones, just watching the flight map for 8+ hours (bonus points if you don't pee or eat).” Apparently, ‘rawdogging’ flights make it feel faster. I dunno.
Looking back at the past 5 years or so, I did probably 87% of my book-reading on flights. I refuse to pay for in-flight wifi and don’t like watching movies on small screens, so I am forced to read. ‘Rawdogging’ a flight has never crossed my mind. It feels like one of those silent retreat challenges that I want no part of.
It’s also pretty hard to ‘rawdog’ a flight when you’re flying with wife and kid because they won’t be pleased if you’re just staring into the ether (maybe I’m just making excuses because my mind is too weak to handle meditating for an entire intercontinental flight).
***
Profile of LVMH’s Bernard Arnault: I wrote about the Paris 2024 Olympics last week and forgot to mention that the Games’ top advertising partner is LVMH, the $500B luxury giant (based in Paris).
Bloomberg has a new profile on its CEO Bernard Arnault — worth $200B and perennially in the top 3 richest person in the world list — and here is an excerpt on how LVMH uses real estate to outcompete its rivals:
Arnault exploits this imbalance in a few ways, namely through real estate. His private equity arm, L Catterton, owns properties worth billions of dollars, including premier retail locations and office buildings in most major cities, and it’s taken advantage of cheap borrowing costs to accelerate the pace of acquisitions. Last year, LVMH spent €2.45 billion on real estate acquisitions, a record for Arnault’s group. He makes money from his own stores, from leasing space to rivals—and from the appreciation of premium real estate.
When LVMH buys a building, it takes the best storefronts for its own brands and often asks rivals to move out when their leases expire. Companies such as Kering and Prada have tried to keep up, buying their own properties. Kering’s recent €1.3 billion building purchase in Milan, coupled with the struggles at its main label, Gucci, even hurt its credit rating. “It’s just a clever way to distract competitors and make them sweat more,” says Solca, the Bernstein analyst. “It’s very difficult for anyone to keep pace.” […]
For rivals, all this creates an intolerable imbalance of power. They are either at the whim of property owners desperate to score a Dior or Vuitton store—or LVMH itself is their landlord. Either way, they’re likely to get bumped from the best locations. One rival luxury brand CEO, who asked not to be identified because he works with LVMH in multiple ways, was apoplectic. “Luxury is a disaster. There is no competition. It’s not a game for everyone, it’s just them,” this person says. “Everywhere you go, they try to kick you out.”
Arnault does not have a lot of sympathy for that sentiment. “We have good and efficient competitors, and you see the result, and we have competitors that are not as good. Usually, the ones who complain are the ones who are not the best,” he says. “They need excuses.”
…and here some extra memes for your weekend meme needs:
Finally, there’s a new AI-powered meme maker called the Glif App. I have no connection to the company but it uses AI sprinkledust to make decent memes and completely roasted me with a simple prompt: “TrungTPhan” (aka my X handle).
See below to see how I got bodied (I don’t actually own a Patagonia vest, though).
My technical leisurewear vest has no label and came from a boutique in Barcelona 6 years ago and is olive green not black, navy, light gray, or dark gray. I float above the whole joke. That's what I tell myself to keep wearing it.
solar not cheap, you want leccie when you want it.