Thursday, July 23rd, 2020
Welcome to the 12th edition of Nuggies, an email newsletter that aggregates articles and commentary on business, economics, startups, and more, in bite-sized nuggets sent right to your email weekly. Created by and for college students.
Our quote of the week comes from psychologist Daniel Kahneman, “No one ever made a decision because of a number. They need a story.”
This Week’s Articles:
Robinhood and How to Lose Money, Ranjan Roy
This article does a great job explaining how Robinhood makes money and how some of its product features nudge investors into more behavior that’s more profitable for Robinhood. The author brings up the saying, “if you're not paying, you are the product,” and for Robinhood traders it’s very true.
Robinhood makes money by selling deal flow to other financial institutions. Features like commission-free trading and a frictionless mobile user experience (UX) helps nudge users into trading more.
This strategy combined with targeting less experienced investors allows Robinhood to generate more revenue per dollar deposited in each investor’s account than its competitors.
Read it here.
GPT-3 Explained in Under 2 Minutes, Dale Markowitz
Although Artificial Intelligence has been used widely, GPT-3 represents a major step change in AI’s capability.
As a neural-networked powered language model, you can give it very human tasks (think poetry or graphic design) and it searches the internet for examples before delivering a new solution.
If the technical language is confusing, check out the mind-blowing examples included in the article.
Read it here.
Pinduoduo, Acquired
Acquired takes a long-form exploration into Chinese ecommerce giant Pinduoduo, a company that describes itself as a hybrid of Costco and Disneyland.
To put the company in an American context, imagine if you could buy goods directly in iMessage and the price dropped as you invite friends to join your order. Plus there’s minigames, such a Farmville clone that lets you purchase real produce to be delivered to your house.
Its innovative approach made Pinduoduo that fastest company to reach a $100B valuation, making is worth about the same as three Snapchats.
Listen to it here.
From Rihanna to Kanye West: Why Music’s Biggest Stars Aren’t Focused on Actual Music, The Wall Street Journal
This article does a great job of unraveling the economics of the music industry, arguing some artists are waiting longer between albums to build their brand and other revenue streams.
About 20% to 50% of an artist’s total earnings now come from non-music sources, a major increase from just a decade ago. After producing a successful project, artists can leverage their fame into a new business, including shoes, cosmetics, and TV shows.
Many artists may now view rushing to release a new project as a risk. If it flops, they risk not only poor album and tour sales, but also damaging their entire brand and portfolio.
Read it here.
This Week’s Tweets:
This Week’s Wildcard (an extra, interesting nugget):
This week’s Wildcard is George Bush Sr.’s letter to Bill Clinton on the day of their power transfer in 1993.
This Week’s Question:
Which asset will have the largest returns in the next 20 years, Bitcoin or Tesla stock?
What are we listening to this week?:
This week we’re listening to Malibu by Anderson .Paak.
Paak is a one of kind talent as a world class drummer, rapper, and singer and his talent shines on this album. If you like the album, check out his performance on NPR’s Tiny Desk.
Thank you for reading! Nuggies is created by Thomas Pero and Spencer Koehl, two undergraduate students at the University of Notre Dame.
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