US Postal Service Testing Self-Driving Trucks

The Wall Street Journal:

The U.S. Postal Service is testing self-driving trucks on a more than 1,000-mile mail run between Phoenix and Dallas, the post office’s first use of the technology for long hauls. […]

The two-week pilot starting Tuesday will use big rigs supplied by autonomous trucking firm TuSimple to haul trailers on five round trips between distribution centers, the company said. The roughly 22-hour trip along three interstate highways is normally serviced by outside trucking companies that use two-driver teams to comply with federal regulations limiting drivers’ hours behind the wheel.

TuSimple is a Chinese-unicorn, and as far as I know — is beating Lyft and Uber (and Tesla?) to the finish line of freight-transport automation. This is a pretty huge defeat for the homegrown rideshare companies. Convincing a bureaucratically-restrained department like the Postal Service to even test automated freight is wild. If you had told me a decade ago that the USPS would be testing a Chinese-backed unicorn’s software for automating freighted post — I would have laughed. It’s simply unbelievable.

A freight-truck driving at dusk, with sensors on it.
TuSimple

But here we are! Living in the future!

At any rate, the WSJ claims that the USPS has been “losing money for several years” as sending letters via post continues to decline and the rising cost of operation goes up. First off, The Postal Service is profitable, but congress decided to neuter the USPS profits (at least until 2056) in 2006. The bill is insane. It’s pretty wild looking back at bi-partisan sponsors of the bill through the political lens of today too. From Bloomberg:

Then there is the Postal Accountability and Enhancement Act of 2006(PAEA), which some have taken to calling “the most insane law” ever passed by Congress. The law requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees’ health benefits up to the year 2056. This is a $5 billion per year cost; it is a requirement that no other entity, private or public, has to make. If that doesn’t meet the definition of insanity, I don’t know what does. Without this obligation, the Post Office actually turns a profit. Some have called this a “manufactured crisis.” It’s also significant that lots of companies benefit from a burden that makes the USPS less competitive; these same companies might also would benefit from full USPS privatization, a goal that has been pushed by several conservative think tanks for years.

Lastly, operating costs always change. That’s a given in just about any industry. So needless to say, I’m happy to see the USPS is taking a gamble on exciting tech like this. Just because Amazon is taking gambles on automation, doesn’t mean the government can’t get skin in the game too.

Snapchat Loses 3M Daily Active Users in 3 Months

From Endgadget:

According to the Snap’s second quarter earnings report, the number of daily active users have dropped from 191 million in the first quarter of the year, to 188 million. That’s a drop of 2 percent, or 3 million users, since the last quarter, and marks the first time that user count has dropped in the company’s corporate history.

Yikes. Looks like my prediction for a Snapchat sale happening in 2019 is fast approaching after all.

Scott Galloway weighs in:

So, what to do? Simple, sell. Only Snap is a terrible investment and a nightmare for investors, as the firm is controlled, via two-class stock, by a 28-year-old who is already a billionaire, so he is a terrible fiduciary for shareholders, as he will not sell to the highest bidder. There are only two relevant criteria for who will acquire Snap:

Galloway goes on saying “It can’t be Facebook,” and that much is for certain — and who would Evan Spiegel even work for after an acquisition? Galloway has his sights on Disney or Amazon, and honestly I don’t see Iger making a play for Snap. But it could happen. Disney could use a pick-me-up for their teenage audience.

Amazon is the more likely bet, simply because they have the capital and the current CFO is an Amazonian Alum. They could (and would) monetize the absolute shit out of the Snapchat app. It would, undoubtedly become the QVC of the appverse. 

A sort of fitting end to a superficial ephemeral “social-network.”

H-E-B Takes on Amazon

Carlos Sanchez for Texas Monthly:

“This state-of-the-art space will be a hub for creativity and innovation as we continue to develop the ultimate digital experience for our customers,” Jag Bath, H-E-B’s chief digital officer and Favor CEO and president, said in a news release. “Bringing H-E-B and Favor closer together will allow us to promote collaboration between our two companies as we strengthen our commitment to building out H-E-B’s omnichannel services.”


The facility will be located on East 6th Street near downtown Austin. Favor has always been an Austin-based company, while H-E-B is based in San Antonio. Bath said that H-E-B’s expanded Austin footprint will bring several hundred new jobs to the Austin economy—mostly in the areas of product management, product design, and software engineering. The new tech facility is the latest move by the company that has sales of $25 billion and operates 400 stores in Texas and Mexico. The building is being designed by IA Interior Architects, the grocery giant said.

As I’ve written before, grocers are forced to grapple with Amazon’s growing market share. Year-over-year, Amazon is gunning for grocery stores big and small. Until reading this piece, I had no idea H-E-B acquired Favor earlier this year. I’m happy to see a Texan grocery chain making moves like that in this arena. What’s more surprising, Favor Delivery is based in Austin.  

Placing a flagship H-E-B store on 6th Street in Austin is a totally safe move. I mean, the foot traffic alone will likely recoup the construction costs in just a couple of years time, perhaps even less.

Make no mistake, Austin (and the surrounding Metro areas) are becoming more and more walkable — Texans continue to leave their small hometowns and migrate to nearby cities for better opportunities. Besides, it’s becoming increasingly clear, that people want a walkable city. Austin will continue to see population growth as long as tech companies continue to move to Texas. So, all-in-all this makes total sense to see H-E-B investing in more sensible store concepts than the more common mega-sized Wal-Mart clones.

Despite my misgivings for the mega-stores concepts H-E-B has opened in the past, many offers modern amenities such as Curbside Pick-up. Even a few remote store locations offer Curbside Pick-up. But Amazon, who now owns Whole Foods and is headquartered in Austin has had delivery available in all major cities for just over a year now.

I’m really curious to see how this showdown all shakes out. On one hand, you have a cult-classic Texan grocery chain (plus the Austin favorite, Favor) willing to fight the big dogs. But on the other hand, you have Whole Foods, who has deep roots with the Austin psyche. But, ultimately isn’t Whole Foods just another arm of the ever-growing blob that is Amazon?

Personally I think H-E-B is a little late to the game. Winning over Austin will not be easy, but it is feasible. H-E-B’s tenacity, willingness to spend money and innovate might just outpace Whole Foods/Amazon’s strategy which has continually been, “cutting prices.” Anyone in the grocery business will tell you outright, a race to zero is not sustainable in this space — even with Amazon’s coffers and willingness to take huge losses.

Reddit Surpasses Facebook in Popularity

Reddit just passed Facebook as #3 most popular website in the US. 🏆

An interesting development on the web happened today. Reddit just passed Facebook as #3 most popular website in the US. This was no small feat for the Reddit engineering team who have also juggled a site re-design. As the Facebook deals with an Exodus, I suspect that new user sign-ups have slowed for the Silicon Valley giant as well. 

As TNW reported:

On average, Reddit users spend 15 minutes and 10 seconds on it every day, a figure substantially higher than its competitors. Google users spend 7 minutes 16 seconds, You’veTube 8 minutes 31 seconds, Facebook 10 minutes 50 seconds and Amazon 7 minutes 37 seconds on the sites each day.

This isn’t great news for Facebook on the face of things. The social media company’s audience is aging and shifting to other platforms and, with the Cambridge Analytica scandal, the company’s lost a lot of sheen.

It really just comes down to two factors: time and traffic.

Facebook has millions of backlinks over their rival Reddit, but people enjoy the fresh and open content. Snoo’s tribes will continue to grow as Facebook’s users age, linger and mob.

I have long been a fan and user of Reddit. I may not enjoy everything I come across on Reddit, but alas is the beauty of their unique paradigms that help keep my feed fresh:

  • Useful Bots (most of the time, clearly labeled as such)
  • Subreddit Flairs (great for improving comment threads and context)
  • Up-voting and down-voting 
  • Karma (helps identify trolls and patron saints of Reddit easily)
  • A never-ending battle to squash bullshit on Reddit

I love Reddit. It’s been through some tough times, and still is wrangling with problematic subreddits, but that’s the cost of a great product and an even better community. It takes real work to cultivate and grow a healthy internet community. I really think Facebook held that title up until 2011 with their first set of re-design efforts. But somewhere along the way Facebook lost their soul and lost their focus.

Here’s to Snoo. You earned it. 🏆 Now get out there and upvote!

Kroger Buys Home Chef

Kroger continues to play catch-up, but will it be enough?

Home Chef is the third-largest meal-kit delivery network, behind Blue Apron and HelloFresh. Apparently, Kroger has acquired Home Chef for $200 million. It's an interesting move from Kroger, considering it is constantly playing catch-up with Amazon. Amazon continues to crush competition as it trenches and digs itself a moat around its businesses.

From homechef.com

While I'm happy to see Kroger acquiring top-quality talent and technology, I'm left disappointed. I think meal-kits are a fad, unprofitable, and produce a lot of waste. When Kroger should be focusing on reducing food waste, they are instead attempting to boost profits from a fad. This will be a short-term gain for Kroger.

Other grocers such as Albertsons, Target, Trader Joes and even Amazon have hyper-local and metropolitan grocery delivery networks in place. Some are more impressive than others, but I think this is the space that Kroger should be focusing their efforts.

A screenshot of Target's same-day delivery offerings

Meal-kits are expensive, and the average consumer will not see a long-term cost-benefit. I think a lot of investors are beginning to understand that too.

It's grocery delivery, not meal-kits that is the real magic — which is totally lost on a bunch of grocers today.  Mastering the delivery of groceries is going to be a crown jewel achievement, and sadly Amazon is leading the way. Although, I have to give credit where credit is due — Kroger has partnered with Instacart in the past. Let's just hope that relationship doesn't sour. I believe Instacart is ripe for acquisition. If Kroger isn't first to acquire Instacart, Amazon will. Which is appropriate considering Instacart was founded by ex-Amazon employees. Kroger should've ponied up the cash for Instacart instead of Home Chef. Kroger nets $122 billion a year, so they surely have the revenue and capital to afford a company of that magnitude.

All of that being said, it's good to see grocers getting skin in the game and finally taking risks. The only real innovation grocers have had in the past century was barcodes and weekly ads — and weekly ads haven't had a profound ROI as customers continue to change their shopping habits to online-first, IRL-second.

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