From disrupting tech to disrupting finance, Apple is leading the way

Apple has been at the leading edge of the consumer technology industry for decades, earning itself a reputation for creating the “new normal” in product areas ranging from personal computers to mobile devices. This week Apple announced a foray into a new category: credit cards. Once again Apple has positioned itself as raising the standards of what consumers can expect in convenience, quality, and security – the Apple trifecta.

Apple has long branded itself as a prescient company, one that knows how to “skate to where the puck is going, not to where it is” – a Wayne Gretzky quote Steve Jobs loved to borrow. This meant defining what consumers want for them more than with them. In the early 2000s, Apple was the first to do away with CD ROMs in favor of USB drives. Consumers transitioned with external CD drives and soon did not miss massive CDs at all – and PCs quickly followed suit. In the last ten years, having a sleek phone that responds to gestures via a touch screen became a standard rather than a luxury, also thanks to Apple’s influence. And now, in a new sector, notorious for high fees, high security risk, and general opacity, Apple is busting up the old model with a clean, user-centric option: Apple is brining virtual credit cards to consumer finance.

Apple has cleaned up several pain points for consumers with the Apple Card in one fell swoop: complexity, hidden costs, and vulnerability to theft. Standard credit cards offer complex points systems, with varying thresholds for earning and redeeming benefits that require a fair bit of math to evaluate the value of. Apple provides a simple, real-time cash back system based on your spending. It also removed ATM and other fees, and is entirely transparent about interest rates. It promotes consumer health by visualizing the distribution of your weekly spend. And because it produces a randomized card number for each transaction, there is little risk of card theft.

Many companies have tried to provide these services in a piecemeal fashion to consumers. While Apple is increasing convenience by bundling all of these services together, the real disruption to the industry is Apple’s challenge to the standard business model of countless fees and selling consumer data. While you may love Mint’s free breakdown of your spending and credit status, you may not love that they package and sell your data to hedge funds. Simple, a banking and budgeting tool similar to Apple Card’s financial management tools, helps consumers contain their spending with recommended spending limits – but it does so at a premium to other banks. Apple is offering more for less: a comprehensive service that doesn’t cost you a pound of flesh or your privacy. Like Apple’s aesthetic, its revenue model is clean, based on simple, low transaction fees.

Much like the CD ROM sunset, there will be a period of transition. For example, hotels will have to figure out how to charge a reservation across multiple card numbers, from the time of booking to the time of checkout. Websites requiring the last four digits of your credit card to validate a transaction will also pose a problem. Yet the alternative is the wildly complex fee system and data selling of modern banks that we’ve all grown to know and hate, limited only by regulatory oversight. Surely Apple’s full service, low-fee offering will be refreshing to consumers. As a non-bank, Apple is unencumbered by bad business model norms, and holds the potential to help the average American reduce its significant debt. With such aligned interests with consumers, Apple’s competitive offering is likely going to create a forcing function for traditional banks to stop milking consumers for all they can and instead pushing them to provide real value to consumers, regardless of income. Apple is well positioned to win consumer confidence and, once again, define a new normal that is higher quality than the dated standard credit card model.

Cheers to the best communicators of 2018

It is immensely human to want to be understood, and a great skill to be able to make oneself understood by wide-ranging audiences. This end-of year post is a hats-off edition for those who take complex, multifaceted topics that otherwise appear unknowable and clearly describe the inner workings of our world in layman’s terms. Four communicators in four fields have been especially influential and necessary.

Four fields have outsized impact on our working present and future: finance, management, science and technology. With the 10 year anniversary of the financial crisis just past, the importance of financial liquidity as the lifeblood of our economy is palpably understood by our businesses. And if strong financial conditions offer a tailwind, good management readies a business to benefit in the near-term. At the same time, science and technology are changing the nature of work day by day. Previously manual jobs like automotive assembly now require a technical literacy that demands that each person arm themselves with the latest technical knowledge. Thus, a knowledge of finance, management, science and technology makes for one capable business leader.

Four experts in these four fields have continually contributed to the public’s ability to grasp big and small ideas with clarity. And the winners are…

Best financial communicator: Felix Salmon of Axios

Felix Salmon’s daily articles on Axios and weekly podcast, Slate Money, complement each other with punchy clarity and practical insights that are both local and global. He speaks directly to the lightly-financially literate American and to the globe, as he covers trends in other large economies as well as struggling economies. He reads what would be tea leaves to most and makes financial indicators approachable. His frequent podcast refrain is to interrupt jargon-laden explanations from co-hosts and say “explain that in English.” Britain-born, he proves we don’t always need to be divided by a common language.

Best management communicator: Adam Grant, author

Adam Grant is an organizational psychologist who has written three books on how to drive personal and professional success. Beyond his famed insights from Give and Take, which show that generosity towards others can drive your own success, he’s gone on to create a podcast called WorkLIfe, in which he interviews entrepreneurs, employees, and companies to unearth practical advice to improve our work lives. He is a prolific tweeter and poster on LinkedIn, where he offers bite-sized daily advice for the business leaders of today.

Best science communicator: Neil deGrasse Tyson, astrophysicist

Neil deGrasse Tyson’s Astrophysics for People in a Hurry has been on the New York Times Best Seller list for the better part of 2018, a testament to his famed ability to generate both wonder and create scientific understanding among his audiences. He has a foundational interest in encouraging curiosity and methodical discovery, which makes the everyman feel he or she can, with careful pursuit, know the unknown.

Astrophysics for People in a Hurry

By Neil de Grasse Tyson

Best technology communicator: Wired, technology magazine

All of Wired Magazine deserves recognition for making complex topics with broad social implications, from the blockchain to ag-tech, easily digestible (no pun intended), with the implications unpacked. Wired humanizes and empathetically portrays the thinking and motivations of the entrepreneurs seeding some of the mega tech trends that are rippling through society.

In summary…

Thank you for an insightful 2018 to the brilliant communicators who have synthesized the most important mechanics and trends in the four fields that are the pillars of modern business. Cheers to you!

Has Amazon become eBay? The new normal for e-marketplaces

There’s a market place with real-time bidding, where all the suppliers with identical products vie to sell their goods to a group of buyers, all with varying willingness to pay. Which market am I speaking of? Is it the stylized market place from Econ 101, the modern financial markets, or today’s primary e-commerce model? In fact, it is all three.

We’ve heard of regression to the mean with stock prices. The past decade has witnessed a regression to the mean of economic models. The difference between the market places academics describe and the ones financiers and commercial platforms implement has rapidly evaporated. In sum, the world has become eBay. 

The great irony in this turn of events is that eBay is one of the few markets where the auction model failed. Although eBay was a classical market, with multiple people selling identical or equivalent items, buyers did not want auctions. So why did eBay’s core model fail where so many others have since succeeded? Two words: buyer experience.

The Wharton course selection process followed a similar arc to that of eBay. Selecting your lineup for the semester used to be the stuff of day traders’ dreams. Speculation and back door deals were required to accumulate enough points and make the right trades to get your dream class lineup. But with the time and energy vortex it created for students, professors decided to swap in a simple system of ranked preferences, that students could set and forget until their course schedule was determined. Both the old and the new systems were based on economic theories, but the new one worked for everyone at a dramatically reduced cost. The selection process went from weeks of game theory strategizing to days of just choosing which courses you were most interested in. Similarly, eBay’s Buy it Now option made it so that you could literally buy peace of mind, knowing that your item was on its way. Now that’s exactly what buyers do 80% of the time on eBay.

Where eBay failed to deploy a streamlined buyer experience to auctions, e-commerce giants and financial markets have succeeded. They ensured that just because they make their markets competitive, doesn’t mean they need to be a hassle. And all with one weird trick: making the sellers compete, not the buyers. was the first e-commerce player to dream the dream of emulating financial markets: one price to rule them all. Jet aggregated all sellers of a single item under one listing, hiding the buyer and just showing the best price. The computer does the comparison for the shopper, bringing them one step closer to a two-click purchase. Amazon quickly riffed on this, showing a list of other sellers for a given item alongside that seller’s user rating. And the bandwagon effect was unleashed. Specialized sellers like Newegg, which formerly focused on technology products, have deployed the same tech to sell across categories, aggregating sellers and drop shipping inventory for a seamless user experience. Other markets are not far behind the curve. Technology has made it so easy to adjust prices that the bidding for hotels and airlines on aggregators like Kayak and Priceline is continuous.

All fields of technology-based commerce appear to be converging to an economists dream: a series of real-time auctions. But is the economists’ dream everyone’s dream — do we want the whole world to be a real-time auction market place? No doubt there is a dark side to a system evaluating actors primarily on price competition. Amazon’s opening the floodgates of international vendors to the U.S. has created a whole underground economy of fake reviews for low quality knockoffs, for example. In other areas, considering price alone has resulted in a number of negative externalities, such as the rash of taxi driver suicides in markets Uber has taken over. As eBay has taught us, without keeping an eye on consumer experience, no market model is sustainable. And as Silicon Valley has taught us, forgetting that these systems affect real people can cause social dislocation. Time will tell how consumers vote with their clicks.