Shopify Launches a Fulfillment Network 

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We believe that Amazon’s dominance of e-commerce has left many traditional retailors feeling helpless. On Amazon’s platform, they have lost control of their brands and face increased competition. Building a full e-commerce operation requires software and logistics capabilities beyond the reach of most merchants.

In response, merchants appear to be flocking to Shopify, an e-commerce software platform that enables them to host webstores, manage inventory, and process payments. This week Shopify announced its most ambitious expansion yet, a network of fulfillment centers across America that will offer two-day shipping by the end of the year. In other words, Shopify is evolving from a software company to a software + logistics company with Amazon Prime-like capabilities.

Shopify hopes to help merchants take the grunt work out of selling physical goods. Just as cloud computing eliminated the need to manage servers, fulfillment-as-a-service eliminates the need to manage inventory. A modern merchant can procure goods from factories in China, ship them to Shopify’s warehouses, and commission UPS to transport them to customers’ doors without ever seeing or handling the goods.

Shopify is building another moat around its business. Today Shopify competes against Wix, Magento, BigCommerce, and others in e-commerce software. With fulfillment services, Shopify will not compete with software alone but with a vertically integrated e-commerce service. Unless its pure-play software peers build warehouses, Shopify is likely to cement its position as the most comprehensive independent e-commerce platform for merchants in the US.

Bitcoin Soars Thanks to the Macro Backdrop and Institutional Demand

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This week, the bitcoin price soared to 52-week highs, surpassing $13,800 for the first time since January 2018. It has tripled over the last three months.  Investors have attributed the recent run to institutional demand but as geopolitical tensions and market volatility increase, the demand for a non-sovereign, digitally scarce store of value also is likely to increase. In April, inflows into the Grayscale Bitcoin Investment Trust (GBTC) hit $1.42 billion, equal to the previous four months of inflows combined. CME bitcoin futures also traded at record volumes, nearly 50% above their highs in April.

At this week's Bitcoin2019 conference in San Francisco, Tetras Capital’s Brendan Bernstein presented a compelling narrative on the macro conditions that could catalyze the demand for bitcoin. "BTC doesn’t need a maximalist ideology. People will buy bitcoin to escape autocratic regimes,” said Bernstein.  Given increased capital controls, currency devaluations, and macroeconomic theories like the Modern Monetary Theory (MMT), demand for scarce assets like bitcoin should become compelling.

In a recent Bloomberg op-ed, George Mason University’s Tyler Cowen reversed his previous position and echoed the sentiment. "Populism is spreading, the Middle East is not calming down, and the world is not solving its geopolitical problems. To the extent bitcoin is a general hedge, much like gold, the conditions for its value seem to be favoring a high future demand for portfolio insurance. Even a small percentage of global wealth put into bitcoin can sustain a high bitcoin price.”

TransferWise Launches a ‘Borderless’ Bank Account and Debit Card in the US

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This week TransferWise, an eight-year old money transfer business, allowed US consumers to open multicurrency bank accounts connected to MasterCard debit cards in many geographic regions. Users can open bank accounts in the European Union, the UK, Australia, and New Zealand with routing and account numbers for US accounts. While it is licensed and regulated as a money remitter in most of these jurisdictions, TransferWise also depends on bank partnerships to offer direct-deposits tied to debit cards across the five geographies and to convert funds into more than 40 currencies. TransferWise limits fees by offering mid-market currency exchange rates.

Raising $292 million from BlackRock, Andreessen Horowitz, and others, TransferWise is valued at $3.5 billion. A breed apart from money-burning Fintech unicorns, TransferWise seems to be living up to its name: it has been profitable since 2017.

Proposed Transplant Legislation Sets the Stage for Increased AI Use in Healthcare

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To lower the probability of organ rejection, transplant recipients must take immunosuppressive medication for the rest of their lives. While necessary, these drugs can damage the body’s immune system and cause widespread inflammation. Physicians balance side effects against organ rejection by altering doses and prescribing different, often expensive, immunosuppressants.

This year, more than 94% of transplant centers in the US reported that their patients were not taking their immunosuppressive medication because they could not afford it. In response, the U.S. Department of Health and Human Services is proposing new legislation that will reimburse them for immunosuppressants, not just for the three years following the procedure as is the case now, but for life, in an attempt to lower the risk of the secondary transplantations.

CareDx (CDNA), a leader in molecular diagnostic tests for transplant recipients, is well positioned to assist in this transition. CareDx’s AI-based, non-invasive, longitudinal personalized tests can monitor the success of transplants, enabling physicians to prescribe medication more precisely. This strategy should improve patient outcomes, ease physician workloads, and lower healthcare costs.

A 3D Printing Unicorn Grows Even Bigger

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This week 3D printing start-up Carbon3D raised $260 million, valuing it above $2.4 billion. Compared to Stratasys, a publicly traded 3D printing company with $660 million in sales, a market capitalization of $1.6 billion, and an enterprise value of $1.2 billion, Carbon3D sports a valuation that is illuminating. Forbes estimates that Carbon3D’s sales this year will surpass $100 million, pegging its valuation at roughly 24 times sales, more than 10 times Stratasys’s valuation. Could private market valuations be pointing the way for their public counterparts?

Chevy’s $100,000 Pickup Truck Signals Sustaining Innovation

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For years now traditional automakers have shifted their strategic focus from sedans to more profitable SUVs and pickup trucks. Chevy’s ultra-high end version of the new Silverado Pickup will cost more than $100,000.

With moves toward sustaining innovation, incumbents offer products of superior quality to satisfy the high end of the market, but they ultimately become too narrowly focused and miss the next big thing, in this case, electric vehicles. Benedict Evans puts it perfectly in his essay “The Best Is the Last” writing,

“a technology often produces its best results just when it's ready to be replaced - it's the best it's ever been, but it's also the best it could ever be. There's no room for more optimization - the technology has run its course and it's time for something new, and any further attempts at optimization produce something that doesn't make much sense.”

Today, a $100,000 pickup truck may not make much sense, not only because of its price but also because of the emerging electric competition. The average inflation-adjusted price of full-size pickup trucks increased from ~$37,300 in 2010 to $45,260 in 2019, offering a price umbrella for the Tesla pickup, which Musk claims will cost less than $50,000 and will be a better truck than an F150.