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The DL - An inside view into Pacific Northwest Tech

Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.
March 16 · Issue #39 · View online
The DL
Welcome to The DL, a weekly newsletter about tech, startups, and investing in the Pacific Northwest.

This week’s issue looks at Amazon Go’s latest announcement, the three most important charts for following coronavirus, and the best way to get teenagers to stop drinking, doing drugs, and having sex.

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The empty stores of the future
^ Free bags at the Go grocery store
^ Free bags at the Go grocery store
Last week, Amazon announced they are going to start selling Amazon Go’s “Just Walk Out” technology to third parties, and the first retailer to roll it out will be CIBO Express in Newark Airport. I love the Go stores, so I’m excited to see more stores adopting this technology.

From a strategic perspective, however, it’s interesting that Amazon is selling this technology to others vs. deploying it in their own stores. Looking at some hints on their website, it looks like it’s part of the Amazon Services group, which includes Fulfillment by Amazon, Advertising, and Amazon Pay.

We’ll see how successful Amazon is at signing up large customers while simultaneously competing with them. If Amazon “wins” and becomes the largest checkout and payments provider for retailers, they would become the gateway for a massive amount of customer and spend data. If you’re the head of strategy at Walmart or Kroger, you definitely don’t want that.

Either way, this market is going to be a really big deal. There has been a ton of media coverage around autonomous vehicles and lost jobs for drivers, but cashier is the third largest occupation in the US, so automated checkout is going to have an equally large impact, and the tech is much further along.

The three most important COVID-19 charts
I didn’t write about coronavirus last week because I thought everyone had done enough reading of their own, but it’s the only thing I read about now, so hard to avoid it for a second week! So here you are… the three most important charts for understanding the current state of coronavirus:

1. COVID-19 Cohort Chart by Country
Note: Y-axis here is logarithmic
Note: Y-axis here is logarithmic
One of the things we always look at in our investments is the performance of cohorts. Basically, set all of your customers to time = 0 and plot their performance over time to compare different segments and understand what’s working well and what isn’t working (here’s a great explainer).

Someone did a similar analysis (and here’s an interactive version) for COVID-19 cases by country, and it’s very illuminating. Here, you can see the oldest “cohorts” (South Korea, Italy, Iran) are roughly three weeks out from hitting 100 cases, and their case counts have exploded (Japan hasn’t done many tests).

Cohort charts are really helpful to predict what will happen in the future because you can compare historical data with current trends, and right now, most of the other countries that hit 100 cases two weeks ago look a lot like Italy, Iran, and South Korea.

With the data laid out like this, it’s clear there is no way we have a Hong Kong-like outcome in the US, but hopefully with more mitigation, our line will start to flatten out like South Korea and not follow Italy.

2. COVID-19 Death Rate vs. Seasonal Flu
This is an important chart because there is a still a lot of chatter about how hundreds of thousands of people die from the flu every year, and COVID-19 is not a big deal because there have only been a few dozen deaths in the US. Well here is a look at the death rate of the flu vs. COVID-19 for every age group: at every age, COVID is 10-20x deadlier.

Additionally, doctors and hospitals are seeing patients who are young, fit, and have no medical problems becoming critically ill, and Hong Kong has found that even after recovering from coronavirus, patients have seen long-term organ damage leading to 20-30% drops in lung function.

3. Cost of Waiting
Someone on Medium wrote a fantastic article on coronavirus with timelines, growth rates, fatality rates, data on testing, and projections. It’s definitely worth a read, but in case you don’t, this is the main takeaway.

Basically, this chart illustrates a model that loosely replicates the spread of COVID-19 in Hubei. He then modeled how much they could slow down the case growth by introducing social distancing to mitigate the spread of the disease. By implementing mitigation (i.e., social distancing) one day later, there would have been a 40% increase in the number of cases.

TL;DR: It’s going to get worse, it’s not even close to being a “bad flu,” stop hanging out with lots of people ASAP

Looking forward in startup land...
^ author of the most popular newsletter in VC
^ author of the most popular newsletter in VC
Other stuff Dan's talking about
🎮 Saving the youths - “Fortnite: the anti-weed, anti-sex, anti-TV, anti-alcohol, anti-smoking solution parents have been seeking for decades.” 😂
💑 America’s hottest new dating sites - …cost $111K per year! Business school weddings are becoming more common now that 40% of students are women. Apparently, one-third of female HBS alums are married to HBS grads, and Booth’s MBA program has yielded nearly 1,500 alumni couples
📉 Bitcoin drops 50% in a day - In addition to the stock, bond, and oil markets plummeting last week, crypto also went crazy. Bitcoins traded as low as $3,867 vs. $8,000-10,000 for the first two months of the year
🚫 PSA: Don’t get ripped off! - Ordering food while you stay home? Make sure to check a few different apps first. NYT did a study where they found that Uber Eats marks up orders by 90%+

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About me: I work as an investor at Madrona Venture Group, a Seattle-based venture capital firm that has been early partners with companies like Amazon, Smartsheet, Apptio, and Redfin.

If you have thoughts, questions, or comments, hit reply!

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