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Salutations, Olio aficionados! 👋 |
Happy Hump Day and welcome to the 104th edition of Weekly Olio - your trusted source for giggles, wisdom, and a dash of intrigue, courtesy of our tantalizing thought piece (yes, buckle up for Publisher's Parmesan). 🧀 |
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The Quote 💭 |
"It is sometimes easier to make the world a better place than to prove you have made the world a better place." | | | | ― Amos Tversky |
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 | Sheel Mohnot @pitdesi |  |
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Heartwarming immigrant banking story: The State Bank of Texas is owned and mostly run by Patels. Poor Indian immigrant Chan Patel comes to Stanford for grad school, becomes a successful hotel entrepreneur. He finds that lenders are unfairly discriminating against Indians &… x.com/i/web/status/1… | |  | | | 10:27 PM • Oct 30, 2024 | | | | | | 8.88K Likes 1.2K Retweets | 495 Replies |
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The Patel community is known and often caricatured as the motel kings of the US. But little did we know that they also run the banking system! The State Bank of Texas is almost fully owned and run by Patels - an immigrant community with roots in Gujarat, India. |
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The Infographic 💹 |
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Charlie Munger: Don't be surprised when you lose to people like this. |
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The Short Read 📝 |
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Recently, nuclear power has re-emerged as a potent source of clean energy. Its proponents claim that is the ultimate solution to both climate change and the rapidly growing global demand for energy. One of the trickiest problems with nuclear energy is managing the waste - it is one of the most dangerous substances on earth with the ability to persist for hundreds of years. One such method is the construction of underground waste storage facilities called Geological Disposal Facilities or GDFs. Read more… |
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We recommend reading the article in full - not just for pictures of these gigantic structures but also to understand the planning that goes into building it. How do you plan and design a structure that is supposed to store nuclear waste for centuries? Often the people designing these structures will not live to see them going live. Read on for more fascinating details on efforts to manage nuclear waste. |
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The Long Read 📜 |
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Dario Amodei is the CEO of Anthropic, a public benefit corporation dedicated to building AI systems that are steerable, interpretable and safe. |
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In this article, Dario tries to imagine what a positive future with powerful AI might look like if everything goes well. While no one can predict the future exactly, and the impact of powerful AI is likely to be more unpredictable than past technologies, this is all about making educated guesses. The goal is to provide useful ideas that give a sense of what might happen, even if many details turn out to be incorrect. Including many details helps to encourage discussion more than vague and abstract ideas. |
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Publisher's Parmesan 🧀 |
Why Keeta's Success in Hong Kong Sets the Stage for Expansion in Saudi Arabia |
Meituan, China's leading food delivery and lifestyle services platform, has made waves in international markets through its overseas branch, Keeta, which quickly gained the top spot in Hong Kong's competitive food delivery scene. Now, Keeta is looking to repeat this success in the Kingdom of Saudi Arabia (KSA), a unique and promising market for food delivery. |
For many in the industry, the questions are clear: how did Keeta become so successful in Hong Kong so quickly? Can they replicate this in Saudi Arabia? And if they succeed, what does that mean for the food delivery landscape in the region and beyond? |
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Hong Kong's dense population, high income levels, and the familiarity of its residents with Chinese culture created a conducive setting for Meituan's expansion. Yet, Hong Kong also had established players like Foodpanda and Deliveroo, both firmly entrenched with a loyal customer base. To compete, Keeta adopted a carefully crafted strategy targeting budget-conscious consumers, focusing heavily on low Average Order Value (AOV) options such as affordable single-person meals. |
This move aligned with Hong Kong's bustling working-class culture, where quick, cost-effective meals are in high demand. By focusing on smaller, frequent orders, Keeta built a solid user base swiftly. |
Leveraging Discounts and Promotions |
From the start, Keeta's approach relied on aggressive discounts and free delivery promotions. By lowering the cost barrier for consumers, they positioned themselves as a budget-friendly alternative to established players. This strategy allowed them to capture market share from the incumbents, particularly from customers looking for a fast, inexpensive way to order food on busy workdays. |
Addressing the Price-Value Equation |
Price sensitivity drives much of the food delivery market. Even high-income earners prefer value for money, especially when they're ordering frequently. By offering lower-priced options, Keeta tapped into this universal consumer psychology, drawing a wide range of customers and generating high order volumes, even if the revenue per order remained low. |
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Expansion into Saudi Arabia: A Calculated Risk |
Following its Hong Kong success, Meituan is now taking its Keeta brand into the Saudi Arabian market—a leap from a semi-familiar environment into a vastly different one. Saudi Arabia offers an attractive proposition: a large, young, and increasingly urban population with rising disposable income and a taste for convenience. However, the market differs significantly in language, culture, and regulatory structure from those Meituan is accustomed to. |
Understanding the Appeal of Saudi Arabia for Food Delivery |
The Kingdom's urban centers, especially Riyadh and Jeddah, are dense, high-demand environments that align well with Meituan's operational strengths. Saudi cities have a high concentration of affluent office workers and a growing need for on-demand services. Coupled with the relative ease of recruiting delivery riders due to affordable labor costs, this environment makes Saudi Arabia a strong candidate for Meituan's expansion strategy. |
Competition and Strategic Differentiation |
Meituan faces stiff competition in Saudi Arabia, primarily from local players like Hunger Station (part of Delivery Hero) and Jahez, both of which are profitable. Despite this, Meituan's established playbook of focusing on low AOV options and efficient, localized marketing could give it a foothold. Local competitors are accustomed to high AOVs and may not immediately adapt to a model emphasizing low-cost individual orders. |
Moreover, Chinese executives overseeing the Saudi expansion will face a learning curve in managing teams in a different cultural context and building out complex operations from the ground up, including logistics, partnerships with local restaurants, and compliance with regulatory standards. To facilitate the transition, Meituan's head of international operations, Tony Qiu, who has experience expanding Didi into Latin America, is leading the charge. |
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Can Meituan's Model Work in New Markets? |
Given its past successes, Meituan's focus on careful preparation and localization will be essential to success in Saudi Arabia and other potential markets. Here's how its approach could unfold: |
Leveraging Operational Efficiency: Meituan's strength in logistics and technology, honed in China's massive market, could allow it to deliver food and services at a lower cost per order than its competitors. In Saudi Arabia, Meituan has the chance to use its resources to quickly build a substantial logistics network by hiring local talent. Tailoring Promotions for Local Consumers: Just as in Hong Kong, Keeta will likely adopt aggressive pricing strategies with discounts aimed at budget-conscious segments of Saudi society, particularly office workers and students. By capturing this audience first, Meituan can establish a foothold before scaling up its offerings to higher AOV segments. Balancing Low AOV and Premium Offerings: Meituan has demonstrated in China that it can use data to segment its market, offering both budget and premium options tailored to different customer needs. In Saudi Arabia, the company can introduce premium services over time to drive up profitability, once it has secured a strong user base with low-AOV options.
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The Next Step: Where Else Could Meituan Expand? |
If Keeta finds success in Saudi Arabia, it could set a precedent for further Middle Eastern expansion, particularly in the United Arab Emirates (UAE), a prime candidate due to its similar economic and demographic structure. Dubai, with its dense, affluent population and established food delivery culture, could be an ideal next stop. |
Other countries in the Middle East, such as Qatar and Kuwait, also offer promising markets for food delivery, though they are smaller in scale. Additionally, as Meituan builds its reputation in Saudi Arabia, it may look to leverage that experience in North African or Southeast Asian countries with large urban populations and similar consumer behaviors. |
Challenges Ahead: Maintaining Growth While Managing Costs |
Despite its potential, Meituan will need to navigate several challenges to ensure long-term success. As it enters new territories, balancing customer acquisition costs with revenue growth will be critical. A reliance on heavy discounting may work initially but isn't sustainable in the long run. Meituan will also need to constantly innovate, as its rivals can adjust their strategies in response to Keeta's low-AOV offerings. |
A larger question is whether Meituan can maintain its customer base while increasing AOV over time. Some platforms that began with a low-cost approach, like Alibaba's Taobao, faced challenges when introducing premium services without alienating their budget-conscious users. Meituan could face similar issues, as increasing prices could drive away initial users drawn to the platform for affordability. |
The Road Ahead: Can Keeta Build a Global Presence? |
Keeta's potential for disrupting food delivery markets in Saudi Arabia and beyond is exciting but challenging. If Meituan can prove its operational model in Saudi Arabia, it could herald the beginning of a global footprint for the Chinese tech giant in food delivery. The real test lies in how effectively it adapts to local markets while keeping costs in check and managing cultural and logistical differences. |
For now, the industry will be watching Meituan's overseas expansion strategy closely. Its success or failure in Saudi Arabia could serve as a model—or a cautionary tale—for other Chinese tech firms considering international expansion. If Keeta can make its mark in the Middle East, it may pave the way for Meituan to become a true global powerhouse in food delivery. |
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That's all for this week. If you enjoyed this edition, we'd really appreciate if you shared it with a friend, family member or colleague. |
We'll be back in your inbox 2 PM IST next Wednesday. Till then, have a productive week! |
Peeyush and Mohit |
Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual. |
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