AMDP Proposal: Postmates

To: Clark Hansen, CEO, ADMP

From: Andrew Lin, Research and Development

Date: October 24, 2015

Subject: Investing in Postmates

You gave me the job to research a company we can invest in and I’ve found it: Postmates. Postmates is an investment opportunity that Anima Mundi Development Partners cannot afford to miss. All of AMDP’s criteria are not just met, but exceeded. Postmates strives to be socially responsible, environmentally friendly, and profitable.

The country is shifting from the traditional method of eating out, to eating in by having favorite foods delivered right to doorsteps. Postmates exactly fulfills this job. But before I convince you to invest, first let me reiterate our company’s standards.

AMDP Standards

Triple Bottom Line

1. People- Beneficial and positive treatment of the company’s suppliers, employees, workers, investors, and community.

2. Profit- Sustainable growth that allows the company to continually generate income

3. Planet- Maximum reduction of the company’s impact on the environment through all types of pollution and waste.

Corporate Social Responsibility:

Since the 1960’s, CSR has become increasingly popular. A company must have a sense of responsibility towards the environment and community in which it operates. This responsibility can be met in several ways­­– reducing pollution on the environment, protecting the interest of investors and customers, and hosting or participating in philanthropic events.

Social Enterprise:

A social enterprise is a company whose main interest is to maximize improvements to humans and the environment, even if it means reducing profits. The two types of a social enterprise are for-profit and non-profit.

Carbon Footprint:

Carbon footprint is the company’s carbon impact on the environment. Carbon dioxide is the major component of greenhouse gasses, but there are many other compounds that are released into the environment that can harm the planet as well. To measure a company's carbon footprint, the green house gas emissions are estimated. The world's temperature has been increasing and green house gasses have been named as the culprit. The government and companies alike are striving to reduce their carbon footprint to minimize the negative impacts on the environment.

What is Postmates?

Founded recently in 2011, Postmates' headquarters is located in San Francisco. Though it didn’t invent food delivery, Postmates revolutionized it to make all kinds of foods accessible to everyone. It provides fast and efficient food delivery where individuals, similar to those who work for Uber and Lyft, provide the transportation (Postmates). The endless amount of food couriers available allows Postmates to deliver foods from anywhere in under an hour. Since its founding, Postmates has not generated large amounts of profit, but has received enormous amounts of funding. This funding has allowed Postmates to launch itself by providing free or discounted deliveries

Are people cared for?

Just like Uber and Lyft, Postmates allows flexibility that restaurants with built-in delivery do not offer. Many couriers choose to work for Postmates as a side job not because of money issues, but because it’s enjoyable. They get to meet individuals of all different backgrounds while exploring the city.

Customers benefit from Postmates as well with speedy deliveries from friendly faces. Postmates ensures its couriers are overqualified by requiring its couriers to pass strict background checks. The courier's mode of transportation is inspected to minimize any transportation issues down the road. Postmates also personally interviews potential couriers before hiring to ensure that they have an easygoing personality. If someone doesn't meet these standards, they are no longer eligible to become a courier.

What about the environment?

Postmates lies in the transportation industry where reducing carbon emissions is extremely difficult, but extremely necessary. To accomplish this task, fossil fuel cuts are implemented almost everywhere.

Many couriers choose riding bicycles over driving cars to not only save gas, but to also exercise (Postmates). They kill not two, but three birds with one stone by exercising while working, while reducing carbon emissions.

Postmates also indirectly contributes to the green movement by offering discounts when ordering from organic and sustainable restaurants. These discounts make green restaurants much more enticing to customers.

Do they even make money?

Postmates has declined to provide its financial data, but it did release its delivery numbers. Since 2012, the amount of deliveries has grown exponentially, which translates to exponential growth in profits as well. To reach 500,000 deliveries, it started off at a grueling 116 weeks, but has now sped up to a mere 10 weeks (Wilhem). Despite the profit cap at just $13 million, Postmates recently raised $80 million to push for $1 deliveries to expand its name and drive out competitors.  Tiger Global Management’s Chief Executive Bastian Lehmann, who helped Postmates raise $80 million, stated that Postmates is not yet profitable, but is geared for insane growth. Postmates plans to expand into markets other than food such as healthcare and beauty products. It has already partnered up with Apple to deliver MacBooks within hours of the purchase. Lehmann said it best when he stated that "Food is for [Postmates] what books were for Amazon (Macmillan)." 

Do other people care?

According to Nancee Halpin and Cooper Smith of BusinessInsider, Postmates is crushing the competition in the on-demand food fight. Unlike Uber, which forces customers to order food and delivery at the same time, Postmates is an intermediary service that strictly delivers food, allowing its customers to order from the full menu of its merchants. (Smith). This strategy has allowed Postmates to secure exclusive partnerships with merchants such as Starbucks. Starbucks' customers have already been utilizing its Mobile Order & Pay service, making fast deliveries a natural extension (Starbucks). 

Similarly, Kia Kokalitcheva from Fortune praised Postmates because of its ability to expand. There are defined peak hours for food delivery, which limits the amount of profit generated by the company and its couriers (Kokalitcheva). To mitigate this, Postmates has begun to expand to other markets. Though it’s still in its developing stages, Postmates has already partnered up with Apple to deliver Macbooks within hours from ordering from the store. If all goes well, Postmates will be able to deliver numerous products from endless vendors, eliminating the peak hours that comes with food delivery, and improve its profits by at least 20% (Macmillan).

My opinions and why you should care

If you’ve read my first sentence, you already know my thoughts. Postmates is a young company that is geared for tremendous success. Although it faces tough competition from other companies such as Uber, it has proven its ability to surpass competitors. Being able to reduce its time to make 500,000 deliveries by 1000% in less than 3 years is just the beginning. Soon Postmates will deliver all sorts of items such as computers, clothes, and beauty products, further increasing its profits. Postmates exceeds all of AMDP’s standards and would be well worth the investment. With AMDP’s help, Postmates can expand into other markets and increase its number of couriers further and faster than before, bringing its friendly service to more customers and couriers.

References

1. Kokalitcheva, Kia. "Why On-demand Delivery Startup Postmates Really Raised $80 Million." Fortune Why Ondemand Delivery Startup Postmates Really Raised 80 Million Comments. Fortune, 25 June 2015. Web. 25 Oct. 2015.

2. Macmillan, Douglas, and Greg Bensinger. "Postmates Raises $80 Million in Push Toward $1 Deliveries." Digits RSS. Dow Jones & Company, Inc., 25 June 2015. Web. 25 Oct. 2015.

3. "Postmates - On-Demand, 24/7." Postmates. Postmates Inc. Web. 25 Oct. 2015.

4. Smith, Nancee. "Why Postmates Is Winning the On-demand Food Fight." Business Insider. Business Insider, Inc, 26 Aug. 2015. Web. 24 Oct. 2015.
5. Starbucks Delivery by Postmates Begins Service in Seattle. (2015, December 2). Retrieved December 3, 2015, from https://news.starbucks.com/news/starbucks-postmates-in-seattle

6. Wilhem, Alex. "Analyzing Postmates’ Growth." TechCrunch. Tech Crunch, 4 Mar. 2015. Web. 25 Oct. 2015. 

The Genius of Money: Money and the Modern Mind

This chapter reveals two stories. The first story is an artist who pays for his meals using currency that he draws. He draws life-like images of money and pays with it, sometimes expecting actual change. The artist's point was to see how much value was put on simple paper money versus the amount of time he put into drawing replicas. He was able to challenge society's emphasis on monetary values set forth by the government.
In the second story, a rich man gives a poor man some food in exchange that the peasant watch over he grave for 3 days and nights. When the man died, the peasant protected his grave. Along came an ex-soldier who joined with him, in hopes to get paid. At the end of the third night, the devil came by to take the rich man's soul. However the peasant and soldier tricked the devil into giving them gold until the sun rose and the devil left. In the end, the rich man's body was safe, the peasant received food, and the soldier donated the gold. The moral of the story that the author tried to convey was that in each and everyone of us, we contain traits of each character. We have the greed of the devil, the kindness of the peasant, and the morality of the soldier. Though we try to escape the temptations of money, we are always drawn back into its paper web.

The Genius of Money: Money and the Dance of Death

In this chapter, Hans Holbein paints a picture of a man sitting at his desk in a jail-like cell. The walls are solid and the windows are closed and protected with metal bars. Hans wanted to illustrate that no man could get in or out, leaving the money alone. However, there is another 'man' sitting on the other side of the desk. Except this 'man' is more of a creature. It is supposed to be death, but Hans wanted to anthropomorphize death. The human man is blind with greed and scolds at death to leave his money alone, not realizing that death could care less about his money. The man is basically about to die, with nothing more than gold coins to keep him company. The dwindling candlelight and empty hourglass signify that he is out of time. To me, Hans's painting represents most of society-- how we are so obsessed with money that it has taken control of our lives. However in the end, we all die and what really counts is the human connections we have formed, not the value of metallic rocks.

The Buzz with Honey Bees

To much surprise (or at least to me), the terrifying stinging honey bee is a critical piece in the global economy. They help pollinate 70% of our crops from fruits, to vegetables, to the food for cows, chickens, and pigs. Without them, our major pollinators would disappear, potentially creating famines. Currently, bees are in decline due to disease and mites that are slowly destroying beehives. Bee farmers are struggling to maintain the health of their hives. We need to slowly bring back our bee populations if we want to maintain our population numbers. Thankfully there are some symbiotic relationships between us and bees that are making bees more approachable.

In China, there's been a recent increase in popularity with a special kind of mochi desert. Unlike traditional mochi that is prepared entirely in the kitchen, this mochi requires the help of bees. After the mochi is prepared, it is left out in the open for honey bees to "eat". As the bees eat at the mochi, they leave behind distinct honey that enhances the flavor of the mochi, making it a popular exotic desert.

Traditional honey hives have been improved as well. Though they were symbiotic before, extracting honey from bee hives was an extremely painstaking task that was uncomfortable for the bees. In order to obtain the honey, the bees had to be removed from the hive to isolate the honey combs. Now, an Australian honey beekeeper has developed a revolutionary hive that is able to extract honey from a beehive like a sink. There is no more need to remove the bees from the hive to obtain honey.

Though honey bees are exactly pet material, there are more ways where honey bees can be more easily included in our society. 

Omnivore's Dilemma No. 3

For this time's blog post, I read the chapter titled The Consumer, A Republic of Fat. What's it about? You guessed it, people and fat.

He starts off by bringing us back to the 1900's when corn first started to become mass produced to a point of surplus. Farmers had managed to produce more corn than people could eat. To try to maximize profits and minimize waste, the excess corn was turned into corn whiskey. This surge of corn whiskey dropped prices, making whiskey extremely cheap and affordable. Everyone started to buy pints of whiskey to drink at every meal. Just as we drink soda, people back then drank whiskey. And rightfully so due to the affordability and abundance. Though the two drinks are entirely different, they're major ingredient is still the same: corn.

Coke was the first company that turned to corn as a substitute for sugar. A surplus of corn made high fructose corn syrup cheaper than real cane sugar. Very soon other soda companies adopted high fructose corn syrup as the sugar substitute. And as we all know, high fructose corn syrup is extremely high in calories, making it much easier to expand our waists.

Michael also addresses something similar to what we've discussed in class: a plant's ability to adapt to human needs. Corn has nailed it when it comes to being desired by humans. Just like how apples have appealed to our sweet tooth, corn too has evolved to become a very useful sugar substitute. Everyone already knows about the famous Johnny Appleseed, but perhaps there should be another figure who spreads the joy of corn across the nation. After all, corn is all around us.

Budgets and Cars, Cars and Budgets

Criteria to Focus on When Purchasing a Car

Imagine the look on friends’ faces when you pull up in your brand new Ferrari. Jaws drop as you rev your 500 horsepower turbo-charged engine. Their overwhelming silence says it all as you step out of your car. But too bad that Ferrari doesn’t actually exist because, well, you’re on a budget; a budget of $23,000 to be more specific. Why? Because $23,000 is a proper amount to purchase a car that can suit most needs. Fortunately, I’ve created this simple guide that covers safety, size, number of doors, engine type, and brand to help you decide which car is best for you. While the task of buying a car may be daunting, I'll make it feel like you have just purchased your very own exotic Italian car. 

1) Safety First

The most important element of a car is its safety rating. There’s no reason to drive a machine that can’t handle the average crash. The Insurance Institute for Highway Safety (IIHS) rates every car as either superior, good, acceptable, or poor based on the vehicle’s crashworthiness and crash avoidance and mitigation. Crashworthiness translates to how well the passengers are protected in a collision and crash avoidance and mitigation translates to the technology that can prevent a crash or lessen the severity (Top Safety Picks).

There are many technical details to determine a car’s rating, but long story short, you want a car that is an IIHS Top Safety Pick. Several examples include the Honda Accord, Hyundai Sonata, Mazda 6 and more.

2) Size Matters

There are three sizes to consider under $23,000: sub-compact (Honda Fit), compact (Toyota Corolla), and midsize (Ford Fusion). Size is probably the factor that will cause you the most frustration due to an infinite number of factors. To make this easier, I’ve condensed size into two major categories: comfort and cargo space.

Comfort means how comfortable your passengers will be. As the driver, you should always be comfortable no matter what, and this won't change based on the car. What will change is how much leg and headroom your passengers will have. Generally, a midsize car can seat 5 adult males comfortably, a compact can seat 4 adult males comfortably, and a sub-compact can seat 4 adult males semi-comfortably.

This sub-compact sedan has little legroom for this passenger

The other major factor is cargo space. How much room you need will affect the size of the car. As a college student, it’s safe to assume that you will need to carry your dorm room around with you several times, leaning you towards a car with more cargo space.

Comfort and cargo space tend to be directly proportional. More comfort equates to more cargo space, which equates to a larger car, but unfortunately also a higher price. 

3) Number of Doors

A car's number of doors goes hand-in-hand with size. Most car manufactures offer the options of 2-doors (coupe), 4-doors (sedan), or 5-doors (hatchback). Which one you pick is entirely up to you.

The coupe looks sporty. Having only two doors gives it a sleek, expensive look for a cheap price. However don’t be fooled—it may look like a sports car, but it doesn’t perform like one. The other downside is convenience. Not only are the back seats slightly smaller, but also getting in and out from the back is a hassle because you constantly have to move the front seats.

Depending on your tastes, the hatchback can vary from ugly to sporty. Regardless of the look, the hatchback offers the most cargo space. The trunk becomes a door, combining the trunk space with the back seats. This allows you to stack your things higher than a normal trunk.

The sedan is the typical car you see that is the middle ground of the coupe and hatchback. In other words, you can’t go wrong with the sedan.

4) To Hybrid or not to Hybrid

That is the age-young question: whether 'tis worth it to buy a conventional or a hybrid car. A hybrid seems better on paper with its attractive 40+ mpg, however this doesn’t come without a hefty price. Hybrids are generally more expensive than their conventional engine counterparts, but do end up saving you money. Assuming you drive the average 10,000 miles per year with gas costing $4/gallon, it would require at least six years to cover the $3000 premium price tag (Govind). In the long run, a hybrid would indeed prove to be more economically sound than a conventional car (provided that gas doesn’t become cheaper than water), but that doesn’t mean there won’t be sacrifices.

These sacrifices come in the size of your car and additional packages. As I mentioned before, larger cars cost more. You could purchase a tiny sub-compact Toyota Prius C starting at $19,500, or you could purchase a larger compact Nissan Sentra for the same price. To compare similar sized cars, you can buy a Honda Fit with extra features such as leather seats for the same price as the stock Toyota Prius C.

What I’m saying is that hybrid fuel economy, while great, comes at the cost of size or luxury.

5) Brand Last

Because a car’s job is to get us from point A to point B, you want the car to be able to run as long as possible. Honda has the highest rated engines with only 1 out of 344 engines failing (20 Best Car Brands). The runner up is Toyota with 1 out of 119 engines failing. However this statistic isn’t the deciding factor as to which cars last the longest.

Warranty also plays a major role in car longevity. Each car brand offers different warranties that can make your average engine last longer than Honda’s impressive engines. There are different kinds of warranties such as basic and powertrain. Pay more attention to powertrain because it covers the parts that move your car. Hyundai currently has the best warranty with 10-year/100,000 miles powertrain. The runner up would be Kia, the subsidiary of Hyundai, with the same warranty (Hunting). Even though Hyundai’s engines aren’t on par with Honda’s, the warranty will save you repair money throughout the lifespan of your vehicle.

***

Of course there are many different cars to choose from based on your personal preferences, but my ideal car on a budget would have to be Hyundai’s Elantra sedan. It’s a combination of good fuel economy, IIHS top safety pick, excellent passenger room (as a compact car), good cargo space, and the nation’s best warranty all while saving $3,000 than if I had bought a hybrid. By no means does this car drive like a Ferrari, but I’d like to think that it’s the best car I can get with a budget that fits my needs.

Congratulations! Now that you’ve reached the end, you’re ready to purchase your very own car. I know it’s hard to pick the perfect car, but the most important advice I can leave you with is this: test drive. Learning everything you can about a car means zilch if you don’t like the feel of the car. Drive as many cars as you want, as many times as you want—don’t worry about annoying the salesperson. He will try to shame you for wasting his time test driving, but remember you're the customer, and the customer is always right. So get up...

Work Cited

1. Govind, A. (2013, February 20). Synapse. Retrieved September 26, 2015, from http://synapse.ucsf.edu/articles/2013/02/20/buying-car-tight-budget.

2. Hunting, B. (n.d.). 9 Best New Car Warranty Programs. Retrieved September 27, 2015, from http://www.autobytel.com/car-buying-guides/features/9-best-new-car-warranty-programs-120917/.

3. The 20 Best Car Brads Listed. (n.d.). Retrieved September 26, 2015, from http://www.telegraph.co.uk/motoring/picturegalleries/10018481/The-20-best-car-brands-listed.html.

4. Top Safety Picks by year. (n.d.). Retrieved September 26, 2015, from http://www.iihs.org/iihs/ratings/TSP-List. 

Expert Article

Buying Your Car on a Budget

Imagine the look on the valet’s face when you throw him the keys to your brand new Ferrari. His silence says it all as you walk away. But too bad that Ferrari doesn’t exist because you’re on a budget. Fortunately for you, I can help guide you through the daunting task of buying a car to make it feel like you’ve just purchased an exotic Italian car.

1) Lease or Purchase

There are many factors that influence your decision of whether you will lease or purchase your first car, but because this is for those entering college on a budget, the best option is to purchase the car. This way you own something. There’s some math involved that deals with opportunity cost, but let’s disregard that as a college student.

Now that purchasing a car is your decision, you may be wondering if you should buy a brand new car or a recently used car. But I’ll come back to this point at the end as it isn’t make or break. 

2) Safety

The first and most important element of a car is its safety rating. There’s no reason to drive a machine that can’t protect you through the average crash. The IIHS, or Insurance Institute for Highway Safety, rates every car on a scale of superior, good, acceptable, and marginal or poor based on the vehicle’s crashworthiness and crash avoidance and mitigation. Crashworthiness translates to how well the passengers are protected and crash avoidance and mitigation translates to the technology that can prevent a crash or lessen its severity. There are numerous technical details to determine a car’s rating, but long story short, you want a car that is an IIHS Top Safety Pick. 

3) Size

When looking at the size, there are three sizes to consider under $25,000: sub-compact (Honda Fit), compact (Toyota Corolla), and midsize (Ford Fusion). Size is probably the factor that will cause you the most frustration due to an infinite number of factors. To make this easier, I’ve condensed size into two major factors: comfort and cargo space. Comfort means how comfortable your passengers will be. As the driver, you should be comfortable no matter what, and this won't change based on the car. What will change is how much leg and head room your passengers will have. The other major factor is cargo space. Every car has different trunk sizes, and depending on how much room you need will affect the size of the car. Comfort and cargo space tend to be directly proportional. More comfort equates to more cargo space which equates to a larger car and also a higher price. 

4) To Hybrid or not to Hybrid

Probably the least important of your worries when buying a car on a budget.The age young question of whether a hybrid or conventional car is worth it. A hybrid seems better on paper with it’s attractive 40+ mpg, however this doesn’t come without a hefty price. Hybrids are generally more expensive than their conventional engine counterparts. The savings in fuel are not worth the premium price tag. Unless fuel prices shoot up to. Looking strictly at cost, buying a conventional engine is the way to go.   $700, $1,206 AT $3.50/gal, you would be saving ~$500 annually assuming 10,000 miles per year. This would require at least 6 years to cover the $3000 premium price tag. In the long run, a hybrid would indeed prove to be more economically sound than a conventional car provided that gas doesn’t become cheaper than water.

5) Brand

Similar to Size, there are many factors to consider when looking at the brand of a car. Because a car’s job is to get us from point A to point B in a reasonable amount of time, the car needs to be able to run as long as possible. Honda has the highest rated engines with only 1 out of 344 engines failing. The next closest company would be Toyota at 1 out of 119 engines falling. However these statistics aren’t the deciding factor as to which car will last the longest. Warranty also plays a huge role. Each car brand offers different warranty’s that can make your average engine last longer than Honda’s impressive engines. There are different kinds of warrantys such as powertrain and blah blah. Powertrain is the most important because it covers the parts that causes your car to move. Hyundai currently has the best warranty with 10 year/100,000 mile powertrain. The runner up would be, Kia, the subsidiary of Hyundai.