The Weekly: Edition #8 - August 30, 2019
Here at Permanent Equity, we're in the business of helping small to mid-sized business owners run, grow, and transition ownership of their business more effectively. With that goal in mind, we are proud to announce The Weekly, a weekly newsletter for operators in the trenches.
FOOD FOR THOUGHT
Heineken's Charlene de Carvalho: a self-made heiress (Fortune)
+ This is the story of how the Heineken family fortune was passed from father to daughter rather abruptly, and how Charlene de Carvalho, despite her lack of formal business training, grew the business to the #3 beer company in the world behind AB Inbev and SABMiller. Here are a few lessons to note for family businesses transitioning ownership to the next generation:
1. Choose one child to take over
This ensures continuity and centralizes control while maintaining other children's stake and roles in the company.
2. Test the children
As Byron Trott states, it's foolish to force the next generation into the business if there isn't a passion for it. But when they demonstrate interest, give them responsibility and begin to prepare them.
3. Pick strong advisers
“Surround yourself with the best possible people who are not yes men and sycophants. You want people who express doubt.” A healthy amount of disagreement, level-headed discussion, and debate is necessary when family businesses change hands. Strong, loyal outsiders can help in the advisory process.
4. Maintain control
Do whatever it takes to maintain control, because this is your competitive advantage that protects long-term thinking against the whims of short-term financial interests.
NOTE: It is worth contrasting the Heineken transition with that of Knight Oil Tools, which we covered in issue 1.
OPERATIONS
The exclusive inside story of the fall of Overstock's mad king, Patrick Byrne (Forbes)
+ Lack of focus and execution led to the fall of Jack Byrne's son (former CEO of Geico), Patrick Byrne, and his Overstock empire.
Inside Shake Shack's secret innovation kitchen (The Hustle)
+ "As it continues to grow, Shake Shack has chosen to adhere to an axiom many start-ups can relate to: “The bigger you get, the smaller you have to act.”"
MONEY
How Starbucks borrows from its customers at 0% (Moneyness)
+ Warren Buffett recognized early on how loyalty programs could be classified similarly to insurance 'float' where companies store customers' money as liabilities on their balance sheet, all while collecting income off of the funds. Starbucks, with their pre-loaded cards, is generating over $1 billion in loyalty program float.
How insurance companies are fueling a rise in ransomware attacks (ProPublica)
+ "Overlooked in the ransomware spree is the role of an industry that is both fueling and benefiting from it: insurance. In recent years, cyber insurance sold by domestic and foreign companies has grown into an estimated $7 billion to $8 billion-a-year market in the U.S. alone..."
HUMAN RESOURCES
The psychological demand of entrepreneurship (Inc.)
+ If you're an entrepreneur, you've most likely experienced the anxiety discussed here.
The queen of pain (The Profile)
+ "Her morning routine involves waking up at 4 a.m, running for three hours, and then going into the office. Boone believes that conquering fear and mastering the art of suffering is where freedom lies." We can all take a page out of Amelia Boone's playbook to build mental toughness for the tough times that are inevitable in life.
WEIRD
How chicken wire is made (Makezine)
+ Ever wondered how chicken wire is made? You're in luck.
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