Kelie Morgan 11/29/19 Kelie Morgan 11/29/19

The Weekly: Edition #21 - November 29, 2019

Suzy Batiz's empire of odor (The New Yorker)
+ "Batiz, whose net worth is estimated at more than two hundred and forty million dollars, grew up poor. She describes her family as “Irish potato-famine people” on her father’s side and “cotton pickers from Arkansas” on her mother’s." Despite Batiz's spotty record before starting her successful Poo-Pourri line, she persevered through personal and business failure and shares her lessons in this in-depth profile. Here are a few of our takeaways:

1. Overnight business success is always 20 years in the making. The best entrepreneurs and operators understand in hindsight that the road to building a successful business is never smooth, never linear, and never instantaneous. It often involves personal failure, a willingness to experiment and hit dead ends, and multiple highs and lows. The Suzy Batiz's of the world know that each bump in the road is a lesson to be learned and applied going forward.

2. Awareness is key. Listen for thorny problems in the form of questions - these are often the kernels of successful businesses. Batiz first had the idea for her Poo-Pourri line while at a dinner party when someone asked a question regarding, well, bodily functions - you never know where you may find your next opportunity.

3. Often, the best businesses are those that no one else will touch. Go where others won't - the businesses that involve 'dirty' jobs, tough work, or unsavory sights. Poo-Pourri, for example, is all about masking your bodily scents. Most likely, you'll find yourself in an area of business with little competition and ample room for exploration and innovation.

Startups and uncertainty (Jerry Neumann)
+ Jerry Neumann masterfully illustrates the key difference between 'risk' and 'uncertainty' - namely, that risk in business is mathematically quantifiable, while the uncertainty in startups is more foggy, more indiscernible, more hazy in nature.

CostCo's business model (Investing City)
+ Ryan Reeves digs into the business model of CostCo and explains how it is a membership business, not a retailer.

The life and death of the local hardware store (New York Times)
+ The ideology of convenience is reshaping retail and business as we know it.

Inside the fall of WeWork (Vanity Fair)
+ This profile of WeWork's former CEO, Adam Neumann, displays the full extent of his charisma which led to the rise and fall of the chaotic organization.

China's private equity champion on winning with the Chinese consumer (Fortune)
+ "Most headlines today depict a China under siege, its long economic boom ominously waning as it duels with the U.S. in a volatile trade war. But Weijian Shan is talking about the other China, the thriving market of 1.4 billion customers that, he claims, stands shielded from tariff disputes—and is one of the world’s best places to invest."

Pinterest launched a new account dedicated to small businesses (Retail Brew)
+ "Pinterest has launched a new profile, Pinterest Shop, dedicated to small retailers. The company is crowing about Pinterest Shop like it’s the birthplace of e-commerce, but Pinterest Shop is just a digital offshoot of multi-brand concept shops growing in popularity today."

Performance reviews kill your culture (Farnam Street)
+ "Internal motivation is easier to sustain. We produce and push ourselves because we get this immense satisfaction from what we are doing, which motivates us to keep doing it. It doesn’t work the same way when your motivation comes in the form of external comparisons."

Mapping out Apple's global supply chain (The Prepared)
+ This is a side project of The Prepared newsletter that uses a published supplier list to illustrate the vast reaches of Apple's supply chain around the globe.

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Kelie Morgan 11/22/19 Kelie Morgan 11/22/19

The Weekly: Edition #20 - November 22, 2019

Apple's strategy: integration and monopoly & what Clayton Christensen got wrong (Stratechery article 1 and article 2)
+ Ben Thompson's lucid thinking on Apple's products and business strategy is instructive for all businesses and entrepreneurs. A few lessons stood out to us worth sharing:

1. Consumers value the quality of the user experience and design of the product or service to a higher degree than the mere utility: "The attribute most valued by consumers, assuming a product is at least in the general vicinity of a need, is ease-of-use. It’s not the only one – again, doing a job-that-needs-done is most important – but all things being equal, consumers prefer a superior user experience."

2. Businesses, on the other hand, value modularized components of products and services and are much more rational customers: "The problem with rational choice theory can be stated in two ways. The first is to say that consumers are not rational. They have widely varying motivations, are susceptible to advertising, lack product knowledge, fall prey to the need for instant gratification, etc. ... Interestingly, though, business buyers are usually extremely rational. A CIO, for example, must justify a software purchase, and said justification usually comes down to balancing lists of features versus prices. Whatever solution scores best, wins."

3. Last and most importantly, integration, while costly from a financial perspective, allows for a controlled, high-quality end-product design. Controlling user experience in consumer retail can be the difference between a first time user becoming a life-long customer or just another person trying your product/service out for size.

The everything town in the middle of nowhere (The Verge)
+ As a bizarre consequence of retail arbitrage and rapid ecommerce growth, Roundup, Montana has become a one-stop-light town that ships thousands of Amazon packages daily.

The long-forgotten flight that sent Boeing off course (The Atlantic)
+ An overview of how Boeing lost its engineering-first culture: '"We weren’t fighting against Boeing,” one union leader told me of the 40-day strike that shut down production in 2000. “We were fighting to save Boeing.”'

The great American tax haven: why the super-rich love South Dakota (The Guardian)
+ "A decade ago, South Dakotan trust companies held $57.3bn in assets. By the end of 2020, that total will have risen to $355.2bn. Those hundreds of billions of dollars are being regulated by a state with a population smaller than Norfolk, a part-time legislature heavily lobbied by trust lawyers, and an administration committed to welcoming as much of the world’s money as it can."

Online streaming: television's looming car crash (Financial Times)
+ "There were 496 scripted TV shows made in the US last year, more than double the 216 series released in 2010. In the past eight years the number of shows grew by 129 per cent, while the US population rose only 6 per cent."

Self storage: how warehouses for personal junk became a $38 billion industry (Curbed)
+ "Though the adage “sex sells” is hard to dispute, the decidedly unsexy self-storage industry made $32.7 billion in 2016, according to Bloomberg, nearly three times Hollywood’s box office gross. Self-storage has seen 7.7 percent annual growth since 2012, according to analysts at IBISWorld, and now employs 144,000 nationwide."

How brands like Chick-fil-A, Levi's, and Wrangler became synonyms for political parties (Morning Brew)
+ Regardless of your political views, this is a good lesson that businesses can be affected from both sides of the aisle based on association with organizations outside of their main business lines.

The unexpected benefits of pursuing a passion outside of work (Harvard Business Review)
+ Since not all jobs allow for employees to pursue their true passion at work, this piece points to a broader lesson for managers: encourage employees to pursue their passion outside of work.

Knocking down walls at Goldman Sachs: can CEO David Solomon get the storied bank to grow again? (Fortune)
+ As Jim Collins wrote in Built to Last, to ensure a lasting organization, leadership must 'preserve the core and stimulate progress.' This is a great profile of how David Solomon is shaking up the culture in one of the oldest organizations in America.

Earthquake conspiracy theorists are wreaking havoc during emergencies (Vice)
+ "Independent "researchers" are sharing unfounded theories across social media, which have the potential to spread panic and confusion—and have even fooled legitimate government agencies."

Kelie Morgan 11/15/19 Kelie Morgan 11/15/19

The Weekly: Edition #19 - November 15, 2019

Don't serve burnt pizza - and other lessons in building minimum lovable products (First Round)
+ Whether you run a startup or a fully operational organization, this piece illustrates key principles for what is required to truly serve your customers with a 'lovable' product or service. A few key lessons to note:

1. View your product or service from the standpoint of your customer: does it solve a big enough "why" for the customer? “Companies will naturally start with a why for the business, just because of how they operate. But as a product leader, if you don’t pair it with a ‘why’ for the user, you won’t be able to set up an effective problem statement for your team.”

2. Study your customers' problems, rather than starting with a solution. "Never start with solutions. Just because you prefer the hammer or the screwdriver doesn't mean it's the tool you need to fix what's broken."

3. 'Lovable' services or products strike at the core of what customers need and find indispensable, not just merely useful. "Your user’s face should light up when they try out your prototype. If the user isn’t lovestruck, you probably aren’t solving a high-value problem — and people won’t be willing to pay for your solution."

4. Focus first on the aspects of your product or service that customers actually love. "If you try to solve every problem with your product, you’ll do it all poorly. I call this the Peanut Butter Principle: spread too thin, it’s no longer tasty."

5. Embrace your customers' reactions to your product or service. "Be observant about how a user interacts with your product. When a user behaves against your expectations, they might just be leading you toward what they find most lovable."

The zombie storefronts of America (The Atlantic)
+ "Those masterminding these abrupt appearances are all banking on the same short-term bet: People still want to shop in stores, even if what they want that store to be in six months is completely different."

33 things successful leaders have given up (The Startup)
+ "Leadership doesn’t exist to make you happy; it exists to make others happy and that’s the reward."

Startup stories: a mix of fact and fiction (The Information)
+ The founding story of your business doesn't have to be all bells and whistles - the reality of building a successful business is always messier than external perception.

Google is getting into banking (New York Times)
+ "Google wants to increase use of its wallet app, which competes with offerings from Apple and Samsung, Mr. Shevlin said. And it may want to deepen its ties to a sector that already uses its technology; some banks, like HSBC, store their data on Google Cloud. And if the company could develop front-end banking tools that interest customers, Google could potentially lace them with ads."

Tariffs are taking their toll on the furniture industry (Morning Brew)
+ "Some retailers have picked up their China-based supply chains and plopped them in Vietnam, where there are no tariffs and manufacturing space aplenty. As a result, imports from Vietnam have increased 51%. Vietnam’s now the third-largest furniture supplier to the U.S."

The new dot com bubble is here: it's called online advertising (The Correspondent)
+ A wonderful explanation behind selection bias, marketing spend and ROI, and whether online ads truly work. It is worth noting that while Ebay may be a household name not in need of online advertising, small to medium sized businesses typically benefit from an online ad presence.

Advice for fashion influencers - and marketers in general (Articles of Style)
+ While this is a broad polemic aimed at the class of 'social media influencers' advertising products for brands, it is also general advice that is applicable to anyone in the marketing and creative content industry for how to sell your services and your brand.

The end of advertising (a16z)
+ a16z partner Connie Chan explains how digital advertising is changing and how the trends will affect various sources of media.

Long work hours waste time and lead to lower productivity (Bloomberg)
+ As Parkinson's Law dictates, work will expand to fill the time allotted to complete it. New research being conducted by larger organizations is showing that hourly productivity actually increases when workers are given three day weekends.

Managing personal relationships with software (The Atlantic)
+ In our hyper-connected world, the ability to stay connected and in touch is ironically getting harder as we meet more people. Thus, the need for personal CRM's.

How cheap robots are transforming ocean floor exploration (Outside)
+ "Backed by billionaire philanthropists and Silicon Valley venture capitalists, a wave of entrepreneurs are developing high-tech, low-cost technologies to probe the watery realms we still barely understand."

Kelie Morgan 11/8/19 Kelie Morgan 11/8/19

The Weekly: Edition #18 - November 8, 2019

If you can manage a Waffle House, you can manage anything (Wall Street Journal $)
+ At the core of a Waffle House manager's spirit is the sheer grit and willingness to role up their sleeves and jump into the fray. We noted a few other points about Waffle House's management and operations worth sharing. The best managers:

1. ...Manage the company culture. Even with robust systems in place, it becomes exponentially harder to manage all employee behavior and customer service as a firm grows. But the culture behind what you sell or how you serve your customers must always be managed.

2. ...Improve operational systems and speed of delivery. Waffle House abides by the WYSIWYG (Wiz-ee-wig) principle - What You See Is What You Get. 'The House' has no hidden fees, products, or services: the bacon, eggs, and butter are all right in front of the customer where the speed of the operation truly shines. How can you increase transparency to your customers for a better overall experience?

3. ...Are integrated into daily operations. "...doing the grunt work is good for business. It helps managers earn the trust and respect of their teams while staying connected to the entire operation.“You learn a lot about what’s working and what’s not”..."

4. ...Lead by serving. "Every executive, including the CEO, visits the restaurants. They wear the same uniform as hourly employees. And if it’s busy, they bus tables and take orders." As Harry Truman once said, "It is amazing what you can accomplish if you do not care who gets the credit."

5. ...Develop long-term customer relationships. At the end of the day, a company is nothing but a connected web of relationships - from employees to suppliers to customers - and how you treat those people will dictate how strong your web becomes."Above all, a successful Waffle House manager needs to cultivate regulars. And doing that means relating to people from all walks of life."

When you combine all of the above lessons in a well-oiled machine, is it any wonder that Waffle House equity shares, based on their annual audited value, have increased every year for the last 57 years running? Good principles add up to good business.

Commerce: a force for good - Shopify's global economic impact report (Shopify)
+ For businesses that need a selling presence online, Shopify represents a one-stop-shop for all of your backend needs from fulfillment to order management to building a site.

Unraveling the secret origins of an AmazonBasic's battery (One Zero)
+ While Amazon is a massive company, this serves as a good lesson for small and medium sized businesses: know your suppliers and dig into their business practices, because your business's reputation may suffer based on practices that are out of your control. The only control a business owner can truly exercise is who she does business with in the first place.

The gross margin problem: lessons from tech-enabled startups (David Sacks)
+ "How did we get here? The truth is that software startups never had to worry about gross margins until software started eating the world. Gross margins only became a concern once software blended with physical-world products and services to create new tech-enabled business models."

Ecommerce landing page playbook (Unbounce)
+ This is a 37-page guide on what constitutes a 'great' landing page for an online business - and how to ensure it leads to higher sales conversions.

The short life of online sales leads (Harvard Business Review)
+ "Firms that tried to contact potential customers within an hour of receiving a query were nearly seven times as likely to qualify the lead (which we defined as having a meaningful conversation with a key decision maker) as those that tried to contact the customer even an hour later—and more than 60 times as likely as companies that waited 24 hours or longer."

Nothing this week…

The father of the modern frozen food industry (The Hustle)
+ A historic example of entrepreneurship improving the human condition: "Birdseye came to realize that the grainy texture of US frozen fish was a direct result of the way the meat was frozen: Slow freezing (the US standard) formed large crystals that eroded tissue cells, causing a grainy texture. By contrast, fish that was frozen instantly (as in Labrador) formed much smaller, less damaging crystals that maintained freshness."

The first map of America's food supply chain is mind boggling (Fast Company)
+ An interesting look at all of the export and import connections of the United States' food industry.

Kelie Morgan 11/1/19 Kelie Morgan 11/1/19

The Weekly: Edition #17 - November 1, 2019

Joel Spoelsky on Strategy: Letters I, II, III, IV, V, and VI
+ While these letters were written in the early 2000's, they provide an insightful look and an insider's opinion into the history of the computing industry in the early years. In addition, there are several timeless strategic principles within the letter series that are applicable to all businesses, regardless of industry.

1. Is your business a Ben and Jerry's or an Amazon? All businesses' strategy for growth will include a firm understanding of whether your industry will allow for slow, steady, profitable growth to succeed over the long run OR will require significant amounts of capital up front to reach a sustainable scale. Spoelsky's first letter articulates how to know whether your business will be a 'Ben and Jerry's' or an 'Amazon'.

2. Understand the microeconomics of your industry. In letter V Spoelsky details the strategic reasoning behind giving a product away to generate long-term service opportunities. While this may apply more to the software industry where the marginal cost to produce the next product is zero, there are certainly business model implications for physical product companies selling goods at cost to generate huge potential service revenue opportunities down the road.

3. Identify barriers to entry for new products and services in your industry, then solve them. Ensure your products and services are backwards-compatible with existing products and services in the industry to ensure ease-of-transition for new customers. Think of this as the solution to your competitors' switching costs - make it easy for your potential customers! "The only strategy in getting people to switch to your product is to eliminate barriers."

How Pizza Hut stopped innovating on its pizzas and fell behind Domino's (The Hustle)
+ Two weeks ago, we shared a Bloomberg piece detailing the strategy behind Domino's rise in the pizza market. The story wouldn't be complete without highlighting its competitor's missteps.

The leading indicator of remodeling activity (LIRA) is pointing to a slow down in 2020 (Joint Center for Housing Studies at Harvard)
+ “Continued weakness in existing home sales and new construction will lead to sluggish remodeling activity next year,” says Chris Herbert, Managing Director of the Joint Center for Housing Studies. “Slowdowns in other key indicators of improvement spending—project permitting, sales of building materials, and home prices—also suggest the remodeling market may be reaching a turning point.”

How much longer can the debt-burdened consumer prop up the American economy? (13D Research)
+ "If the American consumer is Atlas — holding up “the greatest economy ever” — his legs are weakening under the strain."

Negative interest rates are destructive but profitable (Integrating Investor)
+ An interesting view and exploration of what negative interest rates mean for society and workers in general as global interest rates fall.

Amazon is expanding free grocery delivery to 2,000+ cities for prime members (Amazon DayOne)
+ We've written extensively about Amazon and their operational strategies, and this expansion of their capabilities continues to illustrate the degree to which they will push the envelope to serve their customers. Small businesses will continue to have to adapt around Amazon's retail strategy to remain relevant in today's instantaneously connected world.

Nothing this week…

Why is a secretive billionaire buying up the Cayman Islands? (New York Times)
+ "Mr. Dart lives on Seven Mile Beach, in an old hotel — the entire hotel — once known as the West Indian Club. He acquired the property in 1994 after renouncing his United States citizenship, a tax dodge so audacious it inspired federal legislation. Though Cayman was initially a refuge for the financier, Mr. Dart, who is thought to be 64, has taken to his adopted home with zeal. With his fortune and his company, Dart Enterprises, he has increasingly come to define the islands’ future."

Kelie Morgan 10/25/19 Kelie Morgan 10/25/19

The Weekly: Edition #16 - October 25, 2019

The truth about open offices (Harvard Business Review)
+ The movement towards more collaborative environments in the WeWork era is an undeniable trend, but two organizational consultants took the trend to task to explore: does it actually produce more collaboration? Our takeaways:

1. Open office floor plans can actually deter face-to-face interactions. The consultants with Humanyze analyzed data collected on two Fortune 500 companies before and after switching to open floor plans and concluded that face-to-face interactions declined by 70% after switching over while electronic communication increased. Sometimes, there's no substitute for being able to close the door to get pressing work done - doors simply get replaced by headphones in open office plans.

2. Floor plan design must accommodate employee workflows. Different work streams require different setups. Some employees require a lot of collaboration and thus need access to a conference setup or collaboration area. Other employees are much more in need of solitude and singular in their work stream. A good mixture of collaboration space, conference space, and solitary work spaces is highly recommended with square footage depending on your company's work streams.

3. Proximity of teams matters. "Research that one of us (Ben) was involved in at the MIT Media Lab shows that the probability that any two people on a corporate campus will interact physically or digitally is directly proportional to the distance between their desks." While this may be obvious, at scale, proximity directly increases probability of interaction and collaboration.

The overall takeaway is that each organization's work flows look different and require varying degrees of interaction. The key is designing your physical spaces to fit those work streams perfectly rather than forcing employee interaction to look or operate a certain way.

Why did the Boeing 737 Max crash? (David Perrell)
+ David Perrell details the cultural and organizational problems resulting from a previous merger that ultimately led to the 737 Max fiasco. The desire for an expedient profit, while important, cannot be the only priority, especially in industries where human lives are at stake.

Trade spend: the fight for shelf space in consumer retail (Aditi Dash)
+ Aditi Dash put together a helpful breakdown of all the various types of trade spend for consumer brands attempting to gain shelf space in brick and mortar retail and the ideal candidate for each type of trade spend.

Nick Gray's notes on selling his company, Museum Hack (Nick Gray)
+ Nick Gray detailed the process of selling his small business to former partners and employees in a short but worthwhile read.

Spotify saved the music industry. Now what? (Fortune)
+ While some may argue this title, there is little doubt that the music industry and streaming services are 'frenemies': they simply can't live without each other - for now.

EY's latest report on Private Equity and its historic evolution (Ernst & Young)
+ In EY's report on PE fund flows, there are several trends worth noting: "PE firms now manage commitments of nearly US$3.4t, up from less than US$500b in 2000. Including other asset types in the private capital universe – infrastructure, real estate, private debt, natural resources, etc.– brings the total to more than US$6t."

Online influencers tell you what to buy, but retailers wonder who's listening (WSJ $)
+ The influencer marketplace for brand advertising is opaque at best, and brands are beginning to demand more results from their marketing spend in this area.

Help your sales reps grow using data-driven coaching (First Round Review)
+ Sales is an integral part of nearly every organization, and this First Round Review post gets into how to use sales data to coach your reps to success: "(Sales) Ride-alongs are a valuable coaching tool. But if it’s the only one in your arsenal, then things will crack as you start to scale."

The untold story of the 2018 Olympics cyberattack, the most deceptive hack in history (Wired)
+ "If they couldn't recover the servers by the next morning, the entire IT backend of the organizing committee—responsible for everything from meals to hotel reservations to event ticketing—would remain offline as the actual games got underway. And a kind of technological fiasco that had never before struck the Olympics would unfold in one of the world's most wired countries."

Kelie Morgan 10/18/19 Kelie Morgan 10/18/19

The Weekly: Edition #15 - October 18, 2019

The new consumer - a KKR report on changing consumer trends (KKR)
+ While the average consumer seems relatively stable, there are large differences in consumer balance sheets based on home-ownership and renter profiles. Here are a few key quotes on the state of the consumer:

1. Spending: "Spending on both housing as well as durable goods has shown recent improvement, and motor vehicle spending remains solid. Our work has shown that historically, a significant slowdown or decline in spending on durable goods or motor vehicles in particular has precipitated a downturn by a year or more."

2. Credit: "With regard to credit, we are beginning to see some early evidence of headwinds. The proportion of banks tightening lending standards on consumer credit cards has reached the highest level since prior to the financial crisis"

3. Balance sheet: "Finally, the strength of the consumer balance sheet in the aggregate indicates that as the cycle turns, the overall sector is in decent shape to weather a potential downturn. For one, the consumer financial obligations ratio – a measure of household debt-to-income remains at historical lows."

In addition to the state of the consumer, the rise of the rental economy post-financial crisis has several structural drivers that are worth noting in KKR's latest consumer trends report:

1. Student loans: "As of the end of 2018, 43 million Americans owed $1.4 trillion in student debt, an average of $33,500 per borrower. Of the 43 million, 17 million were under 30, and borrowers over 40 are responsible for 40 percent of all education debt."

2. Lack of savings: "For one, the absence of savings for many renters limits their ability to afford the down payment on a house or car."

3. Flexibility and convenience: "Third, the flexibility and convenience offered by sharing economy models remain attractive to consumers. Consumers enjoy the benefits of access without the responsibilities of direct ownership."

The structural factors above are leading to a growing rental and sharing economy among millennial and gen-z consumers. This is a trend that has already affected industries including retail, real estate, transportation, and will continue to affect many more:

The rental economy takes flight (US Chamber of Commerce)
+ "Rentals of consumer goods generated $60 billion in revenue in the United States last year, excluding vehicle and home rentals, according to retail analytics firm GlobalData. A survey by JLL for its 2019 “Future of Retail” report found that 57.3% of all consumers are willing to rent, rather than buy, if the products are “well-made and trendy.” For millennial and Generation Z consumers, the percentage was over 70%."

CostCo's $4.99 rotisserie chicken comes at a tall price (CNN)
+ The new Costco strategy of bringing chicken supply in-house is causing waves in the meat industry. Look for potentially more retailers to attempt to integrate important supply chains vertically: "The chickens have become almost a cult item. 91 million were sold last year, double the number from a decade earlier. They have their own Facebook page with nearly 13,000 followers."

Jeff Bezos' master plan: what he really wants and what it means for the rest of us (The Atlantic)
+ A deep dive on Amazon founder Jeff Bezos, his vision for the company, and what it means to live in its shadow. For another take on the business of Amazon, check out this profile by The New Yorker.

Domino's atoned for its crimes against pizza and built a $9B empire (Bloomberg)
+ In the age of technology-driven services, the base product still matters: "As much as tech, what buoyed Domino’s was a once-in-an-industry strategy: In 2009 it admitted that its foundational product was … bad. Most chains that encounter trouble cop to some failing: Starbucks Corp. once said it built too many stores. McDonald’s Corp. tried to sell healthier food. Chipotle Mexican Grill Inc. promised patrons they wouldn’t get sick. But Domino’s has outdone them all."

The millennial urban lifestyle is about to get more expensive (The Atlantic)
+ Profits are an old-fashioned lesson getting new attention in the private markets: "If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year."

How Emily Weiss’s Glossier grew from millennial catnip to billion-dollar juggernaut (Vanity Fair)
+ This is what it looks like to ride the current millennial instagram and internet marketing trends to billion-dollar status.

New Google local discovery tool: search by photos (Blumenthals)
+ This new Google feature showing images for business results could be a game-changer for small businesses showcasing their products online.

Some businesses bet that tackling burnout will boost bottom lines (The Hustle)
+ Employers are beginning to explore potential ways to deal with increased workplace-related mental health issues to cut healthcare-related costs: "Increased workloads, limited staff and resources, and crazy-long hours are common contributors to the problem. Meanwhile, living expenses are out of control for many younger workers, and that student loan debt ain’t goin’ nowhere. On top of that, there’s a deeply ingrained notion that work shouldn’t just bring in money; it should also provide a sense of identity. The feeling is so pervasive, some go so far as to call “workism” the new religion."

This Chilean startup could help people consume less plastic (The Hustle)
+ Algramo, a bulk dry goods company, is attempting to solve the overabundance of plastic trash by offering large discounts on consumable goods when customers refill their Algramo-branded reusable containers.

Kelie Morgan 10/11/19 Kelie Morgan 10/11/19

The Weekly: Edition #14 - October 11, 2019

Three big things: the most important forces shaping the world (Morgan Housel)
+ Morgan Housel's latest piece is a tour de force of the biggest trends that are shaping our world today. Here are our thoughts in a nutshell:

1. Demographics and the connection with small private business.
Every day, roughly 10,000 people retire in the US. Many of these represent small business owners who are ready to step back from day-to-day operations. This is one of the key points in our thesis on why partnering with retiring executives in family-run businesses can be a win-win for everyone. We are striving to be an integral part of this demographic wave for years to come.

2. Wealth inequality and political change to tax and business policies.
There is no doubt that growing inequality between the top 1% and the bottom 99% is spurring political angst on both the left and right. If the current trend continues unabated, there is a high risk of backlash against business owners and high earners. Current business tax rates in the US are as low as they've been since the early 1940's, but the political atmosphere is darkening on such business-friendly policies.

3. Information flows, industries, and the way we work.
Last, and potentially most important, the internet. It is changing the face of nearly every industry today, from retail to media to real estate. The internet is even changing the way younger generations work (remotely). Small businesses have never been easier to start with the technology available today. Indeed, the Permanent Equity team has connected with many of its closest contacts due to the vast reach of the internet. This trend will only accelerate in the years to come in new and profound ways.

How remote work is quietly changing our lives (Recode)
+ "After years of growth following the recession, America’s three biggest metro areas are now shrinking. Part of the reason is that Americans, particularly millennials, are “moving toward sun and some semblance of affordability,” Derek Thompson wrote in the Atlantic. Those areas include smaller, secondary cities, as well as rural areas."

It dominates everything it touches, but can it compete against Walmart? (Institutional Investor)
+ Amazon's operational strategy for last-mile dominance will have a massive impact on many small businesses in numerous industries: "For investors, Amazon’s last-mile strategy is also having a wide impact on a range of collateral businesses, from transportation services to industrial real estate to financial services." *Bonus: we've written extensively about Amazon on our site.

The map and the terrain (Andreessen Horowitz)
+ This piece by Ben Horowitz underscores the importance of a CEO/CFO relationship and how both must possess a strategic vision for the company and a path to sustainability as a business.

US cities are working to curb the rise of Dollar Stores (The Hustle)
+ "There are about 30k dollar stores in the US today. Per Axios, that’s more than the total number of Walmarts and McDonald’s combined. And discount juggernauts like Dollar Tree and Dollar General — which became the fastest growing retailer in the US in 2018 — have no plans to stop."

Control or be controlled: sales forecasting done right (Andreessen Horowitz)
+ "...“control” means putting in place a strong sales, forecasting, and deal qualification process. This is not some nice-to-have operational exercise — it’s a must-have for successfully scaling your company."

For sale at YouTube: political ad space in 2020 (Wall Street Journal $)
+ Get ready for the 2020 elections to ramp up - and the surge of political YouTube ads. The increased demand for 2020 election ads will mean more expensive ad placement for businesses universally.

Why reverse mentoring works and how to do it right (Harvard Business Review)
+ "Reverse mentoring pairs younger employees with executive team members to mentor them on various topics of strategic and cultural relevance. This approach has precedent: in the late 1990s, GE's Jack Welsh used reverse mentoring to teach senior executives about the internet. But modern reverse mentoring extends far beyond just sharing knowledge about technology; today’s programs focus on how senior executives think about strategic issues, leadership, and the mindset with which they approach their work."

GE freezes 20,000 pensions (The Hustle)
+ Pensions are nearly extinct, and GE's slow move into the 21st century with new benefit plans illustrates where company and retirement benefits are heading in the future. Going forward, companies will be transferring more of the investment risk to employees rather than keeping it on their balance sheets.

Mapping the world's growing plastic mountain, one bottle at a time (Reuters)
+ Ever wondered how much plastic our world produces and throws away? Look no further - it may make you think about drinking that next bottled water.

Kelie Morgan 10/4/19 Kelie Morgan 10/4/19

The Weekly: Edition #13 - October 4, 2019

Staff meetings: daily, weekly, or nonexistent? (Know Your Team)
+ "Ninety-one percent of employees who answered our survey said their manager could improve how they share information."

Information flow is the life-blood of companies: cut it off, and your employees are immediately left in the dark. There are real costs to limiting information flow, but also real disadvantages from meeting overload. This piece is an excellent read on how to think about scheduling meetings, whether they're needed, and what their purpose should serve. While meetings serve an important role in communicating with your team, they are not the only information tool available at your disposal. Our takeaways:

1. Decide whether to have the meeting or not based on an 'importance' threshold. In the words of Mark Cuban, meetings are a waste of time unless someone's cutting a check. Could your information flow be enhanced via email, Slack, Trello, Asana, etc. without causing a work flow stoppage?

2. Always have a 'why' for the meeting. Pointless meetings equal wasted time, which multiplies by the number of people in the room. To pull folks away from valuable tasks must require a solid and well-communicated 'why' ahead of the meeting.

3. Is the meeting a 'process' meeting or 'decision-making' meeting? The 'why' can be broken down two ways: informational (process) or decision-making. Sometimes meetings cannot be avoided because of the importance (#1) of the 'why' (#2). But if they don't meet the importance threshold, there are plenty of other tools to ensure the flow of information does not stop.

4. Employees want a continuous flow of information. Nothing makes an employee angrier than creating additional work due to a communications breakdown. However, meetings aren't always the best way to ensure that information is spread company-wide. Communication and coordination tools such as Asana, Trello, and Slack can ensure a steady flow of communications to the right parties.

McDonalds is learning from Silicon Valley how to meld tech with an analog service business (Bloomberg $)
+ This is an interesting example of how the technology industry is combining with traditional goods and services industries to satisfy higher customer expectations.

As Old Navy and Gap splits, CEO of Old Navy has a new operational and sales vision (Fortune)
+ This is a great profile of the strategic and operational choices Old Navy's CEO has made to successfully compete in the tough brick and mortar retail arena.

Neither and new: lessons from Uber and Vision Fund (Stratechery)
+ Ben Thompson shares key takeaways from the tech-driven business models of Uber, WeWork, and other companies that interface with the physical world of goods and services.

The future of financing comes in the form of three easy payments (The Hustle)
+ "Fintech firms like Affirm Inc., Afterpay Touch Group Ltd., and PayPal Holdings Inc. have started offering plans that allow people to pay for purchases in installments."

One group of politicians hope to solve trade deficit by charging a fee on foreign capital entering the US (Carnegie Endowment)
+ "If the recent Senate bill had been proposed in the nineteenth century—when trade finance dominated international capital flows—the proposal to tax capital inflows wouldn’t have made much sense. But today, as I have explained before (including here and here), the global economy is overflowing with excess savings. The need to park these excess savings somewhere safe is what fuels global capital flows, in turn giving rise to trade imbalances."

Pop up stores are the next big retail strategies (Bloomberg $)
+ The new fad of pop-up stores is becoming a stronger trend as retailers learn to adapt and be flexible with the onslaught of e-commerce by eliminating the fixed overhead of brick and mortar shops.

China learns to love second-hand goods (Bloomberg)
+ "Between 2014 and 2018, China’s secondhand market grew by more than 450%, to $100 billion. That boom isn't led by thrift stores. Instead, it's being driven by tech companies, including Tencent Holdings Ltd. and Alibaba Group Holding Ltd."

Productivity hacks that increase focus and output (Will Chou)
+ While these are generally good self-help tips, they can also be good ideas for company policies to increase efficiency, decrease pointless meetings, and increase all-around employee morale.

Sound database for malfunctioning industrial equipment (Zenodo.org)
+ Hitachi has made available a sound database of normal vs. malfunctioning industrial machinery for public use.

Kelie Morgan 9/27/19 Kelie Morgan 9/27/19

The Weekly: Edition #12 - September 27, 2019

What I learned co-founding Dribbble (Dan Cederholm)
+ Dan Cederholm shares his top lessons learned from founding Dribble. We've shared several 'lessons-learned' type pieces by executives since starting Permanent Equity Weekly and encourage our subscribers to share any lists or lessons you've found helpful. Key lessons from this piece included:

1. Choose your partner wisely. The marriage only lasts if the partners know and trust one another.

2. Persistent iteration trumps flashy launches. While not always true, it's generally true that persistence in the daily grind towards excellence in your business - whether that is satisfying customers, increasing operational efficiency, or forging new relationships - is the key to long-term success.

3. Grow thick skin quickly. In leadership positions, your decisions affect many stakeholders and you can't please everyone.

4. Identify when you're being stubborn and getting in your own way. Don't get complacent and comfortable because you've 'always done things this way.' Allow yourself the intellectual freedom to question your methods and processes constantly.

Writing documents for Jeff Bezos (Medium)
+ Running effective meetings where critical decisions for the firm are made involves both the human touch and intellectual ability. This piece focuses on what made for a smooth or bumpy meeting when presenting the famous 6-page documents before Jeff Bezos at Amazon, however there are a few broader lessons that apply more generally:

1. Have the right people in the room, which would include the subject matter experts pertaining to your presentation. You can't make effective decisions without input from those closest to the problem or area.

2. Check your ego at the door. It's about making the right decision, not getting your ideas acknowledged and accepted.

3. Do not schedule meetings with a half-baked proposal. If the pitch isn't ready, it's less embarrassing (and potentially less harmful to the firm) to reschedule and take more time to sharpen the presentation than wasting everyone's time and accomplish nothing substantial.

The slow burning success of Bob Iger's Disney (New York Times)
+ "Actually, Mr. Iger’s book is a primer on how much you can achieve if you keep your ego in check. In an era of brutish and ego-driven leadership in the White House, Silicon Valley and in many other countries around the world, Mr. Iger doesn’t lead with his ego or try to drive the other alphas out of the herd."

The renegade executives of Houston who shook up the sports industry (Wall Street Journey $)
+ No matter what arena you play in, the lessons of risk and reward remain the same.

WeWork lessons that apply to lots of stuff (Morgan Housel)
+ "Every business has three main stakeholders: Customers, employees, and shareholders. You can ignore any one of those for a while, but eventually all three have to be cared for."

The impact of increasing search frictions on online behavior (Harvard Business School working paper)
+ "We propose that deliberately increasing search frictions by placing small obstacles to locating discounted items can improve online retailers’ margins and even increase conversion. We demonstrate using a simple theoretical framework that inducing consumers to inspect higher-priced items first may simultaneously increase the average price of items sold and the overall expected purchase probability by inducing consumers to search more products"

The tech sector is over (Financial Times $)
+ The 'tech' industry is blending into all sectors: "And as old-world companies like Walmart -- which now, according to Deluard, sells almost as much online as Apple -- move into the territory of its rivals, new-world firms are moving in the opposite direction: Netflix, for example, said it would be spending $13 billion on producing its own content in 2019 (about 90 per cent of its turnover)."

WeWork and the great unicorn delusion (The Atlantic)
+ Extravagant visions are more often accompanied by large losses nowadays. The end of this era may be near, with cold hard numbers coming into focus and visionary plans on the back burner.

The growing list of US government inquiries into Big Tech (Axios)
+ The widespread, and at times illicit, use of data analytics by tech companies to aid in ultra-targeted marketing and anti-competitive behavior has placed Big Tech companies square in the cross hairs of federal regulators.

More workers will qualify for over-time pay under Trump administration rule (Wall Street Journal $)
+ "The rule, set to go into effect Jan. 1, would increase a key salary threshold below which workers generally qualify for time-and-a-half pay for logging more than 40 hours a week."

Family health insurance costs top $20,000 per year, setting a record (Bloomberg)
+ Due to the rising cost of healthcare, many people are purchasing insurance that covers less, costs more, or getting priced out of the insurance market altogether. The costs are also being felt by employers, according to a nationwide survey.

7 things you didn't know about plastic and recycling (National Geographic)
+ "Given its prominence, and the fact that scientists estimate it takes somewhere between 450 -1,000 years to decompose (some argue it will never decompose), it is essential for us to understand this material."

Kelie Morgan 9/20/19 Kelie Morgan 9/20/19

The Weekly: Edition #11 - September 20, 2019

How Adam Neumann's 'over-the-top-style' built WeWork (Wall Street Journal $)
+ Here at Permanent Equity, we love buying simple businesses that produce goods and services profitably while serving customers with excellence. At the other end of the complexity scale, when you mix high confidence, grand visions, and 'tech' investment, companies like WeWork are born. Here are a few lessons to keep in mind in the wake of the postponed WeWork IPO:

1. Incentives matter. When Adam Neumann was cashing out his stake in the company worth hundreds of millions of dollars, analysts were forced to ask about the optics of a captain jumping ship while his crew remained aboard.

2. Profits still matter. While many venture-backed companies burn cash to achieve escape velocity (generating free cash flow), there comes a time in every company's timeline when it must become self-sustaining. As we near the late part of the economic cycle, private companies have been attracting ever greater sums of money to subsidize losses and growth. Public market investors seem to be growing more impatient for sustainable business models with the latest crop of cash-burning businesses coming to the market.

3. Business models matter. In WeWork's case (matching short term assets - subleases - with long term liabilities - leases), there is inherent leverage built into the business model. As everyone knows, leverage only magnifies results. Whether or not you believe WeWork as a company will ultimately be successful depends on whether you believe in its business model, not necessarily whether you believe that the company can execute. It doesn't matter how well a company executes if it executes on a bad business model.

In other news, stay tuned over the next few weeks for the release of our free annotated audiobook The Messy Marketplace in podcast format!

The strategy behind TikTok's global rise (Harvard Business Review)
+ "His strategy of dual versions of Tik Tok – one for China’s internet censored market and another for the rest of the world – could be a new model for other digital content companies aiming for such global reach – including China-based digital startups with new ambitions to venture out beyond the home market. Their story may also hold lessons for American companies who have watched similar ventures into China meet serious constraints."

Casper, the direct-to-consumer mattress company, is vying to become the "Nike of sleep" (New York Times)
+ While direct-to-consumer operating models can put pressure on sleepy incumbents, it isn't a cure-all. Casper is an illustrative case for how DTC brands are being forced into new verticals to find a path to profitability.

MoviePass is shutting down September 14th (The Verge)
+ While the $10 monthly fee for unlimited movie tickets was a fan favorite, its ultimate demise was caused by a financially untenable business model. Turns out, it's hard to "lose money on each unit and make it up in volume."

An overview of US retail bankruptcies and store closures in first half of 2019 (BDO)
+ "Retailers of all scale and size have closed a combined 7,000 stores so far this year, already exceeding all prior full years. For 2018 overall, total store closures were just under 6,000, while Coresight Research predicts over 12,000 stores will be closed this year."

Toilet paper startups show how to get creative with marketing (The Hustle)
+ "But these rump-wiping rookies may have found the crack in Big TP’s — ahem — business model… and if consumers prefer these well-made wipes, Charmin and the gang may have to start pushing some premium paper."

How Instagram became the new mall (Modern Retail)+ This post details how Insta is slowly but surely becoming a new face of retail for DTC and online brands.

The UAW's first strike in a decade could cost GM $100 per day (The Hustle)
+ "The UAW also represents employees who work at Ford and Fiat Chrysler… but the union specifically chose to attack GM for prioritizing profits over ’ployees. Over the past 3 years, General Motors made $35B — but last year the automaker closed 4 factories."

The 20 biggest landowners in the USA (Business Insider)
+ As the saying goes, land's an interesting investment because, well, no one's making any more of it.

Kelie Morgan 9/13/19 Kelie Morgan 9/13/19

The Weekly: Edition #10 - September 13, 2019

What's the second job of a startup CEO? (Y Combinator)
+ "Your First Creation is a Product, Your Second Creation is a Company."

Building a product is hard, but building a company is exponentially more difficult. The principles of building and leading a company from startup to corporate giant remain the same:

1. Delegate. As the old adage goes, if you want to go fast, go alone. But if you want to go far, go together. As the chief, your job after hiring the first team members is to replace yourself as quickly as possible in day to day operations and use your time on the highest leverage tasks like team building and direction.

2. Build a team who can build teams. Once you've built a large enough team that warrants more mid-level executives, it is imperative to empower VP level executives with the full authority and ownership to execute without your input at every step. This yields even more leverage on your time and removes tasks that are unrelated to firm direction and culture.

3. Set the direction. It is impossible to row and steer the boat simultaneously. By setting the direction for the division executives, you align the company around the original vision and mission.

4. Cultivate and protect the culture. A firm is only as good as its people, and its people are attracted (and repelled) by firm culture.

As an addition to the points above, see this article for 30 more great lessons on leadership that we shared in an earlier issue of the weekly newsletter.

The founder's guide to discipline: lessons from Front's Mathilde Collin (First Round)
+ "As a founder, I’d choose discipline over some grand vision any day of the week."

The efficiency-destroying magic of tidying up (Florent Crivello)
+ We often believe that cleaning up and organizing will lead to more efficient workflows, but sometimes this just isn't true.

California passes law stating gig workers must be classified as employees, putting UBER business model at risk (Vox)
+"The passage of AB 5 also means millions of new workers will now have a right to join labor unions. To get a sense of how big this workforce is, consider this: When state tax investigators audited about 8,000 California businesses in 2017, they discovered nearly half a million employees had been misclassified or otherwise left off payrolls."

Stitch Fix: a useful case study for retail's digital transformation (Forbes)
+ This is a great profile of Stitch Fix, the online digital retailer blending data and human touch to excite customers from the comfort of their homes.

Moodys issues warning due to historically high concentration of risky borrowers that could lead to higher defaults than Great Recession (Institutional Investor)
+ "Buyout firms now own about 80 percent of companies with B3 ratings and 68 percent of those rated Caa, according to the report."

How a stealthy insurance tech company bootstrapped to a $2.35B sale in less than 4 years (GeekWire)
+ Bootstrapping a company with no outside capital is difficult in the technology space, but the founders of Assurance IQ pulled it off. Here is their story.

Nothing this week…

40 of our favorite interview questions (First Round)
+ This is a great resource for potential additional questions to mix into interviews at your company.

The 3 things employees want: career, community, cause (Harvard Business Review)
+ "There’s a lot of talk about how different Millennials are from everyone else, but we found that priorities were strikingly similar across age groups."

Everything you ever wanted to know about running an all-hands meeting (Gokul Rajaram)
+ "An All-Hands does three things. It celebrates people and accomplishments; it drives alignment around mission, strategy and priorities; and finally, it provides a forum to ask and answer questions."

Why is movie theater popcorn so expensive? (The Hustle)
+ "Allen Michaan was just 19 when he built his first movie theater in the 1970s. In his 40-year career, he’s operated more than 20 cinemas, including the historic Grand Lake Theatre in Oakland, California. As he tells it, pricey popcorn isn’t some diabolical price-gouging scheme — it’s the lifeblood of a theater’s business model."

Kelie Morgan 9/6/19 Kelie Morgan 9/6/19

The Weekly: Edition #9 - September 6, 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

3-D negotiation: playing the whole game (Harvard Business Review)
+ An oldie but a goodie, this is an in-depth look at second-order thinking applied to negotiations. There are three key takeaways from this article:

1. Know and understand what tactics to use at the negotiation table. This comes down to interpersonal conduct, communications skills, and reading the motivations behind the party across the table. This is plain and simple 1-D negotiation.

2. Know what terms and conditions will increase your chances of a yes. If you can pull side terms into the deal that will unlock efficiencies and create value for both parties, this may tip the scales in your favor. This moves us to 2-D negotiations.

3. Know what third parties will increase your leverage in the deal. This is the biggest lesson for "3-D" negotiators. If you have a solid understanding of how your industry's ecosystem works, you can bring third parties into the deal and align theirs' incentives with yours which can potentially increase the value created for everyone.

Investors and Operators: lessons from both worlds (Permanent Equity)
+ This is Permanent Equity CEO Brent Beshore's latest essay on being both an investor and an operator. Check it out to see what investors can learn from operators and what operators can learn from investors.

OPERATIONS

How Dollar General found a low margin niche (Modern Retail)
+ "The store hit $6.98 billion in revenue in the second-quarter of its fiscal year 2019, and announced that same-store sales had risen by 4%. The company currently has around 16,000 stores and plans to open up 5,000 more by the end of the year."

LaCroix won the bubble battle, but its losing the sparkling water war (Bloomberg)
+ If you have ever had a LaCroix, you probably understand what the hype around the brand is all about. But it turns out that carbonated water is a pretty competitive business.

MONEY

The epic decades-long battle between Ford and a small-time inventor (The Hustle)
+ We all take windshield wipers for granted today, but this is the story of their inventor who wouldn't yield to big corporate greed.

Survive and thrive: the entrepreneur who overcame a $600M deal disaster and fended off WeWork (Forbes)
+ The story behind the survival of one of WeWork's competitors, JustCo, and how the founder narrowly avoided "entrepreneurial oblivion."

Public transit projects cheaper than Uber's $5.2B 2Q loss, ranked (Jalopnik)
+ "Combined, these seven major public transportation projects are projected to cost $16.89 billion, or about four percent more than Uber’s cumulative losses since 2016."

DEMAND

Retailers are rethinking their Google search strategy (Modern Retail)
+ "Data from Jumpshot says that more than 50% of Google searches in June didn’t result in a click. The results show that organic search clicks are going down even as paid Google search clicks are going up, as are searches that result in no clicks whatsoever."

Facebook ad prices surge due to barrage by Democratic hopefuls (Wall Street Journal $)
+ When the field of candidates involves more than 10 potential nominees, is it any wonder that Facebook's ad pricing has surged? It is also interesting to note the connection between increased Facebook advertising and politics.

HUMAN RESOURCES

America's worker deserts (Axios)
+ "Across the country, there are more than 1 million more jobs available than there are people to fill them."

WEIRD

What dropping 17,000 wallets around the world can tell us about honesty (NPR.org)
+ '"People were more likely to return a wallet when it contained a higher amount of money," Cohn says. "At first we almost couldn't believe it and told him to triple the amount of money in the wallet. But yet again we found the same puzzling finding."'

Why the government turns to Waffle House when tracking emergencies (AJC.com)
+ The 'House' is always open, unless severe weather is on the horizon. It's become a reliable index for FEMA and other agencies to monitor how bad weather conditions are in various parts of the country.

Kelie Morgan 8/30/19 Kelie Morgan 8/30/19

The Weekly: Edition #8 - August 30, 2019

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.

Kelie Morgan 8/23/19 Kelie Morgan 8/23/19

The Weekly: Edition #7 - August 23, 2019

FOOD FOR THOUGHT

30 years, 30 lessons in leadership (Dan Greene)
Dan Greene has kept a running list of leadership lessons learned through experience over his career. Leadership boils down to being a person worthy of following (high integrity, caring, proficient, inspiring). Pull, don't push, your team towards excellence. As much art as it is science, leadership can be learned, refined, and polished only through experience, but this list is certainly a head start. A few key lessons from the piece:

"Learn to lead with data, not just instinct. You need to be good at gathering the right sets of data and using it to make informed decisions. Leaders can’t just operate on instinct. Conversely, don’t be paralyzed by collecting and analyzing data. It’s important to make decisions and often to make them quickly. Gather as much information and data as possible, analyze it, and make the call based on the information you have. Remember that an imperfect plan executed with energy and conviction TODAY is better than a perfect plan executed too LATE.
You don’t always win by winning. Sometimes you win by losing. Learn to negotiate, influence and compromise. It’s not always about winning and losing anyway, most of the time, the best outcome is when everyone gets what they need.
Integrity is the fundamental building block of leadership. Without integrity, you simply cannot lead. Do the right thing. Always."

OPERATIONS

The Manufacturing thesis (Pranay Srinivasan)
+ This is a 30,000 foot overview of the current retail brand landscape and the B2B software needs of smaller rising DTC brands.

Sludge audits - eliminating time friction in business, government, and policy (Harvard Public Law)
+ It's worth noting how much sludge (bureaucratic paperwork and time frictions) are present in your business for employees, vendors, and customers and essential to devise policies that reduce it as much as possible for smoother transactions and relationships.

The rise of the virtual restaurant (New York Times $)
+ It's no surprise that on-demand apps are shaping entire industries. The next one: restaurants.

Manufacturers want to quit China for Vietnam but are finding it impossible (Wall Street Journal)
+ "The specialized supply chains that made China a production powerhouse for smartphones and aluminum ladders and vacuum cleaners and dining tables are nowhere near as developed in Vietnam."

MONEY

The rise of hand-me-down inc. (Wall Street Journal $)
+ Retailers are taking note as thrift shopping and used-goods marketplaces are becoming mainstream.

Atlanta's black tech founders are changing entrepreneurship in America (Fast Company)
+ A deep look at the demographic trends and power players driving Atlanta's burgeoning entrepreneurship scene.

What is WeWork?! Understanding the WeWork IPO (Byrne Hobart)
+ An ode to Noah Sweat's Whiskey Speech, Byrne picks apart the good, bad, and ugly of WeWork's business.

DEMAND

Disney's new Star Wars attraction is an early flop - here's why that will change (Intelligencer)
+ This is the story behind the cat-and-mouse game between consumer demand and Disney's pricing strategy.

Ryan Caldbeck's tweet-storm illuminates tough conditions for startup consumer product companies (@ryan_caldbeck)
+ A long set of tweets highlighting the difficulties for smaller consumer product companies to get stocked on big-box retailers.

HUMAN RESOURCES

Three years of misery in Google, the happiest tech company (Wired)
+ It has been a hectic three year journey for Sundar Pichai navigating employee upheaval, political drama, and the culture wars.

Employees try new language to lure job seekers (Wall Street Journal $)+ "Textio found the most effective job ads had an even split between language describing the company and outlining a candidate’s qualifications. The best posts now highlight the organization, selling its strengths."

WEIRD

The launch: the backstory behind a massive new undertaking in the apple growing business (California Sunday)
+ This is an inside look into the apple orchard business and “the largest launch of a single produce item in American history.”

The gambler who cracked the horse racing code (Bloomberg)
+ Bill Benter is the modern-day Ed Thorpe of horse betting.

The fight to protect the world's most trafficked wild commodity (National Geographic)
+ "Chinese demand for rosewood—trafficked more than ivory, rhino horn, and pangolin scales—is fueling a crisis in Guatemala's forests."

Kelie Morgan 8/16/19 Kelie Morgan 8/16/19

The Weekly: Edition #6 - August 16, 2019

FOOD FOR THOUGHT

The billionaires behind the secret tech mecca in America's heartland (Forbes)
+ All technology roads lead to... St. Louis? Technology is expanding at an ever-increasing rate and businesses simply can't keep up with all of the parts needed to run their operations. Enter World Wide Technology - the multi-billion dollar tech service company that helps businesses combine their hardware and software needs into one seamless package. One would think, given most news coverage, that the tech industry lives in Silicon Valley, New York, or Seattle. But the economy is much larger than we know, and there are great businesses prospering right down the road from us in the heartland of America.

How Chick-Fil-A took over America (Business Insider)
+ This is the story behind the Cathy family's adherence to a set of servant-based principles and how it helped build a fried chicken empire. Success emanates from:

1. Principles. While not every business will choose the same faith-based principles as Chick-Fil-A, the founder chose a set of guiding principles early on in the business's history and stuck to them.

2. Culture. Regardless of religious origin, the universal basic principles of kindness and service, when institutionalized in a culture, go a long way in creating a brand.

3. Quality. High quality, reliable products build trust with consumers. No matter what location or what time of the day, they can depend on Chick-Fil-A to satisfy cravings.

4. Systems. If you have ever experienced the efficiency of a Chick-Fil-A drive-through at rush hour, you understand how incredibly efficient this franchise is. The best way to meet increasing same-store demand is by increasing efficiency. The best way to increase efficiency is to be selective in your franchise selection process and to train operators rigorously in best practices.

5. Selectivity. Despite the low capital requirements, Chick-Fil-A's franchise acceptance rate is less than Harvard's admissions rate due to the need for highly motivated, highly skilled, and highly principled operators.

OPERATIONS

California is cracking down on the gig economy (Vox)
+ This represents a near-existential threat to the Uber-like business models of contractor-based service companies. The outcome of this potential legislation will be important to monitor for small businesses employing independent contractors.

Amazon wants to become a book publishing powerhouse (The Hustle)
+ "Amazon uses its dominant position as a bookseller — it sold 25% of the 25.5m books bought by Americans last month — to push its own titles, which often come from lesser-known authors but still appear near the top of Amazon’s charts."

Amazon's ambitions in the alcohol category are growing (Modern Retail)
+ "The e-commerce giant appears to be strategically expanding to take on a new and untapped market."

MONEY

Small business economic trends report - July 2019 (NFIB)
+ “The Optimism Index rose 1.4 points to 104.7, an exceptional reading. Seven of the 10 components advanced, two fell, and one was unchanged. This is confirmation that small business owners remain very optimistic about the economy despite all the talk about “slowing.””

Packaging Solutions Industry Spotlight (McKinsey & Company)
+ "After years of losing value, packaging-solutions (PS) companies in all segments have been generating economic profit since 2013. The next decade could be even more promising. As e-commerce grows and consumer preferences shift, packaging companies will have a chance to move to the forefront of innovation."

10% tariffs were manageable, but at 25%, businesses are squirming (WSJ)
+ US and Chinese companies are being forced to the negotiation table to discuss how they will bear the increased cost of goods. Naturally, the biggest questions relate to how much of the cost to eat and how much of it should be passed on to consumers.

DEMAND

The worst sales promotion in history (The Hustle)
+ "27 years ago, Hoover offered two free international flights with any £100 purchase. Today, it’s remembered as the worst sales promotion in history." Bad risk management and poor planning resulted in a disastrous marketing ploy.

Nike's new membership model for kids' sneakers shows bigger shift to direct sales (Modern Retail)
+ Nike's strategic move illustrates the importance of creating a customer while they are young to encourage purchasing habits and increase brand familiarity.

HUMAN RESOURCES

6 must-reads for cutting through conflict and tough conversations (First Round)
+ Wisdom on dealing with personalities and problems in the workplace.

WEIRD

What I learned from making hot sauce at scale (Jenny Gao)
+ "I hated not being able to take things into my own hands, especially as promises to deliver on projects regularly ballooned from days into weeks and sometimes deflated altogether."

Kelie Morgan 8/9/19 Kelie Morgan 8/9/19

The Weekly: Edition #5 - August 9, 2019

FOOD FOR THOUGHT

Competitive advantage flywheels (Max Olson @ FutureBlind)
+ Max Olson presents a wonderfully visual way of understanding competitive advantages.

After reading Olson's piece above, it is a helpful exercise to draw the competitive advantage feedback loop for the business you own, operate, or work for. The four main questions to contemplate while going through this exercise are:

1. Which category of flywheel does your business fit into? Is it a combination of two or more?

2. Which levers should you pull in order to build the flywheel's momentum?

3. Which part of the flywheel is weakest?

4. Which piece of the flywheel, if broken, would potentially harm your operation most?

Here at Permanent Equity, it is pretty simple:

OPERATIONS

How a mysterious tech billionaire created two fortunes and an outsourcing software sweatshop (Forbes)
+ This piece is the incredible story of Joe Liemandt, the little-known billionaire from Austin, TX who buys enterprise software companies, outsources jobs to lower-wage countries, and reaps massive profits by doing so. Every private equity firm has a different playbook post-close, and it's important to know what that playbook entails.

The strategic reasoning behind DTC consumer brands expanding to service verticals (Modern Retail)
+ When one product won't achieve the desired scale, DTC brands are adapting and augmenting revenue streams by expanding into capital-light adjacent verticals like services, maintenance, and even product-related insurance.

Fedex to end US ground deliveries for Amazon (WSJ $)
+ In response to Amazon's encroachment on Fedex's ground delivery territory, Fedex has chosen not to renew their contract with the behemoth ahead of the upcoming holiday season.

MONEY

China responded to new tariff threats by weakening the Yuan and halting US crop imports (Bloomberg)
+ The first order effects of the currency fluctuations will have far-reaching consequences for businesses exporting to China, but the second order effects may be the longer term economic harm due to uncertainty in trade and monetary policy.

Latest tariff increase could cause short-term spike in transpacific freight rates (American Shipper)
+ Due to manufacturers and purchasers attempting to avoid increased tariffs coming into force in late 2019, there may be a rush to get purchase orders filled before the new tariffs come into effect which could increase freight rates across the Pacific.

DEMAND

'Overhead': why marketing is still seen as a cost-center (Digiday)
+ “A great brand focuses on being relevant in peoples’ lives, proving value and providing a service or product that supports that. Two-thirds of that statement is marketing related.”

The state of digital advertising in 2019 (Marin Software)
+ "Paid search still dominates digital advertising, but other channels are taking their share. Despite ongoing controversies and people leaving for greener (Instagram) pastures, advertisers should stay in front of their massive Facebook audience—and take advantage of surging video and eCommerce advertising opportunities."

How a robotic singing fish made $100M in revenue in one year (The Hustle)
+ One-hit-wonder products are all around us - this is the story behind Big Mouth Billy Bass, the singing fish mount.

Seven reasons why TV's doubters are wrong (Marketing Week)
+ Don't count out TV advertising as a medium for the message just yet!

HUMAN RESOURCES

Durably excellent teams (Irrational Exuberance @ Lethain.com)
+ Every team is in one of four states: 1) falling behind 2) treading water 3) repaying debt or 4) innovating (moving forward). This is a great framework for anyone in a staffing or executive position on thinking about team bandwidth and how to allocate human resources.

Why great employees leave great cultures (Harvard Business Review)
+ Employee and company behaviors must match company expectations - from top executives to the lowest ranks - if an organization's culture is to be maintained over time. Building the right systems to ensure that the right behaviors take precedence within the company's mission and expectations is the only way to define a lasting culture and retain top talent.

WEIRD

The youth sports market doubled in the last decade despite declining participation rates (The Hustle)
+ Promoters are cashing in on parents' willingness to pay for their children's sports endeavors, while the growing trend is keeping children in lower socioeconomic environments out of the game.

The rise of alternative 'milks' and evolution of the dairy industry (The Guardian)
+ Who knew the dairy and plant-based milk industries could be so innovative and so interesting? This story is worthy of your time if you are interested in how consumer product marketing, scientific research, and climate change come together to explain the current state of dairy vs. plant-based milks.

OPERATIONS

MONEY

DEMAND

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Kelie Morgan 8/2/19 Kelie Morgan 8/2/19

The Weekly: Edition #4 - August 2, 2019

FOOD FOR THOUGHT

Pirate Equity: How Private Equity Firms are Pillaging American Retail (United4Respect.org)
It is no secret that e-commerce has pressured brick-and-mortar retail sales over the last decade. So, when an industry with challenging economics like retail is mixed with high leverage and short term objectives, it isn't surprising to see troubles emerge. While this report paints the private equity industry in overly dark colors as a whole, we operate on principles that are different than the typical PE firm - we buy with no intention of selling, use low or no leverage, and work as true partners with our family of companies.

Though this piece has a clear political and activist slant, there are several conclusions worth drawing from the report from the standpoint of a business owner.

1. Who you sell to matters.
Like any industry, private equity has a range of styles, motivations, and ethics. But unlike other industries, values particularly matter due to the nature of transactions, the power held by PE groups, and the depth of involvement. At Permanent Equity, we have a strict pledge for how we treat our portfolio companies and partners. Maximizing sales price sometimes comes with strings attached and understanding who sits on the other side of the table is never more important than post-close.

2. Leverage matters.
Debt is an amplifier. If things go well, debt will create better returns for equity holders. That’s why the typical PE playbook is to load up the company with maximum allowable non-recourse debt, while putting in the minimum amount of equity. It’s also the quickest way to turn a good company into a struggling, or even bankrupt, one.

We typically don’t use debt. It hurts our quantity of earnings, but helps the quality of earnings and life. That’s a trade-off we’re willing to make, especially since the livelihood of many families hang in the balance.

3. All stakeholders matter.
Too often the only stakeholder interests taken into account are the buyer and seller. We think that’s a mistake. As a part of our pledge, we promise our partners to create and perpetuate work environments that encourage flourishing for our executives, employees, vendors, customers, and communities.

4. Investment horizons matter.
Short-term money will make short-term decisions that will carry long-term consequences. No one washes a rental car and a short-term business owner won’t make obvious, logical, and helpful reinvestments. Why? Because just like the renter, short-term owners won’t reap the benefits of delayed gratification. This effect is only magnified in a rapidly changing industry like brick-and-mortar retail.

When we buy a company, we don’t intend to sell, which allows us to play the long, healthy, fruitful game.

5. Who you work with matters.
We have a 'No Asshole' Rule here at Permanent Equity. Whether that is employees, executives, brokers, or capital partners, who you do business and spend time with matters.

OPERATIONS

The tiny brick-and-mortar video store that survived Netflix (The Hustle)
+ This is the story of how, despite the age of digital downloads and streaming, one man managed to eke out a living in physical DVD rentals with grit, perseverance, and a personal touch.

Amazon quietly launches AmazonCommercial, a private label for businesses (AdAge)
+ Amazon continues to introduce its own products alongside competitors who sell in its Marketplace.

Amazon is pushing brands to decrease product packaging with marketplace regulations (WSJ) $
+ Amazon is implementing smaller packaging requirements for businesses selling in its Marketplace in order to cut shipping costs and reduce waste.

Delaware bans plastic bags for big stores starting in 2021 (Whyy.org)
+ "The new law, which takes effect Jan. 2021, bans plastic bags from stores with more than 7,000 square feet of retail space and chain stores with three or more locations with at least 3,000 square feet each."

MONEY

Inside Nuuly, Urban Outfitters' attempt to take on the rental clothing market (Modern Retail)
+ Nuuly is URBN's newest rental service which allows subscribers to rent up to 6 pieces of clothing for $88/month, a new addition to the fast-growing multi-billion dollar sharing economy.

DEMAND

Mapping the four types of visitors to your website (The Atlantic)
+ The Atlantic website team segments its site visitors into Passerby, Occasional, Regular, and Superfan categories and discusses how best to serve each group with an online offering.

Retailers turn to podcasting to expand content programming (Modern Retail)
+ Content marketing has been around for ages, but the medium is changing and podcasting is now mainstream for retail brands.

HUMAN RESOURCES

The Culture Code: the Secrets of Highly Successful Groups (Daniel Coyle)
+ Coyle goes into detail on what makes some of the world's most successful organizations tick.

WEIRD

Putting brand names on stadiums can be extremely valuable - but at what cost? (Business Insider)
+ " Marketers know that putting a name on a venue (if there is no negative association with the place) can make billions of positive brand impressions in the minds of potential buyers."

Kelie Morgan 7/26/19 Kelie Morgan 7/26/19

The Weekly: Edition #3 - July 26, 2019

FOOD FOR THOUGHT

How I spotted a fraud before it was too late (Gary Mishuris)
This is the story of a how a young analyst discovered financial fraud at a commodities firm, but there are deeper lessons to be learned.

1) Don't believe what people say - pay attention to what they have done.

Listen carefully to what potential customers, vendors, suppliers, and partners have to say. As Warren Buffett is so apt to point out, successful business relationships depend on intellect, energy, and integrity. The last piece, integrity, underscores the other two and is the most important prerequisite for long-term success for both parties. Do your research and ensure that words match actions. On the flip side of this, be the partner that you would want in any relationship and DWYSYWD (Do What You Say You Will Do).

2) Be wary of situations that are all story and no numbers.

SMB owner-operators take significant risks with every decision they make - from hiring to partnering to sourcing from vendors - and each risk taken must be supported by solid evidence that substantial performance will follow. Whether this is on-time delivery, dependable employees, or reliable sources of capital, due diligence is key to maintaining a stable operation from all sides of the table (capital, labor, suppliers, and customers).

3) Context matters.

"He inquired about how the investor day went. I answered that I didn’t learn much, other than that the CFO had just bought a large new house in Florida. The portfolio manager’s smile and relaxed posture immediately disappeared. With a furrowed brow he asked me to confirm: in Florida? Yes, in Florida. Why, was that a particularly poor state to purchase a house in? His reply sent shivers down my spine, 'Don’t you know that in Florida they can’t take away your primary residence, even if you go to jail for fraud?'"

Perhaps business was just booming. Or perhaps, given the business was actually generating no cash at all, management was simply extracting what it could before the house of cards collapsed. In any scenario where capital, operations, and relationships are at risk, it pays to know all the facts. Context matters.

OPERATIONS

The Partnership Charter: How to Start Out Right in Your Business Partnership (or Fix the One You're in) (BMC Associates, David Gage)
+ David Gage has seen many partnerships fail through the years, which prompted him to write a book on the potential pitfalls and problems associated with business partnerships. Highly recommended book from the Permanent Equity team (Amazon link).

A case study of the Starbucks app success (The Manifest)
+ Starbucks has shown with its massively successful app that technology can be a powerful tool for learning more about your customers, maintaining customer loyalty, and increasing convenience.

The retailer's guide to selling on Amazon (Modern Retail)
+This report guides retailers through the ins and outs of selling on Amazon as well as some of the nuances of the platform you should know.

Why now may actually be the best time to source from China (Sourcing Journal $)
+ "Talk has surfaced among apparel and footwear manufacturers alike, about Chinese factories offering double digit discounts on product, lowering prices by 25 percent to cover the equivalent threatened U.S.-China trade war tariffs, bending on payment terms—whatever it takes to retain sourcing orders for U.S.-bound shoes."

MONEY

A new small business burden aimed at terrorists and drug dealers is hitting small hard (WSJ $)
+ Congress may impose additional reporting requirements on small businesses (fewer than 20 employees or less than $5MM in revenue), with the stated goal of preventing money laundering by drug dealers and terrorists. The practical effect would more likely be to cause small businesses to spend more money on legal fees for compliance purposes.

Amazon offers sellers a leg up, but with a catch (WSJ $)
+ “Amazon.com Inc. is offering independent merchants on its platform marketing support, product reviews and prominent display. The catch? Amazon gains the right to purchase a merchant’s brand at any time for a fixed price, often $10,000.”

DEMAND

The restaurant owner who asked for 1 star Yelp reviews (The Hustle)
+ Sometimes, you have to take destiny into your own hands as a small business owner. This is the story of one man who was tired of the 'mafia-style extortion' of Yelp's review system and decided to fight back.

Google adds 'Request a Quote' to business listings in search results (Search Engine Journal)
+ Google added a new feature to its search results which could benefit small businesses with just the click of a button. If you have a Google business listing, this could be worth investigating.

HUMAN RESOURCES

Gusto recently raised $200M to help small and medium-sized business owners with payroll (TechCrunch)
+ Gusto is out to solve small and medium-sized business headaches around payroll and benefits. With over 100,000 SMB customers, they may be worth researching depending on what your needs are.

WEIRD

Why is airport food so expensive? (The Hustle)
+ This illustrates the high-cost structure of operating a retail business inside an airport: percentage-of-sales leases, high security costs, and high employee wages all add up to prices that seem monopolistic for consumers in airports.

Kelie Morgan 7/19/19 Kelie Morgan 7/19/19

The Weekly: Edition #2 - July 19, 2019

FOOD FOR THOUGHT

An in-depth study on changing consumer brand preferences: direct-to-consumer vs. incumbent brands (Interactive Advertising Bureau)

The face of the consumer brand landscape is changing rapidly, and this study by IAB illustrates how the internet and social media have allowed small, nimble, direct-to-consumer brands to rapidly develop an audience and customer base using rented third party supply chains and internet marketing. Here are the most important takeaways:

Disruptor brand shoppers comprise 48 percent of all U.S consumers. They are younger than incumbent brand-only shoppers, with 84 percent under 54 years old, and are likelier to have a household income of more than $75,000.
This wave will only swell and grow as the demographic shift continues to play out. It will be important for the next generation of consumer brands to pay attention to the way the 'disruptor brand' shopper conducts their research on a brand online through cross-channel search.
In addition, 53% of direct-to-consumer (DTC) buyers use their favorite brands as vehicles for self-promotion, with twice as many compared to incumbent brand-only shoppers saying that they choose brands to express “who I am.”
The days of function over form may be over. DTC buyers' expression of identity through their relationship to brands has tilted the game in favor of brands that prioritize both form (solves a problem) and function (reflects style). This can be nicely summarized with the question 'is your product or service ready for Instagram?'
Social media is approaching parity with TV for brand discovery and awareness.
This is not to be taken lightly for any business selling in the consumer retail space. Brand influencers abound in today's social media landscape and are responsible for driving the lion's share of brand recognition online for disruptor DTC brands. These new brands are leveraging influencers' captive audiences and a personal touch to cut through the noise of the crowds and grow their customer base.

OPERATIONS

How Shopify is enabling online retailers to compete with Amazon's scale through access to its 3rd party logistics fulfillment and easy one-stop-shop platform (Stratechery)
+ It's no secret that Amazon is eating a lot of businesses' lunch online, but Shopify's platform is showing how using their vertically integrated platform, it may be possible to differentiate your products and go direct to consumer without getting lost in Amazon's infinite shelf space.

No free burnt ends and other BBQ wisdom from Grant Pinkerton of Pinkerton's BBQ (Texas BBQ Posse)+ There are three key points to take away here: demand product excellence, don't miss an opportunity for profitable growth by giving your product away for free, and find ways to serve customers who are falling through the cracks.

Crate and Barrel opens full service restaurant (Chain Store Age)+ More and more, we will see retailers vying for consumers in new ways that blur the lines between retail therapy, product experience, and service.

Step-by-step case study of a manufacturing entrepreneur's journey through manufacturing, marketing, and selling frisbee golf discs (BiggerPockets Business Podcast)+ This is the soup-to-nuts story of how a 19-year-old bootstrapped and scrapped his way to a thriving manufacturing business producing frisbee golf discs.

Chinese recycling protocols and unintended consequences (WSJ)+ This is an epic story about the unintended consequences of well-intended plans. In an effort to improve trash recycling, the Chinese government is asking people to sort trash into 4 categories. In reaction to harsh enforcement, people have resorted to odd behaviors such as dousing their trash in noxious chemicals to throw it all in the hazardous waste category rather than sorting it. It pays to be mindful of second order consequences of policies, both in politics and in business.

MONEY

The improbable story behind Playtex's successful bid to build astronaut space suits (Fast Company)+ Flexibility (pun intended) can be a massive competitive advantage for businesses competing with slow bureaucratic competitors.

The assetization of personal goods (CB Insights)+ "With consumers valuing experiences over possessions, a rising number of goods categories — clothes, furniture, jewelry — are becoming available for rent or resell, or even split into shares that can be traded."

DEMAND

The definitive guide to email marketing from starting a distribution list to conversion (Backlinko) + A complete guide to email marketing in 2019. This expert-written guide covers list building strategies, open and conversion rates, and more.

As Facebook and Instagram ad costs rise, DTC brands find a role for Pinterest (Modern Retail)+ As Facebook and Instagram are beginning to suffer from noisy ads crowding out useful information, Pinterest is increasingly becoming a more direct way to get product information to consumers in helpful DIY 'pins.'

HUMAN RESOURCES

The power of performance reviews (First Round)+This is an in-depth study of what comprises a high quality performance review process and the numerous benefits implementing one can make on employee development, morale, and performance.

WEIRD

The $34,000 bottle of wine (Axios)+ Economics 101: low supply and high quality make for one heck of a price point.

How airplanes are put into storage (The Points Guy)+ An inside look at how airplane fleets are managed when they need to be idled in storage.

Instagram has turned obscure US sites into social media destinations (WSJ)+ As a side note, the selfie phenomenon may be applicable to your business if you have great views, beautiful products, or both!

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