A Bar Charging By the Hour, the GM Strike’s Ripple Effect, and the Cost of Fighting Chinese Counterfeiters

Get the Oxford Morning Report every day. Click here for a free subscription.

THE ECONOMY
As the GM strike enters its fourth week, the pain is spreading: “From suppliers to shippers to restaurants, the impact of the work stoppage is spreading through the web of businesses whose fates are tied to the biggest American automaker. Wael Tlaib, the owner of Phoenix Transit & Logistics, said he had laid off nearly his entire staff, including 80 drivers, and had dipped into his personal savings to keep his company afloat. ‘I might lose the business next week,’ Mr. Tlaib said. The most intense economic pain is being felt in the industrial Midwest, where GM’s network of plants and suppliers is thickest. It is a difficult time for the region’s manufacturing industry, which even before the strike was contending with slowing auto sales, a weakening global economy and the trade war.”

STARTUPS
Property-management startup Doorstead takes on the risk of filling vacancies and guarantees rent to property owners: “It acts as a property manager for single-family homes, but guarantees you rent at a specific rate starting in a certain number of days, even if it can’t fill the house or apartment. It also handles all the algorithmic pricing, advertising, tenant interviews, repairs, maintenance, leases and online payments in exchange for eight percent of rent. Owners just sit back and receive the money, making it much easier to profit off of distant real estate. The startup claims to earn users three percent to nine percent more than other property management models. ‘As consumers grow accustomed to zero-friction services, that approach is branching into bigger and bigger sectors like the trillions paid for long-term rentals. [Ryan] Waliany, Doorstead’s CEO, tells me, ‘We’re in the process of Uber’izing each step of the property management life cycle.’”

Notpla, the startup that manufactured the edible packaging for The Glenlivet’s new line of whiskey cocktails, wants to replace small-volume plastic food packaging with a seaweed-based capsule: “The capsule is not only edible but also composts almost quicker than fruit, [co-CEO Rodrigo] Garcia Gonzalez says. Depending on what’s inside the capsules, production takes place from a week to a month in advance. For the London Marathon earlier this year, Notpla produced 42,000 capsules (one for each participant). … ‘We don’t claim to have a solution that could replace every single packaging,’ Garcia Gonzalez says, ‘At the moment we are focusing on small volume, short-time consumption. We are proving that it works to a certain extent in quite a lot of different scenarios.’ Festivals, tennis tournaments and food delivery are some of those scenarios …”

Companies like Tend work to make going to the dentist more pleasant experience: “[Tend’s] experience is designed to help you feel relaxed. Before your appointment begins, the receptionist will guide you to a room with four sinks covered in blue and green marbling, like mouthwash being swished. By this time you will have chosen one of Tend’s premium, direct-to-consumer toothpastes like RiseWell, Hello, or Marvis. They will then hand you a new Quip toothbrush and under the soft white glow of tube lights you will ceremoniously brush your teeth. The lighting, it seems, is intentionally good. … Everything at Tend is meant to reduce the most unpleasant elements—and actual pain—of going to the dentist’s office. ‘Most [instruments] are air driven, they’re very loud—that whinny, horrible noise that everybody hates,’ says Marc Schlenoff, Tend’s VP of clinical development and former program director at Columbia University’s Advanced Education in General Dentistry. ‘These are electric, they don’t make that noise, there’s almost no vibration.’”

M&A
Hays Travel bought the recently defunct Thomas Cook, filling a void left by one of the world’s oldest tour companies after its collapse: “More than 25 percent of all former Thomas Cook employees who worked in retail have been hired as a result of the deal, which is expected to save up to 2,500 jobs, Hays said in a statement. The move will come as a major relief to many who found themselves unemployed overnight after Thomas Cook’s disintegration. … Hays said that in the immediate aftermath of the collapse of Thomas Cook, which left about 150,000 travelers from Britain in limbo, it had offered jobs to more than 600 of the defunct company’s employees. … [Hays’ managing director John Hays said,] ‘It is a game changer for us,’ he said, ‘almost trebling the number of shops we have and doubling our work force—and for the industry, which will get to keep some of its most talented people.’”

If you were forwarded this newsletter, click here for a free subscription

RETAIL
City governments are pushing back on the influx of dollar stores: “Around 14 million people live in food deserts, per the USDA. Experts say one contributor to the crisis is the meteoric rise of dollar chains, which are popping up on every street corner, crowding out other retailers and grocers, and very rarely selling fresh food. … Consider Birmingham, where close to 70 percent of city residents live in food deserts and the two dollar giants have opened more than 40 locations in the last decade. Since 2005, five Birmingham supermarkets—undercut by the cheap chains—have closed, and the city has struggled to get new grocers to come to town, the report notes. Now Birmingham has passed a pair of laws: The city is banning new dollar stores from setting up shop within a mile of an existing location and it’s financing the opening of new supermarkets.”

FOOD AND BEVERAGE
Open Concept is a St. Louis bar that charges patrons by the hour rather than by drink: “The bar launched Friday and plans to charge guests $10 per hour for access to premium beer, wine, and liquor; and $20 per hour for access to top-shelf beer, wine, and liquor. Owner Michael Butler tells The Takeout the first option includes mostly draft beer, draft wine, and draft cocktails, while the second option includes all those in addition to straight pours of alcohol. Open Concept bills itself as an ‘open bar’ to which guests pay to gain access; its website says ‘for an average price of $10 per hour you can drink as much as you can handle.’ … Customers who booked online will receive a confirmation code to show at the door; all customers also receive text messages at the bar alerting them as to how much time they have left on their booking.”

INTELLECTUAL PROPERTY
US small businesses are posting some wins against Chinese counterfeiters by cooperating with the Chinese government, but it’s costly and time consuming: “Larry Griffith … is president and CEO of Bohning Co., a small business in northern Michigan that … [manufactures] parts for archery equipment. … He said his sales in Australia, one of his most important markets, dropped to less than $100,000 from $500,000 a year due to counterfeit products from China. In response, he decided to apply for trademark protection in China, a process that took 14 months. He said Bohning has spent about $250,000 protecting its trademarks from counterfeiters in China and in other countries where the Chinese knockoffs surface.

“Because of that Chinese trademark protection, ‘police conducted successful raids on three [infringing] factories located in Ningbo. They were able to seize tens of thousands of dollars of counterfeit products in terms of the goods’ estimated value in the US, Griffith said. … Despite this success, the battle is far from over for Griffith. His company is still finding plants making counterfeits, and he says it will likely take years to work through them all. … ‘I think this is like paying taxes—it’s never going to go away,’ Griffith said. ‘But you can really damage it. I look at counterfeiters like a bully on a playground. If you stand up to them and give them hell, they’re going to find an easier target.’”

TAXES
A tax proposal from the Organization of Economic Cooperation and Development would primarily target multinational companies: “Crucially, the new proposal wouldn’t just target technology companies that are predominantly American, but would also affect makers of luxury goods and automobiles—among other products—that are based in Europe and other countries. The new rules would also give more taxing power to countries in which consumers are based, rather than where patents, licenses and brands are owned or where businesses have headquarters. … At issue is the growing digitization of the global economy. Decades ago, when companies sold their products abroad, their profits came mostly from manufactured goods. Digital services don’t require a local physical presence, enabling tech companies to lower their tax bills by basing patents, licenses and trademarks—to which their profits are attributed—in low-tax countries.”

MANAGEMENT
In a business dominated by men on as well as off the field, the Philadelphia Eagles’ front office is run mostly by women: “While [Jeffrey Lurie] wasn’t focused on diversity of gender, he says the Eagles were looking for something else: diversity of thought. They didn’t want executives who viewed things completely alike, and that meant looking for candidates who might not typically be interviewed in football circles. … The Eagles realized that if they wanted to hire the most well-rounded candidates, it was foolish to look within the same industry that has been dominated by backward hiring practices for its century of existence. … 

“Eagles’ brass points to one decision in particular that exemplifies the benefits of their internal evolution. Back in 2013, they gathered to hire a new coach. The circle of decision-makers was small, and it was all men. Three years later, after Chip Kelly had flamed out, the process began all over again. This time, the circle around Lurie was larger. It also included a number of women, including Tina D’Orazio, Lurie’s chief of staff. ‘It was a little bit different of a process this time around,’ D’Orazio says.”

VENTURE CAPITAL 
BrainCheck, a developer of a health assessment and management application, raised $8 million in a Series A round.

Contentstack, a developer of a cloud-based content management system, raised $31.5 million in a Series A round.

HUMAN RESOURCES
You don’t have to be a rocket scientist to work in Silicon Valley, but a lot of them do: “To understand what’s driving astrophysicists into consumer product startups, consider the recent explosion of machine learning. Astrophysicists, who wrangle massive amounts of data collected from high-powered telescopes that survey the sky, have long used machine learning models, which ‘train’ computers to perform tasks based on examples. Tell a computer what to recognize in one intergalactic snapshot and it can do the same for 30 million more and start to make predictions. But machine learning can also be used to make predictions about customers, and around 2012, corporations started to staff up with people who knew how to deploy it.

“These days, machine learning drives everything from Stitch Fix’s curated boxes of clothes to Netflix’s personalized movie recommendations. How does Spotify perfectly predict the songs that will surprise and delight you in its weekly personalized playlists? That’s machine learning at work. And while machine learning now constitutes its own field of study, because scientists from fields like astrophysicists have been working with those kinds of models for years, they’re natural hires on data science teams. ‘We were already in Big Data before Big Data became a thing,’ says Sudeep Das, an astrophysicist who now works at Netflix.”

And that’s what’s ahead.

Please send comments and suggestions to mattg@oxfordcenter.com and lfeldman@oxfordcenter.com

BECOME AN OXFORD MEMBER