Why Americans Don’t Buy Grocers Online, When a Startup Founder Dies Unexpectedly

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Good Friday Morning,

DAYLIGHT  

In an attempt to change the debate on climate change, House Democrats released a resolution that is unlikely to pass any time soon, but will almost certainly be part of the political conversation through the 2020 presidential election: “It includes a 10-year commitment to convert ‘100 percent of the power demand in the United States’ to ‘clean, renewable and zero-emission energy sources,’ to upgrade ‘all existing buildings’ to meet energy efficiency requirements, and to expand high-speed rail so broadly that most air travel would be rendered obsolete.”

What do you think of the Green New Deal? Send your thoughts to Matt and Loren (mattg@oxfordcenter.com and lfeldman@oxfordcenter.com), and we’ll publish them in a Morning Report next week.

MANAGEMENT

When the CEO of a startup dies unexpectedly: “Matt was the kind of leader who would jump up on the table on Monday morning and give inspirational speeches with metaphors about climbing mountains and enjoying the views along the way. He was an incredibly fit guy. He rode his bike into work every day. For the month or so leading up to his diagnosis, he’d had some back problems. Everybody was just kind of laughing about it: ‘Well, he’s finally getting old. I guess he is human after all.’

“He called me early one morning, earlier than we would usually talk. He said, ‘You know, something’s wrong. I had to go to the ER last night. I’m in the hospital right now and they’re running some tests.’ Twenty minutes later he called me again and said, ‘I’ve got bad news. I was diagnosed with pancreatic cancer. I’ve got to deal with this, so I’m going to step down, and I’d like you to be CEO.’ He had already talked to the board and made sure they were supportive of it.”

MEDIA

A business newsletter aimed at Millennials has topped a million readers: “With a lean, profitable operation of ten full-time employees, Morning Brew’s revenue topped $3 million in 2018, according to the company. Morning Brew’s native advertising revenue averages $200,000 a week thanks to more than 40 active clients, including Microsoft, JPMorgan and Allbirds. Clients are charged for every unique reader who actually opens the email. ‘They get what they pay for,’ Rief says. ‘If it doesn’t do well, that’s on us, not them.’”

RETAIL

Americans are less likely to buy groceries online than shoppers in other countries: “Twenty-two percent of apparel sales and 30 percent of computer and electronics sales happen online today, but the same can be said for only three percent of grocery sales, according to a report from Deutsche Bank Securities…

Until online grocery-delivery companies are delivering to hundreds of homes in the same neighborhood, it will be very hard for them to make a profit. Though it is an $800 billion business, grocery is famously low-margin; most grocery stores are barely profitable as it is. Add on the labor, equipment, and gas costs of bringing food to people’s doors quickly and cheaply, and you have a business that seems all but guaranteed to fail. ‘No one has made any great amount of money selling groceries online,’ Sucharita Kodali, an analyst with Forrester Research, told me. ‘In fact, there have been a lot more people losing money.’”

Foot Locker has invested $100 million in a secondary sneaker platform: “GOAT, which takes its name from an acronym for the sports phrase ‘Greatest Of All-Time,’ was founded in 2015 by college friends Eddy Lu and Daishin Sugano. The serial entrepreneurs had hatched the idea for the company two years earlier, after Sugano bought a pair of Air Jordan V Grapes, a shoe that was being re-released by Nike 23 years after its debut. The sneakers Sugano bought on eBay turned out to be fakes, a major problem in the sneaker industry and in particular for Nike, which is one of the most counterfeited brands in the world.

“The duo set out to establish an authentication process for reselling sneakers. Lu says they wanted their company to be the ‘world’s most trusted marketplace.’ Shoes are shipped through one of GOAT’s 12 facilities around the world for authentication before going to the buyer. GOAT takes a ten percent to 30 percent cut of every transaction.”

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TECHNOLOGY

Retailers and convenience stores like Walgreens are replacing the see-through refrigerator doors with screens flashing promotional images that are more like Alexa and Siri than you could imagine: “A startup named Cooler Screens is piloting a new door for commercial freezers and refrigerators equipped with a camera, motion sensors, and eye tracking in six Walgreens pharmacies around the country, including the one off of Union Square. The doors can discern your gender, your general age range, what products you’re looking at, how long you’re standing there, and even what your emotional response is to a particular product…

“The company is also looking into ways that consumers might opt-in to sharing more detailed information with the system. For instance, one day you might be able to indicate in the Walgreens app that you like gluten-free products. Then when you walk by a set of Cooler Screens in a store, a screen could highlight the gluten-free options for you.”

A new study shows that wintry weather drains the batteries of electronic vehicles: “Different factors can affect the loss of range, he and other experts have noted. Simply turning on the electric vehicles AAA studied in 20-degree weather revealed a 12 percent loss in range. On a vehicle like the Chevy Bolt, with an EPA rating of 238 miles per charge, that would drop range to 209 miles. But that part of the test assumed operating the vehicle with cabin heat and seat heaters turned off.”

TAXES

President Trump’s tax law has created jobsfor tax lawyers and accountants: “The overhaul continues to generate thousands of jobs for tax professionals as companies analyze the law, restructure operations and rely on tax experts to do all the work flowing from the legislation and IRS regulations, according to lawyers and executives at tax firms. Business is unusually strong and should remain robust for years as a result of the law, they say.

“US accounting firms crossed the one-million-employee threshold last year, according to the Labor Department. Job growth in the sector in the first year of the law was 3.6 percent, the second-strongest year in the current expansion.”

VENTURE CAPITAL

Amazon has invested in a driverless car startup, Aurora, that has been valued at more than $2 billion: “Aurora, founded in 2017 by veterans of autonomous-vehicle development, says it is developing a mixture of software and hardware that help vehicles see and navigate the world. The company early on signed deals with automakers Volkswagen AG and Hyundai Motor Co. to eventually install its technology in their vehicles.

The technology is a natural fit for Amazon, which could use autonomous forklifts, trucks and drones to shuttle packages quickly and lower its logistical costs. Amazon’s delivery expenses rose 27 percent to $27.7 billion last year, and the company has sought to carry more packages itself and rely less on shippers like FedEx Corp.

A self-driving truck startup, Ike, has raised $52 millioneven though it isn’t trying to be first: “ Ike is working on determining the design and architecture first before laying the foundation—to use a comparison to building a home…This will likely mean Ike’s self-driving trucks will launch after others. But its founders believe that when they do hit the road at scale, it will be a validated and valuable product that won’t need constant tweaks or even a pivot.”

HUMAN RESOURCES

Facebook says it plans to award employee bonuses based on contributions to “social progress”: “Previously, Facebook’s employee bonus formula was based on six factors, including user growth, increased sharing by users, and improvements in product quality. Now the company is adjusting its bonus calculations to better reflect its updated goals, outlined by CEO Mark Zuckerberg during Facebook’s most recent quarterly earnings call on Jan. 30.

“Those goals are to make progress on the major social issues facing the company; build new experiences that improve people’s lives today and set the stage for bigger improvements in the future; build Facebook’s business by supporting the businesses that rely on its services; and communicate better about the company and its role in the world. The shift is at least partly driven by the desire to incentivize workers to prioritize safety and security on the platform.”

GOING GLOBAL

Business leaders are telling President Trump that he needs to make a trade deal with China before the March 1 deadline: “Among those pushing for a deal is Blackstone Group Chief Executive Stephen Schwarzman, who has been phoning Mr. Trump and his senior advisers to warn that the failure to strike a deal will undermine the economy and roil markets, which are anticipating an end to US-China economic hostilities.”

SPOTLIGHT

Oxford Commerce Dinner

Tuesday, February 12, 2019

Cooks & Soldiers Restaurant

691 14th St NW, Atlanta, GA 30318

Contact events@oxfordcenter.com for more info and to RSVP.

And that’s what’s ahead.

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

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