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Are corporate cultures becoming too cultish? “Many of the companies we celebrate are treading that fine line; Apple, Tesla, Zappos, Southwest Airlines, Nordstrom, and Harley-Davidson are a few examples. They have all built a cult-like following among their customers and, increasingly, are encouraging cultish behaviors in their workforces as well.
“What characterizes corporate cult is the degree of control management exercises over employees’ thinking and behavior. This starts with recruitment, where employees are screened for their ‘fit.’ Once in, they then see that on-boarding processes and incentive systems tend to reinforce the need for alignment. This drives the way people communicate, make decisions, evaluate each other, as well as hiring, promotion and termination decisions. In such a climate, individualism is discouraged, and group-think prevails. …
“How can you tell when a company is becoming a cult? Language is a big clue. Corporate cults typically create their own terminology to reinforce the sense of belonging. In Disney, for example, employees are ‘cast members’ and ‘customers’ are ‘guests.’”
Maybe Uber and Lyft should have figured out how to pay drivers fairly before going public: “Although Uber and Lyft could make a comeback, the rocky beginning raises questions about whether gig-economy companies losing billions of dollars a year will be sustainable—and whether the public pressure to make profits will put an even greater squeeze on the millions of drivers who work for them.
“Uber has been undergoing a deep overhaul under new leadership to create a more stable, market-ready company, but the poor performance of its shares is a sign the company is still a risky bet. … A host of other gig-economy startups have been planning to go public in Lyft and Uber’s wake, including grocery service Instacart and delivery companies Postmates and Doordash, which observers say are unprofitable largely because they are also dependent on contract workers.”
Delta Airlines launched an anti-union ad campaign stating that buying a video game console is worth more than paying union dues. “While the people who helped craft that message may have thought they made something pithy and memorable, the result wasn’t quite that. Instead, Delta comes off more like a rich grandfather explaining to his grandchildren that they should be happy with the Applebee’s gift card he set aside for them in his will. In its last earnings report, Delta exceeded revenue expectations–hitting $10.47 billion; its profits jumped 31 percent to $730 million.”
FOOD AND BEVERAGE
Los Angeles has become a hotbed of Nashville hot chicken: “In the last three years, more than two dozen hot chicken restaurants, pop-ups and food trucks have opened in and around the city: There’s Angry Birdz, Raging Hot, Dave’s Hot Chicken, Hotties, Bred Hot Chicken, Chips N’ Chicks, Red Chickz, Blazin’ Hot, Blazin’ Hens, Hot Motha Clucker, Hawaiian Hot Chicken, Flamin Hot Chicken, Lou’s Hot Chicken and Holy Hot Chicken among them. And the descriptor ‘Nashville hot’ has detached itself from chicken—there’s Nashville hot shrimp at Yours Truly in Venice and Nashville hot quail at Nightshade in the Arts District.
“But somehow, getting lost in the whirlwind success of hot chicken, is [Kim] Prince. She’s still struggling to get her hot chicken business off the ground, despite being the only one with any ties to the family that started it all, and one of the few African Americans making hot chicken in Los Angeles. … ‘Somewhere around 2013, I opened up my big mouth and said we were scouting LA, and that’s what sparked it,’ Prince said. ‘And people beat us to the punch.’”
A farming startup is making food safer by growing it without soil: “Sunnyvale-based ÆssenseGrows is growing everything from strawberries to flowers to cannabis in sterile indoor environments where the plants never touch dirt and are tended by sensor-driven machines that provide exactly the right ‘dose’ of irrigation, nutrients and light the plant needs at any particular stage of its growing cycle. If something goes wrong, the ‘farmer’ gets a notice on a mobile phone app that can fix things at the touch of a fingertip. The technology is still too expensive to be feasible for growing anything in the United States except for the highest-value plants—say, a marijuana plant worth $300.”
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Here’s how Trump’s tariffs will hit American shopping carts: “The official $200 billion tariff list starts with ‘frozen retail cuts of meat of swine’ and ends with ‘monopods, bipods, tripods and similar articles of aluminum.’ In between are 194 pages of products that you can find on store shelves across the country. Economists and business owners expect the tariff increases to hit consumers in two ways. Stores that were already passing on the cost of the 10 percent tariffs will now pass on a higher cost. And businesses large and small that previously tried to shield customers from the smaller tariffs will now find it almost impossible to avoid passing some or all of that tax on to Americans who buy their products.”
Regardless of whether President Trump secures a trade deal with China, the economic relationship between the countries has changed: “Chinese consumers for the first time last year bought more Cadillacs than Americans did, helping drive profits at General Motors. And though the designs for those Cadillacs may have been drafted in Detroit, nearly all of the luxury automobiles were assembled in China by some of GM’s nearly 60,000 local workers. This growing dynamic—of American companies serving Chinese consumers with products made in China—marks a shift in global trade that could pose a significant challenge to President Trump’s ‘America First’ agenda. …”
Even a company that is trying to make bikes in the US is suffering because of the tariffs: “Though the bulk of my business comes from imported bikes, I also own and operate a factory in Manning, SC, which produces one of our lines, BCA Bikes. When we opened our doors in 2014, initially hiring 47 employees, we were bucking a trend: More than 95 percent of all bicycles sold in the United States are manufactured in China. But with high employee turnover and labor costs there rising, we decided to make an investment in our long-term growth. Today, our factory is responsible for more than half of the roughly 500,000 bicycles produced in the United States each year. Before President Trump’s trade war, we had plans to grow even further. …
“Ever since our factory opened, I had planned to bring more phases of the manufacturing process home. We’d start by importing steel tubes and welding the bike frames ourselves; from there, we’d buy American steel and make the tubes. Our factory employs 125 people, but that could grow to 300, I thought: Eventually, we could build 1 million bicycles, right here in the United States. But Trump’s protectionist measures are getting in our way. We don’t plan to lay anyone off, but until the situation stabilizes and we have some clarity about our future, we’ll just continue buying bike frames from China.”
TV pitches for prescription drugs will now require prices: “Drug pricing details are expected to appear in text toward the end of commercials, when potential side effects are disclosed. TV viewers should notice the change later this year, perhaps as early as the summer. The government is hoping that patients armed with prices will start discussing affordability with their doctors, and gradually that will put pressure on drugmakers to keep costs of brand-name drugs in check.”
ZACK AND GRANT’S DEAL OF THE DAY
Dogfish Head Craft Brewery, a Delaware-based producer of beers and other spirits, has been acquired by Boston Beer Co. for $300 million. This transaction will combine two of the nation’s top 15 craft brewers to better take on the competition from big beer and a saturated craft beer landscape. Sam Calagione, founder of Dogfish, said “Together, we’ll be better positioned to compete with larger international beer conglomerates that are more than 50x our size, despite our combined company’s volume representing less than two percent of the beer sold in the US.”
Regulators have approved the Long-Term Stock Exchange which plans to give high-growth tech companies more options to list shares outside traditional exchanges: “The LTSE is a bid to build a stock exchange in the country’s tech capital that appeals to hot startups, particularly those that are money-losing and want the luxury of focusing on long-term innovation even while trading in the glare of the public markets.
“The stock exchange was proposed to the SEC in November by technology entrepreneur, author and startup adviser Eric Ries, who has been working on the idea for years. He raised $19 million from venture capitalists to get his project off the ground, but approval from US regulators was necessary to launch the exchange. Ries says the public market’s focus on short-term results leads to a decline in innovation, something LTSE wants to reverse. … ‘Everyone is incentivized to make the numbers quarter to quarter,’ Ries said in a recent interview with Reuters.”
The nonprofit, New Story, is working to build the world’s first 3D-printed neighborhood. “The frame of the small houses, which can be configured to accommodate different family sizes, can be 3D printed in less than a day. It’s a way both to tackle the problem of housing more quickly–more than a billion people currently live without safe shelter, according to the nonprofit–and at a lower cost than traditional building. New Story says that the houses will be more affordable than the standard low-cost homes it currently builds in the developing world, which cost around $7,000.”
A deli meat company, Dietz & Watson, is using a pop-up clothing store to promote its meat: “The two were drawn into the Dietz & Watson ‘Delishop,’ a 3,000-square-foot pop-up at Fifth and South Streets on Wednesday by the gear they saw in the windows. Once inside, they saw the ‘body by bacon’ one-piece bathing suit, a ‘jawn’ tote bag, an ‘i <3 wieners’ T-shirt, and a ‘little ham’ onesie. One small section features cotton shirts, fanny packs, boxers, and baseball caps, all with the saying ‘Dietz Nuts.’
“This pop-up is part of the company’s bid to attract younger consumers and stand out in a crowded marketplace. Arby’s released a $25 subscription box in January that gives customers one package a month for six months full of branded merchandise. Chobani rolled out a children’s clothing line in March to promote its Greek yogurt kids’ snacks. And Auntie Anne’s website promotes its ‘pretzel swag,’ with pretzel-themed leggings, tote bags, sweatshirts, and T-shirts, with all proceeds going to Alex’s Lemonade Stand Foundation.”
Loyalty programs are “a honeypot for hackers”: “As they shift from paper and plastic to apps and websites, [loyalty programs] are increasingly tracking a currency that can be more valuable than how much you spend: personal data. As a result, the programs know things about you that some of your friends may not, like your favorite flavor (mango), when your cravings strike (early afternoon) and how you pay (with your Visa), in addition to billing details and contact information. Hackers are in close pursuit. One loyalty-fraud prevention group estimates, conservatively, that $1 billion a year is lost to crime related to the programs. …
“Rewards memberships have become ‘the single best source of individual customer data relevant to developing personalized marketing,’ said Thomas O’Toole, executive director of the Kellogg School of Management’s data analytics program at Northwestern University. ‘That’s where the ballgame is heading.’”
If you were going to copy a logo, would you copy one that has been accused of resembling genitalia? “The close similarities between the designs led some people to point out the obvious to Sears in the comments when it revealed its new logo on Facebook and Twitter on May 1. Asked about the logo, Sears said it was ‘was created to represent both home and heart, this shape also conveys motion through an infinity loop, reminiscent of one embracing both home and life.’ … Airbnb did not respond to a request for comment. The 11-year old company unveiled its version of the logo in 2014. It generated its own controversy on social media at that time. Some suggested it looked like something not safe for work.”
And that’s what’s ahead.