A Bootstrapped Unicorn, How The Tax Cut Affected Business Investment and Call Cliff For a Number Two Who Can Do

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Good Tuesday Morning,

Daylight – Field Report from Cliff: The new crisis is talent and here’s a highly sought after Number Two Who Can Do, Herve Fages. Just finished up his role as President of Honeywell, Home Connected Division and a series of successful positions such as SVP of Marketing at Schneider Electric. Educated in France, a doer with an international touch. Does not desire Number One role as he is driven to get stuff done. If you have any questions, contact cliff@oxfordcenter.com

Pop Culture – The last of the comic book giants, Stan Lee, passed away yesterday at 95. Lee co-created iconic characters for Marvel Comics like Ant Man, the X-Men, Spider-Man, Thor, the Incredible Hulk, Black Panther and the Fantastic Four to name a few. Over the years he became an entertainment icon as his characters got adapted to the silver screen.

He appeared in cameos in several of the Marvel movies as a wink to comic book fans across the world. Only in 2009, after he moved to LA and made Hollywood connections, when Disney bought Marvel for $4 billion, did the mainstream recognize his icon status. His work ethic is now known as the Marvel Method – collaborate with an artist with a brainstormed idea, write a synopsis, examine the artist’s panels and fill in the word bubbles.

M&A – From Zack Eller – Bristow Group, a helicopter provider, acquired Columbia Helicopters, a service for heavy-lifting helicopters, in a $560 million deal. Columbia Helicopters will help with transportation from offshore oil rigs. Bristow also sells helicopters on their website for anyone that’s looking.

Mercer Advisors acquired Sigma Investment Management, a wealth management firm serving high net worth clients in the Pacific Northwest. Last week we talked about how Mercer is also in the process of acquiring Beacon Wealth Management. Beacon offers some services that could help members of Sigma. However, don’t expect much integration between the two groups.

Cable One agreed to buy Clearwave Communications, an operator of high-capacity fiber networks, from Stephens Capital Partners. Cable One is in operates in 21 states and opens them up to the Midwest market.

Diageo, the world’s largest liquor maker, is selling 19 of its brands including Seagram’s whiskey and Goldschlager to Sazera for $550 million to focus more on its premium brands like Tanqueray and Johnnie Walker. The sale comes from a place of confidence in that people will want to buy their high-end product. But remember, PBR is considered luxury beer in China. Tides change.

By the way, Pabst and MillerCoors are going to court with PBR claiming MillerCoors is trying to run it into the ground. MillerCoors brews and packages Pabst products and says Pabst doesn’t want to pay for the brewing capacity it uses.

Style – Word of the Day: insulate [ˈinsəˌlāt] verb

To prevent from feeling the effects of …

Economy – Many rural and low population towns rely on regional airlines for economic growth and when airlines leave, companies can follow suit, taking a large chunk of revenue. It’s a growing problem as 20 communities have lost air service over the last four years. The CEO of Caterpillar said a big reason the company moved its HQ from Peoria, IL to Chicago was better access to flights.

The arrival of Amazon in Crystal City, Virginia, is likely to strain housing and transportation issues just the way it did in Seattle – unless DC invests some of the money Amazon will bring.

“A rough guess is that 25,000 headquarters jobs paying an average of $100,000 each will induce or indirectly generate another 37,500 jobs elsewhere in the region, for a total job gain of 62,500. That should roughly translate into an extra $5 billion a year in regional income, and an extra $500 million in tax revenue for state and local governments.”

Cliff’s Take on Hollywood vs. Netflix – Talked with Cliff yesterday about the debate between the Hollywood system and the Netflix algorithm. Cliff agrees that neither is sustainable to churning out blockbusters because Hollywood’s too insulated and the algorithm is too isolating. “Instead of tagging and suggesting based on what individuals already watched,” Cliff says, “have Netflix’s suggestions be primarily founded on what other people are watching as well as how well-received it is. Let the public at large determine what’s hot.”

I agree, the algorithm goes overboard. I watched one period drama and my page was filled with suggestions for “The Crown,” “Downton Abbey” and “Foyle’s War.” Cliff went on to say Netflix needs something more like the Waze GPS app combined with movie rating site Rotten Tomatoes.

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Food Culture – Popular UK supermarket chain Tescos is stocking up on patties for the meat-free Beyond Burger as a vegan alternative. The plant-based meat has already made an impact in the US, and that demand actually delayed the UK rollout. Riding the wave now, but jury is still out on the nutritional value. In short, a mixed bag with potentially great returns.

Investment Banking – New Energy Capital invested in SunEast Development, a developer of solar-generating projects.

Hedge Funds – Motive Partners acquired a controlling stake in Lucht Probst Associates GmbH, a software and advisory services firm focused on the financial services industry.

IPO – Legacy Housing, a home manufacturer, filed for a $69 million IPO.

Moderna, a biotech startup creating medicines based on messenger RNA, filed for a $500 million IPO.

Venture Capital – SAP is paying $8 billion in cash for Qualtrics, a unicorn that makes  customer survey software and that resisted taking venture capital for more than a decade:  “Ryan [Smith], who reportedly once turned down a $500 million offer for his company, his family members and other major shareholders are now poised to get about $7 billion for their shares. Not bad for a CEO who got paid $100,000 in salary last year.”

Lia Diagnostics, a flushable and biodegradable pregnancy test maker, raised $2.6 million.

Festicket, a firm for music festival ticketing, raised $10.5 million.

Eximis Surgical, a medical device company, raised $7.5 million.

Idelic, a data and analytics platform for safety in the transportation industry, raised $2 million.

Spotlight – Entrepreneur Briefing – Holiday Party
December 5, 5:00 – 7:30 at Ray’s on the River.

Contact events@oxfordcenter.com for more info.

Did the Trump tax cut change corporate behavior? “It’s true that business spending on fixed investment – such as machinery, buildings and equipment – rose, jumping 11.5 percent and 8.7 percent during the first and second quarters. The 1Q jump was the fastest for investment since 2011. But that pace fizzled during the third quarter. Recently data showed 3Q business investment rose at an annual pace of 0.8 percent. The last quarter of the year – traditionally a big one for capital spending – will fill out the picture, but that data won’t be released until early 2019.” Did the Trump tax cut change anything about your company? Let us know.

And that’s what’s ahead.

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