Morning Report

What you need to know one minute before daylight

Capping Investor Profits, Managing Misfits, and 3-D Printing Houses

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DAYLIGHT  

Sam Altman is introducing Silicon Valley to a “capped profit” model, which limits what investors make: The idea “is to protect the mission by erecting guardrails that keep the company from the overpursuit of money. Altman, who is becoming OpenAI’s CEO, said it’s his ‘sincere hope’ that Silicon Valley sees this as a model for how companies can balance profit with purpose. He told Recode that he wants OpenAI to release documents for a ‘capped-profit’ structure that other companies can copy, too—calling it ‘a way to balance capitalism and sharing benefits.’

“Now, to be clear, the guardrails are pretty low here: Investors can still make 100 times their money in the new for-profit entity. The company says it will need to raise billions of dollars, so that’s a lot of opportunities to strike it rich.”

E-COMMERCE

Amazon will no longer tell third-party merchants that sell products on its platform that they cannot offer the same goods for a lower price on another website: “Critics have said the so-called “most favored nation,” or “price parity,” provisions could violate antitrust law. But even without them, the company still faces a broader set of attacks on its size and power in the United States and around the world.

HUMAN RESOURCES

Employees are making 911 suicide calls from Amazon warehouses: “Between October 2013 and October 2018, emergency workers were summoned to Amazon warehouses at least 189 times for suicide attempts, suicidal thoughts, and other mental-health episodes, according to 911 call logs, ambulance and police reports reviewed and analyzed by The Daily Beast.

“The reports came from 46 warehouses in 17 states—roughly a quarter of the sorting and fulfillment centers that comprise the company’s US network. Jurisdictions for other Amazon warehouses either did not have any suicide reports or declined requests for similar logs. Amazon, founded by the now-richest man in the world, has long faced criticism about working conditions at its warehouses: the high-pressure pace, the stultifying boredom, the timed bathroom breaks, and the digital surveillance that monitors performance.”

MARKETING

A single, pleading tweet turned everything around for a new donut shop in Missouri City, Texas. “‘My dad is sad cause no one is coming to his new donut shop,’ read a Saturday tweet from Billy By. The tweet included several pictures, including one of his father standing alone in Billy’s Donuts and another of the empty parking lot outside. By also included the address of the shop in the message thread.

“By Sunday afternoon, the shop had ‘completely sold out of donuts and kolaches,’ By tweeted, adding: ‘You are all amazing. I can’t thank everyone enough for coming out and supporting local businesses. This means so much to my family.’ As of late Sunday, By’s initial post had garnered nearly 220,000 retweets and nearly 470,000 likes.”

STARTUPS

A Texas startup says it will be able to use a 3-D printer to create a house within days by year-end, shaving 30 percent from total construction costs: “‘It’s no longer a science project,’ said Jason Ballard, co-founder and chief executive of the construction-technology company, Icon. The firm says the printer, unveiled Monday, can produce bungalows of up to 2,000 square feet, nearly as large as the typical 2,400-square-foot American home. Previous efforts in the US and Europe have mainly resulted in printing simple shelters, and the technology has been largely one of promise rather than reality.”

Stilt is issuing loans to immigrants, including H-1B visa holders and DACA recipients, groups who are typically shut out of traditional financing: “Stilt, which came out of the Y Combinator startup accelerator in 2016, looks at an applicant’s education, work history, job offers and even how often they’ve paid on time for subscription services to determine a kind of credit score. ‘If I can better understand how an immigrant is actually earning and spending money on a monthly basis, we can get a sense of how responsible this person is, [co-founder] Mittal [Singh] said.

“Based on that analysis, Stilt offers applicants unsecured personal loans with an average interest rate of 13 percent. Though that’s about twice the rate of a federal graduate student loan, Mittal said it’s lower than other options available to immigrants without credit history or permanent resident status.”

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RETAIL

American Eagle has opened a sneaker resale shop: “The teen retailer known for its jeans—and its growing Aerie lingerie brand, which has stolen share from Victoria’s Secret’s Pink label—has partnered with trendy Las Vegas sneaker consignment shop Urban Necessities for Urban’s first shop outside Sin City.

“The 1,900-square-foot in-store pop-up shop—carrying items that include Supreme streetwear and a pair of 2016 Nike self-lacing sneakers reselling for $50,000—will take up about a third of American Eagle’s first-floor space and stay open for a year, the first such long-term commitment for the retailer. And it’s not just a lease partnership; American Eagle has taken a stake in Urban Necessities to help fund its growth, Chad Kessler, global brand president for the retailer’s flagship brand, said in an interview.”

ZACK ELLER’S DEALS OF THE DAY

Waste Management has acquired Petro Waste Environmental, a services and solid waste disposal company. “Waste Management now has a strong presence in the Permian Basin with multiple disposal sites in West Texas and an expanding footprint in the Eagle Ford Shale Play with one disposal facility currently under construction and a second permitted in south Texas.”

Dialog Semiconductor has acquired FCI, a supplier of WiFi Products for $45 million. “The acquisition also brings to Dialog a broad range of new technologies and engineering capabilities with extensive design expertise in RF wireless communications for cellular 4G and 5G, Narrowband IoT (NB-IoT) transceiver, power amplifiers and deep sub-micron chip design.”

MANAGEMENT

Don’t overlook the disgruntled misfits on your team. When director Brad Bird first pitched “The Incredibles” to Pixar, the studio said “it would never work: It would take 10 years and cost $500 million to animate. But Mr. Bird persisted. He recruited a band of disgruntled people inside Pixar—misfits whose ideas had been ignored—to work with him. The resulting movie won two Oscars and grossed $631 million worldwide, outdoing all of Pixar’s previous successes. …

“Frustration … can actually be a source of creative fuel. When we’re frustrated, we reject the status quo, question the way things have always been done, and search for new and improved methods. But there’s evidence that dissatisfaction only promotes creativity when people feel committed to their team and have the support they need to pursue their ideas.”

ENERGY

The US will be exporting more oil than anyone else by 2024 (9 million barrels daily), according to the International Energy Agency. “IEA forecasts U.S. exports of crude oil and petroleum products will nearly double, hitting about 9 million barrels per day by 2024. At that level, the US will surpass Russia’s shipments and threaten to unseat Saudi Arabia, the current top exporter. ‘The second wave of the US shale revolution is coming,’ IEA Executive Director Fatih Birol said in a statement. It will see the United States account for 70 percent of the rise in global oil production and some 75 percent of the expansion in LNG trade over the next five years.”’

INNOVATION

Built For Zero is a non-profit, data-driven initiative that has ended chronic homelessness in three US cities and virtually ended veteran homelessness in nine others: “One key to the process is data, and a visual dashboard that lets agencies track people experiencing homelessness in real time. In Abilene, with a population a little more than 120,000, for example, the city located every homeless veteran, gathered information about each individual situation, and stored this information in a ‘by-name list’ that was continually updated. …

“Every agency in the city began working together and meeting to discuss how to get each veteran–21 people, as of February 2018–into housing. While watching the data, they could test interventions like working with local landlords and the public housing agency to prioritize people on the list. The average amount of time to house a veteran shrank from more than 40 days to 26.”

REAL ESTATE

Better close fast on that New York apartment, the city is considering a pied-à-terre tax: “Under the Senate’s bill, a pied-à-terre tax would institute a yearly tax on homes worth $5 million or more, and would apply to homes that do not serve as the buyer’s primary residence.”

SPOTLIGHT

Commerce Dinner

Thursday, May 9, 2019

6:30 pm – 8:30 pm

Murphy’s 997 Virginia Ave NE, Atlanta, GA 30306

Contact events@oxfordcenter.com 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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