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Good Wednesday Morning,
CNBC has a long, damning story about the culture at Facebook that includes this explanation for a toxic work environment where dissent is discouraged: “Many former employees blamed the cult-like atmosphere partly on Facebook’s performance review system, which requires employees to get reviews from approximately five of their peers twice a year. This peer review system pressures employees to forge friendships with colleagues at every possible opportunity, whether it be going to lunch together each day or hanging out after work.
“‘It’s a little bit of a popularity contest,’ said one manager who left the company in 2017. ‘You can cherry-pick the people who like you—maybe throw in one bad apple to equalize it.’ Peers can provide feedback directly to their colleagues, or they can send the reviews to the employee’s manager. That feedback is typically treated as anonymous and cannot be challenged. … ‘Your negative feedback can haunt you for all your days at Facebook.’”
Banks and financiers are having a Brexit of their own across the pond. The actual Brexit where the UK would leave the EU hasn’t happened yet, but $1 trillion in assets have been moved out, which rounds out to about ten percent of the country’s banking, according to the financial consulting firm EY:
“Many banks have set up new offices elsewhere in the European Union to safeguard their regional operations … which means they also have to move substantial assets there to satisfy EU regulators. Other firms are moving assets to protect clients against market volatility…” The breakup is set for less than three months from now, but Prime Minister Theresa May still needs support from Parliament to back the deal she’s made with the EU.
A new beverage called Recess is a sparkling water infused with CBD, a non-intoxicating hemp extract that is said to act as a pain reliever, anti-anxiety, and anti-inflammatory: “In the era before the commodified wellness movement, this kind of drink would have been tucked into the dimmest refrigerated corner of the spookiest health-food store, not in high demand at $29.99 for a six-pack. (The company has since caught up, but Recess says that a few weeks after its October start it had 4,000 back-orders.)
“Now, the mania for CBD (and the vague curiosity about adaptogens) means that Recess—the matte, sunset palette of the cans as appealing as a luxury lip gloss or free candy or a toy car—has lit up the shifting aspirations of the middle and upper classes of Millennials.”
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Grabango, has raised $18 million to develop “checkout-free technology” and help retailers compete with Amazon Go: “Grabango joins a growing number of startups working on technology to help retailers go cashierless, or at least need fewer cashiers. Zippin and Standard Cognition, both San Francisco-based startups, are also working on retail technology to get rid of the checkout line. The startups see a huge opportunity. Smart-store technologies are expected to generate more than $78 billion in annual transaction revenue by 2022, up from the expected $9.2 billion to be made this year, according to Juniper Research.”
After winning a Pulitzer Prize, three Grammy Awards, an Emmy Award, a MacArthur Fellowship, three Tony Awards and a star on the Hollywood Walk of Fame, Lin-Manuel Miranda is now going to try to do something really hard—operate a retail bookstore in Manhattan: “Mr. Miranda and three of his ‘Hamilton’ collaborators have purchased the Drama Book Shop, a century-old theater district purveyor of scripts, sheet music and other stage-related reading material. The store has been priced out of the Times Square real estate market and is looking for a new home.
By the way, Sears lives to fight another day. Earlier in the week, the retailer’s social media team appeared to have hit the denial stage by tweeting and responding to followers, “We’re down, but not out.” Stores will stay open for one more week. Chairman Edward Lampert, who took control in 2005, is expected to officially bid for the company in order to maintain it as a “going concern.” He is the largest shareholder and the only bidder not looking to liquidate.
From M&A Man Zack Eller: Plaid, a fintech service company that links bank accounts to fintech apps has acquired Quovo, a company that offers a similar service but for investment and brokerage data for just under $200 million. “San Francisco-based Plaid makes software platforms for consumers of fintech companies to connect with their banks and transact through application program interface (API)… Plaid customers include popular apps such as Venmo and Robinhood…Quovo also develops platforms similar to Plaid’s and counts SoFi, Stifel, Vanguard, Empower Retirement and John Hancock among its customers.”
FOOD AND DRINK
Grubhub’s expansion blitz in 2018 brought the food delivery service to more than 200 new locations, many of which are smaller cities like Rockford, Illinois. That push toward the ‘burbs may be a signal that app-based on-demand services aren’t just for large metros anymore. At RBI’s Bar & Grill in Rockford, according to owner and operator Andy Roiniotis, delivery makes up 10 percent of business, and about 60 percent of delivery orders come through Grubhub:
“Roiniotis has doubled down on the technology, learning how to read the data the platform generates and adjust his strategy accordingly. He monitors for slow times to decide when to run promotions and for busy times to know when to add an extra delivery driver. He’s figuring out when to depend on the service, and a late-November snowstorm that dropped almost a foot of snow on Rockford was one of those times. The business RBI’s did through Grubhub that day offset the income the restaurant lost from diners who stayed home due to the crummy weather, Roiniotis said.”
Food delivery services like UberEats are making ordering food literally as easy as pushing a button. But what if you want beer with your pizza? That is exactly what Pizza Hut is doing ahead of Super Bowl LIII. In 2017, it launched a beer delivery pilot program and is expanding it to a total of 1,000 participating locations by summer. Other chains have experimented with serving alcohol like Shake Shack, Chipotle and Taco Bell.
America’s carbon dioxide emissions rose by 3.4 percent in 2018, the biggest increase in eight years despite a steep drop in coal use. “The big takeaway for me is that we haven’t yet successfully decoupled US emissions growth from economic growth,” said Trevor Houser, a climate and energy analyst at the Rhodium Group.
Climate change could seriously hurt Alaska’s economy, according to a recent study conducted by the University of Alaska Anchorage: “The largest economic effects were associated with costs to prevent damage, relocate and replace infrastructure threatened by permafrost thaw, sea level rise and coastal erosion. The effects are estimated to cost the state an annual $340 to $700 million.”
Some of the most affected regions could be the rural areas, where energy prices are notoriously high. But warmer climate could mean paying less for heating and gas bills. Temperatures across the state have risen by as much as 1.5 degrees, which could save residents up to $150 million per year.
Shamanth Pereira got the idea for her startup came when she was pregnant with her second child. She created Invisibelly leggings to help women avoid showing off the “muffin top.” Pereira knows from firsthand experience that the recovery time for mothers after delivering a child can be a long process and can deeply affect their confidence. She got the idea from the ancient practice of Asian belly-wrapping, “‘I should say, my grandmother had 10 children and always did this, and she looked amazing.’” Taking more than a year to perfect her prototype and after pitching her concept to manufacturers, Pereira was able to focus on the type of customers who would buy her product: those in the “plus-size” demographic.
From Loren: I once attended a talk Ari Weinzweig, co-founder of Zingerman’s Community of Businesses, gave to 20 or 30 business owners. Ari brought a couple of his employees into the room, told us to ask them anything and left. Those employees spoke with such passion for their jobs (frontline positions in a deli) that they literally—I kid you not—brought tears to the eyes of some of the owners in the room.
Thursday on Mind Your Business, I will ask Ari to explain how he and co-founder Paul Saginaw built one of the most influential companies in America (You can read a sneak preview here).
I will be joined on the show by a special guest co-host: Adam Witty, founder of Advantage Media/FORBESBOOKS (and, yes, owner of the Oxford Center). The show airs on SiriusXM 132 at 1:00 p.m. ET.
And that’s what’s ahead.