Finding Time to Create a Digital Presence, Making Airplane Wi-Fi Less Terrible, Rebuilding American Manufacturing

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SPOTLIGHT

Do entrepreneurs and business owners need a social media presence? If so, what platforms should they be on? What should they write about? And who has time to figure all of this out? Loren will be addressing those questions on Mind Your Business today when his guests will be Jay Goltz, an experienced business owner who is decidedly not a digital native, and Marc Reichel, who is director of business development at Qnary, which helps entrepreneurs like Jay optimize their digital footprint. Tune in when the show airs at 1:00 p.m. ET on SiriusXM 132 to see if Marc can sell Jay and to ask your own questions: 844-942-7866.

RETAIL

Amazon is making all kinds of claims about the success of Prime Dayincluding that people bought more than $2 billion worth of goods from small and medium-sized businessesbut those claims are impossible to assess: “Amazon has a long and proud record of semi-announcing the results of major promotional events like this, and its latest press release upholds the tradition. As per usual, the announcement uses a lot of superlatives without ever actually saying anything substantive about total sales for the event, or how they compared with previous Prime Days on a computational level. And the comparisons it does provide are hampered by the fact that last year Amazon defined a Prime Day as 36 hours; this year it was 48 hours.”

Big box retailers like Target and Walmart think they have one big advantage over Amazonstores that they can use as fulfillment centers: “But there are limitations on just how much heavy lifting the store can do when it comes to fulfilling online orders. Volume is one issue. E-commerce fulfillment centers can carry thousands more products than even the largest big-box stores. And using stores as fulfillment centers still comes with additional costs—retailers have to retrain or hire additional staff in order to be able to simultaneously help customers in-store and fulfill online orders. They also have to create space to ship and pack orders that could be dedicated to displaying more product. ‘It’s not one of those things where you can snap your fingers and make it happen,’ Andrew Lipsman, e-commerce analyst for eMarketer said.”

The Video Store, a holdout in Levittown, Pa., is closing shop: “The couple announced last week that the store’s final day of business will be Sept. 30, and that they’ll rent movies up until the last minute, or until their ‘retirement sale’ liquidates the stock that remains. It’s not a downturn in business that’s forcing their hand. As Netflix and Redbox rose up, the couple supplemented their rentals with a variety of services. John Tardino, 66, used his background in electronics engineering to create a robust photo-transfer business, converting customers’ deteriorating VHS or Super 8 footage to digital formats. His wife became a notary, and local police departments started sending people her way for fingerprinting or passport photos.

“The labor got to them, a solid three decades of working seven days a week. More recently, Tardino’s health has taken a turn. He declined to discuss specifics, but the illness required surgery, he said. ‘Part of it is age; we want to try something else,’ he said. ‘We wanted to take it at a slower pace, focus more on my health, rather than be in the store all the time.’” Believe it or not, there are other video-store holdouts, including a chain with more than $400 million in revenue.

PRICING

Netflix lost 126,000 paid subscribers in the second quarter: “In January, the company announced that it was raising its rates by anywhere from 13 to 18 percent, depending on the subscription plan, with the increases hitting existing subscribers in March. The second quarter is typically Netflix’s weakest time of year, but its performance this time was unusually poor. In its letter to shareholders on Wednesday, the company acknowledged that the higher subscription cost had something to do with its failure to meet second-quarter expectations. … The company, based in Los Gatos, Calif., tends to raise its prices around every 18 months. It decided on the latest increase at least partly because it burns a lot of cash, much of it borrowed, spending wildly on Hollywood talent and lavish promotional events.”

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BUSINESS TRAVEL

Airlines are racing to make airplane Wi-Fi less terrible: “For many travelers, Wi-Fi on planes has gone from luxury to expectation. And the good news is that airborne Wi-Fi providers say the service will likely become free on most flights in about two years. JetBlue already offers free Wi-Fi from gate to gate. Alaska, Delta, Southwest and a bunch of foreign carriers offer free text messaging. But other airlines must upgrade their planes to satellite service so that they can handle heavy usage—lots of passengers streaming video, for example. Once that happens, one huge carrier, likely Delta, is going to make Wi-Fi free on its flights and others will follow, industry officials predict.”

MANUFACTURING

When Red Wing Shoe Company decided to introduce a work boot made in the US, the process took two years: “The Burnside leather boot hit Red Wing stores in May, priced at up to $320. It was the first time the cluttered facility, known locally as Plant 2, had made an entirely new work boot from ‘cut to box’ in roughly two decades. ‘The reality was that we had not developed a lot of new products for US manufacturing,’ said Mark Urdahl, a former General Mills executive who joined Red Wing 14 years ago and became chief executive in 2015. ‘You start to lose the skill set—through retirement and attrition—of people who have the ability to develop footwear here.’ … 

“Rebuilding US manufacturing presents complex challenges for industries like footwear, electronics and bicycles, where most of the supply chain has moved abroad. Even a company like Red Wing—with a long history of US production, private ownership and control over a key raw material and distribution—makes more than two-thirds of its shoes abroad. ‘We as a country don’t have the capacity or, frankly, the desire to create the low-paying manufacturing jobs you would need to replicate China’s capacity,’ said Patrick Fox, an executive with VF Corp., which generates nearly $14 billion in annual sales from brands including Timberland, The North Face and Vans, in testimony before the US Trade Representative.”

HUMAN RESOURCES

The owner of a manufacturing business (and former Republican legislator) argues that the free market doesn’t work for health care: “Relieving businesses of the responsibility of employer-sponsored insurance, which is now priced at $19,616 a year for a family plan, will help expand our economy—by creating jobs, raising wages, maintaining our ability to compete internationally, and supporting small and mid-sized businesses like mine that are starting to buckle under the burden. In recent years, my costs have been rising eight percent annually, and that’s low compared to some of my peers. Medicare for All will also encourage entrepreneurship, the bedrock of our economy. Why? Because people can pursue new jobs and careers knowing that they won’t lose access to health care for themselves or their families.”

THE ECONOMY

The real estate market is hurting because foreign buyers, led by the Chinese, are buying fewer US homes: “Foreigners bought less than $78 billion worth of US residential real estate in the year that ended in March—a 36 percent decline from $121 billion the previous year, according to a report released Wednesday by the National Association of Realtors. Their pullback is leading to price cuts in several coastal cities and causing new condos to sit empty. A slowing global economy, a simmering trade dispute with China, President Trump’s anti-immigration rhetoric and a stronger US dollar have made America a less hospitable place for foreigners to invest over the last year, economists and real-estate agents said.”

CULTURE

Millennials are shelling out cash for wedding weekends even to the point of going broke: “The pressure to afford lavish nights out and trips away is exacerbated by the need for everything to be Instagrammable. Gone are the days when a night out on the town, complete with stripper and penis straws stuck into a cocktail bowl will suffice. It seems I’m not alone in this predicament. A recent survey by CompareCards, a division of LendingTree, found that 58 percent of bridesmaids and 61 percent of maids of honor felt pressured to spend money on bridal party-related expenses and say the financial pressure strained their relationship with the bride. The survey also said 43 percent of groomsmen and half of those who were the best man, said they also felt the strain of being in a wedding. And the survey said 37 percent of people—I wish I had been one of them—have declined being in a wedding because of the costs.”

MARKETING

Startup Genies creates avatar versions of a celebrity’s likeness to enhance the personality’s marketing influence on social media: “[Co-founder Akash] Nigam’s company produces 3D animated likenesses that can be playfully customized and used across dozens of messaging apps. The company has several brand partners, including a deal with Gucci that allows users to dress their mini-me in the fashion label’s clothing. Genies also recently launched an agency that creates avatars for such high-profile clients as Offset, DJ Khaled, Steve Aoki, and sports stars like Russell Westbrook and helps them line up sponsorship opportunities with brands. Genies can create the content on behalf of its clients and simply run it past them for approval before posting on Instagram.”

MANAGEMENT

Heath Ceramics was on the brink of collapse when two new owners changed the company’s business model in 2003: “They’ve shifted the business from wholesale to direct-to-consumer, built a San Francisco experiential destination, expanded into the bridal registry business, and forged creative collaborations with everyone from fashion designers to furniture makers. But perhaps the couple’s biggest impact, says Bailey, will come from employing a ‘slow business’ approach to growth that enables the company to go all-in on creativity, quality, and transparency. Since Bailey and Petravic took over, Heath has steadily grown from 25 employees to 246 and from $1.2 million in sales to $30 million, putting it on track to be debt-free by the end of 2020. Earlier this year, they even converted eight percent of the company to an ESOP, with the goal of increasing that to 25 percent.” 

GAMING

Kids and teens are among the top virtual spenders through in-game purchases and it’s becoming a cause for concern: “Lawyers last month filed suit in US District Court for the Northern District of California against ‘Fortnite’ maker Epic Games Inc. on behalf of an anonymous minor and his mother, claiming that the game doesn’t include a way for parents to make informed decisions about minors’ in-game purchases or to track players’ spending history. The suit is seeking class-action certification. ‘Fortnite’ has made $3.9 billion in revenue since its July 2017 launch, with almost all of it coming from microtransactions, estimates Nielsen’s SuperData. Players can buy outfits (aka ‘skins’), and even dances and other moves known as ‘emotes.’”

OXFORD STRATEGIC ADVISORY DEAL OF THE DAY  

Philips, a Dutch technology conglomerate has acquired Medumo, a company that uses email and SMS messages to deliver instructions to hospital patients. 

VENTURE CAPITAL  

Ubiquitilink, a provider of mobile connectivity services intended to provide universal global connectivity directly to standard cell phones, raised $5.2 million in a Seed Round.

Turo, a peer-to-peer car sharing marketplace designed to help users to rent a car from local car owners, raised $250 million in a Series E round.

Fortify, a manufacturer of digital composites, raised $10.6 million in a Series A round.

And that’s what’s ahead.

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

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