Google’s Monopoly, How Tinder Makes Money, and Someone Figures Out TikTok

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MARKETING

While most brands have taken a wait-and-see approach, Chipotle has figured out how to use video-sharing platform TikTok (which now has more users than all platforms other than Facebook, YouTube, and Instagram): “Two-thirds of TikTok’s users are under 30. And, as this cohort morphs into the largest generation in US history, the platform certainly gains more appeal. This trajectory is exactly why Chipotle decided to give it a go, so far the only major restaurant chain to have an official TikTok channel. … 

“Chipotle’s team first met with TikTok’s team at the end of last year, but it was months before the right content presented itself. Perhaps serendipitously, it was a Chipotle employee–Daniel Vasquez from Frederick, Maryland–who supplied that a-ha moment with his lid flip stunt (it is pretty mesmerizing, if you haven’t seen it). That initial six-day campaign, which ran in early May, generated 104 million video starts. By June 6, the #ChipotleLidFlip hashtag had more than 230 million views. …

“It was no doubt enough for Chipotle to keep looking for TikTok-esque opportunities. That happened late last month when the brand issued a #GuacDance challenge, encouraging fans to show off their avocado-themed dance moves inspired by Dr. Jean’s “Guacamole Song.” The challenge generated 250,000 video submissions and 430 million video starts in six days, and became TikTok’s highest-performing branded challenge in the US to date. The promotion also resulted in Chipotle’s biggest guacamole day ever, with more than 800,000 sides served.”

Is Google’s monopoly killing small business? Gene Marks thinks so: “Today everyone needs search. Every company needs a way to be found online, and the only way is down Google Avenue. Sure you can argue that Google competes with Microsoft, Amazon, Apple and other tech giants. But not really. Not when it comes to search.

“This is a monopoly that’s killing small businesses, and it needs to be broken up. According to [Moz CEO Sarah]  Bird, Google and its online properties like YouTube, Gmail and Chrome control close to 95 percent of the search going on in this world. That’s trillions and trillions of potential revenues that rely on one company’s algorithms. And if the big brands can’t figure this stuff out, how in the world can a small business even consider it?

“A small business can’t. It’s because the world of Google is rigged against us. We set up a budget ‘suggested’ by Google that’s based on ‘recommendations’ of keywords made by Google who then mysteriously displays our ads wherever Google chooses, which then drains our budget and then–here’s the kicker–Google reports back to us how our money was spent…by Google…on clicks and views and other things that we have no way of validating. Unless we just believe…well…Google.”

SPOTLIGHT

Gene Marks and Tom Gimbel will be Loren’s guests today on Mind Your Business: Gene, CEO of the Marks Group, will talk about why he thinks Google is killing smaller businesses and a host of other marketing and technology issues. Tom, CEO of the La Salle Network, a fast-growing recruiting firm, will talk about what he sees ahead for hiring and the economy. And we’ll be taking your questions. The show airs on SiriusXM 132 at 1:00 p.m. ET.

PRICING

Tinder remains free to most people, but users are increasingly making in-app purchases: “On Tinder, you can buy extra ‘super likes’ (which alert others that you are enamored of them) and ‘boosts’ (which make your profile more visible to people in the area). Or, to really increase your chances, you might subscribe to Tinder Gold for about $30 a month. (The price depends on multiple factors, including where you live and how many years you have walked the earth searching for a partner.)

“Tinder Gold grants users access to a feature called Likes You,which gives them a list of people who have swiped right on them. Suddenly, there’s no futile swiping whatsoever. Instead, you’ve got a (hopefully long) list of strangers with whom you’re guaranteed to match. It’s something like god mode, for a dating app. ‘The structure of those in-app purchases are highly similar to the structure of in-app purchases for games, in that you have those special abilities,’ said Randy Nelson, the head of mobile insights at Sensor Tower, an analytics firm. … [Tinder] has become, according to Sensor Tower and App Annie, another analytics firm, the top-grossing non-gaming app in the world.”

STARTUPS

Jake Counne, founder of Backyard Fresh Farms, an indoor vertical farming facility in Chicago, is trying to prove he can grow great greens at an affordable price: “Counne currently operates a pilot farm in a 250-square-foot space at The Plant, a food business incubator housed in a former meatpacking factory in the shadow of the old Union Stockyards. There, he is testing cameras and artificial intelligence software to improve the quality and quantity of produce grown, as well as robotics to reduce the amount of time workers spend climbing ladders to tend to plants. For example, an automated lift collects trays of ready plants and brings them to an assembly line of workers for harvest. The process has reduced labor costs by 80 percent compared with a first-generation vertical farm, Counne said. Combined with lower energy costs from other efficiencies, and a farm-to-retailer model that cuts out the distributor, he said he can price his product to compete with high-quality organic greens grown in the field—which are typically priced at about $3 to $3.50 for a five-ounce package of lettuce, he said.”

UpChoose is building a business on reducing consumption, starting with baby clothes: “The company, which calls itself a ‘sustainable consumption’ company, sells new parents a full set of organic cotton clothes. As the babies grow, parents send the clothes back and get a discount for the next size up; the old clothes are resold on the same platform to other parents. … Behavioral science suggests that it’s easier for people to make a change when there’s a major catalyst in their life, like the birth of a child. Parenthood tends to come with mindless consumption of baby clothes, but [founder Ali] El Idrissi also recognized that parents could be receptive to a solution that would make it easier to shop and would save money. Because the clothes are resold multiple times, it’s possible for the platform to offer organic cotton clothing for less money.”

Democrats are counting on startup accelerators to regain the digital-tech advantage from Republicans: “Higher Ground Labs, based in Chicago and founded by former Obama campaigners, has invested $15 million in 36 startups working to bolster progressive politics. More than 3,000 campaigns have used its tools since the accelerator’s launch in 2017. … Arena, another startup accelerator wedded to liberal political causes, was also founded in 2017 and offers fellowships to selected entrepreneurs developing tech that Democratic candidates can use in elections. 

“Conservatives aren’t sitting on their heels when it comes to campaign tech innovations. [But while] the Republican innovations have more of a command-and-control approach from top donors, the liberal tech advances are coming through seed funding competitions led by the accelerators. The conservative model has its advantages. It allows founders to ‘start monolithic, well-funded companies from scratch that can serve its ecosystem really well,’ [Higher Ground Labs’ Shomik] Dutta concedes. But some conservatives worry that a top-down style limits their effectiveness. … That’s where liberal accelerators believe they have an advantage, by supporting a wider range of innovations.”

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HOSPITALITY 

Hotels are upgrading with phone apps that track hotel shuttles and pre-order food: “Airport shuttle tracking amounts to a big ‘it’s about time’ for frequent travelers. Hotel companies are playing catch-up on other connected functions, trying to modernize operations through phone apps. Hotel apps, used mostly for reservations, check-in and check-out, now can be used to preorder food or extra towels in your room before arrival, or ping the hotel staff when a lightbulb is out. Some let you use your phone to control the TV, lights, thermostat and curtains. At Hilton Worldwide Holdings, you can now pick your room off a hotel map on the Hilton Honors app, much like an airline seat map, and even check the view out the window. Several companies offer electronic keys to rooms through phones, letting you completely check-in and avoid a stop at the front desk.”

VENTURE CAPITAL

C2FO, a provider of a working capital marketplace platform designed to liberate working capital and control cash flow, raised $200 million in a Later Stage VC round.

Capsule8, a developer of a cyber protection platform intended to facilitate zero-day attack detection, raised $6.5 million in an Early Stage VC round.

TECHNOLOGY

The rising global temperature is spurring companies to develop wearable air conditioners: “Embr Labs is a startup founded by three MIT PhD students who were frustrated by the fact that their lab was always freezing cold during the summer, even when there were only a few people in the building. … Their solution is a small, $299 device called the Embr Wave that you wear on the inside of your wrist. At the press of a button, a ceramic plate that sits next to your skin gets really cold, providing you a bit of relief by targeting the sensitive thermoreceptor nerves that sit on the inside of your wrist. The company claims that, because Embr would allow people to cool themselves rather than their entire office or home, it could translate to energy savings of between 15 percent and 35 percent of a building’s overall cooling costs.”

RETAIL 

One day after filing for bankruptcy, luxury store Barneys received an injection of capital: “In a last-minute announcement late Tuesday at the start of the company’s first bankruptcy hearing, attorneys for Barneys said the company received a larger capital-infusion offer, extended by Brigade Capital Management and B. Riley Financial. They offered $218 million for the retailer to right its ship while it continues to search for a buyer. US Bankruptcy Court Judge Cecelia G. Morris, for the Southern District of New York, said this funding could replace the retailer’s previously secured $75 million from Hilco Global and the Gordon Brothers Group. The judge said Barneys initially could use $75 million of the new funding, which will go to pay employees, vendors, and other creditors, while giving the company more breathing room to operate and rethink its business.”

CLIMATE

One quarter of the world’s population is at risk of running out of water, a report shows: “From India to Iran to Botswana, 17 countries around the world are currently under extremely high water stress, meaning they are using almost all the water they have, according to new World Resources Institute data published Tuesday. … Mexico’s capital, Mexico City, is drawing groundwater so fast that the city is literally sinking. Dhaka, Bangladesh, relies so heavily on its groundwater for both its residents and its water-guzzling garment factories that it now draws water from aquifers hundreds of feet deep. … By 2030, the number of cities in the extremely high-stress category is expected to rise to 45 and include nearly 470 million people.”

And that’s what’s ahead.

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

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