New Tariffs, A Megamansion Bubble, and How to Destroy Employee Productivity

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President Trump has announced new tariffs designed to stop migration: “In a surprise announcement that could derail a major trade deal, President Donald Trump announced Thursday that he is slapping a five percent tariff on all Mexican imports, effective June 10, to pressure the country to do more to crack down on the surge of Central American migrants trying to cross the US border. He said the percentage will gradually increase—up to 25 percent—‘until the illegal immigration problem is remedied.’

“The decision showed the administration going to new lengths, and looking for new levers, to pressure Mexico to take action—even if those risk upending other policy priorities, like the United States-Mexico-Canada Agreement, a trade deal that is the cornerstone of Trump’s legislative agenda and seen as beneficial to his reelection effort. It also risks further damaging the already strained relationship between the US and Mexico, two countries whose economies are deeply intertwined.”

The trade wars are already changing manufacturers in ways that will be hard to reverse: “When the Trump administration first imposed tariffs on $34 billion in Chinese imports in July, Andy LaFrazia figured it was just another curveball for his company. ‘Everyone was saying: Oh, it’s a negotiating tactic. It won’t last long,’ Mr. LaFrazia recalled.

“But nearly a year later, the trade war shows no sign of cooling off. So ControlTek, the electronics manufacturer that Mr. LaFrazia runs near Portland, is taking steps to protect itself, a strategic shift that has been repeated in boardrooms and executive suites around the world in recent weeks. ControlTek is rewriting contract language to make it easier to pass the cost of tariffs on to its customers. It is shifting supply chains out of China where possible, and redesigning products to avoid Chinese components where it isn’t.”

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Mothership is using historical driver data and AI to make next-day and same-day delivery possible for Amazon’s competitors: “[T]he company automatically connects shippers to the nearest drivers. It also ‘freight pools’ loads, adding new shipments that match the driver’s route, so drivers are continuously picking up and dropping off loads.

“By maximizing capacity and getting as much out of each driver mile as possible, Mothership speeds up the delivery process, transforming ‘what typically is a next day service at best into a service that is overwhelmingly same day and at no extra charge.’ The process is entirely paperless, and drivers, who [CEO Aaron] Peck said earn an average of $80 per hour, get paid on the same day they deliver the load.

“The company’s productivity gains, he said, help drive the scalable business model. ‘Our technology generates efficiencies upwards of 40 percent,’ he explained, enough to give Mothership its margin—and more. … ‘Do we have to be greedy and take an insane margin?’ Peck asked. ‘No, you don’t. You say: At scale, we’ll be a company worth $100 billion, and what you do with the leftover efficiency is you pass on savings to the customer and pay more to the driver.’”

Data privacy startup Rectify is automating the redaction of sensitive documents: “[Redaction] is expensive, annoying and haphazard. … In some cases, the black box electronically drawn over sensitive data can be removed to reveal what lies beneath. Journalists recently unredacted documents released as part of the Mueller investigation into Russian interference in the 2016 election. Rectify has developed an automated tool to ferret out sensitive information, even in the hidden parts of the document. Everyone knows to blackout a Social Security number, but few know about the metadata. Any document with an undo function still could have the Social Security number stored in this hidden file. Rectify’s customers can tell the software what they want redacted and kick out a version that can’t be reversed.”

Cameo’s platform allows people to pay for celebrity shout-outs on Instagram and it has just reached a $300 million valuation. “Big stars like Snoop Dogg and Brett Favre will drop your name for $500 while niche YouTuber celebs offer shout-outs for $5 or less. Cameo is an outgrowth of the influencer economy: The company launched in 2017 when co-founder Steven Galanis saw a Seattle Seahawks superfan wig out after a shout-out and realized that people would pay for the same privilege. Celebrities set their own prices, which range from free for some brand influencers to $2.5k for Caitlyn Jenner. For every Cameo purchased, the company takes a 25 percent cut—and the celebrity gets the rest.”


Salesforce is telling retailers like Camping World to stop selling military-style rifles or stop using its software: “The pressure Salesforce is exerting on those retailers—barring them from using its technology to market products, manage customer service operations and fulfill orders—puts them in a difficult position. Camping World, for example, spends more than $1 million a year on Salesforce’s e-commerce software, according to one analyst estimate. Switching to another provider now could cost the company double that to migrate data, reconfigure systems and retrain employees.”


Tech firms are pushing for employees to take longer work hours, but former gymnast, NCAA champion and startup founder Jason Shen calls bull: “Long hours should be rare, because productivity always takes a hit afterward. This isn’t just my opinion. Stanford economics professor John Pencavel found that the output of employees falls off significantly after 50 hours per week, and becomes basically insignificant after the 55-plus hours per week mark. …

“Training 70 hours a week [as a gymnast] would be a nonstarter. Even if NCAA didn’t regulate training hours, it would be such an obviously bad idea that any coach proposing such a schedule would be fired immediately. … There’s something especially insidious about higher-ups using their own extreme work habits as a model for their staff.”


Tsunekazu Ishihara, CEO of Pokemon Company, wants to motivate people to get a good night’s rest with new product Pokemon Sleep. “‘The concept of this game is for players to look forward to waking up every morning,’ Mr. Ishihara announced at a news conference in Tokyo. … [Pokémon Sleep] will track sleep patterns and change the game based on how long the user sleeps, and what time he or she wakes up. The game will be developed with Niantic, the maker of Pokémon Go, and the game design firm Select Button. Part of the motivation behind the new game is the need for a good night’s sleep, said John Hanke, the chief executive of Niantic.”


Morningstar, an investment research firm, has acquired DBRS, a credit rating firm, for $669 million. The deal value is 4x revenue. “Kunal Kapoor, Morningstar’s chief executive officer, said in a note to shareholders that there is an opportunity in the growing market for global debt. He said that DBRS’s areas of coverage ‘round out’ Morningstar’s.”


Organome, a drug-research and disease-modeling company that uses functional organ equivalents or organoids, was acquired by AxoSim Technologies, a research organization that is developing a 3D cell-based platform that looks and acts like a real nerve.


Psychedelic painter Peter Max was a countercultural staple in the art world until he was diagnosed with dementia. The subsequent years led to several allegations of colleagues and family members taking advantage of Max’s work: “[Max] would see painters—some of them recruited off the street and paid minimum wage—churning out art in the Max aesthetic: cheery, polychrome, wide-brushstroke kaleidoscopes on canvas. Mr. Max would be instructed to hold out his hand, and for hours, he would sign the art as if it were his own, grasping a brush and scrawling Max. The arrangement, which continued until earlier this year, was described to The New York Times by seven people who witnessed it.”


OwnCloud, a provider of cloud-to-cloud backup and recovery to restore lost data raised $23.25 million in a Series C Round.

Pitstop, a developer of a prognostics platform that helps prevent vehicle failures before they happen raised $1.5 in a Seed Funding Round.

Dashlane, an identity-management application to make payments simple raised $110 million in a combination of Series D Funding and debt.

BlueVoyant, a cybersecurity company protects against agile, well-financed cyber attackers raised $82.5 million in a Series B Round.


There’s an oversupply of megamansions in Los Angeles: “Real-estate experts estimate that there are about 50 ultra high-end spec houses under construction in the area, from Beverly Hills to Bel-Air and Brentwood. The unprecedented wave of development has its roots in the heady days of 2014 and 2015, when foreign buyers poured into Los Angeles and luxury markets across the country logged record sales.

“A couple of local megawatt deals—including the $70 million sale of a Beverly Hills compound to billionaire Minecraft creator Markus Persson in 2014—inspired the construction of bigger and pricier homes, most of which were built as contemporary cubes. Some were built by inexperienced developers; many had price tags north of $20 million. Now, there are simply too many, and not enough buyers to go around. ‘It’s created its own monster,’ says Stephen Shapiro of Westside Estate Agency. ‘We have an enormous oversupply of these white boxes. There’s years of inventory out there.’”

And that’s what’s ahead.

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