How to Save on Workers Comp, How to Engage E-Commerce Customers, and How a 7-Year-Old Made $22 Million

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Good Wednesday Morning,

DAYLIGHT  

Here’s how a 7-year-old made $22 million playing with toys in YouTube videos: “Ryan is part of the YouTube trend of unboxing, in which content creators film themselves opening up toys, tech products and other consumer goods, explaining different features and, in Ryan’s case, screaming and giggling with enthusiastic delight as he does so. …

“Nearly all of his money, or about $21 million, comes from pre-roll advertising on his channels, Ryan ToysReview and Ryan’s Family Review. … ‘Unboxing videos provide the proxy for actually experiencing the joy of receiving and opening something you really desire; this is especially true for items that are out of reach or unattainable,’ says Chas Lacaillade, the founder and CEO of Bottle Rocket Management, which represents many unboxers, though not Ryan.”

RETAIL

In the past, President Trump has accused Amazon of scamming the US Postal Service. A new report shows others in his administration disagree: “The task force created by Mr. Trump to investigate the Postal Service’s finances did conclude that the mail system is losing money.

“But a report issued on Tuesday said that commercial package delivery for Amazon and other e-commerce retailers was actually profitable for the Postal Service and was not costing the United States ‘massive amounts of money,’ as Mr. Trump has suggested in his tweets.”

In their efforts to compete with Amazon, smaller retailers are relying on something called Customer 360 software, which can give them a 360-degree view of shoppers: “When a shopper opens the Wander Beauty website, a chatbot will automatically ask for the person’s skin tone.

“If they open the message, the conversation will continue in Facebook Messenger until it gets too technical—a request for a moisturizer with high SPF levels, say, or makeup that won’t exacerbate a skin condition—and a human customer service agent will take it from there, suggesting specific products and how they work together. Some people find chatbots creepy and their hovering presence invasive. But many shoppers have become used to them much the way most of us would rather use an ATM than deal with a human teller.”

MUSIC

Gainesville, Florida is a city known for more than its Gator football cult and starting Gatorade. It’s also known as the hometown of Tom Petty, Stephen Stills and Don Felder. A hometown that’s enjoying a revival for its music scene, but the hub’s dominant genre leans more hipster than “Free Falling.” Rock in the classic sense is all but gone, replaced by new wave styles that look to bend genre – folk-pop, alternative-funk and so on.

The real success of this revival comes from locals supporting local acts, even in the age of the internet. Downloading their album on Spotify just isn’t enough these days. The music scene benefits from students taking initiative to form their own record labels and sign bands. Even major acts are tapping into the “underground oasis.” For example, chart-topping group The 1975 chose Here Again Records, a music store, as one of the 34 locations in the world to host listening parties for their newest album.

HUMAN RESOURCES

When the owner of a bagel-making business died suddenly, his son took over—and got a quick course in how to avoid workers compensation claims: “My father took this so seriously that when he caught a pair of relatively new employees who had been through the training horsing around near the vat that boils the bagels, he warned them they would be fired if he saw such behavior again.

“A few months later, when one of the offending duo played a prank on a different employee near one of the ovens and caused her to nearly fall over, Dad fired him. At the time I thought it was a harsh response, but it did set a tone that probably averted accidents and saved us money. As with most insurance, avoiding claims is the best way to keep premiums as low as possible.

A draft of a report from CBS lawyers’ internal investigation of former chief executive Les Moonves reveal decades of misconduct which will justify them not paying his $120 million severance package. In addition to multiple accounts of sexual misconduct before and after 1995, Moonves was also “evasive and untruthful” throughout the investigation. The draft also states that even some members of the board were aware of his actions and elected not to stop it.

By the way, soon-to-be sworn in Congresswoman Alexandria Ocasio-Cortez went off on her future colleagues for offering little to no pay for staffer positions. Turns out most members of Congress are also relying on unpaid interns. Not a good look these days.

M&A

From Zack Eller: Crown Laboratories acquired five over-the-counter consumer brands from GlaxoSmithKline. Three of the named companies were PanOxyl, Sarna and Zeasorb.

Callaway Golf agreed to buy Jack Wolfskin, a provider of functional outdoor clothing, for $476 million. Unless Jack Wolfskin is a “set it and forget it” company, unclear if this pans out successful for Callaway. The firms are too different.

CYBERSECURITY

Quora, the information sharing site, announced a data breach exposing over 100 million users’ information. Founded by former Facebook employees, the site was meant to act as an open forum for members to ask each other about anything from evolutionary science to the release of Ariana Grande’s newest album.

ECONOMY

Ray Dalio, the founder and head of Bridgewater, mapped out why he thinks the next economic recession will be different than the last. Quick side note—Dalio talked about about the imminent credit collapse from a decade ago, so maybe we should take notes. He believes the next crisis will play out as more of a squeeze because of the amount of government and companies borrowing.

He also referenced the current trade war with China as a cause for concern and put the onus on investors to react to the effects of our frictional relationship with China.

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SPORTS

With the Georgia Bulldogs having their hearts broken by Alabama again, they miss out on the College Football Playoff. Ever since its establishment in 2014, Alabama has been in every CFP and Clemson has gone to four in a row. The only not-so-new kid on the block is Notre Dame.

Lack of diversity in the selections already has a vocal minority calling for a reform to make the road to the National Championship an eight, maybe even 16-team playoff. From an entertainment perspective, sports fans are all-in. From a business and logistics standpoint, will never happen.  

For one, having these D-I athletes throwing their bodies around for an extra two to four games means more injuries, more careers derailed. That means a lesser quality product and less ratings, less ad revenue. It’s a short term solution for more ratings that can cause a long term problem for the players.

FOOD

JBS Tolleson recalled 5.1 million pounds of beef yesterday because it may be tainted with salmonella, according to the US Department Food Safety and Inspection. This is the expansion of a previous recall from October. This is an all too common story with the meat industry.

Corn is a primary cattle feeder. Cattle prefer to be grass-fed, but since we have an abundance of corn in this country, we use the surplus. But corn isn’t processed as easily as grass feeding. The cows have to develop a bacteria to break down the high in starch food which can become the dangerous E. coli and salmonella viruses.

VENTURE CAPITAL  

Freeletics, a digital fitness company, raised $45 million. The AI-powered fitness application tailors fitness plans to individual users that also offers nutritional guidance. The company is taking an interesting direction as they are not looking to sell retail hardware anytime soon.

SnapTravel, a message-driven commerce company, raised $21.2 million. SnapTravel is another AI-powered assistant. This one being for travel shows users hotel deals communicated through text, voice, even Facebook Messenger and WhatsApp.

SPOTLIGHT

Oxford Entrepreneur Briefing

Friday, February 1, 2019, Nashville

The featured speaker will be Carey Smith, founder of Big Ass Fans, which he built to $500 million in sales without taking any investment capital. He’ll explain how the company got its name, why he chose not to distribute his industrial fans through established sales channels, and how he managed to sell the business for half a billion dollars. And he’ll also talk about what he’s been doing in the year since then—creating an investment firm, Unorthodox Adventures, staffed mostly by recent MBAs, who are searching the world for businesses to back. Contact events@oxfordcenter.com for more info.

And that’s what’s ahead.

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

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