The $70,000 Minimum Wage, Rover Outraces Wag, and the First Gas Station to Go All-Electric

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A D.C.-area gas station is the first in the country to shut off its pumps and go electric: “On Thursday, according to Maryland officials, RS Automotive became the first service station in the nation to completely convert its equipment from offering gasoline—the flammable fuel that powers internal combustion engines and global conflicts alike—to electric power, the sustainable stuff that many see as the heart of America’s decarbonized future. But one important detail remained: Nobody, including the station’s longtime owner or the Electric Vehicle Institute—a Baltimore-based company spearheading the transition with the help of a state grant program—was entirely sure what to call a gas station that doesn’t offer … well, gas. ‘We settled on ‘EV charging station,’ but we also thought about calling it a ‘refueling center’ … The terminology here is so loose because all of this is so new.’

“So new, it seems, that in some ways, the unanswered questions have a way of feeling wildly outdated, conjuring up distant memories of the early 20th century, when automotive technology was brand new and America’s fledgling driving culture was still being defined. Among them: What sort of information should the station’s signs communicate to the public? Better yet, does an EV charging station even need signage in the first place? EV owners can find charging stations anywhere in the world using a smartphone, after all. Perhaps most important: What exactly will people do with themselves during the 15- to 30-minute window when their vehicles are charging? Will they linger awkwardly? Grab a bite to eat nearby? Sit in their vehicles and work? Or relax in the station’s new ‘state-of-the-art EV lounge’?”


In the third quarter, global M&A sank to a three-year low amid fears of a trade war: “Global mergers and acquisitions plunged 16 percent year-on-year to $729 billion in the third quarter, according to Refinitiv data, the lowest quarterly volume since 2016, as growing economic uncertainty curbed the risk appetite of companies considering deals. Concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on dealmaking, even as debt financing for acquisitions remained cheap and equity markets stayed robust. … The United States, where consumer spending barely rose in the summer and business investment remained subdued amid the trade tensions, was particularly hit. US M&A sank 40 percent year-on-year to $246 billion in the third quarter, the lowest such quarterly level since 2014.”


Gravity Payments CEO Dan Price, who became famous four years ago for raising the salaries of his employees to a minimum of $70,000 has done the same thing for employees of a subsidiary: “The Boise office was previously an independent company called ChargeItPro, and Gravity, a credit card processing company, acquired it as a subsidiary three years ago. In 2015, Price decided to hike his employees’ pay after he read a study about happiness. It said additional income can make a significant difference in a person’s emotional well-being up to the point when they earn $75,000 a year.

“He then made the decision to increase the salaries for all of his 120 employees in Seattle, raising the minimum salary to $70,000—and slashing his $1 million salary by 90 percent in order to make it happen. The move doubled the pay of about 30 of his workers and gave an additional 40 significant raises. Price says the higher wages have transformed the lives of his employees. They have been able to grow their families, more than 10 percent of employees have purchased a house for the first time and individual 401(k) contributions have more than doubled.” (In 2015, Bloomberg published a highly skeptical story about Price.)


HealthJoy uses artificial intelligence to help employers and employees save money on health care: “The company, which last spring added $12.5 million in financing to its total of $23 million raised so far, offers an app and service that helps employees find the most cost-effective options for medical procedures and pharmaceuticalsand then gives the employer the opportunity to reward those employees when they make that choice. The idea has worked so well that the approximately 125-person company (as of March) has grown its user base by 610 percent last year to 200,000 and expects to grow another 250 percent this year, according to a TechCrunch report. The company mostly focuses on customers with more than 100 employees.

“How does this work? After setting up your employees and your plan details in the system, participants are then asked to submit their medical issues via the app to HealthJoy’s team of doctors and administrators, who will, along with the company’s proprietary artificial intelligence technology, strategize and make recommendations for the most affordable treatment (including telemedicine providers), confirm availability under your company’s health plan, help book appointments, estimate costs, and even resolve any billing issues.”

Wag raised $300 million to build its dog-walking service but is now trailing its main competitor, Rover: “Wag’s stumbles highlight the challenges that startups face in trying to apply the popular on-demand model to upend a range of industries in pursuit of rocket ship growth, even with a war chest of funding. It comes amid broader doubts about SoftBank’s strategy to pump vast amounts of capital into flashy tech startups. Two of SoftBank’s other large investments, Uber and WeWork, have received pushback from public market investors. ‘Senior leadership [at Wag] was disengaged from the company and product and didn’t have a good understanding as to the strategy needed to make it viable long term,’ said Eric Weinmann, who was responsible for analytical reporting, strategy, and analysis concerning growth and user acquisition from August 2018 to July 2019. ‘Wag never appeared to have a coherent way to measure successes and failures.’ … The company’s once-compelling growth has declined while Rover, its main competitor, continues to see increased sales and to dominate over Wag, according to data provided by research firm Second Measure.”

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Logitech, a provider of personal-computer and mobile accessories, has acquired Streamlabs, a provider of software that allows users to overlay content on top of video games. “Logitech has been pushing into the space for some time now, with purpose-built hardware for gamers and streamers (like, say, webcams that auto-remove everything behind you for a greenscreen-style overlay effect). Now they’ve got the software to push people to after their hardware is all setup, and it’s already a proven solution.”


What percentage of online reviews are authentic?Chris McCabe, who evaluated seller performance while employed at Amazon and who now runs a consulting firm for its retailers, estimates the number of inauthentic reviews on the site to be around 30 percent. Amazon estimates it at less than one percent and said it spent more than $400 million last year alone to protect customers from reviews abuse, fraud and misconduct, leading to action against more than five million reviewers. Even so, ‘Amazon doesn’t have the right defenses,’ Mr. McCabe said. …

“In recent years, an increasing amount of information has surfaced about how vendors hire click farms to post positive comments about their products. TripAdvisor recently reported that, last year, its review analysis system rejected 1.4 million submissions out of 66 million. reviews came under scrutiny in 2018 when emails posted to Reddit revealed that some staffers at skin care brand Sunday Riley were sent instructions for posting positive product reviews, including tips to create multiple fake accounts. Sunday Riley acknowledged the emails at the time via its verified Instagram account stating, ‘Yes, the email was sent by a former employee’ and defending its actions by adding that ‘competitors often post negative reviews of products to swing opinion.’”


One reason online brands open physical retail spots is to handle returns: “Returning something is also an opportunity for a retailer because then that customer will, of course, be in the physical store and might look around and buy something else. And in fact, a recent study from Wharton found that customers who enter a physical store end up spending more, and the products they do buy are more expensive. … Consultants helping online retailers get into the real world have another strategy in mind—partnerships. For example, one of Warby Parker’s first physical locations was a kiosk in the lobby of a hotel in West Hollywood. Partnerships can also mean that small online businesses don’t have to carry the lease for an entire space or cover payroll for a whole staff.”

On Sunday, Forever 21, the fast-fashion icon, filed for bankruptcy: “The private, family-held company capped months of speculation about its restructuring efforts by saying that it would cease operations in 40 countries, including Canada and Japan, as part of a Chapter 11 filing. It will close up to 178 stores in the United States and up to 350 over all. Forever 21 said that it would continue to operate its website and hundreds of stores in the United States, where it is a major tenant for mall owners, as well as stores in Mexico and Latin America. ‘What we’re hoping to do with this process is just to simplify things so we can get back to doing what we do best,’ Linda Chang, the chain’s executive vice president, said in an interview. Ms. Chang’s parents, Do Won and Jin Sook Chang, who still run the chain, founded Forever 21 in the 1980s after immigrating to California from South Korea.

“The bankruptcy is a blow to a company that prided itself on embodying the American dream, as well as a reminder of how quickly the retail landscape is transforming. Forever 21 experienced big success in the early 2000s with its troves of merchandise that imitated of-the-moment designer styles at rock-bottom prices. It joined Zara and H&M in making fast, disposable fashion widely available to American shoppers, especially young women, who were exposed to new wares seemingly every time they entered a store. But the company expanded too aggressively just as technology was beginning to upend its business.”

Fintech firms are offering installment plans to help consumers pay for items like sneakers and sweaters: “Fintech companies such as Affirm, Afterpay Touch Group Ltd. and PayPal Holdings Inc. dove into these payment plans after that period, when banks pulled back on consumer lending. Growth is booming. Affirm’s point-of-sale loans doubled to about $2 billion last year and are expected to at least double again this year, CEO Max Levchin said. … But more than half of merchants surveyed this year by advisory firm 451 Research said they already offered installment options or planned to adopt them in the next year. Nearly 40 percent of consumers surveyed said the ability to finance a purchase at checkout made it more likely they would complete a transaction.”


Mike Vetter’s kit-car company has sold more than 300 custom-built cars to buyers all over the world: “His cars range in price from $125,000 to upwards of $225,000. On a typical $125,000 build, he’ll spend $47,000 on parts, a good enough margin to net a comfortable living. When he first began building car bodies, the process would cost him $35,000 and take 6 months working by hand. Now, utilizing routing machines and 3D-modeling programs, he can produce one for $25,000 in a few weeks. He says he gets hundreds of requests to build custom cars but turns many of them down: ‘I could grow bigger, but I try not to. It’s a quality control thing.’

“‘Generally my customer is the gentleman who has already owned several Ferraris and wants something his neighbor can’t go out and buy,’ says Vetter. Many of his clients fear being mocked in their exotic name-brand cars. But with the concept cars, there’s no stigma: “Instead of ‘Look at this jerk in his Ferrari,’ it’s ‘Whoa, that thing is crazy!’”

And that’s what’s ahead.

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