The Dark Side of Startups, a Platform for Medical Tourism, and McDonald’s Franchisees Fear Chick-fil-A

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STARTUPS

The startup world has a dark side: “Under the veneer of fancy parties and multibillion-dollar valuations, many founders and early-startup executives are striving to build pioneering businesses while wrestling with issues like anxiety, drug addiction, insomnia, depression and binge eating. 

“Stress, of course, is a part of any leadership role, and startup leaders often have more resources than most to cope with mental-health woes. But it is also becoming clear that the swashbuckling creativity that pushes many startup founders to take bold leaps often comes with inner demons. Entrepreneurs were 50 percent more likely to report having a lifetime mental-health condition and reported significantly higher rates of depression, attention-deficit disorder, substance abuse and bipolar disorder than a control group, according to a 2016 paper by researchers at the University of California San Francisco, UC Berkeley, and Stanford University, who surveyed more than 200 founders. 

“Some entrepreneurs have ‘a high degree of energy, a low need for sleep, a drive that seems far beyond ordinary driven people and a vivid imagination,’ says Kerry Sulkowicz, a New York psychoanalyst who advises CEOs. These traits allow them to ‘keep going when everybody tells you what you’re doing is crazy’ but also makes them vulnerable to mental-health issues, he says. A massive workload doesn’t help—nor that young entrepreneurs are bombarded by what some call ‘hustle porn,’ the notion that working nonstop is a badge of honor.”

Doctours, an online platform, packages medical tourism for US customers: “The company, which is backed by investors, including the former CEO of Expedia, Erik Blachford; Texas billionaire and CEO of multi-strategy holding company Cathexis, William Harrison; and Charles Cogliando of Mosaic Advisors, offers more than 330 different medical and dental procedures and has a global service area that includes Mexico, Colombia, the Caribbean, Thailand, Dubai, Brazil, Germany and Costa Rica. 

“Currently working out of Quake Capital’s Austin incubator, the company helps patients search for and compare the cost of procedures, connect with doctors and book everything from in vitro fertilization to stem cell therapy, cosmetic and reparative plastic surgery, weight loss surgery, dental work and Lasik. Once the procedure is booked, Doctours puts together itineraries that provide different options for flights and hotels based on the needs of the patient,  the company said.”

HUMAN RESOURCES

Amazon plans to retrain a third of its workforce: “For example, hourly workers in fulfillment centers can retrain for IT support roles, such as managing the machines that operate throughout the facilities. Meanwhile, nontechnical corporate workers can spend several years retraining as software engineers without going back to college. Amazon’s effort to upgrade the skills of its workforce is among the biggest corporate retraining initiatives announced, and breaks down to roughly $7,000 per worker. At a time of historically low unemployment, coupled with rapid digital transformation that requires high-tech job skills, more US companies want to help existing employees transition to new roles. A challenge facing many corporate retraining efforts is that employers often struggle to predict which skills they will need even a few years in advance.”

RETAIL

There’s a type of merchant, known as Amazon nomads, who travel the country buying products in Targets and Walmarts and reselling them on Amazon: “Chris Anderson moves through the Target clearance racks with cool efficiency, surveying the towers of Star Wars Lego sets and Incredibles action figures, sensing, as if by intuition, what would be profitable to sell on Amazon. Discontinued nail polish can be astonishingly lucrative, but not these colors. A dinosaur riding some sort of motorcycle? No way. But these Jurassic Park Jeeps look promising, and an Amazon app on his phone confirms that each could net a $6 profit after fees and shipping. He piles all 20 into his cart. …

“Anderson is an Amazon nomad, part of a small group of merchants who travel the backroads of America searching clearance aisles and dying chains for goods to sell on Amazon. Some live out of RVs and vans, moving from town to town, only stopping long enough to pick the stores clean and ship their wares to Amazon’s fulfillment centers. The majority of goods sold on Amazon are not sold by Amazon itself, but by more than two million merchants who use the company’s platform as their storefront and infrastructure. Some of these sellers make their own products, while others practice arbitrage, buying and reselling wares from other retailers. Amazon has made this easy to do, first by launching Fulfillment by Amazon, which allows sellers to send their goods to company warehouses and have Amazon handle storage and delivery, and then with an app that lets sellers scan goods to instantly check whether they’d be profitable to sell on the site.”

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LOCATION, LOCATION, LOCATION

Sorry, all of you California haters, but Rhode Island is the worst state in the country to do business in: “The Ocean State has a sea of problems, but there are some signs Rhode Island has hit bottom and is poised for a comeback. The state is implementing a major program to fix its last place infrastructure once and for all, funded by new truck tolls. Officials note that they have paved 100 miles of roads and repaired or replaced 180 bridges in the past three years alone. This is Rhode Island’s 5th time at the bottom of the rankings in the 13 years since the CNBC study began. Officials are determined to make this time the last.”

FRANCHISING

McDonald’s franchisees want a better chicken sandwich to fend off Chick-fil-A: “McDonald’s franchisees want the company to focus on making an excellent chicken sandwich as they face a rising threat from fast-growing Chick-fil-A. The National Owners Association, an independent group representing McDonald’s US franchisees, sent a letter to its members Wednesday warning of Chick-fil-A’s expansion and said Chicago-based McDonald’s does not have a premium grilled or crispy sandwich that can compete. ‘A favorite, that our customers want, is a chicken sandwich,’ read the emailed letter from the group’s board. ‘Unfortunately, they have to go to Chick-Fil-A for it. Chick-Fil-A’s results demonstrate the power of chicken.’ 

“Atlanta-based Chick-fil-A grew sales 16.7 percent last year, to nearly $10.5 billion, vaulting past its competition to become the nation’s third-largest restaurant chain by sales after Starbucks and No. 1 McDonald’s, according to industry publication Nation’s Restaurant News. Chick-fil-A, which made those sales despite being closed on Sundays because of the owners’ Christian beliefs, also has ranked first in the American Customer Satisfaction Index for four years in a row.”

OXFORD STRATEGIC ADVISORY DEAL OF THE DAY  

Matterport, a real estate computer vision platform, is set to acquire Arraiy, an AI company that automates special effects processing in film. “The startup tackling Hollywood special effects and a startup best known for digitizing real estate properties to give potential buyers 3D tours might not seem like the most idyllic pairing, but the acquisition might allow Matterport to expand its ambitions further beyond its real estate customer base.”

VENTURE CAPITAL

Demetrix, a developer of a fermentation system designed to create natural medicines, raised $50 million in a Series A round.

Exyn Technologies, a developer of aerial robot systems designed to enable autonomous data acquisition, raised $16 million in a Series A round.

Fyde, a platform designed to offer secure access to the cloud and internet, raised $2 million in an Early Stage VC round.

Minerva Project, a developer of educational degree programs designed to focus on student learning and success, raised $57 million in Series C funding.

SOCIAL MEDIA

TikTok’s strategy to dominate the social media sphere involves lightheartedness and aggressive ad spending: “Compared with social media such as Instagram and Twitter, which can create stress with social pressure or news, TikTok strives to be like candy. It was the third-most installed app worldwide in the first quarter, behind Facebook’s WhatsApp and Messenger. It has about 104 million American downloads to date and nearly 1.2 billion worldwide.”

AGRICULTURE

Small farms are dipping into the rental economy (i.e. Airbnb) to stay afloat: “[C]ity dwellers and suburbanites are hungry to spend their vacation time in a bucolic landscape with the promise of some wholesome downtime and maybe a locally sourced meal. They are part of a growing agritourism trend of family farmers with small to medium farms using their land, food supply, and livestock to attract guests on websites like Airbnb and VRBO, increasing their farms’ revenue and exposure. … 

“The agritourism industry offers farmers an easy, semi-passive form of income. It’s a boon both for farms and for businesses like Airbnb, which profit from the reservations made through their websites. Airbnb recently released data showing that last year there were 57,000 rural listings on the site. An Airbnb spokesperson said that from February 2018 to February 2019, 943,534 guests stayed at a farm they found on Airbnb, booking more than 745,000 nights. Hosts with farm listings earned more than $81 million.”

One farmer, Sarah Wiederkehr explains: “Though it is a small percentage of our annual income, it is definitely an important revenue stream. We get to interact with guests from all over the world, and it’s great, because we never have to leave the farm.”

And that’s what’s ahead.

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

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