Vice Isn’t Selling, Cliff’s Take on Milk and Tequila and Musk Says Ford’s Days are Numbered

Good Thursday Morning,

Daylight – Big development in new media – Vice will shrink its workforce by as much as 15 percent to address stalling growth. Revenue fell in the same ballpark as 2017 at $600 million, which is $100 million short of the projection Vice provided TPG Investments during the summer of last year.

Web traffic also stalled and CEO Nancy Dubuc has an uphill battle. Some of the spin-off pubs in the hot seat are Noisey, Broadly and Munchies. More of the story here.

Cliff’s Take – Two big trends – the feed and income ratios for dairy farmers have hit the danger zone of 20 percent, which means total feed costs to total income is 20 percent – really needs to be lower than 12. Time for them to strike back at the milk substitutes across the board from soy to almond which have as high as 98 percent water content #FakeMilk.  

Meanwhile, the increase in case volume for tequila is amazing, jumping 8.5 percent year over year. I called Mark Stout, Owner and operator of 12 liquor stores, and asked what was going on. He said volume increase was because of middle-aged white women coming into the store and buying it not for occasional shots, but everyday sipping. Branded as the healthy booze. Marketing is a beautiful thing.

M&A – Ford bought Spin, an electric scooter startup, for $40 million. Unlike Lime or Jump, Spin works with local governments to establish mutual policies before launch.

Tress Capital acquired Turning Points Global, a cannabis advisory firm.

Oaktree Capital Management acquired MWH Constructors, a construction firm focused on water and energy.

Frontenac acquired Motion Solutions, a provider of linear motion, motion control and automation solutions for critical, high technology applications.

Growth Trend – Google aims to beef up its New York presence after Amazon’s HQ2 development. It’s a staffing arms race where Google will add space for more than 12,000 workers, totaling around 20,000 in the Big Apple to rival Amazon’s projected 25,000 for its LI city location.

Style – Slow sales in Europe are to blame for Michael Kors shares falling more than 14 percent. The company’s effort to cut back on excess inventory proved overkill. MK hopes to bounce back once the deal acquiring Versace closes – $2.1 billion in potential revenue.

Elon Musk With The Hot Take – He made a bold prediction that Ford won’t make it through the next recession. “Making a car company successful is monumentally difficult. There have been many attempts to create a car company and they have all failed, even the ones that have had a strong base of customers…like GM and Chrysler, [they] still went bankrupt in the last recession. Ford and Tesla made it barely through the last recession. There’s a good chance Ford doesn’t make it in the next recession.”

Musk has his own work cut out for him with the rise of electric car makers like Faraday Future. He calls them “Tesla Killers.” By the way, Robyn Denholm, CFO for telecommunications company Telestra, has been named the new chair of the board to replace Musk.

Buzzard’s Roost – Papa John’s sales fell 16 percent, still mired in the wake of John Schnatter’s ousting after using a racial slur. But his sparring with CEO Steve Ritchie and then suing the pizza chain contributed to poor sales as well.

Another embarrassment for Wells Fargo as it “improperly foreclosed on 545 homeowners between 2010 to 2018.” As of right now, the official comment is that it was because of a miscalculation.

Hot – We already know Ice Cube is one of the contenders when Disney unloads its local sports channels as part of its deal to purchase 21st Century Fox. Now we can throw LL Cool J into the mix. The two MCs have teamed up with Alex and Ani jewelry Founder Carolyn Rafaelian.

They may try the New York market with the YES network. Ice Cube’s Big 3 basketball league travels to NYC for its championship round. Could be worth $5 to $6 billion. Bidding starts today.

Culture – Breaking Bad might be getting the movie treatment as creator and writer Vince Gilligan is poised to shoot a two-hour movie. But, it would most likely not feature Bryan Cranston and Aaron Paul given how the show ended four years ago.

The show serves as a landmark not just for how well-received and popular it was, but also as a landmark for streaming television. Breaking Bad peaked in popularity right on the cusp when streaming episodic television started gaining traction in living rooms across the country. Streaming services like Netflix, in part, actually helped the show be so popular

The business of supplying the background music we barely notice is surprisingly big: “Over recent decades, researchers have found that it can affect how much time we think has passed while waiting in a queue, how co-operative shoppers are with sales staff, and even how sweet or bitter food tastes…The biggest player in the industry, Mood Media, was founded in 2004 and now supplies music to 560,000 locations across the world, from Sainsbury’s to KFC.”

Investment Banking – Gridiron Capital made an investment in Royal Paper, a private label consumer packaged goods company.

NewSpring made an investment in Messagepoint, a provider of customer communications management software and services.

Hedge Funds – Palladin Consumer Retail Partners acquired Splash Car Wash, a regional operator of car washes.

IPO – SoftBank plans to raise $18 billion from retail investors during an IPO of its mobile phone unit.

Venture Capital – RapidSOS, a provider of an advanced emergency tech platform, raised $30 million.

Engineer.ai, a provider of a human-assisted AI that empowers users to build and operate software, raised $29.5 million.

Taranis, a precision agriculture intelligence platform, raised $20 million. With the constantly changing weather, can we find more efficient methods for growing peaches?

YotaScale, a platform that provides intelligent insights to cloud operations, raised $8 million.

Photomath, a developer of a math solving app, raised $6 million. This could prove disastrous for the high-school math teacher who tells students to show their work.

Spotlight – This week we have asked readers to comment on how they know it’s time to pull the plug on a venture – Here’s a take from Lou Mosca of American Management Services: “The reality is that a good idea does not always make a good business. I would suggest you pull the plug before you even start if you have not tested your concept thoroughly, if you are jumping in to an already crowded field with no real differentiation, if you have not established some type of advisory group to shoot holes in your dreams (in advance), and if you do not have enough capital to cover at least two year’s costs.

“Finally, if you are in business and you are mortgaging your house, tapping retirement savings and borrowing from family members with NO clear plan to repay, you probably need to consider this may not be a viable business. The challenging ingredient is that most independent business owners would rather fight to the death than pull the plug.”

And that’s what’s ahead.

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

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