Morning Report

What you need to know one minute before daylight

Voice Ads, Wine-and-Weed Tours, and, Yes, Groupon Still Exists

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At Cliff Oxford’s request, this week’s Commerce Dinner and Entrepreneur Briefing have been rescheduled. The dinner will be June 6 at Murphy’s. The Briefing will be June 7 at Porsche HQ, where Cliff will talk about his new book and Steve Palmer will talk about building The Indigo Road restaurant group. Email to RSVP.


The Trump administration’s escalating trade war with China sent stocks falling and business owners bracing for fallout: “Tiffany Williams, owner of the Luggage Shop of Lubbock in Texas, was already hurting this year from the first phase of duties. They led to a roughly 10 percent increase in the price of the travel bags and accessories that her store sells. Ms. Williams had responded by raising her prices. That, she said, led some customers to shy away from buying high-end bags—which now cost more than $400 each, up from about $370—and instead buy cheaper luggage.

This week, Ms. Williams said, she started getting calls from wholesalers warning that prices will go up again if Mr. Trump makes good on his threat to increase tariffs on Chinese imports. ‘It’s very concerning,’ said Ms. Williams, whose grandfather opened the shop in 1951. ‘It will change what consumers are ready to buy from us.’ As she waits to assess the damage, she said, she is holding off on hiring more workers.”


If that Starbucks cup accidentally left in a “Game of Thrones” scene had been deliberate product placement, it would have cost Super Bowl bucks: “Stacy Jones, CEO of Hollywood Branded, which specializes in product placement and other entertainment marketing campaigns, told MarketWatch that HBO doesn’t accept pay for product placement in its shows because customers are subscribing to an ad-free experience in signing up for the premium cable network. But, if it did, and if ‘Thrones’ took place in a contemporary setting where it made sense to slip in a Starbucks reference, then intentionally placing that cup in front of Daenerys would cost $250,000 in product-placement fees. … ‘We’re saying this is a Super Bowl-sized television series. We’re comparing this to a ‘Transformer’ franchise, and ‘Transformer’s’ deals of this type are around $250,000 to $1 million,’ Jones explained.”

Believe it or not, Groupon still exists, but it wants to move away from coupons to being a marketplace: “With over 47 million active customers globally and 30 million of those in the US, Groupon’s current brand customers include Sam’s Club, Costco and Pandora. Other brands, like AMC Theaters and TripAdvisor, are partnering with Groupon for experiential offerings. The idea is to bring big national brands to the platform alongside the local Main Street mom-and-pop stores that remain a part of the company’s platform. …

“The shift makes sense to brand consultant and co-founder of Metaforce Allen Adamson. ‘It’s generic to give away discounts; it’s not differentiated anymore,’ said Adamson. ‘[Groupon] is trying to reinvent itself, and that’s a smart move. They have to move beyond just coupons, but the business they are getting into is brutally competitive.’”

Spotify is introducing listeners to interactive voice ads that will “encourage the listener to say a verbal command in order to take action on the ad’s content. Initially, the audio ads will direct listeners to a branded Spotify playlist or a podcast, the company says. … For now, Spotify is only focused on content promotion within its own service—not anything outside of its app.”

The streaming service “believes voice ads will allow it to capitalize on consumers’ growing interest in using voice commands and smart assistants—areas where all the major tech companies are investing with their on-device assistants and smart speakers for the home. ‘We believe voice—really across all platforms—are critical areas of growth, particularly for music and audio content,’ Spotify co-founder and CEO Daniel Ek told investors …”


Can Bird build a better scooter before it runs out of cash? “The company is pinning its hopes on the Bird Zero, a custom scooter with longer battery life and sturdier construction. Bird declined to share details on unit economics with The Times for this article, but VanderZanden told tech website the Verge in March that the scooters would need to stay active for six months—around 180 days—for the company to just break even on the purchase price, once charging, repair and permit costs were factored in.

“But based on a Times review of data used in Bird’s smartphone application, even the supposedly new and improved models are falling short. Nearly 7,000 scooters appeared to be active in Los Angeles County in January, having logged a ride in the previous two weeks. By April, more than 5,500 of those same scooters appeared to be removed from active duty, with no rides logged for the prior two weeks. And the average life of those inactive scooters, based on the time elapsed between their first logged ride and their last before going dark, was 126 days.”

Carta, which helps private companies manage the legal complexities of raising private capital, has raised a lot of capital: “Carta, formerly known as eShares, is popular in the startup world as a way to handle options, 409a valuations, and the like. Owning a stake in Carta is effectively a wager on the growing importance of private companies, the private market, and, I’d reckon, a bet on the ability for private shares to trade more freely in the future.”

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FLI Charge Technology, a maker of wireless chargers, has been acquired by asset manager Birch Lake Associates. “The FLI Charge technology is a clear outlier in the power and charging space,’ said FLI Charge’s incoming chief executive officer, Khalid Zitouni. …  ‘We are excited to rapidly expand our consumer product offerings and continue to develop a robust licensing platform for all portable products, including power tools, IOT devices, drones, audio products and small appliances, among others.’”

A&R Logistics, one of the nation’s largest providers of integrated dry bulk logistics for the chemical and plastic industries, has been acquired by Private Equity group Wind Point Partners: “A&R plans to launch multiple new facilities totaling at least two million square feet in the Ports of Charleston and Savannah to support the packaging and export of numerous resins including polyethylene, polyvinyl chloride and polypropylene, among others.”


At this successful IT company, 75 percent of the staff are on the autism spectrum: “[Rajesh] Anandan founded Ultra Testing alongside his former MIT roommate Art Shectman after discovering research on the overlooked strengths common among autistic individuals. Anandan’s wife, who worked with autistic children at a community mental health clinic in Oakland, had also pointed out how much energy is spent trying to improve the skills that are lacking rather than nurturing the children’s often remarkable natural talents.

“‘Individuals on the autism spectrum are more likely to have strengths around pattern recognition, logical reasoning ability, enhanced focus, and so on,’ says Anandan. ‘That’s not to say that everyone on the spectrum has those abilities, but based on peer-reviewed studies published in scientific journals, there is evidence that there is an over indexing of those abilities—and those very abilities are exactly what you would look for in quite a few roles, especially around quality engineering or quality assurance.’”

Lawsuits suggest that Amazon has a pattern of firing workers who become pregnant: “CNET reviewed seven lawsuits against Amazon filed by pregnant warehouse workers who were fired over the last eight years and who’ve alleged that the company failed to accommodate their needs. The requests included longer bathroom breaks and fewer continuous hours on their feet, according to the lawsuits, but in all of the cases the expectant mothers were fired after telling their managers they were pregnant. Six of the cases were settled out of court. These cases fuel the perception that Amazon and CEO Jeff Bezos have created grueling conditions at their US fulfillment centers in the rush to build the online marketplace for everything.”


Entrepreneurs are finding that venture capitalists are not really interested in solving the climate crisis: “‘We don’t need another photo-sharing app or another blockchain start-up,’ said Mr. Rogers, who is investing his money through Incite Ventures, a fund he created with his wife, Swati Mylavarapu. ‘We need to solve the carbon crisis. But a lot of folks are chasing the easy money rather than taking responsibility for what needs to be done.’

“Mr. Rogers knows the arguments: The last time venture capitalists invested heavily in environmentally focused technology during the so-called clean-tech boom of the 2000s, they lost a lot of money. Getting one of these companies off the ground can be expensive, as investors learned a decade ago. But he is not swayed by their caution: ‘Sitting on your pile of money while the oceans are rising may not help you stay dry.’”

Over one million species are in danger of extinction because of us, says a report from the United Nations. “The report, which did not list individual species, found that 25 percent of mammals, more than 40 percent of amphibian species, nearly 33 percent of sharks and 25 percent of plant groups are threatened with extinction. Based on these proportions, the researchers estimated that approximately 1 million animal and plant species could die out, many ‘within decades.’”


In California, weed tourism is the new wine-tasting: “Options for day-trippers bloom in the Emerald Triangle, a three-county Northern California region—Mendocino, Humboldt and Trinity counties—named for the leafy green plant it grows in abundance. Limo buses bring groups of friends celebrating a birthday, retirement or bride-to-be to visit some of the area’s farms. Even a marijuana museum is in the works: Last month, cannabis startup Flow Kana bought 12 acres along Highway 101 in Hopland (Mendocino County). It plans to build a visitor center, featuring grower interviews and demos.

“San Francisco is also getting in on the action. A once-underground supper club called Cannaisseur Series invites paying guests to share an intimate gourmet meal paired with marijuana joints—often in a South of Market warehouse. And some pot shops are adding posh lounges where customers can try the goods. … Wine Country is angling for a piece of the business, too, with several Sonoma County operators offering wine-and-weed tours.”

And that’s what’s ahead.

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