The Worst New Brand, the Last Unconquered Screen, and Easing Employee Transitions

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DAYLIGHT

It’s now illegal in at least 14 states to ask a job applicant how much she makes in her current job, which is part of the reason that Salesforce asks the question this way: “What is the compensation you expect?

The two-weeks-notice approach to changing jobs is bad for both businesses and employees: “What often happens is that by the time someone gives their two weeks’ notice, it’s too late; they are mentally already out of the door and disengaged. As most employers can attest, the most dangerous employees aren’t the ones who leave, but the ones who ‘quit and stay.’ They are physically present, but mentally already gone.

“Three years ago, our company, Acceleration Partners, created our own version of an open transition program that we called Mindful Transition. What we and many other company leaders have found is that having an open transition program actually improves engagement, retention, and the culture overall.

“What’s also important to understand is that transition discussions don’t have to end in an employee departure. For example, we recently had three people transition into new roles—moves that were made possible because of ongoing feedback and open conversations. This wouldn’t have happened if they hadn’t felt safe talking to their managers and starting a discussion about their growing interest in doing something else.”

CAPITALISM

Last week, billionaire investor Ray Dalio warned of revolution if we don’t reform capitalism; now he’s explaining what he would do: “I have a principle that you will not effect change unless you affect the people who have their hands on the levers of power so that they move them to change things the way you want them to change. So there needs to be powerful forces from the top of the country that proclaim the income/wealth/opportunity gap to be a national emergency and take on the responsibility for reengineering the system so that it works better.”

REGULATION

The Trump administration plans to shift much of the power and responsibility for food safety inspections in hog plants to the pork industry: “Under the proposed new inspection system, the responsibility for identifying diseased and contaminated pork would be shared with plant employees, whose training would be at the discretion of plant owners. There would be no limits on slaughter-line speeds. …

“The administration also is working to shift inspection of beef to plant owners. Agriculture Department officials are scheduled next month to discuss the proposed changes with the meat industry. These proposals, part of the administration’s broader effort to reduce regulations, come as the federal government is under fire for delegating some of its aircraft safety oversight responsibilities to Boeing, which developed the 737 Max jets involved in two fatal crashes over the past six months.”

Banks and other financial companies have issued more than $1 trillion in risky corporate loans, sparking fears that Washington and Wall Street are repeating the mistakes made before the financial crisis: “The lending boom was precipitated, in part, by the rush to water down regulations at the start of the Trump administration. That’s when newly minted regulators—many with close ties to the financial industry—sought to strip away post-crisis financial rules and find ways to juice the economy by encouraging more lending.

“One of their top targets was leveraged loans. These are giant loans that banks make to heavily indebted—in financial speak, highly leveraged—companies. Bankers often have little assurance that the loans can be repaid, which can make them particularly risky. Bankers earn large fees off these products, and many banking executives say their institutions are sheltered from losses because they sell the loans to other investors such as hedge funds, mutual funds and insurance companies.”

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RETAIL

Even McDonald’s is copying the retail store template established by Apple: “At a distance, McDonald’s 19,000 square-foot flagship location in Chicago could be mistaken for an Apple store. Its boxy, glass-paneled design, and its airy, minimalistic look and feel, combined with modern-looking furniture, offer some clues as to what might have inspired the design. The company is calling it an “Experience of the Future” store…

“Apple’s 506 stores have been lauded as a retail success story, yielding approximately $5,546 per square foot, according to a 2017 CoStar study. For retailers squeezed by Amazon, the growth of online commerce and outdated stores that face declining traffic, appropriating elements of Apple’s model is a way to breathe life back into physical stores. A clean, carefully presented selection of products, a help center that resembles a hotel concierge, a space for events and classes, and a cashierless checkout system are some elements retailers are trying to copy. The common denominator is that they’re all aiming to nail an approach to retail that’s predicated on a glitch-free, easy customer experience.”

GOING PUBLIC

Why exactly do unicorns that are hemorrhaging money like Lyft go public? “One lesson Elon Musk has learned the hard way is that being public brings new regulatory scrutiny and an investor base that cares about quarterly earnings reports and is not necessarily prepared to buy your very long-range vision for profitability. He clearly wishes Tesla had stayed private.

“You can think of these companies as overgrown adolescents. Just because they are big does not mean they are mature, and they may not yet be at the life stage where it is best for them to move out on their own. If you don’t have a clear road map to profitability—if seeing your profitable future requires a pair of Silicon Valley venture goggles—you may be best off staying private.”

iHeartMedia, which used to be known as Clear Channel, filed for an IPO to pull itself out of Chapter 11but will anyone invest in a company that’s in bankruptcy? Media consultant Fred Jacobs says, “He’s not alone in pointing out that by some measures, iHeart is a solid company that was saddled with $16.1 billion in legacy debt. Post-bankruptcy, that debt is now been reduced to $5.75 billion, which in and of itself makes it a more stable business. ‘iHeartRadio has become a global entertainment force with a giant microphone,’ argues Jacobs.”

REAL ESTATE

Barneys, the world-famous luxury clothing store, has had to extend its credit line by $50 million because rent is becoming too expensive in NYC: “Rent at Barneys’ flagship on Madison Avenue jumped from roughly $16 million to approximately $30 million in January, nearly wiping out its earnings before interest, tax, depreciation and amortization, the people said. Barneys unsuccessfully tried to halt the rent hike. The company says it still has positive EBITDA and projects positive EBITDA for the year and beyond.”

TECHNOLOGY

Silicon Valley and the automakers are battling for control of the last unconquered screen, your dashboard display: “The current state of play is a confused free-for-all as the two industries circle each other warily. Some car makers are turning over their dashboard operating systems to Alphabet’s Google entirely. Others, including Ford Motor  and Daimler, wager they can muster the technological chops to compete.”

Sensei, a small Portuguese startup, is challenging Amazon Go in helping stores go cashierless with a different approach: “The startup uses overhead cameras and artificial-intelligence software to detect what’s picked off shelves and calculate the bill. It can also determine whether products are put down again anywhere in the store, so that shoppers aren’t charged. Customers check in with a payment card or mobile-phone code when they arrive, and the store automatically takes payment when they leave. …”

Sensei founder, Vasco Portugal, says he has Amazon to thank for streamlining the development of his tech which has already found a home in a major UK supermarket, “Amazon Go is the best thing that happened to us … It would have been much more difficult for us if they didn’t exist, because this is an emerging technology and they are putting pressure on the market to move in this way.”

ZACK ELLER’S DEAL OF THE DAY

Hotel Effectiveness, a labor management software company, has acquired LobbyLights, a wage comparison data provider for the hospitality industry. “While there was some overlap between Hotel Effectiveness’ customer base and the clients of LobbyLights, most of the hotels only used one of these services…Following the acquisition, the company will begin integrating the LobbyLights service into the Hotel Effectiveness Labor Management application.”

MARKETING

Snap is getting into mobile gaming with a new ad-supported platform: “Snap is betting that engagement with games will also lure more advertising dollars to its platform with non-skippable, six-second video ads. Analysts were still skeptical about the company’s ability to maintain its user base even after posting better than expected earnings with stabilizing user engagement in its fourth quarter 2018. … Snapchat users will be able to access games directly from the chat feature of the app and invite friends to join them.”

Would you name a clothing brand after “the world’s most notorious drug kingpin?” “A former beauty queen named Emma Coronel, is launching a clothing line she says is inspired by her and her husband’s style. The brand will be called El Chapo Guzman. ‘I am very excited and hope I can create things that everyone likes,’ Coronel wrote in a post on Instagram this week, in which she solicited designers to come work for the new company.

“The contract Guzman signed from prison in February grants the rights to his name and signature to a limited liability company headed by Coronel, said Michael Lambert, an attorney who represented Guzman during his recent trial. Lambert said that none of the profits from the business will go to Guzman, and that the new company will not do business with his client: ‘Additionally, none of the start-up money or any future funding will be connected to him in any way.’”

And that’s what’s ahead.

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

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