Published on: June 14, 2021
Some people think you measure success by much you get and how much you keep. But 17-year-old Verda Tetteh, an immigrant graduating from public high school with a 4.9 GPA and bound for Harvard, recently demonstrated an enormous amount of generosity and emotional intelligence. It isn't a business story, but KC thinks you should make it your business to know about Verda Tetteh.
Published on: June 14, 2021
E-commerce bulk retailer Boxed announced this morning that it is going public via a merger with Seven Oaks Acquisition Corp., a publicly-traded special purpose acquisition company (SPAC).
According to the announcement, "The combined company will be called Boxed, Inc. upon the closing of the transaction and is expected to be listed in the U.S. under a new ticker symbol. Boxed will continue to be led by Chieh Huang, Boxed’s Chief Executive Officer. Gary Matthews, Chairman and Chief Executive Officer of Seven Oaks Acquisition Corp., will serve as Boxed’s Chairman of the Board when the business combination is complete."
The announcement notes the following highlights from the deal:
"Leverages proprietary technology to promote a curated, simple shopping experience which drives big basket sizes of approximately $100, or eight items per average order, for its B2C platform … Significant B2B business servicing a wide-range of customers, from small and midsize businesses to Fortune 100 enterprises; well-positioned to capitalize on the reopening of the U.S. economy … Rapidly growing BoxedUp paid subscriber base providing a loyal, recurring revenue stream … Vertically-integrated technology stack that includes the customer-facing front-end, the operational back-end software and homegrown fulfillment automation robotics … Monetizing proprietary technology platform through unique SaaS business … Proven commitment to an ESG mission with a majority of corporate office positions held by ethnic minorities, and the Company consolidates large orders to reduce carbon footprint."
In its coverage, the Wall Street Journal writes that "Boxed faces mounting competition for its business. While higher than before the pandemic, grocery delivery sales have slowed recently. Instacart Inc., which has said it expects to go public, is pitching its service to businesses and recently introduced 30-minute delivery. Instacart, DoorDash Inc. and Uber Technologies Inc.’s Uber Eats division are also delivering a wider assortment of goods such as baby products, prescriptions and electronics in addition to restaurant meals and groceries.
"Despite recent growth, they are struggling to turn a profit, squeezed by labor and shipping costs.
"Boxed isn’t profitable, Mr. Huang said, but Boxed and Seven Oaks projected that its software, advertising and delivery businesses would help it turn a profit within several years. Boxed’s sales growth has also slowed from high levels at the start of the pandemic last spring, but the company said it expects to continue adding customers."
According to the announcement, "Under the terms of the proposed transaction, Boxed and Seven Oaks will merge with a pro forma combined equity value of approximately $900 million. The combined company is expected to receive $334 million in net cash proceeds from a combination of Seven Oaks’ cash in trust of approximately $259 million, assuming no redemptions by Seven Oaks’ public stockholders, as well as a $120 million fully committed private placement financing. There are no secondary shares being sold by existing Boxed shareholders in the transaction."
Scott Moses of PJ Solomon has been advising Boxed on the deal.
Mrs. Content Guy loved Boxed - she has found it during the pandemic to be better than most online retailers at keeping us stocked up on essentials, and strong on prices.
If this gives Boxed a new lease on life, making its business strategy more sustainable over time, then that's a good thing for competition. Seems to me that this is something that Tom Furphy predicted here in an Innovation Conversation several years ago - that eventually Boxed would have to find a partner that would give it a stronger financial underpinning.
Published on: June 14, 2021
The US House of Representatives on Friday announced five pieces of legislation that, if passed by Congress and signed by the President, would have the effect of "reining in the country’s biggest tech companies" and could "substantially alter the most richly valued companies in America and reshape an industry that has extended its impact into nearly every facet of work and life," the Wall Street Journal writes.
The rare-for-the-times bipartisan nature of the proposed legislation "underscores the mounting bipartisan interest in overhauling federal competition laws to address long-running allegations that Amazon, Apple, Facebook and Google have engaged in monopoly-style tactics," the Washington Post writes. "The measures would outlaw some of the common ways tech companies allegedly solidified their digital dominance and, in the most severe instances, force them to sell off lines of business that represent a conflict of interest."
The New York Times writes that the bills represent "the most aggressive challenge yet from Capitol Hill to Silicon Valley’s tech giants, which have thrived for years without regulation or much restraint on the expansion of their business. Last year, the antitrust subcommittee released a scathing report about the industry after a 16-month investigation, declaring that Amazon, Apple, Facebook and Google engaged in a variety of monopolistic behavior. The proposals released on Friday try to address the concerns detailed in the report."
The Journal writes "one of the proposed measures, titled the Ending Platform Monopolies Act, seeks to require structural separation of Amazon and other big technology companies to break up their businesses. It would make it unlawful for a covered online platform to own a business that 'utilizes the covered platform for the sale or provision of products or services' or that sells services as a condition for access to the platform. The platform company also couldn’t own businesses that create conflicts of interest, such as by creating the 'incentive and ability' for the platform to advantage its own products over competitors.
'A separate bill takes a different approach to target platforms’ self-preferencing. It would bar platforms from conduct that 'advantages the covered platform operator’s own products, services, or lines of business over those of another business user,' or that excludes or disadvantages other businesses."
The Journal goes on:
"Another of the measures would force online platforms to make their services interoperable with those of competitors, which could mean different social networks must allow their users to communicate or allow e-commerce sellers to export their customer reviews from one site to another, according to a summary provided by lawmakers.
"A fourth bill targets mergers, making it unlawful for a large platform to acquire rivals or potential rivals. The bill would have prevented only 'a small percentage of all technology sector deals' over the past decade, the summary said.
"Lawmakers also introduced a bill to raise filing fees for mergers valued more than $1 billion and lower them for transactions under $500,000. It would generate an estimated $135 million for antitrust enforcement in its first year, the summary said. Similar legislation recently passed the Senate."
I have three concerns about this.
One is that tech companies may be held to a different standard than n on-tech companies.
Two, I worry that legislators don't really understand how retailing works - the whole private label emphasis reflects a lack of nuance in the proposals, best I can tell.
And three, I still think that it will be hard to prove that much of what the lawmakers s object to is actually bad for consumers.
Expect that even if these bills get passed - which is far from assured - there will be legal challenges for years.
Published on: June 14, 2021
CNBC has a story about how Amazon has a couple of new warehouse workers, named Bert ands Ernie.
Bert and Ernie, the story notes, are new robots that "Amazon is testing with the goal of reducing strenuous movements for workers … Ernie helps remove items from a robotic shelf so employees don’t have to. The process doesn’t save time, Amazon said in the post, but testing has so far indicated it could make work safer for employees."
Here's how CNBC describes Bert:
"Bert is one of Amazon’s first Autonomous Mobile Robots (AMRs), made to navigate facilities independently, even while workers are moving around. Unlike other robots, Bert would not need to remain in a restricted space, meaning workers could ask it to take items across a facility. Amazon said Bert could eventually move heavier items."
CNBC notes that Amazon's warehouses also are testing out a couple of other robots in their warehouses, called Kermit and Scooter, that can "take over workers’ tasks of moving empty packages across facilities so they can focus on activities requiring critical thinking skills and reduce physically strenuous work."
Cynics will say that Amazon may be as interested in the fact that robots don't get sick or hurt, and don't even think about organizing so they can have union representation. They take order, and don;'t fight back.
At least, not yet.
Of course, we all know how this ends:
By the way, I wonder how the Children's Television Workshop, producers of "Sesame Street," feels about having its beloved characters' names appropriated by Amazon? (I'm imagining Nomadland with Muppets…)
Published on: June 14, 2021
The Verge reports that Microsoft, having closed virtually all its bricks-and-mortar stores last year Microsoft , is putting its toe back into the segment by "selling products at its 'Experience Centers' in London, New York City, and Sydney next month."
However, there will be limitations. There won't be the ability to pick up products ordered online, and the global shortage of computer chips will mean that some products won't be available for purchase.
"Our Microsoft Experience Centers were created to provide customers a way to experience our products in person," said Travis Walter, Microsoft’s head of retail stores, in a prepared statement. “We use these spaces to test and experiment, and continue to evolve the experience based on customer feedback."
The ironic thing is that one of the reasons that the Microsoft stores never really distinguished themselves is that they never did anything to distinguish themselves - they were Apple Store knockoffs without the Apple magic.
These Experience Centers may actually offer customers a differentiated experience that will put Microsoft products in a context that will make them seem more relevant and resonant. Which is the best thing any retailer can do.
Published on: June 14, 2021
• The Wall Street Journal has a story about how "America’s small and medium-size online merchants are being separated into winners and losers according to their ability to adapt to changes in logistics driven largely by Amazon and other big retailers. Amazon’s continuing hiring binge and warehouse building spree facilitate ever-faster, free Prime shipping.
"As a result, even merchants who don’t sell on Amazon are racing to ship products as fast as they can, either eating the extra cost or raising prices and watching their sales decline - while simultaneously coping with supply-chain bottlenecks.
The challenges has been that Amazon keeps setting the increasingly high bar for e-commerce fulfillment: it "has continually ratcheted up the speed with which most goods sold on its site arrive on the doorsteps of shoppers, offering first two day, then one day, and now frequently same-day delivery, as it rolls its Prime Now service into its main site and app … For small or medium-size online sellers, keeping up with the latest Prime demands requires what were until recently considered extraordinary measures. It means operating warehouses at least six days a week, and sometimes resorting to pricey second-day or overnight shipping."
Some are thriving. But some are not.
Published on: June 14, 2021
• The Washington Post reports that McDonald’s "said Friday that some customer and employee information had been exposed by a data breach affecting its markets in South Korea, Taiwan and the United States.
"No customer payment information was exposed in the breach, the company said … The hack was uncovered by external consultants investigating unauthorized activity on McDonald’s internal networks.
"The McDonald’s breach is the latest in a string of recent hacks impacting major companies, from JBS, the world’s largest meat processor, to Colonial Pipeline, which supplies nearly half the fuel on the East Coast. The hacks have revealed the vulnerabilities of U.S. firms and infrastructure, and left government regulators scrambling to address cybersecurity in both public and private realms."
• CNBC reports that Starbucks seems to be laying the groundwork to have its name on some kind of sports arena, having " filed an application with the U.S. Patent and Trademark Office … for the right to use its name on a stadium or training facilities."
The story notes that "companies are willing to shell out big bucks for the brand awareness and fan loyalty that can be derived from a high-profile venue with the corporation’s name. Last year, Amazon reportedly spent $300 million to $400 million on the rights for an arena in Seattle, now called the Climate Pledge Arena."
• USA Today reports that "mall owner Washington Prime Group Inc. filed for Chapter 11 bankruptcy protection late Sunday, citing the COVID-19 pandemic for making the move necessary.
"The company, which spun off from the nation's largest mall operator, Simon Property Group in 2014, currently has 102 shopping centers … Several retailers – some with locations in Washington Prime properties – have filed and exited bankruptcy since May 2020 amid the pandemic, including Christopher & Banks, Guitar Center, New York & Company, J.C. Penney, Stein Mart, Sur La Table, Ascena Retail Group and Tuesday Morning. The bankruptcies have included store closings."
Published on: June 14, 2021
Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…
• Here are the US Covid-19 coronavirus numbers: 34,321,158 total cases … 615,053 deaths … and 28,400,132 reported recoveries.
The global numbers: 176,767,256 total coronavirus cases … 3,820,622 fatalities … and 160,822,092 reported recoveries. (Source.)
• The Centers for Disease Control and Prevention (CDC) says that 64.4 percent of the US population age 18 and older has received at least one dose of vaccine, with 54.1 percent being fully vaccinated.
• From the Wall Street Journal:
"The proportion of Covid-19 laboratory tests that are coming back positive is at the lowest recorded point since the pandemic took hold in the U.S., a sign of progress as the country moves ahead with reopening.
"Laboratories processed more than 677,000 laboratory-based Covid-19 tests a day on average during the week ended June 3, down from the peak of more than two million during the fall and winter, according to the U.S. Centers for Disease Control and Prevention.
"Some 2% of Covid-19 tests are coming back positive, compared with more than 13% during the height of the winter surge, according to Johns Hopkins University, which compiles Covid-19 testing and case data in the U.S."
There will be some who will say that with the positive test levels being so low, why are some folks concerned about getting about more people vaccinated. It is all about now screwing up the end game … you have to finish the job. It reminds me of this scene from Charlie Wilson's War:
• Bloomberg reports that Apple "plans to drop its mask requirement for vaccinated customers at many U.S. stores beginning next week, a move that will mark yet another major retailer moving away from the Covid-19 safety protocol as states ease restrictions … The change will go into effect as early as Tuesday, and employees have been told that they won’t be required to ask customers for verification of vaccination."
Published on: June 14, 2021
Ned Beatty, a classic character actor who could imbue even the smallest role with humanity and depth, playing a wide range of characters in movies like Deliverance, Superman, Rudy, White Lightning, All The President's Men, Toy Story 3, and Nashville, has passed away. He was 83.
Perhaps his greatest performance last three minutes, delivering a Paddy Chayefsky-crafted monologue in Network as a corporate media executive who sets Peter Finch's Howard Beale straight about who has power and who does not.
Published on: June 14, 2021
On the subject of possible federal legislation aimed at tech companies (which On Friday became actual bills, as reported above), one MNB reader wrote:
As an advertiser I’m all in favor of Congress taking action and limiting the power of big tech. Facebook and Google specifically.
I think the big question, given the size of those two, is what if they say no…
Although I’m sure they’re tracking my opinion as I type this…
Got the following email from an MNB reader about businesses outsourcing their delivery functions:
Ordered food from Papa Gino's recently (I know, I know!) for delivery, in NH. A half hour later I'm getting phone calls from San Mateo CA, which I don't answer, I don't know anyone there. Turns out it's the Door Dash driver, in my driveway!
Would have been nice if Papa Gino's had let me know they were outsourcing deliveries.
We had a story last week about how Oxnard, California, decided to pay essential retail front line employees a $1,000 hazard bonus, which it took out of federal stimulus money and which allowed the city tio avoid mandating retailer-paid hazard pay.
I said I had no problem with it, though there were MNB readers who felt that taxpayers were being screwed.
Here's another one:
Kevin, you don’t see it that way?? Who funds the government? Taxpayers. So, when anything comes out of the government that is an additional expense, “we the people” pay for it. Hey I’m an essential worker too. I pay taxes.
I reject what strikes me as an "if they're gonna get theirs, I gotta get mine" mentality. Retail workers were a lot more at risk during the past 18 months than I have been, and so, if there is stimulus money out there, I'm okay with them getting a piece of it.
On another subject, from another MNB reader:
KC, read this article this morning and could not help but comment…
PCC having hiring difficulties due to “a lack of foot traffic from office workers in downtown office buildings…”
I promise I’m not a cynic but I might add: continued social unrest, soaring crime rates, lack of police presence, growing homeless population on the streets, etc… all the things businesses fear! I applaud PCC for embracing their community and wish them a speedy solution!
Regarding UPS considering a same-day delivery offering, one MNB reader wrote:
UPS via their Strategic Enterprise Fund is an investor at least, some say started, a gig style same day delivery company called Roadie. What I often see posted are return lost luggage gigs from the airport to local residences. It doesn’t pay much but the idea is to get something delivered instantly by someone who was going to be making a similar trip anyway and if you have some cargo capacity you can make a few extra bucks.
On another subject, from another MNB reader:
Really enjoyed your views on Albums and Cassettes. It started a very vigorous multi generational debate within our family. For me, it's a quality vs. format issue. But, from a business model perspective the music industry is very excited to have us buy the same music over and over again. Brilliant if you think about it. Not too many industries where that is even possible. I have some select material on LP, but it's more to have the actual album than about the sound itself.
One last point. If you're listening to your music streaming (compressed) and via Bluetooth (more compression on mid range) you are missing a lot. Today I'm listening to Jimmy Buffet's "Songs You Don't Know By Heart", which has new guitar patterns that he and Mac are using. Even my 60 year old ears can hear the difference between the CD and streaming. You are missing a lot of the music quality. But, I totally understand the convenience tradeoff. All of us make that tradeoff depending on where we are in our daily routine. But do yourself a favor and try listening to something you really enjoy in digital (CD, FLAC, etc.) and then listen in streaming service. I think you'll hear what many of us pick up on.
Thanks for the recommendation. (I do like that album a lot.)
And, on still another subject, an MNB reader wrote:
Can’t agree with you more on "Mare of Easttown." One of the best series I’ve seen this year. And as for "Loki" (and the other Marvel runs on Disney+), I think the writing and production on them has been fantastic. The sandbox of Disney+ allows these shows to shake the big budget requirements and tackle stories with meat on them.
"WandaVision" tackling the depression of experiencing loss, and "Falcon and the Winter Soldier"confronting our history of celebrating POC as heroes; powerful stories.
Published on: June 14, 2021
In the women's singles final at the French Open, Barbora Krejcikova of the Czech Republic defeated Anastasia Pavlyuchenkova of Russia, 6-1, 2-6, 6-4 on Saturday to win her first singles championship.
Then, on Sunday, she teamed with with fellow Czech teammate Katerina Siniakova to win the women's doubles championship, 6-4, 6-2 beating Bethanie Mattek-Sands and Iga Swiatek.
Also on Sunday, Novak Djokovic defeated Stefanos Tsitsipas for the men's singles championship, winning 6-7, 2-6, 6-3, 6-2, 6-4, and battling back after going down two sets to none. Djokovic now has won each of the four major Grand Slam championships at least twice.
