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    Published on: January 20, 2023

    Three days spent in the Seattle area last week reminded me of how lucky I am in my choice of career, and offered a business lesson in the importance of education and information.

    Oh, yes…here is the octopus hash that if referred to in my commentary:

    Published on: January 20, 2023

    The US Department of Agriculture (USDA) has announced new "organic" guidelines that are designed "to close loopholes" that permitted ingredients that did not meet the criteria for "certified organic" to get into the organic supply chain.

    The Washington Post reports that "the USDA has a strict definition of 'certified organic,' allowing the label to be used only for products that meet certain standards for soil quality, animal-raising practices, pest and weed control, and use of additives … Government standards require that products bearing the organic label are produced without the use of toxic and persistent pesticides and synthetic nitrogen fertilizers, antibiotics, synthetic hormones, genetic engineering, or other excluded practices, sewage sludge, or irradiation. It’s a high bar that even many farms that use more natural practices don’t meet."

    Tom Chapman, chief executive of the Organic Trade Association, tells the Post that the updates represent 'the single largest revision to the organic standards since they were published in 1990.'  They should go a long way toward boosting confidence in the 'organic' label, Chapman said, noting that the move 'raises the bar to prevent bad actors at any point in the supply chain'."

    The Post notes that there have been persistent problems in the organic supply chain:  "This month, the Justice Department announced indictments of individuals alleged to have masterminded a multimillion-dollar scheme to export nonorganic soybeans from Eastern Europe to be sold into the United States as certified organic. They were able to charge 50 percent more for 'organic' grain than conventional, the department said.  And this week, two Minnesota farmers were charged in connection with an alleged plan to sell more than $46 million in chemically treated crops as organic between 2014 and 2021."

    Axios writes that "the changes include requiring those in the middle — such as traders and brokers — to be certified alongside the food producers themselves … There will also be more inspections and required certification for imports."

    “Protecting and growing the organic sector and the trusted USDA organic seal is a key part of the USDA Food Systems Transformation initiative,” Jenny Lester Moffitt, undersecretary for marketing and regulatory programs, said in a statement. She added that “this success is another demonstration that USDA fully stands behind the organic brand.”

    KC's View:

    I'm totally on board with the ideas of more stringent standards that require organic products to actually live up to their name - to "stretch" the definition strikes me as fraudulent.  I just hope that the fines are onerous, to the point that the folks breaking the rules cannot decide that it makes more economic sense to break the rules and just pay the fines.

    Published on: January 20, 2023

    The Information reports that "Walmart has hired Jason Forrester, a cloud veteran who in recent years has helped Amazon and Target develop networking technology for revamping the experience of shopping in retail stores … A Walmart spokesperson didn’t have a comment on what role Forrester, whose title is technical fellow, will play at the retail giant. But Forrester has spent most of his career building networking operating systems that run on unbranded switches, giving companies an alternative to products from companies like Cisco Systems, according to a person who has worked with him."

    According to the story, "This type of software is strategically important for retailers because it lets them build custom services and features. At Amazon, Forrester helped create the networking OS that powers the Just Walk Out technology in Amazon Go stores, the person said. At Target, he modified an open-source OS called Sonic to develop services like curbside shopping, said the person. Forrester previously spent more than four years at Apple managing a team that designed and operated its global data centers."

    KC's View:

    Lots of possibilities, as Walmart may be thinking about to connect the dots among the various facets of its business.

    Published on: January 20, 2023

    People worried that the labor-management sky is falling because of all the publicity that pro-union movements have gotten lately can relax.

    The Washington Post reports that "Union membership in the United States fell last year to a new low even as the labor movement scored a string of significant victories at high-profile companies that have long evaded unionization, such as Amazon, Starbucks, Apple, Chipotle and Trader Joe’s.

    "The share of the workforce in labor unions dropped to 10.1 percent, the lowest on record, the Labor Department said on Thursday, even as the total number of union members in the United States grew by 273,000 last year. The labor movement could not keep up as the booming job market added 5.3 million jobs, and non-union jobs grew at a faster clip than union positions."

    According to the story, "The disappointing numbers for the U.S. labor movement come at a time of unprecedented worker leverage because of the tight labor market — conditions that tend to favor unions and labor activism. American workers, particularly in low-wage jobs, have been able to demand higher pay and better treatment from employers, as labor participation rates remain low and job openings remain high with close to two job openings for every job seeker over the past year. That trend is only beginning to ease.

    "Union efforts and labor activism tend to flourish in tight labor markets, where job opportunities are abundant, since employers are less likely to retaliate against workers when they’re a scarce resource."

    KC's View:

    Two things may be true here.

    The obvious one is that because there are more jobs, there are more non-union jobs in addition to more union jobs … and the non-union portion simply is growing faster.

    The other one may be that more enlightened companies actually may be creating environments and cultures in which workers feel less compelled to seek union representation.  As more companies pay attention to things like diversity, governance, and environmental issues, they may be creating climates that are more worker-friendly.

    Published on: January 20, 2023

    Two surprising things happened yesterday at Netflix yesterday.

    First, the company announced better-than-widely-expected Q4 results, saying that it added 7.66 million net new subscribers during the period, far more than the 4.5 million it had projected.  It ended the year with 230.75 million worldwide, well beyond its target of 227.59 million - a four percent jump year over year.

    Second, co-founder Reed Hastings stepped down from his co-CEO role, and now will serve solely as executive chairman.   Netflix co-CEO Ted Sarandos now will share the job with the company's current COO, Greg Peters.

    Axios writes that "the executive shakeup comes as Netflix moves to diversify its business from being fully reliant on ad-free subscriptions.  The company has introduced a new subscription advertising tier and has pushed to build up its gaming and merchandising businesses."

    The New York Times writes:  "Netflix said its advertising-supported subscription had resulted in subscriber growth and increased customer engagement. The company said that relatively few of its customers had switched from other plans, and that both customers and advertisers had been bullish on the option.

    "Netflix did not provide any guidance for new subscriber additions in the first quarter of 2023, after an announcement last year that it would stop providing those closely watched updates to investors."

    And Variety writes that "Hastings, in a blog post, said Netflix’s board has been discussing succession planning for several years. As part of that, in July 2020, the company promoted Sarandos to co-CEO alongside Hastings and also appointed Peters to the role of chief operating officer in addition to chief product officer.

    "Over the last two and a half years, according to Hastings, 'I’ve increasingly delegated the management of Netflix' to Sarandos and Peters. He continued, 'It was a baptism by fire, given COVID and recent challenges within our business. But they’ve both managed incredibly well, ensuring Netflix continues to improve and developing a clear path to reaccelerate our revenue and earnings growth. So the board and I believe it’s the right time to complete my succession'."

    KC's View:

    And, if it doesn't work out, Hastings always can follow in the footsteps of Howard Schultz and Bob Iger and Howard Schultz (again) and take the CEO job back.

    But let's be serious.  Despite recent problems at Netflix and some missteps along the way, Hastings has been instrumental as a disrupter, essentially putting a myopic and complacent Blockbuster out of business, and, more recently, helping to create an environment in which movie theaters seem to be less relevant every day.

    It is not a coincidence, I think, that Regal Cinemas has in the last 24 hours announced the closure of more than three dozen of its locations, including flagship downtown multiplexes in New York City and Seattle.  This is a result of its parent company, Cineworld, filing for Chapter 11 bankruptcy protection in the U.S. last September due to nearly $5 billion in debt.

    I still think that Netflix needs to do a better job with its proprietary content/private label movies - it often seems more focused on quantity than quality, and more dependent on directors than screenwriters.  But make no mistake - Hastings has created an enormously effective entertainment engine with what in show business they call "legs."  And the trailer Netflix put out for 2023 is just one indication:

    Published on: January 20, 2023

    •  From the New York Times:

    "Alphabet, the parent company of Google, said on Friday that it plans to cut 12,000 jobs, becoming the latest technology company to reduce its work force after a hiring spree during the pandemic and concerns about a broader economic slowdown.

    "The job cuts announced by Sundar Pichai, Alphabet’s chief executive, amount to about 6 percent of the company’s global work force. Mr. Pichai said the company expanded too rapidly during the pandemic, when demand for digital services boomed … Google joins a list of other technology companies that have laid off workers after concluding they had overextended under the belief that the pandemic-fueled boom for digital services and online tools represented a new normal. Amazon, Meta, Microsoft and Twitter are among others who have announced thousands of job cuts."

    •  From Reuters:

    "E-commerce giant said on Thursday it will increase the prices of some of its music subscription plans from February.

    "The price of Amazon Music's 'Unlimited Individual Plan' will go up by $1 to $10.99 per month, while its 'Unlimited Individual Student Plan' will go up to $5.99 from $4.99 per month, according to the company's FAQ page.  The company said the updated pricing starts on Feb. 21 and customers will begin seeing the new price on their bill following that date."

    •  From Bloomberg:

    "Apple Inc. is working on a slate of devices aimed at challenging Inc. and Google in the smart-home market, including new displays and a faster TV set-top box, after relaunching its larger HomePod speaker.

    "The push into smart displays will start with a tablet product — essentially a low-end iPad — that can control things like thermostats and lights, show video and handle FaceTime chats, people with knowledge of the plans said. The product could be mounted on walls or elsewhere using magnetic fasteners, positioning it as more of a home gadget than a regular iPad.

    "Apple has also discussed the idea of building larger smart-home displays, according to the people, who asked not to be identified because the deliberations are private.

    "While the iPad already has smart-home features, standalone smart-home devices — often designed as countertop or wall-mounted appliances — have grown increasingly popular. Amazon sells a line of Echo Show products with displays, while Google offers its Nest Hub. And the latter company — part of Alphabet Inc. — is readying a Pixel Tablet with an optional stand. Apple also has discussed creating a home stand for its current iPads."

    •  From the Wall Street Journal:

    "Wayfair Inc. is preparing to lay off more than 1,000 workers, according to people familiar with the matter, as the online furniture seller confronts shrinking sales after a pandemic-driven boom.

    "Wayfair’s restructuring, the second round of layoffs in six months, is expected to affect more than 5% of the workforce at the Boston-based company. Wayfair said in August it was cutting about 870 jobs, or about 5% of its global workforce.

    "The company joins Inc., Microsoft Corp. and a growing list of technology companies to slash jobs in recent months amid signs of slowing consumer spending, high inflation and rising interest rates.

    "Wayfair, like many of these firms, aggressively added staff during the pandemic to expand its warehouse operations and customer-service teams. It had 16,681 full-time equivalent employees as of the end of 2021, up from 12,100 at the end of 2018. Its customer-service staff roughly doubled over that period to about 4,900 people, according to company filings."

    Published on: January 20, 2023

    •  From the Wall Street Journal:

    "Jobless claims declined last week to the lowest level since September, suggesting the labor market remained tight at the start of the year.

    "Initial jobless claims, a proxy for layoffs, fell by 15,000 to a seasonally adjusted 190,000 last week, the Labor Department said Thursday. Claims are up from lows reached early in 2022, but continue to hover near prepandemic levels when the job market was also tight … The U.S. labor market remains strong but has gradually lost steam in recent months. Employers added 223,000 jobs in December, the smallest gain in two years. There were 10.5 million job openings in November, down from the peak 11.9 million in March, but far exceeding the number of unemployed Americans seeking work."

    Published on: January 20, 2023

    David Crosby, the rock musician who moved from the Byrds to Crosby, Stills, Nash & (sometimes) Young, has passed away.  He was 81.

    The Associated Press writes that "while he only wrote a handful of widely known songs, the witty and ever opinionated Crosby was on the front lines of the cultural revolution of the ‘60s and ‘70s — whether triumphing with Stephen Stills, Graham Nash and Neil Young on stage at Woodstock, testifying on behalf of a hirsute generation in his anthem 'Almost Cut My Hair' or mourning the assassination of Robert Kennedy in 'Long Time Gone'."

    Published on: January 20, 2023

    The other day we referenced a story from the New York Times detailing how when many workers start jobs in the restaurant business, they are required to "pay around $15 to a company called ServSafe for an online class in food safety."  What they don't know is that ServSafe "doubles as a fund-raising arm of the National Restaurant Association — the largest lobbying group for the food-service industry, claiming to represent more than 500,000 restaurant businesses. The association has spent decades fighting increases to the minimum wage at the federal and state levels, as well as the sub-minimum wage paid to tipped workers like waiters."

    In other words, the Times wrote, employees who generally would argue for an increase in the minimum wage actually are helping to fund a lobbying group that has effectively worked against any such increase.

    Got the following email from MNB reader Duane Eaton:

    Having worked for a trade association serving the produce industry I know the ServSafe program well.  It’s an important program designed to make foodservice workers aware of food safety dangers in preparing and serving food to customers.  As such, IMHO, it should be a “cost of doing business” expense that is borne by the business and not the worker. 


    We reported the other day that Amazon was ending its AmazonSmile charity donation program, saying that " our ability to have an impact was often spread too thin."

    I commented, in part:

    I'm sure that in some cases, the donations are thin … but donations are donations, and for me, it just felt good.

    It seems to me that this could be seen as a case in which Amazon is prioritizing itself over its customers, which is a cultural/perception shift for the company.  Maybe in a vacuum it wouldn't matter, but at a time when Amazon is going through a lot of changes, this is troubling.

    One MNB reader agreed:

    My husband received the same email with the same sentiment. It made us sad and disappointed. It wasn't that we thought our small amount made a huge difference but it added to our "Why use Amazon?". Most of our purchases could be done using someone else. AND maybe our donation with other donations did make a big enough impact. I am sorry to see this program go and disappointed that Amazon decided to discontinue it. 

    And, from another reader:

    This is very disappointing and I totally do not agree with their narrative.  The power of AmazonSmile is a person can pick a charity they want to support and not one Amazon selects.  Taking that choice away is not helpful at all.

    Yesterday we noted a good piece in the New York Times about how, in Florida's Miami-Dade County, vendors "can be found in parking lots and along busy roads … They turn their open car trunks into makeshift cafeterias or grocery stores, selling produce, tamales, seafood and meats. They shout their sales pitches, lighthearted Spanish rhymes, as they follow shoppers coming and going from the stores."  Many of these vendors are immigrants, and they're also unlicensed.

    I commented:

    A lot of these folks are just trying to make a living, though that doesn't address the issue of food safety;  it also doesn't help traditional retailers that find themselves competing with these insurgents.

    That said, if South Florida is like most other places around the country, there must be a lot of retailers looking for motivated, experienced employees who would love to have more traditional jobs with regular paychecks and benefits.  You'd think that somehow retailers could find a way to access all these street vendors and make them appealing offers.

    Now, it may be that the regressive immigration laws we have in this country make this impossible.  That's a different problem.  But there ought to be a way to match people who want to work, wherever they happen to be from and whatever their immigration status, with companies that can't find enough employees.

    MNB reader Scott Vicari responded:

    I am with you up until “whatever their immigration status.”  One of the basic foundations of a nation is its borders, another is its laws. Solving the illegal immigration problem starts with a healthy respect for both.

    From another reader:

    Nice thought, but you are missing a key factor.  These street vendors are flying under the radar.  They don’t want a job that they have to pay taxes and be regulated by others.  The motivation is to stay low, make cash, and go home.  I would say that most are already getting free benefits from government subsidies and free medical too.  Until those things go away, the connection will never be made between business and people that work the street, no matter how good their tamales are.

    And I would say that you are focusing on the worst stereotypes of who these folks are, not the fact that many of them see America as a place where their best, most aspirational dreams can be fulfilled.  The vast majority of immigrants are people who want to work and build lives for themselves and their families - I think they understand the promise of America far better than many people whose families have been here for generations.

    Do we have to come up with a solution for the illegal immigration crisis?  Sure.  Absolutely.  But you don't do that by pandering to the worst stereotypes.

    (I have my own thoughts about this.  If I were President Biden, I'd appoint a six-person commission, co-chaired by Barack Obama and Jeb Bush.  The other four members would be made up of two Republicans and two Democrats, none of whom are in office or have any plans to run for office.  And I'd ask that commission to, within six months, made a series of recommendations for how to fix the immigration and asylum system in a way that respects the law, is in synch with the needs of the economy, and has embedded within it a basic sense of humanity.  It seems to me that neither political party has done well in grappling with the problem, and so I'd try to take it out of politics, and promise to a) try to pass whatever recommendations the commission makes, and b) not use the problem as a political cudgel except against those who are more interested in making noise and political points than finding solutions.)

    Published on: January 20, 2023

    "A Heart That Works," by Rob Delaney, is, I think, a remarkable piece of writing.

    The book, by a writer and comedian perhaps best known for "Catastrophe," is a memoir about Delaney's son, Henry, who was diagnosed with a brain tumor at age one and - spoiler alert - passed way just before his third birthday.  "A Heart That Works" chronicles the two years experienced by Delaney's family in sad and funny detail.

    If that sounds odd, or even counter-intuitive, I can assure you that it is not.  If "A Heart That Works" is suffused with anything, it is deep love.  While heartbroken by the hand his family has been dealt, and certainly experiencing moments of rage, Delaney is able to look at Henry with enormous love, and appreciate the impact the child is having on family and friends, caregivers and co-workers.  This fills his heart rather than depletes it, and Delaney manages to walk a fine narrative line, finding the humor when appropriate, the anger when unavoidable, and the lessons when they come.

    I thought that "A Heart That Works" was simply extraordinary.  I heartily recommend it to you.

    She Said is one my favorite kinds of movies - a kind of detective story in which the heroes are journalists.  (Wish fulfillment. What can I tell you.)

    The movie is in the great tradition of Spotlight and All The President's Men, detailing the long, hard work of two real-life New York Times reporters - Jodi Kantor and Megan Twohey - as they sought out the truth about Harvey Weinstein, the powerful Hollywood producer who also was a serial rapist, abuser and harasser.

    She Said is a quiet thriller, focusing largely on the dogged legwork that the reporters have to do in order to persuade sources and victims to go on the record and expose Weinstein's misdeeds.   Zoe Kazan and Carey Mulligan are terrific as Kantor and Twohey, finding the soul of their characters and offering little bits of illumination while never forgetting that the story - and the movie - are about the victims.  There are terrific supporting performances by the likes of Samantha Morton, Patricia Clarkson and Andre Braugher, and I have to say that the film is rigorous in its honesty about how journalism is done. 

    And, even more importantly, it exposes a culture that allows, enables and even forgives the acts of a monster like Weinstein because he is powerful. We see this time and again in real life - not just in the movie industry - and She Said gives us a peek behind a particularly sordid curtain.  A strong-minded piece of filmmaking, and I encourage you to see it.

    I mentioned in my FaceTime this morning that I had dinner with my friend Morgan, who never has steered me wrong when it comes to wine.  Even though he was sitting next to me instead of behind the bar, Morgan has done it again with the recommendation of the 2021 Cigar Box Malbec from Argentina - a terrifically smooth wine that goes with most things, and that I found particularly enjoyable with meat loaf and mashed potatoes.  (Comfort food all around.)

    That's it for this week.  Have a great weekend, and I'll see you Monday.