Who’s Riding the Dow’s 20K Bull?


The NewCo Daily: Today’s Top Stories

Sam Valadi | Flickr

The Dow hit 20,000 this week! Does anyone care? Our new president has taken credit for the “Trump bounce,” and indeed the latest market run-up started with the election results. Since its March 2009 bottom under 7000, the Dow index has roughly tripled.

At moments like this, it’s worth putting the champagne on hold to review the sober facts about the stock market (handily collected by Helaine Olen in Slate). The Dow Jones Industrial Average is fun to track but not a very good proxy for the overall economy’s health. Stock investments have been pumped up by years of zero interest rates that drove investors to seek higher returns in riskier markets. And whether the index stays aloft or returns to earth, you are unlikely to benefit from its ebullience, unless you’re already seriously rich.

Since the Great Recession that followed the financial collapse of 2007–8, middle-class Americans have shunned stocks while wealthy investors have rushed into the market and captured its massive gains, deepening the gap between the top one percent and everyone else. The Dow’s record-breaking run is a reminder that our inequality problem isn’t just about income but even more about wealth. Those who have more to invest do even better when investments thrive. When things go well, they will rake it in, and if risks mount and disaster hits, they’ve got a lot more room to absorb the loss.

Tesla Is Doing Just Fine in the Trump Era

You’d think that Tesla, Elon Musk’s electric vehicle and solar business, would be suffering under a new president who’s a friend to fossil fuels and a foe of climate science. But Musk is serving as an adviser to the Trump administration, and Trump, it seems, is smitten with Musk’s visionary fervor for big U.S.-based manufacturing and audacious space travel (James B. Stewart in The New York Times). Instead of tanking, Tesla’s stock has roared upwards in recent weeks.

It’s hard to be sure whether Tesla’s market strength has anything to do with the political winds; maybe investors are just eyeing advance orders for its new cars and growing bullish on its giant new battery factory in Nevada. Maybe it’s all just “wishful thinking by fans of Mr. Musk, Tesla investors, environmentalists and hopeful space colonists,” Stewart writes. But for now, at least, Tesla’s strength suggests there’s more resilience in the renewable energy industry than its detractors have been willing to admit. You don’t hear too much ranting about Solyndra any more.

Moore’s Law Hits the Wall, But We’ll Be OK

Moore’s Law — the idea that computer chips grow smaller, denser, faster, and more powerful at an exponential rate by doubling every two years or so — got tech to where it is today. But it is “a force that is nearly spent,” according to Tim Cross in The Guardian. We’re down to transistors that are just dozens of atoms in size, and the gains are getting harder and harder to achieve.

Meanwhile, business is conspiring with physics to end Moore’s Law-style progress: The cost of the equipment to make chips even more powerful has exceeded the value of the power boost they provide.

If the principle that has made computers so much smaller, faster, and more efficient in our lifetimes is reaching its end-of-life, will technological progress falter? Cross suggests we’ll keep pushing tech forward by finding other roads to take — including better programming, specialized chips, radical new designs (like 3-D chips and quantum computing), and advances in cooling that are impractical for personal computers but could transform data centers. Moore’s Law’s demise will change how computing evolves, but it won’t freeze us in place.

At Starbucks, Mobile Ordering Speeds Up One Line, Snarls Another

Starbucks’ mobile ordering system is going gangbusters. It’s so popular, in fact, that it has redistributed the flow of people in many of the coffee chain’s stores: The lines at the registers are gone now, but the lines at the pickup counter have grown, at times, painful (Geekwire).

Seven percent of all Starbucks transactions used its “Mobile Order and Pay” system in the last quarter, but at peak hours at 1200 stores, more than 20 percent of orders came through the app, taxing baristas and espresso machines to their limits. The company says the congestion was responsible for putting a dent in its sales numbers for the quarter.

It shouldn’t be that hard for Starbucks to learn how to redeploy employees and better time customer notifications to smooth out the problem. But it’s a good reminder that when technology speeds up one part of a business, you’d better be prepared to deal with bottlenecks in other places.

The Disruption Narrative Is Due For Disruption

Enough with all the disruption mythology, those tales of heroic startups besting big bad incumbents, writes NewCo editor in chief John Battelle (NewCo Shift). The most interesting startups are busy solving real problems and rethinking how a market should work, not trying to slay Goliaths with slingshots.

Meanwhile, many of those behemoth incumbents are deeply aware of the broad changes in their markets — and partnering with startups to navigate them. At NewCo’s upcoming NewCo Shift Forum, the speaker roster is full of examples of each of these kinds of adaptation.

If you’re as eager to join this conversation as we are to convene it, please join us at the Shift Forum this February 6–8th in San Francisco. We’ve got a very limited number of seats left, and we expect it to sell out shortly. Because the event is held under Chatham House Rule, you’ll have be present to learn from these extraordinary leaders. Non profit and founder discounts are available. We hope to see you there!

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