E-commerce turbo-boost. It’s official — the world’s largest retailer is going to buy e-commerce startup Jet.com for $3 billion (Recode). A move against the Amazon threat, as most media reports argue? Sure — but more importantly, a broader acknowledgment that even the biggest and most efficient company today can’t figure out the future by itself. It’s hard to look around corners when you own the whole street. Walmart rose to its retail dominance by inventing new distribution and pricing systems, but like most industry leaders, it came to face the innovator’s dilemma. Jet offers Walmart some novel algorithmic low-pricing techniques, as well as some startup-speed talent. But history suggests it might take more than an acquisition for Walmart to stay on top. Meanwhile, Jet’s team took only two years to grow to triple-unicorn value by reliably delivering low prices online. (The Walmart-Jet deal is exactly the kind of BigCo-NewCo cross-fertilization that the NewCo Shift Forum event next February is all about.)
Economy stuck in low-grow land. Forget market swings and mega-deals for a second and zoom out to fundamentals: What you see is a new economic normal of low inflation, low unemployment, low interest rates — and low growth. How’d that happen (New York Times)? The gap between long-term U.S. growth of 2 percent (the late 20th-century average) and the 1 percent typical since 2000 explains a lot of today’s news, including the stubborn persistence of inequality and the rise of populist anger. Is our economy “fundamentally broken”? Or did recent generations just experience a one-time boom, and then overestimate how cool new tech would keep it going? Of course, we could be measuring “growth” all wrong (see: GDP). Or we could be in for a rough century. No one’s suggesting a quick fix, but a big spend on infrastructure looks promising to leaders across the political spectrum.
Just Mayo in hot water. Newco Hampton Creek, maker of the eggless Just Mayo beloved by vegans, stands accused of buying its own product to goose demand and impress potential investors. According to a Bloomberg story, the startup paid contractors in 2014 (and maybe 2015) to buy jars of its stuff from Safeway, Costco, Walmart, Whole Foods and other markets. CEO Josh Tetrick says the purchases were mostly to check product quality, and the whole $77,000 program represented a tiny fraction (0.12 percent) of its total sales. But anonymous contractors tell Bloomberg they bought lots of Just Mayo and were free to eat it or toss it. Maybe the company was trying to win bigger orders; maybe it was just overzealous about quality control. This kind of “growth hacking” is seen across the startup world, but the line does get drawn at buying one’s own product. Fast-moving startups don’t always document everything as well, or manage contractors as carefully, as they should. But they’d better be prepared to explain their practices to their most important stakeholders: the customers who trust them, and the investors who backed them.
India creates one tax to rule them all. As Britain — along with, maybe, a trade-pact-shy U.S. — pulls back from the world, India is charging in. It just reformed its vast, tangled tax system — replacing a patchwork of 17 different taxes with one national Goods and Service Tax. That should make a huge difference to the country’s startups and e-commerce businesses (Quartz India), who will no longer have to contend with conflicting and overlapping tax regimes. Instead, they’ve got a “reverse Brexit” — an integration of the entire Indian nation into a single regulatory environment.
Massachusetts draws a line in the job-interview sand. The most novel feature of Massachusetts’ new employment law bars employers from asking job applicants how much they made in previous gigs (The Atlantic). Legislators and activists hope to reduce the gender wage gap by breaking the loop in which small initial pay disparities turn into ever-larger inequities over the course of a career. Considering how stubborn the gender pay gap is, and how complex its causes (Vox), this experiment is surely worth a shot. But the law won’t go into effect for two years; it’ll be longer before we know whether it works. Applicants can still voluntarily tell Massachusetts hiring managers what they make, and the law guarantees workers the right to tell each other, too. Can limiting information in the hiring process really help? In the long run, more info is better than less: you can’t fix the system without knowing the data.
Lab keys are under the mat. Airbnb has taken the wraps off Samara, its new urban-planning innovation lab (Fast Company) aimed at “exploring new attitudes toward sharing and trust.” The first project: a communal housing project in Japan, done up in relaxing unfinished cedar, aimed at revitalizing small rural towns. How will these design projects contribute to the company’s bread-and-butter short-term rental business? Samara’s motto offers a clue: “The journey is long.”
Social media tools keep growing up and looking for a place of their own. Media platforms start by capturing the young and then climb the demographic age ladder: You saw it with Facebook, and now it’s happening to Snapchat (Backchannel). The tool for sharing ephemeral moments and disposable videos is starting to attract Silicon Valley real estate agents, who are there because their clients are, too. Meanwhile, Facebook-owned Instagram has unabashedly cloned Snapchat’s “stories” feature (The Verge) — which keeps photos and videos around for a day for friends to see. Instagram worries that users are too picky about the images they post, and wants to encourage more candid behavior. Everyone’s trying to win fickle users; at the same time, the reality is, no one’s getting any younger — whatever platform we use.
Location, location, location! First we had cubicles, because they were cheap and gave employees a (tiny, gray) space of their own. Then we had an open floor plan because it was even cheaper and (theoretically) encouraged collaboration (and also headphones). Now we may get into office seating based on productivity profiles. According to a new study (Bloomberg), the ideal office pairs people who crank out “just okay” work at a furious pace with those who produce top-notch work more slowly. Presto — everyone gets more done. How could this possibly work? “A combination of inspiration and peer pressure” (Business Insider).
When Wall Street is at the wheel of your ambulance. Private equity firms — the investors formerly known as “corporate raiders” — are operating ever bigger chunks of what we used to call the public sector, shaping our daily lives (New York Times/Dealbook). There’s a logic behind handing emergency services, transportation infrastructure, housing, or utilities to efficiency-minded investment groups: Theoretically, hard-nosed management can squeeze waste out of public services, striking a better deal for local governments. But these companies specialize in “cost cuts, price increases, lobbying and litigation” — so don’t be surprised when their touch turns out to be rough. Maybe there was a point to hanging a big “public” sign over part of the economy?
Airbnb, community disorganizer. When you take a hot neighborhood and turn chunks of its housing into Airbnb rentals, hosts can make money, economists cheer the efficient resource use, and travelers enjoy a quirkier-than-Marriott experience. But turn enough homes into short-term rentals, and that unique neighborhood could lose its character or even disintegrate (Next City). That’s why it makes sense to think twice before swapping too many full-time residents for drop-ins: Community isn’t community when the members are all gone.
If profit isn’t your only goal, congratulations. You’re now at odds with neoliberalism, the economic consensus of the last three decades.
A mission-driven company names a goal and says, “This is why we’re here.” Sure, profit is great, and profit powers a mission, but it’s not the point.
This simple principle puts the whole mission-driven movement on a potential collision course with the most deeply held and widely shared assumptions that have driven the global economy for the last quarter century. Today, neoliberalism — the school of economic thought that promotes market competition and small government — is facing challenges on multiple fronts: Its gospel of austerity hasn’t restored the economies that bought into it. Even the International Monetary Fund’s own researchers are questioning its premises. Popular movements on both right and left are threatening to blow up long-negotiated free-trade pacts. And a lot of the rest of us are hoping to get something more fulfilling out of our work than an “I made more money than you” certificate.