Walmart, Target, and Best Buy are successfully competing against Amazon; You Can't Fire Mark Zuckerberg's Kid's Kids; Inside the Fall of WeWork; The seven ways getting rich increases your odds of divorce
1) Most retailers are getting slaughtered by Amazon (AMZN), but not Walmart (WMT), Target (TGT) and Best Buy (BBY) – so it's worth understanding why. As a starting point, watch this CNBC interview with my friend David Berman of hedge fund Durban Capital, who spoke at my shorting conference a year ago and knows more about the retail sector than just about anyone. Many retailers continue to lose against Amazon. But not Target and Best Buy, investor says. Excerpt:
A lot of traditional retailers will lose in the battle against Amazon, David Berman, founder of Durban Capital, said Friday on "Squawk Alley." But Target and Best Buy seem safe for now.
"You are seeing outliers like Target and Best Buy," Berman . "They were somewhat struggling, and they are suddenly doing a better job."
Amazon has been gobbling up market share from traditional retailers recently, forcing them to enter pricing wars and invest in enhancing online offerings to better integrate their digital and brick-and-mortar businesses.
Target and Best Buy have both managed these integrations well by offering customers multiple ways to make purchases, such as ordering online and picking up in stores, and getting deliveries directly from warehouses. Ahead of Black Friday this year, both retailers offered deals online over the span of a few weeks.
Other retailers have struggled to embrace the changing market.
"It's just going to carry on getting worse," Berman said. " is so big that, by the law of numbers, when they're growing in the 20% range, you can imagine the market share they're taking from everyone else."
2) Kara Swisher, who's one of my favorite writers covering the tech sector, wrote this spot-on op-ed in the New York Times about the abuses of dual-class stocks and what should be done about it: You Can't Fire Mark Zuckerberg's Kid's Kids. Excerpt:
No substantive laws govern tech. Most important, many leaders of these powerhouse companies are in effect unfireable: in order to get the boot, they essentially have to fire themselves. And guess how often that happens?
Welcome to the world of perpetual dual-class stock, an old finance trick that has been used – and now abused – with great enthusiasm by the tech giants.
The car-sharing firm Lyft has it. Dropbox has it. Snap has it. Google's parent company Alphabet has it. WeWork's co-founder and chief executive had so much control of the company that investors were forced to pay him a king's ransom to go away in preparation of an IPO (which was later abandoned). And, perhaps most important of all, Facebook has it.
In a dual-class stock structure, a company issues shares to some shareholders that give them more voting rights, and sometimes other powers. Most simply, the general public gets shares with less voting power, and sometimes with none at all (Snap made this famous). With perpetual dual-class stock, founders and their families, and perhaps other key executives, get shares with voting power that gives them control over a company forever...
Here's the problem with tech companies using dual-class stock schemes: They can work well until they do not.
I'm not alone. Some experts have been calling for imposing new legislation to improve the system. One way to do that is mandatory sunsetting of dual-class stocks (which some companies do voluntarily): After a period of time, the shares automatically convert to single class...
The Investor Stewardship Group and The Council of Institutional Investors, with billions in assets, have been calling for the limiting of dual-class stock after seven years. C.I.I. and other big investors filed a petition to do just that a year ago to the New York Stock Exchange and Nasdaq.
3) Speaking of The Whee Company, if you, like me, can't get enough of it (and its narcissistic co-founder Adam Neumann and his loopy wife Rebekah), then you won't want to miss this in-depth Vanity Fair article: "You Don't Bring Bad News to the Cult Leader": Inside the Fall of WeWork. Excerpt:
The company's valuation put Neumann's net worth at $4.1 billion – and his spending more than kept pace. "It was Succession craziness," a colleague said. Neumann was chauffeured around in a $100,000-plus Maybach sedan and traveled the world on a $60 million Gulfstream G650. As reported in the Wall Street Journal, he and his wife, Rebekah Paltrow Neumann – Gwyneth's first cousin – spent $90 million on a collection of six homes that included a 6000-square-foot Gramercy condo, a 60-acre estate in Westchester County, a pair of Hamptons houses and a $21 million mansion in the Bay Area that features a room shaped like a guitar. They employed a squadron of nannies for their five children, two personal assistants, and a chef. "Adam went through money like water," a former executive said.
In a way, the spending made sense, because Neumann himself was the product. He pitched himself to investors as a gatekeeper to the rising generation. A new way of working. A new way of living. Work was 24/7, coworkers were friends, office was home, work was life. For baby boomers who experienced office life as cubicles and bad coffee, his message was irresistible. "Every investor who walked through was sold," a WeWork executive told me. They saw Neumann as a millennial prophet who did shots of Don Julio during meetings while preaching about the dawn of a new corporate culture, one in which the beer and kombucha flowed and MacBook-toting employees would love coming to work. After sitting with Neumann in his office, outfitted with a Peloton bike, infrared sauna, and cold water plunge, Steve Jobs biographer Walter Isaacson told Fast Company that Neumann reminded him of the Apple cofounder. Neumann later told colleagues that Isaacson might write his biography. (Isaacson never considered writing such a book.)
Through a combination of egomaniacal glamour and millennial mysticism, the Neumanns sold WeWork not merely as a real estate play. It wasn't even a tech company (though he said it should be valued as such). It was a movement, complete with its own catechisms ("What is your superpower?" was one). Adam said WeWork existed to "elevate the world's consciousness." The company would allow people to "make a life and not just a living." It was even capable of solving the world's thorniest problems. Last summer, some WeWork executives were shocked to discover Neumann was working on Jared Kushner's Mideast peace effort. According to two sources, Neumann assigned WeWork's director of development, Roni Bahar, to hire an advertising firm to produce a slick video for Kushner that would showcase what an economically transformed West Bank and Gaza would look like. (Bahar told me he only advised on the video and no WeWork resources were used.) Kushner showed a version of the video during his speech at the White House's peace conference in Bahrain last summer.
To a passel of geezer capitalists, this was too big to miss, even if they didn't fully understand it – possibly, not understanding it was the point. Rupert Murdoch, Sir Martin Sorrell, and Larry Silverstein all took meetings. Mort Zuckerman, the billionaire cofounder of developer Boston Properties, told a real estate executive shortly after WeWork launched that Neumann was creating the future of work. Zuckerman soon offered to buy WeWork for $500 million. (Neumann declined the deal but accepted a $2 million investment from Zuckerman.) "Adam was probably the best salesman of all time," a former WeWork executive told me.
4) Reason No. 2 why making a ton of money can actually increase the odds of divorce: making a lot of money generally requires working long hours and traveling a lot, which can: a) put a huge strain on a marriage... and b) increase opportunities for infidelity (both for the person traveling, as well as for the one at home).
Best regards,
Whitney