Recent reading

Scott Galloway explains NFTs.

When studying Big Numbers you often want a sweeping statistic, even if it's flawed. For the pandemic I think excess mortality is one key stat to watch.

Disc golf and its pandemic problems. I didn't know there were so many disc golf firms in Michigan! (Paywall.)

What is going on in grocery retail?

This is a thought-provoking piece on innovations in grocery retail. 

Farmhouse Market in particular caught my eye. It's a shop in Minnesota that lets customers use a key code to enter and shop 24/7. You can buy groceries alone. There is no on there to help, no on there to watch you, no one there to check you out. For me it flips the downside of zero staff—the fact that no one can help you—into an upside—you can shop anytime you'd like. Many large grocery stores let you shop 24/7 too, but having the option to shop in a smaller shop close to home with better food and less carting around through endless aisles...it sounds compelling. It also upends the Amazon Go grocery test where they hung a zillion dollars worth of cameras watching every move in the effort to let you shop without cashiers. That model is crazy expensive and freaks many people out that they are turning the act of buying cereal into Orwell's 1984. Instead, this couple installed a fifty dollar lock. And Big Brother isn't watching.

One emotion that staff-free retail invokes is trust. Do we believe customers will steal if left unattended? I lived in post-communist Slovakia for a year just after the Berlin Wall fell. The way retail worked there was utterly devoid of trust. In many shops you had to wait in a queue and ask for someone to get your item for you. To buy some noodles I would wait, then point at a box of pasta behind a counter and ask for someone to get it for me. Part of the justification for this nonsense was communism's mission to maximize employment. Jobs for everyone, jobs doing everything. A job getting you a box of pasta. A job handing you a piece of toilet paper at the bathroom (I'm not making that up). But another reason was trust. Since everything was owned by the state, people probably felt about as bad stealing as people do cheating on their taxes in America. A little wouldn't hurt, right?

I haven't thought about what that experience meant to me for years. Then I read this article on Chinese ecommerce. It is fascinating. (I'm sorry it's behind the New Yorker's firewall, if you'd like a copy I can send you a PDF.) It had loads of interesting news. For example, if you're like me and thought Amazon's drone special on 60 minutes was a PR stunt intended to deflect holiday attention from the working conditions described in an undercover Mother Jones article, you may be surprised to learn that they were just copying the Chinese who already use delivery drones. Who knew? But it was the author's own experience coming to America that hit home for me. She is a Chinese immigrant and described shopping for the first time in America after, like me in Slovakia, having to queue-and-ask shop in China. Here is her description of the marvel:

I can still remember the first visit my mom and I made to a Stop & Shop in New Haven, Connecticut, soon after we moved to the U.S., in 1992. I interpreted the unguarded aisles of open shelves as a sign that everything was free. I’d never heard the word “supermarket” before, and it seemed likely that “super” indicated a market where no money was necessary. My mother was awed that store employees, instead of trailing our every move as they did in China, seemed indifferent to our presence. How had shoplifting not bankrupted the establishment? What sort of society would allow such a risk? 

I had always thought of the Slovak model as weird. Here was someone describing how she felt the model I grew up with was weird. I took our get-it-yourself shopping for granted. But a hundred or so years ago, we shopped in America like they did in Slovakia, like they did in China. We lined up in a queue and asked. It made me realize that, of course, duh, retail changes. In high school I had a job at a video rental store. (It was there I watched Better off Dead about a hundred times.) That job no longer exists—for anyone. People don't rent videos from stores. Blockbuster used to employ almost 60,000 Americans. Where did they go? What do they do now?

Of course retail is going to change. Here is a mind boggling list of recent grocery innovations alone. How else will it change? Will it go backwards, like it's done recently adding delivery, something our grandparents took for granted? What will it add? What will it eliminate? Will we eliminate  the next queue — lining up to have people take our money? It seems the answer is inevitably Yes. There are many places, like CVS, where we line up and a machine takes our money. Or there are shops like Apple —or Zingerman's Mail Order, during our warehouse sale — where almost anyone walking around can take your money. There's no need for a single queue. Amazon wants their invisible app to take your money at Amazon Go. Surely that's just a stage, too.

But all that payment stuff, in context, seems like small potatoes now that I think about it. That's just the last part of retail. The money. There is so much more. One of the cornerstones of Toyota's lean operation tools, kanbans, came from how American supermarkets replenished shelves. That idea, born in retail, transformed manufacturing around the world. What else will come from retail? What else will come to retail?  How will we react to it? 

Recent reading in batches

The benefits of batching the news.

The benefits of incrementalism.

The benefits of grocery shopping more frequently.

Another fancy coffee roaster bought by a gigantic company. So what?

In a short period of time most of the 3rd wave coffee roasters that have a national profile have either taken on major outside investors or been bought outright: Intelligentsia, Stumptown, La Colombe, and now Blue Bottle. 

Is this a good thing or bad? Some will say, "It depends," but don't count me as one of them. To me it's pretty much all bad. None of these investors have any track record of making food better. They primarily make more of it and, typically, more cheaply by using cheaper ingredients, cheaper labor, cheaper whatever. They don't say any of that of course. They say "We'll expand Brand X's reach so more people have access to it," making them sound like they're doing it for the good of humanity. But the way they expand comes at a price, it always does. Look, these aren't crack coffee people buying coffee businesses. These are money people buying a chance to make more money. Conglomerate acquisitions are what they are, and they are not good for business creativity, they're not good for health, they're not good for the food. 

I don't know the whole story behind any of these buy-outs. I do know that some of the companies, like Blue Bottle, had already taken on investors ($100 million in their case). That was several years earlier. After the first wave of investors came I noticed these 3rd wave notables started packaging cold brew coffee for supermarkets and opening shops and roasting plants far from home base. They were using investor money to expand their products and to expand geographically. The fact that they are now taking on more money—in some cases the new money is buying out the other investors—could mean the expansion went well. Or it could mean it went badly. Either way it'd be a good story. So far I haven't seen anyone writing about it, though. No one is talking about whether these deals were done in a climate of fear or opportunity.

One article that is particularly telling about some of the other elements in play is this interview with James Freeman, the founder of Blue Bottle. To him, fast growth is a given, as he says, "There are a few paths a company of our growth rate can take when we’re pursuing capital." To some extent you have to forgive the guy. He started his company in Oakland, just up the road from Silicon Valley. He had investors from Instagram and Twitter and elsewhere in tech. This is the way they all think. You must grow big. You must get capital big. You must sell out big. That is how success works in that world. It's classic Silicon Valley, down to the galling self-effacement of a mulitmillionaire shrugging off how rich he is after the buyout saying, "I’ve got kids at home, so security feels great."

The good news behind this, the news that enabled it in the first place, is that small roaster coffee technology has come a long way. You can install a roaster in a single shop and pretty much make the economics work. The big companies can buy what they will. They always do. I have faith the small coffee world will still thrive.

Recent reading

Fast food "meat" is probably scarier than you think.

Many environmental footprint studies are flawed. This one appears to be pretty good. It shows the carbon footprint of a loaf of bread. You might be surprised at what's the biggest contributor to greenhouse gas. Hint: it's not transportation.

UPS taxed air and we cut back on shipping air. The same logic applies when you tax food — check out the eye-popping results of Philadelphia's soda tax.

Ibérico pig immigrants, coming to America.

Recent reading on meat

The lack of small, local slaughterhouses is often cited as one of the obstacles getting in the way of you and me buying affordable meat from small, local farmers. There's a bill being proposed to change slaughterhouse oversight rules in a way that would make it easier for them to get off the ground. The article quotes from some people we work with like Will Harris and Greg Gunthorp.

One argument against raising animals for meat is that it redirects calories to animals that we could otherwise eat. Except...

"...most of the feed that livestock eat is not edible by humans. Globally, just 18 percent of animal feed is made up of grains or other crops that people might otherwise eat. The rest is crop residues, grass, and waste from milling grain and other food processing. And so, despite the inefficiency of converting calories to meat, animals are able to give humans access to energy that they wouldn’t have been able to access otherwise."

Many more interesting points in the article Can meat ever be environmentally friendly?

Your debt and the government's debt. Why are they different?

There are some concepts that, even though they've been in circulation for many years, are still hard for most of us to wrap our minds around. Like Einstein's theory of relativity. Or how global warming makes winter storms. Or, especially recently, government debt. 

What's so strange about debt?

First there's debt that's intuitive. Most of us would probably say debt is OK when it allows us to do something that's long-term beneficial that we couldn't otherwise do. Like buy a car or a house. 

But when things get financially tough we all feel we should hold as little debt as possible. That's sound strategy for a person or a family. Even a city.

But countries are different. Just as how, in the theory of relativity, the normal rules of life break down when we approach light speed, so it is with money when you approach the  size of a country. At that large a scale, when things get financially tough, it's actually in the country's best interest to take on more debt, not less. 

Paul Krugman does a good job explaining why in a short article that contains no numbers and no graphs and very few wonky words,  Full disclosure: I studied economics and physics and I understood the theory of relativity (kind of) even before I understood the theory of government debt. I wish I had Krugman as a professor!

The urban density math of snow plowing

I caught this piece today that said 25% of Detroit's streets were plowed a day after the city's biggest snowfall since 1974. Whether or not that's good or bad here's another way to look at it.

Detroit has 1,884 miles of residential side streets and about 700,000 residents. That means every resident has to pay for about 14 feet of plowing.

New York City has 6,000 miles of streets and 8.4 million people. Even though that measure includes all roads, not just residential side streets, the fact that there are so many more people means big per capita savings. Each New York City resident only has to pay for 4 feet of plowing—over a 70% savings.

It's just a reminder of the uphill battle depopulated cities like Detroit have. The people leave but the streets don't go away.

Detroit can't copy New York's density but they might want to borrow one of its tricks that can create savings. The Big Apple owns very few plow trucks. Instead they just mostly stick plows on garbage trucks, like in the picture above. 

Recent Reading on Poverty and Wealth in America

Tipped workers are more than twice as likely to live in poverty. 

Give everyone in America $11,395. A totally radical — yet possible — way to end poverty in America that will never happen.

How do you think wealth is distributed in America? Hint: it's not even close to being as fair as you think it is. (Caveat: the speaker sometimes uses the words "income" and "wealth" interchangeable but they're very different. Income is the money you make. It's a flow. Income comes in this year, and some of it leaves as expenses. Wealth is what you own. You can make a million dollars this year but have zero wealth. Conversely, a good saver — or a person who inherits wealth — can have little income but lots of wealth.)

Recent Reading on Wages and Resturant Tiplessness

This restaurant has a hybrid model with no tips: a fixed wage or a percent of the business, whichever is higher.

Do you tip baristas more if you pay by credit card?

"We're kind of taking the risk off the server and putting it back on the business." How going tipless changes the pay dynamics in a restaurant.

How many hours do you have to work to buy a beer? An admittedly flawed yet excellent comparison of minimum wage rates across countries.

Recent reading (and watching).

Look how big chickens have gotten in the last sixty years.

A typical cow in the European Union gets a government subsidy of $2.20 a day which is more than the daily wage of 1.2 billion of the world’s poorest people.

Have you been eating sushi wrong (video)?

Jaques Pépin's omelet (video) totally changed how I cook eggs.

Recent Reading

It sounds impossible, but it may be more eco-friendly to fly in a plane than it is to drive a car. 

Do you order fresh peas online? Not yet, but maybe soon. The online grocery business is booming.

This is the kind of talk about food you don't hear very often; the real business side of the good food business. Patrick Martins, our pork man, talks about meat, farming, food, and the praise of real craft.

 

Recent Reading

"Why do many of us perceive Whole Foods and the Creation Museum so differently? By the total lack of outrage over Whole Foods’ existence, and by the total saturation of outrage over the Creation Museum, it’s clear that strict scientific accuracy in the public sphere isn’t quite as important to many of us as we might believe. "

—Whole Foods, the temple of culinary pseudoscience.

"Crabs get shipped from far and wide to the Chesapeake area precisely because the Chesapeake has crabs in it." A great explanation of how local markets do strange things in the global marketplace.

Young people do not make war.

This I share for no reason other than it's staggeringly good writing and it's about food and babies and one of those just arrived on my stoop. 

Recent Reading

Kickstarter backlash. How some existing businesses who use Kickstarter for next stage financing are getting backlashed. It's rare I see my two neighborhoods—Brooklyn and Ann Arbor—mentioned in the same business article but here you go.

More from the department of "There's a website for everything." British chick wear. And by chick, I mean chicken. Hat tip to Val. 

Planet Money makes a T shirt. From cotton to cloth and everything in between. A great five part (though brief) video series about how an everyday product is made in the 21st Century. This is THE story of the modern world and to me it's amazing how rarely it's told. Hat tip to Betsy.

 

Let them have books on Sunday

Three years ago the Postal Service was threatening to cut Saturday mail. Just last week they announced they'll start delivering packages on Sunday. What's going on?

For one, it appears they've woken up to the fact that they can't save their way out of a revenue problem. It's a concept I claim no credit for inventing, but I will take a moment to tactfully clear my throat and point to a 2009 post titled "Why doesn't the post office deliver on Sundays?" Maybe someone at the USPS was reading?

Probably not. I'm sure something far more powerful happened: Amazon.com came calling. Right now Sunday deliveries are only for Amazon packages (sorry every other business in the country). It's also limited to LA and NYC for now, but if it works for those two cities that will surely change.

(Despite the recent holiday we've all had razzing the federal government for its roll-outs it's worth noting the USPS announced this on a Monday and that weekend I got two boxes delivered on Sunday. Delivering things—that's one roll-out the USPS does really well. )

So what's in it for Amazon? So far people have focused on how Amazon is giving customers a service that no one else competes on. That's true, and in the century-old business of mail order where there are very few new tricks for us old dogs, it's a big one. Amazon will get more orders. It also earns Amazon some good will since they look like they're helping out a grand old American institution that's been having a hard time.

Few have written how it benefits Amazon logistically, though, and that's where I think the more interesting story lies. Without USPS, Amazon is limited to just two suppliers for what is one of its most critical business needs: delivering the stuff it sells. It's UPS or FedEx or go home. Between the two, UPS is a much stronger competitor and does the lion's share of Amazon's deliveries. In my experience UPS and FedEx work as a tacitly cooperating duopoly, though, which is to say they don't really compete with each other. Their rates are nearly identical and, strangely, seem to go up 5% each year in lock step. Neither offers services the other doesn't. Think about Sunday delivery. FedEx could have started that at any time to steal business from UPS, but it didn't.

The USPS can be a real competitor to this two member cartel. Presumably, if Sunday delivery goes nationwide, it could take one seventh (14%) of Amazon's business by doing nothing more than opening its doors one more day a week than its competitors do. It's got all the infrastructure: people, trucks, plains, trains, offices. All it needs is the will to make it happen. Speaking for a business that spends 25% of our revenue on a UPS that only works five days a week, I welcome a competitive USPS into the mix. Now let the rest of us get in on the Sunday action, please.

Recent Reading

"There are 80 million power drills in America that are used an average of 13 minutes. Does everyone really need their own drill?” The story of how AirBnB got started and why this kind of thing may mark the beginning of a whole new kind of economy.

AirBnB shares rooms, Lyft shares cars. What if I want to share a chicken?

There's a monthly food club for everyone. Also, apparently, every dog.  (Hat tip to Val.)

Recent reading, entrepreneur's edition

Why Uber is worth billions. What's Uber? Uber is one of a number of new car-calling and car-sharing services. In a place like Michigan where many people have a car — or more than one — it may not seem like a huge deal. But in cities and, I think eventually in the developing world, it's catching on like crazy. Still just tip of the iceberg in the coming sharing economy.

"Which part of your project is hard?" A key question to ask when you're starting a business.

Subscription model grocery continues to spread its wings. The new twist: bringing farmer's market style foods to you once a week.

High tech, high return silicon valley is investing like crazy to transform low tech, low return food.

Recent Reading

Why buses should be what we ride but aren't. (Wonky economic language alert.)

Twitter is not just 140 characters. It is a new communications network...140 characters. That is a feature, not a bug.

If you've ever wondered why people keep thinking Twitter is a big deal, this piece probably explains it as well as anything I've read.

....consumers are spending 300 times the cost of tap water to drink bottled water...What’s most remarkable.. we continue to buy it – even during an economic downturn..."

More amazing facts about how something so "expensive" is bought by Americans of all walks of life.

 

Let's Outsource Some CEOs

"American executives argue—conveniently enough—that their compensation should be compared to what other American executives are paid. This argument has tended to be persuasive to American boards, which—conveniently enough—are made up primarily of American corporate executives. And big American investment management firms—also led by American corporate executives—likewise think this makes sense. Which is all quite nice, but if you tried convincing one of these very same executives that he shouldn’t replace an American factory worker with a cheaper Chinese one, he would laugh you out of the room."

From Matt Yglesias—who's almost always worth reading—about how US CEOs are paid way more than CEOs in other countries. Wages have been on my mind a lot lately as I'm writing a vision for a new way of thinking about pay at Zingerman's and simultaneously watching income inequality in America hit levels that would make a robber baron blush.

Most promiment company, state by state

Debateable but totally interesting. Source: mapsontheweb.