May 10, 2020 8:31 am
It's been a crazy few weeks, hasn't it? Hope you and yours are keeping safe.
I'm back again with the most thought-provoking articles I've read in the week. (in case you missed my previous newsletter, you can find it here).
This week, we first look at a coming inflection point in retail. COVID-19 has complicated retail to an immense degree, and one player has just taken the first initiative.
Next, we talk about supply gluts - both oil and video-conferences. How do we resolve the problem of overabundance?
And third, something we're all grappling with, in our Zoom fatigue. How can we communicate better when we're all working remote?
Here's the deal - Dive as deep as you want. Read my thoughts first. If you find them intriguing, read the main article. If you want to learn more, check out the related articles and books.
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In the last 20 years, there have been three inflection points in retail, creating over $500 billion in shareholder value.
As Scott Galloway says in The Fourth Great Unlock, we now know the next one.
Galloway first talks about the three unlocks of the last 20 years:
1. Temples - or the Apple Experience Store.
Steve Jobs zigged when everyone was zagging. He reallocated billions from traditional brand building to distribution, opening stores — temples to the brand. ... Apple's move to invest in bricks and mortar flew in the face of every trend. In 2001, stores were dead. Pundits predicted that e-commerce would take over.
The iPhone is the most profitable product in history, not because the product is tangibly superior (the Galaxy is better on many metrics), but because of where it’s sold. Buying a phone at an Apple store is sex with Tom Brady. Buying an Android at a Best Buy, AT&T, or Verizon store is having sex with a guy named Roy on a bad carpet under a neon light tube.
2. Monogamy - or Amazon Prime.
Firms who are in transactions businesses, like retail, are serially dating. Being single, while it has its moments, is exhausting and expensive. Equinox, Tinder, vodka, and hangovers all tax your time and well-being. Firms that are single and constantly need to be attractive to strangers to repopulate their customer base, are valued at a multiple of profits. Firms in monogamous relationships (recurring revenue) are valued at a multiple of revenues.
In 2005, Amazon decided it wanted to get serious with its customer base and asked for our hand(s). But when they put a ring on it, they also brought a goose, as on the better tables of a Manhattan club, in the form of 48-hour free delivery. Amazon Prime now has a paying relationship with more households, representing more discretionary income (82% of US households), than any private entity globally.
3. Click and Collect - Walmart warehouses became pickup points. Changing a cost center to a profit center.
As Galloway says, strategy is a company's answer to the following question: What can we do that is really hard?
What can we do, that our competitors will not be able to?
Which brings us to the fourth great unlock. Amazon's investment in COVID-ready supply chains.
As Bezos said in Amazon's Q1 earnings report,
If you’re a shareowner in Amazon, you may want to take a seat... Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit.
But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.
This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own COVID-19 testing capabilities.
Jeff Bezos is developing the world's first “vaccinated” supply chain.
Expect Amazon to put even more distance vs. the next-best player in retail.
I love Galloway's use of analogies in this article. It makes his narrative seem even more compelling.
(He does this a lot. Check out his commentary on WeWork, or more pertinent, WeWTF).
One of the big news of the last month was oil prices going negative. It allowed for hilarious tweets like this:
Oil is in the middle of a COVID-induced supply glut.
In technical terms (Wikipedia), a general glut is an excess of supply relative to demand.
This imbalance causes prices to fall. Producers miss their revenue targets. They then produce more, so they can hit their revenue targets despite lower prices. Even though volumes were the problem in the first place!
A vicious cycle. Which ends with the supplier paying you $40 to please take their oil, because they have no place to store it!
As Packy McCormick says in Wackos and Zoomgluts, we're in the middle of a similar oversupply of online events.
With all our Zoom meetings, webinars, Zoom happy hours, kids' online classes... we're tired. Zoom fatigue is a thing.
Even at zero dollar cost, people don't want to attend most Zoom events. Because they have to pay with something even more valuable: their time.
And, unlike oil, you cannot price a Zoom event at negative time.
How do you solve a glut?
By creating a perception of scarcity.
The article offers some examples:
Good principle to remember: In times of abundance, create scarcity.
How do you solve the Zoomglut at work though? By writing instead of talking.
When you need to make a decision, don't schedule yet another meeting.
Make the decision, explain it in long-form writing, and then have a meeting if you need to debate it.
That's how Amazon's been doing it for years. Jeff Bezos' 6-page memos are legendary for good reason. Clear writing and clear thinking go hand in hand.
And as we all now work remote, writing is even more crucial. As Tim Casasola says,
Writing forces you to be coherent. And it makes it easy for people to collaborate with you. We all love poking holes in arguments and filling gaps. A structured written argument is an invitation to do that. It's harder when you're rambling in a meeting.
Remember, “Five people in a room for an hour isn’t a one hour meeting. It’s a five hour meeting.”
Meetings favor folks who think out loud. They don't favor clear thinking, only fast thinking.
This is important. As you begin to write more, you always default to an asynchronous discussion (over email / chat).
An email thread makes it clear when you need a meeting. The email thread is 10 messages deep, but there's no decision. Many people aren't agreeing. Or they are saying, "Yes, I agree", but then saying something completely incongruous.
It's only then that you need a meeting.
As you read this, if you're saying to yourself, "I don't have the time to write a long explanation. I'm fighting fires here!", remember again: writing saves time.
Five people in a room for an hour isn’t a one hour meeting. It’s a five hour meeting.
The article also shares a few simple tips to write better:
Basecamp's guide to communication in remote work is also a great resource. Strong recommend.
My favorite line:
Meetings, video conferences, calls, etc. are opportunities to interrupt and be interrupted. Instead, always default to writing for important decisions.
This had me in splits:
"This thing is buffering at a crawl tonight," said Brandten, whose 19th-century namesake Nathaniel Lee Brandten once led his kin across barren wilderness in a tragic half-decade trek from Boston to the Pacific Northwest. "I'm not even watching it in full-screen mode. Why is it so slow?"
That's it for this week! Hope you liked the articles. Drop me a line (just hit reply or click on the "Leave a comment" button) and let me know what you think.