Welcome to the weekend.
I’m writing the briefing from a WeWork today. Though I generally tend to stay away from the big headlines of the week, I’m covering on the WeWork story this weekend because I am critical of the Silicon Valley, growth-at-all-costs, approach to building a business. This approach, wholly embraced and evangelized by a charismatic CEO, drove this solid real estate company to become an Icarus. Though this path of hyper-growth may work for a tiny fraction of businesses, it’s become the standard model of growth. The two articles included below are the most thought-provoking pieces on that topic. I find it important to examine the cautionary tales. I hope it allows us all to reconsider our views on what a successful business is.
Quick favor: I’m cooking up an interesting Weekend Briefing project (which I’ll tell you about in the next few months). In pursuit of this project I’m looking for collaborators. So, if you run a company in the following categories or have connections to any, I’d love to chat: (1) luxury / eco hotels in New Zealand or Australia, (2) fine dining / craft cocktail bars / wineries in New Zealand or Australia, (3) brands that align with adventure and travel. If you have a connect, please just reply to this email. Cheers!
4.65 B – BTS had three No. 1 albums on the Billboard 200 in less than one year, sold 300,000 seats with an average price of $452 each in minutes, and has passed 5 billion streams on Spotify. They generate $4.65 billion annually, which is Samsung-tier business.
5 MM – Since the 1987 Montreal Protocol phasing out the production of numerous substances that are responsible for ozone depletion, the hole in the ozone layer has been healing. Today, the ozone hole is just 5 million square kilometers and is on track to be the smallest hole observed in 30 years. It seems that collective environmental action can work.
Last week, WeWork CEO and co-founder Adam Neumann was forced to step down after the company’s valuation dropped at least $30 billion in a matter of days. And on Monday, WeWork officially pulled its IPO. How much of the company’s problem was solved when Adam Neumann stepped down? NYU Stern professor Scott Galloway says: At this point, I would say about none. He and SoftBank entered into a suicide pact, and he jumped out of the plane before it hit the ground. He pulled the rip cord. He has exited the suicide pact with $740 million, and everyone else gets to ride this out to its logical end, which will likely be a bankruptcy file. There probably are a minority of WeWorks that are cash-flow positive and could sustain a corporate headquarters with 80 percent fewer staff. They have 15,000 employees; I don’t see any path that doesn’t involve 5,000 to 10,000 layoffs in the next 60 days. Then the question is how to restructure. This is now a distressed asset that requires immediate restructuring. So does SoftBank want to put more capital in? If SoftBank does not want to put more capital in, they can’t cut costs fast enough and it will be a Chapter 11. If SoftBank does want to put money in, they need to basically cut costs. They’re going to need to close a massive number of offices, and they’re going to need to lay off somewhere between a third and two-thirds of staff at corporate. The consensual hallucination here continues. This is a distressed asset in free fall that is inarguably worth less than zero. Because all we have here is an entity burning $700 million a quarter. New York Mag (10 minutes)
Masayoshi Son is the major investor is behind both Uber and WeWork through his SoftBank’s Vision Fund. Son has always been bold, but the $100B fund takes his boldness to a new level. His strategy is to pick the winners in each category in each geography and cut them big checks ($200MM minimum). He’s known for convincing founders to take more money than they initially asked for and pushing them to think bigger and bolder. His aggressive investment strategy is being put to the test as his main Silicon Valley investments flail as they go to Wall Street. This is a brilliant podcast about Son. The Journal (22 minutes)
Just how long will it take to achieve gender equality around the world? While the World Economic Forum predicts the United States won’t reach this mark for more than two centuries, other countries are further along — and several could reach equality within our (or our children’s) lifetime. The WEF’s Global Gender Gap Report, published annually since 2006, analyzes 149 countries on four dimensions critical to equality: (1) Economic participation and opportunity, (2) Educational attainment, (3) Health and survival, and (4) Political empowerment. The gaps between men and women across all of these measures are slowly getting smaller. In 2018 the WEF report showed that 68% of the overall gap is closed, a slight rise from about 65% in 2006. Much of that has to do with educational attainment and health, where gender differences have almost vanished. But two key areas of power and influence still haven’t caught up: political empowerment and economic participation and opportunity. Women hold a mere 34% of managerial positions worldwide, and fewer than 10% of countries have women as heads of state. So while women are increasingly educated and healthy, they are rarely included in decision making that affects them. Check out these 6 charts to better understand the gender gap. Harvard Business Review (8 minutes)
Elon Musk gave an announcement about SpaceX’s Starship. Among other things, he noted: (1) Starship spaceship could reach orbit in less than six months and fly humans next year. (2) SpaceX is building Starships quickly. SpaceX’s team at Boca Chica Beach built Starship Mk 1 in about four to five months, Musk said. That was after he changed the design from a carbon fiber exterior to stainless steel—a design he said would be cheaper, heat-resistant and would result in a similarly strong, lightweight vehicle. (3) Musk is interested in a lunar presence. Musk said Saturday it would be “very exciting to have a base on the moon,” adding that a base focused on scientific research would be useful. His moon musings come as NASA has stated that it plans to return to the moon and land astronauts at the moon’s South Pole by 2024. YouTube (8 minutes)
Gloria Lin has gone on a lot of dates in the past year. No, not that kind. We’re talking about co-founder dating. As the first head of product at Flipboard and the first PM hire at Stripe, Lin’s seen founding teams in action — and knew what she was looking for as she set out to build a company of her own. In this article, Lin presents that rigorous approach in full, from how she found potential partners and handled early conversations to how they ideated and prototyped together to narrow in on a more specific idea. Whether you’re a proven founder working on your next play or a wannabe entrepreneur waiting in the wings, her process can add a dose of rigor to your own search for a co-founder. Lin also shares the incredibly detailed co-founder questionnaire — with 50 questions spanning across six categories — that she and other fellow founders have collaborated on to probe compatibility more deeply. The article highlights a handful of impactful questions here in this article, tacking on Lin’s marginalia: her reflections on why these questions stood out, the sticking points you need to watch for, and how you’ll know when you’ve found “the one.” First Round Review (22 minutes)
Why do societies vary in their rates of entrepreneurship and organizational founding? Drawing on the largest available longitudinal sample comprising 192 countries over 2001-2018, Professor Valentina Assenova examines the evidence in relation to several explanations, including variation in the density of established organizations, national investment in research and development (R&D), technology transfer to new companies, the quality of science, technology, engineering and math (STEM) education, venture capital (VC) availability, and governmental support and policies for entrepreneurship. Contrary to prevailing theories, there is limited empirical support for these explanations. Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding. Simply put more entrepreneurship exists where it’s socially more acceptable to be an entrepreneur. SSRN (65 minutes)
526 American voters, representative of Americans who are registered to vote — were invited to spend a weekend in a resort outside Dallas to prove that there might be a better way to disagree. Over four days, mostly in small groups, they debated foreign policy, health care, immigration, the economy and the environment. They talked through policy proposals in a 55-page briefing booklet that made little mention of whom the proposals came from. Partisan trigger words — Democrats, Republicans, progressives, conservatives — were, by design, largely missing from the text. They were surveyed before the conference, and again on the same questions at the end; the results were compared with a similar panel of voters who did not get an intense dose of deliberative democracy in the interim. Voters at the event on both the left and the right appeared to edge toward the center. Democratic support receded for a $15 federal minimum wage and for “Medicare for all”; Republican support grew for rejoining the Paris climate agreement and for protecting from deportation immigrants brought to the United States as children. New York Times (12 minutes)
The Education of an Idealist by Samantha Power. Pulitzer Prize winner Samantha Power, widely known as a relentless advocate for promoting human rights, has been heralded by President Barack Obama as one of America’s “foremost thinkers on foreign policy.” In her memoir, Power offers an urgent response to the question “What can one person do?”―and a call for a clearer eye, a kinder heart, and a more open and civil hand in our politics and daily lives. The Education of an Idealist traces Power’s distinctly American journey from immigrant to war correspondent to presidential Cabinet official. In 2005, her critiques of US foreign policy caught the eye of newly elected senator Barack Obama, who invited her to work with him on Capitol Hill and then on his presidential campaign. After Obama was elected president, Power went from being an activist outsider to a government insider, navigating the halls of power while trying to put her ideals into practice. She served for four years as Obama’s human rights adviser, and in 2013, he named her US Ambassador to the United Nations, the youngest American to assume the role. A Pulitzer Prize–winning writer, Power transports us from her childhood in Dublin to the streets of war-torn Bosnia to the White House Situation Room and the world of high-stakes diplomacy. Humorous and deeply honest, The Education of an Idealist lays bare the searing battles and defining moments of her life and shows how she juggled the demands of a 24/7 national security job with the challenge of raising two young children. Along the way, she illuminates the intricacies of politics and geopolitics, reminding us how the United States can lead in the world, and why we each have the opportunity to advance the cause of human dignity. Power’s memoir is an unforgettable account of the power of idealism―and of one person’s fierce determination to make a difference. Amazon
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I’ve been a war reporter and a human rights defender. A professor and a columnist. A diplomat and – by far most thrillingly – a mother. And what I’ve learned from all these experiences is that any change worth making is going to be hard. Period. –Samatha Power