Weekend Briefing No. 314

Welcome to the weekend. In honor of Valentine’s Day, here’s my February playlist.

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Prime Numbers

2032 – The UK plans to ban petrol and diesel vehicles by 2032… that’s not too far away.

1,200 – Software company Basecamp had 1,200 applications for its one open programmer position. Here’s how they attract talent.

5 – Apple Pay accounts for 5% of global card transactions, according to recent research — it's on pace to reach 10% of card transactions by 2025.

Value Investing

The ESG approach to investing is not sufficient to (a) drive meaningful social / environmental impact and (b) to help investors understand how a company’s responsible decision-making creates financial value. If we recognize the enormous power of capitalism as a driver of positive social impact, by far the most powerful way to integrate social innovation and economic value is through a company’s strategy. Creating social impact through an innovative and profitable business model reshapes the nature of competition and makes social impact a part of capitalism itself. This requires going way beyond an ESG checklist. Investors must learn to distinguish real economic-value creation through social impact from corporate window dressing and the spin of reputation management. This means weeding out companies that operate with only a veneer of social responsibility or merely follow industrywide best practices. Shared-value companies will be doing things differently than their competitors in ways that connect social impact with shareholder value. A Shared-value approach can affect strategy at three mutually reinforcing levels: (1) creating new products that address emerging social needs or open currently unserved customer segments; (2) enhancing productivity in the value chain, whether by finding new efficiencies or increasing the productivity of employees and suppliers; and (3) investing to improve the business environment or industry cluster in the regions where the company operates. Shared-value strategies such as these go far beyond traditional, siloed ESG thinking by tying social impact directly to competitive advantage and economic performance. This is by far the most powerful way for companies to help address the world’s grave social challenges. Institutional Investor (52 minutes)

BP’s Commitment

New BP CEO Bernard Looney kicked off his tenure with bold promises to remake the oil giant for a low-carbon future. Climate change, he said, will require “reimagining energy,” the company’s new mission. “The world does have a carbon budget, it is finite, and we need a rapid transition to net zero,” he said in a live-streamed inaugural address. Looney’s core commitment: Net-zero greenhouse gas emissions by 2050 or sooner. That encompasses BP’s operations as well as emissions from the oil and gas it sells – which are roughly equivalent to the total emissions of the U.K. BP is the first of the oil “majors” to adopt such wide-ranging Scope 3 goals (much smaller Repsol did so last year). The embrace of the low-carbon transition by one of the world’s oldest and largest energy producers represented a major shift: BP’s former CEO Bob Dudley warned against moving “too fast” on climate change. Greta Thornberg noted that there is nothing in this commitment to suggest BP will move away from previous plans to increase oil and gas production by 20% over the next 10 years. Impact Alpha (5 minutes)

Debt

If you’re a tech founder raising capital today, there’s really one mainstream way to fund it: by selling equity. The VC model capital stack, which the Silicon Valley venture ecosystem has optimized itself around, is the one-size-fits-all funding model for startups of all shapes and sizes. Could debt be a different / smarter form of funding? Where could you put debt to work effectively? Oh, I dunno, how about that thing that every tech company does now: customer acquisition. You have to spend a bunch of money today to acquire users. But once you have them, they send back recurring revenue that’s pretty predictable at a cohort level. Hmm! Alex Danco (21 minutes)

Startup Downturn

Despite all the hype, New business creation in the U.S. (a fancy way of saying "startups") is at nearly a 40-year low in the US. Why? Experts suggest: (1) The "Walmart-ization of America" -- There's been a huge shift to national chains versus mom and pop shops. Small businesses have found it hard to compete with the Walmarts of the world on price because they lack the infrastructure needed to source cheap goods from overseas. Plus, outsourcing and automation can now take care of tasks that young small businesses used to provide such as local accountants. (2) Regulation -- Opening a business, even a simple local shop, requires more and more licenses and permits. Consider that almost no new banks have opened since the crisis and Dodd-Frank. Companies have also put more "non-compete" clauses in contracts to forbid current employees from leaving and starting their own firms, at least for a few months or years. (3) Big companies are getting more entrepreneurial -- The startup culture has permeated big business now too. Look at Google and Tesla. They have (very well-funded) research and experimental divisions that young people are hungry to join as opposed to doing it on their own. CNN (6 minutes)

P2P Crime

Getaround and Turo are known as peer-to-peer car rental startups, a smaller entry into the larger peer-to-peer market, which includes companies like Airbnb and TaskRabbit. But these kinds of startups have sometimes run into a problem: They are easily used by people who may have nefarious reasons for wanting to use something for only a short period of time. Thieves are targeting Getaround-listed cars for a simple reason, owners said: The keys are kept in the cars so renters can conveniently reserve them and drive away with a few taps on their phones. This is not just breaking into a car and going for a joyride. This is breaking into a car for the purpose of committing another crime. Now, the cars are becoming weapons. They are being used for drug deals, drug running and, in at least one case, homicide. NBC (6 minutes)

Upward Mobility

Tech jobs are coming to New York City in droves. All the big tech companies — even Amazon, which abandoned plans for a headquarters-style campus a year ago — are expanding in the city. But many local workers could miss out because they are not receiving the training they need for well-paid careers in tech, according to a new study by the Center for an Urban Future, a nonprofit research group. Closing the opportunity gap in New York’s tech economy will require more initiatives that truly prepare workers for careers that can be ladders to the middle class. Per Scholas, a nonprofit founded in 1995 and based in the South Bronx, is an example of how this can be done. The nonprofit offers free technology training in courses that run from 15 to 19 weeks. In recent years, it has expanded beyond training for technology-support jobs to add courses in cybersecurity, cloud computing, software engineering and data engineering. Ninety percent of its students are members of minority groups, 60 percent have no more than a high school degree, and half receive some form of public assistance. In New York, Per Scholas graduates are now making $18 to $30 an hour, $37,000 to $62,000 a year, with some earning $40 an hour or about $82,000 a year in jobs as software engineers and data specialists. New York Times (8 minutes)

100 True Fans

More than a decade ago, Wired editor Kevin Kelly wrote an essay called “1,000 True Fans,” predicting that the internet would allow large swaths of people to make a living off their creations, whether an artist, musician, author, or entrepreneur. Rather than pursuing widespread celebrity, he argued, creators only needed to engage a modest base of “true fans”—those who will “buy anything you produce”—to the tune of $100 per fan, per year (for a total annual income of $100,000). By embracing online networks, he believed creators could bypass traditional gatekeepers and middlemen, get paid directly by a smaller base of fans, and live comfortably off the spoils. Today, that idea is as salient as ever—but I propose taking it a step further. As the Passion Economy grows, more people are monetizing what they love. The global adoption of social platforms like Facebook and YouTube, the mainstreaming of the influencer model, and the rise of new creator tools has shifted the threshold for success. I believe that creators need to amass only 100 True Fans—not 1,000—paying them $1,000 a year, not $100. Today, creators can effectively make more money off fewer fans. a16z (18 minutes)

Bookshelf

The Great Mental Models by Shane Parrish. The old saying goes, ''To the man with a hammer, everything looks like a nail.'' But anyone who has done any kind of project knows a hammer often isn't enough. The more tools you have at your disposal, the more likely you'll use the right tool for the job -- and get it done right. The same is true when it comes to your thinking. The quality of your outcomes depends on the mental models in your head. And most people are going through life with little more than a hammer. Until now. The Great Mental Models: General Thinking Concepts is the first book in The Great Mental Models series designed to upgrade your thinking with the best, most useful and powerful tools so you always have the right one on hand. This volume details nine of the most versatile, all-purpose mental models you can use right away to improve your decision making, productivity, and how clearly you see the world. You will discover what forces govern the universe and how to focus your efforts so you can harness them to your advantage, rather than fight with them or worse yet-- ignore them. Upgrade your mental toolbox and get the first volume today. Amazon

About the Weekend Briefing

A Saturday morning briefing on innovation & society by Kyle Westaway – Managing Partner of Westaway and author of Profit & Purpose. Photo by Harrison Broadbent.

Should We Work Together?

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Weekend Wisdom

Entrepreneurship is a personal growth engine disguised as a business pursuit. -James Clear

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