Weekend Briefing No. 329

Welcome to the Weekend.

Last Satureday's Bourbon & Briefing Zoom happy hour conversation with Li Jin on the Passion Economy went so well, we’re doing it again. This week’s guest will be Blair Miller, who wrote the Building Purpose Resilient Companies article below. If you don’t already have a calendar invite, sign up here to get one.

Also, I'm working on a secret project about bringing more purpose into your legal practice. If you are a lawyer and are intrigued, click here.

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Prime Numbers

754 – Last year, 419 colleges were accepting applications after the normal May 1 deadline; this year, that number is 754.

504 – Vinyl sales have risen every year for 14 years, hitting $504 million in 2019.

100 – Spotify strikes a podcast deal with Joe Rogan worth over $100 million.

Purpose Resilient Companies

America, the champion of capitalism, is at a crossroads. For starters, the recent elections have shown us that a large part of the younger generation is looking toward socialism to solve inequality. At the same time, despite the rise in corporate philanthropy and purpose-driven rhetoric from leading CEOs, the COVID-19 crisis has thrown us back into the darkest version of the Milton Friedman maximize shareholder value ethos. The top six U.S. airlines and Boeing have spent more than $90 billion on share buybacks in the past decade only to conduct significant layoffs and ask for a multi-billion bailout. In addition, nearly 24 million Americans are engaged in low-wage, high-contact work that puts them at risk with minimal support from their employers. Our current version of capitalism is not working. When we rise from the ashes of this great pause, the question of the moment is: What does it look like to build back better? Companies serve society when they align purpose and profit. This means the strategy and business model of the company are linked to both financial gain and social impact. They are purpose resilient: When the going gets tough, the social purpose of the company stays. The Hill (7 minutes)

L-Shaped

Dr. Doom is at it again. While many investors bet on a “V-shaped recovery,” Roubini is staking his reputation on an L-shaped depression. Roubini argues that the massive private debts accrued during both the 2008 crash and COVID-19 crisis will durably depress consumption and weaken the short-lived recovery. Meanwhile, the aging of populations across the West will further undermine growth while increasing the fiscal burdens of states already saddled with hazardous debt loads. Although deficit spending is necessary in the present crisis, and will appear benign at the onset of recovery, it is laying the kindling for an inflationary conflagration by mid-decade. As the deepening geopolitical rift between the United States and China triggers a wave of deglobalization, negative supply shocks akin to those of the 1970s are going to raise the cost of real resources, even as hyper-exploited workers suffer perpetual wage and benefit declines. Prices will rise, but growth will peter out, since ordinary people will be forced to pare back their consumption more and more. Stagflation will beget depression. And through it all, humanity will be beset by unnatural disasters, from extreme weather events wrought by man-made climate change to pandemics induced by our disruption of natural ecosystems. Roubini allows that, after a decade of misery, we may get around to developing a “more inclusive, cooperative, and stable international order.” New York Magazine (7 minutes)

Location, Location

What can cellphone location data tell us about the economy reopening? Foursquare is attempting to answer that question. As COVID-19 stay-at-home orders begin to lift, shifting real world behavior will be a critical indicator of economic recovery. How will people start returning to different places and in what order, at what pace? Foursquare location data reliably and accurately reveals these changes in visitation in near real-time, helping you understand and plan for the recovery process. Their live graphs are pretty cool. For instance, (1) Apparel retail is up almost 18 percent week over week, but down 23 percent since COVID. (2) Gyms are up almost 3 percent week over week, but down 49 percent since COVID. (3) Subways are down 2 percent week over week and down 65 percent since COVID. Foursquare (9 minutes)

Welcome Back

Welcome back to work. The corporate cafeteria is closed. The coffee makers are unplugged, and the desks are separated by plastic. Every part of office life is being re-examined in the era of Covid-19. When employees file back into American workplaces—some wearing masks—many will find the office transformed, Human Resources and real-estate executives say. The office adaptations reverse a decade-long push in American corporations to cram workers into tighter spaces, with few separations between colleagues. Companies once spent millions of dollars retrofitting spaces to create rows of open desks, intimate conference rooms and elaborate communal gathering areas. Those designs are now problematic. Wall Street Journal (8 minutes)

The End of Plastic

Carlsberg and Coca-Cola back a pioneering project to make “all-plant” drinks bottles. This plastic has very attractive sustainability credentials because it uses no fossil fuels, and can be recycled, but would also degrade in nature much faster than normal plastics do. The plant plastic is designed to be resilient enough to contain carbonate drinks. Trials have shown that the plant plastic would decompose in one year using a composter and a few years longer if left in normal outdoor conditions. But ideally, it should be recycled. The bio-refinery plans to break down sustainable plant sugars into simple chemical structures that can then be rearranged to form a new plant-based plastic, which could appear on supermarket shelves by 2023. The Guardian (11 minutes)

Magic

With the future of small businesses in urban communities at risk, former National Basketball Association great Magic Johnson has stepped in to offer assistance.

The CEO of Magic Johnson Enterprises collaborated with MBE Capital Partners to offer $100 million in loans to minority- and women-owned companies hurt by stay-at-home orders due to COVID-19. The loans were funded through Johnson’s EquiTrust Life Insurance Company and will be provided through the Small Business Administration’s Paycheck Protection Program. “This will allow them to keep their employees and keep their doors open.” CNBC (5 minutes)

Forgiveness

The SBA released more clarifications on Friday night before Memorial Day weekend on the PPP loan forgiveness process and leaves a number of questions still un-answered. I lay out the key takeaways in my Forbes article. (1) The SBA has complete discretion regarding which loan applications to review. (2) If the SBA reviews your loan application or loan forgiveness application, it will be reviewing eligibility, use of proceeds and forgiveness amount. (3) Banks will review the following docs during your forgiveness application: certifications, documentation on payroll and nonpayroll costs, and calculations of payroll and nonpayroll costs. (4) The guidance failed to address two key issues: an extension of the eight-week period during which PPP funds must be spent to qualify for forgiveness and eliminating the 75/25 Rule. However, these two issues are the focus of multiple bills being considered in Congress. Forbes (6 minutes)

Bookshelf

In this 2020 Pulitzer Prize-winning novel The Nickel Boys by Colson Whitehead, the author brilliantly dramatizes another strand of American history through the story of two boys sentenced to a hellish reform school in Jim Crow-era Florida. When Elwood Curtis, a black boy growing up in 1960s Tallahassee, is unfairly sentenced to a juvenile reformatory called the Nickel Academy, he finds himself trapped in a grotesque chamber of horrors. Elwood’s only salvation is his friendship with fellow “delinquent” Turner, which deepens despite Turner’s conviction that Elwood is hopelessly naive, that the world is crooked and that the only way to survive is to scheme and avoid trouble. As life at the Academy becomes ever more perilous, the tension between Elwood’s ideals and Turner’s skepticism leads to a decision with repercussions that will echo down the decades. Based on the real story of a reform school that operated for 111 years and warped the lives of thousands of children, The Nickel Boys is a devastating, driven narrative that showcases a great American novelist writing at the height of his powers. Amazon

Most Read Last Week

Doughnut Economics—Amsterdam is trying to get ahead of the problem with a recovery plan it released in early April titled Amsterdam Circular Strategy 2020-2025.

Passion Economy—New technologies and business models in the Passion Economy enable more people to unlock economic value from their creative skills and passions, where they had previously been hampered by traditional intermediaries and unfavorable business models.

Purpose Gap—Seventy-two percent of employees say that purpose should have more weight than profit, and only 42 percent say that their company’s purpose has impact.

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 beau mori.

Should We Work Together?

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Weekend Wisdom

The oak fought the wind and was broken, the willow bent when it must and survived. -Robert Jordan

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