Weekend Briefing No. 335

Welcome to the weekend.

This year, many people have been moved to take action on causes they care about. But how do we get involved and donate in the most impactful way? I’d like to invite you to join our virtual book club and read this book The Everyday Philanthropist by my friend Dan Pallotta. Written to empower even small donors to become effective in their giving, the book is clear, concise and reads in an hour. Read more about it below in the Bookshelf section. The virtual book club will be at 3:30 p.m., on Saturday, July 25. Click here to sign up.

There will be no Bourbon & Briefing this weekend because I will (thankfully) be out of range of any Wi-Fi.

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Prime Numbers

33—Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33 percent more likely to have industry-leading profitability, according to a McKinsey study.

30—Diverse founding teams have higher returns when cash is returned to investors. Historically, diverse founding teams earned a 3.26x median realized multiple on IPOs and acquisitions, compared to a 2.50x realized multiple for white founding teams: a 30 percent increase. Ethnically diverse startup founding teams provide higher returns to investors, according to a Kauffman study.

19—Companies with more diverse management teams have 19 percent higher revenues due to innovation and 9 percent higher EBIT margins, according to a BCG study.

Diversity Advantage

How do diverse teams deliver better results (higher revenue, higher profitability and higher returns to shareholders)? Short answer: Better and faster problem-solving. Individuals with different backgrounds and experience see the same problem in different ways, and come up with different solutions—cognitive diversity. That increases the odds that one of those solutions will be a hit. In a fast-changing environment like the technology industry, with high stakes and intense competition to innovate, the responsiveness that diverse teams enable ensures the company is better positioned to adapt. Enriching your team with individuals of different genders, races, ages and more is key to boosting your company’s intellectual potential and likelihood of achieving your mission. Biases can be kept in check because there’s a higher chance of questioning assumptions that hinder innovation and growth. This article lays out a framework for hiring and retaining a diverse team. Check it out. NFX (17 minutes)

Climate Opportunity

The time frame for effective climate action was always going to be tight, but the coronavirus pandemic has shrunk it further. Scientists and policymakers expected the green transition to occur over the next decade, but the pandemic has pushed 10 years of anticipated investment in everything from power plants to roads into a months-long time frame. Countries have already spent $11 trillion to help stem the economic damage from coronavirus disease 2019 (COVID-19). They could spend trillions more. “It’s in this next six months that recovery strategies are likely to be formulated and the path is set,” says Nicholas Stern, a former World Bank chief economist known for his landmark 2006 report warning that climate change could devastate the global economy. The COVID-19 pandemic is the most significant disruption yet to the postwar fossil-fuel order. The global economy is expected to contract more than 5 percent this year, according to the International Monetary Fund (IMF). This is a challenge so big that it has also created a once-in-a-lifetime opportunity to change direction. We don’t know where the chips will fall: Will a newfound respect for science and a fear of future shocks lead us to finally wake up, or will the desire to return to normal overshadow the threats lurking just around the corner? TIME (16 minutes)

Tracing Tech

To identify potentially infected people, China’s government deployed refined facial recognition technology with added temperature sensors and infrared identification solutions. Hospitals and doctors used digital platform solutions for disease monitoring, diagnostics and resource management systems based on big data and artificial intelligence (AI), and free online health consultations. Developers of new contact tracing and health apps have been able to build on existing user agreements and standard privacy policies that permit them to share, transfer and disclose personal information without additional consent in the interest of public safety and public health. China’s data-driven management of COVID-19 has shown key benefits such as: reviving public life in a strictly controlled form based on rapidly deployed solutions to trace people’s movements, contacts and health status. Digital platform solutions have improved medical research, patient treatment and resource management within the health sector. However, the swift rollout of data-driven solutions to manage public health also highlighted several kinds of risks. Technological solutions like the QR health codes proved only partially functional or serviceable. Personal data has been misused by companies to collect data for their own commercial interest. Local cadres have also abused personal data in the drive to detect infected people and reduce new cases. Data leaks have resulted in discrimination and stigma against some social groups (e.g., people from severely affected areas). Data breaches led to publicly voiced concerns about personal data protection. Overall, COVID-19 has triggered new debates on privacy in China which, as in Europe, increasingly evolve around the dilemma of balancing public safety and privacy interests. Merics (21 minutes)

Cost of Living

Facebook just announced that starting next year it will pay people working remotely on an adjusted basis depending on the cost of living where they are located. Basecamp, a software company that’s been remote for years, has a different approach. (1) There are no negotiated salaries or raises at Basecamp. Everyone in the same role at the same level is paid the same. Equal work, equal pay. (2) Raises happen automatically, once per year, when they review market rates. They pay everyone at the company in the 90th percentile, or top 10 percent, of the San Francisco market rates, regardless of their role or where they live. This means everyone has the freedom to pick where they want to live, and there’s no penalty for relocating to a cheaper cost-of-living area. They encourage remote and have many employees who’ve lived all over while continuing to work for Basecamp. (3) There are no stock options at Basecamp because they never intend to sell the company. (But they’ve pledged to distribute 5 percent of the proceeds to all current employees if, against intentions, we did sell the company anyway.) (4) They’ve also recently put a new profit growth sharing scheme in place. If total profits grow year over year, we’ll distribute 25 percent of that growth to employees in that year. Signal v Noise (7 minutes)

Ghost Kitchens

Over the past few years, food delivery has been on the upswing, and delivery-only kitchens—referred to as “ghost kitchens” or “dark kitchens”—are having a moment due to the pandemic. But existing brick and mortar restaurants are also jumping in on the trend. In the San Francisco neighborhood, the Mission, an outpost of Top Round Roast Beef—a small, national, fast-casual chain restaurant—dedicates part of its kitchen to three delivery-only brands that exist solely on Uber Eats: Red Ribbon Fried Chicken, TR Burgers and Wings, and Ice Cream Custard. In New York, the kitchen of Wok Wok, a Thai restaurant in Chinatown, operates multiple spinoff brands, all seemingly search-engine optimized: Thai Ai Ai, Panang Panang! Thai Curry, and Fire Ass Thai. Chuck E. Cheese, a family restaurant chain with on-site arcades and a friendly rat mascot, recently launched its own virtual restaurant brand, Pasqually’s Pizza & Wings, to reach a broader customer base during the pandemic. In May, NRD Capital, the private-equity firm that owns Ruby Tuesday, announced a “host kitchen” initiative, in which existing restaurants will lease kitchen space to third-party brands for delivery; a variation on this is already employed by Wow Bao, a fast-casual chain selling dumplings and steamed buns, which rents kitchen space—and labor—from existing brick-and-mortar restaurants to expand its delivery footprint. Some restaurant owners operate 10 virtual brands from a single kitchen. New Yorker (19 minutes)

53 Years

In 2013, Polina Marinova interviewed my[SV1]  great-grandmother about her childhood, living through World War II, what she learned from 53 years of marriage. Q: How was 53 years of marriage? A: We were together for 53 years, until he passed away. I have never been with anyone else, and he’s all I knew. I can’t say our marriage was perfect, but it was a good life together. To understand what someone will be like as a partner, you need to look at their upbringing. Your great-grandfather was the oldest sibling, and his mom allowed him to become the head of the household early on because his father was an alcoholic. Growing up, he would protect his five younger sisters when his dad lost his temper. As a result, he was always extremely protective of me as well. And that would sometimes turn into jealousy—he thought that because I was so young when I married him that I would be curious about other people. Q: Were you? A: When you commit to someone, you can’t be curious. That shouldn’t even go through your mind. It’s an excuse that people use to escape the problems in their relationship. They think that if they quit and find someone else, the problems will go away. They won’t—there will be other, new problems. No two people are perfect, but over the years, they can help each other learn to break their bad habits. Q: What is the most important lesson you’ve learned in life? A: There has to be compromise in the family. You need to know that there will always be disagreements, but you have to make the decision to stay together. The compromise isn’t just for the woman in the marriage; it has to apply to the man, too. When you’re young and beautiful like we were, falling in love is easy. But you have to fall in love with someone’s soul—because you will get old, but the soul will never change. The Profile (7 minutes)

Fashion

Hermes men’s fashion show this season (digital of course) was surprisingly intriguing and intimate. Much more engaging than a typical runway. See for yourself. Hermes (7 minutes)

Bookshelf

The Everyday Philanthropist by Dan Pallotta demystifies giving, charity, impact, overhead ratios and philanthropy for generous people of all ages and abilities. It’s breakthrough thinking. It’s a concise and counterintuitive guide for everyone—from wealthy benefactors to high school activists to families that want their lives to matter. It can be read in an hour; fits in a pocket and reverses a lifetime of donor indoctrination about giving. It also has 32 quick, easy-to-understand micro chapters, clear and helpful graphics that elucidate key points and is written for the layperson—no fancy specialty or academic language of the trade. It has a breakthrough approach and thinking that makes it equally valuable for even the wealthiest, most sophisticated philanthropists and foundations. It is also a great gift for people from all walks of life, from high school and up. Danpallotta.com

Most Read Last Week

Fishing With Dynamite—This is a documentary film that explores the contentious history of American corporate culture. It explores the arguments of two influential theories—stakeholder vs. shareholder capitalism—and asserts that caring for all stakeholders rather than simply driving value to shareholders is the only possible future for business in the 21st century.

Ambition—Where does ambition go when jobs disappear and the things you’ve been striving for barely even exist anymore? 

Work—As the uncertainties caused by COVID-19 continue to disrupt work environments, business leaders must be mindful of how they can improve employees’ mental health and morale.

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 hue12 photography.

Should We Work Together?

This newsletter is my passion project. I hope it helps you gain deeper insight and equips you to create meaningful impact in the world. Many readers have asked about how we can work together. I run a law firm for startups. We try to keep things simple by offering transparent flat fees. We structure our engagements in two ways: (1) Per-project flat fee engagements—No billable hour means no surprise legal bills. (2) General Counsel—A simple monthly fee for all your day-to-day legal needs. It’s like getting a subscription to your own general counsel. If you’re interested, let’s jump on a call to see if you’re a good fit for the firm. Click here to schedule a call.

Weekend Wisdom

It’s time to re-think charity. It’s time to give charity the big-league freedoms we really give to business. The fight for these freedoms must be our new cause, because without them, all of our causes are ultimately lost.Dan Pallotta

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