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Weekend Briefing No. 325
Welcome to the weekend.
Did I ever tell you guys that I’m featured in a documentary along with some other friends like Kohl Crecelius? Well, it’s true! The New Breed is a documentary about social entrepreneurship (more details below). We shot this awhile ago, but released it yesterday. I think you may dig it. It will be free for six days, so it’s a really good time to watch. Honestly, what else do you have going on this weekend?
Tonight at 5 p.m. ET, join a discussion of the briefing at our weekly Zoom happy hour: Bourbon & Briefing. If you don’t already have a calendar invite, sign up here. See you tonight!
Also, enjoy my May playlist.
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147,000,000 – Kanye West’s Yeezy business’s shoe revenue alone was on track to make $1.3 billion in revenue last year, up 50 percent year over year and enough to score West $147 million in royalties. By comparison, West’s entire music catalog has been valued at about $110.5 million,
2,700,000 – The reopening of a flagship Hermes store in Guangzhou on April 11 hauled in a reported $2.7 million in sales on that day alone, the record for a single boutique store in China.
4.8 – U.S. GDP contracted at a seasonally adjusted annual rate of 4.8 percent in the first three months of 2020. This is the fastest rate of shrinkage since the last recession.
The New Breed
The New Breed—The Rise of the Social Entrepreneur is a new feature documentary, which I’m proud to be a part of. The film captures the journey of three compelling millennials as they start businesses to tackle social and environmental issues, including poverty, homelessness and environmental pollution. It also includes seven short sketches, which illuminate the global forces that have triggered the Social Enterprise movement, tackling topics like colonialism, inequality and “the history of poverty” in simple, fun and easy-to-understand ways. Here’s an exclusive look at the sketch I’m in, tackling the subject of The Profit Motive. The full documentary is available for free, for six more days. Please check it out and help us spread the word by sharing the link with your family and friends. Let me know what you think. newbreed.tv (79 minutes)
Yesterday I posted my first article on Forbes about how entrepreneurs are accessing the Economic Injury Disaster Loan (EIDL) program administered by the SBA. The program has been live for a little over a month, so how is it going? Short answer: not so good. As of April 24, the SBA had approved 38,984 loans for a total of $7,967,174,888. My research shows that: (1) Only 9% of entrepreneurs that applied for EIDL got funded. (2) The process is opaque and frustrating. Forbes (6 minutes)
Despite all evidence to the contrary, there’s more to building a startup than raising venture capital. Even now, founders are finding success without overly relying on VC dollars; some are even sharing profits with their respective employees and customers without the help of traditional funding and Silicon Valley power dynamics. As some investors slow down their funding pace, it has become clear that profitability trumps funding. Plus, venture capital can only take a startup so far when the economy tanks and outside cash streams dry up. According to Indie.vc founder Bryce Roberts, profitability needs to be a habit and founders need to recognize that it’s not a switch they can just turn on. Startups looking to prioritize profitability need to start out as revenue-driven businesses that replace funding milestones with profitability goals. “Genuinely, it’s not rocket science,” he says. “Profitability isn’t this crazy, elusive thing. It’s literally more achievable than a Series A round. It’s way more achievable than a Series B round. If you look at the kind of fall-off between those rounds, most entrepreneurs would be better off finding their path to profitability and scale.” TechCrunch (11 minutes)
About one in six US workers—more than 30 million Americans—filed for unemployment in the six weeks ending May 1. That number erases all of the net job gains since the Great Recession. McKinsey’s initial analysis, published in early April, found that 86 percent of jobs that the pandemic has made vulnerable paid less than $40,000 a year. Part-time workers were disproportionately represented. But as demand has fallen in multiple industries, growing numbers of full-time and white-collar jobs are being affected. Our updated model finds that as of mid-April, 16 percent of workers earning more than $70,000 a year have become vulnerable. However, almost three-quarters of all vulnerable workers earn less than $40,000 a year. McKinsey (19 minutes)
Amish people spend only a fifth as much as you do on health care, and they outperform us on almost every health metric. What can we learn from them? They can share health care costs the way they want, ignoring any regulations to the contrary. They are genuinely on their own. So, they’ve ended up with a simple system based on church aid. Everyone pays tithes to their congregation (though they don’t call it that). The churches meet in houses and have volunteer leaders, so expenses are minimal. Most of the money goes to “alms,” which the bishop distributes to members in need. This replaces the social safety net, including health insurance. Most Amish people go their entire lives without needing anything else. About a third of Amish people are part of a more formal insurance-like institution called Amish Hospital Aid (AHA). Individuals and families pay a fixed fee to the organization, which is not-for-profit and run by an unpaid board of all-male elders. If they need hospital care, AHA will pay for it. Slate Star Codex (17 minutes)
Seneca wrote that the only fighter who can go into the ring confident of winning is one who has “seen his own blood, who has felt his teeth rattle beneath his opponent’s fist … who has been downed in body but not in spirit…” They know they can take getting bloodied and bruised. They know what the darkness before the proverbial dawn feels like. They have a true and accurate sense for the rhythms of a fight and what winning requires. That sense only comes from getting knocked around. That sense is only possible because of their training. In his own life, Seneca bloodied and bruised himself through a practice called premeditatio malorum (the premeditation of evils). Rehearsing his plans, say to take a trip, he would go over the things that could go wrong or prevent the trip from happening. Seneca was always prepared for disruption and always working that disruption into his plans. He was fitted for defeat or victory. He stepped into the ring confident he could take any blow. Nothing happened contrary to his expectations. Ryan Holiday (16 minutes)
Tom Moore, a retired captain who served in World War II, had originally aimed to raise just $1,200 for National Health Service Charities Together when he set out to complete 100 laps around his Marston Moretaine, Bedfordshire, garden before his 100th birthday. Moore completed his walk on April 16, and donations to his JustGiving page reached nearly $35 million, earning him a Guinness World Record for the most money raised by charity walk (individual). Moore earned a second Guinness record on Friday, when You'll Never Walk Alone, a single he appeared on with recording artist Michael Ball, reached the top of the UK charts. Moore is now the record-holder for oldest person to reach number one in the UK charts at 99 years and 359 days old. UPI (4 minutes)
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I want to give a shout-out to the amazing community members that took time (an average of 30 minutes each) to give me some feedback on our firm’s advertising. Check out these awesome people below:
Rita Fuerst Adams
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When someone takes their existing business and tries to transform it into something else, they fail. In technology that is often the case. Look at Kodak: It was the dominant imaging company in the world. They did fabulously during the Great Depression, but then wiped out the shareholders because of technological change. -Charlie Munger
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