Friday Five: July
The Friday Five is a collection of five of the most interesting topics, articles, stories, facts, or general musings that I came across during the past month.

Pupu Platter:
· One of my favorite weekend nights this summer was spent sitting on my balcony, by myself, drinking a bottle of wine and reading a book. I received a few texts with invites to social events, but that only served to enhance my level of enjoyment on my balcony. Turns out, there is a term for this: JOMO or the joy-of-missing-out. The transition from FOMO to JOMO is one of the clearest signs that I am nearing my third decade. Another sign — being hung over from only one bottle of wine.
· San Francisco is increasingly becoming a city of have and have-nots. Many of the non-tech workers can no longer afford to live in the city and businesses are struggling as a result. One restaurant has even started tricking patrons into serving themselves. A new bill has been proposed that would ban corporate cafeterias in all new construction. The problem is that the free meals that the tech companies provide to employees mean that these employees are not buying meals at local eateries, which hurts the local economy. Turns out there is truly no such thing as a free lunch.
· Amazon is launching a new feature in its mobile app called Part Finder. Users can put any screw or bolt next to a penny and them Amazon will use AI technology to analyze the object and find the replacement part. As anyone who has ever stood awkwardly in Home Depot while Don from Power Tools and Hardware puts on his glasses and holds up their screw against bag after bag of different sized screws hoping for a match can tell you, this feature is awesome.
· Fitness trackers can provide a real-time feedback loop on one’s health. For this reason, people have started relying on fitness trackers while doing drugs, particularly cocaine. By monitoring their heart rate, partiers say that they can better understand and control the amount of cocaine they are ingesting and keep it to a “safe” level. On the other hand, doctors say monitoring a cocaine bender with a fitness tracking can provide a false sense of security.
· France has recently installed a number of public urinals. The urinals are designed to be modest and unobtrusive and are often confused with a mailbox. The residents of France are upset with the urinals, calling them indecent and sexist, but as residents of New York and San Francisco can attest, people certainly don’t need a urinal to pee on the street.
Bill Browder, pt 1: Browder is a former hedge fund manager who is now public enemy number one in Russia. His story, encapsulated in his memoir and murder insurance manifesto, Red Notice, reads like a James Patterson novel and is highly relevant to the current state of affairs between the US and Russia. I highly recommend the book. I will touch on the high level points of the story, but this article and podcast also provide solid summaries. Browder is the grandson of the former leader of the US communist party. In an act of family rebellion, Browder became the biggest capitalist in eastern Europe as the largest foreign investor in Russia. He started a hedge fund that would ultimately manage over $4.5 billion. In 1991, after the fall of the USSR, during what is known as Perestroika, Russia began selling state assets for pennies on the dollars. Most of the assets went into the hands of a few dozen Russian oligarchs, who would come to own 40% of the assets in Russia. Browder, however, was able to get in on the action as well. When Putin came to power, fearing the mounting power of the oligarchs, he used the weight of the state to arrest key oligarchs and make deals with the remaining ones that allowed them to avoid prosecution in exchange for 50% of their assets. This is the reason Putin is very likely the richest man in the world.
Bill Browder, pt 2: After becoming rich by purchasing undervalued assets along with the oligarchs (although on a much smaller scale), Browder then discovered that these same oligarchs were stealing hundreds of millions of dollars from the companies they owned. This thievery was obviously not reported, which undervalued their companies in the public markets. Browder decided that if he could expose the oligarchs and reduce the corruption, the companies would increase in value and he would make lots of money in the process. Well, he was right, but he also made a lot of enemies in the process, including Putin who was now business partners with the oligarchs. Now, making a long story short, Browder got deported from Russia, but not before he got his people and his money out. In retaliation, Putin and the Kremlin then tried a series of shady moves to falsely accuse Browder of crimes against the state. Putin arrested, tortured, and ultimately killed Browder’s Russian lawyer, Sergei Magnitsky, who was investigating these false claims. In a search for justice and to stop further corruption, Browder was able to push the Magnitsky act through Congress. The Magnitsky Act allows the US government to sanction human rights offenders (many of the oligarchs), freeze their assets and ban them from entering the US. In other words, it prevents the oligarchs from keeping, investing, or spending their Russian money in the West. Canada and a handful of other countries have also passed Magnitsky acts. In retaliation, Putin said the that the US could no longer adopt Russian children. When Don Jr. met with Russian officials and claimed it was about Russian children, it was really about repealing the Magnitsky act (which only Congress, not Trump, can do). Browder has repeatedly been called out by Putin to stand trial for his (non-existent) crimes in Russia (a request that Trump called “an incredible offer” at the Helsinki summit this past year). The final chapter of this story has yet to be written.
Best Buy: Not only does the Amazon showroom still exist, but it is thriving. Best Buy was never going to be able to compete with Amazon on price. Amazon could charge lower prices because it didn’t have the rent or employee costs of Best Buy. Equally important, Amazon had, and continues to have, the luxury of selling its products at a loss. Hubert Joly, who had no retail experience, was hired to be CEO of Best Buy in 2012 after the company’s profits fell 90% in a single quarter. Under Joly, Best Buy has beaten analyst’s expectations for the past 22 consecutive quarters, by far the largest streak of any public retail company. Joly has turned around a company that was on the brink of doom a few short years ago by doubling down on the areas where Best Buy had an inherent advantage. First, Joly spent money on re-training employees and re-instituting the employee discount program to improve the quality of service on the sales floor. Next, he paid to improve e-commerce and logistics, plus offered a price-match guarantee to get people back into the stores and provide a more seamless union between online and retail ordering (e.g. in-store pickup; 70% of Americans live within 15 miles of a Best Buy). Then, Joly partnered with other companies offering a “store-within-a-store” model. Apple, Google, Microsoft, Amazon, etc. could have a branded space within Best Buy. If Best Buy was going to be a showroom anyway, it should at least get paid to do so. For the other companies, opening a space within Best Buy was a cheap, flexible option to showcase products without needed to operate a full, branded storefront. It was a win-win. Now, Joly is doubling down on his service offering. Best Buy has owned the Geek Squad, which is all about helping customers with products they already own, since 2002. Best Buy recently announced a customer advisory service that will come to customer’s homes. It has three rules: 1) there is no job too small; 2) agents will come to your home for free; and 3) agents do not work on commissions. The goal is to establish a relationship with the customer, which is important as baby boomers are aging and becoming increasingly technologically inept. The first five years of Joly’s tenure were about getting consumers back into the stores; the next five years will be about getting Best Buy into the home.
The Facebook Model: Facebook has 2.2 billion users on its platform. Facebook’s biggest hindrance to growth is that the fact that nearly half the world still doesn’t have access to the internet. That means that roughly 60% of the world’s population that has internet access also has a Facebook account. The only product that has ever achieved a similar market penetration is drinking water. This is why four years ago, Facebook started Project Aquila — solar powered drones that would beam internet down to people. It should be noted that for unknown reasons, Facebook recently shut down the project and said that while is still focused on improving global internet access, it will now rely on other companies to boost such access. The logic is simple: the more people have internet, the more people use Facebook, the more ads Facebook can serve, the more money Facebook can make. In other words, the Facebook Model (as far as I know there is no term to describe this type of growth strategy) is to provide a very valuable free public service/utility because it will indirectly help the company increase revenues. Google faces a similar problem to Facebook in that the lack of global internet access is hindering its growth, so Google has deployed the Facebook Model through an initiative called Google Station, which provides free wi-fi hotspots in under-developed countries. Google Station just announced it will be rolling out in Nigeria, its fifth country, after successful deployments in India, Indonesia, Thailand and Mexico. Dominoes recently launched its version of the Facebook Model called “Paving For Pizza” to a chorus of free press and positive media coverage. Dominos is paving roads and fixing potholes in towns across America because better roads means better and faster pizza delivery. However, a closer look leaves a taste in your mouth like eating a Dominos’ pizza. Dominos, a corporation that generated $2.8 billion of revenue in 2017, offered to pay 20 towns a measly sum of $5,000 towards the cost of fixing their roads, but only if the towns signed a contract stipulating that they would photograph the Dominos repair truck before and after the repair and promise not to portray Dominos or the project in a negative light. Fantastic media stunt; still bad pizza.
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