NewCo Shift
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NewCo Shift

Money Quote Tuesday Dec. 5th 2017

You Probably Never Shop At Dollar General. But Wall St. Loves the Stock.

Plus your morning shots of depresso from DC, StartupLand, and more

I’m going to tip toe out on a limb here and presume that most NewCo Shift readers don’t spend their after work hours perusing the aisles at Dollar General. But our featured story today takes you inside the company behind the fast growing chain, which caters to the rural working class making $40,000 or less. It’s a tour well worth taking if you want to understand troubling trends on the US economy (where everyone is winning, remember?). Dollar General makes more profit, and has a far larger market cap, than nearly all of its more well-known competitors. Why? Well, the answer there is pretty depressing.

Every so often you read a report that breaks you out of the bubble in which you live. This is one of those stories. The rise of Dollar General belies the decline of America. Dollar General is crushing it, because the American middle class has been crushed. MQ: “The more the rural U.S. struggles, company officials said, the more places Dollar General has found to prosper. “The economy is continuing to create more of our core customer,” Chief Executive Todd Vasos said in an interview at the company’s Goodlettsville, Tenn., headquarters. “We are putting stores today [in areas] that perhaps five years ago were just on the cusp of probably not being our demographic,” he said, “and it has now turned to being our demographic.”

Just as Trump wins another victory against everything America stands for, this comes out from the the Center for American Entrepreneurship, showing that nearly half of all Fortune 500 companies were started by immigrants or their children. But yeah, we should totally kick them out. MQ: “Immigrant-founded Fortune 500 firms are headquartered in 33 of the 50 states, employ 12.8 million people worldwide, and accounted for $5.3 trillion in global revenue in 2016. The results are striking and should be carefully considered by policymakers as they continue to deliberate the fate of 800,000 so-called DREAMers — undocumented immigrants brought to the United States illegally as children — and U.S. immigration policy more generally.”

Well, there ya have it. MQ: “Digital ad spending reached $209 billion worldwide — 41 percent of the market — in 2017, while TV brought in $178 billion — 35 percent of the market — in 2017. That’s according to Magna, the research arm of media buying firm IPG Mediabrands.”

Early stage funding is in retreat, and if no one else is going to say it, I will: Blame the tech oligarchy. No one wants to start a company to have it killed in its crib by The Four, and smart investors have figured that out. MQ: “But no matter where you want to put up the fences, it seems fair to say that a variety of data sources and reporting (from reporters and investors alike) indicate that, at the front of the market, activity is slowing down.”

Let’s be clear: No kid wants an app made for kids when they could have the “real thing.” It seems Facebook is being careful and thoughtful about this roll out, but I dunno, this just feels like a win for Snapchat from where I sit. And Zuck’s kids are so young, it’ll be a few years before he really understands what he’s built. MQ: “Mark Zuckerberg, Facebook’s chief executive, did not weigh in on the start of Messenger Kids. Over the weekend, Mr. Zuckerberg, whose second child was born over the summer, posted on Facebook that he was going on paternity leave.”

Two NYT pieces this AM, but I didn’t get to this yesterday, and it’s worth checking out. We used to do retreats for Wired at Esalen, back when it was, well, Esalen. Now it’s….Esalen 2.0. Seems the whole “tech folks are at sea” meme is building in power….MQ: “They wonder if they’re doing the right thing for humanity,” Mr. Tauber said. “These are questions we can only answer behind closed doors.” Er…maybe we should answer them in public too?

CVS + Aetna seems to be getting much better press than CVS + Humana. Why? Read this piece for more. MQ: “Considering the CVS + Aetna combination through health consumers’ eyes, vertical integration can be a good thing for patients and caregivers if the company can streamline and artfully design delightful experiences while serving up value-based care in terms of both cost-value and patients’ own values with greater skin-in-the-healthcare-payment-game.”

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