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Apr 13 2017

No. 210: Meanwhile in Palo Alto

This is issue no. 210. The last issue had a 🔥 50.25% open rate with 4.24% of you going to this article on digital media companies and what determines their valuations. They're all over the place. And here is Jeff Bezos most recent letter to shareholders. And here's everything you need to know about hiring your first eCommerce employee.

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Today's Top Intelligence (12 Reads)
The Fast and the Furious and the Data
DATA: The Fast & Furious blockbuster franchise unfolds over nearly 14 hours so far—and that’s before an eighth movie in the $4 billion series, The Fate of the Furious, arrives in theaters on Friday. The newest film will speak in a lucrative language that audiences have learned to crave: gear shifts, engine revs, car chases, angry banter about cars, and sips of Corona. Exactly how fast and how furious is the Fast & Furious cinematic universe? The family at Bloomberg decided to meticulously analyze all seven movies to track their evolution. 
You Know You Want To
ECOMMERCE: Vertical integration — a business model in which a company owns and operates multiple steps of the production, marketing, and sales process — isn’t a new idea. In fact, it’s been the standard model for most of human history. So while the concept should sound familiar to family farmers, it’s become something of an endangered species in our era of hyper-specialization.
RETAIL: The department store will be the new mall. Everyone eats, so how do you take advantage of that level of frequency? Where you shop is also where you’ll be entertained. We need a much better and healthier mix of what a store offers besides clothes. We need to integrate high frequency activities into the store, be it eateries, entertainment or services, etc.

RETAIL: The company's refusal to adapt as competitors ate its lunch makes for an ironic downfall for a company credited with teaching a generation of consumers what organic food is and how to find healthier fare. But investors should be careful what they wish for. If the choice is between fixing or selling, long-term believers should hope for a repair job.
ECOMMERCE: Net-a-Porter was launched 17 years ago, and its brother operation Mr Porter six years ago. But while they have long dominated the landscape, competition is getting stronger. Farfetch — of which Massenet is co-chairman  — is one formidable newcomer, and sites such as Matchesfashion.com are growing in scale and influence.
BRAND: Lifestyle is now the king of product, and athleisure is ripe territory for young brands that understand this. Here’s a guide to some of the best athleisure labels on the market today, but with the following disclaimer; we’re talking contemporary cuts. We’re leaving the Ellesse and Fila on the rail… for now.
RETAIL: According to the latest U.S. Department of Commerce estimates, eCommerce sales increased from 7.3 percent of total sales in 2015 to 8.1 percent of total sales in 2016. While the share of eCommerce sales is incrementally growing year on year, there are some retailers who are succeeding: retailers that are focused on minimizing space and maximizing consumer value will have a long-term strategic advantage.
DATA: Ultimately, the goal here is to shift a portion of those initial, exploratory shopping searches away from search engines like Google and onto Pinterest itself. That is, when you’re just thinking about buying some new, black boots, you might now go to Pinterest to get ideas. And you may never wind up on Google at all, if you find a pair you like. You could just click through to the retailer’s site directly.
ECOMMERCE: Monthly subscription boxes have become one of those weird parts of retail that are just everywhere now, including my own mailbox. (I’m an Ipsy subscriber, if you must know.) But unlike the organic snacks and cheap makeup samples of other boxes, there is an actual gaping hole in retail that this business model could help address: the extreme lack of plus-size women’s fashion.
RETAIL: On Wednesday, for example, Farfetch — the global online marketplace for independent luxury boutiques — held a daylong event at the Design Museum in London. There, in front of 200 fashion industry insiders and partners, José Neves, the founder of Farfetch, unveiled “The Store of the Future,” a suite of new technologies developed by his company to help brands and boutiques bridge the worlds of online and offline.
MEDIA: It appears that its aim was to create a commercial that would tap into the target demographic’s concerns for intrusive advertising and invasion of their privacy. In turn, this would grab the attention of digital and traditional media who would write about those issues at length and generate tens of millions of dollars of free media and bucket loads of engagement.
MEDIA: Say what you will about Facebook’s misguided implementation of Stories across its many apps and services. But in the one place it arguably matters the most, Instagram, the feature cloned direct from Snapchat continues to see massive success. Instagram Stories now has more than 200 million users per day, measured by someone either posting an update to their story or viewing a friend’s from the carousel at the top of the app.
Last Word: Meanwhile in Palo Alto
At press time, $SNAP is trading at near lows after the news that Facebook's "Stories" have surpassed Snapchat in users. In previous letters, we've alluded to what is now being observed: a bet for Snapchat is a bet against Facebook / Instagram. For each new cloned feature, Snapchat's business model suffers.
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