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kottke.org posts about business

Why Starting a Cannabis Business Is So Hard

posted by Jason Kottke   Nov 04, 2021

This video provides a good overview of the difficulty involved in starting a business that grows, sells, or distributes cannabis products, which can include money, federal illegality, state regulations, and structural racism.

Jeannette: So you really got to get your business funded from your personal wealth or from your network wealth.

Nancy: Those situations begin to favor people who’ve traditionally had good access to capital.

Jeremy: And oftentimes that correlate with being white.

Adriana: It is very white male-dominant. And there’s no reason that that is what it should be.

Narrator: Only 2% of cannabis entrepreneurs are Black. Yet Black Americans were most affected by marijuana’s illegal status in the past.

Jeremy: There is kind of a clear throughline from the war on drugs. According to the ACLU, Black people are four times as likely than whites to get arrested for cannabis use, despite using at very similar rates across age groups, across different states.

See also A Post-Legalization Cannabis Reading List.

The Problem of Corporate Solutions to Public Needs

posted by Jason Kottke   Jul 27, 2021

For Vox, Emily Stewart writes about the shortcomings of the, er, system we’ve developed here in America of outsourcing public needs to private industry: Corporations aren’t going to save America.

Across various segments of American life, the private sector has begun to take on tasks big and small that one might think should be tackled by the public sector. Domino’s filled in potholes. Dawn’s dish soap saved ducks. American Express pitched in on historic preservation. Walmart started selling low-priced insulin. A slew of companies help workers pay for school. Much of America’s health care system is still handled through private insurers and your job. As people lose faith in government to act on sweeping issues such as climate change and guns, they’re increasingly looking to corporate America and asking whether there’s something they can do about it. If Congress won’t tackle gun violence, maybe Dick’s Sporting Goods can try.

It’s not a bad thing for brands and companies to try to make the world better. Starting a business often involves identifying a problem to solve, and it’s much better for companies to help than to do harm. Corporate social responsibility is fine. There are, however, limits.

“Of course we want businesses to be responsible,” said Suzanne Kahn, managing director of research and policy at the Roosevelt Institute. But she emphasized that this does not constitute a plan for how to organize society. “Private companies don’t, can’t, or won’t plan with the same values that we demand and expect the government to.”

(via the morning news)

Labor Shortage or Terrible Jobs?

posted by Jason Kottke   Apr 26, 2021

Anne Helen Peterson noticed a bunch of reports about fast food & retail businesses around the US having trouble finding employees, which difficulty the business owners are blaming on lazy American workers whose unemployment benefits have been extended/expanded during the pandemic. But what if, she writes, those benefits are actually providing a safety net to American workers so that they do not need to take terrible jobs for low wages at terrible companies under terrible management? The ‘Capitalism is Broken’ Economy:

Stick with me here, but what if people weren’t lazy — and instead, for the first time in a long time, were able to say no to exploitative working conditions and poverty-level wages? And what if business owners are scandalized, dismayed, frustrated, or bewildered by this scenario because their pre-pandemic business models were predicated on a steady stream of non-unionized labor with no other options? It’s not the labor force that’s breaking. It’s the economic model.

Unemployment benefits have offered a steady paycheck while you figure out your options. Put differently: a version of the safety net that’s been missing from most American employment, and, by extension, the ability to say no. No, I don’t have to work for a restaurant that only gives me my hours three days ahead of time, thus making it nearly impossible to find reliable childcare. No, I don’t have to work clopen shifts. No, I don’t have to expect a job without sick leave or paid time off. No, I don’t have to deal with asshole customers or managers who degrade me without consequence. No, I don’t have to work in a job with significant, accumulating health risks.

Her question near the end of the piece is worth considering: “If a business can’t pay a living wage, should it be a business?”

What Happened with the Whole European Super League Thing?

posted by Jason Kottke   Apr 26, 2021

Erling Haaland

Last week, twelve of the biggest, richest, and best European soccer teams announced they were going to form a new midweek competition called The European Super League. The reaction was swift: fans revolted, soccer governing bodies threatened to kick these teams out of other competitions (with immediate effect, including the Champions League which is presently in the semifinal stage), large-scale condemnation from the press, teams started to back out, and 48 hours after the announcement, the league was all but dead.

So what the hell happened? There have been lots of takes and I obviously haven’t read them all, but here are two I found especially valuable in wrapping my head about the Super League failure and, more importantly, what it can tell us about how power, wealth, community, and attention interact 21 years into this rapidly aging century. First up, Alex Shephard writing for The New Republic: The Existential Crisis That Led to the European Super League Fiasco.

What all of these cultural dinosaurs are confronting, though rarely head on, is the fact that there is no monoculture anymore. They may occupy tremendous cultural space — and a team like Real Madrid is rivaled only by other European soccer teams in the sports world — but it is not and never will be what it was before. The mass appeal these teams enjoyed until fairly recently is not coming back, and it’s not just the fault of Fortnite or FIFA. There are simply too many competitors — and, after all, you can watch the best bits on social media anyways.

And then Ryan O’Hanlon interviewed economist Mark Blyth for his newsletter: How the Spectacular, Comical Failure of the Super League Explains the World.

O’Hanlon: In addition to the various corporate pressures, it really does seem like the fan reaction made a material difference. Do you find that heartening at all?

Blyth: I think it’s heartening in the following sense. It’s emblematic of broader shifts that are going on right now. Basically we’re all struggling to find a capitalism 4.0, and we’re all fed up with capitalism 3.0, and this is a huge example of the limits of capitalism 3.0. This “I own it. It’s my right. I’ll do what I want with it”. Except, no you won’t because there’s such a thing as a public conception of ownership of these assets, even if you formally own them. There are limits to how far you can push this market logic on the social institutions without provoking a reaction. Karl Polanyi, the Hungarian sociologist and historian from the 1940s, wrote that the big fuck-ups of the 19th century and 20th century were attempts to shove markets down people’s throats to the point where they revolted.

In a sense, what you’re seeing here is a classic Polanyian reaction. So I think it’s heartening in that it shows there are limits to how much you can commodify these social goods even if they are nominally private assets. It’s heartening in another way in that they’re gonna have to have a reckoning with these balance sheets. If you’re not Sheikh Mansour and you’re not Roman Abramovich, how are you going to fund Paul Pogba’s ridiculous salary? And it’s just not clear that you are going to, so there may need to be a restructuring, which would be great because the model is there. Look at how the Germans do this. They invest heavily in talent. They invest heavily in youth, they buy, but they buy judiciously. They don’t pay ludicrous salaries. And the funds own 51 percent of the companies. It’s a perfect model, right? Because they’ve got cooperative ownership between the people who are the kind of social owners. And then you’ve got the titular owners who do the investment, and there’s a balance of those interests.

Let me know if there are other Super League pieces out there that I should read — I’ll add them to this post. (Photo above of Erling Haaland because he is a goofy beast and one of the 12 Super League teams is going to pay an absolutely obscene amount of money for him in a few months.)

Is the McDonald’s Ice Cream Machine Broken?

posted by Jason Kottke   Oct 23, 2020

Map of McDonald's locations and their ice cream machine status

Software developer Rashiq Zahid figured out McDonald’s ordering API and built a program that attempts to order ice cream from every single McDonald’s in the US to check if their ice cream machine is working. If your McFlurry or McSundae cannot be added to the shopping cart, the program assumes the ice cream machine is broken. The program runs several times a day and the results are displayed on a map. From The Verge:

Initially, he created an API that attempted to add a McSundae from every McDonald’s location to its cart once every minute. The app figured out what he was up to and blocked him — “It was like, you can’t do this, you look like a bot,” he recalled.

After a night of trial and error, Zahid figured out the magic time frame. Now, his bot attempts to add a McSundae every 30 minutes. If the bot successfully adds the item, it lets McBroken know that the location’s machine is working. If it can’t, the location gets a red dot.

From the current map, it looks like almost 10% of McDonald’s ice cream machines in the US are not working. In NYC, nearly a quarter of McDonald’s restaurants don’t have a working ice cream machine. I’m wondering though: is the assumption that the machine is broken a good one? What if ice cream ingredients are out of stock or some franchises don’t offer ice cream products at all hours? When The Verge wrote their story last night, they reported only 7.5% of national machines and 15.2% of NYC machines were broken. Did 10% of McDonald’s ice cream machines in NYC break in the last 12 hours? Or are they just not selling McSundaes at 10am?

Update: A company started selling a device that helped franchise owners keep the notoriously finicky ice cream machines running — but then McDonald’s all but shut them down.

Update: In a 30-minute video, Johnny Harris investigated why the McDonald’s ice cream machines are broken so often.

At the heart of this ice cream problem is that McDonald’s customers are not actually the people who buy their food but the franchisees that run the restaurants. That and McDonald’s is actually a real estate business, not a food service business.

Inside the Epicenter of the Pandemic Baking Boom at King Arthur Flour

posted by Jason Kottke   May 20, 2020

King Arthur Flour

Marker’s David Freedman has a great look at how Vermont’s own King Arthur Flour has dealt with a massive increase in demand for their best-in-class flour and other challenges during the pandemic. The piece is a textbook example of what Tim Carmody calls the systemic sublime.

The company knew something weird was going on when they noticed a 600% sales jump almost overnight and started seeing different kinds of questions coming into their consumer call center.

So tricky and specific are some of the bread-baking questions that even though Ely is one of the bread specialists working the hotline, she sometimes puts callers on hold and yells over the cubicle walls to colleagues for second opinions.

But in early March, Ely noticed a change in the questions. Partly it was an increase in the sheer number of calls, a jump that seemed more sudden and pronounced than the normal mild pre-Easter build-up. But even stranger was how many of the callers seemed, well, clueless. How do you tell if bread is done? Do I really need yeast? And strangest of all: What can I use instead of flour?

In a matter of weeks, the employee-owned company transformed several aspects of their business and tripled their flour output in order to keep up with the demand.

As a first step to ramping up the flow of flour to consumers, King Arthur added one to two shifts at all its facilities and contracted with an additional fulfillment center. It shifted most of its long-distance product transportation from rail to trucks, which are more expensive per bag but add speed and flexibility. It stopped international sales to divert all incoming inventory to U.S. customers. To make shipping operations more efficient and get orders out the door faster, the company switched to all “ship-complete” shipping — that is, if one item in a multi-item order was temporarily out of stock, the entire order was held until the item was back in stock.

The company also managed to find a new partner that could mill and bag more flour. The wrinkle was that the partner was only set up to fill three-pound plastic bags, not King Arthur’s five- and 10-pound paper bags. So King Arthur quickly whipped up a new three-pound plastic bag and threw it up on the website as a new product. That move alone would add up to a half-million new units a month to the company’s shipments.

The company has also done right by their employee-owners:

Altogether, three-quarters of the company’s employees were sent home. In many cases, the work went with them, as was the case with the Baker’s Hotline, and with most managers. Many of those whose jobs couldn’t be performed at home were trained to help out with tasks that could. So far, not a single employee has been furloughed; everyone is being paid — including 12 employees who stay busy sewing masks for other employees.

They’ve helped out companies they supply as well:

While home baking was taking off, bakeries were being closed down, sharply reducing demand for the big bags of flour. (To help keep some of them afloat, the company has spent $30,000 so far during the pandemic paying some of its bakery customers around the country — including Empire Baking — to bake bread and donate it to local good causes. Its own bakers have been doing the same for essential workers and those in need in Norwich.)

And I love the photos that accompany the article by Stephanie Gonot — that must have been a fun & messy photoshoot to do at home. (via @robinsloan)

A Pandemic Strikes Business Town

posted by Jason Kottke   Apr 06, 2020

I featured Business Town, an ultra-capitalist spoof of Richard Scarry’s Busy Busy Town, on this site a few years ago. Their last few entries have focused on the pandemic and they are devastatingly spot on.

Business Town Pandemic

Business Town Pandemic

(via waxy)

Photos of an Abandoned & Decaying Ohio Mall, Once the World’s Largest

posted by Jason Kottke   Mar 04, 2020

Randall Mall

Randall Mall

Randall Mall

When it opened in 1977, Randall Park Mall in Ohio was (briefly) the largest shopping mall in the world. But the place was never a huge success and was finally closed in 2009 in the wake of the financial crisis. For six years it lay abandoned and during that time, photographer Michael Christopher captured the decaying building inside and out for his book, Abandoned America.

Whichard Real Estate, who purchased the mall in 2006 for $6 million, was $200,000 behind on property taxes in 2008 and had multiple mortgages on the mall. The next February, Sears announced it was closing its Randall Park location, and with that the mall’s last anchor was gone. The few struggling stores inside the mall, many of which were owned by small business people doing their best to keep the mall afloat, were vacated a month later in March of 2009. The power was shut off in May, and save for the dusty sunbeams streaking through the skylights on sunny afternoons, the mall went dark.

The mall was finally torn down in 2014 and the site is fittingly now home to an Amazon fulfillment center.

The Final Chart Topper of the Decade Perfectly Summarizes the Current State of Media

posted by Jason Kottke   Jan 07, 2020

The number one song on the UK singles chart for the last week of 2019 was Ellie Goulding’s River, despite it not being available on Spotify, Apple, Google, or anywhere but Amazon (with one important exception). How the heck did that happen? Chart Watch UK has the story.

River was simply a prominent part of just about every “Christmas songs” playlist curated by Amazon themselves, a default choice for everyone muttering “Alexa, play Christmas songs” as they basted the turkey and cursed the sprouts. People have been spoon-fed a contemporary hit single like no other before it, and the result of that has been to propel it almost by accident to the top of the charts.

This is a fitting choice for the final chart topper in the 2010s because it encapsulates a number of trends in media that have played out over the past decade. To wit:

  1. The song is a remake. Remakes and sequels dominate our viewing and listening.
  2. It is exclusive to a single platform. The entire media world seems to be headed in this direction.
  3. The platform is operated by one of the handful of tech behemoths that took control of more and more of the media landscape as the decade wore on.
  4. Amazon. Arguably the company of the decade. Led by the world’s richest man, a symbol of the decade’s growth in inequality.
  5. Ok, the song is exclusive to Amazon but is also on YouTube. YT has simply grown so popular for young people listening to music that media companies can’t ignore it, even when they’re direct Google competitors (and who isn’t these days).
  6. Voice assistant devices were instrumental in making the song popular. Since Siri was first released in 2011, voice assistants have become increasingly embedded in our homes and pockets.
  7. Amazon’s editorial team added the exclusive song to several of their Christmas playlists. Amazon has access to the song, compiles the playlists, and sells the devices to play them. This sort of BigCo “synergy” became standard operating procedure in the 2010s.
  8. There was an algorithm involved (Billboard’s). They increasingly determine what we read, watch, and listen to.
  9. And that algorithm was gamed. See also the role of Facebook’s algorithms in the 2016 US Presidential election (and many many other examples of “impartial” algos being manipulated).

It is tough to imagine a more perfect example of how media functions (or doesn’t) today. (via @tedgioia)

Bikes Cosplay As Flatscreen TVs to Limit Shipping Damage

posted by Jason Kottke   Nov 14, 2019

I love this. Bike retailer Vanmoof noticed that a lot of the bikes they shipped to customers in the US arrived damaged. Figuring that package handlers would be more gentle if they thought they were moving fragile electronics, they started printing an illustration of a flatscreen TV on their packages.

TV Bike Box

That small tweak had an outsized impact. Overnight our shipping damages dropped by 70-80%. We sell 80% of our bicycles online, which means we still print TVs on our boxes. More than 60,000 of them have now been shipped directly to our riders worldwide.

Super clever. (via why is this interesting?)

What to Expect When Expecting the Displeasure of the Chinese Government

posted by Jason Kottke   Oct 10, 2019

The partnership between China and Western governments & corporations has hit a rough patch recently, namely the Hong Kong protests and how the NBA, Apple, and gaming company Blizzard have handled various responses to them on their platforms. I don’t have a lot to add on the matter, but I have read some interesting takes in the past few days that you might also want to take a look at.

Ben Thompson, The Chinese Cultural Clash:

I am not particularly excited to write this article. My instinct is towards free trade, my affinity for Asia generally and Greater China specifically, my welfare enhanced by staying off China’s radar. And yet, for all that the idea of being a global citizen is an alluring concept and largely my lived experience, I find in situations like this that I am undoubtedly a child of the West. I do believe in the individual, in free speech, and in democracy, no matter how poorly practiced in the United States or elsewhere. And, in situations like this weekend, when values meet money, I worry just how many companies are capable of choosing the former?

John Gruber riffing on Thompson’s piece:

The gist of it is that 25 years ago, when the West opened trade relations with China, we expected our foundational values like freedom of speech, personal liberty, and democracy to spread to China.

Instead, the opposite is happening. China maintains strict control over what its people see on the Internet — the Great Firewall works. They ban our social networks where free speech reigns, but we accept and use their social networks, like TikTok, where content contrary to the Chinese Community Party line is suppressed.

Farhad Manjoo, Dealing With China Isn’t Worth the Moral Cost:

The People’s Republic of China is the largest, most powerful and arguably most brutal totalitarian state in the world. It denies basic human rights to all of its nearly 1.4 billion citizens. There is no freedom of speech, thought, assembly, religion, movement or any semblance of political liberty in China. Under Xi Jinping, “president for life,” the Communist Party of China has built the most technologically sophisticated repression machine the world has ever seen. In Xinjiang, in Western China, the government is using technology to mount a cultural genocide against the Muslim Uighur minority that is even more total than the one it carried out in Tibet. Human rights experts say that more than a million people are being held in detention camps in Xinjiang, two million more are in forced “re-education,” and everyone else is invasively surveilled via ubiquitous cameras, artificial intelligence and other high-tech means.

None of this is a secret.

Om Malik, Our Collective Chinese Conundrum:

We in the West should very well know what and who we are dealing with — China might be decked out in Louis Vuitton, but underneath, it is still a single-party, quasi-communist nation. Knowing the Western desperation for growth and the insatiable needs of the stock markets, China also knows it can yank anyone’s chain.

Huawei isn’t a recent problem. It was a problem a decade ago. The dynamic in this spat between the NBA and China isn’t new — China gets what China wants, not the other way around. Why are we being outraged now? The West signed up for this.

Malik quotes from Ian Bremmer’s newsletter:

in the west, the past decades have been marked by a view that china would eventually adapt to western norms, institutions, political and economic systems. but from an asian perspective, the opposite appears more likely. after all, of the last 2,000 years, china and india have led the global economy for the first 1800; europe and the united states only flipped the script for the last 200. now that’s about to change. and when it does, it’s going to happen quickly, powered by 1.4 billion increasingly urban, educated and technologically-connected chinese citizens. take the long view (and an asian perspective) and it’s a better bet that the west will adapt to the realities of chinese economic power, not the other way around.

How Does Waffle House Stay Open During Disasters?

posted by Jason Kottke   Sep 03, 2019

Waffle House is prepared to make you breakfast at all hours of the day in any kind of weather. The restaurant chain is so widely respected for its severe weather preparedness that a former director of FEMA started using their stores as an indicator of how bad a particular storm or disaster was:

The “Waffle House Index,” first coined by Federal Emergency Management Agency Director W. Craig Fugate, is based on the extent of operations and service at the restaurant following a storm and indicates how prepared a business is in case of a natural disaster.

For example, if a Waffle House store is open and offering a full menu, the index is green. If it is open but serving from a limited menu, it’s yellow. When the location has been forced to close, the index is red. Because Waffle House is well prepared for disasters, Kouvelis said, it’s rare for the index to hit red. For example, the Joplin, Mo., Waffle House survived the tornado and remained open.

Annie Blanks recently visited the “Waffle House Storm Center” in advance of Hurricane Dorian’s predicted landfall in Florida.

When any of the stores are in danger of being hit by severe weather, so-called “jump teams” are activated to be ready to deploy wherever needed.

Jump teams are made up of Waffle House contractors, construction workers, gas line experts, restaurant operators, food providers and other associates who are assembled and ready to go wherever needed at a moment’s notice. Their purpose is to help relieve local Waffle House operators and employees who need to evacuate, be with their families or tend to their homes when a storm hits, and help make sure restaurants are able to open quickly after a storm or stay open during a storm.

On Twitter, Blanks shared a photo of the four different pared-down menus that Waffle House prepares for disasters.

Waffle House Menus

(via @LauraVW)

The King of Fish and Chips

posted by Jason Kottke   Aug 22, 2019

In the 1960s, Haddon Salt built up a small empire of fish & chips shops in North America — they eventually had more than 500 stores. That attracted the attention of Kentucky Fried Chicken, then flush with cash after their IPO. And then…

An initial Google search revealed that this shop was the last gasp of a once-sprawling fish-and-chips empire with hundreds of locations that started with an immigrant’s secret family recipe, flourished into an eight-figure deal with Colonel Sanders and ended in collapse.

It took several years and the research help of friends to track down Mr. Salt. We found him in a remote retirement community in Southern California’s desert. The rest you can see in the film before you.

For every icon there are those who were almost famous. And perhaps they, even more than their conqueror, have the lessons we need to hear.

See also when Colonel Sanders badmouthing KFC: For the Colonel, It Was Finger-Lickin’ Bad.

The Uber Delusion

posted by Jason Kottke   Jun 12, 2019

Hubert Horan’s broadside of Uber for American Affairs starts out like this and doesn’t let up:

Since it began operations in 2010, Uber has grown to the point where it now collects over $45 billion in gross passenger revenue, and it has seized a major share of the urban car service market. But the widespread belief that it is a highly innovative and successful company has no basis in economic reality.

An examination of Uber’s economics suggests that it has no hope of ever earning sustainable urban car service profits in competitive markets. Its costs are simply much higher than the market is willing to pay, as its nine years of massive losses indicate. Uber not only lacks powerful competitive advantages, but it is actually less efficient than the competitors it has been driving out of business.

This is one of those articles where I want to excerpt the entire thing; it’s just so jammed packed with goodies about a company that represents everything I hate about “tech” and Silicon Valley.

In reality, Uber’s platform does not include any technological breakthroughs, and Uber has done nothing to “disrupt” the economics of providing urban car services. What Uber has disrupted is the idea that competitive consumer and capital markets will maximize overall economic welfare by rewarding companies with superior efficiency. Its multibillion dollar subsidies completely distorted marketplace price and service signals, leading to a massive misallocation of resources. Uber’s most important innovation has been to produce staggering levels of private wealth without creating any sustainable benefits for consumers, workers, the cities they serve, or anyone else.

A later section is titled “Uber’s Narratives Directly Copied Libertarian Propaganda”.

In the early 1990s, a coordinated campaign advocating taxi deregulation was conducted by a variety of pro-corporate/libertarian think tanks that all received funding from Charles and David Koch. This campaign pursued the same deregulation that Uber’s investors needed, and used classic political propaganda techniques. It emphasized emotive themes designed to engage tribal loyalties and convert complex issues into black-and-white moral battles where compromise was impossible. There was an emphasis on simple, attractive conclusions designed to obscure the actual objectives of the campaigners, and their lack of sound supporting evidence.

This campaign’s narratives, repeated across dozens of publications, included framing taxi deregulation as a heroic battle for progress, innovation, and economic freedom. Its main claims were that thousands of struggling entrepreneurial drivers had been blocked from job opportunities by the “cab cartel” and the corrupt regulators beholden to them, and that consumers would enjoy the same benefits that airline deregulation had produced. In a word, consumers were promised a free lunch. Taxi deregulation would lead to lower fares, solve the problems of long waits, provide much greater service (especially in neighborhoods where service was poor), and increase jobs and wages for drivers. Of course, no data or analysis of actual taxi economics showing how these wondrous benefits could be produced was included.

Horan reserves a healthy chunk of his criticism for the media, whose unwillingness to critically cover the company — “the press refuses to reconsider its narra­tive valorizing Uber as a heroic innovator that has created huge benefits for consumers and cities” — has provided a playbook for future investors to exploit for years to come. Blech. What a shitshow.

We Will Add Your Biological and Technological Distinctiveness to Our Own

posted by Jason Kottke   May 22, 2019

Design firm Pentagram has brought in a new partner to their New York office, information designer Giorgia Lupi, who joins heavy hitters like Michael Bierut, Paula Scher, and Eddie Opera. I remain fascinated with how Pentagram operates:

Established in 1972, the firm has a collectivist attitude and adheres to a longstanding constitution, which exists in its original form with only small modifications. It spreads profits and decision-making power equally among its self-governed partners — all designers — irrespective of seniority or how much business they brought in during a given year. There’s no CEO. The partners do collaborate with one another, often across disciplines, but essentially operate their own studios, though the local offices meet on a weekly basis and the entire group convenes twice a year. These all-partner meetings, chaired by one of the partners on a rotating basis, are about sharing work with the group and discussing business dynamics, Pentagram’s publishing program, its website, and trends in the industry.

The process for bringing in a new partner can take years from start to finish and requires the unanimous consent of the rest of the partners:

“One vote against and it’s over, truly,” says Miller. “We’ve seen it happen.”

I’ve often thought about if a collective structure could work for independent content sites. I wouldn’t want to sell kottke.org to anyone, but the idea of sharing resources and infrastructure with a couple dozen similar sites is appealing. You could collect the sites into a membership bundle; hire dedicated staff for customer support, ad sales, & devops; do cross-promotion, syndicate the content via a meta-site, and generally help small indie sites punch above their weight. This is what The Deck could have evolved into, I suppose. Aw well.

Freezing Executive Salaries to Pay Entry-Level Workers a Better Wage

posted by Jason Kottke   May 16, 2019

John Driscoll is the CEO of a healthcare company called CareCentrix. In an opinion piece in The Guardian, he wrote about the success of a plan his company implemented where they froze the salaries of the top 20 executives and gave significant raises to entry-level workers, from the federal minimum wage of $7.25/hr to $15/hr. Driscoll explains why the company decided to do this:

Assuming nothing went wrong, and assuming that our employees were living with another wage earner or working another part-time job, $7.25 hourly wage might be sufficient.

The reality is that for many of us, things do go wrong, and I had emails from my new teammates to prove it.

One was from a customer service representative — a young mother with a family, who had lost her apartment in a fire and did not have enough money for diapers. Another email soon followed — this employee had missed a few bills and was living out of her car with her child.

This drove me crazy: how did we get to the point where one of our employees had to apologetically ask for financial support so she and her family could put a roof over their heads?

While some of our elected officials congratulated us for creating jobs, I felt that we were failing some of our employees, and the communities we were based in. The more our executive team parsed through the requests for assistance, the more we all became uncomfortable with the mismatch between what we asked of our employees and what we provided to them in turn.

And the real kick in the groin about the plan? It wasn’t even that tough to implement!

I challenged the chief financial officer to see how deeply we would have to freeze wages in order to reach our goal of a base rate of $15 per hour.

The answer was that we did not have to go very deep. Over the last few decades executive salaries have skyrocketed. That translates into accelerated wage growth in the highest tiers of executives throughout American business, and it affects every company.

What that meant for our company was that if we just froze the wages of our most senior team — less than 20 executives - we could radically increase the wages and improve the lives of nearly 500 of our teammates.

The conversation with our executives was straightforward. We were in the midst of a turnaround. We were demanding much from every corner of the company. Small financial sacrifices from those at the top could be life changing for those at the bottom of our wage scale. We needed to do it to build a real sense of Team CareCentrix. They agreed.

And it worked really well. Duh. It drives me bananas that more companies don’t see the benefit of doing this versus implementing compensation policies that serve only to line the pockets of the people in char— oh waaaaait, it actually makes perfect sense why this is happening. The shareholders of these companies should start calling bullshit on that sort of behavior with more regularity though.

See also the founder of Richer Sounds retiring and transferring 60% of his company to its employees, with workers also receiving £1,000 for every year they’ve worked for the company.

The Extinction Symbol

posted by Jason Kottke   Apr 23, 2019

Extinction Symbol

With its recent use by the participants in the Extinction Rebellion, the extinction symbol has become much more widely known, on its way to becoming the peace symbol of the climate movement.

The symbol above represents extinction. The circle signifies the planet, while the hourglass inside serves as a warning that time is rapidly running out for many species. The world is currently undergoing a mass extinction event, and this symbol is intended to help raise awareness of the urgent need for change in order to address this crisis. Estimates are that somewhere between 30,000 and 140,000 species are becoming extinct every year in what scientists have named the Holocene, or Sixth Mass Extinction. This ongoing process of destruction is being caused by the impact of human activity. Within the next few decades approximately 50% of all species that now exist will have become extinct. Such a catastrophic loss of biodiversity is highly likely to cause widespread ecosystem collapse and consequently render the planet uninhabitable for humans.

The symbol and a stencil template are available for download “for non-commercial purposes”.

There’s a disclaimer at the bottom of the page about merchandise, which reads in part:

No extinction symbol merchandise exists, and it never will do. The free use of the extinction symbol by individuals in their personal artwork or other forms of expression is strongly welcomed and encouraged, but any form of commercial use of the symbol is completely against its ethos and should therefore be refrained from. To reiterate, please do not use the symbol on any items that will be sold, or for any other fundraising purposes. There are no exceptions to this policy.

Here’s the thing: I want a t-shirt with the extinction symbol on it so I can signify my support (in a small way) for climate justice. If I’m reading this correctly, I can make a t-shirt for myself but not have one made for me? Or can I have a single print-on-demand shirt made for me at cost? Making my own shirt (I’d need to buy a bunch of single-use supplies) or getting a one-off printed doesn’t seem very climate-friendly at all. How about taking orders from other interested folks (like you all) and selling the shirts at cost? That seems much more climate-friendly but also firmly against the symbol maker’s strict policy.

I think we’re bumping up against an inconvenient truth about capitalism here: it is sometimes (or perhaps even often) the most efficient and least wasteful way to produce something because it’s actually a deeply collectivist endeavor. Let’s say you’re holding a climate protest, 100,000 people are coming, and those people want to bring shirts or signs or other protest equipment to the protest to “advertise” their displeasure to those watching, near and far. Is it more climate friendly for all those people to individually buy supplies and each produce their own things or would it be better to rely on a organization whose sole purpose is to produce protest supplies (using carbon-free energy and materials) and pay them more than the cost of the supplies so they can provide their employees a living wage and even advertise their services a little so they can actually remain in the protest supplies business and take even more advantage of economies of scale to keep prices down? Run it as a non-profit if you’d like. That seems far less wasteful to me than people buying one-off supplies, even on a group basis.

You might interject here that producing anything that uses any natural resources for such a protest is wasteful and unethical. I think that’s a fair point! What’s the ROI for protest materials? Is it wasteful to spend a little CO2 now to possibly save a bunch of CO2 in the future or is it smart? Gah, all I want is a shirt to express myself! Are there any simple and ethical solutions in a world that’s so densely networked and interconnected?

The Failure of the Great Tip-Free Restaurant Experiment

posted by Jason Kottke   Apr 18, 2019

Over the past three years, a number of restaurants across the geographic and economic spectrum of America have experimented with eliminating tipping. The practice is outdated, creates a difficult-to-justify wage imbalance between servers and cooks, and can result in mistreatment of staff (racism, sexual harassment) because of the fucked-up power dynamic it creates.

But as Grub Street’s Nikita Richardson writes, the no-tip test has largely failed, with many of those places going back to the old ways. This happened for three main reasons:

1. No tips meant higher prices printed on the menu, and customers stayed away from what they perceived as more expensive meals. That $12 burger became a $14.50 burger and all of a sudden, people knew what they were actually paying for their food. What’s interesting is that in another situation (say, having to pay to check a bag on a flight), people would be upset at not knowing the price up front and having a “hidden charge” added to their bill when they’re drunk and happy at the end of a meal.

2. Servers can make more at tipping restaurants. Places that went tip-free lost a bunch of their staff to places that still had tipping.

Meanwhile, by raising menu prices and thus revenues, the extra money would go toward higher wages for kitchen staff, who could start making $12 to $15 an hour at a time when the state minimum wage was $8.75.

But, it turned out, many front-of-house staffers were more concerned with making money than with maintaining the moral high ground. This February, Meyer admitted that he had lost 30 to 40 percent of his “legacy” staffers since 2015. (One Meyer employee told Grub last year that her wages dropped from $60,000 per year to $50,000 under the new policy.) While he insisted that the employees that replaced them “understand ‘Hospitality Included’ and are thrilled about it,” added employee attrition in an industry where turnover is already 1.5 times that of the private sector average has to hurt.

My regular NYC spot was one of the restaurants that experimented with eliminating tipping, and I can report that the staff was indeed quite skeptical about it and they switched back to the old method very soon. (I believe they kept the raises for the chefs though somehow.)

3. Tips make diners feel powerful. With tipping, you become the boss of your server or bartender and are responsible for a large chunk of their take-home pay.

Generally speaking, Americans hated the practice of tipping when it was first introduced in the late 19th century, perceiving it as a form of bribery for service workers who should simply do their jobs. But as we’ve adjusted to it, tipping has become undeniably intertwined with a sense of power.

Short of walking into the kitchen and telling off the chef, tipping is the easiest way to express satisfaction or dissatisfaction with a dining experience.

As a customer, I loved not tipping. I don’t feel the need to have power over the staff in a restaurant, I want cooks & chefs to get paid as well as servers, and I’ve acclimated to factoring the tip into my dining expenses. But it seems that Americans in the aggregate do care about those things, and so here we are.

And if we’re going to have tipping in restaurants, we should all know how it works.

If you can’t afford to tip 20 percent of the total amount that you spend at a restaurant, you can’t afford to eat at that restaurant.

And if your meal is bad?

You still tip. If something truly egregious happened, you ask to speak privately with a manager. If you do not want to speak privately with a manager, and would rather correct this perceived slight by tipping less or not tipping at all, you do not actually care about your perceived slight; you’re just using it as an excuse to be a dick.

Putting a British Scissors Company Back Together

posted by Jason Kottke   Dec 12, 2018

In 2014, I shared a short film by Shaun Bloodworth called The Putter about Cliff Denton, a master scissors craftsman for a company called Ernest Wright & Sons.

A person who makes scissors by hand is called a putter, short for putter togetherer. The Putter is a four-minute silent film by Shaun Bloodworth that shows putter Cliff Denton making scissors.

The film went viral and the once-struggling company was inundated with orders and launched a very successful Kickstarter campaign for a special pair of kitchen scissors. But as I wrote in a sad update back in June, the company was struggling and on the verge of collapse:

Under new leadership, the company vowed to carry on and fulfill all of the Kickstarter orders, but a message to Kickstarter backers yesterday revealed the company was deep in debt and would be “going into receivership”. It also revealed that Wright had taken his own life.

In late October, a story on the company’s web site called Keeping the Heritage Alive revealed that a pair of Dutch entrepreneurs, Paul Jacobs and Jan Bart, have purchased the company with an eye towards investing in the workshop and its workers while keeping the mission the same.

When we acquired the assets of the company, there had been decades of decline and recent tragedy. The machinery was in neglect and although the workers had done all they could to keep the ship afloat, the heritage was slipping away.

To make sure that Ernest Wright continues to manufacture quality, handmade scissors, we’ve invested heavily in the workshop. By researching how to improve production, new machinery has been introduced that salutes the heritage and skill of our Putters. We’re working hard to keep the craft alive. Cliff Denton and Eric Stones, each with over 60 years worth of experience, are currently passing on their knowledge to new apprentices.

This seems like a really good outcome for the company, its employees, and the city of Sheffield. Now go buy some scissors.

Rookie and the Business of Independent Publishing

posted by Jason Kottke   Dec 03, 2018

Tavi Gevinson started Rookie in 2011 when she was 15 years old and late last week announced that the online magazine was ceasing publication. The stories about the struggle of independent online media in the age of Google & Facebook are well-worn by now, but the first couple of pages of Gevinson’s letter really resonated with me and with what I’m doing (and not doing) here at kottke.org. This paragraph specifically:

It has sometimes felt like there are two Rookies: There’s the publication that you read, that I also love reading, writing for, and editing; and then there is the company that I own and am responsible for. The former is an art project; the latter is a business. Each one needs and feeds the other, but when I started Rookie at age 15, I saw the two as mutually exclusive. Rookie had been founded, in part, as a response to feeling constantly marketed to in almost all forms of media; to being seen as a consumer rather than a reader or person. In my black-and-white view of the world, the idea of capitalizing on an audience seemed cynical, selfish, and something only evil adults do. It would be misleading to say I was a total purist, though, because I also thought Rookie was really good, and that it should reach people rather than be small and struggling. I wanted it to be able to hire more editors, pay contributors more, and grow so that not everything would need my oversight and other voices could be more prominent. I also wanted Rookie to eventually be a source of income for me, which I didn’t need it to be when I was a teenager and living at home. In those first few years, however, just the day-to-day running of the site was brain-consuming enough without also actively trying to make it as profitable as possible. And, that was the part I was most passionate about, and adept at: collaborating with writers and artists, curating and editing their work, and watching the conversations that would unfold around it.

Over the years, kottke.org could have gone in many different directions — possible acquisitions by Conde Nast publications, funding, partnerships — but I could never convince myself that any of those options would actually make the site any better or make me any happier. I thought then, and I still think now (more than ever actually), that growing the reach and operations of the site would be a terrific idea, but the business challenge is tougher than ever. Thanks to the support of my readers through the membership program (more on that in a second), the business side is stable-ish and I’ve been able to grow modestly here and there (e.g. the weekly Noticing newsletter written by Tim Carmody), but the scope of this enterprise from a financial standpoint is still just one person. Adding another full-time person to the mix sounds easy, but doubling the size of your business is rocket-ship growth, even when you’re tiny. So I continue to put almost 100% of my efforts into writing the site and almost 0% into things like audience growth, business development, promotion, or marketing…and hoping that the product will continue to speak for itself. This feels both like the right way forward for me and also idiotic, like the foundation of this house I’ve spent 20 years building is slowly rotting away out from under us. It’s a real catch-22 that keeps me up some nights.

But back to Rookie. I’m a little surprised that Gevinson didn’t pursue subscriptions or a membership program, but I can relate to what she writes here:

I also know that the idea of taking money from readers made me feel an immediate and intimidating sense of responsibility. (In retrospect, that may have been a more manageable kind of responsibility than money from investors, and could have been a hint to how I’d feel about investors, but you can’t know what you don’t know.)

The first time I tried funding kottke.org with reader support back in 2005, I ended up scrapping the scheme after a year because of that same “intimidating sense of responsibility”. Now with the membership program, it feels more like the site and the business part are in greater alignment…that this is something we’re all doing together for similar reasons. There should have been a way for a site with a strong sense of community like Rookie to come up with a membership plan that seemed collaborative and not extractive, that felt good for everyone. But maybe Gevinson was just ready to move onto other challenges in other arenas. God knows I can empathize with that myself.

How the Sears Catalog Undermined White Supremacy in the Jim Crow South

posted by Jason Kottke   Oct 16, 2018

Sears Catalog

Sears has filed for bankruptcy protection and plans to close hundreds of stores in an effort to keep the company afloat. The Sears catalog is perhaps one of the most important and under-appreciated innovations in American life. Starting in 1888 with a mailer advertising watches and jewelry, Sears introduced millions of Americans to in-home shopping by using the growing networks of the railroad and US Postal Service, much like Amazon and other retailers would using the internet decades later.

The time was right for mail order merchandise. Fueled by the Homestead Act of 1862, America’s westward expansion followed the growth of the railroads. The postal system aided the mail order business by permitting the classification of mail order publications as aids in the dissemination of knowledge entitling these catalogs the postage rate of one cent per pound. The advent of Rural Free Delivery in 1896 also made distribution of the catalog economical.

As historian Louis Hyman explained on Twitter, the way Sears sold goods to their customers also provided new opportunities for black Southerners living under the Jim Crow system.

Every time a black southerner went to the local store they were confronted with forced deference to white customers who would be served first. The stores were not self-service, so the black customers would have to wait. And then would have to ask the proprietor to give them goods (often on credit because…sharecropping). The landlord often owned the store. In every way shopping reinforced hierarchy. Until Sears.

The catalog undid the power of the storekeeper, and by extension the landlord. Black families could buy without asking permission. Without waiting. Without being watched. With national (cheap) prices!

This excellent piece by Antonia Noori Farzan has more info. Reading this, I couldn’t help but think of blind auditions, the practice of auditioning orchestra musicians behind a screen to help cut down on gender bias during the hiring process. While not entirely free of bias — opportunities for discrimination by postal workers and Sears employees were still possible — the Sears ordering process was essentially a blind retail transaction, a screen placed between the store and black customers. (The catalog also advertised racist costumes so obviously Sears wasn’t some bastion of social progressivism…they simply wanted to sell more goods to more kinds of people.)

According to Sears historian Jerry Hancock, Sears also developed a policy to help those who couldn’t read or write that well to be able to place orders:

One of Hancock’s discoveries was Sears’ response to the needs of a rural South in which literacy was rare. For someone who could neither read nor write, placing orders and following written protocols were problematic. Richard Sears responded with a policy that his company would fill any order it received, no matter what the medium or format. So, country folks who were once too daunted to send requests to other purveyors could write in on a scrap of paper, asking humbly for a pair of overalls, size large. And even if it was written in broken English or nearly illegible, the overalls would be shipped.

Music scholar Ted Gioia notes that blues musicians were able to buy instruments from Sears that were unavailable to them from local retailers.

With Sears declaring bankruptcy, it’s worth remembering how much impact this company had on American music. In my research into blues and other traditional styles, I found that many, many musicians started out on Sears instruments.

Even under Jim Crow, music was an avenue for upward mobility for African Americans, and Sears and other mail-order retailers were more than happy to provide them with instruments.

Instagram Founders Resign from Facebook

posted by Jason Kottke   Sep 25, 2018

Kevin Systrom and Mike Krieger, the two co-founders of Instagram, have resigned from Facebook.

Mr. Systrom, Instagram’s chief executive, and Mr. Krieger, the chief technical officer, notified Instagram’s leadership team and Facebook on Monday of their decision to leave, said people with direct knowledge of the matter, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly.

In a press release, the pair explained their decision a little:

We’re planning on taking some time off to explore our curiosity and creativity again. Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.

Facebook released a statement from CEO Mark Zuckerberg on Twitter (for some weird reason):

Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents. I’ve learned a lot working with them for the past six years and have really enjoyed it. I wish them all the best and I’m looking forward to seeing what they build next.

Sarah Frier’s piece at Bloomberg suggests the pair left because Zuckerberg and the mothership were meddling more and more with Instagram:

Kevin Systrom and Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, had been able to keep the brand and product independent while relying on Facebook’s infrastructure and resources to grow. Lately, they were frustrated with an uptick in day-to-day involvement by Zuckerberg, who has become more reliant on Instagram in planning for Facebook’s future, said the people, who asked not to be identified sharing internal details.

Without the founders around, Instagram is likely to become more tightly integrated with Facebook, making it more of a product division within the larger company than an independent operation, the people said.

For years, Systrom and Krieger were able to amicably resist certain Facebook product initiatives that they felt went against their vision, while leaning on Facebook for resources, infrastructure and engineering talent. A new leader may not be able to keep the same balance, or may be more willing to make changes that help the overall company at the expense of some of Instagram’s unique qualities.

Instagram is my favorite app by a mile — it eclipsed Twitter some time ago in that category — and might be the best mobile-native app ever. It is also, I believe, the future of Facebook Inc., a better product with a more favorable trajectory than the sprawling (and now heavily tainted) main FB service. I think Facebook would be doing Instagram and its users a real disservice if they folded it into the mothership instead of giving Instagram room to be the best service it can be on its own terms. This is a strangely conservative move on Zuckerberg’s part, an optimization where a higher degree of freedom and experimentation is called for. I guess we’ll see how this plays out.

Update: Ben Thompson at Stratechery has a keen take on why the Instagram founders left: ultimately, Mark Zuckerberg is the CEO of Instagram and has been since the acquisition.

This is the context for whatever dispute drove Systrom and Krieger’s resignation: not only do they not actually control their own company (because they don’t control monetization), they also aren’t essential to solving the biggest issue facing their product. Instagram Stories monetization is ultimately Facebook’s problem, and in case it wasn’t clear before, it is now obvious that Facebook will provide the solution.

My take is still that FB shouldn’t lean so heavily on Instagram for monetization. Even after many years, the service still has some growth and evolving to do to develop into the heir apparent Zuckerberg & his executive team is looking for. (thx, david)

A Sad Update About a Scissors Maker that Went Viral

posted by Jason Kottke   Jun 21, 2018

Back in 2014, a lovely short film by Shaun Bloodworth called The Putter went viral. The film shows Cliff Denton making scissors for Ernest Wright & Sons. Denton works for the company as a putter, short for putter togetherer.

Before the film, business at the firm was so slow that staff were only working two days a week. When the video took off online, the company received two years’ worth of orders in a single day. Two years later in June 2016, the company launched a Kickstarter campaign for a throwback pair of kitchen scissors and ended up making four times their goal from more than 3600 backers.

Outwardly, this seemed to be one of those stories about how an old school company found a new audience and a second chance on the internet. But internally the company was struggling, hamstrung by a series of setbacks. Problems with design and machining the new scissors model delayed production for a year and two key employees, including putter Cliff Denton, were off the job due to illness. Shaun Bloodworth, the filmmaker, died waiting for a liver transplant. And then in February 2018, the news broke that Nick Wright, the company’s managing director, had died suddenly.

Under new leadership, the company vowed to carry on and fulfill all of the Kickstarter orders, but a message to Kickstarter backers yesterday revealed the company was deep in debt and would be “going into receivership”. It also revealed that Wright had taken his own life. Here’s the full message from Pam Addy, the current managing director of Ernest Wright & Sons. (Note: this includes a portion of a final letter written by Wright before he died.)

Hello everyone, this is Pam.

Following the death of Nick Wright, who took his own life in February, myself and the rest of the Ernest Wright team have endeavored to honour all you Kickstarter backers who pledged money for the Kutrite design of kitchen scissors. Unfortunately, only now am I aware of the extent of the business debt incurred prior to my taking over as Director on March 22 2018, so it is with great sadness I announce that Ernest Wright & Son Ltd will be going into receivership.

If you have not received your goods, you will be contacted by the Insolvency Practitioner in due course. Following advice from them, if you paid by Credit Card you may wish to contact your card provider, to see whether they will refund you the money paid.

Nick wrote a final letter. In this letter were personal messages including one to Kickstarter people:

“I tried so hard, this was no scam, I just could not make it happen. Too much pressure, not enough resource or time. I am so very genuinely sorry to you all.”

What a sad situation for Wright’s family and the company. It’s tempting to want to draw conclusions between the finances, the campaign, and Wright’s death, but we don’t actually know much about the situation. But I do think this highlights the potential disconnects between mental health & business, publicity & success, and success & happiness. The internet can seem so intimate but ultimately it’s a thin view of an individual’s or company’s reality. (thx, dawn)

Update: The company’s fortunes are looking up after a pair of Dutch entrepreneurs bought it. More here.

Recommendation: Caliphate, the NY Times podcast about ISIS

posted by Jason Kottke   Jun 12, 2018

Important note: The NY Times has retracted the story at the heart of their award-winning Caliphate podcast. The alleged terrorist they interviewed has been charged by the Canadian government for perpetrating a terrorist hoax.

For the past several weeks, I have been listening to the NY Times’ fantastic and unsettling podcast series Caliphate. The series follows Times foreign correspondent Rukmini Callimachi as she attempts to figure out the inner workings of ISIS. Callimachi and her producer & fellow reporter Andy Mills talk to an Islamic State member from Canada about how he was recruited, investigate the group’s organization, and dig through documents left behind by ISIS as they were driven out of Mosul in July 2017. The podcast is quite upsetting and tough to listen to at times, but I highly recommend doing so.

Here are a few things I kept thinking about while listening:

1. The recruitment process is fascinating. As Callimachi and the recruit talk about how he was persuaded to join up, you can see how young people are enticed by the promise of an Islamic state, of living an ideologically pure life according to one’s religion. What the ISIS recruiters tell them makes sense, it’s logical. (It’s all the things they don’t tell them…therein lies the rub.)

2. The eerie parallels between ISIS and an American business. They’ve got the onboarding process and the rapid expansion plan of a startup like Uber (down to the “ask forgiveness, not permission” tactics). They use tools like YouTube, Tumblr, and Twitter to market themselves with professionally produced videos and marketing materials. When they seized power in an area, ISIS kept much of the existing bureaucracy in place and set about winning hearts and minds by improving services for the people living there.

The world knows the Islamic State for its brutality, but the militants did not rule by the sword alone. They wielded power through two complementary tools: brutality and bureaucracy.

ISIS built a state of administrative efficiency that collected taxes and picked up the garbage. It ran a marriage office that oversaw medical examinations to ensure that couples could have children. It issued birth certificates — printed on Islamic State stationery — to babies born under the caliphate’s black flag. It even ran its own D.M.V.

The documents and interviews with dozens of people who lived under their rule show that the group at times offered better services and proved itself more capable than the government it had replaced.

In the podcast, they talked to residents living in ISIS-controlled areas who say that garbage collection and availability of electricity improved after ISIS took over.

As the group grew, they diversified their income:

One of the keys to their success was their diversified revenue stream. The group drew its income from so many strands of the economy that airstrikes alone were not enough to cripple it.

Ledgers, receipt books and monthly budgets describe how the militants monetized every inch of territory they conquered, taxing every bushel of wheat, every liter of sheep’s milk and every watermelon sold at markets they controlled. From agriculture alone, they reaped hundreds of millions of dollars. Contrary to popular perception, the group was self-financed, not dependent on external donors.

More surprisingly, the documents provide further evidence that the tax revenue the Islamic State earned far outstripped income from oil sales. It was daily commerce and agriculture — not petroleum — that powered the economy of the caliphate.

ISIS was in some ways a model business: adept at PR and marketing, focused on the financial bottom line, sweated the details, and they wanted to keep their “customers” happy.

3. The stated goal of ISIS in establishing a caliphate — to turn back the cultural clock to the time of Muhammad — reminded me slightly of similar efforts here in the US: MAGA, etc.

The podcast is available at Apple or on Spotify. If you are a NY Times subscriber, you get early access to episodes.

See also a 5-minute history of the war in Syria and the rise of ISIS and my past recommendation of the Slow Burn podcast.

Divine Discontent

posted by Patrick Tanguay   May 03, 2018

The always pertinent Ben Thompson considers Apple and Amazon (plus Facebook and Google) and how they each focus on customers. He starts by wondering which of these companies has the best chance at hitting the one trillion market cap first. Focusing on the first two, he offers this interesting comparison.

I mean it when I say these companies are the complete opposite: Apple sells products it makes; Amazon sells products made by anyone and everyone. Apple brags about focus; Amazon calls itself “The Everything Store.” Apple is a product company that struggles at services; Amazon is a services company that struggles at product. Apple has the highest margins and profits in the world; Amazon brags that other’s margin is their opportunity, and until recently, barely registered any profits at all. And, underlying all of this, Apple is an extreme example of a functional organization, and Amazon an extreme example of a divisional one.

Two very different business operating in very different ways.

Both, taken together, are a reminder that there is no one right organizational structure, product focus, or development cycle: what matters is that they all fit together, with a business model to match. That is where Apple and Amazon are arguable more alike than not: both are incredibly aligned in all aspects of their business. What makes them truly similar, though, is the end goal of that alignment: the customer experience.

I’ll skip over much of his section on disruption and Clayton Christensen but if you don’t already know about his take on the matter, have a look at his thorough analysis of Apple vs the disruption theory. Basically, the theory doesn’t account for user experience and Apple manages to not overshoot the price customers want to pay because it understands the value its superior user experience provides.

Apple seems to have mostly saturated the high end, slowly adding switchers even as existing iPhone users hold on to their phones longer; what is not happening, though, is what disruption predicts: Apple isn’t losing customers to low-cost competitors for having “overshot” and overpriced its phones. It seems my thesis was right: a superior experience can never be too good — or perhaps I didn’t go far enough. (Emphasis mine.)

Thompson then looks at Amazon’s focus on custom experience, including an important aspect which Bezos explained in his most recent letter to shareholders.

One thing I love about customers is that they are divinely discontent. Their expectations are never static — they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. […] (Emphasis mine.)

What is amazing today is table stakes tomorrow, and, perhaps surprisingly, that makes for a tremendous business opportunity: if your company is predicated on delivering the best possible experience for consumers, then your company will never achieve its goal.

By focusing on user experience, Amazon is constantly aiming higher and never overshooting what customers want to pay, thus making itself very hard to disrupt.

He closes with Facebook and Google who are focused on advertisers, which makes them less (end)user focused and less popular.

Both, though, are disadvantaged to an extent because their means of making money operate orthogonally to a great user experience; both are protected by the fact would-be competitors inevitably have the same business model.

AIs, predictions and judgment

posted by Patrick Tanguay   Apr 30, 2018

This Mckinsey piece summarizes some of Ajay Agrawal thinking (and book) on the economics of artificial intelligence. It starts with the example of the microprocessor, an invention he frames as “reducing the cost of arithmetic.” He then presents the impact as lowering the cost of the substitute and raising the value of the complements.

The third thing that happened as the cost of arithmetic fell was that it changed the value of other things—the value of arithmetic’s complements went up and the value of its substitutes went down. So, in the case of photography, the complements were the software and hardware used in digital cameras. The value of these increased because we used more of them, while the value of substitutes, the components of film-based cameras, went down because we started using less and less of them.

He then looks at AI and frames it around the reduction of the cost of prediction, first showing how AIs lower the value of our own predictions.

… The AI makes a lot of mistakes at first. But it learns from its mistakes and updates its model every time it incorrectly predicts an action the human will take. Its predictions start getting better and better until it becomes so good at predicting what a human would do that we don’t need the human to do it anymore. The AI can perform the action itself.

The very interesting twist is here, where he mentions the trope of “data is the new oil” but instead presents judgment as the other complement which will gain in value.

But there are other complements to prediction that have been discussed a lot less frequently. One is human judgment. We use both prediction and judgment to make decisions. We’ve never really unbundled those aspects of decision making before—we usually think of human decision making as a single step. Now we’re unbundling decision making. The machine’s doing the prediction, making the distinct role of judgment in decision making clearer. So as the value of human prediction falls, the value of human judgment goes up because AI doesn’t do judgment—it can only make predictions and then hand them off to a human to use his or her judgment to determine what to do with those predictions. (emphasis mine)

This is pretty much exactly the same thing as the idea for advanced or centaur chess where a combination of human and AI can actually be more performant than either one separately. We could also link this to the various discussions on ethics, trolley problems, and autonomous killer robots. The judgment angle above doesn’t automatically solve any of these issues but it does provide another way of understanding the split of responsibilities we could envision between AIs and humans.

The author then presents five imperatives for businesses looking to harness AIs and predictions: “Develop a thesis on time to AI impact; Recognize that AI progress will likely be exponential; Trust the machines; Know what you want to predict; Manage the learning loop.” One last quote, from his fourth imperative:

The organizations that will benefit most from AI will be the ones that are able to most clearly and accurately specify their objectives. We’re going to see a lot of the currently fuzzy mission statements become much clearer. The companies that are able to sharpen their visions the most will reap the most benefits from AI. Due to the methods used to train AIs, AI effectiveness is directly tied to goal-specification clarity.

The only winning move is not to play?

posted by Jason Kottke   Apr 11, 2018

The other day I observed that whenever a new issue of the Noticing newsletter goes out, a bunch of people unsubscribe. When this happens each week I panic a little, so I asked other newsletter writers if this happened to them too. And it does.

In the ensuing thread, a former Twitter employee chimed in to say that “the single biggest correlation with people unfollowing an account [on Twitter] was whenever an account tweeted anything at all”. And someone else chimed in with “historically the biggest problem of newspaper subscriptions: physical delivery of the damn things leads to churn!” I also remarked that this reminded me of Jon Bois’ amazing Chart Party episode on Barry Bonds, where he concludes (spoilers!) that in 2004, Bonds would have finished with essentially the same on-base percentage if he hadn’t used a bat for the entire season.

Newsletters you’re better off not sending, newspapers you shouldn’t publish, and pitches you should never swing at. Was WOPR right in WarGames? Is the only winning move not to play?

Global thermonuclear war notwithstanding, this issue highlights the need to keep in mind why you’re playing a particular game in the first place. I often return to something that Ludicorp (makers of Flickr) had on their about page from a book by Charles Spinosa et al. about the goal of business:

Business owners do not normally work for money either. They work for the enjoyment of their competitive skill, in the context of a life where competing skillfully makes sense. The money they earn supports this way of life. The same is true of their businesses. One might think that they view their businesses as nothing more than machines to produce profits, since they do closely monitor their accounts to keep tabs on those profits.

But this way of thinking replaces the point of the machine’s activity with a diagnostic test of how well it is performing. Normally, one senses whether one is performing skillfully. A basketball player does not need to count baskets to know whether the team as a whole is in flow. Saying that the point of business is to produce profit is like saying that the whole point of playing basketball is to make as many baskets as possible. One could make many more baskets by having no opponent.

The game and styles of playing the game are what matter because they produce identities people care about. Likewise, a business develops an identity by providing a product or a service to people. To do that it needs capital, and it needs to make a profit, but no more than it needs to have competent employees or customers or any other thing that enables production to take place. None of this is the goal of the activity.

The people who work for newspapers want to provide their readers with high quality information.1 Barry Bonds wants to play baseball, be competitive, and provide entertainment to the fans instead of standing bat-less in the batter’s box; the Giants & MLB presumably want those things as well. With my efforts here and with the newsletter, I’m not playing a subscriber or profits maximization game — I want to share my ideas & information that I find and connect with people. This isn’t to say that you shouldn’t keep your eye on how much money you make or how many subscribers you’ve got for a relatively new newsletter,2 but keeping your purpose firmly in mind while you do those things is of paramount importance. Otherwise you’re just stalemating yourself.

  1. We’re witnessing many counter-examples to this in American journalism right now, where corporations are buying up newspapers and, in an effort to maximize profits, firing “expensive” journalists and producing a lower-quality product that’s unsatisfying to their employees and readers alike.

  2. The other issue with the newsletter situation in particular is you’re seeing a small but loud negative signal (people unsubscribing) but not seeing a much larger but quiet positive signal (everyone else reading the newsletter with some degree of satisfaction); this is probably an example of availability bias. That results in a perception that’s 180° from reality…which is, you know, not helpful!

Hoshi Ryokan, One of the World’s Oldest Hotels

posted by Jason Kottke   Apr 11, 2018

From visual journalist Fritz Schumann, a short, poignant documentary on Hoshi Ryokan, a Japanese hotel built on a hot springs that has been run by the same family for 1300 years, making it the oldest running family business in the world.

This ryokan (a traditional japanese style hotel) was built over a natural hot spring in Awazu in central Japan in the year 718. Until 2011, it held the record for being the oldest hotel in the world.

Houshi Ryokan has been visited by the Japanese Imperial Family and countless great artists over the centuries. Its buildings were destroyed by natural disasters many times, but the family has always rebuilt. The garden as well as some parts of the hotel are over 400 years old.

The ryokan is now on its 46th generation of ownership. As you might expect, the changing role of the family in Japanese society has put the future succession of the hotel to the next generation in jeopardy. (via open culture)

Warren Buffett’s daily breakfast allowance

posted by Jason Kottke   Jan 10, 2018

Warren Buffett’s net worth is right around $84 billion. Each morning before he drives himself to work, he tells his wife how much his McDonald’s breakfast is going to cost — $2.61, $2.95, or $3.17 — and she puts the exact change in the cup holder for him to pay with. No, really:

That’s a clip from the HBO documentary, Becoming Warren Buffett. The full documentary is here.

On Medium, Daniel Bourke shared some things he learned from watching Becoming Warren Buffett.

Bill Gates and Warren Buffett are two of the richest men in the world.

One time Warren was at Bill’s house for dinner and Bills dad asked them to write down on a piece of paper what was one word to describe their success.

Focus.

They both wrote down the exact same word.

(via gruber)

Leadership & business lessons gleaned from running an “open-source soccer” club

posted by Jason Kottke   Dec 08, 2017

My pal Dennis Crowley, co-founder of Foursquare, has somehow found the time to also co-found a NPSL soccer club in Kingston, NY called Kingston Stockade FC. The club is only two years old, but they won their division this year, energized a community around the team, and have nearly reached the financial break-even point for 2017…you can read all about it in Crowley’s recap of how the team did in 2017. (And you can read his past writing about building the club from scratch.)

According to another club owner, year two was supposed to be more difficult than the first year…but that was not Crowley’s experience:

About a year ago, I remember talking to another owner of another club and he said something along the lines of “I know you had a great first season, but the second season is the hardest” — e.g. the novelty will wear off, the crowds will thin, etc. I remember being scared shitless by this piece of advice but our club experienced quite the opposite. Our overall attendance numbers were up (despite us having one fewer match on the schedule) and our biggest crowds were considerably larger than last year’s bigger crowds (and we hit our goal of 1000+ fans/game… twice!)

That stuck with me as I read the rest of the piece (which is written in plain, straightforward prose that’s perfectly readable even if you aren’t into soccer or business). I began gathering reasons as to why Stockade FC has thrived when other clubs might how found it difficult and framed them as lessons for anyone who runs a business or is in a leadership position.

1. The first thing is Crowley’s obvious enthusiasm and passion for soccer, starting a business, and his Kingston community (he and his family split their time between Kingston and NYC). No specific excerpt for this one (aside from this photo)…it’s infused throughout everything he’s written about the experience.

2. Be relentless. Sweat the details. Track everything you can. Look for opportunities everywhere to increase revenue and decrease expenses. Be practical. This is just one example of many:

Our hotel costs were ZERO because we designed our schedule so that we would not have an overnight trip. If you remember from last year, we did a 3 day / 2 night / 2 match trip through New Hampshire and Maine (aka: 2 nights in a hotel + 3 meals * 14 rooms). Dropping this trip from the schedule saved us a fortune. To say this another way: Our current business model (tickets/sponsors/merch) supports “day-trips by bus” and not “overnight trips and/or flights”.

3. Look for opportunities to build and grow from above:

With that said, and before we get real deep into Stockade FC data, I’m happy to share that this past weekend I was elected to the NPSL’s Board of Directors at our league’s Annual Operating Meeting (AOM). I am now one of 12 Board Members (and one of 2 representatives of the Northeast Region) operating under a two-year term. The Board Seat gets me a little closer to the bigger-picture decision making and the longer-team strategic planning for our league. It is literally the “seat at the table” I was referring to above and I’m excited to get back to work helping to build from the bottom up.

4. Look for opportunities to build and grow from below:

This is important to the club because a break-even club can operate forever. And this is important to me because I know that if we we can keep Stockade FC going for 10 years, we will have the opportunity to see the kids that we have inspired this season & last season trying out for our squad in a few years time. The idea of a Stockade FC squad full of kids who have been cheering on our club since they were 8, 10, or 12 years old is one of the things that motivates and inspires me the most about this entire project.

5. Do the right thing and often you’ll notice it’s a good business decision as well.

Game Day expenses were down 15% because we stopped buying bottled water for every match and instead started used refillable 10 gallon Gatorade jugs. A win for Mother Earth is a win for Stockade FC! (Btw, getting off plastic bottles, and the waste they produced, was an explicit goal of ours for this season.)

6. Acknowledge that you cannot do it alone. Crowley and his team bring some serious leadership and expertise to the table, but Stockade FC runs on volunteers from the community. Embrace them and don’t take them for granted.

And it’s impossible to talk about Stockade FC without talking about our $0 “Staff” costs. Our entire club is run by volunteers — sometimes an army of 30+ people who show up on game days to help with everything from setup + take down + scoreboard + clock + merchandise + tickets + managing the crowd + leading the youth teams at halftime + emceeing the halftime show + singing the national anthem + announcing on the PA + doing color commentary on the live stream + 100 other tasks. Without you all none of this would come together in the way that it does, so thank you! #WeAreStockade

7. I don’t know what business lesson this holds, but this is the perfect little detail about the club:

Our ticket prices were designed so a family of four can attend for $20 ($8 + $8 + $2 + $2 = $20). This is one of the many things I’m *really, really* proud of.

8. Don’t skimp where it matters and give back. Too many comp tickets for player’s families or first responders isn’t going to make or break your season.

It’s worth noting that less than 10% of attendance for any given is from comp tickets. This year we gave comp tickets to (a) press, (b) players family (4 tix max), (c) ballboys and ballgirls, (d) Radio Woodstock contest winners, (e) First Responder & Military Appreciation Nights.

9. “Think globally, act locally” isn’t just for activism. Stockade FC streamed their games online and sold merch to people from around the world. Their story is resonating around the country and the world. Hell, I live 300 miles away and I’m gonna try my damnedest to make it to a Stockade FC home game this summer.

Streaming continues to be an important part of the Stockade FC story — we know our story is being followed by people outside the Hudson Valley (and outside the USA!) and so streamed matches that are *enjoyable to watch* are a core part of our story.

10. Small teams can act big. The same forces that allowed Instagram’s 13-person company to get acquired by Facebook for $1 billion enable small teams to produce, for instance, a live-streaming experience that rivals the big networks for not a whole lot of money and effort.

And this year, our rockstar team of tech-savvy volunteers has raised the bar for what it means to stream a 4th Division soccer game. Last year’s goals were about “consistency” — “we gotta stream every match”. This year’s goals were around “professionalism” — let’s work in on-air graphics, color commentary and multiple cameras. The team officially outdid themselves when we had live video streaming from a drone during our Conference Championship match (for serious!)

11. Have larger goals that are outside the strict purview of your business. The goal of the US men’s national team winning a World Cup in the next 30 years isn’t going to sell more tickets, but having that as part of your story is going to open up opportunities for your club and everyone else.

Do something to make USA soccer better, faster. We started our club because we ultimately want to make soccer in the United States better, faster. (My original back-of-a napkin goal was: “What can we as fans do to better the US Mens National Team’s odds of winning a World Cup in our lifetime”).

12. Get involved in your local community. But not just that, actually give a damn about your local community and the people and other businesses in it. With everyone working together, you raise all the boats. Non-zero sum games, yo!

On some level, we’ve done much much more than “create a soccer team” — we’ve built something that folks in Kingston have started to rally around and are proud of, and we’ve helped to leverage some of that momentum and excitement and energy into a mechanism that could transform parts of Kingston’s actual urban infrastructure (through this $10M grant). We’re just a tiny, tiny, tiny part of the grant… but, hey, we’re a part of it!

13. Celebrate when successful team members move on to bigger opportunities. Build a team that people want to be a part of because they can develop the skills to move up (either inside your team or outside of it).

Last season, Stockade FC midfielder Dylan Williams got picked up by Australian 2nd division club Launceston City FC. This year, goalkeeper David Giddings got picked up by Swedish 3rd division team Värnamo Södra. Two players from our 2016 squad (Matel Anasta & Matt Koziol) were invited to play in last year’s NPSL Showcase (aka: NPSL All-Star Game w/ scouts) and we’ve expecting 1 or 2 players from our 2017 team will be invited to play in next year’s Showcase.

14. Success begets success. Winning the league obviously helped attendance and raised the team’s profile locally and nationally. But winning the league started with hiring the right coaches and finding the right players…and that started with all the other things on this list. It all connects.

15. Share your knowledge with others. From the start, one of Crowley’s goals has been to run a completely transparent club. He shares every single detail and the club’s finances are an open book. He writes clearly and enthusiastically without a lot of jargon. Move past thinking that other teams are your competition and start thinking about how everyone can work together to achieve larger goals by sharing what works and what doesn’t with each other. Compete on the field but collaborate in the community.

As a tiny business owner without employees or a real-world presence, some of this doesn’t apply to me, but I’ve found Crowley’s posts about Stockade FC incredibly valuable not when thinking about kottke.org from a business perspective but also when considering larger questions about how I want to live my life. Thanks, Dennis!