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📉 Interest rates vs. tech stocks

The Hustle

Residents of fast-growing Hoboken, New Jersey, will be voting today on a $241m proposal for a new high school building. Critics say the money could be better spent, though we have a feeling Hoboken’s youth think the proposed building — complete with a rooftop football field and indoor ice rink — is an absolute must-buy.

Today’s rundown:

  • Technical difficulties: Why are tech stocks in the red?
  • Like Watermelon Oreos? You may be a “harbinger customer.”
  • Phylagen: The startup making the return to work safer.
  • Around the web: Robot bricklayers, how to make perfect pour-over coffee, and more wild web finds.

Let’s do it.

The big idea
stonks meme gif

High-growth tech stocks are tumbling. Why?

In recent years, the face of innovation investing has been Cathie Wood and her Ark Innovation ETF (ARKK).

The fund — which includes hot tech names like Tesla, Roku, Zoom, Twilio, Coinbase, Square and Spotify — had a huge runup in the first year of the pandemic.

But the high-tech growth investing story has had a very very very ugly 2022, though. (Like, really ugly.)

ARKK is down 24% year-to-date…

… which is much worse than the 8% loss for the broad market S&P 500 index.

An even more interesting comparison is Ark and Berkshire Hathaway, Warren Buffett’s ~$680B conglomerate, which has significant stakes in much less sexy industries like energy, utilities, insurance, housing, and railroads.

Since the beginning of last year (2021), Ark is down 40%+ while Berkshire is up 30%+.

What’s happening?

According to the Financial Times, the recent market gyration is a rotation from growth to value stocks:

  • Growth investors prefer companies “that may not be profitable but are expanding rapidly” (like many of the aforementioned Ark names)
  • Value investors are “are more price-sensitive, and often look for bargains in dowdier or beaten-up industries [energy, banks]”

The shift is being brought on…

… by the US Federal Reserve, which plans to hike interest rates and pull back on the loose monetary policy enacted to boost the economy during covid.

Higher interest rates will help to fight rising inflation. But it also historically hurts high-growth tech stocks.

Why? Because the valuation of these companies are based on future profits, which are worth less in a higher interest rate environment.

Today, the Fed begins a 2-day meeting to discuss the central bank interest rate and bond-purchasing plans. Depending on what they decide, things could get uglier still.

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SNIPPETS

Too many orders: Ford cut off customer orders of its new Maverick truck, which starts at $20k, after surging demand exceeded its production capabilities. #ecommerce-retail

Fair warning: GM warned dealers against marking up its incoming EV models above MSRP, threatening to punish offenders by sending vehicles to other dealerships. #clean-energy

Anitian, a cloud security and compliance software startup, raised $55m in a Series B round led by Sageview Capital. #privacy

Crypto sell-off: Bitcoin dropped to $32,981.11, its lowest price since last July. #fintech-crypto

Sketchy practices: Google faces multiple lawsuits over tracking users even after they have opted out of location tracking. #big-tech

MFM: Sam and Shaan predict saunas and cold tubs will be as common as swimming pools in 10 years. #mfm

Is this you?
harbinger customers' effect on product success

What do you call someone who buys Watermelon Oreos?

In 2015, a team of researchers at Northwestern and MIT analyzed 6 years’ worth of transaction data from 130k customers at a large national retail chain.

They found that ~25% of customers — known as “harbingers” — consistently buy products that end up flopping within 3 years. Think Watermelon Oreos, Frito-Lay Lemonade, or Cheetos Lip Balm.

Though harbingers’ purchase activity throws a wrench in sales forecasts, that doesn’t mean corporate America should attempt to ferret them out and ignore them.

Harbingers can teach us what doesn’t work. And sometimes, in business, that’s just as important.

Read the full story →
Cool AF Business
pathogen gif

How Phylagen uses pathogen monitoring to make the workplace safer

WHAT’S THE DEAL?

  • Studies conclude that covid can live on nonporous surfaces for up to 3 days
  • Office occupancy in the US rose to 40% in December 2021, the highest level since March 2020
  • Following the omicron variant surge, only 28% of the workforce in 10 major cities returned to the office in January 2022

Commuting, bad coffee, and awkward small talk are reasons enough to dread returning to the office. But the pandemic introduced a far greater concern — getting exposed to covid at work.

Phylagen, founded in 2014 by engineer and scientist Jessica Green, mitigates this risk with its pathogen-monitoring service.

The service…

… called Ecology, alerts employers to the presence of airborne illnesses in the workspace by collecting samples from high-touch surfaces (e.g., vending machine buttons, door handles, and toilet seats).

  • Customers use test kits to swab 25 surface test points around the office, then return them to Phylagen for analysis.
  • The firm’s lab will make results available on its online platform within 24 hours.

And the results get granular

Workspace data is broken down by room, and the analysis not only measures if the virus is detected but also how high the viral load is.

The company says that this method of data collection has an edge over traditional testing: sampling from shared workspaces rather than swabbing individuals is both cost-effective and less intrusive.

Next up for Phylagen?

The home office. In September, the company partnered with Scotch-Brite to launch a home cleanliness test kit to bring its data collection services to the WFH crowd.

(Have an idea for a Cool AF Business story? Tell us about it here.)

TRENDS

Trends you could’ve known about weeks ago

Hey. No time to waste.

From our weekly Trends flare:

  • Abstract line art: Yup. Searches are rising in several regions, so there are a ton of lucrative opportunities to be claimed right now.
  • E-scooters in India: They’re expected to comprise ~74% of total scooter sales by 2040, but don’t start Scooter Spiff Express just yet.

Plus insights from Trendsters:

  • The rise of the crypto XXXXXX XXXXX: the bandwagon rages on.
  • XXXXXXX robotics: a growing field that’s bracing to boom in 2022.
  • Sextech meets XXXXXXXXX: your worst nightmare or best dream.

We deliver Trends articles like this one weekly with hard data, deeper digging, and plenty of relevant business ideas.

Try Trends for $1 to access our full content arsenal and killer community.

First week for $1 →
AROUND THE WEB

📺 On this day: In 1949, the 1st Emmy Awards occurred at the Hollywood Athletic Club. Winners included “Pantomime Quiz” for Most Popular Television Program.

👾 Wow: This guy turned his coffee table into a functional, playable pinball machine.

💻 Useful: You can use Nimbus for photo and video screenshots. It even works while scrolling.

How to: People wait in lines at cafes for pour-over coffee. Experts explain how to do it yourself at home.

🧱 That’s interesting: Everything you’ve ever wanted to know about robot bricklayers and why, despite efforts dating back to the 19th century, we don’t have them yet.

🎺 Haha: And now, playing a trumpet into a bowl of Jell-O.

Tweet of the day
investing meme

Buckle up. (Source: Twitter)

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Hey, we see you. You’re out there spreading the gospel of The Hustle like it’s nobody’s business. Seems like you might be ready for a little more…

Get {75 – referral_count} more referrals and we’ll slide you a free subscription to Trends.

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dinner with Sam Parr

Well, well. Look who climbed the ladder. We’re so proud.

You seem like the kind of person who knows how to work a network. Your beast-like qualities have granted you an opportunity to bag The Hustle’s grand prize.

Get {1000 – referral_count} more referrals and you’ve got yourself a meeting with Sam Parr, founder of The Hustle. You might recognize him from the My First Million podcast. He loves that you love his good ol’ newsletter, and wants to treat you.

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