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October 9, 2019

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Today, we learn the truth about Western innovation and logic behind media merger pricing has left the station, but first…

The Hustle Daily Email

As global brands stumble into Hong Kong havoc, many try to apologize their way out

For 18 consecutive weeks, anti-government protests in Hong Kong have pitted activists and police against each other in a series of increasingly violent standoffs.

It’s a sticky political situation. And while it could determine the future political autonomy of Hong Kong, a special administrative region of China, the outcome of the clash is uncertain

But, politics aside, the ongoing smackdown has started impacting global businesses. 

And as brands navigate the hostile waters between the 2 global economic powers of Hong Kong and mainland China, many are dishing out the apologies to protect their bottom lines. 

Which companies have been impacted — and how?

One high-profile business free-thrown into the chaos: the NBA. 

After a Houston Rockets employee commented on the protests, China’s state-run broadcaster suspended preseason NBA broadcasts. Fearful of losing China’s 1.4B-person fanbase — and the millions they spend — NBA and Rockets reps apologized to Chinese fans, igniting debate.

But the NBA wasn’t the only company to commit a foul in this high-stakes game. Here’s a rundown of other companies involved:

  • Activision Blizzard: Under pressure from China, the US video-game giant banned a HK player for speaking out… only to kickstart a #BoycottBlizzard campaign among longtime players.
  • Zara: Critics accused the Spanish retailer of picking sides in the conflict, forcing Zara to issue a public apology to keep the peace.
  • Vans: When the American cool-kid shoemaker removed a protest-themed entry from its annual design contest, it accidentally kickstarted a #BoycottVans movement.
  • South Park: After being banned from China for making an episode called “Band in China,” the American comedy show’s creators escalated the feud by issuing a sarcastic apology
  • Starbucks and Shake Shack: Protestors have targeted HK branches of the 2 American restaurant chains with looting, arson, and graffiti due to a partnership with a controversial franchisee.

So, what’s next for business in Hong Kong and China?

The protests have gone on long enough to make a serious dent in Hong Kong’s economy: Goldman Sachs estimates that $4B in capital slipped out Hong Kong’s back door and ended up in Singapore just this past summer.

In China, on the other hand, the NBA (which recently signed a reported $1.5B streaming deal with Tencent) and other big brands will likely keep doing everything they can to keep the Chinese cash coming.

At least, that’s what other brands have done: In recent months, Gap, Marriott, Daimler AG, United Airlines, Delta, McDonald’s, Asics, Calvin Klein, Givenchy, Coach, and Versace all apologized to China for their insensitivity.

» A multibillion-dollar apology
My First Million Podcast by

Today’s episode of My First Million is brought to you by Hustle Con, our annual conference that’s happening December 2-3, 2019 in Oakland, CA. Grab your tickets here.

Million Dollar Brainstorm 

Opportunity is everywhere. You just gotta seize it. This week, Sam Parr returns to talk about the side hustles, trends and big business ideas that keep him up at night.

Shaan talks to Sam about: 

🐶 🧦 Pets on socks

💉 TRT subscription service

📱️ 🏛️ Digital museums

🏃‍♂️ ‍♂️ Voluntary suffering retreats

👶 🏦 Cord blood banking

… and sperm freezing, real estate, remote enterprise software and more. 

Like what you hear? Get a weekly briefing and in-depth research for trends like these when you subscribe to The Hustle’s Trends newsletter

Listening is free, but not doing so could cost you millions. Click below to listen to our podcast, My First Million.

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Private media mergers have some singing ‘No Money, No Problems’

Earlier this week, Group Nine Media acquired POPSUGAR in a deal that valued the women’s lifestyle brand at $300m and the combined company at $1B. But Group Nine’s valuation prior to the POPSUGAR deal was just over $600m. Could something be… off?

The new media landscape is shifting… and looking shifty

The Group Nine/POPSUGAR deal isn’t the first that’s raised eyebrows in the past month. Vox Media acquired New York Media — parent to New York magazine — for a reported value of $105m, and Vice Media acquired Refinery29 for $400m. 

By joining forces, these media companies are hoping to haul in bigger audiences and become more competitive with Google and Facebook for ad revenue. And maaaybe, if they can prove their profitability, some media giant will scoop them up for even more money.

Sounds like the cash is flowing

Yeah, except that these aren’t cash-only deals. The companies are dealing mostly in stock and arbitrarily assigning value to those assets. 

The only way to know how much a private company is really worth is if it sells in an all-cash deal or goes public. However, there are hints that some of these deals aren’t as valuable as the companies let on.

Vice investor Disney has written down its $400m investment in the company, meaning the mouse isn’t expecting to see a return on its money.

» Lies, Damn Lies and Valuations
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The ‘Era of Innovation?’ Not exactly: Western business dynamism has actually been dwindling for decades 

In today’s age of unicorns and accelerators, where “disruption” is the hot biz buzzword and Entrepreneurship 101 is a core MBA req, some say we’re in the Fourth Industrial Revolution.

Despite all that, entrepreneurship and innovation have been declining in the West — particularly in the US — since the 1980s, according to new analysis from The Conversation

New firms have seen declines in market entry and share of employment

Over the past 3 decades, the ratio of US startups to total businesses has halved across all industries, paralleled by a 30% decline in employment share. Interestingly, the most educated entrepreneurs seem to be taking the hardest hit.

For several reasons, the economy is showing its age

The most commonly cited culprits are the slow-growing and aging population and declining labor mobility. Additional barriers include market saturation, an uptick in M&A, and the rise of “zombie firms.” 

Entrepreneurs also face challenges around talent acquisition and cybersecurity, while rising regulations and patent costs deter innovation.  

New players are critical to the economy as a source of innovation and job creation. More importantly, they put pressure on the powerful big dawgs to provide consumers quality offerings at competitive prices.

So whether it’s through pushing for a higher degree of big biz regulation, or encouraging entrepreneurship in all corners, it’s in everyone’s best interest to get the startups started back up.

» Best of luck on your next venture

Bloomberg’s wealth chart helps visualize the global wealth gap 

We’ve heard the ol’ income inequality song before. In 2018, Oxfam released a report noting the world’s richest 26 individuals had the same amount of dough as the poorest half of the population (3.8B people), politicians discuss it ad nauseam on the campaign trail, and, most importantly, breathing humans actually feel it every day. 

So how bad is the global wealth gap?

It’s bad enough that even rich people are like ‘Whoa, I’m really rich…’ 

A recent wealth chart from Bloomberg — meant to focus in on the many tiers of “millionaires” and “billionaires” — helps illustrate the disparity, by allowing us to compare our own net worth to the world’s poorest and richest.

What if you can’t afford bootstraps?

The chart tops out at 11, AKA Bezos & Gates territory, and goes down to -2, (in what the chart generalizes as a vast population of “subsistence farmers”). 

There are 150 people who have a ranking of 10, meaning they have a net worth of $10B on the low end (fun fact: Oprah Winfrey is not one of them).

There are a few other “average American” tiers, and then there’s me. I rank, along with 1.5B others, in the bottom tier — meaning I can afford “very little.” And guess what? The friggin’ chart is spot-on. I can afford very little. And I have a full-time job!

Go ahead, give it a try.

» Money’s a gas, ain’t it?
What Else…

🐽 Swine is going hog wild. Nearly half of the 6-9m feral hogs running rampant in the US are trampling through towns in Texas. Now, helicopter hog hunting has become a business opportunity.

🎧 Calling all planned obsolescence haters: Geoffrey A. Fowler of The Washington Post autopsies his own AirPods to teach us how to replace the batteries inside of each tiny bud — and, while this act of rebellion is a noble one, it does not look easy.

💸 How would you spend an extra $500 a month? Stockton, California, is 8 months into its 18-month pilot program using basic income — a proposed government program that gives citizens a regular infusion of unconditional funds — and it just released data on how people are spending the cash.


This Fortune 500 exec has created bags that expertly blend business and adventure

Wes Fuller had a problem.

As a lifelong outdoorsman, he loved adventure. But, as a global exec at a Fortune 500 company, he wasn’t big on the idea of bringing a Patagonia backpack into the boardroom. 

To be honest, he simply could not find a briefcase, backpack, or duffel that could handle the elements while still looking the part of pro in an office. 

See where we’re going with this?

Cut to today, and his company Fuller Foundry has finally launched their new line of bags that can do it all. 

Made with performance materials, thoughtful layout, and premium design, Fuller Foundry bags are technical, rugged, and still look like they mean business. 

Early users are saying it’s like “Patagonia meets Tom Ford.” That’s high praise in our book. Head over and grab one ASAP to find out for yourself.

Bag your bag
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