Fri, 8/16

The flower delivery industry puts the petal to the metal

UrbanStems, a flower delivery startup, announced that it has raised $12M to expand from bike-courier delivery in its 2 home markets of DC and NYC to next-day, 3rd-party delivery across the country.

It’s a sign that business is blooming at UrbanStems…

But several floral startups are also looking pretty

After this round of funding, UrbanStems has now raised a total of $27.2m.

But Bouqs, a competing flower delivery startup, has already watered its delivery platform with the nurturing liquidity of  $43.1m in venture capital. 

In the US, the retail flower market is an $18B enterprise, and other startups such as Farmgirl Flowers and BloomThat are also keen on clipping off a piece of the market. 

The real competition comes from the OG flower powerhouses…

The flower market is dominated by a few big Flower Powers: 1-800-Flowers, which was founded in 1976, made more than $1.15B in revenue last year, according to its annual report, and Florists’ Transworld Delivery (FTD) did $1.08B in 2017, according to its most recent report.

But revenues at both 1-800-Flower and FTD have been declining over the past few years, likely due to increased competition from startups like UrbanStem and Bouqs that are focused on next-day logistics and flower freshness.

Fri, 8/16

Overstock CEO’s rant sinks stock 36%, a reminder that when CEOs talk, people listen

Patrick Byrne, the eccentric CEO of Overstock known for betting big on blockchain and, well, saying strange things, has done it again: This time, he issued a befuddling statement on the “Deep State.”

Byrne’s statement — check it out here, it’s worth a full read — claims that he accidentally “helped the Men in Black” (his term for the FBI) conduct a Deep State campaign of ”political espionage conducted against Hillary Clinton and Donald Trump.”

He concluded by saying that, having given his comment and cleared his conscience, he would “speak no more on the subject.” But the wide-eyed head-scratching had already begun…

No one asked for this, Pat

Confused investors in Overstock soon began selling their shares in the company, sending the stock price down more than 36% by midweek (although shares began to rebound yesterday).

Whether or not anything Byrne said was true, the rantings of the conspira-CEO prove an important point:

CEOs’ statements have A TON of impact…

Even when they’re kinda deranged. 

We’ve seen it all before: Does anyone not remember Elon Musk’s infamous “Funding secured” Tweet?

In both cases, rogue CEO statements had huge negative impacts on their businesses in the short term… and required lots of cleanup. 

Both businesses weathered the storms brought on by their chief executives, but these outbursts are a reminder that paying more attention to CEO Twitter feeds than corporate balance sheets can pose some serious problems.

Fri, 8/16

I scream, you scream: The Museum of Ice Cream raises $40m

We are living in a golden age of ice cream, people — and apparently the VC world agrees, because the startup behind the Museum of Ice Cream just raised $40m.

According to the WSJ, Figure8 was valued at $200m as investors believe that the frozen dessert palace can build further into branded food, products, and, potentially, other themes.

‘Why didn’t I think of that?’ — Said EVERYONE ever

In 2016, the museum’s chief executive, Maryellis Bunn, and her co-founder Manish Vora launched the museum’s first temporary location in New York’s Meatpacking District.

The Willy Wonka-esque exhibit, which allows cream lovers to bathe in a bath of sprinkles, quickly blew up on Instagram — stars like Beyoncé, Katy Perry, and Kim Kardashian all paid a visit.

Soon after, the business launched pop-up exhibits in Los Angeles and Miami, as well as a permanent location in San Francisco, which more than 1.5m people have visited, according to the company.   

Whatchyu gon’ do with all that cash?

Apart from the museum experiences, the MOIC has launched a line of branded ice cream, and worked on commission products such as a clothing line and cosmetics.

The founders said the funding will help the company form additional partnerships, produce more ice cream and open new permanent museum locations in regions like Asia. Figure8 also reportedly pitched investors about using the cash to build a theme park.

When asked why she likes ice cream so much, Bunn said, “Everyone has a connection to ice cream. It doesn’t see gender, it doesn’t see religion.”

Fri, 8/16

GE shares tank after Bernie Madoff watchdog calls them a ‘bigger scam than Enron’

General Electric shares dropped more than 11% Thursday after the conglomerate was accused of using accounting loopholes to hide $38B in losses.

The company’s CEO, Larry Culp, told CNBC the claims are misleading and represent an attempt at “market manipulation.” 

But it’s hard to shake a dang celebrity accountant who’s calling your storied, multibillion-dollar conglomerate “a bigger fraud than Enron.” 

May the street-cred set you free

Harry Markopolos (pronounced Marco-polos), the famed accountant responsible for getting Bernie Madoff thrown in the slammer, published the report, in collaboration with an unnamed hedge fund, that claims GE is shielding its costs and liabilities from investors in its financial statements.

The research — first covered by the WSJ alleges that the issues lie within GE’s insurance business, and suggests that the company doesn’t have the funds to cover the claims on long-term care policies, which help people pay for nursing homes and assisted living options.

Has the GE bulb finally burned out?

The company has been in a floating freefall since its heyday in the ’90s, when stock hit $51 per share. 

In the past 4 years the company has churned through 3 separate CEOs as it struggled to execute much of its lifeboat strategery toward the future — like revamping its floundering iconic lightbulb business, building a seperate digital division, and selling off its actually successful appliance business.

GE’s stock dropped 33% in 2018, bringing it to about $12, down from $30 in 2017. Its shares are currently around $8 since the dip. 

Put it on the tab

GE’s accounting practices are currently being scrutinized by the SEC and the DOJ regarding a $6B charge to its insurance arm and a $22B write-down to its quick-burning oil and gas unit.

In regards to Markopolos’ allegations, GE claims it isn’t misleading investors and that it has a “strong liquidity position.”

Nonetheless, Markopolos maintains the alleged fraud is “bigger than Enron and WorldCom combined.” If true, the $38B would add up to more than 40% of GE’s market cap.

Thu, 8/15

Billionaire co-founder of Alibaba buying the Brooklyn Nets in historic deal

Joseph Tsai, a Taiwanese-Canadian billionaire who co-founded Alibaba, announced plans to buy (the remainder of) the Brooklyn Nets for $2.35B.

If the deal goes through, it will be the largest amount paid for a sports franchise in history. 

Tsai is a big sportsball guy…

And he already owned the New York Liberty women’s pro basketball team, the San Diego Seals men’s pro lacrosse team, and an investment stake in the newly created Premiere Lacrosse League (Joe T himself played lacrosse at Yale). 

So it’s not a huge surprise that he decided to purchase the 51% of the Nets that he didn’t already own from the Russian billionaire Mikhail Prokhorov. 

Even for a billionaire, it’s a pricey purchase, but it could pay off

When Tsai bought a 49% stake in the Nets for $1B last year, he also locked in the right to buy the remainder of the team for an additional $1.35B before the 2021–22 season.

Now, although it’s only partway through the buying period, Tsai is pulling the trigger on the $2.35B deal 2 years early.

Part of Tsai’s confidence may rest with the Nets themselves: After signing superstars Kevin Durant and Kyrie Irving, the Nets’ revenue is supposed to increase 10-15% this upcoming season.

Thu, 8/15

‘Doomsday capitalists’ are buying up old missile bunkers and creating luxury condos

Real estate developers are building luxury condos 15 stories below ground, catering to people who fear imminent disaster on the earth’s surface — and who have the money to buy a Plan B underground.

According to a report from The New York Times, some of these bunkers sell for as much as $18m and feature amenities including heated pools and rifle ranges — and many developers are only getting started. 

These aren’t your grandpa’s bunkers…

OK, well… in some cases, actually they are — many of these new high-end apocalypse-proof condos are built inside old underground missile silos that were built during the Cold War in the 1960s. 

But they look very different. One underground development in Kansas, Survival Condo, features fake windows with digital screens, underground water slides and dog parks, and storerooms for weapons and food. 

Survival Condo units, which start at $1.3m, all sold within months of hitting the market.

But the bunker boom is just beginning

Larry Hall, the developer behind Survival Condo, is building a 2nd complex in Kansas, and another developer is converting 575 former weapons cellars in South Dakota into “the largest survival community on earth.”

Members of the bunker-buying community convene at PrepperCon and more than a dozen other disaster-preparedness expos and conventions across the country.

For preppers who want to bunker on a budget, there are also at-home bunkers and other resources available for purchase online.

Thu, 8/15

For better or worse, food delivery apps are reshaping American restaurants

Delivery-only establishments fired up their grills around 2013, when Grubhub backed the Green Summit Group, a restaurant startup that produced food for various delivery-only brands out of its own kitchen in New York.

Today, as more and more people order in, Grubhub and its competitors like Uber Eats, DoorDash and others have helped thousands of new age restaurants get off the ground through their apps all across the country.

But, while delivery app technology changes up the menu on the food service industry, it’s also taking a fresh Nakiri knife to the restaurant dining experience, and it’s phasing out some restaurants that have long relied on their own delivery service as a major revenue stream. 

I ain’t afraid of no ‘ghost-kitchen’

The shift has bolstered 2 new kinds of digital eatery establishments — “ghost kitchens” and “virtual restaurants.” 

Virtual restaurants, which are attached to real-life restaurants but make different food specifically for the delivery app market, are leading the charge — revitalizing some seemingly doomed local culinary staples.

Of course, as the world leans toward ordering in over sitting at a restaurant with no Netflix, it’s only a matter of time before Ghost kitchens, AKA remote kitchens that exist entirely for delivery services, become the new norm. 

It’s not just the big boys

CloudKitchens, founded by Uber’s ex-CEO Travis Kalanick, has leased space to several restaurants in LA (including Sweetgreen), and Pasadena, CA-based Kitchen United plans to build 400 ghost kitchens across the country over the next few years.

Ghost kitchens have also emerged in China. The country’s food delivery industry hit $70B in orders last year, and the Chinese-based Panda Selected recently raised $50m from investors.

Not every restaurant is adapting

Uber Eats and other delivery apps insist that their apps have increased sales for restaurateurs by an average of more than 50%

Many restaurants report that Uber’s figures are accurate.

But others — particularly those that relied on delivery orders for revenue since before Uber was even an idea in Travis Kalanick’s diary — have struggled to pay these platforms’ standard 15% to 30% commission fees and subsequently had to turn off their grills.

Wed, 8/14

French broadcasting networks will take on Netflix with new streaming service

French regulators gave the go-ahead on plans by the country’s broadcasting bigwigs to launch a joint streaming service, Salto, to fight the global giants.

Variety reports that Pubcaster France Televisions has joined hands with its commercial rivals M6 and TF1 on the new subscription platform, which is expected to hit the scene Q1 of 2020.

The streams they are a changin’

As if Amazon and Netflix haven’t taken enough hits from domestic broadcast giants, now France is stepping up to compete against international players on their own territory.

And, with more than 5m Netflix subscribers in France, the leaders of the new streaming consortium are smelling the popcorn potential.

“Now that Salto has been approved, we will at last be able to put together Team France in broadcasting,” said Delphine Ernotte Cunci, CEO of France Televisions.

And it’s not just France

ITV and the BBC have also announced the launch of their “best of British” streaming service, BritBox, later this year.

Netflix has over 130m subscribers in more than 190 countries. As technology gives birth to budding film industries all over the world, the streaming biz only stands to become more competitive for companies like Netflix and Amazon.

Wed, 8/14

Tumblr’s latest tumble: A company once valued at $1.1B sells for less than $3m

Verizon, which has been trying to get rid of Tumblr for months and allegedly considering selling it to Pornhub in May, has finally unloaded the once-mighty blogging platform… for a mere $3m.

WordPress’ parent company, Automattic, made the purchase

Automattic, which is privately owned and is said to be considering an IPO, likely bought the beleaguered blogosphere to tack on a well-known, public-facing division to it business. 

Automattic will reportedly also take on Tumblr’s 200 remaining staffers and plans — to the frustration of many bloggers — to continue the controversial ban on porn that Verizon implemented last year.

But Tumblr may survive after all…

In spite of the chaos surrounding its numerous ownership changes, Tumblr still hosts more than 450m blogs.

So, depending on Automattic’s plans, this latest purchase could finally give the platform enough stability to let its users do what they really want… blog about ugly renaissance babies in peace.

Unlike Yahoo (which bought Tumblr for the now-infamous price of $1.1B in 2013) and Verizon, Automattic is known for its commitment to open source web design — which could help the company succeed where so many others have failed.

Wed, 8/14

Fashion brands got a costly geography lesson from China

American fashion brand Coach, French label Givenchy and Italian luxury brand Versace all apologized to China after suggesting that places like Hong Kong and Macau are separate from China.

The fallout began Sunday, when images surfaced of a Versace T-shirt that paired cities next to their corresponding countries and listed the Chinese metropolis as “Hong Kong — HONG KONG” and the gambling getaway of Macau as “Macau — MACAO.” 

Givenchy and Coach were both busted for the same mistake.

The companies were forced to apologize after notable Chinese social media stars terminated their advertising contracts with the companies.

It’s not the first industry to diss China’s sovereignty

In 2018, China vowed to increase its policing over how overseas companies refer to territories such as Hong Kong and Macau, both of which are Chinese territories but run with a high degree of autonomy.

Since then, airlines, carmakers, hotel operators, and other fashion brands have all come under fire for violating the country’s “One China” policy.

China’s market ain’t nuthin to f*ck with

Chinese people account for 30% of all global luxury spending, and as the yuan takes a nosedive, having good standing with the country is vital for luxury goods makers to survive.

Coach posted a lengthy social media post acknowledging they are “fully aware of the severity of this error.” While Givenchy formally apologized on its Weibo account.

Versace said, “We love China deeply, and resolutely respect China’s territory and national sovereignty.”

Wed, 8/14

The CBD boom is reshaping America’s farmland — but will the high demand last?

As the CBD boom continues, farmers across the country are ditching their former crops in favor of something more chill: hemp.

According to US Department of Agriculture data, the amount of farmland planted with hemp quadrupled in the past year, Quartz reports.

How did this all happen so fast?

Two words — decriminalization and demand.

First, the 2018 Farm Bill made hemp farming legal last year, allowing farmers to start producing hemp plants as long as they are less than 0.3% THC by dry weight.

Then, when the first CBD products appeared — mostly in pain-relieving wellness products — they were hugely successful. 

Demand for CBD-infused everything soon followed… Now, shoppers can buy CBD-infused fast food burgers (thanks, Carl’s Jr.), tea, honey, beer, chocolate, dog treats, bath salts, deodorants, protein powders, hot sauce, coffee, gummy candy, shampoo, and face creams… and the list goes on.

But all that CBD comes from hemp… 

And all that hemp has to be grown

So farmers are scrambling to grow the newest, chillest cash crop. Even farmers who formerly had no interest in hemp are starting to grow it. 

Why? Consider this: An acre of soybeans will make a farmer $500. An acre of hemp could make them as much as $30k.

For now, hemp farming may be a great deal for farmers. But regulators have yet to develop proper oversight practices, and some industry groups worry that hemp prices are still too volatile to take seriously.

No one knows when the high (prices) will wear off…

“The boom is coming mostly from word-of-mouth reports about hemp’s profitability,” reports the Hemp Industry Daily. 

For now, growth is poised to continue: Planting of industrial hemp increased 368% from 2018 to 2019, outpacing all other crops, and some big producers — like Ben & Jerry’s — have expressed interest in buying CBD but are holding off until federal laws become more clear.

But if it turns out that the market for CBD dog treats isn’t as big as it’s being billed, the CBD boom could quickly go bust for the farmers who put all their hemp in one basket…

Tue, 8/13

The vegan-leather industry is growing, but is it actually better for the environment?

As a growing number of consumers ditch traditional leather in favor of buying synthetic leather alternatives, a number of faux leather producers have emerged to satisfy demand.

According to Bloomberg, these alt-options to leather are often cheaper. But, when it comes to the environment, it’s worth it to do your research. 

*Googles ‘how to make pleather’?*

Vegan products, which are expected to be a $45B by 2025, are everywhere: Tesla describes its new Model 3 and Model Y as “fully vegan,” and vegan leather is popular in the US footwear industry.

The majority of imitation leather is made from plastic-based polyurethane. But, as the market grows, a variety of companies have developed nature-based products derived from cork, bark, apple peel, and pineapple leaves.

The online availability of vegan leather products has more than doubled in the UK and rose 54% in America between the first half of 2018 and the same period this year.

But is it actually better for the environment?

It depends on the type of synthetic: Plastic-based synthetics aren’t exactly being endorsed by Captain Planet, but plant-based leathers — like those from pineapple leaves and apple peels — can be converted into fertilizer or bio-gas.

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