Fantastic McArticle, really hit the McNail on the McHead.
It feels like McDonalds is really stuck between the characteristics that have led to their past successes and the consumer preferences that are driving the market forward. As a consumer, I have found their foray into healthier options like salads admirable, but I agree that the lack of disruptive innovation in their delivery model is limiting future service improvements. Just last week I had a burger that came out of a vending machine, and while it was delivered directly from a frozen hellscape where taste goes to die, I don’t see why kiosks couldn’t be configured to deliver healthy, fresh options.
In the world where everything can be delivered, though, what value does a restaurant with ‘fast’ service but no ambience really offer? Like in our discussion with Uber, it is not so much about the time the service takes, but about the time that the consumer has to spend dedicated to waiting. With delivery, you can occupy yourself with other pursuits, so the wait time is not in and of itself a problem, but no one wants to spend more time in a McDonalds than they have to. I think McDonalds will need to reexamine the true value that they are delivering to customers, whether it is taste, convenience, experience, and double down in a specific direction. Fighting the food battle on multiple fronts will only lead to failure.
I think the dash button is a great stepping stone towards a future where all goods are delivered to an end user exactly when they need them. Amazon started by offering subscription purchases of household items like detergent, including steep discounts, but I expect that people dont have a strong understanding of what their future needs will be. By providing them with a dash button, amazon can collect real-time information on the use of these products without the time lag of them having to log on and actually purchase the item. By building up these usage patterns in real time, amazon can then return and say ‘you purchase every 2 weeks, on average, would you like to start a subscription at ~5% off?’. In this way, I see that dash button as a an acquisition tool that Amazon is using to migrate customers onto subscription purchase agreements, increasing the stickiness of certain products as well as the channel. Can’t wait for a time when dash buttons can be customized with any product you want!
Looks like TBD is angling for a job in Silk Road 2.0, hope he can hold his breathe to get down to his deep-sea shipping container. Alternatively, Silk Road 2.0 could located themselves inside the heart of a volcano on a remote tropical island, taking a page out of the playbook of decades of comic book villains (1).
I’m curious to see how well these cryptomarkets are adapting to the needs of their customers. Should they be providing the third party logistics and warehousing, similar to Amazon, or is it better for them to maintain a more Alibaba model and simply operate the marketplace? They already built out their Alipay escrow service, what other value-added services could they develop? I think Silk Road 2.0 needs to focus more on the consumer, as I feel that in their success they have lost touch with the average drug dealer, leaving an opening for new entrants to take business.
With Ross in jail, who is the Inigo Montoya that will succeed the ‘dread pirate’ in the business, and why doesn’t the Silk Road recruit in any CPD events?
Amazing to see the interest that has gone into wearables, and the intensity with which normal citizens and weekend warriors have brought to these devices to improve performance. In most cases of amateur wearers, such as fitbit consumers, health outcomes have often been non-existent (1), so there is still a gap between information, action and outcomes.
In terms of business model, I would be interested to see these companies move towards real value pricing and not so much cost pricing, perhaps determining their revenue based on the efficacy of the device. If I go faster, you earn more, and if I gain weight while wearing it, you dont get paid. Clearly the company assumes massive risk here, and there is no precedent for retailers of weights to offer similar pricing, but with constantly connected devices, companies could theoretically tie their performance to outcomes and directly charge for it. How much would an extra 50lbs on a lift be worth to you?
The need for all of these traditional content providers to digitize and monetize is loud and clear, but it seems like putting content behind a paywall, particularly for written content, is a losing strategy. Print outlets like the New Yorker already bundle their digital content with their written subscription, so subscribers get access to all media, but that still has not led to any real recovery in revenue. Content feels commoditized, and readers have been so habituated to being able to read for free that I think moving currently free content behind a paywall would lead to mass defection. I think they will need to deliver a fundamentally different product digitally if they are ever going to convince people it is worth paying for.
The exploration of the Red Cross’s top-line impact from climate change is interesting, but ultimately a non-profit is measuring itself by the services that it provides. I think this is a cynical view, as the the increase in disasters is not an increase in revenue, but an increase in need for the services that the Red Cross provides, so in reality it is really an increase expense! Not only that, but the cost of providing these services could end up being more expensive, as resource are being deployed to locations with increasingly weakened infrastructure and political and economic systems, not to mention the fact that they may be deployed to more concurrent disasters at any given time, increasing the complexity of their operations. Yes, this may be a boon to donations, but I expect it does nothing to the ever-present non profit funding gap.
In the grand scheme of climate change, the impact of emissions from resorts like Vail is virtually negligible, so while it is an admirable effort, the benefit beyond operational efficiency gains is effectively zero. What these resorts need to be doing is 1) scouting locations that will continue to support winter recreation with a changing climate and 2) diversifying activities into the summer season. The climate is not just warming, it is also shifting, so changing precipitation patterns could see increased snowfall in places that previously had very little. Vail should be engaging with climate scientists to identify those regions and specific valleys and aspects that will be the new lords of pow and moving in advance to secure development rights. They should also continue to push summer months, including festivals and cultural events, to satisfy current homeowners and to continue to sell real estate, the true essence of their business.
I applaud Unilever for trying to increase the sustainability of their palm oil supplies, but what it fails to acknowledge is whether there truly is a sustainable source of palm oil, or if that goal is simply a figment of some supply chain imagination. Unlike carbon emissions, which truly are transferable and indistinguishable, these sorts of habitat banks and credits often lead to lower quality habitat being preserved as equal, which in the case of Indonesian rainforest could leave the protected land effectively useless for either humans or animals. What is most concerning, though, is that there is no mention to actually move the recipes away from palm oil towards more sustainable inputs. Instead of trying to make marginal improvements, why don’t they push for a wholesale transition?
The market for protein is clearly evolving, but my impression is that these consumer brands may actually be too far out in front of the consumer, which might lead them to burn through cash in an effort to build out a market that doesn’t exist yet. The eco-conscious food consumer is not a large enough market, not by far, for Tyson et al to get the return they are looking for. In my mind, this product value prop has to focus on the health implications of meat consumption paired with quality taste and texture, thus no habit change required. Eventually the environmental consumers may be a large enough block in food to build a great business, but in the interim focusing on buyers that care about their own health, and the transparency of the businesses that they buy from, is the best bet.
Data analytics in farms will be incredibly powerful in a changing environment, but for me the gap in value creation will be going from data to actionability, which is possible with some larger clients but not always with smaller ones. When you look at larger ag operations, most have normalized at fairly standard crop returns, indicating some convergence of best practice techniques, but where you see real variability, and thus potential for improvement, is in the developing world. With these customers, though, the ‘what to do’ gap becomes larger, as you run into issues of access to capital, supply of inputs, etc. Arable can help all farms operate more efficiently, but if we want to really transform the ag system globally to meet the caloric demands of 9B+ people, we need solutions that help those underutilized growing locations.