Zach, thanks for sharing. Super interesting post. To what extent do you think Cinemark’s return profile is a function of the company’s strong performance in the face of secular headwinds? As a highly cash generative, mature business that pays a relatively large dividend do you think the company is valued on yield? I wonder to what extent the impressive return profile is a related to rates staying lower for longer over the ’11-’15 period and the company’s dividend yield looking more and more appealing on a relative basis? With this in mind, would be curious how you think about the company’s valuation today given the secular headwinds to its business.
Awesome article. I also share Hannah’s concern that the incumbent players have a natural advantage in their ability to build sensors and analytics into their own products. That said, I do think technology increasingly allows for innovation in analytical tools that are actually not physically located on the machinery. Satellite imaging has improved to the point that satellites can monitor the performance of equipment and report back to HQ which units are performing optimally and which are in need of service. Obviously, a satellite player is better positioned to offer these analytical services than an industrial player. The rise of powerful imaging technology also creates interesting questions around what constitutes competition and what constitutes privacy. Would McDonald’s using satellite imaging to track customer traffic at Burger King parking lots be a thorough analysis of a competitor, just plain creepy, or a little of both? From a legal perspective, should McDonald’s be allowed to pursue satellite imaging of Burger King parking lots?
Karan — awesome post. As a runner who has struggled to find the right shoes over the years, I hope this technology takes hold. I’d be first in line to get my shoes customized. I also think consumer willingness to pay would (or at least should) be quite high. The average runner is advised to trade in their shoes every 300-500 miles. Assuming an average run of 3-5 miles, this equates to 300-500 runs. Imagine the custom shoe had a sticker price of $500, over 5x the price of an average running shoe. At such a cost amortizing the shoe over 300-500 runs would equate to a cost per run of between $1.00 and $1.67. In contrast, a Soul Cycle class is $34 (pre-shoe rental). So even at $500, a custom shoe equates to a cost per work out of 20x-34x less than Soul Cycle. I might just be blind to the appeal of Soul Cycle, but splurging on some dope kicks just seems to be the better deal here.
Luke, thanks for writing. As a bit of a Luddite, I’d never actually engaged with Slack prior to HBS. It’s really interesting to learn more about the history of the product and the role it might play in teleworking. I’d be curious to also learn about how company’s are adopting performance evaluation and compensation schemes to an increasingly teleworking society. Corporations are very used to hourly wages and the notion of “clocking in” and “clocking out.” In FRC, we still even think about labor costs by building up from hourly wages. Do you think as we move towards teleworking we’ll have to abandon the hourly wage and come up with more productivity based compensation schemes? Or is it feasible to “clock in” and “clock out” remotely and trust that employees are productive despite being outside the office?
Think generally auto dealers view e-comm as a slippery slope towards direct sales online by the OEM, and the death of their business.
There’s a decent school of though that AutoDealer business shouldn’t exist altogether and we should transact directly with OEMs, but the auto dealer lobby has gotten increasingly powerful over time. See — http://www.motherjones.com/politics/2009/02/why-you-cant-buy-new-car-online
Nico, thanks for sharing. Your post leaves me far more informed about the impact of the leather industry and eager to give up leather altogether or shift consumption to companies like ModMed. How do you think TLF will ultimately adapt to tougher regulation? Does it make sense for TLF to by ModMed? It seems to me that legacy leather players will ultimately need ModMed’s technology, and this would be a very forward-thinking acquisition.
Ethan, it’s really interesting to me that MTN’s consolidation of the industry also seems to have environmental benefits. As the company continues to acquire smaller competitors and increase their share do you expect the company to maintain it’s best-in-class environmental practices? Are you concerned that the company might get complacent as it’s market share grows?
Jasper, reading this post I couldn’t help but draw parallels between Starbucks and Ikea. Both companies seem to face decisions about how to meet their growth goals while simultaneously managing the environmental impact of sourcing a key input in their businesses. Do you think it makes sense for Starbucks to vertically integrate or to build a greater economic interest in the coffee bean business? Alternatively, do you think Starbucks could diversify away from coffee to decrease its reliance on the commodity in the way that Ikea might move to wood substitutes? Do you think a Starbucks customer could be moved to order more tea, or could Starbucks leverage its brand to promote new morning beverages altogether? All in all, really interesting post that raises a lot of interesting questions about a company we all interact with regularly. Thanks for sharing.
Adam, thank you for flagging P&G’s shortcomings as it relates to adapting its business to climate change. It is disheartening to know that a company that directly touches so many consumers is so far behind. Do you have any guess as to why Unilever is so far ahead of P&G? Does Unilever just have more of a social conscience? Or has Unilever identified some economic incentive to adapting to climate change? I’m curious what might potentially catalyze a change in P&G’s approach. Also, how might we go about quantifying the economic headwinds that climate change presents for P&G? Again, thank you for the post; it raises a lot of interesting questions about the company.
Awesome post about an awesome company. It is nice to know that ABI is so focused on managing their footprint. I’d also be interested to learn how the company manages the footprint related to the other pieces of their supply chain, particularly packaging. As the industry leader, they have tremendous power to shape consumer preferences and push consumers towards more environmentally-friendly packaging. For instance, while in the US we purchase single-serve beer (i.e packs of cans or bottles), ABI has promoted more environmentally friendly purchasing behavior in Brazil. In Brazil, ABI has pushed the consumer to purchase high volume large multi-serving bottles. Larger bottles designed to be shared among multiple consumers serve to both reduce the company’s cost per liter and carbon footprint. I wonder if the company is trying to use their market power in other regions to push more environmentally-friendly styles of consumption, like large volume bottles for sharing.