March 12, 2019

Venture Capital and publishing are more similar than you'd think

Venture Capital overlaps publishing

Venture Capital and book publishing have a lot more in common than you might think. According to Ethan Hirsch, the two worlds share many similarities including a focus on lopsided returns and bet-taking. As a result of increased competition and limitless supply, publishers continue to fight to attract the best writers as well as bring to life exciting books.

How Does Venture Capital and Publishing Compare?

To understand the comparison, it helps to comprehend what venture capital is. A VC pools money together to invest in small, unproven but high-potential startups. Depending on the startup’s development (ideation stage vs near full maturity), investors will fund and assess their stake over time. Early funding rounds include “seed” and “series A,” with subsequent rounds going all the way down to IPOs and full acquisitions.

Likewise, publishing firms will take a chance on up-and-coming writers to get their foot in the door. In contrast major publishers give large advances to more prominent writers in exchange for the rights to their books and future earnings. This is typically where things like royalties come into play.

Both fields have incumbents that tend to attract the best in the industry. Just as you’d expect A16Z to invest in Facebook (and get first dibs), you expect Crown Publishing to publish John Grisham or Michelle Obama’s latest book. The smaller firms need to fight and take bets on moonshots to become established incumbents, making success rates statistically lower.

Taking Bets

Just like smaller venture capital shops, publishers will typically pursue “blockbuster” strategies. Blockbuster means taking many small bets, expecting the majority to fail but for outsized returns on a handful. The same applies to VC: for every 10 businesses, 6 will fail, 3 will barely survive and 1 will be a major hit. This technique justifies the losses and helps propel these platforms upwards. Perhaps it’s not just startups and authors trying to win the lottery: VC and publishers are doing the same.

March 9, 2019

When AI meets fashion. How can the two co-exist?

AI Artificial Intelligence Fashion Design

Artificial Intelligence vs. creativity is billed as the fight of the 21st century, and for good reason. In today’s rapidly moving world, companies across industries are looking for a leg up to fend off competitors. Fashion is no exception, but to what extent can it leverage technology and still create the emotional bond that draws crowds to begin with? In his Business of Fashion piece, Charles Beckwith argues that AI will always lack a profound human trait: intuition.

Fashion-Based Artificial Intelligence Won’t Replace Human Traits

In his piece, Beckwith touches on AI, machine learning and blockchain and explains how fashion firms are very much up to speed. From an operational standpoint, these systems are useful and powerful. For example, these systems do a better job of ordering and maintaining inventory. As the technology and systems improve, in part thanks to the hoards of data firms get every month, machines will likely fully replace humans. However, some facets, those closest to our emotions, are simply too hard for machines to comprehend. Ultimately, the author underlines the importance of the Human in an Artificial Intelligence-optimised world, and how our creativity will underpin our future work.

Intuition Matters

We’ve talked about the limitations of Artificial Intelligence before at MAEKAN and its relation to content creation. Just as this applies to journalism, the same can be said for design. For Beckwith, “What is the human quality that A.I. lacks? Intuition, the ability to leap beyond logic. As a computer scientist might put it: IF a traditional computer can leap beyond logic, THEN it is broken. Anything else at this point is science fiction at best.” As many scientists and experts might tell you, these systems are often predictable in their work. Conversely, fashion is (should not, but sometimes is) be unpredictable and continue to push boundaries forward.

A Word of Warning

Although Beckwith raises good points, we still know very little about how AI will evolve over time. AlphaGo, Google’s Deep Learning Go player, stunned the world’s best player by using new and unusual tactics in its conquest. Whilst Machine Learning and Deep Learning are very different, AlphaGo demonstrates how a seemingly human train (creativity in this case) can apply to machines as well. We’ve seen this in art already; perhaps we aren’t so far off from seeing our first ever Artificial Intelligence-driven fashion line either.

March 7, 2019

Real estate magnates to challenge WeWork's continued rise

Since its inception, WeWork flipped the real estate model on its head, transforming traditional work culture in the process. As the change continued, real estate firms began to feel the ensuing pinch. Today, these firms are fighting back hard using one of WeWork’s key tools: technology.

Apps & Data Dominate

As is often a recurring theme, major real estate developers are turning to data solutions that can power new apps, taking a page from WeWork in the process. These apps are designed to enable tenants to make the most out of the premises they occupy, and landlords to optimise services. Broadly speaking, apps enable:

  • Access to the building / guest registry
  • Class booking (e.g: fitness)
  • Food ordering / payments
  • Work orders

Likewise, data collected by landlords provide insights on:

  • User patterns
  • Spikes and anomalies
  • Areas of optimisation

Ultimately, this ecosystem benefits both parties and can enable higher retention rates for landlords in the long-term, securing cash flow over time.

Community Drivers

Beyond data and numbers, real estate developers are using tools to foster a greater sense of community amongst tenants. In fact, they now seek more insights on cultural events that workers would be interested in. In changing their mindset to better accommodate their partners, landlords become community hub creators and enable greater discussions through their own platforms. As these firms speed up their internal changes, WeWork will likely seek to push further to solidify its advantage to counter their competitors’ improvements.

In our experience, this part is the most challenging. Indeed, community in a physical space is no different than running a magazine. You have to understand the demographic, how to speak to them, and how to challenge/solve their pain points. Many competitors entering the space are interested in the idea of building a community. However, their emergence from traditional real estate makes for a challenging transition.

What’s Next For WeWork?

Time will tell if WeWork will continue its dominance in the field. Perhaps the more interesting story is ultimately that real estate firms have learned to adapt much quicker than others when a disrupting firm entered their industries. Most noteworthy and in comparison, Kodak (which actually invented the digital camera) never moved fast enough and ended up losing grip on their industry altogether. Ultimately, this may have been a cautionary tale and a wake-up call for real estate magnates as a whole. Hopefully, this new breed of office space will provide more than just beer and timeboxing techniques.

March 4, 2019

Chinese consumers are buying luxury goods directly at home

Chinese women luxury spending locally in China

Chinese consumers are still driving demand for luxury products globally, but they are making more of their purchases back home. In the past, Chinese consumers would often shop overseas, especially in Hong Kong and Europe. However, the trend is now reversing, and it’s primarily due to today’s macroeconomic landscape. In the doom and gloom of trade wars, luxury products of all things remains a bright spot.

What in the world does macroeconomics have to do with luxury?

Macroeconomics and politics are primarily to blame for this. The ongoing trade war between the US and China impacts demand in many different ways. Since trade wars depend on tariffs, both countries suffer from rising import costs. To combat this, the Chinese government enacted a series of policies to help spur on consumer spending. Luxury brands worried about the possible fallout from the trade war instead had a record year in large part due to Chinese consumption. Beijing increased the amount of tax-free goods consumers could purchase, cut import tariffs and revised its income tax. All these measures help improve demand domestically. As such, local consumers no longer need to travel overseas to purchase luxury goods.

 What else caused Chinese demand to spike?

Other than local government intervention, Chinese consumers benefitted from:

  • A weakening RMB which helps with demand as its less expensive to shop at home than elsewhere
  • Luxury brands tapping into new local markets. For example, luxury brands like LV and Prada expanded to cities like Wuxi, Xi’an and Wuhan. Although you may have never heard of these cities, they host millions of Chinese citizens each, which helps draw investors and brands in the long term.
  • There are more options online for luxury purchases. For shoppers who don’t have access to a boutique near them, they can instead rely on e-commerce giants like T-Mall and JD to source their goods
  • Better touch points. Brands are improving and localizing their store experiences to draw in more crowds

As the global picture continues to unfold, it’ll be interesting to see how Chinese demand for luxury goods continues to evolve, especially in a context of unprecedented debt in China.

February 20, 2019

Timeboxing is a productivity technique to carve out time for tasks

Timeboxing Productivity Meeting With Calendar

Timeboxing might be the key to unleash your productivity. According to Marc Zao-Sanders, the practice enables individuals and teams to improve work efficiency and help businesses move faster. The process is straightforward: move your to-do lists onto your calendar instead to see better results. The author attributes this to the fact that to-do lists can be overwhelming and often lead us to check off the easiest, but often least pressing tasks first. In contrast, adding items to a calendar forces us to prioritise and also visualise when tasks need to be handled. The principles are directly derived from Daniel Markovitz’s work which you should also check out if you want to turbocharge your work.

Five reasons why to-do lists don’t work

The reason why timeboxing is so popular is that to-do lists have 5 core flaws according to Zao-Sanders:

  • They have too many options on them, making it hard to pick tasks at times
  • We tend to gravitate towards simpler tasks
  • We rarely set time aside for important, but non-urgent tasks (things like learning)
  • Lists don’t provide context as to how much time you have readily available, unlike a calendar
  • Lists don’t have a commitment system because they can be ticked off whenever

These five reasons alone are enough for most people to move their lists straight to their calendars

The benefits of timeboxing

The timeboxing method, assuming it’s new to you, will help you improve your workflow significantly. The author provides five main reasons as to why this is the case, and why it worked for him:

  • It helps you position your work, quite literally. Seeing the boxes within a calendar space means you’ll be able to know which blocks are available for you to dedicate time to a task
  • It helps you work in teams and communicate better. Colleagues can track your calendar and will know when you are working on important tasks, leaving you more space to complete the work
  • It provides a record of your work. You can’t track to-do lists in a chronological way, but you can look back on a calendar
  • It helps you feel in control. Since you lock in time to do things, you’ll feel more in command of your tasks and deadlines
  • You’ll be a lot more productive by having to work through these steps

 

Our two cents

Whilst not revelational, timeboxing is definitely helpful for anyone looking to improve their output. The MAEKAN team are big proponents of Google Calendar which help us keep track of our time and work. We’ve also discussed how planning is crucial to business development in the long term, including in some of our MAEKAN Money Moves articles. Ultimately, it boils down to whatever you feel is best for you, and how you manage your work. Speaking from experience, there is never a right or wrong way of doing things; some techniques are perhaps just more optimal and conducive to getting you where you need to be. Give timeboxing a go and see if you notice any positive changes.

February 20, 2019

Artist-endowed foundations are worth more than USD 7 billion

Artist Endowed Foundations Are Worth More Than 7 Billion

There has never been a better time to own art. The asset class attracts investors from across the world who bid for a chance to own prized and recognizable works from renown artists. The red-hot market creates opportunities for artists to open their own foundations from which they can grow different initiatives. Above all, these entities now yield great power to facilitate more progress in the art world and more broadly across culture.

What do foundations do exactly and how have they grown?

  • Foundations are nonprofit corporations or charitable trusts which make financial grants for charitable purposes.
  • It typically involves wealthy individuals or firms who use these vehicles to support initiatives they believe in.
  • Foundations are important as they back groups that can often be left astray or marginalized.
  • These entities focus on leveraging wealth to impact communities with a focus on art-based initiatives.
  • For many artists and creatives, the goal is to see their wealth enable the next generation of talents.
  • Art foundation total values more than doubled to $7.66 billion between 2011 and 2015.
  • Small entities with large coffers create the largest impact, extending to study centers, exhibits and other initiatives.
  • This growth is welcome news for the art world, especially as art funding keeps being cut in favour of STEM-type programs.

Key take-aways

There are six main points worth noting:

  • These entities continuously benefit from soaring art prices. For example, Italian artist Amedeo Modigliani’s “Nu couché (sur le côté gauche)” sold for a whooping $157.2 million in 2018.
  • Foundations have never been so generous, giving away over $90m in 15 years.
  • They focus almost entirely on the arts, as opposed to other charitable causes.
  • They are expensive to run and maintain.
  • The largest estates drive most of the growth, due in part by the rising value of art.
  • They are top-heavy. Similarly to other industries (we see you tech), the art world operates on a “winner takes all” basis..

Ultimately, artist-endowed foundations are here to stay for years to come. Although concentration at the top is not preferable, art foundations have so far done an excellent job at distributing wealth to where it is needed the most. Perhaps the future of art lies in the hands of these wealthy cultural innovators.

February 20, 2019

Mastercard launches its new sonic logo

Mastercard has new audio sonic branding

Mastercard is once again evolving its branding. Contrary to what you might think, the brand is not changing its logo, which it did not so long ago by removing its own name from it’s famous orange and red circles. Instead, the credit card company is pushing further into branding by creating a new and evolving audio identity. The sound will permeate the brands’ different facets and will feature whenever one transacts with the card. Mastercard developed the jingle in partnership with a group of artists which includes Linkin Park’s Mike Shinoda.

 

What’s all the fuss about? 

Mastercard’s sonic rebranding comes at a time where audio has never been so prevalent. Companies like Google and Amazon are already empowering shoppers to buy using voice, so much so that the market is set to hit a staggering US$40 billion by 2020. Amazon broke holiday records recently, due in no small part by its Alexa voice assistant system. Brands are aware of these trends and are rapidly adopting new sounds that listeners recognize subconsciously and become part of daily life.  Beyond branding, audio plays an important role in purchasing behaviour. Economists and scientists have known this for a long time, but these trends will become even more apparent in the coming years due to sonic branding.

 

Audio branding: the next frontier

Whether its Mastercard or Visa, brands will continue to push their offering in new and exciting ways. Audio players across the world are paying attention, including Spotify which recently acquired Gimlet Media and Anchor to bolster its podcast offering. As global brands and players consolidate, we expect to see more Mastercard-like branding in partnership with large audio distributors. Perhaps Apple Music vs Spotify won’t be so much about artists; instead, platforms will compete on who can help brands best pitch their sounds to listeners. As an audio-focused platform ourselves, we look forward to seeing how brands and partners use audio and sound to push their missions further.

February 4, 2019

Madagascar has a business hotspot thanks to its super-fast internet and neutral-sounding French

Despite its size, Madagascar has become a popular country for companies to outsource their services to. Since 2005, the then handful of Business Processing Outsourcing (BPO) companies in the small island nation has now grown to 233, employing between 10,000-15,000 people. The market leader Morocco, by comparison, employs 70,000.

These companies have been helping the companies that employ them with services such as helping their clients find promotions and deals, testing apps across different devices, fielding customer service calls and the like.

Why is Madagascar doing so well in this sector?

Cheaper Labor: even at starting salaries of $130 a month, which is three times the minimum wage, those are still 50% cheaper than Morocco’s with comparable levels of quality.

Empathy: According to Lalatiana Le Goff, director general at Madagascar’s oldest BPO operator, Vivetic, Malagasies (people of Madagascar) are diligent, willing to learn and have a natural empathy that combined with training, makes them suited to handling disgruntled customers.

Malagasy French: where India and the Philippines traditionally handled the needs of English-speaking markets, former French colonies like Morocco, Tunisia, Senegal and Mauritius have served the Francophone market. Ludovic d’Alançon, chief operating officer at Moroccan BPO company Outsourcia, describes Malagasy French as softer and slower with a mild accent that’s hard to place. This means that the dialect’s inherent qualities combined with the high level of French of the Malagasy employees makes for higher customer satisfaction.

Fastest internet in Africa: Madagascar’s broadband internet is served by a 10,000km long undersea fiber optic cable that stretches from Sudan to South Africa, giving it the fastest internet and Africa and speeds faster than the UK, France and Canada. This also gives the country a significant advantage for BPOs since they handle so many net-based services.

For more information, head over to Quartz.

February 3, 2019

LVMH set a new record for sales in 2018 but a lot of questions remain

LVMH 2018 Record Sales High Fashion

LVMH had a massive year in 2018 with USD 53.5 billion in sales. Some key hires came to fruition (think Virgil) while its portfolio of brands including Louis Vuitton, Dior, Celine, Givenchy, and Loewe all growing 15% in revenue from the previous year.

The big questions
What will sustain this? There are many considerations at play that make this a difficult prediction:

  • Can China continue to drive growth? LV thinks so
  • Will there be a streetwear crash? A segment of fashion that includes many of LVMH’s brands in the modern era
  • Will luxury sales keep up amidst a shift towards experiences over products

See more news about LVMH’s earnings at The Fashion Law.

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