Hey Snackers,
This was Amazon's first job posting 25 years ago.
This is ours today. We're hiring a Snacks News Writer — "The Third Snacker." If transforming business news into a digestible daily ritual is your thing, we want you on our team.
If not, jump right on into your Snacks below.
Disrupt the 1st person plural... The We Company has visionary visions to turn real estate into utopias, starting with its WeWork office spaces. It's already stealthily filed to IPO, but the WSJ just reported that it's first taking a pit stop with the banks to borrow $4B. Achieve goal #1 of the IPO now so it's better ready for goal #2 later:
A $47B cash-burning machine... WeWork's biz model calls for a ton of spending. Right now, it's hugely unprofitable (it lost $1.9B last year — that's more than the $1.8B it generated in revenue). Here's how WeWork happens:
Sometimes it's safe to wait... Going public is like going pro. If WeWork raises $4B in cash now by borrowing, it can afford to take another year playing in college to refine its profit skills before facing the judgemental eye of the public market. Look what happened to Uber and Lyft — those money-losing companies both went pro this year, and their stocks are below where they began trading on IPO day.
Something happened over Spring Break... Snapchat changed. Parent company Snap shares have nearly tripled since February, driven by analysts upgrading their price targets for the stock. And that's been driven by Snapchat strengthening — and then flexing — the two biceps of tech apps: growth and engagement.
Left Bicep = "Growth"... The last time Snap updated us in March it had 190M daily active users. To grow beyond that, it's made two key moves:
Right Bicep = "Engagement"... To enhance the time users spend in the app, Snapchat launched games in April:
Snapchat is covering steps #1 and #2 (growth and engagement)... Now it's gotta focus on Step #3: making money. A shocking 90% of all Americans age 13-24 use Snapchat, so the app's trying to monetize them through ads — and its revenues impressively rose 39% in the 1st quarter. But investors eventually want profits, and that means nailing step #3 as it flexes its growth and engagement.
A room full of brains and calculators... That's the Congressional Budget Office, a non-partisan government agency that takes proposed legislation and calculates the economic impact. Its newest report dives into the "Raise the Wage Act" — which would increase the minimum wage nationwide to $15/hour by 2025. It'll likely pass in the Democrat-controlled House of Reps, but it’s unlikely to become law right now.
Paying people more is a trend... Although the federal minimum wage ($7.25/hour) can't even buy a Chipotle burrito (pre-guac) after not being increased since 2009, 29 states plus DC have increased theirs during that period. Here's who'd win and lose with a nationwide livable wage.
Companies would lose, at first, for sure... Higher wages = higher costs = smaller profits. McDonald's has been lobbying against an increased minimum wage for that reason (but actually ended its fight recently because wage hikes seemed inevitable). But longer term, the CBO tells us that 27M Americans will have more money... which they will spend... which could increase companies' profits. We'll know for sure when the theoretical becomes real.