Friday Oct.08, 2021

đź‘–Supply chains = trendy

That new-jeans feeling [Flashpop via Getty Images]
That new-jeans feeling [Flashpop via Getty Images]

Hey Snackers,

To boost its economy, Spain may offer young Spaniards $290/month to move out of their parents’ houses, plus another $462/year to spend on “cultural activities” — except bullfights (for real).

Stocks rose yesterday after lawmakers set aside differences to raise the debt-ceiling through early December and prevent a default. Now all eyes are on the September jobs report, which comes out today.

Hip

Levi’s stock surged thanks to “casualization” and an always-fashionable supply chain

Cotton comeback… High-waisted jeans are in at Levi’s. Levi’s lifted its annual forecasts after last quarter’s sales blew past pre-pandemic levels for the first time. Rising cotton costs have caused shares of retailers like H&M and Gap to fall over the past six months. But Levi’s stock surged 9% yesterday thanks to the denim powerhouse’s strong sales and proactive supply chain.

Casual clothes, serious supply chain… Levi’s is cashing in on denim demand. The overall apparel market has outgrown its pre-pandemic size, and denim sales have grown even faster. Levi’s leaned into the jean-aissance by investing in Levi’s-branded stores and embracing the post-pandemic “casualization” trend (think: baggier fits and yoga-wear). But there’s another secret to Levi’s success: smart supply-chain management. Here’s the skinny:

  • Splitting at the seams: The spread of Delta has caused widespread factory shutdowns in Vietnam, where Nike makes half its shoes, Everlane produces 40% of its clothes, and Adidas gets 28% of its kicks. Retailers’ plans unraveled.
  • Spread the threads: Levi’s makes only 4% of its products in Vietnam. The rest are made in 24 other countries.
  • Never miss a stitch: The supply shortage cost Levi’s just $10M last quarter — out of its $1.5B in sales. Adidas, on the other hand, could lose $600M from supply shortages in the second half of this year alone.

Reliable supply chains never go out of style… but fashion trends come and go. Levi’s sales are booming today because it diversified its supply chain years ago. Levi’s de-risked system ensures no more than 20% of products come from any one country, preventing pipeline wrinkles. In the wake of pandemic factory closures, more companies making everything from shoes to furniture are trying on Levi’s strategy and diversifying their supply chains too.

Swoosh

From Snapchat to StockX: Nike still reigns supreme with Gen Z

King of the sneaks... Nike is officially the No. 1 footwear and apparel brand among teens, according to Piper Sandler’s Gen Z survey. It’s held the top spot in both categories for the past decade. The competition:

  • Runner-up: American Eagle took second — the same spot as the past two years. Converse, owned by Nike, came in fourth.
  • Big spender: Gen Z makes up nearly half of shoppers in the US and has a whopping $140B in spending power. Nike’s taken note.

Slam-dunk strategy… Thanks to social media (Nike is IG’s most followed brand with 177M fans) and the rise of “sneakerheads,” Nike has shown it's not just the sponsor of your favorite NFL team. For years, it’s been tailoring its products and reach to Gen Z:

  • Virtual fits: Since 2019, Fortnite fans have been able to purchase Nike skins and branded clothes for their avatars.
  • Resale: 60% of Gen Z males use StockX, a sneaker-bidding marketplace where a rare pair of Jordans can cost $500 or more.
  • AR Yoga: Nike’s augmented-reality feature allowed Snapchat and TikTok users to experience everything from yoga to dancing. (Snapchat was teens’ No. 1 social-media app.)
  • Gen J’s: This year, NBA player Zion Williamson became the first Gen Z player to design a shoe for Nike’s popular Air Jordan line.

Nike is like the Beyoncé of retail brands… and Gen Z is the music industry. Similar to how Queen B has resonated for decades and across generations, Nike has stayed relevant by reaching young customers where they are and leaning into styles that click. While Fortnite and Snapchat are in today, Nike will need to keep refocusing its strategy as social hubs shift.

What else we’re Snackin’

  • Vax: Pfizer asked the FDA to approve its Covid vaccine for kids ages 5 to 11. Approval, which could protect 28M more people, could come by Halloween.
  • Pricey: Packaged-food giants like PepsiCo and Conagra are raising the prices of grocery-store staples to keep up with rising labor and transportation costs.
  • Toothy: Shares of Smile Direct Club soared 33% over three days this week as retail investors rallied around the stock on Reddit.
  • Glossy: Meredith Corp., which publishes magazines like People and Better Homes and Gardens, sold for $2.7B to the NY media giant IAC.
  • Gas: Prices of natural gas keep hitting record highs. US prices hit their highest levels in a decade, setting the stage for a pricey winter heating season.

Friday

  • September unemployment rate released

ID: 1868094

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Tech

Meta’s not telling where it got its AI training data

Today Meta unleashed its ChatGPT competitor, Meta AI, across its apps and as a standalone. The company boasts that it is running on its latest, greatest AI model, Llama 3, which was trained on “data of the highest quality”! A dataset seven times larger than Llama2! And includes 4 times more code!

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

It did mention that it includes AI-generated data, or synthetic data: “we used Llama 2 to generate the training data for the text-quality classifiers that are powering Llama 3.” There are plenty of known issues with synthetic or AI-created data, foremost of which is that it can exacerbate existing issues with AI, because it’s liable to spit out a more concentrated version of any garbage it is ingesting.

AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

Today’s earnings: Who’s making money edition

Here are some some notable numbers out this morning, as earnings season gathers steam. Thursday’s main event will be Netflix after the close of trading. (Keep an eye on its advertising business.) But until then...

Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Scuba Diving in the Wild Blue Yonder in French Polynesia
7.13%

The 30-year fixed rate mortgage is back above 7%, according to weekly numbers from the Mortgage Bankers Association, the highest level in four months. High borrowing costs are creating havoc for would-be buyers, as affordability lingers at the low levels not seen consistently since the late 1980s.

Business

Amazon’s spy ops on rivals: shell companies, printed docs, and a fake Japanese streetwear brand

Some companies check out rivals’ websites, stores and public filings to stay abreast of the competition. Amazon made its own fake shell company and brands, transacted hundreds of thousands of dollars per year undercover on competitors’ platforms, and kept its intel operation a secret for nearly a decade even from others at Amazon, according to a fascinating investigation by the Wall Street Journal.

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Crypto

Worldcoin pivots to the blockchain… with a 'humans only' discount

Worldcoin, the “proof of personhood” crypto project launched by OpenAI’s Sam Altman, said it plans to launch its own ethereum layer-2 (L2) blockchain dubbed World Chain. The pitch: a blockchain where it’s both easier and cheaper for people to transact than bots.

Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees. 

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees. 

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

Business

Smooth sailing? Not for superyachts

Sales of the luxury boats sank 17% last year. Meanwhile, Super-SUPER yachts (over 650 feet long) took the biggest sales dip, falling around 40%. Part of the problem: a pandemic-era backlog has led to a three- to four-year waitlist for new yacht orders. Meanwhile Russian oligarchs — former MVP customers — are largely out of the boat-buying business due to sanctions.

Dr Martens shares have been stomped

American sales of Docs have dropped

2024-04-17-ai-capabilities-site

AI is getting good at a lot of different tasks

Business

The monkey’s paw curls on endless shrimp

Red Lobster’s shrimp promotions may have contributed to jumbo problems for the company.

The seafood chain is considering a bankruptcy filing to deal with cash flow problems, Bloomberg reports.

Red Lobster has been weighed down by pricey leases and labor costs, but it’s important to remember that it also blamed an $11M operating loss last fall in part on too many people going crustacean-mode on its Ultimate Endless Shrimp deal.

“The proportion of the people selecting this promotion was much higher compared to expectation,” said Red Lobster owner (and seafood supplier) Thai Union Group last year. The chain bumped the price of infinite shrimp by 25%, but Lobsterfest and Cheddar Bay Biscuits may not be enough to save it from Chapter 11.

“The proportion of the people selecting this promotion was much higher compared to expectation,” said Red Lobster owner (and seafood supplier) Thai Union Group last year. The chain bumped the price of infinite shrimp by 25%, but Lobsterfest and Cheddar Bay Biscuits may not be enough to save it from Chapter 11.

Power
Rani Molla
4/17/24

Elon Musk’s car company pays for Elon Musk’s security company

Elon Musk is a rich man who owns a lot of companies. One way he keeps those companies and himself rich is by making his companies support his other companies. Left pocket, meet right.

TechCrunch’s Sean O’Kane dug into Tesla’s latest annual proxy statement to find out the value of these relationships.

Musk’s Tesla bought ads on Musk’s X, aka Twitter, to the tune of $200,000 just through February this year. Tesla also paid X another $200,000 this year and a million in 2023 for “commercial, consulting and support agreements.” Musk’s SpaceX has also advertised on X, presumably helping prop up some of the budget the company has lost from non-Musk advertisers Musk seems hell-bent on driving away. Musk’s Tesla paid Musk’s SpaceX $800,000 to use a private jet and paid Musk’s The Boring Company more than a million dollars for “commercial agreements.”

It also turns out that Musk owns a security company, whose job it is to protect Musk. Naturally Musk’s Tesla paid Musk’s security company nearly $3 million since entering into a service agreement in December 2023. Apparently that represents just a “portion of the total cost of security services concerning Elon Musk,” so presumably Musk’s other companies will be left to foot the rest of the bill.

Musk’s Tesla bought ads on Musk’s X, aka Twitter, to the tune of $200,000 just through February this year. Tesla also paid X another $200,000 this year and a million in 2023 for “commercial, consulting and support agreements.” Musk’s SpaceX has also advertised on X, presumably helping prop up some of the budget the company has lost from non-Musk advertisers Musk seems hell-bent on driving away. Musk’s Tesla paid Musk’s SpaceX $800,000 to use a private jet and paid Musk’s The Boring Company more than a million dollars for “commercial agreements.”

It also turns out that Musk owns a security company, whose job it is to protect Musk. Naturally Musk’s Tesla paid Musk’s security company nearly $3 million since entering into a service agreement in December 2023. Apparently that represents just a “portion of the total cost of security services concerning Elon Musk,” so presumably Musk’s other companies will be left to foot the rest of the bill.

Tech

A social app, but it’s just voice notes on 2X speed

Airchat is basically X meets Clubhouse, and Silicon Valley types are all over it. The social app consists of a feed of audio snippets that plays continuously on 2X speed until you press pause. The speed makes sense: chugging a cold brew and plowing through podcasts on 2X speed is a rite of passage for modern multitaskers.

A surge of new users joined Airchat over the weekend, joining entrepreneur Gary Vaynerchuk and Y Combinator CEO Garry Tan.

If users don’t want to inhale voice notes at hyper speed, there is a somewhat hidden way to adjust Airchat’s cadence, but it’s an intriguing feature. User-generated audio has struggled to break out of a niche, so targeting the personality that wants to listen to a podcast at twice the speed is one way to make the user experience more efficient.

A surge of new users joined Airchat over the weekend, joining entrepreneur Gary Vaynerchuk and Y Combinator CEO Garry Tan.

If users don’t want to inhale voice notes at hyper speed, there is a somewhat hidden way to adjust Airchat’s cadence, but it’s an intriguing feature. User-generated audio has struggled to break out of a niche, so targeting the personality that wants to listen to a podcast at twice the speed is one way to make the user experience more efficient.