Archive

What to do with AI hype

I know I'm not the only one in the stock market who's already tired of hearing about AI this year. But apart from rolling our eyes, is there anything investors should be doing with this commentary? Obviously there are a number of businesses where this is already a very big

The Car Wash Bubble

How can we tell when a boom is tipping into a bubble, and it’s time to get out of the way? Even when it seems obvious at a high level… By our estimates, there are roughly 25 to 30 PE firms of various size in the category today — all

The B2C Premium

Why does consumer-facing real estate outperform?

Amazon and Industrial Real Estate

Does Amazon's post-Covid warehouse contraction mean the end of the industrial boom?

Office Space: The Big Lie

Why 99% of what you're reading about office design is nonsense

What’s Wrong with Health Care REITs?

Three reasons the REIT structure isn't working for health care facilities

Office Space: A Brief Dose of Reality

Advice for CEOs who actually want to "lure" employees back to the office, rather than patronizing them with "amenities"

The Future (and Past) of Movie Theaters

The emerging investment pitch for a movie theater “comeback” is basically another year or two of reversion to the pre-pandemic pitch. Unfortunately, that narrative was mostly wrong. But it’s wrong in interesting ways that may tell us something about what could happen instead, or about the risks in other

How Will the Retail Apocalypse End?

Before the pandemic I offered five ways to explain the “retail apocalypse” without referencing e-commerce. This time I’ll give you one more that ties them all together, and connect it all back to the internet and the standard digital narrative. Because that narrative is not exactly wrong, but it’s i

Why Loyalty Programs Don’t Work, Part 2

Last month I wrote about the ways that airline-style consumer loyalty programs create value for the brands that offer them, and why they’re no longer effective as they spread further into other industries and try to appeal to a wider range of customers. I used retailers and hotels as examples of two

Why Loyalty Programs Don’t Work

This month Abhijit Banerjee shared a Nobel Prize for the use of field experiments in global humanitarian work. His first published paper in 1987, with Larry Summers, was about frequent flyer programs: This paper presents a model of loyalty-inducing arrangements as collusion-facilitating devices. The

Direct to Consumer

SCENE: A department store in 1994. Enter VENTURE CAPITALIST, stage left, after a bright light and puff of smoke offstage. Enter SALESPERSON, stage right. SP: Need help finding anything? VC: Wow, it actually worked… SP: Are you all right? You look a little shaky. VC: No no, it’s just — I’m here from

How Not to Disrupt Self-Storage

Self-storage startups like Clutter and MakeSpace may not be the most exciting “space” in tech, but they can tell us a lot about consumer-facing startups in general, and how the search for a simple narrative makes it impossible to understand how they really succeed or fail. In fact, the best way to f

The Long Arc of Leisure Demand

There are a number of capital-intensive leisure businesses in the US that we associate with Baby Boomers: cruise ships, timeshare resorts, enclosed malls, regional casinos, golf courses, multiplex theaters, ski mountains, and so on. Are there any common elements in how investors should approach them

How to Think About Coworking

Are WeWork, Industrious, Knotel and other coworking startups overvalued? I think they probably are and I’ll explain why, but in some ways that’s the least interesting question you can ask about them. Whether or not these companies ever grow into their current valuations, there are hundreds of thousa

What’s Really Happening to Retail?

It’s true that the “retail apocalypse” narrative is oversimplified, but the counter-narratives are not much better. They tend heavily toward the anecdotal (“look at how this mall replaced their empty Sears”), conspiratorial (“Amazon investors won’t put up with those low margins forever”) or just tau

The Omnichannel Trap

I’ve been reading hundreds of retailer earnings transcripts over the last year, and I’m noticing some recurring feedback loops and circular logic in their current business strategies. Here’s a simple and relatively benign example, not specific to retailers, that you may recognize: You promote your l

The Myth of the Open Plan Office

Is there anyone who still believes that open plan office layouts increase productivity? Article after article, study after study has made it clear that the massive distraction they create outweighs any benefits from “collaboration” or “spontaneous interaction.” It’s almost a running joke at this poi

The Problem with Prediction Markets

Prediction markets — websites where you can bet on politics — are rising in prominence. This election season, their “odds” are often quoted in news stories alongside poll averages. Of course, these odds aren’t worth much if there aren’t many people betting, and there aren’t. This article by Philip W

Graphing Calculators and Competition

This two-year old Washington Post article describes an odd situation that seems to persist today: Texas Instruments is still selling their TI-84 graphing calculator for about $100, though it likely costs only $15-20 to manufacture and they haven’t updated the hardware in over a decade. Phones and ta

Restaurant Rankings vs. Ratings

This idea seems so obvious to me that I’m sure someone has tried it, but I can’t find any good examples. In a nutshell, it’s an app for user ratings of restaurants that’s based on ranking them in categories, rather than rating them individually on a star or point scale. So for example, you might […]

The Airbnb Building

There are really two separate businesses on Airbnb and other hosting platforms. Let’s call them “amateur” and “professional”: Amateur: People renting out homes that they live in themselves at least part of the time (either a spare room while they’re home or the whole place while they’re not home) Pr