Coffee conglomerates, onion futures, gamified accounting, and more. Enjoy!
(1) Secretive Dynasty Missed Out On Billions While Advisors Got Rich
JAB Holding launched in 2012 to manage the fortune of the Reimann family (the heirs to the Benckiser chemical fortune). JAB’s strategy focused on building a coffee empire to rival Nestlé, constructed with the acquisitions of Keurig Dr. Pepper, Peet’s Coffee, Caribou Coffee, Pret A Manger, Krispy Kreme, Panera Bread, along with other iconic brands. JAB also made investments in beauty products (like Coty), pet insurance, and most recently, P&C insurance. But the hired guns from HBS who manage the family fortune have done better for themselves than they have for the family: “Peter Harf and Olivier Goudet became billionaires managing the Reimann money. The family would have done better if they had put their wealth in a low-cost index fund.” Many such cases.
(2) Cornering the Onion Market
Onion futures were added to the Chicago Mercantile Exchange (CME) in 1942. Because of war-time price controls on other commodities, onions soon became the CME’s most actively-traded futures contract: 20% of exchange volume in 1955 was onion futures. But that year, two traders tried the time-tested idea of “cornering” a commodity market (following in the footsteps of Jay Gould with gold on Black Friday, the Hunt brothers with silver on Silver Thursday, among countless other examples). They controlled 98% of the market, liquidated their supply, and prices fell by 90%. In 1958, onions became the first (and only) agricultural commodity banned from futures trading in the US. The CME barely survived, mostly because of bacon futures.
(3) Operation Sexy Bean Counter
Gen Z doesn’t like accounting: accounting graduates have declined 18% in the last decade, new CPAs have declined almost 40%, and over 75% of CPAs are at, or near, retirement. ”Accountants have have become an endangered species [...] nobody dreams of being an accountant when they are in the sandbox […] it is hard to put lipstick on a pig […] accounting isn’t easily Instagrammable.” One solution is higher salaries (but why hasn’t the market corrected itself?). Another solution is to make the curriculum exciting by "incorporating gamification.” Combining gamification and accounting... what could go wrong? They might as well add some fun Star Wars references!
(4) Even Doctors Like Me Are Falling Into This Medical Bill Trap
Hospital outpatient departments (HOPDs) are hospital-affiliated medical practices that look like regular outpatient clinics (such as urgent care). But because the HOPDs are owned by hospitals, they can legally charge hospital prices for identical services: “One patient’s bill went up 10-fold for the same procedure after her doctor [reclassified] her appointment to a hospital-based designation. […] Most patients only find out weeks later when the bill arrives.” Such a tragically classic ending: “After six months of fighting the cost, the hospital quietly cancelled my bill. I’m sure it calculated that this was the simplest way to get rid of a pesky patient.” A person can spend their final days in lots of ways. But on the phone fighting a hospital bill? That’s only in America.
(5) White-Collar Work Is Just Meetings Now
“Microsoft has found that, since 2020, workers in their sample have tripled the time they spent in meetings. […] It sometimes seems as if the modern worker spends more time talking about work than actually working. […] The most common critique [of the meeting industrial complex] is that many meetings are theatrical presentations of information best conveyed in an email. […] Every interruption to the workday leaves behind a wake of dead time [due to] switching costs as you move away from an activity to a meeting. [A] 30-minute meeting is, for the typical worker, best thought of as a one-hour detour. […] Today, knowledge work is less about creating new things than it is about talking about those things.”
(6) My Travel Tips for Seeing the World’s Best Places
Nick Kristof’s travel advice after a lifetime of exotic adventures. Strong endorsements for: (1) “Carry a decoy wallet. If pickpockets grab it, let them run off — only to discover that it contains just a bit of cash for street purchases, a day pass for the subway and an expired credit card.” (2) “Never check a bag for a flight because then it will get lost. That means packing light and taking quick-dry clothes suitable for washing in a hotel sink.” (3) “People worry about terrorists, but the most likely serious risk that [travelers face] is probably a vehicle accident. Motorcycle taxis in low-income countries can be perilous, while buses and trains are safer (inside trains only!).”
(7) Can China Smash the Boeing-Airbus Duopoly?
It’s hard to build a commercial airplane. The attempts at narrow-body short haul (not even wide-body) competition from Bombardier and Embraer nearly bankrupted them. China’s state-owned airplane manufacturer, COMAC, is widely considered a potential rival, but even infinite subsidies can’t fix hard physical constraints: “They would need a decade or more to prepare designs, set up factories, establish a supply chain and obtain the blessing of regulators before any revenue rolled in. They would need to match or beat the price and performance of the duopoly’s planes. They would have to convince airlines, which [have] lower costs [in] a single-make fleet, to switch. They would need to build a vast network of service technicians [that] customers would require.”
(8) Free Will, Determinism, and Choice
This is a bong hit argument, in the spirit of GEB, for free will being deterministic: “Introspectively, your choices seem to not be determined, precisely because you determine them. Choices must be predetermined. If they were not, they would be random events, not choices. To be your choices, they must be predetermined by you. A choice is not the creation of new causality out of nothing. […] The next time someone says “there is no free will” […] tell him that your free will is part of the determinism of the universe, and so you are forced to make choices. You cannot do otherwise.”
(9) Death Age Gap: Can the Rich Buy a Longer Life Expectancy?
*“[US billionaires] survive no longer, on average, than [the average] American man who earns $335,000. The more interesting question may not be what kills the superrich, [but] why aren’t they living any longer? [There] is not that much that the superrich can do [...] death still comes for us all. […] The world’s ninth-richest person [Warren Buffett], who is 93 and is worth $134.6 billion, eats McDonald’s and drinks five cans of Coke [every day].” Long live McDonald’s.
(10) The CEO’s Alternative Summer Reading List
Some beach reads:“Executives would do well to ignore the corporate self-help shelves and head instead for the classics section […] For navigating HR or the finance department, pick up Joseph Heller’s “Catch-22” or Franz Kafka’s “The Trial” (whose characters’ bureaucratic travails will make yours seem trivial). For holding meetings, crack open William Golding’s “Lord of the Flies” (arguments descend into savagery). As for IT support, enjoy Samuel Beckett’s “Waiting for Godot” (pure nothingness). For lessons on digital transformation, dump Clay Christensen’s “The Innovator’s Dilemma” and read Mary Shelley’s “Frankenstein”.”
(0) Miscellaneous Fun
Synthetic training data for AI models. Creating oxygen without photosynthesis. The growing risk of generic parts for TransDigm. Treasury activism using t-bill issuance volume. Venezuela’s problem with socialism. A theory of dominance politics. Origins of Apollo and Athene. Problems with GDP-linked sovereign debt. Newest rollup idea: Italian beach concessions. The latest startup unicorn makes blueberries? The caesar salad turns 100. How to fix land use regulations in Mumbai. Weird dynamics of rent control in Vienna. Europe’s misguided war on tourism. Everybody loves Bird Buddy. Time to try camel milk from Somaliland. Good morning to everyone except people who still require wet signatures on documents.