September 1, 2020

what we are watching...

empowering you with insights and information from the edge of today’s headlines

Summer Snippets

Technology: You might have seen Elon Musk showing off his Neuralink implant at a pig farm this week. Musk said, “It’s kind of like a Fitbit in your skull, with tiny wires.” We were particularly curious about the visual of the charger that you’ll have to plug into your brain at night, but if you are going full cyborg, we guess there are some drawbacks, like no wireless charging. Musk didn’t release information about clinical trials or a commitment to a medical timeline. Apparently, Musk believes the power of the Neuralink is in being a “general population device” to connect directly to computers, rather than aiding the paralyzed or disabled.

China through a curve ball when it comes to the negotiations over the sale of TikTok. China has demanded to approve the deal, and it has also set limitations on the export of technology. TikTok’s main draw was its algorithm which keeps its user based engaged. Without the algorithm, we are not sure the value of the platform. There is speculation that TikTok will announce a buyer or a deal today, but we don’t think China will be going down without a fight.

Airlines: US Airlines have finally realized that in order to lure customers back to the air, they need to make some changes. Shockingly enough, United Airlines was the first to permanently remove change fees on US flights, and Delta and American followed shortly thereafter. Most airlines had dropped fees during the height of the pandemic (although we are still stuck with a credit for our cancelled March plans), but the airlines are hoping reduce friction for those who are actually willing to travel.

The US airlines received federal funding as long as they agreed not to lay off employees, but this funding runs out in September. (The CARES act allowed for $58B in airline relief.) As further stimulus negotiations remain stalled, American Airlines has already announced a plan layoff of 19,000 and will reduce its flying capacity by 45%. Southwest and Delta have also hinted at layoffs, and Southwest has even stated that it will turn down an additional $2.8B in federal aid, due to the onerous restrictions on the loan.

Some frequent fliers are taking their loyalty to an extreme: several Asian airlines are offering in-flight meals for purchase (on land). Airline caterers have been offering prepared meals to the public in order to supplement their revenue, and some are even considering opening actual restaurants to serve their land-bound audience. In Australia, Gate Gourmet offers mystery meals in bulk packs; in Hong Kong, Cathay Pacific sells curry and stir-fried beef. If you are looking for a modern upgrade to your Hungry Meal TV dinner (tray and plastic cutlery included), look no further than your local airline caterer.

E-sports: League of Legends, the popular multi-player game published by Riot Games, has signed a multi-year exclusive partnership with Spotify. Riot will create a podcast series that sounds like an e-sports version of ESPN’s documentary podcast 30 for 30. League of Legends is already one of the most popular e-sports, with over 100M people watching last year’s world championship, and 21M people have watched music videos from the game. Spotify already has a LoL themed music playlist (or two) and will dedicate a day to the music behind LoL.

E-sports are not only branching into music, but into fashion. Puma has signed several deals this year to outfit several international gaming groups. Designers have also created exclusive collections for purchase within games, such as Marc Jacobs for Animal Crossing. Fashion houses are betting that fans of e-sports athletes will follow their fashion lead, or at least dress their avatars in similar apparel. Our avatars will surely be better dressed than we are (although we haven’t dressed up more than a “zoom shirt” this year).

Virtual events: Spotify is introducing a new feature, which will allow you to search for virtual concerts. In 2015, Spotify launched a concert discovery feature connecting fans to artists, and leveraging its relationships with ticket agents like Ticketmaster. Although Spotify doesn’t sell tickets (to live or virtual events), it does recommend events based on a user’s listening history. Soon you may see a link to an event in Fortnite or Instagram on your discovery feed.

Remember Napster? The first online music sharing platform that was shut down due to privacy considerations? Napster is still around as a streaming platform, and was recently purchased for $70M (it does have round 70M users globally) by MelodyVR. The goal of the purchase is to create a platform to stream concerts that will be watched through virtual reality headsets. We didn’t think VR ever really took hold except for gaming (no one looks good in those glasses), but with social distancing concerns, we suspect a home concert helps with the fashion stigma.

Food: The pandemic has accelerated both the destruction of the US food supply chain and the increase in home delivery. Farms have set up e-commerce sites to serve consumers, and some restaurants are even selling bulk goods. Now consumer packaged good firms are trying to bypass the grocery store middleman and go direct to customer. Companies, such as Beyond Meat, PepsiCo and Chipotle, are going direct. While this might seem like a win for the consumer (no need to hit the grocery store and access to sought after items), the CPG firms also get direct access to the customer relationship. Now not only will Amazon know everything about you, so will Doritos. So if you still can’t get a time slot for Amazon Fresh, you have options.

Craving a KitKat but worried about your food allergies? Nestle wants to sell you snacks and also help you to diversify your immune system. Nestle is pushing into health sciences by purchasing Aimmune Therapeutics for $2B, a biotech firm with a treatment for peanut allergies. Aimmune had difficulty launching its treatment due to the lockdown, but Nestle hopes parents and doctors will be more focused once schools and offices open. Nestle has been reducing its focus on snack foods (selling its US confectionery and ice cream businesses), and gearing up its Healths Sciences Division, although the unit hasn’t had many major wins, yet.

Finance: The SEC changed the definition of an “accredited investor” last week. An accredited investor is the determination one needs in order to invest in private markets (unregistered offerings like tokens, hedge funds and other private equity investments.) In order to be an accredited investor in the past, investors had to reach a certain threshold for income and assets (assuming that if you had wealth, you understood the risk/return of investing). For the first time in 35 years, the definition was updated to include investor sophistication triggers rather than just wealth. So now if you are “knowledgeable employee,” set your Robinhood updates to private. (We don’t think there is an app for that, just yet.)

Conspiracy Theories: We tend to steer clear of conspiracy theories, especially in light of 2020 and its insanity, but FT Alphaville had a rather “unique” comparison this week. The FT compares the QAnon cult to the cult surrounding Bitcoin, and their arguments made us laugh out loud, but also made us think. “QAnon could be to “governance” what bitcoin has now asserted itself to be to money;” both have anonymous founders, thrive on puzzles and cryptic messaging, and both have a cult of followers which refuse to believe any negative news or setbacks. Something to ponder…

— Lauren Eve Cantor

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