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👁 Everything is Fear and Timing

Chapek, Warby, and Ape Burgers
March 18, 2022

As much as we’d all like to credit our own brilliance for success, in reality so much of “success” is due to timing. Starbucks building digital loyalty to hit macro scale, pivoting the business from real estate to a digital bank? Timing. Shopify’s ascendency coming just after the open source boom, right as the world turned to cloud and SaaS? Timing. 

It takes brilliance, and a stiff neck to lead, sure. But timing? That’s up to the gods. 

The gods, though; they demand a sacrifice. Bob Chapek might be Disney’s sacrifice to make unpopular changes during a tumultuous period for the business. Following nearly 6 months of changes that further commercialize the business, alienating the House of Mouse from their loyal middle-class customers, Chapek’s latest gaffe has him squaring off against their LGBTQ community who have asked Disney to step up against the Florida law popularly known as “Don’t Say Gay”, which would ban counseling and discussions of same-sex and sexual identity issues in elementary-age children for public schools.

Chapek politely declined to engage. Why? Some say fear. Some have made comparisons to Bob Iger, Chapek’s predecessor. The reality is that the timing has been unfavorable for the embattled chief executive, and with streaming growth for their Disney+ service slugging along, it looks like the next fight may be against shareholders demanding growth, but that growth comes at a cost. Pixar employees have expressed disdain for the decision to push Turning Red, their latest feature release, in direct to streaming, rather than a broad theatrical release. The stated reason was covid-related, but no doubt the Disney+ exclusive helps to bolster their numbers and bridge them into the spring when many new titles like Obi-Wan would be aiding retention.

Disney is forging a path not too dissimilar to Nike, who have walked a fine line with their very broad consumer base on issues of race and equality. Michael Jordan, Nike’s brand namesake, was famously quoted as saying “Republicans buy sneakers, too”. Taking the center road often makes a brand an easy target for both sides of an issue. Both companies risk alienating a middle-class consumer as they move upmarket. Nike’s chief executive, John Donahoe, himself has benefit from stellar timing, he was the leader during eBay’s stellar period of M&A and enterprise growth, which included GSI, Paypal, and Magento; all formidable players which now see their popularity on the decline due to the change in market preferences, and poor timing.

As Chapek weathers the storm, he’ll need to put on a PR campaign to swing the public back to his side. Iger led the company through decades of growth and investment, Chapek will lead the company through belt-tightening and commercialization. Changes long overdue, to be sure, but the timing couldn’t be worse.

  • Phillip

Back to the Future DTC Predictions. Warby Parker reported a net revenue increase of 17.8% year over year in Q4. But, citing impacts from the omicron variant, the company’s fourth quarter net losses were $45.9 million, a 967% widening from last year’s $4.3 million.

This is right in line with our 2022 Predictions episode of the podcast, where we anticipated that DTC 1.0 would really struggle this year.

Supply chain fragility. Toyota is having to suspend operations at over half of its plants throughout Japan because of the 7.4 magnitude earthquake that hit Japan late Wednesday. This adds onto an already struggling supply chain, caused by the pandemic and Russia’s invasion of Ukraine.

More Sights & Sounds. Amazon has acquired MGM in a $6.5 billion deal. Meta is being sued by an Australian regulator because Facebook didn’t remove scam ads involving public figures advocating for cryptocurrency.

Partnership problems/unwanted press. After Kanye West was temporarily suspended from Instagram for violating harassment policies, users on the platform are calling for Gap to end its partnership with the musician.

Rise of the Apes. A Bored Ape Yacht Club NFT owner is opening a pop-up restaurant using their IP ownership rights. Christened “Bored and Hungry,” the restaurant will launch April 9 in Long Beach, CA.

The hottest [new?] beverage. V8, a nearly 100 year old company is working to rebrand itself in new, hip ways in order to win millennials and GenZers as a loyal customer base and become the go-to drink for home entertainers. The company has been releasing energy and protein enhanced drinks, as well as partnering with Ritual Zero Proof to collaborate on non-alcoholic mixed drinks.

More Palate News. Gucci is opening a restaurant in Seoul, Korea this month, the fourth of its kind. The founder of Torchy’s Tacos is returning as CEO of the company, following his interim stint which began in November. DoorDash and Grubhub are putting measures into place to help offset the cost of gas for their delivery drivers. And Bear Robotics has secured  $81 million in funding to help expand their offerings in the hospitality industry, including robots that can perform simple tasks like drink delivery and bussing tables.

To the Mars. Why settle for the moon, when you can enter the realm of the god of war? One could say Elon Musk has a sixth sense about these things—see what we did there? Apparently his prediction is that humans will make their first landing on Mars in the year 2029. How much Doge do you think he would bet on that?

Russia/Ukraine news: Aid, Accusations, and Infringement. PayPal is waving fees and expanding services to Ukrainian users in order to help with humanitarian efforts there. Russia is accusing YouTube and Google of using “information attacks” and engaging in actions “of a terrorist nature.” And as Western brands disengage with Russia, copycat brands are being trademarked to take their place, including a McDonald’s substitute called "Uncle Vanya," which features sideways golden arches against a red background.

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