Category Archives: Business

How Patagonia Continues to Operate As a Model of Responsible Capitalism

How serious are you about saving the planet? Many marketing types say that activism is the new hot advertising strategy, but some businesses actually believe in the philosophies they espouse, like Patagonia. Founded in 1973, the California-based company has always aimed to balance responsible production with environmental activism, by funding environmental causes, refining its business model and manufacturing practices, and empowering like-minds. With the Trump administration’s move to dismantle environmental protections on public land and climate change, Patagonia’s staff believes that too many companies in the outdoor industry have been too passive for too long, and the time has come to spend more company profits fighting the political forces that not only threaten America, but humanity’s future. At OutsideAbe Streep examines the ways Patagonia reaches consumers, manages its factories, thinks of its role in a revolution, and urges other businesses to step up. With power and influence comes great responsibility, which puts brands in the position to influence social good. Interestingly, this socially responsible model has quadrupled Patagonia’s profits during the last ­seven years. The question is: are those other companies committed to long-term political activism?

For decades, Patagonia sought to demonstrate that profitability and environmentalism can go hand in hand—to show a better way by, for example, encouraging fair-trade practices in foreign factories. The company advised Walmart, helping the retail behemoth clean up its supply chain, and worked with Nike to create the Textile Exchange, a nonprofit that encourages more sustainable practices in the apparel industry. Chouinard now believes that he was mistaken in trying to influence publicly traded companies. “I was pretty naive thinking you could do that,” he told me.

Marcario presented an alternative: grow Patagonia into a much bigger brand so that everything it did would have greater impact. She was uniquely qualified to make this argument. In her youth, she was an outspoken progressive activist, arrested during protests on issues like LGBT rights, AIDS, and women’s health. “She understands the need for revolution,” Chouinard has said. But she also understands business. Upon taking the CFO job, she streamlined distribution and shipping, installed industry-standard software, and focused on improving e-commerce. “Doing things that, you know, like, retailers do,” she laughs. During her first year, in 2008, the global economy crashed, but Patagonia—and much of the outdoor industry—didn’t: the company experienced growth in the high single digits. Casey Sheahan, Patagonia’s CEO at the time, told me that this was due to people “aligning themselves tribally” at a time of strife. It was a hint of the opportunity that would come with the rise of Trump.

Sheahan also told me that, at the time he left Patagonia, more than 50 percent of the revenue came from direct-to-­consumer business via Patagonia’s stores and e-­commerce. He suspects that the percentage is bigger today. (The company wouldn’t confirm or deny this.) Selling directly to a consumer, rather than through a third-party retailer like Backcountry.com or REI, ­increases both revenue and influence. According to Joe Flannery, a veteran outdoor-industry marketer and senior VP of technical apparel for Newell Brands, which owns Marmot and Coleman, Patagonia’s direct-to-consumer sales “represents one of the most powerful mechanisms of any brand. When you have that direct interaction, that means the consumer is digesting what you’re saying.”

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“Beef and cheese are the most important ingredients… But really, cheese.”

The U.S.’s reputation in the world might be in a state of… flux, let’s say. But there’s one thing we can still boast about: the 1.3 billion pounds of surplus cheese we have in cold storage. In Bloomberg Businessweek, Clint Rainey introduces us to government-sponsored Dairy Management Inc., which is charged with packing as much dairy into food as is possible, sometimes by embedding food scientists like Lisa McClintock into companies like Pizza Hut and Taco Bell to help engineer maximum cheese delivery. You can thank them for Pizza Hut’s cheese-stuffed crust and for Taco Bell’s latest hit, the Quesalupa.

“If you tried using something like cheddar, you’d get too much oiling off,” McClintock says. “It’s a fattier cheese—it’s not going to hold up well in terms of cheese pull.” She also quickly nixed mozzarella. “Great stretch, but you expect something bold from Taco Bell,” she says. “Pepper jack gave us the extra kick from the jalapeños.” Crucially, it’s also a high-moisture cheese, which means fewer casein connections and therefore a more reliable melt. She toyed with the idea of inserting a cheese “puck” into the tortilla pocket to see if that melted more uniformly, but grated cheese proved the most even. McClintock and Gomez recall intense competitions in the lab where they’d fry up a bunch of Quesalupas and tear them apart to see who could get the longest cheese pull. Winners sometimes stretched theirs a full arm span.

(More exciting advances in cheese science are on the horizon, as Taco Bell’s R&D department is hard at work on Quesalupa 2.0 which, rumor has is, will come in “Volcano and Bacon Club” flavors. If you’re wondering where the Doritos Quesalupa Crunch is, don’t worry: they started testing it this spring.)

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In a League of His Own: One Man’s Mission to Make Moviegoing Fun Again

Launched in Austin 20 years ago by Tim League, the Alamo Drafthouse chain of cinemas has spread to 27 locations and 20 cities, serving up League’s fun, eclectic blend of film, food, and entertainment: a Vin Diesel trivia contest before the screening of The Fast and the Furious. A DeLorean displayed during a run of Back to the Future. Food and drink menus curated for the films. Super-fans dressed in costumes.

But as more people stream movies on their TVs and tablets at home than ever before, traditional theaters face an uncertain future. And League, as Dan Solomon writes in Texas Monthly, believes he can bring us back into theaters — and make moviegoing great again.

In recent years, box office receipts have been high—2015 shattered the previous record, nudging past $11 billion—but much of that profit is based on people paying higher prices. The average cost of a movie ticket has spiked by more than $2.50 since 2004; it is now $8.84. But the number of tickets sold—the number of people going to the movies—has been declining. Except at certain theaters, like the Alamo, which are consistently selling out.

All of which highlights what Tim League and the Alamo Drafthouse are really selling. You can see a movie anywhere, but anyone who’s had to buy tickets weeks or months in advance for the opening night of a movie at the Drafthouse, a movie that will also be playing at every theater in town, knows that, like Marcus Loew, League doesn’t sell tickets to movies, he sells tickets to theaters—to an experience.

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Deporting Billions of Tax Dollars, Farm Work, Good People, and Affordable Food Right Out of America

Between fickle crops, unpredictable weather and the cost of equipment, farming is tough uncertain work. The growing number of deportations thanks to the Trump administration’s fixation on undocumented immigrants has now destabilized the agricultural work force. At The Atlantic, Michael Frank looks at New York’s Hudson Valley to examine the ways deportations will effect America’s farm economy and food system, from taxes to tax-paying citizens to the price of produce.

“My ancestors are Irish and they were called all sorts of names,” Pete, a 58-year-old farmer, told me. He said the country has swung back around to how it was a century ago. “Now people say Hispanics are taking their jobs,” Pete said. “Come on. You can’t get a kid who can flip a burger to come here and do this job for $15 an hour. If we had a workforce that was willing to do this work, I’d hire them, but we don’t.” A 2014 American Farm Bureau study backs that up: It shows that unemployed Americans regularly shun farm work, even preferring to stay unemployed.

Which is one reason why Pete told me he’s anticipating a rough year: He’s not sure he’ll have the hands to do the work on his berry, apple, and vegetable crops. “Word of mouth used to bring guys to the farm during the harvest, but now I don’t know,” he said. He wouldn’t agree to let me use his name because he said even talking to a reporter had him worried about repercussions from zealous ICE agents. (While we were talking, Pete’s wife yelled at him to hang up the phone. He didn’t.) Pete pointed to an ICE arrest of five farmworkers in western New York who did not have criminal records. He said it’s just that kind of unpredictability that adds another layer of uncertainty to a business already fraught with pressures farmers cannot control—like the weather or consumer appetites.

Pete points out that the undocumented community is a net contributor to taxes. It’s true: A recent report by the Institute on Taxation and Economic Policy found that undocumented immigrants contribute billions of dollars to state and local taxes across the country. Deporting them, Pete added, will only hurt Americans. “If they just stopped contributing to the workforce, we’d have a major crisis,” he said. “Pretending [deportation] fixes the system that’s broken only means less food; it doesn’t fix how this works.”

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#FrenchGirlGoals: Artful Dishevelment and Animal Fats

At Racked, Eliza Brooke looks at that enduring style icon — the French Girl — and the big money to be made riding her aspirational, stylishly flyaway coattails. Not sure who the French Girl is? Here you go.

Who is she? She’s intellectual, cool, and a bit of a romantic, but she doesn’t give her approval easily or smile too much. She might run around in black-tipped Chanel slingbacks, or barefoot if she’s on vacation. She has a signature perfume. She eats cheese without abandon and nurses a single glass of wine all night because she’s a master of reasonable indulgences. She’s almost always white, hetero, and thin, and you can only conjure her by willfully ignoring the many French women whose daily routines do not involve bicycling along the Seine in miniskirts with baguettes tucked under their arms.

But the French Girl’s influence is tangible. She makes money for big American drugstore chains, department stores, independent brands, book publishers, magazines, and digital media companies. She definitely has something to do with the fact that rosé, sales of which outpaced the rest of the wine market last year, has become so popular in the US.

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Where Have All the Guitar Heroes Gone?

Fender Telecaster guitars hanging on a wall rack.

Guitar sales have dropped by a third over the past decade. On the Washington Post, Geoff Edgers tries to find out why.

Maybe it’s because we don’t have guitar gods anymore. Jimi Hendrix, Eric Clapton, Jimmy Page, that sound is — well — it’s old. And the new crop of stars don’t inspire the pursuit of guitar god status the way someone like Carlos Santana did.

Here’s Dave Gruhn, a 71-year old Nashville guitar dealer who helped sell off part of Eric Clapton’s collection:

“What we need is guitar heroes,” he says.

He is asked about Clapton, who himself recently downsized his collection. Gruhn sold 29 of his guitars.

“Eric Clapton is my age,” he says.

How about Creed’s Mark Tremonti, Joe Bonamassa, John Mayer? He shakes his head.

“John Mayer?” he asks. “You don’t see a bunch of kids emulating John Mayer and listening to him and wanting to pick up a guitar because of him.”

Sir Paul McCartney has a similar take on the decline in the guitar’s popularity.

“The electric guitar was new and fascinatingly exciting in a period before Jimi and immediately after,” the former Beatle says wistfully in a recent interview. “So you got loads of great players emulating guys like B.B. King and Buddy Guy, and you had a few generations there.”

He pauses.

“Now, it’s more electronic music and kids listen differently,” McCartney says. “They don’t have guitar heroes like you and I did.”

Something Edgers doesn’t address in his article?  Uke sales have doubled in the same period in which guitar sales have declined.  In her Ukulele Anthem, Dresden Dolls front-woman Amanda Palmer says you can teach someone to play the ukulele in  “about the same to teach someone to build a standard pipe bomb — you do the math.” A kid can pick up the uke and find it satisfying in considerably less time than it takes to master the guitar. A few years back, a young Hawaii resident named Jake Shimabukuro made heads spin with his ukulele cover of While My Guitar Gently Weeps, proving that the uke’s simplicity doesn’t limit its musical possibilities.

The ukulele has replaced the recorder in many public school music education programs, too. And the forgiving little axe serves well as a stepping stone to the guitar. The next generation of wanna-be guitar gods could well be out there; they’re just taking a different route to blazing, finger-blistering stardom.


Not so confidential to Grover Norquist — you can absolutely get your kid a starter uke for 35 bucks, including sales tax.

 


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Monocle: The Magazine As Boring, Lifestyle, Branding Infastructure

After ten years of selling its slick, globalist vision of sophistication to the world’s elites, Monocle has implemented a redesign, though it’s subtle in voice and vision. At The New Republic, writer Kyle Chayka sizes up a magazine made for the world’s 1%, to see what Monocle represents, how it has shaped or been shaped by the world, and what our era of increasing nationalism holds for heavily sponsored-content that flattens nations into one continuous business and vacation opportunity.

With the recent redesign, some glimmers of political reality are beginning to enter the magazine’s editorial voice. The new page layouts are more text-heavy, with longer articles and fewer glossy photos and twee spot illustrations. The content has a new seriousness, though it remains ever-optimistic. In an interview for the March issue, the CEO of Lufthansa says he is confident that globalization “cannot be stopped or slowed down, even though some people are trying hard.” The president of Portugal, adopting the vocabulary of a start-up founder, pitches his country as “a platform between cultures, civilizations, and seas.” (“We were an empire,” he reassures readers, “but not imperialistic.”)

Monocle views the world as a single, utopian marketplace, linked by digital technology and first-class air travel, bestridden by compelling brands and their executives. Diversity is part of the vision—the magazine’s subjects are from all over the world, and its fashion models come in every skin color—but this diversity is presented, in a vaguely colonialist way, more as a cool look to buy into than a tangible social ideal. Cities and countries are written up as commodities and investment opportunities rather than real places with intractable problems that require more than a subsidy to resolve. If London is too expensive, Brûlé proposes, why not found your next business in Lisbon, or Munich, or Belgrade? If you don’t, someone else will, and you might just get priced out again.

The magazine doesn’t idealize homogeneity of race or gender norms, but rather a global sameness of taste and aspiration. Every Monocle reader, regardless of where they live or work, should want the same things and seek them out wherever they go in the world, forming an identity made up not of places or people but of desirable products: German newspapers, Thai beach festivals, Norwegian television. The end result of this sameness is that a country can pitch itself to the monied Monocle class simply by adopting its chosen signifiers, or hiring Winkreative to do it for them in a rebranding campaign. In this way, the magazine warps the real world in its own editorial image.

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Why Don’t We Work Less?

workers working

At a recent conference in Detroit, billionaire Jack Ma, founder of the online marketplace Alibaba, told CNBC that, thanks to advances in artificial intelligence, people will soon work less.

“I think in the next 30 years, people only work four hours a day and maybe four days a week,” Ma said. “My grandfather worked 16 hours a day in the farmland and [thought he was] very busy. We work eight hours, five days a week and think we are very busy.”

People have been making this prediction for generations. Economist John Maynard Keynes posited, in an essay published a year after the 1929 Wall Street crash, that his grandchildren would work 15-hour weeks, with five-day weekends. In 2015, NPR caught up with some of his descendants and discovered Keynes — who, according to his grand-nephew died “from working too hard” — was wrong. His grand-nephew reported working over 100 hours a week as a professor, and his grand-niece, a self-employed psychotherapist, said she has to write in her agenda “not working” to remind herself to take breaks.
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How One Porn Mogul Made His Fortune and Ruined Everything

Despite riches, power, and respect, some people are never satisfied. A poor North Carolina kid named Michael Thevis turned paperback smut and peep show machines into a million-dollar empire, and he shaped America’s porn industry right as laws started to relax around the ownership and production of sexually explicit material. When Thevis crossed into arson, threats, and murder, he brought himself down for good. At The Daily Beast, crime journalist Jeff Maysh gets access to Thevis’ diaries and letters to tell the full story of “The Scarface of Sex” for the first time.

Rival peep machine manufacturers emerged, included those run by Leon and Mike Sokolic, Art Sanders, and Bill Walters. Before now, the most Thevis had ever done to intimidate a rival was let off a stink bomb at a store in Baltimore. Not all competitors rolled over so easily. Nat Bailen, who manufactured a peep show machine for cartoons, started to sell his units to sex-shop owners who used them for porn. In 1970, a customer named Harry Mooney in Michigan asked to lease 50 machines from Thevis—an order so large he couldn’t meet it in time. Instead, Mooney bought his machines outright from Nat Bailen. As he would do so often, Thevis turned to Underhill.

“Something,” Thevis told him, “has to be done with Bailen.”

On April 26, 1970, Underhill drove from Atlanta to Louisville in his yellow station wagon, where he met a paid accomplice, Clifford “Sam” Wilson. In the dead of night, they broke into Bailen’s factory, carrying burglary tools and five-gallon containers of gasoline. They built a bonfire using his furniture and paperwork. When Wilson found some paint cans, he told Underhill, “Let’s really screw this guy,” and poured paint over the desks and carpets. There were four-foot-tall flames licking at the windows by the time the goons fled. Reeking of gasoline, Underhill found a pay phone at the Kentucky Turnpike, and called Thevis at the Central Plaza Hotel in Los Angeles.

“Veni vidi vici,” Underhill said—I came, I saw, I conquered.

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How Wells Fargo Bankers Gamed Customers to Make Sales Goals

If you already don’t trust the ways some big banks invest your money, Wells Fargos’ treatment of customers won’t increase your confidence. At Vanity Fair, Bethany McLean reveals the widespread corruption among Wells Fargo salespeople, and the way staff high up the corporate chain tolerated it. Between 2011 and 2015, bankers created over 1.5 million deposit and 565,000 credit-card accounts without customer approval. Employees blamed the company’s intense culture, and internal complaints made little difference. In 2016, Wells paid a $185 million fine, yet it admitted no wrongdoing, and it didn’t immediately eliminate its retail product sales goals. So what changes have been made to protect its customers? And why should anyone trust them again?

Guitron says that customers began coming to her, complaining about getting mail from Wells Fargo on accounts or services that they had never authorized. “People knew me and knew I could fix the problems,” she says. A common denominator, according to Guitron, was that most of the customers were Spanish-speaking, like her, so they didn’t feel comfortable going to management in English.

“All the tellers and staff knew it, but no one else would complain,” Guitron says. “People needed the job. So did I, but I knew right from wrong.” On September 19, 2008, she sent an e-mail to her branch manager. “I have come across instances where I’ve opened accounts and shortly after they are closed and new sets of accounts are opened,” she wrote. “I find NO banker notes to explain why this is happening. I am very concerned as I know this to be GAMING!!!” She collected approximately 300 printouts of accounts that were problematic in various ways, she says, such as a minor having more than a dozen accounts. But, according to Guitron in legal documents, her manager would say only, “It’s a misunderstanding.” Or “You need to mind your own business.”

Nothing changed, so Guitron requested meetings with more senior executives. Overall, she claimed that during her tenure at Wells Fargo she raised concerns on more than 100 occasions, including about a dozen calls to the Wells Fargo EthicsLine, and on no fewer than 37 occasions she provided records that supported her complaints. Guitron alleges that her managers began to retaliate, making it harder for her to meet her sales goals. She was fired in January 2010.

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