2PM - No. 377: The Saga Continues

What the TikTok deal achieved

A. New Media / New York Times: We are in the midst of one of the most convoluted business transactions in modern history, one that will have seen and unforeseen consequences. In today's edition of Stratechery [paywall], Ben Thompson writes: 

Adding insult to injury, TikTok is, despite its continued ownership and operation by ByteDance, much less likely to ever meaningfully challenge Facebook or Google. Now it has to switch to the unproven Oracle cloud, incorporate Walmart ecommerce capabilities, all while sanitizing its source code and preparing for a pre-ordained IPO.

What the current administration hopes to accomplish with this mandate is virtually impossible. Additionally, after the most recent announcement, Beijing has again noted that they will not approve the deal as it currently stands.

As the dust settles on the weeks of drama over the social media app, investors and others are asking what it was all for. The answer? A cloud computing contract for the Silicon Valley business software company Oracle, a merchandising deal for Walmart and a claim of victory for President Trump.

In the words of the great Lee Corso, "Not so fast, my friend." To understand how complex this has become, consider that ByteDance (TikTok's parent) has Sequoia, General Atlantic, and GGV Capital [Big VC] as significant shareholders and Bytedance will still own a significant stake in the new entity TikTok Global. Oracle and Walmart will combine with America's Big VC to form a 50+% majority ownership. But TikTok is still very much a Chinese company. All of this seems like the result of a failed understanding of our deeply-intertwined global economy - one that seems to be on the verge of unraveling.  

ByteDance, Oracle at loggerheads over terms of TikTok agreement

B. New Media / Reuters: The current plan for TikTok Global does not involve any transfer of algorithms or technologies, and Oracle will be able to inspect TikTok U.S.’s source code, ByteDance said on Monday. This is akin to U.S. companies such as Microsoft Corp sharing their source code with Chinese technology experts, ByteDance added. Oracle and Walmart have said all of TikTok’s technology will be in possession of TikTok Global.

Editor's Note: See? 

In China, paying with your face is hard sell

Fintech / Wall Street Journal: In China, the value and wide-spread acceptance of facial recognition for payment functionality is still doused in uncertainty. There may be methods that are easier for consumers, more practical, and ultimately better for all parties moving forward.

USPS delays are affecting the businesses that need it most

eCommerce / Vox: If our economy is to begin addressing the shortfalls caused by the overwhelming contraction in the traditional retail industry, it will need the support of the postal service. For eCommerce, their service is the industry’s last mile for thousands of direct-to-consumer small businesses. The postal service uniquely sits at the intersection of our physical roads and our digital infrastructure. There isn’t a direct substitute and we shouldn’t wait to find out the hard way. 

An internal USPS document obtained by Supply Chain Dive shows the extent of the delays, which postal workers say are ongoing. The document says that workers may “temporarily … see mail left behind or mail on the workroom floor or docks” at the end of a shift, a departure from the standard practice of getting everything out as soon as possible. Some postal workers told the website that Amazon packages are being prioritized, putting small businesses at yet another disadvantage.

Read more of Save the USPS here. 

Office clothing brands face a bleak, office-less future

Retail / Modern Retail: Whether the demise of the office is temporary or permanent, there will surely be a trickle-down effect felt in other industries that contribute to the work-life scene. One of these being disrupted by this current state of ambiguity is fashion - particularly mens and womens workwear. The trend now is towards comfort, and returning back to suits and ties might be a tough sell.

Editor's Note: Not great, Bob. 

Featured: The Emmys had a familiar feel

Streaming Economy /  Economist (Unlocked): This increase is primarily a reflection of the “streaming wars”, a battle for supremacy in online video that now includes old Hollywood stalwarts like the Walt Disney Company, upstart online video services such as Netflix and digital conglomerates including Amazon. In November Apple launched Apple TV+, while Disney released Disney+ and took control of Hulu (a joint venture between several Hollywood giants, Hulu was at one point America’s second-most-popular video-subscription site). 

Additional Reads (if you have the time): 

Lululemon defies brick-and-mortar woes in plan to add stores

Physical Retail / Bloomberg: Banking on their heavily-sought brand affinity and appealing growth trajectory, Lululemon is expanding their retail stronghold at a time when the opposite is very much the market trend. The company is proving to be one of the most optimistic retailers we’ve seen lately, citing their efficient store sizes, repeat customers, and global room for growth.

How CEO Gary Friedman made RH a luxury brand

Brand / Adweek: In early June, much of the country was beginning to emerge from its pandemic-induced hibernation-cars creeping back on the road, restaurants moving tables outside and, of course, stores opening their doors. But while most retailers were shifting their focus to how they could reconfigure their existing stores to the new realities of the Covid-19 era, RH-previously known as Restoration Hardware-took a different approach.

What is the measure of a good company?

Brand / A Continuous Lean: Why is bigger better? Why does multibillion in sales make your company great? Why is that the goal when you are already rich? Even if I had a few hundred million invested in a business I would feel a lot better about the unlikelihood of doubling it if I were just making great things.

COVID ruined weddings, so now people are eloping on Instagram

Digital Media x Trends  / The Verge: For a price that ranges from $2,800 to $4,300, couples get an all-inclusive elopement package that’s completely COVID-19 compliant — outdoors, with a maximum of 12 people. The venue, the officiant, the floral arch, the sound — it’s all taken care of. As are the photos, which often look like they were taken pre-pandemic. Brides wear pale pink flower crowns, guests are given cotton masks printed with tiny daisies and champagne served in crystal flutes. It’s minimalist and earthy in a way that screams, “I have money and taste, and I also don’t want to kill my great-aunt with a 150-person wedding.”

This isn't the first time that this great thinker has inspired a 2PM essay. The impetus behind this deep dive was an original thread by Michael Miraflor that garnered quite a bit of attention. I wanted to understand the mechanics of this partnership and the work that went into it. While there are no official quotes mentioned within it, a great many of the ideas were confirmed by those close to the agreement. However, in the end, I was not able to quantify Scott's role in the pricing of the meals.  

Executive Member Comment: By Michael Miraflor 

It has been difficult to find objective analysis of the Travis Scott x McDonald’s collaboration; the partnership is so groundbreaking that it’s easy for coverage to fall victim to the hype machine. I appreciate 2PM’s Deep Dive breakdown for being thorough and keeping it real from not just business, but historical and cultural perspectives as well. This type of meaningful writing is what will keep me a 2PM Executive Member for the foreseeable future.

Read it here