Friday 21/04/23

1. In TECH NEWS, Insta retreats, Meta and the metaverse look tricky, Google plans to use AI for ads, Twitter cuts legacy check marks and China’s drone supremacy causes concern
2. In RETAIL & CONSUMER NEWS, Whole Foods talks cuts, Ikea announces a massive US investment, Mulberry gets a China boost, WH Smith travels well, consumer confidence rises – and they might get more money from the bank
3. In AUTOMOTIVE NEWS, we look at the role of EVs in net zero, Renault whinges about Tesla, Ford takes its electric pick-up to Norway and GKN’s automotive business has a massive IPO downer
4. In INDIVIDUAL COMPANY NEWS, BuzzFeed closes down news, Deliveroo delivers and Rentokil cleans up
5. AND FINALLY, I bring you a tale of how one woman made money from snoring…

So Meta’s having a meta nightmare, Google wants AI-powered ads, Twitter cuts check marks and China’s zone supremacy causes concern…

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

Instagram quits London headquarters as chill hits tech (Daily Telegraph, James Titcomb) shows that Instagram is going to cut or relocate most of its staff here. The engineering team will pretty much be shutting down, while employees in the app’s sales and operations teams will be learning their fate soon enough in the next few weeks. Meta plans to cut 10% of UK workforce in retreat from London (Financial Times, Cristina Criddle) just reminds us that this is all part of Zuck’s “year of efficiency” as Meta has wider cost reduction plans across the whole group. It comes less than a year after Instagram’s chief, Adam Mosseri, relocated to London to build the business and scale it to combat TikTok. The cuts will even affect its Reality Labs division, which is responsible for delivering the metaverse, and its AI teams. Zuckerberg’s metaverse dream is shattering (Daily Telegraph, Ben Marlow) puts the boot in and slags off the metaverse as a flight of fancy where you have to “don a pair of giant sunglasses and a silly headset” in order to “follow the avatar of an eccentric billionaire into his strange fantasy land” (I think that this is one of my favourite quotes of all time!). Marlow notes that the metaverse is now something Zuck barely mentions, which is a significant change from where it seemed that it was all he would talk about. * SO WHAT? * I’ve said this before but I really do think that many of the innovations that we have been seeing – and are seeing right now – make more sense if they had a home in the metaverse where everything is digital (crypto currency, NFTs, AI-generated avatars and interaction etc.). However, the main problem at the moment is getting access to it all (as per the “silly headset” mentioned above!). This reminds me of the failure not so long ago of 3D TV, which I think failed because the shutter glasses needed to watch the programmes were too expensive (but they were way cheaper than the headsets you need to access the metaverse now!). Users need to have effortless access to something in order for it to really pop IMO and, at the moment, this just isn’t possible – so the vast majority of people just don’t even have a seat at the metaverse table. As for Instagram quitting London, I think that this is a sign of desperation on Zuck’s part, particularly as Mosseri himself is said to be very angry at this development. It must be absolutely gutting for those who work there and got swept up in the hype.

In Google to deploy generative AI to create sophisticated ad campaigns (Financial Times, Cristina Criddle and Hannah Murphy) we see that Google is looking at sliding generative AI into its ad business over the next few months, along with everyone else and their dog in tech trying to integrate AI into everything! It wants to use AI to generate ads that will resemble campaigns produced by marketing agencies! The idea is that human marketers can make creative inputs (e.g. visuals) and the AI will then “remix” it, taking into account the audience it is trying to reach and other KPIs. * SO WHAT? * Sounds pretty impressive, eh? The only thing is that we still don’t know whether it will “hallucinate” and end up costing users a ton of money! At the moment, I would imagine that AI is great for inspiration and some creative input that could potentially speed up the process, but ultimately it is not at the level where it can replace humans. I’ll try and strategise a marketing campaign for Watson’s Daily with ChatGPT and let you know how it goes 😁.

Elsewhere, Twitter begins removing legacy Blue Check marks (Wall Street Journal, Alexa Corse) highlights the fact that Twitter is coming good on its threat to take down legacy verified check marks, much to the annoyance of celebrity whingers such as Chrissy Teigen, Mark Hamill and Dionne Warwick etc. who threw hissy fits at the prospect threatening to leave the platform in protest 😴. I say, why not pay the $8 or whatever, get the increased functionality for your followers that will improve your content and wind your neck in if it’s that important to you (“I’m a celebrity! How very dare they make me pay! 🤣). Some of them could do with having an editing function IMO! * SO WHAT? * I’m not sure how successful the subscription model for something like Twitter, that has been free for so long, will be as a standalone platform. HOWEVER, I DO think that if Musk manages to crystallise his vision of Twitter as an “everything” app where you can trade your shares on eToro, and a whole host of other services, THEN I think paying user numbers will go up. However, I think he’s got to get busy with signing up other services otherwise its fickle user base may just give up.

Then in Drones: China’s growing dominance of the market is a worry (Financial Times, Lex) we see that China’s dominance in drones, most famously with products from DJI (Da Jiang Innovations – which makes up about 70% of the global market on its own!!!), is getting increasingly controversial given rumblings that their drones have been used by the Russians in the Ukraine war. The company says that the drones are designed for civilian – not military – use and have dismissed such conjecture, but when you realise that if you include other Chinese drone manufacturers – such as Guangzhou Ehang and Xi’an Aircraft Industry Group – China’s global drone market share rises above 80%! It’s hardly surprising that they will find their way onto the battlefield with firmware modifications on the black market. * SO WHAT? * Drone usage has become more prolific over the years in film-making, firefighting, deliveries and even in agriculture – and it doesn’t look like China’s dominance will end any time soon. Guangzhou EHang is listed on the NASDAQ and its share price has trebled in the last six months alone! Another area where China leads the world, eh?

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Whole Foods tightens its belt, Ikea goes large in the US, Mulberry gets Chinese help, WH Smith gets a travel boost, UK consumer confidence rises and banks get warned…

There were some interesting developments in the retail sector today. In the US, Whole Foods plans corporate job cuts, shuffles structure (Wall Street Journal, Jaewon Kang) shows that the up-market grocer is looking to cut a few hundred “office” jobs (not jobs in stores or at distribution centres) in a bid to streamline structures. The cuts will affect less than 0.5% of its 105,000 global headcount and it still plans to grow its existing portfolio of 500 stores by around 50. * SO WHAT? * It sounds like a reasonable enough strategic move but I have to say that it has remained a real mystery to me as to why Amazon has not done more with Whole Foods since it bought it – particularly in this country! It seems to me that it bought it and just kind of left it – and it certainly doesn’t appear to have made much of an effort to, say, attract Waitrose customers, for instance. I think there could be some decent growth potential to be had here – particularly as richer members of society are more insulated against the cost-of-living crisis – but it just requires a bit of actual effort!

Meanwhile, Ikea makes biggest investment in single country with €2bn US push (Financial Times, Richard Milne) shows that Ikea has decided to use the current lull in the world economy to build market share by throwing a vast amount of cash at making it big in America. It plans to open eight big new stores and nine smaller planning studios and order points (plus a whole load of refits of existing stores) over a period of three years with the idea that the US will replace Germany as its #1 market by sales. * SO WHAT? * It’s not actually THAT far off being bigger than Germany as it is (it had annual sales in the US of €5.5bn most recently versus €5.7bn in Germany), so the goal sounds realistic. Sounds interesting, no?

Meanwhile, Chinese buyers help Mulberry bag a profit (The Times, Isabella Fish) shows that Chinese consumers’ “revenge spending” post-lockdown has helped to power Mulberry’s pre-results investor update, which showed an “improvement” in the second half. The UK also put in a solid performance. * SO WHAT? * The company was in loss in the first half, but its earnings are weighted to performing in the second half – which are now looking good. It sounds like the luxury goods sector continues to be alive and well!

Then in Sales at WH Smith soar as travel takes off again (The Times, Isabella Fish) we see that the stationer’s American business is on track to generate more profit than its UK high street shops as the recovery continues in the travel sector. Its travel business, which comprises of railway station and airport outlets, is set to make up over 70% of all revenues by the end of the year and a whopping 85% of its profits! The company is expecting to continue the momentum by opening 120 new travel shops – around half of which will be in the US with the rest spread across Scandinavia, Spain, Australia, Malaysia and Britain. Interestingly, most of the shops in the US are not WH Smith branded – they’ve decided to keep the local brands for familiarity. * SO WHAT? * WH Smith suffered hugely under lockdown as its cash cow travel business evaporated as there was no commuting or flying anywhere. It was kept alive by the very boring and very mature high street business during that time (I think the main reason here was the in-house Post Offices which were deemed to be key services that needed to stay open) and now it’s bouncing back with a vengeance! It may be (to me) one of the high street’s most boring shops BUT its travel business continues to have huge potential! I wonder whether it will use any of the money from the travel business to make any UK high street acquisitions (although it may have missed a trick in not buying Paperchase recently)…

As for the consumers themselves, Consumer optimism suddenly flowers despite cost of living crisis (The Times, Arthi Nachiappan) cites the latest research by GfK which shows a broad-based increase in consumer confidence, with some saying that they were more likely now to consider buying big ticket items once more! * SO WHAT? * This signifies a decent bounce from the lows of September last year. If we are getting more confident while inflation is continuing to rise, just think what it’ll be like when interest rates start to fall! Emboldened consumers may even get more money to play with if the FCA, in Banks warned over miserly rates for loyal customers (The Guardian, Rupert Jones) gets its way as it has pointed out that banks have been very slow in passing on higher interest rates to savers given the way that interest rates have risen. It warned of “onerous interventions” if its concerns were ignored so you would have thought that the banks will now slowly move to be more generous on their accounts. At the end of the day, the banks may well just badge a rise in the savings rate as “listening to their customers” whereas I would brand it as banks-wanting-to-pay-out-as-little-as-possible-for-as-long-as-possible 🤣.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

We look at EVs and net zero, Renault complaining about Tesla, Ford selling its pick-up in Norway and GKN’s automotive biz absolutely tanking on its debut…

How China’s e-cars threaten net zero revolution (Daily Telegraph, Howard Mustoe) is a really interesting article which takes a look at just how “green” EVs are – and the conclusion is “not as green as you’d like to think”. The UK is about to get a major influx of EVs from China but then this creates a problem. Shipping them over here (using fuel) and making them (using the electricity from coal-fired power plants) is not exactly what you’d call “green” and although research from the Environmental Protection Agency (EPA) shows that petrol cars still emit over double the pollution as battery cars over their lifetime, it is still worth noting that a Tesla Model 3 driver has to cover 13,500 miles before carbon output is better than that for an equivalent petrol car, according to some research by Reuters in 2021. However, when you also factor in the use of lithium (which is shipped in from Australia and Chile) and copper (from Chile, Peru and the DRC) for the batteries, the environmental benefits shrink further. * SO WHAT? * Although things aren’t exactly brilliant at the moment, power generation and steelmaking are likely to become more efficient and cheaper while advances in battery tech continue over time. However, I would also add into this mix that EV batteries need to become more easily recyclable as a matter of urgency given the lack of some battery materials these days. If more can be salvaged from used batteries, this would no doubt help!

Elsewhere, Renault: discounts killing EV value (Daily Telegraph, Chris Price) shows that the French carmaker complained about potential Tesla price cuts, saying that such moves would “kill” their value. Tesla has been slashing prices to shift numbers and the

company’s profits have taken a hit as a result as margins were squeezed to make prices more appealing to customers. Obviously, this just makes everyone else look bad so it’s unsurprising that Renault wants to whinge about it. It has a point though!

Then in Ford’s electric F-150 Lightning pick-up to go on sale in Norway (Financial Times, Peter Campbell) we see that Ford plans to sell its popular F-150 Lightning in Norway – the first time it will be available outside North America! Norway is the world’s leading EV market with 80% of vehicles sold are battery-powered, so this does make sense. It’ll be the first of its rivals in pick-ups (e.g. Chevrolet and Ram) to launch in Europe. * SO WHAT? * Traditionally, the region hasn’t been the natural market for such vehicles given that they are generally a bit too big and unwieldy for European roads and cities. Although Ford said that there are no plans to sell the model more widely in Europe for the moment, you do wonder whether we’re going to start seeing a car revolution with people starting to get why Americans like pick-ups so much! I wonder whether we’ll see a pick-up revolution along the same lines of the revolution we saw in the noughties when SUVs started to become incredibly popular (although maybe they’ll have to be a bit smaller than the US equivalent)…

Back in London, GKN automotive business falls 20% on first day of London trading (Financial Times, Peter Campbell) shows that the share price of its newly-spun off Dowlais, which makes vehicle parts, cratered by around 20% on its debut yesterday on the LSE. * SO WHAT? * Oh dear. This isn’t what the LSE needed as listings have dried up and it continues to lose out to rivals like the NYSE with companies such as Arm and CRH. Maybe Deliveroo (aka “flopperoo”) will be glad that another company has had a 💩 first day. The LSE is in dire need of some positive PR asap!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

BuzzFeed shrinks, Deliveroo delivers and Rentokil cleans up…

In a quick scoot around some of today’s other interesting stories, BuzzFeed closes news division and cuts jobs to weather digital media downturn (Financial Times, Daniel Thomas) shows that BuzzFeed is going to shut down its award-winning news operation and cut its workforce down by 15% (ouch!) as it tries to slash costs and concentrate on being profitable. Another SPAC-backed company bites the dust (well, almost)…

Meanwhile, Deliveroo Delivers the numbers to put rival in shade (The Times, Dominic Walsh) shows that the company managed to post a “resilient performance” in Q1 as it outperformed Just Eat Takeaway thanks to its more premium offering. Deliveroo’s gross

transaction value grew by 6% whereas Just Eat’s fell by 1% and it also outperformed its rival on the number of orders. * SO WHAT? * This seems like a pretty solid performance against a very tricky economic backdrop so I imagine it could well bounce back strongly if labour markets remain tight and consumer confidence continues to grow.

Rentokil cleans up after embarking on buying spree (The Times, Robert Miller) shows that M&A was behind a 6.7% uplift in quarterly organic revenue (it bought Terminix in December for $6.7bn in cash and shares plus a load of other bolt-on acquisitions in the time period). Fun fact: Rentokil Initial is the world’s biggest commercial pest control services provider! The company sounded pretty confident about the rest of the year as well…

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

I know this is going to sound like a dodgy headline, but I have to say that I found this hilarious: ‘My boyfriend’s snoring drove me nuts – now I make money from his wheezing sounds’ (The Mirror, Zahna Eklund). Talk about enterprising 🤣!!!