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Uber Creates a New Advertising Channel
The ride-share company is offering local businesses another way to reach nearby customers. It’s also making Ubers look more like the taxi industry they disrupted.
Here are today’s highlights:
Business owners are rethinking their banking options—including new services offered by digital banks.
Restaurants are trying creative subscription plans, and food companies are promoting a fourth meal of the day.
More students are choosing apprenticeships over college.
One TikTok video has sparked the theft of hundreds of thousands of cars.
Uber introduces a new advertising option for local businesses: “Uber on Wednesday said it will begin offering a self-service ad platform to allow small- to medium-sized businesses to place ads on its network of digital cartop billboards that sit atop the roofs of Uber vehicles in the U.S. The ride hailing company is hoping the move will unlock a new pool of non-endemic advertisers — from real estate companies to independent stores — that don't already use the Uber Eats app for delivery or advertise with the existing Uber Ads service. A restaurant struggling with weekday lunchtime foot traffic, for example, could geotarget a specific zip code between the hours of 11 a.m. and 1 p.m. Monday to Friday to promote a 20 percent off discount.”
“Uber Ads has laid out plans to grow its ads business from a $500 million revenue run rate currently to $1 billion-plus by 2024. The new ad platform currently offers advertisers access to around 3,500 cartops in seven markets in the U.S., including New York, Los Angeles, and Chicago.”
“Uber said it works with third-party measurement firms to offer advertisers reports on how many impressions their ads reached, as brand awareness and foot traffic lifts. It also offers data on whether ad campaigns led to increased activity on the Uber Eats app.”
“‘This is a way for [drivers] to earn up to 15 percent additional revenue just by doing what they are already doing,’ Baker said. Drivers can also earn additional revenue by installing in-car tablets that showcase ads.” READ MORE
Business owners are rethinking their banking strategies: “Many businesses have been peppering their banks with questions about their financial health in recent days, with many using the moment to take stock of their own banking relationships and where their cash is stored. Experts say there are a variety of steps businesses can take and questions they should be asking right now, but there's one thing they agree on: Diversification is key, even if it's often easier said than done for businesses.”
“Greg Bader, a banking and finance attorney at law firm Gunster LLP, said small businesses should take a look at their deposits and consider spreading them out among multiple banks whenever possible. He pointed to the Certificate of Deposit Account Registry Service system, which allocates a depositor's money across many banks — with some restrictions — and noted other banks often offer other, similar products to capture FDIC coverage for amounts greater than $250,000.”
“Businesses can and should spread their money out, experts say, and that might mean moving some of that money. But federal Covid-19 loan programs, such as the Paycheck Protection Program, showed the value of having an existing relationship, Bader said.”
“Jay Jung, president and founder at Embarc Advisors, stressed every business should have a cash forecast and funding plan for 30, 90 and 365 days out, as well as established policies for ensuring you have access to the cash you need for at least 90 days.” READ MORE
Digital banks are the early winners of the SVB collapse: “The deluge of new account requests began hitting San Francisco-based Mercury last Thursday morning, the day after Silicon Valley Bank announced that it had sold $21 billion in securities at a $1.8 billion loss and needed to raise more capital. Over the weekend, as federal bank regulators scrambled to make sure SVB’s failure didn’t set off a broader bank run, Mercury’s workers scrambled too; its normal account-opening staff was doubled to 60, as risk and compliance pros, plus volunteer software engineers and salespeople (who got a crash course in how to verify and approve new customers), pitched in. In both cases, the extraordinary measures seem to have paid off–for now, at least. Regional banks have stabilized. And according to venture capitalists, Mercury has likely been the biggest winner so far among the fintech digital banks.”
“Immad Akhund, Mercury’s 38-year-old CEO and cofounder, reports that in just six days his 470-person company has added more than $2 billion in deposits and thousands of customers to the 100,000 accounts it had before.”
“San Francisco-based credit card startup Brex, which offers a business banking account, added 3,000 new customers over the past week and reportedly also took in billions in new deposits, though the company declined to confirm any dollar amounts. Brex also extended loans to former SVB customers to help them meet payroll.”
“Meow, a New York startup that lets companies earn interest on their cash through U.S. government bonds, has been seeing ‘hundreds of millions [of dollars] in daily demand’ over the past week, the company claims.”
“Arc, which lets software companies sell their future revenue streams in exchange for upfront cash, has seen ‘500 startups apply for a combined total of more than $150 million in payroll financing since Thursday,’ says CEO Don Muir. New York-based digital bank Rho has also seen a surge of new customers.” READ MORE
Restaurant subscription plans continue to grow and evolve: “Large chains like Panera and P.F. Chang’s as well as neighborhood hangouts are increasingly experimenting with the subscription model as a way to ensure steady revenue and customer visits. Some offer unlimited drinks or free delivery for a monthly fee; others will bring out your favorite appetizer each time you visit. They’re following a trend: The average American juggled 6.7 subscriptions in 2022, up from 4.2 in 2019, according to Rocket Money, a personal finance app.”
“El Lopo, a San Francisco bar, has 26 members in its Take-Care-Of-Me Club. They pay either $89 per month for $100 in dining credits or $175 per month for $200 in credits. When members come in, El Lopo starts bringing out their favorite dishes. Each visit, they can gift a free drink to anyone in the bar.”
“El Lopo owner Daniel Azarkman started the club in March 2021 to encourage patrons to return as the pandemic eased. Now, he’s hearing from restaurants all over the country who are interested in starting similar programs. ‘What it really achieves is getting them in more often,’ he said.”
“In 2021, On the Border Mexican Grill introduced its Queso Club, which offered free cheese dip for a year for $1. The program stopped taking new subscribers a year later. Edithann Ramey, On the Border’s chief marketing officer, said more than 150,000 people signed up for the Queso Club, and members visited seven times more often than the average guest. But the Dallas-based chain wasn’t making enough to cover the cost of the dip.” READ MORE
FOOD & BEVERAGE
Food companies are pushing bedtime snacks as a sleep-inducing fourth meal: “Post Consumer Brands, the cereal company known for Raisin Bran, Grape-Nuts, and Fruity Pebbles, has launched a new line of cereals that it wants you to include in your nightly sleep routine. The cereal of crunchy flakes and almonds, called Sweet Dreams, comes with a description that reads like a box of herbal tea, touting notes of lavender and chamomile, as well as vitamins and minerals intended to support your body’s production of the sleep hormone melatonin.”
“Sweet Dreams is one of a growing number of nighttime snacks marketed to a large segment of sleep-deprived consumers in search of better shut-eye. Studies show that more than half of all adults in the United States experience difficulty falling asleep, and 1 in 5 have insomnia.”
“Marketing late-night meals as sleep enhancers is a way for the food industry to achieve one of its longtime objectives: To boost sales by creating a so-called fourth meal that follows dinner.”
“‘It’s a potential new eating occasion,’ said Nicholas Fereday, the executive director of food and consumer trends at investment firm Rabobank. ‘If they can somehow turn it into a ritual, and it becomes more habit rather than the occasional thing, they’ll start getting their repeat purchases.’” READ MORE
More students are rejecting college and choosing apprenticeships: “Today, colleges and universities enroll about 15 million undergraduate students, while companies employ about 800,000 apprentices. In the past decade, college enrollment has declined by about 15 percent, while the number of apprentices has increased by more than 50 percent, according to federal data and Robert Lerman, a labor economist at the Urban Institute and co-founder of Apprenticeships for America. Apprenticeship programs are increasing in both number and variety. About 40 percent are now outside of construction trades, where most have traditionally been, Dr. Lerman said. Programs are expanding into white-collar industries such as banking, cybersecurity and consulting at companies including McDonald’s, Accenture, and JPMorgan Chase.”
“Apprenticeships take many forms but generally pair students with a course of study focused on a particular occupation and practical work experience under the supervision of a mentor. Typically, employers pay costs associated with school as well as a wage. Some programs have boomed in popularity, with admission rates as competitive as those at some Ivy League universities.”
“Research from other countries shows that success may be short-lived. Eric A. Hanushek, a Stanford University economist, said that the skills learned in an apprenticeship might not be of much help down the line.”
“By contrast, a college degree offers a broader, general education, which ‘makes people more adaptable and able to learn new skills that show up later when the economy changes,’ he said. Employers might be getting the better end of the bargain because they are able to hire apprentices at relatively low wages, he said.” READ MORE
In Massachusetts, some residents want restaurant options close—but not too close: “Overlooking the harbor, the seaside fishing cottages along Old North Wharf on Nantucket have become coveted real estate for magnates who usually reside in vast estates. Billionaire businessmen Charles Schwab and Charles Johnson are among those who own one of the quaint properties near the ferry landing and bustling downtown. But this postcard idyll is under threat, according to many of the cottage owners, by another quintessential character of coastal New England — a clam shack and waterfront restaurant. Two local men are attempting to revive a popular fish market just steps from the cottages and add a casual, family-friendly restaurant. But it has met staunch opposition from residents who say it threatens the sense of quiet retreat and identity of the historic waterfront.”
“The two businessmen, Gabriel Frasca, 48, and Kevin Burleson, 40, described their venture as ‘that local clam shack that every Cape and coastal town has on the water’ and said they have been stunned by the backlash from their prospective neighbors.”
“‘Kevin and I are really excited about this new venture, and mostly we just want to share it with our friends and our community. And we want to fry some clams!’ Frasca wrote in an email to the Globe. ‘And, yeah, it is a little surreal to have Charles Schwab and the owner of the S.F. Giants trying to stop us. But here we are.’”
“‘Candidly, I think that the two largest drivers for the opposition are misinformation and, sadly, NIMBYism. Everyone wants ample restaurants to go to close by, but not too close by. Which I totally get. But the island has established a commercial downtown for a reason, and our project is within that zone,’ Frasca said.” READ MORE
One TikTok video has sparked the theft of hundreds of thousands of cars: “The ‘Kia Challenge’ video, which first appeared in 2021 and regained popularity in July 2022, showed how to easily hijack certain models of Kia and Hyundai vehicles using only a USB cord. While the video was quickly taken down by TikTok each time it resurfaced, the damage was done: 70 percent of the cars stolen in Milwaukee last year and 50 percent of the cars stolen in Chicago this year were from the two South Korean manufacturers.”
“The situation has become so critical that two major auto-insurance companies, State Farm and Progressive, have stopped insuring vulnerable Kia and Hyundai models. And dozens of class-action lawsuits filed around the country are attempting to force the manufacturers to either issue a recall or fix the cars' vulnerability.”
“The TikTok video that sparked the challenge — a how-to reportedly created by user @robbierayyy — exposed a security flaw in Kia models from 2011 to 2021 and Hyundai models from 2015 to 2021. The cars from that time don't have electronic immobilizers, a safety device that uses a unique chip in the key fob.”
“Both Kia and Hyundai told Insider that in response to the thefts, the companies have introduced a free anti-theft-software upgrade, as Hyundai noted, ‘to prevent the vehicles from starting during a method of theft popularized on TikTok and other social media.’" READ MORE
Masatoshi Ito, the king of convenience stores in Japan: “Perhaps his greatest contribution to modern Japan began in 1973, when a young executive persuaded him to bring 7-Eleven to the country. Starting with a single store in Tokyo, the deal he struck with the chain’s owners, the Dallas-based Southland company, launched a revolution in Japanese retailing that would transform everything from the way companies moved their products to the way people eat.”
“The company’s introduction of the ready-to-eat rice ball to store shelves in 1978 made that humble snack into a central part of the country’s fast food culture.”
“In the decades that followed, 7-Eleven and its imitators would open tens of thousands of convenience stores across Japan, providing a wide range of goods and services. The shops — open 24 hours a day, every day of the year — became so integral to daily life that the government declared them part of the national infrastructure.”
“Under Mr. Ito, 7-Eleven Japan quickly outgrew its progenitor, Southland. In 1991, Ito-Yokado purchased a controlling stake in the American retailer, making it a Japanese company. But that success quickly soured into scandal, and Mr. Ito stepped down in 1992 in response to accusations that Ito-Yokado had paid off Japanese racketeers who had threatened to disrupt its annual meetings.” READ MORE
THE 21 HATS PODCAST
For Wunderkeks, It Really Is Go Big or Go Home: This week, Hans Schrei explains why he’s pursuing a deal with Costco and why his vision is to get Wunderkeks cookies into every supermarket in the country. When Jay Goltz counters that instead of thinking big, or thinking small, maybe Hans should think medium, Hans says that may no longer be possible with consumer packaged goods: “The little brand that grows and thrives by growing little by little doesn't really exist any more in this space,” he says.
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Thanks for reading, everyone. — Loren