What Inflation Is Costing Texas
What Inflation Is Costing Texas
With brisket prices soaring, small-town barbecue places all over the state are shutting their doors.
Good morning!
Here are today’s highlights:
It seems there already was a company called Meta.
Retailers are stocking up early for the holiday season.
At some offices, no one’s watching the interns.
Once again, Silicon Valley assumes that things only go up.
INTELLECTUAL PROPERTY
There already was a Meta, and it says Facebook’s rebrand obliterated its business: “Meta Platforms, the company formerly known as Facebook, has been sued for trademark infringement by MetaX LLC, a company that says it does business publicly as Meta and had been operating in the virtual and augmented reality technology space for years before Mark Zuckerberg announced his company's rebranding. Facebook changed its corporate name last fall to Meta, part of a strategic shift in focus from social media to a future, immersive — and so far largely theoretical — form of the internet powered by AR and VR technologies called the metaverse. Its stock started trading under the META (FB) ticker last month.”
“The tech giant's move ‘obliterated’ the smaller company's business, according to allegations in the complaint from MetaX, filed in the Southern District Court of New York on Tuesday. ‘Meta's small business stands no chance against the corporate behemoth,’ the complaint states.”
“MetaX is seeking an injunction ordering Facebook's parent company to cease the use of the Meta name in connection with products, services or activities related to virtual, augmented or extended reality, as well as unspecified damages, according to the complaint.”
“MetaX in its lawsuit said it ‘can no longer provide services and products under the Meta mark because consumers are likely to mistakenly believe that Meta's products and services emanate from Facebook and the toxicity that is inextricably linked with the Facebook brand.’” READ MORE
SOCIAL MEDIA
Facebook, meanwhile, is shifting resources from news to focus on creators: “[Campbell] Brown, a former journalist who leads Facebook’s global media partnerships, said the company would shift engineering and product support away from the two products as ‘those teams heighten their focus on building a more robust creator economy.’ The decision was made at the product level, not by the partnerships team that Ms. Brown is a part of, according to a person familiar with the matter. Facebook News is a curated selection of news stories that users can find as a tab on the mobile app or website, similar to the Facebook Watch tab for video. Bulletin, which Facebook unveiled in June 2021, is a subscription platform meant to compete with Substack. It is aimed at supporting independent writers.”
“Facebook’s shift away from its paid news product was influenced by the stepping up of regulation around the world aiming to require technology platforms such as Facebook to pay for news, according to people familiar with the matter.”
“That reduced Meta Chief Executive Mark Zuckerberg’s enthusiasm for making news a bigger part of Facebook’s offerings, the people said.”
“Reallocating resources from News and Bulletin is part of a broader shift within the company toward the metaverse and short-form video content creators that can compete with ByteDance’s TikTok.” READ MORE
LOGISTICS
Hasbro is stocking up on inventory to avoid any possible supply-chain problems ahead of the holiday season: “The maker of Monopoly board games and My Little Pony dolls on Tuesday reported holding $867.5 million of inventory at the end of June, up nearly 75 percent from a year earlier. That represents Hasbro’s highest quarterly inventory levels going back nearly three decades, according to publicly available data. The rush to stock up on toys comes after supply-chain problems last year wreaked havoc on the industry, with delays in getting some toys to shelves and higher-than-normal out-of-stock levels in the weeks ahead of Christmas, when roughly half of all toy sales are made.”
“This timeline shift puts the company in better shape to handle the holiday season, despite ongoing supply-chain disruptions, higher inflation and fears of a coming recession, according to Chief Financial Officer Deborah Thomas.” READ MORE
THE ECONOMY
Here’s how inflation rippled through small-town Texas: “This year, Tyson Foods, the country’s largest meat processor, saw its first-quarter profits nearly double. Meanwhile, all over Texas, barbecue places have shut their doors: Two Sawers BBQ, in Floresville; 1836 BBQ, in New Braunfels; Brisket Bar-BQ, in Bellaire. Emily Williams Knight, the president of the Texas Restaurant Association, recently called the rising price of brisket a ‘crisis.’ ‘In Texas, in all two hundred and fifty-four counties, you can go get barbecue—that’s what we could lose,’ she said.”
“One Sunday a couple of months ago, Robert Rodriguez thought he’d try something new at R-BBQ, the restaurant he owns in Sabinal, on the southwestern edge of the Texas Hill Country.”
“Wholesale prices were rising—they’d been rising since the covid-19 pandemic began—and now a box of a hundred and eighty eggs, which had cost around eight dollars when he opened the restaurant, in 2001, was nearly fifty.”
“He considered raising prices, but the thought made him uneasy; many of his customers were high-school students, or unemployed, or retirees on fixed incomes. ... ‘So I started doing the shrinkflation.’”
“He scrambled one egg instead of two for a breakfast taco, and started making smaller pancakes. The change didn’t go unnoticed.” READ MORE
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HUMAN RESOURCES
At some offices, no one’s watching the interns: “Summer interns generally are aware of what awkward rites of passage await them. Most have to attend their share of stilted happy hours and softball games. They might have to nod their way through a brown bag lunch. Now, though, interns experience a strange new introduction to professional life. Working a summer job can mean commuting to an empty office, sitting unsupervised with other interns and trying desperately to impress managers over video calls. School is out for the summer — but in some cases, so are the bosses.”
“‘The thing I’ve always been taught by my parents is to be the first one in and last one out,’ Mr. Hyman said. ‘But there’s no one else there. My boss isn’t going to see me put my best foot forward.’” READ MORE
SILICON VALLEY
You’d think layoffs and a looming recession might have quieted some of this talk:
Tech workers took out loans based on the value of their stock options: In recent years, companies such as Quid and Secfi have sprung up to offer loans or other forms of financing to start-up employees, using the value of their private company shares as a sort of collateral. These providers estimate that start-up employees around the world hold at least $1 trillion in equity to lend against.”
“While most of them are structured to be forgiven if a start-up fails, employees could still face a tax bill because the loan forgiveness is treated as taxable income.”
“‘No one’s been thinking about what happens when things go down,’ said Rick Heitzmann, an investor at FirstMark Capital. ‘Everyone’s only thinking about the upside.’” READ MORE
THE 21 HATS PODCAST
Employees Still Have the Leverage: This week, Jay Goltz, Liz Picarazzi, and William Vanderbloemen discuss how their businesses are holding up and whether they’ve gotten past the labor shortage (short answer: No). The conversation veers into a discussion of how to finance growth and what to do when your bank is unresponsive (find another one!). And then Liz explains her intense distaste for dealing with lawyers, accountants, and insurance agents and how she’s trying to cope with it. “Believe me,” responds Jay, “I haven't paid enough attention to certain things that I should have, and it's cost me. But yeah, we can't every day just do the inspiring, cool, fun, oh-my-God, we-had-a-big-sale, look-at-the-problem-I-solved thing. It’s all part of the package.”
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