Category: business | 商業 | 상업 | ビジネス

My interest in business or commercial activity first started when a work friend of my Mum visited our family. She brought a book on commerce which is what business studies would have been called decades earlier. I read the book and that piqued my interest.

At the end of your third year in secondary school you are allowed to pick optional classes that you will take exams in. this is supposed to be something that you’re free to chose.

I was interested in business studies (partly because my friend Joe was doing it). But the school decided that they wanted me to do physics and chemistry instead and they did the same for my advanced level exams because I had done well in the normal level ones. School had a lot to answer for, but fortunately I managed to get back on track with college.

Eventually I finally managed to do pass a foundational course at night school whilst working in industry. I used that to then help me go and study for a degree in marketing.

I work in advertising now. And had previously worked in petrochemicals, plastics and optical fibre manfacture. All of which revolve around business. That’s why you find a business section here on my blog.

Business tends to cover a wide range of sectors that catch my eye over time. Business usually covers sectors that I don’t write about that much, but that have an outside impact on wider economics. So real estate would have been on my radar during the 2008 recession.

  • The Big Score by Michael Malone

    The author of The Big Score is a lifetime inhabitant of Silicon Valley, Michael Malone. Malone went to school with Steve Jobs and spent his entire working life as a journalist covering technology companies of the area. His own career sounds like a veritable history of technology sector business reporting. Malone had written and or edited for the San Jose Mercury News, Fast Company, Upside, Forbes (ASAP), The New York Times, Wall Street Journal and Wired magazine. Now he co-hosts a weekly podcast on the goings on in Silicon Valley.

    The book was originally published in 1985 and has been finished prior to the launch of the Apple Macintosh. At the the time of writing, Malone had been an early to mid-career journalist.

    Silicon Valley time capsule

    His book is time capsule of how Silicon Valley would have likely seen itself. The people portrayed in it lack the kind of artifice that pioneering PR people like Pam Edstrom would later drum into a young Bill Gates with media interview training and briefing books. Companies have since gone a step further and seldom engage with the media at all; instead putting out news by blog post or staged video production a la Apple under Steve Jobs and Tim Cook.

    Steve Jobs on Apple’s future back in 1997

    When we come to understand modern-day Silicon Valley five decades into the future, we won’t have the same level of intellectual honesty that we have in The Big Score because the artefacts and interviews will be so vanilla.

    The book had become a largely forgotten business history book. Michael Malone revisited much of the history of covered in the book with a slightly longer term perspective in his 2002 work The Valley of Hearts Delight, which covered the history of the area from the 1960s to the dot com era. While The Big Score might have been forgotten, it was resurrected when Stripe through its publishing arm put it out again in 2021. They did this because while the book was forgotten by the general public, it has been read in libraries by university students and in their own collections by people like me who followed the technology sector.

    IMG_0008

    Getting things wrong

    In the introduction to the book, late career Malone freely admits the three things that he got wrong in The Big Score:

    • The impact of the internet. While it didn’t reach public consciousness until I was in college; as a high schooler in 1969 Michael Malone had got a chance to try the ARPAnet during a class visit to Xerox PARC (Palo Alto Research Center). Secondly, the San Jose Mercury News had been using email and bulletin boards as part of their business process and offering since the 1980s. Yet Malone’s past familiarity gave him little idea of what was likely to lie ahead. His elevated access as a journalist to the great and the good of the technology sector didn’t help either; in fact Bill Gates made a similar error to Malone in the first edition of his book The Road Ahead. Gates worked very quickly with the publishers to get out a second edition that corrected his mistake. But I think Malone’s inability to see and his intellectual honesty about that is instructive for all of us
    • While he had the chance to meet Doug Engelbart, Malone wrongly assumed that Engelbart was an eccentric inventor trying to get people to pay him his dues for technology that got bypassed. So, Engelbart doesn’t feature in The Big Score at all, despite The Mother of All Demos
    • Intel’s Andy Grove, who Malone now considers to be the most important business man in the history of Silicon Valley doesn’t get a prominent role in the book. That’s not so bad as Andy Grove managed to write a lot in his own right, notably Only The Paranoid Survive

    The Big Score on excess, greed and ethics

    Malone’s The Big Score like Robert X Cringely’s later work Accidental Empires wastes no time in showing Silicon Valley’s underbelly. At the time of writing there was a large amount of industrial espionage happening between hardware companies, many start-ups were being developed by greedy experienced executives and top performing workers were burning out by trying to keep up self medicating with drugs and stimulants and alcohol to take the edge off. Something you still see today with engineers using Adderall to help them focus.

    In this respect The Big Score is very different from other works that cover this era such as Chip War, Fire In The Valley and Where Wizards Stay Up Late.

    The Big Score by Michael Malone tells the tale of Silicon Valley before the Apple Macintosh and the large media companies of Yahoo!, Excite, Alphabet or Meta et al.

    While the counterculture did play a substantial role in the PC revolution, much of early Silicon Valley was about trying to accumulate wealth and while the successful are lionised for a while; most people did middling to ok at best. There was a work culture of hard working and hard drinking which meant that marriages didn’t last. The first barrier that Silicon Valley broke through was one of class, if you were bright and successful enough, class didn’t matter.

    Robert X. Cringely in his later book Accidental Empires talked about how Bob Noyce (a key player at Shockley Labs, Fairchild Semiconductor and Intel) was rejected from joining a local country club despite his business success. Class still existed, but not within these companies to the same extent. Michael Malone in The Big Score conveys how the culture clash over class between its workers and those who funded it, ripped apart Silicon Valley and created an explosion of semiconductor companies that dominated from the late 1960s to the mid-1980s and beyond.

    While Silicon Valley provided a greater egalitarian opportunity for the corporate man who worked there, women are seldom mentioned.

    (Aside: At the start of my career in agency life I had LSI Logic as a client. LSI Logic was founded by Wilf Corrigan a veteran of Fairchild Semiconductor. Even then at the height of the dot com bubble; ‘real men’ were engineers or salesmen and women worked as secretaries or in public relations. As the company had grown their female corporate marketing manager had been pushed out of the headquarters and to the far flung European office, which was the smallest part of the business were she could do the least damage. I still remember how awkward it was to see her treated with distain by her main colleagues. She had many faults, but the treatment lacked decorum and discretion. This kind of culture is fostered from the top of an organisation down. Despite all this she had still been granted shares in the business and a good deal of share options meaning she could be comfortably well off and fund various American christian endeavours.

    I even got to meet Corrigan, the son of a Liverpool docker came across as a Silicon Valley analogue of Michael Gambon’s character in The Layer Cake – rich but not sophisticated. Someone who mistook his mix of hard work and good fortune as a divine right.)

    While much is said about the egalitarian nature of David Packard, William Hewlett and Bob Noyce, they still had the social conservatism of Leave It To Beaver. Malone eulogised Hewlett and Packard in his later award winning business history Bill and Dave. The Big Score portrays them with a clearer eye. But Bill and Dave came out later on when Silicon Valley was starting to lose its moral compass. H-P under Carly Fiorina had ruptured the H-P way and was an indicator of what was to come – so Malone recast them as mythical heroes.

    Silicon Valley soap opera

    Malone’s description in The Big Score of the break away of talent from Shockley Labs and Fairchild Semiconductor is accurate. But the story itself is engaging in the same way that the family drama of the soap operas that my Mam used to follow.

    Stripe Press

    Stripe Press have given The Big Score a much needed needed design refresh. They typography makes it easy to read and the book is immensely well read. The hardback cover, binding and paper are high quality for a book of this nature. It is the kind of book that will be an heirloom that can be handed on down to the next generation. If not for the value, for the historical knowledge. Beyond the self penned introduction at the front, the contents of the book itself were left alone.

    Recommendation?

    If you are student of Silicon Valley history or have read Malone’s other books The Big Score is a great complementary read. The republishing of the book by Stripe Press is timely given the fads of the metaverse and NFTs that have swept through the technology sector recently.

    However if you wanted one book to start you off on your Silicon Valley journey, I wouldn’t recommend it. I would suggest that you read the following books before getting to The Big Score. Its not because these books are better, but that they provide a better initial entry point into the world of Silicon Valley and its history. Malone’s book was written relatively early one and other books can provide a better basic knowledge framework because of The Big Score‘s age:

    • Accidental Empires by Robert X Cringely was something so different to what I’d been used to. I’d worked in industry, but hadn’t experienced anything like this. There are similarly great books to read like Fire In The Valley and Where Wizards Stay Up Late – but they aren’t as entertaining to read as Accidental Empires and pull their punches in order to be seen as ‘serious’ business books
    • Architects Of The Web by Robert H. Reid. He wrote up the profiles of many of the pioneer web companies including Netscape, Real Networks, Marimba, Yahoo! and Silicon Graphics. It’s helpful to revisit the future the way it was envisaged during the late 1990s and see how the future has changed. 
    • Bill and Dave by Michael Malone tells the story of Silicon Valley pioneers Bill Hewlett and Dave Packard. Nowadays people think of them as just a brand of laptops or printers. But Hewlett Packard was much more. They pioneered the Silicon Valley start-up, their successor businesses Agilient, HPE and HP. Bill and Dave’s biggest impact was in Silicon Valley culture and lore. They built the company in a garage and started the egalitarian culture with The HP Way.
    • Chip War by Chris Miller. Miller is a think tank wonk and history professor who tells the story of the semiconductor industry specifically through its relationship with the military industrial complex and its relationship with national security. Chip War deservedly was recommended as one of the FT’s business book’s of the year 2022.
    • Dogfight by Fred Vogelstein. Fred Vogelstein is an experienced journalist who most notably covered the technology sector for Wired magazine. If your familiarity with the tech industry starts with Google and Apple. Dogfight is a great entry point.
    • The New, New Thing by Michael Lewis. Pretty much every book that Lewis writes will compare unfavourably to his first book Liar’s Poker, but that book doesn’t mean that The New, New Thing shouldn’t be read. The book profiles Jim Clark, who founded Netscape and Silicon Graphics and aimed at the time to turn the healthcare industry with a new project. Lewis is capturing Clark when he is past his prime from a creative point of view. What Lewis does capture is the optimism and hubris in Silicon Valley that it can change anything.
    • What The Dormouse Said by John Markoff. John Markoff is one of the titans of reporting on the business of technology alongside Steve Lohr and Walt Mossberg. In this book Markoff draws a line between the counterculture of the 1960s and the personal computing revolution through to Web 2.0

    More on The Big Score here.

  • Silicon Valley Bank + more stuff

    Silicon Valley Bank (SVB)

    Silicon Valley Bank funded this documentary about their history from their founding in 1983 to 2003. It’s now preserved by the Computer History Museum in Mountain View – one of the towns that make up Silicon Valley.

    Business

    POP MART dominates blind box toys market with co-branding | Daxue Consulting – interesting differentiation from Funko with a particular focus on young women and white collar workers. But I can’t see them appealing to the manly men that the Chinese government seeks to have reflected in youth culture

    Why M&A is not a good path for Qualcomm | Digits to Dollars 

    China

    Interesting use of AI by China’s government and academics: AI just predicted the price tag for Beijing’s South China Sea ambitions | South China Morning Post – apparently it was used to help design a high capacity dredger

    China Cultivates Thousands of ‘Little Giants’ in Aerospace, Telecom to Outdo U.S. – WSJ 

    Why did Lego choose Vietnam, not China, to build first carbon-neutral factory? | South China Morning Post – Toy behemoth’s move reflects how like-minded multinational firms are diversifying supply chains away from what has been known for decades as the world’s factory. Lost investment dollars amid the US-China trade war and pandemic have sparked concerns within China

    Economics

    ‘No other option’: Russia’s unequal economic marriage with China – Hong Kong Free Press HKFP – the Ukraine war has cemented Russia as China’s little brother rather than peer. Add to that China’s nationalists still smarting from losing Vladivostok to the Russian empire and one could see how Russia may have trouble on at least two fronts in the future

    Finance

    Longtime China investor Anatole to open ‘outpost’ in Singapore | Financial Times – it makes sense that they would follow the expansion of the global supply chain, but doesn’t reflect long term confidence in China’s dual circulation model

    Silicon Valley Bank / II

    Bloomberg have done a programme explaining about what happened with Silicon Valley Bank and how it went under so quickly. Silicon Valley Bank had problems due to raising interest rates, issues with their risk management and an abnormally high amount of customers withdrawing funds. However there was also an issue about the way Silicon Valley Bank communicated with the market, which in turn created a crisis in depositor confidence.

    Health

    Alphabet’s keynote and plans for the health industries. Usual nod to privacy (hahahaha), cloud computing, consumer devices and AI.

    Hong Kong

    HK’s first AV actress, Erena to star in debut adult film with renowned Japanese actor, Ken Shimizu, Culture, Sports and Tourism Bureau denounces false congratulations – Dimsum Daily 

    Hong Kong bans rapper who joked about hurting the feelings of the Chinese people — Radio Free AsiaThis makes it more likely that artists … will express their loyalty to Xi Jinping, if they know what’s good for them

    Korea

    Inspired by a traditional silver wedding band, Seoul is building the world’s largest spokeless Ferris wheel 

    Luxury

    Chinese tourists unwilling to pay extra for sustainable travel options even as concern about climate change on the rise, McKinsey and Trip.com report says | South China Morning PostChinese travellers are increasingly concerned about climate change and are aware of their environmental footprint, but are still not ready to pay extra for sustainable travel, according to a recent report by consulting firm McKinsey & Company and Chinese travel services provider Trip.com Group. Data from McKinsey, which surveyed a total of 5,457 respondents from 13 countries including China, the United States, India and Saudi Arabia, showed that more than 60 per cent of Chinese travellers were worried about climate change and believed that commercial aviation should become carbon neutral in the future, putting China near the top among the countries surveyed. A separate survey conducted by Trip.com last year showed that almost 85 per cent of Chinese travellers rated sustainable travel as important or very important. However, compared to travellers from other countries, Chinese tourists are reluctant to pay a premium for sustainable travel. Only 20 per cent of surveyed Chinese tourists said they would pay 2 per cent extra for carbon-neutral airline tickets, ranking near the bottom among the countries surveyed – well what would you expect when you have been repeatedly told by your government and media that the west and the United States is to blame for it all anyway? Secondly, civil society like Greenpeace or the Sierra Club can’t operate in China which will also affect awareness

    More on the serious issue of violent crime for luxury watches in London. I wrote recently about the ‘London Watch‘ where watch wearers have an empty wrist when going around central London. This is going to negatively impact everything from luxury sales to hospitality and tourism in the UK at a time when the economy can ill-afford to turn down business.

    Media

    Pornhub owner sold to Canadian private equity firm | Financial Times – I guess the financiers believe that the business has been largely de-risked by the prosecutions against MindGeek owners and clearing out of the platform

    Online

    Deepfake ‘news’ videos ramp up misinformation in Venezuela | Financial Times – it sounds like something from a thriller, but its more insidious and banal all at the same time

    Security

    You Should Really Think About Blurring Your Home on Google Maps – CNET – handy life hack from CNET

    Technology

    The Man Who Made Xilinx | Electronics Weekle – interesting profile of Xilinx co-founder Bernie Vondersmitt. I have been reading Stripe Press’ republication of the 1985 book The Big Score by Michael Malone, so this article felt particularly apropos. More on The Big Score shortly

    Telecoms

    Huawei has replaced thousands of U.S.-banned parts in its products, founder says | Reuters – Ren Zhengfei said Huawei had over the past three years replaced the 13,000 components with domestic Chinese substitutes and had redesigned 4,000 circuit boards for its products.

    Musk brought internet to Brazil’s Amazon. Criminals love it. | AP News 

  • Huamei Qiu + more stuff

    Huamei Qiu

    Huamei Qiu is now an intellectual property lawyer based in Germany. Three years ago she featured in a New York Times documentary about the pressures on Chinese women to marry. She comes across in the film as bright, smart and engaging. She’s pretty in a girl-next-door kind of way with a flattering pixie haircut and definitely someone’s potential partner in a marriage rather than merely a trophy wife.

    Love reading, read good books…

    She has followed the party’s advice to build a good future for herself. As woman in China, she should be a hot commodity relatively speaking in the dating pool. As we see Huamei Qiu face a match maker; you realise that something is very rotten in the Chinese dating market. What Ms Qiu is looking for isn’t that much. Someone who is respectful, educated and ambitious. What I thought would have been hygiene factors? Instead, Huamei Qiu is told, her time is running out and she needs to settle fast.

    China has more men than women in the marriage market, which should mean they would have to compete harder if you think about it as an economic model. Instead Huamei Qiu existed in a Kaftaesque world. I know about the government policy about leftover women, but this just left me feeling angry and frustrated on her behalf.

    Beauty

    The Class Politics of Instagram Face – Tablet Magazineby approaching universality, Instagram Face actually secured its role as an instrument of class distinction—a mark of a certain kind of woman. The women who don’t mind looking like others, or the conspicuousness of the work they’ve had done. Those who think otherwise just haven’t spent enough time with them in real life. Instagram Face goes with implants, middle-aged dates and nails too long to pick up the check. Batting false eyelashes, there in the restaurant it orders for dinner all the food groups of nouveau riche Dubai: caviar, truffle, fillers, foie gras, Botox, bottle service, bodycon silhouettes. The look, in that restaurant and everywhere, has reached a definite status. It’s the girlfriend, not the wife

    Branding

    Girlguiding unveils redesign across Brownies, Rainbows, and more | Creative Review 

    Business

    Ford’s self-repossessing car patent is a nightmare of the connected-car future – The Verge – surprised that the current onboard vehicle systems aren’t letting repo people where they are

    China

    What party control means in China | The EconomistThe workings of Chinese power are not easy for outsiders to follow. Visitors to some official buildings, for example, are greeted by two vertical signboards, one bearing black characters, the other red. The black-lettered sign denotes a government department. Red characters signal an organ of the Communist Party. In bureaucratic slang this is known as “party and government on one shoulder-pole”. Sometimes the two offices oversee the same policy area, and employ some of the same officials. They are not equally transparent. Especially when meeting foreigners, officials may present name cards bearing government titles but stay quiet about party positions which may or may not outrank their state jobs. Many party branches are not publicly marked at all. It is a good moment to remember this quirk of Chinese governance. The annual session of the National People’s Congress (npc), the country’s largely ceremonial legislature, is under way from March 5th to 13th. This year’s npc meeting comes after a big party congress last October. At that gathering China’s supreme leader, President Xi Jinping, secured a norm-trampling third term

    Economics

    FT Swamp Notes: Vladmir Putin’s Russia is much more broke than we think 

    Canary in coal mine type indicator for a recession – South Korea semiconductor inventory hits record high | DigiTimes 

    FMCG

    Cultural innovation: how brands remain agile and relevant 

    Hong Kong

    Hong Kong property: market remains stuck in doldrums as city’s border reopening is not quite the magic bullet hoped for, JLL report says | South China Morning Post – why would you buy in Hong Kong when it isn’t sufficiently differentiated from other Chinese cities. Also worth bearing in mind: Hong Kong’s New Normal Isn’t Fooling Anyone | BloombergThe [Hello HK] marketing push — which celebrates colonial-era historic attractions such as the Peak Tram and features Cantopop stars who were popular before the 1997 return to Chinese sovereignty — resembles what you might expect if you had engaged China’s state broadcaster to make a promotional video about Hong Kong as it was before the Communist Party decided to erase the city’s autonomy. That place no longer exists.

    Hong Kong TV Company Deploys Stars as Salespeople on Taobao | Sixth Tone – TVB scrapes barrel to try and profit from nostalgia of when it was relevant to mainland Chinese culture

    Ideas

    Robots are performing Hindu rituals — some devotees fear they’ll replace worshippers

    Luxury

    FT Fashion Matters: Prada’s very good year 

    Media

    Pornhub made free porn accessible to everyone—but at what cost? | Document magazine – Pornhub’s meteoric rise and reputational downfall is just the latest entry in the clash between consent, cash, and censorship on the internet

    Daring Fireball: Not From The Onion, I Swear: the WWE Is Trying to Legalize Betting on Pro Wrestling 

    Online

    Meet the Japanese Politician Who Won’t Show Up for Work – fantastical online scandal involving a Japanese politician on the lam

    Google – Headless chicken pt. II – Radio Free Mobile – this reminds me of Yahoo! in the mid-2000s, when I worked there. Its size and prior success ensnares it. Projects are likely being started and closed rapidly. It is struggling to meaningfully redefine itself and regain its agility

    Meta is building a decentralized, text-based social network | Platformer – going after Twitter & Mastadon

    Security

    Sanctions further delay Russian missile early warning program in space | Defence News 

    WhatsApp: Rather be blocked in UK than weaken security – BBC News

    ‘Something Was Badly Wrong’: When Washington Realized Russia Was Actually Invading Ukraine – POLITICO

    Studying Ukraine war, China’s military minds fret over US missiles, Starlink | Reutersthe Ukrainian conflict had provided impetus to long-standing efforts by China’s military scientists to develop cyber-warfare models and find ways of better protecting armour from modern Western weapons. “Starlink is really something new for them to worry about; the military application of advanced civilian technology that they can’t easily replicate,” Koh said. Beyond technology, Koh said he was not surprised that Ukrainian special forces operations inside Russia were being studied by China, which, like Russia, moves troops and weapons by rail, making them vulnerable to sabotage.

     EXCLUSIVE: Erik Prince’s Love Letter to “Europe’s Last Dictator” | The Cole Report 

    ASML chief warns of IP theft risks amid chip sanctions | Financial Times 

    Germany reviews security risks posed by China’s 5G technology | Financial Times 

    Singapore

    Singapore offers substantial subsidies to entice TSMC to build 12-inch fab locally

    Wireless

    Interesting ways to hack your way through the process on to getting a Starlink service; even when your location may not be accepting new applications.

  • Francis Fukuyama + more things

    Francis Fukuyama

    Political theorist and author Francis Fukuyama wrote one of the mis-understood books of the late 20th century. The End of History (And The Last Man) was written in 1989 and the title and Francis Fukuyama have been misquoted endlessly since.

    Foror 25 años ICP

    At the 2020 Munich Security Conference Francis Fukuyama gave a talk about the book and what it actually meant from his perspective.

    This one on tribalism on and populism is also very interesting.

    Business

    Great video on the history of HNA, which went under a mountain of debt and was unwound by the Chinese government.

    HNA started off as Hainan Airlines before expanding internationally and across sectors.

    B-5971 Hainan Airways A330

    Finance

    M-Pesa eyes the global remittances trillion-dollar market | Quartz 

    Dollar funding for Chinese start-ups dries up | Financial Times – not terribly surprising given the investment and regulatory environment in China

    FMCG

    Macron versus McDonald’s: how France ditched disposable food packaging | Financial Times

    Ideas

    Why German think tanks have to change the way they work 

    Wokeness as mainline orthodoxy – NoahpinionMusa al-Gharbi has a recent article with quite a bit of data showing that journalistic and academic attention to the topics of diversity, bias, privilege, and so on seems to have peaked, while “cancel culture” incidents have decreased on campuses and in corporations, and political opinions on various social issues have moderated a bit. Anecdotally, corporate interest in DEI seems to be waning as well. Other observers like Tyler Cowen have noticed the trend.

    Luxury

    Survey Finds Japanese People’s Dream Car Is a Lexus | Nippon.com – bad news for Mercedes & BMW. This isn’t about Japanese nationalism as Mercedes and BMW have enjoyed healthy sales in the country in the past. Much of this is about the massification of these brands and the decline in quality in comparison to the single-mindedness of Lexus engineers.

    Marketing

    The Drum | How Nestlé Is Using AI To Set Creative Rules For Its 15,000 Marketers – In 2021, Nestlé started to put all its creative through an AI platform that would rank ads based on their suitability to different online platforms and pull out the key elements that are required for maximum ROI. That process created a set of ’rules’ for successful campaigns and early tests generated transformational results, finding that ads that meet the new creative requirements generate a significantly higher return on ad spend. Now, Nestlé’s 15,000 marketers across 2,000 brands in 200 territories have to test the ads in the machine learning platform prior to rolling a campaign out – my biggest concern is that this becomes reductive in terms of creativity and self reinforcing rather than facilitating the picking of true winners. Secondly, I could see it over-indexing on brand activation rather than brand building spend and ultimately destroy value

    Airbnb’s earnings surge after ‘incredibly effective’ marketing shift | Marketing Week – part of this is down to the fact that most online media is focused on performance marketing or brand activation rather than brand building. Pivoting to a more balanced spend will make a positive difference.

    Media

    Hong Kong journalist Bao Choy launches new media outlet amid ‘collapsing’ press freedom – Hong Kong Free Press HKFP 

    Daily Mirror publisher explores using ChatGPT to help write local news | Financial Times 

    Online

    How a Covert Firm Spreads Lies and Chaos Around the World – DER SPIEGEL 

    Security

    US-initiated joint export curbs on China leave critical loopholes? | DigiTimes 

    ByteDance is quietly becoming a force in VR (and more) | Techinasia – theft of ASML proprietary information by Chinese employees. The song remains the same

  • Patagonia vest recession

    The Patagonia vest recession was a phrase that I first heard touted by Scott Galloway to encapsulate the economy in 2022. In most recessions, the first sectors to go under are construction, retailing and manufacturing – blue and pink collar working class people suffer the blunt of lay-offs and site closures due to recession.

    The kind of vest thought of when one talks about a Patagonia vest recession. It is called a Better Sweater vest and was popular with media firms, technology companies and investment banks as employee schwag.

    Chart House Restaurant
    Taken by soq

    What’s a recession?

    recession, in economics, a downward trend in the business cycle characterized by a decline in production and employment, which in turn causes the incomes and spending of households to decline.

    (December 5, 2022) Recession. United Kingdom: Encyclopaedia Britannica

    A recession generally isn’t felt uniformly across the economy. It doesn’t affect all households. In the past, the middle class might be affected but not as severely affected as working class people. My Dad had managed to move off the shop floor and into an office job in the shipyard as a planner. He was made redundant because he worked in heavy industry and he was in a minority compared to the thousands of other blue collar workers let go.

    Not all businesses experience actual declines in income, for instance accountancy firms, business consultancies and change management firms may find a high demand for their services. However, there is a general expectation about the future being less certain during a recession. This causes businesses to delay making large purchases or investments and possibly look to reduce costs to conserve cash.

    In recessions, the output decline can be traced to a reduction in purchases of durable household goods such as computers and washing machines by consumers. This drives a corresponding decline in corporate purchases of machinery and other equipment.

    If the companies aren’t already running ‘just-in-time’ there reduction in additions of goods to stocks or inventories. Where ‘just-in-time’ is in place, the client reduces their forecast demand to their supply chain driving a similar effect. The greatest effect is likely on inventory; businesses stop adding to their existing inventories and become more willing to draw on them to fill production orders. Inventory declines thus have a double impact on production volume as it filters through the supply chain like a Mexican wave.

    So what happened?

    But the Patagonia vest recession was different. A number of things happened:

    • Technology stocks and start-ups had been swept up in a decade of irrational exuberance in terms of business values
    • Funding suddenly declined for startups. This was partly due to interest rates and a realisation that crypto-currencies weren’t worth what many investors had assumed. This led to a raft of redundancies
    • Crypto companies started falling one after the other. Prominent exchange FTX and related investment fund Alameda Research go under with allegations of fraud. Their rival Binance is ensnared in legal issues too
    • Cloud software firms suddenly find that their pay-as-you-go model can result in sharp cash flow declines which affect their profits
    • Big technology companies had staffed up to meet the COVID-19 related demand, found themselves with an employee overhang. This particularly affected e-tailing and cloud services business. They cut back on staff as they release poor financial results. BUT, the amount of people cut as a percentage was still below the proportion of head count Microsoft would have let go back when it practiced stack ranking. The mainstream media focus on the big numbers rather than the small overall proportion of lay-offs. Secondly those getting made redundant are finding it a reasonable market to get work outside the technology sector
    • Activist investors object to what they consider to be more indulgent projects like Meta’s deep investment in the future metaverse, which is a very long term bet
    • Meanwhile, services and manufacturing industry kept ramping up to meet supply-chain related challenges and meet latent demand. But had problems getting staff. You have restaurants that open up limited hours due to their problems hiring. Manufacturing businesses have been hoarding staff, because they know how hard it is for them to recruit
    • Inflation in the US is starting to come under control as supply chains started to balance out

    Of course, all of this doesn’t mean that the Patagonia vest recession won’t bleed on to Main Street, but at the start it looked very different.

    The Patagonia vest boom prior to the Patagonia vest recession

    To the general public, awareness of the Patagonia vest as an emblematic garment of class came from the press photos taken at the Sun Valley conference hosted by private investment firm Allen & Co. which built up a bit of a reputation in terms of ‘speed dating’ for mergers and acquisitions deals. Media titans like the Murdoch family met Silicon Valley CEOs and Jeff Bezos of Amazon. Telecommunications was represented primarily through the cable TV company executives who attended.

    Amazon founder Jeff Bezos decided to buy the Washington Post when he was at Sun Valley. It was also where the Time Warner | AOL merger was cooked up.

    Cameras aren’t allowed inside the conference which operates in a Chatham House-style arrangement. So press photographers could only take pictures when people were arriving or leaving the conference centre. Sun Valley sat at the nexus of a media and technology sector boom over almost two decades. The bulk of the media photos showed people walking cropped at the knees or their grotch, which focused readers attention on the tops that they were wearing. And a uniform emerged to the general public. The uniform was the Patagonia vest to deal with the cool early morning and early evenings of Sun Valley. These vests were given out some years by Allen & Co.; but the Patagonia vest has extended itself far beyond Sun Valley.

    It became such a cultural touchstone that the Sun Valley conference complete with vests was lampooned in a story arch of Succession.

    Why a Patagonia vest recession?

    Why is this a Patagonia vest recession rather than a North Face vest recession or a Columbia Sportswear vest recession?

    From working with dot com clients to when I worked at Yahoo!, Silicon Valley fashion was bifurcated in nature. The reality of Silicon Valley couture is that many people wore a t-shirt jeans and layers like hoodies. Footwear would vary somewhere between sneakers and trekking sandals.

    Men's Monterey Brown Teva Sandals With Socks

    But the ‘MBA class’ of professional managers tended to wear collared shirts, ‘smart’ jeans or chinos. They may have worn a sleeveless pullover or fleece vest. Their venture capital counterparts who where probably their MBA class colleagues wore a similar uniform, with a bit more of lean towards Ralph Lauren country club friendly shirts or polo shirts.

    Corporate branded wear started with bags. I had my share of corporate branded Timbuk 2 bags. Different engineering projects would have celebratory t-shirts for things like hack days. Eventually we started to see branded corporate wear, from the cringeworthy chambray or scratchy polo shirts issued to booth staff at an exhibition to hoodies and fleeces. I knew engineers who bragged about being dressed almost head to toe (sweatshirt material top, t-shirt, boxers and socks) in schwag that they had picked up for free as an anti-fashion statement.

    You can see these dual styles in the TV show Silicon Valley. Coming from a creative agency background, I felt more at home in the hoodie wearing crowd.

    Secondly, there was a cargo cult amongst try-hards in the early to mid-2000s there was a move towards turtle necks with Silicon Valley types looking suspiciously like architects as they tried to ape Steve Jobs. There has been a similar buzz has surrounded Allbirds sports shoes

    The finance sector had its own transformation. Early dot com era west coast-based tech focused investment bank financiers such as Frank Quattrone mirrored the east coast convention of the tailored business suit, usually in grey with a conservative tie and pocket square. This would be paired with a set of brown shoes, usually loafers. You could buy the look at Armani, Barneys or Brooks Brothers depending on your budget.

    Frank Quattrone
    Frank Quattrone by JD Lasica

    The 2008 Great Recession hit the finance centre like a shockwave. There was a need to dress down. A few things drove this:

    • An Armani suit is an obvious target when you have Occupy Wall Street camped outside your place of work
    • Wall Street had to modernise and attract new types of talent and competed against tech firms
    • The need to mirror the look of the hedge funds and technology companies that investment bankers wanted to do business with. They already stood out with their east coast vibe, the outfits communicated that ‘actually we’re just like you’ with varying degrees of success

    The look has morphed into a relaxed yet sophisticated uniform that drew on preppyness, or the Ivy League look and the country club vibe evoked by Silicon Valley VCs. This resulted in a grey or navy fleece vest paired with a button-down, chino pants, and maybe even leather sneakers. It fitted in with weekend wear in more high class neighbourhoods and didn’t scream privilege in the same way that traditional Wall Street did.

    However this became a power validation all of its own, dubbed the “Midtown Uniform” by many for its popularity throughout Midtown Manhattan as the business casual look rolled across the cultural wallpaper of Wall Street.

    Expired?

    Patagonia haven’t enjoyed their vests being the punchline of a joke. They are a mission led company that looks to be sustainable and environmentally friendly. They’ve been described as the conscience of the outdoor industry. Patagonia doesn’t want its products sold on Amazon, not because it’s luxurious and exclusive. But because Patagonia believes that Amazon encourages thoughtless consumption and is bad for the environment. Being seen as the uniform of the privileged didn’t go down well. So in April 2019, Patagonia announced that it wouldn’t provided corporate branded clothing to financial institutions or fintech companies, preferring to focus on mission-led environmental businesses instead. Given its iconic status within these sectors, the news was given the kind of coverage that would usually be reserved for an uncharacteristically large drop in the S&P 500 index.

    The case against fintech businesses is down to their rapidly expanding energy footprint, which I have covered in depth elsewhere.

    While a clear successor to the Patagonia vest hasn’t become apparent yet, there are brands looking to take their crown such as

    • Cotopaxi – who are environmentally friendly, but also corporate friendly
    • North Face – have been doing some interesting work in more environmentally friendly materials and already well known in the corporate branding space
    • SCOTTeVest – famous for being traveller-friendly. It comes with routing for your headphone cables, a plethora of pockets and charging wires. Their CEO called the Patagonia stance PR BS

    Grandfathered in

    Secondly, Patagonia decided that it wouldn’t leave long term customers in the lurch, which probably means that your favourite investment bank or big tech firm is safe from the customer purge.

    According to Corley Kenna, senior director of global communications at Patagonia, customers and the press had inquired as to “whether we’re leaving ‘bros out in the cold.’” Kenna confirmed again that long-term customers would be grandfathered in.

    (April 5, 2019) Are Bankers and Venture Capitalists Really Getting Fleeced by Patagonia? United States: New York Times

    And those left in the economic cold can still enjoy a Patagonia vest recession. I am thankful that it wasn’t called the Carhartt or Chore coat recession signalling a creative class layoff-led recession.

    More information

    Starbucks, Airpods, and the Fleece Vest: The Rise of Wall Street’s Greatest Fixture | California Review

    Patagonia suggests finance bros aren’t a fit for its fleece vests | Quartz

    Patagonia distances itself from tech bros with new branded vest policy | Guardian

    Patagonia Is Refusing To Sell Its Iconic Power Vests To Some Financial Firms | Buzzfeed News

    The finance bro uniform is officially dead as Patagonia stops adding corporate logos to its ubiquitous fleece vests | Business Insider

    How to dress tech bro | Financial Times

    I Wore A Fleece Vest To Work To See If I Felt Like A Tech Bro | Buzzfeed News

    Patagonia will no longer sell vests with finance firm logos on them | CBS News

    Will Patagonia’s New Corporate Gifting Policy Affect the Event Industry? | BizBash

    Moguls, Deals And Patagonia Vests: A Look Inside ‘Summer Camp For Billionaires’ | WBUR

    Shock, horror: Patagonia bans sale of corporate branded vests to fintech and Wall Street firms | City AM