CEO Daily: The Best in Business Reading

January 8, 2017, 12:45 PM UTC

Good morning.

Anybody who thinks the media are too cynical should spend a month reading only coverage of Silicon Valley in the business press. There, the fawning too often competes with the sycophantic to achieve the most exaggerated accolades for startups that have barely left the crib. That’s why I’ve become a fan of the work of Erin Griffith in Fortune (the very operation that employs me). She brings a sharp eye and an H.L. Mencken-esque dyspepsia that I find most salutary in this particular arena of coverage.

The title of her new feature, “The Ugly Unethical Underside of Silicon Valley,” couldn’t be more direct and the article makes its case with both hard evidence and writerly panache. It opens with a scene of venture capitalist Vinod Khosla—precisely the sort of idol that Mencken would’ve aimed his rapier at—contemptuously brushing aside a journalist named Jonathan Shieber who had the temerity to raise questions about one of Khosla’s investments, “vegan mayo” maker Hampton Creek, at a public event a little over a year ago:

Khosla cut him off with a “talk to the hand” motion and turned to the audience with a wide, this guy amirite? grin. “Here’s a journalist,” he said, “who doesn’t know what’s going on, has an opinion, just like he does, to make interesting stories.” He turned back to Shieber: “I know a lot more about how they’re doing, excuse me, than you do.”

It turns out that Khosla didn’t know so much, to put it charitably, and Griffith ultimately makes sense of Silicon Valley in a way that I’ve never seen before. She describes a financial ecosystem where pressure from investors like Khosla creates incentives for companies like Hampton Creek to stretch the truth and bend the rules to the breaking point—and where investors then deny problems when they come to light or profess bewilderment.




The Battle To Treat Your Pet

The health care sector has been roaring for years. What’s been doing even better? How about health care for animals. The result is a race between two corporations—VCA and Banfield Pet Hospital—to acquire and corporatize previously independent veterinary practices. BloombergBusinessWeek chronicles the competition in a smart article entitled “When Big Business Happens to Your Pet.” It starts with some undeniable facts: even as human birthrates have been falling, the pet population has been surging. “In 2014 there were 179 million cats and dogs in the U.S.,” the article reports, “up from 98 million in 1980.” And pet lovers, many of whom have fewer children than previous generations, are ever more willing to lavish financial love on their furry companions. Combine that with corporate imperatives to maximize tests on pets to increase revenues—exacerbated by the fact that there are few insurers in this realm and even fewer government regulators to hold the companies back—and the result may not be good for the health of your pet.

BusinessWeek finds at least one explanation hiding in VCA’s annual financial reports, which state that VCA’s strategy is “to leverage our existing customer base by increasing the number and intensity of the services received during each visit.” The article quotes VCA’s CEO explaining that that’s a mere financial statement and no veterinarian would ever feel any pressure to over-treat their animal patients. Read this story and you may conclude otherwise.

A Restaurant Bubble?

The lifestyle website Thrillist serves up a fascinating buffet entitled, “There’s a Massive Restaurant Industry Bubble, And It’s About To Burst.” (Thanks to my colleague Matt Heimer for calling my attention to it.) If you’re one of the many customers who has enjoyed the foodie establishments sprouting seemingly on every block of the country, you will be interested—and distressed—to read this examination, which takes readers not so much into the kitchens as in to the back offices of the ambitious restaurants that have come on the scene in recent years. Indeed, what I appreciated in this article was the simple (and damning) math the writer applied. The author, Kevin Alexander, doesn’t appear to be advocating one way or the other, but his calculations don’t bode well for the industry. Alexander uses the same dollars-and-cents approach with two subjects that often succumb to political rhetoric—the impact of Obamacare on small businesses and the effect of rising minimum wages—and the result is persuasive. Among other things, it explains why you may soon be finding your most cutting-edge menus at small stands and temporary locations rather than at full-fledged restaurants.

A Taco That Tastes Like Cat Food? Don't Ask.

Finally, speaking of food, you should not let your week conclude without reading the Wall Street Journal’s article on the tacos served by one fast-food chain. The paradox is captured in the headline: “Americans Eat 554 Million Jack in the Box Tacos a Year, and No One Knows Why.” Still, if you want, er, a bit more meat on the bone, I think one anecdote captures the piece:

The first time Heather Johnson tasted a Jack in the Box taco, she was at a drive-through in Cincinnati when she noticed you could get two for 99 cents, so she added them to her burger order. She took two bites, threw the rest on the passenger seat and kept driving. “It was stale, greasy, spicy, crunchy, saucy and just plain strange,” said Ms. Johnson, a 43-year-old director of operations at an advertising agency in Cincinnati and author of a blog called the Food Hussy. “Who puts a slice of American cheese in a taco?” Two minutes later, she picked the taco off the seat and finished it. Then she ate the other one. “‘I was like, I must have more. This is vile and amazing,’” she said.

“Vile and amazing” may be the best three-word explanation ever uttered to explain the allure of junk food. I urge you in the strongest terms to read the article. I'll leave it to your conscience as to whether you want to sample the tacos.


Bonus: Perry's Nuclear Warning

The Perry in question is Bill Perry, not Rick Perry, our likely next Energy Secretary and thus the steward of our nuclear energy system. Bill Perry, defense secretary under Bill Clinton, is known for his rational thinking rather than alarmism, and as Politico puts it in its headline, "Bill Perry Is Terrified. Why Aren't You?" (Thanks to Alan Murray for pointing me to the piece.) It's true, this is not about business—but then again, the survival of the human race should be everyone's business. As Perry puts it in the article, "We seem to be sleepwalking into this new nuclear arms race. … We and the Russians and others don’t understand what we are doing." Perry, at 89, has taken it upon himself to try to wake us to the dangers, including by using modern media, such as Reddit. The fact that he is sometimes confused for "the Refrigerator," the bulky former Chicago Bears player who shares his name, is only one indication of the magnitude of his challenge.


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