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You might be surprised to learn that one of the hottest “tech” companies in the land makes licensed athletic apparel. It sounds so 1999, like slapping a custom logo on a coffee mug. But the private sports-clothing maker Fanatics has shown how a sophisticated approach to e-commerce, super-fast manufacturing, and online-to-offline retail make a new winner from an old idea.
As an off-and-on sports fan, Fanatics seeped into my consciousness slowly. How could a company I’d never heard of suddenly account for such a giant share of the jerseys and hats I was seeing? It turns out, as I read in Phil Wahba’s excellent piece in the new issue of Fortune, that Fanatics owes its position to the smart thinking of its e-commerce-savvy founder, Michael Rubin. He’s the same entrepreneur who founded back-office digital pioneer GSI Commerce, which he later sold to eBay.
Rubin refers to his company’s approach as “vertical commerce,” or v-commerce. In Wahba’s description that’s “part tech company, part logistics company, part manufacturer.” The story of how Fanatics prepared to make jerseys depending on how LeBron James chose his next team is fascinating.
Is it tech? Is it retail? Is it licensing? Who cares. It’s good business—and worth paying attention to.
Have a good weekend.
Sensei Jetson. How does Japan want to ease traffic congestion on the snarled streets on Tokyo and Yokohama? How about flying cars? The government on Friday announced a consortium of 21 companies, including Boeing, Japan Airlines, and Uber, to work on the project. “The Japanese government will provide appropriate support to help realize the concept of flying cars, such as creation of acceptable rules,” the trade ministry said.
Throwing in the towel. Brad Smith, CEO of Intuit, is stepping down after 11 years in the top post. Executive vice president Sasan Goodarzi will take over on January 1. “I never wanted to be that athlete who loses half a step or can’t complete the pass,” Smith told Fortune. “I wanted to step down when I was still in my learning zone and still had gas in the tank.” Intuit shares, up 35% this year, fell 2% in premarket trading on Friday.
Closing the barn door. Amid growing concerns about the sharing of genetic information, 23andMe said it will no longer let third-party developers access its customers’ raw data, CNBC reports. The data had been made available on an anonymized basis to developers of health apps, weight loss services and others since 2012. Research partners will continue to have access to the raw data, however.
Too cheap. The Justice Department and the Securities and Exchange Commission are investigating Microsoft for possible bribery and corruption over software sales in Hungary, the Wall Street Journal reported. The company sold programs to Hungarian firms at a steep discount and the firms then sold the software to government agencies at close to full price, the report notes. The probes are investigating whether some of the discounts went to pay bribes.
Box office bounty. The next name-brand tech IPO could be online ticketing service Eventbrite. The company filed on Thursday to go public. Sales for fiscal 2017 grew 51% to $202 million while a net loss of $39 million was 5% less than the year before. Evenbright’s complete S-1 filing is here for those curious for more details.
Failing to impress. Also on Wall Street, VMware reported second quarter revenue increased 13% to $2.2 billion and earnings per share jumped 59% to $1.56. Both were slightly better than analysts expected but the results were bolstered by an investment gain from selling shares of Pivotal Software. VMware shares, up 23% this year, were off 3% in premarket trading. HP said its revenue rose 12% to $14.6 billion and adjusted earnings per share rose 21% to 52 cents. Its shares, up 19% this year, also dropped 3% in premarket trading.
Overdue. As it heads towards a likely IPO, Airbnb named Ann Mather, former CFO at Pixar Studios, to its board, also marking the first woman on the board. “I am especially excited for the guidance she will offer in helping us institutionalize our intentions as we plan for the future,” CEO Brian Chesky said in a particularly bad case of Wall Street gobbledygook.
FOR YOUR WEEKEND READING PLEASURE
A few longer reads that I came across this week that may be appealing for your weekend reading pleasure:
How an International Hacker Network Turned Stolen Press Releases Into $100 Million (The Verge)
At a Kiev nightclub in the spring of 2012, 24-year-old Ivan Turchynov made a fateful drunken boast to some fellow hackers. For years, Turchynov said, he’d been hacking unpublished press releases from business newswires and selling them, via Moscow-based middlemen, to stock traders for a cut of the sizable profits.
The Angel Who Keeps Citi Bike Working for New York (Outside)
New York’s Citi Bike, one of the largest bike-share programs in the world, relies on a volunteer army to help redistribute some 12,000 bicycles among 750 stations each day, ensuring that users can grab a ride when they need one.
Archaeologists Explore a Rural Field in Kansas, and a Lost City Emerges (Los Angeles Times)
Of all the places to discover a lost city, this pleasing little community seems an unlikely candidate. There are no vine-covered temples or impenetrable jungles here—just an old-fashioned downtown, a drug store that serves up root beer floats and rambling houses along shady brick lanes. Yet there’s always been something—something just below the surface.
Are Potatoes Good for You? (Consumer Reports)
Why these tasty tubers are not as harmful to your waistline as you may think.
FOOD FOR THOUGHT
The debate over how companies spent the huge windfall they received in last year’s corporate tax cut and how that in turn impacted the economy will no doubt rage for decades. In one corner is the argument over stock buybacks, which have been hitting record levels the past few quarters led by tech giants like Apple. Economist William Lazonick and writer Ken Jacobson contend that the buybacks are harmful, diverting corporate resources and worsening inequality. We’ll share a pro-buyback piece next week, but Lazonick and Jacobson warn:
Defenders of buybacks contend that they do no harm because the funds are reallocated through financial markets and used elsewhere in the economy. A company’s profits are, however, the financial foundation for investments in productive capabilities, first and foremost in employees. Investment in training and retaining employees is the key to productivity growth and innovation, for individual companies and for the economy. According to our research, when trillions of dollars of corporate cash are extracted from companies through buybacks, on top of dividends, the result is a dramatic concentration of income among the richest American households and the destruction of middle-class employment opportunities…
From 2003 to 2007, the value of buybacks by companies in the S.&P. 500 Index quadrupled, reaching almost $600 billion in 2007. With their cash reserves depleted by this orgy of buyback activity, these companies were more vulnerable when the downturn came. Having wasted billions on buybacks, many of them incurred huge losses and required mass layoffs to avoid bankruptcy. After plummeting in 2008 and 2009, buybacks have again soared: A record $800 billion in buybacks by S.&P. 500 companies is predicted for this year.
IN CASE YOU MISSED IT
Facial Recognition Technology Catches Imposter at Airport, Officials Say By Glenn Fleishman
Ritzy Aspen Hotel Sells Real Estate on Blockchain with Indiegogo’s Help By Robert Hackett
Lyft to Offer Free and Discounted Rides to Voters on Election Day By McKenna Moore
BEFORE YOU GO
How tech nostalgic are you? If you ever find yourself pining for the days of the crude pixel graphics of Microsoft’s Windows 95 (still the only operating system to get a kickoff starring the Rolling Stones), you’re in luck. Developer Felix Rieseberg has written a Win95 app that runs on a Mac, modern Windows, and Linux. And it includes Minesweeper.