OOH …Here’s One Thing
by Jim Johnsen,
Managing Director, Johnsen, Fretty & Company
“And after the love games have been played
All our illusions were just a parade
And all the reasons start to fade” Earth, Wind and Fire
So I wrote this scathing piece on Marc Lore almost 4 years ago (see below). I thought it would be fun to revisit Marc Lore and the Walmart acquisition of jet.com, and with the benefit of time, see whether my conclusion that Walmart got taken to the cleaners and Marc Lore is a fugazi was a bit too harsh. It’s funny to think that “AI” wasn’t a thing four years ago. Now, however, I was able to ask this sidekick what “it” thought about the Walmart acquisition of Jet.com . Here is what ChatGPT told me:
“Although Jet.com didn’t succeed as a standalone brand, it fundamentally changed Walmart’s digital trajectory. The deal fueled Walmart’s evolution into a serious Amazon competitor, mostly through talent acquisition, logistical upgrades, and customer base diversification. As Walmart CEO Doug McMillon summarized, he would make the acquisition again “absolutely.”
Interesting, and frankly, I’ll take some humble pie with that wake-up call. I have a tendency to judge acquisitions that companies in the outdoor advertising industry make on the face of it. Was Outdoor Systems’ purchase of the sports marketing business a success or a failure? Period end of sentence. Similarly, CBS’s acquisition of Outernet, Lamar’s acquisition of Arkraft Strauss, or investment in Grocery TV, or Eller’s acquisition of Akerley Media. How about Akerley’s acquisition of the Supersonics, for that matter? On the face of it, some looked great, while others looked like real stinkers. Didn’t OSI get a long-term, dedicated digital screen contract bundled in that sports marketing acquisition? What if Artkraft Strauss got Lamar in the national game in a much bigger way, or CBS’s Outernet purchase taught them something about analytics, or while Akerley lost a bunch of money on the Supersonics each year, the Company tonned it when it spun the team off. While Eller overpaid for Ackerley Miami, he got a right of first refusal on the rest of the business.
Not sure about anyone else, but I am certainly going to look at certain acquisitions in the future through a new lens.
How about Marc Lore? Well, Johnsen, not so fast there either. Turns out, while we were sleeping, Marc Lore has rolled up a good chunk of the meal kit/food delivery/food app market and is trying to elevate it to another level. Here is a snippet from DigestOnline:
What is the Wonder Group?
Wonder Restaurant Group was founded in 2018 and is headquartered in New York City by New Jersey-based entrepreneur Marc Lore. Wonder Group—the parent company of Wonder—has raised a total of $900 million in funding since its inception in 2018. This includes a Series B funding round of $350 million in June 2022, which valued the company at $3.5 billion. Wonder Group has also raised additional funding from investors such as Nestlé, NEA, Accel, GV, General Catalyst, and Bain Capital Ventures, which translates to some heavy hitters backing Marc Lore, the serial entrepreneur, who previously sold his Hoboken-based company Jet.com to Walmart for $3.3 billion.
The concept is simple; there are over ten restaurants per location. You can order from as many or as few of the restaurants offered as you like. No matter the order, it arrives piping hot in 26 minutes. It’s called “fast fine” food delivery by the company. They also offer pickup options. You could eat in the restaurant, but it’s not the strong point of the brand, in my opinion.
Wonder also recently acquired Blue Apron—a service delivering personalized meal kits and recipes to customers’ doorsteps. Blue Apron meal kits can now be ordered through the Wonder app.
Ehem…maybe I was a little too quick on the draw on the Fugazi comment?
Wishing you all a cool week.
Securities transacted through StillPoint Capital Member firm FINRA/SiPC
Date: Sun, Aug 22, 2021 at 3:34 PM
Won’t Get Fooled Again
uniquely qualified snake oil salesmen —OOH …Here’s One Thing
I had a friend who desperately wanted his newly minted graduate to go work at jet.com. I remember him telling me he was just about to get an offer but then the Company sold to Walmart and all bets were off. I didn’t give it a second thought until I was catching up on some old reading and stumbled on to a “recent” article in Forbes focused on Mark Lore and his next move.
Who am I to judge, but this guy feels a lot more like Mark Cuban then Charles Schwab IMHO. What do I mean by this? Ever heard the term pump and dump? I mean there are great business builders and there are probably more great promoters (aka smooth story-tellers) and sometimes a great business builder is also a great promoter and magic happens. But in my professional career I have met my share of uniquely qualified snake oil salesmen, some of whom successfully sell their businesses to some large corporate who just has to have it, only for them to discover later on that its a beautiful box with nothing inside. Anyone else remember Outernet, Cafe USA or TaxiTop Media?
Lore did get Walmart to pay $3.3 billion for Jet.com. Now thats Michael Jordan-esq talent! How did Walmart do with it? “Not so much” as they say in New York.
Earlier he got Amazon to pay $545 million for Diapers.com. How’d they do? As Cheech and Chong once said…”Up in Smoke.”
Please don’t get me wrong here. I’m not trying to crucify the guy or the entire group of uber-talented guys that understand that part of business is show business. As a mechanical engineer’s son, unfortunately I didn’t inherit that gene, but believe me, there is more than a hint of jealousy for those that did. But at some point when everything you sell quickly turns into merde on stick, one has to wonder.
In any event, here is a snippet from the August 22nd edition of “Morning Brew”:
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“Marc Lore has been dubbed the “LeBron James of e-commerce” for his many accomplishments, most notably founding Jet.com and selling it to Walmart.
He recently left running Walmart’s e-commerce division to get his hands dirty with new initiatives, like buying the Minnesota Timberwolves with A-Rod. We talked to Marc about his next steps and how he managed to qualify for the US national bobsled team.
You’ve said your next project is to build a city of the future supported by a “reformed vision of capitalism.” What about capitalism needs reform?
Income and wealth inequality is a result of capitalism as we know it today. And the problem that we will continue to face is that, in spite of all the material progress, there’s always a class of workers who just barely sustain a living.
Take land appreciation for example—especially in the early days when land went from being virtually worthless to worth something when you’ve actually built a city. Land appreciation is caused by primarily two things:
First is when people build communities, other people want to join those communities and live in those locations. The second is about the tax dollars that go to infrastructure to support the city: roads, bridges, tunnels, subways, things like that, which increase the value of land.
It seems to me that the fair way to do it would be for all this land appreciation—appreciation caused by the people within the city—to benefit those citizens and come back to them. We’re calling it Equitism. And it’s about being more equitable and giving citizens an ownership stake and, as the city does better, the residents do better.
You’ve said that the “vision, capital, people” (VCP) framework is fundamental to every business. Rank those three factors by importance.
That’s a tough one and really against the framework. VCP isn’t hierarchical—they all really play hand-in-hand. But if I had to pick the top spot I’d say people. Like most entrepreneurs, I didn’t put enough importance on the Chief People Officer or Head of HR function early on in a company’s existence. And now in the startups that I’m creating today, the Chief People Officer is typically the first hire, because people are the most important asset within a company. Having a really strong Chief People Officer can help set the culture and values and bring in the very best, most diverse talent.
Vision is probably next. It’s crucial to spend a lot of time on the vision, making sure it’s super clear and everybody knows where you’re headed. Then, of course, it’s all about raising capital to put that plan into action.
What will be the most disruptive force in e-commerce in the next 10 years?
I think we’ve only touched the surface of conversational commerce. By 2040, the retail search engine will be what the CD is today. Just imagine kids 20 years from now—they’re going to be shocked to hear that we had to use a search engine when buying something. The fact that we actually had to type in what we wanted, look through thousands of options, filter by price, colors, style, and then read through reviews.
In the future, buying something will be like having your own personal Jarvis. It’ll know your preferences and likes/dislikes as well as your best friend does. In the future, you’ll just say, “I need a toaster,” and one within your price point, aligned with your kitchen style, and the colors in your home will arrive that same day or even within the hour.
What is a fact that most people don’t know about you?
People always love hearing my bobsledding story.
I was in my twenties and working in banking. One day I was having lunch down at the World Financial Center, and I see a bobsled track set up…for like five bucks you could come down, push the sled, and they’d time you. That was fun and interesting, but more interesting was that they were going to take the fastest time of the week and send the person to the US national team training camp.
The next day, I brought my sneakers, pushed the sled, and the guys there were like, “Whoa, that was the fastest we’ve seen anybody push the sled so far.” It turns out I had the fastest time of the week and they invited me to Lake Placid to train for the next month. At the end of the month, there were tryouts and the top 13 would make the US national team. I finished 13th.
What would you write on a gigantic billboard?
The values create the value.
When I graduated college in 1993 and started in banking I was making a $34k salary. The first thing I did was put a sign in my cubicle that read:
SALARY GOAL
6 figures by 26
7 figures by 37
8 figures by 48
While those were ambitious goals, they weren’t backed by purpose. I grew up a mercenary. I was born thinking that jobs were all about making money. I couldn’t have been more wrong. Becoming a missionary was learned, and, when I became one, my career took off. I’d love for people to learn that earlier than I did.”
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Man if you read the read the above, the guy sounds like the second coming. And heck, A-Rod is all in. I want to believe. Let me say that again. I really want to believe. But I have been taken to the cleaners more than once in my life…and that song keeps firing in my synapses…
“I’ll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around
Pick up my guitar and play
Just like yesterday
Then I’ll get on my knees and pray
We don’t get fooled again”
[Oh, and one more thing…Why the reference to Mark Cuban? Per my buddy Wikki…”Broadcast.com was an Internet radio company founded as AudioNet in September 1995 by Cameron Christopher Jaeb. Todd Wagner and Mark Cuban later led the organization and eventually sold to Yahoo! on April 1, 1999 for $5.7 billion, making it the most expensive acquisition Yahoo! has made.[1] The service has since been discontinued.”]
Feel free to pull the howitzer out and hit me back. I welcome the debate.
jfco.com
Securities transacted through StillPoint Capital Member firm FINRA/SiPC
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