(#84) Nike's turnaround problems; India’s tech strategy; Europe’s crappy internet
Brunello Cucinelli’s 10 core ideas on doing business
Knowledge Partner: ENGIE Romania
Soluţii de dotare a parcărilor cu staţii de ȋncărcare pentru maşini electrice, cu posibilitatea finanţării de către ENGIE:
Pentru dezvoltarea capacității de încărcare la nivel local şi dotarea parcărilor cu stații de încărcare electrică, ENGIE vine ȋn sprijinul clienţilor săi cu diverse modele de colaborare:
stațiile pot fi achiziționate de client și operate de ENGIE în spaţiul clientului
stațiile pot fi deținute și operate de ENGIE în parcarea clientului. Adică partenerul oferă spațiul, iar ENGIE vine cu investiția și managementul stațiilor.
Soluţie de management al flotelor de maşini electrice, oferită de ENGIE:
Înlocuirea flotei de mașini convenționale cu vehicule electrice se transpune, pe termen lung, în reduceri semnificative ale costurilor asociate transportului.
Pe lângă instalarea şi operarea staţiilor de ȋncărcare, ENGIE a lansat în 2023 o soluție de management al stațiilor de încărcare electrică cu 3 componente:
1. Aplicație mobilă pentru utilizatorii finali de mașini electrice (e-XPLORE EV, disponibilă în Google Play și App Store)
2. Platformă web-based specifică managementului flotelor de mașini electrice pentru controlul costurilor asociate
3. Interfață dedicată pentru toate operațiunile necesare, inclusiv monetizarea staţiilor de ȋncărcare.
Toate acestea fac parte din pachetul complet de mobilitate electrică, e-XPLORE EV, accesibil printr-o cerere de ofertă prin intermediul formularului aici.
Strategy
Nike’s problems explained:
1/ Nike's turnaround efforts under the new leadership are not producing the desired outcomes, which is posing serious issues. With some of its iconic items, like the Air Force 1s, Air Jordan 1s, and Dunks, losing their cultural significance, the company, which has long dominated the sportswear market, is experiencing challenges. Customers saw the company's recent attempt to spur interest by producing a limited edition of the Wu-Tang Dunks as a desperate measure in the wake of a dismal financial report, and it backfired. There is a more serious problem with the brand's present market perception when a release fails to arouse collectors' enthusiasm and loyalty.
2/ John Donahoe, who moved from the tech sector to Nike in 2020, has had a contentious leadership style. His plan involved massive layoffs and restructuring, reorienting the company's focus from niche sports categories to more general consumer markets like men's, women's, and children's lines. Nevertheless, there have been no favorable financial results from these adjustments. Nike announced an 8% reduction in direct consumer sales and a 2% decline in revenue for the quarter that ended in May. The company's internal focus has been thrown off by this reorganization, which has further damaged Nike's brand by causing quality control problems like the MLB uniform controversy.
3/ Furthermore, since Nike decided to reduce its wholesale relationships, rivals like Hoka, On, and New Balance have been able to gain a larger portion of the market, especially with younger consumers and older adults who are embracing the smart-casual trend. Surveys indicate that consumers' taste for Nike footwear is declining, which is hurting the company's previously strong hold on the teen market. Most of the +40 years old that I see are wearing either On, or Hoka.
The brand is having trouble connecting with the next generation of customers who don't have the same emotional connection to great athletes like Michael Jordan, even though there are some encouraging signals, like higher reservations for upcoming releases. The problems Nike confronts in sustaining its market leadership are highlighted by this shift in consumer preferences across generations. LINK
Brunello Cucinelli’s 10 core ideas on doing business:
Source: Les Echos
1/ Luxury Is Independent of Time
Brunello Cucinelli’s philosophy underscores that true luxury transcends fashion trends and seasons, emphasizing tradition, craftsmanship, and consistent innovation to maintain its position in the absolute luxury segment of the market. This approach highlights the long-term commitment required to build an authentic luxury brand, which relies on decades of experience and a steadfast dedication to quality.
2/ The 8-to-6 Rule
The company’s strict working hours and policies, rooted in Umbrian heritage and inspired by Saint Francis and Saint Benedict, emphasize the importance of work-life balance. Employees work from 8 AM to 6 PM with no overtime, fostering a culture of respect, rest, and creativity. This unique corporate culture aims to enhance productivity and employee well-being, reinforcing the company's commitment to humane and ethical work practices.
3/ Company Guardianship
Brunello Cucinelli's decision to go public was driven by a desire to ensure the company’s longevity beyond his lifetime. By attracting international partners and investors, the company aims to thrive for the next century, embodying a vision where the brand's values and high standards are maintained under new leadership and guardianship. This strategic move highlights the importance of sustainability and long-term planning in business.
4/ The +20% System
By paying workers 20% more than the industry average, Brunello Cucinelli invests in high-quality craftsmanship and ensures excellent living standards for its employees. This strategy is not only about higher wages but also about creating a supportive work environment with benefits like subsidized meals and cultural enrichment, which fosters loyalty and sustains the high quality of their luxury products.
5/ Be Careful With Growth
Brunello Cucinelli advocates for measured and sustainable growth, avoiding rapid expansion that could compromise quality and exclusivity. The company focuses on selective store openings and maintaining high standards of craftsmanship and design, ensuring that their luxury products remain unique and desirable. This cautious approach to growth aims to preserve the brand’s integrity and long-term appeal. Read it all on Quartr.
India’s Tech Strategy
1/ India is shifting its strategy in the technology sector, moving away from promoting domestic social media alternatives to exerting more control over large foreign tech companies. This change comes in the wake of the failure of Koo, an Indian start-up that sought to replace Twitter. Koo, despite its initial success during the conflict between the Indian government and Twitter, failed to maintain its user base and network effects, leading to its recent closure. Instead of trying to replicate U.S. social media platforms, India is now focusing on implementing stricter regulations to ensure compliance with foreign tech giants.
2/ Since 2021, India has introduced rule changes that hold social media executives criminally liable for non-compliance, compelling even staunch advocates of free speech like Elon Musk to adhere to government directives. Following Prime Minister Narendra Modi's re-election, the government is set to introduce new legislation, including the Digital India Act and a digital antitrust bill, to overhaul existing IT laws and preemptively curb monopolistic behavior. This approach aligns with global regulatory trends but also seeks to create a unique regulatory framework that balances consumer protection and state control over online content. India's strategy aims to establish a "fourth path" for internet regulation, which is less stringent than Europe's approach but more focused on consumer protection than the U.S., while granting significant powers to the state, akin to China's regulatory model. This nuanced approach reflects India's ambition to foster its own technological innovation, particularly in AI, tailored to its vast and diverse market. LINK
Little Tech and a16z.com
Ben Horowitz and Marc Andreessen made a podcast this week announcing why they are supporting Donald Trump for the presidency. More exactly, they are pushing for the Litle Tech agenda:
1/ Little Tech, representing tech startups, has historically operated free from political interference. However, recent shifts have brought political issues to the forefront, with poor government policies now posing the greatest threat to these startups. The advocacy for Little Tech underscores its vital role in maintaining America's technological dominance, equating its significance to other major political issues. The call to defend Little Tech is driven by the necessity to protect the freedom to innovate and create jobs, emphasizing that political support or opposition from the firm is solely based on politicians' stances toward Little Tech, regardless of party affiliation.
2/ The significance of Little Tech in sustaining America's leadership across technology, economy, and military is immense. Historically, America's technological advances have propelled its economy and military, fostering global stability and prosperity. However, current governmental hostility towards new startups, manifested through aggressive regulatory actions and proposed tax policies, threatens this ecosystem. To counteract this, there is a pressing need for political advocacy to support pro-startup policies, such as regulatory reform, boosting high-skilled immigration, and revitalizing manufacturing through automation and AI. These measures would not only enhance the startup environment but also ensure America's continued technological and economic leadership into the 21st century.
So, what does Silicon Valley want in general from the next presidential election? I think: (1) Antitrust regulation against Big Tech, (2) crypto, (3) Taxes, (4) no-DEI and anti ‘cancel-culture)I, (5) A stop an antisemite wave. Little Tech, Ben and Marc show
Europe’s crappy internet
Here is what I wrote in the onStrategy Newsletter #81:
“Europe’s economy is crappy, but the digital experience is top (= provided free of charge by USA or China). If we make the life harder of these companies they will offer us a crappy internet. (ie. no Apple Intelligence for the EU yet, Threads delayed 6 months, META ‘forced’ to use less targeted ads). What’s 10% of the revenue after all? Not that much. You would want to look at where the future is: Americas, Africa, India, and S-E Asia.
EU, which is governed by bureaucrats, is being transformed into an open-air museum.”
The Verge this week: “Meta won’t release its multimodal Llama AI model in the EU”. LINK
Again, the EU will use the hardware of the future (ie. the latest iPhones) and the software of the past. And this is what “crappy internet” leads to an “open-air museum”.
Artificial Intelligence
OpenAI’s Sora can now render human hands and other ‘special’ details
1/ AI has historically found it challenging to create realistic human hands. However, this partnership with designer Tim Fu highlights Sora's remarkable capabilities. This collaboration not only showcases the progress in AI-driven design but also sets a new benchmark for what AI can achieve in the creative field. Tim Fu's expertise combined with Sora's advanced algorithms has resulted in a seamless integration of technology and art. This breakthrough is not just about generating human hands; it's a testament to the evolving sophistication of AI in understanding and replicating complex human features. The potential applications are vast, ranging from more lifelike animations in the entertainment industry to improved prosthetics design in healthcare. As AI continues to learn and adapt, we can expect even more refined and human-like creations, bridging the gap between machine and human artistry.
2/ Just a few months ago, we were astonished by the ability to generate static images from text prompts on Midjourney. Now, we can produce 10-second video clips from a simple prompt. This rapid progression in AI technology is a clear indicator of the extraordinary advancements we can anticipate in the coming decade. The leap from static images to dynamic video clips signifies a monumental shift in how we interact with and utilize AI. It opens up new possibilities for content creation, allowing for more immersive and interactive experiences in media and advertising. Furthermore, the potential for real-time video generation could revolutionize industries such as virtual reality, gaming, and education, providing richer and more engaging content. The pace of innovation suggests that we are on the cusp of even more groundbreaking developments, where AI not only assists but also augments human creativity in unprecedented ways. LINK
AI helps detect cancer faster
Journal of Clinical Oncology: “In practices utilizing C the Signs the CDR significantly increased from 58.7% in 2020-21 (prior to the implementation of C the Signs) to 66.0% in 2021-22, reflecting a significant increase of 12.3% (p <0.05)”. LINK
How AI brought 11,000 college football players to digital life in three months. LINK
Interview Robin Li, founder, chairman and CEO of Baidu
1/ In a recent in-depth discussion on AI at the 2024 World Artificial Intelligence Conference (WAIC) with Robin Li, Baidu’s CEO (=Google’s equivalent) , discussed several pressing topics of concern. One particularly intriguing insight is the stark contrast in approaches to generative AI between the Chinese market and overseas markets.
2/ In Silicon Valley, major companies are competing to enhance the capabilities of multimodal large language models (LLMs), with startups focusing on infrastructure and the market eagerly awaiting GPT-5 to confirm the Scaling Law. Conversely, in China, the "battle of the models" has quickly advanced to a price war, occurring much sooner than many anticipated.
3/ Robin Li predicts that the next significant phase in China's AI market will revolve around competition in AI applications. During the interview, Li expressed his views on the price war surrounding LLMs in China and discussed the potential for AI in enterprise-level B2B services. He also addressed the ongoing debate between open-source and closed-source models, the development of AI super apps and agents, and his perspectives on artificial general intelligence (AGI) and the Scaling Law. LINK
Andrey Karpathy
Former OpenAI researcher to launch AI education company - Eureka. LINK
Things Happen
With Trump’s prospects of winning the elections is good to read Geopolitical Futures insights on: US Strategy in Europe. LINK
The Economist: “Romania is now a magnet for the world’s medical student”. LINK
Dyson OnTrac™ headphones global premiere. LINK
How to price your wine. LINK
Bloomberg: ‘AI Laggards’ find favor as Magnificent Seven stocks lose luster. LINK
Nvidia could reach a $50tn market cap in a decade, says James Anderson. LINK
[Report] A Chinese assault on Taiwan would probably include cutting undersea internet cables, significantly hindering communication. LINK
Data
One doesn’t need to be autocratic to be economically successful. LINK
Technology will save the planet. LINK
Wine’s future is not rosé. LINK
Wang Feng, Editor in Chief FT China, on his visit to a Honor factory in Schenzen
1/ “Just visited a model factory of CN phone maker Honor in Shenzhen, shown an 8000sqm floor full of sealed production lines, robotic arms, sensors & inspection robots. This floor churns out 5000 high-end phones per 24h, with about 100 human workers in total.”
2/ “Automation rates at this factory went from 60% to 85% in 2 years, with a handful of robotic arms, precision units made in Japan & Germany. All other equipment developed & made by Honor itself or other domestic companies”
3/ “On the top floor of which sits a US$50m supercomputing center running AI simulations for every aspect of a mobile phone, "powerful enough for a whole city's supercomputing needs". LINK
Outside interest
Chile is as long as all of Europe! LINK
Ghana’s architectural heritage. LINK
How 40 million cork wine stoppers sre harvested Aper day. LINK
The Ched’s shoes, by Grenson. LINK
Peter Thier on the World Economic Forum. LINK
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