E-Mail Of The Day

FROM THE CEO OF A PROMINENT CAR DEALER:

The business model for car dealers has been the same for a hundred
years. Your analogy that we are selling CDs in a streaming age is a
great one. But, worse still, we are doing it from big box stores in
the priciest locations so the business model is particularly
vulnerable. There was enough margin to support the business model
last century but that margin has been eroded significantly. Prices
are transparent and the consumer also has access to tools that create
competition between dealers for their business making erosion
inevitable. So selling mass market cars as assets doesn't work
economically and nor will it work psychologically for people in their
thirties. They can't afford to buy homes and they have never bought
music so why would they rebel against that mindset and buy cars? It's
just a logical extension of the story you have been on to for longer
than most in the context of renting music.

Plus cars are changing faster than at any time in their history.
Hybrids (and to a lesser extent PHEVs) are inconsequential but EVs
have changed the paradigm and self driving cars (like nuclear fusion,
twenty years away in my view) will do so all over again. Without a
universal charging protocol buying an EV involves making an
infrastructure bet. Even if you bet right you're buying tech so
there's always something better coming round the corner quickly (like
inductive road charging) that's going to change things all over again.
For all these reasons, residuals on EVs are terrible. No one in the
trade wants to buy any EV or PHEV we get in stock. Overlay those
realities on the millennial mindset and you can see that there's
gathering momentum pushing people away from car ownership.

Manufacturers do know this and smart ones like Ford and Volvo are
reinventing themselves as suppliers of mobility services. Even
Porsche has been trialling a subscription model, which I know you have
reported on. GM sees this too I suppose and you were prescient in
seeing their recent move in the context of underlying trends, hence my
admiration for your reporting.

Where does all this leave the car dealer who are important parts of
the US and UK economies? Stronger in the US perhaps where they enjoy
special protection because NADA is so powerful. But all dealers are
weakened by the fact that customer data is at best a shared asset.
Manufacturers have captured significant customer data through their
own websites, through warranty registrations and through owning
dealerships themselves so they now understand and can predict
customers better than any individual dealer. Add in all the data
that's going to be captured by manufacturers with connected cars and
you have a data set that Amazon would envy. So the dealers need to
pivot to survive too but that's hard to do when your biggest asset is
real estate, which slows you down. The future may be that dealers
become fulfilment houses acting as agents for the manufacturers but
that pushes a lot of stock back on to the manufacturers' balance sheet
which they won't want. However it plays out, dealers are clearly a
vulnerable species.

As for the manufacturers, aided by their data capture, they will be in
a strong position if they make good choices now and perhaps GM is
doing that. But they all need to act quickly as there are hundreds of
well funded EV start ups in China without any legacy costs of funding
development of the internal combustion engine who will be very well
placed when the pace of transition to EVs reaches its tipping point.
So the smartest manufacturers, especially those who understand the
value of data, will survive and prosper and some of those may yet be
American. I would expect to see Ford, GM and FCA to be looking to the
tech sector for their next CEOs. They should.

Hope this provides some useful perspective for you. I do so enjoy
reading your letter, which has been very influential in my assessment
of our own business opportunities.

Best wishes

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How Ghostbusters 2 explains the Trump era

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Ghostbusters 2   
Hi! I'm still on vacation this week. Which means that, if you made a change to your subscription status any time after November 16, you will not see it reflected until the December 7 newsletter. Thanks for understanding my need to get away for awhile. Back in newsy mode next week!
How Ghostbusters 2 Explains the Trump Era
This horrible president did not invent hatred, xenophobia, homophobia, and misogyny. But he is very excited to capitalize on the current of this shit that runs through and beneath society. Here's my TED Talk about why Ghostbusters 2 was a predictive metaphor for this unfortunate moment in American history.

We begin in the Obama era. Participation in hate groups spikes after his inauguration. But on the surface, things look mostly good. Normal, or maybe even improving. But if you're paying attention, through the cracks you can see... 

Something unsavory is bubbling up.

As with every era of history thus far, you've got some entitled men who are really upset when women reject their advances. Sigourney's art-restorer boss, Janosz, is their stand-in.

She is not into him, but can't tell him to fuck off because he's her boss. (See, there's even a #MeToo subplot.) Yet he won't quit.

Ok, then we've got this ancient evil, which is animating in the form of Vigo, a power-hungry white guy with really outmoded beliefs. He is currently trapped in the past but is doing his damndest to assert himself on the present. He understands hate will increase his power. But he needs some help.
Vigo (aka Trump) finds Janosz (aka the Republican base) to be susceptible to hate and easily manipulable toward his own ends, because they want power, too!

Meanwhile, Sigourney has sounded the alarm to the Ghostbusters after an unidentified evil force is determined to steal her white baby. And the Ghostbusters discover that, under the city, there is a river of evil pink slime. It both creates and feeds on society's worst collective impulses.

"Do you know how much negative energy it must have taken to generate a flow this size?" So much. But the Ghostbusters get hauled off to court for merely trying to take samples of and study the pink slime—which apparently isn't always or inherently evil, but it's complicated.

A witness for the prosecution is like, "Your honor, whatever's down there, THEY must have put it there." In other words, people pointing out racism are the real racists!

As Vigo's power grows, both enabled by and feeding the evil pink slime, people are increasingly scared and under threat. Public institutions start to be affected. Here's a fantastic visual for that one:

People are finally starting to realize that this is something that must be actively organized against. Even in the face of despair.

A giant woman who's really invested in human and civil rights steps in to save the day. She does need some support from Ghostbusters because she has been stuck on an island, isolated from power. But she's activated by what's going on, she's uplifted by the music of Jackie Wilson, and she's the best hope for turning off the slime's bad impulses and turning on the good.

It works! She banishes Vigo and his footsoldiers to the dustbin of history with some amazing early CGI.

The Ghostbusters themselves are kind of beside the point. It's mostly about how one specific evil force can activate the existing evil across society and make things really, really bad for all of us.

The crucial resistance roles of Sigourney and Lady Liberty are written out of history. (Sorry, not to be a pessimist.) The End.
 


A few footnotes
- Trump has a very annoying cameo in the Bobby Brown video for a song from the Ghostbusters 2 soundtrack.
- Before he was a candidate, Trump made headlines for being upset that Ghostbusters was remade with women in the lead roles. (I'd totally forgotten about this because there have been so many other offenses since then.) "They're remaking Indiana Jones without Harrison Ford, you can't do that. And now they're making Ghostbusters with only women. What's going on?!"
- I'm not the first one to recognize the brilliance of the pink slime as a metaphor.

The Classifieds

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