Sunday Snapshots (5th January, 2020)
Sunday Snapshots (5th January, 2020)
LBJ's Presidency, Point, Chinese/US tech firms, and Sweetgreen
Hey everyone,
Greetings from Evanston and welcome to the first Snapshots of 2020!
I just took a transatlantic flight so feel a bit toasted right now. As I was on the flight, I thought about the country that I was coming from and the one I was going to.
India has changed in the last few years, but progress has not been without hiccups. Hiccups of policy and development sure, but also hiccups of identity. Hiccups don't really have a cure; they are a natural part of life. So I'm sure that these hiccups will go away. Many in India are stuck in the tentacles of circumstance and while you can reasonably argue whether the government has helped this demographic or not, that doesn’t really matter to them. They want dignity and they want employment. Today, they are struggling to get either. I’m sure the arc of history in the country will bend towards justice. It just needs to bend faster.
There's been a lot of talk about America's decline as a superpower. It's only fair – you'd be hard pressed to find such hegemonic rule after the post-WW1 British Empire. After a rise comes a fall. But I think most of these fears are overblown. The United States remains the best place in the world to create a great life. Adding to this wealth creation engine is its greatest export – America culture. Culture that now has the tailwind of the internet. Every single one of my cousins watches Friends and Big Bang Theory. 13,000 kilometers away, they are getting a piece of America. That alone is reason enough to be bullish on the country.
With that out of the way, in this week’s Snapshots, I want to talk about:
Lyndon Johnson and the Presidency
Point, a truly differentiated neobank
Why Chinese and US technology firms are both vulnerable
The next phase in Sweetgreen’s evolution
And more!
Book of the week
When you apply for a job, you’ll find at the bottom somewhere around the end you’ll send a sentence along the lines of
[Company X] does not discriminate on the basis of race, color, religion, sex, age, national origin, veteran status, sexual orientation, gender identity, disability, or any other basis of discrimination prohibited by law.
You see it because of the Civil Rights of Act of 1964. You see it because of Lyndon Baines Johnson.
This week, I finished reading Robert Caro’s The Passage of Power. The last portion of the book starts with the events of 22nd November, 1963 when Lyndon Johnson – by a single gunshot – was catapulted from a position of virtually no power to the most powerful position of them all. What he did in the next seven weeks from that fateful day in November to January 8th, 1964 (the day of his first State of Union address) was a reminder that although his old skills might have been unused in the last three years, but they had not been unlearned. In those seven weeks, he laid out a blueprint for successful succession in the face of overwhelming odds. As always, here are my takeaways:
Continuity: It was the first time a President was killed during the nuclear age. Clear continuity had to be demonstrated and it had to be demonstrated fast. Never in the history of untimely succession to the Presidency had there been so many obstacles. The biggest obstacle of them all was a legacy of the person whose position Johnson succeeded into. The Kennedy men hated Johnson and the most important of them – Robert Kennedy, brother and Attorney General to JFK – hated him the most. But he needed them to stay in his administration to demonstrate continuity. Immediately he starts to plead with them as only Lyndon Johnson could plead with men from whom he wanted something. His signature line? “I need you a lot more than Presidency Kennedy did.” It hit every nerve – an acknowledgement of their superior intellect, an acknowledgment of a lack of his, a call to duty, a call to their patriotism. It worked. They all stayed, including Robert Kennedy.
“What the hell’s the Presidency for?”: The day before his address to a Joint Session of Congress – his first public appearance as President – on November 27th, he was at his house fine-tuning the speech with his aides. He wanted to mention in that speech his support for civil rights legislation. The Senate was the death end of many Civil Rights Bills. A coalition of Southern Democrats and Republicans had built a dam that made sure that no such bill passed. Only once had this dam been breached – by Lyndon Johnson when he was Senate Majority Leader in 1960 – and Lyndon Johnson wanted to breach it again. A “wise, practical” person said that because LBJ had limited political capital as the President, he shouldn't wast it on “lost causes” like civil rights. LBJ replied, “Well, then what the hell is the Presidency for?” The “wise, practical” advice was not taken. Civil rights was a centerpiece of Johnson's address the next day.
Codifier of compassion: Although he had addressed Congress and the nation on Civil Rights, it didn't really matter until equal rights were “written into the books of law.” Kennedy also had great words, but he was not skilled at the legislative process. Johnson was a master it. He knew the art of the possible. He knew when to go big as he did with his crusade against poverty, and when to go small as he did for the annual budget. When it came to the Civil Rights Bill, he knew all the tactics the Southern senators would use to stall and delay the bill to try and kill the bill as they had killed so many bills before. For the last three years, Johnson had had no power. No political weapons to threaten or cajole with. Now he had a lot of weapons. Johnson leaned into the key players with the whole arsenal of the Presidency. The Civil Rights Bill was passed on 2nd July, 1964, just seven months after Johnson became President. While Jack Kennedy knew how to make people think, Lyndon Johnson knew how to make people act. Kennedy knew how to elicit compassion. Lyndon Johnson knew how to codify that compassion.
Image: While Johnson was winning several legislative battles, he also had to convince the American people that he was the right leader for them. And that was not the only thing he had to do. He also had to create a public image for the upcoming 1964 Presidential election. This was a difficult task. The public loved Jack Kennedy. And Lyndon Johnson could not have been more different than Jack Kennedy. His existing public persona – to the extent that he was allowed to have a persona for the past three years as Vice President – was that of wheeler and dealer. But a wheeler and dealer is not a leader. To solve this problem, Johnson used tactics that were available only to him. He spent Christmas break on the his ranch in West Texas. He invited journalists there to see how he grew up, how he maintained his ranch and its livestock, and how intimate he was with the people of his town. He even held a state visit from Germany in a nearby town with German immigrants. The state visit was an overwhelming success. Lady Bird (Johnson’s wife) was critical to this effort, giving the journalists and diplomats a taste of the famous Texas hospitality. Lyndon Johnson only revealed the parts of himself that he wanted to be seen. In just a short few weeks, the American public started seeing the sides of Lyndon Johnson that he really wanted them to see. Combined with his work as the codifier of compassion, Johnson was soon admired by the public.
Jack Kennedy was assassinated on 22nd November, 1963. Lyndon Johnson’s Presidency was under the shadow of the former president for the next seven weeks. By the time Lyndon Johnson gave his State of the Union address on 8th January, 1964, his Presidency was his own. This master of power had pulled on the reins of presidential power during these seven weeks. He pulled at them hard. During these seven weeks, he led America through one of its toughest periods and laid the foundation for franchising its most vulnerable citizens. While his reputation would eventually be colored by his escalation of the Vietnam War, during these seven weeks, he was one of the finest presidents that the US ever had.
Product of the week
In the last couple of years, there has been an explosion in so-called neobanks – digital-only banks without any physical locations. The underlying infrastructure for most of these is powered by companies like Plaid.
Even though all of these banks seem the same (their almost identical flat-design aesthetics don’t help), there are some that are truly differentiated.
Enter Point.
A checking account with a debit card that lets you earn points. So you can be responsible with your spending but don’t miss out on the credit card rewards. Point takes it one step further. They have customized rewards tailored to what’s the most appropriate reward at the time.
For example, on New Year’s eve, they offered a 20% cash back on Uber rides. This is to incentivize the user to not drive drunk.
The very next day, they target those same people with a promotion for places where you might go to find things to help you nurse your hangover.
I can see how once Point reaches a critical mass of users, merchants will offer promotions to only these customers to increase spending at their stores.
If you’re interested, sign up for the waiting list here.
Long read of the week
Dan Wang covers technology at Gavekal Dragonomics, a global macro research firm based in Hong Kong and Beijing. His 2019 review is worth reading in its entirety, but the section on Chinese technology companies was particularly impressive.
Dan argues that because the Chinese technology stack is built on American silicon chips, it’s vulnerable to the trade war. However, in the long run this gap in chip manufacturing can be reduced or eliminated. The US is more vulnerable because most of the process knowledge in manufacturing is going to Chinese workers. They are at the forefront of what’s possible. That makes these workers poised to create the next big thing.
Dan lays out some very good arguments in the post. I recommend you read it.
Business move of the week
In a Burger World, Can Sweetgreen Scale Up?
For the uninitiated, Sweetgreen is quick-serve restaurant with salads at its core product. Sweetgreen seems to be on the run of a lifetime. Its customers love it to a cultish degree and are eager to give it more of their hard earned dollars. This has given them the oh-so-wonderful growth numbers that venture capitalists live for. They’ve also showed the company their love – it’s privately valued at more than $1 billion.
It now wants to create and manage stores for its “divinely discontent” customers. This includes partnerships with delivery companies, sweetgreen-exclusive dropoff stations in office buildings, and “cloud kitchens” that don’t have a storefront.
What I like about these moves is that Sweetgreen is obsessed with the customer and is making it easier for them to order Sweetgreen. It’s a win-win.
The question of a fair valuation remains though. Sweetgreen is the only restaurant to have unicorn status – it’s valued at more than a $1 billion. Is it really worth that? For salad? I’m skeptical and would love to see the numbers behind that.
Meal of the week
On my last day in Lucknow, I went to have a dessert that only one shop in the world makes. It’s churned butter but with a cloud-like texture. Absolutely worth the 40 minute drive from my house!
That wraps up this week’s Sunday Snapshots. If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.
Until next Sunday,
Sid