Friday Business, explained.

Garrett King

Jun 21, 2024 — 6 min read

Me, staring at Father Time, marveling how fast my life feels like it's going.

What this is: Hi there, my name's Garrett King. I've put you on the initial distribution list for a new Friday newsletter I'm starting, likely because one or more of the following are true:

👬 we're friends
🤌 we're family
👊 we at least know each other a little bit
🤝 we've worked together in the past in some capacity.

If it's not for you, no big deal, it's easy to unsubscribe below. Below is the first one - if you enjoy it, I'd be psyched for you to stick around.

The mission: I love business. I read the Wall Street Journal nearly every day, I'm fascinated by the stock market, I love learning about people's work and the challenges they face in it. So I'm trying to turn all that time spent reading into something useful for others: Giving you a concise view of a few business headlines you might not have seen during the week, coming up with a business strategy on the fly for companies large and small then giving it away for free so that it might inspire your own creative or strategic thinking, and sending you off to your weekend with something small that's made me smile or got me thinking.

Our three sections to expect each week (for now):

🗂️ Headline Roundup
💵 Cheap Strategy
🍫An Andes Mint Before You Go

If you've made it this far - thank you. Hope you enjoy.

Garrett

🗂️1/ Headline Roundup:

WSJ: You Spent $6,000 on a Secondhand Chanel Bag. Now Find Out if It Is Real.

I‘m 35, and I still can’t quite get the draw of luxury goods like this. I went to a pretty well-to-do high school and occasionally you’d hear some 16-year-old quietly gossiping about who had a real Coach bag and whose was a knockoff.

Something that's changed for me: I can put gas in the car without rifling under the car mats for quarters, but that’s one that hasn’t changed at all. Maybe I’ll get it someday, but at this point in my life it reminds me of something the book The Millionaire Next Door calls "affluent artifacts." Six grand can go a long way. PS, love that somebody’s created a successful business out of validating for legitimacy.

NYT: How 401(K) Drives Inequality

Fascinating read. Three things I never knew:

The 401(K) was initially thought up by a Philadelphia retirement benefits consultant named Ted Benna in the 1970’s, as a way to work around the tax code in order to reduce the tax burden for a local bank’s employees. It became quite popular as we now know.
In 1986, the Reagan administration tried to eliminate it to avoid lost tax revenue.
Australia’s got an interesting approach to retirement funding: “Australia’s Superannuation Guarantee requires companies to contribute the equivalent of 11 percent of an employee’s monthly pay to an investment account that is controlled by the worker, who can also put in additional money.”

Two really eye-opening statistics I saw in here:

US Census Bureau indicated in 2017 that 49% of Americans ages 55 to 66 had “no personal retirement savings.”
The Alliance for Lifetime Income, a nonprofit founded by a group of financial services companies, estimates 4.1 million people will turn 65 this year. The AARP calls it the “silver tsunami.”

Ultimately, I liked getting to hear how 401(k)'s came to be what they are today. I think the headline is a bit sensational, but there's no disputing the stats - the takeaway is that retirement savings are not where they need to be for millions of Americans, and there'll be externalities as a result.

WSJ: It Matters Who De Beers Hooks Up With Next

The diamond market has undergone massive change in the last five years with the rise of lab-grown diamonds: In 2020, about 90% of engagement rings were made with natural diamonds. In April 2024, it was just 55%. Every year, more people continue to shift to lab-grown, whether it’s because they’re cheaper (less than a quarter of the price per carat for natural in 2024) or because of the externalities associated with harvesting diamonds (i.e. labor and practices).

As I read this article, it hit me like a big gleaming “no duh” not only that the largest natural diamond producer in the world is looking for a buyer given these trends, but also that this trend is happening in the first place. Some things that line up with this trend that might be correlated:

Housing costs more: A 10% down payment on a house costs 45% more now than it did at the end of 2019. That money’s got to come from somewhere.

People are getting married later: The share of adults ages 25 to 54 who are currently married fell from 67% in 1990 to 53% in 2019. People are waiting longer.

More are also delaying children: Americans continue to wait longer to have their first child.

The takeaway: Seems like lab-grown diamonds are becoming more widely accepted, which is tough for the traditional diamond industry, but seemingly good for anyone looking to get married.

That’s the end of Headline Roundup for this week. What does it all mean? Life ain’t cheap, save some money.

💵 2/ Cheap Strategy

Each week, I'll write up a short business strategy recommendation for a firm, brand, or startup I've got no connection to and very little experience with. I'll make two promises each time - it'll cost them nothing and may be worth the same.

✈️ This week: We're gonna try to tweak Alaska Airlines' loyalty program in an attempt to capture more west coast travel.

📝Background: Earlier this year, Alaska announced a couple of updates to their loyalty program. One good, one not for frequent flyers like me:

👍: Unlike some of their competitors, you accrue mileage solely through miles flown, not based on how expensive the tickets were.
👎: For anyone with status, you'll see a big cut (sometimes 50%) in how many bonus miles you get for a flight. Right now, a flight from Seattle to Nashville gets me nearly 4000 miles (~2000 miles flown, plus ~2000 bonus miles). Next year, it'll be 3000.

💵My two cents: Alaska has a good loyalty program for people who typically fly alone like me (Southwest probably has them beat for families with children). Why mess with a good thing? They seem to have rebounded pretty well from the whole "door flying off midair" thing earlier this year, their share price is up 7% YTD despite the PR nightmare and I haven't heard about it in months. So they had a rocky start to the year, but the public may be moving on - do we really need to nickel and dime loyal travelers more?

📈Recommendation: Alaska could keep the policy the same on mileage accrual, it helps them stand out vs. Delta, AA, etc. But find a way to walk back the multiplier reduction by incentivizing a behavior they'd like more of.

What if flights purchased with an Alaska credit card still got the full multiplier? It'd encourage card signups, foster loyalty with west coast travelers and likely raise the value of their credit card data.
What if flights booked through a corporate travel portal like Concur got the full multiplier? It'd make business travelers think twice before picking another airline.
What if they identified, similar to their Club 49 program for Alaska residents, a few road-warrior routes that are frequently flown for business, and kept the full multiplier there? Monday evenings from Seattle to JFK, Thursday afternoons from LA to Portland, etc.

Last word: Airlines - come on, man. Make people feel their business is valued, lessens the burden of acquiring new customers because you're better at keeping your existing ones.

🍫 3/ An Andes Mint Before You Go

At Tex-Mex restaurants in Dallas, it's very common to be presented with one Andes Mint per person when paying your tab at the end of a meal. I think it's a lovely touch after I've housed five bowls of tortilla chips, and this is my attempt each week to round this thing out the same way.

Richard Linklater's got a new movie, Hit Man out on Netflix and I highly recommend it. I won't spoil it, but there's a line near the end that I just loved from Glen Powell's character, Gary.

“Seize the identity you want for yourself, and be them with passion and abandon.”