Volume 14: E-Trade sells out, Today if you can find it, ad-agency suicide.

1. Morgan Stanley buys E-Trade: Desperate for customers who won’t be dead in ten years.

Tl;dr: Morgan Stanley buying their way to younger clients.

Last week Morgan Stanley announced the purchase of E-Trade for $13bn, or $2,500 per customer. From the E-Trade perspective it makes sense. Consolidation in the discount broker space accompanied by a brutal price war means a flight to scale is pretty much the only option for survival.

From the Morgan Stanley perspective, however, their rationale is kind of laughable. Yes, they’ll get $56bn in deposits, which is pretty important for them as a funding source. And they’ll get E-Trade’s consumer platform tech capabilities, which they desperately need. But the idea that price sensitive E-Trade customers are going to somehow ‘trade-up’ to highly priced Morgan Stanley advisory services is basically nonsensical.

More than anything, what this deal really shows is how desperate Morgan Stanley is. Their business serves older, wealthier, customers that will all be dead in the next ten to twenty years. They’re just not relevant to younger customers as a brand, as an experience, or as a value proposition, and they know it. Hence E-Trade. But here’s the challenge. To be successful, Morgan Stanley needs to become more like E-Trade, but they’re almost certainly going to make E-Trade more like Morgan Stanley instead. And as soon as they do that, those customers won’t be ‘trading-up,’ they’ll be ‘trading-out’ for a better deal elsewhere.

2. Today at Apple: Building goodwill at scale, but only if you can find it.

Tl;dr: Google and Apple very different in important ways

Years ago, I met some Google folks who were talking about the importance of establishing goodwill with customers and the critical role of human beings in doing so. They bemoaned Larry Page’s refusal to have customer service because “the product should be so good, it doesn’t require it.” (For anyone who’s ever had a problem with a Google product, this is why your experience in getting it resolved is literal hell).

Fast forward to last week, when my son and I went to an Apple store to take a Today at Apple class. We learned how to draw self-portraits on an iPad. It was a lot of fun. More importantly, it required an excellent instructor to make it fun. Multiply this by 500+ stores and goodness knows how many classes, and you have the potential to build a lot of goodwill at a fairly formidable scale. It creates a material change in the emotional relationship with the brand when you get to interact with someone who is neither selling to you nor fixing something that’s broken.

It’s highly differentiating, and might play an important role for Apple as trust in technology declines. There’s just one problem. You can’t find it. Today is communicated terribly today. There’s almost nothing in-store and there’s no link on their website, so you need to use Google to find the booking page (how ironic is that) and once you do, they make these fun classes look desperately dull. But, I guess that compared to getting the really hard stuff right, better communication is an easy fix.

3. Agencies aren’t being killed. It’s more like slow motion suicide.

Tl;dr: A sad tale of a laughably incompetent recruitment experience.

There’s been a lot of discussion about agencies in general, and advertising agencies in particular, dying, being disrupted, being replaced by in-house talent and being out-fought for dollars by the big 4 consultancies, etc.

So, when an advertising agency recently asked if I’d be interested in joining them for an adventure, I was both curious and trepidatious. I didn’t know much about them, but figured it wouldn’t hurt to have a chat. (Now, while I’ve never worked at an ad-agency, I’ve had plenty of similar conversations in the past, so have a pretty good idea the difference between an agency that’s on its game and one that isn’t.)

In the two months that followed, they managed to arrange just two meetings, neither of which touched on what was necessary for the role, what they were looking for, the strategic challenges facing them as a business, or how they see their own position in the market. Mostly the conversation got stuck on my not having an advertising background, which was bizarre since this was the reason they’d given for talking to me in the first place. Worse, in my second conversation this week, the senior executive I was talking to had no idea why we were even talking. By this point, neither did I. They’d sucked my will to live and I didn’t even work there yet.

Now, this isn’t really about me. I view this more as being representative of an insular category run by not particularly good leaders that’s just flat out lost. They know the past isn’t enough for the future, but they haven’t a clue what that future should be.

I actually feel quite sorry for them. These agencies aren’t being killed, they’re committing slow motion suicide.

4. A flywheel effect for Equinox? Please stop, it’s-just-so-damn-exhausting already.

Tl;dr: Equinox wants to own your high-performance life.

For anyone who doesn’t know them, Equinox is a chain of “luxury fitness clubs,” which means an expensive gym with eucalyptus scented towels and obnoxiously wealthy fitness freaks showing off/hitting on each other/working out, generally in that order. As you can probably tell, it’s not for me.

But it is for a lot of people. The tribalism of a gym designed for the fit and wealthy is real, and they’ve been on a bit of a tear recently as the fitness category bifurcates into no-frills bring your own towel at one end and unbridled luxury at the other.

Far from being satisfied just being your gym, however, Equinox now wants to take over your life with a hotel for “high performance individuals where they are free to live exceptionally,” blegh, and now a co-working space. They’re doing this in pursuit of the business goal du j’our known as the flywheel effect, which as far as I can tell is a fancy word for cross-selling but on steroids. Think Amazon and Apple.

But, like WeWork before them, it’s not clear that there’s a flywheel effect to be had here. Gyms, hotels, and co-working spaces are way less connected than phones, watches, and music apps. And it’s not at all clear how using one benefits using another beyond the tribal lifestyle angle, which makes this a lifestyle brand not a flywheel-effect business. If I were being cynical, I’d say this is probably more an attempt to increase the value per square foot of some Hudson Yards property by the “real-estate visionary” that owns them.