Volume 65: An absolute car crash.

Apr 1

1. IPO of Amazon backed Deliveroo branded “an absolute car crash.”

tl;dr: Bad timing & wary investors put brakes on UK tech ambitions.

As a part of their attempt to rebrand Britain as a hub for tech firms post Brexit, the UK government recently relaxed certain listing rules to attract high-growth, no-profit tech firms in the hopes of listing more than their fair share of upcoming IPO’s.

As a result, much was riding on the IPO of “Amazon backed” Deliveroo, a UK-based delivery firm. (For those of us in the US, think DoorDash but on bicycles.)

Unfortunately for the UK government, after floating at the lowest end of its price range, Deliveroo immediately dropped 30%, only recovering slightly to end its first-day trading 26% below its list price.

Observers described it variously as “an absolute car crash,” “deeply embarrassing,” and “disastrous” for future attempts to attract high-profile IPO’s to London. But, when I look at it, what I mostly see are people being justifiably cautious about what looks like a crappy business in a cut-throat competitive market that seriously missed the window for an IPO. Watching investors balk at the introduction of dual-class share ownership (bad for corporate governance), be wary of a business making massive losses that has previously admitted to being close to bankruptcy, and reject Deliveroos treatment of employees as not fitting with their ESG investment thesis, are all good things to my mind. They demonstrate that this is a market that’s actually working as it’s supposed to.

So, the irony is that while it might be a black eye for a government looking for a new role for post-Brexit Britain, it’s actually a great example of markets doing exactly what they’re supposed to be doing.

I just feel sorry for the 70,000 retail investors who bought stock through the Deliveroo app at the list price and who now can’t sell until April 7th. It’s going to be a harsh lesson that stocks really do go down as well as up.

2. My head is spinning. Which way is up?

tl;dr: When there’s so much noise, how do you find the signal?

Last week, I talked to a young strategy professional in India, which was both a lovely thing to get to do and a demonstration of the flattening magic of modern video calling that we take for granted these days.

Anyway, during our conversation, he expressed confusion about the state of play in our professional world. There are so many different opinions out there, so many seemingly contradictory pieces of advice and theory and practice. What should someone curious and eager to learn be paying attention to? It’s a question that stopped me in my tracks because it’s a brilliant question, an obvious one, and one that’s really damn hard to answer, which is why it’s been sitting with me ever since.

Now it would be super easy for me to respond by saying that the basic problem is a rich vein of bullshit that’s an inch deep and a mile wide that people are mining for everything they’re worth. And while this is true, it’s not exactly a satisfying answer.

It’s also not particularly satisfying to point out that social media's democratizing effects aren’t necessarily good for the dissemination of really great thinking, which instead gets lost amidst the chum of business development masquerading as intelligence. Past editorial quality control and professional curation from the likes of the Harvard Business Review, while unabashedly elitist (which brings its own issues), did tend to curb the worst excesses of “speculative bullshit,” which LinkedIn, Medium, and Twitter have been built to accentuate.

To demonstrate this, in just the past week, I’ve stumbled across this description of “new” brand versus “old” brand, this statement of the “4 C’s of the modern brand” and this framework showing the “new 4 P’s of marketing.”

Try to then square all of this with the thinking of, say, Binet & Field or Byron Sharp, and we’re left in a right pickle.

So, here’s my attempt to navigate through this:

First, assume everybody is selling you something. And the easiest way to sell what we do is to say that what we used to do isn’t right anymore and that we need to do it all differently instead. Why? Because we don’t create demand for what we’re selling by saying that everything looks just fine, thank you very much. So be wary of anyone presenting anything as radically or completely “new,” and instead ask yourself what they’re selling.

Second, be careful when you see someone labeling niche ideas as having universal application across all brands. The reality is that brands in different categories might work very differently. So what works for fashion might not work for dishwasher detergent, and vice versa. Take the examples above. A casual observation shows that one is based on an e-sports team, one based on fashion, and one based on CPG/FMCG. Dig a little deeper, and you see the first author is a consultant who seems to specialize in sports entertainment, the second in luxury. The third is an academic who works in a university department largely funded by CPG/FMCG companies. The bias, then, is to take relatively narrow observations and then project across all brands. And this isn’t always going to be true.

Third, and this is probably the most important thing, you need to triangulate context. What on earth does that mean? Well, context is everything, so first, try and understand what you’re looking at because this will help you understand where it is coming from and thus under which circumstances it might be useful. When I say triangulate context, I mean looking for patterns across the work of different people and the evidence that supports their ideas. The case-study-based analysis of Binet & Field, for example, aligns quite well with the empirical observations presented by Byron Sharp, which increases the likelihood that we should pay attention.

Contrast this with the observation that brand strategy is moving from “frameworks” to “flywheels.” Not only don’t I understand what this means, but it’s hard to align this context broadly. Yes, there may be some brands where there is real value in this thought, but equally, there are many where there’s never going to be a flywheel effect to build on.

Or, take the commonly thrown around statistic that purpose is foundational because 80+% of Gen Z consumers consider a brand’s ethical stance when making purchase decisions. This is an interesting data-point, but it doesn’t explain why Uber, DoorDash, or the likes are extremely popular brands among this cohort. As a result, there’s no alignment of context happening between the research-based statement and the observed reality, so in this case, we should at the very least be wary and then endeavor to check this out more deeply for ourselves.

Finally, to add all this up, what really matters is thinking critically about what we see (including everything you might read in this newsletter), connect it to our own observations of the world and the available evidence, and attempt to align the context and evidence of what we observe with what’s being said. Then we can decide whether something might have universal applicability or is perhaps an idea with a niche application in the right context, or finally, an idea that’s just rampantly speculative bullshit.

To save you the trouble of checking, the “new 4 P’s” is the latter.