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Hooters "Hooters Girl"

Increasing Hooters Utilization

WeWork has new competition in Tokyo – Hooters. It’s all about utilization.

Hooters in Tokyo’s Ginza neighborhood has teamed up with Spacee – a space-matching service – to rent out work areas during the restaurant’s downtime.

Hooters has over 400 locations worldwide and they, like all brick and mortar businesses, have a utilization problem. After lunchtime traffic at the Hooters in Ginza dies down, 20 seats open up for rent via Spacee until the dinner rush begins.

While WeWork may not be worried about the competition yet, it’s going to be hard to beat the Hooters price. Spacee members pay only 50 yen, or about 48 cents, for a 30-minute work block, and that includes a discount on some beverages and an atmosphere that some will undoubtedly find truly inspiring.

(Oddly enough, students don’t have to pay the 50 yen fee. But if they’re under 18, then they have to be accompanied by a parent or guardian. Glad someone’s thinking about the children..)

Utilization

From an entrepreneurial theory perspective, one enormous path for adding value is to reduce inefficiencies. Low utilization – especially for capital intensive goods – is a huge contributor to inefficiency. And over the past 10 years, a new wave of utilization-focused start-ups have flourished on the shoulders of both the internet and mobile phones.

AirBnB increases the utilization of your spare bedroom or couch. Getaround increases the utilization of your car. Lyft and Uber increase the utilization of your time (and your car).

What’s interesting is that these companies are all marketplace plays. The business is in connecting parties with spare capacity with parties who need capacity. Bring together both parties in a trusted forum and you’ve got yourself an interesting business.

Look around you: What inefficiencies do you see? Where is utilization low? Is the value being squandered worth recovering? Can you create a trusted marketplace? Can you acquire customers at a reasonable price?

PS: In other WeWork news, the company is continuing to expand very rapidly. You may have seen some misleading headlines about $18 billion in leases, but that number is the sum of many years of leases, $13.2 billion of which is for 2023 and beyond. Their 2018 and 2019 lease payments are for $706 million and $984 million respectively. Bloomberg covers the story here and here.

PPS: Hooters and strategy. Strategy and Hooters. Are you not entertained?

(Photo Credit)

Your 2 Min Week in Review – March 19, 2018

Review of the week of March 19, 2018:

Dropbox has successfully IPO’d

Dropbox raised it’s expected price range mid week and ended up selling shares to institutional investors at $21. The shares (Nasdaq: DBX) JUST started trading now and the price immediately popped $9 to $30, a 44% increase.

I think Dropbox is a hot potato that you won’t want to be left holding but I’ll be keeping an eye on how things go. Personally, I’m more excited about the Spotify IPO in early April (more below).

Liquidating Toys”R”Us

The 70 year old brick and mortar toy retailer is liquidating its assets and hundreds of stores will close worldwide over the next few weeks. While Amazon is delivering the smiles these days, Toys”R”Us has one final gift for us grown-up kids: The story of their rise and fall.

Category Killer

A Category Killer is a sector specialist that leverages their narrow focus to gain a competitive edge over less focused firms through increased bargaining power, pricing tactics, large selection, and strong branding. It’s believed that Toys”R”Us was the very first category killer.

How Putin Protects His Power

Putin has been elected for another 6 year term as President of Russia. Key take away: In order to protect power, first focus on getting the right pieces to the right place at the right time. Then worry about covering your tracks and making things look legitimate.

Spotify IPO

Spotify plans to skip the most expensive and stressful parts of an IPO in early April by directly listing their stock on the market (DPO: Direct Public Offering) and letting current shareholders and would-be buyers do what markets do best: price discovery. I’m excited for this one!

The Facebook Freakout

I’ve learned that the vast, vast majority of people have no clue what the Facebook freakout is all about. Don’t be one of them – get the facts. A few hours after I published my piece on the situation, Zuck posted an adept statement – walking the tightrope of trying to please shareholders, employees, and user. This morning’s Exponent podcast has a fantastic recap and analysis.

IPO Meltdown

Speaking of IPOs and Facebook, I wrote about the crisis that happened during the Facebook IPO back in 2012 and a few tips for how to manage crisis. This pairs nicely with my post a few weeks back: The Anatomy of a Disaster.

Autonomous Car Killed Pedestrian

The first pedestrian fatality involving an autonomous car happened this week. More people are going to die because of self-driving cars. But these deaths are the cost of saving more lives.

Autonomous Cars Will Kill People

Earlier this week a woman was hit and killed by an autonomous car in Tempe, Arizona while she was crossing the road with her bike.

The accident is very sad and my heart goes out to the victim’s family and friends.

If you read my recent piece on the anatomy of disasters, you’ll recognize several of the common features here – although on a smaller scale.

The pedestrian was crossing a 5-lane, 45 MPH street in an area where drivers wouldn’t normally expect pedestrians. The autonomous car, operated by Uber, obviously failed to detect the pedestrian and stop in time. The “safety driver” wasn’t focused on the road or prepared to stop the vehicle.

And it didn’t help that it was very dark outside, this section of the road was unlit, and the pedestrian had no lighting or reflectors to make herself seen.

I’ve seen the video of the accident and it’s terrible. Unfortunately, I think that even an experienced driver would have hit the woman too.

More People Will Be Killed

In 2016, 37,461 people were killed in motor vehicle accidents. That’s over 100 people killed a day in the US. (National Highway Traffic Safety Administration)

Driving is an incredibly dangerous activity that we’ve made extremely safe through a lot of hard work over the past 5 decades. Currently the most accident-prone component of driving is us – humans.

We’re often slow, make poor choices, and drive when we’re tired, inebriated, and distracted. In theory, computers would make for much better drivers than humans.

If we are able to develop autonomous cars that are safer than human-driven cars, then I think we’ll be morally obligated to use them.

But that means that more people will die while we develop that capability. In the meantime, we need to have the courage, patience, and wisdom to get there – because it’ll be worth it when we do.