August 25, 2016
Pizza, like other fast food, proliferated in the US because it was cheap and convenient. Above all else, most Americans expect pizza to cost very little, which can be a recipe for all sorts of culinary shenanigans. While it was beloved for decades — even in the highly industrialized form most of us know today — the big chains lost their way somewhere down the line, in pursuit, perhaps, of efficiency and profit. But what other choice did a pizza enthusiast have? ... At some point, enough people decided they were no longer content to just passively gorge on whatever pizza they were offered. ... The recent explosion of so-called fast-casual chains like Chipotle and Shake Shack — which lie a notch above fast food while avoiding table service and tipping — got many to expect fresh, high-quality, non-GMO, grass-fed, and otherwise ambitious-sounding ingredients, even when they were grabbing a quick bite. It was only a matter of time before customers demanded the same of their pizza. What’s happening in pizza now is all very reminiscent of the chains that have boomed in the last decade by selling tuned-up versions of old-school junk food. ... Each of the three new-school pizza chains have roughly 100 locations, with commitments from franchisees to build hundreds more. There are well over 30 fast-casual pizza concepts — some of which have been around for much longer than these three — testing the market across the country.
- Also: Bloomberg - Beyond Spam 5-15min
Financial crises pose challenges for macroeconomists. Schularick and Taylor (2012) show that credit booms precede crises. Mendoza and Terrones (2008) claim that not all credit booms end in crises. Herrera et al. (2014) argue that crises are not necessarily the result of large negative shocks, but also of political considerations. There is a need for models displaying financial crises that are preceded by credit booms and that are not necessarily the result of large negative shocks. ... In a recent paper (Gorton and Ordonez 2016), we show that credit booms are indeed not rare, that some end in crises (bad booms) but others do not (good booms). Are these two types of booms intrinsically different in their evolution, or do they just differ in how they end? We show that all credit booms start with a positive shock to productivity on average ten years before the end of the boom, but that in bad booms this increase dies off rather quickly while this is not the case for good booms. This suggests that a crisis is the result of an exhausted credit boom. We then develop a simple framework that rationalises these empirical findings and highlight several shortcomings of standard macroeconomic models that tend to neglect the interplay between macroeconomic and financial variables.
Even before all of Fuhu's money disappeared, Mitchell was having a doozy of a month. Three weeks before, he and his co-founder, Robb Fujioka--Fuhu's mastermind and headstrong president--had been contacted by attorneys representing the company's primary manufacturer, Foxconn. The Chinese giant was more than just a vendor. It was an investor and patron that had been instrumental in launching Fuhu on its meteoric rise. With gross revenue of $196 million and a three-year growth rate of 158,957 percent ... But behind the scenes, the company was falling apart. In recent months, it had racked up unpaid bills from just about everyone it did business with. And Foxconn--to which Fuhu owed between $60 million and $110 million, depending on who was counting--had finally reached its breaking point. The lawyers told Fujioka and Mitchell that until they paid their tab, their company would be cut off. ... The consequences of losing their supplier were laid out in a thick stack of a Tennenbaum loan agreement that the Fuhu bosses had never bothered to read. ... The rise and fall of Fuhu is a cautionary tale about the seductions of early success and the overconfidence it can breed. But most of all, it's the story of two entrepreneurs who pushed too hard to go big--one whose personal drive led him to take oversize risks against the advice of those around him, and one who failed to stop him.
The DNDi is an unlikely success story in the expensive, challenging field of drug development. In just over a decade, the group has earned approval for six treatments, tackling sleeping sickness, malaria, Chagas' disease and a form of leishmaniasis called kala-azar. And it has put another 26 drugs into development. It has done this with US$290 million — about one-quarter of what a typical pharmaceutical company would spend to develop just one drug. The model for its success is the product development partnership (PDP), a style of non-profit organization that became popular in the early 2000s. PDPs keep costs down through collaboration — with universities, governments and the pharmaceutical industry. And because the diseases they target typically affect the world's poorest people, and so are neglected by for-profit companies, the DNDi and groups like it face little competitive pressure. They also have lower hurdles to prove that their drugs vastly improve lives. ... Now, policymakers are beginning to wonder whether their methods might work more broadly. ... If successful, the work could challenge standard assumptions about drug development, and potentially rein in the runaway price of medications.
At its peak last summer, a daily fantasy get-rich-now commercial aired every 90 seconds on television. Combined, industry leaders FanDuel and DraftKings plunged more than $750 million into TV commercials, radio spots, digital ads and other promotions. In the weeks leading up to the 2015 NFL season, the two startup companies spent more on advertising than the entire American beer industry. ... Daily fantasy's meteoric rise -- breathtaking for its breakneck speed, avalanche of investors' cash and ever-spiraling valuations -- spurred the two companies' endlessly annoying, record-shattering arms race for new customers and industry dominance. ... The two companies processed a combined $3 billion in player-entry fees in 2015. ... as quickly as it boomed, the industry bottomed. One year after their headiest moments, FanDuel and DraftKings are still not profitable. Both privately held companies' valuations have been sliced -- by more than half, according to some estimates. The companies have hemorrhaged tens of millions of dollars in legal and lobbying expenses. (DraftKings' attorneys fees once ran as high as $1 million per week.) And the fog bank of the industry's uncertain future has made it nearly impossible for either company to raise new money.