Jimmy Donaldson, Square and Bitcoin, Inflation rollercoaster & Why Managers Fail
24th January 2021 Evolution Partners Newsletter
“Don’t mistake activity for achievement” – John Wooden
Hope you’re Thriving!
It’s great to be back, a whole 4 weeks for me without an update!
For the first time since I can remember, I didn’t travel on a plane to go on holiday at this time of year and instead spent time in the South West of Australia enjoying beaches and barbeque seafood thanks to a trade war. An achievement in relaxing and resetting.
Let’s jump right into it and look at a few other activities and achievements from around the world in the past few weeks.
The amazing story of Jimmy Donaldson’s achievement
You probably haven’t heard of 22-year-old Jimmy Donaldson from North Carolina.
In 2016, he dropped out of college to try to solve one of the biggest media mysteries: how does a YouTube video go viral? Donaldson, then 18, had been posting to the site since he was 12 years old without amassing a large audience. But he was convinced that he was about to discover the secrets of the YouTube algorithm, the black box of rules and processes that determines which videos are recommended to viewers.
For months, he and his friends spent almost all their waking hours analysing what made videos get recommended by the YouTube feed, which is the key to success on the platform.
Then in January 2017, he came up with an idea for a video, which he was sure would work. It was simply counting. Donaldson sat in a chair and, for the next forty hours, muttered one number after another, starting from zero and continuing to 100,000. At the end of the exhausting stunt, he stared into the camera deliriously, wondering, “What am I doing with my life?”
That video has now had almost 22 million views, and in total his channel, Mr Beast has had almost 8.8 Billion views.
If you know any kids, they will probably know him under that name quite well.
In his short career:
– He has been awarded Streamy Awards Creator of the Year, the equivalent of the Oscars, but from YouTube
– The average cost of a video is $300,000, the most expensive was $1.2m, he employs about 50 people, and his average video gains more than 20 million views
– He has become a leader in online philanthropy, typically in his videos he will give away tens of thousands of dollars to homeless people, animal shelters, or wounded veterans programs
– He organised a collaborative fundraising program in October 2019 to raise $20m in order to plant 20 million trees, which was achieved two months later
– In December 2020 he launched a virtual restaurant chain with 300 outlets, all on the same day
At 22, I suspect that Jimmy might be only getting started!
I thought you might enjoy this short article about his journey so far.
But how did he launch a 300 outlet burger chain overnight?
To put this into perspective, In-N-Out Burger has 358 locations and has taken over 70 years to build.
He did it by partnering with a company that handles all the operations and just requires a face to be the brand of the organisation. It’s like the white labelling of restaurants, similar to how movie stars have their name on perfume. Here’s another interesting article (thanks to Ian Judson for sharing) which breaks down how Mr Beast did it, and how it works.
Square jumps on the Bitcoin rollercoaster
About a month ago Bitcoin was valued at about $23,000, went up to around $40,000, and is now back down to around $30,000. What a rollercoaster, what a story!
Of course, the mainstream media took great delight in this, with stories about the guy who has only two password guesses remaining to recover $300 million in Bitcoin from his computer or he will lose the lot, or the guy who has $353m worth of Bitcoin on his laptop buried at the rubbish dump and has offered 25% to the local council to help him recover it. But amidst the dramatization of the media, interesting things have also been happening.
In the first week of October 2020 payments company Square invested $50m buying 4,709 Bitcoin to shore up their balance sheet. Good move in hindsight, that $50m went as high as $188m and is now worth about $141m.
But why did they invest in Bitcoin?
The role of a corporate treasurer didn’t exist until the 1970s when companies faced high inflation and financial uncertainty. In this environment, companies without a cash management strategy were effectively losing 10-12% each year to inflation.
The opportunity cost to corporate balance sheets that created those first company treasury roles has continued until today when treasurers are charged with generating a return on the cash held by the company. Years ago, when cash returns were 3-5% this was a lot easier, but today when interest rates are 0% and target inflation is less than 2%, treasurers must balance the need for a return on capital held with the new reality they are faced with. This leads them to investment alternatives that are ideally liquid, regulated, and diverse to their current investments.
Square’s willingness to hold bitcoin on its balance sheet as a treasury asset speaks to:
– the changing landscape that treasurers must navigate, and;
– their ability to manage the operational, risk, and compliance requirements of holding bitcoin directly
Square may be one of the first corporates to hold Bitcoin in its treasury, but it’s another very small and interesting step in the general legitimising of cryptocurrency.
Will the inflation rollercoaster begin to climb?
In the 1988 hit song ‘The Only Way is Up” singer, and perhaps fortune teller Yazz said, “Things may be a little hard now, but we’ll find a brighter day”.
Now there’s a good chance that she wasn’t predicting an upturn in inflation in the early to mid-2020s, but, when interest rates are 0% and target inflation is less than 2%, one day, at some point this will change.
Last week the US, which has effectively the world’s reserve currency and therefore somewhat impacts the world’s finances, elected Joe Biden as the new president.
It’s generally accepted that the US minimum wage hasn’t kept up with inflation, for example, the Australian minimum wage was $3.24 in 1980 and is $19.84 today, a six-times increase, whereas the US minimum wage was $3.10 in 1980 and is $7.25 today, just over 2 times increase.
So Mr Biden wants to rectify this and increase the US minimum wage from $7.25 to $15 by 2025, and also wants to spend $1.9 Trillion stimulating the economy following the COVID impact.
Both seem humane and sensible ideas.
But the question is will this increase inflation in the US, and therefore increase interest rates affecting the rest of the world? With money the cheapest it ever has been to borrow, the largest Government spending ever and now doubling the minimum wage in the world’s largest economy, is this potentially going to put rockets under consumer spending and GDP growth, and then inflation increases quickly, and that leads to increased interest rates?
In Australia, which has so far spent 14% of GDP on the stimulus (to the USA’s 13.2% of GDP before the abovementioned $1.9T), retail spending is so hot at the moment that Gerry Harvey, who owns one of the country’s largest retailers said he has bought 60 warehouses just to house the excess inventory he needs to keep up with demand.
And if that happens, if the rockets being placed in the economy create too much of the desired effect and stimulate too much growth in the coming years, how could that impact your business? If interest rates went up on your debt, how would that affect you? If the price of your supplier’s products went up, how would that affect your business model?
This week on The Growth Whisperers podcast
On episode 41 of The Growth Whisperers, Kevin Lawrence and I talk about the following.
Finding the right person to run your business.
This week on the Growth Whisperers Brad and Kevin talk about how to get someone to come in and run your business. This could mean appointing a CEO, COO, President or General Manager, but where you are handing over responsibility to run the business day-to-day.
They discuss the best practice to appoint a new CEO if you have time and can be prepared, and 6 essential tips if you need to do it in more of a hurry.
Listen to The Growth Whisperers
From the vault
Why Managers Fail
With managers accounting for 70 per cent of the variance in employee engagement scores, having a manager fail is common. But why do managers fail?
I also answer these questions;
Why should the term manager be replaced with the term coach?
What is the reason a manager exists?
What is the difference between a leader and a manager?
Upcoming Event 1
As a part of the Evolution Partners network, you can save $100 on tickets to see the best-selling author of Good To Great, JIM COLLINS at his live global virtual event: Jim Collins – The Roadmap To Greatness on Tuesday 23 February 2021.
All New Findings & World-Changing Insights
Coinciding with the release of his new book, BE 2.0. business leaders and their teams will be among the first to receive Jim Collins’ highly anticipated business-changing framework, “The Map”.
A one-page framework, The Map distils 30 years of Jim’s revolutionary Good to Great® concepts into a single roadmap to build an extraordinary organisation; one that sustains high performance, leads and shapes its industry and remains great for generations.
SECURE YOUR ‘FRONT ROW’ SEAT IN THIS IMMERSIVE EVENT
One of only five business authors in history to sell more than 10 million copies worldwide, Jim has authored six best-selling books, but his appearances are rare.
This live virtual event provides direct access to Jim for 2.5 hours of deep learning, allowing time for Q & A on how Jim’s extraordinary guide to business success can be implemented into your company in 2021.
YOU WILL LEARN:
Drawing on three decades of rigorous research, Jim will equip you with:
• The Map — a one-page framework taking you on a sequential path to implement the Good To Great concepts
• How to achieve the outputs of a great company: superior results, distinctive impact and enduring change
• What great companies have in common that distinguish them from their competitors
• Critical strategies, disciplines and practical tools to build a great organisation
Align your leadership team with the most significant thought leader of our time.
Upcoming Event 2
My business would be so much easier if I didn’t have to deal with people!
There are many challenges in the world of business but getting the right people doing the right things, consistently, is the biggest most CEOs and leaders face.
I believe that most people have great intentions – then life and their own issues get in the way.
So, I’m excited to share that we are doing a two-day virtual Topgrading training session, with Chris Mursau, president of Topgrading. Chris is a master Topgrading professional, and a great guy to spend time with.
For the past few years, we’ve hosted a live session, for our clients and network, to learn Topgrading together. This year, my podcast partner Kevin and our team have been working with Chris Mursau on virtual sessions, which we’re pleased to bring to you, in the new year.
The training is designed for two or three people from your company to attend. This provides the best chance of implementing it and creating the changes you need.
If you’re not sure, watch our Topgrading webinar. Chris and Kevin talk about what it takes to build a notably stronger team and how your hiring process can drive that.
HERE ARE THE DETAILS:
Topgrading Virtual Workshop – Feb 2 & 3, 2021
7:30 am to 2:30 pm PST
Immerse yourself in the secrets, shortcuts and proven methods of Topgrading:
- Get hands-on experience conducting chronological interviews and creating thorough Job Scorecards
- Receive personal coaching from hiring expert and Topgrading President Chris Mursau
- Immerse yourself in the proven methods to hire high performers who will drive your company to succeed.
Following the Workshop, participants also receive:
- A complimentary 1-hour coaching call
- Access to an online tool kit
- A two-month free trial of Topgrading Online Solutions (TOLS).
For more information or register, please contact me directly by reply email.
If you would like to receive our weekly newsletter as an email, simply complete the “subscribe to my newsletter” form at the top of this page.