6 Elements of Today's Customer Buying Journey That Can Make or Break Your Business

In today’s totally interconnected world with its abundance of information, choices, and marketing, how your customers buy has drastically changed. Buying has evolved from a simple transaction decision to multi-faceted experience.

Whether you are an executive, an entrepreneur, a marketer, or a salesperson, it’s time to look beyond how you sell, and focus on how your customers buy.

For example, you may think that buying a commodity like bottled water is still all about price, yet buyers today check their smartphones first for positive brand reviews, environmentally friendly bottles, positive buzz from social media, and the nearest outlet for purchasing.

Think about how much Starbucks customers have changed what you need to consider to sell a cup of coffee.

I found a good outline of the key elements involved in today’s customer buying experience in a new book How Customers Buy…& Why They Don’t by Martyn R. Lewis. With his two decades of experience as an entrepreneur and a sales and marketing consultant across a broad range of businesses, he has some good insights on what works with customers today, and what doesn’t.

In my own recent experiences advising small business owners and entrepreneurs, I have seen the same six elements of the customer buying journey many times, especially as they relate to selling in consumer environments:

1. First you need a trigger to start the buying journey.

You may believe your product or service is very attractive, but you won’t get a customer until someone decides to act on an unsatisfied need. These days, that trigger is much more likely to come from a friend’s experience, social media, or a memorable website, rather than conventional advertising.

2. Understand all steps required to complete the experience.

The sales steps may seem simple to you, but customers today are quick to abort if they get confused, encounter redundancy, or the process takes longer than expected. Make sure you listen carefully to online feedback and reviews, and personally check competitor’s processes.

How many times have you been frustrated, or even given up, on businesses that make returns and exchanges more complex than competitors, or can’t handle transactions and discounts quickly?

The bar is constantly moving up, so don’t get caught at the bottom.

3. Target the key players in the buy decision and process.

In the world of millennials, parents may be doing the buying, but the kids are driving the decisions. In business, buying decisions are now often made by a network of highly connected individuals across a virtual world through instant messaging. Target the players as well as the process.

4. Market to the dominant buying style of your customer.

On one end of the spectrum, people now buy solutions, rather than products. On the other end, many people look for personalized choices, versus value received. There is no right or wrong buying style, and it’s up to you to market and sell according to the style of your target market demographic.

For example, some customer segments prefer the one-size-fits-all approach, for speed and simplicity, while others want the solution to be customized for them, even if it costs more. You need to constantly talk to your target demographic and adapt to their style.

5. Capitalize on key value drivers that motivate your buyer.

The value drivers have to be sufficiently compelling to your customers to outweigh the costs, risks, and change associated with completing the buying process and using your offering. I still remember switching to a personal computer at work, which was a huge change and risk for me, but I desperately needed the productivity boost promised.

I have recently seen an increase in social drivers, including peer pressure, prestige, or environmental impact. For example, I know many people who shop at Whole Foods due to their focus on environmental sustainability, despite somewhat higher prices.

6. Eliminate buying concerns that can slow or stop the sale.

These are the opposite of value drivers. Concerns might include complexity of the process, priority of the need, decision scope required, implications of the solution, and many more. It’s up to you to anticipate and alleviate these concerns in your marketing before they even come up.

For example, in recent surveys, over 50 percent of online shoppers have admitted to abandoning their carts, causing you lost revenue, at least once in the last three months. Most of the reasons given could be fixed purely through simple design changes.

From a big picture standpoint, what you need today is a market engagement strategy, rather than just the traditional sales funnel that focuses on completing transactions. Your selling process has to harmonize with how the market is buying, or tackle the more difficult challenge of changing how the market buys.

Engaging your market is eminently doable with the online and social tools available today, but it takes effort and change on your part to meet your customers, rather than wait forever for them to meet you. It’s time to get started today.

Apple CEO Tim Cook Says Working for Steve Jobs Was ‘Liberating’

Apple CEO Tim Cook is clear about one thing: Apple co-founder Steve Jobs was a great person to work for.

Speaking to Bloomberg in an interview published in June (but resurfaced on Thursday), Cook said that working for Jobs was “liberating.” He described how he would approach his former boss with a “really big” idea. And if Jobs found the idea to be a good one, he’d simply say, “OK” and let Cook run with it.

“It was like a total revelation for me that a company could run like this, because I was used to these layers and bureaucracies and studies—the sort of paralysis that companies could get into—and Apple was totally different,” he said, according to a transcript from 9to5Mac.

Cook’s comment comes on the eve of his seventh anniversary as Apple’s chief executive. He took over the company in 2011 when Jobs was ill and has presided over its continual growth.

Jobs, who died in 2011 after a long battle with cancer, had a reputation for being very clear in how he managed the company. Some have said he was at times a tough boss. Cook, along with many of Apple’s current and former employees, found him to be inspirational.

Cook was one of Jobs’ chief lieutenants and Jobs’ choice to run Apple follow his resignation and death. In the last seven years, Cook has proven to be an exceedingly effective chief executive, who has swelled the company’s profits. He’s also presided over Apple being the first American company to reach $1 trillion in value.

Correction, Aug. 23, 2018: An earlier version of this article misstated the publication date of Cook’s interview with Bloomberg. It occurred in June.

Cutting Bird’s Wings? Cease and Desist Letters Might Be Coming For Electric Scooter Companies

Scooters are all the rage—but they also seem to be incurring the rage of city officials across the U.S.

In the last several months, cities like Los Angeles and San Francisco have moved to ban the dockless electric scooters, citing problems such as people riding illegally on sidewalks and parking scooters illegally.

Now it looks like a temporary ban might actually be implemented in LA. According to Curbed Los Angeles, the LA transportation department has plans to begin issuing cease-and-desist letters “to companies placing dockless scooters in areas where they haven’t been given explicit permission to operate.”

Curbed notes that the letters could come as soon as next week.

The move follows a complaint made by the chair of the L.A. City Council’s public safety committee Mitchell Englander, who questioned why a cease-and-desist letter had only been issued to scooter maker Bird.

In March, the council had unanimously backed a moratorium on electric scooters, to give the city time to determine laws around their use. Yet while the vote has been referenced since, including in the cease-and-desist letter sent to Bird, the city has struggled to streamline and enforce its policies.

Even if the letters are issued, the transportation department does not have the authority to impound the vehicles. As such, Marcel Porras, the transportation department’s chief sustainability officer, has reportedly asked city council for further guidance on how to enforce the existing rules. But no reason to stress yet—in the meantime, it is unlikely that your favorite electric scooter will disappear from the streets entirely.

The Rebirth of Radio Astronomy

In the early 1930s, Bell Labs was experimenting with making wireless transatlantic calls. The communications goliath wanted to understand the static that might crackle across the ocean, so the organization asked an engineer named Karl Jansky to investigate its sources. He found three: nearby thunderstorms, distant thunderstorms, and a steady hiss, coming from … somewhere.

Jansky studied the hiss for a year, using a rudimentary antenna that looks like toppled scaffolding, before announcing its origin: The static was coming from the the galaxy itself. “Radio waves heard from remote space,” announced the New York Times in May 1933. “Sound like steam from a radiator after traveling 30,000 light-years.” Janksy had unwittingly spawned the field of radio astronomy.

Today, a replica of Jansky’s scope sits on the lawn in front of Green Bank Observatory, one of the four world-class, public radio telescopes inside the US. Along with the Very Large Array, Arecibo Observatory, and the Very Long Baseline Array, it is the legacy of a boom time in federal investment in the field that began in earnest after World War II.

In the past several years, though, the National Science Foundation has backed away from three of those instruments. In 2012, the National Science Foundation published a review recommending that the foundation ramp down funding to Green Bank—just 11 years after it had been finished—as well as the VLBA, which can resolve a penny around 960 miles away. Three years later, the foundation asked Arecibo for management proposals that “involve a substantially reduced funding commitment from NSF.”

Now, the future of those scopes—instruments that map the gaseous threads that connect cosmic neighborhoods, penetrate the dust shrouds surrounding not-yet stars, and probe way-warped spacetime—is in question. “Radio astronomy is really, really unique in the kinds of astrophysics that we can study,” says Brian Kent, an astronomer at the National Radio Astronomy Observatory.

That work is far from stopping. But support for pure science in the US is always complicated, since it relies on the good graces of federal agencies and annual budgets. As funders balance building and operating new scopes with the old, while giving grants to the astronomers who actually use those instruments, something’s gotta give. And no matter what it is, the science will not be the same.

Building massive radio telescopes—which today cost anywhere from around $100 million to more than $1 billion—actually began as a cost-sharing measure. In the 1950s, the nascent radio-astronomy community realized universities couldn’t afford to build their own scopes—at least not ones of high enough quality to drive the field forward. So in 1956, the United States formed the National Radio Astronomy Observatory, building a succession of telescopes in Green Bank that it could loan out to scientists from around the country. In Puerto Rico, construction on the 300-meter Arecibo observatory began in the 1960s, and it became the National Astronomy and Ionosphere Center. In the 1970s, the NRAO started building the Very Large Array in New Mexico.

Most recently, NRAO helped create the Atacama Large Millimeter/Submillimeter Array, or ALMA, in Chile. It cost more than a billion dollars to build, with the NSF contributing around $500 million, and another approximately $40 million per year to operate it. But it’s worth it: In US astronomy, interferometers, or telescopes like ALMA made of many smaller antennas, are currently more popular with scientists than big single-dish scopes, says NSF astronomy division director Richard Green. “We really try to be responsive to community interest,” he says. Interferometers provide higher resolution—crisper pictures of smaller areas—and can investigate many of the same celestial phenomena.

Giant single dishes do still hold astronomers’ interest—especially those that want to map large gassy portions of the sky, find and monitor pulsars, and catch the faint emissions that interferometers, less sensitive, can miss. Still, when push came to budget cut, the big single dishes, Arecibo and Green Bank, were the ones to go.

Now, as the NSF gradually decreases funding to Green Bank and Arecibo, the observatories have had to solicit support elsewhere—primarily through pay-to-play private partnerships. A SETI project and a collaboration of pulsar astronomers searching for gravitational waves are helping to keep Green Bank afloat. The Russians are ponying up to communicate with their science spacecraft. And the VLBA has netted Navy money, partly to keep track of Earth’s tilt.

This, a different kind of cost sharing, is a business model the agency can turn to to keep older telescopes online. The NSF still, for the moment, funds part of their time—“open skies” hours available to anyone’s good ideas; the rest of the time, the scopes are subject to their customers’ whims. That’s the tradeoff right now, says Joseph Pesce, NSF’s program director for NRAO (NSF split Green Bank and the VLBA off from the observatory in 2016). “We are able to keep the facilities running,” he says. “That’s a good solution to this problem.”

And it could leave room—ideally—for building up other resources astronomers are interested in, like array-based scopes.

There is a new facility potentially on the horizon: The Next-Generation VLA (the VLA itself, while upgraded, is 40 years old). As currently envisioned, the ngVLA’s many antennas will together have 10 times the sensitivity and resolution as the VLA, at a wider range of frequencies. The primary array will have 214 18-meter antennas, spiraled across New Mexico, Texas, Arizona, and Mexico. Nineteen smaller ones will sit close to the center, and 30 eighteen-meterers will constellate the continent.

With the ngVLA, the hypothetical instrument’s project scientist Eric Murphy says astronomers could make high-def movies of solar systems as they come together—something previously out of reach because the dust surrounding the baby planets obscured their birth, and because radio images weren’t sharp enough. They could capture the collisions that cause gravitational-wave events, up to 650,000,000 light-years away. They could find more molecules that precurse biology in still-forming star systems.

The conditional tense, though, is key. Before it can be realized, a committee has to deem it important in the 2020 “decadal survey,” a priority-plan astronomers make every decade. If it gets a high ranking, and then funding, construction would start around 2025.

But it’s…expensive: $1.5 billion just for construction, of which the US would pay half. Green Bank’s construction, meanwhile, cost about $135 million in today’s dollars, and around $10 million a year to operate, compared to the ngVLA’s $75 million. “It might all get shot down tomorrow, but for now, it’s fun,” says Murphy.

If it does get shot down, he says, the team could scale the plans back, or just keep running the VLA. At the other sites, members of the radio astronomy community are helping make older telescopes new again: They are developing a new Arecibo receiver that would game-change its view, and a Green Bank collaboration is working on a receiver called Argus+ to make, among other things, fast, detailed maps of molecules in galaxies and places where new stars are forming. In 2011, the VLA got a $94 million electronics upgrade and a new name that no one uses: the Expanded Very Large Array. “But 40-year-old dishes become 50 years old,” says Murphy, “and things become more difficult.”

In a hypothetical future in which the US has a 50-year-old VLA—and a partially or fully privatized Green Bank, VLBA, and Arecibo—American radio astronomers will have less they can do from their own backyard. “There is only one Green Bank; there is only one Arecibo; there is only one VLA,” says Kent. “Without those facilities working together in concert, we don’t have the kinds of tools scientists, engineers, and educators need.”

But radio astronomers—always kind of a scrappy, rogue element within the cosmic establishment—will likely continue to find ways to keep their telescopes open, operating, and updated. It’s part of their scientific heritage.

See, after Karl Jansky did his phone project, Bell didn’t care so much about this astronomy stuff. The lab moved Jansky on to other projects. But in Wheaton, Illinois, a guy named Grote Reber became obsessed.

In his backyard, Reber began to build his own radio telescope. Its dish, completed in 1937, was 31 feet across—a length dictated by the boards available at the local hardware store. He published the first map of the galaxy’s radio emissions, a contour plot that looks like a sky cephalopod. For around a decade, Reber was the world’s only active radio astronomer.

When the National Radio Astronomy Observatory started up, in the 1950s, it bought Reber’s telescope and relocated it to Green Bank, right across the street from Jansky’s duplicate—a reminder to support each other’s science, in the face of establishment adversity or ambivalence.


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Investors in Tesla bonds show skepticism on buyout

NEW YORK (Reuters) – Investors in the debt of electric carmaker Tesla (TSLA.O) are betting the take-private deal described by Chief Executive Elon Musk will not materialize.

FILE PHOTO: A Tesla electric car supercharger station is seen in Los Angeles, California, U.S. August 2, 2018. REUTERS/Lucy Nicholson/FIle Photo

Like its stock price, Tesla bonds have given up all of the gains they made after Musk tweeted he had “secured” funding to take the company private, suggesting the credit market has scaled back the chances of a deal.

Tesla’s high-yield debt now trades at around 87.5 cents on the dollar, down from 93.0 cents on the dollar on August 7, according to Thomson Reuters data. Tesla’s convertible bonds due in 2021 88160RAC5=RRPS are trading around 107.20 cents on the dollar, down from 120.46 cents on the dollar on August 7.

Convertible bonds give bondholders the right to trade their debt for equity after shares rise over a certain price.

Bondholders are paid back in full in the event of a buyout – at 101 cents on the dollar for the junk bond coming due in 2025 88160RAE1=RRPS if certain conditions are met. The company’s longer-dated convertible debt would earn an additional premium above par if Tesla were taken private.

“The smart trade at the moment is to short the converts and go long the high-yield bonds, because that spread will collapse” in the event Tesla files for bankruptcy, said Lawrence McDonald, founder of the Bear Traps Report. McDonald believes bankruptcy is the path for Tesla if it does not find a buyer because of the company’s high leverage compared to its earnings before interest, taxes, depreciation and amortization.

A Tesla spokesperson declined to comment. Musk said in his second-quarter shareholder letter that the company can be sustainably profitable from the third quarter onwards.

McDonald contends, there continues to be a spread between the convertible and junk bonds because, despite falling prices, convertible bonds still trade at a bit of a premium because of the volatility of the equity.

Tesla investors have raised their bets against the convertible bonds: short positions in the three converts have risen, from $38.14 million on August 6 to $49.47 million on August 16, according to IHS Markit.

Tesla’s convertible bonds coming due in 2021 are currently trading around 107.20 cents on the dollar – roughly 20.8 cents on the dollar away from where they should trade if a deal at $420 was fully priced, said Geoffrey Dancey, managing partner and portfolio manager at Cutler Capital Management. Musk shocked investors with a tweet on August 7, saying he had “funding secured” for a possible buyout deal at $420 per share.

“If these bonds were priced for a takeover, they would trade at a serious premium to the conversion value compared to when the deal was announced,” said Dancey. “The convertibles are certainly not trading as if this company is going to be taken private at $420 and they never did.”

Longer-dated convertible bonds benefit from take-private deals as bondholders receive additional shares per bond in the event of an acquisition. In a $420 per share deal, the 2021 convertible bond would receive an additional 11 percent above face value, or 11 percent more stock.

On the day of Musk’s buyout tweet, when the share price hit an 11-month high of $387.46, more than $27 dollars above the 2021 conversion rate, the highest the 2021 note traded was 120.46 cents on the dollar.

That the debt is trading below the price prior to the deal tweet suggests the deal was never priced in. That it trades below its price before its solid second-quarter earnings call on August 1, suggests the tweet’s damage was more widespread.

Reporting by Kate Duguid; Editing by Jennifer Ablan and Nick Zieminski

The 2 Words You Need to Eliminate From Your Vocabulary Right Now if You Want to Meet Your Goals

I hear so many entrepreneurs, marketing managers, even vice presidents and CEO say things like, “I hope we get that new account, I hope we hit our sales goal, I hope we make our budget.”

The first question that comes to my mind is, “What are you hoping for? Make it happen.”

When someone says the words, “I hope,” a red light goes off in my mind letting me know they don’t have a plan. They are hoping for an outcome because they aren’t sure of how they’re going to get there–and hoping is always easier than digging into the work.

There’s a famous quote by Stephen Ambrose that says, “Where there is a will, there’s a way.” He’s also known for his quote, “Plan your work and work your plan.” The first time I heard this advice was when Ross Perot was running for President in 1992. As an independent candidate, winning was an uphill battle–and yet he still won 18.9 percent of the popular vote. His no-nonsense business approach to running the country was something that resonated with me for years.

In every one of my companies, I work hard to remove “I hope” statements from our culture, and focus more on cultivating an environment where “Here’s how” statements can lead the way. In order to do that, I’ve had to really nurture employees and fellow leadership team members to not just think or talk about executing, but to actually dig their heels in and get things done. 

The key to creating a culture of “does” and not “wishers” is to measure as many things as possible within your business. Not to the point where people are spending more time filling out excel spreadsheets than they are making productive strides forward, but enough to know whether you’re in “hope” territory or on the path to success. As the old saying goes, “What gets measured, gets done.”

I share a wide variety of examples in my book, All In. One very clear measure-for-success example is something I’m currently experiencing with my most recent company, LendingOne. In our industry, there are many other private lenders and competitors, so we’ve continuously had to ask how to get real estate investors to call us. If we were to just send out advertisements, invest in some marketing and hope for them to call, we’d be doing ourselves a great disservice. That’s not a business strategy, because most of the time you end up sitting around, waiting.

Instead, we’ve had to build very clear systems to build leads. We go so far as to monitor and measure daily and weekly performance against our sales plan. If something doesn’t seem to be working, we change our plan. And sometimes, even if things aren’t working, we fix it anyway–because we want to know if there’s an even better way of doing things.

Most businesses love the planning part. They love brainstorming all the things they “could” do. Some make it to the execution phase, where those plans are beginning to materialize and generate some sort of movement forward for the business. But the truth is, most businesses fail at the third part, which comes down to measuring their own success–and then iterating from there. 

Without measurement, your efforts are no better than shooting in the dark. You don’t know what’s working, what isn’t, and by how much. You don’t know what’s worked in the past, and it becomes tremendously difficult to make assumptions of what would work better moving forward. 

Putting a plan in place and “hoping” for an outcome isn’t a strategy. It’s an excuse.

Jeff Bezos Has a Bulletproof Hiring Strategy That All Comes Down to 3 Profound Questions

If you’re an entrepreneur, there’s also a good chance you’ve hired someone who you later had to let go for similar reasons. 

So the questions remain:

Why do the wrong people so frequently end up in the wrong positions? Is the hiring process broken? What’s going on? 

For some jobs, it’s not as important. non-intensive skill requirements often have a high turnover rate by their very nature, so hiring the perfect employee becomes less of a priority. But when extensive training is required, or valuable information is being passed on, you want to make sure it’s going to someone who is truly right for the job. 

So, how do we make that happen? 

Like many questions of the digital age, this one can be answered (succinctly, if not definitively) by looking through the lens of Amazon, one of the global economy’s most powerful forces, and its leader, Jeff Bezos.

Let’s start by rewinding a bit: 

Bezos got a lot of his inspiration and instruction on hiring from his experience with investment-management firm D.E. Shaw, where recruits were often asked seemingly random questions like, “how many fax machines are there in the United States?” 

Why? The goal wasn’t to get precise answers but to identify the candidates who had the best problem-solving skills.

Moving on to Amazon, in 1998, Bezos brought it full circle, and explained exactly how he selects new hires in a letter to shareholders, challenging hiring executives to consider 3  questions about the candidate: 

  1. Will this person raise the average level of effectiveness of the group they’re entering?
  2. Will you admire this person?
  3. Along what dimension might this person be a superstar? 

This sort of approach might be more common today than it used to be, but there’s certainly no doubt that businesses continue to under-utilize the entire interview process as a way of finding employees who identify most with the company’s core needs and values, while simultaneously challenging your hiring executives to think about the candidate’s true potential in a way they most likely did not. 

Storytime: I know of one small-town movie rental store that’s still in business, despite over 95% of similar businesses closing down in the last 10 years. Their resilience is multi-faceted, without a doubt, but one thing about them stands out to me: their paper application consists of questions like

  1. What is your favorite movie? 
  2. What is the Fermi paradox?
  3. Calculate the area of this triangle.

Is it peculiar? Sure. But there’s more to it than eccentricity — there’s a clear attempt to employ only the people whom the management has determined are most likely to fit in with their business, and this type of outside-the-box thinking is a big part of Bezos’ and Amazon’s success. 

Whether it’s during the interview or after, the lesson here is to peel the layers back even further about a candidate’s potential, and challenge yourself to gauge their long-term fit & impact. During the interview, if you ask candidates those same, tired questions, ‘what are your strengths,’ or ‘what are your goals for the next five years,’ a huge opportunity is missed to ask them much more telling questions — questions that will let us know whether they are going to be dead weight or visionaries inside our organization. Which do you want?

Netflix Has Turned Off—And Deleted—User Reviews

The peer-to-peer recommendation has taken another hit.

Netflix has deleted all user reviews from its streaming service, the company confirmed to Vanity Fair on Sunday. The move means users will no longer have the ability to see what friends liked and didn’t and choose films based on those recommendations.

Netflix turned off the ability to post reviews to its service on July 30. In a support page announcing its decision, Netflix said that it’s removed user reviews because of “declining use” among its membership. Netflix added that it still allows users to give movies and TV series a “thumbs up” or “thumbs down.” It then provides a list of suggested content users would like based on their viewing history and the content they’ve rated highly with a “thumbs up.”

User reviews have long provided Netflix users an opportunity to see what others thought of a movie or series and gain some insight into content before they committed time to watching a program. However, the reviews did little to enhance the broader Netflix viewing experience. And, in a statement to Vanity Fair, a Netflix spokesperson said that it never incorporated good or bad reviews into its suggestion algorithm.

“Recommendations to members are always personalized based on what we think that specific member will enjoy watching based on what they have watched before,” the spokesperson said.

So, nothing will change in the Netflix viewing experience now that user reviews are gone. But the Netflix suggestion algorithm—and its accuracy—might be even more important than ever.

Brazil mall executives shrug off looming Amazon.com expansion

SAO PAULO (Reuters) – Fears of e-commerce taking off in Brazil have sunk shares of the country’s big mall operators this year, but industry executives expressed confidence that local shopping habits, the reputation of malls as public spaces safe from crime and other factors will help them avoid the shakeout that has hit their U.S. peers.

People are seen walking through Iguatemi shopping mall in Sao Paulo, Brazil August 16, 2018. REUTERS/Nacho Doce

The optimism of executives gathered this week at the Shopping Center International Congress in Sao Paulo contrasted sharply with global investor sentiment about malls in the age of online retail.

E-commerce giants Amazon.com Inc (AMZN.O) and Argentina’s Mercadolibre Inc (MELI.O) have set major expansions here, spooking some foreign investors and sending shares in Brazil’s three largest mall operators down more than 19 percent so far this year.

Executives and some major Brazilian shareholders say the threat of e-commerce is overblown. They say a better mix of non-retail tenants in malls, the high costs of shipping in Brazil and other factors should allow malls here to continue to thrive.

But some say the industry is overconfident, noting that Amazon has been scooping up local warehouses and negotiating air cargo deals in Brazil, while some retailers are reporting double-digit growth in online sales from last year.

Slideshow (4 Images)

“In New York, the investors are much more concerned about e-commerce than in Brazil,” said Thiago Muramatsu, chief financial officer at Cyrela Commercial Properties SA (CCPR3.SA) (CCP), which owns malls and office buildings. “In the U.S., they’re seeing a big crisis with malls closing everywhere, electronics retailers shrinking. But here in Brazil, there’s still upside.”

Several Brazilian executives and investors noted in interviews that the malls here attract a steady stream of patrons because they offer a relatively safe public environment in a country with the most murders in the world in recent years.

Home delivery, which Amazon and other e-commerce companies rely upon, is more difficult in Brazil due to shoddy highways, tricky state taxes and large-scale cargo robbery.

In addition, Brazil’s shopping mall market is not saturated, with just a fraction of the malls per capita found in the United States. Brazilian malls dedicate less area to retail, while many U.S. malls are just starting to diversify their tenant mix.

“Close to half of gross leasable area here is not retail. It’s dining … all sorts of things,” said Maximo Lima, a founding partner at real estate investment firm Hemisferio Sul Investimentos. “It’s a one-stop-shop for middle-class Brazilians to solve their life.”

DOMESTIC INTEREST

While shares of the biggest mall operators have taken a hit, some Brazilian investors are still betting on malls.

Between November and April, Brazilian investment firm Vinci Partners raised 730 million reais ($187 million) — largely from domestic investors — for Vinci Shopping Centers (VISC11.SA), a vehicle known as an FII, which is Brazil’s answer to a real estate investment trust, or REIT.

Shares of the some of the larger, more liquid FIIs are also up this year, an indicator that local investors are more sanguine than their U.S. peers.

Still, mall operators are hedging their bets.

Firms such as CCP and BR Malls Participacoes SA (BRML3.SA), Brazil’s largest mall operator, have developed e-commerce units to adapt their business models for digital retail.

Multiplan Empreendimentos Imobiliarios SA (MULT3.SA), another major mall operator, told Reuters the company plans to follow suit.

Those e-commerce units have taken various forms. CCP’s unit, for instance, allows customers to buy online, and pick up items at a mall.

“The customers will have to go to the mall,” said CCP’s Muramatsu. “So it may give them time to go to the movies, go to restaurants, even make additional purchases.”

Reporting by Gram Slattery and Gabriela Mello; Editing by Brad Haynes and David Gregorio

Investors Keep Giving Startups More Funding Than They Need. Here's Why the All-You-Can-Eat Buffet May Cause Indigestion

“This is the best time to raise money ever,” Slack founder Stewart Butterfield told the New York Times in April 2015. “It might be the best time for any kind of business in any industry to raise money for all of history, like since the time of the ancient Egyptians.”

In the months that followed, I and many other observers cited Butterfield’s thoroughly rational exuberance as evidence of a historic tech bubble, one data point among many that private-company valuations had become untethered from reality to a degree that made a painful correction not just inevitable but imminent. 

About those predictions: Um, maybe not. Sure, there was a momentary slowdown and some dying-off of also-rans in overcrowded sectors like on-demand delivery. But that was a blip. Three years later, even the Pharaohs would be jealous of the pyramids of capital piling up around Silicon Valley. 

“Investors participated in a record 273 mega-rounds [defined as at least $100 million raised] last year, according to the data provider Crunchbase,” reports the Times‘s Erin Griffith. “This year is on pace to easily eclipse that, with 268 completed in the first seven months of the year. In July, start-ups reached more than 50 financing deals worth a combined $15 billion, a new monthly high.” 

Mind you, this all-you-can-eat buffet isn’t open to anyone. The investors driving it– sovereign wealth funds, China’s Alibaba and Tencent, and Softbank’s $93 billion Vision Fund–are specifically on the hunt for startups that can ingest nine figures of cash without going straight into a diabetic coma. There’s some trickle-down effect, with early-stage startup funding rounds getting bigger, but it’s offset by a decrease in the number of such rounds

Bubbles are supposed to burst when the market runs out of greater fools willing to bid up an asset. It seems like those of us who called a top underestimated the greatness of some fools out there, or maybe even missed a phase shift to a new stable equilibrium. Whatever. It’s too soon to revisit the bubble question, so let’s talk instead about what this new funding environment does to the startups that operate in it.

On the podcast “This Week In Startups,” Randy Komisar suggested it’s making them weak and stupid. “Most entrepreneurs fail from indigestion, not malnourishment,” Komisar, a partner at of Kleiner Perkins Caufield Byers, told host and angel investor Jason Calacanis. “What happens is, when you’ve got too much capital, you’re insulated from market information,” he explained. 

In other words, not having enough money is a potential sign that whatever you’re doing might not be a great way of making money. It forces you to pay close attention to customer feedback and come up with creative solutions instead of just investing in a lot of Steelcase chairs and butts to fill them. 

Not everyone sees it this way. Back in 2015, Bill Gurley of Benchmark Capital was one of the loudest voices calling the situation “speculative and unstable.” He predicted the landscape would soon be littered with the corpses of “dead unicorns” and fretted that easy money without public-market scrutiny was rewarding startups for financial indiscipline. 

But now Gurley is resigned to the new reality. With interest rates at or near zero for the past decade, there’s just too much cheap money sloshing around. “No one in the history of business has seen what we are seeing right now,” he says via email. “It truly is unprecedented.” 

Hunger might make you smart, but “[i]f your competitor is going to raise $150 million and you want to be conservative and only raise $20 million, you’re going to get run over,” he told Griffith. 

That makes sense–except that businesses where the competition comes down to who can raise more money tend to be businesses where that competition inevitably drives margins down toward zero, and companies with tiny margins will have a hard time returning big multiples to their investors. That’s an argument Peter Thiel makes in his book Zero to One, and Gurley should be familiar with it, since it more or less describes the arc of his most notable portfolio company, Uber, from its birth until now. 

To escape from the infinitesimal-margin trap it has set for itself, Uber has long been counting on the arrival of self-driving cars, which will allow the company to pocket the full fare from each trip, not just the 30 percent left over after the driver’s cut. But the development of autonomous vehicles has so far been nothing but a money sink, drinking up between $125 million and $200 million per quarter, reports The Information. Now Uber–and Lyft, its main rival–see a similar hope in electric scooters and bikes, another form of driverless transport. But with margins on those trips likely to be equally bad, Uber and Lyft are–ironically, given their rhetoric about taking on vested interests–hoping to entrench themselves from competition in at least one market by partnering with the local government. In other words, they’re doing something not all that far from what they’ve always accused taxi fleet operators of doing. 

“As VCs that compete at the top tier, we are involved with businesses going after big markets,” Gurley says. “I don’t think there is a single ‘business model’ that’s 100 percent immune to a competitor blasting at you with hundreds of millions of dollars.” 

In any case, unless there are mega-funds on other planets, Uber and other beyond-late-stage unicorns will eventually have to move out of their parents’ houses and get a job. They’ll have to IPO, that is. But the real world is a harsh place for companies that never had to think about where money comes from until their first Wall Street earnings call. In Bloomberg, Shira Ovide notes that the proportion of young public companies with negative cash flow from operations has risen sharply since 2014, jumping from 29 percent to 37 percent. 

You would think the investors writing $100 million checks would be keener than anyone to see the companies they fund generate profits. But they have other things on their mind. “These giant funds are looking for start-ups that can take large sums of money with one shot,” reports Griffith. “Writing lots of small checks is too time-consuming, and the returns from small bets will not make a difference for a such a big fund.” 

We’ve always had smart money and dumb money. Now, apparently, there’s lazy money. Investors insisting on giving startups more money than they need because figuring out what else to do with it is too much of a hassle may not be proof of a bubble, but it’s definitely a sign their interests aren’t aligned with those of their entrepreneurs. Even a healthy appetite can get indigestion from force-feeding.