Boosting Jobs by Spending More

The global economy has become volatile. The new year began, and financial markets became erratic. People started to be wary about the United States’ economy after seeing a dip in China’s economy and prices for assets fall. Additionally, oil prices are decreasing sharply, leaving the country to worry that credit markets will fall. The International Monetary Fund has been keeping a close watch on the global economy, and they have come to the conclusion that, in order to lower the amount of unemployed people in the world, taxes on employment must be lowered and public spending must increase.

If implemented, these would be highly controversial changes. Higher public spending to help unemployed people find work is ideal, of course, however cutting unemployment benefits would be met with a lot of resistance. In the International Monetary Fund’s opinion, this would be an incentive for unemployed individuals to take lower paying jobs, however this shift in policy would have short-term ramifications for those already employed. It is expected that, if it were implemented, cushions would be in place to offset the short-term consequences.

Long term, however, these reforms would be expected to lower unemployment drastically, and repair the global economy overall. It would be easier for firms to enter different industries, and therefore increase necessary hired labor. Historically, many of theses changes have been put in place to combat unemployment. The result has been positive, with effects such as increased private investments and hiring. When employment protection legislation is altered, additionally, companies become more willing to keep the employees they already have while continuing to hire new ones.

If there is a time to introduce new reforms into the labor market, this is it. The volatile global economy is increasing the amount of unemployed people, and it is difficult for said people to get back into the job market when they are out. Of course, these changes will have to be executed the right way in order to have the positive effects for which we hope. It is crucial to understand what incentives will be the most effective, and which ones must be pushed through their short term detriments to reach long term success.

For example, fiscal stimulus is the single most valuable incentive. It should be implemented in the labor market as soon as possible to start lowering unemployment. However, narrowing unemployment benefits will have short term detriments that must be offset with other policies until the long term is reached.

Overall, the International Monetary Fund has looked at history to decide what reforms need to be made in order to lower unemployment. Whether or not these historically effective policies will work now remains to be seen.  

  

Deadpool's Movie Market Disruption

A different kind of market news has been trending as of late, all thanks to a new highly anticipated film that is hitting movie theaters tomorrow. This movie is a different kind of ‘superhero’ film, about Deadpool, a mercenary with expedited healing powers. This is not your typical Marvel-type hero film with superhumans fighting for good. This one is Fox’s attempt to disrupt the movie market with an edgier, more inappropriate film about someone with special abilities, while being able to retain the movie and franchising rights so they can make more money. So far, the movie has incredible reviews on popular movie review websites and everyone interested in comic books is planning to rush to the theater the second it is released. It seems Fox will be successful in its endeavor.

Deadpool as a character is likeable in his humor, but also has a disturbing, psychopathic personality. Fox chose him as the focus for their next movie for this very reason - they could not make money on widely known superhero figures, so they focused on a smaller franchise which is quickly growing. Deadpool’s obscurity should have made it more difficult for Fox to disrupt the movie market, as many do not buy into that with which they are not familiar. However, Fox ran a series of successful marketing campaigns to spread awareness of Deapool’s disturbing, yet hilarious, personality.

They have taken risks that probably would not have worked with a character any less weird. The first jarring campaign involved a poop emoji on a billboard. Risky? Of course. However, it did catch the attention of the public. They also took the newsletter route, posting funny blurbs with pictures of Deapool in front of a fire. It can be agreed that none of their marketing tactics have been conventional, which fits perfectly with such an unconventional character.

They then took to social media, as all good marketing campaigns should. The Deadpool campaign continued with a new slew of Deadpool emojis and a fake instagram feud between the Deadpool character and Hugh Jackman’s Wolverine. Ryan Reynolds, the actor playing the character Deadpool, has been flooding his Twitter page with movie promotions for at least a month. Deadpool the character even has a profile on the popular dating app Tinder.

All of these tactics has made Deadpool a highly anticipated movie by fans all over the world. Fox has done its job talking up this movie to the public, now we will just have to wait until tomorrow to see just how much it affects the movie market.

For more information on how the Deadpool movie will affect the market, read Forbes’ article on Deadpool cornering the comic book movie market.

2016 Venture Investment Fall

2016 marked the first time in 5 years that the growth of the stock market slowed down. It is not likely we will see any significant stock market growth in 2016 either. This prediction is due to things like interest rates and less of a demand for oil. The venture capital market is no exception to this fall.

After many years of experiencing rapid growth, it seems the venture capital market has calmed down. Business valuations for startups began to flatline in 2015, meaning that investors have had reason to focus their money on other industries. This is not only problematic for startups just entering their industry, but it is a phenomenon driven by flawed principles.

When investing In a company, venture capitalists are now looking for ‘unicorns,’ or companies that can quickly earn a lot of money. Another flawed principle is that the software industry is the only industry worth investment; the hardware industry has fallen by the wayside. These are followed by the belief that the only worthwhile startups come from Silicon Valley.

Some careful research and examination would prove these three principles to be foolish. The truth of the matter is, unicorn valuations do not equate with a company’s actual value, the software industry is not the only worthwhile startup industry, and, of course, successful startups exist in places other than Silicon Valley.

The unicorn valuation is a widely disputed concept in the startup world. There is a risk behind investing too much money in one company, no matter its projected potential. Even Uber, which is now a household name, does not have a value that matches its valuation. Venture investors would be better off investing smaller amounts in multiple companies. Furthermore, studies have been done that prove focusing on one concentrated geographical area is detrimental to the startup industry as a whole. Also, software innovations are creating industries that make hardware necessary as well, which means that the software industry is no longer the only worthwhile industry in which to invest (take, for example, 3D printing.)

All of this information together predicts different trends in the 2016 venture investment industry. Entrepreneurs and investors alike have to look at all of their options, in terms of which industry to join. The software industry cannot be the sole focus. Also, what many have learned about ‘unicorn companies’ needs to be unlearned as quickly as possible.

All in all, we cannot do the same things and expect positive change in 2016.

For more information on venture investment in 2016, read this Forbes article.

The Cost of Instituting a $70,000 Minimum Salary

Many of us know about Gravity Payments. It is a payment processing company that seems innocuous at first, until you learn that its CEO, Dan Price, has instituted a company-wide $70,000 minimum salary. He reported making this change in order to increase the happiness of his employees and make a difference in their lives. His decision got a lot of press coverage, and reactions ranged from astounded, to favorable, to downright angry.  

Unfortunately, Price’s brother was one of the angry ones. Lucas Price ended up suing him, alleging that he had set aside too much profit for himself in the beginning. There was no indication as to whether the lawsuit had to do with the minimum wage increase, and, if anything, this lawsuit made Price more favorable in the public eye. Despite losing some employees who believed the wage increase was not fair to those with more experience, Price and Gravity Payments seemed to be doing well. New job applicants came pouring in and new hires were not difficult to come by.

However, Gravity Payments may still be in jeopardy. An article in Bloomberg Business reports that Dan Price may not be the altruistic CEO he’s made himself out to be. Through a series of interviews, Price’s story about raising the minimum wage went from sweet to sour, as he failed to respond to allegations that put him in a bad light. For example, Lucas’s lawsuit was filed before the minimum wage increased. This means that the lawsuit could not have been in response to the new minimum wage, which begs the question of if Price really was overpaying himself at the onset of Gravity Payments. Was his initial high salary not reflective of what the company was making overall? More importantly, was the minimum wage increase in response to Price’s knowledge of the lawsuit?

Of course, this leaves us to wonder if it matters in the business world if Price paid himself too much initially. Whether or not the claim is true, his company is still paying all employees at least $70,000 dollars. The motivation behind his decision is irrelevant.

However, it seems as if we should not ignore a CEO’s character while promoting a company based on his actions. If Gravity Payments itself was the focal point of the press, Price’s character may not matter, but Price is thriving from his wage decision. He has a great deal of money, a large amount of good press, and a book about his wage experiment on the way. That is a large amount of success for a man who may have abused company money (not to mention has abuse allegations against him by his ex-wife.)

What will the outcome of the trial between Price and his brother mean for Gravity Payments? We will have to wait to see. We can only be sure that the wage increase blew this case wide open. All in all, I would suggest taking Price’s character with a grain of salt for now.

Marketing on a Personal Level

The new film in the Star Wars franchise, The Force Awakens, is all anyone in the movie world can talk about. It is highly anticipated by fans of the franchise, so much so that tickets to its premiere were sold out within seconds of being put online. There is an opportunity here that is rare for newly released films. Some would think that marketing for the film is unnecessary, since the Star Wars series already has an enormous fanbase. Disney, however, saw things differently. Instead of taking a lazy approach to marketing for The Force Awakens, it and other companies decided to try a different tactic to spread word about the movie, and sell related products.

These companies realized that many people have a personal infatuation with Star Wars. A number of fans grew up watching the series, buying the Star Wars merchandise, and reenacting scenes with plastic, light-up lightsabers. Of course, there was a setback in the fanbase when George Lucas released the prequel films, but the new movie has remedied that by bringing back the beloved actors/characters from the original films.

Disney took over for George Lucas and brought back the fans by releasing hints about how this new film will connect with the originals, and old fans who have since grown up were drawn back in immediately.

Star Wars is very much a household name, and companies selling its products, such as Walmart, have seized this as a unique marketing opportunity. They have reignited the sales of their Star Wars merchandise by marketing the franchise to families and people reminiscing about their childhood. The franchise is being marketed as a real-life Toy Story - as something that will make adults regress into the carefree children they once were, with lightsabers and X-Wing fighter ships.

This approach to marketing has spread across companies selling Star Wars related products. New commercials are popping up whose sole purpose is to induce nostalgia in fans of the franchise that yearn to go back to the wonder of their childhood. For example, there are advertisements in which parents are passing their knowledge of the Light Side and the Dark Side to their children.

It is almost terrifying how effective these tactics are in making people further invested in The Force Awakens but, hey, that’s good marketing, right?

Being able to take an already-existing fan base and grow it beyond even its generation shows that these companies know what they’re doing. An effective campaign makes its target audience feel emotions that draw them closer to what is being sold. In terms of Star Wars, many companies have done just that.

To read more about how companies are marketing Star Wars, check out this article by The Week.

Social Media and Marketing

In the fast-paced world of modern marketing, social media is the cornerstone of any good campaign. Overnight, the face of business changed. The effect was so rapid and powerful, a rift has been opened between those able to understand these modern tools, and older businesses stuck in their ways. The market of 50 years ago is gone, and as Bob Dylan famously said, “the times they are a changing.”

Businesses resistant to social media feel that they no longer need additional business to continue functioning. That the advent of social media is little more than a passing fad. This couldn’t be further from the truth as nearly everything we do is handled over one social media platform or another.

As a small company curating a group of loyal clients over social media will not only create a base of consistent business but will start building a powerful brand among people who are active on the medium. A blogger who supports your brand will fight for you, support you, and spread the word of your good works among circles and groups.

Many industries are struggling against a tremendous learning curve. With new and useful technologies being released every day, many struggle to keep their head above the rising tide of social media. However, choosing to ignore the importance of social media in marketing is like a drowning man choosing to ignore the water he sinks in.

The power to connect with your customers like never before, combined with the possibility to receive free product feedback and customer input is possibly the best resource that has ever been made available for small businesses. If used correctly, social media is a launchpad that can take your company to places otherwise impossible to reach.

For more information from Pennington Capital, click here.

Volkswagen in Trouble?

investors are troubled after Volkswagen’s poor performance in the market. After a series of mistakes, chief among them being Volkswagen’s dubious trickery involving the American emissions rules, has the company in hot water with the government and economy. Coming on the heels of their diesel “defeat devices” scandal, Volkswagen has never suffered this much negative PR, and the market’s reaction mirrors the decline in public opinion.

Volkswagen stock plummeted 20% in the European morning markets. In the U.S, the entire line of diesel products was halted to be sure no further fines would be levied against the company. Still reeling from the $900 million settlement with General Motors over ignition switch defects, Volkswagen’s public image is suffering. Once the world’s biggest car manufacturer, analysts suggest that The Curse of The World’s Biggest Carmakers is very real and has now set upon Volkswagen at the height of their success.

Though silly to some, every car company that’s held the coveted spot as #1 in the industry has inevitably fallen victim to themselves. GM once ruled over this spot as the highest seller. For decades, they reigned over all other car companies, and then 2009 brought bankruptcy and a need for a federal bailout. After supplanting GM the year prior, Toyota enjoyed their time in the coveted spot right up until its collapse due in part to poor management from chief executive Akio Toyodo.

Many market analysts are viewing Volkswagen’s crisis as their turn in the grinder. Every large company is expected to receive negative press by virtue of being so public, and if there’s a silver lining Volkswagen is clinging to, it’s that their mistake didn’t cost any lives. Both GM and Toyota faced scandals that carried a weighty human cost, an inexcusable and unforgivable act in the eyes of many consumers. Though little can be said for how the case will turn out, Volkswagen is hopeful that by quickly addressing their wrongdoings, they can erase the smudge on their public image. For more on the subject, click here.