Talibs Weekly Email - Week 29
⚖️ Getting out of Prison earlier saves $$ 🙈 The Army starts banning users on their twitch Call of Duty stream, 🏍️ Harley’s got a new CEO who wants to make Harley relevant again
Good Morning,
Hope everyone had a great weekend outdoors! Thought I’d get started early this week with some interesting news.
Couple of great long form conversations that I enjoyed this weekend & thought I’d share.
a) Tim Ferris - Conversation with Hugh Jackman
Key Highlight: Hugh talks about his love for rowing; 85% rule and his diligent reading habits. It was a really good conversation between Tim and Hugh Jackman.
b) The Portal - Conversation with J.D Vance
Key Highlights: JD Vance is the author of Hillbilly Elegy (I highly recommend everyone read this book) and this conversation is about JD Vance’s history of growing up in the Appalachian surrounded by poverty. Netflix is turning his book into a movie in a few months.
I appreciate all your feedback and all the articles/podcast y’all share with me.
What I’m listening to as I write this weeks email
Tweet that got me thinking
⚖️ Getting out of Prison Sooner saves $$
🙈 The Army starts banning users on their Twitch COD stream
🏍️ Harley’s got a new CEO who wants to make Harley relevant again
Podcast:
🇺🇸Planet Money: Getting out of Prison Sooner
TLDR: Democrats & Republicans have competed on law & order for years; with each party maintaining a stronger stance every year. Things are changing in Oklahoma which has notorious for being strong on Law & order. Politicians are starting to think about long sentences and prison and realizing the economic cost associated with them might be too much to handle.
🇺🇸Oklahoma: The crime trend started happening in the late 1960s with the war on crime & and then war on drugs in 70s & 90s. Republicans & democrats enacted laws that made it easier to get to prison and harder to get out. This led to the stat that 1 in 142 people in country are behind bars. (2.3M people)
Oklahoma became the No. 1 incarcerator in the country. They were No. 1 in locking up people of color, and they are still No. 1 for women.
🔻History: There was a time when prisons were cheaper to run; there were less rules and prisons were basically slavery. Prisoners were forced to work for free for years.
This changed over the years and the prison system started costing billions of dollars. Approx $182 billion is spent on prisons ever year.
2016 INCARCERATION PER 100,000 IN SELECT U.S. STATES, BASED ON 2018 ANALYSIS BY THE PRISON POLICY INITIATIVE
🚨2008: Kris Steele, a member of the House of Representatives in Oklahoma starts taking notice of this trend. He notices that spending for corrections had become Oklahoma’s second fastest growing expenditure (first was medicare).
He decides to dedicate his time to prison reform in Oklahoma. He discovers other Republicans who also share this passion.
a) Inefficiency: wasting money on an inefficient system that is not producing results what it was intended for.
b) Faith: There is significant amount of religion in Republican politics - the element of grace and forgiveness was missing from this “law & order” approach.
This movement got quite bit of traction from certain republicans and democrats; both coming from different angles.
🧑⚖️2016: Voters in Oklahoma passed a law that reclassified several drug & property crimes as misdemeanours rather than felonies. In 2019, Gov. Kevin Stitt signed a law making the measure retroactive. This led to 462 people walking out of prison early and hence the largest single day commutation in the country’s history. It took Oklahoma from #1 incarcerator to #2 in the state.
This saved them $12 million according to the state; other states such as New York, Vermont & NJ are significantly reducing their population by 30%.
🆓In order for Oklahoma to be in line with the national average, they would have to release 12,000 inmates. As of today - they’ve released only 1,000.
💭My Thoughts: The democrats and republicans are having similar conversations but they both come from different angles. Democrats shout that prison reforms disproportionately impact black and coloured people while Republicans claim that prison reform is unnecessarily expensive.
In the end - the goal is the same which is to reduce prison population and less harsh sentences. However if the recidivism rates (percentage of all offenders released in a given year who have returned) stay low - this would be key to Oklahoma keeping that rate low. At this point - they have a recidivism rate of 23% which is considerably lower than the national average of 40% in the US.
Just a quick lookup on Canada; In 2017, it cost $114K per prisoner per year. This amounted to $1.43 billion with just over 14,000 federal prisoners. We are #142 in Prison incarceration rate at 107 per 100,000 people.
Article:
🇺🇸Washington Post: Army ban on war crime comments during Twitch stream may have violated First Amendment, lawyers
TLDR: The Army has decided to ban certain users after trolls bombarded their twitch streams; this caused the Army to pause their e-games recruitment efforts for the time being.
🎮The Army is on Twitch? : The military recognized the appeal of video game streaming a while ago and have utilized it as a recruiting tool for youngsters. The military has an official team that plays popular games such as “Call of Duty” to showcase a slice of Army Life and potential connect with recruits.
📺How Big is Twitch? Lets break it down first, what is twitch? Twitch is an online live streaming platform where you can live stream your video games to the world. Twitch was bought by Amazon a few years for $970M in 2014. Twitch can get their streams in front of 80% of U.S Male teenagers and users have watched 5 billion hours of streaming content in Q2 2020. For comparative purposes - Netflix claimed to have 5 billion hours of content streamed in April. The numbers are getting there!
🕹️So whats happening recently? The military recruitment exercise has gotten involved in a kerfuffle lately when they decided to ban certain members from their streams.
🚫Why did they ban? Trolls & Activists have bombarded the Army’s e-sports team and continuously asked the team about US War Crimes, bringing up figures like Eddie Gallagher (former NAVY Seal who was charged with war crimes & then pardoned by Trump). They had banned approx. 300 of those twitch users at this time.
⛔️What happened then? The US Army team decided to pause streaming while it reviewed “internal policies & procedures”. You are allowed to ban users from watching your streaming and Twitch has a company policy that is focused on harassment. However; the argument here is that this is a government account and the government cannot suppress the dissent voices due to the constitutional freedom rights.
⚖️Examples of such ruling? Lawyers have pointed out recent relevant court rulings that argued that Trump could not block individual users on Twitter because was a government-led banishment on a public forum.
🔫Lets look into this recruiting practice a bit more? The US Army has been accused of using fake prize giveaways to push its viewers towards recruitment pages. They dropped links in the streams to their viewers saying they could win an Xbox controller but when users clicked on the links - they took them straight to a recruitment page with no information about the prize.
👩⚖️AOC: Alexandria Ocasio-Cortez is planning to file an amendment to an upcoming bill that would prevent the military using the funds to “maintain a presence on Twitch.com or any video game, e-sports, or live-streaming platform”. It is very unlikely that this bill will get passed.
The U.S. Army, Navy, and Air Force all run esports teams and connect with potential recruits via Twitch.
🇨🇦Canada does not utilize this recruiting method at this moment.
💭My Thoughts: The whole army on twitch streaming video games just seems predatory recruiting and quite malicious. I don’t see AOC’s bill getting passed as this is marketed just as a presence with citizens and not as an explicit recruiting tool.
🏍️Bloomberg: Harley-Davidson Puts a German Environmentalist in Charge
TLDR: Harley is America’s premier motorcycle brand. But its core customers are aging boomers, and it’s been less successful finding products to woo younger riders.
🙏Who is the new CEO? The new CEO is Jochen Zietz, Zietz is a european environmental activist who is known for re-positioning Puma as a sole sneaker company and turning into a hip fashion brand. His unique turnaround of Puma earned him on the board of Harley in 2007.
👴The issue with Harley? Harley’s core baby boomer riders are aging out of the market. Millennials and Gen Z would rather buy an ATV or an off-road bike rather than a heavyweight bike. Further, competition has also intensified in the last few years when Indian (another US motorcycle brand) has been eating into the heavyweight markets.
📉This has been a problem with Harley for a while - Harley has been experiencing a downturn in sales for a few years; the ex CEO Keith Wandell who took over Harley in 2009 and recently stepped down, was able to upgrade manufacturing technology and forced unions to agree to job cuts.
Under his helm; the company tried expanding into emerging markets by offering less expensive lightweight motorcycles however neither was able to combat the shift from heavyweight motorcycles. These account for 78% of Harley’s shipments worldwide and is a significant chunk of their revenue.
🔽What did the new CEO do? Zietz took helm in March 2020, which unfortunately coincided with COVID-19. Sales had plummeted and his action was quite similar to what he did at Puma; he cut costs significantly.
He dismissed roughly 14% of the Harley workforce including the COO and many mid level managers. He has hinted on focusing more on premium, high margin product - similar to what he did at Puma.
👟He made Puma cool again: Zeitz has been a marketer his whole life and an exceptional one. At Puma, he repositioned the brand into the athleisure category getting big name artists to rock Pumas on stage. (Madonna rocked Pumas during her tours). After two decades - Puma’s stock had risen 27x!
🛵Environmental Capitalism for Harley? As a board member, Zietz pushed the board to embrace a business friendly environmentalism by championing the companys’ first all electric motorcycle - the Livewire. The Livewire had a rocky start with some early issues with Harley temporarily halting production on the bike for months.
💭My Thoughts: Warren Buffet had famously lent Harley Davidson money in 2009 and Harley Davidson tried to re-negotiate with Buffet to pay back the loans early but Buffet was adamant on the terms. Buffet netted a cool $150m but he could’ve made $1B if he invested in the company rather than leant them that money.
When asked why he opted for debt financing
"I knew enough to lend them money; I didn't know enough to buy the equity," the investor replied.
"I kind of like a business where your customers tattoo your name on their chest," he continued. "But figuring out the economic value of that ... I'm not sure even going out and questioning those guys I'd learn much from them."
In the end it was the safe consistent bet that allowed Buffet to lend them the money and he wasn’t so sure on the company’s prospects at that time; he knew they wouldn’t go bankrupt but wasn’t too confident that they’d thrive either.
Harley Davidson has a top of the funnel problem. Their average consumer is way too old and the new bikes are too expensive. The stock has rallied due to the cuts that have occurred recently but overall - this seems like a risky investment.
Books of 2020
Here are my books to read/finish for the next while
Completed
Educated by Tara Westover (9/10)
Loonshots by Safia Bahchall (8/10)
Range - David Epstein (7/10)
American Dirt by Jeannine Cummings (9/10) [fiction]
If you’re looking for books to get, I would suggest checking out bookdepository.com or thriftbooks.com (both are cheaper than amazon at times