Good Monday Morning! It’s March 22nd—and there’s still another Monday coming our way in March. By my count, that will make 143 Mondays this month.
Anyway, here’s the SWIRL:
📱Tech: Volkswagen’s power move
📈Business: Just unDo It
🏛Politics: Cuomo facing three fights
If this is your first SWIRL, keep reading this part. If not, carry on to the content. Welcome, new Swirlers! Here’s a brief reader guide for you: the three teasers above will unfurl below to briefly cover a buzzy story. You’ll read a little about each one. At the end, we pull on a common thread among all three and explore what it might mean for us. If you missed last week’s SWIRL, tuck in here.
📱 Tech: Volkswagen’s power move
This month, we’ve had “International Women’s Day,” “Get Over It Day,” and Saturday was “Proposal Day”—I did not get engaged💍, if anyone is wondering. But, earlier in the week I did get an alert about Volkswagen’s “Power Day.” On Monday, the German auto 🚘 manufacturer revealed plans for a significant investment in its electric car strategy. VW will aim nearly $30B at building battery factories and global charging stations, in addition to investments 💸 in the software onboard its electronic vehicles.
The automaker started its “Power Day” event with opening comments 🎙 from CEO Herbert Diess.
“Let me begin with the obvious: e-mobility has won the race…it is the only solution to reduce mobility emissions fast. Our goal is to secure a pole position in the global scaling of batteries.” - VW CEO Herbert Diess
A German carmaker’s journey to electric ⚡️ cars through the metaphor of a ‘race,’ and its plan to become a leader with a ‘pole position’ is well-done. Touché, Herbert. Let’s play with that for a minute.
If VW is in a race, right now it’s getting lapped by Tesla. Elon Musk’s electric car company is worth nearly $630B.1 Volkswagen Auto Group, which includes Porsche, Audi, Bentley, and several other brands, is valued at ~$130B.2
So, how could VW catch up and pass Tesla? The $30B investment announced last week would allow VW to speed by Tesla’s battery 🔋 power production capability by the end of the decade. By building 6 new battery factories, VW would slide into the number 2 position in global 🌐 battery production, behind Chinese manufacture CATL. But is more battery power enough?
Batteries are crucial, but e-vehicle sales are the finish line. Tesla may be worth 💲more than VW today, but its sales are much slower than VW’s, whose annual sales average is 10 million vehicles. Tesla only delivers ~500K vehicles per year.
If VW can become successful at scaling its battery technology and convincing its customers to begin purchasing electric 🔌 vehicles, they have a real chance at overtaking Tesla as the most valuable car 🚗 company…and achieving their goal of reducing global emissions.
📈 Business: Just (un)Do It
Are you a sneakerhead? If you are, this story may be familiar. If you are not, you might not have known ‘sneakerheads’ were even a thing. So let’s start there.
Sneakerheads are self-proclaimed collectors and traders of…sneakers 👟. It’s a legit phenomenon. In fact, Netflix has a whole series 📺 dedicated to the shoe obsession. That obsession has translated into a huge market. Last year, the global secondary sneaker market (sellers who buy from shoe makers and then resell 🔄 to other buyers) was a $6B enterprise.
Several well-known shoe companies are the most popular brands in the resell market: Nike, Converse, Adidas, and Yeezy for example. However, over the last several weeks, Nike has been the most talked 🗣about—and not because sneakerheads are buzzing about the latest Jordans.
Several weeks ago, Bloomberg broke a story 📰 that revealed a VP at Nike was the mother of an individual who ran a successful sneaker resell business. That sent the sneakerhead community into a frenzy. Online forums began filling with questions 🧐 about whether the VP’s son got special access to Nike products, if he used her employee discount, and concerns about the level of her involvement in his business. The VP, Ann Hebert, ultimately resigned from Nike after 25 years with the Oregon-base shoe company.
Her resignation ✌🏼 prompted Nike’s CEO to address the growing scandal on an internal company call on March 8th, where he told employees “there’s no value more core to who we are than the trust our consumers put into us and our brand and our products.”
On Friday, sneaker journalist 👨🏻💻 (new to the list of things I didn’t know were things) Brendan Dunne extended his coverage of the problem with an article titled “How Nike Can Rebuild Consumer Trust.” Or, in reference to their predicament, how they should Just unDo it…
…the resentment has not yet slowed the pace of product moving off the shelves in any material way. It still sullies the experience of buying cool sneakers, though, eroding a sense of joy or positivity in the community around them. This makes them look less like cultural items and more like, as Bloomberg Businessweek framed it in the story that sparked Hebert’s exit, an asset class. It leaves the most vocal brand fans feeling like the system is busted. If Nike cares to correct this, the time is now. - Brendan Dunne
🏛 Politics: Cuomo facing three separate fights
(Editorial note: Emojis can help make reading more fun and engaging. Every now and then, SWIRL will include topics that aren’t fun and so we’ll forgo including emojis in those sections. This is one of those stories.)
NY Governor Andrew Cuomo, accused by several women of sexual harassment and inappropriate behavior, faces multiple investigations over the next few weeks. The investigations involve a stream of allegations made against the governor. On Friday, the NYT reported a new claim of sexual harassment from an aide who works for Cuomo, making it the second allegation from a current staffer.
There are ongoing investigations looking into those complaints.
NY State: the state’s probe, launched by NY Attorney General Letitia James, is underway; the two attorneys selected to lead the investigation were lauded by victim’s rights advocates
NY Democrats: Democrats in NY’s state assembly have hired outside counsel to conduct an independent investigation; there are concerns about conflicts of interest in this investigation. A former partner for the firm has ties to Cuomo.
These aren’t the only investigations embroiling Cuomo. Details about a federal investigation into Cuomo’s handling of Covid-19 death data emerged this past week.
F.B.I: the federal government has contacted NY state government officials to request documents related to the data NY released on the number of Covid-19 deaths in nursing homes
The governor continues to face mounting pressure to resign from both sides of the political aisle. President Biden tiptoed that line earlier this week in an interview with ABC news, where he suggested that a resignation should occur if the investigation confirms the womens’ claims. The president added that he thought Cuomo could be prosecuted if the claims were proven.
So, how do our three stories swirl together? You probably picked up on the fact that our last two stories are linked by scandal. And if you time travelled back to 2018, you might have remembered that VW had a massive scandal of its own (refresher is below). But scandal isn’t our primary angle for SWIRL this week. Underpinning most scandals is a violation of trust - and how those are navigated is what we’re swirling on this week.
VW violated trust with consumers and governments by building its cars to deceive fossil fuel emission tests. To rebuild trust, they changed leadership and have repositioned themselves to be a potential leader in the green automobile economy. Their trust scandal is over and they’re ascendant.
Nike violated trust with its consumers and most ardent fans. They failed to get ahead of suspicion that the company was involved in rigging the sneaker resale game. They’ve made some staff changes and have acknowledge they have a problem. Their trust scandal has likely peaked, but it’s not over yet. The ball to rebuild trust is still in their court.
Regardless of the results of the investigations into Andrew Cuomo, the behavior he has already admitted to has prompted many to call for his departure, indicating a serious trust issue. The potential cover-up related to Covid-19 death data compounds Cuomo’s problem. He has violated his trust with his state and citizens at large. His trust scandal has only just begun, and it appears his current strategy hinges on maintaining power.3
Every organization and individual will ultimately face some type of trust problem. Businesses face consumer trust issues all the time. Government agencies face calls over impropriety on a regular basis. And in many cases, the trust issues are warranted because expressed behaviors don’t meet our standards or expectations. Here are two questions that leaders in our stories this week might have or are actively considering.
1) Is the root cause issue that created the trust problem a deal-breaker with our people?
2) How can we address that root cause and rebuild the trust?
As you ponder how VW, Nike, and Cuomo think or thought about the answers to those questions, in the right moments, it might be worthwhile to consider them for our own organizations or selves as well.
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Tesla market capitalization as of Mar 20th.
Volkswagen Auto Group market capitalization as of Mar 20th.
I want to clarify here that sexual harassment has much broader consequences than simply being a trust problem; this shouldn’t be perceived as a reduction of sexual harassment to a trust issue.
I ended up watching the highlights of VW’s Power Day event and found it interesting to hear that the VW Group sees their core business as power generation...hence Power Day. So Tesla brought EVs to a large audience but I can see VW taking EVs to the masses...the “people’s car” ;-)