Guy Tal

MTOTW #25: It doesn't matter how powerful your engine is. If you don't have gas in the tank, you're not going anywhere

You’re wrapping up for the day. It’s 4:57 p.m. If you’re not out the door by 5, you won’t be able to meet your nanny before she has to leave. A colleague comes over to ask if you can help him with a quick task. How do you turn him down without appearing like a poor team player? s.hbr.org/2M7pcHb

A couple reflections on the quantum computing breakthrough we just announced... Most of us grew up learning there are three main types of matter that matter: solid, liquid, and gas. Today, that changed. After a nearly 20 year pursuit, we’ve created an entirely new state of matter, unlocked by a new class of materials, topoconductors, that enable a fundamental leap in computing. It powers Majorana 1, the first quantum processing unit built on a topological core. We believe this breakthrough will allow us to create a truly meaningful quantum computer not in decades, as some have predicted, but in years. The qubits created with topoconductors are faster, more reliable, and smaller. They are 1/100th of a millimeter, meaning we now have a clear path to a million-qubit processor. Imagine a chip that can fit in the palm of your hand yet is capable of solving problems that even all the computers on Earth today combined could not! Sometimes researchers have to work on things for decades to make progress possible. It takes patience and persistence to have big impact in the world. And I am glad we get the opportunity to do just that at Microsoft. This is our focus: When productivity rises, economies grow faster, benefiting every sector and every corner of the globe. It’s not about hyping tech; it’s about building technology that truly serves the world.

Creating the new is often more alluring than maintaining the old. But MBA student Lauren Bilbo reminds us: “Maintenance enables innovation. Without maintenance, we can't create the [things] that introduce lasting positive change into the world.” bit.ly/4dYparH

$47.61 for paper towels and TP at Target today. Absolutely insane example of corporate greed and price gouging. In fact, it made me so angry, I decided to do some analysis. Many prices have increased by 50% or more since COVID, so I decided to put on my investment banking hat and spread some financials back to 2018 / 2019. And man, was I ever surprised... I started by looking at Target's annual revenue: 2018: $75.4 billion 2019: $78.1 billion 2020: $93.6 billion 2021: $106.0 billion 2022: $109.1 billion 2023: $107.4 billion Last Twelve Months (LTM): $106.6 billion Couple things I noticed. First, revenue has slipped a bit since 2022 and is continuing to do so in 2024 - not a great sign for the broader economy. Second, there's been big growth since 2018. They must be price gouging! Well, I looked a bit deeper. Let's look at their cost of goods sold over the same period (the price they paid to buy the products they sold you). 2018: $53.3 billion (70.7% of sales) 2019: $54.9 billion (70.2%) 2020: $66.2 billion (70.7%) 2021: $75.0 billion (70.7%) 2022: $82.2 billion (75.4%) 2023: $77.7 billion (72.4%) Last Twelve Months (LTM): $76.8 billion (72%) Wow, so let me get this straight... Target is making less money (28 cents) on every dollar of sales today than they were in 2018 (29.3 cents). Hmmmm. That's weird. Maybe they're not so good at this price gouging thing. So, I decided to dig even deeper. They were prolly being evil and firing all of their employees so they could make up for the money they weren't gouging, right? So, I looked at their operating expenses (the amount they pay to run the stores and the overall business): 2018: $15.7 billion (20.9% of sales) 2019: $16.2 billion (20.8%) 2020: $18.6 billion (19.9%) 2021: $19.8 billion (18.6%) 2022: $20.7 billion (18.9%) 2023: $21.6 billion (20.1%) Last Twelve Months (LTM): $21.7 billion (20.3%) Hmmmm. Very unusual behavior for someone price gouging me. Let's sum this all up by looking at their operating cash flow: 2018: $6.3 billion (8.4% of sales) 2019: $7.0 billion (9.0%) 2020: $8.8 billion (9.4%) 2021: $11.3 billion (10.7%) 2022: $6.2 billion (5.7%) 2023: $8.1 billion (7.6%) Last Twelve Months (LTM): $8.1 billion (7.6%) So, what this all means is that Target's making less overall profit on every dollar of revenue today (7.6 cents) than they were in 2018 (8.4 cents). And revenue has grown at an average (CAGR) of 7.3% per year since 2018 and operating cash flow has grown at 5.1% per year - both of which are pretty much in line w/ the overall rate of inflation during that period. I guess I expected price gouging to be more profitable. ❌ NO PRICE GOUGING AT TARGET ❌ "Well Steve," you may say, "that's all fine and good, but even if Target isn't price gouging, Kimberly Clark and International Paper (both of whom are involved in the manufacture / marketing of paper towels and TP) sure as H3ll must be!" Well Yes! Surely they are! I'll spare you all the numbers, but here's the summary: Kimberly Clark: 5-year avg revenue growth: 2.0% 2018 Gross Margin: 69.7% LTM Gross Margin: 64.0% 2018 EBITDA Margin: 12.1% LTM EBITDA Margin: 15.6% "A-HA! Look at that EBITDA margin!" you say, "They must be gouging!" Well, the gross margin clearly says otherwise, and the five-year EBITDA CAGR is 6.6% - pretty much in line with inflation. Again, management is clearly bad at gouging. ❌ NO PRICE GOUGING AT KIMBERLY-CLARK ❌ "Well ok," you say, "I'm sure International Paper must be capturing all of that extra profit because they're the ones gouging then." Let's take a look: International Paper: 5-year avg revenue growth: 0.8% 2019 Gross Margin: 30.8% LTM Gross Margin: 27.8% 2018 EBITDA Margin: 16.1% LTM EBITDA Margin: 11.6% Wowza, I guess IP is the worst price gouger of all since, well, they've basically been destroying value since before COVID began. You would think price gougers would be gouging to, I don't know, make more money and all. Well, IP made almost $3 billion of EBITDA in 2019, and a little over $2 billion over the last twelve months. Sigh. ❌ NO PRICE GOUGING AT INT'L PAPER ❌ So, maybe this means the inflation we've been dealing with hasn't been about corporate greed and price gouging after all. Maybe it has had something to do with, oh, I don't know, government spending and stimulus run amok or something. So, rather than going on populist rants about implementing price controls for the greedy corporations (which, you know, have never worked out so well in the past), maybe we should consider some price controls for government spending. That's a novel idea. 🤔 p.s. And for those of you who say "Hey, wait a minute, your receipt says "Bounty" - that's not Kimberly Clark, that's P&G! They must be price gouging!" Procter & Gamble: 5-year avg revenue growth: 4.4% 2019 Gross Margin: 48.6% LTM Gross Margin: 51.4% 2019 EBITDA Margin: 20.4% LTM EBITDA Margin: 23.7% Gross margin up? Yep. EBITDA margin up? Yep. Good management? Yep. Price gouging? Nope. ❌ NO PRICE GOUGING AT P&G ❌

This underwater upside down view of synchronized swimmers produces a surreal effect, to say the least [📹 Fabio Ferioli]

It's the end of an era, but what a way to go. Arizona walks off USC to win the Pac-12 tourney title. As it stands, this was the final sporting event ever for a conference that was formed more than 100 years ago.

The rich history and culture of Arizona tribal nations is one of the things that makes our state so special. I’m proud to deliver support that will help preserve that heritage for future generations to see and learn from. azmirror.com/briefs/az-trib…

Things I’ve Learned What I wish I knew at 18… 1. College is mostly a scam I’m glad I went to college, because I wanted to work on Wall Street. But today, I wouldn’t waste $300,000 on it, and I wouldn’t want to work in banking. Instead, I’d load up on college credits during high school, go to a school like the University of Texas to have fun, graduate in 3 years debt-free, and travel around the world for a year.

Peter Thiel recruited Reid Hoffman, Chad Hurley, Sam Altman, David Sacks, and Keith Rabois. Also partnered with Elon Musk. He's used these 4 questions time and time again to identify 20-year-olds who would go on to be billionaires. Test yourself with these questions:

Persuasion is an ancient art — but we do it every day. This formula from Aristotle can be applied in the modern workplace. s.hbr.org/3tZo1iR

Building relationships and learning how to influence downward, sideways, and upward is pivotal to your career success. s.hbr.org/48L1Prm

Don’t skip your lunch break, and don’t feel guilty about stepping away, especially when you are feeling stuck. Doing so may actually be the best use of your time. s.hbr.org/3NuT4cJ

Dude shows off the invisibility shield he made

Novices seek praise. Recognizing strengths builds confidence to keep going. Experts crave criticism. Seeing shortcomings reveals avenues to keep growing. Preferring corrections to compliments is a sign of skill. The better you get, the more determined you become to get better.

Don’t forget something very important about this life: Your job is to train people how to treat you. You get more of what you tolerate. If you tolerate people being manipulative, you’ll get more of it. If you tolerate employees being flakey and unreliable, you’ll get more of it. If you tolerate verbal abuse, head games, drama and gossip you will get more of it. It isn’t rocket science folks. People will do more of what benefits them and hurts you if you surround yourself with that type of person.

Arthur C. Clarke on BBC's Horizon in 1964, when he gave some astonishing predictions about the future. t.co/ID0X7idWyy

60 important life lessons I wish I knew years ago: 1 lost money can be found; lost time is lost forever; protect what matters most 2 to learn, unlearn, relearn and change yourself is a superpower 3 you are not your job 4 networking is about giving 5 the best teacher is your last mistake 6 good manners is as important as good education 7 do not take your good health for granted 8 be a better friend and value relationships 9 if you are waiting for a title to lead, you are not ready to lead 10 a work sponsor is more important than a mentor 11 a good story is data with a soul 12 stop worrying about what others think of you 13 if you want an easier life, work on harder problems 14 best teachers are life long students 15 imposter syndrome is real, and a good thing 16 fight against a sense of entitlement 17 half the battle is showing up 18 love and cherish your parents by giving them your time 19 success is not accidental 20 the best views are there for those who love the climb 21 lucky people work harder 22 takers may end up with more, but givers sleep better at night 23 memorizing is not learning 24 it is okay to look back, just don’t stare 25 knowing is not acting - I can > IQ 26 straight roads do not make great drivers 27 good listeners hear the unsaid (listen with your eyes) 28 be the person that you want to follow 29 do not limit your contribution to a job description 30 take care of your parents - the best gift that you can give yourself 31 customer service is not a department 32 in the long run, the optimists create the future 33 never ruin an apology with excuses 34 salary is for expenses. equity is wealth - do not rent your time. 35 do not take a caring boss, joyful work or steady income for granted 36 as you get older, you love your parents more 37 challenge assumptions, starting with your own 38 we learn more from disagreements 39 best gift you can give yourself is quality time with parents 40 the older you get the less you care about what others think of you 41 be a good person but do not waste time trying to prove it 42 be comfortable with saying ‘I don’t know’ - there are no experts of tomorrow 43 being self-aware is a key to learning and growth; know yourself 44 first, invest in yourself, then help others win 45 if the answer is no, do not say maybe or yes 46 Don’t just translate, write something new and original; write for yourself - writing improves your thinking 47 It’s more important to do the right thing than to win an argument 48 do not buy your children what you never had, teach them what you never knew 49 begin with the end in mind 50 to make progress on your to-do list, you must also keep a to-don’t list 51 leave everything and everyone better than you found them 52 be kind and polite to everyone 53 Here’s how luck finds you: —Work harder than expected —Stay teachable —Give without expecting a get —Read and write more —Show up on time —Focus on your customers —Develop good manners —Be humble —Be kind and generous —Surround yourself with smarter people 54 The bosses we remember: —provided us a safe space to grow —opened career doors —defended us when we needed it —recognized and rewarded us —developed us as leaders —inspired us to stretch higher —led by example —told us our work mattered —forgave us when we made mistakes 55 The older you get, the more quiet you become. Life humbles you so deeply as you age. You realize how much nonsense you’ve wasted time on. 56 Hire based on high rate of learning and good judgment 57 straight lines do not make great drivers 58 stand in the middle of the road for too long and you may get hit from both sides - be decisive 59 if you do not know the answer, it is okay to say 'I don't know, but I will find out' 60 do not follow or admire mean people - be the person that you would want to follow

A recent survey identified four of the most common qualities of companies that regularly produce top leadership talent: s.hbr.org/4af5mQc

@IhoPwaitress74 @AmsterdamLost @EylonALevy Oops memri.org/tv/palestinian…

@AmsterdamLost @EylonALevy She was NOT a car bomber. Her car caught on fire.

This "disfigured woman" is a car bomber who, having blown herself up in a an attempt to kill Israelis, demanded that Israelis pay for her plastic surgeries. This is how The New York Times covered her release.

Magecart, Outlook bypass, and JSON Web Tokens were just a few of the major stories last year. We look back — and ahead — in our latest SOTI report. Learn more. ow.ly/lRhu50Qav5k