The Good Links Tries to Explain Private Equity
Plus Tremors (!!!!!) is on Netflix.
Featuring pyramid schemes, private equity ruining retail, and Entourage.
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Millennials (Get Embroiled in a Pyramid Scheme)
This week’s issue is (mostly) all about bad business decisions, and we start with a multi-level marketing scheme called LuLaRoe. Founded by Mormon twin grandmothers (??? what!!!), LuLaRoe sold leggings, but more than that it sold a big promise to millennial women — get out of debt, work from home, live the dream. At its height in 2017, LuLaRoe was generating 2.3 billion dollars, billion with a “b”! But it cost at least $5,000 just to get in on LuLaRoe, and ended up bankrupting many of its “consultants” AKA the people buying into the pyramid scheme (of which there were 60,000 at one point).
The company is now facing multiple lawsuits — allegations that they sold faulty clothing and multiple states suing them for running illegal pyramid schemes. But they faced plenty of other scandals — clothes arriving “moldy” from factories, and the husband of one of the founders calling their customers “pigs”, among a laundry list of other things. But even as the founders face lawsuits for bankrupting all these people, they continue to live lavish lifestyles — to the disappointment of all the people who lost a ton of money trying to sell leggings.
The whole thing is a mess on essentially every level — the company reportedly “tore apart” the families of the “Mormon twin grandmothers” who started the business, and the other twin started a rival company to LuLaRoe called “Piphany.” Each line of this article feels crazier than the next!
If it walks like a pyramid scheme and talks like a pyramid scheme, it’s a pyramid scheme.
P.S. It’s also very important to me that you understand that one of the women who started this company is named Deanna Startup Brady Stidham. Her middle name is STARTUP. I mean: how is it real? How! Is! It! Real! And that’s just the tip of the hereditary iceberg, apparently her mother ran “femininity” forums in the ‘60s that taught women how to subjugate themselves in order to find a husband and also helped Phyllis Schlafly fight the Equal Rights Amendment in the ‘70s. The history!
A More or Less Serious Item (Not About Bad Business Decisions)
If all this “people going bankrupt because of someone else’s greed” business is bumming you out, I implore you to check this CityLab story about why Japan’s lost and found system is so good. Some 4 million lost items were turned in to police in 2018. 4 million! Apparently it’s a combination of an extremely efficient lost and found system and a culture that values returning lost stuff. By comparison — about 10% of lost wallets in NYC get returned to their owners vs. 80% in Tokyo. That’s crazy! It’s crazy. And? It’s wholesome!
This Week’s Theme: Private Equity Doing Everybody Dirty
It feels crazy to me that I’ve never sent the Vox article that explains that private equity is ruining all of the retail stuff we love. I teased the story back when I covered the downfall of Deadspin (a popular sports blog, catch that Good Links issue here), but this article really has the whole story. It explains all the beloved chains we’ve seen go belly up thanks to private equity: Toys R Us, Payless, Claire’s, Gymboree, etc., and it explains how private equity contributed to their bankruptcy. Plus, a new study suggests that about 600,000 retail jobs have been eliminated thanks to the tyranny of private equity.
And if high-level explanations of private equity bore you, you can read a more specific example in the recent downfall of New York City’s storied grocery chain Fairway. After a private equity firm called Sterling Investment Partners bought stake in the company in 2007, Fairway’s financial situation began to deteriorate slowly, as Sterling began to prioritize a profit-driven bottom line over good business practices.
On the other side of the spectrum is the ways in which private equity is influencing Hollywood. Private equity firms now own majority stakes in four of the major Hollywood agencies (UTA, ICM, CAA, and the Ari Emanuel powerhouse WME), and are a large part of the reason that WGA (Writers’ Guild of America) writers fired their agents back in early 2019. This NYT article explains more, but essentially, to seek profit, agencies have now moved into producing content (movies, tv shows, whatever the heck else “content” is these days), which writers feel puts them in a position of conflict of interest when it comes to their agents helping them get the best projects and not just projects being produced by the agencies themselves. Very inside-baseball stuff! And if you don’t care about it, that’s great! You can read about the grocery store!
Private equity firms w/ everyone’s money.
Politics (Is Somebody Doing Something About Private Equity?)
Full disclosure: I’m an avid Elizabeth Warren supporter. It’s a full-on coincidence that she’s the one that introduced a bill to Congress last summer called the “Stop Wall Street Looting Act” that aims to completely overhaul the private equity industry so that firms are forced to have more skin in the game if the businesses they acquire ends up failing. Is that a testament to how great of a candidate she is? Who can say? Who can say! Her bill includes provisions that prioritize workers in the case of bankruptcy, requires more transparency, and forces private equity funds to be on the hook for things like pensions and ethical layoffs (like getting those Toys R Us workers their severance) in case the company fails.
P.S. If you’re a Pennsylvania voter, now’s a great time to check your voter registration status because the PA primary is coming up. PA primaries are CLOSED so if you want to vote for a candidate in the primary, you need to be registered as a member of whichever party your candidate is part of.
A Celebrity Thinger (Somehow STILL Linked to Private Equity)
And speaking of Hollywood talent agencies & Ari Emanuel, I have a celebrity two-fer this week.
First, please read these horror stories from former Hollywood assistants that Vulture has collected. One guy seems to have developed PTSD from a three-day gig working for an agent, and another person got yelled at on the toilet. Ultimately, I think it’s important to remember that your job could always be worse!
In case you didn’t know, Ari Emanuel (brother of Chicago Mayor Rahm and health care talking head Ezekiel) is one of Hollywood’s most powerful agents. He also inspired the character Ari Gold on the television program Entourage. Entourage! The once crown jewel of HBO’s programming. But the thing about Entourage is that it simply hasn’t aged well. And that Slate article about how it hasn’t aged well is extreme fun, analyzing why the show’s pedestal treatment of bro code over all else leaves us with a sort of bad taste in our mouths these days.
P.S. The article was written before this happened, but I’m sure it’s not helping Entourage’s legacy that Jeremy Piven (who played Ari Gold) has been totally #MeToo’d.
Would You Rather? (Lady Gaga Edition)
Would you rather have your ex-boyfriend date Lady Gaga or pretend like you’ve never heard Lady Gaga’s leaked new single before?
A Recommendation (LISTEN UP!)
Tremors is on Netflix. This is very important to me. If you haven’t seen Tremors, you should absolutely fucking watch Tremors. It’s about WORM MONSTERS popping out of the desert (a la whack a moles) and eating people. Also, Kevin Bacon is there. I really can’t emphasize this enough: Tremors is perfect. Now if you HAVE seen Tremors? Great, watch Tremors again because? Tremors is perfect.
Tfw you are Kevin Bacon and a worm monster is popping out of the desert.
The Interactive Bits (Interact with me!)
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