The Birth of American Exceptionalism

General Washington rousing the troops in 1777. One of SNL's best skits in a long while.

Mean Girls 2024: Stanley Cups are So Fetch!

Tina Fey's 2004 movie Mean Girls is considered a classic for its authenticity of teen culture, specifically teen girl culture. It astutely examined the rigid social hierarchy of secondary school filled with cliques, drama, and competition while giving us memorable lines like "that was so fetch"—Gretchen Weiners, "If you’re from Africa, why are you white?”—Karen Smith, and "...you're, like, really pretty. So, you agree? You think you're really pretty?"—Regina George. For many girls, life—at least for a time (perhaps more?)—is all about "Queen Bees and Wannabees".

Now, The Cut reports middle schools across the U.S. have been overtaken by Stanley Cup fever; and your status in the intricate social hierarchy of tween/teen girls is being dictated by whether or not you own an overpriced ($45-$55) 40z water bottle. Made by a 110-year old Seattle-based company, the Stanley Quencher has gone mega viral and is bringing overnight lines and mayhem to stores like Targets and Walmart. The sudden fame has turned the company that was generating about $70 million a year in revenue in 2019 into a $750 million business.  

When Stanleys are suddenly so fetch, they are a must-have. “Every day when I get into school at like 7:45 a.m., everybody comes over to me like, ‘Oh my God, I like your Stanley!’ or ‘It’s so cool, I want a Stanley just like yours!’” [said Dahlia], who is in eighth grade...“It makes me feel like I’m famous and being swarmed by paparazzi.”

On the other hand, you can be mercilessly banished to the Out Krowd if you have the wrong drinking receptacle. In a viral TikTok a mom said her daughter was made fun of for having a Walmart dupe. Another woman said her niece was "bullied by her classmates for bringing an off-brand version of the cup...basically the exact same product, minus the Stanley logo."

Of course, such dynamics aren't new. Studies find Mean Girls to be a distinct youth subculture with marked roles and positions: Queen, sidekick, banker, torn bystander, wannabees, and target. Particularly among girls, it can be characterized by social or relational aggressive behavior: back-biting and manipulation that can often be quite vicious. As protagonist Cady Hebron famously observes in the movie "in girl world, all fighting had to be sneaky." Such behaviors induce anxiety and stress that can take a significant toll on teenagers' mental health, with the CDC reporting 1 in 5 students feeling being bullied last year.   

What ya gonna do? To quote the Girl Who Doesn't Go to North Shore “I wish we could all get along...bake a cake filled with rainbows and smiles and everyone would eat and be happy.” More realistically, we will just have to shell out $50 for something our kids don't really need to keep them happy.  

NFTs: The Final Chapter?

Back in the surreal days of 2021 a restless population, flush with pandemic stimulus and speculative fervor, discovered...non-fungible tokens or NFTs. They were unique cryptographic tokens that exist on a blockchain and cannot be replicated--whatever that meant. But who cares? Have money, will play, right? NTFs were irreverent and fun, as exemplified by the sale of a set of Bored Apes NFTs for more than $24 million in Sotheby's "Ape In!" online auction. The NFT craze generated over $40 billion in trading volume in 2021, peaking with artist Beeple's digital work--The First 5000 Days--selling for $69 million! 

Good investments? Umm, you probably know where this is going. As per the Guardian, "a new report by dappGambl that reviewed data from NFT Scan and CoinMarketCap, 69,795 out of 73,257 NFT collections have a market cap of 0 Ether, leaving 95% of those holding NFT collections – or 23 million people – with worthless investments." 

Not surprising then that people are having regrets and looking for someone to blame. In addition to a long list of celebrity NFT promoters like Paris Hilton, Gwyneth Paltrow, Kevin Hart, Snoop Dogg, Serena Williams, Madonna, Jimmy Fallon, Steph Curry, and Justin Bieber, Sotheby's is also apparently at fault. The famous auction house "has been named as a defendant in a lawsuit filed by investors who regret buying Bored Ape Yacht Club NFTs that sold for highly inflated prices during the NFT craze in 2021. A Sotheby's auction duped investors by giving the Bored Ape NFTs "an air of legitimacy"...the class-action lawsuit claims." Sure, no one was trusting Hilton or Curry to be NFT experts, but Sotheby's was supposed to do some vetting? We dunno know...Sotheby's does have an authenticity guarantee but that was not an issue here. If people want to bid something up, it's almost by definition not an auction house's job to interject. But there's a twist...one of the buyers in the auction, it now turns out, was FTX. Does that make a difference, even though no one knew at the time? Seems like a stretch.

That's What She Said

The second Republican debate happened on Wednesday, if anyone even cared. With Trump, who has a nearly unassailable 40-point lead in the polls, absent again, it was a largely uneventful affair. Expect for maybe former South Carolina governor Nikki Haley's zinger about famously annoying candidate Vivek Ramaswamy, who shined in the first debate. On the topic of TikTok, Nikki snapped at Vivek with sincere disdain: “Honestly, every time I hear you, I feel a little bit dumber for what you say”. Burn.

But wait...here's what Nikki said about Vivek in a blurb for his 2021 book, Woke Inc. that helped put him on the political map in the first place: "His combination of honesty, intellect, and foresight are exactly what we need..."

Nikki apparently changes her mind a lot, but that's politics!

Instacart: The Early Bird Gets the Worm?

The IPO market has largely been dormant for the past 18 months. However, hopes of a revival were kindled recently as several high-profile companies went public in the last two weeks, including pandemic darling Instacart.

 

                                         Source: stockanalysis.com. *Includes REITs, SPACs, closed-end funds, ADRs, 
                                         banks, limited partnerships and trusts, **Thru 9/22/2023.

The grocery delivery service's IPO on Sep 19 was priced at $30, valuing the company at ~$10 billion. That was far below its (infamous) March 2021 funding round which valued the company at astonishing $38.5 billion!! Oh, 2021. Now, $30/share seems to be a fair price according to valuation guru Aswath Damodaran in a detailed analysis of Instacart's business model. And the market agrees? After a strong debut (gaining 43% on its first trading day), Instacart fell back to its IPO price within a week.

Regardless, Instacart was estimated to have raised $660 million from its IPO, with all three of the company's co-founders cashing in: "Brandon and Maxwell Leonardo sold 1.5 million of their 7.8 million shares, pocketing about $43 million each, while former CEO Apoorva Mehta sold 700,000 of his 28.9 million shares, netting $21 million. Mehta, a great example of entrepreneurial grit and perseverance, is now worth an estimated $1.3 billion. Prettay, prettaay, good. So, who were the other winners from Instacart's IPO, if any?

The chart above (click to enlarge) shows Instacart had a lot funding rounds (up to Series I) and many investors. But if you didn't get in early, you didn't do too well. Series F and later investors lost money outright, but it gets even worse if you consider relative performance. As this table (click to enlarge) from Damodaran's analysis demonstrates: 

Source: Aswath Damodaran (aswathdamodaran.substack.com)

As per Damodaran, the seed capital providers Khosla, Canaan and Y Combinator will have earned a 55% compounded annual return on their original investment...well in excess of the S&P 500's annual return of 13% over the same period. Or put it another way that's an 80x (gross) return vs 3.4x for the S&P 500. Nice! If the typical VC seed investment in 2012 was about $600-$700K, then that's a potential gain of around $50 million! Silicon Valley's pre-eminent VC firm, Sequoia, will have done even better, earning 62% on its 2013 Series A investment of $8 million as per the WSJ; that's a potential gain of over $600 million--cha ching!! Andreesen Horowitz ("a16z") will have earned a 29% annual on its 2014 Series B investment (on a $15-$20 million investment, that would be a potential gain of $100-$150 million). 

After that things start to unravel...all investments in Instacart made after 2015 have underperformed the S&P 500 significantly, and the NASDAQ by even more. In fact, any investment made after 2018 generated an (unrealized) dollar loss! Hedge fund crossovers, Tiger, Coatue, and D1 underperformed but so did established VCs like DST Global and General Catalyst, who invested $75 million and $50 million, respectively. The worst off possibly was T. Rowe Price, whose growth fund invested $86 million in 2021. That investment has lost more than half of its value. 

To be sure, firms like Sequoia have invested in multiple rounds, taking some of the shine off their early perspicacity. But the success of those early rounds more than makes up for the losses of the later rounds. Sequoia, in fact, invested $300 million across all funding rounds prior to Instacart's IPO and currently owns more than 15% of the company; its stake is estimated to be worth over $1.5 billion. Interestingly, perhaps aware that a successful Instacart IPO was needed to help thaw a frozen IPO market for their other portfolio companies, Sequoia and other VCs agreed to buy up to $400 million worth of shares sold in Instacart's IPO, accounting for ~66% of the total proceeds. Unless they immediately sold, they are essentially holding those shares at cost less than a week later. 

Ultimately, Instacart's IPO was an expensive lesson in market timing and herd mentality. Yes, the early bird does get the worm...but habit rules the unreflecting herd. Invest carefully.

Why Bidenomics Gets So Little Love? Blame David Brooks!

Bidenomics is the President's signature economic plan, meant to grow the economy from the middle out and bottom up. It is a rejection of the Republican party's core policies of "trick-down economics" and is expected to be financed in part by greater taxes on the wealthy and corporations. And it seems to be working: (i) 13 million jobs added since Biden's inauguration (January 2021)--including 800K of those elusive manufacturing jobs, (ii) unemployment at less than 4%, and (iii) the strongest growth since the pandemic of any major economy. Yes, inflation reached a 40-year high in June of last year with a yoy increase of 9.1% but thanks to the Fed's aggressive rate hikes and supply chain normalization, CPI has steadily declined (though still elevated at 3.7%). If the conventional wisdom about elections is true, that "it's the economy, stupid", then Biden should be sitting pretty. 

Yet, despite robust job growth, rising wages, and falling inequality the electorate is anxious about the state of affairs, very anxious; an NBC poll at the end of June found 74% of Americans feel the country is heading in the wrong direction. Huh? Why is Biden not getting credit for the economy?

Inflation is certainly a part of it. A September Harris poll for the Guardian newspaper found that "two-thirds of respondents (68%) reported it’s difficult to be happy about positive economic news when they feel financially squeezed each month (Republicans: 69%, Democrats: 68%)." And there is hard data to support such disquiet. While most measures show real wages are up since prior to the pandemic, Jason Furman (Harvard economist and chair of the Council of Economic Advisers under President Obama) calculates that [they] are still 3-5% below their immediate pre-pandemic trajectory. In other words, things were already improving under Trump then the pandemic hit, followed by nearly double-digit not transitory inflation causing real wages to plummet. Workers' real incomes are now back up to Q1 2020 levels, but still below the trajectory they were on in the waning years of the Trump administration. Simply put, Americans feel real wages should be higher.   

But the Harris/Guardian survey finds another, more dire, reason for voters' dissatisfaction: mistrust in media and government. Two-thirds of Americans (65%) believe that the economy is worse than the media makes it out to be. For example, while the unemployment rate was close to a 50-year low in August at 3.8%, the poll found that "51% [surveyed] wrongly believe that unemployment is nearing a 50-year high rather than those who believe it’s actually low (49%)". And it wasn't just Republicans, a sizable number Independents and Democrats also felt the same.

Taken together, it's not much of a surprise that more than half of Americans (53%) believe the economy is getting worse instead of better or staying the same. Republicans and independents were more likely to think it’s getting worse (72% and 58%, respectively, v Democrats: 32%).

That brings us to David Brooks, the New York Times' conservative columnist and recovering neocon/Republican.  In a June op-ed, he also explored why Biden was struggling to make his economic case. Sure, inflation was a part of it, but Brooks believed the media and (crucially) a bruised national psyche were mainly to blame. What's that again, David? National psychology. Brook argues that during the Trump era Americans suffered "a collective moral injury, a collective loss of confidence, a loss of faith in ourselves as a nation". It is reflected in a recent Gallup poll showing Americans' "satisfaction with their personal lives is nearly four times as high as their satisfaction with the state of the nation". And the media isn't helping, over the past couple of decades headlines have grown starkly more negative, particularly from right-leaning outlets, stoking anger and distrust. Hmm...like if a nationally syndicated columnist were to tweet on his NYT X account about the outrageous price ($78) of an airport hamburger and fries meal as an example of why Americans are so gloomy about the economy, while conveniently omitting that 80% of the tab ($62) was for his bar bill.

Maybe he was speaking an "emotional truth". Regardless, intentional or not, he validated his own media thesis about trust. Does this mean Biden is toast...no, not really. Because, at this point Trump is almost a lock for the Republican nomination leading by 50 points over his nearest rival, Ron DeSantis in recent polls...but Biden wins against Trump in a rematch! Politics!!

Is the Patriarchy Romantic?

It's the 2020s, women today make up 60% of college undergraduate enrollments; among married couples almost half of women make as much or more than their husbands. Even Barbie is a feminist now? Still, there is one tradition that's going strong, despite its deep patriarchal roots: American women taking their husbands' last names. As the NY Times reports, a 2023 study from the Pew Research Center reveals nearly 80% of U.S. women changed their names after marriage.

Looking a little deeper into the data, views on marital naming diverged somewhat by politics (naturally) and education: "Among conservative Republican women, 90 percent took their husbands’ name, compared with 66 percent of liberal Democrats, Pew found. Eighty-three percent of women without a college degree changed their names, while 68 percent of those with a postgraduate degree did." Also, younger women (<50) are twice as likely to keep their names than older women (50+). 

These findings are consistent with a scholarly paper examining the same behavior. A 2004 paper by Harvard economist Claudia Goldin and Maria Shim in the prestigious Journal of Economic Perspectives found largely the same set of correlates to changing one's surname: higher education (less likely to), delayed marriage (less likely to), highly educated spouse (less likely to), children (more likely to), etc. Still these factors seem to be overwhelmed by larger cultural factors. Regardless of age, education, or status, women's desire to "make a name" for themselves appear to be subsumed by their longing to conform to tradition and customs. 

That tradition, at least among Anglo-Saxons, is rooted in Western society's patriarchal history. Until the middle-ages, women were simply referred to as "wife of [insert husband's name]"--like in the Handmaid's Tale (Offred or Ofjoseph). Then coverture arrived in England around the 15th century and a husband and wife became a unified entity. But not in the way the Spice Girls cooed about. Rather coverture held that "no female person had a legal identity...[she was] covered by [first] her father's identity, and then, when she was married, by her husband's". As coverture caught on, the practice of wives adopting their husband's surname became firmly entrenched in English society. So much so, in 1765, it was codified into law. 

   

The custom was carried over into the U.S. and other British colonies. In the spirit of the revolution Abigail Adams (wife of John) pleaded with her husband to change the practice, in her famous "Remember the Ladies" letter of 1776, but he apparently thought she was joking (oh Ofjohn, you're so funny). So, it would take a couple of centuries before women were recognized as separate from their husbands. Until the 1970s women in the U.S. could not get a driver's license, passport, or register to vote unless they took their husband's surname.

And yet, today despite a great deal more financial, political, and social freedom, women continue to be drawn to patriarchal gender norms. In fact, many even find changing names compelling because as JLo explained when she became Mrs. Affleck: it's romantic! Since it is commonly viewed as a sign of love or commitment to their husbands and their new life together, many women happily take their spouse's surname. Now to be fair, for the less famous, there are also practical considerations. As the Times article referenced earlier notes, many women "find it easier to have the same name as their future children, and to simplify dinner reservations or utility bills."

It's also important to note, the custom of marital name changes is by no means universal. In China, Korea, and other East Asian countries women traditionally retain their surname after marriage. The same in many Muslim countries. Even in Western countries things have changed; in Italy, France, the Netherlands, and Greece, women by law are required to keep their maiden names. So maybe it's just another case of Americans being WEIRD. We simply assume that's how the world works, because we do it that way.