My favorite Story of the Week

Investment Analysis Clubs Macro Economic Trends and Risks
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As Wendy sometimes does, I will announce this is MacroEconomic because our entire economy, not to mention society, is built upon marketing and value addition. And with that:

The store opened in Santa Monica in November 2018 under the name Palessi, which sounded Italian enough that nobody asked, in a retail space that had recently been occupied by Armani.

The fit-out was convincing, with sparse shelving, dramatic spot lighting, a single shoe on each plinth, and staff who could talk about the line.

Influencers and local shoppers were invited to the launch and filmed as they browsed, picking up the shoes, examining the stitching, weighing them in their hands and offering exactly the kind of commentary the format invites, praising the elegance of the design and the quality of the materials, with several guessing the pieces were worth somewhere between four hundred and six hundred dollars.

Every pair had come off a Payless shelf, where the same shoes sold for roughly twenty dollars. The company had emptied its own ordinary stock into a luxury environment, put a made-up name on the door, and priced the shoes at a multiple of fifty or more, and in three hours it took in about three thousand dollars from people who were genuinely delighted with their purchases.

When the setup was revealed the reactions were recorded too, and the entire exercise became the advertising campaign it had always been designed as. Every buyer was refunded in full and told to keep the shoes, which mattered, because a prank that leaves people out of pocket reads very differently from one that leaves them with a story and free footwear.

What the stunt actually demonstrated is uncomfortable and fairly well established in the research on pricing, which is that in the absence of reliable information about quality people use price and presentation as a proxy for it and then experience the product accordingly. The shoes hadn’t changed at all between the Payless shelf and the Santa Monica plinth, and only the room had.

Now I could make some snide comment here about shares in SpaceX, or maybe the upcoming Anthropic or OpenAI IPOs, but I’ll refrain.

OK, no I won’t. :wink:

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It would be interesting to isolate which factor mattered most to these “influencers”: the Italian-sounding brand name, luxury pricing, attentive staff, or social expectations.

With SpaceX, it seems luxury pricing and brand name seem premium features since I wouldn’t call the company especially attentive to investors, at least the little ones. As for social expectations, that may be more of Kool-Aid factor.

Pete

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Fashion is a consumable item with a short shelf life. The SpaceX “addressable market” is literally infinite and includes the 95% of the universe we know nothing about.

intercst

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Let’s not get carried away. 100% of SpaceX’s customers live here on Earth and consist of people who need payloads carried into space and people with bad internet who can afford good internet. Which is a lot of people, but definitely finite.

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Explain to me what use the consumer in Iowa has for “something in space” between, say, Jupiter and Saturn, and I’ll concede that maybe you have a point. Until then, it’s hyperventilating to the max.

Then there is what I call “the 100 year problem.” Between 1492 and 1620, when the first Pilgrims landed to start a colony, almost 130 years elapsed. Sure, there was other stuff in between (Magellan, Ponce DeLeon, etc) but little that lasted or mattered economically. And sure things move a little faster now, but “outer space?”

GPS started in 1973, but didn’t become a commercial product until 2000. There’s a HUGE time lag in these sorts of things, a time lag which renders investment theses moot (unless you’re starting a foundation which doesn’t do anything until long after you’re dead.)

Silly stuff. And no, nobody is going “asteroid mining” anytime soon.

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