Behind the nylon cult

unduhan-79It all started in a yellow suburban house in Brisbane with a single plastic sewing machine, a blog, and a hope that girls somewhere would like these patterned tights.

Now, the nylon cult that is Black Milk Clothing is a global phenomenon.

While half its loyal customers are local, Black Milk now ships to 200 countries and boasts celebrity fans such as Miley Cyrus, Katy Perry and Whoopi Goldberg.

The brand is also a social media phenomenon – heading towards two million followers on social media, they have more than a million on Instagram alone, and a dedicated team who respond to every comment.

Such is the popularity of Black Milk clothing, it has a dedicated IT department to help deal with the surge in website activity on collection day, when coveted items such as the Harry Potter–themed kimono sell out in minutes.

So how did this locally designed and made clothing brand famous for its geeky tights and swimsuits become such a success?

James Lillis, the man who started it all, still seems surprised by the growth some eight years after starting out.

“I never envisaged it would become this,” he says. “I was like, maybe if I can sell a couple of pairs of leggings a day, I’d be pretty happy.

“I think for some bizarre reason I really believed in it – and I don’t know why, I didn’t really have a lot of evidence – but a part of me felt, ‘I think I can do this.’ “

Despite his lack of formal training and “just kind of making it up” as he went along, Lillis says it was sheer determination that has taken the company to where it is today.

Tech companies pounce as allure

images-52When he started thinking about leaving Apple this year, Darren Haas briefly contemplated Uber Technologies, where many friends worked. Instead, the cloud-computing engineer pursued an opportunity he considered more exciting: General Electric.

Excitement and a century-old industrial company don’t usually mix in the minds of Silicon Valley talent. But Haas said hardcore challenges at GE, like keeping planes airborne and nations’ water systems flowing, sold him. Now, he pitches potential hires from late-stage startups on those same big projects, along with competitive compensation.

“You’re betting on a lottery ticket,” he said he tells prospects who like the idea of getting stock in a startup. “There’s lots of ups and downs. GE is stable.” Since he joined in June, he’s recruited several engineers from unicorns – startups valued at $US1 billion or more – a move he said would have been much harder last year when unicorns were riding high.

The typical trade-off between working at an established public company and a startup works like this: Young businesses generally can’t pay big salaries, but offer options that could make staff wealthy if everything works out. Older firms typically pay more, but you won’t become a multi-millionaire. Fading unicorn luster tips the scales in favour of steadier employers.

Fifteen months ago, online local search company Yelp said the “unicorn bubble” was hurting its numbers, including the cost of product development which rose three per centage points to 20 per cent of revenue.

“That’s just a function of compensation in the marketplace,” Geoff Donaker, Yelp’s Chief Operating Officer at the time said on an earnings call. “We’ll do what we can to kind of hold the dam on that whole thing and ride it out.”

The Reason Your Employees Are Always Putting Out

images-53Company leaders, consider the following questions: How many surprises have you dealt with this week? How many customer relationships have had to be rescued or late orders escalated? How many apologies delivered, numbers explained, or presentations redone?

Every leader I know wrestles with these and other crises as a matter of routine. Yet leaders also recognize that running a business through constant firefighting puts them at risk of stressed-out employees, customer defections, a damaged brand, and safety or ethics catastrophes.

On closer inspection, the vast majority of fires are preventable. They are essentially “rework” — the added effort and cost required because something was not done right the first time. Unfortunately, firms can get stuck in a vicious cycle of rework, shortcuts, and more rework. I once worked with a workers compensation firm that discovered they could cut costly disputes and attorney involvement by contacting injured workers within 24 hours. Still, new claims would languish for a full five to seven days, because employees were dealing with all the prior claims that had gone to court. Unfortunately, this meant 80 percent of those new claims would also involve attorneys and disputes. In aggregate, rework costs can be huge. The Juran Institute estimated in 2010 that 15 to 20 percent of revenues for manufacturing companies went to rework; for service businesses, it estimated 30 to 35 percent.

How did we get to this point, where firefighting is standard operating procedure? And how do we get out? Thirty years ago, the godfather of quality, W. Edwards Deming, addressed a similar situation with his book, Out of the Crisis (MIT, 1982). Japan had begun making products with high conformance quality at lower cost than poorer quality products made elsewhere. Many U.S. executives assumed Japanese exporters must be dumping products at a loss, and responded with price wars, cost cutting, and blame for American workers. In his book, Deming focused on how leaders could shift their organizations from a short-term focus on manipulating numbers to more ongoing, sustained success. Although his work is generally applied to manufacturing or routine services, many of Deming’s “14 points for management” can be adapted to help managers in knowledge-driven, professional businesses to dig their teams out of constant crisis. Here are just a few:

“Create constancy of purpose.” Without a sense of the bigger picture — what you are trying to accomplish and why it matters — people naturally default to fixing problems. Unfortunately, this approach never creates the level of delight or innovation that wins you customers for life. Deming encouraged managers to focus explicitly on a mission and longer-term goals to counter-balance the pull of immediate issues. This means defining clearly what you are promising to your customers, so employees know what they should strive to deliver. Even in highly dynamic environments, such a meaningful mission can provide constancy while tactics and strategies shift.

Talk About Australian government

Risk-averse and technology-backwards bureaucrats are hampering the push for agile and innovative Australian government, high-tech start-up firms say.

Emerging firms say government contracts remain sown up by multinational “dinosaurs” like IBM, SAP and Accenture, despite high-profile stuff-ups, because they are masters of the federal government’s painfully bureaucratic tender process.

Public servants who don’t know what technological solutions are available are another inhibitor of Prime Minister Malcolm Turnbull’s innovation drive, with too few bureaucrats willing to explore or experiment.

But there is hope, with one digital marketing firm saying the reboot of the Digital Transformation Office – now the Digital Transformation Agency – was taking government tech in the right direction.

Sydney start-up URGE offers a Yellow Pages-style directory of businesses that can communicate with their customers via text or live webchat.

Chief executive and co-founder Doron Ostrin says URGE, or technology like it, could make the difference to Centrelink’s dismal customer service performance.

But he says the firm hits a brick wall when it tries to show the Commonwealth what it can do.

“We just get passed around, it’s like nobody really has the final say,” Mr Ostrin said.

“On the back of one of the last Centrelink articles, when they were saying that they wanted to find new ways of letting their customers talk to them, we did reach out to them, but we haven’t heard anything back.”

Mr Ostrin said bureaucrats believed the low-risk option was hiring established giants like IBM, Accenture or SAP, even if the multinationals had a track record of involvement in high-profile tech-wrecks like the recent census debacle.

“But in the tech-world, hiring the biggest builder doesn’t get you the best house,” Mr Ostrin said.

“You don’t see enough experiments or trials happening because they [departments] are too nervous of going to the public with anything that isn’t perfect.”

Mike Pritchett, managing director of video production start-up Shootsta, is another tech executive frustrated by the Commonwealth tendering maze.

“Nine times out of 10, the government tenders are very convoluted and there have been some more recently where they have been getting a little better,” Mr Pritchett said.

Snapchat parent could be worth

The sharemarket float of messaging phenomenon Snapchat is likely to make chief executive Evan Spiegel and his Australian fiance, model Miranda Kerr, one of the world’s richest young couples.

Snapchat’s parent Snap Inc filed paperwork for an initial public offering that may value the company as high as $US25 billion ($33 billion), The Wall Street Journal reported.

Mr Spiegel, a 27-year-old co-founder, is the driving force behind the company.

Having proposed to the 33-year-old Ms Kerr five months ago, the couple could be worth about $3.9 billion if the company lists at the top end of the valuation range. Morgan Stanley and Goldman Sachs have been assigned as underwriters, the Journal reported.

Under California family law, assets acquired before a marriage don’t have to be split equally in a divorce.

Stanford student

A notorious partier from a well-off Los Angeles family, Mr Spiegel founded Snapchat when he was a student at Stanford University five years ago studying product design and the social chair of a fraternity.

Snapchat was initially designed for sexting – the app was used to send short video messages that erased themselves after a few seconds. But it became a hugely popular rival to Instagram and a popular medium for advertisers chasing hard-to-get younger people.

The app is used by more than 150 million people daily, including 41 per cent of American 18 to 34-year-olds, Nielsen estimates.

Mr Spiegel turned down a $US3 billion offer for the business from Facebook three years ago. In May the company was valued at $US18 billion, according to regulatory filings, which suggest it has about 200 investors.

Mr Spiegel loves expensive cars, expensive hoodies and lavish parties. Before becoming engaged to Ms Kerr he was romantically linked to singer Taylor Swift.

Small-town model

Ms Kerr grew up in the NSW town of Gunnedah and won a modelling competition run by Dolly magazine when she was 13. She was the first Australian Victoria’s Secret model and the face of David Jones for several years.

In 2010 she married actor Orlando Bloom. The relationship last three years, according to tabloid news reports. Now the face of Wonderbra, Ms Kerr is sixth on Forbes’ ranking of highest-paid models.

After Mr Spiegel proposed, she posted a picture of her engagement ring on Instagram and Twitter.

Two years ago the tech blog Valleywag published sexually explicit, misogynistic and homophobic emails Mr Spiegel sent as an undergraduate.

“I’m sorry I wrote them at the time and I was jerk to have written them,” he told Business Insider.

At 25 he was crowned the world’s youngest billionaire by Forbes.


Young rich that will inspire you

If you’re planning on joining the ranks of Australia’s young rich listers, it helps to be male, tech savvy and university-educated – and live in Melbourne.

An analysis of the top 25 performers in the BRW Young Rich List for 2016 reveals men dominate, with only two women making it in.

Both female entrants – Cyan Ta’eed and Melanie Perkins – work in tandem with their respective male partners, Collis Ta’eed and Cliff Obrecht.

Tech entrepreneurs are the clear winners in this year’s list with Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar top of the heap with $4.68 billion.

The pair, both 36, met while studying business information technology at the University of NSW, which has produced more young rich listers in the top 25 than any other institution.

While a number of the young rich listers have multiple qualifications from a range of organisations, UNSW has educated five in the top 25, including Cannon-Brookes and Farquhar.

Ori Allon, worth $316 million thanks to his real estate technology disrupter Compass, gained a PhD in engineering from the university.

Collis Ta’eed, who, with wife Cyan is worth $184 million, did a bachelor of science at UNSW before undertaking post graduate study at the University of Technology, Sydney, and then launching Envato, a network of websites with more than 6 million members.

Another UNSW alumni is Simon Clausen, number 6 on the list with $391 million in bank account, who attended the Australian Graduate School of Management before becoming involved in a variety of tech businesses.

Technology trumps property among the top 25 with 14 of the rich-listers involved in tech businesses providing a range of services from email marketing, retail, entertainment to graphic design.

Avert a market freeze

Germany’s two-year bond yields shot up from record lows after a report that the European Central Bank is looking to lend out more bonds to avert a market freeze.

Broader European bond yields also came under upward pressure as a sell-off in global bonds markets resumed. British gilt and US Treasury yields soared while Italy’s 10-year bond yield hit its highest level since September 2015.

The two-year German Schatz yield rose more than 7 basis points from a record low hit after central bank sources told Reuters the ECB is looking for ways to lend out more of its huge pile of government debt to avert a freeze in the €5.5 trillion short-term funding market.

“The story does leave me feeling more confident that the ECB is going to extend the asset-purchase programme in December,” said Mizuho rates strategist Peter Chatwell.

“If they are making technical changes, that implies they are thinking about everything that needs to take place to allow the programme to run for longer.”

Two-year German bond yields have fallen sharply this week, hitting a record low of minus 0.75 per cent in early trade.

ING attributed the move to a growing scarcity of collateral as short-dated German government bonds are often posted as collateral for short-term borrowing in repo markets.

“Not everyone has access to the ECB’s deposit facility, so they turn to a safe place to put their cash,” ING strategist Benjamin Schroeder said.

The ECB’s bond-buying programme, which has so far pumped well over €1 trillion into the system, has left many investors with an excess of cash.

Dutch and French equivalent bonds were yielding minus 0.69 per cent and minus 0.60 per cent respectively, but were 3 bps higher on the day by 1630 GMT.,

Euro zone bond yields in general headed back towards recent highs hit after the US presidential election victory of Donald Trump, with 10-year German Bund yields up 4 bps at 0.27 per cent.

Trump’s views on fiscal expansion have pushed bond yields up in recent weeks because of increased growth and inflation expectations.

US 10-year Treasury yields hit their highest level since July 2015, while two-year bond yields hit a 6-1/2 year high of 1.147 per cent.

British gilt yields were up 11 bps, rising after Britain ramped up its borrowing forecasts by much more than expected and said the vote to leave the European Union would weigh heavily on the economy.

Indicators pointing to solid economic growth in the euro zone’s two largest economies also played into a theme of a changing outlook for world bond markets.

US Economy is confident

Federal Reserve policymakers appeared confident on the eve of the US presidential election that the economy was strengthening enough to warrant interest rate increases soon, minutes from the Fed’s November 1-2 meeting showed.

The minutes released on Wednesday (Thursday AEDT) back the consensus view on Wall Street that the Fed is poised to raise rates in December. Policymakers left borrowing costs unchanged earlier this month, just days before Republican Donald Trump triumphed in the November 8 presidential contest.

Voting members of the Fed’s rate-setting committee saw equal risks the economy would overshoot or undershoot their forecasts for continued growth and a tightening labour market.

“Almost all of them continued to judge that near-term risks to the economic outlook were roughly balanced,” according to the minutes.

Most of the voting policymakers backed holding off on rate increases “for the time being”, according to the minutes, a view that was reflected in the language of the November 2 policy statement.

Seventeen policymakers participated at the November policy meeting, of whom 10 had a vote. Among the wider group of participants, most said it “could well become appropriate” to raise rates “relatively soon”, according to the minutes.

Some argued a hike should come at the Fed’s December meeting in order to preserve the central bank’s “credibility”.

Fed officials have already downplayed the significance of Trump’s election for near-term policy decisions, although they have warned the Fed could raise rates more quickly if the federal budget deficit widens under Trump.

Fed chair Janet Yellen said last week in congressional testimony that Trump’s election did nothing to change the Fed’s plans for a rate increase “relatively soon”.

OPEC led on production

Oil prices fell slightly amid investor doubts that OPEC will agree to a production cut large enough to make a significant dent in the global glut of crude as U.S. drilling rises.

Members of the Organisation of the Petroleum Exporting Countries(OPEC) will meet next week on November 30 in Vienna to decide on the details of an agreement to cut output that the group has been trying to hammer out since September.

Oil prices fluctuated throughout the day, starting lower in the morning and later briefly turning positive after the Energy Information Administration said US crude stocks unexpectedly fell 1.3 million barrels last week after three straight weeks of builds.

Reports that US drillers added rigs this week tempered the gains ahead of the settlement.

In the US market, West Texas Intermediate (WTI) crude oil futures settled down 7 cents, or 0.2 per cent, at $US47.96 a barrel.

Brent crude futures settled down 17 cents, or 0.35 per cent at $US48.95 a barrel.

Calendar spreads, the difference in price between one month and the next in the futures market, showed little signs that traders are pricing in a big change in market fundamentals.

The front to second-month WTI calendar spread traded at its widest level in seven months on Tuesday, although it narrowed slightly on Wednesday. The one to six-month spread traded at one of the widest levels since August.

The WTI cash roll, which allows physical traders to roll long positions forward, traded down to negative $US1.80 a barrel on Tuesday, the weakest since March.

All are indications that traders expect little change in oversupply in the market in the near term.

“Looking at the forward curve, the spread has gotten substantially weaker on the WTI side … so that’s bearish and pressures the front of the curve,” said Tariq Zahir, an analyst at Tyche Capital Advisors in New York.

“There’s going to be some cut, but is Saudi Arabia really going to take the lion’s share of the cut?”

Doubts remain over whether the group will agree to a proposed cut of 4 per cent to 4.5 per cent that has been discussed. That would imply a supply cut of more than 1.2 million barrels per day, according to Reuters calculations.

Iraq has been one of the more reluctant members to agree to a cut, but Prime Minister Haider al-Abadi told reporters on Wednesday in Baghdad that they were willing to lower their output.

Separately, non-OPEC member Russia has said it would cut production, but domestic oil companies have not worked out details, muddying the outlook for cutting output.

US oil drillers added rigs this week, as shale producers boost spending to capture forecast higher crude prices in coming months. The increase thus far in November is the largest since July.

Drillers added three oil rigs in the week to November 23, bringing the total count up to 474, the most since January, but still below the 555 rigs seen a year ago, energy services firm Baker Hughes.

Favour as investors

The remarkable outperformance of small caps seems to have run out of puff, with investors finally turning their attention back to the growth potential of blue chips.

Since the beginning of October, there has been a clear divergence between the top 20 ASX companies and the small cap index. While the former have risen about 3 per cent, small caps are now off 1 per cent – and the difference is even more pronounced since the US election.

That’s in sharp contrast to the previous 18 months during which small caps rallied about 13 per cent, while the top 20 stocks collectively fell 15 per cent, weighing on the benchmark S&P/ASX 200 Index.

“We’ve had a reversal of the lower-for-longer, pay-up for certainty, safety yield thematics,” said Matt Sherwood, head of investment strategy at Perpetual Investments. “Investors have decided that trade is over and are buying up quality.”

Investors sold off bonds after Donald Trump’s surprise election victory, which saw the yield on Australian government bonds spike. This bodes well for Australian banks – that like to borrow at the short end and lend at the long end – meaning a steeper yield curve is good for the earnings. It also hasn’t hurt the local banks that President-elect Trump has vowed to slice regulation in the sector.

Big four lead way

As such, investors have poured money into bank stocks also as fears of further bank capital raising have eased both abroad and locally. The big four banks have led the local rally since the Trump election, each rising about 10 per cent as investors take advantage of the rotation out of yield plays.

Miners give back gains

Investors are taking profits in the mining sector, as early optimism on the ASX sours amid heavy selling in Aussie bonds, while Boral slumps following a capital raising.

  • Boral shares plunge 10% after resuming trade, says placement was ‘greatly oversubscribed’
  • Japanese stocks continue to rally, hitting their highest since early January on a weaker yen
  • Rio sells aluminium assets in Scotland, in a deal that Citi says is ‘value accretive’
  • Spot gold slides below $US1200, losing $US100 in three weeks and hitting gold miners
  • Bonds resume their sell-off, with the yield on the 10-year note climbing to 2.76 per cent

The election of Donald Trump has sparked worries of increasing trade protectionism, but the following chart shows that global trade has already been slowing since 2012.

Several factors are contributing to the sluggishness of world trade, BNP Paribas notes: there’s cyclical reasons such as sluggish eurozone growth, the slowdown in the emerging economies and the changed composition of demand in favour of household consumption and public spending.

But other factors are structural, the bank’s economists say.

“Indeed globalisation is losing steam, and, in recent years, we have seenhigher wage costs in China. All of these factors hamper the international segmentation of the supply chain and trade.”

BusinessDay columnist Elizabeth Knight explains why James Packer’s casino wounds have been re-opened:

This week’s formal arrests by Chinese authorities of 18 Crown Resorts staff more than a month after they were detained highlight the particular problem for the James Packer-controlled casino operator. Each new incremental bit of news reignites investor concerns about the ramifications of losing a large part – if not all – of the Chinese VIP market.

There is so much unpredictability about what will happen to this lucrative source of gambling customers – to say nothing of the fate of those now arrested – that it’s difficult for the company to provide any meaningful guidance on what it means for earnings this year or next.

The information vacuum from the Chinese authorities only compounds the issue.

However, Crown does know how many Chinese VIP players have signed on since the Chinese raid last month. But it’s not telling.

The Crown share price, which fell 20 per cent in response to the initial arrests, has already factored in an almost total drying up of the Chinese VIP market. That has cost the market value of the company half a billion dollars.

It has a legal team in China dealing with the situation and it will also have a better handle on the staff’s situation and prospects. However, it is understandable that Crown is heralding its legal tactics at the risk of inflaming the Chinese authorities.

It also knows the activities that its China-based staff were engaged in on the mainland and if they were actively or aggressively marketing to locals.

Since the raids, there has been numerous – and often contradictory – theories about why Crown in particular was targeted.

This week, one of the junker operators – the groups that market and arrange gaming clients to travel to casinos – broke ranks and said Crown was in effect operating outside the bounds.