🍺That Candy Bar is About to Get A Lot More Expensive.
Plus, AI troubles in the EU, tax hacks, March Marketing, and more.
The Weekly from The Liquid Lunch Project, Issue No 110 | March 22, 2024
The Ultimate Disappearing Act: On April 8, North America will witness a total solar eclipse lasting up to 4 minutes and 28 seconds, twice as long as the 2017 event. With an estimated 44 million people in its path, from Mexico to Canada, this cosmic extravaganza guarantees jammed roads and epic star parties. Just don't forget to pack your eclipse glasses.
ON TAP THIS WEEK
💁🏼♀️ What, Like It's Hard? Why being a small biz owner ain't for the faint of heart.
❌ Why is the EU putting AI on a tight leash?
😱 Cocoa Crisis: Brace yourselves for the great chocolate price surge.
🕹️ LinkedIn Levels Up: From networking to next-level gaming.
🍎 Apple's Artificial Intelligence is Rising from the Ashes with Google's Gemini.
💸 Tax Hacks for Small Biz Bosses: Learn how to maximize your deductions.
🌐 And from Around the Web: 💻 STEM Trumps Liberal Arts, 🏀 March Madness Marketing, and 🩺 AI Doc's Mixed Messages.
THE CLASSROOM
The Hardest Things About Being a Small Business Owner?
by Luigi Rosabianca
Thinking about starting your own business? Or maybe buying one?
We say go for it!
We think everyone should own some type of business. It’s great for extra cash flow and financial security and gives you the opportunity to flex your entrepreneurial skills.
But, as thrilling as it is to be your own boss, let's not sugarcoat it – being a business owner also comes with its fair share of challenges.
To help you out, we’ve compiled ten reasons why being a small biz owner is difficult and tips to overcome them.
HEARD ON THE STREET
🆘 May Day for AI
In maintaining its role as the California for the planet, the EU just approved the first-ever comprehensive AI law to place guardrails around this tech. The landmark law is set to go into effect in May. The EU’s effort to pass AI rules started three years ago and separates tech into risk categories, ranging from ‘unacceptable’ (banned) to low risk. Companies that break the rules, including US tech giants, can be fined up to 7% of their annual revenue.
The act bans AI applications that impinge on citizens’ rights, such as facial-recognition databases trained on photos from the Internet or CCTV and emotion-recognition software in the workplace.
AI-generated content will have to be labeled as such to prevent misinformation from deep fakes, and AI models must comply with European copyright laws. Companies like Microsoft and OpenAI are dealing with huge copyright infringement suits.
The AI Act comes as governments try to reel in the fast-expanding technology. Over a third of EU companies have adopted some form of AI, and 27% of Americans said they interacted with AI several times a day last year. Leading players like Microsoft, OpenAI, and Meta have lobbied to help shape the rules. Past EU tech regulations have had significant effects on US tech companies.
The EU’s Digital Markets Act (DMA) gives the union sweeping powers to govern anticompetitive tech practices. This month, the EU fined Apple $2 billion, claiming it suppressed music-streaming competition. Europe’s GDPR dictates how Big Tech companies handle user data (cookie-consent pop-ups). California introduced a similar privacy act shortly after GDPR passed.
Curious to see how long it takes AI to figure out loopholes around these regulations!
🍫 Chocolate Therapy May Get as Expensive
Demand for chocolate is vastly outweighing the available cocoa supply, leading to skyrocketing cocoa prices that will inevitably make chocolate treats more expensive around the world. This week, benchmark cocoa futures surged to a record $8K+/metric ton, a 25% increase last week alone and 215% higher than last year. The price spike has caused large African cocoa processors—which take ugly raw cocoa beans and use magic to make them yummy—to slash production since they can no longer afford to buy beans.
Cocoa trees only flourish in a narrow band around the equator, which is why four West African countries (Ivory Coast, Ghana, Cameroon, and Nigeria) produce almost 75% of the globe’s cocoa supply. Ivory Coast alone produces nearly half of the world’s cocoa! Due to bad weather, bean disease, and a lack of investment in new trees stretching back decades, recent cocoa harvests have been dreadful, resulting in a robust gap between supply and demand. The cocoa market will be short 374K tons this season, up from a shortfall of 74K tons last season.
Supply is only one side of the price equation. As chocolate has transitioned from a luxury item to one you can easily pick up for an afternoon boost, global demand has doubled in the last three decades. Prices for chocolate products at US retail stores grew 11.6% in ‘23 compared to the previous year, and going forward, confection companies Hershey and Cadbury-maker Mondelez warned they’ll have no choice but to pass on higher cocoa costs to consumers.
We can already see the creative faux chocolate types biting at the bit to offer cheap chocolate choices labeled Cocoa Chanel and Haute Hershey! The real lesson is not making your business beholden to the supply chains that control your destiny. Once upon a time, Firestone Tires purchased rubber tree farms to ensure a smooth supply. Think along these lines when digging your business moat to prevent disruptions from happening without!
🎮 All Work and No Play…
LinkedIn is getting games. While there’s no launch date yet, the networking platform is developing puzzle-based games. Not the most natural pairing, but it makes sense given that its corporate parent is Microsoft. The gaming behemoth (which includes Xbox, Activision Blizzard, and ZeniMax) brought in $7.1B in revenues last quarter, passing Windows revenues for the first time.
Over the years, LinkedIn has tried numerous new features to boost how people use its platform, with their strategy described as: ‘How can we take the most popular tools people are using right now and make them relevant to LinkedIn’s audience and focus on the world of work?’ Those have ranged from online education and professional development efforts to a publishing and news operation, bringing in more video tools and courting creators and influencers. Apparently, workers are attracted to gaming, putting the final nails in the coffin for water cooler talk!
📱 Reports of My Death Have Been Greatly Exaggerated
You can stop drafting the eulogy for Apple. It’s now weighing a deal to have the iPhone’s upcoming AI features powered by Google’s Gemini AI model. A deal with Google could be seen as Apple’s implied nod to its own AI development being behind the pack. It could be the answer to the generative AI troubles for both Apple and Google. It’s not their first time as tag team partners: Google reportedly pays Apple $18B every year to be the default search engine on its devices. A deal involving Gemini could help both companies overcome OpenAI’s seemingly big head start in the AI race.
This deal could help Apple shift investors’ perception that the company is an AI laggard. While the company’s official mantra is ‘it is investing significantly,’ Apple’s products are inferior to the leading models. Apple could still use its own AI for on-device tasks and use Gemini for more complex features in the cloud (like text-to-image generation). For Google, this deal could be the stamp of approval it always sought. It would be the AI model’s highest-profile partnership and its best chance at getting ahead of the white-hot competition. Should the deal occur, Gemini could be on 2B+ iPhones around the world.
Gemini briefly shut down last month due to controversy over the model generating historically inaccurate images, so this transaction could be a nice promotional opportunity. As regulators clamp down on Big Tech, there could be pushback to Google and Apple getting even cozier. Their search engine deal is already the subject of a DOJ lawsuit. Apple has also considered using OpenAI’s model, and any deal probably won’t be announced until Apple’s Worldwide Developers Conference in June. An Apple a day keeps the bear market away.
THE MONEY MINUTE WITH MRM
Exclusive Tax Benefits: A Guide for Small Business Owners
with Matthew R. Meehan
As a business owner, did you know that you can get some pretty sweet tax deductions that regular folks can't? You can even put your family members on the payroll for legit work and get deductions for your retirement and healthcare (among other things). To make the most of it, it's important to know the tax implications of different business structures, such as sole proprietorships or limited liability companies. Check out this article to learn all about small business taxes and how to get as many deductions as possible.
AROUND THE WEB
Bad news for liberal arts grads: a New York Federal Reserve analysis shows they're among the lowest earners post-college, along with other majors like hospitality and history. Meanwhile, STEM graduates continue to command top dollar, particularly in male-dominated fields, with engineers leading the pack in earning potential. Something to think about for those with a Jr. at home anxious to take on student loan debt.
March Madness isn't just for basketball fans—it's a marketing goldmine. From Wendy's offering $1 and $2 burgers to Buffalo Wild Wings' buffalo-bracket challenge, restaurants are capitalizing on the excitement. Even if your bracket busts, TGI Fridays offers free wings, and Hooters tempts with a trip to Cancun. Small biz owners take note: It's a slam-dunk strategy for driving customer engagement and sales during the tournament frenzy.
But Will It Improve Their Handwriting? Doctors are getting a hand from artificial intelligence to write friendlier messages, but sometimes the bots get a bit carried away (like diagnosing runny noses as brain fluid leaks). While it saves time and prevents burnout, it raises questions of trust, transparency, and whether your next check-up chat is with your doctor or their digital sidekick. Privacy concerns linger, but hey, at least your doc can make eye contact now!
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