333 S. Grand AveLos Angeles, CA 90071

Pg1THE FUTURE OF FOOD: CLOUD KITCHENS AND THE REMAKING OF FOOD DELIVERYJust a few months ago, when we mentioned food delivery, most people would scoff. “Food delivery? That’s not a viable business.” It’s funny how quickly things change. Now, food-delivery services are viewed by many as “essential services” (and rightly so!). We cut through the grease, bring the key issues to a simmer, and box up the topics for the reader to feast upon. Hold the pickles.

Pg11 LIFE AFTER THE DEATH OF MOVIE THEATERSThe movie theater business has died and come back to life more times than a bad horror movie villain. New innovations, such as television, videotapes, DVDs, and pirated movies on the internet, have threatened to end the idea of spending a night at the movies. But, will the rise of online streaming—coupled with stay-at-home theater closures—finally sound the death knell for the movie theater business?

Pg 5 THE GREAT INFLUENZA: THE STORY OF THE GREATEST MODERN PANDEMIC AND ITS LESSONS FOR 2020 AND BEYONDThe world now faces another major pandemic. While the death toll in the current pandemic is still but a fraction of the greatest modern pandemic of the 1918 Spanish flu, there are valuable lessons from a century ago that can put our current predicament in perspective. We explore.

SPRING 2020

Pg7 PREDICTION OR PROPHECY? WHEN BOLD FORECASTS GO WRONG Confident, highly convicted, and…wrong. We catalog a few notable predictions gone awry. The lesson: especially in uncertain times, take bold predictions with a grain of salt—but don’t blame the predictor, it’s not their fault!

1

Y our phone rings. You jump off the couch where you’ve been watching television after

a day full of Zoom calls. You are stuck at home, along with most of the world. As layoffs hit the millions, a few workers remain among the truly essential. One such worker is calling you right now with your meal, ready for a “contactless” pickup outside your home.

It’s a food-delivery person.

The delivery of food is not a novel concept. Still, recently the global economy has seen the rise of numerous smartphone-enabled applications that allow hungry eaters to order up any cuisine with a few taps on the phone. Delivery app usage has become so ubiquitous that the company names are now verbs. “I’m going to Postmates it” or “Deliveroo it” is how some of our readers now speak about ordering food. Pull up to any stoplight in New York, Mumbai, or São Paulo, and you see the names emblazoned on cars, bikes, motorcycles, and delivery bags.

Here, we digest the food-delivery apps, the last hope for the embattled restaurant industry. We start by diving into the history of food delivery, discussing its rise in the pre-coronavirus world, its importance today, and the future of food delivery tomorrow.

FROM POMPEII TO PIZZA

Food delivery has been around for a long time. As with so many other “new” Silicon Valley projects, food delivery and takeout applications are more of a reinvention than an invention. In the ruins of Pompeii, frozen in time since the eruption of Mt. Vesuvius in AD 79, there are around 150 thermopolias or long “bar-like restaurants where people could grab a quick meal” to go.1 In AD 79, most people did not cook for themselves since kitchens were a luxury only the rich could afford.

Fast-forward to 1890, when during the British Colonial Rule in Mumbai, India, an army of semi-literate workers started delivering homemade food to workers across the city on foot, bicycle,

and railway. Despite their introduction in 1890, dabbawallas are still the source of sustenance for millions of office workers in India’s second-largest city. Dabbawallas have developed an almost cult-like following through picking up homemade lunch you’ve made for your loved one, delivering it to their desk, and returning your box in the evening. Their system is so efficient that it has spurred studies from Harvard Business School and FedEx.2

No discussion of food delivery is complete without an analysis of a flat piece of round, thin bread draped with cheese and tomato sauce. We speak of the humble pizza, which might as well be synonymous with delivered food. In the 1950s, a restaurant in Los Angeles, Casa D’Amore, began free delivery for their pizzas. In 1994, Pizza Hut set up a website for the first-ever online order of pizza. In 2010, the first-ever Bitcoin transaction was for two—you guessed it—pizzas from Papa John’s. Today, Domino’s earns almost 65% of its sales via digital orders, and more than 90% of Domino’s international markets have online ordering functionality.3

THERE’S AN APP FOR THAT

In 2014, we wrote an article on Ubernomics, discussing the appeal of a ride-share service, given that most cars sit idly 96% of the time. The advent and ubiquity of smartphones meant it was easy for those without a car to hop into an Uber driver’s car to reach their destination. Many considered Uber a niche luxury good when it was released, but ride-sharing is now a global phenomenon, not just a fad.

«PULL UP TO ANY STOPLIGHT IN NEW YORK, MUMBAI, OR SÃO PAULO,

AND YOU SEE THE NAMES EMBLAZONED ON CARS,

BIKES, MOTORCYCLES, AND DELIVERY BAGS.»

«IN AD 79, MOST PEOPLE DID NOT COOK FOR THEMSELVES SINCE

KITCHENS WERE A LUXURY ONLY THE RICH COULD

AFFORD.»

The Future of Food: Cloud Kitchens and the Remaking of Food Delivery

BIG SPENDERS–CONSUMER SPENDING ON THE 100 LARGEST CONSUMER-FACING MARKETPLACE STARTUPS AND PRIVATE COMPANIES

fig. 1

Source: a16z marketplace

DoorDash

Postmates

0%

5%

10%

15%

20%

25%

30%

35%

40%

Airbnb DoorDash and Postmates Instacart Other Companies

% o

f Tot

al S

pend

ing

Into this ecosystem came food delivery apps. Before the advent of these apps, the only way to have food delivered from your favorite restaurant involved a long process. You had to find the restaurant’s phone number, hope that they had someone employed to deliver your food, wait on hold for what seemed like an eternity before ordering, and then wait for the delivery. Readers living in an era without the smartphone remember the multitude of takeout and delivery menus that had a permanent drawer in the kitchen. Food delivery behemoth Grubhub launched in 2004 as an online alternative to those paper menus. However, the company did not IPO until 2014. What changed in that time? The iPhone launched in 2008, followed by a deluge of competitor smartphones.

Food delivery apps have taken off with increased smartphone usage. The goal of these apps can best be summed up by a question that inspired the founder of Postmates, a U.S.-based food delivery app: “What if you could use the city as a warehouse?”4 Specifically, food-delivery apps allow you to seamlessly browse all the restaurants in your area based on your location, select what you want to eat, and enter your preferences (for example, your author prefers his Thai curry “extra spicy and without fish sauce”). The technology in your (and your delivery worker’s) phone handles

where you are, how long the food will take to get to you, and where the delivery worker needs to go to pick it up. You also do not have to worry about rummaging through your wallet to get exact change for the delivery worker. The app takes care of that in an entirely cashless transaction.

Food-delivery apps have multiplied across the world, including Deliveroo in Europe, Swiggy in India, and DoorDash in the U.S. To date, investors have poured almost $20 billion into food-delivery apps across the globe.5 Neither investors’ optimism nor the amount of investment are surprising when you realize that food-delivery apps are also some of the most promising nascent companies today. Andreesen Horowitz, a venture-capital investment firm, created a ranking of the

“largest and fastest-growing consumer-facing marketplace startups and private companies.” Two of the top five companies were food delivery-based apps (DoorDash and Postmates), accounting for 23% of total spending in the top 100 companies that Andreesen Horowitz surveyed in February 2020 (See Figure 1 on Page 1).

LET’S GET THIS BREAD

The primary issue for food-delivery apps in a pre-COVID world was their profitability and

widespread adoption. Even though these apps were gaining popularity, online food delivery in the U.S. accounted for less than 4% of total spending at restaurants. The market penetration of food-delivery apps was far behind other sectors that had been disrupted by the online marketplace (see Figure 2).

The reason most people do not utilize food-delivery apps is the additional cost. For example, an analysis by the New York Times showed that the markup for a 6-inch sandwich could be as high as 91%(!) (see Figure 3 on Page 3) for the unassuming millennial who did not read the fine print about “small cart” fees associated with Uber Eats.6 With such high markups, you would think that food-delivery apps made a lot of bread (sorry, profit). Not really.

Due to their lack of adoption and only slow-emerging popularity, food-delivery apps spent a lot of money on marketing and advertising. How much? Based on an analysis by Barclays, an investment bank, food-delivery apps in the U.S. were losing roughly $1.35 per order in 2019. In fact, in aggregate, they lost $1 billion through their operations. After accounting for delivery-worker payouts and restaurant commissions, typical food-delivery profits were a scant 6%. They ended up spending all of that profit and more (6.3% to be exact) on marketing. Into this environment arrives the COVID-19 pandemic.

«READERS LIVING IN AN ERA WITHOUT THE

SMARTPHONE REMEMBER THE MULTITUDE OF

TAKEOUT AND DELIVERY MENUS THAT HAD A

PERMANENT DRAWER IN THE KITCHEN.»

«THE GOAL OF THESE APPS CAN BEST BE SUMMED

UP BY A QUESTION THAT INSPIRED THE FOUNDER OF

POSTMATES, A U.S.-BASED FOOD DELIVERY APP: “WHAT IF YOU COULD USE THE CITY

AS A WAREHOUSE?»

«EVEN THOUGH THESE APPS WERE GAINING POPULARITY, ONLINE FOOD DELIVERY IN THE U.S. ACCOUNTED FOR

LESS THAN 4% OF TOTAL SPENDING AT RESTAURANTS.»

2

fig. 2 BREAKFAST IS STILL BUFFERING–SALES DONE ONLINE IN VARIOUS CONSUMER SECTORS

Source: Barclays Research

0% 10% 20% 30% 40% 50% 60% 70%

Hotels

MusicEvents

MovieTickets

Ecommerce

Ridesharing

Grocery

Food Delivery

% of Sales Done Online

STAY-AT-HOME: ORDER CHICKEN WINGS

Since the onset of the COVID-19 crisis, your author (now unable to visit movie theaters) has resorted to watching movies on Hulu, a streaming service. Being too cheap to pay for the premium version means coming across a commercial for Postmates with none other than Martha Stewart, an icon of home cooking. She provides us a live cook-along on a new way to make chicken wings. Her message is simple. She asks the viewer, “Do you want to make Thai chicken wings?” Stewart then taps on her phone and says, “There, you made Thai chicken wings.”

Due to the COVID-19 pandemic, global reservations on OpenTable, an online restaurant reservation platform, have fallen 100% year-over-year. Also, since the cans of beans hoarded from grocery stores have started to look inedible, food delivery has seen a surge in popularity (see Figure

4 on Page 4). Many restaurants have utilized food delivery apps to generate some revenue. However, their dining spaces, previously bustling with customers squeezed into tables and chairs next to each other, remain empty. The COVID-19 crisis will end one day, and eventually, diners will return. Still, do all restaurants need so much dining space if most patrons prefer to eat from the comfort of their homes? Do they need any dining space?

EVERYTHING IS MOVING TO THE “CLOUD,” EVEN YOUR KITCHEN

The CEO of Naspers, a firm that invests in food-delivery companies, commented that “a hundred and fifty years ago, most people made their own clothes,” and he is “fairly convinced that 20 years from now, we will mostly not make our own food.” Will kitchens disappear from our homes?

Before the industrial revolution, the kitchen was a simple affair and not a pleasant place to be. It’s no wonder that in homes fortunate enough to have kitchens, the cooking was done “downstairs” and not “upstairs.” Fans of the show Downton Abbey or the aptly named Upstairs, Downstairs, will recognize such a division. After the invention of the gas stove and the widespread adoption of commercial appliances, the kitchen became a symbol of growth and development. Having a cooking range and microwave went hand in hand with economic development.

While it’s useful to have food delivered if you are lazy, don’t have time to cook, or live during a pandemic when dining areas of restaurants are closed, getting delivery is more expensive than cooking at home on your $1,000 gas range that came “free” with your apartment. The high markups on delivered food are due not only to marketing budgets but also the amount that the restaurant charges for its food. Kitchen equipment

is expensive and takes up a lot of space. On top of that, restaurateurs must create a dining space to cater to walk-ins and sit-down dinners during pandemic-free times. Restaurants also have to hire waitstaff and managers and set up reservation platforms. As a result, setting up a brick-and-mortar restaurant in a major metropolitan area is a million dollar investment.7 That’s all before you know if your restaurant concept even works. What if people do not like your food? You are stuck with a sunk cost and kitchen equipment that you cannot quickly move.

A new development in cloud, ghost, or virtual kitchens could be the answer. Whether it is Dubai-based Kitopi or U.S.-based CloudKitchens, Virtual Kitchen Co., or KitchensUnited, the race is on for the “next big thing” in food delivery. These companies buy cheap real estate near major city hubs and convert it into kitchens for rent. Instead of buying or creating a restaurant in London, you can simply rent out shared kitchen space for £1,500 a month. In the U.S., chef Eric Greenspan, who operates a virtual food court, has launched four online brands that serve burritos,

3

«STILL, DO ALL RESTAURANTS NEED SO

MUCH DINING SPACE IF MOST PATRONS

PREFER TO EAT FROM THE COMFORT OF THEIR HOMES? DO THEY NEED

ANY DINING SPACE?»

«“A HUNDRED AND FIFTY YEARS AGO, MOST

PEOPLE MADE THEIR OWN CLOTHES,” AND HE IS

“FAIRLY CONVINCED THAT 20 YEARS FROM NOW, WE WILL MOSTLY NOT MAKE OUR OWN FOOD.” WILL KITCHENS DISAPPEAR FROM OUR HOMES?»

Source: New York Times

$0 $5 $10 $15 $20 $25

Grubhub

DoorDash

Postmates

Uber Eats

Restaurant

Menu Cost Delivery Fee Service Fee Misc. Fees Sales Tax

With various fees, markups can be as high as 91%!

MEAL MARKUPS–TOTAL COST OF TWO SUBWAY TURKEY BURGERS WITH SELECTED PLATFORMS

fig. 3

«BASED ON AN ANALYSIS BY BARCLAYS, AN INVESTMENT

BANK, FOOD-DELIVERY APPS IN THE U.S. WERE

LOSING ROUGHLY $1.35 PER ORDER IN 2019.»

sandwiches, burgers, and fusion food for 25% of the cost of a traditional restaurant.8

According to the CEO of Kitchen United, most quick-service restaurants hire 30 to 50 people. By using a Kitchen United location, you can create food with just two people per shift and cut labor costs by 75% to 80%. The U.K.-based food-delivery app Deliveroo has also realized the value of such spaces and has created Deliveroo Editions, a series of kitchens inside of shipping containers in underutilized parking lots! These

so-called cloud kitchens lower the cost of running a restaurant, but they also allow your food to be delivered faster since you do not compete with the in-house diners for the chef ’s attention.

Cloud kitchens do not just make your meals cheaper and faster; they also allow restaurateurs and chefs to test their new concepts without the pressure of having a profitable restaurant. Do customers dislike the taste of your new breakfast food concept or noodle house? Just “move out” of your cloud kitchen like you would from an apartment. Or, since you have no physical storefront, continue your lease and launch a new brand of different food. No one has to know. Chef Greenspan, a CloudKitchens “tenant,” notes that “if a brand doesn’t work, you just turn it off on the delivery apps.”

RESTAURATEURS: RESET AND REASSURE

The COVID-19 pandemic will change consumer behavior for many years to come. We think that the increased usage of food delivery is here to stay. Food delivery and cloud kitchens will do to restaurants what Amazon and online shopping have done to the retail industry. In the end, we could find ourselves in a world where you can order food to your door cheaper than it costs to make it at home. That would mean you have more time to cater to other creative endeavors—maybe even your new restaurant concept?

SOURCES

1. “Atlas Obscura (https://www.atlasobscura.com/places/thermopolia-of-pompeii-pompei-italy)

2. Rai, Saritha. “In India, Grandma Cooks, They Deliver.” New York Times, May 29, 2007.

3. “Domino’s 101: Fun Facts.” Dominos.com

4. Jones, Sara. “The Postmates Problem.” Eater, July 31, 2015.

5. "The startups building 'dark kitchens' for Uber Eats and Deliveroo." Financial Times

6. Chen, Brian X. “Up to 91% More Expensive: How Delivery Apps Eat Up Your Budget.” New York Times, February 26, 2020.

7. https://www.cloudkitchens.com/our-commercial-kitchen-partners/

8. ibid

4

«CHEF GREENSPAN, A CLOUDKITCHENS

“TENANT,” NOTES THAT “IF A BRAND DOESN’T WORK,

YOU JUST TURN IT OFF ON THE DELIVERY APPS.”»

«IN THE U.S., CHEF ERIC GREENSPAN, WHO

OPERATES A VIRTUAL FOOD COURT, HAS

LAUNCHED FOUR ONLINE BRANDS THAT SERVE

BURRITOS, SANDWICHES, BURGERS, AND FUSION FOOD FOR 25% OF THE

COST OF A TRADITIONAL RESTAURANT.»

«THE U.K.-BASED FOOD-DELIVERY APP

DELIVEROO HAS ALSO REALIZED THE VALUE OF SUCH SPACES AND HAS CREATED DELIVEROO

EDITIONS, A SERIES OF KITCHENS INSIDE OF

SHIPPING CONTAINERS IN UNDERUTILIZED PARKING

LOTS! »

SURGING DEMAND–GLOBAL SEARCH INTEREST ON GOOGLE FOR "FOOD DELIVERY"

fig. 4

0

10

20

30

40

50

60

70

80

90

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Inde

x

Grubhub IPOs

Restaurants shut down across the world

iPhone3G (with data) released

Source: Google Trends

"I f anything kills over 10 million people in the next few decades, it’s most likely to be

a highly infectious virus, rather than a war. Not missiles, but microbes.”1

These prescient words were spoken in 2015 by none other than Bill Gates, the co-founder of Microsoft. In a TED Talk, Gates lamented humanity’s misplaced focus. While we have invested heavily in nuclear deterrents, he opined, we have invested very little to stop a pandemic. He concluded, “We’re not ready for the next epidemic.”2

Gates was right. A pandemic has now enveloped the world, roiled financial markets, brought the global economy to its knees—and caught almost everyone unprepared. As we go to press, SARS-CoV-2, the virus that causes COVID-19, has already surpassed the 2009 H1N1 pandemic in terms of case count and global deaths (see Figure 1). The current pandemic could rival the 1957 and 1968 episodes when all is said and done.

Rare events pose particular challenges for investors. Are they just random occurrences? How do we put current events into the proper perspective? Our response is that history teaches those who inquire with an open mind. We

provide a few lessons from the Great Influenza, its magnitude, its origins, its uncontrolled spread, and some of its consequences. Pandemics are not random events.

THE SHADOW OF 1918

Although accounts vary, an estimated one-third of the world’s population, or roughly 500 million people, were infected during the 1918–1920

“Great Influenza” pandemic (See Did You Know? The Spanish Flu Misnomer). The pandemic was not your regular seasonal flu—the illness was far more severe than the average seasonal flu variety. Total death estimates range from 50 million to 100 million of the global population at the time.3 A comparable death toll today implies around

240–480 million deaths—simply staggering and unfathomable. So, the first lesson is that the tragedy now unfolding is NOT the Great Influenza (or the Black Death for that matter).

In addition to the death toll, there was the speed with which the destruction was inflicted on the population in 1918. The Great Influenza killed swiftly, often within hours of infection. One army report from 1918 described it as “fulminating pneumonia, with wet hemorrhagic lungs” that proved “fatal in 24 to 48 hours.”

An estimated two-thirds of total deaths occurred in just 24 weeks in 1918, “and more than half of those deaths occurred” in less than three months, from mid-September to early December. In sum, the “Great Influenza” took more lives than the ongoing, decades-long AIDS epidemic—in a manner of mere weeks.

Frightening? It gets worse. Typically, the flu befalls the very old and the very weak. With the Great Influenza, young adults, aged 20–40 years, fared the worst, accounting for nearly half of all deaths. Furthermore, an estimated 47% of all deaths in the United States in 1918–1919—that includes all deaths from everything from cancer to accidents—were due to the influenza.

«AN ESTIMATED ONE-THIRD OF THE

WORLD’S POPULATION, OR ROUGHLY 500

MILLION PEOPLE, WERE INFECTED DURING

THE 1918–1920 “GREAT INFLUENZA” PANDEMIC»

The Great Influenza: The Story of the Greatest Modern Pandemic and Its

Lessons for 2020 and Beyond

A RARE EVENT OR HISTORY REPEATING ITSELF? SELECTED PANDEMICS SINCE 165 AD

fig. 1

Source: Washington Post *For some pandemics, there was a range of values and we chose to plot the lower end of the estimates.

5.0

30.0

75.0

25.0

1.0

0.08

12.0

1.0

0.15

50.0

1.0

1.0

35.0

0.001

0.011

0.001

0.20

0.29

0 10 20 30 40 50 60 70 80

Antonine Plague, 165 - 180

Plague of Justinian, 541 - 542

Black Death, 1347 - 1352

New World smallpox, 1520

Italian Plague, 1629 - 1631

Great Plague of London, 1665

Third Plague, 1885

Russian flu, 1889 - 1890

Yellow Fever, 1895

The Great Influenza, 1918 - 1920

Asian flu, 1957 - 1958

Hong Kong flu, 1968 - 1970

HIV/AIDS, 1981-Present

SARS, 2002 - 2003

Ebola, 2014 - 2016

MERS, 2015

Swine Flu (H1N1), 2009 - 2020

COVID-19, 2020 - ?

Millions of Deaths*

Pand

emic

, Yea

r

The Black Death was the deadliest pandemic in recorded history, wiping out 30-60% of Europe's population

5

However, the worst part of all is that, amid the pandemic, scientists didn’t even know the enemy at hand. “No one could find the guilty bug, no one could see it, no one could name it or comprehend it, because virology itself had scarcely begun to exist. The virus responsible, which turned out to be a variant of H1N1, wasn’t precisely identified until …2005!”4 Humanity was in the dark.

VIRUSES: WAIT, WHAT ARE THEY?

Viruses have been around on Earth for billions of years, meaning the viruses on Earth today are formidable foes as “only the fittest have survived.” We tend to imagine large predators as our primary competitors for survival, such as the lions of the Serengeti, but tiny terrors lurk everywhere. You are undoubtedly surrounded by plenty of viruses right now—don’t touch your face!

For millennia, humans were surrounded by viruses, yet ignorant of them. Why? First, viruses were not likely an issue for humans until modern cities allowed for dense enough populations to sustain a virus and promote its spread to plenty of nearby victims. For most of human history, our hunter-gatherer brethren roamed about; only very recently (~2,000 years) have we humans confined ourselves to dense cities.6

Once in close contact, humans, and viruses have been at war. History is punctuated by repeated, devastating epidemics. In China alone, records show that “between 37 A.D. and 1718 A.D., 234 outbreaks were severe enough to count as plagues—that’s one every seven years!”7 Figure 1 shows the most devastating tolls in recorded global history.

Second, the direct human-to-human spread was not always observed, so scientists remained in the dark about transmission. Malaria, for example, spreads from person-to-person via mosquito bites, not direct human contact.

And, third, humankind did not yet have the scientific tools to discover viruses. Viruses are small. Much smaller than the average bacteria. The

Roman writer Varro (116–26 B.C.) speculated about tiny invisible germs, but scientists didn’t see a virus under a microscope until the 1930s.

WE AREN’T IN KANSAS ANYMORE

Aside from not being able to see the enemy, humanity in 1918 was also blind to its origins. Again, speculation abounds, and the science remains unsettled, but one plausible theory is that the Great Influenza began, not in Spain, despite the moniker, but in Kansas.

Yes, Kansas. Haskell, Kansas.

What was so special about Haskell? Well, for starters, a man named Loring Miner. A doctor, he

saw many patients in early 1918 suffering from a worrisome illness and alerted the U.S. Public Health Service on his findings of “influenza of the severe type.” His reports were the only influenza mentions from anywhere in the world at that early point in the outbreak.

Haskell was also close to a military camp: Camp Funston, Kansas. The frigid winter of 1917–1918 forced recruits to huddle together in makeshift tents and overcrowded barracks, awaiting dispatch to Europe and World War I. As people with influenza can transmit the virus before symptoms appear, close quarters provide ripe conditions for a viral outbreak.

Influenza’s high infectivity preceded symptoms, a characteristic that probably helped account for

the scale of worldwide misery and death during the Great Influenza.

Haskell added one other vital ingredient to the story: animals (it was an agricultural area). Scientists now use the term “spillover” to designate the moment a pathogen jumps from a host or reservoir species—say, birds or pigs—where the genetic backdrop is similar enough to humans,

and the virus has a chance to survive and replicate, to humans. AIDS and influenza are examples of these “zoonoses”—and, indeed, most viruses we know of infect humans through such an avenue. The jump was possibly made in Haskell.

ALL THAT WAS NEEDED WAS A SPARK

If Kansas was indeed the epicenter, the virus wasted little time in spreading across the world.

It was the rapid buildup of U.S. involvement in World War I that provided the perfect kindling for a pandemic. Public health took a backseat to politics (shocking, we know!). President Wilson made no statements on the influenza, in public or, it seems, in private, and the federal government focused on mobilizing for war.

With the benefit of hindsight, by the fall of 1918, little more than a month remained in the conflict. However, the U.S. was determined to ramp up troops for the war. From Funston, troops went to other army bases and then off to France. Influenza cases sprung up in the following weeks in Georgia, and then twenty-four of the thirty-six largest army camps experienced an influenza outbreak that spring.

Further, thirty of the fifty largest cities in the country, most of them adjacent to military facilities, also suffered an April spike in “excess mortality” from influenza, most of which were not realized at the time.

The virus then ripped around the globe, from Portugal to Greece, back to England, Scotland, and Wales, then Calcutta, Madras, and Rangoon after Bombay, and on to Karachi. Shanghai and Sydney followed. It’s worth noting that the global spread occurred in an era long before the hyperconnected travel and trade networks that now define the global economy. The mere presence of a mail carrier seemed to be enough to spread the virus city-by-city.

The bad news continued, though. Many are already talking about a “second wave” of the coronavirus in 2020. The Great Influenza hibernated over the summer of 1918 and returned with a vengeance in the fall when it did most of its killing.

The Spanish Flu Misnomer

According to the author John Barry, Spain is unfairly pinned with the Spanish flu name due

to happenstance. Spain had few cases but was a neutral nation in World War I, one of the

few countries with a free press. Whereas other countries suppressed influenza stories so as

not to stoke fears, Spanish papers reported on the disease, and the Spanish King, Alfonso

XIII, fell ill. For this piece, we adopt Barry’s nomenclature and refer to the episode as the

Great Influenza. 5

«YOUNG ADULTS, AGED 20–40 YEARS, FARED THE

WORST, ACCOUNTING FOR NEARLY HALF OF ALL

DEATHS.»

« YOU ARE UNDOUBTEDLY SURROUNDED BY PLENTY OF VIRUSES RIGHT NOW—

DON’T TOUCH YOUR FACE!»

Continued on page 9

6

DID YOU KNOW?

«ONE PLAUSIBLE THEORY IS THAT THE

GREAT INFLUENZA BEGAN, NOT IN SPAIN,

DESPITE THE MONIKER, BUT IN KANSAS.»

«PUBLIC HEALTH TOOK A BACKSEAT TO POLITICS

(SHOCKING, WE KNOW!)»

9

Continued from page 6

In the words of the Australian virologist Frank Macfarlane Burnet, “It is convenient to follow the story of influenza at this period mainly in regard to the army experiences in America and Europe.”8 On September 29, a group of 9,000 soldiers left for France on the USS Leviathan—2,000 died en route.

With nurses and doctors pressed into war service, cities and states left mostly to their own devices employed a wide array of strategies to arrest the virus. Some cities enforced strict social distancing measures. Others, such as Philadelphia, were much more lenient. In an analysis of 1914 and 1919 Census data, researchers at the New York Federal Reserve

discovered that certain cities that implemented stricter interventions (like social distancing) saw lower mortality rates and better employment outcomes during the pandemic (see Figure 2). Such findings present hope for our present predicament, in which we see a global, synchronized use of social distancing measures to stem the virus.

BETTER OFF TODAY

Can a brief tour of history relieve any of our present anxiety? The lesson of 1918 is that humanity was largely in the dark. Ignorant of the virus, its origins, its piggyback spread on the waves of war, humanity was left extremely vulnerable. Medical capacity was overrun quickly, and scientists didn’t even catch their first glimpse at a virus for more than a decade.

And while there is much we still do not know about SARS-CoV-2, we do know the world is a much better place in 2020. Indeed, perhaps one of the reasons we are so startled by the virus is because we have become accustomed to dying of other things: heart disease, cancer, or just old age. But that’s a modern luxury. In 1918, life expectancy at birth did not exceed 50 in the U.S. and Europe, with far worse prospects for the rest of the globe. Microbes, not missiles, had caused most deaths throughout recorded human history. We are the lucky ones who have lately gained the upper hand.

Seen in that light, we can’t treat the current pandemic as an isolated, random event, chalking it up to bad luck. Pandemics do not just happen. Humanity has battled viruses for centuries—most of the time, with devastating results due

to overwhelming ignorance. While denser populations build up a resistance to familiar viruses, they are vulnerable to “novel” ones. Given enough time and proximity to nature, novel viruses will make the leap into humans again. Aside from the ever-present threat of the influenza virus, we have now experienced three coronavirus outbreaks in the last 20 years: SARS-CoV-1 in 2003–2004, MERS in 2015, and now SARS-CoV-2.

Our best chance today and in the future is to push progress forward relentlessly. How do we measure medical progress? One way is to gauge the information sharing among scientists collaborating to develop treatments and vaccines in real-time. A surge in science “preprints” in March and April 2020 (see Figure 3 on Page 10) shows researchers are rushing to share information with the world, with the growth rate in preprints more than doubling in the last two months.9 The efforts could yield results in a shorter timespan than ever before. Bill Gates, who opened our story with a warning, closes it with

«IT’S WORTH NOTING THAT THE GLOBAL

SPREAD OCCURRED IN AN ERA LONG BEFORE

THE HYPERCONNECTED TRAVEL AND TRADE

NETWORKS THAT NOW DEFINE THE GLOBAL

ECONOMY.» « MICROBES, NOT

MISSILES, HAD CAUSED MOST DEATHS

THROUGHOUT RECORDED HUMAN

HISTORY. WE ARE THE LUCKY ONES WHO HAVE

LATELY GAINED THE UPPER HAND.»

«ON SEPTEMBER 29, A GROUP OF 9,000

SOLDIERS LEFT FOR FRANCE ON THE USS

LEVIATHAN—2,000 DIED EN ROUTE. »

SAVING LIVES TO (EVENTUALLY) SAVE THE ECONOMY? AMERICAN CITIES' SOCIAL DISTANCING MEASURES AND MANUFACTURING SECTOR EMPLOYMENT GROWTH

AROUND THE 1918 PANDEMIC

fig. 2

Source: Sergio Correia, Stephan Luck, and Emil Verner, “Fight the Pandemic, Save the Economy: Lessons from the 1918 Flu,” Federal Reserve Bank of New York Liberty Street Economics, March 27, 2020

Empl

oym

ent

Gro

wth

Bet

wee

n 19

14 a

nd 1

919

*The paper uses measures of non-pharmeceutical interventions (e.g. social distancing, mask wearing) established in Markel et. al. (2007)

BirminghamSan Francisco

New Haven

Washington

Baltimore

Boston

Cambridge

Fall RiverLowell

WorcesterGrand Rapids

Saint PaulAlbany

BuffaloRochester

Syracuse

Philadelphia

PittsburghProvidence

NashvilleRichmond

NewarkDayton

Oakland

Los Angeles

Denver

Chicago

Indianapolis

LouisvilleNew Orleans

Minneapolis

St. Louis

Omaha

New YorkCincinnati

ClevelandColumbus

Toledo

Portland

Seattle

Spokane

MilwaukeeKansas City

0%

20%

40%

60%

80%

100%

120%

200 400 600 800 1000 1200Deaths Per 100,000

Less Restrictive Measures* More Restrictive Measures Linear Trend

Cities that implemented harsh social distancing and saw lower mortality also saw their employment bounce back faster

10

a hint of optimism. “Although eighteen months [to a vaccine] might sound like a long time, this would be the fastest scientists have created a new vaccine.”10 Perhaps never before in history has humanity been so united in finding a solution.

Let’s count ourselves fortunate that the current pandemic pales in comparison to the Great Influenza—but let’s also use this opportunity to learn how to prevent the next one—because it’s inevitable.

SOURCES

1. “The New Outbreak? We’re Not Ready.” Bill Gates.

TedTalk. March 2015. https://www.ted.com/

talks/bill_gates_the_next_outbreak_we_re_not_

ready?language=en#t-62818

2. An epidemic is defined by Merriam-Webster as “an

outbreak of disease that spreads quickly and affects

many individuals at the same time.” A pandemic

is a type of epidemic (one with greater range and

coverage), an outbreak of a disease that occurs over

a wide geographic area and affects an exceptionally

high proportion of the population.

3. “1918 Influenza: the Mother of All Pandemics”,

Jeffery K. Taubenberger and David M. Morens,

Emerging Infectious Diseases. 2006 Jan; 12(1):

15–22. https://www.ncbi.nlm.nih.gov/pmc/

articles/PMC3291398/

4. David Quammen. “Spillover: Animal Infections

and the Next Human Pandemic.” W.W. Norton &

Company, October 2012.

5. John Barry. “The Great Influenza: The Story of the

Greatest Pandemic In History.” New York: Penguin

Books, 2005.

6. See for example our Point of View, “The Story

of World History Through The Most Populous

Cities", Winter 2016, page 10, https://www.payden.

com/displayfile.aspx?fileloc=11

7. David P. Clark. “Germs, Genes, & Civilization.

How Epidemics Shaped Who We Are Today.” FT

Press: Upper Saddle River, New Jersey, 2010.

8. Barry 120.

9. Kai Kupferschmidt, “‘A completely new culture

of doing research.’ Coronavirus outbreak changes

how scientists communicate,” Science, February 26,

2020.

10. Bill Gates, “What you need to know about the

COVID-19 vaccine,” GatesNotes, April 30, 2020.

INFORMATION SHARING IS AT ALL TIME HIGHS–BIOMEDICAL PREPRINTS PER MONTH

fig. 3

«ASIDE FROM THE EVER-PRESENT THREAT

OF THE INFLUENZA VIRUS, WE HAVE

NOW EXPERIENCED THREE CORONAVIRUS

OUTBREAKS IN THE LAST 20 YEARS.»

Source: Zenodo.org

2013 2014 2015 2016 2017 2018 2019 2020

Num

ber

of P

repr

ints

M ovie theater owners were in a state of panic. A new medium was challenging the supremacy

of the old, pouring vast amounts of money into production, advertising, and using film in unknown and sophisticated ways. The innovations were going to impose changes that most theater owners and operators were unprepared to make. They were going to have to double ticket prices and spend huge amounts of money on renovation and expansion. They were going to adapt or die.

New movies arrived on the scene (pun intended!) with longer run times (some up to three hours--take that, Martin Scorsese!) and full orchestras to play at select movie houses. But, who exactly was going to sit indoors without air-conditioning to watch a three-hour film?

Since the beginning, the movie theater industry has been locked into a perpetual arms race against new entertainment forms. Every decade brings a new challenge, whether it be from radio, television, videotapes, or DVDs. Each time, exhibitors have come up with innovations to keep audiences coming back for more. As the world faces yet another upheaval with streaming and COVID-19, will this time be any different?

A HORROR MOVIE UNFOLDING BEFORE OUR EYES

The latest threat coming for the cineplex is straight out of a ’50s era horror movie, The Blob, featuring an alien life-form that devoured everything it

touched to become larger. Today, the Blob is the internet, which has devoured almost every industry it has touched, from books and music to transportation, personal finance, and food (see this issue, Point of View Spring 2020, “The Future of Food: Cloud Kitchens and the Remaking of Food Delivery”). Now, the Blob is coming to destroy a theater near you.

The rise of Netflix, Hulu, Amazon Prime Video, Disney+, Apple TV+, Peacock, HBO Max, etc.—you get the point—has changed the way we consume TV shows and movies. In Q1 2020 alone, Netflix added 16 million subscribers, boasting 183 million paid subscribers globally. The just-launched

Disney+ subscriber count has surged past 50 million paying patrons.1 With an estimated 3.3 billion in the global labor force, plenty of customers remain willing to pay the online behemoths as they expand their reach and offerings. It’s no surprise that theater attendance in 2019 also fell to the second-lowest level in 25 years.

However, the box office revenue numbers from the start of 2020 seemed to show that movie theater owners were holding on to their revenues. Box office revenues only fell 4% from 2018, to a cool $11 billion.2 What gives?

While box office grosses are commonly used to assess the health of the movie theater business, like the Death Star, the industry’s gargantuan facade had a weakness. Since 2015, the three largest studios have released almost 300 movies, generating $33 billion in revenue. Eleven of those films accounted for 25% of all revenue and grossed more than half a billion apiece (see Figure 1). In other words, movie theaters rely on a few superhero films a year to stay relevant and profitable. Is this a durable business model?

Then, things went from bad to cataclysmic. 2020 will make 2019 look like an exceptional year for theaters. As the COVID-19 crisis spread globally, movie theaters were among the first businesses to completely close across the world. In 2020, box office revenues quickly fell to zero (see Figure 2). Yes, zero. Despite economies opening back up, movie theaters remain shuttered (as we go to press).

VIRUSES OR TROLLS: WHAT’S WORSE?

As people remained stuck at home, streaming services saw a surge in demand. As a result of the shutdowns, Universal Studios decided to release Trolls World Tour, a movie based on the eponymous dolls, directly to online streaming platforms. They

11

GO BIG OR GO (WATCH AT) HOME? U.S. DOMESTIC BOX OFFICE GROSS OF MOVIES RELEASED SINCE 2015

fig. 1

«SINCE 2015, THE THREE LARGEST STUDIOS HAVE RELEASED

ALMOST 300 MOVIES, GENERATING $33

BILLION IN REVENUE.»

Life After the Death of Movie Theaters

Source: Box Office Mojo

0

20

40

60

80

100

120

>$50 $50-$100 $100-$150 $150-$200 $200-$250 $250-$300 $300-$350 $350-$400 $400-$450 $450-$500 $500+

Num

ber

of M

ovie

s

Walt Disney Universal Warner Bros.

These 14 movies were responsible for 25% of the total revenue generated by the three largest movie studios in the last 5 years!

Domestic Box Office Gross (USD Millions)

were not worried about cannibalizing theater revenue, since theaters were shut down across the country, and did not want to postpone the release, as they were already wrapping up a multi-million dollar marketing campaign for the movie. Movie theaters traditionally have agreements with studios to keep movies in theaters for a few months before they go to video exclusively. However, with the rise of other avenues for watching movies, the time has almost halved in the last two decades (see Figure 3 on Page 13 ).

The online release was a stupendous success. Just through online 48-hour rentals on streaming platforms, Trolls World Tour generated $200 million, making it the highest-grossing movie of 2020 so far.3 Parents stuck at home and out of options for entertaining their kids probably contributed to the success of the film, but it showed studios that they could have a hit on streaming platforms alone. To add fuel to the fire, Universal Studios does not have to split the revenue with theaters 50-50 but keeps 80% of the haul.4 Streaming services, after all, do not have expensive theaters or maintenance—no ushers, ticket collectors, or popcorn makers—just some engineers keeping the servers up and running.

DINNER AND A MOVIE?

How large of a threat is the streaming phenomenon to movie theaters in the aftermath of the pandemic? The CEO of AMC Theaters, the largest movie theater chain in the world, has an answer. In an open letter, he threatened to not play a single Universal film in his theaters, in retaliation for the Trolls World Tour debacle. Movie theaters face a monumental challenge once they do reopen. What could save the theater business if the studios create their own streaming services and skip theater runs altogether? Movie theaters must find ways to lure people away from their 4K TVs and unlimited content on streaming services. They must make going to the theater an event.

In many ways, though, there is nothing new here. For decades, theaters have remained competitive by integrating new technologies. Theaters were one of the first businesses to introduce indoor air conditioning. Sound was added to films, and then came color. But eventually, these innovations became common and expected. Owners had to bear the substantial upfront costs of outfitting their theaters with the latest projectors and sound systems without any guarantee that the new technology would get people off their couches. In the case of 3D, the technology didn’t seem to improve the experience, as patrons complained that the headsets used to create the illusion were uncomfortable, darkened the image, and, in some cases, made them sick. Theater owners realized that chasing the latest technology had a ceiling.

Their next play was to create a more premium experience by merging cinema with fine dining. It was a natural progression, as theater owners had been making the majority of their profits through their concessions, anyway. “Dinner and a movie” is a common refrain for a Friday night out. Now film exhibitors wanted the other half of that adage.

Alamo Drafthouse was the first chain to implement this plan nationally, introducing 41 theaters across the United States. Seating is luxurious, comfortable, and features hideaway tables. Waiters unobtrusively crouch and crawl through the aisles, taking orders and delivering premium-priced food and custom-designed beverages.

TICKET PRICES: HOW HIGH CAN THEY GO?

But the dine-in movie experience does nothing to help existing theaters and is too expensive for most patrons. In 2000, theater lovers asked, “How high can they go?” when Broadway tickets to Mel Brooks’ The Producers debuted at more than $300 a seat. Most people believed that things had gone too far and that such prices could never be sustained. If investors required such a high price to get a decent return, then it was the end of Broadway, the pundits prognosticated. Since then, gross profits have continued to rise, as have ticket prices, with people paying thousands of dollars per seat for mega-hit shows like Hamilton. But Broadway is a one-of-a-kind, live event with limited seating. The ticket prices for a Broadway show rise because of scarcity, an issue the cinema doesn’t have.

One other possible solution is embracing the enemy. Enter stage right: Silicon Valley.

Internet startups have been using subscriptions to sell items as diverse as food delivery services, razor blades, and toothbrushes. Who hasn’t had a health club membership constantly sucking money out

12

FROM BOOM TO BUST: U.S. DOMESTIC BOX OFFICE fig. 2

«WHAT COULD SAVE THE THEATER BUSINESS IF THE

STUDIOS CREATE THEIR OWN STREAMING SERVICES

AND SKIP THEATER RUNS ALTOGETHER? »

«JUST THROUGH ONLINE 48-HOUR RENTALS ON

STREAMING PLATFORMS, TROLLS WORLD TOUR

GENERATED $200 MILLION, MAKING IT THE HIGHEST-

GROSSING MOVIE OF 2020 SO FAR.»

Source: Box Office Mojo

$0

$100

$200

$300

$400

$500

$600

0 10 20 30 40 50

USD

Mill

ions

Week

2017 2018 2019 2020

of one’s bank account? Gyms depend on no-show members who do not take advantage of the facility to off-set the heavy users. It may shock you to find out people like going to the movies more than they like going to the gym.

MoviePass was a startup that was after that same flow of steady income. Prices started at a pretty hefty $50 per month for an unlimited pass to the major theater chains, but the company was struggling. In August 2017, MoviePass sold a majority share to the analytics firm Helios and Matheson, who then dramatically dropped its price to $10 per month.

The business model was simple. Customers would order a ticket from the app, and MoviePass would buy a ticket from the movie theater at full price. Ultimately, the point was not to make money from the customer. For MoviePass, the product was the customer. The real prize was the data that they were collecting on regular moviegoers. They were willing to take a loss to obtain information about their customers’ movie habits and sell it to studios, distributors, and exhibitors.5

Exhibitors immediately saw the potential of this data and realized that they didn’t have to pay for it. They simply had to replicate it. AMC was the first out of the gate, signing up 500,000 members to its Stubs A-List service in the first four months. Regal Cinemas has since come out with their subscription plan, and Alamo Drafthouse is experimenting with the idea as well. MoviePass closed its doors in September last year.

A NEW HOPE? ADAPT OR DIE AGAIN

Is this the last gasp for movie theaters? While “Death of Industry X” headlines generate internet clicks and attract eyeballs, the reality is constantly evolving. Theaters will always exist in one form or another—perhaps just not in the way you remember from your years as an eager moviegoing teenager or from those first dates long ago.

Some help might come from the artists who make the movies. Filmmakers still want to see their films in a theater. Filmmaker Lulu Wang passed a big payday from the streamers for her autobiographical movie The Farewell, opting for a theatrical run for half the money. Indie studios like A24 will put more money into advertising and awards promotion. Filmmakers pour their hearts and souls into their films and want to see them on the big screen in front of an audience. Streaming services are always putting out content, often with little or no promotion. Mid- to low-budget films need attention and money, and sometimes the payoffs are enormous. Jordan Peele’s Get Out was made for $5 million and grossed $300 million at the box office. Blumhouse, the producer of the film, could have never gotten that kind of return from streaming.

Good stories matter, too. The movie industry is always looking out for the hit that will make up for all the other losses; last summer, Warner Bros. got it with Joker, which became the highest-selling R-rated movie in history, grossing over a $1 billion—a surprise ending for an industry that relies on a good twist in the story.

Even as the COVID-19 crisis shutters theaters, some movies have been delayed and are not being released on streaming platforms, suggesting that studios still see value in theater audiences. As economists, we want to know if the economy will be open enough by December to go to a theater. As

fans of Top Gun, we are curious if we actually will be able to watch Top Gun: Maverick in theaters upon its delayed December release. We doubt a home-screening via a steaming service would do it justice.

SOURCES

1. Flint, Joe and Micah Maidenberg. “‘Netflix Adds 16 Million New Subscribers as Homebound Consumers Stream Away.” Wall Street Journal, April 21, 2020.

2. Boxofficemojo.com

3. Schwartzel, Erich. “‘Trolls World Tour’ Breaks Digital Records and Charts a New Path for Hollywood.” Wall Street Journal, April 28, 2020.

4. ibid

5. Levine, Matt. “MoviePass Worked Out Great.” Bloomberg, August 7, 2019.

Source: National Association of Theater Owners, Barclays Research

Mon

ths

0

1

2

3

4

5

6

‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19

COMING SOON TO A TV NEAR YOU: AVERAGE TIME BETWEEN THEATER RELEASE AND VIDEO RELEASE

fig. 3

«IT MAY SHOCK YOU TO FIND OUT PEOPLE LIKE GOING TO

THE MOVIES MORE THAN THEY LIKE GOING TO THE

GYM.»

13

Stuck at Home?

If You Are Enjoying This Issue Please Peruse The Archives. Here Are A Few Selections That Remain Relevant:

“AUDIO-BOOM”: PODCASTING AND THE SECOND GOLDEN AGE OF AUDIOA second golden age of audio is upon us in the flood of “podcasts” available at the touch of a button. But the industry resembles the Wild West, not a finely-tuned broadcasting machine. Will the podcast kill the radio star or are podcast listeners riding a trend that will never go mainstream due to the fragmented, quirky nature of the industry? We explore. Summer 2019 Click Here.

GAMERS OF THE WORLD UNITE: ONLINE GAMING AS A GLIMPSE INTO THE FUTURE OF THE GLOBAL ECONOMYVideo games draw the ire of social commentators and parents alike. Put aside your opinions on gamers and imagine what online gatherings might mean for the future of economic organizations.explore. Winter 2020 Click Here.

NIRP REDUX: IS NEGATIVE INTEREST RATE POLICY (NIRP) A “CURE” WORSE THAN THE DISEASE?Like a bad dream that won’t end, negative rates continue to haunt global investors. Having first addressed negative interest rate policy (NIRP) in a 2016 article, we revisit the topic and double down on our original take: NIRP harms the very institutions an economy needs to thrive. Winter 2020 Click Here.

NEO-CHARTALISTS OR NEO-CHARLATANS? A DIVE INTO MODERN MONETARY THEORYA small revolution is brewing in the world of macroeconomics. It’s an idea that counts a Democratic socialist presidential candidate and a hedge fund manager among its adherents. We speak here of Modern Monetary Theory, popularly known as MMT. In what follows, we break down MMT’s foundational underpinnings, evaluate some of its claims, and conclude that while it may be plausible at face value, investors would do well to doubt its legitimacy. Spring 2019 Click Here.

ESBIES: A CURE FOR EUROZONE RISK OR ANOTHER INEFFECTIVE REMEDY? ECONOMYJanuary 2019 marked 20 years since the launch of the euro—the most obvious sign of European economic and political integration. Decades in the making, the project is not yet complete. As evidenced by a renewed bout of concern in 2018 over the Italian fiscal situation and banking system, we think the Eurosystem is missing a key component of the financial architecture. We explain and explore one possible solution: ESBies. Economy. Here, 20 years later, we dust off the ‘ol book and put the authors’ claims to the test. Just how durable were the models used? What we find is indeed a robust manual for understanding important developments in the 21st century economy. Winter 2019 Click Here.

FOR WHOM THE BELL TOLLS: QUICK SERVICE RESTAURANTS AND THE RISE OF TACO BELLDon’t look now, but the heat is on in the U.S. quick service restaurant (QSR) industry. Spicy, quick service contenders serving Mexican food have seen sales grow at 1.5x the rate of the broader QSR industry since 2011. At the top of tortilla stack? Taco Bell. Whether you are a confi rmed member of the Belluminati or just enjoy the occasional fourth meal, we invite our readers to Live Más on a tour of the Mexican quick service restaurant industry and witness its potential for global growth in the years ahead. Spring 2018 Click Here.

MALLRATS: THE PAST, PRESENT, AND FUTURE OF THE SHOPPING MALLIn the mid-1990s, a distinct species infested the suburban world: the mallrat. Fast becoming extinct, these once-great bipeds wasted hours of their lives looking for love, piercing ears, and scooping up compact discs in the great halls of commerce known as malls. Today’s world of online shopping appears to spell the end for mallrats. However, lost in the foreboding headlines are pockets of opportunity. Fall 2017 Click Here.

WEIGHING THE WORLDEarth is a planet teeming with life. Often when we think of life we think of our pets, livestock, insects, birds, fish and, of course, the 7+ billion homo sapiens scattered around the globe. However, taking stock of everything around us reveals a surprising picture. Estimating the weight—in million tonnes of carbon—of animal life on Earth and you find that the organisms we cannot even see with the naked eye comprise most of life on earth. Summer 2017 Click Here.

UBERNOMICS: THE FUTURE IS HERE, IT’S JUST NOT EVENLY DISTRIBUTEDA fleet of vehicles ready at a moment’s notice to ferry passengers anywhere they desire? It used to be such luxuries were reserved for Kings and American Presidents. Now an ordinary person like me enjoys the services.you find that the organisms we cannot even see with the naked eye comprise most of life on earth. Fall 2014 Click Here.

IS THE FUTURE OF SPACE IN PRIVATE HANDS?With the passing of Neil Armstrong and shuttering of NASA’s space shuttle program, we must wonder at the future of extra-Earthly travel. Does NASA’s retreat entail a dark age for space travel? Fall 2012 Click Here.

Go to Payden & Rygel's Point of View to view more

Or email us at economics@payden.com for a back issue

Payden & Rygel’s Point of View reflects the firm’s current opinion and is subject to change without notice. Sources for the material contained herein are deemed reliable but cannot be guaranteed. Point of View articles may not be reprinted without permission. We welcome your comments and feedback at editor@payden.com.

EQUITYGlobal Equity Income FundU.S. Equity Income Fund

LIQUIDITY FUNDSEuro Liquidity FundSterling Reserve FundU.S. Dollar Liquidity Fund

FIXED INCOMEAbsolute Return Bond FundGlobal Bond FundGlobal Emerging Markets Bond FundGlobal Emerging Markets Corporate Bond FundGlobal Government Bond Index FundGlobal High Yield Bond FundGlobal Inflation-Linked Bond FundGlobal Short Bond FundSterling Corporate Bond FundU.S. Core Bond FundUSD Low Duration Credit Fund

CASH BALANCEPayden/Kravitz Cash Balance Plan Fund

EQUITYEquity Income Fund

GLOBAL FIXED INCOMEEmerging Markets Bond FundEmerging Markets Corporate Bond FundEmerging Markets Local Bond FundGlobal Fixed Income Fund Global Low Duration Fund

TAX-EXEMPT INCOMECalifornia Municipal Income Fund

U.S. FIXED INCOMEAbsolute Return Bond FundCash Reserves Money Market FundCore Bond FundCorporate Bond FundFloating Rate FundGNMA FundHigh Income FundLimited Maturity FundLow Duration FundStrategic Income FundU.S. Government Fund

U.S. DOMICILED MUTUAL FUNDS

DUBLIN DOMICILED UCITS FUNDS

For more information about Payden & Rygel’s funds, contact us at a location listed below.

LOS ANGELES 333 South Grand AvenueLos Angeles, California 90071213 625-1900

BOSTON 265 Franklin StreetBoston, Massachusetts02110617 807-1990

LONDON1 Bartholomew LaneLondon EC2N 2AX United Kingdom+ 44 (0) 20-7621-3000

MILANCorso Matteotti, 120121Milan, Italy+39 02 76067111

FOLLOW USwww.twitter.com/paydenrygel

PAYDEN.COM

LOS ANGELES | BOSTON | LONDON | MILAN

OVER 35 YEARS OF INSPIRINGC O N F I D E N C E W I T H A N UNWAVERING COMMITMENT TO OUR CLIENTS’ NEEDS.