The Wall Street Journal covers companies. Pirate Street Journal cover categories.
Each week, we pick three headlines worth paying attention to and break down the category underneath. Live every Tuesday at 7 am PST / 10 am EST. See the news through a different lens.
Dear Friend, Subscriber, and Category Pirate,
Here’s what we covered in this episode:
1. Why did the best turnaround in casual dining come from betting on basic tech?
Chili’s parent company is up more than 500% since June of 2022.
Twenty quarters in a row of sales growth. Last quarter sales rose another 4%, on top of a 31% jump the year before.
Almost none of it came from AI.
Here is what their tech boss, Chris Caldwell, bought instead:
Wi-Fi. Two years of work to fix it in 1,200 restaurants.
23,000 iPads. The old tablets couldn’t hold a charge through one shift.
9,000 kitchen touch screens and 1,200 laptops for managers.
Six AI projects. His team pitched him a few dozen. He kept six, and says he expects to cut more than he approves.
The robot waiters went back.
Chili’s did the thing almost nobody does.
They started with the problem, not the tech.
A restaurant has two problems.
The small one: the staff can’t hear each other. Anyone who has watched The Bear knows how fast that goes wrong.
The big one is turns and tickets. How many times a day does that table get used, and how much does each guest spend.
A robot waiter doesn’t move either number.
A button on the table that calls your server does. Paying up front, like at a ramen shop in Tokyo, does. Plastic food in the window so people know what to order does.
So what does this mean for you?
The Census Bureau says only 17 to 20% of American businesses used AI between December and May. At companies with 250+ people, it’s 37%. At companies under 20 people, it’s under 20%. That number didn’t move for five months.
If you own a small business, you’ve been told that gap means you’re behind.
It means the opposite.
Big companies have the money. You have the thing they lost: you still know what problem your business exists to solve. The S&P 500 minus the seven giant tech companies spends about twice as much buying back its own stock as it does on new ideas. A buyback is a company saying, out loud, that it ran out of things to try.
Use AI as your co-founder. Point it at your real problem in the next 12 to 18 months and you can pass companies a thousand times your size.
2. What happens when the customer becomes the power company?
Base Power is three years old and just raised $1 billion. Investors say it’s worth $13 billion.
It has put more than 23,000 batteries in people’s yards across Texas and Chicago. About 100 more every day.
That adds up to 550 megawatt hours, as much storage as a big power plant project. It’s just spread across thousands of backyards instead of sitting in one place.
Your power company has always been a monopoly. One choice, take it or leave it, run by the government or by a company the government controls.
Base flips it. They own the battery in your yard. They sell you electricity. Then, when everyone’s air conditioning kicks on, and power gets expensive, they sell the power in all those batteries back to the grid.
Here’s why that matters to you. You stop being the person who gets a bill. You become the person with something to sell.
In West Texas, El Paso Electric is now paying homeowners $250 a battery, testing whether it can stop building expensive new plants entirely.
People are already moving. Home electricity costs are up 42% across the country in five years. Up 94% in Washington DC. Up 74% in Maryland. Americans put in a record 1.3 gigawatt hours of home batteries in the first three months of this year alone.
Two things follow, and they annoy opposite ends of the political spectrum.
This is the greenest thing a homeowner can do, because the hours when everyone needs power are exactly the hours utilities burn their dirtiest fuel.
It’s also the Jevons paradox: when something gets cheaper, people use much more of it. Go ahead and run the hot tub.
Underneath all of it is one question. Is power scarce, or is it abundant?
Believe it’s scarce and you ration it, fight your neighbors, and protest data centers.
Believe it’s abundant and you notice there’s a giant nuclear reactor in the sky that has never once sent anybody a bill.
3. How did college kids gets get big career outcomes before graduating?
Not a class project. This was real money from real strangers.
$12 million raised from outside investors. None of it from the school.
$7.8 million from 74 investors last year. One person wrote a check for $700,000.
400 deals looked at a year, 12 bought. Ten experienced executives sit on their committee and turn down about a third of what the students bring.
65% profit in about 16 months on the first one they sold, a warehouse outside Indianapolis.
Not one of them gets paid.
Now the other number. The New York Fed says 41.5% of recent college graduates are working jobs that never required a degree.
There are two kinds of education, and only one of them is the real one.
The first is class. Read it, memorize it, hand it back on a test.
The second is apprenticeship. I do it while you watch, and we talk about it. Then you do it while I watch, and we talk about it. Then you can do it alone.
For a surgeon, that’s residency.
For a trader, that’s the desk.
For these students, it’s a real deal with real money that can really lose.
So here’s the question to ask, whether it’s for you or for a kid whose tuition you’re paying: how fast do you get to actually do the work?
A future surgeon can wait ten years, because there’s a big paycheck at the end. If you can’t see when you’d ever get to do the real thing, that’s your problem right there.
But the real winner of this WSJ article is the author. Look at who wrote the article. Lily Bell Polling is a senior at Yale and a reporting intern. A young person learning to report, writing about young people learning to invest.
3 conversations to have about the news with the Pirate Eddie Bot and Pirate Christopher Bot
Every move above works on your business too. The Pirate Eddie Bot and the Pirate Christopher Bot help you run these plays on YOUR category, they come with the founding tier, and they jam 24/7.
Take this to them this week:
Find your small problem and your big problem. Give the bots your five biggest headaches and have them sort out which ones are plumbing and which one is the real problem underneath. Chili’s plumbing was Wi-Fi. Its real problem was turns and tickets. What are yours?
Find where your customer has no choice. Ask the bots which part of your industry works like a monopoly, then design the version where your customer gets to sell something back. That’s what Base Power did to the grid.
Time your apprenticeship. Have the bots map how long it takes a new person at your company to actually do the work. If the answer is years, you have a design problem.
The through-line: everybody reported the technology, and the problem was sitting underneath it the whole time. The robot, the utility, the diploma. Each one was a solution looking for a problem, and the winners this week went the other way.
Not a founding member yet? You can join here.
What’s coming up on Pirate Street Journal
Next Tuesday, three topics we are already arguing about:
Zuck’s accidental AI manifesto. He wrote a long post about privacy and open source. The behavior he’s describing is what Apple and Google already do, which makes it an argument for owning those two and not Meta.
LinkedIn wants you to use less AI. 41% of long posts and 30% of comments there get flagged as fully AI-written. Pirate Eddie got flagged at 40% on something he wrote himself, about renting fins in Hawaii. This is the rare one where the three of us don’t agree.
Three weird facts about the future of flying. Wine is losing drinkers on the ground and winning at 35,000 feet. Consultants are booking layovers on purpose to get planes with Starlink. And DoorDash is putting delivery drones into a sky that already has small planes in it.
New episodes drop every Tuesday: three topics, thirty minutes, a couple of bongos.
Our Deep Dive Reports go deep on one company or one shift, with the category read and the call attached. Founding Members get each one start to finish the day it drops, and everyone else gets the preview. Read the Deep Dive Reports here.
Most of what we make never shows up in a post like this one.
$20 a month gets you the Tuesday episodes, every mini-book, every DDR preview, and every Breaking News report in full.
$375 a year, about a dollar a day, gets you all of that plus the vault. Every Deep Dive Report start to finish the day it drops. The Pirate Eddie Bot and the Pirate Christopher Bot, which will jam with you at 3am about your category. All 300+ mini-books we have ever written, 30+ audiobooks, and all seven big books.
Arrrrrrr,
Category Pirates 🏴☠️
Eddie Yoon
Christopher Lochhead
P.S. - Every story this week came down to the same move: find the problem before you go shopping for a solution.
The Category Design Academy is where you do that at the category level. You name the problem only you can name, then design the category around it, so you stop competing on terms somebody else set.
The next cohort starts in October and will sell out. Apply now to save your seat.
