🍋 Consultants Down Bad

Why management consulting is like investment banking but with worse pay, plus Chipotle announced a 50-to-1 stock split.

Together With

"When you have a position in the marketplace, you have to be positioned for the possibility of a market change. You have to be prepared to lose money." — Lloyd Blankfein

Good Morning! Fed sees three rate cuts in 2024 but a more shallow easing path. Chipotle will do a rare 50-to-1 stock split as its share price climbs towards $3,000. Reddit priced its IPO at $34 a share, the top of the expected range, valuing the social media company at about $6.5 billion. The shares start trading today under the ticker RDDT. Carlyle is no longer helping Alex Rodriguez buy the Minnesota Timberwolves. Plus the salary a single person needs to live comfortably in 25 major U.S. cities.

SQUEEZ OF THE DAY

Consultant Crunch

Consultants have gotten rekt over the past few years. Some of the world’s largest consultant firms like Boston Consulting Group, McKinsey, and Deloitte overhired during the pandemic, when companies wanted a piece of the consulting magic to navigate the Covid chaos. But now, it seems like the industry is in a slump.

With demand for consulting gigs drying up, it’s a different story. We’re seeing some firms like McKinsey put 3,000 of its consultants on performance reviews. Most are cracking down on expenses, too.

Gone are the days of fancy client dinners and limitless expense accounts. Now, it's more about brown-bag lunches and Zoom calls at home, rather than traveling on-site to the client. Even office snacks and Uber rides are under scrutiny.   

And some consultants are starting to get a taste of what it’s like to work in investment banking. One says that she was staffed on a project that, during the pandemic, would have had 12 consultants on it. In 2024? It was just her and one other consultant - she ended up working all through the night, taking lots of Adderall and had clumps of hair falling out.

Other students of top MBA programs had their start dates pushed back so far that they had to turn to working for Uber Eats and tutoring to make ends meet.

Takeaway: Investment bankers and management consultants have always had a bit of a rivalry. Sure, the pay isn’t as great in management consulting - but there were definitely some perks of the job that it seems a lot of firms are cracking down on. Both the banking and consultant industries have had a rough time since 2021 - there is some truth when economists say we’re in a white-collar recession.

PRESENTED BY RYSE

Smart Home Industry Growth Leads to Consolidation

The smart home industry is entering a phase of consolidation, with a wave of acquisitions that have led to massive returns for early investors:

  • Smart home conglomerate Vivint acquired by NRG Energy Inc for $2.8B.

  • Smart thermostat Ecobee acquired by power generation giant Generac for $770M.

And let’s not forget RING and Nest — acquired by Amazon and Google for $1.2B and $3.2B respectively.

The trend behind these acquisitions? Patented products and retail distribution. 

RYSE is the up-and-coming company in the Smart Shades industry, with proprietary tech that has just launched into +100 Best Buy stores.

They are disruptors in the slow-moving window shades industry and if you missed out on previous opportunities you can invest in their company now at $1.50/share!

HEADLINES

Top Reads

  • Federal Reserve holds interest rates steady, still projects cuts ahead (Axios)

  • Chipotle will do its first-ever, 50-to-1 stock split (YF)

  • Reddit users balk at chance to participate in IPO (CNBC)

  • Carlyle no longer helping to finance ARod, Lore's takeover of Timberwolves (Axios)

  • The salary a single person needs to live comfortably in 25 major U.S. cities (CNBC)

  • Small banks are demanding full-time office work more than bigger peers (BB)

  • Citi cuts London investment bankers as drought in deals persists (BB)

  • Crypto market sheds $400 billion of value after Bitcoin's all-time high (CNBC

  • The surging wealth of employee-owners (Axios)

  • The rates trade is back in focus for stock investors (YF)

  • How Intel won $8.5 billion in chipmaking cash (YF)

CAPITAL PULSE

Markets Rundown

Stocks closed higher because policymakers maintained their rate-cut forecast.

Movers & Shakers

  • (+) Boeing ($BA) +4% because the airplane manufacturer wants to sell a couple of its defense businesses.

  • (+) Chipotle ($CMG) +3% after the board approved a 50-to-1 stock split.

  • (–) Signet Jewelers ($SIG) -12% because marriage engagements are dropping.

Private Dealmaking

  • Montagu Private Equity bought Johnson Matthey’s for $700 million

  • Clasp Therapeutics, an immuno-oncology startup, raised $150 million

  • Solaris, a banking-as-a-service startup, raised $104 million

  • Pocket FM, an audio entertainment startup, raised $103 million

  • Figure Markets, a decentralized crypto exchange, raised $60 million

  • TigerEye, a provider of business simulation tools, raised $35 million

For more PE, VC & M&A deals, subscribe to our Buysiders newsletter.

BOOK OF THE DAY

Homo Deus

Over the past century humankind has managed to do the impossible and rein in famine, plague, and war. This may seem hard to accept, but, as Harari explains in his trademark style—thorough, yet riveting—famine, plague and war have been transformed from incomprehensible and uncontrollable forces of nature into manageable challenges.

For the first time ever, more people die from eating too much than from eating too little; more people die from old age than from infectious diseases; and more people commit suicide than are killed by soldiers, terrorists and criminals put together. The average American is a thousand times more likely to die from binging at McDonalds than from being blown up by Al Qaeda.

What then will replace famine, plague, and war at the top of the human agenda? As the self-made gods of planet earth, what destinies will we set ourselves, and which quests will we undertake?

Homo Deus explores the projects, dreams and nightmares that will shape the twenty-first century—from overcoming death to creating artificial life. It asks the fundamental questions: Where do we go from here? And how will we protect this fragile world from our own destructive powers? This is the next stage of evolution. This is Homo Deus.

“The most common reaction of the human mind to achievement is not satisfaction, but craving for more.”

DAILY VISUAL

The Sweet Rise of Ice Cream Prices

Average US price for a half a gallon of ice-cream

Source: Axios

DAILY ACUMEN

Being Wrong

Admitting to a mistake is not a sign of failure but rather an opportunity for growth. The fear of being wrong, deeply ingrained in us from a young age, often leads to a pursuit of perfectionism that makes admitting errors feel like a personal flaw.

However, embracing our mistakes can profoundly impact our reputation positively, contrary to the common fear of embarrassment or social ostracism.

The psychological concept of cognitive dissonance explains our reluctance to accept our errors, as it causes discomfort when our actions conflict with our beliefs. Yet, recognizing and admitting our wrongs can not only improve how others view us but also foster a deeper understanding and acceptance of our fallibility.

The journey to acknowledging a mistake can range from an instant realization to a gradual process of changing beliefs. It requires openness to the idea that we are capable of errors and a willingness to set aside ego.

Admitting mistakes without excuses or defensiveness is a skill that can be developed over time, allowing us to move past our errors and learn from them. This process involves not only recognizing the mistake but also understanding its impact on others and taking steps to make amends if necessary.

By normalizing the admission of errors and viewing them as chances for learning and improvement, we can create a more forgiving and productive environment for ourselves and those around us.

ENLIGHTENMENT

Short Squeez Picks

MEME-A-PALOOZA

Memes of the Day

 

 

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