Hey folks!

Our world revolves around the internet. That’s how you’re reading this newsletter! And internet fame can be crazy. If you go viral, you instantly go from zero to hero and everyone knows you for a brief moment at least. But what if we tell you that internet fame can be brutal too?

Enter the wirecutter effect.

A few days ago Bloomberg had a very interesting story to tell. It said that Wirecutter, a website owned by the New York Times was actually killing businesses by making them viral. How’s that?

See, Wirecutter works as an online recommendation site. It commissions people to try out different products and recommend the best ones on its page. So these folks could try out multiple drip coffee makers, stick vacuum cleaners, under desk treadmills, or any gadgets under the sun, only to declare the best of them all as the sole winner. And customers who browse Wirecutter, then go after that one best product.

Now, when this happened to the Wok Shop at San Francisco, the  positive review overwhelmed the merchant with excessive orders, so much that it wasn’t able to keep up with the demand. That's because Wirecutter listed its carbon steel pan as the best wok on e-commerce. And customers immediately started flocking to it with online orders expecting Amazon-like quick deliveries, warranties, easy returns and refunds.

Little did they know that that Tane Chan, the store owner, was single-handedly reviewing, packing and shipping these orders all by herself.

And when they were too much to handle, the Wok Shop’s response time and shipping speed slowed down. Customers were even left hanging for two to three months without confirmation emails or shipping notifications. Translating into one-star reviews on Google and Yelp and doing more harm than good for the Wok Shop.

So yeah, internet fame isn’t always good because the wirecutter effect can always blow up in your face.

Here’s a soundtrack to put you in the mood 🎵

Whatever by Hasan

Thanks for the rec, Mohammed Motiwala!

A couple of things caught our eye this week 👀

HarperCollins is going green

HarperCollins, one of the four biggest publishing houses in the world has managed to save 5,618 trees over the last few years. Thanks to the realisation that it could play with its fonts to save as much as 245 million pages, depending on fewer trees for paper in the process.

But how did it crack the green code, you ask?

Well, it all started in 2015 with HarperCollins’s Christian publishing division ― Zondervan Bibles, which published Bibles. They figured out that trying out different fonts and adjusting page layouts could help save up on the number of sheets.

So, they developed a new custom typeface called the NIV Comfort Print. That saved them over 350 pages per Bible or 100 million pages in 2017 alone. For context, if you stacked up those many pages, they’d be 4x the height of New York’s Empire State Building!

That nudged HarperCollins to experiment with this idea in its thrillers and romance novels too. And guess what happened?

The publisher wasn’t just able to save up on paper, but also on ink, translating into lower printing costs as well.

But we’ll be wrong if we credit HarperCollins’ Zondervan team for coming up with this clever idea. Because here’s what we found out when we dug up the internet.

In 2014, just a year before Zondervan started tweaking its typefaces, Suvir Mirchandani, a teenager studying at Dorseyville Middle School was tired of too many handouts he was getting from his teachers. So he actually collected samples of these handouts and analysed the most common characters (e, t, a, o and r) they used to see if there was a way to cut down on ink and paper.

After all, ink is twice as expensive as French perfume by volume, he thought. Which is true because an ounce of Chanel No. 5 perfume at the time cost $38, as against $75 for the same amount of Hewlett-Packard printer ink.

His analysis told him that the Garamond font had thinner strokes. So using it could cut down ink consumption by 24% at his school district, in turn saving as much as $21,000 annually. Not just that, Suvir concluded that if the US Federal Government used Garamond exclusively it could save nearly 30% in costs or $136 million per year.

These findings were so impressive that they ended up in the Journal for Emerging Investigators (JEI), a publication founded by a group of Harvard grad students.

And who knows, that’s probably where Zondervan picked up its inspiration from too Does it mean that HarperCollins owes one to a middle school genius for helping them go green?

***

HUL might eventually break up with ice cream. But why?

HUL (Hindustan Unilever), India’s largest FMCG by market capitalisation is hiving off its ice cream arm. And rumour has it that it could eventually sell it off.

But why?

See, HUL is the Indian arm of Britain’s Unilever PLC. And its second biggest market after the US in terms of revenue. Recently, Unilever decided to spin off its global ice cream business which includes big brands like Wall’s, Magnum and Ben & Jerry’s.

That’s because ice cream manufacturing requires a different approach in terms of manufacturing and distribution. And this strategy could actually help Unilever simplify the products in its portfolio by focusing on its four big business units ― Beauty & Wellbeing, Personal Care, Home Care and Nutrition. That'll also help it save a whopping €800 million (∼ $870 million) over the next 3 years. Besides, raking in more capital if it becomes a newly listed company.

And maybe, HUL is walking in its boss’ footsteps too. Business Today suggests that HUL’s ice cream business has a gross profit margin of 35-40%. But the company may want to focus on categories like personal products which deliver higher margins.

Could splitting the business turn out the way HUL imagines? Well, if it doesn’t “anything is possible from this point” as a former HUL executive puts it. Maybe even an eventual sale.

So, we’ll only have to wait and see how it all pans out.

Infographic 📊

Money tips 💰

How does the Rule of 72 work?

What if we told you that you can use a simple formula to predict the time it’ll take to double your investments?

It’s not even rocket science. All you have to do is divide 72 by the annual rate of return you’re expecting on your money. And voila! It’ll tell you how many years it’ll take for your savings to double itself.

Let’s take an example. Let’s assume that you’ve invested ₹1,00,000 now and you’ll get an interest of 8% every year. That means, your ₹1,00,000 will become ₹2,00,000 in approximately 9 years (72/8).

But how does this rule work, you ask?

See, this investing rule has been used for ages. In fact, its initial reference dates back to a 15th century work called Summa de arithmetica by an Italian mathematician Luca Pacioli.

But he doesn’t really tell people how he arrived at this investment doubling formula. So it’s possible that he was just building on the work of an earlier scholar who’d figured out something similar. In fact, the calculation could be even more accurate if we use the number 69 instead of 72. But since 69 isn’t a very easily divisible number, we use 72.

But here are three things to keep in mind.

1. This formula only works when you’re earning a compound interest on your investment. Or interest you earn on both the initial money or principal you invested and the interest that principal has accumulated from previous periods. So even if you have a constant principal lying in your savings account, you can’t use this rule to estimate when your savings will double.
2. Don’t be too excited thinking that you could use this for any kind of investment because this formula may not be the best fit for your stock or mutual fund investments. And that’s because you might consider the annual average return of these investments based on how they’ve performed in the past. But past performance doesn’t guarantee that returns will be the same in the future, no? If the returns fall, your average annual return gets affected and your calculations can go haywire.
   
   So when do you use this, then? You could use it for other goals like saving up for a down payment for a car or home you’ll buy in the future or even for putting aside money for your higher education, wedding or retirement. But before that, read the next exception too.
3. This rule doesn’t consider the diminishing power of your doubled investment. Simply put, going by our previous example, the ₹2,00,000 you make after 9 years won’t be able to buy you the same number of things that you can buy today. That’s because the purchasing power of your savings drops as inflation eats into it.
   
   And to fix that you can simply use the same formula to find out how many years it’ll take for the purchasing power of your savings to halve. So, if the average inflation rate is 5% every year, the purchasing power of your investment will halve in about 14 years. Don’t forget to factor that in when you’re using this rule.

Readers Recommend 🗒️

This week our reader Enam Suchiang recommends "Ego Is the Enemy" by Ryan Holiday. It's a book that tells you how the main hurdle to a successful life is nothing but ego. That’s probably why the poor remain poor and rich can’t get richer. So yeah, ego can mess up a lot of things if we don’t hold it back.

Thanks for the rec, Enam!

That’s it from us this week, folks. We’ll see you next Sunday.

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