Economy
Discover facts about economy. Small discoveries that change the way you see familiar things.
Economy
Free restaurant bread fills diners before ordering meat cuts
A basket of cheap bread can do its job before the meat reaches the table: diners eat, feel fuller, and may order less of the pricier food.
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Why cereal boxes are tall and thin
A tall, narrow box can look more generous than a shorter, wider one, even when the amount inside doesn't change. Consumers tend to overestimate how much the…
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Why “don’t miss out” makes you buy
A “limited-time” ad makes a missed deal feel like something you’ve lost, not money you’ve kept. Because people often feel losses more strongly than equal…
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The extra letter that breaks price matching
The appliance could look nearly identical and still fail a price match over one extra letter. Retailers used slightly different model numbers so a…
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Startup term sheets can hide investor veto rights and liquidation preferences
A term sheet can quietly decide two things founders may care about most: who gets paid first in a sale and who gets to say no to major decisions. Those…
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Capital expenditures require years of painful amortization
Buying major equipment can make one year’s expenses spike. Companies spread the cost over the years the equipment is expected to work, matching the bill to…
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Mutual funds obscure incredibly high management fees
A fee can look small each year and still keep taking a slice of an investment’s growth. Because the money left behind cannot compound, management and…
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Double entry bookkeeping demands absolute numerical symmetry
In double-entry bookkeeping, a transaction gets written down twice, and the two sides have to balance. The books must show assets equal to liabilities plus…
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Earnouts delay payouts to paranoid startup founders
A founder can sell a startup and still have to keep working for its new owners. Some of the sale price arrives only if the business hits future targets.
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Proxy fights manipulate shareholder voting power
An activist investor who wants to replace a company’s board needs votes, not just a complaint. So the investor gathers other shareholders’ voting rights and…
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Why Startup Funding Can Hinge on Founder Charisma
Before a startup has a product or revenue, investors may have almost nothing to judge but the founders’ pitch. Confidence and charisma can help decide whether…
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Hostile takeovers bypass corporate boards completely
The target company’s bosses may plead with shareholders not to accept, but they don’t get the final say. A hostile bidder offers shareholders a premium for…
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Intangible assets dominate modern corporate valuations
A company can be worth far more for software, patents and intellectual property than for its factories or machinery. Much of its value may sit in things you…
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The software announced before it exists
A promised product can do useful work for a company before it exists: an announcement may stop customers from buying a competitor’s working alternative.…
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Corporate spinoffs isolate the worst performing assets
The parent can separate a struggling division and leave its weaker assets behind in a new public company. Its own results may look more profitable, while…
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Depreciation makes perfectly good assets look worthless
A server farm can keep running perfectly while its recorded value falls year after year. Depreciation changes the number on the books, not whether the…
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Beta metrics quantify pure financial anxiety
A beta number compares a stock's price swings with the market's. Investors use it to put a figure on how much the stock tends to move when the broader market…
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The budgeting method that makes everyone start from zero
Managers cannot simply copy last year’s budget and tweak a few numbers. Zero-based budgeting makes them justify every planned expense from scratch.
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A trillion-dollar valuation isn't a trillion dollars
If a company has a billion shares, a one-dollar rise in each share adds a billion dollars to its market value on paper. No matching pile of cash appears in a…
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How index funds win by not picking stocks
An index fund doesn’t have to guess which company will win. It buys a broad slice of the companies in a market index instead.
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Network effects create insurmountable tech monopolies
A better app may still lose if your friends, contacts, or other users are all on the old one. Each new member makes that platform more useful to everyone…
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The accounting trick that made a startup look profitable
The key to the startup’s Community Adjusted EBITDA was what it left out: major operating costs. Remove those from the calculation, and the business looked…
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Capital allocation determines corporate life spans
An executive can put the same company’s money into research, spend it buying another business, or send it back to shareholders. Each choice changes what the…
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Open-core models restrict features for enterprise clients
You can use the basic version for free, but a company needing enterprise features, security tools, or support may have to buy a license. The free product is…
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