Polymathic Audio No. 10: Anthony Pompliano


Anthony Pompliano joined the latest episode of Polymathic Audio. He shared thoughts on all-things media and commerce with an emphasis on the opportunity surrounding vertical integration. The conversation builds around the importance of customer acquisition on the journey of building brands, and the order of operations for those who are looking to leverage and maximize. From the perspective of both an investor and content creator, Anthony dives into the synergy between his creative and business processes.

At the crossroads of media and commerce, Anthony proposes an alternative structuring of the agreement between Barstool Sports and Penn Gaming, the company that recently acquired them. Web and Anthony also discuss the educational system, higher education, the concept of credentialism, and what it all means in the present and future moments.

This is a truly fascinating conversation.

By Brad Biehl, Research Associate

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Member Brief: The American Dream


This Member Exclusive is temporarily unlocked. On occasion, we make these reports available to the greater audience for topics that are widely important. This content is part of Executive Membership. I invite you to join. 

More than 8,000 stores closed in 2017. That number surpassed 9,300 in 2019. With 6,000 stores shuttered already, 2020 has a projected a new record: 12,000 or more. These aren’t just retail casualties. America’s malls were designed to appeal to the middle class, and both are disappearing.

Today’s retail distress is the culmination of thirty years of evolving American sociology. Of course middle-class retailers are shuttering, we’ve entered a new Gilded Age. There are echoes of this bifurcation throughout the physical and digital spaces of commerce. Contrary to popular opinion, retail isn’t dying. Instead: changes in middle-class earnings (against inflation), increased consumer debt, and diminished consumer confidence are beginning to polarize some consumers. The middle-class is being squeezed and the retail industry failed to anticipate the changes in how America lives, works, and where we choose to do both.

In 1992 in a third grade classroom, I sat among a group of eight and nine year olds as we churned butter for a class project on America’s farms. In an upper-middle class suburb of Dallas, Texas, it felt like a promised future. The classroom was racially and economically integrated, the education was superior, and things seemed to work. After churning some top-notch butter, I walked over to hug my teacher, Mrs. Chapman. Her local claim to fame was that she was a descendant of Johnny Appleseed.

A lot happened between 1983 and 1992. I was born into a lingering version of enforced segregation in Houston, Texas. Deed restricted neighborhoods no longer (legally) existed but that didn’t mean that the rules loosened. As my father tells the story:

We searched every middle-class neighborhood in and around Houston. We just sought out good schools and safety. No luck, we couldn’t close a single place. Frankly, I failed you. So Fifth Ward, Houston it was.

In 1983, a middle-class, African-American family of three could not find suburban housing in the south. My parents were no exception. My dad was a military officer and my mother was an international flight attendant. Financial stability didn’t count for much back then and as a result, we lived in a bullet-riddled neighborhood for my first five years. But by 1992, the United States was well into the peak of integration and I was one of its beneficiaries.

[Author Rucker C.] Johnson described how America truly enforced school integration for only 15 years. “We reached peak integration levels in 1988, and each year since, we regressed… to the point where the levels of segregation are back to where they were before integration began in earnest.” [1]

That Dallas, Texas suburb is no longer the model of integration that it was. In 1992, our home could be purchased for $90,000. Today, the average home on that same street is nearly $700,000. When I attended school, African-Americans were close to 9% of the district population. Today, that number falls below 1%. Education isn’t just a powerful tool for young students. Equity in education is one of the last vestiges of the middle-class promise that we began striving for in 1954. That same neighborhood that I was zoned to didn’t exist by accident. In fact, it was a product of the legislation that followed Brown v. Board of Education‘s Supreme Court ruling. It was one of the hundreds of American suburbs partly responsible for our retail bubble today.

I discuss this in depth in the Ballad of Victor Gruen:

Shortly after this Supreme Court decision, Eisenhower enacted the “Accelerated Depreciation” (AD) program. This allowed the owners of commercial real estate developments to deduct building costs from their tax burdens. This new form of tax deduction enabled builders to extract wealth from their developments 10x faster than the year before. Thomas Hanchett’s “U.S. Tax Policy and the Shopping-Center Boom of the 1950’s and 1960’s” notes that there was one regional mall in 1953. No less than 25 were approved immediately after this decision. America grew from one mall to 25 in one year.  [2]

In the early days, retail preceded new population growth. Today, retail is but a lagging indicator. For over three decades, wealth bifurcation has accelerated. The poor have gotten poorer and the rich richer. The second order effects have only begun to manifest. The public markets have rallied while unemployment has risen to record highs. In 1970, over 65% of the American population was considered middle class by income. Today, that number is closer to 50%. The middle class continues to dwindle and like a number of other trends, COVID has accelerated it.

The median income of middle-class households in 2016 was about the same as in 2000, a reflection of the lingering effects of the Great Recession and an earlier recession in 2001. [Pew Research, 3]

With over 20 million unemployed, school is about to begin for tens of millions of school-aged children. And some students may have a different experience than the rest.

The Micro School Conundrum

The middle class can be attributed to a succession of social movements. There was onset of the post-war G.I. Bill, the Federal Housing Agency’s programs, the rise in unionism. The result was a doubling in the median family income. For 50 years, collectivism was government policy. For many, it provided the platform for aspiration.

The key to middle-class growth has been the pursuit of the aspirational American Dream. A family makes a good living, their children go to good schools, those students are afforded better experiences that provide a ladder to an even better life. Between 1945 and the close of the 1970s, this approach provided a virtuous cycle that served as the basis for the golden age in middle-class economics.

West Coast Educational Pod and Early Uber

A defining trait of the middle class was the ability to make a good living as a salaried worker or wage earner. Another trait was the innate aspiration to move beyond that identity whether through education, work, savings, or chance. Today’s reality is different. If you’re working class, it is more difficult to enter the middle class. If you’re in the middle class, it’s just as difficult to rise above it. Education is once again at the forefront of the class discussion. A number of America’s wealthiest parents are discarding traditional education altogether to form school “pod” systems.

While this is not an indictment on any parent who chooses this direction for their children, it is but another indicator that perhaps the golden age is gone for good. And while collectivism has given way to individualism in many other facets of American life, this form is the most jarring. Education has been closely tied to economic controls for nearly 70 years. It influences real estate, the jobs market, and even the business of consumer goods. Across the country, parents are lobbying teachers to leave their schools for added salary and fewer responsibilities. Nowhere is the movement more prominent than in the Bay Area of California.

As schools in the San Francisco Bay Area shifted to remote learning, Ms. Evans, who moderates a Facebook group to connect Silicon Valley families looking to form pods, saw it surpass 1,500 members within a week. But nearly all the new members were from Palo Alto, an affluent suburb in California known for its concentration of tech employees. There were relatively few people from East Palo Alto, the neighboring town with a median income roughly a third of its wealthier neighbor. [4]

But without a larger picture, I’m afraid that we’re taking a short-sighted approach to solving educational deficiencies in the short-term. As we move further away from our social contract with one another, we run the risk of accelerating the demise of more monuments to the middle class. In many cities, the public school systems have already reached the point of disarray. Our roads reflect disrepair. Our public transit systems stall in California and flood beneath the streets of New York City. Our malls have crumbled as middle-class foot traffic has diminished.

Our actions should consider that the American experiment performed best when the majority of the country thrived in the middle. Our new minority and majority are unclear but the direction of their growth or contraction are evident. The American Dream diminishes with each instance of shunned collectivism. There may be no greater example of the fragility of the times than the retail development constructed despite all indicators that it was past its time: New Jersey’s American Dream.

“It was probably a good idea 20 years ago,” said retail consultant Kate Newlin. “But I don’t think it was a good idea pre-COVID, and I really think it’s crazy now.” But even with the mountain of issues and retail reeling because of the pandemic, many haven’t counted out [management’s] ability to turn the American Dream around. [5]

In an economy built on consumption, the retail industry is a lagging indicator. It reflects our social contracts with one another. It reflects the state of our culture, capitalism, and collectivism. We built millions of square feet of retail institutions and then forgot the sociological fundamentals that kept them in business. Above all fundamentals is a thriving middle class. That’s the dream. And part of that dream is equity in childhood education. Without it, I’d be where I began.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy | About 2PM