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Tuning in Weak Signals - Is Starbucks going down?
12 Plays2 months ago
Manny breaks down weak signals: what they are, where to find them (Reddit/Discord, trade mags, field notes), and how to score, steelman, and test them. We open on Starbucks (900+ corporate layoffs, 400+ store closures, $1B restructuring under new CEO Brian Niccol with a ~$100M package): weak signal or just optimization? Then three case studies—women’s sports surge, EV charging (NACS), Retail Media Networks—plus classic misreads (Clubhouse, NFTs, Peloton), and a “blank-space team” playbook (Mission, Metrics, Management, Money, Moat).
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Transcript
Podcast Introduction
00:00:04
Speaker
The voice of growth, mastering the mind and market.
00:00:10
Speaker
And you've missed the boat. Cemetery of dead or dying companies. They're not going to be publicized on the main street media. Do you remember the bored ape?
00:00:24
Speaker
That is a telltale signal of a weak signal. You've got a really do a stress test over time. out the fringes. If I'm wrong, what else could have explained this?
00:00:44
Speaker
Welcome back to the Voice of Growth podcast, Mastering the Mind and Market. My name is Manny Turan, and I'm your host.
Starbucks Restructuring Discussion
00:00:51
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Starbucks just laid off over 900 corporate employees and is closing over 400 stores in the US, including seven here in Tucson, as part of a $1 billion dollar restructuring deal by the new CEO, Brian Nickel.
00:01:07
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Brian Nickel is the CEO that turned both Chipotle and Taco Bell around, and he's being lured with a $100 million dollar package in order to secure the revenues and the growth of Starbucks.
00:01:20
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Now, is are these closures weak signal of bigger things happening down the road, or is this just cleaning up underperformers? So let's dive deep into the concept of a weak signal and help you to understand what they are, how to decode it, and realize the power of a weak signal.
Understanding Weak Signals
00:01:40
Speaker
So first of all, what is a weak signal? A weak signal, by definition, is a early, ambiguous, subtle hint of change. These are data points. They're edge cases. They're anomalies that show up way before a trend becomes obvious.
00:01:56
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The origin for for these comes from a strategy pioneer, Igor Ansoff, who described a weak signal as early warnings that have sensed and acted upon will help a leader avoid strategic surprise.
00:02:11
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That, of course, is when you are going down the road with your product or service and you recognize too late and you're surprised by a new trend that has already taken hold and you've missed the boat.
00:02:25
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There's lots of examples of this that have occurred. BlackBerry, of course, is one of the famous ones where they were once the dominant leader of the mobile space. And in 2007, the iPhone and came to be.
00:02:39
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they They scoffed at it. And by that time, it was ah already too late. The iPhone with no keyboard and MP3 player and a camera, all that took hold. And it was too late for BlackBerry.
00:02:51
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Lots of examples of this in the cemetery of dead or dying companies. So why do they matter? Because they allow you to move first. They allow you to secure an early lead and gain momentum with your competitors while they're still looking at last year's dashboard.
00:03:08
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There are lots of examples that I'm going to go through later on, but I want to also kind of talk more specifically about what some characters is characteristics you can actually see.
00:03:19
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So first of all, they're small. They're strange. They don't fit the model. They don't fit the narrative. They're sticky, so they keep on reoccurring. They oftentimes come from these edge cases, from power users. You see them in trade magazines. You see them on Discord channels and on Reddit channels.
00:03:41
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They're not going to be publicized on the mainstream media. And they're certainly not going to be publicized in the K-1 reports that are given to shareholders. But there is a clue there, by the way, because if the divergence between the K-1 and what's happening in real life is occurring, that is a telltale signal of a weak signal.
00:04:03
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So if they're saying they're going to launch a new brand in a new direction, on their K1, and then you see three months down the road, six months down the road, they're not doing that, they're going in a different direction, that is telling you that there's something going on behind the scenes.
Examples of Weak Signals in Growth
00:04:19
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So I'm going to give some examples of some weak signals here that will help to give clarity to what these things mean, how to read them, and ultimately the power of them.
00:04:30
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The first of which we'll talk about is women's sports surge. So what happened in 2023 is there was a very large exhibition at an Iowa football stadium.
00:04:42
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ah for women's basketball. And it drew 55,000 people, set new goals, set new ratings. And that was the early week signal.
00:04:53
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Because two years later in 2025, you're seeing the WNBA attendance at an all-time high. You're seeing the whole rights momentum. You're seeing that the NCAA moved to take the 2028 women's final four to an NFL stadium.
00:05:10
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You're seeing all these things at play. And if you're in this domain, if you're in the world of sports, that weak signal could give you some clues to how you might position your branding, your marketing.
00:05:24
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For instance, sponsorship, um that whole element is growing in that domain. The venue scale up is growing. Maybe there's some pipelines with the youth sports you can be part of. So those are all early signals that showed you a bigger trend happening in women's sports.
EV Industry and Charging Standards
00:05:42
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The second example has to do with EVs. So within the EV domain, you saw 2023,
00:05:53
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Ford and GM adopted Tesla's North American charging standard. So this is the the connector, the charging platform, kind of a big deal. But it was in the news, but it wasn't like front page news.
00:06:07
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Now, two years later 2025, You've seen the the supercharger access opens broadly. Consumers are now expecting to have this charging situation by Tesla in whatever car they're driving.
00:06:20
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And the experience has been has been simplified considerably by it' essentially, you know, making everything common. And so the early signal was the adoption by Ford and GM.
00:06:33
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The trend was now these superchargers will charge any car anywhere. And so you as a an ah entrepreneur could see this as a way to deploy more hardware, maybe payment structures, maybe build out um gas stations or fuel stations that would include these charging stations, have a coffee shop.
00:06:53
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And so these are all early signals that led to a bigger trend. The last one I'll talk about is in the retail media network.
The Rise of Retail Media Networks
00:07:02
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So back in 2019, Amazon was experimenting with this thing called a retail media network, where they essentially put ads right towards the end of people checking out by buying their products. so you go to Amazon, you you buy something from Amazon, and you're going down, you're adding things to your cart, you're about to check out, and on the right there, you'll see ads for similar products.
00:07:26
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So then you can make a decision of, oh, this is a cheaper product or this is a cheaper buy, or you know I really prefer this other brand. And by having it at the very end, you're able to then make a decision. And the the retail giants are all adopting this now.
00:07:43
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But in the early days, 2019, it was a pioneering process. And so if you fast forward to today, Everybody's got them. In 2025, you have Target, Walmart, Kroger, Home Depot. They all have these these retail media networks where they are going to the brands and putting their sponsored ads right at the end, right when people are making the decision.
00:08:09
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If you're in advertising, you know you want to have these touch points all along the process. of decision-making buying product A product B. And by having it at the checkout approximate placement, you're getting them at the final step.
00:08:24
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Retailers love to sell this. The return on investment, the ROAS is as it's called, is much greater. And it's basically something that is now ubiquitous. It's everywhere.
00:08:38
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But in 2019, it was just this tiny blip on the radar, and now it's everywhere. So these are all elements of of of weak signals that are clear to see.
Misleading Weak Signals
00:08:50
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Now, there are times when weak signal will fool you. The first of which I'll talk about Clubhouse. do you remember Clubhouse? That was a live audio platform that was really touted as a new social media platform. Everybody was jumping on it. what happened is it had some early traction, but it couldn't survive when the other platforms, the Instagrams and the Xs and other things started to do similar things. It very quickly, it killed Clubhouse.
00:09:23
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And so that was an early signal that did not show a bigger trend. and And I'll talk about why that is is um possible or why that really happened in ah few minutes here.
00:09:33
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The second example is the NFT mania that happened in 2021. Do you remember the bored ape? Do you remember the the NFT art called Every Days that sold for over $69 million? dollars Well, that whole market crashed.
00:09:52
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And that same, i did some research earlier today about that piece of art that sold for $69 million. dollars Of course, this is an NFT. So it's like not even real, not even tangible. It's something just lives on the blockchain.
00:10:05
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That $69 million dollars piece of art is now worth less than $100. Believe it or not, I don't know, it's out there, but the whole NFT market crashed 97, 98, 99%.
00:10:19
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And the Bored Ape and all the things that the big artists like Justin Bieber bought are basically worthless. So the lesson here is that early speculation can mimic demand, but you've got to track utility. You've got to track repeated use. You've got to track um how fast this is being adopted.
00:10:37
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And these are all elements that can throw you off the trail.
Peloton's Pandemic Surge and Decline
00:10:43
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The last example I'll use is Peloton. Peloton had a major pandemic spike back in 2020, 2021.
00:10:51
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Their sales were exploding. They were 172%, quarter over quarter kind of growth. And it was massive. And so what they did is they re they invested in new people, new facilities, new manufacturing, new software.
00:11:07
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And what happened is once the pandemic started to subside, that spike of demand started to come down. And after that, they had massive layoffs.
00:11:18
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The CEO exited. And the lesson here is that you've got a really do a stress test over time. And you've got to understand that why things happened. So looking at the pandemic, seeing that as a punctuated equilibrium, as a moment in time that really created this spike,
00:11:38
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that was not really, didn't have an enough wherewithal, enough momentum to keep it going. um The idea of this punctuated equilibrium was first introduced by one of my mentors and former business partner, Adam Hartung.
00:11:52
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And when I first heard about the idea, it was mind blowing that there are these moments in time where things occur in the market that can fundamentally shift the way things happen afterwards.
00:12:04
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Other versions of this are when the encyclopedia was taken from your shelf on the wall to a CD and then a DVD. And then ultimately they are a thing of a past because we can look on our computers and have the the world's information really at our fingertips in a different way.
00:12:23
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All right, let's go back to what happened with Starbucks. So, Is what happened to Starbucks a true weak signal of bigger things to come, or is it just restructuring and cleaning house?
00:12:38
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So if we look at the the headlines, you know there's protests in Seattle, and there's all this thing about downsizing, people freaking out. you know With Nickel having the $100 million dollar ante here to lure him to make very strong decisions,
00:12:55
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there is a way to read this in kind of two different ways.
Local Market Dynamics and Weak Signals
00:13:00
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The first way is very ah firm specific. You're looking at some optimization within the way that they're doing business.
00:13:09
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These stores were maybe underperforming, maybe they grew too fast and now they're kind of pulling back. So these are all things that happened within the um the growing of a corporate giant.
00:13:22
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um Starbucks has 18,000 stores nationwide. So closing 400 is a very minimal amount. And if you look at worldwide, there are about 32,000 stores. So this is very minimal.
00:13:34
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It's kind of a blip on the radar, nothing major. And so in in some ways, there is a lot of indications saying this is only bloodletting. This is only cleaning house.
00:13:45
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But the smaller part of this, the weak signal that can really show a bigger shift has to do with reading between the lines. So if you look at what the Starbucks was doing right at the pandemic and then slightly afterwards, they made a decision to pull a lot of the couches and big tables out of their their shops.
00:14:09
Speaker
remember many times as a sales guy out on the road, i would have meetings at Starbucks. Well, I went to a Starbucks about three weeks ago to pick up some things, some coffee with my son. and this Starbucks that I'd been to in the past that had beautiful couches and like a nice layout was completely barren except for three small two top tables.
00:14:31
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And so you had all this space and it was clear that they were pushing the idea of running in, getting your coffee, running out. So that to me was a big so ah signal, an initial week signal.
00:14:43
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The other signal has to do with at least our market here in Tucson, very we're less than a million people in this community. ah right ah around a million. And so there is the resurgence of lots and lots of smaller boutique coffee shops that have opened up and are no prevalent.
00:15:01
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So there's Decibel Coffee, there is Sonoran House Coffee, there's Pretty Something Coffee, um there is Black Crown, and I can go on and on and on, Roadrunner. um And of course, there's a ah kind of a smaller... um I wouldn't say as big as Starbucks, but they have a couple understores called BlackRock that is now on every, you know, there's a seven or eight in town.
00:15:22
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And so the idea here is that in this micro market, it could be that there is a case for ah Starbucks going downhill in this market.
00:15:33
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Now, does this signal a complete downgrade from the entire mothership? Likely not. But in a micro market, this is showing some signals of a things to come that may not be plausible to invest in Starbucks as it pertains to the local market.
00:15:52
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So these are all elements that need to be taken into
Establishing a Weak Signals Review Process
00:15:55
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account. Weak signals um as a tool are very powerful. Think of it more as an invitation to question rather than truth.
00:16:06
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Weak signals are hints that you read and they can be a level of of um certainty with these. So I'm going to give you some points about how to read these weak signals without fooling yourself.
00:16:20
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So the first thing you want to do is you want to establish a a signals review process, whether that's an internal process you do yourself, if you're in a solopreneur or a small company, or maybe you have a ah ah company you run and you can invite your um a few folks in your team to a monthly process where you look at weak signals.
00:16:42
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And so the second thing you want to do is you want to scout the fringes. You want to search local. You want to look through Reddit, Discord channels. You want to look at what's happening with the suppliers that are feeding up to this particular company where you see a weak signal.
00:16:57
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And the third thing you want to do is you want to verify the source. If you go to these Reddit channels, the source is always, you know, not always um illustrated. so you want to make sure that you're actually pulling from the right place.
00:17:09
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Another thing you can do is look at live data if you're able to. If you're able to go down to the Starbucks store and talk to the employees, if you're going to, in your own local market, if you've got something you're really struggling to find find out if it's a weak signal line, you can go talk to people and understand what's happening.
00:17:25
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ah Trade shows, trade associations, those are all places where you can gain clues. And the fourth thing you want to do is you want to then write them down and stack them.
00:17:36
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So the idea here is you want to create a database. It could be as simple as a anth Excel spreadsheet or a journal where you write down, OK, on this particular day, this is what I what i saw, what I heard.
00:17:48
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And then the fifth thing you want to do is you want to score them. You want to give some score between one and five on the following topics. Magnitude. So this is how big of an impact it has.
00:18:00
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Momentum, which is ah how fast how fast is it happening. Multiplicity. So how many independent sources are you garnering this information from? And essentially match.
00:18:12
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So how close does this meet your strategy or your concept or your idea? You do those four things, you measure, and then you track over time. And if it's more than 12, 13, then you know that there's something really there. If it's less than 10 or so, then it's just a blip on the radar.
00:18:30
Speaker
um And then the seventh thing you want to do, or sorry, the sixth thing you want to do is you want to run the idea of a steel man. We talked about a straw man before. When you look at your opponents,
00:18:42
Speaker
um whatever their message is in the straw man is you identify one element of that message, which you can artificially blow up and make bigger. That's an overarching, almost like a broad brushstroke.
00:18:56
Speaker
So then you can beat it down more easily. The steel man is the exact opposite. We want to look at the other side and figure out the strongest possible defense they have and really challenge that. So you can ask yourself, if I'm wrong, what else can explain this particular thing?
00:19:14
Speaker
So rather than say, if I'm If I'm right, this is why it's going to happen. And what you're doing is you're introducing confirmation bias. So you really want to look at if I'm wrong, what else could have explained this?
00:19:27
Speaker
Could it be seasonality? This is something that comes in seasons. Could it be some policy from the government? Could be some accounting issue? Could it be a lawsuit at play? So there's other elements that could be at play.
00:19:38
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But if you use a steel man, you'll actually begin to not only ah dive deeper into the weeds, but it'll give you more idea of what could possibly be going wrong.
00:19:50
Speaker
And the idea is you want to sort of disprove the idea of of a weak signal, because if you misread a weak signal, you can lead down the road of the NFTs and clubhouse, like I mentioned before, which is sometimes sometimes often worse than staying in your course and and staying in your own lane.
00:20:09
Speaker
um The last thing you want to do um is you want to ah Run tests and understand. so say, for instance, you're looking at the Starbucks model and you decide in the local market that they are going downhill.
Forming a 'Blank Space Team'
00:20:24
Speaker
So you can test things out. You can put an ad out for baristas. You can get people in your door. You can start to do some social media experiments. And you want to do some some cheap time box experiments to either validate or discredit your your strategy, your thoughts, before you actually commit to a full-blown direction.
00:20:44
Speaker
Now, while at Spark Partners, we had developed a tool for ah creating a blank space team. So Richard Branson created the idea of a white space team. We called it blank space team, where essentially you take your your company has a ah core value that they're delivering to their customers through their value delivery mechanism.
00:21:08
Speaker
But you start to notice that ah another market, an adjacent market, is sort of calling your name. There's some things there. Maybe there's a weak signal that it's it's leading you in a new direction. So the idea of a blank space team is that you create a small team among your company and you you look at these five M's, the first of which is ah mission.
00:21:31
Speaker
You define a mission for this team to go out and and understand whether or not this new weak signal or new market is something you want to explore. Mission is number one.
00:21:41
Speaker
Second thing, metrics. You want to define what success looks like in that departure into that new domain, that new weak signal, whatever it is. So you've got the the mission.
00:21:54
Speaker
You have the metrics. The third thing is the management. Who's going to run this? Who's going to operate this? How are they going to operate? What are the the reporting structures back to the mothership? Very important.
00:22:05
Speaker
The fourth is the money. You've got to make sure that this group is well capitalized so they don't run out of money in the middle of it. And you've got to be committed to this, by the way. You can't just sort of halfway go in, halfway go out. You've got to be full bore in that the the fact you want to explore this new market.
00:22:21
Speaker
And the last thing, the most important thing, the one that I failed to do when I was a CEO running my own company years ago, is you've got to build a moat around that team, around that process.
00:22:33
Speaker
What happened to me is we were creating a new kind of app for the wine industry. And I did the four of the five. I had a team together. our mission was to revolutionize the way people consume wine and have some data from their phones. And it was this cool concept.
00:22:52
Speaker
So we did that. We had the money allocated. We had the team allocated. We had the metrics, but I didn't build a moat. So when our main customer in the core business came knocking, they wanted a new project to be worked on.
00:23:06
Speaker
Went back to my team that I had created. if There was ah only like a few people. I plucked them out of that team and I put them in the um core customers team thinking that, okay, we'd go at this for three, four months. And then we'd go back to the original um new departure team.
00:23:26
Speaker
Well, it didn't happen that way. I brought them over to the mothership and after that project was over, they went on to another project and we never actually went back and finished the original new departure.
00:23:38
Speaker
So the mode is extremely important and it's something that needs to be kept paramount to your decision-making.
Cognitive Biases in Signal Interpretation
00:23:46
Speaker
So let me talk about a couple misreads here that you can make.
00:23:51
Speaker
So the idea of, The recency and virility bias. So loud does not mean likely. The idea of something that's all over the news, it's not likely a weak signal.
00:24:06
Speaker
um The idea of survivorship bias, this is where you only hear about the winners. You don't hear about the losers. That can easily detract you away from um reading correctly ah whether something is a weak signal or not.
00:24:20
Speaker
There's also the category fallacy where something is very firm, specific, and not talking about an entire industry or an entire trend. For instance, Starbucks closing some stores, even if they they close 1,000 stores, that could be something that's only in the coffee industry.
00:24:36
Speaker
Now, if they close 5,000 stores, now you're talking about things that could be affecting the entire economy. Maybe there's other things at play. So you've got to really look at the ones that are category specific.
Conclusion: Opportunities in Weak Signals
00:24:48
Speaker
And so to close off today's podcast, weak signals aren't predictions. They're invitations. This is an invitation to explore ah potential new launch into a new trend.
00:25:05
Speaker
This is your edge, and you've got to be open-minded and disciplined. The discipline part comes in keeping track of these weak signals over time. It's very easy to read something on the news and then dismiss it.
00:25:19
Speaker
It's very easy to have a conversation with somebody and then dismiss it. The discipline comes writing that down and revisiting it in two weeks or months later and see what the trend line looks like.
00:25:32
Speaker
Because if you're seeing more and more chatter in that direction, then there's likely something there behind the weak signal. But if you don't remember whether or not you talked about it, then it's it's a moot point. Whether Starbucks is reshaping their cafe framework or the you know well women's sports is rewriting their future, those are all elements that could have been read early on.
00:25:55
Speaker
The idea with Starbucks is left to be um determined. and your call to action as a business leader is to not only think about what we've talked about today with the weak signals and how they could be in affecting your particular market,
00:26:11
Speaker
But also send this to somebody who is always thinking about um the future or especially those who notice things first. I have friends that are in my domain that that are very good at picking up small clues.
00:26:25
Speaker
If you send them this podcast, it'll give them something to focus on. And then you can use them as as a resource for these monthly meetings when you talk about weak signals.
00:26:36
Speaker
um Ultimately, it is a very powerful tool. Steve Jobs was really good at this tool, being able to look at things. And you know they said that he can look around the corner. Well, a lot of that had to do with weak signals. A lot of that had to do with understanding the market and truly understanding the customer.
00:26:53
Speaker
We're going to do an entire podcast where we really dive deep into what it takes to truly understand the customer. Understanding the customer does not mean that you simply do marketing surveys, that you sit around with potential customers or you send some survey out on social media.
00:27:11
Speaker
That's not knowing the customer. Those are just surveys. And to understand, to deeply understand the customer, there's actually a process, there's a science to it, and it's an art in some ways by being able to look behind the corner,
00:27:26
Speaker
but it's foundationally built upon some true science. And folks like Elon Musk, like Steve Jobs, are trendsetters in their own way in understanding and reading the tea leaves so that they can make decisions for their companies and ultimately show big time success.
00:27:44
Speaker
Thank you for your time. And we'll talk to you later. Cheers.