Sunday, July 12, 2020 RIPEH-E-B FOR
CHANGEAT ITS DIGITAL OUTPOST, COMPANY REMAKES ITSELF FOR THE HIGH-TECH AGE
CLIMATE CHANGE USAA WEATHERS BARRAGE OF STORM CLAIMS MICHAEL TAYLOR 5 YEARS LATER, COLUMNIST STILL HATES TESLA STOCK
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Presented by: Your Company Here USAA is feeling the heat from climate change
GREG JEFFERSON made combined profits of $48.1 Commentary billion in the first nine months of 2018, their second-biggest haul since 2008. But just as the fact that it’s still snowy in some places doesn’t mean global warming is a hoax, the insurers’ net income doesn’t mean that storms and wildfires aren’t becoming more perilous. The effects of climate change are L ast March, one of USAA’s gnawing at their core business. social media producers posted Insurance companies have this blurb on Twitter: “During responded by hiring more cli- the past five years, floods have mate experts, changing their affected every single state — even catastrophe models and pushing those considered low-risk.” up premiums in higher-risk The tweet invited readers to communities. USAA probably use a tool on the San Antonio has, too, but Hartwig declined to insurer’s website to gauge their discuss specifics, saying, “We flood risk. view our efforts as competitively You’ve probably already sensitive.” guessed how it played out. A Moody’s Investors Service, for couple of the more predictable one, still likes USAA. In a May 8 responses: “No climate change report, the bond-rating agency though!” and “Funny so much Associated Press file photo gave the company’s insurance cold and snow in a warming Wildfires are among the natural disasters increasingly gnawing at USAA’s bottom line. business a rating of Aaa, or ex- climate.” ceptional. It cited USAA’s “effi- Climate change deniers are deadly Camp Fire in Northern is hard to come by. include but not limited to fi- cient operations and its strong going to deny, and some of those California in November 2018. But we know the insurer paid nancial, is part of the consider- balance sheet,” as well as its who accept that global warming Natural catastrophes bruised more than $2 billion in claims in ation by the board” in determin- “market leadership” in serving is real are going to be zealots — USAA’s results in 2018. Profits 2018 for the Camp Fire and other ing the size of the annual bonus, active-duty and retired military and will come off just as cartoon- slipped from $2.4 billion the year wildfires, two hurricanes and USAA spokesman Matt Hartwig personnel and their families. ishly as their foils. before, even as revenue hit a other catastrophes. As Express- said. But Moody’s analysts included Whatever. record $34.2 billion. The compa- News Staff Writer Patrick Danner Clearly, no one is weeping this caveat: “Tempering these What’s key is that storms, ny will release its 2019 numbers reported, it was third straight over USAA employees’ slightly strengths are USAA’s volatile flooding and wildfires have been in the spring. year for USAA in which claims diminished bonuses. That’s (property and casualty) results getting worse, and USAA, which The 2018 results, however, stemming from natural disasters because, unlike many other San in recent years, reflecting in- employs 19,000 people at its aren’t a clear window into how surpassed $2 billion. Antonio-area workers, they’re dustry-wide catastrophe losses North Side headquarters-fortress climate change is affecting When USAA employees getting bonuses. and fluctuating personal auto and other local offices, has been USAA’s property and casualty learned a year ago that their The annual payout, in addi- loss cost trends.” trying for years now to adjust to business. Those figures include bonuses would drop to 14.8 tion to the $2.4 billion that USAA The fallout from global warm- the new reality. Just like every the performance of the compa- percent of annual pay from 16.2 returned to policyholders last ing is obviously a greater threat other major insurer. ny’s investment management percent the year before, their year in rebates and dividends, is to humans than to corporations. Of the 10 costliest wildfires in arm and its federal savings bank, bosses cited disaster claims as a sign of the company’s financial But San Antonio’s second-largest U.S. history, as measured by as well as its life insurance line. one reason. strength. So is its net worth of employer — a big part of whose insured losses, the top five broke And there’s this: USAA isn’t a The latest bonus, announced $35.5 billion. business is tied to the weather — out in 2017 and 2018, according publicly traded company — it’s a in January, slipped again, to 14.5 And no one’s weeping for the is feeling the heat. to the Insurance Information member-owned mutual insurer percent, the lowest since 2008. property and casualty insurance Institute. The worst was the — so a detailed financial picture “Overall performance, to industry as a whole. Insurers [email protected] San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J5 J6 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 SA INC. THE SMART MONEY S.A.
Presented by: Your Company Here 5 years later, Tesla still not a good stock to own
MICHAEL TAYLOR himself from tweeting nonsense, Commentary earning rebukes and a $40 mil- lion fine from the Securities and Exchange Commission, and law- suits from fights he picks unnec- essarily. He also employs his knack for distracting the media to change the subject whenever they attempt to ask about Tesla’s lack of profit. Oh, yeah, and about that prof- The most important rule for it. Tesla has never turned an writing a business column — at annual profit in nearly 10 years as least my most inviolate rule — is a public company. to never, ever forecast or make Tesla’s market cap at $98 bil- “market calls” on individual lion is larger than Ford and Gen- stocks. eral Motors combined. I have broken this rule only Let’s compare those compa- once in my 5½ years. It’s time to nies to Tesla. Ford sold 5.9 million break my rule again. On the same vehicles in 2018 for a profit of $3.8 stock. billion. General Motors sold 8.4 Some background: I last tucked million vehicles in 2018, earning a my first-and-only individual-stock Ringo H.W. Chiu / Associated Press profit of $1.9 billion. Tesla, which forecast into a column in March Tesla CEO Elon Musk’s company has never turned an annual profit in nearly 10 years. has never turned an annual prof- 2015. it, sold 367,500 cars in 2019. The point of that 2015 column w hile stepping into the batter’s lesson is that you, too, should as the Wall Street phrase goes, Tesla has sold 891,000 vehicles was to highlight the unpleasant box for my inevitable home run, I never forecast individual stocks. “The market can remain irratio- since it began manufacturing. fact that “sin-investing,” especial- wrote, “Would a few people mark You will be emotionally in- nal longer than you can remain Total. In other words, Ford and ly in a nasty tobacco company their calendars for five years on vested in a way that hurts your solvent.” General Motors sell more cars in such as Altria (formerly known as Tesla and let me know how I did chances of building wealth. You I was correct about Tesla then, any given month than Tesla has Philip Morris, ticker symbol MO) with my call? Because I AM SO will buy, or sell, that stock too and I’m still even more correct! I ever sold. I could go on, but you has been extraordinarily profit- RIGHT.” frequently. You will let fear and will now double down on all of get the idea. Tesla is a stock that able over the past 40 years. Anyway, time flies. It’s five then greed cloud your judgment. my errors. mostly exists in our collective But that wasn’t my stock fore- years later. You will look up that stock Unlike, say, software tech- imaginations. cast. Instead, I contrasted MO I’ll save you the hassle and let price exactly at the moment nology companies that enjoy It turns out that Wall Street with green-tech market darling you know that Tesla stock in- when you should be enjoying infinite scalability, building an pros mostly agree with me about Tesla (ticker symbol TSLA), the creased 170 percent since then, your daughter’s ballet recital. auto manufacturer is highly ex- Tesla. It is the most “shorted” sexy electric-car company that from $200 per share at the time (How many times do I have to tell pensive to scale. It takes cash. large stock on the U.S. stock mar- combines virtue-signaling for of my home-run call to $569.56 you to put your phone down?) Tesla has burned billions in cash ket, meaning sophisticated in- reducing your carbon footprint per share at Wednesday’s close. You will read headlines that con- to build plants in Nevada and vestors have bet against the share with 0-to-60 acceleration in 1.9 The market cap has expanded firm your preconceived biases, Shanghai. The competition from price, finding it as absurd as I do. seconds. from $25 billion to $97 billion. It’s and you will discount headlines other auto companies is intense Shorting means hedge funds I wrote the following about up 30 percent just this year. Tesla that contradict them. and global. Regulation is massive. have sold shares at current prices Tesla in March 2015: “Tesla Mo- will announce fourth-quarter You can guess how I know all Innovation, for which Tesla is in anticipation of buying back tors, to name one public compa- 2109 results on Wednesday. these things about you. known, is expensive to imple- shares when they drop in the ny that I’m reasonably certain Having broken my inviolate Beyond the emotional reasons, ment. The company has nearly future. Shorting Tesla has been, will be dead in five years, despite rule five years ago, it is only right you should avoid forecasting run out of money more than once as you can imagine, one of the its $25 billion market cap, is an and just that I have both my hy- because you will also be wrong. in the past five years, even by the most spectacularly unprofitable innovative company. But that pocrisy and terrible market call You will even be wrong for all the admission of its CEO/evangelist trades of the past few months. doesn’t make it a good stock to publicly mocked. right reasons. Like me. Elon Musk. Some people never learn. Like own.” But that’s not the main lesson Tesla, by all rational analyses, And then there’s Musk himself. me and you, the pros also Then, to further metaphorical- you should take away from this has always been a stupid stock. Ugh. As clearly brilliant and vi- shouldn’t be forecasting individu- ly point to the bleacher seats shameful episode. The main It’s been overvalued forever. But sionary as he is, he can’t stop al stocks. San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J7 J8 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J9 SA INC. THE SKYLINE
Presented by: Your Company Here Austin developer moves into Pearl area
By Madison Iszler STAFF WRITER
A n Austin firm wants to build a 10-story mixed-use development with 325 units across the San Anto- nio River from the Pearl. Sabot Development is proposing putting the project on about 1.5 acres bounded by East Euclid, East Myrtle, East Elmira and East Locust streets. It would include 14,000 square feet of retail and about 400 parking spaces. The development, expected to cost upward of $100 million, is the firm’s first in San Antonio. Jim Young, a San Anto- nio native and president of Sabot, said he visited the Pearl complex several years ago and has been eyeing the area around it. “We see multifamily as a future for a lot of peo- ple,” he said. “A lot of baby boomers and millen- nials alike, they want to enjoy the camaraderie of Courtesy of the Historic and Design Review Commission living with a diverse set of neighbors … and they Sabot Development has “a first-class architectural piece of a large mixed-use seek to live in apartments proposed constructing a development,” he said. development that in- because of the high level 10story mixeduse development cludes office space and of experiences they get with 325 units near the Pearl. Pipe Dream Hotel? private residences.” The with their neighbors.” A New York-based com- hotel itself is to feature a The firm’s plans involve expects to close next year mission gave its initial inconsistent with our pany plans to open a rooftop pool deck, two demolishing several build- and start work in the approval to the firm’s neighborhood in height 217-room, 25-story hotel street-level restaurants, ings on the site, which second quarter of 2021, plans. and density,” said Scott dubbed Dream San Anto- fitness facilities, meeting currently is home to co- Young said. It currently is Several neighborhood O’Brien, who lives in the nio along the River Walk. space and a bar and working business Cubes at not seeking incentives for residents and property area and added he was Whether it’s nothing lounge. the Quonset, a storage the project, he added. owners spoke at the Zon- worried about parking but a pipe dream remains The company declined facility, a construction The city’s Zoning Com- ing Commission meeting, and privacy. to be seen — the company to disclose an address or company, a real estate mission OK’d a request with some voicing their Richard Moore, presi- won’t reveal who’s devel- name the local developer office and a food truck. Tuesday to rezone the support for the project dent of the Tobin Hill oping the project — or handling the project. The The project excludes lots property to allow for the and its design and others Neighborhood Associa- where. developer still is raising at East Myrtle and East multifamily development expressing concerns tion, said Sabot repre- In an announcement funds for it and owns the Elmira. with retail space. Last about how it would fit sentatives met with local this week, Dream Hotel land the hotel will be built Sabot is under contract month, the city’s Historic into the area and parking. residents and asked for Group described the bou- on, spokeswoman Katie to buy the land. The firm and Design Review Com- “The rezoning is quite input. The project will be tique hotel as “the center- Fontana said. J10 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J11 SA INC. THE WARY TRAVELER Planes gets cozier with more seats, tighter legroom
By Randy Diamond es, the airline says. STAFF WRITER Even first-class space is being reduced, a reduction to 37 inch- I f your knees hit the seat in es from 40 inches on some front of you on your next Amer- American aircraft. ican Airlines flight, rest assured “If you are going to fly Amer- — you’re not growing. Passen- ican in upcoming months, ex- gers’ legroom is shrinking. pect to be cozy with your neigh- Fort Worth Star-Telegram file photo American Airlines, the world’s bors,” said Brian Sumers, senior Dallas-based American Airlines is trimming the legroom in coach to 30 inches. largest carrier and the second aviation business editor at travel largest at San Antonio Interna- industry website Skift. even most pressing, concerns for ence last month. Asked about American’s qual- tional, is in the midst of a multi- At San Antonio International, passengers on American in re- According to data provider ity of service, Koos noted the year overhaul of its entire fleet. American mainly flies two plane cent months. Flightaware, American flight retirement of Kerry Philipovitch, That includes increasing the models — the Boeing 737 and the A labor dispute between the cancellations at San Antonio senior vice president of custom- number of seats on each plane, Airbus 321. The program to in- airline and its mechanics union International in September de- er experience, and the appoint- with the obvious result: less crease the number of seats on led to an unofficial work slow- clined to 3. ment of new officials to oversee space for passengers. the Boeing 737 from 160 to 172 down this summer as mechanics Koos said in a statement, operations and network strategy. The Dallas-based airline is began several years ago. The refused to certify that planes “(We) have worked to improve Joe Brancatelli, who runs the trimming legroom in coach to 30 retrofits were suspended over were in working order, leading our operation” and that on-time business travel website Joe Sent inches, which is the amount of the summer because America to hundreds of cancellations. arrivals have been increasing. Me blames American’s problems space you have before your needed all its planes to make up June was an especially bad American has been near the on top executives like Kerr and knees bump into the seat in for the grounded Boeing 737 month at San Antonio Interna- bottom of airlines in terms of his boss, chairman and CEO front of you. Max jets. tional for American, with 5.31 on-time performance in the Doug Parker, both of whom were Airlines have been cutting American spokeswoman An- percent of its flights canceled, or latest data from the Bureau of the top executives at US Airways legroom for years, and cramped drea Koos said the retrofits on 39 of 735, the Federal Bureau of Transportation Statistics. More before it merged with American conditions have become the the Airbus 321 began recently — Transportation Statistics reports. than 14 percent of its flights in 2013. norm. Legroom of 31 to 32 inches only one plane has been refur- In comparison, Delta Air Lines departing out of San Antonio “We all know how they ran US is standard on major carriers. bished. The Airbus overhaul will and United Airlines each can- International were late by more Airways — it was a terrible air- While 30 inches isn’t unheard add up to nine seats, for a total celed two flights that month. than 15 minutes in August. How- line,” Brancatelli said, adding of, no airline has revealed plans of 190 seats. The number of American ever, Flightaware data show that US Airways was known for as ambitious as American’s to go American has nearly 1,000 cancellations in August dropped American’s late flights had de- poor customer service and un- below 31 inches on domestic planes in its fleet, and airline after a federal judge ordered an clined to 10.7 percent in Septem- comfortable planes. routes. officials have not said how long injunction against the mechan- ber. While passengers are losing American’s legroom does have it will take to complete the reno- ics. The carrier still canceled 15 Another problem area for legroom, the renovated planes an exception: flights between vations. flights, or more than 2 percent of American over the past year has also include larger luggage bins New York and Los Angeles and The carrier also is squeezing its flights that month, at San been damaged and lost checked and a power outlet at every seat. San Francisco. restroom space. American’s new Antonio International. baggage. The company scored Brancatelli said the larger bins You won’t be able to pay your configuration reduces the rest- Throughout its entire system, badly compared to other airlines speed up boarding and end way out of the situation, at least room size in coach to 24 inches, American canceled 2.9 percent between January and August, fights over limited luggage space. not entirely. taking away 7 inches, to help of its flights in August, the worst federal statistics show. Of the 17 And if American speeds the American’s Main Cabin Extra accommodate the additional of any airline besides Spirit Air- carriers tracked by federal offi- boarding process, it might be seats, which travelers can pur- seats. lines, which had a 3 percent cials, American consistently able to add an extra flight to an chase for an extra fee or fre- “You really have to practice cancellation rate. placed in the bottom three in the aircraft’s schedule, increasing quent fliers receive for free, still yoga or gymnastics to squeeze “Unfortunately, during the eight-month period. It was last profits. will be available — but their in,” said Scott Mayerowitz, exec- summer there was an illegal among major airlines. “Its all part of an effort to legroom is shrinking, too. Previ- utive editorial director of the work action … and it slowed In June, more than 1 percent maximum revenue, “ said Bran- ously, these seats had 6 inches of travel website Points Guy. down our airline,” Derek Kerr, of checked baggage was report- catelli. “Its great for American extra legroom; on some planes, Less legroom and tighter American’s chief financial offi- ed delayed, lost, stolen or bro- Airlines but not as good for the that’s being cut to 33 total inch- restrooms aren’t the only, or cer, said at a Skift travel confer- ken into. customer.” J12 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 SA INC
COVER STORY Wth digital outpost, H-E-B embraces shifts in shopping
By Dwight Silverman when the 400-plus coders, devel- to Favor, an on-demand delivery STAFF WRITER opers and marketers in the build- startup that H-E-B bought in early ing are more than ready to re- 2018. Bath was its president and USTIN — When you fresh and relax. (There’s a kom- CEO, a title he retains. At the walk into the build- bucha keg for teetotalers.) time, it was H-E-B’s first-ever ing at 2416 E. Sixth That all this is found in an acquisition, and it was a bet that ASt. on this city’s Austin technology hub is not combining a pure technology trendy East Side, surprising. What may come as a company with a venerable gro- it’s immediately clear that it’s a shock is that the company that cery retailer would jump-start tech workplace. Visually, it’s leased this 81,000-square-foot the latter’s efforts to survive and almost a cliche. former recycling center is H-E-B, thrive as its business undergoes Scores of young women and Texas’ biggest regional grocer. digital disruption. men are glued to computers — Here — on a street where its “You can learn a lot from a many with two or three monitors neighbors are software devel- pure-play technology startup and — in sprawling, open-concept opment firms, graphic design apply that to the core business,” office areas. Coffee and snack houses and trendy restaurants Bath said. “That’s exactly what bars with free food and drink frequented by digital-native mil- we have done.” abound. There’s a rock-climbing lennials — the supermarket chain wall in the gym and wall-mount- has drawn a tech line in the sand. Embracing change ed bicycle racks. Conference “It’s a no-brainer to set up a The grocery business has long rooms have red or green lights to presence here,” said Jag Bath, had a reputation of being resis- signal if they are occupied or H-E-B’s chief digital officer, point- tant to change, but that may not available. ing out that Austin, a major out- be deserved. The industry has Creature comforts are every- post for Google, Facebook, Apple adopted technologies that made where. Carts in unisex restrooms and others, has a critical mass of sense as they came along — think are loaded with mouthwash, technology talent. self-checkout kiosks or the com- bobby pins, hair ties, moisturiz- “When you have conversations puter-managed inventory control er, even individually wrapped about tech, it’s all about the pioneered by Walmart. In Europe toothbrushes in multiple colors. talent,” he said. In other words, and Japan, online shopping and Oh, and don’t forget the beer. to compete for that talent with on-demand delivery have been Look to the right once you’ve the tech giants that lumber popular for a decade, even cleared security and there’s a bar around Austin, you need a work- though startups offering it fizzled sprouting multiple taps in front place as cool as theirs. in the U.S. in the dot-com bust of of a neon sign that reads “Beer To be clear, only half of the the early 2000s. Friday.” It’s lit up at 4:30 p.m. on building is occupied by H-E-B. But nothing sounded a digital the last day of the workweek, The rest of its real estate belongs H-E-B continues on J14 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J13 A INC.
Young men and women work seem glued to their computers in the sprawling, open-concept office areas at H-E-B Eastside Tech Hub in trendy East Austin.
Godofredo A. Vásquez / Staff photographer J14 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 SA INC.
H-E-B from page J12 “The busiest times are be- tween 7:30 and 10 a.m., and 3 to clarion call like the $13.4 billion 7 p.m.,” Canty said. “We can acquisition of Austin-based process up to 60 orders at at a Whole Foods by online retail time.” goliath Amazon in mid-2017. On a cold, blustery December “Amazon buying Whole Foods day, personal shopper Brenda woke a lot of people up,” said Flores worked the produce sec- Katherine Black, a principle tion, putting fruits and vegetables analyst for consumer and retail into the compartments of a cart strategy at KPMG. “Amazon was a she pulled from the cooler. The big catalyst in the marketplace.” chilled shelves of the cart — With its expertise in online which can hold orders for a doz- shopping, its emphasis on rock- en customers — help keep the bottom pricing and its ability to produce fresh. leverage its Prime membership Elsewhere in the store, other program, Amazon instantly be- personal shoppers — wearing came a force to be reckoned T-shirts that are the same blue as with. While grocery companies Favor’s delivery drivers — are had already been dabbling in fulfilling other parts of custom- online initiatives, the acquisition ers’ online orders. An order may of Whole Foods by the company have three or four shoppers upending retail created a new Annie Mulligan / Contributor working it, and then its items are sense of urgency. Employees use an program to fulfill curbside orders. For custotmers, H-E-B also is testing an app bagged and combined for deliv- It was against this landscape allowing cashierless checkouts. ery or pickup. that H-E-B bought Favor Delivery H-E-B now has 200 stores in February 2018 for an undis- Now, you can order groceries at stores in San Antonio and would a software developer want statewide that offer Curbside, its closed amount. At the time, and arrange delivery or a pickup Austin. to work at H-E-B instead of, say, pickup service. Customers drive Favor claimed it was the first with the company’s Curbside The focus of work at the East- Google or Apple? into a space near the Curbside on-demand delivery service to service in the app itself. It also side Tech Hub, as the Austin “This is an industry that is ripe entrance and send a message via become profitable. Founded in lets you manage digital coupons, center is called, is on the app and for disruption,” Bath said. “That’s smartphone that they’ve arrived. 2013 in Austin, it has 80,000 compile a grocery list and more. the technology behind. But it also very appealing to someone like a One of the personal shoppers contract “runners” who bring Bath said this is just “the first serves as a showcase to attract software engineer who’s interest- then brings the shipment to the food from restaurants and goods phase” of the new app and more talent in the hypercompetitive ed in e-commerce.” vehicle. For delivery, the order is from retail stores to homes in 130 features are coming. That might Austin tech job market. The whisked away by a Favor runner. cities across Texas. eventually include being able to building is designed not just to Shopping ease Scott McClelland, H-E-B’s Favor continues to operate as check out without going through provide the kind of amenities What happens when you order president, previously managed an independent entity, but it’s a cashier or even a self-checkout tech workers have come to ex- groceries through the H-E-B app the grocer’s Houston region. He also how H-E-B handles deliveries kiosk. pect,but to also do it with a flair or website for pickup or delivery said the company’s approach has to customers who order online. H-E-B has another smartphone that’s distinct to Texas and H-E-B. involves both internet wizardry been to use technology to pro- And if you want to see just how app called H-E-B Go that’s used For example, there are mul- and old-fashioned retail logistics. vide convenience to shoppers. Favor has impacted H-E-B’s ap- with a handful of stores testing tiple food bars throughout the At the company’s new Buffalo And customers are increasingly proach to technology, you need cashierless checkouts. Its users building, each one themed Heights store on Washington willing to pay the fees associated only download the grocer’s up- scan barcodes on items on around H-E-B’s four grocery Avenue in Houston, online orders with pickup and delivery for dated smartphone app released shelves or from scales used to brands — the core H-E-B store; Mi appear on a computer screen in online shopping. in December. “My H-E-B,” avail- weigh produce and bulk items. Tienda, which targets the Latinx an area packed with rows of tall “One of the things we know able for both iOS and Android They proceed to a checkout market; Joe V’s Smart Shop, a carts. At another end of the room our customers want is for life to smartphones, is a sleeker, more station if a purchase includes budget brand; and Central Mar- is a cooler with more carts inside. be simpler,” McClelland said. capable app than the one it re- alcohol or involves coupons. ket, the company’s answer to the Managers like Shannon Canty “There are so many pressures on placed. Payment for the groceries is higher-end Whole Foods. While monitor the screen. When cus- our time. There’s a difference in Before, if you wanted to order made on the phone, and the the Central Market food bar tomers place an order, they can the way our generations have groceries to be delivered via the customer shows a receipt on the features locally roasted espresso pick a time for pickup or delivery. looked at the value of time. My previous version of the app, you phone’s screen as they exit the beans, the Joe V’s has jars full of Canty serves as triage, assigning father would happily spend 10 were kicked out to H-E-B’s web- store. M&Ms. employees dubbed “personal minutes to drive further to save site to complete the process. Most of the H-E-B Go trials are Even with these perks, why shoppers” to fulfill orders. H-E-B continues on J16 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J15 J16 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 SA INC.
Godofredo A. Vásquez / Staff photographer H-E-B’s Eastside Tech Hub occupies half of the building. The rest belongs to Favor, an on-demand delivery startup H-E-B bought in early 2018. from page J14 “They can see what they made off a test of driverless delivery to a logistical challenge. Foods and Albertson’s-owned on that display, and whether vehicles with a company called “What happens when an au- Randalls accept phone-based $5 on cheaper gas. Today, his things are selling or are just gath- Nuro. The fleet of Toyota Priuses tonomous delivery vehicle ar- payments such as Apple Pay and kids will spend $10 to order food ering dust,” he said, adding it lets topped by lidar sensors have rives and the customer has to Google Pay. to be delivered rather than driv- the managers see what’s happen- become a common site on some walk out to it and pick up 20 Kroger last year launched its ing to pick it up.” ing without consulting a comput- Houston streets. bags?” he asked, adding that own phone payment system Technology is also used in the er in a backroom. H-E-B has its own autonomous apartment and gated-community using a scannable QR code tied to store to help H-E-B understand “We want them on the floor, delivery trial, though it’s on a deliveries further complicate the a credit card in its app. what works to sell groceries. we don’t want them stuck in the much smaller scale than Krog- scenario. “It’s a much better H-E-B has thus far not gone McClelland said every display office,” he said. er’s. When you talk to McClelland experience if a human brings it to this route, even though its stores and every 4 feet of shelving in the H-E-B, of course, is not the about autonomous delivery, he your door, or even better, inside have the phone-scanning hard- stores have bar codes. Managers only grocery operation adopting doesn’t wax as enthusiastic as your home.” ware to do it. McClelland said it’s in charge of that department can technology at a rapid clip. Krog- other grocery executives. He says H-E-B also lags behind Kroger a privacy issue, and potentially a scan the code with their smart- er, the biggest grocery chain in the average e-commerce order is and Amazon’s Whole Foods competitive one. phones and see how many items the country, made a splash in twice as big as the average in- when it comes to offering in-store “Who is going to own the have been sold from there. Houston last year when it kicked store purchase, and that amounts digital payment systems. Whole customer and the customer’s San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J17 SA INC.
Annie Mulligan / Contributor H-E-B personal shopper Brenda Flores gathers cold food items for a curbside order inside a Houston store. An order may have three or four shoppers working it. data?” he asked. “Apple is not in McClelland says H-E-B “feels “in-store transactions.” would have an impact on the tech employees who work at its the grocery business today, but everybody deserves to have the “While it is possible to collect grocer as a whole. headquarters, and more are Amazon wasn’t in it a few years same low price, you shouldn’t data from credit card usage, a lot “We’re already starting to see being hired all the time. The new ago, either.” need a card to get it.” of our customers do not use it,” he said. “We have many in- building will be 170,000 square H-E-B also doesn’t have a loy- “Customers feel those are a them in our stores for purchas- stances where people come feet and be home to 1,000 tech alty card as do many of its com- hassle, and there’s some invasion es,” said Lisa Helfman, director of together and share ideas.” workers. petitors, even though these are of privacy. Does Big Brother need H-E-B’s public affairs in Houston. In fact, H-E-B is planning to How technology might change popular with customers. A Krog- to know everything that I buy?” “Therefore we don’t find data build a second technology hub at H-E-B stores 10 years from now? er spokesperson said 96 percent However, H-E-B can collect sourced through credit card its existing headquarters campus Bath paused. of all in-store transactions involve shopper purchase data when usage in our stores to be very in San Antonio. “I don’t know if any of us its loyalty card, which gives cus- customers make a credit-card reliable.” Bath said the building, which know the answer to that,” he tomers discounted gasoline at purchase. In the privacy policy Tech expansionBack in Austin, is expected to be completed in replied. “What you won’t see is some of its stores, customized on its website, the company says Bath said he hoped the experi- the fall of 2022, will be vertical, this technology replacing our coupons mailed to their homes it may “supplement” personal ment of putting the Favor staff in rather than the sprawling ware- people. We believe our people and an in-store discount on many information you supply with, the same building with the tech- house style found in East Austin. make a tremendous difference to items. among many other sources, nology employees of H-E-B H-E-B already has hundreds of the customer experience.” J18 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J19 J20 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 SA INC. SPOTLIGHT
Presented by: Your Company Here Investment czar talks Frost, Great Recession
By Greg Jefferson As Bill STAFF WRITER Sirakos, chief A decade ago, in the chaos economist after the U.S. housing market’s for Frost collapse, Bill Sirakos called U.S. Bank and Rep. Lamar Smith to plead with head of its him to vote against a bank bail- capital out. markets arm Sirakos was Frost Bank’s chief retires, the economist and head of its cap- Great ital markets arm, but he’d con- Recession tacted the San Antonio Repub- still haunts lican’s office as an agitated banking. constituent. He passionately Don’t get believed banks that had allowed Sirakos greed to overwhelm their pru- started on dence should pay the price. one of its As he waited, Sirakos learned aftereffects: that Tom Frost Jr., chairman the emeritus of the bank, was on Dodd-Frank the other line — asking Smith to banking vote for the bailout bill. regulations. “I was like, ‘Oops.’ I’m glad he didn’t know I was on that phone, too,” the 67-year-old Sirakos said. He hadn’t worked much di- rectly under Frost. The bank hired Sirakos as an asset liability manager in 1996, just a year before Frost stepped down as CEO. Frost died in August at age 90. Yet Sirakos, who retired from Frost Bank on Friday after 23 years, talks about Tom Frost with a combination of respect, deference and enough under- standing that he didn’t be- grudge Frost his views on the bailout. “Mr. Frost was a very wise man,” Sirakos said. “He didn’t want violent shocks to the econ- Carlos Javier omy. Whereas I, being a little Sanchez / younger and more brash may- Contributor be, more libertarian — I was more willing to say, ‘Well, we blunt-spoken and honest, funny ty. trades stocks and bonds, in to bonds, Sirakos said, “we were need the shock. Go ahead and and fiery. Frost was polite, One thing they shared was a 2000, as many internet compa- profitable in our first year. It let’s have the shock.’ ” understated and courtly, with a conservative approach to bank- nies — better at selling Wall wasn’t big, but it was a profit.” Even that understates the sense of obligation to the bank’s ing and investing. Street on their “story” than The Pittsburgh native, whose differences between the two customers, employees and Sirakos launched the capital selling goods and services — mother taught high school math men. Sirakos is opinionated, investors and to the communi- markets division, which mostly began faltering. Sticking largely and whose father worked at the San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J21 SA INC.
Federal Home Loan Bank, mar- now CEO, I reported to him for veled as insanely complicated 20 years. And I would disagree securities backed by lousy mort- vehemently with him. We had gages enriched investors — then some pretty good arguments, nearly wiped them out in the but I never, ever felt like he Great Recession. would hold that against me. I “We’re like, ‘Who buys this would just speak out — I was stuff? This is nuclear waste,’ ” just out there with it. And it Sirakos said. Frost stayed out of encouraged some pretty good the toxic mix and was one of the ideas. But one thing about Phil, few regional banks strong he was an accountant, and you enough to turn down federal had to have the facts to back bailout funds in 2009. yourself up. You didn’t say, As he retires — his immediate “Well I just feel like this would plan is to spend more time ...” No, that didn’t cut it. You raising sheep on his 140-acre have to say this, this, this, and ranch in Gillespie County — the this to back up your argument. Great Recession still haunts the Q: Looking at the roots of the economy and banking. And financial crisis a decade ago, don’t get Sirakos started on one First Union went on to acquire of its aftereffects: the Dodd- Wachovia — Frank banking regulations, A: That was after I left. intended to stop financial in- Q: — which was forced to stitutions from behaving badly. merge with Wells Fargo because Sirakos talked with the San of bad mortgages. In retrospect, Antonio Express-News recently did First Union’s culture seem in his office at Frost Bank head- to you a little loose, a little gun- quarters. The following tran- slinging? script has been edited for clarity A: Well, I think that what and length. happened was they almost got Q: Your first job out of college to believe they couldn’t do any- Carlos Javier Sanchez / Contributor was bank examiner at (the Of- thing wrong — because they had fice of the Comptroller of the the banks you can’t pay any Bill Sirakos, chief seven-year Treasury notes at 14 done so many things right. I Currency, a bank regulator), more than this on deposits and economist for Frost percent. I bought 30-year Gin- mean, we would just buy bonds and you hated it. What did you that you have to do this and Bank and head of its nie Maes. But as soon as we and buy banks, and we were hate about it? this?” So the more I learned capital markets arm is bought that stuff, the Fed start- just knocking it out of the park. A: I hated the traveling. We about the regulatory environ- retiring after 23 years ed cutting interest rates. And so And then they made a couple traveled all the time, and I had a ment, the more I came to de- with the company. we bought more, and then we of mistakes. They bought this girlfriend, who is now my wife spise it. bought more, and then we outfit called the Money Store. I of 44 years — but we’d never see Q: From the OCC, you went bought more, and the book think they paid a little over $1 each other except on weekends. to work at First Union Bank in value of First Union rose be- billion for it, and they ended up And there were just a lot of Charlotte, N.C. Describe its “Being a little cause the bonds were going up just closing it because it was so things about traveling that just culture. in price. And we were able to bad. And they made this bad, didn’t fit me. Also, some of the A: Ed Crutchfield was the younger and more buy other banks. So all of a bad mistake with this thrift in people I worked with were, let’s CEO, and he was a very domi- brash maybe, more sudden, we started growing into California that they bought. just say, less than ambitious. nant figure, intimidating. And this huge bank. When I left First That’s what really put them I graduated in 1974, and if we so people really didn’t feel free libertarian — I Union, they were a $37 billion under. By that time, Ed Crutch- could go back to the regulatory to speak their mind. But the was more willing bank. But people were intimi- field had retired and Ken structure in 1974, it would look bank was wildly successful be- to say, ‘Well, we dated in speaking out to a large Thompson had taken over, and like the Wild West compared to cause when interest rates start- extent because the CEO was they’d issue statements saying, where we are today. But I was ed to fall in the early 1980s, Ed need the shock. Go very dominant. “Well, we’ve addressed all of just shocked at how regulated Crutchfield made the decision ahead and let’s When I came here (in 1996), our mortgage-backed concerns, banks were. And I said, “I that we — we weren’t even a $5 the difference was profound. and we should be clear going thought we were a free coun- billion bank — we were gonna have the shock.’ ” They encouraged you to speak forward.” And I looked at that try.” I was very idealistic. “We’re buy $500 million dollars worth Bill Sirakos, recalling the bank out without consequence here. and I thought, “I don’t think a free country. How can you tell of bonds. And we did. I bought bailout of 2008 And the CFO, Phil Green, who’s so.” So I sold my stock. J22 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020 | J23 SA INC. DATA POINTS
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Gias nosande liquate nullautate net, omni volupid enistem. da ntempore nita cus ne alicim Taut quate ration provid quo tem voluptumque volupta enda dit J24 | San Antonio Express-News | ExpressNews.com | Sunday, July 12, 2020