Apr 1, 2019

Axios Future

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1 big thing: A Mexican tale in Storm Lake
The Arceo family's Storm Lake outlet. Photo: Steve LeVine/Axios

STORM LAKE, Iowa — In 1991, Manuel Arceo emigrated to the United States, finally settling three years later in the small Washington state city of Chehalis. There, he parlayed his cooking skills into Plaza Jalisco, a restaurant he named after his native state in Mexico.

A quarter-century later, Arceo and several of his brothers are the owners of 14 restaurants in three states — including an improbable five here in Iowa.

  • Against the toxic U.S. debate around Hispanic immigrants, the Arceos' story illustrates a lesser-told dimension of the decades-long Mexican influx into the country — a familiar tale of pluck aligning with bedrock American tradition.
  • "There's a lot of business for everybody," says Efreen Arceo, one of Manuel's eight brothers, who manages Plaza Mexico, the family's outlet in Storm Lake.

What's happening: Until around 1980, Storm Lake, a city in northwest Iowa, was, like the rest of the state, almost entirely white. But then a first wave of immigrants arrived — Tai Dams, an ethnic minority from Vietnam and Laos. Many of the adults went to work at local pork and turkey slaughtering houses, Art Cullen, the Pulitzer Prize-winning editor of the local paper, tells in his lyrically crafted book, "Storm Lake."

  • Today, about 54% of Storm Lake's approximately 15,000 people are immigrants, mostly Hispanic. They have swelled the local population, going the opposite direction from the rest of the state, in which 71 of 99 counties have lost residents over the last decade.
  • While schools in much of the state are short of students and are consolidating, and towns are aging as young people move away, Storm Lake has a housing shortage and the schools are bulging with children.

The immigrants have infused Storm Lake with a surprising Hispanic feel, with Spanish-language downtown storefronts, including Mexican restaurants like La Juanita and Plaza Mexico.

Going against the national trend: Storm Lake, like the state, went for President Trump in 2016. In the 2018 midterms, it re-elected Rep. Steve King, the anti-immigrant Republican congressman.

  • But Jose Ibarra, a member of the city council, says Storm Lake's non-immigrant population is not hostile to the relative newcomers.
  • Ibarra, sales manager of a local electronics store, moved here along with his family in 1999. Two years ago, after seeing that the city council had no immigrant members, he became the top vote-getter in the election.
  • "We are in the middle of a very red area," Ibarra tells me, describing some anti-immigrant hostility in the more rural countryside. "But Storm Lake is different. We don't have any race issues."

Getting to Iowa: In 2000, the Arceos opened a Des Moines restaurant. Four years later, Efreen began looking for another location, and in Storm Lake he noticed a vacant McDonald's. He bought it for $140,000, figuring that, between the heavily immigrant meat packing workers and local Buena Vista University, there would be plenty of customers.

It has turned out that way. And Efreen figures the town is better for the immigrants, too. While other parts of the state are moribund, Storm Lake "has more people and more business. It's good for the stores, for everybody."

2. The new retail unicorns

Illustration: Lazaro Gamio/Axios

As once-thriving retailers like Gap, Victoria's Secret and JCPenney announce almost 5,000 store closings in just 2019, three retail startups have hit valuations of $1 billion or more — and entered the exclusive "unicorn" club.

Erica writes: In the past 10 days, Rent the Runway, Glossier and Casper have all topped $1 billion valuations. The success of the three charts the future of retail — a landscape peppered with tech-infused startups that begin online then go to Main Street.

Why it matters: These are physical product companies that, arguably, are being valued like software companies, notes Axios' Dan Primack.

All three companies have capitalized on a trend we've dubbed "the Instagramification of retail": New retailers are conducting most of their business online but building out a small number of shops in the glitziest parts of big cities to function as profitable billboards.

  • Shoppers — the majority of them Gen Zers and millennials — can swing by Rent the Runway's swanky D.C. showroom or Glossier's beautifully designed New York flagship to take a selfie or browse dresses and lipsticks as if walking around inside an Instagram post come to life.
  • Casper's stores, which are called "Dreameries" and include giant beds for patrons to take naps on, are also trying to sell the lifestyle instead of the mattress — in hopes the customer will eventually buy into both.

But, but, but: Such startups should beware the competition, says Moody's lead retail analyst Charlie O'Shea. "One of the key risks to the innovator is the copycat phenomenon whereby a larger, better-capitalized company recognizes the opportunity and decides to compete in the space," he says.

  • This is already happening in the mattress industry. Amazon has Casper and other mattress sellers spooked with its recent entry into the industry.
3. Mailbox: Rebooting high school; and Iowa

Photo: Robert Alexander/Getty

Among the mail received from Future readers the last few days are these:

"When my father got his Ph.D. in physical chemistry in 1941, people asked him, 'Why pick a field with no practical applications?' The next year, the Manhattan project started, and his career trajectory took off.
When I was a high school kid in the late 50s, I asked his advice on what to study in college. He replied, 'It doesn't matter. When you are 40 there will be so many jobs available that haven't even been thought of yet. The most important things are to learn how to write and speak effectively, and to learn how to learn.'
Dad was way ahead of his time."
— Gibbs Kinderman, Willow Bend, West Virginia
"I was raised on a small stock farm. My brothers told me there was 'not enough farm for the number of brothers' in 1975, and I went to work in the oilfield. Then, there were 500 farmers in our county; now, less than 100.
My first job in the oilfield in 1975 was with a natural gas pipeline. There were 10 companies building pipelines and competing for the gas from wells in our area. Today there are only two and they do not compete. The gathering companies raised their share of each individual well’s production from 50% to 100% over the last two years. There used to be majors and many independent, family owned gas producers here in the Texas panhandle, but now there are only a handful (of which I am one). The pipes are stealing tax revenue from every citizen, killing jobs and royalty revenue, and consumers still pay full price at the burner-tip. The pipes managed to get a small section of pipe (called a 'gathering line') excluded from any regulation.
John D. Rockefeller had nothing on Warren Buffett. He chooses companies with 'pricing power,' which is a nice way to say 'unregulated monopoly.' He says he will never sell Coke. Try getting some shelf space in a store to market your local soda-pop. When I was a kid, every local Coke bottler also had their own local brand. Now the local bottler AND his brand are long gone. Buffett has great PR but he is a monopolist and a job killer."
— John Bozeman, Perryton, Texas
4. Worthy of your time
Expand chart
Data: Adapted from a CDC chart; Chart: Axios Visuals

The day the dinosaurs died (Douglas Preston — New Yorker)

Measles will be worse this year (Eileen Drage O'Reilly — Axios)

The communities passed over by the census (Sarah Parvini and Ellis Simani — LA Times)

South Korea's population will start to shrink in a decade (Isabella Steger — Quartz)

Why Russia may shut off the internet (Andrei Soldatov — Foreign Affairs)

5. 1 fun thing: Bringing the stadium home

The Canadiens celebrate a goal. Photo: Bruce Bennett/Getty

A Montreal hockey superfan has bottled up some of the wild excitement of watching a home game in the arena.

Kaveh writes: In a new video from ESPN, François Maillet — an AI developer by day — shows off his setup, which re-creates raucous "and-the-crowd-goes-wild" moments in his living room.

  • "I have a beer in my hand, I got my friends on my couch, the Habs score — I want something awesome to happen," Maillet says, using a nickname for his team, the Montreal Canadiens.
  • How it works: Maillet's system listens for peaks in excitement in the game commentary and triggers a light show and celebratory music when the enthusiasm crests.

Watch the video.