✉️ Should post be delivered every day?

The business news that matters

Hello and welcome to the latest edition of Off to Lunch…

There needs to be a national debate about the UK’s postal service and how regularly we can receive letters, according to Ofcom, the regulator.

The universal postal service obligation means that Royal Mail must deliver letters anywhere in the UK from Monday to Saturday and parcels from Monday to Friday. However, Ofcom has warned this “risks becoming unsustainable” because the volume of letters sent since 2011 has halved.

Ofcom, which regulates communications in the UK, has laid out two options to reform the postal service. They are:

Royal Mail would save up to £200 million a year if letter deliveries were reduced to five days a week - with no Saturday deliveries, for example - and save up to £650 million if they were reduced to three days a week. That is according to estimates by Ofcom.

However, this is an emotive topic. The history of the Royal Mail and the postal service in the UK can be traced back to 1516 when Henry VIII established a “Master of the Posts”. A spokesperson for Rishi Sunak said earlier this week that the prime minister “would not countenance” allowing Royal Mail to shift away from Saturday deliveries. They said:

“Obviously Ofcom has a role here and is reviewing the future of Royal Mail.

“But the prime minister’s strong view is that Saturday deliveries provide flexibility and convenience that are important for businesses and particularly publishers and the prime minister would not countenance seeing Saturday deliveries scrapped.

“So I think we’ll see exactly what the outcomes are. But given the importance of these deliveries, particularly to businesses, it’s not something we would countenance.”

Nonetheless, shares in International Distributions Services, the parent company of Royal Mail, are up more than 5 per cent on the back of Ofcom’s report. The graph below shows Royal Mail’s share price since it floated in 2013:

Keith Williams, the chairman of International Distributions Services, has laid out his view through a column in The Times today. It responds robustly to Sunak’s comments. He writes:

Nostalgia for a bygone era is not going to turn back the clock. The number of letters we deliver has fallen from 20 billion to 7 billion. We only deliver about four letters per address, per week. This means we have to walk more than three times as far to deliver the same number of letters as we did before, increasing the cost per letter of each delivery.

Without help from government we have had no option but to raise prices. Without reform of the regulatory system, or a subsidy, we are stuck in a vicious spiral leading to heavy losses and an unsustainable service.

You can find that piece here

There is plenty of reaction on social media to the potential postal changes, including some amusing takes…

The next step in all this is that interested parties must send their views to Ofcom by April 3. The regulator says it wants to “understand the potential impact on people and businesses”. It added:

This includes vulnerable people, those in rural and remote areas of the UK’s nations, as well as large organisations who use bulk mail services.”

We will hold events in the coming months to discuss the evidence and options, bringing together a range of people and organisations with different perspectives. After carefully considering the feedback, we will provide an update in the summer.

You can find Ofcom’s statement here

Let the national debate begin…

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Other stories that matter…

1. Netflix added a record number of new subscribers - 13.1 million - in the final three months of 2023 as family and friends who had previously shared passwords were forced to sign-up themselves. The streaming service has also announced it will move into live broadcasting after agreeing a $5 billion (£7.8 billion) 10-year deal to show WWE wrestling. You can find Netflix’s latest quarterly results here and a BBC story here

2. More good news for the UK’s world-leading video game industry. The founders of Playdemic, a mobile games studio which was sold by Warner Bros Games to Electronic Arts for $1.4 billion (£1.1 billion) in 2021, have founded a new video game company in Manchester. ForthStar has raised $10 million in funding and will focus on making free games for mobile phones. You can read more in a story by The Hollywood Reporter here and find the company’s new website here

3. The Co-op is planning to open hundreds of new shops across the UK and expand from 5 million members to 8 million by 2030. You can find the retailer’s statement here

4. Academic research is starting to come in about how working from home has impacted productivity for businesses and the economy. A working paper by researchers at the Federal Reserve, the University of Virginia and Harvard suggests that it has meant junior staff get less mentoring by senior colleagues and this has reduced the productivity of the senior colleagues because they have to spend more time helping the younger staff. However, the company at the centre of this research adapted to this change by hiring staff with more training, which meant its productivity did not significantly change. The research suggests all sorts of nuances about what flexible working means. You can find the research and a summary of the findings via Axios here

5. Pessimistic and negative media coverage discourages innovation and the creation of new businesses, according to research flagged by the superb Klement on Investing newsletter here

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Podcast…

The latest episode of our Business Leader podcast features an interview with Suranga Chandratillake, general partner at Balderton Capital, about how he reached the top of the venture capital industry and why he swapped being the chief executive and founder of a promising technology company for investing in them instead. The episode covers the rise and fall of Autonomy, what venture capital investors look for in a promising business, and why chief executives need to change their approach to work to avoid burning out.

You can listen to the episode via Substack here, Apple here or Spotify here

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And finally…

The Oscar nominations were announced yesterday and Oppenheimer leads the way with 13. This includes nominations for best picture, best actor (Cillian Murphy), best supporting actress (Emily Blunt), best supporting actor (Robert Downey Jr) and best director (Christopher Nolan). The film is now available to rent on streaming services for those who haven’t watched it yet.

J. Robert Oppenheimer has had a notable influence on the business world, particularly on recruitment, because of how he put together the team that worked on the Manhattan Project. Steve Jobs, the co-founder of Apple, said he studied Oppenheimer when putting together his teams. The quote below is from Jobs and an extract from Walter Isaacson’s biography of him. Jobs said:

"For most things in life, the range between best and average is 30 per cent or so. The best airplane flight, the best meal, they may be 30 per cent better than your average one. What I saw with Woz (Steve Wozniak, co-founder of Apple with Jobs) was somebody who was fifty times better than the average engineer. He could have meetings in his head.

“The Mac team was an attempt to build a whole team like that, A players. People said they wouldn't get along, they'd hate working with each other. But I realised that A players like to work with A players, they just didn't like working with C players.

“At Pixar, it was a whole company of A players. When I got back to Apple, that's what I decided to try to do. You need to have a collaborative hiring process. When we hire someone, even if they're going to be in marketing, I will have them talk to the design folks and the engineers. My role model was J. Robert Oppenheimer. I read about the type of people he sought for the atom bomb project. I wasn't nearly as good as he was, but that's what I aspired to do."

Oppenheimer was also one of the scientists behind the Doomsday Clock, which is meant to symbolically show how close the world is to nuclear Armageddon. The Bulletin of the Atomic Scientists, which manages the clock, has just announced that they will leave it set at 90 seconds to midnight for 2024, the same as 2023, despite concerns about the rise of artificial intelligence. You can read more here

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Best

Graham