21 Hats Will Remain 21 Hats
That’s the good news. The bad news is that the deal that promised an infusion of resources has come apart.
Good morning!
Here are today’s highlights:
There are ways to reduce the stress of those who work for you.
Have you noticed how many offices now look like a WeWork?
When naming a business, do you go for practical or aspirational?
You’ll never guess which newsletter made Inc.’s list of best newsletters for business owners.
THE 21 HATS PODCAST
21 Hats Will Remain 21 Hats: This week, we start with an update of how 21 Hats has been doing since its sale brought new resources and new ambitions (Spoiler alert: It’s not going great!). Then, Dana White tells Shawn Busse and Jay Goltz about the progress she’s made on multiple fronts: attempting to sell franchises to revive her struggling Midtown Detroit location, to open new salons at Fort Bragg and in Dallas, and to secure financing. The owners discuss Dana’s financing options—venture capital, private equity, bank loan—assessing, in Shawn’s words, their “degrees of evil.” Plus: Shawn explains how his views on remote work have been evolving, and Jay explains why he’s tired of being called a tyrant (even though no one’s actually called him that).
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
RETAIL
Miss A, a Dallas-based beauty retailer, is expanding rapidly by selling makeup, applicators, and accessories priced for $1: “Stores carry 5,000 items with new items added weekly such as press-on nails and nail stickers that are coming this summer. The hot pink teardrop-shaped makeup sponge applicators are often compared on social media with a $20 version sold at Sephora. [Co-founder] Jean Baik said the company has strong relationships with the same manufacturers in South Korea and Taiwan that produce for the major makeup and beauty brands sold in drugstores and mass merchants. Miss A, which is named for Baik’s Korean middle name Jin-Ah, can sell items for $1 because it sells directly to the consumer ‘without a middleman.’”
“Since it started its business online in 2013 and then opened its debut store in Grapevine Mills in 2016, Miss A has had to win over shoppers asking ‘Is this a scam? How can this be just $1?’”
“The retailer has already opened three stores this year and now has eight in D-FW, six in Houston and one in Albuquerque, N.M. Fifteen more stores are planned this year, including in Austin, San Antonio, Tulsa, Oklahoma City and Rogers, Ark.”
“‘Our goal is to be a national chain in the next three to five years with more than 200 stores,’ said Baik, who’s 36.” READ MORE
MANAGEMENT
There are ways to reduce the stress of those who work for you: “These rules certainly aren’t exhaustive, but the basic principles behind them can be applied broadly to lots of situations at work. Uncertainty-based stress can wreak havoc on your health. At work, it’s the feeling you get when your boss shoots you an email on Friday evening that reads, ‘We need to talk. How’s next Thursday?’”
“When you communicate, whatever the subject, hit people over the head with blinding clarity. In the above example, one simple sentence (‘I would like to meet because you want another Friday off, but we really need you this month’) could reduce uncertainty-based stress for the next week.”
“Stress is often a bottom-up process—the more physically uncomfortable we feel, the more mentally worn down we become over time. Office temperature alone is a huge predictor of workplace productivity (one study found that it accounted for nearly 39 percent of the variance in workplace performance; just under 70 degrees Fahrenheit is best).”
“Bosses should try to move the needle on small, daily choices, like who caters lunch, whether you can wear jeans to work, and whether it’s OK to leave your Zoom camera on (or off). Sometimes we get so bogged down in policy and rule-making, we forget to give people wiggle room.” READ MORE
STARTUPS
Research suggests there are two ways to name a new business: “When coming up with a name for their first venture, entrepreneurs devise ones that emphasize what they do as a company, a practice called cognitive naming, according to research from Yuval Engel, an assistant professor at the University of Amsterdam. More-experienced entrepreneurs tend to use names that resonate with people’s feelings, or emotive naming, Prof. Engel finds. He reached his conclusions after comparing the naming strategies from a group of eight novices and a group of eight experienced entrepreneurs. When asked to come up with the name for a software startup, new entrepreneurs said they wanted names that were simple and referenced the product or service, while serial entrepreneurs said they chose names that were aspirational or could create buzz for investors.”
“So, to highlight the company’s signature product—a digital simulation of entrepreneurship—new entrepreneurs came up with names that alluded to ‘game’ or ‘software,’ or that described what the product did, such as ‘Cashflow Simulator.’ Serial entrepreneurs leaned more heavily on emotive names, such as ‘Be Your Own Boss’ and ‘CEO.’”
“‘Novices are not entirely sure what it is that they are doing,’ Prof. Engel says. ‘The experts have learned something along the way about what moves people.’” READ MORE
OFFICE SPACE
Austin has lured the most employees back to their offices: “These days, the city’s workforce is putting in more face time at offices than those in any other major U.S. metro area. Austin offices are 59 percent-occupied—and cracked the 60 percent threshold last month—according to data from Kastle Systems, an office-security firm that records workers’ comings and goings by measuring badge swipes into skyscrapers and corporate campuses.”
“Austin was also at the forefront of pioneering part-remote work before the pandemic, Ms. Huffman said. The pre-pandemic work norm for many Austin workers involved splitting time between home and the office.”
“‘In a lot of places, companies are having to create brand new policies around flexible work schedules. Many of our companies already have them,’ she said.”
“Julie Whelan, a lead global researcher for real-estate company CBRE Group, said some have theorized that conservative political leanings in Texas explain the state’s charge back to offices. Liberal-leaning Austin defies that explanation.” READ MORE
Funny thing: more and more offices are looking like WeWorks: “While WeWork has become a cautionary tale, office life in the U.S. has quietly embraced several of its core tenets. Many workers who spent the last two years at home—a small portion of the overall labor force—are being called back to offices that look different from the ones they vacated in 2020, with fewer desks and more open spaces designed to foster collaboration. A survey by CBRE, a commercial real estate company, found that 51 percent of respondents expect flex space to make up a significant portion of their offices in the next two years.”
“‘The office is undergoing a major evolution,’ says Paul Fiorilla, research director for Yardi Matrix, which analyzes commercial real estate. Employers, he says, now need to justify to workers why they should show up in person.”
“For companies that lease their offices, that switch to a flex space can be an effective way to shrink their footprint and save money—even if some workers have reported that they miss having a dedicated desk.” READ MORE
THE ECONOMY
After struggling early in the pandemic, Black businesses have surged: “In the early months of the pandemic, Black-owned small businesses closed at twice the rate of other businesses, with 41 percent shutting down, according to April 2020 census data. Concentrated in the retail, restaurant and other service industries, Black owned-businesses had a harder time pivoting given pandemic restrictions. They operated on thinner margins, lacked relationships with banks and were shut out of the federal government’s relief program for small businesses. Then Black business ownership rebounded, soaring higher than it had been pre-pandemic, a Washington Post analysis of Bureau of Labor Statistics showed. In 2021, Black-owned small businesses were created at the fastest clip in at least 26 years.” READ MORE
Even as mortgage rates rise, home buyers continue to push up housing prices: “Many buyers rushed to lock in purchases in the first quarter before rates climbed even higher, according to real-estate agents. ‘The housing market remains very active right now,’ said Nick Bailey, chief executive ofRe/Max, on a Re/Max Holdings earnings call last week. ‘Buyers are rushing to beat anticipated mortgage rate hikes.’”
“The median sales price for single-family existing homes was higher in the first quarter compared with a year ago in 181 of the 185 metro areas tracked by the NAR, the association said Tuesday.”
“The current housing boom has been geographically widespread, with most metro areas in the country posting robust home-price growth in the past two years.” READ MORE
FINANCE
Elon Musk’s Twitter deal perfectly captures the absurdity of this business era: “The only plot twist making for a better tale of speculative excess would be if Musk, a crypto evangelist, had arranged to pay in bitcoin. I’m going to go out on a limb here and predict that we will come to see this deal as a market top, when sky-high valuations and over-indebtedness reach a convulsive crescendo in a megadeal driven by hype, overconfidence and ego. In many respects, it is reminiscent of AOL’s disastrous takeover of Time Warner two months before the massive tech and telecom bubble burst in the spring of 2000.”
“All that borrowing might work out just dandy as long as the value of the collateral — Tesla stock — remains at or near the $1,000 per share it was trading at when the deal was announced last week.”
“Yet in the week since the announcement, it dropped 15 percent, to $870, at least in part out of fear that the stock could get caught up in Musk’s Twitter misadventure.”
“A further decline in TSLA shares is a real possibility, given the bubble in tech stocks over the past two years, with already highly priced shares doubling in value.”
“Since March of 2020, Tesla shares have soared from $85 to as high as $1,243 in October, briefly giving the upstart carmaker a market value of more than $1 trillion — more than Toyota, Volkswagen, Daimler, Ford and GM combined.” READ MORE
LOGISTICS
There’s now a shortage of chips used to make chips: “The drought in chip availability that has hit auto production, raised electronics prices and stoked supply-chain worries in capitals around the globe has a new pain point: a lack of chips needed for the machines that make chips, industry executives say. The wait time it takes to get machinery for chip-making—one of the world’s most complex and delicate kinds of manufacturing—has extended over recent months. Early in the pandemic it took months from placing an order to receiving the equipment. That time frame has stretched to two or three years in some cases, according to chip-making and equipment executives.”
“What began as a pandemic-era aberration of supercharged demand for laptops and other chip-hungry gadgets has spiraled into a structural problem for the industry. Now many chip executives say the problem will persist into 2023 and 2024, or even longer.”
“‘There’s this wishful thinking that by the end of 2022, supply will be balanced with demand,’ said Tom Caulfield, chief executive of contract chip manufacturer GlobalFoundries. ‘I just don’t see it.’” READ MORE
MEDIA
Brit Morse of Inc. magazine just published a list of the best newsletters for business owners, and look who’s No 1: “The newsletter ‘21 Hats’ founded by longtime journalist Loren Feldman is a daily email newsletter that combines articles, interviews, and insights with the most important news of the day for business owners. In addition to news, the letter often features interesting stories written by business owners themselves, about the struggles, hopes, trials, and tribulations of what it's like to run their own company.” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren