A Business Owner Dares to Talk About Race

Mel Gravely, owner and CEO of TriVersity Construction, has written a challenging book, “Dear White Friend,” that offers suggestions to business owners who want to help.

Good morning!

Here are today’s highlights:

• With the Delta variant surging, restaurant reservations are declining.

• Gene Marks asks whether restaurant owners are brave or stupid.

• Facebook is rethinking its ads.

THE 21 HATS CONVERSATION

Business owners may have more influence than they realize: White owners often ask Mel Gravely, CEO of TriVersity Construction, what they can do to help. He’s got an answer for them, which he offers in this interview and in his challenging new book, Dear White Friend. The answer relates to his own journey to becoming a business owner and CEO, which happened only because a whole bunch of people made very deliberate decisions to reach out and offer him opportunities.” In our conversation, Mel talks about his own journey, acknowledges that not all of his own efforts have succeeded, and offers some concrete suggestions:

• “There was no path from my Black neighborhood to the seat I sit in today.”

• “​​I said I wanted this division to be 20 percent Black. And so it became 20 percent Black, but they ignored performance. They ignored people adhering to our values, and they wouldn't step in and deal with people who needed to be dealt with from a managerial standpoint.”

• “I had people who own their business, some of them multigenerational business owners, who were the leaders of their organizations, and they hadn't thought about influencing their own sphere of influence. How are you looking at hiring? How are you looking at philanthropy? How are you looking at your supply chain?” READ MORE

THE COVID ECONOMY

It’s not just government lockdowns that keep consumers at home: “The surging Delta variant is pushing Americans away from restaurants in some of the worst-hit states for COVID-19, a trend that might curb economic recovery for the badly hit industry, CNN reported. In five of some of the worst-hit states for COVID-19, restaurant reservations on OpenTable fell to 80 percent of 2019 levels in the past week, marking a U-turn from July, when bookings on the platform were 10 percent above 2019 levels. The restaurant industry has been devastated by the pandemic, with around 17 percent of U.S. restaurants permanently closing their doors since the virus began spreading. Now, the recovery brought about by climbing vaccination rates and other policies may be hamstrung by the rise of the highly contagious new variant.”

• “‘The next stage of the recovery requires consumers to leave the home, go on vacation, go to stores, restaurants and malls,’ said Stuart Kaiser, strategist at UBS, said to CNN. ‘The fact they are showing less willingness to do that is a negative indicator.’” READ MORE

Gene Marks asks whether restaurant owners who turn away unvaccinated customers are brave or stupid (or both)? “Just think about it: The restaurant industry is gasping from one of its worst years since the bubonic plague. Thousands of establishments have gone under. Thousands more have been turned away for promised government aid. The ones that have survived are struggling to get back on their feet. Food prices are rising. Employees are hard to find. It cannot be easy running a restaurant right now. In Philly, summer traffic is lighter as people flock to the shore. It's even lighter now that some are thinking twice about leaving their homes while the delta variant rages. And yet, in the midst of all these challenges and uncertainty [Marc] Vetri, and hundreds of others in the industry are turning away customers.”

• “That’s pretty baller. That's called standing up for something you believe in. It's an unselfish act and proof that there are people in this world who are truly putting their money where their mouth is to help do their part and push this country past the pandemic.”

• “So yes…brave. But then again, it's also kind of stupid, isn't it?” READ MORE

More companies are revising their reopening dates: “Comcast Corp.’s NBCUniversal and Capital One Financial Corp. are postponing their return-to-office dates, citing a rise Covid-19 cases. Capital One will require returning employees to be fully vaccinated, while NBC will require that status for U.S. employees. McDonald’s Global Chief People Officer Heidi Capozzi said in the message to U.S. employees: ‘A resurgence of infections caused by Covid-19 variants has many of us uneasy.’ She added, ‘We’ve heard from many of you that you would feel more comfortable returning to the office if you had more certainty your colleagues were vaccinated.’”

• “Many other U.S. companies have reassessed their office reopening plans, as fears over the spread of the Delta variant mount.”

• “Elsewhere in the media industry, CNN said it would no longer reopen on Sept. 7, as previously planned, and now tentatively expects a return sometime in mid-October, though plans could change.” READ MORE

MARKETING

Facebook is rebuilding its ads to track less information about users: “Facebook’s massive business was built on its ability to track users across the internet. But now, thanks to looming regulation and other moves to restrict such data collection, that is changing. Hundreds of engineers are rebuilding how Facebook’s ads work to place more value on user privacy, according to Graham Mudd, a top ad executive at the company. The moves by Facebook, which are still in their infancy, illustrate how the ad-supported internet economy is in the process of being fundamentally reshaped. Along with Google, Facebook is examining several privacy-enhancing techniques to deliver personalized ads without knowing anything about the specific individuals who view them. That’s an about-face from how ad targeting has worked online to date.”

• “The stakes couldn’t be higher for Facebook to get this right. Apple recently introduced a prompt to iPhones that makes developers ask for permission to track users across other apps for targeting ads.”

• “Facebook has said the prompt will likely hurt its revenue growth. Google is planning something similar for Android phones.” READ MORE

HUMAN RESOURCES

There can be surprises when remote office workers gather for the first time: “Numerous office workers hired during the era of Zoom calls and Slack messages finally saw one another this summer as some firms eased restrictions or squeezed in meetups before the Delta variant spread. Many reunions have been sweet, others nerve-racking. Nearly all of them—visceral reminders that colleagues are in fact three-dimensional—feel very weird.”

• “Emily Brungard joined a software startup in January as employee No. 2. The company’s now-seven-person team met in June in Indianapolis, where she lives and the firm’s venture backers are based.”

• “Upon meeting colleagues in a conference room at the investors’ office, Ms. Brungard, who is 5-foot-6, said she was shocked to see that she is “on the shorter side of my team.” The chief executive of the company is about 6-foot-3, she estimated, while a designer is roughly 5-foot-8.” READ MORE

PRICING

Used car prices are stabilizing: “Surging used car and truck prices have been Exhibit A for the bizarre supply-chain snarls that have caused inflation to shoot up this year as the economy has begun shaking off the effects of the coronavirus crisis. The rapidly rising cost of shopping for a certified, pre-owned Ford or Honda accounted for a whopping one-third of the steep overall increase in the Consumer Price Index during the spring and early summer. Overall, the inflation numbers—the likes of which haven’t been seen in decades—have become something of a political liability for the Biden administration while putting pressure on the Federal Reserve to start tightening its approach to monetary policy.”

• “But now, the unprecedented run-up in the used car market finally seems to be running out of gas. Partly as a result, inflation on the whole slowed down a bit as well last month.”

• “Analysts I’ve talked to say they don’t expect used cars to get much cheaper until the problems with new car production are finally ironed out, which could take well into 2022.” READ MORE

New home builders can’t keep up with demand, which why the median price of a newly built home rose 6.1 percent in June to $361,800: “While that increase isn’t especially high, given the booming demand and limited supply, some publicly traded builders are reporting much larger price jumps. Taylor Morrison Home Corp. said its average sales price for homes sales that closed in the second quarter rose 9.8 percent from a year earlier. The average price for new orders in the same quarter climbed 31.8 percent. Meritage Homes Corp. reported a 4 percent annual increase in average sales price for second-quarter home closings and an 18 percent increase for new orders.”

• “‘Because builders are intentionally not selling, it’s creating a lot of pricing power,’ said Alan Ratner, managing director at real-estate research and advisory firm Zelman & Associates.”

• “Housing starts, a measure of U.S. home-building activity, climbed 29 percent in June from a year earlier, according to the Commerce Department.”

• “But sales of newly built homes slid 19 percent in the same time frame.” READ MORE

THE 21 HATS PODCAST

Episode 72: It’s a Pile of Money: This week, Paul Downs makes two seemingly contradictory points: One is that his business is on track to have its best year ever. The other is that he expects to claim another huge government subsidy, courtesy of the recently enhanced Employee Retention Tax Credit. As Paul says, if you don’t know about the ERTC or if you don’t know that its requirements have been relaxed, you probably should check it out. Meanwhile, Jay Goltz tells us what happened when three employees found out what the others were being paid, and Dana White feels a little deflated after talking to an investment banker. Plus: Paul shares his new strategy for coping with the labor shortage.

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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