A Conference to Remember

The brand new Main Street Summit is likely to be a mainstay on the SMB conference circuit for years to come.

Good Morning!

Here are today’s highlights:            

• Is there any reason business owners should feel squeamish about engaging in “shrinkflation?”

• Those who can’t find a house to buy are finding other ways to use their savings.

• Should bosses and companies weigh in on Israel and Gaza?

THE MAIN STREET SUMMIT

John Garrett and I assessed the Main Street media landscape yesterday during our session at the Main Street Summit, a remarkable conference that attracted 850 people from around the world to Columbia, Mo., which is not the easiest place to reach. The attendees were somewhat weighted toward investors and ETA-ers, which stands for Entrepreneurship Through Acquisition and is a fancy way of saying they buy companies instead of starting them. There’s an interesting cultural difference between more traditional owners who generally start a business because they have an underlying skill—say, plumbing—and the ETA community which brings modern management tools and techniques but may not know how to, say, change a washer. I’m thinking I’m going to have to tackle the relative merits on either side of that cultural divide in an upcoming podcast, but I’m hoping that the start-from-scratch owners—let’s call it the SFS community—will come out in greater force next year. This was a first-time ever conference that did not feel like one and that I suspect will be a mainstay on the smallbiz circuit for years to come.

• Earlier this year, Shawn Busse and I did a podcast with John Garrett in which John explained how he went against the tide and created a business model that works for a local media company. You can LISTEN HERE.

• And a few years back, I published a video conversation with Brent Beshore, the host of the Main Street Summit, in which Brent explained his highly unusual approach to private equity. You can LISTEN HERE.

PRICING

Gene Marks is a big fan of shrinkflation as a pricing strategy: “It’s when you charge the same price for something that you’ve always charged, but this time, you deliver just a little bit less. If that sounds unethical or immoral, it’s not. In fact, it’s being practiced all over the place by some of the world’s largest brands. Take Walmart, for example. Their Great Value Paper Towels used to be 168 sheets per roll, but now it’s 120 sheets. Did the price change? Nope.”

• “There are plenty of other examples of this kind of thing, but I think you get the point. Does this make you angry? It shouldn’t. It’s just smart business. People don’t really check this stuff. And no one’s breaking any laws.”

• “I have some manufacturing and distribution clients that are including a few less bolts in a box or shipping lighter pallets than before. Like Amazon, they’re adjusting their ‘free shipping’ policies or limiting it to closer geographic areas. I have some clients that no longer include setup or training in the price of the equipment they sell.”

• “Are you in a service business? My clients in these industries are now excluding certain ongoing support and maintenance services from their normal billing. Others are now adding ‘travel time’ as part of their projects, a cost they previously absorbed.” READ MORE

SOCIAL MEDIA

Mark Zuckerberg is developing more business uses for WhatsApp: “A Snapchat-like feature that allows users to post temporary text, photo and video updates, called Status, has become the world’s most used Stories product, Meta said. WhatsApp also began offering paid tools and custom apps for businesses that wanted to use the platform to communicate with consumers. Chevrolet, Lenovo, Samsung and L’Oreal now use some of those tools, and WhatsApp has forged business and advertising partnerships in Latin America and India with companies such as Amazon and Uber. In 2017, WhatsApp introduced ‘click-to-message’ advertising, which is an ad format that businesses can buy to place inside a Facebook feed.”

• “When users click on the ad on Facebook, it links them to a brand’s WhatsApp account, where they can talk with customer service representatives or take an action like booking a flight or buying goods. The ads have become Meta’s fastest-growing ad format, the company said.”

• “Nissan spent the past year building chatbots on WhatsApp that can help the automaker talk with its customers in Brazil and route them to a local car dealership. Between 30 to 40 percent of Nissan’s new sales leads in Brazil now come through WhatsApp, the auto company said, and the service has reduced its response time to customers to a matter of seconds from an average of 30 minutes.” READ MORE

THE ECONOMY

Consumers who can’t find a house to buy are finding other ways to use their down-payment savings: “With mortgage rates near 8 percent and average home prices hitting record highs, sales of existing homes were down 15.4 percent year-over-year in September, according to the National Association of Realtors. Those thwarted by one of the worst-ever times to buy instead of rent are deferring their first house hunts not just for a few months, but for years. Others locked into low mortgages are realizing they’re stuck in their starter homes indefinitely.”

• “Some of these people are putting money that would have gone into a home into their relatives’ futures. There was a 15 percent increase in the number of new 529 college savings accounts opened in the third quarter from a year ago, according to data firm ISS Market Intelligence.”

• “Others are taking more expensive vacations and shelling out for extensive renovations and decorations for their current spaces. Homeowners spent $489 billion on improvements and repairs over the 12 months ending in September, according to Harvard University’s Joint Center for Housing Studies, a 5.4 percent gain over the previous period on top of a 17 percent gain the year before.”

• “These consumers are helping fuel a spate of increased spending in the U.S. that has confounded economists who were predicting a recession less than a year ago.” READ MORE

AROUND THE WORLD

The U.K. economy is stagnating: “The British economy flatlined in the third quarter, entering what is expected to be a protracted period of stagnation on the cusp of a recession. Gross domestic product recorded no growth in July to September compared with the previous quarter, when it grew 0.2 percent. The economy was 0.6 percent larger in the third quarter than a year ago, when many businesses closed for the state funeral for Queen Elizabeth II, the Office for National Statistics said on Friday.”

• “Britain’s weak economy mirrors the stagnation in Europe, where eurozone economies contracted 0.1 percent in the third quarter. Germany, the bloc’s largest economy, has barely avoided a recession as businesses have been hit by high energy prices and weak demand for industrial goods.”

• “This contrasts with the United States, where the economy is growing strongly and defying expectations for a slowdown prompted by high interest rates. Instead, slowing inflation and a resilient labor market have bolstered consumers’ confidence to spend.” READ MORE

MANAGEMENT

Should the boss weigh in on Israel and Gaza? “Company executives have, over the past month, faced a dilemma that they’re by now well practiced in confronting: whether to engage with a large humanitarian or social issue, in this case the war between Israel and Hamas. This time, many say, responding — with a public statement, internal discussion, a donation or even social media parameters for staff members — presents complexities that they have not experienced when wading into other recent social crises. ‘If you release a statement about the damage of a hurricane, there’s nobody who will say, Actually that area of the country deserved a hurricane,’ said Iliya Rybchin, a partner at the consultancy Elixirr, who has advised dozens of Fortune 500 chief executives.”

• “More than 200 American businesses have issued statements condemning the Hamas attacks in Israel that killed roughly 1,400 people, according to a tracker from Jeffrey Sonnenfeld, a professor at the Yale School of Management. Some business leaders made donations to humanitarian organizations and pointed their employees to company-sponsored mental health resources.”

• “A smaller number said they also communicated to their staff about the rising death toll of civilians in Gaza. Adding to the complexities that executives are weighing, many American companies have financial ties to Israel but few have business interests to consider in Gaza, Mr. Sonnenfeld noted.”

• “David Barrett, who runs the software company Expensify, which has roughly 140 employees, explained that before he issued an internal response to the war, he called meetings for his human resources leaders to discuss the Israeli-Palestinian conflict and review its historical and geopolitical context.”

• “‘We’re not historians,’ Mr. Barrett said. ‘A lot of us didn’t understand the issue very well, didn’t understand the history, didn’t understand the kind of impact it was having on people.’” READ MORE

THE 21 HATS PODCAST 

The I-Hate-Marketing Approach to Marketing: This week, Shawn Busse tells Jay Goltz and Mel Gravely why he doesn’t want his firm, Kinesis, to be known as a marketing agency. Part of it is his sense that people just don’t trust marketers. But Shawn also believes that what Kinesis offers its clients is much more than just marketing. Hearing that prompts Mel to take us through his recent decision to spend a lot of money rebranding his construction business, which he says created alignment throughout the business and would have been worth twice what he paid. (Don’t tell his marketing consultant!)

• Plus: Mel explains how he manages to generate new business without employing salespeople. Jay asks if it’s still possible in this tight labor market to enforce attendance policies. And, for the first time in the almost four-year history of this podcast, Jay goes extremely quiet for an extended period. What exactly was that about?

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

Thanks for reading, everyone. — Loren