A Pediatrician Takes a Stab at Branding
Once deeply in debt, a medical practice tried branding and customer service—and is now taking over New York City.
Good Morning!
Here are today’s highlights:
How one family business seized 20 percent of the restaurant supply industry.
Dashboard: Tracy Bech on when it’s time to take a slow period seriously.
The crisis for child-care centers—and those who use them—is getting worse.
Ikea thinks it knows how to bring Americans back to shopping malls.
PROFILES
Here’s how Dr. Michael Cohen turned a pediatric office, Tribeca Pediatrics, into a medical juggernaut: “It has taken the model of the quirky, neighborhood pediatrician who knows your child personally and made it into a replicable, exportable aesthetic — one that embodies the sophistication of living in an exclusive, wealthy urban area like Tribeca. Now, wherever you are in the city, you are sure to encounter a Tribeca Pediatrics office or a storefront sign proclaiming one coming soon.”
“Fifteen years ago, Dr. Cohen woke up to realize that his practice, which had three locations in the city at that point, in TriBeCa, Williamsburg, and Boerum Hill, wasn’t making any money. He was $400,000 in debt.”
“[Tribeca Pediatrics] currently operates 48 offices in New York and its suburbs, employing around 400 people, including 112 doctors and nurse practitioners, who treat more than 100,000 patients.”
“Each location features the company’s trademark design elements: open picture windows; whimsical plywood furniture; bright, contrasting colors; and a blue logo of a curved line meant to evoke a child being cradled.”
“With its expansion, Tribeca Pediatrics aims to make medical treatment for your child as seamless and convenient as calling an Uber. In 2020, the company built a digital portal that allows parents to schedule a visit, request a school form, and ask questions about a child’s symptoms or medications, all without ever picking up the phone or waiting on hold.” READ MORE
One family business has seized 20 percent of the restaurant-supply market: “On a snowy January morning in Lancaster, Pennsylvania, a flat-screen monitor in a former Mennonite elementary school displays the vital signs of WebstaurantStore, which, excepting produce, sells everything a restaurant might need, from $25,000 walk-in freezers to 15-cent takeout containers. Business is booming. By 9 a.m., WebstaurantStore, the Internet storefront of Clark Associates, a 53-year-old family-owned firm, has already rung up $800,000 in sales. It bagged $8.6 million the day prior. In a former classroom nearby which still has a chalkboard on the wall, employees run demand projections to ensure Clark’s warehouses remain well-stocked with 35-pound buckets of peanut butter, boot-shaped beer mugs, and the rest of the 420,000 products the website offers.”
“Clark Associates’ sales have ballooned from $80 million in 2009 to $4 billion today—an eye-popping growth rate of 32 percent a year. Over the same period, employee headcount has gone from 350 to 7,000. Hence buying the elementary school. ‘We were desperate for space,’ says Clark’s CEO, Gene Clark.”
“Clark, 39, took the helm in 2020 from his father, Fred, a blunt-talking 65-year-old former electrician and self-taught businessman with a penchant for bucking conventional wisdom. In particular, everyone thought restaurant equipment was too complicated to sell effectively online.”
“Before WebstaurantStore launched in 2004, Clark Associates was one of hundreds of regional distributors of restaurant equipment and supplies. It also built commercial kitchens and operated a small chain of brick-and-mortar stores.”
“Gene Clark, whose office is a cubicle in the back of the Lancaster Restaurant Store identifiable only by the CEO nameplate on his desk, says they could easily take hundreds of millions from a private-equity firm to finance their brick-and-mortar expansion plan into Florida. Outside money would let them open a dozen new stores in two years rather than ten. He won’t take it: ‘We’re going to grow within our cash flow.’” READ MORE
THE 21 HATS PODCAST: DASHBOARD
When Is It Time to Panic? Most businesses have ups and downs. This week, Tracy Bech, CEO of Starboard Collectives and co-author of the “60 Minute CFO,” offers some guidance on when to ride out a slow period and when to take action. Plus, she also talks about how she’s building an AI tool to help with financial analysis and when it makes sense to hire a fractional CFO.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
HUMAN RESOURCES
Running a child-care business is more precarious than ever: “In a survey released Sunday by the National Association for the Education of Young Children, over half of 3,815 child care owners or directors said they were enrolling fewer children than they were licensed for. Mostly it was because of staffing shortages — they said they could not afford to pay workers more because parents could not afford to pay more.”
“During the pandemic, there was temporary relief. The federal government spent $24 billion to keep the industry afloat. Many providers were given thousands of dollars a month, depending on their size, which they used to pay for expenses, the biggest of which was wages. But that funding, which started in April 2021, expired in September. Five months later, the business is more precarious than ever.”
“This year has been the most challenging in three decades for Rebecca Davis, who runs a child care center in Arkansas from her home in the Little Rock area. She used to care for children from six weeks old until they entered kindergarten, but since the pandemic, turnover has been higher. Taxes are coming due on the pandemic grant money.”
“‘It’s a Catch-22: I would love to be able to give my employees a stipend or an increase on their hourly wages, but I can’t because the cost of everything has went up, and parents just can’t pay.’ After expenses — payroll, utilities, mortgage payments, food, and supplies — Ms. Davis’s take-home pay is often around $2 an hour.”
“‘You do not make a living doing child care,’ she said. ‘Why do I do it? Because I love making a difference in a child’s life.’” READ MORE
In California, an unusual law allows employees to sue employers on behalf of other employees: “Now a battle is shaping up over the law, known as the Private Attorneys General Act, or PAGA. An initiative seeking to replace PAGA will appear on the ballot in California in November, the culmination of long-standing efforts by corporate and industry groups to undo the law. Two reports released last week offer dueling narratives about whether PAGA helps or hurts workers — marking the opening of a potentially expensive fight over the landmark law that relatively few know about.”
“Labor researchers say that the ballot measure, if approved, would harm employees, particularly people with low-wage jobs, by taking away their ability to file what are essentially class-action suits against employers that allege labor law violations. The ballot measure also would weaken the state’s already strained system for enforcing workplace laws, the researchers say.”
“But the business coalition backing the ballot initiative, called the Fair Play and Employer Accountability Act, counters that the labor law has resulted in a proliferation of lawsuits that small businesses and nonprofits have little ability to fight. Workers end up getting less money after a long legal process than if they had filed complaints through state agencies, the initiative’s proponents say.”
“Backers emphasize it also offers replacement provisions that would bolster state agency enforcement of workplace rules. Replacement provisions include doubling penalties for employers ‘willfully’ violating labor law, requiring 100 percent of monetary penalties to be awarded to harmed employees (rather than the current division of 25 percent to the employee and 75 percent to the state of California), and requiring that the state provide employers with resources to help with coming into compliance.” READ MORE
There’s a debate raging about early-morning meetings: “A clip from the business comedy podcast ‘Demoted’ that recently made the rounds on TikTok has unleashed a wave of commentary about meeting times. One of the hosts read a listener email about a Gen Z employee missing an 8 a.m. meeting because of a workout class. The conversation went viral, with various tweets sharing the clip reaching more than 29 million views. On TikTok, those sharing and debating the now-deleted video led to more than 250,000 likes, and subsequent discussion garnered millions of views.”
“Red Thread PR in Philadelphia designates the same working hours for all employees—9 a.m. to 5:30 p.m.—and discourages them from sending nonurgent emails between 8 p.m. and 8 a.m., says Laura Emanuel, the firm’s managing director. Most employees are in the same time zone, but their clients might not be. If there’s ever a need to have an early or late meeting, Emanuel asks ahead of time. And if employees do end up taking a meeting outside of working hours, she tells them to leave early or arrive later the next day.”
“Joey Hodges, a chief executive of a marketing and communications agency, normally takes 8 a.m. meetings at least three days a week. Hodges, who is based in San Francisco, sees it as a reality of working with global clients while living on the West Coast. ‘I developed the early-riser mentality, because so much had already happened by the time I woke up’ out West, Hodges says. While he makes himself available at 8 a.m., he doesn’t expect everyone on his team to log on early.”
“Jake Rudy, a human-resources specialist in Minneapolis, says 8 a.m. meetings give him sleep stress. Rudy, whose workdays normally begin at 9 a.m., finds he doesn’t sleep as well when he knows he has to get up earlier than usual. ‘If I have to push myself to an 8 o’clock meeting, I really had better have a good reason for being there,’ says Rudy, 36 years old.” READ MORE
MARKETING
A married couple has been skewering influencer culture on TikTok: “‘My husband and I have removed the bottoms of all our shoes,’ Christi Fritz says in a voiceover of their most viral TikTok video, with 56 million views. The video shows her husband, Seth Fritz, using a small saw tool, to cut through the rubber on a sneaker, while Christi extols the virtues of going barefoot. ‘We decided to start walking barefoot,’ Christi explains. (‘Grounding’ or ‘earthing’ is a Gwenyth Paltrow-endorsed practice meant to commune with nature by walking barefoot on the soil. There are, indeed, ‘grounding’ influencers.) But the couple had encountered a problem.”
“In an earlier video, Christi was kicked out of a Sephora for lacking shoes. ‘Since some businesses don't want us being completely barefoot, if we cut off the bottoms of our shoes, we can blend in with everyone else.’ The couple puts on their sole-less sneakers — Christi mentions that their entire shoe collection is worth $20,000 — and walks back confidently into a Sephora.”
“The Fritzes were, in fact, joking. The hugely viral video was part of a long set of deftly executed satire they've been doing on TikTok. ‘I would consider it comedy. I guess other people like to see it as satire,’ Christi told Business Insider.”
“I first came across the Fritzes in a video where Christi talks about how they had set themselves a $20,000 budget for holiday gifts for their young children. At first watch, I seethed. How dare they?! The hair on the back of my neck stood up. My blood boiled. I watched again — wait, is this a joke? I wasn't sure. I scrolled through their page, looking for clues.”
“Their satire is so delicious because it skewers the kind of mindless consumption that permeates social media: influencers flaunting their wealth and boring tastes — everyone with the same overpriced Stanley cup, Lululemon sweatshirt, and Dior lip oil.” READ MORE
RETAIL
Maybe shopping malls and downtowns do have a future: “Ingka Group, the operator of most of the world’s IKEA stores, has assembled its own mall empire in recent years, spanning from China to Europe to the U.S., and says it wants to buy more locations as it aims to diversify beyond retail. The company’s blueprint is to anchor its malls with an IKEA store and seek to pull in more would-be shoppers with additions such as WeWork-style co-working spaces, Nordic-themed food halls, and children’s play areas inspired by outer space.”
“Ingka opened its first mall, or meeting place as it calls them, in 1973 in Sundsvall, Sweden, together with an IKEA store. In recent years the company has expanded its real-estate business, opening a string of new malls, and says it is actively looking to buy and develop more locations, including in the U.S.”
“Ingka’s push into malls has latterly been driven by the invention of a new compact-format IKEA store, designed for the city centers rather than its typical suburban warehouses. IKEA is rolling out downtown stores globally to tap into an urban audience it believes is underserved by its out-of-town locations.”
“Ingka prefers to open downtown IKEAs in its own properties, where it has free rein to construct them to its preferred specifications and where it doesn’t have to pay rent.” READ MORE
THE ECONOMY
Goldman Sachs says that the more Americans take Ozempic, the more the economy will grow: “The thinking behind Goldman's forecast is that poor health burdens economic growth because it can weigh heavily on the total labor supply and hours worked through elevated frequencies of ‘missed days’ at work, early death, and informal caregiving that takes people out of the workforce. ‘Combining current losses in hours worked and labor force participation from sickness and disability, early deaths, and informal caregiving, we estimate that GDP would potentially be over 10 percent higher if poor health outcomes did not limit labor supply in the U.S.,’ Jan Hatzius, the chief economist at Goldman Sachs, said.”
“GLP-1 drugs from Novo Nordisk and Eli Lilly and Company are sold under the brand names Ozempic and Mounjaro to treat type 2 diabetes, and under the names Wegovy and Zepbound to treat obesity.”
“The drugs have seen sales explode as some users have counted drastic weight loss of up to 20 percent of body weight, improved sleep-apnea symptoms, and a reduced number of cardiac events such as strokes and heart attacks among the benefits.” READ MORE
THE 21 HATS PODCAST
That Would Put Me Out of Business: This week, Mel Gravely, Liz Picarazzi, and Jaci Russo talk about how they set prices. Jaci explains why she refuses to respond to requests for proposal. “We have not participated in a single RFP in 15 years,” she says, “and we won’t under my watch.” Mel explains how his construction company manages to get work despite always being among the highest-priced bidders (which is why he never gets government jobs). And Liz tells us what happened when she was forced to raise prices because of the tariffs placed on goods manufactured in China. But first, she tells us what she’s thinking now that there’s a possibility those tariffs could go to 60 percent. Plus: we review how the three owners handle employee reviews.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren