Apocalypse Soon!
For decades, businesses have been stuffing their websites with keywords in the hope that Google would discover them and rank them. It’s not clear that that’s going to keep working.
Good Morning!
Scheduling note: In observance of Juneteenth, the Morning Report will not be published Wednesday. It will return on Thursday.
Here are today’s highlights:
As Google searches become less helpful, an interesting hack has surfaced. (You can even Google it.)
Would you pay $4.2 million (plus inventory) for a van-life ecommerce business?
Despite the hype, there’s still no killer AI app for small businesses.
An entrepreneur who knew he was working too hard dies at 45.
THE 21 HATS PODCAST
What Will Businesses Do if SEO Dies? This week, Shawn Busse, Liz Picarazzi, and Jaci Russo talk about how the marketing world is turning upside down. For decades, business owners have treated search engine optimization as something of a religion. They may not have been able to explain it, but they had faith that, if they obeyed the rules, Google would discover their sites and rank them. But search engines are getting a lot less generous about sharing links, and Shawn fears there’s an apocalypse coming for businesses that rely too heavily on SEO. Jaci’s a little more optimistic: “There'll be some other places to go get free traffic,” she says. “There always are.”
Plus: Liz gives us an update on her recent trip to Vietnam in search of a contract manufacturer. And in a case study ripped right from the subreddit headlines, I ask the three owners: What do you do if a loyal, hard-working employee starts a side hustle selling a product that doesn’t compete with your product but looks a whole lot like it?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
SOCIAL MEDIA
Frustrated with Google, some searchers have found a hack that uses Reddit as a search engine: “Reddit, which went public in March, is a social network with 82.7 million daily active users who gather and usually post anonymously in groups called subreddits. Users can ‘upvote’ or ‘downvote’ what others contribute, surfacing what are considered the best responses. The decision to turn to Reddit is happening because many people are unhappy with their Google results. This is partly because the importance of ranking high on Google has led companies to game the system, clogging results with unhelpful links. There are misleading ads, a barrage of sponsored shopping links, and dicey websites claiming to be experts when they aren’t. Some people turn to AI chatbots like ChatGPT for answers, but others are now adding ‘Reddit’ to the end of any Google search string to surface comments by real people.”
“Ryan Bender, a publicist working in entertainment and technology in Los Angeles, views Reddit as a ‘two-way Wikipedia’ service. You can do research and also find a community to keep chatting about a topic. Reddit isn’t great for information like when a baseball game starts, but it’s helpful when you want various viewpoints.”
“Bender, 35 years old and the parent of a 3-year-old, recently came across a social-media ad for a sale on toddler clothing. He googled the name of the company with ‘ad too good to be true.’ The first result was a Reddit thread where several people said they had fallen for the scam. Others pointed out site details that could indicate fraud. ‘With Reddit, you are talking to like-minded people with nothing to gain outside of sharing their opinions,’ Bender says.”
“The key to searching on Reddit … is not searching on Reddit. Instead, add the word to Google searches, say power users.”
“Also important: People on Reddit sometimes joke around. A notorious AI-generated Google recommendation to add glue to pizza is believed to have started as a Reddit comment 11 years ago. (Google declined to confirm that.)” READ MORE
It’s getting harder to make a living as an influencer: “Platforms are doling out less money for popular posts, and brands are being pickier about what they want out of sponsorship deals. The real possibility of TikTok potentially shutting down in 2025 is adding to creators’ anxiety over whether they can afford to stick with the job for the long haul. Hundreds of millions of people around the globe regularly post videos and photos to entertain or educate social-media users. About 50 million earn money from it, according to a 2023 report from Goldman Sachs. The investment bank expects the number of creator-earners to grow at an annual rate of 10 percent to 20 percent through 2028, crowding the field even further. The Labor Department doesn’t track wages for these creators, also known as influencers.”
“This year, U.S. social-media creators as a whole are expected to make $13.7 billion, according to Emarketer. The research firm projects the majority of that—$8.14 billion, or 59 percent—will come from brand sponsorships. Advertisers have always led in compensating creators, paying out far more money than the social-media platforms and fans who buy merchandise or dole out tips.”
“But these days, advertisers expect more from creators than just large followings, according to agency and talent representatives. They want to see evidence of strong engagement in the form of saved and shared posts, plus the demographics of creators’ audiences. ‘Brands are looking at metrics that are far less predictable for creators and also very difficult to price yourself on,’ says Sarah Peretz, a business-strategy consultant in Los Angeles who helps creators negotiate partnerships and deals with advertisers.” READ MORE
BUSINESS FOR SALE
Michael Girdley evaluates a van-life ecommerce business that claims lots of organic traffic, a 10x return on its ad spend, and a catalog of 600 SKUs: “Let’s start with the niche market. Selling van-life products means you’re targeting a passionate community that most people aren’t catering to. And these folks have built up a 5-star Google rating, so they’re already a trusted source. Next: their web game is strong. If they’re driving 100,000 sessions a month of organic traffic — without heavy reliance on paid advertising — they are definitely doing something right!”
“Then there’s the strong ecommerce setup. Their sales are spread over their catalog, with the top SKU only making up 12 percent of sales. That’s a great sign for an online business. And all this stuff has serious growth potential. Improve the website, spend some more money on ads, and put in the time that the current owners aren’t. … you could see big moves in not too long.”
“The numbers: Asking $4.2 million, based on $1.2 million net income. But that price is ‘plus inventory,’ and they claim an average order value of $900-plus. So that could be steep! Also: a 5-star Google rating, which is a big win for an ecommerce business.”
“One big question: has #vanlife peaked? It was definitely a boom during Covid, but there’s no guarantee it’ll stay big or grow. Then there’s the fact that 70 percent of the orders are self-fulfilled. Managing a warehouse is a headache for day to day operations, and also puts a logistical ceiling on your potential growth.” SUBSCRIBE HERE
ARTIFICIAL INTELLIGENCE
Most companies are still figuring out what to do with AI: “Allison Giddens, a co-president at Win-Tech, an aerospace manufacturing company with 41 employees in Kennesaw, Ga., said she started using ChatGPT about six months ago for some operational tasks, like writing emails to employees, analyzing data and drafting basic procedures for the company’s front office. A note taped to her computer monitor says simply ‘ChatGPT’ to remind her to use the technology. ‘We have to get in the habit of actually using the tool,’ she said.”
“But she faces hurdles in implementing it more broadly and using it to make her company more efficient. Sometimes she finds ChatGPT’s responses off base. Cybersecurity is important in her industry, so she must be careful about the information she feeds into A.I. models.”
“And she hasn’t found a place for the technology on the factory floor, where machinists make custom aluminum and titanium parts for the defense industry. ‘There’s not a whole heck of a lot of use cases for the shop floor yet,’ she said.”
“David Duncan, the chief executive of First Hospitality, a hotel management company in Chicago, said the company was working to ensure that its internal financial data could be used by A.I. systems in the future. ‘We’re planning for the next generation of applications of A.I.,’ he said.
“Mr. Duncan said he envisioned using A.I. to analyze this data and create initial drafts of reports, freeing up executives and general managers. The company, with about 3,600 employees, also hopes to leverage A.I. to analyze weekly surveys of workers over the course of a year to glean insights about trends in their teams’ overall morale.” READ MORE
HUMAN RESOURCES
The Biden administration is announcing a plan that will shield undocumented spouses of U.S. citizens from deportation: “The plan grants parole in place to undocumented people who have been in the U.S. for 10 years and have been married to a U.S. citizen since June 17 or prior. It does not apply to immigrants who have been previously deported. According to the communication distributed Monday by the White House, nearly 500,000 undocumented spouses would qualify for this relief. Additionally, 50,000 non-citizen stepchildren with a U.S. citizen parent would also be eligible for this protection. Those who are eligible will have their case assessed by the Department of Homeland Security. If approved, they’ll be given three years to apply for permanent residency.”
“Biden’s plan intends to keep families together, said senior White House officials who asked not to be identified because the information they provided will be announced on Tuesday by the president. ‘These actions will promote family unity and strengthen our economy, providing a significant benefit to the country and helping U.S. citizens and their noncitizen family members stay together.’”
“‘Employers are thrilled,’ says Rebecca Shi, executive director of the American Business Immigration Coalition. ‘We have a very tight labor market. And for years, employers have been saying, hey, we need to have a path to legal status for people that have been working, paying taxes, and are now married or have U.S. citizen children.’”
“Parole authority is an executive power, meaning a different administration could pause Biden’s order.” READ MORE
Unless a court intervenes, thousands of businesses could see overtime pay start to spike on July 1: “The changes, which are opposed by a number of business groups, could significantly increase costs for businesses and make millions of salaried workers newly eligible for overtime pay. Under the terms of the new rule, which was finalized by the Department of Labor on April 22, the annual salary threshold under which non-exempt workers would be eligible for overtime will go from $35,568 to $43,888 starting July 1. On Jan. 1, that threshold will increase further, to $58,656 — a 64 percent increase from its current level.”
“Essentially, businesses will have to raise the salaries of workers who are currently working for less than the new threshold to avoid paying overtime — or, instead, institute overtime pay for those employees, which means paying them time and a half for every hour above 40 hours per week.”
“‘My first piece of advice is to get expert help, especially if you are converting previously exempt positions to non-exempt roles,’ said Katherine Roberts, partner at law firm Sidney Austin LLP. ‘There are a number of new rules that you will need to follow and that you will need to train your employees on. Not all of these rules are intuitive, and the consequences for getting things wrong can be significant.’”
“Employment attorneys have noted the rule bears strong similarities to a 2016 overtime rule put forth by the Obama administration that ultimately was overturned by a federal judge after a nationwide injunction was issued against the rule going into effect. Opponents have filed a series of lawsuits against the rule that are asking courts to do the same — stop it from going into effect.” READ MORE
OBITUARY
James Kent, a 45-year-old chef/entrepreneur who was building a restaurant empire, died Saturday of a heart attack: “He met Kelly Clarke on his first day at Fiorello H. LaGuardia High School of Music & Art and Performing Arts in Manhattan. They married in 2008 and had two children, Gavin and Avery. In addition to his wife and children, he is survived by his parents; two older brothers, Rashid and Omar; and a sister, Lina Axel. Mr. Kent and his family lived in the Financial District.”
“Mr. Kent spoke at length about how hard he worked. He said he noticed himself looking fatigued in photographs. He recalled once having a panic attack on showing up to work. He said running had helped him feel more grounded.”
“‘Before running, I only had professional goals,’ he told Bandit. ‘I was like, I want to be the best, learn from the best, and run these incredible restaurants. And then I got to the point where, without the personal goals, I was on the floor thinking I was going to die.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Why Business-Book Advice Doesn’t Work for You: This week, Shawn Busse talks about why the business-advice books we’ve all read often fall flat. Shawn says it’s because much of what they suggest is predicated on a traditional model of a business that makes widgets. As a result, that advice may work fine if you are a manufacturer, but it’s far less likely to help if your product or service is more customized. That may seem obvious but the thinking Shawn describes remains deeply embedded in the small business mindset. One example: the implementation of highly regimented processes. It can be great for some businesses, stifling for others.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
You can also read “Rethinking Your Value Model,” an article Shawn wrote.
Thanks for reading, everyone. — Loren
I finally found the "construction" Instagram account I mentioned the other day: @chichi_charlie. Check it out!