Are Solopreneurs Real Business Owners?

Harry Elston calls out the most recent 21 Hats Podcast for demeaning one-person businesses.

Good Morning!

Here are today’s highlights:            

• There’s a way to explain dynamic pricing, but it’s not the one Wendy’s used.

• Jason Fried says, by and large, we’re not teaching entrepreneurship very well.

• A survey indicates a lot of CEOs have been stepping down of late.

• The competition for your airport-lounge business is heating up.

SOLOPRENEURSHIP

Harry Elston, long-time friend of 21 Hats, thinks our most recent podcast demeaned solopreneurs: “On Episode 185, Sarah Segal once again alluded that independent contractors are not small businesses or business owners and that freelancers/contractors are somehow not worthy of peerage as a small business. I’d like to challenge that thinking: Midwest Chemical Safety, LLC is a company of one. Yes, I am an independent contractor who is the owner and employee of the company. But does that relieve me of the burden of doing business in a business-like fashion? I think not. For example, on any given day, I must: Negotiate 5- and 6-figure contracts. Manage people—primarily manage client expectations and occasionally have hard conversations with clients when I have to let them go. Manage projects professionally, including contract scope changes which influence cost/scheduling. (That always leads to some hard conversations!) Do business promotion (such as it is…). Do all those behind-the-scenes business things: accounting, payroll, client and project scheduling, holding client’s hands, etc. – all of which must be done professionally.”

• “Exactly what part of those things that must be juggled is not worthy of business-status recognition? I would like to challenge Sarah to name one business function outside HR that she must do that MCS doesn’t? She asks, ‘Do people really want to start a business just to be one person in their business?’ As Jay [Goltz] pointed out, the answer is, ‘Yes.’ I concur.”

• “However, Jay is flat out wrong when he states, ‘They [freelancers/independent contractors] can’t handle managing people. Managing people takes courage and takes confrontation…’ and goes on to equate the lack of ability to manage people to not having the desire to manage them. He should know better than that, given his penchant for stating there are no absolutes.”

• “I submit that it takes courage to confront a client who is going off the rails so far that they need to be let go for liability reasons—even when they represent double-digit percentages of the corporate income. I have chosen to remain a solopreneur with the full knowledge that the corporate income will be limited to roughly 2,000 hours times my hourly rate. And that is good enough.”

PRICING

Wendy’s may have botched its announcement, but dynamic pricing is here to stay: “Wendy's has sparked some pretty understandable outrage after announcing it's going to start experimenting with surge pricing next year — in essence, changing the price of various menu items based on demand and the time of day. The chain is spending $20 million to outfit all its U.S. restaurants with digital menu boards, which executives said would allow locations to play it a little faster and looser with menu selections and prices. ‘Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and daypart offerings along with AI-enabled menu changes and suggestive selling,’ Kirk Tanner, the CEO and president of Wendy's, said in the chain's fourth-quarter earnings call.”

• “Many people aren't thrilled at the idea of a Frosty costing extra because it's hot outside and everybody else is also jonesing for a cool, sweet treat or waiting in line for some nuggets and suddenly seeing the price change when they're next at the register.”

• “In a different world, you could imagine the company laying this out as a win for consumers: ‘Come on in and get a discount on your favorite Wendy's sandwich when business is slow.’ That is not, however, the route it took — which is what's coming back to bite the chain.”

• “In a Capterra survey of U.S. consumers, 52 percent of respondents said they thought [dynamic pricing] amounted to price gouging, and only 34 percent said they thought it benefited consumers. Nearly two-thirds said it made it more difficult to budget their restaurant spending, and one-third said they'd order less frequently from restaurants that implement the practice.”

• “This makes sense: Nobody wants to drive 20 minutes to pick up food during their lunch hour and then discover they're on the hook for $5 more than they bargained for.” READ MORE

ENTREPRENEURSHIP

Jason Fried questions whether we really understand how to teach business building: “Imagine teaching guitar without putting an instrument in someone’s hands. Or teaching ceramics without having people work with clay. Or teaching tennis without swinging the racket and hitting balls. I’m sure there’s some way to teach those things without doing those things, but come on, we all know you have to do those things to really learn those things. I believe business is in the same category. It’s much closer to learning an art, sport, or instrument than it is to learning history, political science, or another subject primarily taught through written texts, lectures, or observing without doing.”

• “Yet how many entrepreneurship programs out there require their students to start a real business? They may exist, but I’ve been around and haven’t seen one yet. It can be the simplest damn business — buying and selling on eBay, for example — but it’s got to be a business with costs, products or services, and sales to customers.”

• “Give me two people — Person A has spent two years in business school studying how to start a business that doesn’t yet exist. Person B has never set foot in business school, but has been running their own business for two years. Who’s learned more about entrepreneurship along the way? Who has the advantage in year three? I know who I’m picking.” READ MORE

MANAGEMENT

A growing number of CEOs have been walking away: “The outplacement firm Challenger, Gray & Christmas reported Tuesday that nearly 200 CEOs stepped down in January, and that in all of 2023, over 1,900 headed for the exits. That’s the most the firm has reported since the mid-2010s, at least. When a CEO steps down, that likely means one of two things, said Yo-Jud Cheng at the University of Virginia’s Darden School of Business. ‘It can indicate that things are good, the economy is stable, the firm is performing well, CEOs are collaborating with their boards to set a transition timeline,’ she said. And then there are the times when a CEO is pushed out or leaves abruptly, which could mean ‘increasing competition, poor performance, basically, resulting in more CEOs being pressured out of their roles,’ she said.”

• “Both of these scenarios probably played out with chief executives who stepped down last year, but Andy Challenger of Challenger, Gray & Christmas thinks one theme might run through a lot of them: the pandemic. ‘Companies were loath to let go of their leaders in the middle of a crisis,’ he said.”

• “Now, he said, they’re not. That’s because the economy’s more stable, and companies see an opportunity to make a change. ‘It is actually a positive sign of more certainty, more ability to make long-term major decisions at a company than we’ve seen over the past few years,’ he said.” READ MORE

BUSINESS TRAVEL

There’s an arms race for airport-lounge supremacy: “If you want a peek into the one-upmanship under way to win your airport free time and travel and credit-card loyalty, spend an afternoon at Denver International Airport. Yes, there’s a giant new American Express lounge in Atlanta and shiny new Chase lounges at LaGuardia and JFK. But no U.S. airport can beat that new-lounge smell flowing into Denver’s concourses. The busting-at-the-seams Colorado hub is a hotbed of new lounges, rife with high-quality grab-and-go food, custom IPAs, and shrimp banh mi. The upgrades underscore the high stakes to woo big-spending travelers and are a preview of things to come at an airport near you.”

• “Capital One, a recent lounge entrant competing with American Express and Chase for travel-loving premium cardholders, opened its third lounge in Denver. United Airlines, the airport’s busiest carrier, opened two new lounges in Denver last summer—one is its largest worldwide. It joined Club Fly, United’s first and only grab-and-go market for club members in a rush, which was launched in 2022.”

• “A third United lounge is under renovation and scheduled to open in 2025. And there are plans for an even fancier dedicated lounge for travelers booking United’s pricey Polaris business-class tickets. United made a big bet early in the pandemic on an eventual rebound in premium travel demand and doubled down on lounge space and premium seats in places like Denver and Newark, N.J.” READ MORE

HUMAN RESOURCES

The employment rate for people with disabilities has hit a record high: “These are people who face huge obstacles in landing jobs; that more of them are employed is a sign of a strong labor market, post-pandemic changes, and the rise of remote employment. The Bureau of Labor Statistics classifies someone as disabled if they're deaf or seriously hard of hearing; blind or seriously vision-impaired; or have difficulty doing things like walking, dressing or bathing; or have severe issues concentrating or remembering, among other things.”

• “The ability to work from home has been a boon to many disabled workers, who no longer need to contend with an arduous commute and have more flexibility to configure a work set-up that accommodates their needs.”

• “The shift happened at the same time there's been an increase in the overall share of Americans who are disabled. 12.5 percent of Americans were disabled in 2023, up from 11.7 percent in 2019, according to BLS data cited in a report from the National Partnership for Women and Family.” READ MORE

Immigration has propelled the U.S. job market: “About 50 percent of the labor market’s extraordinary recent growth came from foreign-born workers between January 2023 and January 2024, according to an Economic Policy Institute analysis of federal data. And even before that, by the middle of 2022, the foreign-born labor force had grown so fast that it closed the labor force gap created by the pandemic, according to research from the Federal Reserve Bank of San Francisco. Immigrant workers also recovered much faster than native-born workers from the pandemic’s disruptions, and many saw some of the largest wage gains in industries eager to hire.”

• “In Dalton, Ga. — known as the ‘Carpet Capital of the World’ — Jan Pourquoi said the entire economy would collapse without immigrant workers. Pourquoi owns a rug company with a warehouse near the city’s railroad tracks and pays $11 an hour for jobs like cutting and sewing door and bathroom mats. He said that he doesn’t question anyone’s paperwork, and that he knows workers will reliably line up at his door looking for openings every morning.”

• “Pourquoi emigrated from Belgium 37 years ago and said he understands his workers’ desire for more job security. But he also said that more needs to be done to stop the flow of immigration at the southern border, and that the government is responsible for opening pathways to citizenship that would make economic security more certain.”

• “As for his business, if stricter immigration policies slashed his workforce and he had to raise wages to $15 an hour, he wouldn’t be able to compete against foreign firms with cheaper wholesale prices. ‘If I was a poor Mexican, I would be the first one to cross the Rio Grande illegally myself,’ he said. ‘I don’t blame these people. I blame our politicians and our government for letting it happen.” READ MORE

THE 21 HATS PODCAST

Managing Your Tasks, Your Credit Cards, and Your Anxiety: This week, Jay Goltz, Jaci Russo, and Sarah Segal talk about whether it’s finally time for Jay to enter the brave new world of task-management software. That’s, in fact, what his two kids in the business are encouraging him to do. As it happens, Jaci and Sarah have tried most of the project-management tools out there, and they kind of love them—but with one caveat: They can be a lot of work. Which is all Jay needed to hear. After that, we talk about the challenges of managing credit cards and points, and Jay explains why, after 40 years, American Express is no longer what’s in his wallet.”

• Plus: the owners tackle a question posed by an entrepreneur with a very new startup: “When does the anxiety of a new business subside?” asks the newbie, which prompts some laughter and this answer: The anxiety subsides in the 42nd year, says Jay, who’s been running his business for 42 years.

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

Thanks for reading, everyone. — Loren