Beyond Trust Falls
In this week’s podcast episode, an event planner explains how she planned her employee retreat and how she responded when asked: “Are you selling?”
Good Morning!
Here are today’s highlights:
High interest rates continue to plague smaller businesses in all industries.
What does it mean when Zoom suggests you get off Zoom?
Elizabeth Holmes is in prison, but other companies are fulfilling the promise of Theranos.
Can one wealthy entrepreneur bring turn Bayonne, N.J. into Hollywood?
THE 21 HATS PODCAST
An Event Planner Plans an Offsite: This week, Shawn Busse, Jay Goltz, and Jennifer Kerhin talk about what it takes to plan and execute an employee retreat—especially in our post-Covid, more-remote environment. Do you go offsite? Do you take everybody? Do you delegate the planning? Do you try to measure the ROI? Jennifer tells us about the interesting responses she got when she encouraged her employees at her retreat to ask her anything. Shawn explains why he let his leadership team do the planning—and didn’t set a budget. Jay, meanwhile, offers a slightly different perspective: “My company retreat,” he tells us, “is I cut back on my advertising. That's my retreat.”
Plus: How well does The E-Myth hold up as a playbook for business owners? Is it still relevant? Or was it written for a type of business that is far less prevalent today? And Jay tells us what he thinks of Wayfair opening a massive brick-and-mortar furniture store right down the expressway from his furniture store.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
FINANCE
For businesses like Erin McKenna’s Bakery, the high interest rates on top of all of the turmoil in recent years can be devastating: ”As it turned out, the food-allergic, kosher vegans of New York were a substantial demographic. And they were substantially excited that someone was finally letting them eat cake. ‘In the beginning, we were the only game in town,’ McKenna recalls. ‘People were coming in droves, and then I got on Martha Stewart.’ That TV spot was a very good thing for McKenna, who suddenly had orders pouring in from across the country. By 2019, she had a multimillion-dollar business with locations in New York, Los Angeles and at Disney World.”
“She was ready to take her thriving business to the next level: opening her biggest shop ever, in a wealthy Santa Monica, California, neighborhood. ‘This location was going to be transformative for us,’ McKenna recalls. ‘I knew the customer. I'm like, 'This is a slam dunk.'”
“It was a major investment, but McKenna had done her homework and she was confident. ‘I took out this massive loan, and we opened in July of 2019.’ Then, of course, came the pandemic and lockdown. ‘It just completely destroyed the business,’ McKenna says. ‘I was trying to make that location work and using all my resources to keep it open.’”
“McKenna’s original loan for the Santa Monica store was for $800,000. When the loan reached maturity a few weeks ago, McKenna still owed about $330,000. She went to refinance her loan, but the interest rate she was offered was 15 percent. That would put her whole business at risk. ‘I'm facing a dilemma of how to refinance my loan without bankrupting my company,’ she says.” READ MORE
SUBSCRIBER REMINDER
Starting Monday, only paid subscribers will receive the full 21 Hats Morning Report every day: But you can keep getting the most important news of the day highlighted specifically for business owners for just nine (tax-deductible) dollars a month (or one annual payment of $99). With a paid subscription, you also get access to the 21 Hats Sounding Board, our dedicated Slack channel, where you can tap the wisdom of a very smart crowd. READ MORE
THE ENTREPRENEURIAL LIFE
Even Zoom thinks we all need a break: “It recently filed a patent application for a ‘remote management of work-life balance scheduling’ tool that would use machine learning to analyze workers’ schedules and remind them to take breaks. Users can select what kinds of breaks they desire — journaling, family time, exercise, etc. — and under what circumstances: For example, users might be reminded to take their medication at a specific time, or prompted to take a walk, or stretch after a long meeting.”
“Breaks can incorporate third-party apps, such as music players, fitness apps, or calendars. Over time, the tool will learn users’ preferences and what activities work best when offering more personalized recommendations and schedules.”
“Zoom must find new ways to remain relevant, especially among competitors like Microsoft Teams, and it seems like it’s leaning on everyone’s favorite hot topic: AI. Last month, Zoom CEO Eric Yuan discussed the AI-powered Zoom Workplace, designed to boost productivity and reduce busy work. His ultimate vision includes a digital twin that could act as employees in meetings it determines they don’t need to attend.” READ MORE
SALES
Michael Girdley says a well written sales script can give even a junior salesperson the tools needed to close deals: “Sales scripts should not be rigid, inflexible checklists that make you sound like a robot (we’ve all gotten those calls). They should be guides. The most successful sales calls will be improvised, letting the sales person have a real conversation that’s informed by your script, not dictated by it. And the golden rule: use simple, clear language. Make your script easy to understand. Make sure anyone can grasp what you’re offering, without any specialized knowledge.”
“Where should you start? There’s one principle that guides everything. The prospect is always thinking: “What’s in it for me?” Everything should focus on the client and providing value. Customers only care about what you can do for them.”
“Prep work: If you’re in B2B sales, spend the time to understand the landscape of your potential clients. What challenges do they face? Who are the big players? What solutions are other companies offering them? If you’re working through a short enough list, it’s worth doing a little footwork on each client. Check their website, your contact person’s LinkedIn, or other social profiles.”
“Hook: This could be a provocative question, a surprising fact, or a concise statement that highlights a common problem your service solves. The first few seconds of your interaction can make or break the engagement, so start with an opening that grabs attention.” SUBSCRIBE HERE
THE ECONOMY
These have not been easy times for pawn shops: “In 2023, and continuing into 2024, Americans need less money. With salaries rising and unemployment low, the pawn shop sector performed ‘poorly’ through the end of last year, according to IBISWorld, a New York-based market researcher. Indeed, it's been quite a ride for the industry. Paraphrasing IBISWorld, when the number of consumers whose income falls below the poverty line drops, they need such services — in which they effectively use goods as collateral for loans — less.”
“The sector had faced earlier drops in 2020 and 2021 when the federal government provided assistance to those who lost their jobs or made less, the target audience for pawn shops.”
“Over the past five years, industry revenue has dropped annually by 0.3 percent. In 2023, revenue was estimated to have fallen by 4.9 percent, the researcher said.” READ MORE
The momentum for an interest rate cut is building:
STARTUPS
Other companies are realizing the dream that eluded Theranos: “The rise and fall of Theranos—the Silicon Valley startup that promised to revolutionize blood testing but ended dissolved, with its founder Elizabeth Holmes convicted of fraud—cast a pall over the idea that critical medical tests could be run on mere drops of blood. Demand for alternatives to standard blood draws never went away, however. And companies—including Becton Dickinson and Babson Diagnostics, which make the tests rolling out in Austin—have been working out technological kinks that foiled Theranos.”
“Becton’s hand-held finger-prick device and Babson’s sample-handling machine are the first to hit the market. Drawbridge Health received regulatory clearance in April for a device that collects a small amount of blood from the upper arm and can be self-administered at home.”
“Theranos has ‘always been a two-edged sword in that it put a stain on the integrity of the industry that I don’t think will ever go away,’ said Eric Olson, founder and chairman of Babson. ‘And at the same time, it awoke the idea that things can be different.’” READ MORE
OPPORTUNITIES
Arpad Busson wants to recreate the Golden Age of Hollywood in Bayonne, N.J.: Busson’s ambitious 1888 Studios project plans to include 23 soundstages across 17 buildings, encompassing over 1.5 million square feet of end-to-end film-production services, a loading dock, and helipad. As construction begins, Busson said he is partnering with Louis Moore Bacon’s Moore Capital and the Rothschild family.”
“He is capitalizing on New Jersey’s film-industry incentives. The New Jersey Economic Development Authority granted him up to 50 percent of project costs as tax credits, capped at $400 million. He has spent about $100 million and expects a total investment of up to $1.2 billion when the studio is completed in 2026.”
“Demand for soundstages and other production facilities has surged in recent years as Netflix and Amazon were joined by newer players such as Paramount+, Peacock, and Disney to offer streaming services and boost demand for content. While New York City has been the second-largest U.S. studio site after Los Angeles, Busson said he found the package offered by New Jersey more compelling.”
“Busson’s willingness to take on the challenge of cleaning up and developing a brownfield site that others have shied away from has garnered respect and excitement from local officials and residents. The construction alone is expected to bring in 2,000 to 3,000 union-paying jobs, Davis said. Busson said his stages will support fourth-gen “volume” technology for large-scale CGI productions that require huge amounts of power. New Jersey’s PSE&G’s reliable power grid gives 1888 Studios an edge over Queens or Brooklyn stages.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
What We Can Learn from CrowdStrike: This week, Gene Marks explains the global tech outage: what actually happened, how seriously we should take it, and what business owners should do (but probably won’t) before the next outage. Those lessons include: 1) Keep some paper handy. 2) Understand that the internet is going to go down from time to time. 3) Have a disaster-recovery plan. 4) And if you don’t have a disaster-recovery plan, start with ChatGPT.
Gene also discusses the upheaval in the real estate industry and why the CEO of an HR platform, Lattice, wound up on a subreddit called LinkedIn Lunatics.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren