Buy the Building
At the end, the real estate is often worth more than the business.
Good morning!
Here are today’s highlights:
The Producer Price Index, which signals where inflation is headed, stayed low in November.
More companies see the monitoring of employees as a tradeoff for remote work.
There’s a problem with charging by the hour, but Gene Marks does it anyway.
What do you do when your customers keep dying?
CLOSING TIME
The closing of a San Jose institution is another reminder that, when possible, it’s nice to own the building: “One of the few remaining symbols of San Jose’s agricultural era will shutter at the end of this month. Sam’s Downtown Feed on 759 W. San Carlos St. — famous for its life-sized horse statue in the parking lot — has served as a bedrock for the region’s farmers and pet owners for over three decades. Located in a 100-plus-year-old warehouse, the large brick building’s basement is also rumored to have been a speakeasy during Prohibition times. ‘It makes me melancholy,’ said Lisa Blackford, who co-owns the business with her husband, Sam, about the closure. ‘But you can’t expect things to last forever.’”
“Blackford said a multitude of factors have contributed to the closure, including Sam’s health and the challenges that the pandemic is posing to small businesses.”
“Walking in feels like stepping back in time — there’s not a single computer in the whole store, even behind the register. Established in 1986, the Blackford family name and legacy in what is now Silicon Valley go back even further, when Sam’s family came to the region in 1860 to grow prunes and apricots.”
“With its interior walls draped with old grain sacks and art handed down from longtime customers, the store is an emporium for those who have a cat all the way up to a stable of horses. Myriad grains, farming equipment and even animal-themed sympathy cards are for sale.”
“The property, which has a separate owner, is currently on the market for $5.2 million.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
The Problem with Charging by the Hour: This week, Gene Marks talks about how charging by the hour actually punishes you for being good at your job—but there’s a good reason Gene does it anyway. Plus: Gene also discusses his one concern about hiring ex-offenders and issues a warning to business owners about their remote employees: Gene thinks they’re probably stealing from you.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
THE ECONOMY
Inflation for U.S. companies remained low in November: “The Producer Price Index rose by 0.3 percent in the month of November, slightly above economists’ expectations. Economists surveyed by Factset expected a 0.2 percent increase in the index in November.”
“The increase is the same as October’s and represents an overall slowdown in producer prices, as the year-over-year change in producer prices fell from 8 percent to 7.4 percent.”
“‘Easing producer prices foreshadow an improving inflation environment,’ said Jeffrey Roach, chief economist for LPL Financial, in an email. ‘The Fed will likely downshift the pace of rate hikes next week and should continue to downshift in 2023.’” READ MORE
SMALLBIZ TECH
AWS is offering businesses a new tool for supply-chain management: “Amazon Web Services is delving into supply-chain management with a new cloud-based application to help businesses manage their inventory and coordinate their networks of manufacturers, suppliers, distribution facilities, and transportation providers. The machine learning-powered software, which is now available in preview, offers a real-time visual map of a company's entire supply chain network and aggregates data from other enterprise applications and suppliers into a single system. Based on that information, the application offers automated alerts and recommendations about inventory rebalancing, lead times, and potential risks, such as backlogs or stocks that are running low.”
“Nearly a third of business owners report that supply-chain disruptions have had a significant impact on their business, according to the most recent monthly report from the National Federation of Independent Business. Of those surveyed, only one out of 10 said that their business had not been impacted by recent supply-chain disruptions.”
“Amazon, which ships 1.6 million packages a day, could be uniquely situated to solve the supply-chain crunch for other businesses, because the homegrown tool harnesses Amazon's own expertise and data.” READ MORE
HUMAN RESOURCES
More companies are choosing to monitor remote employees: “Virtual private network provider ExpressVPN revealed that 78 percent of the 2,000 employers surveyed in 2021 reported that they use monitoring software to track employee performance, online activity, or both. Demand continues to grow incrementally each year, according to an analysis of internet search volume conducted by Top10VPN, a virtual private network review site. It found that broad, as well as brand-specific, searches for monitoring software were up 63 percent in 2022, compared with 2019.
“Interest in the technology may be the result of a troubling disconnect between managers and employees in terms of expectations. According to a Microsoft survey of 20,000 people in 11 countries, 87 percent of workers felt they were just as efficient at home as in the office. Meanwhile, 85 percent of business leaders say the shift to hybrid work has made it challenging to ensure employees are being productive.”
“‘We are in this new phase of business evolution, human evolution,’ says Elizabeth Harz, CEO of Awareness Technologies, which offers Veriato and InterGuard employee-monitoring products. ‘People are not going back to 8 a.m. to 6 p.m. in corporations around the world. There are certain ones bringing people back, but by and large there is flexibility.’”
“She argues that monitoring software is part of that tradeoff. ‘This is how people end up having flexibility and not going into the office all the time,’ she says. ‘It’s a give and take between the employee and the employer to embrace the future of work.’” READ MORE
Gen Z has not just its own sensibilities but even its own language: “Generation Z — defined by Pew Research Center as those born between 1997 and 2012 — is bringing its own style of communication to the workplace. As conversations have increasingly moved online to text-driven environments, Gen Z’s form of messaging is creating a quirky challenge for multigenerational workplaces: the potential for confusing, anxiety-inducing, and sometimes comical miscommunication.”
“[Mary Clare] Wall said using ‘slay,’ which to Generation Z means ‘good job’ or ‘killing it,’ is one of the many examples of how she and some of her older colleagues miscommunicate. Miscommunication also happens through uses of punctuation, phrases and emojis.”
“‘I [had to] give an almost definition of the word ‘slay,’ she said. ‘Now they all text me slay. They’re excited they know how to use it.’”
“Janvi Kalra, a 23-year-old software engineer at San Francisco-based start-up Coda, agrees, noting that sometimes zoomers interpret periods as passive aggressive or cold because it’s so formal. But older colleagues prefer to use full sentences, complete with periods.”
“Alyssa Velez, a 23-year-old media relations specialist in Chicago, said she had to adjust to seeing periods at the end of a sentence in Slack and email messages from her colleagues. Once she received a comment from a colleague saying ‘good job.’ But the period made her second guess whether she was actually being praised. ‘I’m like, Is it a good job?’ she said.” READ MORE
Here’s how Howard Schultz is fighting unionization: “Mr. Schultz, 69, appears intent on defusing interest in a union before he leaves the company next spring for the third — and, dare one say, final — time. He has thrown himself into providing new benefits and wage increases but withheld them from employees in the union, which represents about 2 percent of the company’s U.S. work force of more than 250,000. When asked in an interview in June if he could ever imagine embracing the union, Mr. Schultz responded with a single immovable word: ‘No.’”
“At Starbucks, Mr. Schultz’s resistance to a union appears to be a matter of self-image, according to those who know him: He prefers to see himself as a generous boss, not a boss who is forced to treat employees generously.”
“One reason Mr. Schultz did not always appreciate how conditions had deteriorated for Starbucks workers is that he operated at a remove from their frustrations. When Mr. Schultz visited, operations officials often ensured that stores looked and functioned immaculately. When he appeared at company events, he was hailed as a rock star.”
“If the union manages to wring significant concessions from Starbucks, it could accelerate organizing elsewhere and help change the relationship between management and labor across the country.” READ MORE
STARTUPS
Some states are making it easier to start businesses: “If you're considering starting a business, like the 5.4 million Americans who did last year, the ease of the process varies depending on where you live. Over the past couple years, some states have made entrepreneurship easier by passing legislation that lifted certain restrictions, enacted tax breaks for young companies, and banned red tape that can make it difficult for some to survive.” For example:
“In 2021, Missouri passed the Right to Start Act, which outlines plans to make the state a better place for entrepreneurs to get their businesses up and running. ... The bill requires the government to award 5 percent of all state contracts to startups that have been operating for less than five years, nullifies non-compete clauses in worker contracts, and establishes an office of entrepreneurship. There are also several tax provisions for companies less than five years old.”
“Businesses in Colorado can apply for the Employee Ownership Tax Credit to allow employee shareholding in exchange for a tax break. The state covers half the cost of converting a company's equity into stock-ownership plans, employee-ownership trusts, or worker cooperatives. The tax provision, which is credited on a company's state income tax, will continue through 2027.”
“In 2019, Arizona became the first state to pass universal licensing legislation. The law allows professionals to receive a new license as long as they have valid certification in good standing in another state. This applies to barbers, chiropractors, contractors, cosmetologists, dentists, real-estate agents, and others.” READ MORE
HEALTH
What do you do when your customers keep dying? The hospice industry found an answer: “It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care. Medicare pays providers a set rate per patient per day, regardless of how much help they deliver. Since most hospice care takes place at home and nurses aren’t required to visit more than twice a month, it’s not difficult to keep overhead low and to outsource the bulk of the labor to unpaid family members—assuming that willing family members are at hand.”
“[Marsha Farmer] tried not to mention death in her opening pitch, or even hospice if she could avoid it. Instead, she described an amazing government benefit that offered medications, nursing visits, nutritional supplements, and light housekeeping—all for free.”
“She sent colleagues to cadge rides on the Meals on Wheels van or to chat up veterans at the American Legion bar. ‘We’d find run-down places where people were more on the poverty line,’ she told me. ‘You’re looking for uneducated people, if you will, because you’re able to provide something to them and meet a need.’”
“‘Why not try us just for a few days?’ she’d ask families, glancing down at her watch as she’d been trained to do, to pressure them into a quick decision.”
“When Farmer started out in the hospice business, in 2002, it felt less like a sales gig than like a calling.” READ MORE
THE 21 HATS PODCAST
I Want to Double Sales Again Next Year: This week, Shawn Busse, Paul Downs, and Liz Picarazzi talk about their plans and goals for 2023. Shawn, whose marketing efforts still haven’t recovered from the pandemic, is hoping to build on the success of a recent event. Paul, coming off his best year ever, is investing $150,000 in a marketing campaign, including a new website targeting a different set of customers. And Liz, too, is attempting to shift her customer base, in her case from residential to municipal work. More immediately, however, Liz, who does not relish dealing with legal issues, has to decide how to confront a copycat competitor.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren