Discover more from The 21 Hats Morning Report
Can Employee Happiness Be Managed?
At Harvard Business School, future M.B.A.s are being taught how to cultivate their teams’ happiness as well as their own.
Here are today’s highlights:
The pandemic has strained the relationship between car dealers and car makers.
Some Silicon Valley startups are rediscovering the joys of bootstrapping.
It’s probably best not to refer to older workers as “dinobabies.”
In Ukraine, entrepreneurs are trying to build businesses despite the threat of war.
Is it unethical for car dealers to charge more than car makers suggest? “Soaring car prices have set off a battle between automakers and independent dealers, with consumers routinely paying hundreds, often thousands, more than the listed price amid a protracted vehicle shortage. Ford and General Motors recently upbraided dealers for ignoring the manufacturer’s suggested retail price, or MSRP, a practice that was practically unheard of a year ago and GM calls ‘unethical.’ They’ve threatened to withhold deliveries of their most popular offerings, including Ford’s buzz-generating F-150 Lightning pickup, and other forthcoming electric vehicle models.”
“But data shows such markups are pervasive across the industry: More than 80 percent of U.S. car buyers paid above MSRP in January, according to auto market research firm Edmunds.”
“Ford and GM’s warnings expose tense undercurrents between legacy carmakers and dealers, which have grown more fraught in recent years as upstart electric vehicle manufacturers like Tesla, Rivian and Lucid sell directly to consumers.”
“Legacy manufacturers, which often are required by state law to sell through dealerships, have conspicuously eyed direct-to-consumer sales strategies in recent years.” READ MORE
Vishal Joshi’s wedtech startup, Joy, grew 187 percent last year with very little marketing: “The former Microsoft engineer created Joy, a virtual wedding planner, when his co-founder’s sister was having trouble navigating dozens of disparate services to pull together her wedding. Experienced at coding cloud products, Joshi decided to create a website that integrated every step — RSVPs, registries, hotel bookings, dinners, and events — in one place, allowing couples and guests to communicate on the same page throughout the process. Soon, many people in their circle were asking for their own website –– so Joshi, Michael Bach, and Kaiwalya Kher quit their jobs and launched their side project as a full-fledged wedding-site builder in 2016.”
“In a crowded space, Joy stands out by having intuitive designs and tech-focused features. Its website builder is free to use, it doesn’t push products or retailers on its registries, and it doesn’t add fees to any services.”
“When an item is fulfilled on a couple’s registry, the manufacturer shares a small cut of sales with Joy — without charging users anything more.”
“Joy banks on happy couples to spread the word of its service — and more happy guests to follow in their footsteps. ‘People spend millions and millions of dollars [in marketing] to get a few weddings, and we get them for free,’ Joshi says.” READ MORE
THE COVID ECONOMY
Mark Zandi, chief economist at Moody’s Analytics, says inflation has peaked: “How is this possible? A close look at the numbers shows that the annual C.P.I. inflation rate reflects the very low base levels of one year ago, when the pandemic had suppressed demand and prices were low. The month-to-month numbers support a different narrative. Consider that monthly C.P.I. rose:
.09 percent in October.
0.7 percent in November.
0.6 percent in December.
0.6 percent in January.
“It’s true that this has been the worst year for inflation in more than 40 years, but we’ve known that for months. What these numbers show is that although inflation is high, it has also been fairly stable on a month-to-month basis. Mr. Zandi, who says he takes ‘a sanguine view,’ expects that the annual C.P.I. numbers will start to decline in several months, whatever the Fed does.” READ MORE
Inflation was hottest last year in Atlanta and in other growing metropolitan regions: “The Atlanta-Sandy Springs-Roswell area saw the highest inflation among metropolitan areas with more than 2.5 million people—9.8 percent for the 12 months through December, according to the Labor Department. Phoenix, St. Louis and Tampa also saw annual inflation rates higher than the 7 percent national rate in December. The San Francisco-Oakland-Hayward area, known as one of the country’s most-expensive places to live, saw 4.2 percent inflation last year, the lowest of any of the 23 large metro areas for which the Labor Department publishes inflation data. Inflation also came in below the national rate in the New York City, Boston and Washington, D.C., metro areas.”
“‘The lion’s share of difference between Atlanta and the rest of the country has to do with what’s happening with shelter,’ said Brent Meyer, an economist at the Federal Reserve Bank of Atlanta. ‘A lot of what’s going on here driving up rental prices is the booming economy.’”
“‘Everything was so expensive to begin with [in the San Francisco area], maybe the rest of the country is just catching up with us,’ said Paul Lazzareschi, co-owner of Depot Café and Bookstore in Mill Valley, near San Francisco. ‘The upside to coronavirus is it gave us the ability to use outdoor seating and enlarge our space and you could raise prices without anyone saying a word.’” READ MORE
THE 21 HATS DASHBOARD
Is the Labor Shortage Easing? This week, Loren Feldman and Gene Marks talk about why he thinks inflation is pulling workers back into the workforce. Plus: Is it a big deal that Apple is going to let businesses take payment by iPhone? And Gene explains just how easy it can be to steal money from a company’s bank account—and what you can do to protect your business.
You can find Dashboard in your 21 Hats Podcast feed.
Silicon Valley founders rediscover the joys of bootstrapping: “[Andrew] Gazdecki is one founder who raised venture funding after bootstrapping—running a company without outside funding—for a year. Crunchbase data shows that more than 1,000 startups founded before 2015 raised a pre-seed or seed round in 2021, meaning they operated without venture capital or with minimal funding for several years before raising money from VCs or angel investors. Despite bootstrapped companies not fitting into the traditional Silicon Valley mold, some VCs are looking to invest in these companies, according to Kurt Beyer, a lecturer in entrepreneurship and innovation at UC Berkeley’s Haas School of Business.”
“‘They may have gotten through the valley of death already, they may have achieved product-market fit, may have some revenue, so in a way they have de-risked the startup,’ Beyer said. ‘If I make an investment as a VC during the valley of death, pre-revenue, there’s a tremendous amount of risk.’”
“‘The benefits of bootstrapping is like being at the blackjack table where you have a lot of chips and you can cash in whenever you want,’ Gazdecki said. ‘You don’t need board approval. You can sell for $30 million. That’s a fire sale for a venture firm.”
“In the case of MicroAcquire, Gazdecki’s current business, he bootstrapped the company for a year before his personal goals with the business changed. MicroAcquire provides a marketplace for startups—many of which are bootstrapped—to get acquired, and he saw the market opportunity for the company grow with increased M&A activity last year.”
“‘I got to the point where I said, ‘Let’s put some gasoline on this.’” READ MORE
In Ukraine, entrepreneurs are trying to build businesses despite the threat of war: “Igor Mazepa, 45, was expecting an economic boom as the country emerged from the grips of the pandemic. Now Mr. Mazepa, the director general of Concorde Capital, an investment bank, is looking at things differently. ‘When you’re constantly thinking about invading Russians you’re not going to go buy a new phone, or a car, or a house,’ he said. Consumer spending was down, and he said that several deals had fallen through because one of the companies involved was too worried about the risks of sustained conflict. But as of late January, one group wasn’t retreating from the market: ‘Ukrainian investors are more resistant to these waves of external pressure,’ he said.”
“[Liubov Tsybulska] tries to prepare her staff at the restaurant for the worst-case scenario. ‘We distributed brochures on what to do in case of war,’ she said.”
“At work one day, she and her employees decided to take a field trip: ‘We researched the nearest bomb shelter on the internet and went to take a look where it is.’” READ MORE
Startups are developing technologies to help businesses cope with supply-chain issues: “Their innovations include more nimble systems for managing warehouses and tracking inventory. They are also developing software and services that make it easier to rent out unused warehouse space, or to help retailers position goods closer to consumers so they can reach them quickly. And they are working on new ways to automate parts of the labor-intensive supply chain, not just to reduce the need for scarce workers but to help make the employees that companies do hire more productive and happy.”
“In a 716,000-square-foot warehouse in Olathe, Kan., Accelerate360, the company that puts magazines and other products in the checkout aisles of more than 90 percent of the grocery stores in the U.S., is using one of the most highly automated robotic fulfillment systems in the world.”
“Built by a Canadian company called Attabotics, its biggest and most striking feature is a gigantic and nearly featureless white cube that sits in the middle of the warehouse, looking as much like contemporary art as it does a piece of technology.”
“Inside it, robots the size of large suitcases, which the company calls ‘ants,’ move on tracks up and down as well as side to side, grabbing bins of goods stored anywhere within the cube.” READ MORE
The IRS has a backlog of 24 million unprocessed returns—from last year: “Nearly 24 million taxpayers are still waiting for the Internal Revenue Service to process their tax returns from last year — a number far larger than previously reported by the agency — with many refunds being held up for 10 months or more. The inventory of unprocessed returns and related correspondence was provided by the IRS’s taxpayer advocate service to the tax-writing committees in Congress.”
“The backlog will probably further slow service in the 2022 filing season; the Treasury Department, the IRS’s parent agency, warned in January that it expected its response to be subpar this year.” READ MORE
A hot course at Harvard Business School teaches future M.B.A.s how to manage happiness: “As business schools train the corporate chieftains of tomorrow, skills like emotional awareness and improving well-being are taking their places alongside deal making and financial modeling. Courses on happiness, relationships and balance are among the most in-demand courses at top M.B.A. programs. Their popularity reflects both the demand for soft skills and students’ desire for more-balanced lives—and an intention among schools to turn out better bosses.”
“Participants are taught how to cultivate their teams’ happiness, along with their own. A central tenet is that happiness is key to being an effective leader.”
“Happiness isn’t just a product of chance, genes or life circumstances, Dr. Brooks posits, but of habitually tending to four key areas—family, friends, meaningful work, and faith or life philosophy.” READ MORE
If you’re planning to get rid of older workers, you probably shouldn’t refer to them as “dinobabies”: “In recent years, former IBM employees have accused the company of age discrimination in a variety of legal filings and press accounts, arguing that IBM sought to replace thousands of older workers with younger ones to keep pace with corporate rivals. Now it appears that top IBM executives were directly involved in discussions about the need to reduce the portion of older employees at the company, sometimes disparaging them with terms of art like ‘dinobabies.’”
“A trove of previously sealed documents made public by a Federal District Court on Friday show executives discussing plans to phase out older employees and bemoaning the company’s relatively low percentage of millennials.”
One email reported: “‘You will see that while Accenture is 72 percent millennial we are at 42 percent with a wide range and many units falling well below that average. Speaks to the need to hire early professionals.”
“Another email by a top executive, appearing to refer to older workers, mentions a plan to ‘accelerate change by inviting the dinobabies (new species) to leave’ and make them an ‘extinct species.’” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren