Consumers Embrace ‘Revenge Travel’
As Omicron fades, Americans tired of staying home are booking restaurants, hotels, and flights—while they can.
Good morning! Happy Presidents Weekend to all who observe. The 21 Hats Morning Report will return on Tuesday — as will the 21 Hats Podcast, with a fascinating one-on-one interview with Paul Downs.
Here are today’s highlights:
The pandemic and Great Resignation have accelerated a new class of entrepreneurship.
Walmart is getting an early start on live shopping.
There is $28 billion of unforgiven PPP debt weighing on smaller businesses.
In a remote job interview, are you sure you know whom you are evaluating?
The Great Resignation has accelerated the trend toward a new class of entrepreneur: “More than 5 million new business applications were filed last year, according to the U.S. Census Bureau — that's up from the 4.4 million filed in 2020. Many of these businesses are sole proprietorships or single entrepreneurs without employees.” Here are some examples of successful solopreneurs:
“Sarah Turner launched her eponymous copywriting agency in 2013, after leaving her job as a research assistant. Sarah Turner Agency offers freelance copywriting for clients in the medical and health sectors, content marketing strategy, and training programs for future copywriters. Last year, Turner booked $2.6 million in revenue, according to documents verified by Insider.”
“Joanna Bassi turned her unused backyard — measuring 150 feet by 75 feet — into an urban farm that could grow fresh produce for local establishments. Bassi started from the ground up in January 2018, and by the following year, she netted nearly $6,000 in revenue from selling at farmers markets and local restaurants, according to documents viewed by Insider. In 2020, the pandemic temporarily closed Bassi's restaurant clients and hurt business. She still managed to book nearly $7,000 by creating new revenue streams.”
“Alessio Lacco and Sofia Arango launched Atlanta Pizza Truck last August as way to make money during the pandemic. In its first five months of business, the couple booked $82,000 in sales, according to documents reviewed by Insider. In the first three months of 2021, they netted $53,000 in sales and believe they are on track to at least double sales from 2020.”
“When the opening of Abby Love's bakery was delayed due to the pandemic, she launched 10 pop-up bakeries around Dripping Springs, Texas to keep her brand alive, attract new customers, and boost revenue. Love partnered with local businesses for her pop-ups, choosing establishments that didn't sell baked goods and attracted the kind of customers who would appreciate her locally sourced ingredients.” READ MORE
Here’s how Walmart is trying to get a head start on live-shopping: “The retailer became an early player in the influencer space when, in 2018, it worked with the influencer-marketing agency Collective Bias and commerce agency Rich Context (now The Stable) to add photos and videos created by influencers to product pages. Early on, the company also saw the potential in nano and micro influencers, which are a subset of creators who have a small but engaged following, and in 2020, the retailer even began working with hundreds of in-store workers to turn them into TikTok stars. Now, the company is moving full force into live-shopping.”
“The company has also built a partnership with the livestream commerce platform TalkShopLive, where users can watch creators and brands sell products live on its site.”
“The platform features one-click checkout integration for Walmart's product catalog, and Walmart worked with TalkShopLive to host its first holiday shoppable livestream on TalkShopLive's app.”
“Walmart has even built its own live shopping hub: Walmart Shop Live. Through this page, consumers can re-watch and shop from recorded streams, find upcoming events, or watch livestreams through an embedded video player which shows a stream simultaneously on both Walmart Shop Live and TalkShopLive.” READ MORE
THE COVID ECONOMY
As Omicron cases fade, Americans are making restaurant reservations, reserving hotel rooms, and booking “revenge travel”: “Travel agents, hotel operators and restaurateurs say they’ve seen dramatic spikes in demand in the past week, following a drop of more than 40 percent in daily U.S. coronavirus cases and spates of warmer weather in some parts of the country. People are booking spring break trips and summer vacations. They’re splurging on Disney vacations, private tours of Hawaii and cruises to Antarctica. Unlike earlier in the crisis, when it seemed the pandemic would end with a celebratory boom, the reality has been more uncertain and filled with fits and starts.”
“Many say that’s given them a sense of urgency to lock in ‘revenge travel’ during this window of relative calm before it possibly disappears again.”
“And though the Food and Drug Administration has delayed a decision on a vaccine for children under 5, families are holding their breath and booking anyway.”
“‘People really want to make sure they travel while they can,’ said Mark Matthews, marketing manager for Maui Seasons, a private tour company in Hawaii where bookings are up 65 percent so far this year. ‘Who knows when the next strain is going to come?” READ MORE
There is $28 billion of unforgiven PPP debt burdening smaller businesses: “Angela Thompson, owner and chief executive officer of a property renovation company based in Jacksonville, Florida, first applied for forgiveness for her $172,000 PPP loan in December 2020. Over a year and more than 100 calls to loan providers later, she’s gotten several notices saying she’s on the hook to start repaying the debt. Initially, she applied for forgiveness via Kabbage, the online lender that had given her the loan. But when American Express bought Kabbage in August 2020, it didn’t acquire its pre-existing loan portfolio. Instead, her loan lived with another provider, K Servicing. Thompson did not get a link to their PPP forgiveness website until August 2021. She immediately submitted her application. But in December, she got a bill for $22,000 for her monthly loan repayment; and then another in January and another in February.”
“Almost 350,000 loans made to small businesses in 2020 during the Covid-19 pandemic haven’t been forgiven, according to a Bloomberg News analysis of Paycheck Protection Program data, and most of them are for less than $25,000.”
“That lingering debt — about $28 billion, the analysis shows — is creating a burden for the smallest businesses, including many run by minority entrepreneurs, say advocacy groups, community leaders and business owners.” READ MORE
We protect individuals from predatory lending practices. Should we do the same for businesses? “Predatory small business lending has a long history in the United States, often in the guise of ‘helping’ those on the margins (it’s a motif in films like It’s a Wonderful Life and The Godfather). Predatory lenders, particularly in the digital age, aren’t as easy to recognize as they are in films. Prior to the pandemic there was rapid growth in ‘new’ lenders offering products with annual percentage rates in the high double or triple digits, with monthly payments often double what the business could afford to pay, and sometimes using high-pressure collections tactics when borrowers fell behind on their products.”
“The Responsible Business Lending Coalition — of which the Aspen Institute is a founding member — has been tracking these practices and working to identify and advocate for policies that help ensure that small businesses access financing that is fair and responsible.” READ MORE
Remote job interviews have made it harder for employers to know for sure whom they are interviewing: “Kristin Zawatski, 44, who works in information technology, in a department of about 70 people, was helping to conduct a virtual job interview. She said she was impressed by the candidate’s sharp understanding of the technical skills required for the position. But about 15 minutes into the conversation, one of her colleagues muted the video call. ‘The person answering the questions isn’t the person on camera,’ he declared, according to her recollection, prompting an audible gasp from his teammates.”
“Interviewers are also getting savvier at detecting dishonesty. Meta, formerly Facebook, has in-house psychologists who devise probing questions that would be hard for interviewees to fake.”
“Scott Gregory, chief executive of the personality testing company Hogan Assessment Systems, encourages employers to scrap classic interview questions — “What are your greatest strengths?” — in favor of situational and behavioral ones, in which candidates narrate experiences they’ve had or explore hypothetical scenarios.” READ MORE
In the fourth quarter of 2021, Walmart spent four times what it expected to on paid sick leave: “Walmart said Thursday that sick leave costs due to omicron increased to more than $400 million in its fourth quarter, well above the over $100 million it had anticipated. That brought its total spending on Covid-19 leave to over $1 billion last year. Amazon also said that it ended up paying a lot more in overtime to cover shifts left unfilled because of another employee’s sick leave, meaning it was paying two or three times for an hour of labor. Amazon and many other companies have been struggling to hire the workers they need.”
“Both companies offered paid leave for up to two weeks for those who had tested positive or were in mandated quarantine. Walmart also offered partial pay for up to 26 weeks for those who contracted the virus and had a medical certification.”
“Walmart and Amazon scaled back their sick leave policies earlier this year, offering just one week of paid leave rather than two.”
“That came after the Centers for Disease Control and Prevention shortened its recommended isolation period to five days from ten. Walmart plans to drop its paid sick leave policy for Covid-19 entirely in March, unless it’s required by local government.” READ MORE
THE 21 HATS PODCAST
Why Not Become the Strategic Buyer? This week, Shawn Busse, Karen Clark Cole, and Jay Goltz compare notes on some of the many choices they’ve made building their businesses, such as the emphasis they’ve placed on growth, the risks they see in growing through acquisition, and—as Karen has recently experienced—the rewards of being acquired. They also discuss whether The Great Resignation, despite forcing companies to pay higher wages and work harder to find and keep talent, just might be a good thing for business owners. As Shawn says, “This puts more people into the marketplace looking for businesses where culture matters, where the owner has compassion and empathy, where families are valued, just on and on and on. And if you're that employer, you win.”
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