Cutting Your Office Space by 80 Percent

For many businesses, it’s time to rethink how they use that space.

Good morning!

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Here are today’s highlights:

• Even without cars, car dealers are making money.

• A steakhouse offers a vision of a better business model.

• The bull-whip effect: panic buying by retailers is making the supply chain crisis worse.

STARTUPS

Being a startup founder (or any business owner) can be exceedingly lonely: “If you want to know what it really feels like to run a startup, there are a handful of people you need to speak to — and they’re not founders. They’re the founders’ coaches. They hear it all — co-founder skirmishes, nightmare investors, even founder fetishes — although they rarely name names. And the reason they get to know so much? ‘Founders have literally no-one to talk to,’ says Julius Bachmann, a Berlin-based coach who works with dozens of startup founders at any one time.”

• “‘I think the job of being a founder is exceptionally lonely,’ says Ben Stephenson, founder of travel tech startup Impala. ‘And the job of being a CEO founder is an order of magnitude more lonely.’”

• “‘You need to be quite far removed from the people you spend a lot of time with. You have an inability to befriend colleagues in a really close way, because you might have to fire them at some point… Your co-founder can’t help, your investors can’t help, your wife or husband can’t help.’”

• “But coaches, often, can.” READ MORE

THE COVID ECONOMY

No cars on the lot? No problem. Car dealer profits continue to soar: “The latest example came on Thursday, when AutoNation, a chain of more than 350 new-vehicle franchises, reported its profit doubled to $362 million in the third quarter. The result, the company’s sixth-consecutive record quarter on a per-share basis, stemmed mainly from higher prices and rising sales of used cars. Because of the chip shortage, automakers have had to idle plants for weeks at a time, leaving consumers with fewer new cars to choose from. The lack of inventory has pushed up prices and allowed both manufacturers and dealers to cut back on profit-eating discounts and incentives they once had to offer to move cars off the lot.”

• “‘This is a result of the pandemic and then the chip shortage,’ Mike Jackson, AutoNation’s chief executive, said. ‘There’s not enough supply to meet demand. Vehicles come in and they go out right away.’”

• “At the end of September, AutoNation had about 5,000 new vehicles in inventory. At the same point in 2019, it had 56,000.”

• “Mr. Jackson estimated about 60 percent of the vehicles AutoNation orders from manufacturers are earmarked as sold before they even arrive at its dealers.” READ MORE

Here’s another unexpected result of the pandemic, an uptick in terror-themed restaurants: “At Terror Tacos in St. Louis, the welcome is rendered in blood — actually, lurid red paint that covers one wall in long drips, like the macabre drapery that Satan’s gnarled hand might pull back to usher the damned into hell. Bradley Roach and Brian Roash, brothers and self-described horror-movie geeks, opened Terror Tacos in March. (They spell their surnames differently.) As head chef, Mr. Roach put together an all-vegan menu of tacos and burritos featuring his housemade ‘carnage asada’ seitan. Mr. Roash, an artist who handles the restaurant’s marketing, painted the frightful artwork, including a screaming woman’s face that resembles Shelley Duvall’s in ‘The Shining.’”

• “The restaurant’s brew of horror, extreme metal and veganism is what’s drawing repeat customers, Mr. Roach said, including hard-core carnivores. ‘They come back not necessarily because the food is plant-based,’ he said. ‘They’re just excited to eat in a place that’s bizarre.’”

• “Terror Tacos is one of several gore-obsessed restaurants that have opened across the country since last Halloween, despite the pandemic and its restrictions on dining. It’s hard to say why. Perhaps horror fans are living their now-or-never dreams. Maybe the restaurants are an antidote to the cheeriness of corporate chains. Or maybe they’re a positive response to a world that feels broken.”

• “‘You’d never want to equate terror with your brand, because people might think our tacos are terrible,’ he said. ‘But we’ve been terrified for two years, and people can relate to a screaming face.’” READ MORE

FOOD & BEVERAGE

Bateau, a steakhouse in Seattle, is trying to reinvent the steakhouse: “The environmentally conscious practices that Bateau follows — including whole-animal butchering — are hardly novel. But they’re nearly impossible to adhere to while still delivering what steakhouses have conditioned the nation’s diners to expect: a narrow lineup of steaks that are tender and marbled with fat. Both of those selling points are often products of an inhumane feedlot system that is complicit in the climate crisis. All of this makes the restaurant nearly a genre of its own: a steakhouse that is also a critique of steakhouses, and a model of a better way forward.”

• “Bateau pushes back at the notion that eliminating beef is the most thoughtful remedy for an ailing food system. Instead, it favors embracing beef from cattle raised entirely on pasture vegetation, a pillar of the regenerative-agriculture movement that sees cattle as essential to healthy ecosystems and, by extension, fighting climate change.”

• “Each week Bateau buys a whole carcass, and one to three supplemental slabs of beef, all cut into steaks by Scott Johnson, the staff butcher. The selections, handwritten daily on chalkboard menus, are limited to what’s been dry-aged for at least 21 days and to the finite supply of what’s in the cooler.”

• “Particular cuts are crossed off the menu throughout the night as that supply dwindles.”

• “The meat is priced by weight, with some cuts available in four- or five-ounce portions. This reduces waste and encourages diners to sample.” READ MORE

POLICY

Dozens of groups are trying to influence President Biden’s vaccine mandate: “Lobbyists from industry associations and unions, as well as some private anti-vaccine individuals, are lining up to take meetings with the Office of Management and Budget, which is in the process of finalizing the rule that will apply to some 80 million workers, before its expected release in coming weeks. The unusually high number of groups requesting meetings is a sign of the intense interest in how the Biden administration crafts the policy. Many view this policy as its highest-profile — and probably its most widely contested — effort to increase coronavirus vaccination rates across the country, perhaps one of the most significant undertakings in Labor Department history.”

• “‘The overwhelming majority of respondents said to us this is going to negatively impact their businesses and their ability to retain employees,’ said Kevin McKenney, director of government affairs at the NLBMDA.”

• “McKenney said many of the group’s member businesses were worried about the financial impact, if employers are required to pay for testing for employees who opt for it, and the strain on the labor force.”

• “‘If you’re trying to get vaccine-resistant employees to get vaccinated, it would be crazy to require employers to pay for that testing option,’ he said.”  READ MORE

In California, In-N-Out Burger has become a flashpoint in the battle over whether businesses should have to demand proof of vaccination from customers: “San Francisco officials announced earlier this month that an In-N-Out Burger location was forced to temporarily close after failing to comply with such a local rule. It’s unclear whether In-N-Out will ultimately prove a harbinger for a larger pushback from businesses that don’t want to screen their patrons’ inoculation status. But the issue isn’t likely to go away anytime soon. Communities across California have imposed a number of vaccine-verification requirements in hopes of slowing the spread of the coronavirus and encouraging more people to get vaccinated.”

• “But the rules are a patchwork, differing from county to county and city to city. And enforcement is still another issue.”

• “In Los Angeles County, though, the rules are less rigorous. Public health officials highly recommend — but do not require — that restaurants check indoor dining patrons for proof of full Covid-19 vaccination.”

• “‘As a company, In-N-Out Burger strongly believes in the highest form of customer service and to us that means serving all customers who visit us and making all customers feel welcome,’ [an In-N-Out executive] said. ‘We refuse to become the vaccination police for any government.’” READ MORE

RETAIL

Panic-buying by retailers is making the supply-chain crisis worse: “Retailers and manufacturers are over-ordering or placing orders too early amid panic over the massive supply chain crisis, and that’s making things much worse, those in the industry told CNBC. ‘Suddenly, retailers and manufacturers are over-ordering because of these supply chain issues, and that’s just leading to essentially an even worse scenario,’ Jonathan Savoir, CEO of supply chain technology firm Quincus told CNBC’s Squawk Box Asia on Monday.”

• “Savoir said the situation of retailers overstocking is causing a bigger crunch on capacity, and leading to what he called a ‘bullwhip effect.’”

• “That’s a term describing how small changes in demand at the retail level can progressively cause larger movements in demand to impact wholesalers, distributors and manufacturers. The supplier of raw materials will feel the biggest impact.”

• “The end result of this effect could include distorted demand forecasts and unfulfilled orders.” READ MORE

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OFFICE SPACE

Here’s how Dropbox CEO Drew Houston reduced the company’s office space by 80 percent: “The pandemic sent many workers home. If their work was doable through a combination of typing into a laptop and participating in videoconferencing, there may be little reason to change that approach. However, you should analyze objectively how well that work has been getting done. Are your people producing high quality work and meeting deadlines? More generally, are your productivity, customer retention, customer satisfaction, and market share rising? If so, you should keep that work remote. You should also explore whether there are other kinds of work that have been done in the office that could be shifted to remote work while improving performance.”

• “The most significant takeaway for business leaders is to rethink whether office space is something your company still needs and if so, what the purpose of the space should be.”

• “For Dropbox, the answer was to eliminate individual desks and turn the office into a "convening, collaborative space," Houston said. Dropbox has achieved this purpose while eliminating costs by reducing its real estate footprint by 80 percent.”

• “Business leaders may not be able to reduce their office space as much as Dropbox has -- but they should make sure to fit their space requirements to a clear purpose in a world where much office work can be done at home.”

• “I would let team members agree on a day when they will all meet together in the office to strengthen their relationships.” READ MORE

THE 21 HATS PODCAST

Holy Crap! This Is All My Dreams Come True: This week, in episode 81, we have a celebration. As many of you will recall, when we started this podcast, Karen Clark Cole was coming off months of failed negotiations with a potential investor in Blink, the business she co-founded. Those months she spent trying to land the investor took a toll on both Blink and on Karen, who subsequently took a mental health sabbatical. But, as she tells Jay Goltz and William Vanderbloemen, she came back, refocused, and has just sold Blink for $94 million in cash. As you might imagine, we had some questions for Karen, including: Will she stay? How many employees knew what was going on? Was there a bidding war? Is there an earn out? What was it like to wake up one morning knowing that she had taken all of her financial risk off the table? And is she ready to report to a boss?

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

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