Dana Opens in Dallas
In our latest podcast episode, Dana White talks about what’s working and what’s not at her brand new location—and how she got some unexpected help from a member of the 21 Hats community.
Good morning!
Here are today’s highlights:
Two words terrify young employees. Do you use them?
Retailers have already started discounting holiday merchandise.
A proposed rule would make it harder to classify workers as contractors.
Startups are taking the risk of financing growth with debt.
THE 21 HATS PODCAST
Dana Opens in Dallas: This week, Dana White tells Paul Downs and Jay Goltz how her move to Dallas is going, including hiring a manager, firing a publicist, tweaking her business model, and for the first time, confronting competition. Dana also explains the surprising way she managed to get the financing to open her first salon on a military base, which she now thinks could be up and running by the end of the year. Plus: Paul has had to make adjustments to handle a sudden influx of business. And Jay is still looking for a head of HR. Should he post the ad on ZipRecruiter or Indeed? Should he offer a salary range in the ad? And is it reasonable for him to expect a follow-up note after an interview?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
RETAIL
Holiday discounting has already started: “Retailers have been overwhelmed with excess inventory this year as shoppers have shifted their spending habits. Earlier in the pandemic, customers used their savings and stimulus checks to buy home items and casual clothes from retailers. Now more of them are instead spending on services like travel and entertainment as they have been squeezed by surging inflation that remains close to a four-decade high.”
“Target said that it would roll out both daily and weekly deals now through the week of Black Friday, which is on Nov. 25 this year. Some of the offers include steep markdowns on TVs and air fryers and 50 percent off Beats by Dre headphones.”
“Walmart said Monday that it was offering four days of discounts this week for early holiday shoppers. The company is selling discounted Apple Watches, electric bikes and other products.”
“If retailers don’t offer aggressive discounts, they risk paying high costs to hold excess inventory, the analysts said.” READ MORE
MANAGEMENT
Are you a “pls fix” manager? “Picture this: It’s 9 p.m. and your workday is finally winding down. You, a professional in your 20s or 30s, haven’t heard from your manager in a few hours. Things are looking good as you start closing out dozens of tabs and spreadsheets, hoping to shut the laptop and take a few hours after dark for yourself. Suddenly, a ping. A ‘pls fix’ email. ‘Until you’ve gotten that 10 p.m. pls fix, you just don’t get it,’ says Amelia Noël, a former consultant and investment banker turned career coach.”
“The buzzword has spawned ‘pls fix’ merchandise, and made it into the Urban Dictionary, which defines ‘pls fix’ as a frequent email reply from a boss in consulting or finance that more accurately translates: ‘fix this ASAP and don’t F$%^& up again.’”
“Few things panic young professionals like getting the notes. On Instagram and TikTok, they share snapshots and stories of receiving ‘pls fix’ emails at all hours and on vacation, while at bars, at the gym, by pools, on trains, slopeside at ski resorts, or as they are boarding a flight.”
“A podcast called ‘Pls Fix Thx!,’ which started early in the pandemic, talks about ‘modern-day fads and trends that leave us feeling overwhelmed, drained, and burned out.’”
“Litquidity, known for finance-related memes, sells a ‘pls fix, thx’ mug for $15 and a ball cap for $35. Crazy Mgmt Consultants, a meme account on Instagram, sells a ‘pls fix’-themed ugly Christmas sweater for $45 and baby onesies for $25 reading: ‘Daddy and Mommy, Pls fix my milk ASAP, thx. Sent from my iPad.’” READ MORE
THE ECONOMY
Small business confidence improved in September: “The National Federation of Independent Business said its Small Business Optimism Index increased 0.3 points to 92.1 this month, the second straight month of gains following a deterioration in the first half of this year. Thirty percent of owners reported that inflation was their single most important issue in operating their business, up one point from August but seven points down from July's reading, which was the highest share since the fourth quarter of 1979. The U.S. Federal Reserve has raised interest rates from near-zero at the beginning of this year to a current range of 3.00% to 3.25 percent as it battles to quash stubbornly high inflation.”
“The survey also showed 46 percent of owners reported job openings they could not fill last month, down three points from August. That tallies with government data released last week that showed 10.1 million job openings on the last day of August, still historically high but the biggest drop in nearly 2-1/2 years.” READ MORE
HUMAN RESOURCES
A new rule would make it harder to classify workers as independent contractors: “The proposed rule is essentially a test that the Labor Department will apply to determine whether workers are contractors or employees for companies. The test considers factors such as how much control workers have over how they do their jobs and how much opportunity they have to increase their earnings by doing things like offering new services. Workers who have little of either are often considered employees. The new version of the test lowers the bar for that employee classification from the current test, which the Trump administration’s Labor Department created.”
“The proposal by the Biden Labor Department argues that several factors must be weighed when assessing whether a worker is a contractor or an employee, and that none of them are necessarily more important than the others. Among the additional factors are whether the work being performed is central to a company’s business, and what kind of investments workers make to do their jobs, such as buying equipment.”
“Uber and Lyft have said in federal filings that having to treat drivers as employees could force them to alter their business models, and some gig economy officials have estimated that their labor costs would rise 20 to 30 percent.”
“Uber and Lyft have often argued that drivers prefer the flexibility that independent contractor status affords them, such as the ability to work when, where and however long they choose to. They have cited polling data that appears to affirm this.”
“Companies, unions, workers and other members of the public will have a month and a half to formally comment on the proposal before the department incorporates feedback into a final rule.” READ MORE
A former Uber employee created an app, Para, to help drivers understand how much money they really make: “Released last year, the free app aims to give gig economy workers more information about their work to help them maximize their earnings — even as the platforms that dispatch them resist. The app’s most popular feature allowed DoorDash drivers to know the tip for each job before they accepted it. Other than in New York City (where, since last year, apps have been required to show tips in advance), DoorDash hides that figure from drivers, even though most customers set the tip when they place their order.”
“Para also lets drivers set parameters to juggle multiple apps, automatically decline low-paying gigs and flag rude customers and undesirable locations, such as confusing apartment complexes and restaurants with long waits.”
“Para is growing in popularity as on-demand delivery services are under fire from all sides: They are largely unprofitable, and investors are pressuring them to cut costs. Restaurants, which relied on delivery as a lifeline during the pandemic, are fed up with the fees they charge.”
“Stephanie Vigil, a driver who works for multiple apps in Colorado Springs, Colo., started using Para last year. ‘It ends up increasing your earnings because you’re not wasting your time on anything,’ she said. ‘I’m not going to take anything that’s not a solid offer because I don’t have to.’” READ MORE
THE CREATOR ECONOMY
Patreon, one of the early stars of the industry that helps independent creators monetize their work, is struggling: “Patreon experienced explosive growth during the pandemic — with 30,000 new creators joining in March 2020 alone — that has since fizzled. It's not the only creator-economy company hurting. At least 20 creator-economy companies have laid off staff since May of this year, by Insider's count. ‘Most of the companies that had benefited from Covid lockdowns have experienced the opposite effect with Covid recovery,’ [Patreon SVP of finance, Carlos]] Cabrera wrote in the memo.”
“Accordingly, Patreon has two key priorities looking ahead, Cabrera wrote in the internal memo: ‘Avoid the need for fundraising for 3+ years, and strengthen our product offering.’” READ MORE
COMMERCIAL REAL ESTATE
Warehouses have been popping up everywhere, but they are not always welcome: “As warehouse construction has ballooned nationwide, residents in communities both rural and urban have pushed back. Neighborhood apps like Nextdoor and Facebook groups have been flooded with complaints over construction. In California, the anger has turned to widespread action. Several cities in this slice of Southern California, known as the Inland Empire, have passed ordinances in recent months halting new warehouse projects so officials can study the effects of pollution and congestion on residents like Ms. Lemos. Similar local moratoriums have cropped up in New York and New Jersey in recent years, but on a much smaller scale.”
“Since 2020, elected officials in a half-dozen Inland Empire cities, including Riverside, its most populous, have imposed moratoriums on warehouse construction.”
“The timeouts are meant to assess, among other things, the effects of pollution, the appropriate distances between homes and warehouses, and the impact of heavy truck traffic on streets.” READ MORE
STARTUPS
Venture-backed startups are turning to debt financing: “Startups are brushing aside higher interest rates and taking on debt, in part to avoid resetting prices for equity stakes in their companies, after years of easy money pushed private-market valuations to record highs. Rather than risk selling shares at a lower price than in prior fundraising rounds—and taking a hit to lofty valuations—many startups in need of fresh capital are instead borrowing millions of dollars from banks, private-equity firms and other financial services. But in doing so, market analysts say, they may be facing bigger troubles down the road—given the likelihood of further interest-rate hikes and a souring economy.”
“In the past, loans to startups mostly consisted of convertible notes, or other credit arrangements, that could be swapped out for equity in a company’s next fundraising round, said Arif Janmohamed, a partner at Lightspeed Venture Partners. ‘Now we’re seeing debt that just needs to be paid back,’ Mr. Janmohamed said.”
“Startup loans can also come with restrictive covenants, such as requirements to keep a certain level of cash on hand. That can handcuff a startup when unplanned growth opportunities arise, hampering the agility that can give young companies an edge over large, slower-moving competitors, Mr. Janmohamed said.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
This week, as many businesses find out what they’ll pay for health insurance next year, Gene Marks talks about how businesses can save money. Gene explains why self insurance has become more feasible for smaller businesses and why he thinks it makes sense to offer employees better health coverage instead of a pay increase. Also, it’s probably time to revisit your workplace drug policies. Plus: how the issues important to small businesses often get overshadowed by those of big businesses.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren