Dana White Decides to Franchise

Today’s Highlights: A debate about pricing. A dental practice raises venture capital. And can a video game identify the best job candidates?

THE 21 HATS PODCAST

Episode 57: Dana White Decides to Franchise Paralee Boyd: This week, Dana White informs Jay Goltz and Stephanie Stuckey that she has begun the process of franchising her hair salons across the country, and perhaps the world. Why did she choose to franchise? As she explains, she does have concerns about controlling the culture in franchised locations, but she believes this is her best opportunity to grow. Interestingly, when Stephanie took over Stuckey’s in 2019, she bought a franchise business that she says had lost control of its franchisees, which is why she’s now moving in the opposite direction. Plus: Stephanie shares a debate that is raging within her company: Should she price her pecan log rolls for the convenience stores she’s selling them to now or for the more upscale outlets she hopes to attract? And Jay gives us an update on that idea for a new business he told us about just two weeks ago. (Spoiler alert: This is Jay Goltz we’re talking about.)

MEDICAL PRACTICES

A startup dental practice has raised $200 million in venture capital: “Tend, a dental startup with six clinics in New York City, was in a tough spot. New York City was the center of a rapidly evolving public-health crisis and the 6-month-old startup had to shutter completely. ‘You can't put people's hands in strangers' mouths in the global epicenter of a pandemic,’ [founder Doug] Hudson told Insider. Three months later, dental offices like Tend were granted essential status and allowed to reopen. While it was a slow reopening, Hudson said the company ultimately lost only about 15 percent of its business. And he is marching full-steam ahead with fresh funding to open more clinics and start offering Tend's service in Washington, DC, and Boston, he said.”

  • “‘We learned that dental is a durable form of retail,’ Hudson said of the business' recovery. ‘You can't fill a cavity at home. The appointments don't evaporate like a restaurant reservation — they are just delayed.’”

  • “While it is an ambitious growth plan, Hudson says Tend will not buy up struggling dental offices in the metropolitan areas he is targeting the way some of his private-equity-backed competitors have.”

  • “He said that to create a Tend-approved experience, everything needed to be built from the ground up. ‘Because our experience is so unique, we have to do it ourselves,’ Hudson said. ‘We open the practice with zero patients, then we start to market it, and we fill up that way.’” READ MORE

HUMAN RESOURCES

Dan Price argues that companies who can’t find workers should pay more:

Can a Mark Cuban-backed startup’s video game do a better job of identifying job candidates than you do? “Hiring companies can screen candidates by having them play Scoutible's app-based adventure game for 15 minutes. The platform analyzes their in-game decision-making and produces evaluations on qualities like learning style, creativity, grit, and leadership, as well as skills like pattern recognition and memory. Those results can be compared to the hiring company's internal testing of its employees or to Scoutible's database. The startup has had clients using the platform during a several-year pilot test, which Antony says has given it robust data on the kinds of qualities that correlate with many common roles.”

  • “‘The data that we collect around personality and cognitive strengths are the single most predictive hiring selection criteria that exist,’ says Antony. ‘But they're not in today's hiring process at all.’”

  • “She cites the example of a tech company that recently used Scoutible's platform to hire for an engineering role. One of the top candidates identified by the platform was a man without a college degree who was working at an auto body shop and had taken a coding class on the side. He got the job and went on to excel in the role.” 

  • “Scoutible's platform is currently free for companies to use to screen candidates. The startup will eventually make money by charging to connect companies with candidates, acting like a recruiting firm that screens based on skills rather than previous job experience.” READ MORE

REOPENING

Businesses can back off a bit on cleaning surfaces: “The Centers for Disease Control and Prevention updated its guidance on cleaning and disinfecting everyday household surfaces on Monday, saying that in most situations with no known coronavirus exposure, scrubbing a surface with soap and water, rather than disinfectant sprays and wipes, will suffice. While the virus can land on surfaces, the probability of getting infected by it is extremely low. ‘In most situations, regular cleaning of surfaces with soap and detergent, not necessarily disinfecting those surfaces, is enough to reduce the risk of Covid-19 spread,’ CDC Director Dr. Rochelle Walensky said at a White House briefing Monday.”

  • “The CDC recommends cleaning high-touch surfaces at least once a day.”

  • “As always, the CDC guidance is not mandatory, so businesses can generally do whatever fits their business the best.” READ MORE

In California, officials built a fence around a restaurant and arrested its co-owner three times, but the restaurant continues to defy the lockdown: “Officials in Burbank, California, have put up a chain-link fence around a restaurant that repeatedly refused to stop serving diners during the pandemic. Authorities had already revoked Tin Horn Flats' public-health permit, cut off its power supply, padlocked the door, and arrested one co-owner three times—but the restaurant stayed open, using its own generator. The city erected the fence on Saturday after receiving a preliminary injunction, Burbank police Lt. Derek Green said at a media briefing, per NBC Los Angeles. In Instagram posts from Tin Horn Flats showing the fence being erected, the restaurant said it would still not comply with demands to close.”

  • “Co-owner Baret Lepejian previously told Insider that he kept the restaurant open to avoid ‘certain major debt’ and because there was ‘zero science and zero sense’ behind the lockdown orders.”

  • “Lepejian previously told Insider he would consider taking the city to the Supreme Court, and said: ‘I will never pay fines or penalties for 'crimes' I never committed.’ He told The Los Angeles Times that fines totaling around $50,000 had been levied against the business.” READ MORE

A Los Angeles theater chain will not be reopening: “ArcLight Cinemas, a beloved chain of movie theaters based in Los Angeles, including the Cinerama Dome in Hollywood, will permanently close all its locations, Pacific Theaters announced on Monday, after the pandemic decimated the cinema business. ArcLight’s locations in and around Hollywood have played host to many a movie premiere, in addition to being favorite spots for moviegoers seeking out blockbusters and prestige titles.”

  • “In recent weeks, the majority of the country’s largest theater chains, including AMC and Regal Cinemas, have reopened in anticipation of the slate of Hollywood films that have been put back on the calendar, many after repeated delays because of pandemic restrictions.”

  • “A touch of optimism is even in the air as a result of the Warner Bros. movie ‘Godzilla vs. Kong,’ which has generated some $70 million in box office receipts since opening over Easter weekend.”

  • “That does not seem to be the case for Pacific Theaters, which, according to two people with knowledge of the matter, fired its entire staff on Monday.” READ MORE

THE 21 HATS CONVERSATION

Today at 3 ET, I get to turn the table on Ramon Ray. Ramon, who is the first-ever entrepreneur-in-residence at OracleNetSuite and the founder ofSmartHustle.com, has built a real business primarily by supporting business owners. We’ll talk about how he did that.

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OPPORTUNITIES

Here’s how the pandemic turned a payment company into the hottest startup in Silicon Valley: “Stripe processes payments for e-commerce companies, keeping a tiny cut of each purchase as a fee for its services. When stay-at-home orders early in the pandemic caused spending to plunge and refund requests to skyrocket, the outlook wasn’t great. Then everything moved online. More than 500,000 doctors’ offices, farmers markets and other businesses migrated to online payments and used Stripe to do it. As people worked out at home, redecorated or both, Stripe customers such as Peloton and Wayfair enjoyed blockbuster sales. Stripe’s revenue last year rose nearly 70 percent, to about $7.4 billion, according to people with knowledge of the company’s finances. Other startups might have flashier apps or more recognized brands, but Stripe showed that it is better to be a workhorse than a show pony.”

  • “Investors view Stripe as an index of sorts for all of Silicon Valley, because it processes payments for plenty of fellow startups and tech companies—and Silicon Valley has thrived almost since the pandemic began.”

  • “A survey of small-business customers of Stripe by Stanford University economists and Stripe’s top data scientist found that the average business suffered a slowdown for much of last year. But the top 5 percent increased their sales by 50 percent or more and expected those gains to endure.

  • “Greg Isenberg, founder of You Probably Need a Haircut, said choosing Stripe was a no-brainer because it made accepting credit cards so effortless: ‘It’s like do you want your car to be automatic or manual? Sometimes it’s just nice that the gears shift themselves.’” READ MORE

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FOOD & BEVERAGE

The food product of the moment in France right now is, of all things, a fast food called French tacos: “French tacos are tacos like chicken fingers are fingers. Which is to say, they are not tacos at all. First of all, through some mistranslation or misapprehension of its Mexican namesake, the French tacos is always plural, even when there’s only one, pronounced with a voiced ‘S.’ Technically, the French tacos is a sandwich: a flour tortilla, slathered with condiments, piled with meat (usually halal) and other things (usually French fries), doused in cheese sauce, folded into a rectangular packet, and then toasted on a grill. ‘In short, a rather successful marriage between panini, kebab, and burrito,’ according to the municipal newsletter of Vaulx-en-Velin, a suburb of Lyon in which the French tacos may or may not have been born.”

  • “The trade publication Toute la Franchise recently declared that ‘the French tacos is without a doubt the product that will drive the market for dining out for the next ten years.’”

  • “Chain restaurants have proliferated: New School Tacos, Chamas Tacos, Le Tacos de Lyon, Takos King, Tacos Avenue (which used to be called Tacos King before a trademark spat broke out).”

  • “Such is the success of these chains that, according to a French economics magazine, some are ‘turning fat into gold.’” READ MORE

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