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Don’t Forget Atlanta
Today’s highlights:The SBA’s PPP platform is giving false negatives. A new marketplace offers support for small manufacturers. And GM puts a sell date on its last internal-combustion engine.
The SBA’s PPP loan platform is mistakenly rejecting some applications: “By most accounts, this latest round of the Paycheck Protection Program has been a much smoother process. In the course of the now $284.5 billion relief program, the Small Business Administration has already approved more than 400,580 forgivable loans for approximately $35 billion. Yet some lenders say not all eligible borrowers have been getting the assistance they need. Worse, they're getting immediate rejections. On a phone call with lenders on Tuesday, the SBA offered new remedies for handling such rejections, which have triggered holds on borrowers' second-draw PPP loan applications and thus delayed vital funding for struggling businesses. The SBA estimates that about 4.7 percent of lender-submitted data from the prior rounds of PPP was found to contain anomalies—described by the SBA as ‘mostly data mismatches and eligibility concerns.’"
“‘These concerns,’ the agency added in a statement, ‘will require follow-up between the lender and the borrower so that borrowers can access a second round of loans.’”
“What the SBA hasn't said it will do is change its system to stop triggering the false negatives. Instead, it is doubling down on the platform as a necessary vetting tool.” READ MORE
THE COVID ECONOMY
Last year was the worst year for economic growth since WW II: “The U.S. economy shrank by 3.5 percent in 2020, as the coronavirus pandemic ravaged factories, businesses and households, pushing U.S. economic growth to a low not seen since the U.S. wound down war-time spending in 1946. Overall, the economy was surprisingly resilient in the second half of the year, given the fall-off at the start of the public health crisis, according to data released Thursday from the Bureau of Economic Analysis. Yet, the 1-percent growth in the fourth quarter signaled a faltering recovery and a long road ahead with 9.8 million jobs still missing and 23.8 million adults struggling to feed their families.” READ MORE
Fast, a San Francisco-based startup, offers one-click checkouts for everyone: “Fast lets shoppers log into websites and check out, without having to enter information more than once. It also allows users to purchase items without going into a shopping cart, which CEO Domm Holland likened to Amazon’s one-click checkout. He described the two-year-old company as an ‘identity network’ rather than a payments play. ‘It’s one-click checkout for the entire internet,’ Holland told CNBC in a phone interview, adding that the pandemic has sped up the need for online checkout. ‘With the pace and migration to e-commerce, people have realized that every product and service can be bought online—that’s a fundamental shift that’s only going to accelerate.’” READ MORE
A lot of people are moving to Miami: “Dozens of big names have arrived. There was a tech contingent: Keith Rabois, a PayPal co-founder and investor, and his husband. Then their friend Peter Thiel, the tech investor and prominent conservative. Jon Oringer, founder of the stock-photography provider Shutterstock, and the media mogul Bryan Goldberg. Steven Galanis, the head of the celebrity-video product Cameo, is here. Elon Musk is talking about building car tunnels under Miami. ... If there is a symbol for the shift in Miami culture, it’s Mr. Oringer’s house. The house — 20,000 square feet, with two docks (water scooter and yacht) — once belonged to the baseball star Alex Rodriguez. But as of last fall, for $42 million, it belonged to Mr. Oringer, the founder of Shutterstock. He is now figuring out how to remodel the property’s batting cage to be something more useful. The house has become the co-working space for several of the new companies that Mr. Oringer has invested in through Pareto Holdings, a fund that he and Edward Lando created to invest in Miami start-ups.”
“Pareto has made about 100 investments, with another 100 expected by the end of 2021. The team is focusing on telemedicine, fintech and consumer-relationship management companies.” READ MORE
Miami and Austin are getting the headlines, but don’t forget about Atlanta: “[Georgia’s] largest city has produced at least three unicorns in the past six months, with Greenlight, SalesLoft and Calendly all reaching or surpassing the $1 billion valuation mark. A look back at 2020 finds yet another unicorn with fintech startup Bakkt reaching the coveted status in March. While Silicon Valley churns out unicorn-valuation startups at a frequent clip, seeing one city produce numerous billion-dollar companies in a short time frame is pretty rare. And that could help the future of Atlanta’s startup ecosystem, particularly during a time of remote work and more discussions of building companies outside of traditional tech cities like San Francisco and New York. ‘I think any success stories create more gravitational pull to the city,’ David Cummings, co-founder of Atlanta-based robotic lawnmower startup Greenzie, said in an interview with Crunchbase News. Cummings also co-founded and invested in SalesLoft and invested in Calendly.”
“Funding for venture-backed startups based in the greater Atlanta area hit a five-year high last year, reaching nearly $2 billion across 188 deals, according to preliminary Crunchbase data.”
Plenty of large companies, including Delta, Coca-Cola, Cox Enterprises, and the IntercontinentalExchange, all have their headquarters in the city, with others setting up regional offices there. And Atlanta is home to around 40 corporate innovation centers.
“‘It’s just a beautiful playground for entrepreneurs to be part of.’” READ MORE
GM’s saying it will sell only zero-emission vehicles by 2035 will have an impact: “The announcement is likely to put pressure on automakers around the world to make similar commitments. It could also embolden President Biden and other elected officials to push for even more aggressive policies to fight climate change. Leaders could point to G.M.’s decision as evidence that even big businesses have decided that it is time for the world to begin to transition away from fossil fuels that have powered the global economy for more than a century. G.M.’s move is sure to roil the auto industry, which, between car and parts makers, employed about one million people in the United States in 2019, more than any other manufacturing sector by far. It will also have huge ramifications for the oil and gas sector, whose fortunes are closely tied to the internal combustion engine.”
“A rapid shift by the auto industry could lead to job losses and business failures in related areas. Electric cars don’t have transmissions or need oil changes, meaning conventional service stations will have to retool what they do.”
“At the same time, the move to electric cars will spark a boom in areas like battery manufacturing, mining and charging stations.” READ MORE
Xometry helps companies search thousands of providers to track down custom parts—creating a market for small manufacturers: “‘We combine artificial intelligence with algorithms to predict the market price of customized parts within seconds,’ said Xometry co-founder and chief executive Randy Altschuler. ‘The same software then scours our 5,000 manufacturers to deliver the right source at the right price. ... There are thousands of small manufacturers across the U.S. making small things and doing billions of dollars of business. It’s very fragmented, mostly family businesses doing a couple of million dollars a year. It could be a couple of brothers running a manufacturing shop started by their grandfather.” These small suppliers have been heavily reliant on the health of big companies in their regions. If you are in Houston, your business lives and dies with oil and gas. In the Midwest, it’s automotive. Boston caters to medical device companies. Washington is well known for its aerospace and defense.”
“Altschuler has essentially created on-demand shopping for the $260 billion business-to-business marketplace for custom manufactured parts.”
“Altschuler said revenues have been growing fast: Sales topped $800,000 in 2014, $2.9 million in 2015, $80 million in 2019 and are now headed toward $150 million.” READ MORE
President Biden’s Buy American order directs more spending toward small businesses: “On Monday, Biden signed an executive order intended to boost federal purchasing from U.S. suppliers, especially small and midsized businesses and underrepresented entrepreneurs. The move adds new executive muscle to old rules intended to ensure taxpayer dollars support American jobs. While former President Donald Trump spoke endlessly about the revival of U.S. manufacturing, his aversion to regulation — and demonstrated tolerance for cronyism — meant federal spending only became more confusing and unfair for smaller firms under his administration. ‘Under the previous administration, the federal government contract awarded directly to foreign companies went up 30 percent,’ Biden said at the signing. ‘That is going to change on our watch.’”
“Biden's order encourages the government to spend more on small businesses by calling for an increase in the allowable price difference between domestic and foreign goods and services.”
“In essence, a federal agency would need to find a much lower price in order to buy something from a foreign company instead of a domestic one.” READ MORE
THE COVID ECONOMY
A Small Business Majority poll shows the disproportionate impact the pandemic has had on small-business owners of color: “Entering into a new year, more entrepreneurs of color report they may temporarily close their business in the next three months: 32 percent of Latino, 29 percent of Black and 25 percent of AAPI business owners, compared to 21 percent of white business owners. Nearly 1 in 4 (22 percent) business owners of color may lay off employees permanently, compared to 14 percent of white business owners.” READ MORE
THE 21 HATS PODCAST
Episode 46: A Fabulous Conversation About Marketing: This week, we introduce Stephanie Stuckey, a new regular on the podcast who tells Dana White and Laura Zander about the iconic road-stop business her grandfather founded: when it peaked, what went wrong, why she bought it back, and how she plans to rejuvenate it. Along the way, we discuss whether small businesses should outsource their marketing, how hard it is to find an agency that listens, and what an agency should cost. Plus: Stephanie offers a tutorial on how to engage followers—and get free consulting—on LinkedIn.
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