Doubling Down on Remote
Having learned they can hire successfully around the country, some small businesses are now hiring around the world.
Here are today’s highlights:
Venture-backed startups are taking advantage of the cheap office space.
Holiday shoppers broke all kinds of records over the weekend (some of it with borrowed money).
High interest rates have been a bigger problem for smaller businesses.
Startups are finding a use for artificial intelligence that you might not have considered. It’s called “grief tech.”
Some businesses that embraced remote workers are now going even more remote: “Small business owners that have hired international workers started by adopting remote work — and now many are looking to grow their international workforce. Payroll and benefits platform Gusto surveyed small businesses with at least one international employee or contractor and found 67 percent had a remote employee within the United States before they made their first international hire. Out of those companies, 72 percent said their experience managing a remote employee gave them a boost in their decision to hire international employees.”
“Liz Wilke, a principal economist at Gusto, said in a LinkedIn Live presentation that managing a remote worker honed similar skills to managing an international worker, including objective work measurements, time management, and asynchronous work. ‘It almost is like a little bit of training wheels for (small- and medium-sized enterprises) that are thinking about hiring international employees,’ Wilke said.”
“And these smaller businesses are happy enough with the experience to add to their international workforce, with 75 percent surveyed saying they plan to increase their international employee headcount. About 54 percent said they plan to increase both their overseas and U.S.-based headcount over the next three years.”
“The top reason small business owners are hiring overseas is to manage costs, with 86 percent saying that was their main reason. About 58 percent said they are also facing a shortage of available U.S. employees for the work (companies could pick more than one reason).” READ MORE
COMMERCIAL REAL ESTATE
In Boston, venture-backed startups are grabbing cheap office space: “With millions of square feet on the market, several venture capital firms have snapped up cheap subleases. Now, they’re offering space to companies they are backing, potential entrepreneurs, and even event organizers. The new firm Venture Guides has taken a full floor in the modern office tower at 120 Causeway St., even though it only needs about one-quarter of the space for itself. Founded by a group of five executives (including Bain Capital Ventures veterans Ben Nye, Ben Holzman, and Mo Garad) who sold their last company, Turbonomic, to IBM for about $2 billion, Venture Guides is encouraging its portfolio companies to come to Boston.”
“One of the firm’s portfolio companies already in residence is Elastiflow, which makes network monitoring and security software. The company was started by Rob Cowart, who lives in Germany. But Nye and Holzman encouraged him to use some of their available space when he needed to hire a sales team.”
“It’s not an entirely positive story for local tech. The low-cost spaces so far have come from larger tech companies such as Wayfair and Rapid7 that found themselves locked into leasing too much space after layoffs. A record 38 million square feet of office space is available in the regional market, according to Colliers, thanks to overbuilding and corporate downsizing.” READ MORE
Looking for a backdoor to the U.S., Chinese companies are flocking to Mexico: “Chinese companies’ heightened interest in Mexico dates to 2018 when Donald Trump, America’s president at the time, launched a trade war that included raising tariffs on imports from China. His successor, Joe Biden, has kept the tariffs in place. Mr Biden’s own America-first policies, such as the Inflation Reduction Act, are encouraging companies to consider ‘nearshoring’ in North America, in large part to thwart China. The pandemic and the snarl-ups in supply chains it caused also pushed manufacturers to move closer to the American market. And setting up in Mexico has begun to look cheaper, as wages and other costs in China rise.”
“Mexico has tried to lure Chinese money before. The Mexico-China Chamber of Commerce and Technology organized events in 2008 to encourage the flow of capital but they were unsuccessful, says the chamber’s César Fragoz; back then China had no need to use Mexico as a way into America, which had yet to turn its back on Chinese companies.”
“‘The irony is that the first to react positively to an explicit policy against China are Chinese firms,’ says Enrique Dussel Peters of the Centre for Chinese-Mexican Studies at unam, a university in Mexico City.” READ MORE
Holiday shoppers spent big over the weekend (but there’s always a “but”): “The five-day holiday shopping weekend was another one for the records, with Americans spending more than ever on Monday. But lingering inflation and rising debt, among other financial headwinds, continue to keep retailers and industry analysts wary about the rest of the year and into 2024. ‘Given that many people are racking up debt and remain in a very cautious mood, we may see a slight softening of spending as we move into December,’ said Neil Saunders, managing director of the analytics company GlobalData. ‘The consumer can’t defy gravity forever.’”
“Consumers spent $38 billion online over the five-day period, according to data from Adobe Analytics, a 7.8 percent increase over last year. Cyber Monday remains the hottest shopping day of the season, with consumers surpassing Adobe’s projections and shelling out $12.4 billion, a 9.6 percent year-over-year jump. Sales on Black Friday ticked up 7.5 percent to a record $9.8 billion.”
“A record 200.4 million people shopped over the five-day period, according to the National Retail Federation. And more consumers than ever shopped online, coming in at 134.2 million. More than half of them used their mobile devices, according to Adobe.”
“The highest-performing shopping categories were clothing and accessories, toys, gift cards, books, video games and other media, and — for the first time — personal care and beauty, according to Phil Rist, the executive vice president of strategy at Prosper Insights and Analytics.”
“Meanwhile, buy now, pay later options — which allow consumers to pay off items in installments — saw staggering growth over the five-day event, with a 42.5 percent surge in usage year-over-year, contributing $940 million to online spending, according to Adobe.” READ MORE
Not surprisingly, high interest rates have been more of a problem for small businesses than big businesses: “There are two key reasons that big business has avoided the hammer of higher rates. In the same way that the average rate on existing household mortgages is still only 3.6 percent — reflecting the millions of owners who bought or refinanced homes at the low-cost terms that prevailed until early last year — leaders in corporate America locked in cheap funding in the bond market before rates began to rise. Also, as the Fed pushed rates above 5 percent, from near zero at the start of 2022, chief financial officers at those businesses began to shuffle surplus cash into investments that generated a higher level of interest income.”
“The combination meant that net interest payments — the money owed on debt, less the income from interest-bearing investments — for American companies plunged to $136.8 billion by the end of September. It was a low not seen since the 1980s, data from the Bureau of Economic Analysis showed.”
“That could soon change. While many small businesses and some risky corporate borrowers have already seen interest costs rise, the biggest companies will face a sharp rise in borrowing costs in the years ahead if interest rates don’t start to decline. That’s because a wave of debt is coming due in the corporate bond and loan markets over the next two years, and firms are likely to have to refinance that borrowing at higher rates.”
“Small and medium-size companies with good credit ratings were paying 4 percent for a line of credit from their bankers a couple of years ago, according to the National Federation of Independent Business, a trade group. Now, they’re paying 10 percent interest on short-term loans. Hiring within these firms has slowed, and their credit card balances are higher than they were before the pandemic, even as spending has slowed.”
“‘This suggests to us that more small businesses are not paying the full balance and are using credit cards as a source of financing,’ analysts at Bank of America said, adding that it points to ‘financial stress for certain firms,’ though it is not yet a widespread problem.” READ MORE
Business Insider says these are the 25 sports-related startups to watch: “Startups are upending nearly every corner of the sports landscape, from the way athletes train, to ticketing in stadiums, to how fans bet on sports. While the flow of money pouring into startups overall has eased a bit in the shaky economy, sports — particularly sports tech — has remained somewhat resilient this year. More than $5 billion in new funds from sources like venture capital and private equity went into sports tech in 2022, and already $6 billion this year had been tracked in the sector by mid-August, according to tech investment bank DrakeStar.”
“Swedish company Data Talks works with teams to collect data on their fans, such as which games they attend, videos they watch, and merchandise they buy. Data Talks then makes promotional offers targeted to specific fans based on what they like and their activity (or inactivity). Data Talks gives teams a dashboard of how well the promotions run and how much revenue has been generated.”
“Five Iron Golf is an indoor golf experience and sports bar with golf simulators. Unlike TopGolf's massive indoor-outdoor venues, Five Iron Golf is designed for cities and urban environments. It has golf simulators for rental, as well as a full bar, food menu, golf instructors, and events. ... ‘Sports and hospitality are growing increasingly intertwined — we are seeing TopGolf reimagined for every other sport, from baseball to darts to soccer,’”
“Outlier built a sort of trading desk for sports betting where gamblers can browse, analyze, and execute picks across major sportsbooks in one place. It likens itself to an E-Trade or Bloomberg Terminal for sports betting. Outlier is trying to make it easier for bettors to get all the sports information they need to place a bet, compare odds across sportsbooks like FanDuel and DraftKings, and set up their wagers within a single app.” READ MORE
Amazon introduces an A.I. chatbot for businesses: “The chatbot, developed by Amazon’s cloud computing division, is focused on workplaces and not intended for consumers. Amazon Q aims to help employees with daily tasks, such as summarizing strategy documents, filling out internal support tickets and answering questions about company policy. It will compete with other corporate chatbots, including Copilot, Google’s Duet AI and ChatGPT Enterprise.”
“Amazon built Q to be more secure and private than a consumer chatbot, [Adam Selipsky, the chief executive of Amazon Web Services] said. Amazon Q, for example, can have the same security permissions that business customers have already set up for their users.”
“At a company where an employee in marketing may not have access to sensitive financial forecasts, Q can emulate that by not providing that employee with such financial data when asked.”
“Pricing for Amazon Q starts at $20 per user each month. Microsoft and Google both charge $30 a month for each user of the enterprise chatbots that work with their email and other productivity applications.” READ MORE
There’s a growing slate of platforms that use A.I. models to let people “communicate” with the deceased: “Hailed as grief tech, a crop of California-based startups like Replika, HereAfter AI, StoryFile, and Seance AI are offering users a range of services to cope with the loss of a loved one — interactive video conversations with the dead, ‘companions’ or virtual avatars that you can text day or night, and audio legacies for posterity. Depending on its unique function, the software typically guides users through a personality questionnaire and trains its A.I.-backed algorithm based on the responses.”
“Prices for plans can range from a few dollars a month to hundreds of dollars per year. For instance, StoryFile’s premium offering — a one-time fee of $499 — gives users access to higher-resolution and longer videos of their late loved ones.”
“In a recent interview with Futurism, Jarren Rocks, the founder of a ghostbot company Seance AI — a playful interface that allows users to conduct a short fictional interaction with the deceased — clarified that his software is simply meant to ‘provide a sense of closure’ and not intended as ‘something super long term.’”
“In the spring of 2023, Sunshine Henle texted her mother. She asked where she had gone, told her that she missed her, and soon received a response: ‘Honey, I wish I could give you a definite answer, but what I do know is that our bond and our love transcends physical boundaries. In some ways, I’m everywhere. I’m in the memories we shared, the love we had and the lessons I gave you. I’m in your heart and in your dreams. ...’” READ MORE
Forbes editors knew someone would release a list of the most dubious people ever to make their Under 30 list, so they did it themselves: “An astounding number of these folks have gone on to become cultural tastemakers, tech titans, even billionaires––32 of the latter, and counting. But regrets, we’ve had a few. While our process correctly weeded out folks like Fyre Festival impresario Billy McFarland and, yes, even Elizabeth Holmes––one-time superstars who all wound up fraudsters––others slipped through. Below are 10, out of 10,000, that we’d like to walk back. We’ll add more here as the years go on––the 30 Under 30 list is, by definition, future-facing, and not even Warren Buffett can predict with 100 percent accuracy. But we’d guess he’d be good with 99.9 percent.” READ MORE
THE 21 HATS PODCAST
Are Salespeople Built or Born? It used to be that best practices in sales were pretty standard across the board. But since the pandemic and with the advent of artificial intelligence, says Lance Tyson, founder of the Tyson Group sales consultancy, it’s like the Wild West out there. Suddenly, everyone’s playing by different rules, and the best sales approach can vary, depending on the seller, the target, the industry, the region of the country. The keys, Tyson says in this week’s bonus episode, are to pay attention and stay flexible.
“He addresses a host of hot-button topics: How important is it to see a prospect face-to-face? Is cold-calling dead? Will A.I. replace sales trainers? What’s the right balance between base and commission? How do you handle the salesperson who can’t or won’t be a team player? How do you get salespeople to take maintaining their CRM seriously?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren