Employees Don’t Learn How Stuff Really Works at Big Companies

The best training for building a successful business, Michael Girdley says, is working at a small one.

Good Morning!

Here are today’s highlights:            

• Gene Marks talks about the best way to get started in government contracting.

• We already know what the world will look like without non-competes.

• More businesses are concluding that in-person meetings are worth the expense.

• Political partisanship is dramatically compounding the regulatory uncertainty that afflicts businesses.

ENTREPRENEURSHIP

The best preparation for being an entrepreneur? Michael Girdley says it's working for a small company: “I talked to many founders, and some of them had only experience at huge organizations. Usually, they had no idea how stuff worked. Customers came from the sales fairy. New people appeared and disappeared from the distant land of HR. And money was infinite if you could justify the expense. Then I would see founders who had worked at small businesses. These people actually knew how to do things like get customers, find talent, and watch every dollar.”

• “These days, I’ve seen the same thing in companies I’ve started. I co-founded a company here in San Antonio called Dura Software with a guy named Paul as the CEO. He came from a big company, and I was amazed at how well he ran things. Then I learned he used to own and operate a restaurant.”

• “Running a non-branded, non-franchise restaurant in the U.S. is one of the toughest gigs out there: long hours, tough employees, tight margins, and dealing with clogged toilets from the last customer of the day. You don’t learn that stuff at big companies. And that’s why we worked so well together.” READ MORE

THE 21 HATS PODCAST: DASHBOARD

Every Business Should Know about Apex Accelerators: Okay, maybe not every business, but this week, Gene Marks tells us about a little known program in the Department of Defense that is dedicated to helping small businesses find contracting opportunities at all levels of government and even with prime contractors. The service is free, it includes one-on-one counseling, and the advisors will take you through every step of the often-frustrating application process. You might be surprised by the opportunities out there. Plus: Is inflation still a problem for business owners?

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

INTELLECTUAL PROPERTY

You don’t need non-competes to protect trade secrets: “What does a world without non-competes look like? California. The state basically banned them back in the 1800s, said Mark Lemley, a law professor at Stanford. ‘You know, banning non-competes doesn’t mean people are free to do whatever they want,’ said Lemley. For instance, an engineer who worked on self-driving cars at Google was found to have violated trade secret law by taking documents to launch a competing company that was then bought by Uber. ‘California law says we can’t stop you from going to work for Uber, but we can absolutely stop you from taking the secrets with you,’ said Lemley.”

• “All states have some form of trade secret protection, and there’s been a federal law on the books since 2016. But to qualify as a trade secret, the information has to be valuable as well as secret, like the closely guarded blend of 11 herbs and spices in KFC’s fried chicken, said Doug Brayley, an employment attorney in Boston.”

• “Summey said he’s already advising clients to move away from non-compete agreements and toward policies that more directly address what employees can and can’t do with company secrets. That means more onboarding sessions, bigger employee handbooks, and tighter security, cyber and physical.” READ MORE

BUSINESS TRAVEL

It turns out Zoom has not rendered in-person meetings obsolete: “Michael Wieder, co-founder and president of Lalo, a baby products company, recently returned from a weeklong trip to Hong Kong and neighboring cities in southern China, meeting with manufacturers and others. He noticed many hotels were full of American businesspeople. ‘You saw big teams of people traveling back,’ he said. Wieder has more travel planned soon to cities such as Toronto and Las Vegas, with another trip to Asia likely in the next two months. Some of the travel is spurred by customers who want to meet in person again or attend trade events or speak at conferences, where in-person attendance is once again the norm.”

• “Many companies got by without business travel during the Covid-19 pandemic, and some industry observers predicted they would permanently adapt. While vacationers flocked back to airports in recent years, big corporations were more reticent, facing the logistical challenges of remote work and economic uncertainty that cut into travel budgets. Airlines and hotels say that is changing.”

• “Airlines reported big increases in revenues from corporate accounts in the first quarter, with Delta and United both reporting a 14-percent bump from a year ago. Alaska Air said corporate travel sales rose 22 percent in the first quarter, back to pre-pandemic levels, led by tech companies and professional services firms. United said it has had nine of its top 10 corporate booking days in its history this year.”

• “Kevin Davis, CEO of the Americas for the hotels and hospitality arm of real estate giant Jones Lang LaSalle, said he mostly encourages his team to take in-person meetings whenever feasible. When pitching clients, he finds the meetings to be more effective face-to-face and the conversation livelier, with greater opportunities to build relationships: ‘I always say the last 15 or 20 minutes of in-person meeting or lunch are frequently the most valuable because that’s where the conversation has the opportunity to flow organically.’” READ MORE

RETAIL

This company helps retailers set the mood in their stores: “Mood Media works on all things vibe — a store’s soundtrack, scents, and signage — to capture a brand’s personality through the senses. They’re the global leader in a field known as retail atmospherics. And they’re behind most of the stores you visit every day. Mood Media reaches 165 million people every day through 500,000 store locations around the world, a huge share of the world’s 3.5 billion total consumers. They’ve puffed the scent of campfire smoke through Yeti, and helped Ferrari customers design their own vehicles via tablet. ‘It’s really about how we are helping to shape perceptions and activate behaviors, and then drive business results for our clients,’ Bettencourt says. ‘What we ultimately want to do is help brands create that emotional connection and drive loyalty. It’s about feeling good.’”

• “For every client, Mood starts by creating a profile through a robust discovery process. Think a personality quiz, but way, way more nuanced. From there, Mood’s staff of world-class DJs, music PhDs, and music designers develops curated (and ad-free) playlists. They analyze lyrics and tempo, and consider innuendo and image, to develop a brand’s audio persona.”

• “Mood will also create content, from narratives to QR codes to drive-thru menus, with a department of expert animators to propel customers deeper into a store and a brand. Even the language they use to describe customers’ behavior — ‘dwell time’ and ‘footfall’—sounds focus-tested.”

• “But for every brand, the nuance and recommendations and engineering all come down to one question: ‘How do they want people to feel?’” READ MORE

REGULATION

Political polarization is adding to the uncertainty businesses confront: “The Biden administration’s move on Thursday to strictly limit pollution from coal-burning power plants is a major policy shift. But in many ways it’s one more hairpin turn in a zigzag approach to environmental regulation in the United States, a pattern that has grown more extreme as the political landscape has become more polarized. Nearly a decade ago, President Barack Obama was the Democrat who tried to force power plants to stop burning coal, the dirtiest of the fossil fuels. His Republican successor, Donald J. Trump, effectively reversed that plan. Now President Biden is trying once more to put an end to carbon emissions from coal plants. But Mr. Trump, who is running to replace Mr. Biden, has promised that he will again delete those plans if he wins in November.”

• “Government policies have always shifted between Democratic and Republican administrations, but they have generally stayed in place and have been tightened or loosened along a spectrum, depending on the occupant of the White House. But in the last decade, environmental rules in particular have been caught in a cycle of erase-and-replace whiplash.”

• “‘In the old days, the regulatory days of my youth, we were going back and forth between the 40-yard lines,’ said Douglas Holtz-Eakin, who directed the nonpartisan Congressional Budget Office and now runs the American Action Forum, a conservative research organization. ‘Now, it’s back and forth between the 10-yard lines. They do it and undo it and do it and undo it.’”

• “Economists and business executives say this new era of sharp switchbacks makes it difficult for industries to plan. If there is anything that companies like less than government regulation, it is an unstable business climate.” READ MORE

DESIGN

Apiary Studio, a Philadelphia landscape firm, turns urban decay into gritty gardens: “‘Don’t throw it away. There is no away.’ That waste-conscious message was scrawled on the back of a decades-old pickup in the Nebraska town where Martha Keen grew up. The doctor who drove it could have afforded a new one, but no: The truck had plenty of life left in it. Onward. The phrase ‘there is no away’ has become a tenet guiding Apiary Studio, a Philadelphia landscape firm founded in 2015 by Ms. Keen’s partner, Hans Hesselein, a landscape architect. Ms. Keen joined him soon after, and now the couple design and build outdoor urban spaces, many of them in residential settings, using as light an environmental touch as possible and creatively reusing what each site has to offer. Yes, even slabs of old concrete, as well as what passes for soil in those urban settings. Really, it’s more like the stuff of a landfill, Mr. Hesselein said, or a post-industrial brownfield.”

• “Standard practice in the trade would be to dig it all up, cart it away and bring in clean soil that would be easier on plants. But contributing to the waste stream doesn’t sit well with the Apiary team. Their design intention is to be regenerative, not to pass along — or compound — the problem.”

• “It’s not unusual for the Apiary team to arrive at a prospective client’s home for a consultation and find the whole place is paved — a common condition, they said, in urban Philadelphia or New York. The first instinct may be to get rid of it all. But the modest budgets of the firm’s early jobs meant that was a no-go, even apart from Mr. Hesselein and Ms. Keen’s convictions about sustainability. Still, it’s hard to ignore the environmental impact of a material like concrete.”

• “A series of mock-ups helps them, and their clients, find their way to a design that turns debris piles into ‘a mosaic of mixed pavers,’ he said. Other artifacts the site may cough up — old bricks, cobblestones and rocks, sometimes accompanied by irresistible castoffs retrieved from the transfer station — become part of the improvised mosaics. Think of it as terrazzo with a twist.”

• “These are unexpected, experimental landscapes, the couple concede, but they are determined to continue experimenting — for the creative challenge they thrive on, to pursue their environmental goals and to provoke new thinking about our built landscapes. ‘Only one person has ever come to us and said, I want this recycled landscape aesthetic in my garden,’ Mr. Hesselein said. ‘Only one client ever.’” READ MORE

STARTUPS

Daniel Ek, co-founder of Spotify has a new startup that wants to make full-body scans a routine part of the annual check-up: “The company says its full-body scans can detect the onset of a host of cardiovascular and metabolic diseases, as well as skin conditions. It calls its scans, which cost about $230, or 2,500 Swedish krona, ‘a health check for your future self.’ Whole-body scans have been around for a while. But they have taken off in recent years thanks to artificial intelligence and social media. Kim Kardashian helped put one buzzy rival, Prenuvo, on the map last summer when she referred to its M.R.I. scanner as a ‘life saving machine’ in an Instagram post. Another, the New York-based Ezra, announced in February that it had raised $21 million to help it expand to 20 North American cities by year-end.”

• “Despite the boom in interest, medical professionals say proactive screening technologies have yet to prove that they can achieve better outcomes for patient health or longevity. And the verdict is still out on the business model.”

• “He compared the challenge to the streaming wars. When Spotify debuted in 2008, the music industry was being ravaged by piracy and plummeting revenues. ‘Everyone told me, this is a horrible business. Please don’t do that,’ he recalled. Mr. Ek acknowledged that taking on health care may be even tougher.”

• “And in some ways, the Neko founders’ vision is more ambitious than their competitors. Their goal is to make early diagnosis of diseases affordable, so that full-body scans become as routine as an annual checkup. That could help reverse a depressing pattern where gains in life expectancy have slowed in many wealthy countries over the past decade, despite ballooning health care spending.” READ MORE

THE 21 HATS PODCAST

You Need to Accept That You’re the Boss: This week, in episode 193, Sarah Segal takes Paul Downs and Jay Goltz through her recent QuickBooks nightmare. Right before tax season, Sarah ran her P&L, and it showed a profit of $250,000—but she knew right away that that couldn’t be right. It then took a bookkeeping SWAT team to figure out what exactly had gone wrong. “I was literally on the verge of tears,” Sarah tells us. “How am I going to do this and not be late on filing my taxes? And credit to this woman, who, I swear to God, was like my therapist and my bookkeeper. She was like, ‘Don't worry, Sarah. We're going to figure it out.’” Which they did—and which brings an important reminder: Not every dollar that comes in the door should be counted as revenue.

• Plus: What do you do when a new employee isn’t working out? When is the right time to intervene? Do performance improvement plans actually work? Are grace periods a good idea?

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

Thanks for reading, everyone. — Loren