Employers Say It’s Not About the Degree
But that’s still how they tend to hire. Now, however, LinkedIn is making it easier to search for candidates based on skills.
Good Morning!
Here are today’s highlights:
Livestream shopping shows signs of life in the U.S.
Nike backs away from its move toward direct-to-consumer.
The fight over credit-card swipe fees is starting up again.
For venture-backed startups, a “mass-extinction event” may well be under way.
HUMAN RESOURCES
LinkedIn is betting on work skills over degrees: “LinkedIn, the popular job-networking site, sees a future in which employers will be willing to look beyond long-established entry requirements such as college degrees and prior job titles to focus instead on an applicant's proven skills whether that be data analysis, leadership or storytelling. LinkedIn is anticipating the direction companies themselves have indicated they've wanted to move in. While over 80 percent of employers believe they should hire based on skills rather than degrees, more than half say they are still hiring college grads because it feels less risky. That’s according to a survey conducted last summer by workforce development nonprofits American Student Assistance and Jobs for the Future.”
“LinkedIn launched a skills-matching feature in February, allowing users to see how the skills a job calls for might align with their own strengths. There are some positive early signs: More than 45 percent of recruiters on LinkedIn now search for candidates using skills data, according to the company.”
“Since emerging from the dot-com bust, LinkedIn has already helped move the needle on what's acceptable behavior in the job market. It's no longer considered disloyal, for instance, for an employee to create a profile allowing recruiters to scout — and hire — talented people not actively looking for another job.” READ MORE
Productivity has fallen, year over year, for five straight quarters, the longest streak on record: “Why has it dropped in recent years? Experts including former Treasury Secretary Larry Summers attributed it to less inspired employees that were more likely to participate in trends like ‘quiet quitting’ or ‘Bare Minimum Monday.’ ‘There's a highly empowered workforce that was engaged in a certain amount of quiet quitting,’ Summers told The Washington Post in October. He said that it created a ‘certain amount of absenteeism on and off the job’ that was probably leading to lower productivity.”
“Then there's remote work. While the ability to work from home often only applies to certain white-collar professionals, tech titans like Mark Zuckerberg and Marc Benioff have suggested that the rise of remote work was negatively impacting productivity.”
“Another culprit could be the practice of ‘labor hoarding,’ where employers once desperate for workers during the pandemic are holding onto them despite falling profits. As Insider reported in March, major retailers like Walmart, Target, and Kroger were locked in a labor-hoarding war over hourly employees that pushed pay higher.” READ MORE
THE 21 HATS PODCAST: DASHBOARD:
Today’s episode of Dashboard will be published later this morning. In it, Gene Marks talks about why he thinks Florida’s new immigration law doesn’t go far enough. He’ll also warn business owners that two “huge tax increases” are looming. But are they really tax increases?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
MARKETING
Is livestream shopping starting to catch on in the U.S.? “Last year, Anthony Velez, CEO of Bagriculture, a small business selling pre-owned designer handbags, made up to $100,000 a month across his seven brick-and-mortar stores in New York City. This year, business is much different: Velez has closed all of his physical locations, but he’s generating up to $100,000 a day. The secret to his success, he told CNBC, has been diving into the world of livestream shopping. ‘All the metrics exceed any other form of shopping I’ve seen – period,’ Velez said. ‘We can go live on three to four platforms simultaneously.’”
“‘Poshmark, eBay, TikTok. [I’ve gotten] non-stop phone calls,’ Velez said. ‘TikTok flew in from China to meet with us.’”
“Influencer Danielle Santana hosts live-shopping shows on Amazon, selling products from other businesses — everything from cheese graters to make-up sponges. She said she gets a cut of every transaction. Santana, who can sell 500 to 3,000 items in one show, told CNBC she made six figures just on Amazon Live last year.” READ MORE
Nike has decided that selling direct-to-consumer may not be the whole answer: “Investing in its stores, building shopping apps, and narrowing its retail partnerships were elements of Nike’s strategy to win over modern shoppers and boost profit margins. In mid-2020, the company introduced its strategy called One Nike Marketplace, which focused on working with retail partners that could deliver customer experiences in stores and online similar to what Nike offered. Analysts said Nike executives wanted to move away from the types of poor product displays and customer experiences that shoppers had at some department and discount stores. ‘Consumers want a seamless digital and physical experience,’ Nike CEO John Donahoe said in September 2020. ‘The North America retail market today is the furthest away from that.’”
“Signs of a shift emerged months ago at Foot Locker, whose market value plunged during the pandemic after having access to fewer Nike products to sell. In February, Foot Locker CEO Mary Dillon said her company was rebuilding its relationship with the sneaker company. The retailer would focus on Nike’s basketball, sneakers and children’s products, she said.”
“‘Nike thought they could do a lot of it themselves but they aren’t as capable as they thought they were,’ said Sam Poser, an equities analyst at Williams Trading.” READ MORE
PAYMENT
Businesses are backing a bill that would resume the fight over credit-card swipe fees: “The legislation would require banks with more than $100 billion in assets that issue credit cards to allow their cards to be processed on at least two unaffiliated networks — Visa or Mastercard plus at least one competitor. Proponents of the bill say the increased competition would drive down fees by $11 billion and also make the system as a whole more resilient against potential hacks and other cyberattacks. Nearly 2,000 companies and 270 trade associations from across the country called on Congress in a letter to pass the legislation. The groups represent a cross-section of industries, among them the American Booksellers Association, National Franchisee Association, National Association of Theatre Owners, National Retail Federation and National Restaurant Federation.”
“‘While this legislation would benefit all merchants, it is small retailers who are calling for swipe fee reform more than any segment of our industry,’ the groups said in the letter. ‘Small retailers have the narrowest profit margins and fewest resources and are hit hardest by continuing unjustified increases in swipe fees.’”
“The groups said that credit and debit card fees have more than doubled in the last decade and grew 16.7 percent in 2022 to $160.7 billion — with those fees driving up consumer prices, costing the average family $1,000 a year. And while businesses often have no choice but to accept credit cards, they are unable to negotiate which platforms they use to process those payments.”
“The legislation, however, faces an uphill battle for passage. Analysts at investment firm Raymond James have noted that there seems to be a lack of political interest in Congress for tackling the issue.” READ MORE
REAL ESTATE
The most sought-after amenity in real estate right now? An assumable mortgage: “When Matthew Kilboy listed the Washington, D.C., condominium that he and his husband had bought in 2017, they accepted that higher interest rates and a soft market for condos meant any dollar over the $529,000 they had paid was a dollar they would thank their lucky stars for. A similar two-bedroom and two-bath unit in the building had recently gone for just under half a million. The $549,000 price they listed in April was basically a wish. A month later, the couple closed at $565,000 — thanks to a little-known amenity that has become increasingly popular as mortgage rates have risen. Their unit came with an assumable 30-year mortgage, with a 2.25 percent fixed rate that the couple had locked in after a November 2020 refinancing.”
“‘It was the very first sentence of the listing,’ said Mr. Kilboy, 39, a former Navy nurse whose loan, backed by the Department of Veterans Affairs, could be passed to the buyer. ‘No one could find an interest rate that low, so we were really pushing it.’”
“Redfin, the real estate brokerage, has seen a steep rise in listings like Mr. Kilboy’s that have comments like ‘beautiful home with assumable loan at 3.25 percent.’ Facebook groups have popped up to find buyers for them, while new companies are pitching services to speed up the transfer.”
“Most U.S. mortgages are not directly assumable. However, a host of popular government-backed mortgages — such as those insured by the Federal Housing Administration, the Department of Veterans Affairs, and the Department of Agriculture — typically are, said Michael Fratantoni, chief economist at the Mortgage Bankers Association.”
“These loans are frequently used by first-time buyers and account for roughly a quarter of outstanding mortgages, according to Black Knight, a mortgage technology and data provider.” READ MORE
THE ECONOMY
Mark Zandi thinks we may avoid a recession:
CRIME
A Chicago business group has a plan to address violence in the city: “It involves bringing the city, nonprofits and the business community together to boost investment in neglected neighborhoods, create more jobs for people at risk of getting involved in violence and greatly expand violence-prevention efforts. ‘We are relatively late to this conversation, and we are showing up to see what our contribution can be,’ said billionaire Jim Crown, scion of one of the richest families in the city and chairman of the Civic Committee’s public safety task force.”
“Crime was the biggest issue in this spring’s Chicago mayoral race, and business leaders largely supported Paul Vallas, whose solution was putting more cops on the street. His opponent, Brandon Johnson, won the race with a plan to attack the root causes of crime with things like summer jobs, mental health programs and economic development in distressed neighborhoods.”
“In addition to bringing jobs and investment to hard-hit areas, the group pledged to push for changes at the Chicago Police Department and expand violence-prevention efforts to reach 75 percent of people most at risk of committing a shooting or being shot, up from around 20 percent today.” READ MORE
STARTUPS
More startups are throwing in the towel: “The pace of startup shutdowns, fire sales, and sharp business-strategy changes is picking up. Fresh capital from venture investors and bank loans is scarce and expensive. Going public is nearly impossible. Some business models that worked when cash was cheap are unsustainable now. That means venture-backed startups are running out of money and facing hard choices. ‘The Mass Extinction Event for startups is under way,’ said Tom Loverro, general partner at venture firm IVP, in a recent tweet.”
“Loverro said in an interview that none of his portfolio companies has shut down recently, but it is early days in what could be a wave of startup failures. ‘It’s like the entire industry went out drinking and is now suffering the consequences,’ he said about the venture boom of 2021 that he believes is heading for a bust.”
“Some venture investors see the impact already. ‘It is hitting now,’ said Elizabeth Yin, co-founder and general partner of pre-seed investment firm Hustle Fund. Of her firm’s first fund, only about 60 of the original 101 portfolio companies are around. There were roughly 90 active startups a year ago.”
“Yin said that she isn’t concerned that the wave of closures will have a serious negative effect on her fund’s returns. That is because the companies that recently folded were never marked to a high value in the portfolio, she said.” READ MORE
Julie Wainwright, former CEO of Pets.com and founder and former CEO of the luxury online consignment company The RealReal, has a new startup: “Called Ahara, the Los Angeles-based outfit describes itself as a personalized nutrition company that provides recommendations to its customers after they first fill out a health questionnaire that asks them about their diet and health history, and their age and location, after which they can take a variety of at-home tests for genetic, epigenetic and biomarkers.”
“Wainwright isn’t a wellness expert, but after leaving The RealReal last June after running the company for 11 years, she teamed up with celebrity physician-nutritionist Melina Jampolis as co-founder. Jampolis is also the outfit’s chief medical doctor.”
“In conversation last week with investor Ian Sigalow of Greycroft — the firm was also an early backer in The RealReal — he offered his theories about why The RealReal boasts a market cap of just $170 million after reaching a market cap of $2.39 billion the day of its IPO three years ago.”
“Though The RealReal was a ‘really good idea,’ creating a far more vibrant second-hand luxury goods market, the ‘challenge with the model is that it is very capital intensive. The storage of the garments is expensive. The way that they procure in such a white-glove manner is expensive.’” READ MORE
THE 21 HATS PODCAST
“What Doesn’t Keep Me Up at Night?” This week, we did something different. We recorded this session in Chicago at our very first 21 Hats in-person event. In May, some 20 impressive entrepreneurs from around the country, from different industries, with businesses of different sizes and stages, gathered to talk shop for three days. The last thing we did was to record this episode in which we gave the participants the opportunity to ask the podcast regulars anything they wanted. Those regulars included Jay Goltz, Sarah Segal, and Dana White, and the questions addressed everything from hiring to motivating to delegating to pricing to coping with stress to what they wished they’d figured out sooner and to what still keeps them up at night.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren