Feeling the FUD
Feeling the FUD
Dana White, as she prepares to franchise her hair salon, confronts fear, uncertainty, and doubt.
Good morning!
Today’s highlights: The main reason CRM implementations fail. Economic forces and generational preferences are creating a new kind of housing: the landlord suburb. And venture-backed services like Uber, Airbnb, and DoorDash decide profit does matter.
THE 21 HATS PODCAST
Episode 63: Dana White Fears She May Not Be Ready to Franchise: This week, Dana tells Paul Downs and Jay Goltz why she’s experiencing FUD—fear, uncertainty, and doubt—over whether she’s really ready to sell franchises in Paralee Boyd. She’s concerned because her hair salon is having some issues with customer service. On the other hand, her head of operations is telling her, “If you wait to expand your business until every customer is happy and until everything is perfect, you will stay at one location for the next 50 years.” Plus, Paul resolves his cybercrime, and we find out whether Paul, Jay, and Dana have done anything to prepare for a ransomware attack. It turns out one of them has.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
REOPENING
Texas will punish businesses that try to protect customers and employees: “Texas businesses that require customers to be vaccinated against COVID-19 will be denied state contracts and could lose their licenses or operating permits under legislation Gov. Greg Abbott signed into law Monday. ‘Texas is open 100 percent, and we want to make sure you have the freedom to go where you want without limits,’ Abbott said before signing the law, in a video he posted Monday on Twitter. ‘Vaccine passports are now prohibited in the Lone Star State.’”
“Just under half of all Texans have gotten at least one dose of the vaccine. About 36.5 percent of Texans are fully vaccinated.”
“Abbott’s signature on the new law comes as Carnival Cruise Line announced Monday that it would be restarting its cruises leaving from Galveston in July but only allow vaccinated passengers on board ...”
“Carnival Vista sails out of Galveston on July 3, followed by Carnival Breeze on July 15. It was unclear Monday how the new Texas law would affect those plans.” READ MORE
PAYMENTS
Kelly Nelson of Emerald World says merchants are paying too much in processing fees to “payfacs” like Square and Stripe: “‘No Hidden Fees’ they say. That's like saying there's no hidden fees on a $39.99 leaf rake. Talk about ‘normalizing’ behaviors. 2.90 percent plus .30 cents per transaction is the off the rack Discount Rate for Square and Stripe—as well as most emerging industry specific software companies (payfacs). But I'm here to tell you that 2.90 percent-plus .30 is not normal, it's VERY HIGH.”
“If you are a merchant with an average ticket of $80 and less, by default you're accepting a high percentage of regulated debit cards. And even if a regulated debit card is not present, you should be paying less than 1 percent for that transaction, not 2.90 percent plus .30 cents.”
“And if you're a wholesaler, manufacturer or distributor and accept Commercial Visa P-Cards and MasterCard P-Cards they can ‘legally’ jack it up to 3.50 percent-4.00 percent-plus. Just check your contract.”
“Moral of the Story: Never go with an industry specific software package, Backoffice or POS system that is in bed with a credit card processor. Make sure you have the freedom to select any credit card processor you prefer.” READ MORE
SMALL BUSINESS TECHNOLOGY
Gene Marks says companies that implement CRM systems are frequently disappointed and almost always for the same reason: “In the 20-plus years I’ve been implementing CRM systems at mostly small and mid-sized firms there’s really only one major reason — the biggest — why they never reach their potential: it’s people. Well, one person actually. That person is the administrator. If you don’t invest in an administrator for your CRM system then your system will fail. Period. That is a cost and it is probably not included in your software vendor’s budget. But ignoring it will be fatal.”
“The administrator is in charge of making sure that everyone is using the CRM system effectively. Goals are set. Answers are provided. Training is given. Problems are fixed. Advanced tasks, like creating workflows, designing reports, adding fields, integrating with other applications and sending customized messages are performed.”
“An important note here: your administrator is definitely not your IT manager. That person has enough to worry about ...” READ MORE
HUMAN RESOURCES
Amazon continues to set the de facto minimum wage: “Levi Strauss and Co. has been selling jeans for 168 years, but 2021 is proving particularly difficult for the company to find workers, thanks in large part to Amazon. ‘There's no question that labor is challenging right now,’ said CEO Chip Berg in an interview with the Associated Press. Even as Berg calls the Levi's ‘aspirational company for a lot of people to work for,’ he says the company is starting to face some headwinds when it comes to staffing its retail stores and distribution centers in the current labor market.”
“‘We are considering right now what we have to do with our wage rates going forward,’ he said. ‘Candidly, we have folks that are right around the corner from Amazon distribution centers and Amazon is not afraid to pay $20 an hour.’”
“‘One study showed that our pay raise resulted in a 4.7 percent increase in the average hourly wage among other employers in the same labor market,’ CEO Jeff Bezos said in Amazon's latest shareholders meeting ...”
“In May, the company announced it is hiring another 75,000 workers in its fulfillment and logistics network across the U.S. and Canada with a starting wage of $17 per hour and hiring bonus of up to $1,000.” READ MORE
APPAREL
Meanwhile, the CEO of Levi’s also says a lot of Americans are sporting a new size: “The number of people who are in a new size is pretty staggering. Some people gained weight during the pandemic, and many people lost weight. But both on the men’s side of the business and women’s side. More than 25 percent of consumers have a new size today.” READ MORE
PRICING
For years, venture capitalists kept prices of rides, deliveries, movies, gyms artificially low. Now they’re thinking maybe they should make a profit: “These subsidies allowed us to live Balenciaga lifestyles on Banana Republic budgets. Collectively, we took millions of cheap Uber and Lyft rides, shuttling ourselves around like bourgeoisie royalty while splitting the bill with those companies’ investors. We plunged MoviePass into bankruptcy by taking advantage of its $9.95-a-month, all-you-can-watch movie ticket deal, and took so many subsidized spin classes that ClassPass was forced to cancel its $99-a-month unlimited plan. We filled graveyards with the carcasses of food delivery start-ups — Maple, Sprig, SpoonRocket, Munchery — just by accepting their offers of underpriced gourmet meals.”
“They were just trying to get traction for their start-ups, all of which needed to attract customers quickly to establish a dominant market position, elbow out competitors and justify their soaring valuations.”
“‘Today my Uber ride from Midtown to JFK cost me as much as my flight from JFK to SFO,’ Sunny Madra, a vice president at Ford’s venture incubator, recently tweeted, along with a screenshot of a receipt that showed he had spent nearly $250 on a ride to the airport.”
“The average Uber and Lyft ride costs 40 percent more than it did a year ago, according to Rakuten Intelligence, and food delivery apps like DoorDash and Grubhub have been steadily increasing their fees over the past year.”
“The average daily rate of an Airbnb rental increased 35 percent in the first quarter of 2021, compared with the same quarter the year before, according to the company’s financial filings.” READ MORE
MARKETING
Instagram is altering the relationship between brands and influencers: “On Monday, Instagram rolled out some changes to how brands and influencers interact that will make it easier for both to do business in a more organized way, said a rep from the platform. There are two big changes. First, influencers can tag up to two brands in a sponsored content post. They can then ask for approval from the brand through the app to have their post officially designated as branded content. Brands can see what other brands are tagged and can approve the post automatically. The post can be published with or without approval, but the ‘Paid Partnership’ tag and brand name will not appear until it is approved. Secondly, brands can now see data and insights from every sponsored Reels and Live post that they’re tagged in.”
“Instagram’s new Drops feature lets brands announce upcoming drops, build buzz and release limited-edition product at a set time, similar to the way streetwear brands like Supreme operate.”
“Social commerce in the U.S. is expected to rise by 34 percent this year to $36 billion, according to eMarketer.” READ MORE
HOUSING
Built-to-rent suburbs are expanding across the U.S.: “Today, built-to-rent homes make up just over 6 percent of new homes built in the U.S. every year, according to Hunter Housing Economics, a real estate consulting firm, which projects the number of these homes built annually will double by 2024. The country’s largest home builders are planning for that future. Backed by banks and private investment firms, they have already bet billions on the sector, and will put down some $40 billion more during the next 18 months, Brad Hunter, founder of Hunter Housing Economics, projects.”
“Many young professionals and families are less keen than their parents in being tied down by a 30-year mortgage, according to real-estate analysts, builders and tenants.”
“What becomes of the suburbs if, one day, homeowners are outnumbered by renters? For one, the suburbs may become more transient places where residents move in and out more often, industry experts say.”
“‘They’re not going to plant an oak tree,’ says real estate consultant John Burns, referring to built-to-rent tenants.” READ MORE
THE MORNING REPORT WEEKLY WRAP-UP
Every Friday, Gregg Stebben of the Small Business & Entrepreneurship Council and I offer our takes on the week’s most important stories for business owners and entrepreneurs. We post a new episode Fridays at noon. You can subscribe wherever you get podcasts or you can LISTEN HERE
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