Discover more from The 21 Hats Morning Report
First, Clay Mathile Saved Iams Pet Food
Then he invested more than $100 million in an organization, Aileron, designed to support other small businesses in pain. It’s a special place.
Here are today’s highlights:
Why do employees leave right after they get a raise?
Signs of the times: Entrepreneurs are finding opportunities in cooling gear and pickleball.
Even restaurants are having an easier time staffing up these days.
“For the love of God, if you’re not feeling well, don’t come in,” said Aaron Levie, chief executive officer of the technology company Box.
There’s no Dashboard podcast today. It will return next week.
As temperatures rise, the cooling gear industry grows: “In crop fields, on construction scaffolding, beside drive-through lanes, working conditions are getting hotter, igniting a small but fast-growing industry to cool workers down. There are vests packed with ice and pressed against the skin, and others soaked in water to evaporate on the body. There are high-tech stickers that measure sweat content and core temperature. One commercial lab is attempting to make fabric that reflects sunlight, mimicking the skin of a desert ant.”
“Gus Lackerdas, a national sales manager at cooling-gear firm Techniche and parent company OccuNomix, has a quick and easy pitch for prospective buyers, who include developers, contractors, and road pavers: ‘Not only can your people be more productive, which I know you want, but they’ll be safer, which I know your HR department wants.’”
“By the company’s estimates, the cooling-gear sector has grown from $30 million to $100 million in sales over the past three years. Cooling products for Techniche and OccuNomix have brought in at least $3 million to $5 million in annual revenue over that span, Lackerdas said.”
“A skin patch developed by Epicore Biosystems measures sweat content and skin temperature and contains an accelerometer to measure work rate. The company markets the patches to industrial employers, CEO Roozbeh Ghaffari said. Bluetooth transmitters in each patch communicate to management when workers need more hydration, electrolytes, or just a break.” READ MORE
Can pickleball save a Santa Monica mall? “Pickle Pop, an indoor pickleball venue where players can reserve court time, opened its doors on Santa Monica’s Third Street Promenade, one of the city’s popular shopping areas, on Saturday. Part sports club, part clothing retailer, part restaurant, Pickle Pop positions itself as an inviting space for serious athletes and social picklers alike, offering a relatively affordable alternative to waiting in line to play at public parks. The 10,000-square-foot space used to be an Adidas store. Pickle Pop co-founder Steph McCaffrey works in an office near the Third Street Promenade and often walks through the three-block pedestrian shopping district to grab coffee. After a while, she began to see the many vacant storefronts as an opportunity.”
“Partners in business and in life, McCaffrey and co-founder Erin Robertson conceived the idea for Pickle Pop earlier this summer and moved quickly. Even though not all vacant retail storefronts are, as Robertson says, ‘pickleball-able,’ many are with a reasonably low lift.”
“Robertson is a fashion designer who won season 15 of the Bravo competition series ‘Project Runway’; McCaffrey is an investor at Anthos Capital, a consumer-focused growth equity fund, and a former professional soccer player.”
“Anyone can play, but a $55-a-month membership offers reservations for court times and ticketed events, plus discounts on hourly play. Non-members pay around $20 an hour to play, while member prices are about $12 per player.” READ MORE
Employees are quitting right after they get a raise. Why? “An accountant who quit because her promotion into a six-figure job only stoked her ‘resentment.’ A plumber who started his own shop after getting a raise to $45 an hour at a highly regarded company. A business strategist who left a $200,000 CFO position because the boss kept his promotion a secret from the team. These might sound like bizarre outliers in America’s career chronicles. In fact, these three workers who spoke with Fortune are part of a new trend, research shows. New data from payroll processor ADP, released this week, show that promotions increase the chance that a person will leave their job. The research found that 29 percent of workers who were promoted left within a month—compared with just 18 percent for those who weren’t.”
“So do promotions make people want to quit? That’s not quite right, said ADP’s chief economist Nela Richardson. It’s more likely that, by the time a manager considers someone promotion-ready, that worker is already looking elsewhere. ‘When you get to a point in your career trajectory where a promotion becomes a possibility, you’re probably looking internally and externally,’ Richardson told Fortune. ‘You’re probably weighing your options.’”
“Many post-promotion quitters are making the decision to bet on themselves, even if that means the risky choice of starting a business over the stability of having an employer. It’s a sign of the broader deterioration of Americans’ trust in institutions, according to Rubab Jafry O’Connor, a professor of Management at Carnegie Mellon University.” READ MORE
The job-hiring frenzy is officially ending: “Now, companies are hiring more slowly and reducing job postings as higher interest rates weigh on economic demand. More workers, including women, immigrants and Americans with disabilities, are flowing into the labor force, helping businesses fill open roles. Some economists think the labor-market cool-down points to a so-called soft landing, in which inflation falls without the economy entering a recession. Rising labor-force participation should help cool wage growth—and in turn take pressure off the Federal Reserve to raise interest rates further to reduce inflation by slowing the economy.”
“Professional and business-services providers—which include many white-collar jobs in accounting, law and consulting—have sharply reduced job postings. Manufacturers and retailers have also cut back on openings, after seeking workers earlier in the pandemic to meet surging consumer demand for goods such as bikes, furniture and sweatpants.”
“Restaurants, hospitals, and nursing homes, which struggled to staff up amid pandemic reopenings, have also reported fewer job openings over the past year-and-a-half. More workers started looking for jobs, helping these companies backfill positions they cut at the pandemic’s onset.”
“Women are driving the charge. The lure of higher pay, adoption of remote work and high inflation are spurring more women to seek jobs after daycare and school disruptions during the pandemic drove many to the sidelines.”
“More foreign-born workers are jumping into hard-to-fill jobs at restaurants, amusement parks and nursing homes, as pandemic-era immigration restrictions ease. Labor-force participation among individuals with disabilities also is surging as the tight labor market and flexible work options provide new job opportunities.” READ MORE
As Covid rates rise, more companies are considering how to respond: “Few companies or schools are ready to reinstate anything approaching measures such as stringent masking rules that were common during the first years of the pandemic. But the rise in Covid-19 is a reminder that the virus retains power to disrupt learning and work. ‘We’ve taken a pretty clear line that just says, please, for the love of God, if you’re not feeling well, don’t come in,’ said Aaron Levie, chief executive officer of the technology company Box. Levie said some Box workers have voluntarily worn masks recently or taken time off to care for sick relatives. The company has told employees, who are required to come in on Tuesdays and Thursdays if they live near its offices, that they can stay home if they are immunocompromised or don’t feel comfortable around others indoors.”
“Diversified Automation has noted more Covid-19 cases among employees and their families at its offices in Las Vegas, Dallas and Louisville, Ky., as well as among workers on industrial construction sites. The company is managing them locally without introducing mandates, said Erika Tedesco, vice president of human resources.”
“Office workers don’t have to wear masks and can work from home for now if it makes them more comfortable. ‘Seems like the cases are milder, but we are honoring the needs of our employees,’ she said.” READ MORE
Here are a few highlights from Walter Isaacson’s biography of Elon Musk, which which will be released tomorrow: “A new biography of Elon Musk portrays the billionaire entrepreneur as a complex, tortured figure whose brilliance is often overshadowed by his inability to relate on a human level to the people around him — his wives, his children and those on whom he relied to help develop the space exploration and electric car businesses that made him the wealthiest man on Earth. Mr. Musk’s life so far — his difficult childhood in South Africa, his stormy romantic relationships, his success as a visionary who built SpaceX and Tesla, and his impetuous decision to buy Twitter — is detailed through scores of interviews with his family, friends, business associates, and Mr. Musk himself.”
“Mr. Musk’s father is described as emotionally and physically abusive and is quoted speaking disparagingly of Black people. When Mr. Musk agreed in 2016 to meet his father, from whom he has been largely estranged, a friend recalls to Mr. Isaacson, ‘It was the only time I had ever seen Elon’s hands shaking.’ Mr. Isaacson writes, ‘There are certain people who occupy a demon’s corner of Musk’s head space. They trigger him, turn him dark, and rouse a cold anger. His father is number one.’”
“After acquiring Twitter, Mr. Musk and his lieutenants combed through its employees’ internal communications and social media posts, looking for signs of disloyalty, Mr. Isaacson writes. The ‘musketeers,’ as Musk loyalists were known inside Twitter, searched Twitter’s Slack archives for keywords including ‘Elon,’ and fired dozens of employees who had made snarky comments about Mr. Musk.”
“Production sprints and struggles at Tesla and the space exploration company SpaceX also sharpened Mr. Musk’s philosophy, which he distilled into a five-step approach that he called ‘the algorithm’ and which he repeatedly invoked to employees. It involved, in order: questioning requirements, deleting parts or processes, simplifying and optimizing, accelerating processes, and, finally, automating. ‘I became a broken record on the algorithm,’ Mr. Musk told Mr. Isaacson.” READ MORE
It may be possible to sell clothing online that actually fits: “Alvanon is developing a consumer app for people to create virtual body avatars from their measurements or photos. The app, built using Alvanon’s precise fit standards that it creates for fashion brands and designers, aims to allow customers to see how clothing will fall on their body, eliminating the guesswork that often comes with online shopping. By sharing garment specifications with Alvanon, brands would in turn glean fit data to help them better serve their consumer base.”
“Four-year-old startup Balodana, based in a Chicago suburb, is using similar information to help designers create made-to-order women’s clothing. Like an Etsy for custom garments, the clothing marketplace can use AI to extrapolate measurements based on shoppers’ photos.”
“It also allows customers to disclose their own body measurements to guide designers as they create bespoke items that are guaranteed to fit well. ‘If you can fit more people, you can significantly reduce the waste, the returns, the economic and planetary damage that is occurring because of crappy fits,’ said founder Dana Todd.”
“A San Francisco-based startup called Unspun, which has raised more than $25 million to date, is leveraging 3D body scans of customers to spin up made-to-fit jeans. Its jeans, which can be selected from 14 preset styles, run about $200 and have a three-week turnaround time for customers.” READ MORE
Clay Mathile built Iams pet food and then started a non-profit, Aileron, to support business owners: “Mathile bought part ownership in Iams in the 1970s, then became full owner in the early 1980s, and sold Iams to Procter & Gamble in 1999 for $2.3 billion. According to Forbes, Iams’ annual sales were $500,000 when Mathile joined in 1970, and grew 1,600 times over, to $800 million by 1999. Mathile was heavily involved in Dayton, [Ohio]-area causes. He founded the Aileron business nonprofit, as well as the Mathile Family Foundation and The Glen at St. Joseph, a Dayton institution that aims to help low-income single mothers.”
“Mathile moved to Dayton in 1970 to begin working with Paul F. Iams’ Iams Food Company, which produced premium dog food products, according to the family. When Paul Iams retired in January 1982, Clay and MaryAnn Mathile became sole owners and Clay the CEO of The Iams Company.”
“Mathile founded Aileron in 1996, three years before he sold Iams, as the Center for Entrepreneurial Education. Its mission was to function as a local outreach in response to the declining automotive and manufacturing industries in the Dayton region.”
“Mathile wanted to help other business owners the way his mentors had helped him, family members said.” READ MORE
I wrote about Clay and Aileron in 2014: “‘They don’t come here unless they’re in pain,’ said Clay Mathile, Aileron’s founder and benefactor and himself once the owner of a troubled business. In the early 1970s, Mr. Mathile took over the management of a pet food company, first as an employee, later as the owner, that had less than $1 million in revenue. At the beginning, he likes to say, he was trying to sell dog food that dogs didn’t like to eat in packaging that people didn’t want to buy — ‘and it took me five years to figure that out and another five years to fix it.’”
“What [Iams] did have was a nutrition-based pet food that was ahead of its time and that would eventually produce a billion dollars a year in revenue, once Mr. Mathile had survived his 10-year learning curve and adopted the best practices of professional management. In 1999, he sold Iams to Procter & Gamble for $2.3 billion.”
“So far, about $150 million of Mr. Mathile’s money has gone to expand and endow Aileron, whose goal is to help owners shorten their learning curves. But before introducing the theory of management gurus like Deming and Drucker, the program tries to address the issues that cause the owners immediate pain.”
“The owner of a tourism business had made it to the meeting, even though his flight had been canceled, by driving overnight from Virginia through a blizzard. He told the group that he had been trying desperately to find employees who would approach their jobs as passionately as he approached his. ‘Not gonna happen!’ came the response, a chorus that echoed through the room.” READ MORE
THE 21 HATS PODCAST
In this week’s bonus episode, Dr. Randy Spencer talks about the changes that have been roiling vet businesses: For one thing, that pandemic puppy boom we all heard about has brought additional stress to veterinary workers who had already had more than their share. For another, there’s been a wave of corporate money and private equity flowing into the industry. That sounds as if it could be a good thing, and Spencer says he’s been dodging a constant series of acquisition inquiries for years. But the big money has also engendered considerable turnover and disruption, and in response, Spencer decided to sell 100 percent of his business, 1st Pet Veterinary Centers, to an employee stock ownership plan in 2021. The transition to an ESOP remains something of a work in progress, in part because veterinary people tend to be more focused on pets than they are on profits.
“Veterinary medicine,” Spencer says, “is just the best profession in the world. In a way, it's a service industry, but we get to serve pets. That's why veterinarians get into it.”
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Thanks for reading, everyone. — Loren