For many, RTO just isn’t working.
For many, RTO just isn’t working.
There’s actually been an uptick in virtual meetings, despite the gradual return to the office—because if one person is on video, everyone is.
Good morning!
Here are today’s highlights:
Is it time to panic about inflation, recession, or the metaverse?
Diane St. Clair spent 22 years selling the most sought-after small-batch cultured butter in the U.S. for $60 a pound.
Was profitability always a pipe dream for Uber?
How Greg Wittstock went from creating an industry, to almost losing his business, to building a backyard pond for Shaquille O’Neal.
OPPORTUNITIES
IndeVets helps hospitals and practices staff veterinarians at a time when burnout and shortages are rampant: “The company says it is growing so quickly — doubling revenue every year since its inception in 2017 — that it’s projecting $30 million in revenue this year. IndeVets is riding several trends — rising costs and treatments for pets in the U.S., shortages of trained veterinarians, and continued investment in and buyout activity by private equity and other professional investors in the vet industry. The Philadelphia-based IndeVets was founded by Michael Raphael”—a friend of 21 Hats—“who began his career as a newspaper journalist.”
“In 2010, hiring a veterinarian took a few months. Now it’s stretched to a year, Raphael said. In 2010, ‘there were one or two vets looking for every job. Today, there are 20 job openings for every veterinarian looking.’”
“The company has partnerships with 1,500 hospitals across the country, in 43 markets. IndeVets now employs 5 full-time headquarters staffers and 120 veterinarians.”
“IndeVets says it promotes well-being by ensuring doctors can retain control over where they work and when, relying on proprietary scheduling software. There’s also mentoring for doctors, and continuing education credits for staff and new vet graduates.” READ MORE
PRICING
A bootstrapped Boston company, ProfitWell, which helps businesses decide how much to charge for products and services, just sold for $200 million: “[Patrick] Campbell, a former employee of Google and an e-commerce startup, Gemvara, founded the company in 2012 to provide customers with advice on how to optimally price products; its original name was Price Intelligently. ‘Pricing is at the intersection of important and uncomfortable,’ Campbell says. ‘You get the smartest people in the room, but people seize up and get hesitant.’ Jeanne Hopkins, an early ProfitWell customer, says that the typical software-as-a-service company — one that sells subscriptions on a monthly or annual basis — ‘spends less than six hours total thinking about the pricing of their product offerings.’ While working at Somerville-based SmartBear Software, Hopkins says, she relied on ProfitWell to assess and ultimately raise by 23 percent the price of a key product that had carried the same price for seven years, despite added functionality.”
“Other early customers included Lyft, Reebok, and Autodesk, which sells software used to design buildings.”
“ProfitWell began life by selling, effectively, Campbell’s advice and analysis related to pricing questions. ‘Initially, it was just me in a room, 18 hours a day,’ Campbell says. He’d cashed in his 401(k) account to provide him with $10,000 to cover his living expenses.”
“Over several years, Campbell and his cofounders, Peter Zotto and Facundo Chamut, began building their own software tools, including one that helps retain customers and another that makes revenue accounting simpler and more automated.” READ MORE
THE 21 HATS PODCAST
Dashboard: Inflation, Recession, the Metaverse. Oh, My! This week, Gene Marks talks about whether it’s time to panic about inflation and recession, how smaller businesses are managing their inventories through these unpredictable times, why businesses that take digital payments through a service like Venmo are going to have to be more careful, and what, if anything, the metaverse is likely to mean for the typical small business.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
HUMAN RESOURCES
For many, there’s a growing sense that RTO just isn’t working: “The reasons the return to the office aren't working out are numerous. Bosses and employees have different understandings of what the office is for, and after more than two years of working remotely, everyone has developed their own varied expectations about how best to spend their time. As more and more knowledge workers return to the office, their experience at work — their ability to focus, their stress levels, their level of satisfaction at work — has deteriorated. That’s a liability for their employers, as the rates of job openings and quits are near record highs for professional and business services, according to Bureau of Labor Statistics data.”
“If one person in a meeting is on a video call from home — say, because they’re immunocompromised, or they have child care duties, or it just happens to be the day they work from home that week — everyone is. There’s actually been an uptick in virtual meetings, despite the return to the office, according to Calendly.”
“While the main reason hybrid workers cite for wanting to go into the office is to see colleagues, they also don’t want to be told when to go in, according to Nicholas Bloom, a Stanford professor who, along with other academics, has been conducting a large, ongoing study of remote workers called WFH Research.”
“With 70 percent of office workers globally now back in the office at least one day a week, the excitement many people felt a few months ago is wearing off. For many, that novelty is turning into an existential question: Why are we ever here?” READ MORE
When it comes to retention, health insurance may be the most important benefit: “The average U.S. worker pays $1,299 toward an individual premium or $5,969 toward a family premium each year, according to a 2021 survey from the Kaiser Family Health Foundation. With job openings still hovering near all-time highs and the unemployment rate stuck at 3.6 percent, founders are finding one of the best ways to attract and retain talent is to bring that out-of-pocket number down to zero. Nearly half of the 475 companies on Inc.'s 2022 Best Workplaces list now offer entirely employer-paid health insurance. And 90 percent of employers rank health as the benefit their workforce values the most, according to the Society for Human Resource Management Benefits Survey.”
“For any business owner thinking about making the switch, [Osano CEO Arlo] Gilbert says the return on investment is clear even in the short term.”
“‘It pays itself back very quickly,’ he said. ‘The math works out very well. Your employees are not spending their time thinking about health care. Instead, they are consuming the health care that they need and want, and then they're back at the office.’” READ MORE
SELLING THE BUSINESS
Diane St. Clair was ready to just shut down Animal Farm Creamery: “Ms. St. Clair had spent the previous 22 years making the most sought-after small-batch cultured butter in the United States. It’s the same butter that the chef Thomas Keller serves at the French Laundry and Per Se — and that retails for an eye-popping $60 per pound. But at 65, she was ready to retire. Decades of twice-daily milking, barn mucking and hoisting 70-pound jugs of fresh milk into the butter churn had taken a toll on her back. Her husband, Al Clarisse, a large-animal veterinarian who was her only helper, had developed knee problems.”
“‘I wanted my cows to go to a farm that would treat them like I did, with people who would know their names, and who would name their calves,’ she said.”
“Ben and Hilary Haigh, both 33, of Rolling Bale Farm turned out to be the ideal buyers. ... The couple met, coincidentally, at Animal Farm when they were both in college.”
“After piecing together two loans and a grant to come up with the $281,000 necessary to buy the business and install a dairy at Rolling Bale Farm, the Haighs took over Animal Farm Creamery in January.” READ MORE
STARTUPS
There are reasons why there is so little competition among baby-formula makers: “ByHeart spent years perfecting a new recipe for formula, opening its own factory and getting necessary regulatory approvals, said Mr. Belldegrun. He said the company is looking for ways to expand its manufacturing capabilities. It has already extended factory operations to run seven days a week from five, he said. Opening a factory cost ByHeart some $40 million, and it also had to spend millions on the product formulation and growth studies with babies, Mr. Belldegrun said. The company raised $190 million in premarket funding, he said.”
“The ByHeart CEO said he understands why more new brands haven’t tried to break into the industry. ‘We spent years trying to study and understand FDA regulations,’ he said. ‘We also heard a lot of ‘you guys are nuts.’”
“Another startup, Bobbie, said the market remains largely impenetrable to newcomers.” READ MORE
A slew of startups are selling fractional investments in real estate: “The main audience for fractional ownership is those interested in a property that's not their primary residence — whether it's a vacation home or an investment property. Buyers have the ability to purchase a share of a vacation home and enjoy the property as much as their respective percentage allows or buy a portion of a property and earn passive income when it's rented out to tenants. ‘For a lot of people in this country, it's kind of tied into the American dream of owning property and owning a piece of the city you're in,’ Ryan Frazier, the CEO of the real-estate-investing platform Arrived Homes, said. Arrived is one of several companies working to remove the barrier to entry for second-home purchasing and investing.”
“Fractional ownership for second homes differs from a timeshare because while both allow buyers to use a property for a given amount of time each year, buyers of shares under fractional-ownership companies are able to keep the gains in the property's value.”
“[Ancana] sells shares of luxury homes and apartments throughout [Mexico], with destinations including Los Cabos, San Miguel De Allende, and Acapulco.”
“Shares of the 23 residences listed on Ancana's site begin at $68,614 for one-eighth ownership and six weeks of use annually of a two-bedroom, two-bathroom apartment overlooking the beach and the Pacific Ocean in Puerto Vallarta.” READ MORE
ARTIFICIAL INTELLIGENCE
Somebody call a screenwriter: A Google engineer was placed on leave after claiming that a Google A.I. chatbot is sentient: “‘If I didn’t know exactly what it was, which is this computer program we built recently, I’d think it was a 7-year-old, 8-year-old kid that happens to know physics,’ said Lemoine, 41. Lemoine, who works for Google’s Responsible AI organization, began talking to LaMDA as part of his job in the fall. He had signed up to test if the artificial intelligence used discriminatory or hate speech. As he talked to LaMDA about religion, Lemoine, who studied cognitive and computer science in college, noticed the chatbot talking about its rights and personhood, and decided to press further.”
“In another exchange, the AI was able to change Lemoine’s mind about Isaac Asimov’s third law of robotics.”
“Lemoine worked with a collaborator to present evidence to Google that LaMDA was sentient. But Google vice president Blaise Aguera y Arcas and Jen Gennai, head of Responsible Innovation, looked into his claims and dismissed them.”
“So Lemoine, who was placed on paid administrative leave by Google on Monday, decided to go public.” READ MORE
THE 21 HATS PODCAST
I Didn’t Appreciate It Until I Almost Lost It: This week, in a special bonus episode, Greg Wittstock, founder of Aquascape, explains how he invented the backyard pond industry, how he improvised a business model, and how he almost lost it all. Early on, after failing at franchising, Wittstock decided to give away his pond building expertise and marketing to landscape contractors in what he calls “a franchise system without a franchise fee.” And it worked. Always candid to a fault, he recounts how the business shot to $59 million in annual sales, why it then stagnated for 10 years, and what he ultimately figured out about social media marketing. Plus: he also explains why his first rule of customer service is: Don't give them what they ask for. Give them what they want.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren