Giving Back Through EO

Ami Kassar says he was in survival mode before joining the Entrepreneurs' Organization: “Life was about work and whatever time I could squeeze in for my family.”

Good Morning!

Here are today’s highlights:            

• There’s a big opportunity in New York City for anyone selling trash enclosures.

• The economics of buying electric trucks are improving.

• American manufacturing, generally at the forefront of any recession, is stalling.

• It’s becoming clearer that Britain is paying a price for Brexit.

THE ENTREPRENEURIAL LIFE

Ami Kassar says Entrepreneurs’ Organization helped make him a more complete person: “Taking on leadership of a non-profit organization is a big commitment of time and energy, especially while building a business. So a fair question might be why I’m accepting this responsibility. And how do I intend to manage my already crazy schedule with this extra load? The answer is that being a member of EO taught me that spending time working on and thinking about things other than my business is healthy.  Before I started my EO journey, I was in survival mode. Life was about work and whatever time I could squeeze in for my family. It was around the clock, 24/7. Having fun and pursuing hobbies were not a part of my DNA. I considered attending a workshop or a talk that I didn’t think could improve my business a waste of time. I was caught in the rat race.”

• “It was EO that slowly started to break me down. I remember my first forum, where the members asked me—well, told me—to toss my cell phone into the bag for the meeting. I shook.”

• “In July, I will start my presidency of the Philadelphia Chapter, where we currently have 111 members.” READ MORE

OPPORTUNITIES

Anybody know anyone in the trash-enclosure business? “New York City, where sidewalks have long been overrun by foul-smelling heaps of garbage bags that force passers-by to yield to oncoming rat traffic, is about to try a not-so-novel idea to solve the problem. The concept, known as trash containerization, seems simple enough: Get trash off the streets and into containers. The strategy has been used successfully in cities across Europe and Asia, like Barcelona and Singapore. But in New York, nothing is that simple. In a highly anticipated new report being released on Wednesday, city sanitation officials estimate that it would be possible to move trash to containers on 89 percent of the city’s residential streets. To do so, however, will require removing 150,000 parking spots, and up to 25 percent of parking spots on some blocks.”

• “The report does not address the cost of implementing trash containerization citywide, but it could easily cost hundreds of millions of dollars over the next decade.”

• “City officials must buy new specialized trash trucks and stationary containers, while also increasing the frequency of trash collection in large swaths of the city.” READ MORE

SMALLBIZ TECH

It may be time to buy an electric truck: “You can get a delivery truck—those boxy vans that companies ranging from FedEx Corp. to the local bakery use to shuttle goods from warehouses to homes and shops—for around $100,000. Lately, though, growing numbers of buyers are choosing to pay twice as much. The reason: The pricier ones are electric rather than diesel. And the cost of purchasing and operating the vehicle, after factoring in fuel savings, is fast approaching parity with traditional trucks. “The technology really works for this,” says BloombergNEF analyst Nikolas Soulopoulos. “And the economics work, or at least they’re starting to.”

• “In April, e-truck makers got a sweetener for their sales pitch: up to $40,000 in tax breaks per vehicle, thanks to the recent Inflation Reduction Act. And state aid can be stacked on top of the federal money, so in generous California, a medium-duty truck might be eligible for as much as $120,000 in incentives.”

• “School buses can tap into an even richer vein of support, with some buyers scrounging up enough subsidy money to offset the entire cost of the vehicle, says Tim Reeser, chief executive officer of Lightning eMotors, an e-truck maker in Loveland, Colorado. ‘They’re essentially getting a free bus,” he says.’” READ MORE

DESIGN

Jason Fried has some advice for evaluating a redesign: our first instinct is to compare the new design to the old design. But don’t do that. The first step is to understand what you’re evaluating. If you just put the new design up against the old design, and compare the two, the old design will strongly influence your evaluation of the new design. This is OK if nothing’s changed since the original design was launched. But it’s likely a lot has changed since then – especially if many months or years have passed. Maybe there are new insights, maybe there’s new data, maybe there’s a new goal, maybe there’s a new hunch, or maybe there’s a whole new strategy at play. Maybe ‘make it readable’ was important 3 years ago, while ‘help people see things they couldn’t see before’ is more important today. Or maybe it’s both now.”

• “But if the old design sets the tone about what’s important, then you may be losing out on an opportunity to make a significant leap forward. A design should never set the tone – ideas should set the tone. Ideas are independent of the design.”

• “It’s a subtle thing, but it can make all the difference.” READ MORE

MANUFACTURING

After a pandemic surge, manufacturing is stalling: “The pandemic had a bright silver lining for Elkhart, Ind. The city, renowned as the capital of recreational vehicle production, had a surge in demand as cooped-up families took to the highways and avoided hotels. The cluster of manufacturers enjoyed record profits, and workers benefited as well: The metropolitan area’s unemployment rate sank to 1 percent in late 2021, and average weekly wages jumped 35 percent from their level in early 2020. That frenzy, however, has turned to a chill. Dealers, who stocked up on as many trailers and vans as they could, have been discounting them to clear their lots — and new orders have dried up. The area has lost nearly 7,000 manufacturing jobs over the past year, and unemployment is now above the national average.”

• “Thor Industries, which owns a wide portfolio of RV brands, saw its sales tumble 39.4 percent from the quarter a year ago. ‘In 2022, manufacturers overproduced, and you’re seeing some of the impact of that from the staffing standpoint,’ said Chris Stager, chief executive of the Economic Development Corporation of Elkhart County.”

• “He foresees new projects propelled by recent federal energy and infrastructure legislation, but rising interest rates are taking a toll in the meantime. ‘It’s not bad, but it’s not what it was,’ Mr. Stager said. That’s manufacturing in America in 2023.” 

• “A bigger question for the American economy is whether this heralds a broader downturn, since cooling demand for goods usually signifies that consumers are feeling financially strained. ‘Manufacturing is always at the forefront of the recession,’ notes Barbara Denham, a senior economist at Oxford Economics.” READ MORE

REGULATION

Britain is now paying the price for its decision to leave the European Union: “From the time a tomato is harvested, every minute counts en route to the purchaser’s table. In March, the BBC reported that Britain’s departure from the European Union has added 10 to 20 minutes of additional paperwork to every truckload of tomatoes shipped from Spain—longer if the truckload mixes different produce varieties. Ten to 20 minutes may not sound like much. But multiply that burden by thousands of trucks, squeeze the trucks through the bottleneck of the single underwater tunnel that connects Britain to freight traffic from Europe, and costs and delays accumulate. The result: winter tomato gluts on the continent, winter tomato shortages in the United Kingdom.”

• “Altogether, Britain is expected to be the worst performing of the world’s 20 biggest economies this year. The British government’s official forecaster predicts that after-inflation household incomes will decline by an average of 7.1 percent over the three years ending in spring 2024. On the present trajectory, Britain will not return to 2019 levels of disposable income until 2027.”

• “Britain voted to exit in the summer of 2016. The departure was formalized on December 31, 2020. Since then, new barriers to trade, investment, and movement have risen between Britain and its nearest neighbors. Investment in Britain has tumbled, and the British economy has shrunk. By one authoritative estimate, Britain is 4 percent poorer today than if it had stayed in the EU.” READ MORE

THE 21 HATS PODCAST

Bonus Episode: Not Sold on ESOPs? There’s a New Alternative: This week, two special guests who have built highly successful companies talk about what they ultimately plan to do with those companies. Ari Weinzweig is co-founder of Zingerman’s Community of Businesses, a collection of mostly food-related companies that are an iconic part of Ann Arbor, Michigan. Brad Herrmann is co-founder of Text-Em-All, a software firm based near Dallas that helps organizations deliver personalized, informational, and emergency messages by text and by phone. Both Zingerman’s and Text-Em-All consider themselves purpose-driven. Both practice open-book management. And so, not surprisingly, the founders of both companies took a hard look at selling to an employee stock ownership plan, or ESOP, in the hope that the cultures they’ve created might live on.

But both companies, independently, soured on the notion of creating an ESOP, one after spending more than $200,000 and coming within a week of closing the deal. And now, both have settled on a little known alternative, what’s called a perpetual purpose trust. So far, only a handful of companies have tried to create a purpose trust for this particular purpose, but Zingerman’s and Text-Em-All are taking the leap. As both Ari and Brad acknowledge, they’re kind of figuring it out as they go.

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

Thanks for reading, everyone. — Loren