Good morning!
Here are today’s highlights:
The supply chain crisis is forcing smaller businesses to build better business models.
ClusterTruck is trying to solve the third-party delivery problem for restaurants.
America actually has plenty of truck drivers.
Love Cloud, an airline-charter business, offers membership in the Mile High Club.
THOUGHT LEADERSHIP
Heather Morgan, half of the couple accused of hacking billions in Bitcoin, contributed articles to Forbes and Inc with headlines like “3 Steps to Become an Expert in Anything,” “What You Need to Know About Selling and Marketing During the Pandemic,” and—best of all—”Protect Your Business from Cybercriminals:” “While you'd expect crypto criminals to keep a low profile, especially those who made off with billions in Bitcoin, that isn't the case with this alleged culprit. Morgan's aspirations to be a rapper, writer, and influencer have left a lengthy trail of pictures and videos on social media, including these from TikTok. Morgan, whose lyrics in the video above include ‘yes that was cheesy/at least I'm not sleazy,’ also has a website dedicated to her rapper alter-ego named ‘Razzlekhan.’”
“Morgan's LinkedIn profile, meanwhile, describes her as a ‘Serial Entrepreneur, SaaS Investor and Surrealist.’”
“It notes she obtained a BA in Economics from UC Davis, and lists her skills as ‘Inside Sales’ and ‘Email Marketing.’”
Read her thought leadership for Inc.
Read her thought leadership for Forbes. READ MORE
LOGISTICS
The broken supply chain forces smaller businesses to find better ways to compete: “Giants like Walmart, Home Depot, and Dollar Tree have chartered their own cargo ships to sail to smaller ports like Houston, Texas, and Everett, Washington, avoiding weeks-long waits at the heavily trafficked ports of Los Angeles and Long Beach. Walmart repurposed a vessel that usually carries grains in order to deliver toys to a dock outside the Los Angeles port last fall. Home Depot, whose executives jokingly pitched the idea of chartering a ship last spring, later hired several vessels to transport plumbing tools, holiday decorations, and other items. Between November 15 and December 20 alone, nine ships chartered by retail companies docked at U.S. ports, compared to zero during the same period in 2020, according to ocean freight analyst Steve Ferreira.
“Small businesses have had to center their business models around products or services customers would prioritize above cost and convenience. Many retailers have carved out niches. Wright’s Market specializes in meat, and sources some of its products from local meat processors.”
“Many independent toy stores, including Fundamentally Toys, stock toys from smaller toy makers, which are often longer-lasting and more environmentally friendly than Barbies and Legos. In some industries, such as fashion and food, a movement toward ethical consumption and transparency has given newcomers an edge.”
“But even when small retailers hone their specialties, they still have to work within a system dominated by big manufacturers and suppliers.” READ MORE
FOOD & BEVERAGE
A startup ghost kitchen, ClusterTruck, claims to have solved delivery for restaurants: “Software entrepreneur Chris Baggott launched a sustainable cattle farm in 2010 to fix a broken food-supply system. Six years later, in Indianapolis, he opened one of America's first ghost kitchens to repair another food problem: third-party delivery. Baggott owns a grass-fed burger restaurant in Greenfield, Indiana, that serves his farm's beef. After launching the business, the tech veteran turned restaurateur immediately saw the pitfalls of food e-commerce. Consumers blame restaurants for soggy food and late deliveries, but most damaging are the third-party-delivery fees that kill thin restaurant profits.”
“Yet Baggott said he kept hearing delivery apps like Grubhub say they generate ‘incremental revenue’ for restaurants. Baggott, whose farm sells pasture-raised pork, beef, and chicken directly to the public, knew that was hogwash.”
“‘That sort of pissed me off,’ he told Insider. Third-party-delivery operators can charge restaurants about 30 percent of orders in commission fees in cities without caps in place.”
"So Baggott co-founded ClusterTruck in 2016, a delivery-only restaurant company that, like his farm, cuts out the ‘middleman’ by selling food directly to consumers. ClusterTruck creates delivery-only brands, prepares the food in ghost kitchens, and leverages technology to deliver the meals using its own fleet of gig workers – bypassing third-party-delivery apps.” READ MORE
MANUFACTURING
The Canadian trucker protest has spread to Windsor and the Ambassador Bridge, threatening an auto industry lifeline: “Each day, $300 million worth of car and truck parts, agricultural products, steel and other raw materials flows across the bridge, according to Flavio Volpe, president of the Auto Parts Manufacturers Association in Toronto. U.S. manufacturers rely on daily or near-daily shipments to and from their Canadian partners. Just one or two more days of interrupted deliveries could lead to temporary layoffs or plant closures, Volpe said. ‘We work in 24-48 hour contingencies. Everybody is thinking about what that means for tomorrow’s production,’ he said. ‘A few dozen people are getting in the way of the American economy.’”
“For almost 30 years, North American trade agreements have melded vehicle makers in the U.S. and Canada into a seamless operation.”
“Incomplete vehicles routinely cross the northern border several times before assembly is completed.”
“As U.S. plants run short of Canadian components, they will react by cutting their own orders to suppliers elsewhere, meaning layoffs could ripple across the industry, Volpe added.” READ MORE
SMALL BUSINESS TECH
Apple will let businesses take payment with iPhones: “Apple said Tuesday the feature will be made available to payment platforms and app developers to integrate into their iOS apps and offer as a payment option to business customers. With the feature, merchants would be able to accept payment from customers by having them hold their iPhone or Apple Watch near the merchant’s iPhone to pay with a digital wallet like Apple Pay or a contactless credit or debit card.”
“Payment processor Stripe will be the first platform to offer the feature this spring to its customers, which include Shopify’s point-of-sale app, Apple said.”
“Other payment platforms and apps will start offering the feature later this year, the company said.” READ MORE
HUMAN RESOURCES
America actually has plenty of truck drivers: “In a world contending with the unrelenting impact of the Great Supply Chain Disruption and its attendant worry of the moment, rising consumer prices, a shortage of truck drivers is frequently cited as an explanation for shortages of many other things — from construction supplies to electronics to clothing. Last year, trucking companies in the United States suffered a record deficit of 80,000 drivers, according to the American Trucking Associations, a trade association. Given that trucks move 72 percent of American freight, a lack of drivers spells substantial disruption.”
“Some experts counter that the very notion of too few drivers is bogus — a reach by the industry for federal subsidies to train recruits as compensation for its poor rates of retention.”
“The average trucking company has a turnover rate of roughly 95 percent, meaning that it must replace nearly all of its workforce in the course of a year. More recruits boost the supply of drivers, which keeps a cap on wages.”
“As the trucking association itself noted, more than 10 million Americans held commercial driver’s licenses in 2019. That was nearly triple the 3.7 million trucks that required a driver holding that certification.”
“‘This shortage narrative is industry lobbying rhetoric,’ says Steve Viscelli, a labor expert at the University of Pennsylvania who previously worked as a truck driver. ‘There is no shortage of truck drivers. These are just really bad jobs.’” READ MORE
THE COVID ECONOMY
Has the pandemic killed the middle class dream of home ownership? “Buying a home, especially for first-time homeowners, has been a nightmare for most of the pandemic. Low interest rates, supply-chain troubles, and a rising demand for homes all sent prices skyrocketing while the inventory of available houses on the market remains at a historic low. Now the NAR study is breaking down just how bad it is—and it’s really bad. he new study, released Monday, found that at the end of 2021, there were about 411,000 fewer homes on the market that were ‘affordable’ for households earning between $75,000 and $100,000 than before the pandemic.”
“To put that in perspective, at the end of 2019, there was one ‘affordable’ listing for every 24 households in that income bracket, and it was one out of 65 by December 2021.”
“For middle-income prospective homeowners, the competition is fierce, as the share of listings affordable to buyers within this range dropped from 58 percent in 2019 to 51 percent now.” READ MORE
STARTUPS
Love Cloud, an airplane charter business, offers private flights for couples: “For $995, Love Cloud will fly you and a partner in a private airplane for 45 minutes so that you can have sex. Granted, you don’t have to have sex on the plane. You could pay $1,195 to get married on board. For $100 more, it can be booked for a romantic one-course meal; for $1,595, you’ll get three courses. With any package, an extra $300 will get you a bottle of bubbly and ride to the tarmac in a limousine.”
“But according to Andy Johnson, 40, a pilot and the founder of Love Cloud, its Mile High Club Flight, which comes with a commemorative membership card signed by the pilot, remains the business’s most popular offering.”
“Love Cloud mostly books couples, but has accommodated groups of three or four, with an additional fee of $200 per person.” READ MORE
THE 21 HATS PODCAST
Have You Considered Not Taking Investors? This week, Jay Goltz, Liz Picarazzi, and Dana White talk about the advantages and disadvantages of bringing in outside capital and expertise—something both Liz and Dana have considered. “I have a background in Russian literature and credit card marketing,” says Liz. “I'm now a manufacturer, so if I could have an outside investor who either brought that to the table or could help me with it, that would be really valuable.” But of course, there are trade-offs. We also talk about Dana’s looming franchise sales, why it’s so hard to hire lawyers and accountants, and whether there’s an opportunity for Jay in framing NFT art.
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
Perhaps she "thought" she could get away with it!