'God, Loren, You Are Such a Jerk'

Today’s Highlights: Small businesses struggle to find workers. A stealth startup plans to roll up Shopify merchants. And how do salespeople make a human connection in a virtual world?

THE 21 HATS PODCAST

Episode 56: God, Loren, You Are Such a Jerk: This week with Paul Downs, William Vanderbloemen, and Laura Zander, the talk leaps from one plague to another—floods, power outages, cyber crime, employee churn, supplier price hikes, and vanished shipping containers—not to mention the actual plague. For Laura, whose wholesale yarn business keeps falling further behind on its orders, these events have necessitated a series of difficult conversations with customers: “They can't get mad about the pandemic,” she tells us. “And they're not going to get mad about the fact that we're moving. And they're not going to get mad about the fact that there's a deep freeze. But at some point, they're going to get tired, whether it's consciously or subconsciously.” To which she adds, “but if the locusts hit, I don't know how much more of this people can take.” Plus: a friendly discussion about whether raising your prices makes you a jerk. (Spoiler alert: It does not.)

SALES

How do salespeople make human connections in a virtual world? Founded in 1995, KBAA has about 50 employees, including seven salespeople. The firm advises on art to create striking interiors for offices, health care and senior living facilities, and such high-end hotels as the St. Regis in Toronto and the Palms Casino Resort in Las Vegas. In the travel sector, KBAA’s service is an upscale offering at a time of enormous budget cuts. When the travel industry plunged, so did KBAA’s revenues in the sector. For KBAA Principal Allison Barry, the pandemic prompted a moment of soul searching. ‘With the virus, fear, and death, we thought, What’s appropriate for us from a marketing perspective?’ she says.”

  • “The firm landed on a strategy of building human connections through virtual interactions with customers and prospects. It eliminated the pitch from its sales calls, focusing instead on asking customers how they were coping as people.”

  • “It trained its salespeople on how to look good on Zoom and required them to always turn the camera on. To demonstrate its aesthetic prowess, KBAA’s graphics department created video backgrounds depicting edgy artwork.” READ MORE

STARTUPS

A stealth startup plans to buy up merchants on Shopify: “Founders Fund's Keith Rabois and Atomic's Jack Abraham are quietly building a team for a new stealth startup in Miami. The two California-to-Florida transplants both moved to Miami during the pandemic year and have joined forces to create OpenStore, a company that will ‘provide instant liquidity to long-tail Shopify merchants,’ Rabois tells Insider in an exclusive interview. ‘So we will give them an offer to buy their business instantly, the same day,’ he added. In exchange for the cash from the acquisition, those merchants will agree to move their e-commerce shops to OpenStore which will integrate and operate them all on a single platform.”

  • “Another way to describe the company is ‘Square meets OpenDoor.’ In addition to being an investor at Founders Fund, Rabois is also the cofounder of OpenDoor, the online real estate company, and he's former COO of digital payments processor Square.”

  • “‘It's like OpenDoor in the sense of reevaluating a house site and seeing instant offers. And it's a little bit like Square in that we are making liquidity available to any business owner online instantly,’ said Rabois.” READ MORE

CityBldr and Throne are close to rolling out a solution toAmazon’s latest PR debacle: “Two startups with roots in Seattle and Washington, D.C. — which also happen to be the hometowns of Amazon’s HQ1 and HQ2 — believe they’ve got the proper solution for drivers who need to go. Throne says it takes the ‘stress out of finding a clean bathroom in a few easy steps.’ After delivery drivers download the app, they simply can reserve a nearby Throne bathroom unit, with the company noting that ‘we’ll hold it so you don’t have to.' Like the systems used to unlock ride-sharing vehicles — think of the old Seattle-based ReachNow service or Lime bike and scooter offering — the app then can be used to unlock the bathroom so the user can ‘go in your Throne.’” READ MORE

HUMAN RESOURCES

Even with unemployment high, small businesses are struggling to find workers: “Sierra Pacific Industries, which manufactures doors, windows, and millwork, is so desperate to fill openings that it’s offering hiring bonuses of up to $1,500 at its factories in California, Washington, and Wisconsin. In rural Northern California, the Red Bluff Job Training Center is trying to lure young people with extra-large pizzas in the hope that some who stop by can be persuaded to fill out a job application. ‘We’re trying to get inside their head and help them find employment. Businesses would be so eager to train them,’ says Kathy Garcia, the business services and marketing manager. ‘There are absolutely no job seekers.’”

  • “On April 1 the NFIB reported that in March a record-high percentage of small businesses surveyed said they had jobs they couldn’t fill: 42 percent, vs. an average since 1974 of 22 percent.”

  • “Also 91 percent of respondents said they had few or no qualified applicants for job openings in the past three months, tied for the third highest since that question was added to the NFIB survey in 1993.” READ MORE

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COMMERCIAL SPACE

Businesses are driving down rents and locking in long-term deals: “Big companies are making plans to stick with city-center office buildings, but they are cutting back on space and driving down rent prices for years to come, according to an analysis of U.S. office leasing trends prepared for The Wall Street Journal. The Journal’s leasing information comes from the data firm VTS, which tracks tens of thousands of negotiations across the U.S. between landlords and tenants. Landlord and tenant discussions in seven of the largest office markets offer an early glimpse into the evolving workplace strategies for hundreds of companies after a year of largely remote work. Rent proposals made during the first quarter suggest that many companies in the biggest markets—including New York, San Francisco, Chicago and Los Angeles—are embracing an emerging hybrid model: maintaining a shrunken office presence while allowing employees to work remotely at least part-time.”

  • “The terms under negotiation show landlords are offering long-term leases of four and more years at discounts up to 13 percent below rent rates reached in the first quarter of 2020 when factoring in concessions like periods of free rent, according to VTS.”

  • “Companies are also seeking on average about 10 percent less space than they were looking for in the first quarter of 2020.”

  • “More than 45 percent of the tenants who are negotiating with landlords want to make commitments of seven years or more, compared with 34 percdnt in 2019, according to VTS.” READ MORE

POLICY

A national coalition of small businesses is lobbying to break up Amazon: “The effort is being launched Tuesday by trade groups that represent small hardware stores, office suppliers, booksellers, grocers and others, along with business groups from 12 cities, organizers say. Merchants plan to push their congressional representatives for stricter antitrust laws and tougher enforcement of existing ones. The groups, which collectively represent thousands of businesses, want federal legislation that would prevent the owner of a dominant online marketplace from selling its own products in competition with other sellers, a policy that could effectively separate Amazon’s retail product business from its online marketplace.”

  • “Members of the House Antitrust Subcommittee are considering legislation along those lines as they weigh changes to U.S. antitrust law, though no bill has yet been introduced.”

  • “‘Amazon and third-party sellers complement each other, and sellers having the opportunity to sell right alongside a retailer’s products is the very competition that most benefits consumers and has made the marketplace model so successful for third-party sellers,’ the [Amazon] spokesperson added.”

  • “Members of the coalition, dubbed Small Business Rising, include the National Grocers Association, the American Booksellers Association and the Alliance for Pharmacy Compounding.” READ MORE

Republicans and corporations seem to be splitting over Georgia’s voting law: “The acrimony between Republicans and large companies over Georgia underscores the party’s increasingly fraying relationship with corporate America over social and cultural issues as GOP leaders grapple with the direction of the party after the 2020 election. The future of that relationship is complicated by the fact that Republicans continue to support economic policies advocated by the private sector on taxes and regulations, making it unclear what form of retribution leaders could pursue. For instance, McConnell and other Republicans have said that a big reason they oppose President Biden’s infrastructure proposal unveiled last week is because the White House has proposed paying for the package by raising corporate tax rates.”

  • “McConnell’s office declined to elaborate on what ‘consequences’ the Senate minority leader might pursue against companies that get on the wrong side of Republicans.” READ MORE

READER FEEDBACK

On Thursday, we highlighted a piece by Victor Hwang, co-founder of Right to Start, that pointed out that states are about to receive a $10 billion infusion of funding into the State Small Business Credit Initiative program to support entrepreneurs. Among other things, Victor emphasized that he believes the SSBCI funds in each state should be managed by people who comprehend entrepreneurial capital, like experienced investors and/or entrepreneurs skilled in capitalizing nascent, young, and growing businesses. One reader, C. Earl Peek, a former senior policy advisor at the U.S. Department of Treasury, took issue with that:

“Many studies support the conclusion that the best people to invest in a community are people who look like the people they will invest in. I agree with Victor Hwang that the funds should be professionally managed but sharply disagree with the invariable and unspoken messaging that the funds need to be managed by the same white people from the same white firms from the same Ivy League schools. These funds need to be managed by highly qualified socially disadvantaged persons who graduated from HBCUs, who have been in the front lines of community development, and who care about  LMI and underserved communities.”

LOGISTICS

The latest supply-chain-induced shortage? Ketchup: “Restaurants are trying to secure the tabletop staple after Covid-19 upended the condiment world order. Managers are using generic versions, pouring out bulk ketchup into individual cups and hitting the aisles of Costco for substitutes. ‘We’ve been hunting high and low,’ said Chris Fuselier, owner of Denver-based Blake Street Tavern, who has struggled to keep ketchup in stock for much of this year. The pandemic turned many sit-down restaurants into takeout specialists, making individual ketchup packets the primary condiment currency for both national chains and mom-and-pop restaurants.”

  • “Packet prices are up 13 percent since January 2020, and their market share has exploded at the expense of tabletop bottles, according to restaurant-business platform Plate IQ.”

  • “Even more is eaten at home, and the pandemic helped push retail ketchup sales in the U.S. over $1 billion in 2020, around 15 percent higher than 2019, Euromonitor data showed.” READ MORE

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