Have You Tried Monk Mode?
Modern technology and devices can make it harder to focus. Fortunately, new technology can help!
Good Morning!
Here are today’s highlights:
Uber has a startup competitor that actually employs its drivers.
New research shows that the loss of an early employee can be devastating for startups.
“This is going to be a bloodbath of breweries,” said a craft brewer who just closed down.
Private employers added fewer jobs than expected in September.
MANAGEMENT
Having trouble focusing because of all of the disruptions from your devices? There’s an app for that: “The answer, for some, is ‘monk mode,’ the productivity trend inspired by — you guessed it — monks and the secluded, reflective lives they lead. One-part detox and one-part productivity hack, the practice centers on abstaining from digital distractions in order to achieve deep focus. While the approach itself is nothing new — entrepreneurs were talking about this back in the early 2000s — it’s recently taken off on social media. The hashtag #monkmode has 68.8m+ views on TikTok.”
“Ironically, those seeking enlightenment are using technology to stay offline: The Freedom app, which allows users to block specific social sites or turn off internet access entirely, has 2.5 million-plus global users. FocusMe lets users customize their website blocking (you can block all of Facebook with the exception of one group, for example). Cold Turkey claims its website blockers are nearly impossible to break.” READ MORE
STARTUPS
Uber has a new rival that doesn’t rely upon contract workers: “That’s the main allure of Alto, a Dallas-based transportation start-up founded in 2018 that promotes itself as a safer, higher-quality version of Uber or Lyft, with drivers who are thoroughly vetted, employed by the company, and paid hourly. It’s a drastic departure from the business model espoused by the dominant ride-hailing companies, where drivers are independent contractors who set their own hours, drive their own cars and are responsible for their own expenses, without a minimum wage or health care benefits. With the gig worker system increasingly under fire nationwide by labor activists who contend it exploits and underpays drivers, Alto thinks its approach — in some ways a high-tech version of a black car service — could hold growing appeal.”
“Alto, with 2,000 drivers in five major cities, under two million total rides and just $120 million in funding so far, is far smaller than either Uber or Lyft. But executives think the company, whose 2023 revenue has grown 30 percent from a year ago, can carve out a niche in the high-end ride-hailing business, competing with the premium lines of Lyft and Uber.”
“But it’s too early to say whether Alto can succeed at a scale that challenges the dominant model. It’s an expensive service, and it has struggled recently. In July, Alto pulled out of the San Francisco Bay Area, just a year after beginning to offer rides there — a decision that Mr. Coleman attributed to San Francisco’s not yet returning to pre-pandemic levels of commuting.”
“Whether Alto’s approach is truly a better deal for drivers is also up for debate. Its driver pay, which varies by city, is not especially high. In Dallas, where the minimum wage is $7.25 per hour but many entry-level jobs pay twice that, Alto drivers average $15 to $20 per hour.” READ MORE
EVENTS
Want to meet a whole bunch of owners, operators, and investors on journeys similar to yours? Come join us in Columbia, Missouri, November 8 and 9, at a brand new event for business owners where there will be a whole slew of impressive speakers (and me). I’ll be talking about why media outlets have such a hard time covering privately owned businesses — like the ones attending this event -- and what challenges and opportunities that presents for owners. While this is the inaugural Main Street Summit, I can assure you that the folks behind it -- Brent Beshore, Permanent Equity, Capital Camp -- have a reputation for doing things right. You could tell that from the conversation I had with Brent a couple of years back: “Brent Beshore Takes a Radical Approach to Private Equity.”
Tickets start at $500. And by all means, let me know if you’re coming.
HUMAN RESOURCES
New research shows that startups who lose early employees struggle to recover: “The researchers found that the initial people hired in a startup’s first year have a strong and long-lasting effect on the company’s performance, while the same is not true for employees hired just a year later. [Co-author J. Daniel Kim, an assistant professor of management at the Wharton School at the University of Pennsylvania] speculates that early joiners contribute to knowledge that a company can’t easily replace. ‘Relationships with key suppliers and/or customers, know-how in developing and deploying a new technology, company culture—the sort of knowledge that can’t be learned outright through a written-down manual but rather gained through experience,’ Kim says. When the early joiner is gone, the human capital ‘might be lost because no one can fill that void as effectively.’”
“The researchers chose an employee death as a point of comparison, instead of looking at whether an early employee simply left the company, since early employees might choose to quit a young company because it was failing—and that might skew the interpretation about how the companies performed after the departure of a worker.”
“The team found that startups that lost an early joiner within six years of launch saw an average 6-percent drop in headcount and revenue over a five-year period compared with their twin companies. Ten years out, on average, the companies that had suffered a loss never got back to where they were before the death.” READ MORE
THE ECONOMY
Private sector hiring slowed last month: “U.S. employers in the private sector added an estimated 89,000 jobs in September, a much lower total than expected and a potential indication of a sharp pullback in the labor market, payroll processor ADP reported Wednesday. The September tally landed well below economists’ estimates for 153,000 jobs added, as well as August’s upwardly revised total of 180,000 jobs added. It’s the slowest pace of job growth reported by ADP since January 2021.”
“‘We are seeing a steepening decline in jobs this month,’ said Nela Richardson, chief economist at ADP, in a statement Wednesday morning. ‘Additionally, we are seeing a steady decline in wages in the past 12 months.’”
“Annual pay increases for people who remained at their jobs were 5.9 percent, the slowest gains since October 2021; and were 9.5 percent for ‘job changers.’” READ MORE
THE BEER INDUSTRY
Three Philadelphia-area craft breweries just closed: “After percolating through the ’90s then taking off like a bottle rocket in the late ’00s and early ’10s, the national craft beer market has started to fizzle in recent years. Philly and South Jersey have so far bucked the trend — with scores of new breweries still in the works — but at least one ex-brewery owner thinks we’re at the start of a downslope. ‘This is going to be a bloodbath of breweries,’ said Mike Treon of Liquid Art, which first launched in Chambersburg in 2008. As Treon and his partners have wrapped up the business, speaking with lawyers and other contacts, they’ve heard anecdotes of other craft breweries in the process of folding.”
“The pandemic’s financial toll and increased costs all contributed to Liquid Art’s closing, but craft beer’s changing landscape plays into it as well. Besides facing competition from hard seltzer and big-name brands, the industry is teeming with more small-scale producers than ever.”
“‘We opened Roy Pitz in 2008 and Chambersburg had not seen a microbrewery in 10 to 15 years. And now in that county I think there’s 12,’ Treon said. ‘All else being equal, the consumer demand didn’t grow by a factor of 12.’”
“In 2008, craft brewers were geared toward finding footholds in retail and distribution. Today’s brewery taprooms tend to have more modest ambitions. ‘Local craft is really, really local, and we weren’t really sized for it — we were sized much bigger. And it’s just been an exercise in trying to realign,’ Treon said.” READ MORE
RESTAURANTS
Blackbird gives independent restaurants the ability to offer loyalty programs: “Ben Leventhal helped found the popular restaurant-news site Eater and the innovative restaurant-reservation service Resy. So a lot of attention has focused on his latest project — Blackbird, the first loyalty platform for independent restaurants — since it began operating in New York City in April. Blackbird Labs announced Wednesday that its pilot program has been a success, that it is expanding to San Francisco and Los Angeles, and that it has raised $24 million through a16z, the Silicon Valley venture capital firm also known as Andreessen Horowitz.”
“Like all rewards programs, Blackbird is designed to entice customers into becoming regulars. It arrives amid a sweeping post-Covid self-evaluation by independent restaurants about how to survive high labor costs, new price plateaus and the relentless march of national chains.”
“Home delivery via third-party apps like DoorDash spiked during the pandemic, restaurants began using social media to communicate with diners, and many no longer have a direct reservations line or even a phone number. Blackbird is the first app that enables restaurants and members to text back and forth, in real time.”
“About 20 restaurants in Manhattan and Brooklyn already have Blackbird readers at the entrance. Most are relatively new arrivals with a high cool factor, like the cozy Vietnamese restaurant Di An Di, in Greenpoint, Brooklyn; the high-end Principe, in SoHo; and the fast-growing local chain Upside Pizza. For independent restaurants like these, direct marketing to diners has always been a challenge.” READ MORE
A company in Denmark is trying to address food waste by making a market for leftovers: “Too Good To Go works with businesses to sell their end-of-day leftovers for 60 percent to 80 percent off. By matching hungry, cost-conscious customers with surplus food, the app's creators say they minimize waste, one bag of saved food at a time. ‘I think it's doing that on a micro scale and having a macro impact,’ says Chris MacAulay, the app's U.S. country manager.”
“The app started in Denmark in 2015. Today there are participating stores in 17 countries and more than a dozen U.S. cities including New York, Phoenix and Seattle. Several cities including Santa Barbara, Minneapolis and Atlanta just started participating this year. The company claims Los Angeles is its most successful city yet. Next, it's headed to cities in the Southeast.”
“When someone buys a ‘surprise bag,’ the app adds that purchase to the consumer's lifetime climate impact tally. It displays all the electricity and the carbon emissions prevented from going to waste. ‘We've saved over 250 million meals,’ MacAulay says. ‘That's one meal every three seconds. So if you think about the scale, it is having an impact.’” READ MORE
PROFILE
Five years ago, Wynne Nowland, CEO of financial services firm Bradley and Parker, sent a company-wide email sharing her identity as a trans woman: “Her team immediately embraced her, and five years later, Nowland is more than confident she made the right call. ‘When I came out, I had just become CEO of our company,’ says Nowland. ‘I was certainly nervous. As it turns out, I didn't really have any reason to be because the acceptance here from my team was just spectacular.’”
“‘Many companies have never had an experience with a transgender person,’ she says. ‘My company certainly hadn't until I was around. That's where a lot of the trouble comes from. It doesn't come from a position of maliciousness but often from a position of naivete.’”
“I was the subject of a fairly substantial piece in The Wall Street Journal, and one of the things that the reporter who wrote that story did was talk to multiple employees here. Several people said the same thing: I really haven't changed too much. But for some reason, women found me more approachable and were more comfortable talking to me about things than they had been before.”
“Most companies have these policies and practices, but the problem is they really don't walk the walk. They'll have a diversity policy for hiring, but if you look at their workforce, it's not diverse at all. And if you ask them about that, they'll say something like, 'Well we have a diversity policy, it's just that the people don't apply.'”
“Whereas companies who are really looking to diversify their workforce will take another step. They will use employment agencies that are specialized in diversity, or advertise in colleges or communities that may be more diverse. We spend too much time talking about the policies, and not what they do with them.” READ MORE
THE 21 HATS PODCAST
It’s Like Planning Your Own Funeral: This week, Jay Goltz tells Shawn Busse about the latest stop on his journey to figuring out whether an employee stock ownership plan is right for his business. Jay’s latest adventure includes waking up at 4:30 in the morning in Minneapolis too anxious to sleep—“Oh my God, what am I getting myself into here?”—and deciding to leave the seminar and drive back to Chicago. But on that six-hour return trip, Jay says his anxiety turned into clarity. In fact, he thinks he’s pretty sure he knows now what he wants to do. Of course, he has said that before. And we continue to learn more about ESOPs, this week hitting upon an interesting issue: ESOP enthusiasts love to tout the benefits of turning employees into owners. But are they really owners? And is that the right message to send them?
Plus: We also talk about when business owners should ignore their accountants and whether Shawn and Jay expect their employees to come forward and tell them if they see another employee doing something they shouldn’t be doing.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren