'Holy Crap! This Is All My Dreams Come True’
In our latest 21 Hats Podcast episode, Karen Clark Cole talks about how she managed to sell her business, Blink, and what it means for her and for the company.
In case you missed it, I recently posted my plan to turn 21 Hats into a sustainable business. The upshot is I’m asking readers to sign up as either a Paid Subscriber or as a Founding Member. You can READ MORE HERE.
Here are today’s highlights:
How a bootstrapped Austin cookie shop soared to more than $3.5 million in annual revenue.
Venture capitalists are worried that their returns may be too good.
Retail owners try to convince customers they are doing the best they can.
Amazon is hiring another 150,000—and offering $3,000 signing bonuses.
THE 21 HATS PODCAST
Holy Crap! This Is All My Dreams Come True: This week, we have a celebration. As many of you will recall, when we started this podcast, Karen Clark Cole was coming off months of failed negotiations with a potential investor in Blink, the business she co-founded. Those months she spent trying to land the investor took a toll on both Blink and on Karen, who subsequently took a mental health sabbatical. But, as she tells Jay Goltz and William Vanderbloemen, she came back, refocused, and has just sold Blink for $94 million in cash. As you might imagine, we had some questions for Karen, including: Will she stay? How many employees knew what was going on? Was there a bidding war? Is there an earn out? What was it like to wake up one morning knowing that she had taken all of her financial risk off the table? And is she ready to report to a boss?
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
Venture capitalists are worried that their returns are too good: “Venture capital funds are reaping the rewards of a booming market as returns continue to improve. But the dizzying climb in startup valuations has some worried that the market euphoria is turning irrational. ‘It’s going too well. I’m not actually that smart. It can’t continue like this,’ said Matt Harris, a partner at Bain Capital Ventures. Over the past 12 months, five of his portfolio companies either went public—including Flywire Corp. and AvidXchange Holdings Inc.—or have been preparing to list.” READ MORE
THE COVID ECONOMY
Supply-chain constraints brought a decline in industrial production in September: “Industrial production—which includes output at factory, mining and utility companies—fell at a seasonally adjusted 1.3 percent in September from the previous month, data from the Federal Reserve released Monday showed. September’s decline in industrial production is the sharpest since February, when the severe winter weather in the South and central region of the country disrupted factory activity. In August, industrial output fell by a revised 0.1 percent from a 0.4 percent rise previously estimated.”
“Manufacturing output, the biggest component of industrial production, fell 0.7 percent in September compared with August. Motor vehicle and parts production decreased 7.2 percent amid the shortage of semiconductors.”
“Despite last month’s drop, industrial production rose at an annual rate of 4.3 percent in the third quarter, marking the fifth consecutive quarter with a gain of more than 4 percent.” READ MORE
It’s not just that there’s an everything shortage. It’s that we are buying a lot more stuff than we usually do: “To understand the situation, consider the country's inventory-to-sales ratio. This metric, tracked by the U.S. Census Bureau, compares how much stuff sellers have on hand to how much stuff consumers are buying. The ratio is at a 10-year low, which indicates that we're low on stuff. But: the Port of Los Angeles reported a 30-percent uptick in incoming cargo in the first nine months of this year. (Important note, most non-food goods sold in the U.S. come from abroad.) The Port of Charleston, South Carolina has been breaking all-time records since March. Prologis, a major industrial real estate player, is ‘effectively sold out’ of warehouse space.”
“All of that means that the inventory-to-sales ratio isn't low because the U.S. is short on stuff. It's low because sales have gone completely nuts.”
“In the first nine months of 2021, retail sales were up 14.5 percent over the same period in 2020 — a year in which retail sales jumped 8 percent over 2019.”
“The NRF expects to end the year with sales up 10.5 percent to 13.5 percent.” READ MORE
Retail owners say they are doing the best they can: “Ann Arbor merchants have given me a glimpse of what it’s like on their side of the supply chain misery. Leyla Conlan, owner of the stationery shop The Write Touch by Leyla, says she recently returned from a gift trade show, where vendors were happy to take her orders but warned that they couldn’t promise the same delivery time as they had in the past. The reasons included factory slowdowns, shortages of packing materials and fewer truck drivers. Steve Mangigian, managing partner at Zingerman’s coffee and candy companies, tells me he used to order paper cups and lids for his baristas about six to eight weeks in advance. Now, the wait is 16 to 18 weeks — possibly longer. ‘If I can’t get cups to sell my product, what am I supposed to do? The supply chain could literally shut down my business.’”
“‘I understand people are getting frustrated, but it’s time for people to take a chill pill,’ says Lisa McDonald, owner of TeaHaus, an Ann Arbor shop selling tea and gifts. ‘I’m just not going to have the things that I usually have. Maybe they aren’t going to get the purple mug, but the blue one is pretty, too.’”
“‘For generations, American shoppers have been trained to be nightmares,’ Amanda Mull wrote in August in the Atlantic, before the supply chain problem turned truly ugly. ‘The pandemic has shown just how desperately the consumer class clings to the feeling of being served.’”
Customers’ persistent whine, ‘Why don’t they just hire more people?’ sounds feeble in this era of the Great Resignation, especially in industries, such as food service, with reputations for being tough places to work.” READ MORE
Martha Stewart will sell NFTs, digital collectibles tied to seasons and holidays: “The 80-year-old lifestyle guru plans to unveil a collection of NFTs on her ecommerce site Tuesday. Alongside her wares for dining, drinking and decorating, Ms. Stewart will hawk her first line of digital collectibles, Halloween-themed non-fungible tokens featuring images of her costumes (and other good things) carved into pumpkins. Unlike celebrities who flocked to the blockchain to do a one-off NFT drop, often making millions from big investors known as crypto whales, the mogul of domestic perfection has a longer term plan. Ms. Stewart will offer regular releases of NFTs tied to seasons and holidays.”
“While the DIY trailblazer has been a multi-decade mainstay for how to prune roses, dress a window, sharpen a chainsaw, raise a peacock or make a pie—she released her 99th book, ‘Fruit Desserts,’ last week—she has in more recent years wielded her behemoth brand, cheeky wit and street cred to become a pop-culture sensation.”
“NFTs—digital collectibles that are authenticated or ‘minted’ using blockchain technology and usually bought with cryptocurrencies—are part of that trajectory.” READ MORE
Smaller cities continue to benefit from moving trends: “The housing boom sparked by Covid-19 has been widespread, with prices surging in major metro areas and small towns alike. While the number of home sales has moderated in recent months, demand continues to outpace the supply of homes on the market. Many smaller metro areas around the U.S. benefited in the past year from inward migration, as residents of bigger cities took advantage of remote work to seek cheaper housing and a different lifestyle. Vacation destinations also boomed.”
“Elkhart, Ind., which bills itself as the RV capital of the world because its region is the country’s leading manufacturer of recreational vehicles, topped the housing index this quarter, followed by Rapid City, S.D., Topeka, Kan., Raleigh, N.C., and Jefferson City, Mo.”
“‘There’s a lot of flux in the housing market because of the flexibility people have,’ said Ben Ayers, senior economist at Nationwide Insurance. ‘We’ve seen huge demand for homes in suburban and exurban areas, as many people decided they want to move out from the center cores.’” READ MORE
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Here’s how a couple from Guatemala bootstrapped their Austin cookie business, Wunderkeks, to more than $3.5 million in sales: “In the U.S., the couple started selling their cookies at farmers' markets and a few local shops, hoping to eventually make it into Whole Foods stores. In March 2020, they planned a pop-up at SXSW. The festival's cancellation because of the Covid-19 pandemic left them with 25,000 frozen cookies and $14,000 out of pocket, [co-founder Hans] Schrei said. They started a social-media campaign to get people to buy their cookies online; it generated about 50 orders that weekend. Then the actor Busy Philipps, who has nearly 400,000 followers, retweeted them and bought $300 worth of cookies. They woke up Monday morning with 700 orders.”
“In April 2020, they moved Wunderkeks' website from Squarespace to BigCommerce and purchased Facebook ads. They hit $100,000 in monthly sales in May and nearly $300,000 in December.”
“Schrei said they were switching marketing agencies after one spent $500,000 on ads. ‘We had a very poor strategy, but since we were growing, we didn't see it,’ he said.”
“They also discovered that some discount promotions were losing them money. They've hired a part-time chief financial officer to catch more of those issues.” READ MORE
With some getting $3,000 hiring bonuses, Amazon plans to hire 150,000 seasonal workers this year: “It’s a sharp uptick from last year, when Amazon said it would bring on 100,000 seasonal employees. The employees will help pick, pack and ship orders at warehouses across Amazon’s sprawling fulfillment network. The company typically beefs up its ranks in the fall to help tackle the flurry of orders that arrive leading up to the holidays, a period often referred to as ‘peak season.’”
“Amazon said the jobs have an average starting pay of $18 an hour. The company will also offer a $3,000 sign-on bonus in some locations, along with an additional $3 per hour for workers in some shifts.”
“The company has been on a hiring spree since the start of the pandemic, bringing on 500,000 employees in 2020.” READ MORE
Workers returning to their offices after 18 months are finding some surprises: “Though millions of workers remain fully remote, those who are returning to office life say it can be like stumbling into a bizarre corporate Pompeii. Wall calendars are still set to 2020. Desktop computers reveal browser tabs open to news pages about a novel coronavirus that could keep people home for several weeks. Vending machines and desk drawers house snacks that are long expired—but might technically still be safe to eat.”
“One worker returning to her office in Midtown Manhattan recently found three sealed boxes of Girl Scout cookies, and one open sleeve of thin mints. Surrounding the thin mints were tiny mounds that resembled dirt. An ant colony had moved in.” READ MORE
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