How Much Is PPP Helping?
Today’s highlights: Instagram for the incarcerated. A remarkably candid menu goes viral. And a 21 Hats Conversation with Predictable Profits’ Charlie Gaudet
RESCUE LOANS
Economists disagree on how much the PPP program has helped. The answer depends, to some extent, on whether it was supposed to save jobs or businesses: “Academic economists who have studied the program have concluded that it has saved relatively few jobs and that, at a cost of more than half a trillion dollars, it has been far less efficient than other government efforts to help the economy. ‘A very large chunk of the benefit went to a very small share of the firms, and those were probably the firms least in need,’ said David Autor, an M.I.T. economist who led one study. ... Many policy experts on Wall Street and in Washington — as well as businesses and banks on Main Streets across the country — say the program’s merits should be assessed instead on what it did to save businesses.”
“On that basis, they say, it helped prevent a greater calamity and fostered economic healing.”
“In the short term, the program’s proponents are winning the argument.”
“But the debate over the program’s merits could shape the next round of aid.” READ MORE
PROFILE
Marcus Bullock faced life in prison before starting “Instagram for the incarcerated”: “Upon his release in 2004, the 23-year-old found that the professional market wasn’t kind to folks with a criminal record. After being rejected from 41 jobs, he finally landed a gig mixing paint. Once he secured this opportunity, Bullock knew he ‘had to be much better’ than anyone else to succeed. He studied the paint industry nonstop — and eventually learned enough about the trade to launch his own contracting business. From the onset, he set out to hire ‘returning citizens’ (a term he prefers to ‘former inmates’).
“‘The Maryland Department of Transportation helped me set up as a minority business enterprise,’ he says of launching his first startup. ‘Once I got that status and could bid on state projects, I went out to hustle.’”
“In 2012, Bullock came up with the idea of a platform where families could easily communicate with their imprisoned loved ones by sending postcards and messages. He called it Flikshop.” READ MORE
MARKETING
A Chinese restaurant in Montreal was bleeding cash before its remarkably candid menu went viral: “Ever since an admiring customer posted AuntDai’s menu on Twitter on Jan. 10, extolling its ‘extremely honest’ owner, he can barely keep up with demand for his takeout meals. At last count, the tweet had more than 75,000 ‘likes,’ while Mr. Fei, who immigrated to Montreal from China 14 years ago, has done print and video interviews with media outlets in Britain, Germany, Israel and Australia, as well as Canada and the United States. ‘When I am asked about something I feel ashamed of, I will choose to avoid answering instead of lying,’ Mr. Fei, 42, said in a FaceTime call from his unassuming restaurant — frequently peppering his sentences with ‘to tell you the truth.’” Some examples from his menu:
His orange chicken: “Comparing to our General Tao Chicken, this one is not THAT good. Anyway, I am not big fan of North American Chinese food and it’s your call.”
His braised pork belly: “This is a very popular dish among the customers who don’t care its greasiness.”
Mouth-watering chicken: “We are not 100 percent satisfied with the flavor now and it will get better really soon. PS: I am surprised that some customers still order this plate.”
“Since the big tweet ... takeout orders have been so brisk that Mr. Fei, who doesn’t particularly like to cook, spends his days helping AuntDai’s chef cut vegetables, when he isn’t monitoring his busy Twitter feed.” READ MORE
READER FEEDBACK
For our Saturday Survey question this week, we asked whether your health insurance rates were going up or down this year. Also: how much do you spend on health insurance as a percentage of your revenue? Among the responses was this one from Elton Potts: “We went with a health insurance stipend ... about 3 years ago because it was simple to execute. We give each employee $300 per month towards their insurance. We were under 10 employees then. We are a team of 35 today, and we will most likely pass 50 this year. Our challenge is now switching to healthcare due to federal law, but with employees in 7 states, I am concerned about finding good coverage at a reasonable price. Any advice would be greatly appreciated.”
THE 21 HATS CONVERSATION
Join us Tuesday at 3 ET for a conversation with Charlie Gaudet, founder of Predictable Profits, a business coaching service based in New Hampshire. We’ll talk about how his clients have been faring during the crisis, how he assesses a business that’s looking for help, and how his own firm has been doing. Bring your own questions.
MANUFACTURING
Safety measures and supply constraints are taking a toll: “Manufacturers including Whirlpool and Polaris said their ability to meet increased demand for their products remains hampered by supply constraints and safety measures taken to protect workers amid the coronavirus pandemic. People are buying long-lasting goods like exercise equipment, boats and camping gear at record levels. Normally, manufacturers would raise production to meet such demand. But doing business during the pandemic remains challenging, companies said during recent quarterly updates. Many manufacturers continue to suffer from inventory shortages, a remnant from when plants were closed last spring. In addition, measures to prevent the spread of Covid-19, such as adding space between workers, are weighing on production.”
“As a result, manufacturing backlogs hit a two-and-a-half year high in December, according to the Institute for Supply Management.”
“Slowdowns are compounding along supply chains, from ports to warehouses to factory floors, leading to higher costs.”
“‘You are seeing logistic costs going up, trucking costs going up, airfreight going up,’ 3M Co. Chief Executive Mike Roman said in an interview.” READ MORE
GM’s push to make zero-emission cars may help China dominate the industry: “General Motors’ surprise announcement on Thursday that it aspires to eliminate gasoline and diesel cars from its fleet by 2035 and embrace electric cars follows a road map successfully drawn by Beijing. To get there, G.M., the Detroit stalwart and symbol of American industrial might, may have no choice but to embrace car and battery technologies in which Chinese companies play leading roles. Even when setting the time frame, G.M. seems to be matching Beijing’s speed. Just three months ago, Chinese policymakers ordered that most vehicles sold in China must be electric by 2035.”
“Today, China is the leading maker of big battery packs for electric cars, producing considerably more than the rest of the world combined.” READ MORE
AGRICULTURE
The Biden Administration plans to address discrimination against African-American farmers: “The administration has promised to make agriculture a cornerstone of its ambitious climate agenda, looking to farmers to take up farming methods that could keep planet-warming carbon dioxide locked in the soil and out of the atmosphere. At the same time, President Biden has pledged to tackle a legacy of discrimination that has driven generations of Black Americans from their farms, with steps to improve Black and other minority farmers’ access to land, loans and other assistance, including ‘climate smart’ production.”
“Farms run by African Americans make up less than 2 percent of all of the nation’s farms today, down from 14 percent in 1920, because of decades of racial violence and unfair lending and land ownership policies.”
“As recently as 2015, Black farmers obtained only about $11 million in microloans designed for small farmers in 2015, or less than 0.2 percent of the roughly $5.7 billion in loans administered or guaranteed by the Agriculture Department that year, according to researchers Nathan Rosenberg and Bryce Wilson Stucki.”
“A Senate bill, sponsored by Democrats Cory Booker, Elizabeth Warren and Kirsten Gillibrand, would permit Black farmers to reclaim as many as 160 acres apiece through federal land grants.” READ MORE
THE 21 HATS PODCAST
Episode 46: A Fabulous Conversation About Marketing: This week, we introduce Stephanie Stuckey, a new regular on the podcast who tells Dana White and Laura Zander about the iconic road-stop business her grandfather founded: when it peaked, what went wrong, why she bought it back, and how she plans to rejuvenate it. Along the way, we discuss whether small businesses should outsource their marketing, how hard it is to find an agency that listens, and what an agency should cost. Plus: Stephanie offers a tutorial on how to engage followers—and get free consulting—on LinkedIn.
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