How Seven Startups Are Using AI
How Seven Startups Are Using AI
It’s still very much early days, but the use cases for running a business are proliferating.
Good Morning!
Here are today’s highlights:
The Biden administration is considering tripling tariffs on steel and aluminum.
A former business reporter says NPR’s real problem is a failure to reckon with podcasts.
Last year, 49 percent of new businesses were started by women.
Adam Neumann explains what he’s building with the $350 million he raised for his latest startup.
ARTIFICIAL INTELLIGENCE
Here’s how seven startups are using AI: “While AI isn't new, the pace of innovation is having a material effect: chiefly, that AI is becoming more approachable. Already, the use cases for AI--from drafting marketing copy to scrubbing code--are proliferating, as are scarcely imagined ideas for how to run a company better, faster, stronger.”
“After taking over Aetrex in 1998 from his father--his grandfather and great uncle started the company in 1946--[Larry] Schwartz noted that roughly 30 to 40 percent of online footwear sales were returned because of incorrect sizing. Schwartz tried to resolve the issue with a number of tools over the years--depth-sensing cameras, capable of taking 3-D scans, for instance, led to the 2018 release of the company's flagship fit product, Albert.”
“Now, the latest version, dubbed Albert 2 Pro, which captures both 3-D foot scans and foot pressure data, can be found in shoe stores across the globe. When paired with Aetrex's AI-powered FitGenius platform, the company can recommend specific shoe models and sizes by automatically cross-referencing a customer's unique 3-D foot profile with the purchase history of customers with similar-size feet.
“Schwartz is now in the middle of adding a new line of business: Foot.com, a B2B-focused portal containing Aetrex's vast array of data from more than three million foot scans. This data is used by footwear developers like Ecco, Boa, and Lululemon when creating new shoes, and Schwartz says it could help standardize sizes across brands and drastically lower returns.” READ MORE
POLICY
Joe Biden is considering tripling the tariffs on Chinese steel and aluminum: “Biden is determined not to allow former President Trump to outflank him on who is tougher on China. He's also bent on winning Pennsylvania, a state he considers a second home. So Biden will zero in on steel and shipbuilding as industries that need protection from cheaper Chinese imports. ‘China's subsidies and other forms of support lead to exports flooding global markets at artificially low prices, undercutting American steel,’ National Economic Council Director Lael Brainard told reporters late Tuesday. ‘China cannot export its way to recovery.’”
“Biden will direct Katherine Tai, the United States trade representative, to open an investigation into China's alleged subsidies for its shipbuilders. The probe was requested by five labor unions. Steel and aluminum imports from China currently face 7.5 percent tariffs under Section 301 of Trade Act of 1974. Biden is directing Tai to consider raising them to 25 percent.”
“The shipbuilding probe will be part of Biden's overall review of Trump's tariffs on some $300 billion worth of Chinese imports. Biden has kept those tariffs on the books and is likely to extend them with a few modifications — including efforts to protect America's electric vehicle industry. Increasing the steel and aluminum tariffs would be a highly symbolic way for Biden to claim that his Section 301 tariffs are more strategic than Trump's.”
“Trump also is talking tough on China and has floated tariffs of up to 60 percent on all imported Chinese products.” READ MORE
The turn away from free-market policies could slow global growth: “Meeting outside Paris last week, top officials from France, Germany, and Italy pledged to pursue a coordinated economic policy to counter stepped-up efforts by Washington and Beijing to protect their own homegrown businesses. The three European countries have joined the parade of others that are enthusiastically embracing industrial policies — the catchall term for a variety of measures like targeted subsidies, tax incentives, regulations and trade restrictions — meant to steer an economy. More than 2,500 industrial policies were introduced last year, roughly three times the number in 2019, according to a new study. And most were imposed by the richest, most advanced economies — many of which could previously be counted on to criticize such tactics.”
“‘There are different ways of shooting yourself in the foot,’ M. Ayhan Kose, the deputy chief economist of the World Bank, said about the trend of rich countries pursuing industrial policies. ‘This is one way of doing it.’”
“After years of complaints about China’s subsidies of private and state-owned industries, the United States and Europe have increasingly copied Beijing’s playbook, undertaking multibillion-dollar industrial policies focused on critical technology and climate change.”
“The United States passed two mammoth bills in 2022 to strengthen its domestic semiconductor industry and renewable energy sector. Europe passed its own Green Deal Industrial Plan last year to speed the energy transition. Soon after, South Korea approved the K-Chips Act to support its semiconductor production.” READ MORE
BUSINESS MODELS
Adam Davidson, creator of Planet Money and business reporter for NPR and other outlets, says NPR’s real problem is a business problem: “NPR's core channel was disrupted. It was built as a wholesale distributor serving retailers. Then, podcasting allowed for direct distribution to end users. For reasons familiar to any industry that has faced channel conflict (meaning competition between different ways of selling to the same people: such as wholesale vs. retail), it was stuck between servicing a slowly-dying business model and adapting to a fast-growing but small new model.”
“It failed, for the most part. It had a huge lead because some of its existing shows, like Fresh Air, were natural podcast hits. (And allied non-NPR public radio shows like This American Life and RadioLab were, too). And a few of its first forays into podcasting--Planet Money (ahem), Invisibilia, Hidden Brain--were really good and hit well.”
“But then the thing happens that often happens without strong leadership: the internal culture, built around the old model, crushed internal innovation towards the new model. Look at nearly every NPR staffer who in, say, 2012, was creating great podcasts or hoping to. They are all long gone from NPR. It became widely known as a place that is not welcoming to fast-moving innovation.”
“I remember the NYT, in 2009, wanted NPR to collaborate on building podcasts. The Daily was first developed within NPR. But NPR wouldn't support it, so it went to NYT. That's just one example.” READ MORE
LOGISTICS
There’s a race on to reroute goods around Baltimore’s port: “Frenetic workarounds to deal with Baltimore’s closing are happening up and down the East Coast, for vehicles, shipping containers and coal. But not all the adjustments are going well. The trucking industry is under immense stress with executives saying they are struggling to get drivers and loads to where they are needed on time and without losing money. Akram Ayyad, owner of 410 Transport, a Maryland trucking company, said that his costs had shot up because he now had to transport cargo farther, to the Port of New York and New Jersey instead of Baltimore, and that his customers were balking at having to pay more. ‘We’re dying here,’ he said.”
“The Baltimore disruption is an unnerving reminder of the extreme supply chain snarls of 2021 and 2022 that caused shipping costs to soar and helped stoke inflation, which remains elevated.”
“To help alleviate the impact of the Key Bridge’s collapse, the Biden administration is turning to a special supply chain disruption task force it set up in 2021. ‘That helped with easing frictions very, very quickly,’ said Lael Brainard, the director of the National Economic Council.” READ MORE
ENTREPRENEURSHIP
Record numbers of people are starting businesses: “And more and more of them are women and minorities, according to a new study. New business applications jumped in 2020 as the pandemic started, and have continued to be filed at a record pace. More than 5 million applications were filed in 2021 and 2022 and a record 5.5 million new business applications were filed in 2023. Payroll firm Gusto surveyed 1,300 owners who started their small business last year to discover their characteristics.”
“Women made up 49 percent of the new business owners surveyed. That’s in line with the past several years, but up starkly from 2019, when just 29 percent of new business owners were women.”
“Black entrepreneurs made up 6 percent of new business owners in 2023, double the 3 percent rate seen before the pandemic. Hispanic entrepreneurs made up 13 percent of new owners, compared to 8 percent last year.” READ MORE
PROFILE
Would you give this man $350 million? “In August 2022, former WeWork CEO Adam Neumann announced he was back, starting a new company named Flow to transform apartment living. Andreessen Horowitz, one of Silicon Valley's most prestigious venture firms, invested $350 million, its single largest investment ever, which instantly made Flow worth a billion dollars on paper. Late last year, I was the first reporter to tour Flow's first residential building in Fort Lauderdale, Florida. I spoke with residents and staff, but my many requests to speak on the record with Neumann himself were always rebuffed. But then, on Thursday, Neumann finally agreed to take my call. He was calling me from the official opening of Flow, which after more than a year and a half of operating in secrecy, is now launching two apartment buildings in South Florida and a new website.”
“Part of what is nice about doing a venture for the second time is you get to take the best things you did last time and do them again. But you also get to take lessons and learn. One of [the lessons] is when you have a product you're really passionate about, it's a great thing to take your time and really perfect it.”
“Flow is multiple things. We're a vertically integrated company. We build our own technology, we built our own property management from scratch. We own the buildings, and on the tech side, we build the app, we build a backend, we build a website. And in our new app, our payment system is fully integrated.”
“There's a lot of things that are going on, which means Flow in five years has a tremendous amount of potential to go in many different ways. Right now, we're still focusing on learning, testing, and seeing what works. Of our current two buildings, the one in Fort Lauderdale is 95 percent full, and the one in Miami is 96 percent full, and there's a lot more coming soon.” READ MORE
THE 21 HATS PODCAST
The Art of Building a Real Estate Boutique: This week, in episode 192, special guest Jenelle Etzel, who majored in weaving, tells Shawn Busse, who majored in ceramics, why she believes attending art school and managing a punk rock band were perfect preparation for building a thriving real estate business. Her agency, Living Room Realty, has 130 brokers, roughly $5 million in revenue, and a market position that stands out among the big boys. While she once considered business a dirty word, she has embraced entrepreneurship and learned lots of important lessons, mostly through trial and error. For one, she figured out that there was a segment of the housing market—or the potential housing market—that more traditional brokers were ignoring.”
“She also figured out, somewhat counterintuitively, that her real customers aren’t the people who buy and sell homes. Her real customers, she says, are her own brokers, who happen to be independent contractors: “I can't tell anybody what to do,” Jenelle tells us. “So it's like being a politician, in a way. I've got a lot of responsibility with very little authority, and that's an interesting leadership challenge.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren