How to Waste Money on Marketing
In this week’s podcast episode, the owners explain why business owners are so often frustrated by their marketing efforts—and what they can do about it.
Good Morning!
Here are today’s highlights:
A co-founder breaks down the sale of Boardroom Insiders, a database for marketers targeting C-suite executives.
Philadelphia’s public housing authority is trying to turn residents into entrepreneurs.
The Massachusetts “millionaires tax” is bringing in more money than expected.
A big-box retailer announces it is reducing prices on 5,000 items.
THE 21 HATS PODCAST
This week, Shawn Busse, Jaci Russo, and William Vanderbloemen talk about a whole slew of marketing challenges: From strategizing for trade shows, to whether your logo has to tell a story, to understanding what constitutes a brand, to whether that iPad ad Apple pulled was terrible or brilliant, they discuss what makes marketing so difficult. It all starts, Jaci says, with the industry’s refusal to set standards: “I can't find another industry that treats themselves so badly. Electrician, CPA, Realtor, hairdresser, nail salon tech, everybody else has some semblance of something to say, ‘I am a legit entity.’ Except our industry.” Which is part of the reason, Jaci says, that the constant refrain she hears from frustrated business owners who hire agencies is, “We paid them all this money. And we got nothing for it.”
Plus: how do owners get past that feeling that they need to be the hardest worker in the office, the first one in and the last one out?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
SELLING THE BUSINESS
Here’s how Sharon Gillenwater and Lee Demby sold Boardroom Insiders, a database for marketers targeting the C-suite, for $25 million: “Gillenwater, who lives in San Francisco, started working on Boardroom Insiders in 2008 after consulting for tech companies. ‘I started really listening to my consulting clients, which were some of the biggest tech companies in the world,’ she posted on TikTok. ‘I started noticing that they all have the same challenge… Salespeople didn’t know how to talk to senior executive customers. They didn’t know how to sell into the C-suite or what to say to those people or what the story should be.’ She knew she’d never be able to sell a consulting company for top-dollar because buyers don’t want revenue attached to billable hours — they’ll pay far more for subscription-based businesses with recurring revenue that can more easily scale. So she created Boardroom Insiders, a database of vetted executive profiles designed to help C-suite sellers and marketers access key decision makers and build stronger relationships — and ultimately close bigger deals faster.”
“Gillenwater said the biggest challenge growing the company was gaining access to capital. Initially, she felt like she needed to raise venture capital to be seen as a legitimate startup, she said. But her first meeting didn’t go as planned. As she recounts, the investor interrupted and told her to stop talking about how great her idea was — ‘no one cares.’ She walked out of the meeting with a new takeaway: The average VC funder doesn’t care about the customer or their experiences — they just want to invest in massively scalable companies that pay off quickly.”
“For a long time, Gillenwater and Demby didn’t take salaries. When they finally started paying themselves, they each took around $2,000 to $4,000 a month. Over time, they scaled and finally reached market-rate salaries about two or three years before they sold. By the end of 2021, Boardroom Insiders had grown to become a team of 28 full-time employees. They also relied on two vendors: one out of India with 25 researchers and one out of Russia with two developers. At sale, annual recurring revenue was around $5 million, Gillenwater shared.”
“Their first offer was from Euromoney, a B2B information-services business (now rebranded to Delinian). It was all cash, but for a lot less than what they’d hoped. They countered, asking for a 33 percent increase, and Euromoney came back with a 25 percent higher offer. The $25 million deal worked out to a multiple of 5x ARR, which was $5 million. Gillenwater and Demby accepted the offer, and due diligence began.”
“Since the sale, she’s been on a mission to make entrepreneurship more accessible to people from nontraditional backgrounds. That includes writing a book, launching several content series on TikTok and sharing details of the sale on her blog. There, Gillenwater shared that she grossed just under $13 million as the majority shareholder from the $25 million sale of Boardroom Insiders.” READ MORE
HUMAN RESOURCES
Big companies trying to attract entry-level employees are still in sales mode: “Not long ago, new college graduates on the hunt for their first professional role could expect job ads to contain a litany of duties and responsibilities to the company. Postings today extol the opportunities that workers can expect from their employers, including commitments to flexible work styles and bosses’ respect for work-life boundaries. The Wall Street Journal analyzed hundreds of entry-level job postings in a range of roles, sectors, and locations, from Chicago to Dallas to San Jose, Calif. They reveal what entry-level work looks like—a mix of in-office and remote work that puts new graduates on track for more responsibility—and what companies think young workers want now.”
“Young professionals care more about salary than paid-time off and remote work, according to a recent poll of about 2,000 college students on priorities in the job search by research and analytics firm Veris Insights. New grads can expect more employers to spell out salary ranges in job postings, thanks to pay-transparency laws in places like New York City, California, and Colorado.”
“Employers are trumpeting benefits that go far beyond 401(k)s and basic health plans. Companies are emphasizing mental health resources as college campuses have seen spikes in student anxiety. Many companies are highlighting their work-life balance. Companies are expanding student debt-repayment programs, which usually come with strings attached.” READ MORE
TAXES
The “millionaires” tax that passed in Massachusetts is delivering more revenue than expected: “State officials said Monday that the voter-approved surtax on high earners has generated more than $1.8 billion in revenue this fiscal year — with still three months left to go — meaning state officials could have hundreds of millions of surplus dollars to spend on transportation and education initiatives. The estimated haul is already $800 million more than what Governor Maura Healey and state lawmakers planned to spend from its revenue in fiscal year 2024, the first full year of its implementation. Most of the additional money raised beyond the $1 billion already budgeted would flow to a reserve account, from which state policymakers can pluck money for one-time investments into projects or programs.”
“Voters approved the measure in 2022 to levy an additional 4 percent tax on annual earnings over $1 million. At the time, the Massachusetts Budget and Policy Center, a left-leaning think tank, projected it could generate at least $2 billion a year. State officials last year put their estimates slightly lower at up to $1.7 billion, and lawmakers embraced calls from economists to cap what it initially spends from the surtax, given it may be too volatile to rely upon in its first year.”
“Massachusetts has struggled with residents leaving the state in recent years. In 2021 — before the ‘millionaires tax’ took effect — Massachusetts said goodbye to taxpayers with a collective $4.3 billion in adjusted gross income, an increase of 40 percent from the prior year, according to an analysis by the Pioneer Institute. Nearly 25,200 more tax filers moved out of Massachusetts than moved in, the data show.”
“‘Whatever short-term financial benefit the state will receive from the income surtax will be outweighed by the long-term negative effect this tax is having on the state,’ said Paul Craney, a spokesperson for the conservative-leaning Massachusetts Fiscal Alliance.” READ MORE
POLICY
The Philadelphia Housing Authority has helped some 40 public housing residents grow their own businesses: “Through the public housing authority’s six-month entrepreneurial fellowship program, started in 2021, residents learn budgeting, cash flow management, marketing, and other skills. They get help establishing their companies and getting licenses. And they receive up to $3,000 as a small business grant and up to $2,000 to reimburse them for business expenses.”
“Donta Daniels, 27, got into the program on his second try. This year, he launched his clothing brand, We Are Pixxxies, and printed shirts in time for a pop-up event Wednesday that showcased PHA residents’ businesses at the agency’s headquarters. Daniels said he comes from a long line of seamstresses and patternmakers and tried to run a clothing company before, but it didn’t work out. Through PHA’s program, he said, he became more business-minded and developed skills he needed.”
“Aisha Burnett owns Ruthann’s Kitchen, the soul food business PHA hired in January to cater a lunch for visiting officials from the Department of Housing and Urban Development. Nija Wiggins has entered her busiest time as the owner of Corneey’s, which sells gourmet corn on the cob and flavored popcorn. It’s both corn season and the time of year when Philly neighborhoods start ramping up community festivals, where she sets up her food truck.” READ MORE
THE ECONOMY
Target says it is cutting prices because it wants to help its customers: “Target said Monday it is dropping the prices of 5,000 common items to help consumers save money. There will be price reductions on items such as ‘milk, meat, bread, soda, fresh fruit and vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels, pet food and more,’ the company said. Target said it regularly updates its prices to stay competitive in its markets. We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,’ Executive Vice President Rick Gomez said.”
“For example, in some areas, a 20-ounce package of Thomas' Plain Bagels is going from $4.19 to $3.79; a 75-count of Clorox Scented Wipes is going from $5.79 to $4.99; and a 1-pound container of Good & Gather Unsalted Butter is going from $3.99 to $3.79.” READ MORE
OBITUARY
Bruce Nordstrom, along with three family members, transformed a small chain of shoe stores into an international retail giant: “As a grandson of John W. Nordstrom, the Swedish immigrant who founded the company, Mr. Nordstrom was a member of the third generation of the family to run the company jointly, sharing power and making decisions by consensus — an unusual but successful Nordstrom tradition that continues to this day. He shared leadership with his cousins John N. Nordstrom and Jim Nordstrom, who were brothers, and Jack McMillan, who was married to their cousin Loyal Nordstrom. Management by committee is considered a business school formula for disaster, but the Nordstrom family, starting with Bruce’s father, Everett, and Everett’s brothers Elmer and Lloyd, decided that they could be more effective as co-leaders of the company, which was founded in 1901 in Seattle.”
“When Lloyd Nordstrom called 30-year-old Bruce into his office in 1963 and named him president of the company, the younger Mr. Nordstrom accepted the post. But he soon decided that he would emulate his father’s generation and share leadership with his three relatives.”
“Mr. Nordstrom acknowledged that the company’s leaders had occasional differences. ‘We don’t agree all the time,’ he told Footwear News, ‘but we vote when we need to decide things. Sometimes, behind closed doors, there might be smoke. But we are committed to finding a solution. When we walk out, we walk out as one.’” READ MORE
THE 21 HATS PODCAST: DASHBOARD
The Software Isn’t the Problem: You are. That’s Gene Marks’ story, and he’s sticking to it. This week, Gene talks about all of the people who love to hate on Workday’s HR platform, and he argues that whatever problems exist are really the fault of the companies using the software, not the company that makes it. Plus: Gene tells us what we need to know about the latest ChatGPT upgrade. Spoiler alert: He says we will long remember the spring of 2024 as the moment when the true power of artificial intelligence became clear, but so far it’s mostly big businesses that are reaping the benefits.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren