How Would You Sell a $169 Nut Grinder?
Alicia Long started by giving 30 of them away for free. Now she has contracts with Williams Sonoma, Nordstrom, and Bloomingdale's.
Here are today’s highlights:
Yes, you still need to pay back that EIDL loan.
Kim Abrams chose a boring approach to preventing wildfires.
Gene Marks makes the business case for addressing employee mental health.
Thirty years ago, Bing Newcomb had the fastest-growing private company in Silicon Valley.
Here’s how one entrepreneur got people to buy a $169 dairy-free milk maker: “Growing up in China, Alicia Long drank homemade plant-based milk. When she moved to the U.S. in 2008 for college, she discovered it was hard to find organic dairy-free milk that didn't cost an arm and a leg. So two years ago, she decided to do something about it. With her mechanical engineer husband, Long invented the Nutr Machine, a stainless steel pitcher with a blade that pulverizes nuts to make dairy-free milk. Getting people to spend $169 for the device took marketing savvy and gumption, and Long, a 35-year-old former Google recruiter, has those skills in spades.”
“She sent the machines for free to roughly 30 wellness-focused micro-influencers with around 50,000 followers on either Instagram or TikTok. She included a missive about how most nut milks are only 2 percent nuts; the rest is mostly water, sugar, and preservatives.”
“All that Nutr CEO Long asked of them was that they share their experiences with their audiences. More than 90 percent of them did, helping the Columbus, Ohio-based firm sell out of its first production run of 1,000 units and win contracts with Williams Sonoma, Nordstrom, and Bloomingdale's, among other retailers.” READ MORE
The SBA may not try to collect on certain EIDL loans, but borrowers could still face consequences: “The Small Business Administration may not attempt to collect on some delinquent Covid-19 Economic Injury Disaster Loans, according to a prominent lawmaker. Sen. Joni Ernst, R-Iowa, and ranking member of the Senate Small Business Committee, wrote in a letter to SBA Administrator Isabel Guzman that she had ‘received reports’ that the SBA intended to forgo collections on Covid EIDL loans under $100,000 — accounting for about $71 billion of the roughly $378 billion across about 3.9 million loans made before the program ran out of funding in May 2022.”
“The idea that the SBA might decide not to collect on delinquent EIDL loans comes after the agency drew scrutiny for its decision not to collect on delinquent Paycheck Protection Program loans of under $100,000.”
“‘I want to reiterate that it is unacceptable for the SBA to write off taxpayer-funded loans by foregoing collections, and my concern, as reflected in reports by the IG, is that the longer SBA waits to begin repayment and collections, the less likely it is that taxpayers will ever be repaid. I urge the agency to reverse course immediately,’ Ernst said in the letter.”
“The SBA said in a statement that, while the agency has a policy to collect on every loan, the process had been made more difficult by the fact that personal guarantees and requiring collateral were barred for all of the 3.6 million loans made under the Trump administration, according to SBA spokesperson Han Nguyen.”
“‘Everyone who took out a Covid-EIDL loan is required to pay it back. There are no waivers or exemptions. Failure to repay will result in severe consequences that include being barred from other federal assistance and detrimental impacts on credit scores. These consequences will be enforced,’ Nguyen said in a statement.” READ MORE
Kim Abrams decided to do something about California’s devastating wildfires: “Abrams, who had previously managed tech partnerships at NASA and co-founded a robotics startup, decided to build a better drill. With the help of some top engineers, Abrams has applied 21st-century technology to one of humanity's oldest tools. Today she is co-founder and CEO of Petra, a San Francisco-based tunnel-boring company that has developed a robotic drill capable of slicing through anything from the softest clay to the hardest granite. The company has already been commissioned for boring projects around the world, and Abrams expects that Petra will soon be helping some of the largest utilities in the U.S. bury more of their power lines. And that, in turn, can help prevent both devastating wildfires and the knock-on effects of other natural disasters, such as the 2021 winter storm in Texas that killed 246 and crippled utility lines, and the hurricanes that have ravaged the East Coast in recent years and left many without electricity for weeks.”
“‘You haven't seen VCs interested in solving this problem until very recently,’ says Abrams. ‘Now investors are seeing this as an existential problem to our communities.’ And a potentially profitable one.”
“The idea of burying power lines actually has a long history. Some cities, like Anaheim, California, and Colorado Springs, Colorado, have had ordinances in place for years that require lines to be moved underground. An estimated 20 percent of utility lines in the U.S. are now below ground, and some industry leaders want to see that number reach 50 percent by 2040.” READ MORE
Job openings fell in February, “dropping below 10 million for the first time in nearly two years in a sign that employers’ demand for workers eased amid a still strong labor market. There were a seasonally adjusted 9.9 million job openings in February, the Labor Department said Tuesday, down from January’s downwardly revised 10.6 million. February’s openings were below a record 12 million reached last March, according to revised 2022 data, but still well above 7 million openings in February 2020 ahead of the pandemic. Job openings in February still far outnumbered the 5.9 million unemployed people seeking work, indicating the labor market remained tight.”
“‘We’re finally seeing companies cutting back their openings, which is the first step towards easing the tightness of the labor market,’ said Lightcast Senior Economist Ron Hetrick. ‘This could be what a soft landing looks like in today’s economy.’”
“The Labor Department is set to release on Friday its March employment report, which will show how the labor market fared in a month when federal regulators intervened to stabilize the banking system after two regional banks failed.”
“‘Small firms are still trying to find qualified talent,’ said Nela Richardson, chief economist at payroll processor Automatic Data Processing. ‘It’s still a challenge for them to find those people.’” READ MORE
Gene Marks makes the business case for addressing employee mental health: “Finding ways to support your employees’ mental health needs is not just an ethical issue for business owners. Mental health creates significant financial costs as well, with Gallup estimating that workers with fair or poor mental health incur about 12 days of unplanned absences compared to 2.5 days for all other workers. Mental health issues have increased substantially since the pandemic, with younger workers most affected.”
“Your first step is to revisit the mental health benefits your insurance provider offers and make sure your employees know about them. [Bill Webb, a vice president at Saratoga Benefits Services, an employee benefits consulting firm based in Moorestown, N.J.] says many people think these benefits only include things that are physical — like doctors’ appointments and hospital visits — rather than services that address mental health needs. But this is probably not the case.”
“Webb says that many providers offer telehealth services with online professionals to provide counseling for employees. And there are a number of other platforms such as Betterup and Growthspace that offer confidential therapy sessions which may also be covered by a company’s health insurance plan.”
“Financial wellness shouldn’t be ignored either and has become a significant trend. ‘When we survey our clients, we find many desire help with their finances,” he said. “People often have stress when it comes to their money. Some services can help with budgeting and cash-management tools to help people live within their means. It all relates to mental health.” READ MORE
On the other hand, burnout may be driving more entrepreneurship: “Burned out American workers frustrated by their 9-to-5 jobs are launching side hustles and full-blown businesses — part of a dramatic change in the business ecosystem brought about in part by the Covid-19 pandemic. That was a takeaway from Gusto’s new business-owner survey for 2023, which included nearly 1,600 Americans who launched businesses last year. The survey also found more women and people of color are forming businesses than before the pandemic, and that more people are starting these businesses because they are burned out or worried about the future.”
“Workers quitting their jobs entirely to launch their own business was highest among 25- to 34-year-olds at 55 percent, then 35- to 54-year-olds at 48 percent and 39 percent among workers age 55 and up.”
“‘There’s this shift since the pandemic from trying to fit your personal life into your professional life to fitting your professional life into your personal life. A lot of people are seeing they are able to do that while by creating their own business,’ [Gusto Economist Luke Pardue] said. READ MORE
Amazon gave out “Small” and “Black-Owned” badges to companies that are neither: “Amazon gave ‘Small Business’ badges to sellers that are ‘multinational corporations with thousands of employees,’ The Information reported. Amazon has said the badges are intended for U.S. companies with fewer than 100 employees and less than $50 million in revenue. Likewise, Amazon reportedly also gave ‘Black-Owned Small Business’ badges to companies that were not actually Black-owned, The Information reported. When The Information reached out for comment, Amazon removed the badges from some of the products it apparently miscategorized, though some still remain. Amazon didn't immediately respond to Insider's request for comment.”
“For instance, Amazon gave companies like coffee bean and clothing store Black Rifle Coffee Co. a badge even though it generated over $300 million in revenue in 2022, The Information reported. The company has a market cap of $1.1 billion as of this year.”
“Backpacks and luggage from SwissGear, a subsidiary of knife manufacturer Victorinox that made $446 million in revenue as of December 2021, per Pitchbook, also received the badge. Clothes from sportswear firm Cutter & Buck, and kitchen items and handbags from vendors based in China, did as well, The Information said.”
“But whether Amazon's badge programs intend to really support small and Black-owned businesses rather than boost its own bottom line is up for debate, Stacey Mitchell, a co-director of the Institute for Local Self-Reliance and vocal Amazon critic, told The Information. ‘It's very much in Amazon's interest to try to suggest that in fact they're supporting small businesses rather than eating their lunch,’ Mitchell said.” READ MORE
Bing Newcomb, co-founder of E*Trade: “In 1980, Mr. Newcomb and William A. Porter were introduced by a mutual friend at a Halloween party in Palo Alto. Mr. Porter, a one-time cowboy turned electronics whiz, had just purchased an Apple II personal computer, the company’s first model aimed at consumers. How, he wondered, could he and other individuals use the new technology to buy and sell stocks from home? Mr. Newcomb, who had been working as a freelance computer programmer, hiring himself out to banks and other businesses that needed a guide to emerging digital technologies, provided the answers. In 1982, with $15,000 in capital, the partners started TradePlus, one of the first electronic trading platforms. Its first trade was made on July 11, 1983, by a Michigan dentist.”
“By enabling investors to trade stocks from their computers, the company cut the cost of transactions below the rates charged not only by full-service brokerage houses but even by many discount brokers.”
“The service helped promote the sale of home computers and transformed amateur Wall Street buffs into professional day traders.”
“After the market tanked in the mid-1980s, the company re-emerged in 1991 as E-Trade Securities. It rapidly became a leader in online stock transactions.”
“By 1994, revenues had risen geometrically, from $850,000 only two years earlier to nearly $11 million. A business journal proclaimed the firm to be the fastest-growing private company in Silicon Valley. It went public as the E*Trade Group in 1996.” READ MORE
THE 21 HATS PODCAST
This week, Paul Downs, Sarah Segal, and Laura Zander discuss how they think about the possibility of recession: Do they proceed with planned hires? Do they continue to spend on marketing? Do they look for unexpected opportunities? In addition, Sarah, having recently taken back ownership of her PR firm, asks Paul and Laura how they pay themselves, how much cash they keep on hand, and whether they think she should expand her offerings to include digital marketing. Plus: Laura, who’s acquired several businesses over the years, explains what she looks for, how she decides how much to pay, and why she’s come to see acquisitions as necessary for the survival of Jimmy Beans Wool. As usual, all three owners are remarkably generous about sharing their thinking and even their numbers.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren