Discover more from The 21 Hats Morning Report
How Zingerman’s Is Surviving
It’s a little like being in a really bad car accident, says co-founder Ari Weinzweig. Plus: Bay Area businesses sue the governor. And business travel will never be the same.
In his latest podcast, Paul Spiegelman talks to Ari Weinzweig about how the vision of a diverse array of businesses has guided Zingerman’s for decades but especially through the pandemic. Ari tells Paul: “I’ve taken to describing it, it’s a little bit like you were in a really bad car accident. The guy next to you was killed. The one in the backseat is a paraplegic. And they tell you you only broke your legs. So, out of context, it would be horrific. In context, it’s a huge relief.” LISTEN HERE
In the first week of PPP round II, 60,000 businesses got $5 billion in forgivable loans: “The small-business coronavirus relief effort relaunched Jan. 11 after closing last August. The first wave of applications was largely handled by community and small lenders after the SBA set aside time for them to process the loans exclusively.” READ MORE
The SBA has issued further guidance on how you validate your gross receipts reduction for your PPP applications: “The guidance says that you have to base your request on the accounting system that you use. You can essentially use cash or accrual—as long as it is the same for each period.”
“If your PPP application is for under $150,000, you do not have to provide this information at application but will when you apply for forgiveness.” READ MORE
Retail rents are plummeting in Manhattan: “Manhattan’s retail pain is worsening as the pandemic drags on, with rents falling in every major shopping district. Soho was hit the hardest in the fourth quarter, with average asking rents dropping nearly 22 percent to $290 a square foot, according to a report by brokerage Cushman & Wakefield. Rents in the area, known for its many fashion boutiques, have been sliding over the past four years. Asking rents tumbled 20 percent on lower Fifth Avenue — running from 42nd to 49th streets and dominated by big national chains. Upscale Madison Avenue saw a 16-percent decline.”
“Few businesses are looking to expand, and many have closed, leaving the city with swaths of empty stores.” READ MORE
The pandemic is not stopping Restoration Hardware from expanding: “The home goods retailer last week announced it made a $105 million equity investment into Aspen, Colorado, real estate to build out a first-of-its-kind ecosystem of properties. The project will feature retail locations, hospitality concepts, restaurants, residential developments and workforce housing projects, according to the company. It will open its Guesthouse concept in Aspen's Crystal Palace, which will also host the company's first bath house and spa. RH is also building out its Residences, which will include up to five four-bedroom homes at the Boomerang Lodge in addition to a six-bedroom home on Red Mountain.” READ MORE
The Post Office survived the election but was crushed over the holidays: “‘This is the worst I’ve ever seen it in at least the last 10 to 20 years that I can recall,’ said Angelo Anagnostopoulos, the vice president for postal affairs at GrayHair Software, which tracks mail for large companies that send, prepare and transport it. Several other industry experts echoed that assessment.”
“At clogged postal facilities, truck drivers dropping shipments for commercial mailers sometimes had to wait 12 hours or more to unload, and in some cases had to leave and try again the next day, said Kathleen Siviter, an official with the National Association of Presort Mailers.”
“She described drivers refusing to transport mail to postal facilities, and companies that spent hundreds of thousands of dollars in extra transportation costs.”
“Delays like these had further consequences, in bill payments that arrived past due, in coupons that missed the sale window, and in nonprofit fund-raising pleas that weren’t opened before the end of the tax year.” READ MORE
THE COVID ECONOMY
More than 50 Bay Area businesses sued California Gov. Newsom on Tuesday: “The lawsuit, filed in Napa County Superior Court, alleges that scientific data does not support the on-site dining prohibition Newsom enacted in December, relegating restaurants to take-out and delivery only. The group behind the action is The Wine Country Coalition for Safe Reopening, a Calistoga-based association that formed in December comprising more than 50 restaurants, wineries, tasting rooms and suppliers, primarily in Napa and Sonoma counties. Coalition members say their revenues are down as much as 75 percent following the ban and after they collectively spent millions of dollars to build or weatherproof parklets and other outdoor dining spaces to adapt to earlier restrictions.”
“‘We support the state's efforts to limit the spread of Covid and have collectively invested millions of dollars to operate safely for our customers and employees,’ said Carl Dene of Sam's General Store, a member of the coalition, in a statement. ‘All we ask is to be treated fairly and in accordance with the science.’” READ MORE
Bill Gates has predicted that half of business travel is never coming back: “Some senior executives have discovered that being grounded has introduced vast time efficiencies. Rather than spending weeks traveling to visit colleagues and clients in other markets, they’ve managed to connect over video calls in a fraction of the time. Many have found professional relationships have flourished rather than wilted as a direct result. That’s caused many to consider eliminating business travel entirely in future.”
“‘It has made me think that flying isn’t all that necessary,’ admitted Chotai. ‘I constantly had a suitcase packed. I now stop and pause and appreciate things. Before I couldn’t even tell you what the weather was like when I was in a taxi. I was just thinking do I have my boarding pass?’” READ MORE
Runway, a financial organization in Oakland, has been experimenting with giving black entrepreneurs a monthly stipend of $1,000, with no strings attached: “The experiment is the brainchild of Jessica Norwood who before co-founding Runway, studied the problem of why Black businesses fail as a research fellow for several organizations including the Nathan Cummings Foundation and the Center for Economic Democracy. She arrived at the often-cited reason that financial institutions don’t finance and capitalize Black entrepreneurs like they do white ones. But digging deeper, she found that many African Americans also don’t have a family-and-friends network to rely on for backup even if they do get financing.”
“A 2016 Bank of America study found that more than a third of business owners received a financial gift from friends and family to help launch their companies.”
“Because of the racial wealth gap — the median net worth of white families is an estimated $171,000 compared to the $17,150 median net worth of Black families — there’s just not a lot of disposable money laying around among Black parents, aunties and loved ones for them to help out kindred Black entrepreneurs when they need it.”
“After the first year of the experiment, some results are already clear: Not one of the 30 businesses in the Runway consortium had to close up shop due the pandemic shutdowns.” READ MORE
A study found that 85 percent of MBA students are considering entrepreneurship: “Illuminate surveyed 500 business school students at more than 20 schools, including Carnegie Mellon's Tepper School of Business, the Yale School of Management, and the University of Chicago Booth School of Business, throughout the first half of 2020, and published its results in January. More than 85 percent of students said they were interested in entrepreneurship as a career path.”
“In 2018, a study of global prospective MBA students found that only about 25 percent were considering entrepreneurship as a career path post-graduation.“ READ MORE
How a Beverly Hills salon owner ended up storming the Capitol: “[Gina] Bisignano characterizes her role that day as a passive one. She was armed with nothing more than a cellphone and occasionally, a borrowed megaphone. A few videos reviewed by the Courier, however, show Bisignano taking more of an active role than she suggests. In one video, she encourages others to enter through the broken window and into the Capitol. ‘We need Americans,’ she calls out as she exits the building. ‘Come on guys. We need patriots. You guys, it’s the way in.’”
“In another video circulating on social media, Bisignano stands on the same ledge with a megaphone. ‘Everybody, we need gas masks. We need weapons.’” READ MORE
THE 21 HATS PODCAST
Episode 45: I Will Be Here: This week, Paul Downs and Jay Goltz talk about their New Year’s resolutions. Here’s Paul’s: “My New Year's resolution is that we will be open on December 31st, 2021. And I don't know whether I'll have the same number of employees, but we will be open. I will be here.” And here’s Jay’s: “My New Year's resolution is, I'm not gonna do anything stupid this year. So far, so good.” Paul and Jay also talk about Paul’s disappearing backlog, each of their plans for PPP Round II, Jay’s efforts to lure one of his sons into his business, and—responding to a listener question—how they handle business and personal expenses. “I think we have to stop recording right here,” says Paul.
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