‘I Challenge Any of You to Outwork Me. But You Won’t’

Another day brings another example of a CEO getting unwanted publicity for demanding that employees work harder.

Good Morning!

Here are today’s highlights:            

• Gene Marks suggests ways to guard against employee theft.

• A maker space is creating good-paying jobs for the formerly incarcerated.

• Did you ever wonder how Taco Bell came up with the Waffle Taco?

• “I wouldn’t describe myself as a bully,” says the star of L.A.’s startup scene.

MANAGEMENT

Gene Marks says almost every day brings another story of an employee stealing from a business: “There’s the employee at a small bank who created and paid himself with cashier’s checks using forged signatures. Or the office manager at a law firm in Rhode Island that walked away with hundreds of thousands of dollars in firm funds. Or the employee at a Florida beer distributor that tampered with the company’s accounts receivable system to steal more than $300,000. Or the bookkeeper of a Delaware nonprofit who stole more than $2.6 million over a 25-year period.”

• “So what should you do to prevent this kind of thing from happening before it happens? Well, there are a few things. For starters, you don’t put one person in control of everything. You segregate duties. Entering a customer invoice into your accounting system and inputting cash received should be done by two different people. The same goes for the payables side.”

• “Your open accounts receivable report — and financial statements — should be closely reviewed every month by someone other than your accounting staff. That’s you.”

• “And while you’re at it, ask your bookkeeper to print out your monthly general ledger activity and take an hour out to read it. ... Identify and investigate any transaction that seems unfamiliar or unusual.”

• “Another important tactic is to require that everyone — particularly anyone who deals with your money — takes a vacation. When someone is out of the office, and someone fills in for that person, you’re not only making sure that there’s cross-training, but it’s very likely that the fill-in will stumble on something unusual if something unusual is happening.” READ MORE

Meanwhile, almost every day also brings another example of a CEO getting publicity for the wrong reasons: “In a virtual town hall last week, the CEO of a Utah-based digital marketing and technology company, who is forcing employees to return to the office, celebrated the sacrifice of a worker who had to sell the family dog as a result of his decisions. He also questioned the motives of those who disagreed, accusing some of quiet quitting, and waxed skeptical on the compatibility of working full time with serving as a primary caregiver to children. The decision by Clearlink CEO James Clarke to mandate in-office work had come as a surprise to many workers, seeing as Clarke himself had said over email as recently as late October that he had ‘no plans’ to mandate in-office work and some Clearlink employees had been hired with the understanding that the company was ‘remote-first.’”

• “But ‘circumstances’ had ‘changed,’ the company told employees this month, as Clearlink, like many others, has struggled to adapt to a teetering economy and recently undergone a round of layoffs. To jumpstart the firm, Clarke sent a company-wide email on April 3 saying that people who live within 50 miles of the company’s new headquarters in Draper, Utah, would be required to come into the office four days a week, with limited exceptions, starting April 17.”

• “During a video meeting to explain the reasoning behind the changes, Clarke unleashed on his employees, saying he had deduced that some 30 employees had not opened their laptops for a month (the quiet quitters); wondering aloud if some remote employees were secretly working multiple jobs; and asking the company to increase productivity to ‘30 to 50 times our normal production’ as a result of recent advances in artificial intelligence while also making reference to the ‘Judeo-Christian ethic’ and noting, for unclear reasons, that he went to Oxford and Harvard.”

• “All he was asking, he said, is that people come into the office and give their ‘blood, sweat, and tears’ to the company. ‘I challenge any of you to outwork me, but you won’t,’ he added.” READ MORE

What’s the real problem? A lot of bosses think it’s Gen Z: “In a new ResumeBuilder survey of more than 1,300 managers, 74 percent of respondents said they find Gen Z more difficult to work with than other generations, and of those, 12 percent reported having to fire a young worker within their first week on the job. Of the 1,000 managers who said they felt Gen Z was difficult to work with, about half said it was difficult to work with the younger generation ‘most or all of the time,’ according to the survey. While generational differences in the workplace have long been a point of contention, ResumeBuilder's chief career advisor Stacie Haller said the pandemic has further exacerbated challenges around areas like communication and work style. ‘As a result of COVID-19 and remote education, it's possible that GenZers lack the foundation to be more successful than older generations in entry-level positions,’ Haller said in a statement.”

• “The managers cited a variety of reasons for their disinterest in working with Gen Z, ranging from a lack of effort and productivity to how they believe young workers are easily offended.”

• “Adam Garfield, marketing director at Hairbro, said in a statement that while Gen Z employees can be ‘highly innovative and adaptable’ and ‘not afraid to challenge the status quo and bring new ideas to the table,’ they can also struggle with effective communication.”

• “‘While they are proficient in using digital communication tools, they may lack some of the interpersonal skills required for face-to-face interactions,’ Garfield said in a statement. ‘GenZers could benefit from developing their communication skills to build stronger relationships with colleagues and clients.’” READ MORE

ECONOMIC DEVELOPMENT

Virginia isn’t quite getting the payoff it expected from Amazon’s HQ2 (but Amazon still wants its subsidies): “Amazon’s second headquarters was supposed to supercharge its new neighborhood in Northern Virginia. In exchange for millions of dollars from state and local officials, the tech giant promised to build shiny glass towers and fill them with well-paid software engineers, who would patronize local businesses and boost tax revenue. Architectural renderings showed bustling sidewalks in this area just outside D.C. filled with pedestrians and cyclists — the kind of lively urban landscape that could attract other companies and even more investment. But as she peered outside her Arlington storefront to the company’s construction site on one recent, cloudless afternoon, Grace Park was having trouble seeing how that idea could ever come to life.”

• “‘I don’t think it’s going to get much busier than this,’ said Park, who has operated a dry-cleaning business here since 2017, the sidewalk empty save for some workers pouring concrete and planting shrubs. ‘Why build more offices if people aren’t going to come?’”

• “‘We have a mismatch of intent and strategy,’ said Jim Russell, a geographer who chairs the Virginia Statewide Community Land Trust. ‘HQ2 is infrastructure for an economic era that no longer exists.’”

• “Amazon spokesman Zach Goldsztejn said that while the company declined to request any payments from Virginia during the first three years of the pandemic, it recently submitted an application to receive incentives for 6,939 new jobs. That means the company could receive nearly $153 million by September 2026 if it maintains those jobs.” READ MORE

21 HATS OFFICE HOURS

Sarah Segal will be the featured guest at the next 21 Hats Office Hours, Monday at 5 ET, when she will take questions about all things public relations. We expect a few of the other podcast regulars to attend as well. It’s an open conversation where anyone can ask anyone anything. All 21 Hats Founding Members are invited -- click the subscribe button below for more info -- but if you’d like a free-trial invite, just let me know in a reply to this email.

BANKING

Smaller banks that serve smaller businesses are starting to pay more on deposits: “The smaller banks that serve a wide swath of America’s consumers and businesses are starting to pay up to keep their deposits. Main Street banks such as Citizens Financial Group and First Horizon Corp. said in recent first-quarter earnings reports they are having a tougher time hanging onto customer money in a world where the Federal Reserve has aggressively raised interest rates. To keep those depositors around, some lenders are paying more on savings accounts and turning to products like certificates of deposit.”

• “Deposits were plentiful in the era of super low rates because customers had little incentive to move their money elsewhere. Banks grew to rely on them as a cheap source of funding that they could use to make loans or buy bonds and other securities.” READ MORE

HUMAN RESOURCES

A maker space creates livelihoods for the formerly incarcerated: “At its foundation Past Lives is a Southeast Portland maker space occupying a 26,000-square-foot building with ground floor industrial space for full wood shop, metal casting and machining and ceramics. Upstairs is space for fine arts with painting, sculpting, machine embroidery, leatherwork and 3D printing. There is also private art space members can rent for workspace or storage. Where Past Lives differs from other such spaces is its mission to create good-paying jobs for a segment of the population that faces increased barriers to employment. The company focuses on employing people who were formerly incarcerated or other marginalization.”

• “It’s creating jobs within the organization and also within a fully licensed design-and-build business that can be hired to do any kind of residential or commercial renovation. The company has a team of 14 that grows based on the number of design-build contracts or other custom fabrication projects it has.”

• “‘The cool thing is we have all this equipment and more than 100 people who know how to use it in various trades,’ said [Past Lives founder Brandon] Morlock, adding that his ultimate goal is to create a labor collective with guaranteed pay scales and raises and health insurance.”

• “Past Lives’ focus on supporting those coming out of incarceration is a personal mission for its 29-year-old founder. Morlock started the company in 2020 when he was released from prison. He served five years for a car crash that killed his friend.” READ MORE

INNOVATION

How did Taco Bell outdo Burger King’s Bacon Sundae, Pizza Hut’s hot-dog-stuffed crust, and Cinnabon’s Pizzabon? “Taco Bell’s food-innovation staff, which includes sixty developers, focusses on big questions: How do you make a Cheez-It snack cracker big enough to be a tostada? What are the ideal Cheez-It dimensions to guarantee that the tostada won’t crack inconveniently when bitten into? Or consider the Doritos Locos Taco: What safeguards can be implemented to prevent the orange Doritos dust from staining a consumer’s hands or clothing? Can fourteen Flamin’ Hot Fritos corn chips be added to the middle of a burrito and retain their crunch? Can a taco shell be made out of a waffle, or a folded slab of chicken Milanese? These are all problems of architecture and scalability; fast food is assembly, not cooking.”

• “I recently visited Taco Bell’s headquarters, in Irvine, in a corporate complex off the I-5 freeway, next to Ford’s regional offices and a Marriott, to see how the company creates new menu items in its laboratory-like Innovation Kitchen.”

• “After passing through several doors that were unlocked via a coded keypad, I sat with Rene Pisciotti, the executive chef, who is known as the Taco Whisperer; Liz Matthews, the global chief food-innovation officer; and Heather Mottershaw, the vice-president of pipeline innovation and product development. (She invented the Waffle Taco.)”

• “The team has to make sure that the recipe components can be prepared in vast quantities, and that the items can be cooked on the line in a minute or less. Then comes the all-important naming process. The cheese-topped burrito became the Grilled Cheese Burrito. ‘The name brings out emotion and nostalgia,’ Matthews said. In the Innovation Kitchen, the words ‘nostalgia,’ ‘emotion,’ and ‘memory’ are in heavy rotation.” READ MORE

PROFILE

Mark Suster, the star of L.A.’s startup scene, has a few detractors: “With maniacal attention to detail and relentless hustle, Suster, 54, has for the past decade built the Upfront Summit into one of the most exclusive gatherings in tech. Overseeing more than $3 billion in assets as the managing partner of Upfront Ventures, he has made himself the face of L.A.'s booming tech scene. But Suster's abrasive, take-no-prisoners approach has also alienated some startup founders and investors who say they will never work with him again because they found him overly aggressive, condescending, and ego-driven. ‘I have worked with more than 50 VCs and nobody comes close to what it is like to work with Mark Suster,’ said a founder backed by Suster. ‘He's the least founder-friendly VC I have ever seen.’"

• “Insider spoke with more than 35 people and reviewed confidential text messages, emails, court filings, and investment-return data to better understand Suster and his approach as a startup investor. Those who spoke with Insider asked to remain anonymous for fear of retaliation or because they had signed nondisclosure agreements.”

• “‘My job is not to be the best friend of the CEO,’ Suster said. ‘It's important to be tough on founders to push them to do better and not to give them a free pass. It's not like we let our children eat chocolate for breakfast every day.’”

• “‘I wouldn't describe myself as a bully,’ Suster said. ‘I have a strong point of view. I named the firm Upfront. What you see is what you get.’" READ MORE

THE 21 HATS PODCAST

‘It’s Going to Take $8 Million in Financing:’ This week, Stephanie Stuckey tells Paul Downs and Liz Picarazzi how she and her partners have taken their business from $2 million in annual revenue to more than $13 million in three years. What’s frustrating, she says, is that she could be selling a lot more pecan snacks and candies. But with production at capacity, she’s not doing much sales outreach until they can fully revamp their manufacturing operation, which will require a significant investment. “I spend my days doing financial paperwork,” Stephanie says. Plus: Liz explains why her business picks up when the weather warms up, and after a slow start, Paul gets a boost from a big manufacturer.

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Thanks for reading, everyone. — Loren