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I Didn’t Appreciate It Until I Almost Lost It
In a 21 Hats Podcast bonus episode, Greg Wittstock—aka The Pond Guy—explains how he created Aquascape—and then what went wrong.
Here are today’s highlights:
Today’s big questions: Is your line of credit big enough? And is it now okay to wear shorts to the office?
Meanwhile, California restaurants are invading Europe.
And inflation hits a four-decade high.
“Don't give them what they ask for,” says Wittstock. “Give them what they want.”
THE 21 HATS PODCAST
I Didn’t Appreciate It Until I Almost Lost It: This week, in a special bonus episode, Greg Wittstock, founder of Aquascape, explains how he invented the backyard pond industry, how he improvised a business model, and how he almost lost it all. Early on, after failing at franchising, Wittstock decided to give away his pond building expertise and marketing to landscape contractors in what he calls “a franchise system without a franchise fee.” And it worked. Always candid to a fault, he recounts how the business shot to $59 million in annual sales, why it then stagnated for 10 years, and what he ultimately figured out about social media marketing. Plus: he also explains why his first rule of customer service is: Don't give them what they ask for. Give them what they want.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Ami Kassar says a line of credit should be part of the furniture: “I spoke with an entrepreneur yesterday whose business is growing 50 percent this year, and her B2B sales have grown from 10 percent to 30 percent. For the first time, cash flow is becoming an issue.”
“Her business has high margins. But you can't catch up when it takes 60 days to get paid, and you have to pay your employees.”
“I like to see lines of credit at greater than 10 percent of top-line sales, or 85 percent of [accounts receivable] and 50 percent of inventory.” READ MORE
Every month, more California restaurants are opening in Europe: “In the last year, L.A. cooks Nancy Silverton of Mozza and Kris Yenbamroong of Night + Market have opened locations in London. Eggslut, the brioche egg sandwich chain that began as an L.A. food truck, now has three cafes in this city. Toca Madera, the club-like West 3rd Street spot where vegan enchiladas are paired with $16 margaritas, opened a rooftop outpost in Marylebone. A restaurant in a hotel in the financial district lures in patrons with two words — Malibu Kitchen — before offering ‘superfood salads, cured fish and meat, and plant-based dishes.’”
“Even in Paris, a city skilled at contempt for things American, a chic hotel north of the Seine recently opened Santa Barbara-inspired Montecito. And a chef who once worked the kitchens at Venice’s Gjusta and Gjelina is cooking up California-meets-Nashville cuisine in the 10th arrondissement and will soon launch a spot in the 11th.”
“In Munich and Milan, bright, yellow-accented cafes advertising sunny dishes and avocado toast have popped up with cursive neon signs and wall murals that could pass for a West Hollywood scene made for Instagram.”
“‘In food, California has become a trendy word,’ says Mailea Weger, the former chef of Echo, a deli Californien that in recent years popularized breakfast chorizo tacos, huevos rancheros and crispy rice bowls for Parisians.” READ MORE
Early in the pandemic, apparel maker Life is Good, faced bankruptcy, but revenues have since doubled: “The prudent financial decision, analysts said, would have been to lay off a chunk of staff and swallow the losses from warm-weather inventory that would never make it to store shelves. Retailers were closed and production halted by the need for ‘social distancing.’ But the thought of closing was crushing for a company that brothers John and Bert Jacobs started in 1994, with just $78 to their name. ‘Even hearing the word bankruptcy in strategic meetings made my heart stop,’ now-chief executive Bert Jacobs said from the company’s Fort Point office.”
“So, instead, Life is Good played offense: They created more shirts, not less. They hired staff by the dozens.”
“Two years later, it’s clear the bold move worked. Annual revenue doubled between 2019 and 2021, reaching $150 million, and online sales increased by 75 percent.” READ MORE
What would Henry Ford do? “He was consumed with stockpiling enough materials to ensure that his assembly lines could continue operating without debilitating shortages. He bought his own coal mines in Kentucky and Virginia, along with railroads to carry their output to his factories. He amassed a fleet of ships that plied the Great Lakes, bearing a steady supply of iron ore and lumber harvested from Michigan’s Upper Peninsula. And he erected an enormous plant outside Detroit on the River Rouge, a complex of factories engineered to handle every stage of turning raw materials into a finished automobile.”
“‘He recognized that the supply chain even then was full of risks,’ said Mike Skinner, a founder of the Henry Ford Heritage Association. If he were around today, ‘Ford would have been making their own chips,’ Mr. Skinner added.”
“The people running Ford say that’s an oversimplification. The F-150 pickup produced at the Rouge uses more than 800 types of chips, requiring dependence on specialists.”
“For Ford, making its own chips, or even limiting its suppliers to North America, would pose ‘a Herculean task that would be very asset- and capital-intensive, and just not realistic.’” READ MORE
Inflation just hit a four-decade high: “The Labor Department on Friday said that the consumer-price index increased 8.6 percent in May from the same month a year ago, marking its fastest pace since December 1981. That was also up from April’s CPI reading, which was slightly below the previous 40-year high reached in March. The CPI measures what consumers pay for goods and services. May’s increase was driven by sharp rises in the prices for energy, which rose 34.6 percent from a year earlier, and groceries, which jumped 11.9 percent on the year.”
“Prices for used cars and trucks rose 1.8 percent in May from April, reversing three months of declines.”
“Shelter costs, an indicator of broad inflation pressures, accelerated on a monthly basis in May and were up 5.5 percent compared with a year ago.”
“High inflation is a downside of strong U.S. growth, fueled in part by low interest rates and government stimulus to counter the Covid-19 pandemic’s impact.” READ MORE
The IRS has raised its mileage rate: “The Internal Revenue Service raised the mileage rate used for calculating business tax deductions for vehicle use, making a rare midyear change in response to increasing gasoline prices. The new rate for the final six months of 2022 will be 62.5 cents a mile, up from 58.5 cents a mile, which itself was a 2.5 cent increase from 2021. The IRS had set the 2022 rates in December 2021 and typically doesn’t change the rates during the year. But gasoline prices have increased steadily since then, particularly since Russia’s invasion of Ukraine, prompting the IRS to make the first midyear adjustment since 2011.” READ MORE
Is it now okay to wear shorts to the office? “Some bosses even see shorts as a sweetener for potential new hires in a competitive job market. ‘When you interview somebody and you’re just wearing street clothes, I think it’s a huge advantage over a law firm that sits there telling these people that they’ve got to show up to work at 8 a.m. every day with a suit and tie,’ said Blake Markus, 38, the president of a small law firm in Jefferson City, Mo. Mr. Markus wears straight-fitting shorts in red or teal to compliment his red Chuck Taylor sneakers and maintains no actual dress code at his office, only asking staff to dress up if they’re heading to court.”
“He claims that wearing shorts also endears his staff to clients. ‘It actually comes off as being extremely authentic and in some weird way helps build rapport with our clients and vendors,’ he said.”
“For women, exposing skin at the office carries a heightened risk of judgment. ‘I haven’t found shorts that are formal enough to be taken seriously,’ said Nikitha Suryadevara, 30, a product manager at a technology company in San Francisco. ‘Women have a hard enough time in tech being taken seriously.’” READ MORE
With time running out, summer camps are scrambling to find staffers: “The average cost to hire camp staff this summer has increased at least 10 percent to 15 percent, according to Tom Rosenberg, chief executive of American Camp Association, an industry group. Some camps are offering signing bonuses, recruiting from new places like local senior centers, and offering hires more flexible schedules. While most day and overnight camps say they expect to be able to operate as promised, some camps have had to cancel either entire programs or certain offerings. Many employers across a range of businesses have said labor shortages will likely result in delays and closures this summer.”
“A record number of camps have wait lists this summer, says Sarah Kurtz McKinnon, a former camp director and co-founder of industry group the Summer Camp Society.”
“One bright spot in the staffing issue is that J-1 visas are back, allowing camps to recruit staff members from abroad.” READ MORE
When a beloved coffee shop in Helsinki closed, its customers banded together to open a new one: “Concerned about their neighborhood’s dwindling mom-and-pop sensibility and yearning to foster community spirit, 25 patrons of the former establishment formed the company Kruununhaan Korttelikahvila Oy. (Korttelikahvila means ‘cafe of the block’ in Finnish.) They each chipped in €2,500 to €10,000 ($2,700 to $10,700), renovated the space, and opened the cafe under the name Mariankatu 18 in August. The group of owners—many of whom had little to no prior entrepreneurial experience—has since grown to 40 and includes university professors, the mayor of Helsinki, an orchestra conductor, a filmmaker, and a retired head of a bank.”
“Even as neighborhood shops struggle to stay afloat, demand for their services is rising in the remote-work era, when people expect to find convenience goods closer to home rather than in retail spaces near their offices, says Bing Wang, an associate professor in practice of real estate and the built environment at the Graduate School of Design at Harvard.”
“Community-owned enterprises work best in well-to-do areas where residents have the capital and time needed to run a business, she says.” READ MORE
The Economist reports that some bosses want to give their staffers psychedelics: “In February Dr Bronner’s, an American soapmaker that has long supported efforts to loosen laws around the use of psychedelics and cannabis, added therapy that combines ketamine and counseling to its employee mental-health-care plans. Daniel Poneman of Beyond Athlete Management, a sports agency, says he has seen psychedelic medicine be extremely effective in helping clients struggling with performance anxiety, pressure, and isolation from constant travel.”
“Psychedelics have corporate uses beyond improving workers’ mental health. Anne Philippi, boss of The New Health Club, a German psychedelic-retreat outfit, says some firms are also experimenting with such drugs to make executives more empathetic, enhance team bonding, boost creativity or change company culture.”
“Field Trip offers a weekend retreat for ‘leaders’ to allow them to experience ‘a heightened level of consciousness.’” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren