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I Didn’t Know It Was Going to Work
At a time when local publications have been collapsing, John Garrett has built a chain of newspapers—print newspapers!—that’s thriving. He’s also learned some important lessons about marketing.
Here are today’s highlights:
Maybe think twice before you fire that talented jerk.
Hotels are rolling out the red carpet for pets.
Will the “millionaires tax” scare away Boston’s tech founders?
Bill Oesterle was co-founder and CEO of Angie’s List.
THE 21 HATS PODCAST
Marketing Workshop: I Didn’t Know It Was Going to Work: This week, Shawn Busse and Loren Feldman talk to John Garrett about his contrarian approach to newspapers, marketing, and competition. Garrett has built a Texas-based chain of print newspapers that has managed to outcompete established news organizations and digital platforms for both community engagement and local advertising. Not surprisingly, when he first took out a $39,000 credit card loan in 2005 and started telling people that his business model would feature a monthly print publication that he would mail to everyone in his target communities for free, he didn’t get a lot of congratulations. And not everything he’s tried has worked. An expansion into Arizona, Tennessee, and Georgia, for example, failed early in the pandemic. But almost 20 years after its debut, a period during which most local publications have been in retreat, Community Impact is thriving, expecting $35 million in revenue this year. And from his seat as a publisher, Garrett offers a perspective on marketing that any business owner would be wise to consider.
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They still need workers but many small businesses have slowed hiring: “The portion of small-business owners who expect to expand their workforce over the next year was below 50 percent for the second month in a row in May, hitting the lowest level since June 2020, during the early months of the Covid-19 pandemic, according to a recent survey conducted for The Wall Street Journal. Small businesses struggled to hire staff during the pandemic as competition for workers increased and large companies with deeper pockets scooped up many of the available job candidates. Pools of applicants have increased, making it easier for some small businesses to fill openings. But pay expectations remain high, making it tough for others to make hires.”
“Small-business hiring plans have been weaker on only two occasions since the launch of the survey in 2012: during the early portion of the Covid shutdown from April to June 2020 and the federal fiscal cliff crisis in 2012.”
“‘There is no question that CEOs are downshifting into a slowing economy,’ said Vistage chief research officer Joe Galvin. Despite caution about adding additional workers, ‘no one is willing to shed the hard-earned and expensive employees they hired,’ Mr. Galvin said. Entrepreneurs often still struggle to fill openings when workers leave, he added.”
“TMD Holdings, which helps companies source products, laid off three of its 26 employees at the end of February after Party City declared bankruptcy and other major retail clients cut orders. The Pittsburgh-based company is trying to automate functions such as lead generation and scheduling so it can do more with its existing staff, said TMD President Joe Kelly.”
“TMD hopes to offset the decline in the retail sector by expanding its industrial and custom sourcing businesses. Mr. Kelly said he would hire as many as six sales representatives this year if he could find the right people, but thinks adding one or two is more likely. ‘They are hard to find, but when we do find them, they are gold,’ he said.” READ MORE
The Economist says you should think twice before firing talented jerks: “The enthusiasm for banning jerks ought to make people a little uneasy, for at least three reasons. The first is that the no-jerk rule involves a lot of subjectivity. Some types of behavior are obviously and immediately beyond the pale. But the boundaries between seeking high standards and being unreasonable, or between being candid and being crushing, are not always clear-cut. Zero tolerance is dangerous. You may mean to create a supportive culture but end up in a corporate Salem, without the bonnets but with the accusations of jerkcraft.”
“The second is that jerks come in different flavors. Total jerks should just be got rid of. But they are rare, whereas bit-of-a-jerks are everywhere and can be redeemed. The oblivious jerk is one potentially fixable category.”
“Other people are situational jerks: they behave badly in some circumstances and not in others. If those circumstances are very broad (whenever the person in question is awake, say), then that tells you the problem cannot be fixed. But if jerkiness occurs only at specific moments, like interacting with another jerk, then it may be that a solution exists.”
“A third issue is one of consistency. This is not just about what happens when the person declaring war on jerks is also a jerk. It is also about the many other problem types who crowd the corridors of workplaces. Where are the policies that ban constructive wreckers, the people offering up so many ostensibly helpful criticisms that nothing ever actually gets done?” READ MORE
MANAGEMENT: FROM OUR SPONSOR
In a recent conversation, Kevin Walter (on the right), who co-founded Tasty Catering with brothers Larry and Tom, talks about why Tasty decided to open its books, why he became a Great Game of Business coach, and how the catering business made it through the pandemic without laying off employees.
“We did have some turnover up till 2005 or 2006 when we approached two 20-somethings with job offers for life, a little equity in companies they wanted to start. And they said, ‘No, we’re leaving unless the culture changes.’”
“We were down 95 percent the first month [of the pandemic]—off of where we were supposed to be. Our team came to us and said, All right, we're tired of looking at the red numbers. What really matters is how much runway we have before we have to start looking for jobs.”
“We kept everybody employed. They told us we need a minimum amount of hours a week. We’ll take a 10-percent pay cut. The owners will take 30 percent. But we’ve got to keep this band together, because this is going to end.” READ MORE
Doggy menus, plush beds, nose balm and pet sitting: hotels are finding more ways to cater to pets: “With more and more guests wanting to travel with their pets, especially since the pandemic, major hotel companies such as Marriott, Hilton and Kimpton are rolling out or expanding their programs across thousands of hotels and vacation rentals. While many inns have long welcomed pets, today all kinds of lodgings are courting them. Whether you and your furry friend are seeking a budget hotel in Ithaca, N.Y., or a villa in Umbria, Italy, these new programs and properties aim to make it easy for the both of you to sit and stay.”
Andaz Mexico City Condesa: “You can hang out at the hotel’s indoor-outdoor Wooftop Beer Garden & Canine Club and enjoy snacks and drinks from a food truck that offers ‘dog beer’ — not to worry, it’s made with water, bone broth, meat and herbs — for your companion, and then check out the pop-up pet accessory boutique from Perro de Mundo.”
Virgin Hotels New York City: “Virgin’s first hotel in New York City, which had its grand opening party in April, offers ‘pet-menities,’ including a dog bed that the hotel promises pets is ‘as comfortable as your human’s,’ a food and water dish, and a Virgin Hotels dog bandanna. Dogs also receive treats from Shameless Pets, a company that upcycles leftover food into treats.”
Hilton: “Guests can gain access to the service through a phone help line and a website with a live-chat feature and get advice and answers to questions about pet health, wellness and behavior. Last year, Hilton announced that it had expanded its partnership with Mars Petcare, as well as its pet-friendly offerings, to more than 4,600 hotels in the United States and Canada. ... Today, nearly 85 percent of U.S. Hilton properties are pet‑friendly.” READ MORE
Boston is a good place to start a tech company but the “millionaires tax” may make it harder to keep them: “For more than 70 years Massachusetts has nurtured tech companies despite its longstanding reputation as a high-tax, highly regulated, and expensive place to do business. Digital Equipment, Analog Devices, and Lotus Development were among the trailblazers back in the day. Today’s home-grown stars, launched around the turn of the century, include Akamai, Tripadvisor, and Wayfair. ... The tech ecosystem has thrived — attracting industry giants like Amazon and Meta — amid mounting concern that the state has become less appealing to entrepreneurs and more inhospitable to companies, whether they are emerging or long established.”
“And questions about the state’s competitive standing — and loss of residents to other states — have absolutely dominated the business discourse since voters approved the controversial ‘millionaires tax’ ballot proposal in November.”
“The new tax — a 4 percentage point surcharge on individual incomes of more than $1 million, with the revenue earmarked for transportation and education — was a big blow to the state’s competitiveness, said Christopher R. Anderson, president of the Massachusetts High Technology Council. ‘We have to reverse the trend in the business climate,’ he said. ‘We need to treat business creators differently.’”
“But supporters of the tax, including some tech industry leaders, argue that the state has long lost rich residents to low-tax locales like New Hampshire and Florida, and the effect on the state will be marginal. ‘Our fixation on taxes on high income is a huge distraction from what we should focus on, which is how we actually become more competitive,’ said Mohamad Ali, chief executive of IDG, a Needham-based technology and data company.” READ MORE
In five years, Lane Levine has gone from delivering bread to selling his frozen grilled cheese sandwiches in 500 grocery stores up and down the East Coast: “Levine launched the bread company by offering sourdough loaves for both delivery and local wholesale at stores and farmers' markets. A Friendly Bread’s products then expanded to include cracker-like mini sourdough toasts. The toasts were sold in MOM’s Organic Market and various Whole Foods locations. The bread company founder was always looking at new ways to offer his sourdough products and entered a cooking contest with grilled cheeses using his staple bread. He won the ‘Battle of the Brands’ at B-More Kitchen but had to put the idea on hold because home bread delivery ‘skyrocketed’ during the Covid-19 pandemic, he said.”
“A Friendly Bread could also be found in local grocery stores during that time, but ‘the money was not good because the margins were a lot smaller’ in wholesale compared to direct-to-consumer. The company was losing money, so Levine shifted to packaged goods and revisited the grilled cheese idea.”
“‘We’re not competing with any other grilled cheese product, which is a really good thing and a really bad thing,’ Levine said, noting people might not want the product because they can make it themselves.”
“Out of all of the company’s iterations since 2018, Levine said the grilled cheese product has one of the better profit margins, at 50 percent so far. It costs $1.50 to make the sandwiches and he makes the same amount in profit per sandwich.” READ MORE
Bill Oesterle, co-founder and long-time CEO of Angie’s List: “The idea behind Angie’s List, which Mr. Oesterle (pronounced OST-er-lee) founded in Columbus, Ohio, in 1995 with Angie Hicks, was to connect people who paid a subscription fee to trustworthy contractors and other home improvement professionals, removing some of the anxiety from hiring a stranger for expensive home repairs. The business, originally called Columbus Neighbors, was a hyperlocal affair: Ms. Hicks signed up new subscribers by going door to door and provided referrals over the phone, consulting an actual list that had to be updated whenever a company’s rating changed. The service spread the word even further by advertising in newspapers, and the name became Angie’s List in 1996.”
“In 1999, with the dotcom boom near its apogee, Angie’s List moved online. The site, which still charged a subscription fee and also made money through advertising, rated different businesses from A to F in categories like punctuality and professionalism. It also allowed users to write signed reviews about different businesses in their area, which Angie’s List hoped would make reviews fairer and more accurate.”
“Mr. Oesterle became chief executive in 1999, when Ms. Hicks left to attend Harvard Business School. (She later returned in a different capacity.) In time the company employed more than 2,000 workers, mainly based in Indianapolis during Mr. Oesterle’s tenure, and developed a user base of millions in dozens of cities across the United States.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Yes, It’s Time to Worry about the Debt Ceiling: This week, Gene Marks tells Loren Feldman that businesses should be making contingency plans in case there’s a default, especially if they rely on government contracts. Be careful how you spend and how you stash your cash. Plus: Gene gloats a bit about the end of the age of the worker (and then has some second thoughts). He also says reports of the death of the metaverse are greatly exaggerated and that it wouldn’t be so terrible if the government loses the ability to regulate.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren