‘I Had to Fire the Guy’
In our latest podcast episode, the owners discuss whether zero tolerance is the best policy when it comes to employees and sexual harassment.
Good Morning!
Here are today’s highlights:
More managers are using ChatGPT to write performance reviews.
Early adopters of Microsoft Copilot are not entirely sold on the AI tool.
It’s really not that important which CRM brand you choose.
Two former spies are upending the market for cyber insurance—even though, they say, few people take security seriously.
THE 21 HATS PODCAST
This week, Paul Downs, Jay Goltz, and Sarah Segal talk about sexual harassment and where you draw the line with employees. Is it sexual harassment for one employee to ask another for a date? Is it sexual harassment to ask twice? Does it make sense to have a policy of zero tolerance? Or is it better to leave room for discretion and judgment? The conversation was sparked by a recent situation Jay experienced with an employee who had been with the company for almost three decades, having started at the age of 17. “It was a very sad thing,” Jay tells us.
Plus: Sarah Segal asks whether it’s better to build her business on a bunch of small clients or a smaller number of large clients. And is being CEO a health risk? We begin the episode by talking about an eye-catching story the Wall Street Journal recently published noting that an increasing number of CEOs have been dying on the job, presumably because of the heightened levels of stress.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
ARTIFICIAL INTELLIGENCE
Both managers and employees are using ChatGPT to write performance reviews: “If you ask manager friends, you'll probably find at least one may have taken this shortcut with performance reviews. A brief search of X, LinkedIn, or Reddit will show you scores of people bragging about it. What they're saying: A former manager at Dropbox (who asked to remain anonymous) says she has used ChatGPT to help write performance reviews for direct reports and peers because, she tells Axios, the review process at big tech companies can be ‘exhausting,’ ‘tedious’ and bureaucratic.’ She also used it to write her self reviews, ‘particularly when I know that my manager is busy, far away from the day to day and I'm assessing my own performance as meets expectations,’ she added.”
“Stephen Lytle, assistant vice president of people and culture at Evara Health, puts his own meeting notes into ChatGPT along with the person's self evaluation and feedback he's gotten from other people. And then he tells ChatGPT, ‘synthesize this into an effective evaluation.’”
“[Lee] Gonzales told Axios he takes copious one-on-one notes throughout the year and then feeds them into the enterprise version of ChatGPT to get what he calls a ‘shitty first draft’ of a performance review. Then he edits from there.”
"’Never, ever, ever, ever take what comes out of these models as the truth,’ Gonzales says. ‘They make stuff up. They confabulate.’” READ MORE
Early adopters are questioning the price of Microsoft Copilot: “Microsoft’s new artificial-intelligence assistant for its bestselling software has been in the hands of testers for more than six months and their reviews are in: useful, but often doesn’t live up to its price. The company is hoping for one of its biggest hits in decades with Copilot for Microsoft 365, an AI upgrade that plugs into Word, Outlook, and Teams. It uses the same technology as OpenAI’s ChatGPT and can summarize emails, generate text, and create documents based on natural language prompts. Companies involved in testing say their employees have been clamoring to test the tool—at least initially. So far, the shortcomings with software including Excel and PowerPoint and its tendency to make mistakes have given some testers pause about whether, at $30 a head, it is worth the price.”
“[Microsoft] shares have soared on the belief that the technology will turbocharge its revenue, making it the most valuable company in the world. On Sunday, it showed its first Super Bowl ad in four years, touting Copilot as a tool that can help young people realize their entrepreneurial dreams.”
“A survey from Boston Consulting Group showed that while nearly 90 percent of business executives said generative AI was a top priority for their companies this year, nearly two-thirds said it would take at least two years for the technology to move beyond hype. About 70 percent of them were focused only on small-scale and limited tests.”
“Early testers who spoke with The Wall Street Journal said the AI add-ons for Microsoft’s workplace communication software Teams were most useful. Some had already become reliant on Copilot if they were late to a meeting, to get a summary of what had been said. Those in different countries and time zones now have the option to skip meetings and just read summaries.”
“Guido Appenzeller, a partner at investment firm Andreessen Horowitz, posted a thread on X showing the mistakes it makes when prompted to make a presentation. ‘It is a mess and not anywhere close to adding value,’ Appenzeller said.” READ MORE
TECHNOLOGY
Gene Marks reminds that it’s not about which CRM system you buy; it’s about how you implement it: “I’ve found over the past 20 years of selling CRM solutions that if companies don’t do the right things implementing these applications they’ll turn the best ones into the worst. So what are these right things? It actually comes down to one thing: who owns the system and how they’re supported. To be the best, these CRM systems need an owner. Unfortunately many companies don’t invest in this person. And so they get the worst. Every CRM system has to have someone — or a small team — who owns it.”
“This person doesn’t necessarily have to be an IT person but should be a power user. They should be connected to the group that’s using the system (i.e. the sales or customer service group) and act in a support role. That person should know the CRM system well and also be given all the resources needed by management to make it a success, including training and the availability of outside experts and consultants.”
“There’s been a lot of talk about AI in the tech world, and most CRM systems are rolling out some amazing AI functionality that can do anything from measuring sentiment and chatting with website visitors to monitoring and giving feedback to salespeople or automatically creating campaigns and landing pages. It’s the owner’s job to know all this.”
“They should be in regular contact with the CRM provider and be completely up to speed on all the AI and automation functionality both available and on the horizon so that their team is using the system to its best advantage.” READ MORE
THE ECONOMY
Consumer prices cooled again in January: “The Labor Department reported Tuesday that consumer prices rose 3.1 percent in January from a year earlier, versus a December gain of 3.4 percent. That marked the lowest reading since June. Core prices, which exclude food and energy items in an effort to better track inflation’s underlying trend, were up 3.9 percent. That was equal to December’s gain, which was the lowest since mid-2021. From a month earlier, overall prices were up 0.3 percent, and core prices were up 0.4 percent—larger gains than economists expected.” READ MORE
REGULATION
Tougher rent laws are threatening landlords and New York Community Bancorp: “NYCB is the city’s largest lender on rent-stabilized apartments. About $18 billion of its loans are backed by the city’s rent-stabilized units, representing more than 20 percent of its total loan book. Many of these loans were made when developers had more flexibility to upgrade rent-stabilized units and then boost the rent to market rate, or convert them to condominiums. In 2019, new laws capped the amounts that landlords can raise rents at these properties. Though these buildings could still deliver steady returns, business plans that were based on steeper rent increases no longer penciled out.”
“Sale prices of buildings containing rent-regulated units have fallen 34 percent since then, according to Maverick Real Estate Partners, a private-equity fund manager. Some rent-stabilized multifamily buildings have sold for half—or even less than half—of what owners paid for them before the 2019 law went into effect.”
“Tenant advocates have heralded the new laws as overdue relief for some of the country’s most cost-burdened renters. Landlord groups say the new rules are bankrupting owners, while threatening to bring down regional banks like NYCB.” READ MORE
CYBERSECURITY
Two former spies cracked the cyber insurance market: “Since 2017, Coalition and its closest competitor, At-Bay, also based in San Francisco, have been reinventing the way cyber insurance is underwritten and managed, particularly for small and midsize clients. Old-line insurers seemed hopelessly out of touch, sending prospective customers forms asking such basic questions as whether they had antivirus software installed. The newcomers, by contrast, scanned potential customers’ systems as a hacker might. Sometimes they required specific security upgrades before agreeing to insure them. Other times, they simply turned them down. ‘We’ll let AIG or Chubb have you,’ says At-Bay CEO and cofounder Rotem Iram, a 43-year-old veteran of one of Israel’s elite military cyber intelligence units.”
“Even after Coalition or At-Bay accept a customer, they keep scanning it and sending alerts to control both their own and clients’ risk. In effect, small enterprises that haven’t traditionally paid for stand-alone cybersecurity services but are ready to shell out for insurance get both—whether they like it or not.”
“Iram describes a constant battle to make clients take risk seriously. ‘People don’t care about security,’ he complains. ‘When you work in security for too long, you think that everybody cares about it just like you do. But nobody cares.’” READ MORE
STARTUPS
Thirty-five startups to watch in 2024: “The post-pandemic cooldown for venture-backed startups has created a new normal for companies that've had to pivot, tighten their belts, and find new ways to thrive as funding sources become more scarce. Despite those headwinds, startups across the country are finding ways to grow and innovate, disrupting industries from logistics to health care with novel ideas and new ways of improving business. To spotlight some of these promising new companies, American Inno is publishing its second-ever national Startups to Watch, a look at upstarts from across the country poised for growth in the coming years.”
“Atlas Robotics: Atlas is developing robotics-based material-handling solutions for manufacturing and warehousing facilities. The startup's robots include pallet trucks, which can autonomously move items throughout a warehouse. Its customers include Sütaş Group, a Turkish company that produces products like yogurt and cheese.”
“B.well Connected Health: B.well's platform helps patients compile all their medical records in one place. B.well's goal is to make it easier for patients to understand their vaccination schedule or identify possible drug interactions from different prescriptions. It recently landed a deal with Samsung to have its technology installed on every device by the electronics giant.”
“CleanFiber manufactures building insulation from recycled corrugated cardboard. The startup says it's able to produce higher-quality insulation with lower amounts of dust and contamination. Last year, CleanFiber began work on a $16 million expansion project at its 67,000-square-foot facility.” READ MORE
OBITUARY
Bob Moore, founder of Bob’s Red Mill: “A folksy, almost Santa-like figure who often donned a red vest or coat, Mr. Moore was immediately recognizable to anyone who ever bought a package of Bob’s Red Mill barley, bulgur, or buckwheat. An illustration of his face, gently smiling under a flat cap and wire-rimmed glasses, adorns each of the company’s more than 200 products, alongside a salutation that conveyed some of the onetime seminarian’s easygoing charm: ‘To Your Good Health.’”
“Under Mr. Moore and his wife, co-founder Charlee Moore, the private company grew from an artisanal Oregon business into a global empire of stone-ground grains, cereals and flours, with annual sales of ‘well over $100 million,’ Mr. Moore told podcast host Guy Raz in 2018. The company went on a hiring spree in 2020, buoyed by a surge of interest in baking during the coronavirus pandemic, and says it now has more than 700 employees, with sales in more than 70 countries.”
“For years, Mr. Moore turned down prospective buyers, insisting on maintaining ownership of the company. In 2010, on his 81st birthday, he began transferring control to his staff through a new employee stock ownership plan. ‘The Bible says to do unto others as you would have them do unto you,’ he later told Portland Monthly, explaining his belief that sharing profits and ownership would ‘make things more fair and more benevolent.’” READ MORE
21 HATS PODCAST: DASHBOARD
What Can We Learn from Boeing? This week, Shawn Busse, who soon will be boarding an Alaska Air plane made by the Boeing Company to attend the 21 Hats Live event in Fort Worth, finds lessons for smaller businesses in Boeing’s struggles. For one thing, there’s always danger when combining the cultures of two companies. Plus: Shawn, whose company, Kinesis, has been a certified B corp since 2016, talks about whether the certification is losing its luster.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren