‘I Was Raised By Entrepreneur Wolves’

Rob Dyrdek says his goal is to build 50 to 100 businesses and sell each of them for $75 million to $200 million.

Good morning! And welcome back.

Today’s highlights: Why venture capitalists are falling in love with nail-care startups. How businesses are taking advantage of a glut of commercial space. And the EEOC says employers can require employees to get vaccinated.

THE 21 HATS CONVERSATION

Rob Dyrdek—a high school dropout, professional skateboarder, reality TV star, entrepreneur, and founder of the Dyrdek Machine—says his goal is to build 50 to 100 businesses and sell each of them for $75 million to $200 million. In this 21 Hats Conversation, he explains his plan, how the Machine method works, and how he got his start:

  • “The skate shop that I started going to [when I was 11] was founded by a 19-year-old serial entrepreneur who I watched build company after company after company.”

  • “You can sell a business for $50 million to $150 million to two or three thousand people. Anything above $200 million, you're selling it to like 10 people.”

  • “I'll tell you one thing for certain: You learn a whole lot about your business when you take it to raise money.”

  • “I've never even met the guy in person, and [we’re] building a new company based out of New York. I wouldn't even have thought that was possible.”

    Read the transcript or watch the video

OPPORTUNITIES

Venture capitalists are falling in love with nail-care startups: “A standard salon visit every two weeks, for instance, easily costs over $1,000 a year. Premium polishes and press-on nails can add up to hundreds for at-home care. Add in custom nail art and other options, and the sums go stratospherically higher. All of this may seem other-worldly to those whose self-care routine consists of using some well-worn clippers every week or so. But for a raft of recently funded nail-care startups, founders and investors are betting that enthusiasts can form the basis for highly scalable and profitable businesses.”

  • “‘I think you’re looking at a space that’s really been quite analog, and really taking that experience and making it digital,’ said Pree Walia, CEO and founder of Preemadonna, a startup offering a nail-painting robot and manicure products.”

  • “The Silicon Valley-based startup is one of at least 10 U.S. nail-focused companies that have raised capital in the past couple of years. Funded business models range from manicure robots to custom stick-on nails to extra hygienic, sustainable salon experiences.” READ MORE

  • PLUS: Back in 2016, Bo Burlingham wrote about how investment firm Cue Ball set out to create the Starbucks of nail salons. READ MORE

COMMERCIAL SPACE

Last spring, Stacey Fraser was forced to close all four New York City locations of her children’s clothing store Pink Chicken. But thanks in part to a glut of vacant retail space, this spring is looking very different: “Suddenly Ms. Fraser was not only reopening her four stores but opening a fifth one on hallowed Bleecker Street, something she had ‘never entertained as rents were too astronomical’ there. A few months later, she signed a lease for a storefront two doors down from Magnolia, at about half of what asking rents were in 2016, when rents were at historical highs.”

  • “For the first time in years, ambitious business owners are landing affordable leases with tenant-friendly amendments on Manhattan storefronts.”

  • “‘I feel like I’m in the driver’s seat when negotiating with landlords,’ said Ms. Resler, a co-founder of Sharks Pool Club, an online service and app where customers can book private rooms with pool tables. ‘And how long can a market that favors the tenant last?’”

  • “Retail corridors that cater to tourists, like upper Fifth Avenue, will probably take longer to come back to life. ‘There are still plenty of landlords that are not ready to make long-term deals at cheap rents,’ he said.” READ MORE

REOPENING

On Friday, the EEOC said employers can require employees to get vaccinated: “The Equal Employment Opportunity Commission issued updated guidance stating that federal laws don’t prevent an employer from requiring workers to be vaccinated. However, in some circumstances, federal laws may require the employer to provide reasonable accommodations for employees who, because of a disability or a religious belief, aren’t vaccinated. For example, the EEOC said as a reasonable accommodation, an unvaccinated employee entering the workplace might wear a face mask, work at a social distance or be given the opportunity to telework.”

  • “The new guidelines also say that federal laws don’t prevent or limit incentives that can be offered to workers to voluntarily take the vaccine.”

  • “And employers that are administering vaccines to their employees may also offer incentives, as long as the incentives aren’t coercive.” READ MORE

A concert promoter in Florida decided to price tickets at $18 for those who are vaccinated—and $1,000 for those who are not: “This spring, Florida Gov. Ron DeSantis issued an executive order forbidding businesses from making their patrons prove that they have been vaccinated against the coronavirus. He also signed into law a bill to give the ban more teeth, threatening violators with fines in the thousands of dollars. ... I’m not denying entry to anyone,’ said Paul Williams. ‘I’m just offering a discount.’ The governor’s office says the unorthodox pricing violates Florida’s rules.”

  • “Williams said he figured his tactics were safe— the executive order carries limited penalties, and the new law does not go into effect until shortly after his small punk rock event planned for June 26 in St. Petersburg.”

  • “But he said he was unprepared for the vitriol that followed: The anti-vaccinationFacebook messages, the sudden spam calls, the misspelled email that warned the band their next show could be their ‘last’ ...” READ MORE

CYBERSECURITY

What would you do if your business was hit with a ransomware attack? “A few days after Thanksgiving last year, Kurtis Minder got a message from a man whose small construction-engineering firm in upstate New York had been hacked. Minder and his security company, GroupSense, get calls and e-mails like this all the time now, many of them tinged with panic. An employee at a brewery, or a printshop, or a Web-design company would show up for work one morning and find all the computer files locked and a ransom note demanding a cryptocurrency payment to release them.”

  • “For the past year, Minder, who is forty-four years old, has been managing the fraught discussions between companies and hackers as a ransomware negotiator, a role that didn’t exist only a few years ago.”

  • “The half-dozen ransomware-negotiation specialists, and the insurance companies they regularly partner with, help people navigate the world of cyber extortion. But they’ve also been accused of abetting crime by facilitating payments to hackers.”

  • “‘The people who reach out to me are upset,’ Minder told me. ‘They’re very, very upset.’” READ MORE

MANUFACTURING

These are not easy times for the two dozen domestic companies that have been making face masks: “Some of the slackening demand is tied to the loosening of masking guidelines by the Centers for Disease Control and Prevention, but industry experts say a bigger factor has been the return of inexpensive protective gear from China that began flooding the American market earlier this year.”

  • “In recent weeks, at least three companies have stopped producing masks and medical gowns, and several others have markedly scaled back production, among them Premium-PPE, a year-old surgical mask-maker in Virginia that recently laid off most of its 280 workers.”

  • “‘Our industry is in break-glass mode,’ said Brent Dillie, the co-owner of the company. Like other start-ups, the company got into the mask business after China, the world’s largest producer of protective medical gear, halted exports at the start of the pandemic.”

  • “‘Six months from now, many of us won’t be around and that won’t be good for America the next time there’s a national health emergency.’” READ MORE

HUMAN RESOURCES

Companies short of workers are turning to teenagers: “For American teenagers looking for work, this may be the best summer in years. As companies try to go from hardly staffed to fully staffed practically overnight, teens appear to be winning out more than any demographic group. The share of 16- to 19-year-olds who are working hasn’t been this high since 2008, before the unfolding global financial crisis sent employment plummeting.”

  • “Small businesses in a database compiled by the payroll platform Gusto have been raising teen wages in service sector jobs in recent months, said Luke Pardue, an economist at the company.”

  • “Teens took a hit at the onset of the pandemic but got back to their pre-coronavirus wage levels in March 2021 and have spent the first part of May seeing their wages accelerate above that.” READ MORE

CONSTRUCTION

Home builders can’t keep up with demand: “Tired of being cooped up, eager to take advantage of low interest rates and increasingly willing to move two or more hours from the urban core, buyers have propelled new home construction to its highest level since 2006. That was the year when the mid-2000s housing bubble started deflating on its way to what would become the financial crisis and Great Recession. After a prolonged period of anemic sales since the housing bust, home builders now risk losing business because they can’t supply enough inventory.”

  • “Just as notable as the level of new construction is where it is taking place. From the mountains of central Pennsylvania to the one-stoplight towns beyond Houston’s endless expanse to California’s San Joaquin Valley, developers are racing to build homes in areas that buyers used to judge beyond the outer limits of an acceptable commute.”

  • “‘People can move to where it’s more affordable,’ said John Burns, chief executive of John Burns Real Estate Consulting. ‘This is a permanent game-changer in the housing market.’” READ MORE

ECOMMERCE

America’s online shoppers have decided they really like buying now and paying later: “Services that offer financing to shoppers at the point of checkout are booming in the U.S. The pitch to consumers — mostly younger shoppers — is to spread the cost over several weeks or months. Depending on the terms, it might be interest free. These services — Klarna, Affirm, Afterpay, and others — have exploded over the past 12 months as the Covid-19 pandemic turned online shopping into the norm..”

  • “Klarna, founded in Sweden in 2005, is so popular that it is already Europe's most valuable startup.”

  • “By 2025, services like Klarna and Affirm could be processing $1 trillion annually in gross merchandise volume, according to one estimate by CB Insights.” READ MORE

LOGISTICS

Now there’s a shortage of chlorine—just in time for pool season: “Stuck at home because of the coronavirus pandemic, people who found themselves sitting on savings from canceled vacations and other cutbacks built pools in record numbers last year to make quarantine more enjoyable. Then a fire at the end of last summer caused a shutdown at the plant that produces most of the country’s supply of chlorine tablets. This year, the arrival of Memorial Day and pool season has industry experts warning of a shortage that threatens to disrupt backyard plans from coast to coast.”

  • “‘There is a very, very good possibility that we’re going to run out of chlorine tablets,’ said Rudy Stankowitz, a swimming pool consultant and educator with more than 30 years of experience in the industry. ‘People should start looking into alternative methods of sanitizing swimming pools.’” READ MORE

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