'If Only It Had Burned Down'

Today’s Highlights: At New Jersey's American Dream mall, the nightmare continues. A historic opportunity for states to back businesses. And cardboard has never been more expensive.

Editor’s note: The Morning Report will return on Monday. Enjoy the holiday weekend.


Victor Hwang, founder of Right to Start, says states are about to get an infusion of capital to back businesses—and they better not blow it: “Entrepreneurs are the front line of economic recovery in America, since young businesses create almost all job growth. Yet, capital to grow emerging businesses is unevenly distributed. Over 83 percent of businesses don’t access venture capital or traditional banking, and 73 percent of venture capital is concentrated in just three states: California, New York and Massachusetts. That leaves out most of the nation and all but the best-connected entrepreneurs. To address that gap, the recently passed $1.9 trillion federal stimulus package contains $10 billion for the State Small Business Credit Initiative, which will offer states and territories a once-in-a-generation opportunity to transform the capital landscape for entrepreneurs.”

  • “If SSBCI is treated like just a shot of adrenaline—a temporary infusion of money into a few businesses—the moment will be wasted.”

  • If it’s used to build long-term capital infrastructure, it could greatly expand the availability of capital for years to come, helping countless businesses grow and create jobs. READ MORE

Ramon Ray, the founder of SmartHustle.com, a tireless advocate for small businesses, and a loyal friend of 21 Hats, has been named NetSuite’s first-ever entrepreneur in residence: “Ramon will support NetSuite’s continued success in supporting small and medium businesses as they look to scale and grow. ‘We’re excited to partner with Ramon Ray, bringing his high energy and entrepreneurial experience, to help us inspire, educate and better serve business owners and entrepreneurs,’ said Jennifer Smith, VP of Communications, Oracle NetSuite.” MORE HERE


Cardboard boxes have never been so expensive: “Stay-at-home orders and stimulus checks fueled a banner year for e-commerce and a run on shipping boxes. U.S. producers in 2020 churned out nearly 407 billion square feet of corrugated product, from dotcom delivery boxes to watermelon crates, according to the Fibre Box Association. The year-over-year rise was 3.4 percent, equivalent to about 477 square miles of additional corrugated board. Enough to cover New York City and then some. The demand prompted producers to raise prices to new highs in autumn and again recently, adding to the supply-chain woes piling up on businesses as the economy reopens.”

  • “Already contending with record wood prices, scarce shipping containers and fast-rising freight, cabinetmaker John K. Morgan now faces more costly corrugated board.”

  • “His Green Forest Cabinetry is paying 22 percent more for boxes than a year ago. Bales of corrugated board, which are folded into custom packaging at the company’s Chesapeake, Va., factory, cost nearly 10 percent more and he has been warned by his supplier that prices are headed higher.” READ MORE

Inventory shortages are making car buyers desperate: “U.S. auto sales surged by more than 8 percent in the first three months of the year, according to analysts’ estimates. The projected gain was powered by higher demand in anticipation of a return to offices and everyday travel as vaccination rates exceeded one-quarter of the population. Greater confidence in the economy spurred purchases as did fear of lower supplies of cars due to chip shortages. That has left consumers scrambling for any steering wheel they can lay their hands on, accepting less-than-optimal colors, features and even swapping to a different model entirely if they must.”

  • “‘There’s a little FOMO going on here, fear of missing out,’  said Jeff Schuster, president of the Americas and global vehicle forecasting at researcher LMC Automotive. ‘You take what you can get right now.’” READ MORE

France is heading into four weeks of lockdown: “Mr. Macron said restrictions that currently apply only to Paris and other hard-hit areas would be extended across the country for four weeks, starting Saturday evening. Schools will shut for three weeks beginning Monday, Mr. Macron said, with spring break being shifted to coincide with the last two weeks of the shutdown. Elementary-school students will return to in-person classes after the vacation, while middle- and high-school students will return to the classroom a week later, Mr. Macron said. Unlike a year ago at the start of the pandemic, the public won’t be required to fill out a form to leave the house during France’s third nationwide lockdown.”

  • “In an attempt to cushion France’s economy, Mr. Macron left the country relatively open during the depths of winter and then hewed to softer restrictions in mid-March as infections surged and intensive-care units in Paris overflowed.” READ MORE


Ensemble has an expense-tracking app that helps divorced parents avoid arguing about money: “At the age of 14, Jacklyn Rome saw firsthand how divorce can impact families, and how arguing about finances both during and after the process can impact children. The experience stuck with her. As an adult, after leading new product launches at Uber and Blue Apron,  Rome came up with the concept behind her startup, Ensemble. The expense tracking app quietly launched in the App Store in 2020 with the mission of reducing tension among co-parents and making sure kids’ needs aren’t negatively impacted by a divorce.”

  • “Today, Ensemble is coming out of stealth with $3 million in seed funding from TTV Capital, Lerer Hippeau and Citi Ventures.”

  • “Roughly 30 percent of Ensemble’s downloads were organic in people discovering the app in the App Store, she said.”

  • “For now, the app is free. Ensemble plans to begin monetizing with the use of funds from its seed round.” READ MORE


If your business is active on Instagram, you probably want to know about Linktree: “Links aren’t allowed in post captions, and users are only allowed one URL in their bios, so many create a simple website with multiple links for their followers. Linktree, one of the most popular ‘link in bio’ services with more than 12 million users, announced today it has raised $45 million in Series B funding.” READ MORE


President Biden is letting the Trump administration’s work-visa ban expire: “The decision to let the ban expire will benefit a range of companies, from technology to landscaping, that say there aren’t American workers who can fill their specific needs, especially as they plan for an improving economic outlook. Tech companies left jobs unfilled or hired preferred employees to work remotely from abroad. Seasonal employers, including landscapers, resort owners and summer camps, use other visa types covered by the ban to employ foreign workers for their busy seasons, and families use them to hire au pairs.”

  • “Even with the ban lifted, immigration experts say it will be tough for many of the blocked workers to come to the U.S., since pandemic travel restrictions remain in effect for most of Europe, Brazil, China, Iran and South Africa, and consulates in those countries for the most part won’t issue visas.”

  • “Consulates in countries without blanket travel bans are still operating at reduced capacity, and in those cases, the State Department has instructed them to give priority to green cards over work visas.” READ MORE

Employees say remote work is leading to more—not less—harassment: “The survey of nearly 3,000 people around the country was conducted between May and February by Project Include, an advocacy group founded by Ellen Pao. ... Pao said the survey responses suggested that some of the increase in harassment and hostility may be the result of people working longer hours, the blurring of boundaries between work and home life, and more conversations where other office mates aren't present as witnesses.”

  • “‘There's the assumption that once everybody went separately and you were protected in your own home, that you wouldn't see the same level of harassment,’ she said. ‘It turned out that actually wasn't the case.’’’

  • “‘There's more one-on-one interaction when you're not in the office,’ Pao said. ‘People are seeing more harassment on chat and on email and on video conferencing.’" READ MORE

Amazon wants its workers back in their offices by fall: “The Seattle-based commerce giant told employees in a company-wide announcement that it is planning a ‘return to an office-centric culture as our baseline.’ The transition away from remote work is expected to wrap up by autumn, according to the announcement Tuesday. Working in offices, the note said, ‘enables us to invent, collaborate, and learn together most effectively.’ ... Amazon executives preach a culture of in-person collaboration within ‘two-pizza teams’ — groups small enough to be fed with two pizzas. Incoming Amazon CEO Andy Jassy knocked remote work in an interview with CNBC last year, saying staying home during the pandemic made it hard to ‘riff the same way’ with co-workers to develop new ideas.”

  • “Among Amazon employees, reaction was mixed and at times indignant, with some saying they would start looking for jobs elsewhere if Amazon forces them back to the office full time.”

  • “Several downtown Seattle business owners, though, greeted the news with joy: They say the return of Amazon workers to offices will be the linchpin of an economic recovery from the coronavirus pandemic.” READ MORE



The American Dream mall in New Jersey continues to be a nightmare: One year into the pandemic and amid financial restructuring, American Dream has a challenge ahead of itself to get the mall’s financials back on track. The company is counting on its many non-shopping amenities to make up for the lack of retail revenue, but it’s unclear if it will be enough. At the beginning of March, Kurt Hagen, SVP of development for American Dream developer Triple Five said in a public meeting, “It would have been much better if American Dream had burned down or a hurricane had hit it, financially. Because we would have been covered by insurance. But this pandemic that we didn’t see coming has not been covered, and it is the worst scenario imaginable.”

  • “He was speaking about the possibility that Triple Five would have to give up a 49 percent stake in Mall of America and the West Edmonton Mall in Canada to its financial lenders if it defaulted on the nearly $3 billion loan it took out to finance the development of American Dream.”

  • “That worry came to fruition last week when Triple Five did indeed default on its American Dream loan.” READ MORE

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Employee-owned co-ops and the investors who back them are attracting attention: “Among the most successful is Red Emma’s Bookstore Coffeehouse, where BRED Executive Director Kate Khatib is a worker-owner. Red Emma’s strives for maximum democracy, making decisions by consensus and giving each employee one ownership share and one vote. However, the model takes many forms. Some cooperatives have chief executive officers and division managers; a worker-owner’s ‘one vote’ can be limited to their representation on the board. What’s essential, says Khatib, is that workers at the lowest level of the organization are represented at the highest level of governance. ‘Co-ops will almost always choose the path with the most security for their workers,’ she says.”

  • “BRED offers co-ops ‘non-extractive’ loans in which debt service doesn’t begin right away.”

  • “Project officer Emily Lerman says she helps borrowers identify a point when they can start repayment as a percentage of net profits—a percentage that leaves the business sufficient working capital. ‘Your loan repayments should never be at the expense of the business’s success,’ she says.”

  • “About 25 new co-op firms emerge each year, with a growing number of those—now a quarter of them—having converted from some other form of ownership, according to the U.S. Federation of Worker Cooperatives. There are more than 400 worker cooperatives in the U.S.”

  • “ESOPs share equity with workers but generally don’t offer them the same level of control.” READ MORE


Episode 55: Confessions of an Entrepreneuraholic: This week, Jay Goltz explains his five-point test for whether he should start a new business: First, what kind of upside does the business have? Two, what’s it going to cost to launch? Three, what if things go bad? Can I get out of it? Four, is this going to be a pain in the ass? Is this going to require a ton of employees? Lastly, do you have some special expertise to leverage to give you an advantage in the marketplace? In this episode, Jay put his latest new-business scheme—an online art gallery—to the test. He does the same for Dana White's new cannabis business. And Laura Zander assesses the damage done to the yarn industry by two venture-backed rivals.