Discover more from The 21 Hats Morning Report
Instagram’s Changes Leave Businesses Reeling
Shifting its algorithm to emphasize video over text—and to try to keep up with TikTok—has upended many of the platform’s most successful users.
Here are today’s highlights:
Will the Great Resignation be followed by the Great Regret?
How one founder learned to ignore SCORE and differentiate her product.
Can an on-demand public transit startup bring back bus riders lost over the pandemic?
Instagram offers yet another reminder that no business should be dependent on any one platform: “Since Instagram arrived in 2010, sharing food photos, writing a thoughtful caption and adding relevant hashtags have been the foundation of many small food businesses’ social media strategy and a low-cost form of advertising. Then, at the end of 2021, Instagram’s parent company, Meta, changed the platform’s algorithm to prioritize videos, called Reels. Accounts that don’t regularly post the short-form videos appear below those that have embraced the format in users’ Instagram feeds, resulting in a notable drop in engagement on posts — and, in turn, sales — for many small businesses.”
“Instagram tells its users that successful Reels are high-quality; use text, filters and camera effects; are set to music and trending sounds; and are ‘entertaining and fun,’ featuring content that ‘delights people, grabs their attention, makes them laugh or has a fun surprise or twist.’”
“This is no small feat for business owners and social editors who lack video-editing skills. Abigail Knoff, the marketing director at the mushroom company Smallhold, notes that it’s a much bigger lift for her team.”
“The planning, editing and voice-over and music skills for more produced video content are very different from still iPhone photography,’ she said. Ms. Knoff is left with two options: ‘We can occasionally work with freelancers who are, rightfully so, higher cost, or be patient as we learn these new skills on the job.’”
“One newly favored way for a company to end reliance on Instagram’s algorithm: Move to another platform. PJ Monte, the founder of Monte’s Fine Foods, turned his attention away from Instagram and toward TikTok. ‘With basically no followers on TikTok, I’ve had two videos gain a few million views,’ Mr. Monte said.” READ MORE
Gene Marks believes the Great Resignation may be followed by the Great Regret: “Are all these workers leaving their jobs for new jobs finding that the new jobs are that much better than their old jobs? That their new employers are that much better than their existing employers? Or is it possible that Joe is taking a new job that’s replacing Susan, who left that job for the same reason that Joe is leaving his job? Yes, there’s lots of turnover and lots of people changing jobs. But given the fact that most are likely just swapping these jobs, maybe the problem isn’t all with the employer. Perhaps employees are being a bit naive too.”
“That theory has been given credence by another study released this week by the job search site the Daily Muse. Its study of more than 2,500 workers found that almost three-quarters of them (72 percent) experienced either ‘surprise or regret’ that the new position or new company they quit their job for turned out to be ‘very different’ from what they were led to believe.”
“Nearly half (48 percent) of these workers said they would try to get their old job back thanks to a phenomenon that The Daily Muse is calling ‘shift shock.’” READ MORE
BuildStrong Academy, which trains construction workers, is expanding nationally: “A nonprofit organization called BuildStrong Academy that trains construction workers is expanding nationally, in response to a labor shortage that has prevented home builders from meeting demand. Home-building activity has increased in the past two years as historically low mortgage-interest rates and a rise in remote work have fueled home-buying demand. Housing starts rose in February to the highest level since 2006, according to the Commerce Department. But builders have struggled to produce homes fast enough because of a shortage of construction workers and tradespeople, supply-chain issues, volatile material costs and a limited supply of ready-to-build land.”
“Many builders restricted sales last year to make sure they didn’t sell more homes than they could build.”
“About 90 percent of home builders surveyed by housing-market research firm Zonda in March said labor disruptions were limiting how much they could build, up from 42 percent in March 2021.” READ MORE
One in three U.S. workers still makes less than $15 an hour: “Nearly 52 million U.S. workers — or 32 percent of the country’s workforce — earn less than $15 an hour, according to a report published Tuesday by Oxfam America. The data help quantify how many Americans could be impacted by the Raise the Wage Act, which would set a $15 federal hourly minimum and has been pending in Congress since January 2021.” READ MORE
Abena Foli built POKS Spices by ignoring a would-be mentor and learning how to differentiate her product: “Based in greater Dallas, Texas, the company produces West African pepper-based, dry seasoning blends: mild, spicy and extra spicy. The blends feature West Africa’s ‘Holy Trinity’ of ingredients, described by Foli as chili peppers, ginger and onion (or garlic). ‘There is no West African dish that will not have the trio,’ says Foli. The ratios may vary, the heat intensity may vary, whether they’re making Jollof rice or a stew; people are going to be blending these three.’”
“In the very beginning, I felt that if I focused on the West African aspect, given media stereotypes, negative stereotypes, who would want to pick it up? So I just marketed it as all-purpose seasoning. But then I asked myself, if people are buying an all-purpose seasoning, they’re not going to pick up the new brand they’ve never tasted before. How am I differentiating myself on the market?”
“Our value proposition is that this is a West African seasoning blend. It’s my cultural heritage and I need not be ashamed of that. I need to be proud of it. I need to be bold with that messaging.”
“We were having conversations in 2018, should we continue to do this? We were profitable, but our profit margin was very low. I wanted to continue with the business because it’s my passion but felt I needed to understand the financial aspect better; I’m a scientist, not a finance person.”
“I went to the SBA website that led to the SCORE mentorship program and I signed up for a mentor. We scheduled a call. I was talking to this person, explaining to him our situation and his feedback after 15 minutes or so was, ‘Well, I don’t think you should be doing this business then.’” READ MORE
The Routing Company brings ride-hailing to public transit: “Led by CEO James Cox, formerly the global head of product operations at Uber, the 40-person Boston startup has developed rider, driver and fleet management software to rapidly assess where riders want to be picked up, and how to gather them into a shared bus or shuttle efficiently. Unlike carpool-style services such as Lyft Line and UberPool, which only place two to several riders into a driver’s vehicle, The Routing Company can group 18 people into a bus or shuttle with the vehicles arriving to pick up a passenger between 2 and 12 minutes from the time they hail their ride. Riders can be picked up where they are, rather than walking to a stop on a fixed route.”
“The company has helped deliver more than 75,000 rides to date in pilot and commercial programs around the world, including in Houston and Seattle in the U.S., multiple smaller towns on the West coast of Scotland and in Andorra, a principality between Spain and France.” READ MORE
The rise in gas prices has more consumers considering electric vehicles: “In the week that ended March 13, one-quarter of shoppers on Edmunds.com considered a hybrid, plug-in hybrid or electric vehicle, a 39 percent increase from the previous week and an 84 percent surge from the same week in February. More than two-thirds of Americans surveyed by consumer-tracker Piplsay said in a report last week that they are nervous about rising fuel prices, and 49 percent said the running cost of a gasoline-powered vehicle isn’t affordable. Nearly half of those surveyed said EVs could provide a viable alternative to internal-combustion-engine cars, Piplsay found.”
“Customers not interested in buying an EV remained concerned about high EV prices, limited charging infrastructure and the vehicles’ range capacity, Edmunds said.”
“EVs are also in short supply, with some buyers having to wait a year or two for delivery.” READ MORE
The Biden administration and Congress are talking about ocean shipping prices, but it’s not clear there’s anything government can do: “The price to transport a container from China to the West Coast of the United States costs 12 times as much as it did two years ago, while the time it takes a container to make that journey has nearly doubled. That has pushed up costs for companies that source products or parts from overseas, seeping into what consumers pay. Mr. Biden has pledged to try to lower costs by increasing competition in the shipping industry, which is dominated by a handful of foreign-owned ocean carriers. He has cited the industry’s record profits and directed his administration to provide more support for investigations into antitrust violations and other unfair practices.”
“Global supply chains are still plagued by delays and disruptions, including those stemming from the Russian invasion of Ukraine and China’s broad lockdowns in Shenzhen, Shanghai and elsewhere.”
“The effect is expected to worsen in the coming months. Shipping rates typically take 12 to 18 months to fully pass through to consumer prices, said Nicholas Sly, an economist at the Federal Reserve Bank of Kansas City.” READ MORE
Okta has put thousands of businesses on alert over a security breach: “Okta, an authentication company used by thousands of organizations around the world, has now confirmed an attacker had access to one of its employees’ laptops for five days in January 2022 — but claims its service ‘has not been breached and remains fully operational.’ The disclosure comes as hacking group Lapsus$ has posted screenshots to its Telegram channel claiming to be of Okta’s internal systems, including one that appears to show Okta’s Slack channels, and another with a Cloudflare interface.”
“Any hack of Okta could have major ramifications for the companies, universities, and government agencies that depend upon Okta to authenticate user access to internal systems.”
“But in a statement on Tuesday afternoon, Okta now says that an attacker would only have had limited access during that five-day period — limited enough that the company claims 'there are no corrective actions that need to be taken by our customers.’” READ MORE
THE RUSSIAN INVASION
Before the war, a new tech economy was taking hold in Eastern Europe: “Jacob Udodov’s software start-up was a symbol of Eastern Europe’s promising tech economy. From his base in Latvia, he built a team of developers in Ukraine and Russia who proved that the tech industry can work seamlessly across borders, Udodov said, ‘not tied to any location.’ That all changed at 8 a.m. on Feb. 24, when his wife shook him awake to say that Russian bombs were raining down on Ukraine. Udodov quickly opened his company’s group chat and urged his Ukrainian programmers to head west to the safest location. ‘My employees sent me a map of the aerial bombardment,’ Udodov recalled in a recent interview.”
“It showed strikes all across the country, from Lviv to Kharkiv. ‘They sent me this map and said, There is no safe destination in Ukraine.’”
“Nearly a month later, the Ukrainian employees of his start-up, Bordio, are taking cover in bomb shelters, struggling with power and Internet cuts and saying goodbye to family members as the civilian population scatters to escape Russian troops.” READ MORE
THE 21 HATS PODCAST
Why I Sold 21 Hats: This week, the tables are turned, as I announce the sale of 21 Hats and take questions from Shawn Busse, Karen Clark Cole, and Jay Goltz. The buyer is Toby Scammell, founder of Womply, which provides software services to small businesses and helped more than a million of them obtain Paycheck Protection Program loans. I will continue as editor-in-chief, but as we discuss, much of what this will mean for 21 Hats has yet to be determined—including, for example, whether the new entity will keep the 21 Hats name. Shawn, Karen, and Jay share their thoughts on that and also talk about how Karen solves problems for her big tech clients—and what smaller businesses can learn from her process. And Jay explains a change he’s making to his 401(k) plan that he believes will make it fairer for all of his employees.
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