Is ‘Good to Great’ Still Great?

Today’s Highlights: Now Amazon is going after government contracts. It hasn’t been easy for landlords either. And should small businesses have boards?

THE 21 HATS PODCAST

Episode 54: Should Small Businesses Have Boards? This week, Stephanie Stuckey tells Paul Downs and Jay Goltz about seeking the guidance and perspective that a board of advisers could bring to Stuckey’s. But does a business have to be a certain size to warrant having a board? How do you recruit board members? How should they be compensated? And is a peer group, like Vistage, a better alternative? Plus: Uncovering a $140,000 cyber crime. Coping with the nightmare of shipping furniture. And Jay tells us why, if you listen to either the artists or the accountants in your business, you’re likely to go broke.

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MANAGEMENT

Twenty years later, Jim Collins’ ‘Good to Great’ doesn’t read quite the same way: “Collins isn’t the first management thinker to imagine a company as a machine; it remains the dominant metaphor in business books perhaps because that means all the messy human stuff can be left out. Collins doesn’t care much about markets, competition, the shifting sands of cultural mores. In his quest for timeless truths, context cannot matter. But it does matter. Winston Churchill — who Collins loves to cite as an example to follow — was a great leader in wartime but not before or afterward. He saved lives in Europe but lost millions in Bengal.”

• “Collins’ definition of greatness is bewilderingly arbitrary: Fortune 500 companies between 1964 and 1999 that achieved returns 6.9 times the stock market over 15 years. Out of 1,435 companies, just 11 meet these criteria.”

• “Why consider only publicly traded companies and ignore private, family-, or employee-owned businesses? Would a 14-year run or returns 6.8 times the market make a business merely good?”

• “The belief on which the book relies, that stock price alone anoints the great, makes reading it today feel inadequate, ideological, and naive. Good in parts perhaps, but not great.” READ MORE

PPP LOANS

Changes to the rules came too late for some of the smallest businesses: “‘These changes that they’ve done are supposed to be to help someone like me, and they’re not,’ said Lorraine Lyman, who owns Savvy Success Unlimited, an Oakland, Calif., career coaching and college admissions consulting firm. Ms. Lyman, 45, runs her business as a sole proprietorship and moved quickly to get a second loan through the Paycheck Protection Program when the initiative reopened in January. That was before the Biden administration announced changes to how the program calculates funding amounts for sole proprietors and other very small businesses.”

• “She estimates the changes could have resulted in a $20,833 loan, versus the nearly $7,800 she received.”

• “But current guidelines don’t allow borrowers to seek additional funding if their loans were finalized before the first week of March, when the changes took effect.” READ MORE

MARKETING

Immigrant entrepreneurs are working with brand strategists to introduce unfamiliar products: “Fonio, a cereal grain imported from West Africa, was once relegated to the shelves of tiny grocery stores frequented by immigrants primarily from Senegal and Mali. But it has gradually made its way to Whole Foods, where pouches decorated with a painted map of Africa are nestled amid packages of rice and lentils, aimed at a broader range of American consumers. That journey was pushed in part by a Brooklyn company, Yolélé, which roughly means ‘let the good times roll’ in Fula, a West African language. Yolélé also offers seasoned fonio pilafs, a line of fonio chips and, coming soon, fonio flour.”

• “‘People really do shop with their eyes,’ said Chris Manca, a buyer at Whole Foods Market focusing on local products for the company’s stores in New York, New Jersey and Connecticut. ‘If your product doesn’t really jump off the shelf and catch your eye, it’s going to get overlooked.’”

• “The global food industry has changed substantially over the past several decades, Mr. Lempert said. New foreign food brands today tend to celebrate their origins, whereas businesses just 10 years ago might have pushed to Americanize their products.”

• “‘There was a stigma there,’ he said.” READ MORE

GOVERNMENT CONTRACTING

Now, Amazon is going after government spending: “A major change is coming to how the federal government buys commercial goods, and it's a big win for Amazon — but trade groups representing smaller sellers and distributors are less thrilled with the arrangement. The new program, part of the Commercial Platforms Initiative, allows government purchasers to buy office supplies, furniture, and IT equipment directly from select online stores, rather than wait weeks or months for the traditional procurement process. Last year, the government awarded the contract to Amazon Business, Overstock, and Thermo Fisher Scientific for a three-year pilot. The General Services Administration, which oversees the program, estimates the government will spend some $18 billion at these stores across the three years of the pilot.”

• “Amazon pitches the program as a win-win for everybody, helping connect small businesses and suppliers with government customers.”

• “However, Amazon's involvement in the program has been met with strident opposition from groups representing smaller suppliers and government contractors, who fear the online retail giant will take an undue share of each sale or otherwise squeeze them out — echoing concerns raised by critics over Amazon's dominance in the mainstream e-commerce sector.” READ MORE

STARTUPS

Saltbox helps small ecommerce companies get off the ground: “Tyler Scriven, a former Palantir exec, founded Saltbox in 2019 to fit what he sees as a growing segment of the small business world. These converted warehouses serve as office space, logistics hubs, and storage space for e-commerce startups that prefer flexible, month-to-month leases. The company says its mix of features falls ‘in that sweet spot between coworking and raw warehouse space.’ Scriven believes his timing was aided by the pandemic. Saltbox’s original Atlanta location, which opened in December 2019, hit full occupancy by February 2020, and he just opened a new facility in Dallas. He hopes to expand to up to eight additional markets by the end of the year.”

• “‘The infrastructure needed to support a digital economy is much more complex,’ Scriven said. ‘Every big company has the money and capital, but small businesses by and large still lack the right infrastructure.’” READ MORE

COMMERCIAL REAL ESTATE

It hasn’t been easy for landlords either: “It’s been easily the toughest year professionally for me, and I started working in 2008 so my first introduction into real estate was a financial crisis. I distinctly remember that time period, and this is really hard. On one hand, you want to do the right thing, but there are limited concessions for landlords. Our biggest expenses are going to be property tax and our mortgage. There’s no deferral on our property-tax bills, and there are limited options when it comes to mortgage payments. At the absolute worst of it, we were making 50 percent of our rent collections, maybe even lower. We’ve weathered the worst of it, and we’ve started to see the end of the tunnel. We have seen some recovery in apartments.”

• “There was a flood of people coming back to NYC sometime after January, but commercial real estate has been slower in recovery. We’ve had an incredibly hard time in Chinatown specifically but really for everyone.”

• “And it’s been compounded by the fact that we’ve seen this uptick in anti-Asian sentiment, and that’s really tough and those issues have to be addressed.”

• “It’s a little tough to talk about anti-Asian racism because, chances are, if you ask any Asian American in New York City if they’ve been on the receiving end of harassment or violence, the answer is most likely yes.” READ MORE

PETS

Between 2019 and 2020, the amount of venture capital invested in pet companies grew almost 30 percent: “‘Last year, we saw a macro trend of humanization of pets, where people were treating pets as members of the family, and therefore, spending more money on food, grooming, treats and walking,’ Nick Stocks, general partner of White Star Capital, told Crunchbase News. U.S. spending on pets reached nearly $100 billion in 2020, up from $95.7 billion in 2019, according to the American Pet Products Association, which also found that owners spend an average of $1,380 for dogs and $908 for cats annually. As people shifted their spending online, the pet space also benefited. The pet e-commerce sector is poised to be 35 percent of total spending by 2024, up from 22 percent in 2019 and just 7 percent in 2014, Stocks said. That kind of huge volume is boosting everyone, including the big dogs BarkBox, Rover and Chewy.”

• “Venture capital flowing into the space is following the trend. Stocks estimates funding to startups grew 10x over the last five years.”

• “San Francisco-based Fuzzy – The Pet Parent Company, a subscription-based pet health care startup, raising $18 million in Series B funding earlier this month, led by Greycroft.”

• New York-based Fi inked a $30 million Series B round in February for its smart dog collars, led by Longview Partners.” READ MORE

THE COVID ECONOMY

What did the pandemic teach us about the restaurant industry? “We learned that chefs can run rotten kitchens even as they preach the virtues of kindness to the public. That, even during a global health crisis, owners will flagrantly jeopardize workers’ safety if it means more money. That diners still see servers as objects in their periphery, and that the toll of catering to every entitled customer can become unmanageable. That being labeled ‘essential’ is not the honor it sounds like. We learned that, even in death, the crucial contributions of a talented-but-unknown career cook can go unrecognized by the famous chef whose name is on the restaurant. We learned, in short, that there is too much suffering, at every level.”

• “The overworked dish crews who are forced to close restaurants at night before opening them the next morning, often with no sleep in between.”

• “The line cooks and servers who silently endure verbal attacks from racist customers and abusive managers.”

• “The owners whose very livelihoods are at risk because of the cruel financial realities of this past year unable to find meaningful government support when it mattered most, even as those same leaders demanded that dining rooms remain dark.” READ MORE