Is Texting the New Email?
Is Texting the New Email?
And is that a good thing? Either way, retailers are finding consumers are much more likely to open a text ad than an email ad.
Good morning!
Here are today’s highlights:
We may be experiencing a revolution in entrepreneurship.
With leasing expenses soaring, more businesses are buying office condos.
Brexit has not been kind to smaller businesses in the U.K.
Why Brent Beshore loves Twitter but needed a break.
MARKETING
More retailers are texting their customers: “So you bought some Dr. Squatch soap. That’s just a start. Dr. Squatch wants more from your relationship. Dr. Squatch wants to text you. Starting in late 2020, the men’s soap company began offering customers a discount if they signed up for text messages, which it uses to communicate promotions and new products an average of five times a month. It’s been ridiculously successful. The money spent texting goes some seven times further than any Instagram ad, with text messages now driving as much as 20 percent of the company’s over $200 million in revenue.”
“‘Brands are realizing that there’s at least a subset of their audience, if not the majority of their audience, that would prefer to be contacted through this way,’ said Adam Turner, CEO of Postscript, which powers text-message marketing for Dr. Squatch and other retailers.”
“It’s hard to beat the open rate, which borders on 100 percent thanks to the fact that Americans check their phones about 96 times a day.”
“‘My gut here is that SMS will be the new email,’ said Tejas Konduru, CEO of mobile commerce platform Via, referring to ‘short message service,’ the technical name for texts. ‘Even two years ago there was a hesitation that text seemed pretty intrusive. Now it’s the No. 1 channel everybody wants to invest in.’” READ MORE
ENTREPRENEURSHIP
The pandemic-inspired revolution in side hustles and solo projects may just be getting started: “It's an economic and cultural revolution every bit as sweeping as the pandemic-fueled boom in remote work, but one that has been far less heralded in the press and popular culture. ‘The numbers are remarkable,’ John Haltiwanger, a professor of economics at the University of Maryland who is an expert on business formation, told me. ‘People see that there are market opportunities out there, given the new normal we're headed towards.’”
“In 1984, according to one analysis of Census Bureau data, the rate stood at 13.1 percent. By 2006, it was down to 10.1 percent, and in 2019 it stood at only 8.2 percent.”
“During the Great Recession, applications by likely employers fell, while likely nonemployer applications rose, suggesting that many founders were just trying to cobble together a source of income for themselves.”
“But during the pandemic, both kinds of applications rose — meaning that many founders envisioned employing not only themselves but others as well.” READ MORE
OFFICE SPACE
For small businesses, the opportunities to buy space are growing: “In some hot U.S. markets, developers have started selling office ‘condos’ to employers, betting that high lease prices and inflation may make the idea of owning small office spaces an increasingly attractive proposition. The vast majority of white-collar employers rent or lease their office space from landlords; the biggest companies, like Apple and Google, own whole campuses. It’s much rarer to see small business owners buy their office space outright. A few developers in Austin, Nashville, and San Diego are pitching to change that, selling units to solo entrepreneurs, low-headcount companies, and small medical practices that want to invest in their own commercial real estate.”
“‘Basically, our market is small, medium-sized businesses who are like, I’ll own space for the same price as it is to rent, which it basically is,’ said Byron Smith, the co-founder of the commercial developer XSpace.”
“XSpace started out by selling storage units in Australia, and has since expanded into Austin, Texas, with a commercial condo model that caters to entrepreneurs and creatives.”
“These developers didn’t invent the concept of selling commercial condos, which had a heyday in the early 2000s, says Jilliene Helman, founder and CEO of RealtyMogul, a crowdfunding platform for Realtors.”
“‘It’s very much gone out of favor, and you’re starting to see it creep back up, given what’s going on with rental rates, given what’s going on with inflation,’ she said.” READ MORE
SUBSCRIPTION PRICING
According to Truebill, these are the subscriptions people cancel the most: “Subscriptions for Audible, Time, Amazon Kindle, The New York Times, and BeenVerified — in that order — have the highest cancellation rates, Truebill found based on the percentage of users who have a subscription and canceled last month. All of those subscriptions have cancellation rates above 15 percent, with Audible’s rate sitting about 18 percent. [Truebill’s chief revenue officer Yahya] Mokhtarzada said high cancellation rates aren’t always the sign of a bad product. Audible, for instance, has a massive user base.”
“The least-canceled subscriptions include productivity services like Wix, Squarespace, Dropbox, and Zoom.”
“There’s a box for just about everything, from a Japanese food subscription service to niche dating.”
“Mokhtarzada said he likes popular boxes like The Farmer’s Dog for pet food, sock boxes and Imperfect Foods, which delivers a weekly staple of fruits and vegetables that would otherwise be thrown away.” READ MORE
THE ECONOMY
The fall in GDP masks a strong underlying economy: “The Commerce Department on Thursday reported that GDP fell a seasonally adjusted 1.4 percent in the first quarter from the final quarter of last year, at an annual rate, marking its first drop since the second quarter of 2020, when the pandemic slammed into the economy. But the report also showed that private demand actually strengthened, with spending by U.S. consumers, businesses and other private purchasers growing at a 3.7 percent annual rate in the first quarter versus the fourth quarter’s 2.6 percent. So, what gives?”
“For starters, the trade deficit expanded, meaning that some U.S. demand was basically met by other countries’ production. That alone shaved 3.2 percentage points off GDP growth.”
“A growing trade deficit shouldn’t be taken lightly, but in the first quarter it was brought on in part by the roiling effects of the pandemic on international trade: A lot of shipments that would otherwise have landed in the U.S. this fall landed in the winter instead.”
“The fact remains, however, that shortages have left inventories woefully low, and that, given the opportunity, companies will continue to restock their warehouses through the year. That should be a plus for GDP in the quarters to come.” READ MORE
LOGISTICS
Railroad gridlock is bogging down the farm sector: “Delayed trains and scarce railcars are impeding crop shipments this spring, causing grain storage facilities to fill up, backing up fertilizer shipments and temporarily shutting down production at ethanol producing plants, company executives said. Railroad operators said they are working to fix the problems, but struggling to find enough workers. The railroad slowdown has grain companies looking for other ways to move farm commodities across the country, leading to higher transportation costs that company officials said will ultimately increase food prices for consumers.”
“Food globally is already becoming more expensive, with food makers paying more for fuel, ingredients, and labor.”
“‘We are seeing a disruption across the industry from top to bottom,’ said Todd Becker, chief executive of Green Plains, a major producer of ethanol and animal feed ingredients. ‘Transportation is a big driver of food prices.’”
“For the week ending April 14, bids for railcar delivery in April reached $3,750, over $3,000 above average, according to the USDA report.” READ MORE
HUMAN RESOURCES
New York’s city council voted to postpone a law that would require businesses to list a salary range with job postings: “The council on Thursday approved a bill that, if enacted, would revise and delay the city’s existing salary disclosure law until Nov. 1, giving employers more than five additional months to prepare to include pay information on job listings. The law is currently set to go into effect May 15. A bill becomes law if the mayor signs or takes no action within 30 days of passage. A spokeswoman for Mayor Eric Adams didn’t immediately respond to a request for comment.” READ MORE
INTERNATIONAL
The Economist says Brexit has clobbered smaller businesses: “Brexit was always going to be a bother. The question was how much of one it would be. Although industries like financial services have not suffered the disaster some predicted, it is not hard to find aggravated business owners complaining that leaving the E.U. has brought baffling bureaucracy, higher costs, and frustrating delays. A flurry of new studies quantifies the pain.”
“Catherine Mann of the Bank of England has pointed out that by the end of 2021 consumer prices were around 4 percent higher than in otherwise comparable economies that did not experience Brexit.” READ MORE
THE ENTREPRENEURIAL LIFE
Brent Beshore says he loves Twitter but he needed a break (and from some other things as well). PLUS: Here’s an interview I did with Brent in which he explains his radical approach to investing in traditional small businesses.
THE 21 HATS PODCAST
Setting an Anchor Price: This week, Liz Picarazzi tells Shawn Busse and Paul Downs about the remarkable, dream-come-true, my-product-in-Times Square PR gift she just received. Of course, this is entrepreneurship we’re talking about, so even when dreams come true, there tend to be complications. Liz’s business is getting a wave of publicity at a time when her fabricator in Shanghai has been locked down for almost four weeks. She’s talking to domestic fabricators as well, but they, too, will be dependent on raw materials that have to come from China. It’s a problem, she tells us.
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