Is Your Business Too Dependent on You?
The very qualities that got you where you are could keep you from where you’re trying to go.
Good morning!
Here are today’s highlights:
WeWork offices are now just as full—and unprofitable—as they were before the pandemic.
Remote work has inspired a new generation of job titles.
Did Amazon buy iRobot because it wants to see into our homes?
On Dashboard, Gene Marks finds something else to hate about employees.
MANAGEMENT
What got you here may not get you there: “Owners are a particular breed. It takes grit, determination, passion, and robust amounts of optimism to start a small business. And that’s before we even get to making it succeed. And then, if by some miracle or sheer resilience you find yourself the owner of a successful business, one that you built from the ground up, it’s hard to let go. For some, it’s a question of ego, sure—it’s hard to see the crown on a new head. But really, it’s more nuanced than that. If you start a business with the long term in mind, you also know that there will be a time that the business must be able to run without you, whether you retire, lose interest, or get hit by a bus.”
“It’s easy to see how the very qualities that got you where you are could keep you from where you’re going, whether that’s growing your company, selling your company, or preparing for the unexpected.”
“The reality is that if your business is dependent on you, it’s less attractive to investors, harder to transition to new ownership, and unnecessarily chaotic to wrangle if something happens to you.” READ MORE
RETAIL
At the Green Place, plants are not the only attraction: “Many who enter the Green Place don’t come for the plants, and owner Jennifer Aragon is more than OK with that. They might paint their own terracotta pots, parking themselves at the plant shop’s center table to start crafting. They might bop their heads to Elvis or Blondie as they sip iced coffee on the couch. If they’re the guy from next door, they might come in on their daily lunch break to play the well-loved piano. Still, those who do come for the plants are never disappointed. The shop is thriving with heart-shaped caladiums, tropical marantas and soft-pink syngoniums.”
“My vision was really to make it feel like you were in someone’s house, like you come and it’s comfortable. About 90 percent of everything here is handmade or given or just donated, so everything has a story in its own sense — and that’s what I wanted.”
“I didn’t want it to feel very boutique-y; I wanted it to feel like you were like hanging out at your friend’s house, and I think we captured that.”
“It’s a scary thing, and I did it by myself. I don’t have a partner, so if it fails, then I fail by myself. But if it succeeds, then I succeed by myself.” READ MORE
THE ECONOMY
WeWork offices are now just as full as they were before the pandemic: “WeWork said offices were 72 percent full at the end of the second quarter, matching the occupancy rate from before the Covid-19 pandemic in late 2019 for the first time. WeWork’s occupancy rate — the percentage of its total desks that were rented out — dropped dramatically during the first year of the pandemic, when many tenants canceled their rental contracts and decided to work from home. That metric hit its low point of 46 percent a year later.”
“WeWork continues to lose money and is narrowing that gap more slowly than predicted: Last quarter it reported a $635 million loss when analysts expected $479 million.”
“Its loss in the second quarter is wider than the first quarter’s $504 million.” READ MORE
HUMAN RESOURCES
One indication that businesses have been in chaos the last few years is the profusion of new job titles: “LinkedIn has seen a 304 percent spike in titles that reference ‘hybrid work’ and a 60 percent increase in titles related to the future of work since the start of the pandemic. Far-reaching currents of malaise, coupled with churn in the labor market, have also led to the creation of new positions focused on boosting morale — though workers are often skeptical of what they really stand to gain from those feelings-focused roles. Here’s a glimpse of some of the new jobs arising from upheaval in the office, especially in tech and other companies that have embraced remote work.”
“Atlassian is a company that makes collaboration software, so when the company went remote in 2020, its leaders felt the pressure to keep the engines of collaboration running smoothly. Six months ago the company hired a ‘head of team anywhere’ ...”
“With mental health issues heightening, employers are wrestling with how they can provide support, especially given the gaps in actual mental health care. Claude Silver, for example, serves as ‘chief heart officer’ at the agency VaynerMedia, a title she has held for years, though it has grown more necessary during the pandemic.”
“Samantha Fisher, head of dynamic work at Okta, a cybersecurity company, wants employees to feel they can pick and choose routines that work best for them. ‘A less binary approach — you’re either remote or you’re not — is what we’re going to end up with,’ Ms. Fisher said.” READ MORE
DATA
Did Amazon buy IRobot because it wants to see inside our homes? “The vacuum company has detailed knowledge of our floor plans and, crucially, how they change. It knows where your kitchen is, which your kids’ rooms are, where your sofa is (and how new it is), and if you recently turned the guest room into a nursery. This type of data is digital gold to a company whose primary purpose is to sell you more stuff.”
“Amazon’s history of sharing data with police departments through its subsidiary Ring, combined with its ‘always listening (for the wake word)’ Echo smart speakers and now its thorough knowledge of your floor plan, give it a pretty complete picture of your daily life.”
“On its latest model, the j7, iRobot added a front-facing, AI-powered camera that, according to Angle, has detected more than 43 million objects in people’s homes. Other models have a low-resolution camera that points at the ceiling for navigation.”
“All this makes it likely this purchase isn’t about robotics; if that’s what Amazon wanted, it would have bought iRobot years ago. ... iRobot just reported a 30 percent revenue decline in the face of increasing competition.” READ MORE
OPPORTUNITIES
Thanks to a nonprofit, veterans are finding a new mission in beekeeping: “The two have been paired together through Hives for Heroes, a Houston-based nonprofit that helps veterans take up beekeeping by matching them with experienced mentors. The project tackles two disparate problems: the mental health risks that veterans face when they separate from service and the declining population of honeybees. Launched in 2018 by Marine Corps veteran Steve Jimenez, a Houstonian whose rough transition back to civilian life was transformed by beekeeping, the project has expanded to every state and matched more than 1,200 veterans—’newbees,’ in the group’s parlance—with beekeeping mentors.”
“Hives for Heroes aims to increase the number of qualified beekeepers who can tend honeybee colonies, thereby helping increase the number of bees. For the first year of the relationship, most pairs meet at the mentor’s bee yard.”
“After the first year, the mentor often gifts the new beekeeper a ‘split,’ a portion of bees from a hive that the mentee nurtures as it grows into its own colony. A few of the first veterans to join Hives for Heroes as newbees have now become mentors themselves.”
“The project harnesses veterans’ desire to be of service—they’re helping the environment, and some volunteer to relocate unwanted colonies from walls and trees—and can lead to a new career. Though not all beekeepers harvest honey, some do turn the hobby into a business.” READ MORE
MARKETING
Meta is bringing “click to message” to WhatsApp: “The Facebook parent company launched WhatsApp Business in 2018 with free, simple tools to help small businesses keep in touch with customers, offering a way for them to directly interact, search for products, and indicate purchasing interest. Soon the company will roll out a premium service to small businesses, and it’s doubling down on a newer advertising format called click-to-message, which allows consumers to click on a company’s ad within Facebook or Instagram and directly start a conversation with that business on Messenger, Instagram or WhatsApp.”
“‘Messaging is an international forum that everybody uses on an ongoing basis. It’s massive and it’s growing,’ said Brian Fitzgerald, managing director and senior equity research analyst at Wells Fargo Securities.”
“There’s considerable room for growth in the U.S., where WhatsApp is still a ‘a largely untapped resource by small businesses,’ said Rob Retzlaff, executive director of The Connected Commerce Council ...” READ MORE
POLICY
Bill Gates is all in on the Inflation Reduction Act: “This bill would catalyze a new era of American innovation. The ability of America’s universities and industries to innovate remains second to none, yet the country risks falling behind as other countries race to build their own clean energy economies. This legislation would help turn American energy innovations into American energy industries and unlock huge economic opportunities in the energy market. If it becomes law, few nations would have the capacity for producing homegrown clean energy like the United States.”
“I’ve spoken with corporate leaders who are eager for our government to act. Many have made big climate pledges and invested significant amounts in clean energy, both because they care about making good on their promises and because it’s good business.”
“Even more businesses are waiting on the sidelines for a strong signal from government that clean industries are a solid long-term investment.” READ MORE
Despite its dismal track record, private equity has once again managed to preserve the carried-interest loophole: “One of private equity’s main plays is the leveraged buyout, which involves borrowing huge sums of money to gobble up companies in the hopes of restructuring them and one day selling them for a gain. But the acquired companies — which range across just about every economic sector, from retailing to food to health care and housing — are often overloaded with debt to the point of unsustainability. They frequently slash jobs and benefits for employees, cut services and hike prices for consumers, and sometimes even endanger lives and undermine the social fabric.”
“Private equity firms presided over many of the largest retailer bankruptcies in the last decade — among them Toys ‘R’ Us, Sears, RadioShack and Payless ShoeSource — resulting in nearly 600,000 lost jobs, according to a 2019 study by several left-leaning economic policy advocates.”
“Other investigations have shown that when private equity firms buy houses and apartments, rents and evictions soar. When they buy hospitals and doctors’ practices, the cost of care shoots up. When they buy nursing homes, patient mortality rises.”
“It is unclear even if private equity pays off for the investors — like university endowments, public pension funds and wealthy individuals — who put money into the industry in the hopes of outsize returns.”
“Since at least 2006, according to a study by the economist Ludovic Phalippou, the performance of the largest private equity funds has essentially matched returns of comparable publicly traded companies.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Why Gene Marks Hates Employees, Part 492: This week, Gene talks about how he recently had a mild case of Covid but worked right through it, which got him to wondering why employees—in his view—do not seem to be similarly dedicated. In fact, Gene believes that many employees are using ‘Covid hysteria’ as a pretext to avoid work and catch up on their TV watching. Plus, Gene explains why he thinks Wawa, a chain of convenience stores, is a good model for his own business. And he tries to make sense of a recessionary economy that produced more than half a million jobs in July.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren