‘It’s Almost Like a Pinch-Me Scenario’
Businesses keep hiring, and economists keep being surprised by the strength of the economy.
Here are today’s highlights:
AI and TikTok are combining to create new marketing opportunities.
Could startup search engine Perplexity challenge Google?
The EEOC is releasing new guidelines that business owners should review.
Independent retailers are coming up with creative ways to cover rising rents.
Lou Mosca on the challenges business owners confront: In 25 years at American Management Services, Lou has seen the inner workings of as many as 15,000 businesses. In part one of two videos, he warns about the 12 challenges and mistakes he sees most often. We’ll publish part two next Friday.
AI and social media are producing a new era of product placement: “New technology has made it easier to insert digital, realistic-looking versions of soda cans and shampoo onto the tables and walls of videos on YouTube and TikTok. And a growing group of creators and advertisers is grabbing at the chance for an additional revenue stream.”
“Virtual product placements have been offered by start-ups and streaming services like Amazon Prime and NBC’s Peacock in recent years. But a recent wave of them on social media, in which brief, animated messages disclosing the sponsorships appear on the videos themselves, is the work of a start-up called Rembrand.”
“Rembrand’s executives say their technology could transform product placements, which have often been used to cut production costs on bigger projects and can take weeks, months or sometimes years to negotiate. For creators, it’s a way to make money from advertisers without physically handling products or discussing them.”
“Advertisers use Rembrand’s marketplace to connect with more than 1,000 creators from agencies it works with. Creators upload their videos to its platform and receive them within 24 hours with the product placements. Rembrand has someone check for quality and someone else for how the brand appears. Then creators upload the clips and eventually get paid from the brands based on video views.”
“The company said it expected to turn into a ‘self-service platform’ by the middle of this year, where any creator or brand could connect and run digital product placement campaigns without Rembrand’s involvement.” READ MORE
A tech columnist gives startup search engine Perplexity a favorable review: “Intrigued by the hype, I recently spent several weeks using Perplexity as my default search engine on both desktop and mobile. I tested both the free version and the paid product, Perplexity Pro, which costs $20 per month and gives users access to more powerful A.I. models and certain features, such as the ability to upload their own files. Hundreds of searches later, I can report that even though Perplexity isn’t perfect, it’s very good.”
“At first glance, Perplexity’s desktop interface looks a lot like Google’s — a text box centered on a sparse landing page. But as soon as you start typing, the differences become obvious. When you ask a question, Perplexity doesn’t give you back a list of links. Instead, it scours the web for you and uses A.I. to write a summary of what it finds. These answers are annotated with links to the sources the A.I. used, which also appear in a panel above the response.”
“One impressive Perplexity feature is ‘Copilot,’ which helps a user narrow down a query by asking clarifying questions. When I asked for ideas on where to host a birthday party for a 2-year-old, for example, Copilot asked whether I wanted suggestions for outdoor spaces, indoor spaces, or both. When I selected ‘indoor,’ it asked me to choose a rough budget for the party. Only then did it give me a list of possible venues.”
“During my tests, I found Perplexity most useful for complicated or open-ended searches, such as summarizing recent news articles about a specific company or giving me suggestions for date-night restaurants. I also found it useful when what I was looking for — instructions for renewing a passport, for example — was buried on a crowded, hard-to-navigate website.” READ MORE
Hiring surged in January, surprising economists yet again: “The United States delivered another bigger-than-expected batch of jobs last month, adding further evidence that the economy still has plenty of steam even as its fuel reserves dwindle. Employers added 353,000 jobs in January, the Labor Department reported on Friday, and the unemployment rate remained at 3.7 percent. After the loss of 14 percent of the nation’s jobs early in the Covid-19 pandemic, the labor market’s endurance for more than three years has surprised economists, who expected factors including the Federal Reserve’s interest rate increases to slow hiring more sharply.”
“‘There’s layoffs happening, but workers are able to find new positions,’ said Sara Rutledge, an independent economics consultant. ‘It’s almost like a pinch me scenario.’” READ MORE
Meanwhile, the number of British companies that folded last year was the most in decades: “More than 25,000 companies registered as insolvent in 2023, the most since 1993, according to government data published this week. As pandemic-related support measures for businesses ended, the wreckage from years of high debt and interest rates, soaring prices and a cost-of-living crisis becomes clearer. Insolvencies have spread from small to larger businesses, analysts said. Businesses still dealing with relatively high costs, demands for higher wages, supply chain uncertainties and wavering consumer confidence are hoping for brighter economic times.”
“Jeff Cansdale closed down his fish and chip shop in Reading, a town west of London, last week after seven years in business. Initially, business wasn’t too bad in the pandemic because Mr. Cansdale offered takeout and could stay open, he said.”
“But a government-funded discount meant to encourage people to eat in restaurants hurt his business. Mr. Cansdale bounced back from that, Russia invaded Ukraine, and the shop’s essential costs — fish, oil, and energy — skyrocketed. As inflation squeezed household budgets, his regular customers came much less frequently and ordered less. Profits took a dive and didn’t recover.” READ MORE
The EEOC has new guidelines that employers should review: “The updated rules forbid any harassment toward LGBTQ+ employees by their fellow workers which includes slurs, bullying, or intentional and repeated misgendering. According to the EEOC, if an employer does not provide gender neutral bathrooms, the refusal to allow employees to use bathrooms that align with their gender identity can contribute to a hostile work environment. ‘It’s not a mandate to have a gender-neutral bathroom,’ said [Michael Truncellito, an attorney at Buchanan Ingersoll & Rooney PC]. ‘But having one available can alleviate potential workplace issues as it allows for an alternative if a particular employee is uncomfortable with other employees using bathrooms based upon gender identity.’”
“Employees who are pregnant or recently gave birth will also find themselves enjoying better protections under the updated guidelines. Employers who do not provide private areas for lactation could find themselves under more scrutiny.”
“Finally, the EEOC is addressing any harassment that may occur in a virtual or off-site environment. That could mean derogatory or inflammatory statements made by one employee to another over social media, in online meetings, or even at an off-site company gathering.”
“It’s also important to have a good mechanism for reporting and addressing any potential issues. Employees should know that if they feel uncomfortable there’s a procedure to follow that will allow them to confidentially discuss the issue and see it through to resolution.” READ MORE
Small, independent shops are finding creative ways to cover the rising cost of rent: “Last March, Emily Schildt opened Pop Up Grocer on a Bleecker Street corner in the West Village, selling artfully packaged condiments, beverages and other products made by small, emerging brands in a pay-to-play business model. Customers can buy artisanal hot sauces or zucchini chips from brands like Peepal People and Van Van that pay a fee to be on the shelves. Typically 150 to 200 brands are on display at a time, and some are replaced on a quarterly basis. ‘If we were to be solely reliant on product sales, we would need to sell at a much higher volume,’ Ms. Schildt said. ‘That’s just an impossibility when you’re talking about a store made up of completely unfamiliar goods.’”
“Dolce Brooklyn sells gelato and ice cream from a storefront in the Brooklyn neighborhood Cobble Hill, but it is the company’s wholesale business, selling to high-end restaurants, some with two Michelin stars, that makes a profit. ‘You need to find different revenue channels,’ the company’s owner, Pierre Alexandre, said.”
“Rachel Krupa’s omnichannel approach for her company, the Goods Mart, includes curating and distributing snacks at hotels, coffee shops, and corporate pantries. At her minimalist shop in SoHo, one of three locations, she sells packaged snacks from 200 brands, mostly emerging producers, like garlic chili crisps made by Mama Teav’s, a company in Oakland, Calif.”
“Another way for independent owners to build business is through connection and community, often through in-store events, which creates vibrant street life, foot traffic, and a gathering of like-minded people.” READ MORE
Shopify is introducing a brick-and-mortar store-fulfillment option: “Shopify POS customers will have a new ‘ship from store’ feature meant to help address inventory and fulfillment challenges. This will be available to those who sign up for early access before being rolled out to all POS customers. The feature will work as a menu option in the POS system that shows all incoming orders and their fulfillment status. Associates will be able to see what orders need to be fulfilled and can pick, pack, and ship the item from their location.”
“This blurring of the line between online and physical stores is an important growth area for Shopify, which says that its offline GMV went up by 26 percent last quarter.”
“Last August saw the launch of the Retail Plan for brick-and-mortar businesses, which gives them a POS system and a simple online storefront, with plans starting at $89 a month. The company also introduced a new enterprise-level POS terminal that can operate as a mobile or counter system, priced at $349 a device.” READ MORE
Twenty-somethings are insisting on getting more sleep, and businesses are having to adjust: “Seatings between 4 p.m. and 6 p.m. now make up 31 percent of Yelp reservations, up from 19 percent in 2017. The proportion of reservations between 6 p.m. and midnight have declined in tandem. In New York City, bars are experimenting with early dance parties for those who want to get down during daylight hours. Joyface in the East Village has hosted four ‘matinees’ since Halloween that start at 5 p.m. On New Year’s Eve, revelers counted down to 2024 at 8 p.m. The wait list that night was 200 people long, owner Jennifer Shorr says. ‘We order pizza for everyone, it peaks at 8 p.m., then everyone can still be in bed by 11,’ she says.”
“In 2022, those in their 20s reported getting an average of nine hours and 28 minutes of sleep, according to an analysis of American Time Use Survey data by RentCafe.”
“Will and Kelsey Tjernlund say they laugh and sometimes decline if friends invite them out to an 8 p.m. dinner on a Friday. ‘We’re like, Oh my gosh, that’s so late,’ says 33-year-old Will, who runs an e-commerce consulting business from the couple’s home in Austin, Texas, and is usually in bed by 8:30.” READ MORE
The Consumer Product Safety Commission is preparing an order that could make Amazon responsible for the safety of products sold by third-party sellers: “That designation could give Amazon the same safety responsibilities as traditional retailers and potentially open Amazon up to lawsuits and extensive recalls over items sold through its website. Amazon accounts for nearly 40 percent of all e-commerce in the U.S., according to eMarketer, a research firm. Amazon has fought the distributor designation because of the nature of its online marketplace. The company sells some items from its own inventory, as bricks-and-mortar stores do, but more than 60 percent of sales on Amazon.com are by outside vendors, known as third-party sellers.”
“Amazon has said that it invests in product safety across its site. It also has argued that for those third-party sales it is merely a platform for sellers and buyers to connect, and therefore isn’t responsible for ensuring the quality and safety of products sold by outside vendors on its site.”
“In 2021, the commission sued Amazon for distributing unsafe products from sellers on its website through Fulfillment by Amazon, which handles logistics for third-party sellers. The agency cited three specific products in that suit: children’s pajamas that failed flammability tests, a carbon monoxide detector that failed to detect carbon monoxide accurately and hair driers without the required shock protectors in the plug.”
“Amazon’s marketplace for third-party sellers, launched in 2000, has been the linchpin to its dominance in online retail.” READ MORE
THE 21 HATS PODCAST
Have We Been Too Generous With Employees? This week, Mel Gravely, Jaci Russo, and William Vanderbloemen talk about the possibility that, after several years of the Great Resignation and the labor shortage, some owners may have given away the store. We all know the risks of not offering employees enough. What are the risks of offering too much? How do you even know when you’ve crossed the line? The owners also discuss why this might be a good time to consider acquiring other businesses. “I think this is a time to double-down,” says Mel. And Jaci explains how she and her team are reviewing everything the company does to see if AI can be employed to improve each and every process.
Plus: How exactly, in this day and age, are business owners supposed to keep track of all of the subscriptions—and all of the subscription log-ins—that they and their employees have acquired through the years? How much money are they spending on stuff they no longer use? “Thanks a lot,” responds Mel. “I’m starting to sweat.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.\
Thanks for reading, everyone. — Loren