It’s Bonus Season. Are You Feeling Generous?

In our latest 21 Hats Podcast episode, the owners discuss their bonus and management strategies.

Good morning!

Reminder: I recently posted my plan to turn 21 Hats into a sustainable business. You can READ MORE HERE. The upshot is I’m asking readers to sign up as either a Paid Subscriber or as a Founding Member.

Here are today’s highlights:

  • Are hybrid offices the worst of both worlds?

  • More businesses are using software to track the performance of work-from-home employees.

  • Labor unions want the vax-or-test mandate to apply to smaller businesses, too.

  • There’s another big funding program coming for smaller businesses.

THE 21 HATS PODCAST

It’s Bonus Season. Are You Feeling Generous? This week, Paul Downs, Jay Goltz, and Laura Zander talk about the bonuses they plan to pay this year—and how their bonus plans and philosophies have evolved over time: Are the payments a reward for company performance? Are they a reward for personal performance? Are they supposed to motivate? Or are they just a thank you? Then the owners talk management, a discussion inspired by last week’s episode with Dana White about navigating the space between being a pushover and being a jerk. Plus: Are 360 reviews good management or are they kind of creepy?

  • You can subscribe to The 21 Hats Podcast wherever you get podcasts.

Listen to the Podcast

MARKETING

How a diaper startup with no marketing budget seized the pandemic opportunity: “It’s easy to outline the benefits of reusable diapers. What’s more difficult is reaching a wide audience of busy parents willing to choose cloth over convenience. That’s been the experience of Esembly, a cloth diaper startup founded in 2019 by Liz Turrigiano, Marta Baumann, and Sarah Edwards. … After raising $1.2 million through Brooklyn Bridge Ventures, the women had to figure out how to stretch their funds to develop the system and get it in front of consumers.”

  • “We came across Knock, Inc., a creative agency based in Minneapolis, whose founders were really into our project. They came on in exchange for equity and helped us with all of the initial branding, company design, and naming.”

  • “We’re a small team, so a lot of social media is all hands on deck. Lauren and I sit down and sculpt the story we want to tell on Instagram, Facebook, and Pinterest. Given our photography and design backgrounds, we create the visual assets ourselves.”

  • “When we first launched, most of our marketing spend was on Facebook and Instagram. It was a great way to get out there because they’re so visual, but we quickly realized you can’t rely on that. Getting onto other platforms—Google, Pinterest, TikTok—is key.” READ MORE

HUMAN RESOURCES

Are hybrid offices the worst of both worlds? “The share of employed people who worked remotely at some point during the month because of Covid, which had peaked in May 2020 at 35 percent, dropped in October to 11 percent, the lowest point since the pandemic began, according to the Bureau of Labor Statistics. A closer look at the New York workforce, from a November survey of 188 major employers, showed that 8 percent of Manhattan office workers are back in the office full time, 54 percent are fully remote and everyone else — nearly 40 percent — is hybrid.”

  • “‘We’re going to see a lot of companies get this wrong,’ said Chris Herd, an entrepreneur and expert on hybrid work.”

  • “‘Hybrid is most definitely tougher than completely in person or completely remote,’ [head of workplace at LinkedIn, Brett] Hautop said. ‘It takes a lot more forethought, and none of us, or anybody else at any company, has figured out exactly how it’s going to work.’”

  • “‘We all had such a terrible experience that we made a decision at the end of that meeting that all executive meetings going forward will be in person,’ [Anna Binder, Asana’s head of people] continued. ‘Or they will be fully remote. We’re not doing the in-between.’” READ MORE

Gene Marks advises against keeping tabs on your work-from-home staff: “A study of 1,250 employers by Digital.com revealed that 60 percent were using monitoring software to track the productivity and activity of their work-from-home employees, citing reasons such as a ‘better understanding how employees are spending time,’ ‘confirming workers are working a full day,’ and ‘ensuring they’re not using work equipment for personal use.’ Meanwhile, demand for remote monitoring software is up more than 54 percent since the pandemic started, according to a site that tracks these things, and to meet that demand a proliferation of software companies have emerged offering work-from-home monitoring solutions.”

  • “For example, there’s Aware, a platform that analyzes employee behavior across messaging platforms like Slack, which raised a $60 million third round of financing last month.”

  • “Microsoft announced just this week that it was adding increased employee surveillance so that its Microsoft 365 platform can use machine learning to track employee actions.”

  • “Workpuls promises its customers that employees can be monitored ‘without being noticed’ so that they can ‘still get the information you need.’”

  • “Want my advice? Don’t. Don’t monitor your employees. Don’t buy any of this software. Don’t worry about what your employees are doing when they’re not in the office. And for God’s sake, don’t install a camera in an employee’s home!” READ MORE

Portugal is attempting to legislate work-life balance: “Portugal is barring employers from contacting their staff outside their contracted working hours under a new law and from remotely monitoring their work, in one of the world’s boldest efforts to regulate the remote work that the pandemic forced on many in the industrialized world. And, at a time when a surge in natural gas prices has sent electricity costs soaring, the law requires employers to pay part of the electricity and internet bills of staff who work from home. The legislation, approved in Parliament on Friday and coming into effect this weekend,  was drafted by Portugal’s Socialist-led government as an attempt to preserve work-life balance.”

  • “Portugal has become a major destination for so-called digital nomads, in part because it is offering them special temporary resident visas to work from Portugal.” READ MORE

FINANCE

There’s a $100 billion small business funding program on the way: “This week, the U.S. Department of Treasury posted guidance for its newly reauthorized State Small Business Credit Initiative (SSBCI), which is a federal small business aid program that's been around since 2010 but is set to be replenished by the $1.9 trillion federal coronavirus relief stimulus package enacted in March. This latest iteration of the program is expected to kick off with a new tranche of $10 billion in funding as soon as next year, though the exact timeline of when businesses can see these funds will vary by state. The Treasury estimates that the program could wield as much as $100 billion in overall lending authority over seven years.”

  • “Rather than seeding businesses directly, states, U.S. territories, the District of Columbia, and Native American tribes must apply for funding, which then flows to participating lenders.”

  • “States and territories are required to use at least 90 percent of their fund allocation for loans, investments, and other support for small businesses headquartered in the same state.”

  • “Eligible small businesses and startups--typically defined as companies with 500 or fewer workers--may secure loans or investments as they normally would through their bank, community lender, or equity investor. Funds can be used for everything from startup costs and hiring employees to franchise fees and equipment purchases.” READ MORE

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INSURANCE

Some businesses suing insurance companies over Covid-19 coverage are getting jury trials: “Over the past year, judges have ruled in favor of insurers in hundreds of cases, backing up the carriers’ rejections of business-interruption insurance claims. Many of those rulings have involved policies with virus-specific exclusions, which can make the cases more open-and-shut for judges. But last month, a jury in federal court in Kansas City, Mo., heard a restaurateur duke it out with a unit of Cincinnati Financial Corp. in a case without the virus-specific exclusion. It was the first coverage dispute, out of more than 1,800 Covid-19 lawsuits filed so far, to reach jurors, according to a Covid-19 litigation-tracking effort at the University of Pennsylvania Carey Law School.”

  • “While Cincinnati Financial still won, the trial signals that policyholders may be entering a new phase, in which their cases survive early motions to dismiss and get a fuller hearing than they have generally gotten so far.”

  • “The plaintiffs in this new wave are expected to feature some large companies and organizations, such as Major League Baseball, a far cry from the local restaurants and other small businesses that so far have dominated action.”

  • “Large companies often have tailored policies, which don’t always have the boilerplate virus-specific exclusion that is common in policies sold to smaller businesses, said Tom Baker, a Penn law-school professor who runs the litigation-tracking project.” READ MORE

POLICY

Labor unions are arguing that the Biden administration’s vax-or-test mandate should apply to smaller companies: “Three labor organizations are calling on the Biden administration to review its Covid-19 vaccine mandate, with some indicating the policy is too limited in applying to only large businesses. The AFL-CIO and the United Food and Commercial Workers International Union filed a petition in federal court last week asking the Occupational Health and Safety Administration to review the new federal vaccine policy, which directs companies with 100 or more employees to require that workers either be vaccinated or get tested regularly for Covid-19 and wear masks.”

  • “In its filing, SEIU 32BJ said the directive ‘fails to adequately protect all workers who face a grave danger from Covid-19 exposure in the workplace.’”

  • “Just over half of U.S. states, meanwhile, are suing the administration to stop the mandate from being enforced, saying the federal government doesn’t have the authority to issue the requirement.” READ MORE

THE ECONOMY

Inflation just got real in Philadelphia: “Cheesesteaks — real ones that went for almost $10 — will now set you back $12. Maybe $15, soon. ... ‘I’m a wreck,’ because of inflation, said John Bucci, owner of the award-winning John’s Roast Pork on Snyder Avenue in South Philly, after raising his base sandwich price to $12 on Thursday, from $11.75 last week, and $9.75, pre-pandemic. ‘I’m ready for a nervous breakdown.”

  • “‘Roast pork was 89 cents a pound pre-pandemic, now it’s $1.89,’ Bucci said. ‘Cheese, onions, more than double. Chicken steaks up to $3.65 a pound. Steak is way over $5 a pound.’”

  • “‘I put three-quarters of a pound of meat on my sandwiches,’ he added. ‘We’re already at $7, without the wrapper, the labor, the store costs. Dude, I’m losing my mind.’” READ MORE

PROFILE

Yemeni entrepreneurs in Brooklyn are staking a claim in specialty coffee: “Hakim Sulaimani is the owner of Yafa Cafe in Sunset Park, Brooklyn. Along with za’atar-sprinkled avocado toast and vegan blueberry muffins, he sells coffee made from beans grown on the terraced flanks of Yemen’s rugged Yafa’a mountains. The storefront sits just down the street from the bodega where his father still works seven days a week, 12 hours a day, but there are big differences between the specialty product that the younger Sulaimani serves in delicate glasses and the regular joe that his dad still pours into those classic Greek-themed paper cups. For one thing, a 12-ounce serving of Yafa’s coffee costs $7. When customers ask why it’s so expensive, Sulaimani is happy to explain.”

  • “The price, he says, reflects the cost of growing the plants in accordance with the natural methods that Yemeni farmers have employed for centuries .... Also, the coffee is extremely good.”

  • “At Qahwah House, in Williamsburg, you can sip coffee grown on a Yemeni farm that has been in the proprietor’s family for eight generations.”

  • “At Asal, in Bay Ridge, you can order a cappuccino with a Yemeni honeycomb pattern inscribed in the foam.”

  • “And at Diwan, in Cobble Hill, you can enjoy ancient blends spiced with cardamom and ginger in a meticulously designed space where the neo-soul vibes of Erykah Badu flow from the speakers and $90 jars of a rare Yemeni honey sit high on the shelves.” READ MORE

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