It’s Not Just Venture Capital Fueling Silicon Valley
Drug use has become an accepted part of corporate culture in the startup world, where it’s increasingly routine to arrive at work “California sober.”
Here are today’s highlights:
In our latest 21 Hats Podcast episode, the owners talk about how they’re using ChatGPT.
In Brazil, McDonald’s, Burger King, and Subway are engaged in a ChatGPT-driven marketing battle.
The Great Resignation hasn’t ended for moms.
“The pandemic didn’t kill the buffet; it just made it stronger.”
Magic mushrooms, ketamine, and LSD are now a part of business life in Silicon Valley: “Elon Musk takes ketamine. Sergey Brin sometimes enjoys magic mushrooms. Executives at venture-capital firm Founders Fund, known for its investments in SpaceX and Facebook, have thrown parties that include psychedelics. Routine drug use has moved from an after-hours activity squarely into corporate culture, leaving boards and business leaders to wrestle with their responsibilities for a workforce that frequently uses. At the vanguard are tech executives and employees who see psychedelics and similar substances, among them psilocybin, ketamine and LSD, as gateways to business breakthroughs.”
“Silicon Valley has long had a tolerance toward drug use—many companies don’t test employees regularly—but the phenomenon is worrying some companies and their boards, who fear they could be held liable for illegal activity, according to consultants and others close to the companies.”
“Users rely on drug dealers for ecstasy and most other psychedelics, or in elite cases, they employ chemists. One prolific drug dealer in San Francisco who serves a slice of the tech world is known as ‘Costco’ because users can buy bulk at a discount, according to people familiar with the business. ‘Cuddle puddles,’ which feature groups of people embracing and showing platonic affection, have become standard fare.”
“Spencer Shulem, CEO of the startup BuildBetter.ai, said he uses LSD about every three months because it increases focus and helps him think more creatively. While working alone after hours, he will sometimes take a low-enough dose where he said no one would know he was on LSD. Other times, he’ll take a larger dose alone and connect with nature on a hike.”
“Shulem, who lives in New York City, said the high expectations of venture-capital firms and investors in general can lead founders to turn to psychedelics to provide an edge. ‘They don’t want a normal person, a normal company,’ he said. ‘They want something extraordinary. You’re not born extraordinary.’” READ MORE
THE 21 HATS PODCAST
Embrace It. Leverage It. Or Die: This week, Liz Picarazzi, Sarah Segal, and Laura Zander wind up talking about artificial intelligence, concluding that the time has come for business owners to take AI seriously. Laura says she’s already experimented with using ChatGPT to create lists, to write product descriptions, and to write a marketing plan for a new product. She even used ChatGPT to prepare a presentation for her staff about how to use ChatGPT. She did this in part to reassure them that they don’t have to fear losing their jobs. “What I told the team is, ‘It's a nail gun,’” says Laura. “‘Sometimes you need to use a hammer, because it needs to be perfect, and it needs to be exact. Sometimes you just need a damn nail gun, and you just want to pop it through. And that becomes the skill. The skill becomes: When do I use the hammer and when do I use the nail gun?’”
“On their way to the conversation about ChatGPT, Liz, Sarah, and Laura consider the various ways business owners can tap expertise, including through advisory boards, through business groups, and with strategic weekly lunches. Plus: Laura explains why she likes to hire people even when she doesn’t have an opening.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
McDonald’s recently unveiled an ad in Brazil written entirely by ChatGPT and that answered the prompt, “What is the most iconic burger in the world?” “While there are many iconic burgers around the world, the most globally recognized burger is likely the McDonald's Big Mac. First introduced in 1967, the Big Mac has become synonymous with fast food and McDonald's itself. The burger consists of two beef patties, lettuce, cheese, pickles, onions, and the signature ‘special sauce’ served on a three-part sesame seed bun. The Big Mac is so iconic that it even has its own measurement index, the Big Mac Index, which is an informal way of comparing the purchasing power of different currencies. Answered by ChatGPT.”
“The McDonald's ad inspired some responses. First among them, Burger King, which apparently put together its own ChatGPT-prompt-inspired ad, and ran the results adjacent to McDonald's billboards.” Its prompt: “And which one is the biggest?”
“The story doesn't end there, however, because Subway was then also inspired to create its own ChatGPT ad, and place it adjacent to the McDonald's and Burger King offerings.” Its prompt: ‘And how do they compare to a footlong?’” READ MORE
Amazon is looking for coffee shops, florists, and other retailers to become mini-delivery hubs: “Last year, Vox reported that Amazon was secretly recruiting mom-and-pop shops in Alabama, Mississippi, and Nebraska to join a pilot delivery program. At the time, businesses like florists and restaurants were asked to handle Amazon’s delivery loads within a 10-mile radius for a per-package rate. Participating businesses will need to be available for deliveries seven days a week and need to have a physical location Amazon can drop packages off to daily. Now Amazon’s program, called Hub Delivery, is no longer a secret. The company has a goal to connect with 2,500 drivers operating out of those small businesses by the end of the year. Amazon’s VP of last mile delivery and technology, Beryl Tomay, tells Axios the program can supplement business’ incomes and creates ‘opportunities for delivery partners interested in growing a business.’”
“The program is starting in 23 states, including Alabama, Alaska, Arkansas, California, Florida, Iowa, Indiana, North Carolina, North Dakota, Ohio, and South Dakota.”
“It’s not just about rural communities, though: Amazon is also looking to partner up with businesses in densely populated cities, including Boston, New York, Los Angeles, and Seattle.” READ MORE
The Great Resignation never ended for moms: “As more companies are herding their employees back into the office, many mothers feel they have no choice but to exit the workforce and enter the full-time job of caring for their children. According to a recent survey of 10,000 Gen Z and Millennial mothers, young mothers are increasingly stressed about finances yet lack access to affordable childcare, which has led to nearly double the rate of stay-at-home-moms in 2023 vs. 2022. ‘America is in a childcare crisis and the data shows it’s driving moms from the workforce and threatening the economic security of our families,’ said Reshma Saujani, founder and CEO of Moms First.”
“Childcare costs have climbed to such astronomical levels over the last decade that most U.S. families find it unaffordable, according to recent data from Care.com. That report found that families are spending more than a quarter – 27 percent – of their household income on child care, with the majority of parents planning to spend more than $18,000 this year.”
“‘It wasn’t financially prudent to work and send my children to childcare. I didn’t want to work full time to pay someone else to look after my kids when I would have minimal money left and nothing to show for it,’ said one mother in the survey, identified as Mandy W.”
“Another mother, identified as Mary B., said she is still working but took a massive pay cut to take a job where she could work from home.” READ MORE
The battle over Taco Tuesday is heating up: “Taco Bell, owned by Yum Brands, filed a petition in May with the U.S. Patent and Trademark Office, saying Taco Tuesday is a common phrase and any restaurant that makes tacos should be able to use it. The company launched a marketing campaign featuring NBA star LeBron James to publicize its efforts to ‘liberate Taco Tuesday.’ Taco Bell’s position that Taco Tuesday is a common phrase was ‘a legal conclusion,’ Spicy Seasonings, the [parent company] of Taco John’s, said in a filing with the U.S. Patent and Trademark Office on Friday. The company said that to the extent it could be deemed an allegation of fact, Spicy Seasonings denied it.”
“Legal experts have said protecting a term like Taco Tuesday could be difficult given how ubiquitous it is, and the fight could take several years.”
“The owner of Taco John’s said it had the right to enforce its trademark. It said some of Taco Bell’s allegations were opinions that didn’t merit a response.” READ MORE
The Sriracha shortage has been driven by climate change: “For nearly 30 years, Huy Fong Foods — which goes through about 50,000 tons of chiles a year to make its Sriracha, chile-garlic sauce and sambal oelek — sourced all its peppers from Ventura County’s Underwood Ranches, until the parties parted ways over a bitter contract dispute that led to a multimillion-dollar judgment in favor of Underwood in 2019. Huy Fong now sources its chiles from multiple suppliers throughout Mexico, where severe drought conditions have curtailed crops and led to water shortages in many cities and towns. In a statement, the Irwindale, [California] company said it is ‘still experiencing a shortage of raw material’ and has no estimate when supplies will return. It produced some Sriracha in the fall, but output was limited.”
“Large swaths of Mexico receive water from the Colorado River, but U.S. farms have first right to that water. For years, farmers have been growing their produce with diminishing water supplies, but it’s come to the point where the methods to grow those crops have to adapt to a changing landscape, according to a recent study authored by [Gary Nabhan, an agricultural ecologist and professor emeritus at the University of Arizona].”
“In the Bay Area, some desperate Sriracha lovers have taken to swiping bottles from Filipino restaurant chain Señor Sisig, SFGate reported. A single 28-ounce bottle was listed for $29.99 at an Asian grocery in Oakland this month, with a limit of two per customer.”
“The situation is no better online, where virtually all Sriracha options are out of stock on Amazon. At one point, a two-pack of 17-ounce bottles was listed for over $160.” READ MORE
The buffet is back: “The buffet got creamed during the pandemic. Even when diners crept back into restaurants covered in hand sanitizer, a model of eating based on shared serving spoons and food seasoned with the breath of strangers seemed like a goner. But the all-you-can-eat buffet, that symbol of America’s love of choice and penchant for excess, will not be denied. From piles of crab legs at swank Las Vegas casinos to pans of fried chicken in small-town Southern restaurants, the buffet is back, baby.”
“‘The media called buffets zombie companies — we didn’t know we were dead,’ said Lance Trenary, the chief executive of Golden Corral, whose 360 restaurants offer unlimited helpings of 150 different items for less than $20. ‘But we’re the comeback kids. Year to date, we’re running about 20 percent up.’”
“At a time when inflation has driven up the cost of both groceries and restaurant meals, the renewed popularity of an inexpensive chain-restaurant buffet could be explained as a value proposition. But at the most lavish spreads in Las Vegas, where dinner can cost $79.99 before cocktails and tax, reservations remain hard to come by and waits can stretch to more than two hours.”
“In smaller cities and towns in the South, the buffet is as much about community as it is about endless trays of fried chicken and squash casserole. The Movie Star Restaurant, a $15.99 all-you-can-eat buffet in Hattiesburg, Miss., is named after the lingerie factory that occupied the building of its original location.”
“This past March was its strongest month of sales since the restaurant opened in 2000. ‘The pandemic didn’t kill the buffet, it just made it stronger,’ said Lori Ford, whose parents founded the restaurant. ‘I think not having it for so long made people appreciate it more.’” READ MORE
Rental prices have finally fallen: “After years of eye-popping price increases, renters may finally be getting some relief. Rent prices fell 0.5 percent in May compared with the year before, according to data from Realtor.com released Monday. The firm’s tracking showed that to be the first year-over-year drop since early in the pandemic, when strong consumer demand collided with a lack of available apartments and homes. The median asking rent — essentially what landlords advertise for a vacant unit — was $1,739, down by $38 from July 2022’s peak.”
“That’s welcome news for millions of American renters, many of whom have forced their budgets to stretch each time a new payment is due. But there is still a long way to go: Housing costs are still by far the main factor driving inflation.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
You Control Your Destiny: This week, Lou Mosca, who runs American Management Services, a consulting firm that helps businesses improve their performance, explains why he doesn’t accept excuses from his clients. Whatever the economy or the labor market throws at them, Lou says, the owners control what happens within their own four walls. We also talk about why he always comes back to encouraging his clients to get in their cars and visit customers, why he thinks your best prospects just may be former customers, what he’s learned recently about digital marketing, and what every business owner should be tracking in these unusual times.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren