‘It’s Not Slowing Down’
Many businesses say they are seeing no signs of a recession.
Good morning!
Here are today’s highlights:
Gene Marks says business owners should think twice before replacing their CRM.
Job candidates are lying and cheating more than ever. But there are tools.
Amazon is backing away from competing with its own third-party sellers.
Do you know the difference between an accelerator and an incubator?
HUMAN RESOURCES
In the age of remote job interviews, more candidates are lying and cheating during the hiring process: “Cameron Edwards, the senior vice president of client strategy and operations at Matlen Silver, a staffing agency that screens applicants for jobs at Fortune 500 companies, said the phenomenon was happening across industries and roles but that it's most common in technical, IT, and developer jobs. ‘There've always been people who fluff their résumés, but more and more, we're dealing with people who are just plain not who they say they are,’ Edwards told Insider. ‘There was once somebody hiding beneath the desk answering interview questions for a candidate — you could even see the top of the person's head. But there are other instances of fraud that are hard to catch.’”
“A 2020 survey from Checkster, a reference-checking company, found that 78 percent of job candidates in its poll admitted they'd misrepresented themselves or would consider doing so.”
“But experts say that the practice has recently become more prevalent — and more nefarious — as previous social norms around work have weakened.”
“Artificial intelligence is a standard component of today's hiring process. According to the Society for Human Resource Management, 88 percent of companies globally use AI in some way for HR.”
“Some tools, for instance, can detect cheating and plagiarism in technical assessments by identifying questionable patterns of behavior, including whether candidates are using their phones and whether they're using multiple screens.” READ MORE
For tech workers, the days of endless perks may be ending: “Tech workers used to asking for the moon are starting to hear an unfamiliar word as startups and giants such as Google and Microsoft get more cautious: No. For much of the pandemic, tech companies big and small went on hiring sprees where would-be employees could name their price and expect rich, work-from-anywhere perks. Now, as fears of a recession loom, more employers are scaling back or freezing hiring, rethinking how many of their positions should be remote and in some cases even rescinding job offers.”
“Highly skilled workers in areas such as machine learning and artificial intelligence can still name their price, recruiters say.”
“Candidates who want to go into an office may have an edge over those seeking remote arrangements, according to venture capitalists and recruiters.” READ MORE
THE ECONOMY
What recession? Consumers are still spending: “High gasoline prices, rising interest rates and soaring inflation are crushing consumer sentiment nationwide. But Texans are still spending heavily, and the state has the receipts to prove it. Sales tax revenue reached nearly $3.7 billion in June, an increase of 16.4 percent compared with June a year ago, the Texas comptroller reported. For the first 10 months of the state’s fiscal year, sales tax revenue topped $35 billion, a year-over-year gain of over 20 percent, which is more than double the rise in inflation.”
“‘Sales tax really drives the train of the health of the state economy,’ Texas Comptroller Glenn Hegar told a House committee on Tuesday. ‘It has been exceptional over the last several months.’”
“In Arlington, sales tax growth is running three to four times higher than projected. Crowds are turning out for restaurants, entertainment, pro sports and the usual staples — both online and at brick-and-mortar stores, said city manager Trey Yelverton.”
“‘You can see it in the activity at the stadiums, in more concerts and events, and that turns into more people staying in hotels and going to parks,’ Yelverton said.”
“‘We’ve never seen this kind of increase in sales — nobody has in our industry,’ said James Kennemer, president of Frisco Wholesale Lumber, which opened in 1983. ‘It’s been going on for the last 12 months, and it’s not slowing down. We’re pretty much shipping everything we can buy for a house.’” READ MORE
Gas prices are falling sharply: “Gasoline was a major reason that U.S. consumer prices were 9.1 percent higher in June than a year earlier, the biggest annual increase in four decades. But now gas prices have declined 28 days in a row, the longest decline since the collapse in energy demand in early 2020 as the Covid-19 pandemic paralyzed the economy. Energy analysts say American consumers are spending $140 million less on gasoline daily than they were a month ago.”
“The average national price per gallon of regular gasoline on Wednesday was $4.63, a drop of more than 2 cents from Tuesday, according to the AAA auto club. Prices have fallen 15 cents over the last week and 38 cents from four weeks ago, when the average price climbed to just over $5 a gallon.”
“The descent has been particularly sharp in Texas, Ohio, Illinois and California, all economically important states, where prices have fallen by 16 cents or more over the last week.” READ MORE
SMALLBIZ TECH
Gene Marks reacts to a survey that found a quarter of small business owners changed CRM systems last year—many because they claimed to be looking for better features: “But when I start digging, I frequently find that ‘better features’ is just an excuse for poor implementation. Today’s mainstream, commercial CRM applications have the features most companies need. And because they’re in the cloud and watched closely by each other, new features are often emulated. Unless a CRM system is very old, or on-premise, I’ve found that the ‘lack of features’ excuse is often due to lack of knowledge about the product.”
“Talk to the vendor or a partner. Go to their conference. Pay for some consulting and training. Spend some time on YouTube. Read.”
“I bet you’ll find that the ‘lack of features’ is really due to your lack of understanding and can be addressed via customization or training at a price much, much less than replacing the entire system. It will certainly be less disruptive.” READ MORE
ECOMMERCE
Amazon has been cutting its private-label lines amid weak sales and antitrust concerns: “Amazon.com has started drastically reducing the number of items it sells under its own brands, and the company has discussed the possibility of exiting the private-label business entirely to alleviate regulatory pressure, according to people familiar with the matter. Amazon’s private-label business, with 243,000 products across 45 different house brands as of 2020, has been a source of controversy because it competes with other sellers on its platform. The decision to scale back the house brands resulted partly from disappointing sales for many of the items, the people said. It also came as the retail-and-technology giant has faced criticism in recent years from lawmakers and others that it sometimes gives advantages to its own brands at the expense of products sold by other vendors on its site.”
“Amazon’s private-label business started in 2009 with consumer electronics products such as cables and expanded into other categories.”
“It now encompasses everything from vitamins and coffee to clothing and furniture, with brand names such as Amazon Basics, Goodthreads and Solimo. However, Amazon has said that its house brands only account for about 1 percent of its retail sales.”
“In 2020, The Wall Street Journal detailed how Amazon employees used data from its platform on individual third-party sellers to develop Amazon-branded products that compete with those sellers.” READ MORE
RETAIL
Not everyone believes that the Starbucks store closings are related to safety: “None of the L.A. stores that will close had formed unions, but two of the Seattle stores set to close had voted to unionize and one of the Portland, Ore., locations had petitioned to hold a union vote, according to a statement from Starbucks Workers United. ‘Every decision Starbucks makes must be viewed through the lens of the company’s unprecedented and virulent union-busting campaign,’ the organization said in a statement. ‘It is simply not credible for the company to argue that this was not a response to the growing union movement spreading across the country.’”
“The company has waged contentious battles over unionizing at its stores and has been accused multiple times of illegally firing union organizers during a recent wave of union campaigns across the country.”
“Starbucks officials, though, have said the recent closures are not related to unionization efforts, calling the move ‘part of our business operations.’” READ MORE
STARTUPS
Do you know the difference between a startup accelerator and a startup incubator? “One of the most significant differences between startup accelerators and startup incubators is the stage of growth the businesses they target are in. Startup accelerators almost always only admit startups that already have a minimum viable product, while incubators generally don’t care about whether or not your company even has a prototype yet — you can get into an incubator program with only a good idea. In other words, incubators focus on very early-stage startups, while accelerators concentrate on those that already have traction and are ready to scale aggressively.”
“That being said, both startup incubators and accelerators target businesses with high growth potential, just at different stages in their life cycles.”
“Another huge difference between startup accelerators and incubators is that startup accelerators are quite funding focused, while incubators do not generally invest capital into the startups they accept.”
“Accelerator programs accept only a small batch of the total number of companies that apply for each 3-6 month cohort program to receive funding and intensive mentoring and growth assistance.”
“Startup incubators do not have such a competitive application process. Not just anyone can join an incubator — you still need to have an innovative business idea and high growth potential — but it’s much easier to get into an incubator than into an accelerator.” READ MORE
THE 21 HATS PODCAST
How Would You Spend $10,000 a Month on Marketing? Shawn Busse, Hans Schrei, and Sarah Segal explain what they would do with an extra $10,000 a month to spend on marketing. As we all know, there’s a lot going on right now. No one’s entirely certain where the economy is headed, and no one’s entirely certain where digital marketing is headed. So it seemed like a good time to ask our regulars where they would place their bets if we offered them each an imaginary pot of money to promote their brands.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
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