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Leverage Continues to Shift Toward Employees
Businesses are scrambling to offer more benefits, but ZipRecruiter’s chief economist says people still don’t realize how much has changed.
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Here are today’s highlights:
What’s the real cost of a DIY rebranding?
‘This doesn’t end well:’ Is this the golden age of venture capital? Or something darker?
Female founders are launching startups to solve a problem: toxic bro culture.
A 21 Hats webinar with two investors who decided they’d rather be operators of blue-collar businesses.
What’s the Real Cost of a DIY Rebrand? “A recent 21 Hats Morning Report shared the story of Red Runner Coffee, a San Antonio-based coffee chain. In a Twitter thread, investor, entrepreneur, and co-founder Michael Girdley explained how his team recently rebranded its drive-thru coffee business. He proudly proclaimed that all the work was led by him, in-house, without the help of a branding firm that would cost $20,000-$50,000—which he wrote would have been ‘awful.’ ... So naturally we’re a bit curious when a business owner says he’s managed to save tens of thousands of dollars with a ‘simple technique’—and in this case, one involving just four steps. Given our experience in brand consulting, we decided to explore Girdley’s claim.”
“So on the low end, our guess is $27,000 worth of time was spent to rebrand the company.”
“Of course, the most significant expenses are the distractions a business incurs when its employees do work that’s not in their wheelhouse.” READ MORE
Google has a fake review problem: “Nearly two-thirds of consumers say they check Google reviews before visiting a business location, but according to the results of a new report, more of those reviews are fake than people realize. In an analysis of more than 4 million store reviews on Google, Facebook, Yelp, and TripAdvisor, Uberall and The Transparency Company found that Google has the highest average percentage of inauthentic reviews across business categories. More than one in 10 reviews on Google’s platform was identified as fraudulent or fake in Uberall’s analysis. The category with the highest percentage of fake reviews was locksmiths, while pharmacies came in as the category with the lowest percentage of fake reviews.”
“‘Since this is the first year of the study, we don’t have [year-over-year] comparison data. However, third-party consumer survey data over time, credible media reports, as well as anecdotal findings from digital marketers suggest the problem is growing,’ says Greg Sterling, Uberall’s vice president of market insights.”
“Sterling says the evidence is clear that review fraud is a losing game for business owners. Google’s emphasis on reviews as a ranking signal in local search may be partially to blame for the proliferation of review mills that write positive reviews for a price, as business owners look for any chance to get ahead of the competition.”
“The most obvious solution is for platforms to implement location verification or to rely exclusively on verified purchasers for reviews.” READ MORE
THE 21 HATS CONVERSATION
In their previous lives, Bob Schwartz was an investment banker with Salomon Brothers and Mills Snell reviewed acquisition targets with a private equity firm, Permanent Equity. Then they both decided to cash in their careers and buy blue-collar businesses. More than 20 years ago, Schwartz bought a chain of laundromats called SuperSuds. More recently, Snell bought a roofing contractor called Aqua Seal. In the next 21 Hats webinar conversation, we’ll ask Schwartz and Snell what they learned about buying and operating businesses. If they had it to do over, would they take the same leap? Bring your own questions! Tuesday, November 9 at 3 ET.
Leverage is continuing to shift toward employees: “Some of her colleagues were quitting — often walking out mid-shift — and Ms. Roberts, 22, could tell that the managers were ‘sweating’ trying to figure out how to staff the restaurant. So instead of leaving, she wrote a petition. She asked that Sonic make it easier for customers to tip their carhops. Weeks later, her manager pulled her aside to say the Sonic app was being changed to allow credit card tips.”
“Today, job seekers find nearly 50 percent more openings than they had pre-Covid, and many can expand their search beyond their hometowns because of newly flexible workplace arrangements across industries.”
“Businesses are scrambling to offer new benefits, including bonuses and family insurance plans; some hospitality companies are promising managers ‘stay bonuses’ as high as $75,000 to prevent poaching.”
“‘People don’t realize the scale of what has changed,’ said Julia Pollak, chief economist at ZipRecruiter. ‘If you take even one chair away in musical chairs, it changes the entire dynamic of the game. That’s what we’re seeing now, where the 50 percent increase in job openings has given job seekers dramatically more leverage.’” READ MORE
In the U.K., they’re concerned that the supply-chain crisis will ruin Christmas: “As the world moves into another pandemic winter, shortages fueled by supply-chain issues are cropping up all over. In Denver, public-school children are having a hard time getting milk, Bloomberg reported. In Chicago, there aren’t enough canned goods. In Germany, factories are short of plywood, copper, and semiconductors. In Boston, pasta is on the fritz. The situation looks especially grim in the U.K., which has had to contend with the dual crises of the virus and Brexit-related disruptions. Since January, when new immigration rules went into effect, sectors that have long relied on E.U. workers have found themselves struggling.”
“The impact on the meat industry has been the most dramatic. Charlie Dewhirst, a policy adviser for the National Pig Association, said that understaffed meat-processing plants had led to a surplus of pigs on farms.”
“Overwhelmed farmers, finding no one to take the animals, had been forced to cull some eight thousand pigs—a logistically difficult, traumatic, and ultimately wasteful process.” READ MORE
Is this the golden age of venture capital? “By almost any metric, life in the venture capital industry looks better than ever. ‘We're in record territories for everything,’ said Jeff Clavier, the founder and managing partner of Uncork Capital, a seed-stage venture firm. ‘The fear of missing out right now is extreme.’ Money is pouring into venture firms, and those firms are doling out millions to inspired startups that are changing the world. Many investors and founders (and some employees) are becoming filthy rich in the process, as a continuous number of high-profile firms go public, turning theoretical stock options into cash.”
“‘We all look smart right now,’ Villi Iltchev, a partner at the early-stage firm Two Sigma Ventures, told Motherboard. ‘Anything we have done over the past few years is looking great.’”
“Colossal, a self-proclaimed ‘de-extinction company,’ nabbed $15 million on a pitch to resurrect the woolly mammoth. A fast-delivery service called Gopuff pulled in $1 billion at a $15 billion valuation. In a poetic moment, the startup Who Gives a Crap [toilet paper] grabbed $31 million in venture funding this September.”
“He added that certain firms are struggling with a generational ‘culture clash.’ Younger investors are saying that the firms need to adapt to the new normal and continue to make investments. Then he added: ‘The older guys are like, This doesn't end well.’” READ MORE
Women are launching startups to combat toxic bro culture: “Nearly all sexual harassment in U.S. workplaces goes unreported, according to a study by the University of Massachusetts Amherst. In the U.K., around half of British women have reported experiencing harassment at work, according to 2016 TUC data. After resigning from the company, which Insider is not naming, [Jana] Morrin set out in 2018 to build the tool she wished she had during her own experiences. Speakfully, an anonymous reporting and documentation tool for workplace harassment, was born.”
“A trope of startup investing is that the most successful founders set out to solve their own problems.”
“It is perhaps telling that one of the few areas of tech dominated by female founders in a post-MeToo world is tech geared to mitigate toxicity and harassment.”
“Deal counts for workplace reporting startups stood at 14 [in 2017], then rose to 17 in 2018, before hitting 28 in 2019. In 2021 to date, VCs have invested a record $106 million across 15 deals, according to Pitchbook data.”
“Businesses adopting some of these tools span health care, academia, tech and government, with clients including Netflix, Zoom, Monzo, Zendesk, and Stripe.” READ MORE
Microsoft is preparing for the metaverse, too, and it’s bringing PowerPoint: “The company is adapting its signature software products to create a more corporate version of the metaverse — a concept promoted by Facebook co-founder Mark Zuckerberg that promises to let users live, work and play within interconnected virtual worlds. The first offering, a version of Microsoft’s Teams chat and conferencing program that features digital avatars, is in testing now and will be available in the first half of 2022. Customers will be able to share Office files and features, like PowerPoint decks, in the virtual world.”
“The new Teams features, unveiled Tuesday at the company’s Ignite conference, will let businesses create immersive spaces where workers can meet.”
“‘This pandemic has made the commercial use cases much more mainstream, even though sometimes the consumer stuff feels like science fiction,’ Microsoft Chief Executive Officer Satya Nadella said in an interview on Bloomberg Television.”
“Nadella himself has used the technology to visit a Covid-19 ward in a U.K. hospital, a Toyota manufacturing plant and even the international space station, he said.” READ MORE
THE 21 HATS PODCAST
Paying the Volcano God: This week, Paul Downs tells Jay Goltz and Laura Zander why he’s come to view Google as the Volcano God. He’s not sure what it will take to keep the Volcano God happy, but he’s obsessed with doing everything he can, because the consequences of failing would be so great. We also talk about Paul’s content marketing strategy, the pricing lessons that emerged from our recent attempt to monetize 21 Hats, and why Laura—even in the midst of the labor shortage—now has a waiting list of people hoping to work at her yarn manufacturer in Texas.
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