Married to an Entrepreneur
“Lately, I've been fixated on a nagging question,” says the wife of a tech company founder: “Would my marriage be happier if my husband's startup failed?”
Good Morning!
Here are today’s highlights:
Are you still getting ghosted by job candidates? It could be your process.
Would you move from N.Y.C. to L.A. to be closer to a certain grocery store?
Retail sales fell in October, but the Wall Street Journal sees a soft landing.
“I’d rather people complain about my prices than complain about my food.”
THE ENTREPRENEURIAL LIFE
Do you ever think about what it would be like to be married to you? “That night, as he plugged in his Apple Watch, iPhone, and Steam Deck on his side of the bed, I sidled up to him and asked what the story was. Kyle shrugged it off. Playbyte, which had started as a kind of TikTok for games (which I loved) and then pivoted to software for indie game developers (meh, he could do better), was about to pivot again. For weeks, Kyle told me, he and Playbyte's two employees — all who were left after he laid off several others during the tech downturn — had been working on a new tool, one that would let anyone build a web app by describing it to a chatbot. I knew that part, though barely because Kyle had been sharing less and less about the company with me.”
“Then he said he didn't relate to the name Playbyte anymore. My cheeks flushed. I wanted to scream. Kyle had put 3 and a half years of his life — of our life — into building his startup, and now he had wiped it from public view in a few keystrokes. That, I told him, sent a message to his 20,000 Twitter followers that he had given up.”
“What he was really doing was siphoning off code from the old project to start a new one. Had he considered the knock-on effects on his ability to attract new investors or talent? (After eight years of reporting on startups and venture capital, I'm sad to say, I reflexively use phrases like ‘knock-on effects’ with my husband in bed.)”
“By the time I rolled over and turned off the light, I was feeling a pang of remorse. I wished I had told Kyle that I would understand if he wanted to quit. I'd reassure him that he hadn't failed. I had the words ready, but I couldn't bring myself to say them. I still wanted to present as the kind of wife who had unlimited confidence in her husband's ability to turn things around.”
“Lately, I've been fixated on a nagging question: Would my marriage be happier if my husband's startup failed?” READ MORE
PRICING
Here’s why a lobster roll costs $32: “Even as costs surged at her [Brooklyn, N.Y.] restaurant during the pandemic, Susan Povich waited as long as possible before raising the price of a lobster roll with fries. Eventually, she was out of options. A price once unimaginable, $32, became inevitable. Ms. Povich, the Red Hook Lobster Pound’s co-founder, is an evangelist for lobster claw and knuckle meat, her ideal choice for rolls. A pound was about $14 in 2008 and peaked at nearly $50 during the worst of the pandemic. The restaurant sets aside about $15,000 a year to train its staff and has little choice but to absorb the cost if a new line cook or waiter leaves after a few weeks. Insurance costs have gone up about $12,000 since 2019.”
“The cost of frying oil, which the restaurant uses for everything from fries to chips to bacon, has doubled since the pandemic began, and now runs just under $44 a case. The crushing costs of running a restaurant are like New Yorkers’ own soaring bills, but on steroids, Ms. Povich said. She paid about $54,000 last year for electricity and gas.”
“It costs almost $400 a month to keep the website running and another $450 to list the restaurant on the Resy reservations service. Ms. Povich has accepted that she will keep losing money on Seamless, the food delivery service, where a lobster roll and fries costs $44.77 — and the restaurant takes home $24.75.”
“These days, the business feels precarious. The restaurant is open year-round, but lobster rolls are really a hot weather treat, and fewer people came to Red Hook this summer, a particularly rainy and humid season. Sales are down for the first time in years, Ms. Povich said, and winter is on its way.”
“Customers almost never say anything in person. But on Yelp, or Google Reviews, the gripes she sees are consistent: It’s not enough lobster to justify the price. Ms. Povich can’t see a way to lower the cost without cutting corners. Still, Ms. Povich said, ‘I’d rather people complain about my prices than complain about my food.’” READ MORE
HUMAN RESOURCES
There may be a reason your company is still getting ghosted: “Job interviews could mean hours of prep work from candidates, as they strive to impress their potential employers — but are employers putting in enough work to impress their candidates? According to a survey by hiring software company Greenhouse, over one-third of U.S.-based candidates have ghosted employers during the hiring process because the company did not meet expectations or they had a poor interview experience. Additionally, over one-third of candidates have experienced discriminatory interview questions, most commonly around their age, race, and gender.”
“Hiring new talent doesn't come cheap, with costs estimated at anywhere between 1.2 times and 4 times the former position's salary. Employers need to update their approach or risk losing great talent and money, says Ariana Moon, head of talent planning and acquisition at Greenhouse.”
“Moon notes that while every company will have unique challenges when it comes to its hiring process, those challenges are all likely rooted in poor communication. For Moon, a good rule of thumb is to update candidates every two to three business days about their progression, even if it means sending an email letting the candidate know that no decision has been made yet.” READ MORE
Gene Marks says Pennsylvania—and other states—has apprentice programs that more businesses should consider: “When most people think of apprentices, they think of tradespeople, like welders, plumbers, and pipe fitters and that’s certainly true. But today’s apprentices go well beyond these occupations. For example, Carlos Aponte, the founder and executive director of We Love Philly—a nonprofit that targets underserved youth and provides them with education and professional skills—says that his organization recently received certification to provide digital marketing apprenticeship programs, where he currently has more than 20 students enrolled.”
“One of Drexel University’s Business Development and Workforce Initiatives offers a state-approved apprenticeship program for cybersecurity support technicians, a fast-growing industry. Robert Grimmie, the program’s assistant director, says he felt it was important to register their program with the state for credibility.”
“For companies — big and small — working with an approved apprentice provider not only ensures access to skilled workers but also the ability to participate in certain funding programs that can significantly lower compensation costs.” READ MORE
FINANCE
The experience of a Minnesota bank offers more evidence that banks are making fewer loans: “For the first time in more than a decade, Bridgewater Bank saw a decrease in the amount of loans on its books. St. Louis Park-based bank reported a slight decrease of .36 percent in loans in the third quarter compared to the previous period. While the decrease is not monumental, it’s a significant marker for a bank that has long been known for its rapid growth. The decrease is also intentional; Bridgewater is reacting to economic pressures prompting the banking industry to rethink growth strategies. ‘Bridgewater has always been a growth engine and we certainly don't see that changing. However, we believe being more selective today will position us better for the long term,’ the bank’s CEO, Jerry Baack, said on a earnings call late last month.”
“‘It's not just affecting Bridgewater but affecting all banks. As interest rates have moved up, it's just made transactions that we look at more and more difficult to pencil out,’ Nick Place, the bank’s chief lending officer said.”
“Along with a more muted approach to loan growth, bank leaders also said they are going to be putting more emphasis and growing core deposits and lowering its loan-to-deposit ratio.” READ MORE
THE ECONOMY
The Wall Street Journal thinks we may be getting that soft landing after all: “Six months ago, the consensus among economists surveyed by The Wall Street Journal was that the economy would enter a recession over the next 12 months. In October’s survey, the average forecast of economists was for no recession. After Tuesday, the probability appears to have dropped further. That, at least, seems to be the verdict of investors who sent stocks up sharply and Treasury bond yields down on news that inflation was surprisingly docile in October.”
“If they’re right, it would be highly unusual. In the past 80 years, the Federal Reserve has never managed to bring inflation down substantially without sparking a recession.”
“Over the five months ended in October core inflation, which excludes food and energy, ran at a 2.8 percent annual rate, spitting distance from 2 percent and well below the 5.1 percent annual pace in the first five months of the year. The big drop happened while employers continued to add jobs and without any obvious sign economic growth was petering out.” READ MORE
For the first time since March, retail sales declined in October: “Consumers spent less at stores, dealerships and gas stations last month, a sign the summer spending boom is cooling heading into the holiday shopping season. U.S. retail sales fell 0.1 percent in October from a month earlier. That is the first decline since March and comes after a 0.9 percent increase in September. Declining retail sales, combined with slower hiring and easing inflation indicate that the economy is cooling after surprisingly strong growth much of this year.”
“The National Retail Federation expects spending this holiday season, which it defines as Nov. 1 through Dec. 31, to grow 3 percent to 4 percent from the same period last year. That would be down from a 5.4 percent increase in holiday sales last year and a 12.7 percent jump in 2021, according to Commerce Department figures.” READ MORE
REAL ESTATE
Since the big verdict involving broker fees, residential brokerages have said they expect minimal impact: “Some analysts have been less sanguine. In a report released ahead of the verdict, Keefe, Bruyette & Woods predicted that the lawsuits could lead to a 30-percent reduction in the $100 billion that Americans pay in real-estate commissions every year and push well over half of the almost 1.6 million agents out of the industry. ‘It’s surprising to us that most companies have been very quick to dismiss the risk of material impacts to their business models or the industry at large,’ said Ryan Tomasello, managing director at Keefe, Bruyette & Woods. ‘You have more and more lawsuits being filed.’”
“Looking ahead, a much larger suit against the Realtors association and brokerages, involving 20 markets from Philadelphia to Miami, could go to trial next year, and at least two nationwide lawsuits against NAR and other large brokerage companies were filed after the Oct. 31 verdict.”
“Real-estate brokerages faced a tough business environment even before the verdict. The volume of home sales has slumped this year and is on track for the worst year since at least 2011 because of higher mortgage rates and a limited supply of homes for sale.”
“‘There’s still a significant degree of uncertainty, and I would underline significant,’ said John Campbell, managing director of equity research at Stephens. ‘If you are alive in this industry today, and you are a leader, I feel like you have to be focused on this.’” READ MORE
FEATURE
Here’s the strange story of how Erewhon became a culty L.A. grocery chain that has managed to sell $400 smoothies and a distinctive lifestyle: “This store will do, this week, $1 million in sales. A woman tells me she moved from Harlem to L.A. ‘for Erewhon’; a professor friend calls it ‘a central part of my L.A. existence.’ Whole Foods ‘is copying us now,’ an employee says. Something has been worked out here, some mystery solved, in the 57 years since Erewhon came into being. Someone has seen past what we say we want to whatever it is we will actually buy, a process of discovery that began with Japanese utopians and progressed to $40 jars of sea-moss gel ‘sourced from the pristine waters of St. Lucia,’ sincerely said to strengthen bones and blood.”
“The day in which New Yorkers can partake of Buffalo cauliflower ($19 a pound) on their own turf is always just upon us, a rumored pop-up away. ‘We are gonna be in New York,’ vice-president Jason Widener tells me. ‘We are gonna be in New York.’”
“That one cannot possibly reach much of the inventory is part of the design. You have to ask for help, and there are inevitably three people in the vicinity happy to provide it. It is this, as much as anything, that feels luxurious in our time — a store in which there is a staff.”
“At the wellness event, I watch a nun in a full habit accept a small cup of sunflower milk. ‘Have you tried sunflower milk before?’ asks the sunflower-milk man. ‘No you haven’t,’ he says. ‘No one has tried this before; that’s a trick question.’”
“Every Erewhon is different, but they are all deeply comforting, sanitized simulacra of their respective neighborhoods. Patrons of the Beverly Hills Erewhon carry, one finds, more hardware: heavy jewelry, small dogs. The boots are bigger, the men’s purses more insistently structured. You are likely to see at least one woman in futuristic wraparound sunglasses and black activewear, looking as if she had just landed, holding a clear box of Buffalo cauliflower.” READ MORE
THE 21 HATS PODCAST
Start Up, Throw Up, and Grow Up: This week, Dana White drops a few surprises. When we began this podcast in 2020, Dana had two promising hair salons in Detroit that she’d named after her grandmother, Paralee Boyd. She had an innovative business model designed specifically for women with thick and curly hair. And she was on her way to winning a prestigious business plan competition. All of which presented her with a wide array of opportunities to consider. Would she continue to bootstrap? Would she franchise? Would she take on an investor? Would she open salons on military bases? But the pandemic hit her hard. Struggling to find both employees and customers, she eventually decided to close her Detroit locations and open a new one in Dallas, Texas, where she hoped the greater population density would help her make a fresh start. But in this episode, Dana tells Jay Goltz and Laura Zander that she’s come to a painful realization: “Paralee Boyd is not working.”
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren