Masks, Anxiety, and Cruise Ships Return

Business owners ask what impact the delta variant will have on the recovery.

Good morning!

Here are today’s highlights:

  • Work-from-home policies give Silicon Valley yet another advantage.

  • Cruise lines say they are the real safe spaces.

  • And can California pot match the cachet of California wines?

STARTUPS

For investors around the world, startups offering 10-minute deliveries are the next big thing: “Zipping around central London, among the bikes and scooters of Uber Eats, Just Eat and Deliveroo, is a new entrant promising almost instantaneous satisfaction for your craving for a bar of chocolate or pint of ice cream: Getir, a Turkish company that says it will deliver your groceries in 10 minutes. The speed of Getir’s deliveries, from a network of neighborhood warehouses, matches the astonishing pace of the company’s recent expansion. After five and a half years pioneering the model in Turkey, it suddenly opened in six European countries this year, bought a rival and, by the end of 2021, expects to be in at least three American cities, including New York.”

  • “In London alone, five new rapid grocery delivery companies have taken to the streets in the past year or so.”

  • “Glovo, a six-year-old Spanish company that delivers restaurant meals as well as groceries, raised more than half a billion dollars in April, just a month after Gopuff, based in Philadelphia, raised $1.5 billion ...”

  • “The road to profitability has been elusive in the food delivery industry. But that hasn’t stopped venture capitalists from investing about $14 billion in online delivery grocery businesses since the start of 2020 …” READ MORE

HUMAN RESOURCES

Work-from-home policies are giving Silicon Valley yet another hiring advantage: “Online interior-design startup Havenly can’t compete with Silicon Valley heavyweights when it comes to compensation, but it used to have an effective weapon in the battle for tech talent: the Rocky Mountains. The 150-person company counted on Denver’s outdoorsy lifestyle to help lure people from more-expensive places. Since the pandemic spurred leading tech companies to embrace ‘work from anywhere’ policies, that advantage is fading fast. Now that a software engineer or marketing guru can work from a creekside cabin while still pulling down big bucks from Facebook or Salesforce, smaller firms far from the coasts are feeling the pinch.”

  • “For Havenly, landing new hires now means competing with companies all over the country, and hanging onto talent has been harder than ever.”

  • “‘My CMO and my CFO were both like, Listen, we love this company but the reality right now is I have an old friend reaching out to me,’ said Lee Mayer, Havenly’s co-founder and CEO.”

  • “She almost lost multiple executives to Bay Area companies offering on average 20 percent salary increases and no requirement to relocate. ‘I was getting recruited’ too, she said.” READ MORE

Walmart is offering to cover 100 percent of college tuition for its workers: “The program includes 10 academic partners ranging from the University of Arizona to Southern New Hampshire University. Participants must remain part-time or full-time employees at Walmart to be eligible. The company said Tuesday that it will drop a previous $1 a day fee paid by Walmart and Sam's Club workers who want to earn a degree and also begin covering the costs of their books. Around 28,000 workers participate in the program, which Walmart began in 2018. Walmart has around 1.5 million workers.”

  • “Walmart also said it was adding four new academic partners, bringing the total to 10, and offering more degree and certificate options in areas like business administration, supply chain and cybersecurity.”

  • “Walmart has incentive to expand the program. Employees who have participated in the program are twice as likely to get promoted and are retained at a ‘significantly higher rate’ than other workers ...” READ MORE

THE COVID ECONOMY

The CDC’s latest ruling on masks will affect when and how companies return to the office: “Businesses, too, are likely to find that new mask recommendations complicate plans to return to their offices in places where the virus is spreading and may necessitate new mandates for employees to get vaccines. The Washington Post, for example, on Tuesday said it would require proof of vaccination as a condition of employment when workers return to the office in September, after hearing concerns from many employees about the emergence of coronavirus variants.”

  • “If businesses believe that such mandates would be beneficial, ‘we encourage them to do so,’ Dr. Walensky said at the news briefing. ‘We’re encouraging, really, any activities that would motivate further vaccination.’”

  • “The agency’s move follows rising case counts in states like Florida and Missouri, as well as growing reports of breakthrough infections of the more contagious Delta variant among people who are fully immunized.”

  • “The Biden administration is considering requiring all federal employees to be vaccinated or to submit to regular testing and workplace restrictions, requirements similar to those being imposed in New York City and California.” READ MORE

For many business owners, the anxiety is back: “This past week, Chris McClelland got a COVID test for the first time in months. McClelland, who co-owns Earnest Drinks bar and restaurant in Kendall Square, is fully vaccinated, and had been with a fully vaccinated friend who later got sick. ‘They told me they had a breakthrough case and that [stuff] is scary,’ he said. ‘I was like, [shoot], how do I even get a COVID test these days?’ Kendall Square’s been a ghost town during the pandemic, but Earnest Drinks, squeezed between offices and a movie theater, is finally starting to see things pick up. ‘I don’t see people changing or going back at this point,’ McClelland said.”

  • “But the new mask advisory in Cambridge — and its implications for his own health — has him nervous that the momentum might stall.”

  • “For restaurant owners like him, there’s a gnawing sense that growing public uncertainty could once again upend his ability to do business, at a moment when running a restaurant is as hard as it’s ever been.”

  • “Event planners, and their clients, are uncertain too. Myriam Michel, the founder of Waltham-based M&M Elite Events, has been planning (and replanning, and replanning) a large September event. Initially it was supposed to be half in-person, half-virtual — already a tall order.”

  • “Then in May, Governor Charlie Baker announced the entire state would open up. Michel and her colleagues scrambled to secure the vendors and workers to make it live. Now, her clients are reconsidering.” READ MORE

The cruise lines are coming back — and they say their ships are eliminating risk: “Several epidemiologists questioned whether cruise ships, with their high capacities, close quarters and forced physical proximity, could restart during the pandemic, or whether they would be able to win back the trust of travelers traumatized from the initial outbreaks. Now, said Mr. Fain, the opposite has proved true. ‘The ship environment is no longer a disadvantage, it’s an advantage because unlike anywhere else, we are able to control our environment, which eliminates the risks of a big outbreak.”

  • “The highly contagious delta variant, which is causing surges of the virus around the world, could stymie the industry’s recovery, especially if large outbreaks occur on board.”

  • “But analysts are generally optimistic about its prospects and the potential for passenger numbers to recover to pre-pandemic levels, perhaps as soon as next year.”

  • “That optimism is fueled by what may be the industry’s best asset: an unshakably loyal customer base.” READ MORE

COMMERCIAL SPACE

The vacancy rate for downtown office space has risen to 16.4 percent over the past year: “But there is hope for anxious landlords: The life sciences industry, flush with cash from a record $70 billion of private and public capital investments in North America last year, is swooping in to claim that empty space. Across the six largest U.S. life sciences markets, more than 20 percent of the laboratory spaces being built are conversions from offices. In San Francisco, Chicago, Boston and Raleigh, N.C., asking rents for lab space have increased more than 60 percent since the beginning of 2016, while office rents have crept up only 15 to 30 percent.”

  • “And in San Diego, home to about 16 percent of California’s biotech companies, lab space is now priced on average at $44 to $58 per square foot. Office space, on the other hand, is going for an average of $36.36 per square foot.” READ MORE

SUCCESSION

In Germany, too, a lot of businesses are looking for a successor: “Alexander Keil has worked in startups and founded startups, and he knows his way around the Berlin digital entrepreneurial scene. But after eight years as a manager, a new industry has grabbed him: midsize businesses. Companies that employ fewer than 250 people and generate annual sales of no more than 50 million euros are the foundation of the German economy. ‘I identify with the Mittelstand,’ Keil said in an interview with Business Insider. ‘I was very fascinated by the passion with which entrepreneurs work and bear responsibility, in some cases up to a ripe old age,’ Keil said.”

  • “That's exactly what he wants to achieve. His dream is to be CEO and co-owner of a midsize company by his mid-30s, and his plan is to do it through succession.”

  • “In other words, he doesn't want to be just an investor. He wants to find a midsize company in which he can invest and run.” READ MORE

OPPORTUNITIES

California pot is aiming for the cachet of California wines: “Glass House Brands, one of California’s largest marijuana growers, is planning for a U.S. market with no interstate boundaries in which any state’s cannabis can be sold legally across the country. The Santa Barbara-based company recently completed a transaction with a special purpose acquisition company. But instead of building out production elsewhere to gain access to new markets, Glass House doesn’t plan to use any new capital to expand beyond California, Chief Executive Kyle Kazan told me in a recent interview. ‘I like that we’re in California,’ he said, predicting that when cannabis becomes federally legal in the U.S., marijuana grown in the state, which is already the world’s largest legal recreational market, will become the most sought after in the country.”

  • “He said California produces some of the world’s best marijuana because of its long history of cultivation and a favorable climate.”

  • “‘Cannabis will trade outside its state of origin; Californian product will be like Napa wines,’ he said.” READ MORE

THE 21 HATS PODCAST

Episode 70: Oh, No! They Accepted Our Offer: This week, Laura Zander, Diana Lee, and Dana White all share big news. Laura tells us that she and her husband/co-founder Doug put in a bid to buy a building for their business in Reno—and she’s not sure how she feels about the fact that their offer was accepted. Diana explains why she’s decided to pay a fortune to take over space vacated by glitzy magazine company Conde Nast in Manhattan’s Freedom Tower, a move that required her to put down a $2 million security deposit. And Dana tells us that she’s had preliminary conversations about opening Paralee Boyd salons on U.S. military bases around the world, which prompted Diana to encourage Dana to start vetting investment banking firms: “I'd be like, ‘Here's the contract with the Army. Give me the money so I can scale this out.’”

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