Partying Like It’s 2019
American consumers are back to their old ways—”rocking out at crowded concerts, doing deadlifts next to strangers at the gym, and stocking a standard supply of toilet paper.”
Good morning!
Here are today’s highlights:
Luxury hotels are springing up around the country (for cats).
Your social media manager is probably going to quit.
Reminder No. 4,322: confirm resumes and check references.
Will business leaders have to take a stand on abortion?
OPPORTUNITIES
The cat business is booming: “While the cat has long been considered a low-maintenance pet, the economy emerging post-pandemic is challenging that notion as grooming and sitting for cats become more widespread. Cat owners are willing to pay for services from daycare to baths and exercise, to social stimulation and even a little time at the spa. Jacque Opp, owner of Pet Agree Mobile Grooming in Bismarck, N.D., is booked 10 weeks out with a waiting list a dozen pages long. The only certified feline master groomer in North Dakota, Ms. Opp now has 257 clients and stopped accepting new ones about a year ago.”
“‘Cats are where it’s at—it’s a niche industry, and there’s a gajillion dog groomers everywhere,’ said Ms. Opp, who started out in dog-grooming but went cats-only in 2017.”
“Ms. Rivera took Peanut to the Happy Cat Hotel and Spa in nearby Alexandria, Va. Part of a franchise offshoot of a hotel started in Windsor, Conn., it is one of many luxury cat hotels that are springing up around the country.”
“‘It is underestimated how much people will spend on cats,’ said Julie Fredrick, owner of Pet Sitter in Boise, Idaho. Before the pandemic, her business employed 55 people and was evenly split between dogs and cats.”
“Now, with 40 workers, business is up 50 percent from 2019 levels, buoyed by Boise’s booming population and pent-up travel demand. Cats drive two-thirds of that revenue. ‘We’re shifting our business more toward cat care as it’s easier to staff for cats,’ said Ms. Fredrick.’” READ MORE
MARKETING
Spending on digital advertising, which soared after the pandemic hit, is slowing: “The slowdown was caused by a confluence of events, including inflation fears, supply-chain shortages, the war in Ukraine, a gradual return to normalcy two years into the pandemic, the continued rise of TikTok, and Apple’s recent privacy changes. ‘We have not seen a collective set of headwinds for advertisers like this since the early 1980s,’ said Michael Nathanson, an analyst at MoffettNathanson.”
“The year 2020 marked the first time Google, Facebook and Amazon collected the majority of all ad spending in the U.S.”
“The slower growth comes at a particularly vulnerable moment for the digital-ad business, which is trying to cope with the fallout from mobile ad-tracking changes that Apple introduced last year that make it harder for advertisers to target consumers and measure the efficacy of their ads.”
“The change has hobbled the digital-advertising model and continues to be a pain point, causing many small and e-commerce companies to diversify their spending across a larger swath of players.” READ MORE
SOCIAL MEDIA
Here’s why your social media manager is about to quit: “Plenty of digital-first jobs in the knowledge economy have seen reports of burned out employees over the last few years. But perhaps none more so than social media managers. The role of a social media manager, sometimes referred to as a quintessentially millennial job, is one that can be ‘always on’ by nature, requires a myriad of different skills and often doesn't pay well.”
“It takes ‘my boss emails me after hours’ to a new level. If a social media manager ignores or misses something on a brand social account, it makes the whole company look bad. Not just the social media manager. Many social pros consider their work day to be never ending, which can quickly lead to burnout.”
“Social media roles typically don't pay well considering how much responsibility the department has in managing a brand's image and communicating directly with customers. The national average salary for a Social Media Manager is $55,117 per year according to Glassdoor.”
“That may seem like a reasonable figure, but when you consider how much time is often spent working after hours and the skills required to excel at the job, it's a mismatch.”
“The most direct way you can improve employee retention on the social team is to increase headcount. ... If growing the team isn't an option, though, there are other ways management can help.” READ MORE
THE ECONOMY
American consumers are partying like it’s 2019: “In early 2020, many companies said the pandemic would change everything for consumers. And it did—for a while. Now many Americans are resuming their pre-pandemic habits: rocking out at crowded concerts, doing deadlifts next to strangers at the gym, and stocking a standard supply of toilet paper. Airlines, restaurants and child-care centers, which relied on government loans to stay afloat during Covid-19’s peak, can now hardly keep up with demand. Live Nation, which owns Ticketmaster, said concert ticket sales were up 45 percent as of February 2022 compared with the same period in 2019, the last full pre-pandemic year.”
“Membership levels at gym chain Planet Fitness in January surpassed pre-pandemic levels following a stretch in which some 25 percent of the nation’s gyms closed, according to industry data.”
“Over two million people traveled by plane each day on average between April 17 and 23, according to the Transportation Security Administration. That figure averaged about 2.4 million in 2019.” READ MORE
A third of small retailers can’t pay their rent: “Throughout the pandemic, rent has determined the fates of both retailers and landlords. All around the country, tenants and their landlords renegotiated leases, payments, and the broader contours of their relationships. Rent demands drove some retailers into bankruptcy, while unpaid rent drove some landlords and mall operators to file as well. Resounding rebounds of foot traffic and sales in 2021 have given landlords more leverage to raise rents. Tussles over leases are still driving some retailers out of their locations.”
“The share of small retail businesses that couldn’t make rent rose to 34 percent in April, up six percentage points from February ...”
“Of those small businesses surveyed by Alginable, 46 percent said their rent was higher than six months ago.” READ MORE
HUMAN RESOURCES
It’s really not good when the reporters who cover your business confirm the resumes and call the references of the people you hire before you do: “When ZenLedger put out word of a deal in March for the Internal Revenue Service to keep using its software, Dan Hannum said he was ‘thrilled.’ It was a big moment for the company, which has the backing of Mark Cuban and other investors as it aims to be a kind of TurboTax for crypto enthusiasts. It was no surprise Mr. Hannum was front and center in ZenLedger’s news release. As its chief operating officer, he had spoken with the voice of the company to The Wall Street Journal, Politico and numerous podcasters. And who wouldn’t want to talk to him?”
“In interviews — and a lengthy Forbes profile — he talked about turning his life around and getting his M.B.A., stints at Wall Street heavyweights like Goldman Sachs, and staggeringly profitable crypto investments that allowed him to make millions of dollars for himself and people like the talk show host Larry King. If only all of that were true.”
“Within a few weeks of announcing the I.R.S. deal, the company fired Mr. Hannum. I had asked ZenLedger about things I could not verify about Mr. Hannum after I talked to him for an article about crypto trading and taxes. Much of what he had said to others did not check out, either.” READ MORE
Some employees will not return to the office unless they feel safe psychologically: “Sadly, this is especially the case for many people of color who have decades of experience with discrimination: They have been excluded from employment, seen others credited for their work, and often continue to be treated as less than because of their difference. While some business leaders might think they’re creating safe spaces, in reality, not all of their employees feel comfortable in them.”
“As CallRail’s director of culture and engagement, I’ve learned that your company cannot create a back-to-the-office plan in a vacuum and expect inclusive employee engagement.”
“This can be as basic as a three-question survey checking in on your employees and how they are feeling about returning to the office.” READ MORE
POLICY
Abortion is officially a business issue: “Businesses with workers spread coast-to-coast might face logistical hurdles to providing equal access to health care for workers in Texas vs. California. Entire parts of the country might be ruled in or out for new development and investment. Some companies might struggle to attract new hires to states with abortion bans, while other employees might seek out work only in those same areas. ‘This issue is going to force a lot of companies to take a side,’ said Laura Gitman, chief operating officer of the nonprofit business consultants BSR.”
“Working adults by a 2-to-1 margin said they would prefer to live in a state where abortion is legal and accessible ...”
“It also reported that 71 percent of respondents said a state’s social policies should be a factor in a decision to move there.”
“Two years ago, a chorus of corporate leaders spoke out against the surge of state abortion laws. Executives from more than 180 companies — including Twitter, The Body Shop and Yelp — signed a letter calling abortion restrictions ‘bad for business.’” READ MORE
RETAIL
Remind me again why we sell cars the way we do: “When you want to buy a refrigerator, you don’t go to a Whirlpool store, then a Maytag store, and a Bosch store. You go to an appliance store. And even if there is a store that only sells clothing from one company – like Gap, which only sells clothing from Gap – that store is owned and operated by Gap. But when you want to buy a new car you have to go to different stores for different brands. The Ford store isn’t owned by Ford, though, and the Toyota store isn’t owned by Toyota. They’re owned by other companies, some big and some small, but very rarely are they owned by the company that has its name over the front door.”
“What’s even more bizarre, if a new car company wants to open its own store and sell directly to customers, it’s illegal for them to do that in many U.S. states. If an established automaker wants to start doing that, it’s illegal virtually everywhere in America.”
“A car dealer was usually among the biggest local businesses in its area. Car dealers paid taxes, they sponsored local functions like the Little League team and the Fourth of July Parade. And they contributed to political campaigns and the owners even ran for office themselves.”
“Before long, state legislatures across the country were passing laws to protect them from abuse by those big car companies. ... These laws were intended to keep big automakers, like General Motors and Ford, from opening their own stores.”
“Some new car companies, like Rivian, Tesla and Lucid, are working to change this system.” READ MORE
LOGISTICS
Importers say shipping carriers are exploiting the supply chain chaos to breach contracts and raise rates: “David Reich assumed that a contract was a contract. His Chicago company, MSRF, assembles gift baskets for Walmart, Walgreens, and other huge chains, importing key elements such as mugs and bowls from China. To move his goods across the Pacific, he has relied on agreements with some of the world’s largest container shipping companies. But last year, just as Mr. Reich was preparing for the holiday season, he discovered that his contracts appeared to guarantee nothing.”
“On paper, Mr. Reich was guaranteed a minimum number of containers per year going from China to Chicago, at prices between $4,000 and $5,000 per journey, seemingly providing a handle on his future costs.”
“Yet over the past year, HMM, a South Korean shipping giant, has moved only nine of his promised 25 containers, while Yang Ming Marine Transport, a Taiwanese firm, has transported only four of 100 loads, according to Mr. Reich and documents examined by The New York Times.”
“The carriers refused to confirm bookings even when his company assented to special premium charges, Mr. Reich said. Facing calamity, he has been forced to pay prevailing market rates, spending an average of $15,000 per container.” READ MORE
THE 21 HATS PODCAST
21 Hats Will Remain 21 Hats: This week, in episode 106, we start with an update of how 21 Hats has been doing since its sale brought new resources and new ambitions (Spoiler alert: The deal isn’t going great!). Then, Dana White tells Shawn Busse and Jay Goltz about the progress she’s made on multiple fronts: attempting to sell franchises to revive her struggling Midtown Detroit location, to open new salons at Fort Bragg and in Dallas, and to secure financing. The owners discuss Dana’s financing options—venture capital, private equity, bank loan—assessing, in Shawn’s words, their “degrees of evil.” Plus: Shawn explains how his views on remote work have been evolving, and Jay explains why he’s tired of being called a tyrant (even though no one’s actually called him that).
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