Rehiring Boomerang Employees
Today’s highlights: A bank that doesn’t care about collateral or credit scores. The owner of a boutique hotel makes a very tough call. And the debate over the $15 minimum wage continues.
PROFILE
Vicis ran out of cash and lost its founders but is still making Super Bowl-caliber helmets: “Pro players are reluctant to change, in many cases having used the same helmets for years. Plus, a high price tag—$1,500 for the first Vicis helmet iteration—hindered wide adoption outside of the NFL. Vicis struggled to turn a profit, and by November 2019, the company was pleading with investors for more capital. The funding didn't come. Co-founder and CEO Dave Marver resigned, and a month later, Vicis' board voted to place the company into receivership in an effort to avoid bankruptcy. Nearly 100 of the company's 110 employees were laid off.”
“Last April, New York-based investment firm Innovatus Capital Partners acquired Vicis for less than $3 million, according to GeekWire. [Jason] Neubauer, the highest-ranking employee still on staff, was granted permission by the new owners to make a few hires.”
“The new helmet's price tag is $759--still higher than many competitors, but more affordable than the company's previous versions.”
“Including [Patrick] Mahomes, the company says eleven combined players on the Chiefs and Tampa Bay Buccaneers will wear Vicis helmets on Super Bowl Sunday ...” READ MORE
HUMAN RESOURCES
Should you rehire an employee who left your business? “A stellar employee leaves your company for another job. Perhaps they were lured by a recruiter offering an enticing salary and impressive perks, or maybe they just wanted to try something new. But months — or even years — later, they’re knocking on your door again. Turns out the grass wasn’t greener on the other side. Do you rehire them? Historically, leaving an organization was considered disloyal, and rehiring former employees was considered taboo. However, in an age when the average employee will work for more than 12 different employers during their career and companies are grappling with a tight labor market and skill shortages, many organizations are giving consideration to these ‘boomerang’ employees.”
“Boomerang employees’ performance tends to remain the same after being rehired.”
“Boomerang employees are more likely to turn over than both internal and external hires.” READ MORE
The debate over the $15 minimum wage continues: “Mr. Biden endorses a plan to more than double the wage in steps over four years, noting that at $15 an hour, a job could support a family of four and it wouldn’t live in poverty. The president’s advisers also say raising the wage from $7.25 an hour, where it has stood since 2009, would show gratitude to essential workers at grocery stores and warehouses who stayed on the job during the coronavirus pandemic and would boost the economy by allowing low-wage workers to spend more.”
“The impact would be felt in more rural states, such as Mississippi, the opponents say. Half of all workers there earned $15 an hour or less in 2019, according to the Labor Department.
The nonpartisan Congressional Budget Office found in a 2019 study that raising the federal minimum wage to $15 an hour by 2025 could cost 1.3 million Americans their jobs.”
“The same study found the higher level could boost the pay of about 27 million workers and lift 1.3 million Americans out of poverty.” READ MORE
MANAGEMENT
In January, the owner of a boutique hotel in D.C. had to make a tough call: “Soon after Election Day, people started booking rooms for the week of Jan. 20 — all Democrats, we assumed. Then, over the next few weeks, rooms started filling up on an unexpected date: the middle of the first week of January. I realized that people were coming to town for President Donald Trump’s ‘Stop the Steal’ rally. I’m a lifelong Democrat. Although they’re apathetic to politics in general, and often say there’s no difference between Democrats and Republicans, all my staff oppose Trump. Most are people of color who emigrated from Asia, Africa and Central America. Yet when I asked each of them if they wanted to temporarily close rather than rent to Trump supporters, they thought I was joking. For them, there was no choice. We had to stay open out of financial necessity.”
“The paradox is twofold. While my employees are the targets of Trump’s bigotry, a paycheck matters to them far more than the politics of our guests. Meanwhile, those so quick to cast judgment on us for hosting Trump supporters are patronizingly blind to the actual perspectives and circumstances of the people they think they’re defending.”
“If I closed my inn to make a statement, I’d be putting my own self-righteousness and politics ahead of my employees’ wishes and dire financial needs.”
“This month, after 46 years in operation, Adam’s Inn will close — another small business falling victim to the pandemic. Nearly all our reservations for the inauguration were canceled because of security concerns.” READ MORE
Andy Jassy, Amazon’s CEO-to-be, launched AWS and turned it into one of the most disruptive tech companies ever built: “Starting with simple computing and storage services delivered remotely over the internet, AWS has gone on to define a new era of enterprise computing as well as new business models for aspiring tech companies built on or around AWS. Inside AWS, Jassy has a reputation for sweating the details, driving the company to focus on executing its plan to deliver the most comprehensive suite of cloud infrastructure services on the planet: ‘The Everything Store,’ just for CIOs. In the early days of cloud computing, this was an uphill battle, trying to convince risk-averse business leaders to bet on an emerging technology when all they really wanted was tech that wouldn't break.” READ MORE
LOGISTICS
Trove is capitalizing on the second-hand clothing boom by partnering with big brands: “The 80,000-square-foot warehouse outside San Francisco is the central nervous system for Trove, the big-brand reseller setting up shop at the crossroads of retail’s tumultuous present and potentially transformative future. ‘It’s soup to nuts,’ says Andy Ruben, 48, the nine-year-old startup’s co-founder and CEO, whose operation helps companies capitalize on used goods that their customers would ordinarily pawn at vintage shops or dump into landfills. ‘It’s resale in a box.’ Ruben operates behind the scenes to power resale offerings for Patagonia, REI, Levi’s, Arc’teryx, Taylor Stitch and Eileen Fisher.”
“The company says it’s in talks with 15 additional brands and is set to double revenue this year from an estimated $20 million in 2020.”
“Trove handles the messy logistics of taking back merchandise and preparing it for resale, managing the online listings and shipping the merchandise in each brand’s own packaging.” READ MORE
FINANCE
A community bank in Chicago says it will no longer consider credit scores or require collateral of small businesses: “The decision to drop two standard lending metrics is part of an overall strategy change at Allies for Community Business, formerly known as Accion Chicago, which lends $500 to $100,000 to small businesses that struggle to get traditional bank financing. Now, it is strengthening the free coaching services offered to entrepreneurs while expanding access to funds after watching small businesses struggle to navigate fast-moving regulations and financial assistance programs during the pandemic.”
“Borrowers must have made payments on other kinds of debt, such as a mortgage, credit card or business loan on time for the past year and can’t have sought bankruptcy protection within the last two years or maxed out other forms of existing credit. All borrowers are asked to personally guarantee the loan.”
“Interest rates will stay at 9 percent, with a 1 percent closing fee.”
“That’s higher than traditional bank loans and businesses should check out their options, said Ted Rossman, an industry analyst at CreditCards.com.” READ MORE
PRICING
Some restaurants have been trying out subscription models: “And now, a star restaurant group [in San Francisco] has announced what might be the most ambitious program so far: Quince, the fine-dining favorite with three Michelin stars, introduced a new membership program for $5,000 per year. Weeks later, the slots were completely sold out. Owners Michael and Lindsay Tusk are calling the membership program ‘Quince & Co.’ which includes not just Quince, but sister restaurants Cotogna and Verjus, as well as the Fresh Run Farm in Bolinas. The annual $5K membership includes a variety of benefits: $1,000 in dining budget, which can be spent at any of the three restaurants.”
“A quarterly provisions box, filled with produce from the farm, specialty products such as the chef’s favorite Calabrian chiles, and other pantry staples like olive oil and vinegars.”
“There are also exclusive events, such as apple picking, cider pressing, beekeeping, and cheesemaking workshops on or near the farm.”
“Whenever Quince does reopen for indoor dining, members will get first access, effectively transforming the restaurant into a kind of clubby members-only space.” READ NOW
DESIGN
A Brooklyn-based architecture firm is becoming known for its “streeteries”: “The firm isn’t setting out to be the studio of streeteries, but so far it’s created some of the city’s nicest — and coziest — ones, like the outdoor spots for Don Angie in the West Village, COTE Korean Steakhouse in Flatiron, and Quality Eats restaurants all across the city. Before streeteries was even a word, GRT reached out to its clients offering pro-bono help when the pandemic hit. It started out with a few fairly simple projects: They helped a bakery transition to become more of a grocery store and consulted restaurants and cafés.
“These aren’t money-making projects for the firm — GRT just breaks even and they only account for five percent of its business — but they have become ways to have instant gratification when it comes to experimentation.”
“‘We get bigger every year, and it becomes harder to take on small projects, which we miss,’ says Rustam-Marc Mehta, who cofounded GRT in 2014 with Tal Schori. ‘It’s fun to be hands on and quick.’”
“While a typical build-out might take years to complete, these are done in just a couple of weeks. But with that comes a lot of creative opportunity.” READ MORE
SOCIAL MEDIA
Still trying to figure out Clubhouse? Here’s another explanation: “Clubhouse is an iPhone app that allows users to talk among themselves as if they were dialing in to a pre-internet AM talk-radio show. A moderator recognizes participants by bringing them ‘onstage.’ Everyone else listens. Don't like the chatter in one room? It's easy to shift to another, just like changing channels in days of yore, except that there are so many more channels. You'll likely be drawn to your next room because people you follow, who you may or may not know, might be there. The opportunities for chatter are endless.”
“In the past few days, I have listened in on a group of stock-market hucksters talking about the GameStop-Reddit short-seller controversy.”
“When I went to bed Wednesday night, Marc Andreessen, whose venture-capital firm is Clubhouse's main backer and whose members have been relentlessly promoting the service, was sharing more thoughts on GameStop.”
“As for making money, Clubhouse has ideas. [CEO Paul] Davison says advertising isn't likely, but he is keen on taking a cut of any tips, subscriptions, or other fees ‘creators’ might collect.” READ MORE
THE 21 HATS PODCAST
Episode 47: Optimism in D Minor: This week, William Vanderbloemen tells Karen Clark Cole and Dana White that he’s cautiously optimistic about 2021 because his clients are cautiously optimistic and because he’s expecting lots of turnover as the pandemic recedes. William explains how he uses a “Frankenstein” customer relations system to track what his clients read on his website and to sense when those clients are getting ready to make a hire. The system then prompts the Vanderbloemen team to give the client a call. We also talk about why Karen is tired of being a best-kept secret and how Dana handles customers who have to be fired. Plus: there’s a new tax credit you should know about that William calls “pretty incredible” but that seems to be getting lost in the PPP shuffle.
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