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Successful Raise, Fast Growth, and Mental Health Issues
In our latest podcast, Hans Schrei explains why this has been a challenging year for him and for his business, Wunderkeks.
Here are today’s highlights:
Got a bad Yelp review? Gene Marks says, Stand your ground.
Homebuilders say they learned their lesson during the last downturn.
Do job candidates owe you a thank-you note? Or do you owe them?
Why a home-furnishings business is opening restaurants around the world.
THE 21 HATS PODCAST
This week, Hans Schrei tells Shawn Busse this has been a difficult year at Wunderkeks—despite many outward signs of success: It has to do with buying into the need to raise money and shoot the moon. It has to do with accepting the accolades that come with entrepreneurial achievement and then questioning your own self-worth when those accolades stop coming. It’s what Hans calls, “the miracle worker complex.” Hans and Shawn also discuss what it means to rely upon a sales platform like Amazon. Do you own the customer or does Amazon? And Shawn shares the biggest takeaway from his most recent Vistage meeting. (It’s not a happy one.)
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Gene Marks thinks you should fight back against bad Yelp reviews: “During the pandemic, Yelp saw a 161-percent spike in negative restaurant reviews from users and the platform removed over 15,000 bad user reviews related to Covid restrictions. What kind of person is leaving a bad review for a struggling business at perhaps one of the worst economic catastrophes in recent memory? And who complains when a business owner is struggling to make their establishment safe for their workers and customers? Idiots, that’s who. Lots and lots of idiots that are on Yelp.”
“Most experts tell small businesses to be kind to these idiots. One of them, for example, a restaurant industry adviser, says that you should say ‘thank you,’ swallow your ego and your desire to avoid conflict. ‘The other readers will see that you are responsive and caring for your customers,’ he writes.”
“The industry adviser’s advice is the general consensus among most experts. Be nice, they say. Be professional. Respond courteously. Take responsibility. Acknowledge the complaint and show the public that you’re aware of the problem and will address it. But is this really good advice? No, it’s not. My advice: stand up for yourself and fight.”
“Don’t apologize. Don’t snivel. Don’t take responsibility for inaccurate, unwarranted comments. If you have done something wrong, admit it, and fix what you can. Otherwise stand your ground. Be professional, of course. But fight back and defend your business.” READ MORE
Homebuilders say they’ve learned from the last recession: “A year ago, business was booming for Touchstone Living. The Nevada builder had a list of 639 qualified buyers who wanted homes in its development about 15 miles north of the Las Vegas Strip. Today, that list has shriveled to about 30. Many would-be buyers are unable to qualify for loans since mortgage rates have surged to 6.94 percent, their highest level since 2002 and more than double the rate of a year ago. Little of this is good news for Touchstone or its owner, Tom McCormick. That said, in a potential indicator for how this slowdown could play out, it isn’t looking like the last time the Las Vegas market melted down.”
“He was the owner of Astoria Homes, one of the biggest privately owned home builders based in Nevada during the early 2000s housing boom. At its peak in 2004 and 2005, Astoria built about 1,000 homes a year.”
“Astoria shrank from 170 employees to three, including Mr. McCormick. A few of its lenders were taken over by the Federal Deposit Insurance Corp. Mr. McCormick, who had made personal guarantees on Astoria’s debts, spent years settling them.”
“Mr. McCormick said his new company has less debt and fewer lenders than his former company did heading into the 2007-09 recession, and has grown more slowly and bought less land.”
“‘I’ve learned my lesson,’ he said. Still, he said, ‘I’ve never seen it change this fast,’ referring to the rapid decline in sales.” READ MORE
Bilt Rewards converts rent payments into loyalty points: “The New York-based startup, which launched last year, processes $3 billion in annualized rent payments, and its Bilt Mastercard customers are spending at an annualized rate of $1.6 billion, [CEO Ankur] Jain said. Bilt is profitable and has more than 500,000 active members, a figure Jain said he expects to grow dramatically as the company’s landlord partners direct tenants to Bilt as a primary payment platform. These real estate firms, including AvalonBay Communities, Blackstone, Related Cos. and Equity Residential, own more than 2.5 million apartments.”
“In an effort to make home-buying easier, the startup launched Bilt Homes, which shows renters which homes they can own with a mortgage payment equal to their monthly rent.”
“Bilt customers can use points toward down payments and closing costs and, ahead of any purchase, can bolster their credit history by having on-time rent payments reported to credit bureaus Equifax, Experian, and TransUnion.”
“Jain said Bilt has gained traction with 21-to-35-year-olds in major metropolitan U.S. cities including New York and Los Angeles, which together account for 21 percent of its users, as well as Houston, San Francisco, Atlanta, Seattle, and Austin, Texas.” READ MORE
OPINION: No, you should not expect job candidates to send you a thank-you note: “There are a minimum of two people in an interview. You can sometimes have five or more interviewers and one candidate in a panel interview. Do you know who had to take unpaid time off work, drive across town, pay for parking, and have an incredibly stressful day? Hint: It's not the interviewers. This is part of the hiring manager's job. They are paid for this. The idea that the candidate should be grateful for the hiring manager taking time out of their day is utterly ridiculous. The hiring manager should be thankful that the candidate is taking time out of their day.”
“When you search for a new perfect person to fill a vacancy, remember that your candidates go through hell to find a new job. Who should be grateful that they are willing to do it? You should.”
“Candidates sometimes get jobs because they wrote thank-you notes when no one else did. So if you're a candidate, write that thank you note. But if you're a hiring manager or a recruiter? Knock it off. That candidate is doing you a favor. You write them a thank-you note.” READ MORE
Telehealth startup Cerebral is cutting 20 percent of its jobs and restructuring its operations: “In a memo to staff on Monday, chief executive David Mou said the changes would be spread across all divisions, including headquarters, clinical-care teams and support staff. ... Cerebral, which publicly launched its services in 2020, added hundreds of thousands of patients with social-media ads and quick prescriptions for attention-deficit hyperactivity disorder and other mental-health conditions, the Journal has reported. It raised hundreds of millions of dollars in venture capital and hired hundreds of nurse practitioners as contract workers to see clients.”
“Some of Cerebral’s practices have become the subject of investigations by the Federal Trade Commission and Justice Department.”
“Cerebral has said it is cooperating with the investigations and has stopped prescribing most controlled substances to new patients.” READ MORE
As hybrid work becomes more ingrained, companies are starting to share office space: “Enter Codi. The flex-office-space company manages about 50 furnished, private offices and coordinates office sharing so that the same set of desks, huddle rooms, whiteboards, and snacks can be used by two to three different companies that occupy that same space on different days of the week. These arrangements, which are something like a timeshare rental for offices, mean companies pay only for those days when their offices are likely occupied. About 35 percent of Codi’s customers lease an office for fewer than five days a week, said Chief Executive Christelle Rohaut.”
“The office timeshare concept doesn’t work for everyone. It is geared toward smaller companies and startups that do most of their work on laptops and don’t store sensitive information in bulky servers or filing cabinets.”
“For some companies, cutting back on days means they can afford more space. Fuzzy, a pet-telehealth company based in San Francisco, initially sought a 2,000-square-foot office, said the company’s general counsel, Dave Toomey.”
“It is now leasing about 3,000 square feet—but only for Tuesdays and Wednesdays. At roughly $8,000 a month, the price tag is about half of what a similar office would cost under a traditional lease, Mr. Toomey said.” READ MORE
More than 600 former Amazon managers have gone on to found businesses: “They often take Amazon's unique, metrics-driven culture with them. Rakesh Mathur became a vice president at Amazon after it acquired his search startup, Junglee, in 1998. He said his one year at the company was so formative that he brought lessons he learned there to each of the five startups he later founded, including the messaging platform Gupshup, the analytics firm Percipient.AI, and the anonymous social app Fizz. ‘It was energizing enough that I'm still doing this,’ Mathur told Insider with a laugh.”
“The tech giant's leadership practices — internally called ‘mechanisms’ — cover everything from budgets to meeting protocols. As Insider has previously reported, some Amazon employees have described the culture as hyper-competitive and overly frugal, which can lead to burnout.”
“‘If you're not obsessed with making your customers' lives better, you are just not going to do as good of a job,’ Ian Freed, the founder of Bamboo Learning, said.”
“Freed had a wide-ranging 12-year career at Amazon, from tech assistant for then-CEO Bezos to working on Kindle and Alexa, as well as vice-presidential roles.” READ MORE
Why is a home-furnishings store opening restaurants? “On a recent night at the Dining Room at RH Guesthouse New York — a restaurant from the home-design company formerly known as Restoration Hardware — the server began her tableside spiel with a paean to the surroundings: ‘Welcome to our very beige space.’ The room, she explained, was built from white oak and Italian travertine. Each table, chair, and light fixture was custom made. The hearth was carved from a single slab of stone. Creating the space — which looks like a high-end art museum without any of the art — took nearly seven years, she said. The food got a brief mention.”
“RH has opened 15 of these restaurants across the United States and Canada in the last decade, most of them connected to stores, and they have clearly resonated with diners, many of them drawn by the décor. Each restaurant [takes in] an average of $10 million annually, said Gary Friedman, the company’s chief executive.”
“RH restaurants aren’t just a way to draw in shoppers. They’re central to Mr. Friedman’s goal of promoting RH as a luxury company. (RH also has a private jet for rent, a yacht available to charter, and the aforementioned guesthouse in New York, where rooms start at $3,500 per night.)”
“RH opened its first restaurant in 2015, in the courtyard of a historic building in the wealthy Gold Coast neighborhood of Chicago. Most locations share roughly the same furnishings (chandeliers, olive trees, a fountain) and menu (burgers, chicken, Caesar salads). And more restaurants are on the way, with plans to open in Paris, London, Palo Alto, Calif., and Aspen, Colo.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Gene Marks Has One Piece of Tech Advice: Before you spend more on technology, he says, you might want to figure out how to make the most of the tech you already have. Crazy, huh? Gene also talks about the key elements of a buy-sell agreement, how to get your employees to actually use your CRM system, and whether all of our ever-expanding array of productivity tools actually help productivity.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren