Take a Breath Before You Try that Big Bank
Take a Breath Before You Try that Big Bank
In the aftermath of the SVB collapse, there’s a lot of talk about businesses moving their money from smaller, regional banks to the big banks. Not so fast!
Good Morning!
Here are today’s highlights:
Here’s how one CEO steered her business through the SVB panic.
In New York City, some businesses concerned about shoplifting are using facial recognition software.
Reminder: Just because you’re a great chef doesn’t necessarily mean you know how to run a restaurant.
A marketing agency pays employees to pursue their hobbies. (Don’t tell Gene Marks!)
FINANCE
Ami Kassar says your business is still better off using a smaller, regional bank: “Can you imagine a massive bank consolidation, where the banking industry turns into a version of the airline industry? Having a handful of banks to pick from instead of thousands would be an awful situation for business owners and entrepreneurs. Relationship banking would disappear, and we would have only robots to help us. Even before the collapse of Silicon Valley Bank, the big banks hardly served the interests of our communities.”
“Remember that your banking relationship is bigger than where you put your deposits. All businesses should have a line of credit, and most businesses will want to borrow money from time to time.”
“If you have deposits in your accounts of less than $250,000 you have nothing to worry about. And even if your deposits are greater than $250,000 you probably have nothing to worry about.”
“With the IntraFi network, banks can sweep individual deposits of more than $250,000 to different participating banks overnight, creating options for many millions of dollars of FDIC insurance. You can still manage all your accounts in one place, but you have the comfort of knowing that your money is safe.” READ MORE
This is what Sara Mauskopf, the CEO of Winnie, a marketplace for childcare, learned during the SVB panic: “SVB was Winnie's only bank account. We have an agreement with them that says they will be our only bank account. We have a line of venture debt with them. We've never used those funds, but the idea was that the line was there kind of as an insurance policy if it ever were needed. And a requirement of that line is that we keep all of our money in SVB. That's never been a problem. We've been banking with them since we started Winnie more than seven years ago. It's always been a safe place to deposit and withdraw cash.”
“I decided to actually set up an entire other bank account on Thursday. And at the very end of the day, I wired money out. That wire would have hit on Friday when banks reopened and wire transfers happened again. So I went to bed not super concerned.”
“But on Friday, the Federal Deposit Insurance Corporation closed SVB, so that wire never did anything and ended up being canceled when I logged in that day. And Friday, when the FDIC actually closed SVB, that's when I saw how bad this was because we no longer had access to any of that money.”
“Then it got worse, because we also had a credit card with SVB, and it was part of our agreement with them that we would have the majority of our charges go on that credit card. Saturday morning is when that credit card stopped working, and all of our charges, everything automated that we've set up for the company, every piece of software to run the company, any charge that was on that particular credit card stopped working.”
“Our website was at risk at that point, and our whole business operation. I decided I just had to put up my personal credit cards, which was fine. I knew it was just kind of a cash-flow crunch, so I wasn't worried that, you know, ‘Am I going to get paid back or something?’ I knew Winnie was good for it. The problem is that personal credit cards just have a much lower limit.” READ MORE
RETAIL
In New York City, businesses are starting to use facial-recognition technology: “Mayor Eric Adams had recently encouraged businesses to use facial recognition to fight shoplifting. Who answered his call? If you shoplift once, are you barred for life? ... New York City has a quirky new law that makes it the only municipality in the country where a business scanning faces has to post a sign telling customers that it is doing so. After I left the meeting, I set off on a miles-long walk in search of those signs. They weren’t where I expected them to be.”
“I left the hearing in Lower Manhattan and walked south, past the clothing retailer Zara and a CVS. Neither had a ‘biometric identifier information’ disclosure, so presumably they weren’t using facial-recognition technology.”
“I popped into a Ralph Lauren where a blue cotton blazer was $790, a Sunglass Hut selling Gucci glasses for $550 and a Louis Vuitton with a $990 sleeveless crop top. None of them had a biometric sign, only many employees who watched me closely.”
“As I crossed 25th Street, and the pedometer on my iPhone hit nearly 14,000 steps, I finally spotted a sign at the gourmet grocer Fairway Market. A flimsy white piece of paper, titled ‘Biometric Identifier Information Disclosure,’ was taped to a sliding-glass door.”
“The findings from my four-hour walkabout were confounding. I had checked dozens of stores. The high-end retailers of SoHo apparently weren’t using the cutting-edge technology to protect their expensive apparel, but Fairway Market, with lemons on sale for 99 cents, was. Either we are in the early days of the technology’s deployment, or it is not proving as popular with retailers as expected.” READ MORE
ECOMMERCE
With ecommerce sales slowing, logistics businesses are laying off thousands: “Trucking, warehousing, and parcel-delivery companies cut a combined 16,900 jobs in February, following a drop of 2,200 jobs in January, according to seasonally adjusted preliminary employment figures released Friday by the U.S. Bureau of Labor Statistics. The pullback came as the broader U.S. economy added 311,000 jobs, driven by growth in service sectors such as restaurants, hospitals, and nursing homes.”
“The boom in online ordering that took place amid the Covid-19 pandemic is slowing, which is hitting the warehousing and parcel-carrier sectors particularly hard, said Satish Jindel, president of ShipMatrix, which analyzes package-shipping data.”
“February parcel volume was down in the estimated mid-single digits compared with a year earlier, Mr. Jindel said. ‘The warehousing labor market is not going to rebound for the next several weeks or months,’ he said.” READ MORE
MANAGEMENT
Nick Huber explains the difference between being a chef and being a restaurant owner:
HUMAN RESOURCES
A marketing agency pays employees to pursue their hobbies: “It can feel impossible to fit in hobbies or personal interests amid a never-ending to-do list. Yet attaining work-life balance is essential to fostering happy and fulfilled employees, and Haberman, a Minneapolis-based marketing firm, is giving employees a necessary nudge. The company offers a passion project program — employees who have worked at the firm for at least a year are eligible for $1,000 and three days of PTO to pursue an interest or hobby outside of work. Employees then present their projects to the team, inviting the staff to learn about something new and get to know each other on a more personal level.”
“The company has sponsored these passion projects with the stipend and PTO since 2010 — during that time, employees have pursued projects that have even led to career changes. Haberman shares that one employee took a course in prenatal yoga, which led her to a new passion for maternal health in underserved communities. She eventually left the company to work as a doula.”
“Haberman says that while losing an employee to their passion project is a potential risk, the rewards of fostering a supportive work environment are far more important.” READ MORE
Here are some red flags that concern Gen Z: “Many Gen Zers are looking for jobs that give them purpose, and some aren't willing to sacrifice good pay, flexibility, or a healthy work-life balance in exchange. While work-life balance looks different for everyone and can vary by industry, four young professionals told Insider they're prioritizing jobs that allow them to pursue hobbies, side hustles, and activities outside the nine-to-five window.”
“When Jorge Alvarez asked some potential employers about their policies on work-life balance, several of the people conducting interviews went on tangents along the lines of needing someone who could ‘work hard and give their all,’ he said. The answers signaled to Alvarez that he and the companies weren't aligned on values and expectations.”
“In interviews, Alvarez inquires about team sizes and the scope of the projects teams work on. He asks questions like, ‘Who else is on the team?’ and, ‘How will I be engaging with them in this position?’ to determine the level of support. A smaller team with large projects might indicate a heavy workload, late nights, or weekend work that isn't in the posted job description, Alvarez said.”
“‘Instead of just asking folks about the work-life balance, I would ask employees what they do outside of work,’ [AJ Eckstein] said. He added that ‘a red flag would be if the interviewer shared that they do not do much outside of work given that their full-time job is so demanding,’ or if they have little time for hobbies due to all-consuming work, even on weekends.” READ MORE
PROFILE
The company that makes those rat balloons you see protesting non-union labor appears to have given up the business: “Nearly all of the rat balloons across the country have come from a sole distributor: a Plainfield, Illinois, company called Big Sky Balloons. Big Sky was founded in 1980 as a hot air balloon tour business by Peggy and Mike O’Connor, a couple whose interest in activism manifested only as obsessive balloon advocacy. They’d had a balloon-themed wedding, where guests could float around on company vessels; they traveled in their own personal hot air balloon, dubbed August One after their wedding date; and they set a record in 1984, when they became the first married couple to make the 6.5-hour trip across Lake Michigan by balloon.”
“Big Sky is partially responsible for the standalone inflatables one sees across America’s curbs. In the early 90s, frustrated by ballooning’s weather sensitivity, the O’Connors developed ‘an electronic motor and fan system’ that kept the inflatables’ form even on Chicago’s windiest days.”
“Big Sky itself was, incredibly, not a union shop. It made most of its other balloons for major city businesses – the Chicago Bulls, Cubs, and White Sox; the Navy Pier, the Chicago Auto Show, and most car dealerships in the area, employers who could easily have found themselves with a Scabby”—that’s the rat’s name—”parked out front.”
“When I called Big Sky last week, a woman identifying herself as Michelle said that, in the past month, the business had come under new ownership. ‘We don’t do any of the unions or the rat stuff any more,’ she said. ‘We have nothing to do with the inflatable rats.’ The identities of Big Sky’s new owners or their plans for the business remain a mystery.” READ MORE
THE 21 HATS PODCAST
For Wunderkeks, It Really Is Go Big or Go Home: This week, Hans Schrei explains why he’s pursuing a deal with Costco and why his vision is to get Wunderkeks cookies into every supermarket in the country. When Jay Goltz counters that instead of thinking big, or thinking small, maybe Hans should think medium, Hans says that may no longer be possible with consumer packaged goods: “The little brand that grows and thrives by growing little by little doesn't really exist any more in this space,” he says.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren