Teaching Employees to Behave Is a Booming Business
There are workers of all ages who could use a refresher in office etiquette, but it’s the youngest employees who struggle the most.
Good Morning!
Here are today’s highlights:
Small-business bankruptcies have been surging.
A new regulation in San Francisco threatens the survival of bike shops.
More advertising dollars are shifting from Meta and Google to Amazon.
In today’s Silicon Valley, decacorns are the new unicorns.
HUMAN RESOURCES
The workplace-etiquette industry is booming: “Demand for workplace-etiquette training has surged over the past two years as companies grapple with the fact that some employees brought their at-home habits back to the office and others had little experience in a professional setting in the first place. More than 60 percent of companies plan to implement etiquette courses for staff this year, according to a survey of more than 1,500 business leaders published in July by job seeker service company Resume Builder.”
“Anne Chertoff, chief operating officer at New York-based etiquette consultancy Beaumont Etiquette, said the firm has experienced a 100-percent increase in companies requesting trainings over the past two years, with demand coming from employers of all kinds.”
“Many office workers will likely be familiar with the most common workplace behavior faux pas: things like coworkers who aren’t mindful of their volume while on the phone and employees who leave a mess around the office, as well as inappropriate office conversations, awkward introductions, and novel-length emails.”
“Although workers in all stages of their careers can benefit from a workplace-etiquette refresher, such training is especially important for Gen Z employees who are just starting out their careers, Chertoff said. Many of those younger workers missed out on opportunities to practice professional behavior in college and in-person internships because of disruptions from the pandemic and may have started their first jobs working from home.” READ MORE
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FINANCE
Small business bankruptcies surged in February: “Last month, as many as 213 small businesses filed for chapter 11 bankruptcy in the U.S., a 78-percent increase compared with the same month a year ago, according to bankruptcy data provider Epiq. Companies with less than $7.5 million in debt can file under a subchapter under the bankruptcy code that went into effect in 2020 as part of the Small Business Reorganization Act, offering small businesses a faster and cheaper way to restructure debt. Since then, more than 7,200 cases have been filed under the subchapter, according to the U.S. Department of Justice.”
“The Small Business Reorganization Act of 2019 that included subchapter V became effective in February 2020. Originally, small businesses with less than roughly $2.7 million in debt could file under the subchapter.”
“In response to the economic distress caused by the Covid-19 pandemic, Congress shortly thereafter authorized a temporary increase in the subchapter V debt eligibility threshold to $7.5 million for cases filed on or after March 27, 2020, making more small businesses eligible. The higher cap on these filings is due to sunset on June 21, when the limit could go back to the lower number, adjusted for inflation, unless Congress takes action.”
“Small businesses have begun facing repayment demands for the Economic Injury Disaster Loans that they received from the Small Business Administration during the pandemic, said David Cox, managing attorney at Cox Law Group. ‘Many of my clients weren’t ready for those additional expenses.’”
“Small businesses also turned to merchant cash-advance providers and high-interest products that are easily available online, Cox said. ‘Many of my clients aren’t able to generate enough cash flow to service those loans and then must seek relief in bankruptcy,’ he said.” READ MORE
REGULATION
San Francisco’s new regulations for e-bikes could put bike shops out of business: “There’s no real difference between the chargers for an electric bike and a MacBook Pro. But a new San Francisco law treats one as a dire threat to public safety and the other as a harmless feature of everyday life. Some of the city’s e-bike retailers now say that distinction could put them out of business. Responding to an increased number of fires spawned by improperly charged e-bike batteries, the Board of Supervisors in February unanimously amended the city’s fire code to regulate which e-bikes can be sold and how their lithium-ion batteries are to be handled. Among other things, the law sets a minimum distance between charging stations in stores and—perhaps most cost-prohibitively—mandates the installation of sprinkler systems in shops that charge five or more bikes.”
“‘That basically means you’re putting any bike store without [sprinklers] out of business,’ said Eugene Dickey, the owner of Third Rail EBikes in the Mission District. ‘We’re an older building. I don’t even have plumbing here, so we’re talking on the order of $50,000 to $60,000 to get sprinklers.’”
“Brett Thurber, the founder of Bernal Heights e-bike shop The New Wheel, agreed that safety concerns for cheaply made e-bike batteries are real. But in spite of a few headline-grabbing incidents, he said, the increase in fires is nowhere near the exponential growth in e-bike use.”
“In New York, tens of thousands of food-delivery drivers—often immigrants living in substandard housing conditions—have daisy-chained power strips together, sometimes charging dozens of cheap e-bikes at once and sparking serious fires. That has not been the case in San Francisco, he said.” READ MORE
MARKETING
More advertisers are shifting from Meta and Google to Amazon: “Laura Meyer, the founder and CEO of Envision Horizons, an Amazon agency, said about 70 percent to 80 percent of advertisers' Amazon budgets were going to search ads that drive sales. But Amazon is increasingly investing in advertising technology to grow its ad business beyond search placements and better compete with giants such as Meta and Google. Over the past couple of months, Amazon has added new features to its ‘demand-side platform’ that buys targeted programmatic ads — such as the ability to manage campaigns in bulk and a feature that allows advertisers to quickly vet creative to make sure it doesn't violate any policies — to better compete with other DSPs such as Google and The Trade Desk. Advertisers say Amazon is also pitching the DSP as a key way of buying Prime Video ads.”
“Patrick Miller, a cofounder of the ad agency Flywheel Digital, says Amazon's data is better than that of The Trade Desk and Google because it comes directly from shoppers and is indicative of what products people are interested in.”
“Separately, ad buyers say Amazon is heavily pitching its so-called data clean room that solves for the impending death of third-party cookies. Advertisers use the clean room to find audiences to target ads based on Amazon's first-party data about its shoppers.”
“One advantage Amazon has over Meta and Google is using its shopper data to acquire new customers. Envision Horizon's Meyer said it was getting more expensive and difficult for advertisers to find new customers on Meta.” READ MORE
THE ECONOMY
Insurance costs are driving inflation: “It is costing Americans more to protect against disaster, a development that is pushing up official inflation figures. Various kinds of insurance — including car, medical and property protection — are costing more, at least as official inflation figures measure them. Although it is tough for economic policymakers to do much to snuff out the various drivers behind the trend, the pressure is helping to increase overall prices.”
“Vehicle insurance is the one adding notably to overall inflation, said Omair Sharif, founder of the research firm Inflation Insights. Part of the increase in car insurance comes from the fact that parts and replacement vehicles have become a lot more expensive over recent years, and that is slowly feeding through to insurance premiums, he said.”
“And tenant’s and household insurance has been rising quickly — likely partly as climate-related problems like wildfires and sea level rise make homes in some regions of the country more expensive to insure, increasing the policy premiums that feed into that measure.” READ MORE
SILICON VALLEY
The titans of venture capital are concluding that it’s no longer enough to back a unicorn: “Few venture capital funds are reaping the kinds of enormous windfalls — which come from start-ups going public or being bought — that can secure an investor’s reputation. That also makes it harder for venture firms to raise money, with fund-raising by the industry falling 61 percent last year and some large firms cutting their targets. The last generation of investors, including Mr. Moritz, 69; Mr. Hoffman, 56; John Doerr of Kleiner Perkins, 72; Jim Breyer of Accel, 62; and Bill Gurley of Benchmark, 57, rose to prominence by making bets on consumer internet start-ups like Google, Facebook, Uber, and Airbnb, which turned into behemoths.”
“Today’s up-and-coming venture capitalists are waiting for their version of those winners. Some of the most highly valued start-ups — such as OpenAI, the artificial intelligence company valued at $86 billion — are in no hurry to go public or sell. And the frenzy around generative A.I. could take years to translate into big wins.”
“Many venture funds have also grown so large that owning a stake in a ‘unicorn,’ or a start-up valued at $1 billion or more, is no longer enough to reap the same profits as before. ‘If you want to return three times your fund, then a unicorn isn’t sufficient,’ said Renata Quintini, an investor at Renegade Partners, a venture capital firm. ‘You need a decacorn,’ she added, referring to a start-up worth $10 billion or more.” READ MORE
PROFILE
Marc Lore thinks Wonder could be the Amazon of food and beverage: “His latest scheme, a start-up called Wonder, exists to tackle food delivery, which Mr. Lore believes too often disappoints customers by arriving too slowly. Wonder’s opening salvo, in 2021, was flooding the New Jersey suburbs with hundreds of Mercedes Sprinter vans that could cook menus designed by celebrity chefs like Bobby Flay or José Andrés in customers’ driveways. Demand for food delivery is most concentrated in cities, but Mr. Lore thought that the suburbs held plenty of untapped potential; a van-based strategy faced more challenges in crowded urban environments, which the company planned to work up to.”
“It had been a busy 2023: The company started the year by abandoning the meals-on-wheels strategy — the biggest problem, Mr. Lore said, was finding enough parking — and began cooking food the old-fashioned way, in kitchens. Wonder built 10 locations in and around New York City, from Park Slope to Chelsea to Westfield, N.J.”
“It more than doubled the breadth of its food offerings, bought the meal kit company Blue Apron, secured a $100 million strategic investment from Nestlé, and signed a deal with Walmart to build Wonders in four of its stores. It had also been expanding a part of the business that provides food and technology to food service operations at venues like sporting arenas, hotels, and airport lounges.”
“The business doesn’t fit neatly into an existing food service category. ‘Delivery company’ implies just an app and courier network, like Uber Eats or Grubhub, but Wonder makes all its own food in its own kitchens, too. ... Lately, the company’s internal creative team of seven has coalesced around the tagline ‘A New Kind of Food Hall.’”
“‘This is once in a lifetime,’ Mr. Lore told me, with characteristic zeal. ‘This could be the Amazon of food and beverage.’” READ MORE
THE 21 HATS PODCAST
Man, I’m Glad We Didn’t Do an ESOP: This week, Matt Hoying, president of Choice One Engineering, explains to Shawn Busse and Jay Goltz how he created a DIY employee-ownership plan for his firm. Some 10 years ago, Matt’s predecessor as president tasked him with selecting an ownership structure that would engage employees and help Choice One be as successful as possible. That sent Matt on a mission in which he researched the pluses and minuses of every structure he could find—including employee stock ownership plans—before ultimately creating his own structure.
Matt’s plan doesn’t enjoy the tax advantages of an ESOP, but it’s open even to part-timers, and it requires employees who want to be owners to make a financial investment in the business. In other words, they aren’t given ownership; they have to buy into it. Shawn and Jay quiz Matt on the choices he made and how the plan has worked out.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren