Discover more from The 21 Hats Morning Report
If you’re trying to reach young people, you’re going to want to know about BeReal, a social media app that eliminates filters.
Here’s hoping you have a wonderful Memorial Day weekend. Both the 21 Hats Morning Report and the 21 Hats Podcast will be published next on Tuesday.
And here are today’s highlights:
José Andrés’ World Central Kitchen is already serving meals in Buffalo and Uvalde.
Amazon has opened its first brick-and-mortar clothing store.
What’s happening in Silicon Valley right now follows years of “wildly inflated valuations, crypto-flavored pyramid schemes, and all manner of naked opportunism.”
A class-action lawsuit could be an existential threat to the crypto industry.
Companies are experimenting with yet another social media app, BeReal, which is becoming Gen Z’s new fave: “BeReal essentially promotes a ‘be yourself’ mantra and filter-free reality. So what’s a company doing on there? Well, in Chipotle’s case, Gen Z and millennials make up half of its consumer base, so the chain figured it would give the app a try. Chipotle’s first campaign focused on boosting its profile: It posted a reusable promo code where the first 100 people who used it would get a free entrée. ‘The response was incredible the first day,’ Candice Beck, Chipotle’s director of social and influencer, told Retail Brew. ‘All of our codes were gone in about 30 minutes, because it was new. And we’re still gaining followers. We just told people, and then every day after that, it was under a minute.’”
“The company now has 2,000 ‘friends’ (BeReal terminology) on the platform. But, put in perspective, Chipotle has 1.7+ million followers on TikTok, where it says it sees the highest engagement.”
“‘It’s very clear that time after time, the earlier you are on a certain platform as a brand, the more success you’ll have on it,’ Horne said. ‘If nothing else, it’s a very low-risk way to test and just see what customers engage with their content, and frankly, what it does for your brand.’” READ MORE
Here’s more about BeReal, which can be thought of as the anti-Instagram: “In the past few months, the platform has seen a surge in users, accompanied (or perhaps catalyzed) by a rash of glowing media coverage, including in the Wall Street Journal, Teen Vogue, and Business Insider. To summarize the BeReal user experience: once a day, at a random time, the app sends a push notification to its users, granting them two minutes to snap a two-way photo using their phones’ front- and rear-facing cameras. Only after posting the daily photo can users see what their friends have posted; photos taken after the two-minute window are marked as late, and metadata reveal how many times a photo has been retaken before the final image is posted—an element supposedly designed for the sake of transparency, but which reads more like a badge of shame.”
“The permascroll reveals people walking their dogs, studying for finals, eating dinner, watching movies, reading, and brushing their teeth.”
“Instagram was initially marketed as a sort of online photo diary, but using BeReal is perhaps an even more voyeuristic venture, one which drops the user not into major life events or chosen moments but, rather, pinprick views into the everyday in all its banality.” READ MORE
Gene Marks says employee ownership is growing because it offers owners a way to exit, it offers big tax savings, and it can improve a company’s culture: “In a typical employee-ownership transaction an entity owned by the company’s employees (which can include the owner) is created. That entity then buys a portion or all of the company’s shares. A bank generally finances this purchase so the employees are not out of pocket (remember: this is a benefit plan). The company pays back the bank, and gets a tax deduction by doing so. But there’s even more. The income from the company that’s allocated to the entity is also non-taxable to its owners.”
“Research from Rutgers University showed companies with an employee stock ownership plan laid off fewer employees, cut fewer salaries and required less help from federal aid packages during the pandemic.”
“According to Kaiser Permanente, employees who have equity in the companies they work for report 33 percent higher median income, 53 percent longer median job tenure and 92 percent higher household net worth. Employers say their profit margins are 8.5 percent higher and that they are three to four times more likely to retain staff.”
“I don’t want to completely sugarcoat employee ownership because there are some potential obstacles to consider.” READ MORE
José Andrés continues to set a remarkable example:
It has taken time, but Guy Fieri has won respect and become a powerful force in the restaurant industry: “Mr. Fieri has emerged as one of the most influential food philanthropists of the Covid age, helping to raise more than $20 million for restaurant workers. He has established himself as an industry mentor among chefs who may or may not admire his cooking but recognize his gifts as a messenger, which have boosted business for the hundreds of restaurants featured on his show. He has won the blessing of the white-tablecloth set through sheer force of charisma and relentlessness, coaxing a reconsideration of how the food establishment treated him in the first place.”
“‘I don’t think he had the respect of people like me or people in the food industry,’ said Traci Des Jardins, an acclaimed Bay Area chef who has become a friend. ‘He has earned that respect.’”
“‘An amazing individual,’ said the philanthropic chef José Andrés, recalling how Mr. Fieri churned out plates of turkey for wildfire evacuees in 2018.” READ MORE
Big cities continued to lose residents as the pandemic dragged on: “The largest cities lost a greater share of residents than small- and midsize cities during the year that ended July 1, 2021, new estimates show. Collectively, in the nine cities with more than one million people, the population fell 1.7 percent, a loss of 419,000 residents. Only two cities in that group grew: Phoenix and San Antonio. New York, the nation’s largest city, lost 3.5 percent of its residents, or about 305,000 people. The second-largest city, Los Angeles, lost 1 percent, or 41,000 people, while the third-largest, Chicago, lost 1.6 percent, or 45,000 people.”
“San Francisco’s population fell 6.3 percent, a loss of 55,000 people. It and Chicago have lost so many people that their populations have fallen close to their 2010 levels.”
“Several large cities that had logged gains in recent years saw losses, including Denver, Nashville, Tenn., Seattle and Atlanta.” READ MORE
Amazon has opened its first brick-and-mortar clothing store: “Called Amazon Style, the shop is located in Glendale, California, near Los Angeles. The Seattle-based company has pledged to open stores only when it has something original to offer customers. In Style’s case, the new wrinkle is an app that lets shoppers scan codes on displayed items, which employees fetch in the right size or color and then send to a fitting room or checkout counter. Amazon has built a giant e-commerce business selling basic clothing items like packs of t-shirts. But it has had less success courting fashion brands, which have long balked at counterfeits on Amazon’s third-party marketplace.”
“The new store will sell brands including Lacoste, Levi’s, and Steve Madden, according to the outlet’s website.” READ MORE
The tech selloff is real: “Over the past half-century, Silicon Valley has toggled between two similar-sounding pursuits that are often in conflict: wealth creation and money making. Wealth creation is the act of invention and patient, long-term business building. It’s the rising tide that lifts the boats of employees, shareholders, and everyone else. Money making is the baser impulse: the hunt for a quick buck. The technology industry and its risk-happy patrons have learned, time and again, what happens when short-term profiteering takes precedence over the development of stable companies that can create cool stuff. And yet, here we are again. Years of wildly inflated valuations, crypto-flavored pyramid schemes, and all manner of naked opportunism have led us to the Bust of 2022.”
“It started with the two things that motivate all venture capitalists: 1) a paralyzing fear of missing the next big thing, and 2) greed.”
“To attract the most promising startups, certain VC firms, notably Andreessen Horowitz, eagerly endorsed this high-stakes grade inflation and often allowed founders to cash out before they’d proved their business models.”
“The mania seemed to reach its most ‘something ain’t right here’ moment during this year’s Super Bowl, when NBC broadcast crypto ads starring LeBron James, Matt Damon, and Larry David. For techies who aren’t old enough to remember the infamous sock-puppet commercials that seemed to signal the popping of the dot-com bubble, the Super Bowl ads provided a taste of what that felt like.” READ MORE
A lawsuit could decide an existential question for crypto companies: “Attorneys for cryptocurrency-trading platform Coinbase Global filed a motion this month to dismiss a class-action lawsuit arguing that 79 of the tokens listed on the firm’s platform are unregistered securities. The group of Coinbase users is demanding reimbursement for trading fees and market losses and seeking to prevent the assets from continuing to trade on the platform. Outside of enforcement actions, the Securities and Exchange Commission hasn’t indicated which cryptocurrencies it considers to be securities.”
“But federal statutes passed in the 1930s deputize ordinary investors to help the SEC do its job, by giving buyers of unregistered securities the right to sue the seller for their money back.”
“The evaporation of some $1.5 trillion from cryptocurrency markets in the past six months could give investors a new incentive to test that power.”
“U.S. laws impose meticulous regulations and burdensome disclosure requirements on issuers and intermediaries that sell securities, a category of assets that includes stocks and bonds. They also create potentially crippling liabilities for anyone who skirts the law.” READ MORE
THE 21 HATS PODCAST
The Early Warning Signs: “I see it, and I feel it,” Liz Picarazzi tells Shawn Busse and Jay Goltz this week in a conversation about the looming recession many are predicting. But Liz is not hunkering down. In fact, she has launched an ambitious marketing campaign that relies not on Google AdWords but on Google Alerts. She’s also taking some advice from Carey Smith, the founder of Big Ass Fans, that she didn’t want to hear when it was first offered. Plus: How some owners trap themselves in miserable businesses. And Shawn, Jay, and Liz suggest regulations that need to die—with Jay going off on the way businesses are compelled to pay for unemployment insurance.
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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