The Ben & Jerry’s of Apple Sauce
Since he was 15, Ethan Holmes has dreamed of building an applesauce empire. Now he’s preparing to test-launch in Walmart.
Good morning!
Here are today’s highlights: Venture funding for Black-owned businesses has grown (a little). Maybe California isn’t doomed? And is there a smarter way to end supplemental unemployment benefits?
CYBER SECURITY
Cyber insurance companies are raising premiums and limiting coverage for ransomware: “Prices for at least half of insurance buyers went up 10 percent to 30 percent in late 2020, according to a survey cited by the U.S. Government Accountability Office. In some cases, annual premiums that companies are expected to pay have increased by as much as 50 percent, said Joshua Motta, founder of insurance tech company Coalition. Many insurers also are restricting how much cyber coverage they can offer or limiting the terms and conditions, several industry executives said. In some cases, that means slashing the amount of reimbursement that can be used specifically for ransomware attacks.”
“At the same time, the GAO study shows that companies are increasingly opting to buy cyber insurance — large insurance broker Marsh McLennan told the agency that 47 percent of its eligible clients decided to get the coverage last year, compared with 26 percent in 2016.”
“Adding to the chaos is the fact that hackers themselves are sometimes targeting companies specifically because they have insurance.” READ MORE
Paying the ransom doesn’t always work: “In a global survey of nearly 1,300 security professionals, two-thirds said that their company had suffered a significant financial loss due to a ransomware attack. About one-third of the victims had paid a ransom. But of those, 80 percent said they suffered a subsequent attack after paying, often by the same criminals responsible for the original breach. The report also said that while most victims who paid got their data back, 46 percent found that some or all of the data had been corrupted, making it difficult or impossible to use.”
“‘This is the reason I came to the conclusion that it doesn’t pay to pay,’ said Cybereason chief executive Lior Div.”
“The Cybereason survey found that ransomware takes a major toll on businesses. Two-thirds of ransomware victims suffered a substantial revenue loss, 29 percent were forced to lay off workers, and 26 percent were driven out of business altogether.” READ MORE
HUMAN RESOURCES
Have some states found a smarter way to end supplemental unemployment benefits? “Lawmakers in states like Maine, Arizona, Kentucky, and Connecticut are all launching programs that turn expanded unemployment benefits into a one-time bonus given to unemployed people who obtain jobs.”
“Adding the bonus increases the incentive for people to find work, while allowing jobless people who depend on the benefits to continue receiving them.” READ MORE
Many companies are looking to hire remote workers—unless the workers are in Colorado: “At issue is a new Colorado law that requires companies with even a few employees in the state to disclose the expected salary or pay range for each open role they advertise, including remote positions. The rule’s aim is to narrow gender wage gaps and provide greater pay transparency for employees. To avoid having to disclose that information, though, some employers seeking remote workers nationwide are saying that those living in Colorado need not apply.” READ MORE
STARTUPS
Holmes Mouthwatering Applesauce Is preparing to test-launch in Walmart: “Since he was 15 years old, Ethan Holmes has had one dream: to build an applesauce empire. In college, he would map out his plans on the walls of his dorm room. ‘Anytime I could get my hands on $20, I'd buy fruit just to make applesauce,’ Holmes, now 27, told Insider. He attended Hiram College and dropped out in 2015 to launch his company. He invested $20,000 to launch Holmes Mouthwatering Applesauce, which has since expanded into more than 300 stores across the Midwest, including Whole Foods, Kroger, and Acme Fresh.”
“‘We're trying to be the Ben & Jerry's of applesauce,’ he said. ‘Nobody has been able to shape up applesauce the way ice cream has been.’”
“In 2018, the global applesauce market was valued at over $900 million, and in the U.S., one name rules them all: Motts. Other big names include Musselman's and Gogo Squeez.”
“For his efforts so far, Holmes Mouthwatering says it has received over six figures worth of investments and was accepted into Chobani's Incubator program for food startups last year.” READ MORE
THE ECONOMY
It turns out that reports of California’s economic doom have been greatly exaggerated: “No one anticipated the latest data readout showing the Golden State has no peers among developed economies for expanding GDP, creating jobs, raising household income, manufacturing growth, investment in innovation, producing clean energy and unprecedented wealth through its stocks and bonds. All of which underlines Governor Gavin Newsom's announcement last month of the biggest state tax rebate in American history.”
“By adding 1.3 million people to its non-farm payrolls since April last year -- equal to the entire workforce of Nevada -- California easily surpassed also-rans Texas and New York.”
“At the same time, California household income increased $164 billion, almost as much as Texas, Florida and Pennsylvania combined, according to data compiled by Bloomberg.”
“The state’s gross domestic product increased 21 percent during the past five years, dwarfing No. 2 New York (14 percent) and No. 3 Texas (12 percent), according to data compiled by Bloomberg.” READ MORE
VENTURE CAPITAL
Venture funding for Black-owned businesses is growing: “According to a 2020 Morgan Stanley survey of venture capitalists, 43 percent said finding opportunities to invest in companies with nonwhite founders was a priority, up 10 percentage points from the prior year. Another 61 percent said the Black Lives Matter movement had affected their investment strategy.”
“Though levels are still low, there are signs of an uptick under way: So far this year, companies with Black founders have received 1.4 percent of all U.S. venture-capital funding ...”
“Last year, there were a record 306 venture-capital investments in Black-founded U.S. companies, nearly twice the number from five years earlier.”
“The pandemic has helped spur a cultural shift in venture capital over the past year, as more investors jettisoned their typical face-to-face pitch meetings in favor of Zoom, says Michael Seibel, a managing director of Y Combinator ....” READ MORE
GOVERNMENT SUPPORT
As you may have noticed, the SBA’s capabilities were overwhelmed by the pandemic—especially its Office of Disaster Assistance: “Since March 2020, the office has issued roughly $211 billion in pandemic-related Economic Injury Disaster Loans, three times as much aid as in the previous 68 years combined. In total, the office has provided roughly 9.8 million loans and grants totaling more than $230 billion, SBA data show. These pandemic responsibilities would have challenged even the best-run government agency.”
“Small firms accounted for 47 percent of the private sector workforce in 2017, the most recent data available, and after being disproportionately hit by the pandemic, they are lagging behind bigger companies as the economy reopens.”
“Nearly one-third of small employers say it will take them more than six months to recover from the pandemic, according to a Census Bureau survey.” READ MORE
BUSINESS TRAVEL
It continues to look as if business travel isn’t coming back any time soon: “Mike Volpe, chief executive of Boston corporate travel firm Lola.com, said his team expects to see fewer business trips when video is a good substitute and when the travel time is high compared to the duration of the meeting. That translates to far fewer day trips for a single meeting with a small group of people. ‘When you talk about flying across the country for an hour meeting, is that really going to be necessary?’”
“Fewer short trips might mean fewer one-night stays, though Airbnb cofounder Nate Blecharczyk sees a potential upside:”
“With more companies allowing employees to work from anywhere, more people could travel to the headquarters for longer stretches, such as one week per quarter, for face time with colleagues.” READ MORE
THE MORNING REPORT WEEKLY WRAP-UP
Every Friday, Gregg Stebben of the Small Business & Entrepreneurship Council and I offer our takes on the week’s most important stories for business owners and entrepreneurs. We post a new episode Fridays at noon. You can subscribe wherever you get podcasts or you can LISTEN HERE
THE 21 HATS PODCAST
Episode 64: Adventures in Candyland: This week, Stephanie Stuckey tells Jay Goltz and Dana White about moving closer to the candy factory she recently bought to get a better feel for the people, the operation, and the challenges. Right now, those challenges include recruiting enough employees, absorbing increased supplier prices, and figuring out how much she should raise her own prices: “We can only give up so much of our margin, right?” she tells us. To which Jay responds, “Why give up any?” Plus: we talk about competing for labor with Amazon, whether to require employees to get vaccinated, how to manage legal fees, and whether Dana’s feelings of FUD have eased.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
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