The Child-Care Crisis Hits Home

In a new report, business owners say the inability of employees to find affordable child care is stunting their growth.

Good Morning!

Here are today’s highlights:            

• Are you really the only one who can complete that task? Or are you just not good at delegating?

• Landlords are turning to pricing software that encourages them to raise rents even if it means more vacant apartments.

• More than 40 percent of small businesses suffered a cyber attack last year.

• How a Detroit-style pizzeria uses Instagram to sell out its inventory in minutes.

MANAGEMENT

Tony Castaldi writes about the fear of delegating—and how to overcome it: “My business took off when I learned how to delegate effectively, and I was able to work less while getting more done. It's a common challenge for business owners to delegate tasks, even when they're overwhelmed and have a team to support them. Common reasons given for not being able to delegate: 1) I am the only one that knows how to do it. 2) Nobody can do it as good as I can. 3) I feel arrogant passing off my work to someone else. All three of these reasons begin and end with you. Here is how you tackle the challenges mentioned above.”

• “Get the information out of your head and create a process for others to follow.  Do not just tell them, give them something to reference. It takes time initially, but allows you to pass it on to someone else effectively.”

• “Set clear expectations for what success looks like before delegating. Set a clear timeline for the work being delegated. Let them do it their way.  Micromanaging is ineffective and demoralizing.”

• “Delegating will level up your business and allow you to have a life outside your company.” READ MORE

POLICY

The child-care crisis is having a big impact on small businesses: “Fifty-nine percent of small business owners affirm that barriers to child-care access are preventing them from growing their business, with about a quarter of founders noting that they've had to shutter their company entirely, and return to the broader workforce that offers more flexibility, because of child-care problems. That's according to a new research report from Small Business Majority, a small business advocacy group in Washington D.C. In late January, the organization polled 566 founders across the country who are either working parents or employ working parents. The report does not mince words: a lack of affordable and accessible child care is preventing the country's entrepreneurs from flourishing. Thirty-nine percent of founders share that they missed out on business opportunities due to child care problems, while another 51 percent of business owners say they've faced diminished productivity when staff face issues accessing care for their children.”

• “‘Along with rising costs, finding and accessing childcare is a struggle, as half of Americans live in child-care deserts where no care is available,’ the report reads. ‘This puts working parents in a precarious position of having to choose between leaving the workforce or leaving their communities to find affordable, quality child care.’”

• “Care is pricey in America: workers pay thousands of dollars per month, which largely fluctuates depending on what part of the country they live. The Washington D.C.-based Center for American Progress, a public policy research firm, finds that working parents with infants spend roughly $16,000 a year to cover child-care costs.”

• “Business owners are calling on Congress to take action to lower the high costs of child care: 67 percent of survey respondents believe that the Child Care Stabilization program should be renewed since it extended $16 billion in annual grant funding to child care providers, helping them lower costs.” READ MORE

PRICING

Landlords using pricing software to raise rents are being accused of price-fixing: “Big-time apartment owners, it turns out, also had a secret weapon: a Texas company called RealPage, which sells software to property managers to help them set rents and juice their profits. Its algorithm tells landlords exactly how much rent they should charge for units in their buildings, based on a potent mix of both public and nonpublic data that property owners supply to the company.”

• “RealPage openly brags about its ability to help clients ‘outpace the market in good times and bad.’ In a new lawsuit against the company, Kris Mayes, Arizona's attorney general, offered a translation: ‘Outpace' is code for charging higher prices than what would be charged in a market untainted by collusion,’ the complaint reads. ‘This is price fixing, and it is illegal.’”

• “The lawsuit is one of dozens that accuse RealPage of operating a vast conspiracy to overcharge renters via its prized algorithm. Critics say the cooperation between RealPage and apartment managers has emboldened landlords to raise prices even if it means more units are left empty when tenants are forced to leave. Without RealPage, the plaintiffs argue, landlords would be hesitant to jack up rents; instead, they'd focus on keeping their buildings full.”

• “The cases offer a revealing glimpse at how corporate apartment owners rely on technology to wring every last dollar out of tenants, who often have little idea how their rents are calculated or why a double-digit annual percentage increase is justified. But a win for the plaintiffs is far from guaranteed.” READ MORE

CYBER SECURITY

More than 40 percent of small businesses suffered a cyber attack last year: “Four years in, Brillies was making more than $1 million in sales a year. It had been featured in Vogue, Harper’s Bazaar, and Sports Illustrated. Movies and TV shows were contacting her, so were celebrity stylists. [Owner Kaila] Uli loved every minute of it: She was passionate about vintage. She felt this spark when she would talk about it. ‘When my sales hit six figures a month, I was like, Oh my God, what a dream! And then … boop!’”

• “That boop happened in June 2021, when Uli woke up to something strange. ‘ There had been no sales overnight and I was like, That is so weird.’ Normally Uli would wake up to hundreds of sales. She figured maybe it was just a slow day. She kept checking. But a few hours later, she still had no sales.”

• “Then she checked her website and realized she was under cyberattack. Basically, an army of zombie computers, or bots, kept sending requests to Brillies, over and over again, in a ‘denial of service,’ or DDoS, attack. ‘In a DDoS attack, your site gets flooded with bot traffic, and it overwhelms your servers. So the reason my sales were gone was because I was knocked offline.’ Uli did have cyber-insurance. She contacted her provider, who told her for an attack like this, she basically needed to wait it out.”

• “Cyberattacks against businesses have been on the rise for years, and most of the companies that get targeted are not big, multinational corporations with armies of tech workers. Most are small. In fact, more than 40 percent of small businesses fell victim to a cyberattack last year. And a lot of those businesses don’t have a big IT team or a financial cushion to deal with an attack.” READ MORE

THE ECONOMY

Consumer prices came in hotter than expected in March: “The consumer-price index, a measure of goods and services prices across the economy, rose 3.5 percent in March from a year earlier, the Labor Department said Wednesday, up from 3.2 percent in February. Excluding volatile food and energy categories, so-called core prices rose 3.8 percent from a year earlier. Of particular interest to investors and economists who care mostly about recent trends, the increase in core prices was 0.4 percent over a one-month period. That was above economists’ expectations for a 0.3 percent gain.”

• “Investors and economists have been looking forward to Wednesday’s release with unusually high interest—even by the standards of CPI reports, which are always a highlight of the monthly economic calendar. Recent data showed inflation running higher than expected in January and February, an unwelcome break from months of encouraging reports that showed a marked decline in the pace of price increases.”

• “Still, Federal Reserve officials haven’t reacted as strongly to those firmer readings as they might have, describing them as bumps on the road to their 2 percent inflation target that don’t derail plans to cut interest rates this year. That has put extra focus on the March CPI reading.” READ MORE

REAL ESTATE

Downtown St. Louis is stuck in a real estate nightmare: “Cities such as San Francisco and Chicago are trying to save their downtown office districts from spiraling into a doom loop. St. Louis is already trapped in one. As offices sit empty, shops and restaurants close and abandoned buildings become voids that suck the life out of the streets around them. Locals often find boarded-up buildings depressing and empty sidewalks scary. So even fewer people commute downtown. This self-reinforcing cycle accelerated in recent years as the pandemic emptied offices. St. Louis’s central business district had the steepest drop in foot traffic of 66 major North American cities between the start of the pandemic and last summer, according to the University of Toronto’s School of Cities.”

• “‘It’s a classic chicken-and-egg kind of deal,’ said Glenn MacDonald, a professor of economics at Washington University in St. Louis’s Olin Business School. ‘People don’t go there because there’s nothing to do. There’s nothing to do because people don’t go there.’”

• “In a campaign to revive its office district, the city is trying to get more people on the streets. It is adding landscaping, bike lanes, and traffic barriers. Greater St. Louis Inc., a business and civic organization, pays buskers to play on street corners. The goal ‘is to put more people on the street doing positive things,’ said Kurt Weigle, the group’s chief downtown officer.”

• “His organization and the St. Louis Development Corporation this month launched a program that hands out up to $50,000 to retailers that move downtown to help pay for construction work. The program also plans to hand out cash for sidewalk cafes and pop-up shops. Discounted rents and other incentives have helped fill some empty storefronts and boosted foot traffic in cities including Minneapolis, but aren’t seen to be enough to offer true revitalization.” READ MORE

TECHNOLOGY

A tech columnist makes the argument that YouTube is the most consequential technology in America: “You think you know YouTube. It’s where billions of people learn how to change a tire, follow a favorite yoga workout or catch footage of Monday’s solar eclipse. But maybe you don’t know that YouTube is also the most popular way to hear music and one of the country’s largest cable TV providers. YouTube is the healthiest economy on the internet. And it has been rocket fuel for artificial intelligence. I’m digging into YouTube’s identity because it’s essential to understand the influence of technologies in our lives. As popular as YouTube is, its power over the internet and us is somehow still underrated.”

• “If you post on Instagram, Facebook, TikTok, Reddit, or X, you are basically making those companies’ products for free. YouTube doesn’t work that way. From each dollar that advertisers pay for commercials on many millions of YouTube videos, the person who made the video gets 55 cents. Google, which owns YouTube, keeps the rest.”

• “YouTube has had this financial arrangement for close to 20 years. Still today, no other large app has such a consistent way for people to earn income from what they create and post online. YouTube’s revolutionary payment system matters to you even if you never earn a dime from making a YouTube video.”

• “If you buy a subscription to YouTube Premium, which lets you watch videos without ads, YouTube hands over portions of your money to the video makers, in proportion to your viewing time. If you watch a lot of videos from MrBeast and Not Just Bikes, those YouTube channels will receive a large chunk of your subscription money. The relatively democratic system to pay the people making stuff is not how most music services like Spotify or Netflix work.” READ MORE

MARKETING

Scarcity and an unusual ordering system has made a Detroit-style pizza all the rage in Rhode Island: “Despite its name, the only way to get a Hotline Pizza is to slide into their Instagram direct messages once a week when ordering opens. Only some will make the cut. On a recent weekend, Hotline closed ordering after one minute, receiving more than 400 requests for just 120 available pizzas. ‘I feel like I’m in 1990 trying to win New Kids on the Block tickets,’ wrote one member of a Facebook group devoted to local pizza.’ Behind that demand is some seriously great pizza — but it’s also being driven by the pizza-obsessive RI Pizza Fans group online. Local pizzerias say the group’s enthusiasm influences business, and the resulting online food fight over who gets Hotline — and who doesn’t — may illustrate how the internet can stoke division even when we’re talking about one of the most unifying foods.”

• “Hotline owner Elijah Rumbarger served pizza as the staff meal at the fine dining restaurant where he worked pre-pandemic, and it was a hit. Now, the tiny operation has become the relentless talk of the usually convivial Facebook group — those who love it versus those who prefer to pick up the phone, thank you very much. There were arguments. There were memes.”

• “In early February, Hotline posted that they’d sold out in three minutes, and within a few weeks, they were selling out within a minute. One reason Hotline is so popular is its novelty. Author Peter Reinhart, who once taught at Johnson & Wales in Providence, said Gus Guerra, a Detroit restaurateur, was first to use blue steel pans — used in motor repair — to make the first Detroit-style pizzas. Taller pans allowed thicker toppings, as cheese melted down the edges, said Reinhart.”

• “Another reason behind the Hotline frenzy is the relentless talk in the Facebook group. If word of mouth was a driver before, the group has turbo-charged that. Brian Sclama of Cranston said he founded the group with his wife, Vanessa, in order to post pizza photos and support local businesses. ‘We were just sharing pizza,’ he said. Now, more than 23,000 others have joined in. Pizzeria owners caught on, too, visiting the group to promote specials.”

• “Some say the Hotline ordering system is not only easy but fun. Evan Dale Lunsford of Smithfield said that despite rumors that it is difficult to place an order, he was inspired to try and managed to place an order on his first attempt. ‘We called our parents and we were like, We won the lottery,’ he said. ‘The pizza lottery.’” READ MORE

THE 21 HATS PODCAST

Do You Take This Man to Be Your Business Partner? This week, Liz Picarazzi, Jaci Russo, and Laura Zander talk about what it’s been like building a business in partnership with a spouse, and they all agree on some important things. For one, they all say that, had their husband been just another employee, he probably would have been fired. All three say that in their relationships, they are the gas that drives the business, and their husband is the brake that sometimes keeps them out of trouble and sometimes frustrates their entrepreneurial instincts.

• And all three agree that some things are best left undiscussed. For example, says Jaci: “Michael doesn’t even know what we make. He also doesn't know what any of the employees make.” But the three CEOs also agree on this: In the final cost-benefit analysis, they wouldn’t want to build a business any other way.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

Thanks for reading, everyone. — Loren