The EIDL Confusion Deepens
There is still no word on when Economic Injury Disaster Loan checks might be available.
Good morning!
Here are today’s highlights:
The CEO who turned around Best Buy is now trying to fix capitalism.
Gene Marks says accounting firms shouldn’t even bother setting up a CRM.
And co-working spaces are making a comeback.
FINANCE
Ami Kassar reports that confusion at the SBA over EIDL extensions continues to reign: “Yesterday, the SBA sent out an unknown amount of emails in error to applicants for the EIDL extension. I have heard and read stories of people being notified that they are dead, their business cannot be verified, or their application has been withdrawn. I am still waiting to hear about one that a dog ate the application, but not yet. If you got one of these messages, I have no good advice about what you should do. Phone lines were down yesterday, probably from many upset people, and there were long wait times. I would love to say that I am confident that the SBA knows who they sent the erroneous messages to and is correcting this issue. But, unfortunately, I am not convinced of anything.” READ MORE
MARKETING
Gene Marks, a C.P.A. who runs a firm that helps small businesses with technology, says accounting firms shouldn’t even try to use customer-relations software: “I know this because my tech company has tried – and failed – to implement CRMs at a dozen small and mid-sized accounting firms over the past few years. By failure I mean that each of these firms spent a significant amount of money – tens of thousands of dollars – on software and services only to either find themselves with nothing more than a glorified spreadsheet or abandoning the system altogether. Was it because of the software? No. Was it bad consulting on my part? I don’t think so, although there’s always that possibility. I’ve thought about this a lot and I’m convinced that there are other reasons contributing to these failures that are very particular to my profession.”
“For starters, accountants are not marketers. We never professed to be marketers. We will never become marketers. As CPAs, our lives are based on tangible, data-driven facts. And even though the best marketers are data-driven marketers, we accountants don’t seem to connect that data to our CRM systems.”
“We are bad at collecting and following up leads. We have been trained to analyze past transactions and are not accustomed to looking at the future with things like ‘pipeline reports’ and ‘opportunity analysis.’” READ MORE
COMMERCIAL REAL ESTATE
To the surprise of many, co-working spaces are coming back: “It would be easy to assume that the pandemic had dealt a final blow to co-working spaces. Instead, they are doing just fine, taking advantage of pent-up remote workers and a very confused commercial real estate sector. The Wing and WeWork, both of which endured recent public relations disasters — the former with charges of casual racism and the latter imploding after being significantly overvalued — are reorganizing, with memberships on the upswing. Corporations like IBM and Palantir, many of which are reducing office space, are starting to partner with WeWork and other co-working entities.” READ MORE
HUMAN RESOURCES
Also to the surprise of many, tech workers are returning to the Bay Area: “The pandemic was supposed to lead to a great tech diaspora. Freed of their offices and after-work klatches, the Bay Area’s tech workers were said to be roaming America, searching for a better life in cities like Miami and Austin, Texas — where the weather is warmer, the homes are cheaper and state income taxes don’t exist. But dire warnings over the past year that tech was done with the Bay Area because of a high cost of living, homelessness, crowding and crime are looking overheated. Mr. Osuri is one of a growing number of industry workers already trickling back as a healthy local rate of coronavirus vaccinations makes fall return-to-office dates for many companies look likely.”
“Bumper-to-bumper traffic has returned to the region’s bridges and freeways. Tech commuter buses are reappearing on the roads. Rents are spiking, especially in San Francisco neighborhoods where tech employees often live.”
“Median San Francisco home prices, which bottomed out at a still-jarring $1.58 million for a single-family home in December, recently hit $1.9 million, according to the California Association of Realtors. That’s higher than before the pandemic.”
“‘I think people were pretty noisy about quitting the Bay Area,’ said Eric Bahn, a co-founder of an early-stage Palo Alto, Calif., investment firm, Hustle Fund. ‘But they’ve been very quiet in admitting they want to move back.’” READ MORE
REOPENING
Springfield, Mo., is being ravaged by the delta variant, with hospitalizations surging beyond capacity: “Experts fear that the surge in Springfield, known as the birthplace of Bass Pro Shops and Andy’s Frozen Custard [as well as Jack Stack’s SRC Remanufacturing], is a harbinger of tensions to come as people play down the pandemic and refuse to get vaccinated even in the face of overwhelmed hospitals and preventable death. Instead of unifying the community, the surge has hardened divisions, unleashing anger from health-care workers fed up with vaccine misinformation and exposing deep antipathy toward the public health establishment. New infections are rapidly rising to levels not seen since early January, prompting the school system to reinstate a mask mandate for summer school.”
“‘It’s a sad reality that we are facing,’ said Katie Towns, the acting health director. ‘I don’t think we are coming out of it anytime soon. We are going to see more people get really sick. We are going to see a lot of people die.’” READ MORE
In Los Angeles County, Covid restrictions are coming back: “Just a month ago, Los Angeles County and the rest of California celebrated a long-awaited reopening, marking the tremendous progress made in the battle against COVID-19 by lifting virtually all restrictions on businesses and other public spaces. Now, the coronavirus is resurgent, and the nation’s most-populous county is scrambling to beat back the pandemic’s latest charge. Starting Saturday night, residents will again be required to wear masks in indoor public spaces, regardless of their vaccination status.”
“‘This is an all-hands-on-deck moment,’ said Dr. Muntu Davis, the county’s health officer.”
“The order will continue to allow indoor restaurant dining, although people will need to keep their masks on when they’re not eating or drinking.” READ MORE
VENTURE CAPITAL
Maveron, a VC firm, has been designated a B corp: “The designation is given to for-profit companies that adhere to standards for social and environmental performance, public transparency, and legal accountability. The idea is to make sure businesses have an overall positive impact on the world — to balance profit and purpose, according to B Lab, a nonprofit that administers certifications. There are more than 3,500 ‘B Corp’ businesses worldwide.”
“The firm, which has offices in Seattle and San Francisco, first learned about ‘B Corp’ when it invested in popular shoe brand Allbirds in 2016. Other startups in its portfolio, which is focused on business-to-consumer companies, also have the certification.”
“Notable exits include eBay, Groupon, Shutterfly, Trupanion, Zulily, and others. More recent investments include Pacaso, Booster Fuels, Imperfect Foods, Modern Fertility, and more.” READ MORE
MANAGEMENT
Hubert Joly, who turned around Best Buy, is calling for the end to profit maximization: “The world we live in is not working. We have these multifaceted crises — health crises, economic crises, societal crises, racial crises, environmental issues, geopolitical tensions. For me, on the top of my F.B.I. most wanted list are two people. One is Milton Friedman, with his shareholder primacy — the excessive, obsessive focus on profits as the key thing that matters. And the other one is Bob McNamara, with the model of scientific, top-down management — getting a bunch of smart people, coming up with a plan, tell everyone else what to do, put incentives in place and hope something is going to work.”
“The combination of these two things is what got us here. It’s sad because if instead of following Milton Friedman we had followed Peter Drucker, it would have been a different situation.”
“I’m on the record saying that the more taxes I pay, the happier I am.” READ MORE
THE 21 HATS CONVERSATION
Last month, at the Tugboat Institute Summit, I heard one of the best talks I’ve ever heard at a business conference and one of the few to get a standing ovation. It was given by Mel Gravely, who is CEO of TriVersity Construction and who is about to publish a book called “Dear White Friend.” On Tuesday at 3 ET, Mel will join me for a 21 Hats Conversation about how managed to become CEO/owner of a construction business, why he chose to write a book addressing the issue of race, and what he would ask of other business owners. Bring your own questions. REGISTER HERE
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 by noon. You can subscribe wherever you get podcasts or you can LISTEN HERE
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