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The Growing Power of TikTok
The impact of TikTok can be seen in two trends: Some influencers are telling consumers what NOT to buy. Others, meanwhile, are causing chaos in restaurants by promoting off-menu items.
Good Morning!
Here are today’s highlights:
Gene Marks says inflation, regulation, and entitled employees make it even harder to run a business in the U.K.
Yes, tech and media companies laid off 5,000 employees in December. But construction companies added 25,000.
What happened to all of the restaurant workers? They found better jobs.
Bob Born was the Henry Ford of Peeps.
MANAGEMENT
Michael Girdley offers 15 smart lessons from the trenches that you won’t find in many business books:
MARKETING
Influencers tell their followers what to buy. Meet the de-influencers: “The term is being popularized in videos by people whose experience runs the gamut: disappointed consumers, savvy beauty bloggers, doctors dispelling skin-care myths and former retail employees dishing on which products they saw returned most often. Their shared guidance is a rejoinder to a seemingly endless stream of recommendations and promotional content on the platform—and a sign of growing backlash to overconsumption. TikTok videos under the hashtag #deinfluencing have surpassed 68 million views.”
“TikTok has become one of the most powerful forces in online retail, helping to boost butt-lifting leggings, luxe lip oils, and green-juice powders, among other trendy products.”
“But a deluge of sponsored videos and hyper-enthusiastic reviews has made it harder for consumers to figure out which items are actually worth their money.”
“De-influencing videos may steer consumers toward cheaper alternatives, also known as dupes, or discourage them from spending money in certain categories altogether.”
“Maddie Wells, a beauty influencer in Lexington, Ky., was early to the trend. She began making videos in 2020 about the products she frequently saw customers return to Sephora and Ulta, where she held sales associate jobs between 2018 and 2021.” READ MORE
TikTok can create tremendous stress for restaurant employees. But isn’t this a great way to develop new products? “At a Waffle House in Georgia, the customer is not always right. The fast-food restaurant was inundated last month with orders for a waffle sandwich that wasn’t on the menu — but was on TikTok. According to videos on TikTok, Waffle House posted handwritten signs pleading with customers to stop ordering a special combo they had seen on social media: ‘Order from the menu,’ one sign read. ‘We are not making anything you saw on TikTok!!’”
“Two weeks earlier, @shantellxoxo posted a TikTok video about how she had satisfied a pregnancy craving by ordering a Texas bacon melt with waffles instead of bread. The combination was so amazing that it could only be described using expletives.”
“Her video got more than 6.3 million views, and TikTok users soon overwhelmed their local Waffle Houses with requests for the sandwich, which costs about $20.”
“This happens often: People post online about their favorite items or custom orders at chain restaurants. These food reviews can spread quickly, leading to overwhelmed employees, chaos at fast-food establishments and ingredient shortages.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
So You Think Building a Business in the U.S. Is Hard? Well, it is, but after spending a month in London, Gene Marks says inflation, regulation, and entitled employees make it even worse there. In fact, Gene says he’s going to stop complaining about conditions in the U.S. (We’ll see.) Plus: why Gene thinks even small businesses should offer unlimited PTO, how to make sure you don’t fall prey to one of the Employee Retention Tax Credit scams, and Gene’s list of things a small business can do with ChatGPT.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
HUMAN RESOURCES
The media got the layoff story wrong: “There have been blaring headlines about layoffs at technology firms and at media outlets—tech because it is the sector housing society’s deepest desires (riches, easy solutions to problems) and fears (dystopia), and media because journalists love gossip/want jobs. So it might surprise you, even with a record low unemployment rate, to know that monthly layoffs and firings since the end of the pandemic recession have been lower than any time since the year 2000, when this kind of data first was collected.”
“For one comparison, even though some 5,000 net jobs were lost in the information sector in December—which includes both media and tech—25,000 construction jobs were added.”
“It’s also important to recall over-hiring during the pandemic among technology and e-commerce companies who bet big on the internet capturing a growing share of economic activity. Meta, for example, grew its ranks by 60 percent between 2019 and 2021.” READ MORE
There’s a reason restaurants still can’t hire enough workers: “Nearly three years since the coronavirus pandemic upended the labor market, restaurants, bars, hotels and casinos remain short-staffed, with nearly 2 million unfilled openings. The leisure and hospitality industry, which before the pandemic accounted for much of the country’s job growth, is still short roughly 500,000 employees from 2020 levels, even as many other sectors have recovered. But these workers didn’t disappear. A lot of them, like McGrath, who were laid off early in the pandemic, moved to behind-the-scenes office work where they are more likely to have increased flexibility, stability, and often better pay.”
“Ashton Rodriquez, who lives in Cleveland, switched careers in March 2020 after nearly 15 years working in restaurants and bars. She had been considering starting her own jewelry business for years but said the jolt of the pandemic sped things up.”
“She makes twice the money she made as a bartender at LongHorn Steakhouse and says she likes having control over her own hours. Instead of working well into the morning, she’s often in bed by 8:30 p.m. ‘Working for yourself is super scary,’ she said. ‘But I would never go back.’” READ MORE
The lack of child care is still keeping parents out of the workforce: “There were about 58,000 fewer daycare workers in the U.S. last month compared with February 2020, just before the pandemic took hold, according to the Labor Department, even though the broader labor market has recovered all lost jobs. Lack of care is one factor that has kept Americans on the sidelines, despite 11 million available jobs at the end of last year. That limited supply of labor is also keeping upward pressure on costs. The median price to put an infant in center-based care ranges from $8,000 a year in less-populated counties to more than $17,000 in a major metro area, according to a Labor Department report. The report found care costs can be nearly a fifth of median family income in high-cost, large cities, and as a result mothers in those areas were less likely to work.”
“‘The wait list just continues to grow, I think we just break hearts every day when we tell people we don’t have space for them,’ said Erica Kral, founder and CEO of Green Garden Child Development Center, which operates several child-care centers in suburban Detroit.”
“‘We just can’t compete with employers in other industries who are able to offer higher wages, flexible hours, remote work,’ she said.”
“Daycare employees earned an average hourly wage of $19.74 in December, according to the Labor Department, in line with pay for restaurant and hotel workers and well below the national average of $32.93 an hour for private-sector workers.”
“Green Garden has raised wages 20 percent since 2020, and three of the company’s administrative staff each spend about 20 to 25 hours a week trying to recruit and schedule interviews for new workers.” READ MORE
Hush trips—when remote workers wander without permission—are the latest work-from-home trend, which can be a real problem for employers: “On the employer's side, hush trips can cause tax and legal headaches if they go on for too long, Courtney Leyes, a partner at the law firm Fisher Phillips, told Insider. In November, a tech startup CEO said he was hit with $30,000 in surprise taxes after a former software engineer worked remotely in California and Texas without telling the company. The first thing businesses need to do when it comes to regulating hush trips is to have a clear travel policy in place, Leyes said, noting that overly strict policies could backfire and provoke employees to hide their whereabouts from their bosses.”
“‘It's kind of like parenting — whenever you're super strict and nobody can ever tell you anything, people do things on the side,’ she said.”
“On top of having a travel policy, Detert said companies need to make their case to employees about why they need to follow certain rules.” READ MORE
21 HATS LIVE FROM CHICAGO
Join us for the very first 21 Hats Live event: This intimate, three-day gathering will be limited to 20 business owners/CEOs. It starts with dinner on Wednesday, May 17, and runs through lunch on Friday, May 19. It will feature lots of opportunities to engage with other owners on similar journeys. We’ll have two deep-dive peer group sessions, for which you’ll help choose the topics. Bring your own challenges! You’ll also get to hang with 21 Hats Podcast regulars including Paul Downs, Jay Goltz, Liz Picarazzi, Sarah Segal, and Dana White. And you’ll participate in the taping of a podcast episode.
Plus: Tour Jay Goltz’s retail operation. Take an architectural cruise on the Chicago River. And make connections that will last a lifetime.
Where: Chicago.
When: May 17-19.
Fee: $2,750. (All meals, activities included. Travel, hotel not included.)
Sign up: Reply to this email with any questions or to reserve your spot.
OBITUARY
Bob Born, the Henry Ford of Peeps: “Mr. Born’s company, which his father founded and which he led for more than 30 years, produces a variety of candies — its best seller is Mike and Ike, the bullet-shaped fruit chews — but Peeps are by far its most recognized, and its best loved. Thanks to mass-production equipment that Mr. Born designed, the company makes more than 5.5 million Peeps a day, or close to two billion a year, the vast majority of which sell in the months leading up to Easter.”
“Around 1953, early in his career at Just Born, with a degree in engineering physics from nearby Lehigh University, he set out to automate the company’s production lines. At the time, the yellow chicks known as Peeps were just a seasonal side product, a legacy holdover from a small confectioner that Just Born bought for its jelly-bean technology.”
“It took him and another engineer nine months to design and build a new machine. They studied the movements of the men who filled the marshmallow tubs and of the women who squeezed the pastry tubes. ‘There was a lot of trial and error,’ he told The Associated Press in 2003. ‘We made so many samples. At first some of them coming down the line looked like seals. So we had to try again.’”
“The company was unprepared for the candy’s subsequent elevation into the pop-culture pantheon. But it quickly embraced its good fortune, sponsoring diorama and recipe contests and even fitting out a pair of old school buses with giant fiberglass Peeps to tour the country.”
“By the 1990s Mr. Born had retired and moved away. But he returned to the company’s headquarters in Bethlehem, Pa., from time to time to join in the city’s many Peep-centered celebrations, including Peepsfest, which culminates with the dropping of a giant Peep on New Year’s Eve.” READ MORE
THE 21 HATS PODCAST
Shawn Busse, Paul Downs, and Jay Goltz go right to the bottom line. Shawn points out how easy it is for businesses to fool themselves into thinking they’re more profitable than they really are. Paul talks about how margins can vary from year to year, especially if an owner decides to invest in improving the business—as Paul’s doing right now. Jay says he’s long sought a 10-percent profit margin but so far, he hasn’t managed to get there. Plus: Shawn explains how he solved his accounts receivable problem. And have you looked at the 401(k) accounts of your employees lately? If not, there’s a good chance you’re going to find that they’re not saving a whole lot. Is that just the employee’s problem, or is it also the owner’s problem?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren
The Growing Power of TikTok
We all should consider whether we need to hire someone who can adapt our content for TikTok.
I think about that all of the time.