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The Growth Trap
Yet another saga of a Silicon Valley entrepreneur who may have had a good idea but promised more than he could deliver.
Here are today’s highlights:
Are you offering support for child care and dependent care?
Gene Marks changes his mind about specialized CRM software.
There’s a reason so many tech jobs and entrepreneurs are heading to Canada.
Conference rooms may never be the same.
Has inflation peaked? “U.S. inflation eased slightly in April to an 8.3 percent annual rate, the Labor Department said Wednesday, dropping for the first time in eight months as energy prices moderate. The consumer-price index measures what consumers pay for goods and services. The annual rate of inflation has risen sharply since early 2021, when the U.S. economy’s rebound from the Covid-19 pandemic accelerated, leading to supply disruptions and other imbalances that have put upward pressure on prices.”
“Some of the price surges fueling inflation are starting to ease. Gasoline prices fell slightly in April, after the late February Russian invasion of Ukraine sent them skyrocketing. Improving supply chains have also taken the edge off rapid price gains for vehicles.”
“‘Now what we’re starting to see is that pressure is no longer emanating from the supply side—it’s emanating from the labor-market side. And that’s less likely to go away on its own,’ said Ms. Markowska. ‘So the Fed will have to work that much harder to get us back to 2 percent inflation.’” READ MORE
Gene Marks is rethinking specialized CRM software: “When clients ask me about vertical — or industry specific — CRMs I generally poo-poo the idea. For me, a CRM is all about people, and if you’re doing business with people, then any mainstream application with a little customization should usually be fine. I’m also wary about niche players because they oftentimes lack the resources, community and support infrastructure of their bigger competitors. But reading about Rinsed has changed my mind a bit. Why? Because I must admit if I were operating a car wash I would probably want a CRM for car washes.”
“For starters it comes out of the box with an ecommerce platform already configured for a car wash and enabled to handle online checkouts as well as track both visits and conversions and support credit card payments.”
“Just as importantly, it automatically integrates with many of the popular point-of-sale systems used by car washes and is configured to setup memberships and subscriptions, which has become a critical revenue model for the industry. And, of course, it comes with analytics and reports specific to the industry.”
“Can all of this be done with a Salesforce, Zoho, Dynamics or other mainstream CRMs? Yes. But it would take some customization, perhaps a little development, and certainly integrations with other third-party products.”
“But then again, the chances of one of those companies folding up and going away are pretty remote. That’s a pretty big deal, particularly if you’re a smaller operator who relies heavily on its CRM as a core business application.” READ MORE
Are you offering support with child care? “Almost half of mothers with young children who left the workforce cited child care as a reason for the move, according to a survey released Wednesday, and 69 percent of women looking for a job said child-care benefits could sway their decision on where to work. The survey of more than 1,000 workers, by the consulting firm McKinsey & Company and Marshall Plan for Moms, a campaign focused on the economic participation of mothers, adds to research exploring how the lack of child care continues to drag on the economy and tighten an already-hot labor market.”
“‘Companies are scrambling for talent,’ said Reshma Saujani, who founded Marshall Plan for Moms and Girls Who Code, a nonprofit aimed at closing the gender gap in tech. ‘Our report shows that you can attract, retain and advance women in the workforce only through the provision of offering child-care benefits.’” READ MORE
Here are some ways small businesses can help with child and dependent care: “As the nation’s labor shortage continues, many small employers are weighing the best benefits to offer both prospective and current employees, and among those in high demand is assistance with dependents. That’s because so much of the workforce — 47 percent by some estimates — is part of the ‘sandwich generation,’ that group of people caught between providing for both children and parents.”
“The first is helping reimburse employees through a Dependent Care Flexible Spending Account, or DCFSA. With a DCFSA plan, employees filing individually or with a joint tax return can contribute up to $5,000 a year, pre-tax, and then submit dependent care expenses …”
“Another benefit: Elder care may be eligible for reimbursement with a DCFSA if the adult lives with an employee at least eight hours of the day and is claimed as a dependent on the employee’s federal tax return.”
“By offering tailored schedules and remote working options for employees who have dependent care responsibilities, you can argue that your firm is more accommodating and flexible than a bigger company.” READ MORE
Here’s why tech jobs and entrepreneurs are going to Canada: “Tech-industry representatives are coming to Capitol Hill this week to warn that the remote-work trend will lead to more offshoring of software developer and other technology jobs unless the U.S. admits more high-skilled immigrants. Remote jobs in tech jumped by more than 420 percent between January 2020 and last month, growth that was intensified by the pandemic, according to a jobs data review by Tecna, a trade group for regional tech councils. In February, more than 22 percent of all tech jobs were listed as remote, compared with 4.4 percent in January 2020.”
“The U.S. allows 65,000 skilled-worker visas annually under its H1-B program, plus another 20,000 for people who hold graduate degrees from American universities. Those numbers haven’t budged since 2005 despite the sharp rise in tech jobs.”
“In contrast, Canada, which has been courting tech workers for years, has no cap on visas for immigrating tech workers and entrepreneurs, making it an attractive destination for Indian, Chinese and Eastern European computer coders and software engineers who have had a hard time obtaining U.S. visas.”
“Toronto added more than 81,000 tech jobs since 2016, more than any other city in North America, according to a report published last year ...” READ MORE
Another study has found that employees are just as productive working remotely: “The study doesn’t examine pandemic-induced work from home — it was conducted before remote labor became more commonplace in the spring of 2020, a period when over one-third of the American workforce was telecommuting. A Texas A&M research team examined the productivity at a large oil and gas company in Houston where workers were displaced from the office for seven months by Hurricane Harvey, a Category 4 hurricane that hit Texas in August of 2017.”
“Computer use dropped during the hurricane, but productivity rose to pre-storm levels soon after employees began working from home.”
“The study, published in February, concluded that ‘the ability to work remotely may improve resiliency of employees to perform workplace tasks during events causing workplace displacement.’” READ MORE
Just 8 percent of Manhattan office workers are back full-time: “On the average weekday, 38 percent of Manhattan office workers are in the office, a figure that employers expect will rise to 49 percent by September. In the group’s January survey, many employers said they thought daily attendance would exceed 50 percent by April. The new survey’s most significant finding, according to the partnership’s president, Kathryn Wylde, is that 78 percent of workplaces have adopted a hybrid model, allowing a mix of remote and in-person work. That’s a leap from 6 percent before the pandemic.”
“‘It’s a complete turnabout. It’s quite revolutionary,’ Ms. Wylde said. ‘The employers have come kicking and screaming to this position. They’re not thrilled. They think being in the office is how people learn.’” READ MORE
Conference rooms may never be the same: “The conference room is perhaps the least loved space in the modern office. Typically long and narrow, with a rectangular table presided over by a boss at one end, it’s the place where countless workers have nodded off, shared eye rolls or sneaked peeks at cellphones held in their laps. The design of the room contributed to these responses, workplace experts say, citing the stuffy formality of the space and the obvious hierarchy of the seating arrangement. But as convulsions brought on by working from home during the pandemic roil the office, this old-school space is getting a reboot.”
“To lure employees back to the office, companies are seeking to make them more welcoming and conducive to collaboration, conference rooms included.”
“LinkedIn did away with a central table altogether in spaces that look more like lounges. Each has a squishy sofa with throw pillows, and plants and books abound.”
“Screens were once relegated to a short end wall, forcing everyone in the meeting to turn to face it. Recognizing that most people in a conference room sit on the long sides of the table, Skidmore, Owings & Merrill has been placing screens opposite them, on the long sides of a room.” READ MORE
Stop me if you’ve heard this one before: Ryan Breslow, founder of a payment startup valued at $11 billion, faked it until he made it. “He has promised to shake up the boring but important business of online payments with Bolt Financial, the start-up he founded eight years ago at 19. He has fashioned himself into a fund-raising maven, dispensing wisdom through TikTok videos and self-published books. Forbes magazine put him on a recent cover, estimating his net worth at $2 billion. ... From Peter Thiel’s fund to BlackRock, blue-chip investors have put in nearly $1 billion, drawn to Bolt’s technology — essentially a version of Amazon’s ‘Buy Now’ button that can be plugged into an online merchant’s website, making checkout a breeze.”
“In a rush to show growth, Bolt often overstated its technological capability and misrepresented the number of merchants using its service, some of the people said.”
“One of Bolt’s biggest customers, Authentic Brands Group, which owns and licenses brands like Brooks Brothers, is suing the company for having ‘utterly failed to deliver on the technological capabilities that it held itself out as possessing.’”
“The story of Bolt’s swift ascent and its current troubles echoes a familiar Silicon Valley narrative.” READ MORE
THE 21 HATS PODCAST
Does Firing People Ever Get Easier? This week, Shawn Busse, Jay Goltz, and William Vanderbloemen discuss whether the old line about hiring slow and firing fast makes sense during a labor shortage. As William puts it, “What if you do have to hire fast? How do you do that? What if you do want to keep people even if you might have wanted to get rid of them before? How do you do that without ruining your culture?” Plus: How do you know it’s really time for someone to go? And what happens when employees share their salaries with each other? Anything good? And as we all binge watch the real life dramas about WeWork and Theranos, the question inevitably arises: Is it still okay to fake it until you make it? If so, where do you draw the line?
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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