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The Hardest Thing I’ve Done in Business
In our latest 21 Hats Podcast episode, three entrepreneurs talk about why it's so hard to give up responsibility for driving sales.
Here are today’s highlights:
We’re seeing the biggest boom in entrepreneurship in half a century.
Workers care more about flexible hours than they do about remote work.
A lawsuit reveals how Amazon treats its independent delivery partners.
A Kentucky restaurant hires only recovering substance abusers.
THE 21 HATS PODCAST
The Hardest Thing I’ve Done in Business: This week, Jay Goltz, Liz Picarazzi, and William Vanderbloemen talk about sales, specifically the transition most founders have to make from handling sales themselves to building a sales team. Jay, Liz, and William also discuss the value of going to trade shows, the pros and cons of compensating salespeople based on commission, and the differences between inside sales and outside sales. “The kind of person,” Jay says, “who can go out there and cold-call all day long and get the door slammed in their face—it's very hard to find, very hard to keep, very hard to train, very hard to control. And that’s been my biggest challenge in business, without any doubt.”
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7-Eleven is introducing a subscription delivery service: “Subscribers can spend $5.95 per month to access over 3,000 items including hot food, drinks, household items and groceries for delivery. Customers can expect orders in about 30 minutes and will be able to track their delivery in real time through the company's app, 7Now. Shoppers with orders of at least $10 will receive additional benefits including the option to select a free product.” READ MORE
THE COVID ECONOMY
Omicron has hit the U.S. economy especially hard: “‘Soaring virus cases have brought the U.S. economy to a near standstill at the start of the year,’ said Chris Williamson, chief business economist at IHS Markit. In the U.S., IHS Markit’s composite purchasing managers Index—which measures activity in both the manufacturing and services sectors—fell to 50.8 in January from 57 in December, to hit an 18-month low. A reading above 50.0 indicates that activity is increasing, while a reading below that threshold points to a decline. The rapid spread of the new variant has led to a surge in infections around the world, prompting increased consumer wariness of activities that involve physical proximity to others, while quarantine requirements have sidelined many workers. The U.S. services and manufacturing sectors suffered from supply issues and labor shortages attributed to the surge in cases from the Omicron variant.”
“High rates of staff turnover resulted in the first decline in overall employment among manufacturers since July 2020, IHS Markit said.”
“Much of the economic impact comes from Covid-related staff absences, Simon MacAdam, senior global economist at Capital Economics, said in a note to clients.”
“‘We think the economic hit will prove short-lived and will be mostly made up for in the months ahead,’ he said.” READ MORE
Workers care more about flexible hours than they do about working remotely: “Ninety-five percent of people surveyed want flexible hours, compared with 78 percent of workers who want location flexibility, according to a new report from Future Forum, a consortium focused on reimagining the future of work led by Slack Technologies. The new data, collected in November 2021 from a survey of more than 10,000 knowledge workers, offers a snapshot into just how popular hybrid arrangements have become in the second year of the pandemic, how virtually all workers prize schedule flexibility above all and the growing concerns that many bosses have about how to keep promotions and pay fair when some employees are in the office while others stay home.”
“The survey also found that 72 percent of workers who weren’t happy with their level of flexibility—whether time or location—are likely to seek out a new opportunity in the next year.”
“‘It really needs to be a shift from presenteeism and activity tracking to actually understanding the results that people are driving and the value that they’re creating.’” READ MORE
Rob and Diane Perez hire only recovering substance abusers at their restaurant in Lexington, Kentucky: “Diane once found an employee shooting up heroin in the bathroom. But rather than fire the employee and criminalize her for her addiction, the Perezes opted for a more humanistic, rehabilitative approach. They created DV8 Kitchen, a restaurant and bakery staffed entirely by people in addiction recovery. At its inception, 30 percent of DV8 Kitchen’s employees were recovering substance users. Now they hire 100 percent and have opened a second restaurant location.”
“The Perezes moved to Lexington 18 years ago and opened a restaurant, and they quickly learned that addiction was pervasive among restaurant workers.”
“Working alongside fellow recovering users helps alleviate the stigma often suffered in this community and helps workers feel more at ease.”
“‘This place played such a huge role in my sobriety,’ Brandy says of DV8 Kitchen. ‘I have so many people around me, supporting me and carrying me through this. It starts to create self-esteem. We’re able to grow.’” READ MORE
A restaurant darling in Philadelphia is trying to rebrand with a new business model after racist comments by a now-departed chef: “[Pat] O’Malley clearly denounced the comments. But he also took responsibility for being part of a flawed management team that had too long maintained a toxic workplace status quo. And nothing has been status quo since. ... O’Malley rebooted his restaurant as solo owner a couple weeks later with a pledge to revamp its systems with antiracist goals, going through diversity training with his staff, revising hiring strategies to be more inclusive. The restaurant was also rebranded in October 2020 as Fitz and Starts. But that was hardly O’Malley’s most important move. That would be his implementing a new service model based on an automatic 20-percent service charge, as opposed to traditional tips.”
“The change guarantees hourly workers a $15-an-hour minimum base salary, with take-home pay supplemented by those divided service fees, raising pay usually into the mid-$20s.”
“But the system, which raises the earnings floor but also can limit its ceiling, hasn’t been universally appealing to workers during the pandemic’s hyper-competitive job market.”
“O’Malley couldn’t compete with the thousand-dollar signing bonuses demanded by many job candidates last fall. And he couldn’t find a dishwasher for six weeks, meaning that the chef, general manager, and O’Malley took turns in the dish pit.” READ MORE
At Rosella, the only sustainable sushi restaurant in New York City, it’s not just about avoiding overfished species: “In his quest for sustainability, [Jeff] Miller has discovered a constellation of nearby artisans making traditional Japanese ingredients. He said that he mixes his sushi rice with ‘rice vinegar made in Pennsylvania by a little husband-and-wife operation called Keepwell Vinegar. They also make the misos that we use.’ That Mystic soy sauce is from Moromi, a company started by Bob Florence, who left the corporate world to learn fermenting techniques at the esteemed Chiba Shoyu, in Japan. And Rosella highlights Brooklyn-made sake: Kato Sake Works, in Bushwick, was started by a Japanese expat who produces a lovely, bright, smooth junmai. ‘Most of these things didn’t even exist five years ago,’ Miller said. READ MORE
Applications for new businesses rose 20 percent last year: “Angela Muhwezi-Hall had a startup idea long before the pandemic—it just never seemed like the right time. She had a steady job at a university, a 401(k), and the ability to take paid time off. Then came March 2020. As the university shut down and Muhwezi-Hall retreated to work from home, she started to think about making the leap. What she wanted to build was a job platform for service workers. While the idea was old, the timing was suddenly perfect: Millions of service workers had just been laid off and were looking for new jobs. She recruited her sister, Deborah Gladney, to help build a prototype. By August, the sisters had quit their full-time jobs to work on the startup, QuickHire. Muhwezi-Hall and Gladney are part of a rising tide of first-time entrepreneurs.”
“In 2021, more than 5.4 million applications for new businesses were filed, according to the US Census Bureau. That’s 23 percent more than in 2020, and about twice as many as a decade ago.”
“The sudden burst of startup activity reverses a decade-long slump, and it has created the biggest entrepreneurship boom in half a century.” READ MORE
A lawsuit shines a light on how Amazon treats the people it encourages to go into business as delivery partners: “In May 2019, Ahaji Amos set up a limited liability corporation to create a delivery company for Amazon packages in Durham, North Carolina. Nearly three years later, Amos is suing Amazon Logistics, alleging that the company misled her about the potential for success in the partnership and claiming that Amazon designed the program to make it nearly impossible for the LLC to be profitable or independent.”
“Amazon had advertised that any individual — but no group — could apply to become a delivery partner and make as much as $300,000 per year, as long as they set up their own LLC or similar corporation, according to the suit.”
“So Amos created Kirk Amos LLC, paid $10,000 to Amazon Logistics to officially join the Delivery Service Partner program, hired delivery drivers and tried to make money delivering packages.”
“The attorneys alleged in the suit that Amazon made it nearly impossible for the company to achieve the ‘Fantastic Plus’ delivery score that would make it profitable, refused to pay Amos when her workers worked overtime hours and refused to allow Amos to appeal when Amazon decided to discipline, retrain or fire her workers.” READ MORE
The author of a book about venture capital makes the case that VCs are not incompetent: “Vinod Khosla, a former kingmaker at Kleiner Perkins who now runs his own venture capital outfit, once told me of his decision to bet on the meat-free burger company Impossible Foods, a start-up whose ambitions once seemed as over-the-top as that of Theranos. Patrick Brown, Impossible’s founder, had laid out a plan to eliminate the meat-industrial complex. It was an insanely messianic vision. If he fails, Mr. Khosla recalls thinking, ‘he’ll be mocked.’ Mr. Khosla put that worry aside, and made a bet on Impossible, reckoning that even if Mr. Brown had only a one in a hundred chance, it was a shot worth taking. Eleven years later, while the meat-industrial complex may not have been toppled, Impossible is worth $7 billion. Which is better, Mr. Khosla observed: to try and fail, or to fail to try?”
“The Theranos debacle fails as an indictment of venture capital for two reasons. First, nearly all the money raised by the company came not from venture capitalists but from technology outsiders.”
“Second, the handful of famous technology investors who did back Theranos do not discredit venture capital as a whole. VCs approach risk differently from other financiers. They fully expect the majority of their bets to be losers, an unthinkable catastrophe for a stock market investor.” READ MORE
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