The Last Typewriter Shop
For just $35,000, you can buy the last typewriter shop in Boston, which has been grossing $125,000 a year by catering to young people who are sick of digital.
Good Morning!
Here are today’s highlights:
Michael Girdley breaks down a deal for a lighting company with a profit margin approaching 50 percent.
A periodic reminder from Gene Marks: the problem probably isn’t the software.
Is Facebook the “dead internet” or the “zombie internet”?
Startup churches have discovered the franchising model and taking a “Christian Shark Tank” approach.
BUSINESSES FOR SALE
Here’s Michael Girdley’s latest analysis of a business listing: “This is a landscape and architectural lighting company in one of the bougiest neighborhoods in the world — the Hamptons. So basically, if you want to light up your $40 million mansion, they’ll design, install, and maintain the equipment to do that.”
“The numbers: Asking $1.25 million on $800,000 annual revenue and $375,000 cash flow. Making almost 50 percent profit is pretty great — that’s high-margin business!”
“So, I love the profitability. Running a business like this at 40 to 50 percent profit margins shows there’s a real demand for premium service. It also requires some level of expertise, so this is not a super easy industry to get into — you can get whole degrees to understand the science of this stuff, so you’re not going to be competing with a ton of newcomers.”
“This is not a set-it-and-forget-it kind of deal. You’ve got to be schmoozing, getting to know all the architects, contractors, etc who are doing design out there, because you want them calling you when they need lighting. You need to be hanging out at the hitching post (fancy towns have those, right?) to make sure you’re the go-to person.” SEE THE LISTING
The last typewriter shop in Boston is on the market: “Tom Furrier, the longtime proprietor and master repairman of Cambridge Typewriter in Arlington, planned to retire in June and sell the store to his apprentice. But in mid-April, Furrier said, his heir apparent backed out — leaving Furrier to either find a new, highly skilled buyer, fast, or close up shop. ‘I do not have the time to train somebody new,’ said Furrier, 69. ‘I’d really like to give it six months, end of the year at the most, to find someone.’”
“The shop grossed about $125,000 in 2023, Furrier said, and he estimates that he repairs about 700 machines a year and sells about 200. It was the rare brick-and-mortar business that thrived during Covid; in 2021, Furrier said the pandemic had given him a 40-percent sales boom.”
“His asking price? $35,000 — just $10,000 more than Furrier paid for the shop in 1990, after a decade of working under the original owner as a technician. This price tag includes the business itself, as well as hundreds of ready-to-sell Royals, Remingtons, and Underwoods that line the store’s shelves; cabinets filled with old replacement parts; and the ample stock of typewriter ephemera, such as the vintage advertisements that hang on the walls.”
“Since the early aughts, Furrier has found success catering to a steady stream of younger customers who, ‘sick of digital,’ are chasing analog experiences. ‘They get the old-school vibe and they try typewriters, and it just resonates with them,’ he said. It is these younger generations that have helped typewriters flourish in the 21st century, said Richard Polt, a philosophy professor at Xavier University in Cincinnati who runs the Typewriter Revolution blog.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
The Software Isn’t the Problem: You are. That’s Gene Marks’ story, and he’s sticking to it. This week, Gene talks about all of the people who love to hate on Workday’s HR platform, and he argues that whatever problems exist are really the fault of the companies using the software, not the company that makes it. Plus: Gene tells us what we need to know about the latest ChatGPT upgrade. Spoiler alert: He says we will long remember the spring of 2024 as the moment when the true power of artificial intelligence became clear, but so far, it’s mostly big businesses that are reaping the benefits.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
MARKETING
Facebook is allowing itself to be consumed by AI spam: “Over the last few months, many have proposed that the AI spam taking over Facebook is a great example of the ‘Dead Internet Theory,’ which posits that large portions of the internet are made up of bots talking to bots, filtered through the lens of recommendation and engagement algorithms. Facebook is undeniably cooked, a decaying, depressing hall of horrors full of viral AI-generated content that seemingly gets worse every day. But I do not think Facebook is the dead internet. Instead, I think it is something worse. Facebook is the zombie internet, where a mix of bots, humans, and accounts that were once humans but aren’t anymore mix together to form a disastrous website where there is little social connection at all.”
“On Meta’s first quarter earnings call last week, Mark Zuckerberg said that ‘right now, about 30 percent of the posts on Facebook feed are delivered by our AI recommendation system. That’s up 2x over the last couple of years.’ Zuckerberg is referring to a TikTok-like ‘For You’ system on the News Feed where content is being recommended that is not content from pages or groups that users have specifically liked, nor is it content that people’s friends have interacted with.”
“It is reductive to call Facebook the ‘Dead Internet.’ There are real people on Facebook, and real people are being fed this content. The images themselves are being made by AI at the direction of real humans who have learned that spam can be monetized. Real humans at Facebook the company are choosing not to or are not equipped to take action on these accounts or this type of content, which now makes up an unknown but significant portion of content on the site”
“AI spam, as well as the specter of AI content, is impacting how real people use Facebook and perceive reality more broadly. Facebook itself is shoving its own AI features down people’s throats, and has made clear that it is going to continue spending billions of dollars on AI features that it intends to make core to its products and business model.” READ MORE
BUSINESS MODELS
Restaurants are trying smaller groups and shorter weeks: “Chefs and restaurant owners who used to put diners on a pedestal are ‘reevaluating our place in our relationship with customers,’ says Aaron Adams, the talent behind the plant-based Astera and Il Paffuto in Portland, Ore. Part of the change is due to age and experience. Adams, 49, has been cooking for three decades, long enough to learn the pitfalls of seating more than six people at a table. Another explanation involves ‘emboldened’ young chefs who feel less constrained by rules, says the chef. ‘We are in service. We are not servants.’ Hospitality remains a priority, but ‘we are done trying to be everything to everyone.’”
“Trevor Fleming, one of three veteran chefs behind the year-old Warlord in Chicago, says his team pulled ‘pieces of different operations we liked in our model,’ including a four-day workweek, closing on Tuesdays, Wednesdays, and Thursdays. While Warlord does three turns a night in its 45-seat dining room, ‘we care about the quality of life outside work,’ he says.”
“Monday is the new Saturday. Or so it seems at a lot of new restaurants, some of which are open on days attractive to people in the business of feeding people. When Warlord opened its doors last spring, the chef-owners knew they wanted to be industry-focused, ‘so Monday was important to do and stay open late,’ says Fleming. ‘The night owl culture’ meant opening at 6 p.m. ‘to eliminate the stress of 5 o’clock’ and serving until 2 a.m.’”
“At many places, good luck if you’re more than four people and trying to book a table. ‘Diners don’t understand tables are real estate,’ says Saied Azali, owner of the recently opened Turkish restaurant Namak in D.C., which doesn’t accept large parties. ‘We have to turn tables. That’s how we make money — some money.’”
“You might assume groups are good for business. Not necessarily. When a group of six goes out, ‘nobody shows up at the same time,’ says Azali. Large parties not only take longer to eat, he says, ‘they don’t want to leave, even though we tell people online [about a time limit], and then they get mad when asked.’” READ MORE
ECOMMERCE
Your work-from-home employees have been a big boon for online retailers: “On our remote days, it turns out, we shop while we work. Researchers say it’s driving billions in online sales. There we all are, browsing everything from toothpaste to concert tickets while nodding along on a video call, keying in credit-card info in between dashing off emails to the boss. Shopping away our entire workday is obviously a bad move. But indulging in a little isn’t going to tank productivity. We pause and procrastinate at the office, too, in ways that are acceptable there. At home, we gather around clothing reviews like we’re hanging out at the office water cooler, and tick errands off our list via Target.com.”
“New research from Stanford University, Northwestern University and the Mastercard Economics Institute, the payments company’s research arm, finds the pandemic prompted a rise in online shopping that’s persisted. Last year, for example, we spent $375 billion more than we would have otherwise, the report estimates.”
“The brunt of that bump is being driven by people working hybrid or fully remote schedules, says Nick Bloom, a Stanford economist and co-author. County-level data shows that in areas where work-from-home jobs are prevalent, online shopping is up, while it’s back to pre-pandemic levels in places where more folks work in-person.”
“With no one looking over our shoulders, we can puncture the monotony of another vanilla workday with the dopamine high of finding the perfect pair of shoes. Even if we might sometimes regret it. ‘I wouldn’t have bought this stupid thing if it weren’t for All Hands,’ Megan Morreale, a content marketer in New Jersey, thought to herself after purchasing an influencer’s branded candle during a company-wide meeting.” READ MORE
FRANCHISING
The latest trend in franchising? Startup churches: “Aaron Burke launched Radiant Church a decade ago in a rundown movie theater in Tampa, Fla., offering a model of Christianity increasingly popular among America’s faithful. The church leans conservative on matters of gender and sexuality, and its services feature a Pentecostal-style exuberance with high-energy bands and entertaining sermons. Radiant drew fewer than 200 guests in the early days. It now averages nearly 8,000 in nine church locations. Burke, a pastor ordained in the Pentecostal Assemblies of God, started his church with more than faith. He sold a thrift store in Pensacola, Fla., and raised other funds, including $30,000 from the Association of Related Churches, a franchise-style church network known as ARC.”
“ARC functions as a startup accelerator, providing money and mentoring in exchange for a continuing cut of church revenues that it invests in opening new churches. Similar entrepreneurial networks are sprouting new, largely nondenominational places of worship at a time when many traditional church congregations are shrinking.”
“The new churches are opening across the U.S., from urban centers to suburbs, red states and blue, as well as abroad. The ‘church-planting’ networks, established as nonprofit organizations, deploy marketing, branding, and social-media strategies akin to other franchise businesses.”
“The process is intense, said Michael Matthew, who founded Houston’s Eternal Rock Church in 2020 with his wife, Lisbeth Hernandez-Matthew. Their credit scores didn’t reach ARC’s threshold—because of medical debt, he said—and the couple worked with a financial coach to boost them sufficiently.”
“The couple were asked to demonstrate their ability to preach, manage staff, and attract volunteers. They needed a branding and marketing strategy and had to show they could produce a year’s worth of sermons. Then they had to present their plan to ARC representatives. ‘It would be almost like a Christian Shark Tank type of atmosphere,’ said Matthew, 47.” READ MORE
THE ECONOMY
Bay Area small businesses say that inflation remains their biggest challenge: “It is definitely not party time at Aimbrell Shanks’ Santa Clara rental company, PartyTime Machines. As at a great many Bay Area small businesses, inflation is not only driving expenses up, it is shrinking her market as consumers cut spending to cope with their own rising household costs. ‘I am not optimistic,’ said Shanks, who in 2015 bought PartyTime — which rents out machines that dispense popcorn, churros, ice cream, margaritas, slushees and other festive delicacies — after working there for a decade. Her raw material costs have gone up about 25 percent across the board, with some items like sugar for cotton candy machines 30 percent to 40 percent more expensive, she said.”
“Regular patrons have reduced the number of machines they rent for their events. Some customers buy their own popcorn kernels and serving cups to use with the rented machines. On a job that in years past would have brought in $5,000, she may now only make $800, she said.”
“Shanks, who is also a small business development counselor, said she is far from alone among business owners struggling as rising costs afflict them along with potential customers. A new report from Bank of America shows that in the Bay Area, small business owners’ confidence in the economy has fallen from last year, with inflation the top concern.”
“For Janae Nguyen, owner of Contempo Furniture in San Jose, the Bay Area’s housing crisis and inflation are quashing sales. Fewer people changing residences means lower demand for furnishings, she said. And while her costs have risen for everything from wholesale goods to business insurance, her potential customers are also faced with higher expenses for necessities. New furniture is often far down the list. But raising prices is not an option, she said. ‘People are not going to purchase from you,’ Nguyen said.”
“Still, nearly two-thirds (64 percent) of Bay Area owners said they expected their revenue to increase in the coming year. And businesspeople in this region expressed a substantially rosier view than their counterparts across the U.S. Nationally, only 42 percent of small business owners thought their local economies would get better, and only 33 percent believed the national economy would improve.” READ MORE
THE 21 HATS PODCAST
Yeah, I Can Hold Myself Accountable: This week, Mel Gravely tells Jay Goltz and Liz Picarazzi about his recently executed succession plan, including what’s worked and what could have gone better. The main thing that could have gone better, Mel says, is his purchase of another small business where he says he misdiagnosed the challenges the business is confronting: “I thought they just had a bad model and they weren't managing it well. It was worse.” All of which leads to a discussion of the role that a board of advisors can play in helping an owner build a business. While Mel has said he wouldn’t run a lemonade stand without a board, Liz and Jay—like most business owners—have taken a different approach. The notion of having a board of advisors, Jay tells us, is something he struggles to get his head around.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Are you concerned about how the tariff increases may affect your business? If so, Liz Picarazzi and I are putting together a virtual discussion group to track the changes as we learn more and to consider how businesses can best respond. If you’re interested in joining the group, please let me know by replying to this newsletter.
Thanks for reading, everyone. — Loren