The Surfer Who Missed the Wave

Back in 2020, when the demand for bicycles was soaring and supply chains were choked, bike shops ordered a few too many bikes.

Good morning!

Here are today’s highlights:

• A CEO goes viral after posting a photo of himself crying on LinkedIn.

• Record temperatures are good news for pest control businesses.

• Seth Goldman has raised $14.5 million to fund his second act.

• A podcast listener has a smart suggestion for service businesses that invest in elaborate pitch proposals only to be ghosted.

RETAIL

Bike shops ordered bikes as if the demand of the early pandemic would never end: “Many retailers that had too little to offer during the early stages of the pandemic now have too much of everything—from bikes and furniture to clothing and barbecue grills. They amassed the extra inventory because they expected sustained demand and supply-chain problems. What they didn’t expect is that customers would shift their spending to concerts, restaurants and travel, or that rising inflation would eat away at household budgets. ... Sales are cooling at smaller cycling businesses, too. Revenue at U.S. bicycle retailers declined by 7 percent in January through June versus last year, according to market research group NPD, compared with jumps of 46 percent and 4 percent during the same periods in 2020 and 2021.”

• “ElliptiGo Chief Executive Bryan Pate didn’t have enough of his outdoor elliptical bikes to sell when demand surged in 2020. Today he has a San Diego warehouse packed with too many bicycles that not enough people want.”

• “‘The decisions were made a long time ago under very different circumstances,’ Mr. Pate said. ‘And the world is not the way it was back then.’”

• “‘We were like a surfer who did not catch the wave,’ said Mr. Pate, whose bikes start at roughly $1,500. ‘It’s an all-hands-on-deck battle to break even for the next 18 months.’” READ MORE

OPPORTUNITIES

Pest control businesses are killing it: “After more than 20 days of record temperatures across 28 states in the U.S., spanning from California to New Hampshire, according to the National Weather Service Climate Prediction Center, pests are out in record numbers. Bat sightings are gaining frequency as the flying mammals flock to dark havens with lower temperatures, rats are moving indoors, and, in general, vermin are on the march, says Trent Ragar, 41, the founder of Natural State Pest Control, a 2021 Inc. 5000 honoree based in Lowell, Arkansas. ‘Longer summers and warmer winters create a thriving bug population,’ adds Ragar. Even ‘many homeowners, who are typically the do-it-yourself type, are calling for professional help with routine preventive treatments.’”

• “Adam Carace, 33, CEO of Pest-End, a 2021 Inc. 5000 awardee in Plaistow, New Hampshire, says the company used to wrap up the warm season pests around the beginning of October, but it now sees warmer weather in November and even December.” READ MORE

SOCIAL MEDIA

After laying off two employees, a startup CEO, posted a crying selfie on LinkedIn: “[Braden] Wallake wanted to own his mistakes, he said, and reach out to other business owners who might be ‘feeling the pain’ behind their tough decisions. He wanted them to feel less alone. ‘I just want people to see,’  he wrote, ‘that not every CEO out there is cold-hearted and doesn’t care when he/she have to lay people off.’ The post quickly went viral on LinkedIn and beyond, as many accused Wallake of being insensitive and ‘cringe.’ With more than 68,000 workers in tech laid off so far in 2022, many read Wallake’s post as privileging the chief executive’s pain over that of the employees being let go.”

• “‘This does come across as tone-deaf, self indulgent, and a tad inauthentic,’ one commenter said. ‘Maybe you could have made the post about the people your decisions have impacted, rather than about yourself?’”

• “‘If my boss had posted a picture of themselves crying about having to lay me off with zero apologies I would be [angry],’ said another.”

• “In some ways, Wallake said, his post was meant to push back against the idea that chief executives are supposed to be brave: ‘Being a business owner and letting people go, I know it’s not fun on the other end but we’re human, too, and we feel like we’re losing a friend.’” READ MORE

LinkedIn is rolling out some new content tools, including making it easier to embed links: “In the coming weeks, creators on LinkedIn will be able to add a clickable link directly onto their images and videos to drive traffic to their websites or other resources, regardless of whether they’re on or off LinkedIn. For example, the company notes that creators can use the new feature to link to their most recent newsletters or their personal websites. You can add a clickable link by tapping the ‘Add a link’ icon after creating a new post on mobile with an image or video.”

• “The company is also launching a new Templates feature that is designed to help creators ensure that their text posts will stand out in users’ feeds. The Templates are designed to give text posts a pop of color to make them more visually pleasing and eye-catching for viewers.” READ MORE

STARTUPS

Seth Goldman has raised $14.5 million to build Just Tea, his Maryland-based successor to Honest Tea, which Goldman co-founded and sold to Coke and which Coke recently discontinued: “Just Ice Tea is set to brew its first pilot run Monday. Bottles would hit shelves locally in September, and start selling in two national chains in October, Goldman said, declining to share specifics at this point. About 1,000 stores are committed to carry the beverage line nationally, starting with the East Coast this year, ‘and I’m confident there will be more,’ Goldman said. Eat the Change [Goldman’s two-year-old snack company]  is using the funding to set up and scale up production and commit to major purchases of bottles, caps, tea and ingredients. The company has yet to name the six varieties in Just Ice Tea’s first product line, instead planning to announce one each Monday over the next six weeks.”

• “Whereas Honest Tea grew ‘very organically’ over several years, ‘this is going national with major retailers basically in a matter of weeks,’ Goldman said.”

• “‘If Honest Tea were still around, I wouldn’t do this,’ Goldman said. ‘But when you basically hand-deliver a compelling market opportunity to an entrepreneurial business, especially a market opportunity that we know exactly the playbook, it’s almost our duty as entrepreneurs to claim it.’” READ MORE

MANUFACTURING

Some electric vehicle makers are disappointed in the climate bill—but not Tesla and GM: “Auto industry representatives have been griping that the proposed $7,500 tax credits for electric vehicle buyers come with so many strings attached that few cars will qualify. Buyers can’t have very high incomes, the vehicles can’t cost too much, and the cars and their batteries have to meet made-in-America requirements that many carmakers cannot easily achieve.”

• “The new credits favor companies, like Tesla and General Motors, that have been selling electric cars for years and have reorganized their supply chains to produce vehicles in the United States. A joint venture between GM and LG Energy Solution will soon open a battery plant in Ohio, part of a wave of electric vehicle investment by automakers and suppliers.”

• “Vehicles sold by Tesla and GM will regain eligibility for incentives that the carmakers had lost because they had sold more than their quota of 200,000 electric cars under current law. The legislation eliminates that cap.” READ MORE

HUMAN RESOURCES

Walgreens is paying pharmacists signing bonuses of as much as $75,000: “The Deerfield, Ill.-based pharmacy chain said it is ramping up spending on labor to alleviate the shortfall, which has dented drug sales and angered workers, some of whom have quit and posted calls on social media for the company to improve working conditions. Bonuses are on offer in certain markets in every state, according to job postings reviewed by The Wall Street Journal and people familiar with the matter. The $75,000 bonus that Walgreens is paying is rare; more common at the chain are awards of $30,000 or $50,000. The bonuses come with a requirement for pharmacists to remain in their jobs for a period, usually a year or more.”

• “Some 3,000 stores operate with reduced pharmacy hours due to pharmacist shortages, causing the chain to lose revenue on prescriptions, the company has said.” READ MORE

THE 21 HATS PODCAST

Buzz Park, CEO of Lightyear Management Group, listened to this week’s podcast and has a suggestion for Sarah Segal: “I could directly relate to Sarah's dilemma with companies ghosting her after a pitch. Possible solution: As Sarah mentioned, preparing a proposal for a prospect is fairly costly and the post-pitch ghosting can be quite frustrating. I was a marketing consultant for over 10 years and a few years ago, at the recommendation of some peers, I started charging for my proposals. If a company wanted me to look at their marketing plan and come up with a strategy or ad campaign, I would charge a minimum of $1,500 for the proposal and that amount would be credited towards my services if I won the contract.”

• “My reasoning was that if a company was serious about evaluating my services, they would understand the value of the proposal and would be willing to pay one or more agencies/consultants to pitch them.”

• “This is just an idea that might be a good compromise solution for Sarah for new prospects. It compensates her company for the time/effort of the pitch and weeds out the tire-kickers and idea-stealers.”

• Editor’s note: We will discuss Buzz’s suggestion with Sarah in a future episode.

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