The Worker Co-Op Solution

Don’t scoff! Here’s why one owner thinks co-ops could solve the silver tsunami.

Good Morning!

Here are today’s highlights:            

• Michael Girdley offers some advice that entrepreneurs need to hear, like, “Go sell some stuff.”

• There’s a brand new benefit that is helping businesses hire and retain employees.

• On the other hand, it’s not clear that workplace wellness programs are doing much good.

• The Supreme Court will hear a case about herring fishing tomorrow that could upend federal regulation.

THE 21 HATS PODCAST

In this week’s bonus episode, Cameron Madill takes us on his succession journey, which began years ago when he started having conversations with older business owners, many of whom seemed to feel trapped. They’d had a lot of success, they were proud of the business they’d built, but they weren’t sure what to do with it or how to leave it. None of the usual options seemed terribly appealing. Hoping to write a different ending, Madill, now in his 40s, started looking for better options much earlier than most owners, and the one he landed on was an unusual choice: a worker cooperative. Now, there are aspects of this model that are likely to give some owners pause. For one, a co-op probably isn’t going to produce the biggest payday for a selling owner. And if the owner wants to stick around as CEO, he or she will have to report to a board, and that board can challenge any and all of the owner’s decisions.

• But Madill, as he explains in a conversation we recorded late last year, before he stepped down from his role as CEO, decided to sell to his employees anyway. Not only is he glad he did, he thinks co-ops are an option far more owners, especially those struggling to find a buyer, should consider.

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

MANAGEMENT

Michael Girdley says there are 11 pieces of advice that entrepreneurs need to hear: “I love to teach. It might be a one-on-one scenario, or talking with other leaders in my Vistage group or with fellow Scalepath members, or conversations with the CEOs of my companies. And looking back over the conversations I’ve had, I realized that many people face the same problems. So the same pieces of advice keep coming up. Here are my top 11 pieces of advice for entrepreneurs. How many of these apply to you?”

• “Your prices are too low: Low prices can get a business stuck in the mud. I talk to people with bad customers who have nothing to spend on the stuff that matters, who do everything on hard mode. Instead of pricing for their value, they priced so low that nobody could possibly complain. Charge what you’re worth.”

• “Stop playing house: This is the idea that people love to do the stuff that looks like entrepreneurship… but isn’t. Trademarks, patents, LLCs, billing systems, offices … even stuff like websites and email addresses. Forget all that. Go sell some stuff first.”

• “You’re asking a cat to bark: Say employee X is failing. Or you’re struggling as a CEO to grow your business. Something that took me a long time to learn: every business problem is a people problem. And usually, the problem is that you’re asking someone to do things they are bad at. Put the right people in the right seats, and things will transform.” READ MORE

HUMAN RESOURCES

There’s a new benefit that’s become extremely popular among employees: “The survey of 1,300 Americans by diabetes-care firm 9amHealth found that when ranking their desired job benefits in order of importance, coverage for weight-loss drugs such as Ozempic and Wegovy ranked behind only employee-sponsored health care, flexible working hours, company equity, and matching 401(k) contributions. It came in ahead of unlimited PTO, work-from-home or hybrid work, and child-care assistance.”

• “About 30 percent of the survey respondents said they were employed somewhere that covered the weight-loss drugs, but for those who said they were not, about 21 percent said they would be very likely or likely to change jobs if they could access coverage to the drugs.”

• “Among respondents who were taking the drugs, about 67 percent said coverage was either an extremely important or very important consideration for staying at their current job; another 23 percent said it was a somewhat important consideration.” READ MORE

Workplace wellness programs may offer little help: “Employee mental health services have become a billion-dollar industry. New hires, once they have found the restrooms and enrolled in 401(k) plans, are presented with a panoply of digital wellness solutions, mindfulness seminars, massage classes, resilience workshops, coaching sessions, and sleep apps. These programs are a point of pride for forward-thinking human resource departments, evidence that employers care about their workers. But a British researcher who analyzed survey responses from 46,336 workers at companies that offered such programs found that people who participated in them were no better off than colleagues who did not.”

• “The study, published this month in Industrial Relations Journal, considered the outcomes of 90 different interventions and found a single notable exception: Workers who were given the opportunity to do charity or volunteer work did seem to have improved well-being.”

• “Across the study’s large population, none of the other offerings — apps, coaching, relaxation classes, courses in time management or financial health — had any positive effect. Training on resilience and stress management actually appeared to have a negative effect.”

• “Dr. Fleming’s analysis suggests that employers concerned about workers’ mental health would do better to focus on ‘core organizational practices’ like schedules, pay, and performance reviews.” READ MORE

REGULATION

The Supreme Court will hear a case Wednesday that could curtail federal regulation: “[Herring fisherman Bill] Bright laid out the basic question in his case. A 1976 federal law requires herring boats to carry federal observers to collect data needed to prevent overfishing. That was fine with him. ‘There’s nothing wrong with the monitors,’ he said. ‘They’re actually gathering information that is valuable to us.’ But a 2020 regulation interpreting the law that required his company to pay for the oversight, at a rate of some $700 a day, was another matter. ‘I don’t think it’s fair,’ he said, adding that Congress had not authorized the agency to impose the fee.”

• “In a good week at sea, he said, ‘we might catch $100,000 worth of herring, which would make us happy.’ The monitor’s fee would add up to 5 percent of that, about the same as the $5,000 shares claimed by each of the crew’s four members, who can spend weeks without pay preparing for a voyage. He added that not every week at sea is a good week.”

• “The cases are in one respect curious, as the Biden administration explained in a brief defending Chevron. ‘In practice, the 2020 rule’s monitoring provisions have had no financial impact on regulated vessels,’ the brief said, adding that the program was suspended last year and the agency reimbursed the monitoring costs that had been incurred under it.”

• “Mr. Bright did not dispute that Congress may impose such a fee. But he said — and this is the central issue in the case before the Supreme Court — that judges rather than regulators must decide whether the 1976 law allows it. The Chevron decision established the framework under attack in Mr. Bright’s case, ruling that courts must defer to agencies’ reasonable interpretations of ambiguous statutes.”

• “Overturning the decision could threaten regulations on the environment, health care, consumer safety, nuclear energy, government benefit programs, and guns. It would also shift power from agencies to judges.” READ MORE

ECOMMERCE

TikTok Shop has been sending its sellers a lot of violation notices: “Fishing content creator ‘Joel-O Shotz’ built an audience of around 10,000 followers on the app by live-streaming himself fishing in open lakes, rivers, and creeks. He started making money on the app by offering fishing baits through TikTok Shop, selling around 92 strawberry- and sweet-corn-flavored ‘little bitz,’ for instance. But lately, TikTok has slapped the seller with a series of violation claims that have made it harder for him to sell on the app. In repeated notices, he was told that he incorrectly categorized his products by tagging them as ‘fishing,’ per documentation viewed by Business Insider. The penalties, which he successfully appealed in each instance, caused his product listings to deactivate.”

• “TikTok, in recent months, has been sending a flurry of violation claims to sellers that use its e-commerce platform, stating that they've set ‘spam prices’ on products, inadequately displayed items during live-streams, assigned inaccurate product-listing titles, or incorrectly categorized their goods.”

• “‘TikTok product violations are nearly enough to make me walk away,’ one merchant who sells children's products on TikTok Shop told BI. This person requested anonymity to avoid damaging their relationship with the company. ‘It's so frustrating to continually be flagged by bots for bogus issues.’” 

• “Small-business owners have been the lifeblood of TikTok Shop as it's rolled out in the U.S., particularly as some larger brands have been wary of testing out a new platform.” READ MORE

THE ECONOMY

Consumer prices ticked up in December, but producer prices fell, which bodes well: “It’s actually not so weird that the CPI goes up while the PPI goes down. After all, they measure different things, said Cassie Happe, an analyst at WalletHub. ‘So with a box of cereal, CPI would be telling you how much you paid for that box of cereal,’ Happe said. ‘PPI would be telling you what was spent to produce the good.’ It might seem that the prices producers are selling things for should, more or less, line up with what consumers are paying. But this isn’t always the case.”

• “The PPI includes things like what employers or the government pay for health care, which the CPI does not. The CPI includes certain housing cost estimates, which the PPI does not. ‘A big part of why we’re seeing CPI inflation can be high is because of the fact that it’s influenced by shelter inflation that’s not popping up in PPI,’ he said. Economists like to look at the PPI to get a sense of what’s coming.”

• “‘Producers tend to sell their goods before consumers buy them, right? So you would think of producer price indices as being slightly leading over consumer price indices,’ said Kathryn Anne Edwards, an independent researcher and adjunct economist at the Rand Corp. She said the latest PPI numbers are a good sign.”

• “‘Because, you know, typically a good that’s measured, say, in the December producer index might be purchased, say, January through March of the consumer index,’ she said. So if producers are spending less now to, well, produce something, in theory that means prices could be lower for consumers in the future. If that’s how companies decide to use those savings.” READ MORE

ENERGY

California has dealt a blow to green-energy businesses: “Thousands of companies — including installers, manufacturers, and distributors — are reeling from the new policy, which took effect in April and greatly reduced incentives that had encouraged homeowners to install solar panels. Since the change, sales of rooftop solar installations in California dropped as much as 85 percent in some months of 2023 from a year earlier, according to a report by Ohm Analytics, a research firm that tracks the solar marketplace. Industry groups project that installations in the state will drop more than 40 percent this year and continue to decline through 2028.”

• “Construct Sun, a solar installation company that is based in Reno, Nev., stopped doing business in California after its sales dried up four months after the policy began; executives said the company was now focusing its efforts on Florida, North Carolina, and Ohio.”

• “State officials chafe at the idea that California is undercutting renewable energy and have defended the policy change, which lowered the value of the credits homeowners with new installations receive for the power they send to the grid by 75 percent. They have argued that the old rules, which still apply to systems installed before April, offered too generous a subsidy, helping mostly affluent homeowners.”

• “As a result, lower-income people who could not afford panels were effectively left bearing more of the cost of maintaining the state’s electricity system.” READ MORE

A new book argues that the green transition is missing something important: profits: “In ‘The Price Is Wrong,’ [Brett Christophers] argues that, for many years now, those fighting for or debating the merits of a green transition have been too fixated on the price of clean energy and not focused enough on how much profit it can be expected to yield. Consumers may like low-cost electricity, but that preference alone isn’t enough to construct a supersized clean grid or the wind and solar farms to power it.”

• “‘Price is a misleading yardstick for assessing the current and future prospects of investment in renewable energy infrastructure,’ Christophers writes. ‘The better, more meaningful, yardstick is profit,’ and more specifically expected profit, he says, which guides and governs investment decisions far more than any calculation about price. And by that yardstick, renewable energy is not winning but losing the race, with an expected rate of return much lower than those enjoyed by the oil and gas business.”

• “To Christophers, working in the left-wing tradition, the fact that anyone keeps talking about price in this context is a conceptual mistake — a basic misunderstanding of what drives economic activity and how best to direct it toward a fossil-free future.” READ MORE

THE 21 HATS PODCAST: DASHBOARD

AI, TikTok, and the Rise of Women Owners: This week, Shawn Busse talks about some big changes coming to the world of small business. At his consulting firm, Kinesis, Shawn is already beginning to experience the impact artificial intelligence is having on his industry. He also knows B2B business owners who are spending a lot of time on TikTok—and they’re not just watching dancing videos. And his client base has already shifted dramatically toward women-owned businesses. 

• You can subscribe to the 21 Hats Podcast wherever you get podcasts.

Thanks for reading, everyone. — Loren