They’re Getting Even Crazier in Silicon Valley
If you think A.I. needs guardrails, you’re the enemy. And of course, if you’re bootstrapping, you’re nothing but a lifestyle business.
Here are today’s highlights:
Does 4.9 percent annualized GDP growth sound like a recession to you?
A small Connecticut pet brand saved a New York City dog parade.
Women-owned businesses are taking off in Louisville.
A new employee benefit: Wellthy helps stressed-out staffers balance careers and care-giving.
Here’s how a small pet brand saved a New York City dog parade: “The parade has been held at the Tompkins Square Dog Run for the last three decades, says the park's organizer, Joseph Borduin, but this year finally grew too large, per city-enforced limits. Stage and studio rents for a parade cost upward of $10,000, plus an additional $10,000 for permits in New York City. As the lead organizer of an entirely volunteer-run organization on a budget, he felt he had no choice but to cancel the event for 2023. ‘We needed to bring the event to the street, but that's not cheap and takes a lot of work,’ says Borduin.’It was too much stress last year--we lost money, and I'm just a volunteer.’”
“However, only a day after the dog-run community shared the announcement of the parade's cancellation on Instagram on September 27, Connecticut-based pet food company Get Joy reached out, offering to help in any way necessary. The company's founder, Tom Arrix, 58, started the business in 2019 after his dog's lymphoma diagnosis inspired him to study pet wellness.”
“Get Joy covered the costs of nearly everything: insurance, signs, banners, trash collection, street sweeping services, and tarps and umbrellas for potential rain--even pickup and delivery fees, which Borduin says can add up to hundreds of dollars. Arrix estimates that his company spent tens of thousands on permits, logistics, and execution.”
“The event's organizers estimated about 15,000 people were in attendance on Saturday, including dog owners and spectators, compared with 8,000 last year. Get Joy employees handed out free swag, set up water stations, and led the crowd as volunteers.” READ MORE
Do we have too many guardrails blocking technological innovation? “[Marc] Andreessen, the eponymous cofounder of Silicon Valley investment firm Andreessen Horowitz, is known for firing off lengthy memos in defense of technology, the sector that has enriched him. His latest is a 5,000-word manifesto about past, present, and future civilization being built on innovation. ‘We believe in the romance of technology, of industry,’ he writes, via digressions on the artist Andy Warhol, economist Milton Friedman, and the myth of Prometheus. ‘The eros of the train, the car, the electric light, the skyscraper. And the microchip, the neural network, the rocket, the split atom.’”
“These developments were unarguably good for humanity, he writes, improving wealth, happiness, and ensuring security. Where he gets to with this argument is a little startling. Anyone, he says, who stands in the way of unrestrained progress of AI and other frontier technologies is an ‘enemy.’ ‘We believe any deceleration of A.I. will cost lives,’ he continues.”
“Andreessen and other prominent Silicon Valley figures such as Y Combinator president Garry Tan have quietly added the term e/acc to their social media profiles. The tag refers to ‘effective accelerationism,’ the idea that technology should be developed to its fullest potential as fast as possible and with minimal or zero guardrails. In his manifesto, Andreessen calls it ‘techno-optimism.’”
“This is Silicon Valley's current religion, and Andreessen its lead preacher. His mission has been fired up by the arrival of ChatGPT and other practical applications of artificial intelligence. To some extent, it's a repackaging of what Silicon Valley has always peddled — let us build, grow, and make money without limitations.” READ MORE
In “Confessions of a Venture Capital-Backed Startup Founder”, an anonymous founder talks about life in the fast lane: “We were growing sustainably, making even our pickiest customers happy, but it was a euphoric time in the world outside our Zoom screens; you might be having fun sober at the party, but it’s hard not to watch your friends on drugs and wonder what it’s like. The irony that selling fiction to investors was making these founders richer than selling a bona fide product to paying customers wasn’t lost on me. But it wasn’t just the money: After years of work, I had the temerity to be proud of the culture and product we had built. I had started to believe we could actually make a difference. In the market of 2021, our mission felt quaint; we may as well have been a lifestyle business.”
“I could have tried roughing it without venture funding, what the industry calls ‘bootstrapping.’ The venture world has a condescending label for bootstrapped companies without scale potential: a ‘lifestyle’ business, which roughly translates to: Good for you, now back to the sandbox until you’re ready to play with the big boys.”
“At work, there’s some sense that we’ve missed the windfall, the easy IPO, the fairy godmother of acquisition that taps some lucky people and makes them rich. You’d think that would suck for morale. But from what I can tell, our team seems happy.”
“What venture capitalists are now telling startups to do — forget ‘growth at all costs’, be profitable — is what we, partly by accident, have been doing all along. With the exception of the new wave of A.I. companies, the skies are full of Icaruses crashing to earth, but we’ve been here the whole time.” READ MORE
Inflation? Rising interest rates? Recession? Nope. The economy has been surging: “Gross domestic product grew at a seasonally- and inflation-adjusted 4.9 percent annual rate in the third quarter, the Commerce Department reported Thursday. That was much stronger than economists were anticipating just a few months ago, and up sharply from the 2.1 percent increase in the second quarter.”
“The big reason for the summer’s blowout growth: Americans stepped up spending, defying expectations they would pull back due to a series of interest-rate hikes from the Federal Reserve aimed at cooling inflation by slowing the economy.”
“The economic acceleration, which was foreshadowed by strong hiring and retail data, won’t change the Fed’s plans to hold rates steady at their meeting next week. Consumer spending rose at an annual rate of 4.0 percent in the third quarter, jumping from a gain of 0.8 percent in the prior quarter and the largest increase since the fourth quarter of 2021.”
“‘In my opinion, the U.S. economy might have already gotten through the stickiest spot of the post-pandemic normalization,’ said Bill Adams, chief economist at Comerica Bank.” READ MORE
The cost of childcare is a looming workforce problem: “In September, an increase in the number of prime-age men in the workforce was offset by a drop in the number of prime-age women working, which comes after years of gains, according to Bureau of Labor Statistics data. At the same time, child-care spending per household in September was 32 percent higher than the 2019 average. With women bearing the brunt of child-care responsibilities, that could lead to more women leaving the workforce, according to a report by Bank of America.”
“Growth in child-care costs and the drop-off of women in the workforce in September may be a precursor to even higher costs. The $24 billion Child Care Stabilization program passed during the pandemic also expired at the end of September, creating what experts had warned was a child-care cliff.”
“Childcare has long been a challenge but the Covid-19 pandemic dealt a blow to what already was a rickety, ad-hoc system of daycares, in-home care, friends, family and schooling. Thousands of centers shut down during the pandemic and burned-out workers left the industry in droves.”
“A recent report by The Century Foundation detailed the possible economic and social fallout, including both $9 billion in lost earnings for parents as well as a loss of 232,000 child-care jobs. That's on top of the risk that some workers will drop out of the workforce, putting more pressure on employers.” READ MORE
Louisville has had the biggest uptick in women-owned businesses: “Louisville's share of women business owners increased from 24 percent in 2019 to 32 percent in 2023, according to a new report from payroll and HR platform Gusto. That puts it at No. 1 among the top 50 metros analyzed in the research, ahead of Oklahoma City (No. 2); Hartford, Connecticut (No. 3); Columbus, Ohio (No. 4); and Raleigh, North Carolina (No. 5). ‘That data suggests that, as women drive the surge in entrepreneurship, they are driving the renewal of economic growth outside of the country’s large economic hubs, bringing new dynamism to the Midwest and Southern US,’ wrote Luke Pardue, a Gusto economist, in the report.”
“Women owned 38 percent of all American businesses, staff writer Anne Stych reports, and women-owned firms account for just 21 percent of businesses with employees and 5 percent of total revenue for American businesses.”
“Lisa Bajorinas, executive director of Kentucky Innovation Hubs and program director of the Vogt Awards, told us that in Kentucky, the number of businesses owned by women is increasing at a rate of 1.5 times the national average and many of those businesses are started by people of color and veterans.” READ MORE
Affirmative-action litigation is targeting small business contracts: “The Small Business Administration’s federal contracting program for socially and economically disadvantaged small businesses wasn’t a direct target of the U.S. Supreme Court decision earlier this year to effectively end race-conscious admission programs at colleges and universities. But it helped buoy the legal attacks against the SBA program, and more changes could be on the way due to ongoing litigation. The SBA had to briefly pause new applications, and then tweak the application process for its 8(a) Business Development Program in the wake of a court ruling by Judge Clifton L. Corker of the U.S. District Court for the Eastern District of Tennessee. He ruled that the SBA had violated the U.S. Constitution through policies that presumed minority business owners were socially disadvantaged based solely on their race.”
“The SBA initially suspended new applications for the 8(a) program in response to the court ruling. It reopened the application portal in late September, with guidance for small businesses on how to apply and update their application, if necessary.”
“To comply with the ruling, the SBA now requires owners to describe in some detail their social disadvantage, instead of relying on the race-based presumption. The hope is that this narrowly tailored approach will pass legal muster.”
“The application now includes a plain language, fillable questionnaire that offers owners the opportunity to describe their social disadvantage. There are a handful or so of questions to guide owners, prompting them to describe what happened and how it affected their ability to start or expand their business, among other things.” READ MORE
Wellthy helps stressed-out staffers balance careers and care-giving: “When [Ellen] Kessler reached out to Wellthy, they connected her with care consultant Lynda Cooke. Kessler’s mother has macular degeneration that impairs her vision, but she had resisted moving somewhere with full-time caregivers, so Cooke guided the family through finding a home health aide. Then, a nighttime fall that resulted in a broken rib changed Kessler’s mother’s thinking about assisted living. ‘She said, Ellen, I will not fight you anymore,’ Kessler recalled. Cooke was able to change course and provide Ellen with detailed questions to ask the facilities, guidance on negotiating fees, and emotional support.”
“Lindsay Jurist-Rosner co-founded Wellthy in 2014 after struggling to balance a demanding career in marketing with caring for her mother, who had multiple sclerosis and died in 2017. She started offering the concierge service to individuals but quickly expanded to focus on selling it to employers as a sponsored benefit, meaning it’s free for employees.”
“Companies usually pay between $3 and $6 per employee per month. That gets them access to Wellthy’s network of care specialists — many of them experienced social workers — who are available around the clock.”
“More than half the U.S. labor force has caregiving responsibilities outside of work, and some 37 million Americans can spend an average of nearly four hours a day looking after an elder, according to U.S. government data.” READ MORE
THE 21 HATS PODCAST
And Some Days the Bear Eats You: This week, Liz Picarazzi tells Jay Goltz and Sarah Segal that her trip to a bear sanctuary in Montana to get her trash enclosures certified as bear-resistant did not go precisely as planned. Because of a logistical snafu, she has not yet obtained either the certification or her real goal: a marketing video of the grizzlies attempting to crack open her baited enclosure. Fortunately, things went better for Liz in a more traditional marketing venue, a trade show in Chicago where she promoted her rat-resistant enclosures. Meanwhile, Sarah follows up on how things are going since losing two big clients and having to lay off three employees, and Jay explains his new catch phrase, “Let me not sleep on it.”
“Plus: we discuss the owner of a two-year-old construction business who wonders how long he should keep going if he doesn’t start to make a profit. He also asks why no one ever talks about how hard it is to run a business. While we can’t know for sure what’s happening inside his company, we can be pretty confident that he’s not listening to the right podcast.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren