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This Is What It Takes to Build a Business
In a special year-end 21 Hats Podcast episode, we highlight our happiest, smartest, funniest, and most difficult conversations of the year.
Here are today’s highlights:
In case you didn’t notice, the U.S. economy is booming.
One reason retailers are all over TikTok? Their ads look just like content.
Some businesses are welcoming municipal proof-of-vaccine requirements.
Suddenly, the hot opportunities in Silicon Valley are in crypto.
THE 21 HATS PODCAST
This Is What It Takes to Build a Business: This week, in our last episode of 2021, we take a look back at the conversations we’ve had this year about the rewards and responsibilities of business ownership, including what it’s like to sell your business, to fire an employee, to risk your own home in order to get financing, to have to make a bet-the-company decision, and to deal with mental health issues, even thoughts of suicide. In this bonus episode, we highlight some of our happiest, smartest, funniest, and most difficult exchanges from the past year.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
Retailers are flocking to TikTok, where the ads look just like the content: “Welcome to the holiday shopping season on TikTok, where retailers are present like never before, their authentic-seeming advertisements dropped in between dances, confessionals, comedy routines and makeovers. Young men and women showcase shimmering American Eagle tops as pulsating music plays in videos designed to look as though they were filmed in the 1990s. A woman in a unicorn onesie retrieves a specific brand of cookies at Target to the tune of ‘Jingle Bell Rock.’ A home chef mixes and bakes cinnamon apple cakes from Walmart in 30 seconds, displaying a blue bag from the retailer.”
“A regular stream of products, from leggings to carpet cleaners, have gone viral on the platform this year, often accompanied by the hashtag #TikTokMadeMeBuyIt, which has been viewed more than seven billion times.”
“In reports shared with advertisers and obtained by The New York Times, TikTok said Gen Z users, defined as 18- to 24-year-olds, watched an average of more than 233 TikToks a day and spent 14 percent more time on the app than millennials or Gen Xers on a daily basis.”
“TikTok also told one agency that 48 percent of millennial mothers were on the platform, and that women ages 25 to 34 spent an average of 60 minutes on the TikTok app a day.” READ MORE
Did Theranos change PR forever? “Theranos CEO Elizabeth Holmes used to attract the kind of press founders dream of. She had a glowing profile in the New Yorker and landed on the cover of Fortune and Forbes. But now those same articles have been entered into evidence in her criminal fraud case, where she faces 11 charges for fraud and conspiracy to commit fraud. The statements Holmes made to hype her blood-testing startup are now what the government is using to prove she committed crimes.”
“‘At the time, Theranos was an embarrassment for the entire comms world because it highlighted the worst possible stereotype — the evil PR spin doctor with no moral compass,’ said Hadley Wilkins, who helps startups with storytelling as VP of communications at Atomic.”
“‘Theranos was so wildly egregious in every aspect, but it did serve in making founders and startup comms in general laser-focused on data and numbers to tell your story.’”
“‘No one wants to make claims before you have proof,’ Wilkins said in an email.” READ MORE
How one restaurant owner is fighting for every nickel and dime: “Judy Henry’s restaurant has been known for its house-made rosemary focaccia, served warm with extra-virgin olive oil to each table. In November, after nearly 20 years of the bread being complimentary, she began charging guests $1.50 per loaf. Using bread to help balance the books is one way the chef-owner is managing rising costs of everything from workers to crab meat at her restaurant, Judy’s on Cherry, in Reading, Pa. Beef and pork trimmings previously used in soup are now ground up and used in a meatball appetizer, creating a new source of revenue. Ms. Henry last month raised the price of nonalcoholic beverages by 30 cents and stopped offering free refills.”
“Ms. Henry worries that there are limits to what a small restaurant can charge, particularly in places like Reading, which has a median annual household income of roughly $32,000.”
“Sales have picked up this year, totaling $750,000 through November, but remain 43 percent below the same period in 2019.”
Labor costs now eat up roughly 43 percent of revenue, up from 34 percent in 2019, even though headcount has shrunk to 19 from about 30.”
“She recently raised the price of a filet mignon dish by $2 and the cost of a popular lobster and pasta offering by 10 percent but is holding firm on the $38 price for the Chilean sea bass entree.”
“These and other moves, Ms. Henry said, have kept food costs to 33 percent of revenue, which she calls ‘the magic number’ in the restaurant industry.” READ MORE
THE COVID ECONOMY
By the way, the U.S. economy is really taking off: “A booming U.S. economy is rippling around the world, sucking in imports, straining global supply chains and pushing up prices. The force of the American expansion is also inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies. U.S. consumers, flush with trillions of dollars of fiscal stimulus, are snapping up manufactured goods and scarce materials.”
“U.S. economic output is set to expand by more than 7 percent annualized in the final three months of the year, up from about 2 percent in the previous quarter, according to early output estimates published by the Federal Reserve Bank of Atlanta.”
“That compares with expected annualized growth of about 2 percent in the eurozone and 4 percent in China for the fourth quarter, according to JPMorgan Chase.” READ MORE
Airlines are preparing for a busy week: “The rapid spread of the Omicron variant is looming over holiday travel, but airports are getting busier as travelers try to stick to plans to see friends and family over the holidays. While travel hasn’t fully recovered to pre-pandemic levels, some airlines said they are expecting flights to be even fuller than they were over Thanksgiving, when daily passenger volumes hit their highest levels since the start of the pandemic.”
“United Airlines, for instance, said it expects to carry an average of 420,000 passengers a day from Dec. 16 through Jan. 3, about 5 percent more than the daily volumes over Thanksgiving.”
“Delta Air Lines said the 7.8 million customers it anticipates between Dec. 17 and Jan. 3 would be the most since before the pandemic began in 2019, and more than double the number who flew Delta during the holidays in 2020.”
“One sign that travel is still strong: Mitzi Kramer of Nebraska said she wanted to go to Disney World—and still would—but couldn’t get theme-park reservations, and hotel rooms on the property were running about $900 a night. ‘I tried,’ she said. ‘I’ll just pass this year and maybe go this spring.’” READ MORE
Many Boston businesses welcome the requirement to get proof of vaccination: “Over the past few weeks, as the COVID-19 case numbers have ratcheted back up, Christopher Glionna, the managing partner of The Aquitaine Group in Boston, has been trying to decide whether or not to require guests to show a vaccine card at the restaurants. On Monday Mayor Michelle Wu decided for him. And that’s OK. ‘It made my job a lot easier,’ Glionna said. Wu’s announcement Monday that indoor venues — including restaurants, gyms, and nightclubs and performance venues — must begin checking proof of vaccination starting Jan. 15, 2022 was met with a range of emotions from business owners. Including, for Glionna anyway, relief that it’s out of his hands.”
“‘Being out in front of something like this is always hard, but it was something that our employees wanted and it was something that our guests wanted, and now it is a level playing field across the city,’ he said. ‘It’s not just our policy. It’s the policy of the city of Boston.’”
“And some restaurant owners worried about just another burden in what’s been a difficult time. Baheja Rostami, the owner of Ariana Restaurant in Brighton, said she might need to add an extra person to her Afghani restaurant’s seven-person staff to check vaccine cards at the door, and risk alienating customers in the process.” READ MORE
Fox will no longer allow its employees a test-out option: “The new policy was in keeping with New York City’s vaccine rule, which Mayor Bill de Blasio announced in early December and which is more stringent than a contested Biden administration rule requiring vaccine mandates or weekly testing at larger employers. The New York City mandate, which requires on-site workers at all businesses to be vaccinated, is the country’s most sweeping local vaccine mandate and affects some 184,000 businesses.” READ MORE
The Biden administration will offer 20,000 more H-2B visas for temporary workers: “The visas are being made available in addition to 33,000 visas already set aside for seasonal employers, such as landscapers, hotels and ski resorts, for the winter hiring season. They will be available to employers looking to bring on temporary workers on or before March 31. The move marks the first time the department is offering the additional visas for the winter season, and leaves open the possibility that the administration could make an additional batch available for the summer, which is typically busier.”
“The Biden administration has come under intense pressure from employers and business groups to make the additional visas available sooner to help alleviate labor shortages, which are being felt most acutely in low-wage industries that rely on immigrant labor.”
“Of the 20,000 additional visas, 6,500 will be set aside for applicants from Guatemala, Honduras, El Salvador and Haiti—all countries that have sent large numbers of migrants to the U.S. border in recent months.”
“The remainder will be set aside for returning workers from any country.” READ MORE
Is the H-1B visa program a scam? “I spoke with current and former H-1B holders, U.S. workers, union reps, academics, lobbyists, recruiters and immigration lawyers on both sides of the political spectrum. While they differed on the specifics, many said that the program is used not to fill labor shortages, as corporations insist, but to cut costs. Critics say that businesses regularly game the system to pay H-1B visa holders below market wages, both exploiting foreign workers and stacking the deck against American job seekers.”
“While many pro-labor groups say the program lines the pockets of the likes of Google and Facebook at the expense of American workers, immigration advocates, along with business interests, oppose measures to rein it in, saying that doing so will hurt American competitiveness by narrowing access to a badly needed pipeline of high-skilled talent.”
“Politically, H-1B reform is pegging two powerful Democratic constituencies against each other.” READ MORE
Suddenly, the hot jobs are in crypto, aka web3: “When Sandy Carter left her job as a vice president of Amazon’s cloud computing unit this month, she announced in a LinkedIn post that she was joining a crypto technology company. She included a link for open positions at the start-up. Within two days, she said, more than 350 people — many from the biggest internet companies — had clicked the link to apply for jobs at the firm, Unstoppable Domains. The start-up sells website addresses that sit on the blockchain, the distributed ledger system that underpins cryptocurrencies.”
“Ms. Carter is part of a wave of executives and engineers leaving cushy jobs at Google, Amazon, Apple and other large tech companies — some of which pay millions of dollars in annual compensation — to chase what they see as a once-in-a-generation opportunity.”
“That next big thing is crypto, they said, a catchall designation that includes digital currencies like Bitcoin and products like nonfungible tokens, or NFTs, that rely on the blockchain.”
“With crypto, they see historical parallels to how the personal computer and the internet were once ridiculed, only to upend the status quo and mint a new generation of billionaires.” 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