TikTok and AI Are Getting Harder to Ignore

Scoff if you must, but this stuff is getting real. A step-by-step guide to selling on the world’s most influential social app, where reaching customers is “shockingly easy.”

Good Morning!

Here are today’s highlights:            

• Don’t call them “caterers.” It’s an entirely different business model. 

• And yes, of course, at CES in Las Vegas, it’s all about artificial intelligence.

• You’re not going to have to show your receipt when leaving Sam’s Club much longer.

• A media company knows why people are so down on the economy. It’s the media’s fault.

MARKETING

TikTok is turning into a full-fledged store: “TikTok has always been an unapologetically consumerist space. The app’s algorithms are a good match for product recommendations, and its massive influencer economy brings with it a ready-made sales and marketing infrastructure. In September, though, TikTok announced the ‘full launch’ of the long-brewing TikTok Shop, which allows individuals and businesses to list and sell products directly in the app. At the same time, the company invited the rest of its users to promote sellers’ products — say, by including them in posts or livestreams — in exchange for an affiliate fee.”

• “My next test was to list a product myself. I had no intention to sell anything, just to understand what sort of onboarding and vetting process TikTok had put in place, compared to its competitors. I registered as a seller using my TikTok account. After a brief identification and profile-building process, I was approved.”

• “I listed a product within arm’s reach at my desk, a gently used mechanical pencil, yellow, twist-type. I took a few photos, listed a few keywords, checked a few boxes, and let TikTok generate a product listing using AI. From ‘pencil, mechanical, yellow, classic, vintage’ TikTok’s AI came up with a peppy intro — ‘Upgrade your writing game with the Classic Mechanical Pencil! This retro and vintage-inspired pencil is a must-have for any office or school setting!’”

• “I submitted the listing and was rejected for a low-quality product image. Fair. I let TikTok ‘enhance’ the lead image with more AI, which subtly altered the colors, and submitted it again. Success. After the product was live, I was prompted with a few possibilities. I could include my pencil in TikTok posts as a small tag. I could reach out to influencers to sell my pencil on commission. I could also go live, starting a stream in which to sell my pencil.”

• “I decided to go live. The TikTok login I used for this experiment is a test account. It had, at the time, 34 followers — mostly random bots or bot-like strangers, people I had interacted with in the process of reporting other stories, and a few friends who looked me up by phone number. The account had zero posts and very few interactions of any sort. Still, when I went live, [hundreds of] viewers showed up.” READ MORE

BUSINESS MODELS

Catering is getting a makeover: “As in-person socializing continues its comeback, the concurrent return of the dinner party has engendered a new slate of companies that will, in effect, hold dinner parties for those who don’t want to do the cooking. But if you scroll through their websites and Instagram accounts, you will never see the word ‘catering.’ Instead, customers can ‘reserve a feast’ for up to 12 people from critically lauded restaurants around the country. They can host an ‘intimate dining event’ with a chef from Per Se or Tatiana in the kitchen of a private penthouse. They can ‘turn [their] home into a restaurant.’ Welcome to the New Catering. Or, at least, welcome to it being easier than ever to eat a restaurant chef’s food in your home. It’s an arrangement that many chefs and restaurants are hoping is the key to their survival.”

• “Some companies, like Resident, connect chefs to new employment opportunities. Resident offers two services: You can book a private party, which includes choosing a chic New York venue to turn into your personal hangout for the night, with either a sit-down dinner or food served from stations (the estimated cost of a five-course dinner for 25 with wine pairing is around $8,500).”

• “Or you can buy a ticket to a dinner at a private apartment, which costs $195 per person. For customers, the sell is easy: The list of chefs on the Resident website is full of résumés with familiar restaurant names like Olmsted, Eleven Madison Park, Gage & Tollner, and Le Coucou. The best restaurants in the world, now made even more exclusive as a private experience, sometimes in your own home.”

• “Supporting chefs in a volatile industry is also the mission of Moveable Feast, which hires chefs to prepare meals for up to 12 people that are then shipped around the country. Co-founder John Stubbs says the idea for the business came directly from the pandemic, as he worked on restaurant legislation with the Independent Restaurant Coalition and looked for more ways to support chefs.” READ MORE

ARTIFICIAL INTELLIGENCE

At CES, the world’s biggest technology trade show, “AI” has replaced “smart” as the key word: “Among the scores of gadgets on display at CES in Las Vegas this week, hundreds if not thousands claim to be enhanced by artificial intelligence. For starters, there are: AI-powered grills. AI-powered body cameras. AI-driven cat doors. AI-driven real-estate marketing. AI race cars. AI glucose prediction. AI-based livestock solutions.”

• “A new PC keyboard built for AI: Many new Windows computers will come with a Copilot key that summons Microsoft’s suite of AI products when pressed. Generally, you’ll find it to the right of the space bar. You can use it to type questions, generate images, summarize web pages, draft documents and more.”

• “A home-patrolling robot: LG’s AI agent doesn’t just beep and bop around. The companion robot patrols your home when you’re away and personably greets you when you return. It zips around, balancing on two wheeled legs using a camera and AI to recognize people and objects. The bot has sensors to monitor temperature, humidity and air quality. It’s billed as an autonomous mini butler, controlling your gadgets, keeping an eye on your pets.”

• “A pillow for snoozing, not snoring: Tired of your partner’s nighttime elbow jabs? The Derucci Anti-Snore Pillow uses sensors to detect your snoring and automatically adjust your head. Plug it into the wall, and when you start to snort, it inflates internal air bags to nudge your noggin into a less noisy position. Pair it with the mobile app for sleep-improvement recommendations.” READ MORE

Sam’s Club is using AI to review photos of your shopping cart: “Shopping trips to Sam's Club are about to get a little shorter — at the exit, at least. The Walmart-owned warehouse club said Tuesday it's ditching physical receipt checks for an artificial-intelligence-powered scan of members' shopping carts as they roll out of the store. ‘Eliminating even the few seconds it takes to scan a receipt at the exit door is well worth it,’ Sam's Club U.S.'s chief merchant, Megan Crozier, said in the company's keynote presentation at the Consumer Electronics Show in Las Vegas.”

• “During the presentation, Walmart played a video demonstration of the tech portraying two versions of the same shopper. The tech-savvy shopper teaches her less-savvy counterpart to scan items with the Sam's Club mobile app and pay on it.”

• “As the shoppers leave the store, the less tech-savvy shopper says: ‘Wait, you have to show your receipt.’ Her counterpart passes through a large blue gateway to scan her items. The gateway is equipped with cameras and sensors that capture images of the shopper's cart, recognize individual items, and verify the purchase — all in real time.” READ MORE

AI is fueling a boom in edtech: “The Covid-19 pandemic may not truly be over, but the boom it spawned in online learning and tutoring startups sure is. Now, with kids back in classrooms and venture capital funding for edtech down near pre-pandemic levels, entrepreneurs and venture capitalists have turned their attention to virtual reality, short form video and, first and foremost, artificial intelligence. ‘Investors are going gaga over artificial intelligence,’ says Tony Wan, head of platform at Reach Capital, a VC firm that invests in dozens of edtech companies. The education industry has been flirting with AI for half a dozen years, he notes, but suddenly, the relationship has turned serious. ‘Every business in ed tech—if it’s not an AI business—needs to have an AI component,’ echoes Michael Moe, founder and CEO of GSV Holdings, a VC firm focused on the education and workforce skills sectors.”

• “Within the education community there have been fears that GPT-3, or its successor, could disrupt traditional education by helping students write essays or cheat on homework. But Wan believes that AI could help teachers create grading tools, rubrics, and syllabi, and that students could legitimately use the technology as a study tool.”

• “Edgi Learning is offering Edgi Bot, an AI that uses GPT-3 to answer students’ homework questions. Edgi Bot, backed by early-stage tech investor Avalanche VC, debuted in May, but the bot improved after OpenAI updated its model in the fall. High school and college students have since moved from using it as a novelty app to relying on it for study help, says Josh Shapiro, co-founder and CEO of Edgi Learning, Edgi Bot’s parent company.” READ MORE

THE ECONOMY

Consumer prices rose more than expected in December: “Prices that consumers pay for a variety of goods and services rose more than expected in December, according to a Labor Department measure Thursday that shows inflation still holding a grip on the U.S. economy. The consumer price index increased 0.3 percent for the month, higher than the 0.2 percent estimate at a time when most economists and policymakers see inflationary pressures easing. On a 12-month basis, the CPI closed 2023 up 3.4 percent. Economists surveyed by Dow Jones had been looking for respective readings of 0.2 percent and 3.2 percent.”

• “Much of the increase came due to rising shelter costs. The category rose 0.5 percent for the month and accounted for more than half the core CPI increase. On an annual basis, shelter costs increased 6.2 percent, or about two-thirds of the rise in inflation.”

• “Food prices increased 0.2 percent in December, the same as in November, while energy posted a 0.4 percent gain after sliding 2.3 percent in November. Gasoline rose 0.2 percent. In other key price indexes, motor vehicle insurance bounced 1.5 percent higher, medical care accelerated by 0.6 percent and used vehicle prices, a key contributor in the initial inflation surge, increased another 0.5 percent after being up 1.6 percent in November.” READ MORE

Is it the media’s fault that people are down on the economy? “Most recent data suggests a pretty strong economy in the U.S. Inflation remains at 3.1 percent — above the Federal Reserve's 2 percent target but well below a year ago at 6.7  percent — while the unemployment rate has stayed below 4 percent for two years. Meanwhile, the economy has grown faster than most economists' expectations in 2023, while racial and gender income inequality has narrowed. Layoff rates are also still near historic lows. But Americans don't think the economy is doing that well. Despite an increase in December, the University of Michigan Consumer Sentiment Index still reveals people feel rather gloomy about the economy, with levels matching those of the Great Recession in 2009. Meanwhile, a December Bankrate study found that 59 percent of U.S. adults feel the economy is in a recession.”

• “A new Brookings study found that since 2018 — and more specifically over the last three years — the media has taken a more negative bias toward covering the economy than the fundamentals would have suggested, the study found.”

• “Brookings researchers hypothesized that U.S. households view the economy as less robust when economic news is more negative. Using the San Francisco Federal Reserve's Economic News Sentiment Index, the researchers looked into the sentiment of economic news stories from major media outlets and compared their tone with what would be expected based on the state of the actual economy. Variables analyzed included GDP, the Consumer Price Index, unemployment rate, and equity prices.”

• “‘One of the weird things about the recent economy has been the way that it is very strong for people on the bottom and for entry-level workers and for younger people, but it's a lot weaker obviously for media, for tech, for wealthier people,’ [Will Stancil, a researcher at the University of Minnesota] said. ‘Of course, these are the voices that have access to the platforms to spread ideas.’" READ MORE

MANUFACTURING

Phoenix is ranked No. 1 for manufacturing growth: “Nearly 15,500 jobs have been promised as part of the major manufacturing developments coming to the Valley, which topped the nation for both projected jobs added and manufacturing announcements in excess of $100 million, according to Newmark research. Elizabeth Berthelette, author of the Newmark report, said Phoenix has a long history in advanced manufacturing with companies such as Intel and Honeywell over the past 50-plus years. ‘Having that basis of skill-level, other facilities, other types of companies doing similar things — R&D, highly skilled manufacturing and production — has really continued to attract new announcements,’ she said. ‘It's the business climate, economic climate, less expensive power, more development opportunities.’”

• “Newmark found that the Phoenix market had nearly 75,000 advanced manufacturing workers as of 2023, although finding the labor to fill the new jobs will be a challenge across all markets, especially in smaller regions that do not have as diverse economies.”

• "‘Phoenix isn't immune to the challenges of the greater advanced manufacturing sector,’ Berthelette said. ‘Where Phoenix may excel is the diversity of its economy — it's very large, there's a lot of different industries there, the population growth is very fast.’”

• “Other large markets that are seeing the most growth in the industry were Atlanta, which has had 12,713 jobs announced since 2020, and Austin, which has had 11,465 jobs announced since then. In mid-size and small metros measured, Syracuse, New York, saw the most manufacturing jobs announced with 9,000 new jobs for a new Micron facility, while Savannah, Georgia, had nearly 9,000 jobs announced across two facilities since 2020.” READ MORE

STARTUPS

A real estate startup called Here has shut down: “Here raised $5 million from investors over seed funding rounds in 2022, according to data from private company database Crunchbase. The startup reported it aimed to make it easier for average people to invest in real estate by making it possible to purchase shares of vacation properties located in popular destinations. When it launched, Here offered shares for as low as $1 each. ‘We launched Here because we believe anyone should have access to the same investment opportunities the ultra-wealthy have,’ Ashton Walters said in a statement in late 2022.”

• “The company, a fractional short-term vacation rental marketplace, reports it is suspending operations ‘due to the current interest rate environment and economic conditions.’ Here aims to sell off its properties in the next six months, the letter said.”

• “Interest rate hikes over the past two years have posed a challenge for real estate technology companies. In November, the Airbnb-backed property management firm Zeus Living notably folded after raising more than $150 million from investors.” READ MORE

THE 21 HATS PODCAST

New Year’s Resolution? Make. Some. Money: This week, Shawn Busse, Paul Downs, and Laura Zander talk about why 2023 was so challenging for them and what they plan to do differently in 2024. “Last year was a year when I knew I was going to be making a bunch of investments and didn't expect to show much or any of a profit,” says Paul. “And I absolutely nailed that goal.” Shawn, meanwhile, explains how his new marketing scheme is working, and Laura says she’s addressing her issues by going shopping — shopping, that is, for businesses.

• “She’s now bought a total of six, and she offers a step-by-step guide to how even a relatively small business can grow through acquisition, including what she’s looking for (mostly companies in distress), how she sets a price (she aims to recoup her cash outlay pretty quickly), how she finances the deals (not with a bank!), and how she integrates her old and new operations (that can be a bear).

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

Thanks for reading, everyone. — Loren