We’ll Be Doing This Again
Last week in Chicago, we celebrated wins, and we compared notes on the kinds of issues and challenges that many business owners and entrepreneurs face alone.
Here are today’s highlights:
You might be surprised by the businesses that are willing to haggle over price.
This would be a good time to focus on the recruitment and retention of women.
On Wednesday, the price of electricity turned negative in Finland.
Let’s buy an oyster farm!
21 HATS LIVE: CHICAGO
A week later, I’m still processing all of the things that happened at the first 21 Hats Live event in Chicago: “I’ve planned events before but never one like this. I made some mistakes, I learned some lessons, and we almost missed the boat that took us on an architectural tour down the Chicago River. But my fondest hope came true—20 entrepreneurs gathered almost as if it were a family reunion (a family, that is, that actually likes each other). There were no speakers at this event, and there were no attendees either. We were all participants.”
“We compared notes on the kinds of issues and challenges that many business owners and entrepreneurs face alone: How big do we want our businesses to be? Is our business as profitable as it should be? How exactly do we spend our days?”
“We will be doing more of these. Let me know if you’d like to suggest a location or if you’d like to be alerted when plans are set.” READ MORE (AND SEE WHAT PARTICIPANTS HAD TO SAY)
See you on Tuesday: After observing the Memorial Day weekend, the Morning Report and the podcast will return on Tuesday. Dashboard will return next week. Here’s hoping you and yours enjoy a nice break.
More businesses are open to haggling over price: “Everything from your mortgage rate to your hotel room and medical bills is fair game. When you speak up, ask open-ended questions and do a little research, and you can save hundreds if not thousands of dollars. To get in the right mindset, think about what you might be able to offer the other party in your negotiation, perhaps in terms of future business. Humanize yourself, practice with a script and always show respect, said Richard Shell, a professor at the Wharton School of the University of Pennsylvania who teaches negotiation.”
“Take mattresses. Sixty percent of people who choose to haggle for a mattress succeeded—and saved a median of $245, according to a recent study by Consumer Reports.”
“If you’re shopping for something complex, say a mortgage, beware of the human tendency to go on autopilot and accept the first price you’re offered, said Samantha Lamas, senior behavioral researcher at fund-research firm Morningstar. Lenders may be counting on you to choose the easiest route because you feel overwhelmed, she said.”
“The end of your wireless or internet bill contract means you’re free to change providers. It also means you’re ripe with fresh haggling power. Companies may be more willing to dish out their best offerings to convince you to stick around. Start by familiarizing yourself with your plan.” READ MORE
Technology was supposed to disrupt the pricing of insurance: “At first, the insurance pricing process—heavily reliant on algorithms and mathematical modeling—seemed ripe for upending, thanks to advances in the sheer amount and variety of data digitally native companies could suddenly collect on customers. But the Silicon Valley axiom to move-fast-and-break-things hasn’t been enough to transform an industry built on centuries of observed human behavior, massive marketing budgets, and a savvy grasp of the regulatory environment.”
“So far, the insurtechs have been slow to gather and contextualize enough data to actually build better models. Regulations have restricted the use of some of their data and differentiated pricing. And it has been difficult to chip away market share from established industry giants.”
“’We did a fairly shoddy job of pricing and identifying risks. And we knew we would,’ said Lemonade co-CEO and co-founder Daniel Schreiber of the early days of the company. The problem was that Lemonade, along with other insurtechs, started without access to the historical data sets that incumbents have been gathering, in some cases, over many decades.”
“It’s a similar story at auto insurance startup Root, which built its business around the use of telematics. Through a smartphone app, Root could track the driving styles of users for two weeks, then offer them a personalized price based on how they drove. But Root didn’t know for sure whether certain driver behaviors actually correlated to higher risk until accidents occurred and the claims started coming in, said Chief Executive and Co-founder Alex Timm.” READ MORE
Job satisfaction just hit a three-decade high—but less so for women: “Job satisfaction is at its highest point in more than three decades, thanks to a tight labor market and more flexible work arrangements, but not everyone is satisfied with the status quo. The Conference Board’s annual Job Satisfaction report found 62.3 percent of U.S. workers are satisfied with their jobs, an uptick from 60.2 percent last year and 56.8 percent in 2020. Allan Schweyer, principal researcher of human capital at The Conference Board, said because the labor market will remain tight for the foreseeable future, a focus on worker retention is critical.”
“But despite year-over-year improvements, the survey identified some red flags for employers, specifically when it comes to their efforts to recruit and retain women. The Conference Board found women are much less satisfied than men in every category surveyed, especially when it comes to job security, promotion policy and bonus plans.”
“As we've noted, experts say employers that aren't focusing on retention and recruitment of women are jeopardizing their long-term talent pools at a time when they can ill-afford to do so. The survey suggests many employers have significant room to improve in that regard.” READ MORE
We need more housing. Why aren’t we building it? “Greater Boston’s business groups, housing advocates and politicians agree: Housing is way too expensive, and we need to build a lot more of it. But lately, homebuilders in the region are putting up less housing. Through the end of April, cities and towns in the Boston metro area have approved building permits for 3,771 new housing units so far this year. That's a 30 percent decline from the same four months in 2022, according to new U.S. Census Bureau data. The drop locally in permitted units is also larger than the 26 percent decline nationwide year-over-year. Looking at April alone, the numbers are even worse: Just over 640 units were permitted to be constructed across the metro area last month, according to the data. That's less than half the number from last April, and not even a third of the total from April 2021.”
“The same factors that contributed to a year-over-year decline in building permits in 2022 — higher borrowing costs, economic uncertainty — appear to be further hurting production this year.”
“On top of that, the recent collapses of Silicon Valley Bank and First Republic have caused banks to tighten their lending, suggesting more slowdowns ahead.” READ MORE
A Brooklyn couple leaves the city to farm oysters: “The Little Ram Oyster Co., a farm of 2 million oysters on the North Fork of Long Island, started with a Groupon. To celebrate a friend’s birthday in the summer of 2017, Stefanie Bassett and Elizabeth Peeples joined eight other enthusiasts in Long Island City to learn how to shuck oysters at a discount. The Brooklyn couple, who knew each other from middle school in Columbia, Md., always had a love for the delicacy. But as they laughed with their friends and fumbled with their oyster knives, they also listened intently as an instructor explained the history and magic of the mollusks. ‘The thing that drew our attention was the positive environmental impact oysters have,’ said Ms. Bassett, 42.”
“Faster than one can slurp an oyster, Ms. Bassett, who worked in advertising at the time, and Ms. Peeples, then an interior designer, decided to become oyster farmers. ‘We said, OK, let’s give ourselves five years,’ Ms. Bassett said, ‘save money, change our budget, change our way of living.’”
“Ms. Bassett and Ms. Peeples were buying a business, which included an Eastern 22’ Lobster work boat, commercial refrigeration equipment, cages, buoys and 150,000 oysters. The sale also came with the rights to the official name, Cornelius & Little Ram Oyster Company L.L.C. Named for its location, as is tradition for oyster companies, the farm is visible from Shelter Island, positioned between Cornelius Point and Little Ram Island. ... After some negotiation, they agreed to pay $117,000 for the business.”
“Little Rams are now in 15 to 20 restaurants on the North Fork and in Manhattan. Out East, this includes the North Fork Table & Inn and François Payard’s Southold Social on the North Fork. They’re on the menu at Cull & Pistol in Chelsea Market and in the Michelin-chef John Fraser’s three New York City restaurants, including Iris, which serves Mediterranean fare in Midtown.” READ MORE
Banning TikTok may be harder than lawmakers thought: “Last week, Montana became the first US state to ban TikTok — and the rule's implementation could show just how hard it would be to enact a federal ban. There's already been strong opposition to the state bill. On Tuesday, TikTok sued Montana over the new law, saying it violates Americans' First Amendment right to free expression. That's after a group of TikTok creators also sued the state with the same argument. The ACLU has also issued a statement calling the ban unconstitutional. Montana's ban comes as U.S. lawmakers have been discussing a federal ban on TikTok, citing concerns with TikTok's parent company Bytedance and its ties to China.”
“Meanwhile, privacy advocates and others said Montana's law is hard to enforce — both politically and technologically. On top of that, privacy and tech experts say it's not likely to solve the actual concern with TikTok's data-gathering practices.”
“The law allows for $10,000-per-day fines on TikTok, app stores, or any other ‘entity’ that ‘offered the ability’ to download TikTok in the state. But both Apple and Google say that doing this would require redoing how users are tracked, The Washington Post reported. It actually would require more user data to be tracked to determine exact locations, they say.”
“‘Montana's TikTok ban is laughably unconstitutional, but it's also comically difficult to enforce,’ said Evan Greer, of privacy-advocacy group Fight for the Future. ‘Any teenage anime fan or British TV aficionado can tell you how to circumvent such a silly ban using a virtual private network.’” READ MORE
Startups are getting hit with surprise tax bills: “The unwelcome surprises stem from lawmakers in Washington failing to extend the provision that allows research and development costs to be fully expensed under Section 174 of the tax code. The change comes at an already-tough time for many in the innovation sector, which is grappling with reduced venture capital funding, upheaval in the technology sector and economic uncertainty. ‘It stinks for software companies,’ said Chris Geiss, whose company, Seguno Software in Durham, North Carolina, allows firms to create, manage and track email marketing within Shopify. ‘What counts as R&D is a little crazy to me, because it’s kind of every feature, software product you put out there — you’re constantly evolving it and improving it, and they say those things count toward R&D, so pretty much the majority of your engineering salary is going toward that.’”
“The tax code now requires R&D amortization over a period of five years, potentially creating a mathematical mismatch for software firms whose largest R&D line item is typically software development talent. The life sciences industry is also feeling the strain.”
“Stephen Furst, founder and CEO of Raleigh-based Smart Material Solutions, a startup focused on advanced manufacturing, said his firm could have to consider layoffs without Congressional action. Since its inception as an S-corporation in 2016, the firm has accumulated about $3 million in grants earmarked for research.”
“With the tax change, SMS has extended its tax return (which, as an S-corp. means so did all six of its shareholders, personally). Furst is banking on a legislative solution, having recently hired a fourth team member set to start this summer. But if the $300,000 tax bill has to be paid, ‘we would have to take out debt.’” READ MORE
Gas prices have fallen dramatically: “The national average price for regular gasoline is a full dollar a gallon lower than a year ago. Drivers paid over $4.60 in May 2022, and prices had reached $5 by the second week of June. This week, they paid just over $3.50 a gallon for regular gasoline, according to AAA, the motor club. Many energy experts said they expected prices to stay around these levels for much of the summer, barring a major disruption to global oil supplies. Because gasoline prices are posted on street corners on big colorful signs, they can have a powerful psychological impact on consumers, especially on middle- and lower-income people who tend to drive older, less fuel-efficient vehicles and spend a larger proportion of their income on energy than affluent people.”
“After nearly two years of contending with high inflation, many Americans appear to have changed how and where they buy gasoline and diesel, said Tom Kloza, the global head of energy analysis at Oil Price Information Service. Many people have started buying fuel at big-box retailers, which often offer lower prices than independent gas stations.”
“Another factor dampening prices is the growing popularity of electric vehicles. Battery-powered vehicles could become increasingly important in reducing demand for fossil fuels and limiting climate change over the next decade.” READ MORE
On Wednesday, clean energy was so abundant in Finland that prices went negative: “Finland was dealing with an unusual problem on Wednesday: clean electricity that was so abundant it sent energy prices into the negative. While much of Europe was facing an energy crisis, the Nordic country reported that its spot energy prices dropped below zero before noon. This meant that the average energy price for the day was ‘slightly’ below zero, Jukka Ruusunen, the CEO of Finland's grid operator, Fingrid, told the Finnish public broadcaster Yle. “
“The price drop was driven by an unexpected glut of renewable energy and Finns cutting back on energy use because of the crisis caused by Russia's invasion of Ukraine.”
“The news is a remarkable turnaround for a country that only a few months ago told its people to watch their energy consumption. ‘Last winter, the only thing people could talk about was where to get more electricity. Now we are thinking hard about how to limit production. We have gone from one extreme to another,’ Ruusunen told Yle.”
“Finland is now dealing with the opposite problem of poor energy supply: energy operators may no longer be able to operate normally if the electricity is worth less than the cost of producing it. ‘Production that is not profitable at these prices is usually removed from the market,’ Ruusunen said.” READ MORE
THE 21 HATS PODCAST
Is PR Worth the Effort? This week, William Vanderbloemen says good public relations is absolutely worth the time and money. Paul Downs, on the other hand, says PR hasn’t worked for him. At this point, he says, there are all kinds of ways he’d rather spend his time and money. Meanwhile, Sarah Segal, who owns a PR firm, offers some tips on how to approach and how to employ a firm effectively. Along the way, we discuss what’s expensive when it comes to PR and whether owners can just do it themselves. Plus: Paul explains how he dug himself out of a sales hole by not doing anything differently. And we find out how the owners feel about all of the new ways they’re being asked to leave tips. Spoiler alert: they’re not loving it.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren