When Is It Too Hot to Keep Working?

And who gets to decide? Employees? Employers? Regulators?

Good Morning!

Here are today’s highlights:            

• Phil Hayes makes sense of the often-confusing world of ESOPs.

• The new dish New York City is talking about is a $29 hot dog.

• The early days on Threads have been an opportunity for small brands to go a little crazy.

• A lot of people are watching one lawyer try to hold Big Oil accountable for climate damages.

THE 21 HATS PODCAST: BONUS EPISODE

The Long Journey to Really Understanding ESOPs: If you’ve been listening to this podcast, you know that we’ve been taking periodic dives into the world of employee stock ownership plans. We started down this path because Jay Goltz was thinking about his own succession issues. In a series of podcast episodes and conversations and seminars over the course of more than a year, Jay progressed through the three stages of ESOP discovery: First, he had his eyes opened. (“Wait a second. If you’re an ESOP, you don’t pay taxes?”) Then he got a little euphoric. (“I think I can make more money owning 70 percent of the business than I do now owning 100 percent.”) And then he confronted what I’ve been calling the ESOP industrial complex—the big firm lawyers and consultants who sometimes seem inclined to make ESOPs as complicated and expensive as possible. (“They want to charge me a ‘success fee’ for finding a buyer even though they didn’t find the buyer.”)

That introduction to Big ESOP occurred at a conference that Jay and Shawn Busse attended in Portland and that left Jay convinced that ESOPs are probably right for a lot of people but not for him. And yet, it was also at the conference in Portland that Shawn and Jay met Phillip Hayes, who takes a decidedly different approach than the industrial complex gang. What immediately stood out about Phil, who calls himself The ESOP Guy and who has his own podcast, Journey to an ESOP, is that he doesn’t view his mission as selling owners on ESOPs. His goal is to help owners figure out which solution is best for them, whether that’s an ESOP or something else. Which is why Shawn and I decided to sit down with Phil and have a conversation about his approach. 

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

REGULATION

In most states, businesses decide when it’s too hot to keep working: “The relentless heat wave that has smothered parts of the country in triple-digit temperatures is drawing calls from workers’ advocacy groups and others for greater protections for those who work outside—from construction workers to farmworkers to garbage collectors. While several states in recent years have enacted regulations that mandate periodic relief from the heat, most don’t. The groups say the lack of protections leaves those whose jobs require them to labor outside especially vulnerable to heat-related illness. Business groups, meanwhile, say their constituents are already providing breaks, water and training in accordance with federal guidelines and that they need consistent regulations across cities.”

• “California, Washington, Oregon and Colorado have regulations requiring employers to provide protections for workers when the weather gets hot. They include requiring businesses to provide shade, regular breaks and free access to water. Minnesota enforces heat protections that apply only to workers indoors.”

• “Texas has gone in the opposite direction. A bill signed in June by Gov. Greg Abbott bans local ordinances in cities such as Dallas and Austin that mandate rests and water breaks when temperatures rise. The law, set to take effect in September, prevents cities and counties from creating local ordinances that go further than what is allowed under state law.

• “The move in Texas is backed by the construction industry, which says such municipal rules are too onerous.” READ MORE

PRICING

The most important new dish in NYC is a $29 hot dog: “New Yorkers have talked about the $29 hot dog at Mischa more than any other new dish this year. It may be better known than Mischa itself, which opened in Midtown in April with an American theme that Alex Stupak, the chef and an owner, interprets freely and with a big pinch of Eastern Europe and the Eastern Mediterranean. Considered as a public statement, the $29 hot dog is obnoxious, a flagrantly expensive lowbrow-highbrow stunt out of the Jeff Koons catalog. If you can forget all this and just eat it, though, the $29 hot dog is glorious. It gets to you both on a mindless, lizard-brain level and through a sophisticated appeal to your mind. It’s ‘Barbie’ and it’s ‘Oppenheimer.’”

• “The natural casing snaps crisply, like a cap gun. The filling is emulsified brisket with pork fat. The flavor and juiciness are not far from those of steamed corned beef. The potato bun isn’t smushy, the great flaw of normal hot dog buns unless you are Joey Chestnut. It keeps its integrity whether you eat the hot dog with a fork and knife or with your hands.”

• “I’m not convinced the $29 hot dog is a hot dog; it may be too smoky and garlic-drenched to qualify. Even if it’s just a sausage in a bun, though, it’s got to be the greatest sausage in a bun in the city.”

• “‘I think my job is to make things that no one else would make,’ Mr. Stupak told an interviewer not long ago.” READ MORE

LOGISTICS

If UPS is the only shipping carrier you do business with, start diversifying now: “UPS and the International Brotherhood of Teamsters are currently in negotiations for a new agreement, which is set to expire on August 1. If a strike does occur -- marking the first one since 1997, which lasted 15 days -- all UPS deliveries will come to an immediate halt on August 1. This means that any packages sent via UPS, including those already shipped, will not be delivered until an agreement is signed. While it is possible that both UPS and the Teamsters will find common ground and avoid a strike, it's important that shippers be prepared for any outcome.”

• “It takes time to get contracts in place, so, especially with peak holiday season around the corner, the sooner you start shifting volume to USPS, FedEx, or regional carriers, the more flexibility you'll have.”

• “This isn't just true of a strike situation. If you only have a contract with one carrier and your business experiences a sudden shift -- for example, business begins picking up in new regions -- delivering those orders could quickly become an issue. There are a lot of ways to go down, and none of them are ideal, but failing because business it too good is among the tougher pills to swallow.” READ MORE

SOCIAL MEDIA

The early days on Threads were something of a small-brand bonanza: “The first days of Threads, Meta’s new text-based social media platform designed to rival Twitter, were described as ‘unhinged,’ ‘chaotic,’ and ‘off the rails,’ by some users. Specifically, those who own small businesses, namely independently-owned consumer brands. The quick and effortless sign-up process through an Instagram account, also owned by Meta, is a low barrier for entry, allowing the number of Threads users soar to 100 million in the first week after its July 6 launch, according to CNBC; Quiver Quantitative estimates there are now 115 million Threads users.”

• “Brands unabashedly, thus hilariously, attempted to engage fellow Thread users with brand-relevant questions, promotions and ridiculous, verging on nonsensical, posts. Ithaca Hummus asked its followers to ‘Thread’ their favorite flavor and a song ‘matching its vibe.’”

• “So far, Threads is a ‘safe space’ for small brands to let their freak flag fly, so to speak, all while still marketing to their audience. Small independent brands don’t have the editorial constraints that corporate brands do, but they are after all, still companies, many with investors, but the nuttiness continued.”

• “The environmentally friendly toilet paper company Who Gives A Crap best summed up Threads (while deftly weaving in relevance to their brand) in a post, ‘This place has the warm, welcoming and slightly unhinged vibes of making a group of new besties in the nightclub toilet line.’ They now have 22.8K Threads followers.” READ MORE

THE ECONOMY

Americans still have more money in the bank than they did before the pandemic: “Despite a year when inflation pushed prices to new heights, Americans are still better off now than before the pandemic, with nearly 10 to 15 percent more in their bank accounts than in 2019, new checking and savings account data shows. However, households are rapidly spending down that extra cash they’d socked away during the pandemic. Median account balances are at their lowest levels in roughly three years and have dropped as much as 41 percent from their peak in April 2021, when Americans were flush with government stimulus money and tax returns, according to a JPMorgan Chase Institute analysis of the bank accounts of 9 million Chase customers.”

• “Taken together, the data helps explain the big mystery behind how the U.S. economy has managed to avoid a recession that many economists had forecast: Consumers, supported by a strong labor market, have been able to keep spending despite inflation and a sharp rise in borrowing costs.”

• “But it also highlights why Americans remain tentative about their economic prospects, particularly as they face higher prices on food, housing and travel.” READ MORE

LITIGATION

Missy Sims is suing Big Oil for climate damages: “Ms. Sims, 54, may be the most surprising legal figure to emerge as the world grapples with the devastating impacts of a warming planet. An Armani-and-Rolex wearing observant Catholic from a small Midwest town who talks to God as she mulls her complex legal cases, Ms. Sims is also a constant TikTok poster whose dog has more followers than some celebrities. And she is now the singular force behind a creative legal gambit to make oil and gas companies pay for the devastation being wrought by climate change in Puerto Rico. Her strategy is being carefully watched by the fossil fuel industry and environmental groups as well as other lawyers and municipalities.”

• “The case is part of a new wave of litigation targeting oil, gas and coal companies over climate change, which is driven by the burning of their products. But it stands out in two significant ways.

• “It was the first to allege that, by downplaying the effects of global warming for decades, the fossil fuel companies violated the Racketeer Influenced and Corrupt Organizations Act, which was originally designed to crack down on organized crime. So-called RICO charges expose the defendants to potentially huge financial damages and open up a new front in their growing legal challenges.”

• “The case was also the first to request damages from a specific weather event. In her 247-page complaint, Ms. Sims notes that scientific studies have shown that man-made global warming made the 2017 hurricanes more severe, causing Maria to rapidly intensify in a way that killed thousands and inflicted more than $100 billion worth of destruction on Puerto Rico.” READ MORE

THE 21 HATS PODCAST

Is anybody listening to me? This week, Shawn Busse, Paul Downs, and Jennifer Kerhin talk about the challenges of communicating with employees, especially in the post-pandemic world. It’s hard enough to get aligned on mission and vision, but how do you connect with an employee you’ve never actually met in person? Is that even possible? We also discuss Jennifer’s realization that she has over-performed on sales but under-performed on marketing, which is part of the reason she’s re-doing her website. “I need a higher level of prestige,” she tells us, “so, better copy, better photographs, an all-around more sophisticated look. What we had was mom and pop. You know, Wix.”

• “Plus: the panel tackles a question posted on the small business subreddit: “How large can my margins become before I'm ripping off my clients?”

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

Thanks for reading, everyone. — Loren