When It Really Is Go Big or Go Home
In our latest podcast episode, Hans Schrei of Wunderkeks says it's no longer realistic to try to bootstrap a consumer packaged goods company.
Good Morning!
Here are today’s highlights:
John Oliver is giving a big boost to a local plumbing company’s advertising efforts.
Inflation continued to cool in February.
Uber and Lyft won a big independent-contractor victory in California.
Gene Marks still thinks he can talk business owners into trying a four-day work week.
THE 21 HATS PODCAST
This week, Hans Schrei explains why he’s pursuing a deal with Costco and why his vision is to get Wunderkeks cookies into every supermarket in the country. When Jay Goltz counters that instead of thinking big, or thinking small, maybe Hans should think medium, Hans says that may no longer be possible with consumer packaged goods: “The little brand that grows and thrives by growing little by little doesn't really exist any more in this space,” he says. Underlying the discussion of how fast Hans wants Wunderkeks to grow and how quickly he wants to exit are the stress-related mental health issues that he’s discussed previously on the podcast and the fact that his partner, Luis, is in the U.S. on an entrepreneurial visa, which means that if the business were to fail, they might have to leave the country.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
MARKETING
John Oliver has gotten a response from the local plumbing company whose movie-parody commercials he recently featured: “Radiant Plumbing & Air Conditioning, an Austin company whose wacky ads include movie parodies like ‘The Toiletnator’ and ‘Toilet Dune,’ was featured on the March 5 episode of ‘Last Week Tonight with John Oliver’ on HBO. Oliver had a proposition for Radiant — make a parody of a movie of Oliver's choosing and he will donate $10,000 to Central Texas Food Bank. The texts started to come in soon after. Brad Casebier, co-founder of Radiant Plumbing & Air Conditioning, was not watching the show in real time and found out they'd been featured from friends.”
“‘I texted one of my friends, like, 'Is this good or bad?' And they were like, 'Super good,' Casebier told the American-Statesman. Casebier and the team at Radiant got right to work as Oliver gave them just seven days to respond and accept the challenge.”
Below is the response. Watch to the end. READ MORE
THE ECONOMY
Inflation continued to cool in February: “The consumer-price index, a closely watched inflation gauge, rose 6 percent in February from a year earlier, versus a 6.4 percent gain the prior month, the Labor Department said Tuesday, the slowest pace since September 2021. The smaller increase comes as the Fed contemplates its next interest rate move while confronting price pressures and bank failures.”
“When excluding volatile food and energy prices, consumer prices advanced 5.5 percent from a year earlier in February compared with 5.6 percent in January. Economists view so-called core prices as a better indicator of future inflation.”
“The inflation rate has cooled from a recent peak last June, but has remained stubbornly high. That combined with a strong labor market and solid consumer spending introduced the possibility that the Fed could raise its benchmark interest rate by a half-percentage-point at its March 21-22 meeting, after opting for a smaller increase in early February.” READ MORE
Logan Aguirre of 417 magazine, speaking at a Great Game conference.
MANAGEMENT: FROM OUR SPONSOR
Logan Aguirre explains why she decided to do everything she could last year to get the employees at her regional magazine to actually take time off: “Your critical number is the number one most important thing your organization needs to be focused on. So it can be a threat or an opportunity. But it's defined as, if you don't pay attention to this one critical number, it can be a detriment to your business. And so all businesses have different critical numbers. And obviously, they can be financially driven. They can be about a profit margin.”
“Last year, our critical number was 100-percent PTO use. We wanted everyone on our team to use their full PTO. We are not an unlimited PTO company, but we found we were having a lot of burnout and a lot of turnover.”
“So every month when we would look at our actuals, we would announce where we were. We forecasted out for people, Hey, based on what you've submitted in the payroll system, this is how much you have booked—so you're not going to get there or you are going to get there.”
“At the Great Game, at the conference, I had a couple of owners or leaders come up and say, ‘We pay out PTO if you don't use your PTO. So we're actually encouraging people to not take their PTO. So maybe we need to really rethink that.’” READ MORE
HUMAN RESOURCES
Penalties will soon kick in for businesses that ignore new protections for pregnant and lactating employees: “There was already a provision under the Fair Labor Standards Act that required employers to provide break time for workers who needed to pump breast milk, but that provision only existed for so-called ‘exempt’ workers, or those who were exempted from overtime. Now, more workers are covered, expanding the pool of covered workers by millions. The 2022 version of the PUMP Act closes some gaps when the original law was passed in 2010, but still excludes some groups such as flight attendants and pilots.”
“Businesses that violate the law can be liable for unpaid minimum or overtime wages, employment reinstatement and payment of wages lost, as well as potential additional damages including economic losses and punitive damages, according to experts.”
“The PUMP Act applies to all businesses with 50 or more employees, as well as businesses under 50 employees unless the business can show the law causes an undue hardship on the business.”
“Stephanie Boms, CEO and co-founder of Nessel, which creates corporate lactation stations, said while there is now a legal requirement for many employers to provide pumping accommodations, businesses that embrace the rule can see a positive impact on recruiting, retention and company morale — as well as boost a company culture.”
“The PUMP Act is separate from the portions of the Pregnant Workers Fairness Act that was also passed into law as part of the omnibus. The PWFA extends the Americans with Disabilities Act to cover pregnant workers, which means businesses with 15 or more employees must provide reasonable accommodations to pregnant employees.” READ MORE
Gene Marks still thinks he can talk business owners into trying a four-day work week: “When I ask my clients about the four-day work week I generally get the same response: the eye roll. ‘Let me see if I understand this,’ they will inevitably say. ‘The employee works for four days, but I pay them for five, right? Thanks, I’m out.’ According to these business owners, my clients, this kind of thing just won’t happen in America. And don’t you roll your eyes at them either: these are very smart and profit-minded people who care very much for their employees.”
“My clients complain frequently about how tough it is to compete for talent. And yet, here is something that drops right in our laps and which can help us fix this labor shortage problem and we’re rolling our eyes?”
“Do you have hourly workers on the shop floor? Construction workers on the job site? Service techs out in the field? Customer service reps in the office? Then change their hours. Instead of an eight-hour day over five days offer the option of working 10 hours over four days.”
“What about salaried people? Look at their schedules, too. Can they take responsibility for delivering whatever is in their job description in however many hours it takes them to do the work? Do you care if your marketing manager is creating leads in four days or five days as long as the leads are coming in?” READ MORE
LITIGATION
Uber and Lyft won a big victory in California: “A state appeals court said that workers should continue to be treated as independent contractors under a California ballot measure known as Proposition 22, though it asked that a clause which put restrictions on collective bargaining by workers be severed from it. Proposition 22, which passed in November 2020, allowed these companies to continue to treat their labor force as independent contractors. A California court deemed it unconstitutional in 2021. Monday’s order reversed parts of that lower-court ruling.”
“While the court preserved the companies’ independent-contractor models, it did away with a clause that made it tough for workers to unionize. The ballot measure required a seven-eighths majority of the California legislature to amend workers’ rights to collective bargaining, a bar critics said was tough to meet.”
“‘The right to join together in a union is the most powerful way for workers to challenge gig corporations’ exploitative business model that profits off of paying low wages and silencing its workers. Today’s ruling opens the door to the possibility,’ said Theresa Rutherford, a board member of the Service Employees International Union, a labor union that challenged the constitutionality of Proposition 22 alongside several drivers.”
“Uber, which has a larger global footprint, has had to make bigger concessions outside the U.S. It agreed to grant its U.K. drivers an employment status entitling them to vacation pay and pension contributions after exhausting its legal options in 2021.” READ MORE
FINANCE
SVB’s collapse leaves California’s wineries looking for banking alternatives: “Wine Country vintners who bank with Silicon Valley Bank could let out a collective exhale with news of the federal guarantee for all deposits — beyond the default $250,000 maximum — late on Sunday. But questions remain about what will fill the void left by one of the industry's bank partners, which has established itself since the 1990s as an authority in winery financing and the expensive and often complicated valuations of land and equipment years ahead of the first bottle. The bank has made more than $4 billion in loans to wineries and vineyards since 1994, per its website, financing acquisitions, development costs, real estate, and equipment purchases.”
“SVB had about $1.1 billion in outstanding loans to premium wine clients as of Dec. 31, according to a Securities and Exchange Commission filing last week. Whether a buyer emerges or the Federal Deposit Insurance Corp. sells off the bank's assets piecemeal in the absence of one, those loans will be held by a new entity.”
“SVB's premium wine division has approximately 400 industry clients and employed some 35 professionals specializing in wine. The FDIC has informed SVB employees they will keep their jobs for at least the next 45 days, in order to complete a sale or parceling out of assets if no whole buyer is found.” READ MORE
The collapse will also change the way venture-backed startups do their banking: “Silicon Valley Bank had exclusivity clauses with some of its clients, according to a CNBC report, forcing them to use the firm for most or all of their banking services. ‘Before, when every VC thought SVB was safe, this was fine,’ said Wesley Chan, managing partner of FPV Ventures. Now that the banking crisis has sent a shiver through the tech ecosystem, more companies will move to spread their funds across multiple firms, Chan explained. ‘No single board member will ever allow keeping money with one bank anymore,’ said Chan.”
“After her company's assets froze last week, Sara Mauskopf of startup Winnie was forced to move its cloud-computing and marketing bills from a corporate credit card to her personal one. She spent the weekend phoning banks in the hopes of opening an account. By Monday morning, Winnie had five new accounts.”
“One of them is with Meow, a financial services company that allows businesses to invest in Treasury Bills under their own name at BNY Mellon Pershing, a leading provider of clearing and custody services.”
“A number of founders told Insider that they planned to place the majority of their capital with a ‘Big Four’ bank — JP Morgan, Bank of America, Wells Fargo, and Citigroup — for the stability and safety they provide.” READ MORE
Some former SVB customers are getting cash by selling SVB merch on eBay: “The items listed on eBay included a blue cardboard box with SVB's logo displayed on the front, which was priced at $201 at time of publication. It was listed on eBay on Saturday and the site showed there were five days left until the auction for the box closed. In the description, the seller wrote the box was ‘received after getting an offer letter one month before the bank blew up.’ They said it was ‘limited edition’ and asked for people to bid because they needed to pay their rent this month.” READ MORE
PROFILE
This is what happened when the owner of Red Truck Bakery, in Warrenton, Va., offered free coffee to people protesting police brutality: “Red Truck got dragged into this drama on the last Saturday in February when a relatively new member of the All Lives Matter group entered the bakery, camera phone in hand. Jennifer Blevins Ragle asked a young employee why the shop was giving out free coffee to participants at the Black Lives Matter vigil, but not others on the square. She implied Red Truck was discriminating against ALM.”
“Ragle’s video was posted on a YouTube channel called Singing Patriot, where it gained little traction. But it was also posted on a TikTok account, named crossstitch1954, where it has racked up more than 21,000 views and generated more than 800 comments, many of them calling for boycotts of Red Truck. Or worse.”
“‘Hope this place burns to the ground,’ wrote one commenter. ‘Close the place down! Let those black lives keep the place open. All the other lives don’t matter,’ wrote another.”
“‘It started as an innocent and spur-of-the-moment neighborly gesture, but no good deed goes unpunished, I guess,’ [owner Brian] Noyes wrote. ‘I don’t remember an All Lives Matter group being there back then, but if they had ever asked me about this, I certainly would have given them the same consideration.’”
“He’s already paid a price, both emotionally and financially. He figures he has lost between $15,000 to $20,000 because of the bakery closures. He’s paying out another $1,000 a day for security. ‘That’s a lot of muffins,’ he deadpanned.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Taxes, Regulation, and a Punch to the Face: This week, Gene Marks discusses what it means for small businesses that some tax deductions are going away, some new regulations are arriving, and Joe Biden has released a budget proposal. He also counters the Bare Minimum Monday meme with a suggestion for what practitioners of Bare Minimum Mondays can do on Tuesdays.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren