When the Mall Reopens

Lights were dimmed inside H&M and a handwritten sign taped to the inside of the glass door told customers they would need to shop elsewhere.

Good Morning!

Here are today’s highlights:            

• As job openings rise, employee resignations are falling and leverage is shifting.

• Cinemas are investing millions to try to win back customers.

• Scribe Media, a leader in DIY publishing and thought leadership for entrepreneurs, has closed its doors.

• There may yet be life in American cities—just not where the office buildings are.

RETAIL

This is what it’s like when the mall reopens: “Shoppers waited in line at Tory Burch to look at shoes and handbags, at Adidas to look at athletic wear and Gap for clothing. They carried shopping bags back and forth to cars while extra security including police officers were on the scene. Global apparel retailer H&M was one of the few stores that did not reopen, along with local shoe stores Escros and women’s apparel store Papaya. It was in front of H&M that a gunman opened fire on shoppers and employees, killing eight and injuring at least seven. Lights were dimmed inside H&M and a handwritten sign taped to the inside of the glass door told customers that they would need to shop elsewhere.”

• “All but a few of the 120 stores at the Allen Premium Outlets shopping center [north of Dallas] reopened as one of the region’s busiest retail destinations tries to get back to normal 25 days after the May 6 mass shooting. The Simon-owned shopping center reopened at 10 a.m. Wednesday while shoppers and employees returned to the scene of chaos and tragedy a few weeks ago.”

• “Marcus Kergosien, manager of the Zwilling Factory Store, had a small framed tribute to one of the victims displayed on a table in his store. On May 6, Elio Cumana-Rivas, 32, died on the sidewalk in front of Zwilling while scared shoppers, including a father with a baby in a stroller, found safety in the store. ... ‘We watched him die, and we said prayers for him,’ Kergosien said.”

• “Kergosien said he wanted to tell his story Wednesday because the more he learned about Cumana-Rivas, the more he mourned a life lost. ‘I learned he was here buying a birthday gift for his daughter in Venezuela and was here to work and send money back home to his family,’ Kergosien said. ‘I want to raise awareness.’” READ MORE

HUMAN RESOURCES

Job openings rose in April after three months of decline: “Employers reported a seasonally adjusted 10.1 million job openings in April, the Labor Department said Wednesday, up from a revised 9.7 million in March. April’s increase reversed three months of declines. Layoffs fell to 1.6 million in April, from 1.8 million in March. Openings have decreased from the record 12 million recorded in March 2022. But they remained well above the 5.7 million people looking for work in April—pointing to a solid labor market more than a year after the Federal Reserve began aggressively lifting interest rates to cool the economy and tame inflation. ‘Demand is still strong and the labor market is very active,’ said Dawn Fay, operational president at job recruiting firm Robert Half. ‘Everyone is still looking to hire, it seems, whether they’re small businesses or large businesses. We’re not really seeing any pockets of weakness.’”

• “Job openings increased for positions at retailers, warehouses, healthcare businesses and transportation. Vacancies declined at factories, real-estate firms, and state and local governments.”

• “The number of times workers quit their jobs held roughly steady at 3.8 million in April, a sign that workers remain confident in their ability to find a new job.”

• “‘Businesses are clearly hoarding labor, particularly in retail and leisure and hospitality,’ said Ryan Sweet, chief U.S. economist at Oxford Economics. ‘If you get laid off, you’re finding work very, very quickly.’” READ MORE

But the Great Resignation seems to have ended: “During the past year, the rate at which Americans quit their jobs has steadily declined from a record high back to pre-pandemic levels — seeming to spell the end of the labor market trend that came to be known as the ‘great resignation,’ labor economists said. The ‘quits rate’ fell to 2.4 percent in April, down from 2.5 percent the month prior and from a 3 percent peak in April 2022, the U.S. Bureau of Labor Statistics reported Wednesday in the Job Openings and Labor Turnover Survey. This rate is the share of monthly quits (i.e., voluntary departures by workers) relative to total employment. It’s now roughly on par with the monthly pre-pandemic average between 2.3 percent and 2.4 percent in 2019.”

• “‘I think the great resignation as we know it is over,’ said Daniel Zhao, lead economist at career site Glassdoor. ‘We are much closer to the labor market we had in 2019, which was hot but not overheating.’”

• “‘The pandemic gave workers more leverage than they’d ever had,’ said Julia Pollak, chief economist at ZipRecruiter. The dynamic has changed, however. The U.S. labor market has gradually cooled, staffing shortages have become less of an issue and workers appear more nervous about the job outlook, Pollak said.” READ MORE

BUSINESS MODELS

Cinemas are spending millions, trying to win back customers: “Cinemas were already upgrading before the pandemic — bringing in cushier seating, bigger screens, better sound equipment, and tastier food and beverage options. But many theaters also went into 2020 with thin margins and may have survived only because of federal pandemic relief programs. Now cinemas are spending millions of dollars to beef up their offerings and surpass moviegoing of old. ‘There’s an urgency now,’ said Mike Polydoros, president of PaperAirplane Media, a cinema marketing agency.”

• “EVO Entertainment, one of a handful of companies creating ‘cinema entertainment centers,’ turned a 14-screen theater in Southlake, Texas, into an eight-screen venue with a restaurant, a rock-climbing wall, a ropes course, bowling, bumper cars — and that aforementioned gangplank. The cost: more than $10 million, about the same to build a complex from scratch, said Mitch Roberts, the company’s chief executive.”

• “Theaters are installing heated lounge chairs that fully recline or have built-in trays and buttons to summon waiters. Some seats move in sync with the movie’s action or provide special effects such as a blast of air during a windy scene, tricks that were once typical only at amusement parks.”

• “Some auditoriums now have screens on the sides as well as at the front. Menu options have grown ever more sophisticated. Sushi, anyone? You can wash it down with an I.P.A.”

• “Not surprisingly, such excursions now cost more, and not just because of pricier refreshments: Some theaters are charging 65 percent more for a movie shown on the jazziest new screens like ScreenX and RealD 3D.” READ MORE

THOUGHT LEADERSHIP

Scribe Media, which helped entrepreneurs write and publish books, has ceased operations: “The company said it laid off 90 people as a result of the decision, according to a notice the company sent to the Texas Workforce Commission. Executives of Scribe Media couldn't be reached for comment. The company's explanation hinted at funding issues, but provided little detail on why it had to shut down so suddenly. ‘Based on unforeseen business circumstances and faltering business based on unavailability of additional capital, Scribe is forced to shut down its operations and lay off employees at 507 Calles Street [in Austin] on May 24, 2023,’ the company said in its letter to the state.”

• “The startup was founded by author Tucker Max and entrepreneur Zach Obront in 2014 as Book in a Box. Max fired himself from the CEO role in 2016 and named to the position JeVon McCormick, previously president of Headspring Software.”

• “Scribe Media went on to make headlines for its radically transparent culture, as well as its impact on what could be considered a staid industry in the social media age. In 2019, Max predicted the company would one day be valued at over $1 billion.” READ MORE

• McCormick, himself an author and inspirational speaker, has been active in business groups such as the Tugboat Institute and Conscious Capitalism: “JeVon McCormick was born the son of a black pimp father and a white orphan mother. Today, he’s the CEO of a multi-million dollar publishing company that was recently ranked the #1 Top Company Culture in America by Entrepreneur Magazine.” READ MORE

INSURANCE

It’s not just California where the climate crisis is becoming a financial crisis: “In parts of eastern Kentucky ravaged by storms last summer, the price of flood insurance is set to quadruple. In Louisiana, the top insurance official says the market is in crisis, and is offering millions of dollars in subsidies to try to draw insurers to the state. And in much of Florida, homeowners are increasingly struggling to buy storm coverage. Most big insurers have pulled out of the state already, sending homeowners to smaller private companies that are straining to stay in business — a possible glimpse into California’s future if more big insurers leave.”

• “Michael Soller, a spokesman for the California Department of Insurance, said the agency was working to address the underlying factors that have caused disruption in the insurance industry across the country and around the world, including the biggest one: climate change.”

• “In December, Louisiana had to increase premiums for coverage provided by its Citizens plan by 63 percent, to an average of $4,700 a year. In March, it borrowed $500 million from the bond market to pay the claims of homeowners who had been abandoned when their private insurers failed, Mr. Donelon said. The state recently agreed to new subsidies for private insurers, essentially paying them to do business in the state.” READ MORE

OPPORTUNITIES

American cities are showing some life—just not near office buildings: “The pandemic and remote work have done little to dent the overall appeal of cities such as New York, Chicago and Los Angeles, foot-traffic and rent data show. Instead, the pandemic has shifted the urban center of gravity, moving away from often sterile office districts to neighborhoods with apartments, bars, and restaurants. ‘We’re now back to what cities really are—they’re not containers for working,’ said Richard Florida, a specialist in city planning at the University of Toronto. ‘They’re places for people to live and connect with others.’”

• “Data from Placer.ai, which tracks people’s movements based on cellphone usage, shows a stark divide between office and residential districts. In Downtown Los Angeles, visitor foot traffic is 30.7 percent below pre-pandemic levels, while Downtown Chicago’s visitor foot traffic is 27.2 percent lower.”

• “By contrast, in the residential areas of South Glendale and Highland Park near Los Angeles and in Chicago’s residential Logan Square neighborhood, visitor foot traffic has been rising and is nearly back to pre-pandemic levels.”

• “Andrea Loscalzo, owner of the Italian restaurant Salumeria Rosi in Manhattan’s Upper West Side, said his eatery is as busy as before the pandemic. Many regulars left the neighborhood and never returned, but young professionals in their 30s and 40s moved in to replace them, he said.” READ MORE

STARTUPS

A St. Louis startup has won a grant to build a cricket farm: “Mighty Cricket said it received a $131,500 Small Business Innovation Research grant from the U.S. Department of Agriculture for a pilot cricket farm it plans to operate in St. Louis. The project will also involve turning food waste into feed for crickets at the farm, the startup said. Mighty Cricket, led by founder and CEO Sarah Schlafly, sells a line of oatmeals and protein powders that are made using flour from crickets. It has positioned cricket flour as a more climate-friendly approach to sourcing protein for food items, saying the development of cricket flour requires less water and feed, and emits less carbon dioxide, than traditional proteins like beef, chicken and pork. Schlafly said part of Mighty Cricket’s mission is to make consumers ‘more comfortable with protein that comes from bugs.’”

• “The local cricket farm that Mighty Cricket plans to launch will be an indoor facility that will allow the startup to use its own crickets to develop its products. Schlafly said the company currently works directly with cricket farmers to source the protein it uses.”

• “The startup’s own farm will give it greater control over its product’s flavor profile and provide an opportunity to use automation in its farming operations to reduce costs, Schlafly said.” READ MORE

CYBERSECURITY

What do you do if your business is hacked? “Karim Toubba was a few months into his new job as chief executive officer of LastPass US LP, which allows customers to store and manage passwords, when he learned that his company had been hacked. Two weeks later, in August 2022, he published a blog post saying that while the hackers had stolen some source code and proprietary technical information, there was no evidence that access was given to customer data or encrypted password vaults. Crisis averted—until the hackers returned, using information stolen in the earlier attack to obtain encrypted usernames and passwords, among other data. That development, revealed in a blog post by Toubba days before Christmas, prompted waves of criticism and a Wired story entitled ‘Yes, It’s Time to Ditch LastPass.’”

• “Toubba says his company got many things right in responding to the hack but could have done better in some areas, such as communication. His team continues to review the response, looking for ways to refine processes.”

• “‘Improvement to those kinds of things is a never-ending game,’ he says. His message to other CEOs who may find themselves in a similar position? You won’t be judged for being hacked, but you will for how you respond.” READ MORE

THE 21 HATS PODCAST

Best Of: What It Takes to Build a Business: So, I decided to give the 21 Hats Podcast crew this past week off. Between the Memorial Day holiday and our first 21 Hats in-person event in Chicago—attended by five of the podcast regulars—it seemed the right thing to do. It also seemed like a great opportunity to reprise one of our favorite all-time episodes. We first published it in December of 2021, and it features highlights taken from the podcasts we’d published up until that point that cover many of the risks and rewards 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, and even to deal with serious mental health issues. If you’re new to the podcast, I think you’ll find that these conversations bring real context to the journeys of the entrepreneurs you’ve been following here. But even if you’ve heard some of these discussions before, I think you’ll find them a refreshing reminder that choosing to build a business can be a noble mission, but it generally doesn’t come with an owner’s manual. We’re all figuring it out as we go.

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

Thanks for reading, everyone. — Loren