Why I Sold 21 Hats
In our latest podcast episode, Loren Feldman talks about selling the business for the chance to build a real media company.
Good morning!
Here are today’s highlights:
The third biggest tech hub in North America isn’t Miami or Austin.
Office workers who return to their offices are being greeted by “lunchflation.”
An entrepreneurial group of cattle ranchers challenges the big meatpackers.
The Biden administration continues to warn American businesses to prepare for Russian cyberattacks.
THE 21 HATS PODCAST
Why I Sold 21 Hats: This week, the tables are turned, as I announce the sale of 21 Hats and take questions from Shawn Busse, Karen Clark Cole, and Jay Goltz. The buyer is Toby Scammell, founder of Womply, which provides software services to small businesses and helped more than a million of them obtain Paycheck Protection Program loans. I will continue as editor-in-chief, but as we discuss, much of what this will mean for 21 Hats has yet to be determined—including, for example, whether the new entity will keep the 21 Hats name. Shawn, Karen, and Jay share their thoughts on that and also talk about how Karen solves problems for her big tech clients—and what smaller businesses can learn from her process. And Jay explains a change he’s making to his 401(k) plan that he believes will make it fairer for all of his employees.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
ECOMMERCE
TikTok is creating more opportunities to sell online: “To make the platform shoppable, TikTok partnered with Shopify last year and launched in-app purchasing capabilities in certain markets. When users discover products while scrolling through videos, they can click through to a Shopping tab on businesses' TikTok profile. Companies can either sell directly on TikTok in a native shopping experience where product management, shipping, billing, purchasing, and returns all take place directly on the platform, or they can use partner integrations to handle certain parts of the checkout and post-payment process outside of the app.”
“Not only does TikTok Shopping create more sales opportunities for brands and retailers, but it also allows creators to get commission on their content through the TikTok Affiliate Program.” READ MORE
OFFICE SPACE
With fewer office workers, downtown economies may never be the same: “And for Midtown Manhattan, a neighborhood built on the five-day-a-week commuter, that is a problem so momentous that after decades as the dominant office district in the country, real-estate developers and city planners are trying to imagine what else it can offer. On the residential side, Manhattan apartment rentals are booming and sales are reaching record levels. But offices in Midtown are attracting barely one-third of their pre-pandemic workforces. ‘There’s no question that Midtown is going to have to reinvent itself,’ said Chris Jones, senior research fellow at the Regional Plan Association, an urban-planning group.”
“Tourism, upgrades to public transit and more dynamic, pedestrian-centered streets would help Midtown attract the people it needs, Mr. Jones said. ‘The transition is going to be hard. It’s going to be hard on small businesses and low-wage workers that don’t have the resources to adapt,’ he said.”
“Midtown’s survival is critical for Manhattan, which was home to nearly 11 percent of all office inventory in the U.S. last year, according to an October report by New York state Comptroller Thomas DiNapoli.”
“Once-packed commuter trains arrive at Grand Central Terminal and New York Penn Station with ridership at less than half of pre-pandemic levels. Restaurants, bars and shops that depended on heavy foot traffic have gone out of business.” READ MORE
Those workers who do return to the office are experiencing sticker shock: “The first time Matthew McCarthy bought lunch out upon returning to his Waltham, Mass., office in September—a noodle bowl from a local Chinese restaurant—he got sticker shock. While Mr. McCarthy would like to support downtown businesses that suffered during the pandemic, he says he wasn’t prepared for the average price of lunch to seemingly double to $20 in his absence. ‘It’s 20 bucks for lunch. What the hell happened?’ the 50-year-old business-systems analyst says.”
“Sweetgreen, a salad chain, says it raised menu prices 6 percent this January. With more workers returning to offices, the company is also relaunching a delivery program for office buildings.”
“Sandwich chain Potbelly raised prices 5.4 percent in February, Chief Executive Bob Wright says. The company has reported an 86 percent increase in sales at downtown shops compared with fall 2020.”
“Payments company Square calculated that the prices of standard lunch items within major cities, including San Francisco, Seattle, New York City, Washington, D.C., and Austin, Texas, are skyrocketing.”
“The average price of wraps is up 18 percent since last March, sandwiches are up 14 percent, salads have gone up 11 percent and burgers are costing an average of 8 percent more as of March 1, according to the company.” READ MORE
OPPORTUNITIES
Cattle ranchers are joining forces to challenge the big meatpackers: “On 80 acres in western Nebraska, a group of cattle ranchers and feedlot owners this spring plans to break ground on a $325 million processing plant they say will boost competition—and livestock prices—in one of the country’s top beef-producing regions. The venture, Sustainable Beef LLC, comes as ranchers say they have struggled against years of low cattle prices, most recently despite the rise of wholesale beef prices over the pandemic. The average price for live cattle was up 5 percent in 2021 from 2019, according to figures from the Livestock Marketing Information Center and Agriculture Department, while the average price of boxed beef—cuts that packaging plants box to ship to retailers—was up 26 percent.”
“Cattlemen have tried to create their own plants before, but few have been successful, said Bill Rupp, a Sustainable Beef board member and former consultant at a firm that helped set up such ventures.”
“New plants often struggle to keep costs low, he said, because they don’t have the economies of scale to price their meat competitively with the big four.”
“Company officials said the plant will be more spacious than others, won’t use night shifts and will pay workers starting wages of about $50,000 a year, officials said. The average annual wage for such workers was $31,210 in May 2020, according to the Labor Department.”
“The company’s estimated $325 million startup cost has grown from earlier estimates of about $236 million. Sustainable Beef’s founders said they have raised about $150 million and will borrow the rest to meet the startup cost.” READ MORE
FROM OUR SPONSOR: WORK BETTER NOW
Start getting more done with a virtual assistant: How many times at the end of the day do you realize that you haven’t completed the important things that really improve the value of your business. Too many business owners spend the bulk of their day on administrative tasks instead of high-value priorities like:
Spending time with current and prospective customers.
Developing a new marketing initiative. Keeping your team engaged and focused.
Thinking about new products and services.
And of course, a little more personal time would be nice.
Work Better Now provides highly qualified, enthusiastic, and dedicated virtual assistants at a price any business can afford — and 21 Hats subscribers get $150 off for the first three months by mentioning “LOREN.” LEARN MORE HERE
TECHNOLOGY
Toronto is now North America’s third largest tech hub: “As the tech industry continues to expand and communities all over the world compete for tech jobs outside Silicon Valley, many executives, investors and entrepreneurs are promoting warm climes like Austin and Miami as the next big tech hubs. But they are tiny tech communities compared with the new hub growing in the cool air along the shore of Lake Ontario. Thanks to years of investment from local universities, government agencies and business leaders and Canada’s liberal immigration policies, Toronto is now the third-largest tech hub in North America. It is home to more tech workers than Chicago, Los Angeles, Seattle and Washington, D.C., trailing only New York and Silicon Valley, according to CBRE, a real estate company that tracks tech hiring.”
“‘Everyone points to Miami as the next tech hub because it offers low taxes. But it offers little else from a tech point of view,’ Mike Volpi, a partner with the venture capital firm Index Ventures, said on a recent visit to Toronto. ‘You need anchor companies that can provide a transformative impact. Entrepreneurs come from these companies and start their own.’”
“These anchor companies — including the Canadian e-commerce company Shopify as well as the many American giants — have come to Toronto for the researchers and engineers who are already here. But they also believe the talent pool will grow.”
“In Toronto, U.S.-based companies can also speed the arrival of new tech talent from other countries — a talent stream that has long been the lifeblood of the American tech industry. As the U.S. immigration system slowed and sputtered under the Trump administration, Canada introduced programs intended to bring skilled workers into a country that is already unusually diverse.” READ MORE
THE ECONOMY
Conventions are returning to McCormick Place in Chicago: “The economic engine of Chicago’s tourism industry, McCormick Place was hard-hit by the pandemic, with more than 230 event cancellations costing the city about 3.4 million attendees and nearly $3.1 billion in economic impact. McCormick Place has 176 events on the calendar this year and projects nearly $1.9 billion in economic impact for the city. In 2019, McCormick Place held 289 events with a total attendance of 2.9 million.”
“Sanders said convention attendance had been steadily declining in Chicago and across the country for a decade before the pandemic. While attendance will likely bounce back from its lows, the pandemic is ‘bound to accelerate’ the long-term decline at trade shows and conventions, he said.”
“‘The industry likes to say you can’t replace face-to-face,’ Sanders said. ‘The larger economic reality is that as employers increasingly embrace, to varying degrees, remote work, and they recognize that the technology today has made lots of virtual activities far more viable, they aren’t going to send as many employees to attend a convention and trade show as they used to.” READ MORE
THE GIG ECONOMY
With gas prices surging, some drivers say they’ve had enough: “‘High gas prices are the final nail in the coffin,’ said Harry Campbell, who writes a blog called the Rideshare Guy and produces a podcast aimed at helping ride-hailing drivers. ‘Rising gas prices make a tough situation even tougher, and for a lot of drivers it’s sort of the final straw that pushes them over the edge.’ In a survey last week of 325 drivers who follow his content, Mr. Campbell found that 38 percent were driving less because of high gas prices and 15 percent had quit driving altogether.”
“Uber, Lyft and DoorDash say overall driver numbers are not down. Uber said it had more active drivers now than it did in January.”
“Both Uber and Lyft added small fees to the price of rides in most places for the next two months, a change they say will help compensate drivers.”
“Both Uber and Lyft say drivers have been making more money since lockdowns lifted than they did earlier in the pandemic or even pre-pandemic, even when accounting for rising gas prices.” READ MORE
THE RUSSIAN INVASION
Ukrainian refugees are being met with job offers: “In Germany, where over 300,000 jobs are unfilled, a group of entrepreneurs created JobAidUkraine to help refugees find work as they arrived by rail, bus and air. On a recent day, nearly 30,000 online visitors scrolled through over 5,000 jobs listed by companies from London to Lisbon, for McDonald’s shift work, human resources specialists, software developers and nursing aides. ‘We’ve been amazed to have big and small companies advertising in every industry, from programmers to farmers to bars,’ said Christina Kaesshoefer, a co-founder of the website. ‘People want to do anything they can to help.’”
“Despite the good will, there are challenges. Ukraine is recognized for its skilled workforce, with 70 percent of workers holding secondary or higher education degrees. The country boasts the largest tech engineering force in central and Eastern Europe, drawing Microsoft, Cisco, Google and other multinational companies to outsource work there.”
“But the war has shattered an entire society. Programmers, lawyers and truck drivers are among the tens of thousands of Ukrainian men between 18 and 60 to pick up arms to defend their country.”
“The influx is seen as a boon in Lithuania, a country that has long grappled with labor shortages linked to an aging population, a declining birthrate and the migration of young people elsewhere in Europe in search of well-paying jobs, Ms. Balnanosiene said.”
“‘This will help solve our labor shortage problem, even temporarily, and our people are not afraid that they will lose their own jobs, because we have enough for everyone,’ she said.” READ MORE
CYBERSECURITY
The Biden administration continues to warn businesses to prepare for Russian cyberattacks: “The White House last week briefed more than 100 companies in the United States on the best ways to defend against a cyberattack. The administration on Monday directed companies to ‘harden your cyber defenses immediately,’ recommending measures such as enabling multifactor authentication, ensuring offline backups of data and educating employees on hacking methods.”
“‘It’s part of Russia’s playbook,’ Mr. Biden said in the statement. ‘Today, my administration is reiterating those warnings based on evolving intelligence that the Russian Government is exploring options for potential cyberattacks.’”
“‘You have the power, the capacity, and the responsibility to strengthen the cybersecurity and resilience of the critical services and technologies on which Americans rely,’ Mr. Biden said in the statement.” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren