Discover more from The 21 Hats Morning Report
Why Isn’t This Product Selling?
In our latest podcast episode, the owners talk about how long you keep pushing a product that doesn’t seem to be connecting.
Here are today’s highlights:
There are times when it’s better to let someone else run your business.
Influencers are often willing to help market luxury real estate free of charge.
A Spotify layoff memo offers a powerful example of “toxic positivity.”
Gene Marks thinks even small businesses should offer unlimited PTO.
THE 21 HATS PODCAST
This week, Shawn Busse, Liz Picarazzi, and Sarah Segal talk about when it’s time to give up on a product. For Liz, the problem product is her package locker, which is designed to defeat porch pirates but hasn’t really taken off—especially considering how widespread the concern is. Could the glitter-bomb guy be the answer to Liz’s marketing challenge? Or is it time for her to back off? Plus: In the age of Zoom and remote workers, what have the owners figured out about running effective meetings? And if you're pricing a range of services in a proposal, do you price your offering a la carte? Do you always charge the same prices? And is there a way to ease a client into a monthly retainer?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
SELLING THE BUSINESS
Realizing that she was burning out, a founder hired a CEO to run her business: “By 2022, Proofread Anywhere was generating between $250,000 and $300,000 in revenue each month, [Caitlin] Pyle said. And it had an email subscriber list of more than 300,000 readers—an extremely valuable asset for any content business. Since its launch, Proofread Anywhere has helped more than 15,000 people start their own remote proofreading businesses. But behind the scenes, that growth was not as smooth for Pyle. Her business had grown so fast Pyle said she had a hard time keeping up with it. ‘I was overwhelmed and overworking and had no idea what was happening most of the time,’ she said. She first thought about selling Proofread Anywhere in 2017, but her business was still growing so quickly that she didn’t see a clear path to exit. Her burnout escalated when she got divorced in 2019, she said, and her body hit ‘rock bottom’—she had a thyroid imbalance, severe depression, and complications of the Epstein-Barr virus.”
“Pyle hired Cody Lister in 2020 to take the reins of Proofread Anywhere as CEO while she focused on her health. They’d met at an event several years before and became friends. He focused on strengthening systems and processes, while Pyle set up email campaign sequences that eventually freed her from the pressure of creating new content all the time.”
“They were able to eventually remove Pyle’s name and face from the day-to-day of the company, building evidence that the business she built on her personal brand didn’t actually require her presence to operate it.”
“Onfolio Holdings, which went public just before the sale closed in October 2022, paid $2.1 million in cash at closing, and will pay the rest of the $4.49 million sale price in late 2023, according to Onfolio’s SEC report and confirmed by Onfolio’s CEO Dominic Wells.”
“Proofread Anywhere reported about $1.38 million of adjusted EBITDA in 2021, according to Onfolio’s press release, which means the company sold for a multiple of about 3.3X EBITDA. Ten percent of the sale went to Pyle’s CEO, per an agreement they set up when he joined the company.” READ MORE
Luxury real estate is increasingly being sold through social media—often at no charge: “In a study from Matter Communications, 61 percent of respondents said they were more likely to be swayed by the recommendations of an influencer than by content created by a brand itself. Aside from coffee and a modest spread of doughnuts, the photographers at Sutton Tower received no compensation for their time. They all understood that they were allowed to keep any images they shot, but they were expected to post at least a handful to their social media channels, with hashtags and geotags that identified the building.”
“Having no money exchange hands is the new standard in these arrangements, said Dan Tubb, sales director for the Towers of the Waldorf Astoria, a 375-unit residential development being built alongside New York’s Waldorf Astoria hotel, where homes are priced at $1.825 million to $18.5 million.”
“‘We’re seeing this a ton in Miami, where new buildings will pop up and they get a ton of influencers to post content from parties inside an apartment that’s not even on the market yet,’ said Austin Cohen, a co-founder of 456 Growth, a marketing consultancy. ‘For influencers, a key part of their business is being seen as always on the go and at the most desirable places. And for companies, this helps slash their marketing budgets.’”
“But it’s not always free. Some developers, particularly in neighborhoods where their luxury projects may drive up rents, are leaning on influencers from the local community, paying them consultancy fees in exchange for positive posts.” READ MORE
Small and mid-sized businesses are driving the recovery of business travel: “Transactions by this segment reached 80 percent of pre-pandemic levels in the third quarter, according to Amex GBT. Travel by global and multinational firms, by contrast, is back to only 61 percent of pre-pandemic levels. ‘There’s a pretty healthy gap,’ said Evan Konwiser, chief marketing and strategy officer for Amex GBT. ‘That’s been pretty consistent really since the early days of the recovery.’ Individual business travel and small internal meetings by companies bringing remote workers together represent the fastest-growing forms of business travel coming out of the pandemic, according to Amex GBT. Hotels are upgrading their food and beverage offerings and adding or expanding on-premise workspaces as they compete to host these small meetings, Mr. Konwiser said.”
“Those kinds of guests can range from sales teams looking to get face time with regional customers to specialized construction crews getting put up near a job site that would otherwise be too far to commute to each day.”
“Those travelers tend to favor extended-stay hotels that cater to those visiting for at least a week and other hotels that offer lower- and mid-priced rates.”
“‘This surge is real,’ said Choice Hotels International chief executive Pat Pacious. ‘Middle class, small business, construction, logistics—those industry verticals—that’s going to continue to expand.’”
“The hotel bar, previously stocked with IPAs and craft beers, now serves Coors Light on tap. The kitchen has changed its hours to accommodate guests who work the night shift.” READ MORE
Gene Marks says even small businesses should offer unlimited paid time off: “My small business offers it. And I have a number of clients who do the same. Along with health insurance and retirement benefits, companies that offer generous vacation plans are the ones that are meeting today’s workers’ needs. There are many recent studies — like this one from the Society for Human Resource Management — that have shown that flexibility, four-day work weeks, remote-working arrangements and generous vacation plans are in high demand. Telling a prospective employee that your company offers unlimited PTO is a powerful recruiting tool, particularly in this tight labor market.”
“And yet, whenever I bring up the topic of offering unlimited PTO to them I usually get the eye roll. I understand why: the typical small business owner in this country is over the age of 50. To us, unlimited PTO sounds like an over-the-top demand dreamed up by those lazy, good-for-nothing, younger workers.”
“But even if that argument fails to kindle interest, I always raise this point to my clients: offering an unlimited PTO plan can not only help attract better talent, it can — ready? — also help reduce costs. Now that gets their attention!”
“Recent studies like this one from HR platform Namely have shown that companies that have offered unlimited PTO plans actually find that their employees take less time off than under a traditional use-it-or-lose-it plan.”
“Another cost savings has to do with when an employee leaves. Under most traditional plans, unused vacation days are usually paid out when an employee departs, with many states requiring the practice. But, other than California (surprise!), most states don’t require employers who offer unlimited PTO plans to do this ...” READ MORE
Spotify CEO Daniel Ek demonstrates how not to write a layoff memo: “In the memo, which was published on Spotify's website Monday, Ek described what would happen now that the company had announced plans to lay off about 6 percent of its workforce. That would come to about 588 employees based on the global workforce the company reported with its third-quarter earnings. Ek wrote about forthcoming changes in the C-suite, then said: ‘Personally, these changes will allow me to get back to the part where I do my best work — spending more time working on the future of Spotify — and I can't wait to share more about all the things we have coming.’”
“His excitement seemed discordant with the announcement that came a few paragraphs later: ‘We've made the difficult but necessary decision to reduce our number of employees.’”
“‘Talking about, or in any way putting oneself at the center as 'what's in this for me' is not appropriate in this kind of note,’ Coco Brown, the CEO and founder of Athena Alliance, an executive-development network for women, wrote in an email to Insider.”
“‘This is a powerful example of toxic positivity,’ Brooks Scott, an executive coach and the CEO of Merging Path Coaching, wrote in an email to Insider.” READ MORE
Expectations continue to grow for the new retirement rules: “‘Secure 2.0 is a game changer for small business owners,’ said Craig Reid, president and national practice leader of retirement and wealth at the Marsh McLennan Agency. ‘A robust retirement plan program is one of the most highly sought-after benefits people look for in a new employer, and small businesses have historically been at a disadvantage to large employers when it comes to this type of benefit.’ One big benefit is a tax incentive for businesses offering 401(k) plans of their own, Reid said. For businesses with less than 50 employees, there is a startup credit of 100 percent of administrative costs up to $5,000 (up from the current 50 percent credit) and additional credits for employer contributions on behalf of employees up to $1,000. That benefit is phased out for small businesses with 51 to 100 employees and also phases out over time, Reid said.”
“Employers will now be able to adopt a matching rule that counts an employee’s student loan payment toward the retirement match — and employers using that student loan payment to calculate their own matching contribution. That starts in 2024.”
“The legislation creates emergency savings accounts within retirement accounts that hold up to $2,500. A participant can pull out $1,000 per year for emergencies tax free and repay those withdrawals to build the balance back up again. That begins in 2024.”
“Part-time employees can now participate in a company retirement plan after two years, instead of three, and for working 500 hours a year, down from 1,000.”
“‘If a small business owner has been contemplating a 401(k) plan to attract and retain talent and help grow their business, now is the time,’ Reid said.” READ MORE
Walmart has opened an ecommerce site to target small businesses: “The initiative, called Walmart Business, is designed to offer a one-stop shop for office supplies, furniture, food and electronics, Ashley Hubka, the senior vice president managing the program, said in an interview. Walmart is also pitching a business membership plan that dangles extra savings.”
“Walmart is betting that the venture will help it encroach on rivals such as Staples, Costco, and Amazon.com, which stepped up efforts to woo smaller companies during the coronavirus pandemic.”
“The retailer started the business website – business.walmart.com – in September with little fanfare, Hubka said. Now, having honed the product assortment based on user feedback, it’s looking to ramp up growth.” READ MORE
More businesses are looking for alternatives to UPS and FedEx, even adopting multi-carrier strategies: “The push comes as the e-commerce boom that fueled carriers’ growth has faded and inflation-weary shoppers begin to pull back on purchases. Some small carriers say that despite the slowdown, they see an opportunity to build on the gains they made during the height of the Covid-19 pandemic. LaserShip/OnTrac, the largest regional carrier, is expanding its delivery network into Texas this year. Lone Star Overnight, a Plano, Texas-based carrier with a network in Texas, Arkansas, Oklahoma, Kansas and Missouri, plans to open a major sorting facility in Chicago next year. LSO is also working with local delivery companies in cities such as Minneapolis, Milwaukee and Atlanta this year, following requests by its customers to expand its delivery network.”
“In the past, retailers typically gave all their packages to one carrier to maximize volume and reap bigger discounts. ‘The new normal is to use a multi-carrier strategy for different types of packages for different locations,’ said Krish Iyer, vice president of strategic partnerships at Auctane, a shipping and software solutions company.”
“Some companies could still be resistant to using multiple carriers. One reason is it can be complicated for a business to keep track of which packages go with which carrier, said Mr. Taylor, the consultant.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Gene Marks on ChatGPT, Salesforce CRM, and the Contractor Dilemma: This week, Gene discusses the “inconvenient truth” about Salesforce CRM, which is that it’s probably not right for most small businesses. Already using it? Gene explains how to assess whether it’s worth the pain of switching. Plus: Gene thinks the Department of Labor’s new worker-classification law will be a disaster for smaller businesses—but suggests some ways it could be improved. Gene also has some thoughts about ChatGPT’s potential value to businesses: real potential, not there yet.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren