Will You Pay for Your Employees’ Commute?

Some businesses are trying to lure remote workers by offering commuting benefits.

Good Morning!

Here are today’s highlights:            

• Predictably, there’s already a generational divide in how businesses use AI.

• Retailers are expanding use of facial-recognition technology in the UK.

• What do you think it costs to obtain a liquor license in Boston?

TECHNOLOGY

More business owners are investing in artificial intelligence: “A new survey of 1,000 businesses with up to 200 employees by Intuit Quickbooks found business owners were expecting to spend between $45,000 and $142,000 on digital tools over the next 12 months, with about 73 percent of those respondents saying they are prioritizing tools such as artificial intelligence and e-commerce. ‘The number one question I am asked by our customers is, How do I ensure the success of my business?’ said Kelly Vincent, vice president of mid-market segment and product at Intuit. ‘The short answer is, know where to invest. If ever there was a time to tune in and understand how AI and technology can unlock prosperity for your business, it’s now.’”

• “While many small-business owners are anxious to use AI to cut labor costs, the survey found they are often using it with another focus: saving time.”

• “Ultimately, small-business owners are hoping to automate their most time-consuming tasks, including expense management, invoicing, and payroll. Their plan is to use the time saved to develop customer relationships and develop new products or services, the survey found.”

• “While 63 percent of Gen Z small-business owners said they have used AI for business or personal purposes, 83 percent of baby boomers said they have not yet tried it.” READ MORE

British merchants are increasingly using facial recognition technology to identify shoplifters: “Simon Mackenzie, a security officer at the discount retailer QD Stores outside London, was short of breath. He had just chased after three shoplifters who had taken off with several packages of laundry soap. Before the police arrived, he sat at a back-room desk to do something important: Capture the culprits’ faces. On an aging desktop computer, he pulled up security camera footage, pausing to zoom in and save a photo of each thief. He then logged in to a facial recognition program, Facewatch, which his store uses to identify shoplifters. The next time those people enter any shop within a few miles that uses Facewatch, store staff will receive an alert. ‘It’s like having somebody with you saying, That person you bagged last week just came back in,’ Mr. Mackenzie said.”

• “Use of facial recognition technology by the police has been heavily scrutinized in recent years, but its application by private businesses has received less attention. Now, as the technology improves and its cost falls, the systems are reaching further into people’s lives. No longer just the purview of government agencies, facial recognition is increasingly being deployed to identify shoplifters, problematic customers, and legal adversaries.”

• “Facewatch, a British company, is used by retailers across the country frustrated by petty crime. For as little as 250 pounds a month, or roughly $320, Facewatch offers access to a customized watchlist that stores near one another share.”

• “Facewatch was founded in 2010 by Simon Gordon, the owner of a popular 19th-century wine bar in central London known for its cellarlike interior and popularity among pickpockets. At the time, Mr. Gordon hired software developers to create an online tool to share security camera footage with the authorities, hoping it would save the police time filing incident reports and result in more arrests.”

• “By 2018, Mr. Gordon felt the technology was ready for commercial use. ‘You’ve got to help yourself,’ he said in an interview. ‘You can’t expect the police to come.’” READ MORE

HUMAN RESOURCES

Some companies are luring remote workers by paying for their commutes: “Phil Libin firmly believes commuting to work every day is toxic. Libin, former managing director at General Catalyst and former co-founder and CEO at Evernote and CoreStreet, said he has given up the daily commute forever, and he is never looking back. He won’t ask his employees at video communications app mmhmm to make a trip to the office every day, either. ‘There is no amount of money I can pay someone to make it worth sacrificing three hours a day every day of the week on commute,’ Libin said. ‘I am vaguely embarrassed for having run companies before where I expected hundreds of people to commute.’”

• “If management decides to require employees to come in, he thinks they should pay employees for their time — and do their best to minimize employee commute times. ‘If people are commuting for two hours because you don’t pay them enough to live in the city, you should pay them for their time,’ Libin said. ‘It’s kind of weird that that's not expected.’”

• “In the past two years, job postings that cited commuter benefits rose 43 percent, according to an analysis by workforce and labor demographic firm Lightcast. However, that still represents just a small portion of job postings overall, at 1.1 percent.”

• “‘Employers list benefits in job postings as a way to signal that they are an attractive place to work. The data shows that as more employers try to get workers back in the office, more are using commuter benefits to attract workers,’ said Lightcast Senior Economist Layla O’Kane.” READ MORE

REGULATION

Texas is blocking local laws that mandate water breaks: As the heat index hit 115 degrees on Monday, Karla Perez took a five-minute water break at a construction site in Dallas. Such rest breaks are required by the city, as they are in Austin. But a change in Texas state law, which goes into effect in September, will wipe away those local requirements, leaving workers like Ms. Perez to count on their employers to provide time to rest and rehydrate. Right now, she gets three breaks a day. She dreads what the change might bring. ‘Workers are going to die,’ she said. ‘There’s no way around it.’”

• “The new law, labeled ‘the Death Star’ by its Democratic opponents, would preempt a broad swath of ordinances, including those affecting labor, agriculture and natural resources. It is expected to nullify regulations such as those dealing with some payday lending, puppy mills, certain sanitation requirements and other practices.”

• “‘For too long, progressive municipal officials and agencies have made Texas small businesses jump through contradictory and confusing hoops,’ State Representative Dustin Burrows, a Republican from the Lubbock area, said in a statement when he filed the bill this year.”

• “The law grew out of complaints about a growing number of local rules from business owners, particularly those who cross city and county lines, said Annie Spilman, the Texas state director of the National Federation of Independent Business, which lobbied for the legislation.” READ MORE

What do you think it costs to buy a liquor license in Boston? “The high price of liquor licenses in Boston has always been a barrier to entry for restaurateurs, but that didn’t faze Palmer Matthews, who budgeted $350,000 to buy one on the secondary market. As he and his partners got close to signing a lease last spring, however, sticker shock struck: The going rate for a full-bar license surged to more than $500,000. They shelved their plans to open a restaurant. ‘No way we could justify that kind of investment,’ said Matthews, a former Boston bartender who has opened two restaurants in Quincy, Pearl & Lime and Townshend, where liquor licenses are a fraction of the cost. ‘The long and short of it, it’s prohibitive in a way that it is hurting [Boston] in a lot of different ways.’”

• “While scores of restaurants shuttered for good during the Covid-19 public health crisis, others are clamoring to fill the gap. In an industry with notoriously thin profit margins, that means big landlords and deep-pocketed restaurateurs are increasingly the only ones who can stomach the high cost of doing business in Boston. That’s shutting out smaller players with more modest resources, especially those of color in lower-income neighborhoods.”

• “The state caps the number of liquor licenses in Boston. Over the past two decades, the Legislature has allowed the city to issue new ones, but demand continues to outstrip supply. That means if restaurateurs want a license, they most likely have to negotiate a sale directly from an existing holder.”

• “A recent high mark for such a transaction: a $600,000 sale of a full-bar liquor license to the restaurant and lounge attached to View Boston, the newly opened observatory perched at the top of the Prudential Center, where admission alone is $34.99 for adults.” READ MORE

CRIME

A business owner who preyed on business owners: “Some of Philadelphia’s richest business owners, sophisticated finance professionals, and the state-funded Ben Franklin Technology Partnership of Southeastern Pennsylvania fell for an investment scheme that the Securities and Exchange Commission now says was too good to be true.The identities of the alleged victims, and how they unwittingly helped fool each other, is the untold story behind the SEC’s June 13 civil fraud complaint against Josh Verne, who resigned from the hometown companies he started and left his Gladwyne home for Florida after investors began getting suspicious.”

• “It’s been five years since a Philadelphia start-up called Ownable, based in Urban Outfitters’ old headquarters near the University of Pennsylvania, began pitching investors what it called in its marketing materials ‘a Billion Dollar Opportunity.’ Ownable’s plan was to rent laptops and smartphones to ‘subprime customers’ who couldn’t afford to buy their own gadgets.”

• “Now the SEC says it was a fraud. The agency says Verne spent at least $9 million from his investors, family, staffers and friends on personal expenses — such as his kids’ Main Line private-school tuition and a house for himself in Florida, according to the suit.”

• “The SEC also accuses Verne of hiding Ownable’s losses through $5 million in ‘Ponzi-like’ payments to reassure some investors, so he could attract new ones. For example, developer Bart Blatstein says he got back the $150,000 he invested with Verne.” READ MORE

OBITUARY

Joseph Pedott brought us Chia Pets craze and the Clapper: “Amid a sickly and harrowing childhood — he spent years in a convalescent home and later fled an abusive father — Mr. Pedott cultivated an innate streak of creativity that, in time, found an ideal outlet in advertising and the world of novelties. The Chicago native settled in San Francisco and founded an advertising agency in 1958. In 1977, business took him back to his hometown, where an encounter at a housewares convention piqued his interest. A buyer for a drugstore chain mentioned that his hottest holiday seller was a ceramic figurine then imported from Mexico. Soaked in water, and covered with a paste of fast-germinating Salvia hispanica or Chia seeds, it would sprout a green coat that looked something like hair. The inventor, Walter Houston, was losing money on the product and agreed to sell it to Mr. Pedott for $25,000.”

• “Mr. Pedott traveled to Mexico, cut out a thieving middleman, and relaunched the product now known as the Chia Pet through a manufacturing company, Joseph Enterprises. The first widely distributed animal incarnation of Chia products, introduced in 1982, was a ram.”

• “The ‘Ch-ch-ch-Chia’ tune became familiar to millions of TV watchers and helped make the Chia Pet one of the most popular items in the history of novelty sales. More animal Chia creations followed — turtles, kittens, puppies and dinosaurs.”

• “Through his advertising and manufacturing companies, Mr. Pedott was also largely responsible for popularizing the Clapper, a gadget that, when connected to a lamp or appliance at the electrical outlet, allows a user to turn the appliance on or off with a forceful clap. It was first sold in 1985.”

• “He improved the design before launching the Clapper, with the memorable ‘Clap on, clap off’ jingle, in commercials that showcased its utility for people too weary to get up to turn on or off a light.” READ MORE

THE 21 HATS PODCAST

Embrace It. Leverage It. Or Die: This week, Liz Picarazzi, Sarah Segal, and Laura Zander wind up talking about artificial intelligence, concluding that the time has come for business owners to take AI seriously. Laura says she’s already experimented with using ChatGPT to create lists, to write product descriptions, and to write a marketing plan for a new product. She even used ChatGPT to prepare a presentation for her staff about how to use ChatGPT. She did this in part to reassure them that they don’t have to fear losing their jobs. “What I told the team is, ‘It's a nail gun,’” says Laura. “‘Sometimes you need to use a hammer, because it needs to be perfect, and it needs to be exact. Sometimes you just need a damn nail gun, and you just want to pop it through. And that becomes the skill. The skill becomes: When do I use the hammer and when do I use the nail gun?’”

• On their way to the conversation about ChatGPT, Liz, Sarah, and Laura consider the various ways business owners can tap expertise, including through advisory boards, through business groups, and with strategic weekly lunches. Plus: Laura explains why she likes to hire people even when she doesn’t have an opening.

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

Thanks for reading, everyone. — Loren