Good morning!

Here are today’s highlights:

Dan Kahn writes about becoming a more vulnerable and more intuitive leader.
Gene Marks says you should ignore the strong GDP growth that the government just reported.
Is pay transparency a burden for businesses or an opportunity? Or maybe both?
Entrepreneurs take enough risk in their day jobs; they should not invest their money the way other people do.

MANAGEMENT

The pandemic, Dan Kahn writes, has had a profound impact on how he runs his business: “I started scheduling one-on-one meetings with every employee at least once a month. With a staff of 30, I typically have at least one or two of these daily. They have no agenda, no talking points, just a simple check-in asking how they are feeling, what challenges they are facing and how I can help. The results have been incredible. First and foremost, these check-ins are not about me. My job is to help, listen, and, hopefully, learn. … Employees started sharing struggles at work, asking questions about why we do or don’t do things a certain way, and even sharing stories and moments of pride from their personal life.”

“At first, it was hard hearing staff, especially newer hires, questioning why we do things, but once I got past my own ego and started to listen, I learned a lot about the people on my team, the challenges we faced as a company and heard clear feedback on how we can change and grow.”

“My biggest takeaway from these one-on-one meetings was that everyone is struggling more now than ever. Our world is in flux, with some working from home and struggling with work/life balance.”
“In the meantime, while this process has (hopefully) made me a better, more intuitive leader, it has not resolved my struggle with managing the ups and downs of business ownership.”
“And I’m keenly aware that, like the crying CEO I referenced at the start of this post learned the hard way, my staff doesn’t (and shouldn’t) have to deal with my personal baggage. That’s what peer groups, family, and networks are for.” READ MORE

21 HATS PODCAST: DASHBOARD

Kurt Wilkin, co-founder of HireBetter, says he thinks concerns about a recession are largely media-driven, but if your business is slowing, this might be a good time to reevaluate your team: Are you happy with everyone you’ve hired? Plus: What does it mean that wages kept rising in the third quarter? Should job listings include salary ranges? And what would Kurt tell business owners who struggle with compensating themselves?

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

Listen to Dashboard

THE ECONOMY

Mark Zandi thinks the surprisingly strong third-quarter GDP growth announced last week is cause for optimism:

READ THE THREAD

Gene Marks, on the other hand, thinks you should ignore the GDP numbers: “Why? Because like most of the big numbers that the government reports this number is based on surveys, and how accurate are you when you answer a survey? At worst, it’s inaccurate; at best, it’s merely preliminary data that’s revised multiple times over the succeeding months. By the time it’s finalized the data is too old to be of use to any business manager looking to figure out the economic future. My advice: base your decisions on actual data.”

“I also ignore the dozens of surveys pitched to me from companies and their PR firms measuring small business ‘optimism’ and ‘confidence.’ They’re mostly pushing someone else’s agenda and aren’t very scientific.”
“Instead, I watch the banks. This month, for example, the CEOs of JP Morgan and Wells Fargo sounded pretty (if not surprisingly) positive about their small business loans and credit card spending data from their actual customers.”
“When it comes to consumer spending, ignore the retail sales numbers from the U.S. Census Bureau. and be careful of industry reports because even National Retail Federation’s numbers are estimates and let’s face it: it’s a trade association that wants to avoid bad news about its members.”
“I prefer to closely watch the big box public companies that are actually selling to actual consumers.” READ MORE

Subscribe now

HUMAN RESOURCES

Some employers think the transition to greater pay transparency is a good thing—even if it can be challenging: “Trey Ditto, who runs a public relations company with about 15 employees in the New York area, has long been frustrated by the awkwardness of salary conversations. 'There was always this song-and-dance,’ Mr. Ditto said. ‘The company would say, How much do you want? and the candidate would say, How much are you offering?’’ Mr. Ditto said his company started sharing salary ranges with candidates three years ago. For all the skepticism from people outside the firm, he said his own employees have benefited because the move allowed him to identify inequities in his salary system. ‘A recruiter thought I was crazy,’ he said. ‘In the beginning there were people that were underpaid and people that were overpaid. It took a good two years to work that out.’”

“Salary disclosure, in other words, is only the first step. The bumpy period that follows can be a catalyst for deeper changes in compensation policy.”
“‘This pay transparency era is an opportunity for companies to start getting really good at proactively addressing this stuff,’ said Maria Colacurcio, Syndio’s chief executive.”
“And her employees are feeling the results: ‘I know if I get a promotion, how much I’ll get,’ said Jenny Yin, a senior engineering manager at the company. ‘I don’t have to go negotiate and guess.’” READ MORE

Going forward, you might want to try to avoid the latest euphemism for layoffs: “‘Today, we shared the difficult news with 54 of our team members (representing 15 percent of our team) that they no longer have go-forward roles at the company,’ the Mom Project, a digital talent marketplace, wrote in a LinkedIn post in July. Two months later, Compass, the real estate brokerage, used the term in a Securities and Exchange Commission filing, saying, ‘The company believes it is in a position to reduce its go-forward investment in technology given the maturity of the company’s technology platform.’ As a result, the company wrote, it would be laying off workers on its product and engineering team.”

“Layoff euphemisms — including ‘rightsizing’ and ‘reduction in force—make abstract what is a painful, human process, said Roger Lee, the creator of Layoffs.fyi, a site that tracks layoffs in the tech industry.”
“Employers often refer to cutting roles rather than employees, he said, and such language can ‘dehumanize the whole process.’” READ MORE

There’s a shortage of HR leaders, especially in tech: “‘Talented HR professionals in general are in high demand, and there’s just not enough of them,’ said Brian Kropp, managing director at Accenture. ‘One of the biggest lessons that I think CEOs have really had is, great C-level HR talent can make or break a company.’ ... HR leaders have been ‘literally dealing with the life and death of their employees,’ Kropp said. Not to mention taking teams remote; hiring rapidly; planning for hybrid work when employees don’t want to return to the office; facing slow gains around DEI; and supporting employees through everything from social justice movements and U.S. political tensions to inflation, economic downturn, and war. All of this is pushing senior HR talent to leave operating roles, either for retirement, sabbatical, consulting, or VC jobs.”

“HR also tends to take an outsized amount of flack from employees when things aren’t going well — but when things are going well, HR doesn’t get credit, Sellin said.”
“‘If people liked the culture, they would say the CEO and the founders have done a fabulous job,’ Sellin said. ‘If they did not like the culture, their experience wasn’t good, they blamed it on HR.’”
“Fighting for diversity, equity, inclusion, and belonging initiatives can be particularly trying for HR leaders. Adams said she had to ‘continually convince’ other executives of the business case for building a diverse team, making employees feel included, and implementing equitable policies.” READ MORE

STARTUPS

Leap helps ecommerce businesses jump into brick-and-mortar retail: “Since 2018, the 100-person platform has partnered with 55 direct-to-consumer brands that started on the web, such as Social Tourist and Frankie’s Bikinis. For a monthly operating fee and a 15 percent cut of the revenue, Leap does the hard work: It scouts brick-and-mortar locations, hires retail associates, and signs a lease. Ecommerce brands just show up, stock up, and pay the fee. This month, Leap first arrived in Boston with storefronts for Goodlife and ThirdLove, a size-inclusive women’s intimates brand, on Newbury Street near the Boston Public Garden. It already operates dozens of spots in New York, Miami, Chicago, and beyond.”

“Goodlife CEO Andrew Codispoti said the benefits are already panning out at its four Leap locations nationwide. Normally, an apparel brand like his would have to take on a multi-year lease with a hefty security deposit to land prime real estate.”
“But Leap puts the lease in their name, taking the biggest risk and fronting the biggest costs, Codispoti said. In case of a recession (or say, a pandemic that sends the world into lockdown), he added, Goodlife has ‘a pretty easy out.’”
“And Leap could theoretically refill the space with another brand that might be a better fit. (If they can’t find a replacement, the startup faces the consequences.)” READ MORE

THE ENTREPRENEURIAL LIFE

Here’s why business owners shouldn’t invest their money the way others do: “As a business owner, you often face a very different set of financial risks than your non-business-owning counterparts. When it comes to investing, there are two major considerations you’ll need to remember. First, keep your powder dry. This is an old seaman’s term that I like to use when describing the need to keep enough cash in your personal and business finances to weather life’s storms. The other consideration is that you likely have heavy concentration risk. In other words, most of your net worth is tied up in your business.”

“If I were to look at a client’s portfolio and see that they have 70 percent or 80 percent of their funds invested in a single business, that would raise a huge red flag.”
“That tells me this client is open to an enormous risk should that holding suddenly decrease in value. Yet this is exactly what is happening with business owners all over the world. Additionally, business owners are so used to dealing with risk that they often become too comfortable with it.” READ MORE

THE 21 HATS PODCAST

A Founder’s Year: Successful Raise, Fast Growth, and Mental Health Issues: This week, Hans Schrei tells Shawn Busse this has been a difficult year at Wunderkeks—despite many outward signs of success. It has to do with buying into the need to raise money and shoot the moon. It has to do with accepting the accolades that come with entrepreneurial achievement and then questioning your own self-worth when those accolades stop coming. It’s what Hans calls, “the miracle worker complex.” Hans and Shawn also discuss what it means to rely upon a sales platform like Amazon. Do you own the customer or does Amazon? And Shawn shares the biggest takeaway from his most recent Vistage meeting.

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

Listen to the Podcast

Thanks for reading, everyone. — Loren

The 21 Hats Morning Report

Would You Hire Them Again?