An Israeli Startup Reinvents the Car Wheel, California Targets the Gig Economy, and Dean & DeLuca Stops Paying Small Vendors

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HUMAN RESOURCES

California is preparing to declare that Uber and Lyft drivers are employees: “The bill, which passed the Assembly 53-11 in May, codifies and expands a 2018 California Supreme Court decision known as Dynamex.The ruling makes it harder for companies to claim that workers are independent contractors, saying workers are employees if companies control their activities, if they do work central to the company’s business, and if the workers do not have independent enterprises doing that work.

“AB5 supporters say companies misclassify workers as independent contractors to sidestep laws about minimum wage, overtime, workers’ compensation, disability and other benefits that can add some 30 percent to companies’ labor costs. But opponents say the legislation would devastate many businesses and hurt workers who prefer the flexibility of setting their own schedules. The bill could affect scores of industries, but much attention focuses on the gig economy—new companies like Uber, Lyft, DoorDash, Postmates, Instacart and more that use smartphone apps to dispatch workers as drivers and couriers. Barclays investment bank last month said that turning California drivers into employees could cost Uber $500 million a year and Lyft $290 million.”

A lot of people talk about building a diverse workforce, here are some strategies for actually doing it: “In the 1970s and 1980s, orchestras began employing blind auditions to remove bias from hiring decisions. Potential hires would literally perform a recital behind a screen, and the orchestras would hire based on the performance rather than the identity or appearance of the musician. To a significant extent, it worked: 25 percent more women musicians were hired after orchestras made the switch.

“The technique, says Wynn, is still potentially useful, particularly in fields where technical ability is easy to test and analyze. For example, a platform called GapJumpers helps companies apply that strategy to modern skillsets. ‘It’s the tech version of a blind audition,’ says Wynn. ‘The hiring manager can design a coding challenge that’s commensurate with what they’ll be doing on the job.’ According to Forbes, GapJumpers claims to increase the chances of minority and female applicants being offered a first-round job interview by about 40 percent.”

MARKETING

With the cost of advertising rising on Facebook and Instagram, direct-to-consumer brands are turning to Pinterest: “Some are using Pinterest primarily to capture emails. Others are using new tools that Pinterest recently rolled out that it purports will help brands increase conversions. Brandon Doyle, the founder of digital media agency Wallaroo Media, which has worked with DTC brands like Casper and Cotopaxi, said that his firm has found that how-to-content typically resonates well with Pinterest users.

“One strategy that Wallaroo found success with is creating promoted pins that highlight ‘how-to-content’ for its clients, target it to select demographics on Pinterest, and then retargeting the users who scroll at least 50 percent of the way through the content on Facebook and Instagram. One of Wallaroo’s clients is Spikeball, which sells lawn games. A couple of months ago, Doyle said that his team created three promoted pins centered around summer activities, like ‘how to throw a backyard party.’ Doyle said that these promoted pins got an average click-through rate of five percent, when ‘one percent is high on any platform,’ and conversion rates of eight percent.”

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STARTUPS

Israeli EV startup Ree is dramatically rethinking the design of electric cars: “[T]he drive components for the EV are contained wholly inside the wheels. This means that there is no bulky drive unit sitting between the front or rear wheels. That gives the advantage of having a completely flat floor for more passenger and cargo space in a given application. Having individual motors in each wheel also opens the door for really advanced torque vectoring, which would—in theory, at least—improve both safety and handling.”

Ree’s design places “not only the motor inside the wheel but the steering, suspension, drivetrain, sensing, brakes, thermal systems and electronic components as well. … Ree is really championing the scalable, modular nature of its technology. Since the architecture of a vehicle would be significantly simplified by having all of its drive and suspension systems inside its wheels, along with a flat floor that is made up of a structural battery pack, you could conceivably whack any body you like on top of it, depending on your need.”

REAL ESTATE

Amazon HQ2, announced in November, is upending Northern Virginia’s housing market: “As of June, the median home price in Arlington County was on track to spike 17.2 percent by the end of 2019, according to a report by the Northern Virginia Association of Realtors and the George Mason University Center for Regional Analysis.

“Speculators have begun asking homeowners to sell. Potential home buyers, typically younger, are holding off buying to save more money for down payments. Low-income renters are worried about rising rents and about how they will afford basic necessities. And Amazon has not even fully arrived yet. The company plans to hire 400 employees for the headquarters by the end of the year, and 1,000 to 1,500 employees in subsequent years. James Younger, a homeowner in South Arlington for over 30 years, received inquiries from speculators once or twice a year before the Amazon HQ2 announcement. Now, he gets inquiries at least twice a month.”

FOOD AND BEVERAGE

Dean & Deluca is closing stores and failing to pay small vendors: “Based on the reputation built by the store’s founders, Giorgio DeLuca and Joel Dean, who curated fine food at their airy shop in SoHo, Dean & DeLuca has become a global brand since its first offshoot opened in Tokyo in 2003. As of today, there are more than 60 Dean & DeLuca cafes and markets operating in Asia, and three more in the Middle East. But in the United States, the chain, now owned by a Thai real estate magnate, is foundering. Since it was bought by Pace Development in 2014, Dean & DeLuca has pulled out of lease agreements, promised and revoked sponsorships, closed its stores in North Carolina, Kansas and Maryland, and consistently withheld payment from vendors, who are increasingly vocal in their outrage.

“Small vendors in New York City alone said they are owed hundreds of thousands of dollars. Bien Cuit, a bakery in Brooklyn known for its burnished croissants: $75,000. Colson Patisserie, purveyor of French macarons and other sweets: $24,000. Amy’s Bread, which allowed the company to stock its famous layer cakes: $51,000. ‘It stings because so many of us bakers grew up alongside Dean & DeLuca,’ said Eleni Gianopulos of Eleni’s Cookies, who sued the company last year for $86,000 and ultimately settled for 50 cents on the dollar: an overall loss. Dean & DeLuca carved its niche with artisanal food products like hers, she said, and now the creators are treated as disposable. ‘Getting your product into their store was an honor, like a golden ticket, and now it’s a nightmare,’ she said.”

Impossible Foods and others are now developing fishless fish: “So far, much of Impossible’s work has focused on the biochemistry of fish flavor, which can be reproduced using heme, the same protein undergirding its meat formula, according to Pat Brown, the company’s chief executive. Last month, Impossible’s 124-person research and development team, which the company plans to increase to around 200 by the end of next year, produced an anchovy-flavored broth made from plants, he said. The fishless-fish project is part of Impossible’s grand ambitions to devise tasty replacements for every animal-based food on the market by 2035. … 

“Not all the companies developing sustainable seafood alternatives use plants. At the San Francisco company Wild Type, the co-founders, Aryé Elfenbein and Justin Kolbeck, are using cellular agriculture technology to grow salmon in a lab, obviating the need for a fishless, plant-based recipe. ‘There are some limitations when you try to reconstitute the same texture from plant ingredients,’ Mr. Elfenbein said. With lab-grown salmon, he added, the texture is ‘programmed in.’”

TRADE

Was Ross Perot, the entrepreneur who twice ran for president and recently passed away, right about that “giant sucking sound”? “‘We do the world’s dumbest trade agreements,’ Mr. Perot told Vice President Al Gore in a televised debate in 1993. ‘You go back to the agreements we’ve done all over the world, you’d be amazed that adults did them.’ … Many of Mr. Perot’s predictions about NAFTA’S impact—notably his claim of the ‘giant sucking sound’ Americans would hear as businesses shuttered operations in the United States—proved either wrong or overstated.

“Paradoxically, however, his skepticism about lowering trade barriers has proved prescient. Some industries indeed relocated operations to Mexico or added new capacity there following NAFTA. Mexico added many manufacturing jobs in the first several years after the deal. But in the five years after NAFTA came into force in 1994, manufacturing employment in the United States increased, too, by 800,000. Many got their jobs from a surge in exports from the United States to Mexico.”

CULTURE

There’s actually a market for parenting coaches who help in raising smartphone-free children: “Gloria DeGaetano was a private coach working in Seattle to wean families off screens when she noticed the demand was higher than she could handle on her own. She launched the Parent Coaching Institute, a network of 500 coaches and a training program. Her coaches in small cities and rural areas charge $80 an hour. In larger cities, rates range from $125 to $250. Parents typically sign up for eight to 12 sessions. ‘If you mess with Mother Nature, it messes with you,’ Ms. DeGaetano said of her philosophy. ‘You can’t be a machine. We’re thinking like machines because we live in this mechanistic milieu. You can’t grow children optimally from principles in a mechanistic mindset.’”

MEDIA

Live podcast events are a moneymaker for influencers and creators: “The number of events that have sold based on podcasts has increased by over 2000 percent in the past six years, according to ticket sales data from Vivid Seats, one of the largest independent ticket vendors in North America. Live events offer podcasts the opportunity to monetize outside of audio ad revenue, which is growing but still pretty small compared to radio ad revenue. The big picture: Many of the most expensive tickets sell to shows that are personality-driven.”

SPOTLIGHT 

Loren’s guests today on Mind Your Business will be Cliff Oxford, founder of both the Oxford Center and Cliffco, as well as Tom McCrary, a managing partner with Chief Outsiders, a company that provides businesses with part-time chief marketing officers. Got a question for Cliff or Tom? You can call 844-942-7866 when the show airs on SiriusXM 132 at 1:00 p.m. ET.

And that’s what’s ahead.

Please send comments and suggestions to mattg@oxfordcenter.com and lfeldman@oxfordcenter.com

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