Dropping Health Insurance, Making Websites Accessible, and the Vagina Economy

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HUMAN RESOURCES

A gym injury led Jason Schappert to drop his employee health plan: “What Schappert and his team stumbled into back thena type of ‘self-funded’ or ‘self-insured’ health care optionis not new; it has long been in use among larger firms. It is, however, growing in popularity among small companies. Among firms with fewer than 200 employees, 17 percent of covered workers are enrolled partially or completely in plans where employers take on the financial risk for providing health care benefits to employees. That’s according to the 2019 Kaiser Family Foundation’s Employer Health Benefits Survey. The 2018 survey showed that 13 percent of workers at firms with fewer than 200 employees had some form of self-insured plan last year, while 15 percent of covered workers at smaller firms utilized the option in 2017.

“In practice, for companies like MzeroA.com, taking out the middlemanthat is, paying for claims out of pocket instead of paying a pre-determined premium to an insurance companyhas led to savings. … Despite the promise of lower costs, the downsides of self-funded plans are plentiful and should be met with caution, says Jeff Becker, a senior health care analyst at Forrester. ‘You’re going to pay the claims yourself,’ he says. ‘And there’s more volatility in cash flow for a small business than a medium or large business.’”

Dallas Mavericks CEO Cynthia Marshall is out to fix her organization’s historically toxic culture: “Months after [a Sports Illustrated] article came out, an independent investigation launched by the Mavericks unearthed a number of instances over more than 20 years of sexual harassment and other improper workplace conduct, including inappropriate comments, touching, and forcible kissing. … Within weeks, she had implemented a 100-day plan to turn around the team’s leadership and create a non-hostile work environment. The first areas she focused on were developing a women’s agenda and creating a values-based employment system, she says. She also sought to bring transparency to the workplace by granting an outside counsel full access to the team’s business operations. … She and her team set up a 24/7 hotline for employees to report any concerns they might have, established an external advisory council of 27 local Dallas business leaders and implemented ongoing ethics, compliance and unconscious bias training sessions.”

STARTUPS

Female founders think “vagina economy” products should be made by people who have vaginas: “Polly Rodriguez, co-founder and CEO of sexual wellness company Unbound, came into the space after going through menopause at age 21 as a result of chemotherapy for stage three colon cancer. ‘My doctors told me I wouldn’t be able to have children, but no one mentioned the lifelong consequences for my sexual health,’ Rodriguez says. ‘I had to figure out what was happening to me by Googling it.’

“Joanna Griffiths, founder and CEO of intimate apparel company Knix, was motivated by a similar retail hellscape: adult diapers. While talking to her mother, a doctor, Griffiths learned that one in three people experience urinary incontinence during or after pregnancy. ‘There were no suitable products on the market,’ Griffiths says. ‘You’d get told to go to CVS or Walgreens to pick up Depends, but that didn’t feel very relevant to my demographic.’ It’s hard to imagine a 29-year-old Instagram mommy blogger wanting to wear a diaper under her sundress. Griffiths started conducting online surveys and found that many, many folks were concerned about leaks. ‘It extends way beyond urinary incontinence,’ she says. ‘It’s periods, it’s discharge, it’s sweat.’ Again, the array of products on the market was making people having perfectly normal experiences feel like icky outliers. ‘There was a great need for innovation in this category overall,’ Griffiths says. So she started designing leak-proof underwear.”

Steeped fills two market gaps with one productan instant coffee for both the environmentally conscious and coffee snobs: “Steeped founder Josh Wilbur wanted to create a sustainable, single-serve brew without the aluminum pods most consumers struggle to recycle. … According to the company, the proprietary system ‘delivers fresh roasted, pre-portioned, precision ground, micro-batched coffee in customized Full Immersion Filters.’ ‘Premium coffee roasters have shied away from offering their specialty beans in single-serve packaging because it’s been nearly impossible to keep ground coffee fresh, which quickly ruins the taste,’ said Wilbur. ‘With our nitro-sealed bags, oxygen is replaced with nitrogen, so the coffee stays fresh as if it was ground moments ago.’ … The company joins an ongoing boom at the intersection of the coffee and tech industries, which includes the development of beanless coffee, to capitalize on caffeine lovers’ devotion.”

Bounce gives travelers with a layover the option to temporarily drop off their luggage: “Catering to anyone who doesn’t feel like lugging their stuff around town, whether they’re travelers or residents, Bounce partners with local businesses who provide unused space as temporary storage space. Online or via the app (iOS, Android), users can pick a location, reserve, drop off items and go—for as little as $5.90 per item. Restaurants, hotels, retail stores and more can serve as locations in key areas of the city, allowing travelers especially to make the most of a long layover without the burden of carrying bags. In Seattle, there are 11 such drop-off spots so far. Bounce is in at least 18 US cities, with plans for expansion to many more. … Every item is tagged and sealed and comes with a $5,000 insurance guarantee.”

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REGULATION

The Supreme Court may decide whether Domino’s website has to conform with the Americans with Disabilities Act: “In the lawsuit at the center of the dispute, Guillermo Robles, who is blind, alleges that he was unable to order a pizza from the Domino’s website or mobile app because neither was accessible via screen readers, a type of software utilized by visually impaired people to browse the web and use other applications on computers and phones. Domino’s says that it has ‘no interest in discriminating against potential customers’ with disabilities but claims that the Americans with Disabilities Act, the legal statute under which the lawsuit was filed, applies only to a physical ‘place’ and therefore is inapplicable to websites.

“The potential consequences of this fill me with genuine terror because the consequences extend far beyond pizza. I’m legally blind, and the internet, phone apps, and e-commerce are more integral parts of my daily life than shopping malls or brick-and-mortar stores have ever been. If the Supreme Court were to eventually rule in the company’s favor, the blind, visually impaired, and others who rely on accessibility tools to use the web could be locked out of the modern economy—and much of modern life. If companies and other organizations are not required to make their websites and apps accessible, people like me would be unable to access our bank accounts, look up or pay our utility bills, or buy household essentials from Amazon or other retailers.”

INSURANCE

For California’s tree service contractors, the threat of wildfires makes it easier to find work but harder to buy insurance: “Before he first went to work for PG&E after the 2015 Butte Fire, which scorched more than 70,000 acres in the Sierra foothills, [DJ] Gomes said it cost around $1,500 to buy $1 million in annual liability coverage. He spent $15,000 last year to secure $5 million in liability coverage then required by PG&E. In addition to surging premiums, insurance brokers said that some contractors were seeing policies canceled or were unable to secure new coverage. Tree work has always been hard to insure because of hazards like falls from 100-foot trees and the heavy use of chainsaws. Now, after several seasons of major wildfires, the risk calculus has changed. ‘They’re starting to apply wildfire exclusions,’ said Milton Smith, a senior vice president at the national insurance brokerage McGriff, Seibels & Williams. And without wildfire coverage, Mr. Smith said, a fire traced to a contractor’s job site can be ‘a business-ending event.’”

COMMERCIAL REAL ESTATE 

Landlords are showing WeWork the door: “Landlord sentiment souring on WeWork could further weigh down the New York City office market, which is the country’s largest. Office leases in Manhattan have come under pressure in recent years from an abundance of new supply, from the World Trade Center to the new Hudson Yards in Midtown, and new office designs that reduce the amount of space per worker. Other big US office markets could also suffer from the current aversion to WeWork. Building owners in cities including Chicago, Boston, Los Angeles and San Francisco have relied heavily on WeWork to fill excess space and to appeal to startup companies attracted to co-working’s layouts and ethos. Co-working tenants occupy 54.2 million square feet nationally and more than 16.5 percent of office demand since the beginning of 2017 can be attributed to WeWork and other co-working firms in 54 major US markets, according to data firm CoStar Group Inc. … ‘We know there are going to be repercussions,’ said Eric Roseman, [Lincoln Property’s] vice president of innovation. ‘We just don’t know if the whole mountain is going to get wiped out.’”

SUSTAINABILITY

The hotel group Eaton DC, which caters to activists, decided to make its menus meat-free in an effort to combat the Amazon Rainforest’s fire crisis: “They expect that cutting beef will decrease the hotel’s carbon footprint by 27 tons for those two months. While Eaton DC is taking beef off its menu to make a point, guests won’t have to go hungry, of course. The hotel has swapped beef for Impossible plant-based burgers on the menu, giving meat eaters a chance to sink their teeth into the new vegetarian craze that is sweeping the nation’s fast-food restaurants. Twenty percent of the proceeds from those Impossible burger sales, which will be on the menu through the end of the year, will be donated to Amazon Watch.”

M&A

In 2016, PetSmart realized that Chewy, an e-commerce startup, was eating its lunch: “[PetSmart’s private equity owner] quickly realized it would never be able to beat the online star. Instead, the buyout firm settled on a high-stakes strategy for a debt-laden retailer: It bought the very e-commerce upstart that was undermining its business. In April 2017, PetSmart paid $3.35 billion for Chewy in what was then the largest e-commerce deal ever. The purchase was criticized by PetSmart’s lenders and the wider market as a bet-the-company move that would force PetSmart to add $2 billion in debt to the $6 billion it already had, all to buy an unprofitable rival. Some likened Chewy to Pets.com, a notorious failure of the dot-com era, and predicted it would ultimately fall victim to competition from Amazon. … These days, Chewy is worth about $11 billion, and PetSmart is shaping up to be one of the most successful private-equity turnarounds in history.”

OXFORD STRATEGIC ADVISORY DEAL OF THE DAY  

Concord Records, a record label, has acquired Victory Records. The deal is reported to be worth $27-$34 million. “I love my bands but I realized that with where multiples are right now [for music catalogs] I have to be realistic. This time with music assets selling at these type of multiples may never happen again,” said Tony Brummel, founder of Victory records. 

VENTURE CAPITAL

KingsCrowd, a provider of private market ratings and analytics for individual investors, raised $133,511 of a planned $10,000 of angel funding.

Kenzie Academy, an operator of a coding school, raised $7.8 million in a Series A round.  

And that’s what’s ahead.

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