Is the Gig Economy Ending? Why Walmart Is Done Buying Small Retailers, And How to Pick a New Office

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REGULATION

When the Small Business Reorganization Act takes effect in February 2020, it will get easier for small businesses to reorganize under Chapter 11: “For starters, the new law gives small business owners 90 days to file a reorganization plan, with easier rules for extending. … It no longer requires them to repay their debts in full in order to retain ownership of their companies, instead allowing those debts to be paid down using a new formula that projects disposable income over a period of three to five years. 

“The law now also requires the small business owner to appoint a ‘standing trustee’ to oversee a bankruptcy case and no longer necessitates a ‘creditor committee’ be formed that must vote on the plan or approve a disclosure document. This streamlines the process and saves costs. It also makes it harder for creditors to take away a business owner’s home and allows the courts to more quickly confirm a company’s reorganization plan.”

HUMAN RESOURCES

Uber and Lyft are likely to lose their fight against a proposed California law that could upend business models across the country: “The bill already passed the State Assembly 59-15 and is expected to be voted on in the state Senate before the legislative session ends on Friday, possibly as soon as Monday night. Democratic Gov. Gavin Newsom has said he would sign the bill, which intends to force companies that rely on ‘gig workers’ to reclassify them as employees …

“The companies have argued the bill would introduce new costs and logistical challenges that would be bad for them and many of their employees, who prefer job flexibility. If the measure becomes law, it is expected to have national repercussions given California’s economic importance and history of creating precedent-setting business regulations. ‘What California does here is being watched by the rest of the nation,’ said Ken Jacobs, chair of the Labor Center at the University of California, Berkeley. ‘What happens here is likely to affect what other states do and—depending on what happens in the upcoming elections—what Congress does.’ While Uber and Lyft have been the bill’s most active opponents, the measure also could force the reclassification of workers in other industries from trucking to janitorial services to music workers, according to Dr. Jacobs and business representatives.”

TIME magazine has named a sandwich shop in Minneapolis one of the world’s greatest places: “Of course, All Square, the grilled cheese-slinging restaurant in south Minneapolis is not just a sandwich shop. As noted in Time’s description of the small but mighty kitchen: ‘Its ambitions are much greater.’ When civil rights lawyer Emily Hunt Turner opened the shop in September 2018, her primary goal was to employ formerly incarcerated individuals, offering them a steady paycheck and a fellowship in professional development.

“‘Fellows work at least 30 hours a week at the shop, training in everything from wellness to social media,’ TIME magazine writes of the program. ‘They devote 10 to 15 more hours to learning critical skills like résumé writing and personal finance.’ The first All Square class graduated this year, sending 11 fellows out into the world with references, work experience and new skills. Those employment essentials are not always easy to come by for individuals with a criminal record. Re-entry to society after incarceration is often dogged by difficulty finding affordable housing, rejections based on routine background checks and a loss of voting rights.”

RETAIL

Walmart says its done buying small retailers to try to compete with Amazonit can just copy them: “Instead of looking to acquire commerce companies like the semi-upscale men’s apparel company Bonobos, Walmart is going to create its own ‘digital first’ brands, Lore told Recode’s Jason Del Rey at the 2019 Code Commerce conference on Monday. Lore thinks his company can incubate new concepts and then bring them to both Walmart.com and Walmart’s network of thousands of retail outlets.

“He pointed to Allswell, a mattress concept designed to compete with the Caspers of the world, which he says will become a ‘multi-hundred-million-[dollar] brand’ for Walmart that’s required minimal investment. ‘This was like an aha for us,’ he said. ‘This is super interesting. We can create these ourselves.’ The way Lore deploys Walmart capital is of particular interest these days. As Del Rey reported this summer, tension exists between Lore and some of his fellow executives at the giant retailer, which has traditionally been focused on profit margins. But Lore’s e-commerce group will lose $1 billion this year—a number that doesn’t include the $3.3 billion it spent on Lore’s company Jet.com in 2016.”

Starbucks is opening a pick-up only store: “The New York store, which is still in development, was inspired by the chain’s success with its Starbucks Now concept in China, where customers order in advance on mobile phones and pick up their half-caf, extra hot, grande coconut milk lattes in ‘express’ shops without the wait and without having to talk to strangers. The cafés could also serve as delivery hubs for that aspect of the Starbucks business model. Starbucks is currently available for delivery via Uber Eats in 11 markets, with more rolling out throughout the rest of the year and into next year.”

Can a rebranded downtown mall succeed in Philadelphia? “This month, Fashion District—the long-awaited $400 million renovation of the old Gallery mall—will finally open on Market Street. … PREIT, one of the companies behind Fashion District, has reasons to hope. For starters, unlike the Gallery, Fashion District will bring a long-overdue cineplex to Center City. Entertainment to draw people into malls is critical when they could more easily shop online. ‘Successful malls are multi-use,’ says Wharton marketing professor Barbara Kahn. The problem is that for an 800,000-square-foot complex with the word ‘fashion’ in its name, Fashion District has tenants—H&M (not bad), Sunglass Hut (really?), GameStop (yikes)—that are mostly … unfashionable.”

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COMMERCIAL REAL ESTATE

Inc. magazine has published its annual list of the world’s 10 most beautiful offices, including Gusto’s San Francisco headquarters: “This warehouse on San Francisco’s Pier 70 was used to construct and repair ships from the 19th century through World War II before sitting unoccupied for decades. It’s now the home of Gusto, a company that makes cloud-based HR software for small businesses. When the startup moved into the building last year, it collaborated with architecture firm Gensler to create a design that left many of the industrial elements intact, including the lifts and cranes. Gusto pays homage to its clients within the cavernous space. Meeting rooms are named after theoretical small businesses (Donut Factory, Bait & Tackle) and a mural wall—painted by employeesincludes illustrations of everything from baristas to veterinarians. An added perk: The floors are heated to keep workers warm on cold Bay Area days.”

Johnathan Wasserstrum, co-founder of commercial real estate firm SquareFoot, says you should be wary about involving employees in a relocation discussion: “And though it’s useful to take into account the needs of as many of your employees as possible, don’t try to crowdsource office location and design ideas, because you’ll never be able to please everyone. Wasserstrum says that in his experience, nine out of 10 times final decisions ultimately are made by the leadership team regardless of employees’ input, so you’re better off limiting their role. ‘People should be involved at different points in the process,’ he says. ‘But you don’t want to do a survey asking, ‘Where would you like to be?’ Because there is no perfect office, there is no perfect location. You’re just setting yourself up to have a whole lot of disappointed people who think, ‘Do I really want to go on? Nobody ever listens to me around here.’”

Do you agree? Send us your thoughts: mattg@oxfordcenter.com and lfeldman@oxfordcenter.com.

CANNABUSINESS

The Mayor of Fall River, Mass., Jasiel Correia, was arrested for extorting marijuana vendors for six-figure bribes. “Prosecutors say Correia agreed to sign non-opposition letters in return for significant six-figure payments from four marijuana vendors looking to open businesses in the city of nearly 90,000 about an hour’s drive south of Boston. The letters are required to obtain a license to operate a marijuana business in Massachusetts, where cannabis is legal.” Fun fact: Millennial Matt was a year behind Correia at Providence College.

MARKETING

Male-centered ads ranging from underwear to body scents are featuring more realistic depictions of men: “The emphasis on men with ordinary bodies and others who don’t fit tired stereotypes seems like progress for an industry that, a decade ago, featured a shirtless hunk scented with Old Spice. These days, more and more advertisers are telling men they don’t need to be the buffest or most interesting man in the world, just themselves. … Schick got on board with a commercial that told potential customers, ‘It takes a man to be yourself.’ And Dollar Shave Club echoed the theme with a commercial that showed one man playing video games on the toilet and another shaving his legs while in full makeup to a soundtrack of Steve Lawrence crooning ‘I Gotta Be Me.’ … As marketers reconsider manliness, recent ads have promoted fathers who braid their daughter’s hair (Pantene), cry at their weddings (Travelers) and apply eyeliner (Just for Men). The clothing company Bonobos has urged men to ‘#evolvethedefinition’ of masculinity.”

STARTUPS

Grove Collaborative, which has been valued at more than $1 billion, is pitching an eco-friendly online business model: “The household cleaning products and personal care company is aiming to shift consumers’ habits from in-store to online, by offering brands that are better for the environment. ‘There really is this amazing moment as the category transitions from offline to online, where the consumer can be better educated about the health and sustainability impact of the product that he or she is bringing into their home,’ Stuart Landesberg, Grove Collaborative CEO & Co-Founder, told Yahoo Finance’s YFi PM. One of Grove’s in-house brands is an ultra-concentrated laundry detergent, which the company says slashes plastic waste by 80 percent, compared to a typical 40-ounce laundry detergent.”

A Lebanese startup, Slighter, makes lighters that help people quit smoking: “Its only product is a $129 black, gas cigarette lighter that relies on a combination of tracking, some shaming and flame withholding. The device, which is packed with sensors and artificial intelligence, spends the first week familiarizing itself with the frequency of the user’s typical smoking schedule. A companion app collects the data via Bluetooth and creates a customized plan to gradually help a smoker reduce or eliminate their cigarette use. The screen on the lighter displays a countdown letting the smoker know how many minutes are left until they’re allowed to smoke again. The key part of the system happens in between those times: The flame is disabled from igniting so the smoker cannot light up. However, it features a button that allows users to sneak in a smoke. Founder Samer El Gharib said that without a cheat button, some smokers would inevitably go back to a normal lighter.”

SILICON VALLEY

In the wake of the Jeffrey Epstein scandal, TechCrunch’s Danny Crichton says companies in Silicon Valley need to be more aware of where their funding comes from: “Why can’t capital just be immoral? Well, Epstein’s web of donations provided him with a philanthropic sheen that eased access to the highest echelons of society while he committed his crimes. Saudi Arabia is the largest investor in Silicon Valley not only because it drives a return and diversifies its oil-dependent economy, but also because it can Valley-wash the horrific rights abuses and atrocities it commits against all of its citizens, including women, LGBT people, and immigrants. (But hey, women can drive now, just in time for autonomous vehicles.)”

OXFORD STRATEGIC ADVISORY DEAL OF THE DAY  

Shopify, the ecommerce platform, has acquired 6 River Systems, a fulfillment automation platform for ecommerce and retail operations, for $450 million. 

PRIVATE EQUITY

Electronic Transaction Cleaning, an operator of a cleaning firm, was acquired by PEAK6 Investments through an LBO. 

VENTURE CAPITAL

AppZen, a developer of an AI platform for finance teams, raised $50 million in a Series C round.

Brave Care, an operator of urgent care childcare service clinics, raised $5 million in a Seed round.

Drivetime, a provider of an online platform that allows drivers to play games while they drive, raised $11 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.

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