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We highlighted so many interesting items this week in the Morning Report that we decided to send out a few of our favorites in case you missed them the first time or you would like to dig deeper on a day when you have a little more time. As always, if you have questions or suggestions about any aspect of the Morning Report, please send them to Matt Gillick and Loren Feldman: firstname.lastname@example.org and email@example.com
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.”
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.”
The startup world has a dark side: “Under the veneer of fancy parties and multibillion-dollar valuations, many founders and early-startup executives are striving to build pioneering businesses while wrestling with issues like anxiety, drug addiction, insomnia, depression and binge eating.
“Stress, of course, is a part of any leadership role, and startup leaders often have more resources than most to cope with mental-health woes. But it is also becoming clear that the swashbuckling creativity that pushes many startup founders to take bold leaps often comes with inner demons. Entrepreneurs were 50 percent more likely to report having a lifetime mental-health condition and reported significantly higher rates of depression, attention-deficit disorder, substance abuse and bipolar disorder than a control group, according to a 2016 paper by researchers at the University of California San Francisco, UC Berkeley, and Stanford University, who surveyed more than 200 founders.
“Some entrepreneurs have ‘a high degree of energy, a low need for sleep, a drive that seems far beyond ordinary driven people and a vivid imagination,’ says Kerry Sulkowicz, a New York psychoanalyst who advises CEOs. These traits allow them to ‘keep going when everybody tells you what you’re doing is crazy’ but also makes them vulnerable to mental-health issues, he says. A massive workload doesn’t help—nor that young entrepreneurs are bombarded by what some call ‘hustle porn,’ the notion that working nonstop is a badge of honor.”
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.”
Inc. magazine has published a list of 50 private equity firms “you can trust,”according to the magazine: “Private equity firms are now sitting on a record amount of uninvested capital, which is good news for businesses seeking funds. That cash pile is prompting those firms to expand their purview and do deals with businesses that just five years ago would have been unlikely targets, according to Tom Stewart, executive director of the National Center for the Middle Market.
“‘They’re investing in younger, earlier-stage companies, and they’re more willing to take a minority stake than they were, because they’ve got to put the money to work,’ Stewart says. ‘It’s more of a sellers’ market.’ Family businesses are often strong candidates for outside investment. ‘It’s a rare family that can continue to evolve and grow a business without help from a third party,’ says Dave Brackett, co-founder and CEO of private credit manager Antares Capital, which has helped finance acquisitions for more than 400 private equity firms. ‘You constantly need to innovate and bring people on board.’”
Color us skeptical: It’s certainly true that PE firms are sitting on piles of cash but should business owners trust them to have the best interests of their business at heart? What’s been your experience with private equity? Tell us what you think by emailing us at firstname.lastname@example.org and email@example.com.
A car-selling service groups car buyers into groups to get them a discount from dealers: “CarBuckets, a Miami-based startup, is one of the first companies to bring the idea of ‘buying in bulk’ to retail car buying. The company selects the dealerships allowed on the platform. By grouping consumers into ‘Buckets,’ based on the car brand they want to buy, CarBuckets gets dealers to compete to win the group’s business. The dealer with the lowest overall out-the-door price wins (including all taxes and fees), and consumers in the bucket will be matched with the dealer if they choose. …
“So far, the service has been offered only in South Florida, but now it is expanding nationally. … Users are seeing a 42 percent greater discount on average when they buy with CarBuckets vs. negotiating a price on their own, [CEO Alexandra] Esteve said. ‘Our biggest discount to date was a user who got a $17,885 discount on a pickup. Needless to say, he was very happy.’ Dealers on the platform are happy too because none have dropped their participation, she said.”
In year 2001, Rich Winley, then 18, moved to Atlanta to start his first marketing company, and since then he’s run a number of businesses, including No Chains, a Yelp-like app that helped diners avoid chain restaurants; Gnomad, which put sponsored iPads in rideshares during Coachella and the Atlanta SuperBowl; and Infinite, which puts ATMs in gas stations and splits proceeds with property owners. Saul Elbein caught up with Rich to talk about The Foundation, his recently introduced newsletter that looks at entrepreneurship from an African-American perspective.
What is your goal for The Foundation?
African-Americans are a $1 trillion dollar market, and nobody ever approaches us as a business. For example, my friend Dawn Dickson just raised $1 million for her startup, PopCom, through crowd-funding because VCs didn’t take her seriously, even though she had a proven track record. I think a lot of people don’t realize that you can raise investment by crowdfunding, so long as your investors are accredited. That’s the kind of tool we want to make available to people, because for African-Americans often we follow what white people have done, even if their model doesn’t work for us.
How will The Foundation make money?
I think the future is not in content-heavy sites like Forbes—no one has time for that—but in bite-sized newsletters. So we do this, and it’s free—but then at the end of the year we put out one publication, super high end, signature, collectible, and charge for that.
What do you think mainstream business publications are missing?
You know the movie Hidden Figures? I see a world full of hidden opportunities, and people miss a lot of them because they’re not sexy. Infinite was founded when we realized that gas stations don’t pay for ATMs or a lot of other accessories—they just let you put them there, and then take a cut of sales. So you buy the ATM, put it in the gas station, and then you’re just making money.
Then when the Georgia Lottery rules changed, we went to coin machine gaming. Then we realized that we could put air pump machines and vacuums on our client’s lots, and they were happy to have the extra amenity. And we got the money. So now I look at, say, gas station ice machines. Who services those?
(Laughs.) I don’t know. But that’s the kind of thing I’m talking about.
You’ve talked about Atlanta as the premier city for the African-American tech industry.
It’s not just tech—it’s all business. Atlanta is the place for African-Americans and blacks in general, no matter what you come to the city for. When I moved from Greenville, South Carolina in my early 20s, it was the first place I’d ever been where I saw people who looked like me in positions of business leadership. Like, “Wait, this guy is African-American, and he’s CEO of the Federal Reserve?”
Atlanta is still really conservative—it knows consumer products, real estate, and finance, and people don’t really know what to do with tech. But seeing it, you can at least start to dream dreams.
Please enjoy the rest of your weekend. See you Monday morning!