Common Enemy, Common Goal

The American small business economy is simultaneously a beautiful free market system full of opportunity and a ruthless battleground of competitive forces. Throw a pandemic into the mix, and industry dynamics can turn overnight. A common enemy (in this case, covid-19) can easily turn competitors into cooperators, and tense relationships into productive partnerships. 

This week, we read a piece detailing how Yelp is coming to the aid of small businesses in dire need of digital transformations in a digital-native world due to the advent of covid-19.  What is notable, however, is that as late as 2019, there were stories surfacing of Yelp's predatory behaviors towards small businesses using a pay-to-play advertising scheme that hurt companies unwilling to pay Yelp's prices:

"Yelp had been accused of extorting countless small businesses to the point of them nearly going out of business due to negative reviews. To make matters worse there is a section below every Yelp profile (most miss this) that is faded gray. It reads “other reviews that are not currently recommended”. What does this even mean?"

At the moment, hundreds of thousands of small businesses around the country teeter on the brink of closure due to government mandated lockdowns and a lack of consumer demand. Yelp's business is inextricably tied to main street small business. Nothing unifies a sour relationship more than a common enemy. This about-face in Yelp's case is a staunch reminder of how important delighting - rather than squeezing - customers is for long-term success. 

In edition #57 of The Weekly, we explored how Costco cultivated its supplier ecosystem and built its world-class Kirkland brand by leveraging its distribution network and considering its suppliers' incentives.  In this case, Yelp's suppliers and customers are the same - small businesses. And it has every reason to help its customers transition quickly to a new normal - in fact, its survival depends on it:

"Yelp and the businesses it works with had to pivot to stay relevant to our new, socially distant society. But how does a company that's made its name with physical properties — and tested the trust of small businesses on more than one occasion — move into the virtual world? The site that reinvented the concept of the Yellow Pages would have to reinvent itself."

We suspect (and hope) the 'common enemy' dynamic has played out across many industries. As we wrote back in March when covid-19 reached pandemic status, it will be important for owners, vendors, and customers to lock arms as we begin the long recovery ahead:

"Being in the same boat forces everyone to recognize our shared humanity in these turbulent times. Those who choose to grab turf in the short-term may win the battle, but others who survive the war will not remember their war-time decisions kindly. Now is the time to recognize our common humanity. There are no businesses without customers, there are no customers without jobs, and there are no jobs without businesses."

Inside Ed Rudisell’s pandemic nightmare (Indianapolis Monthly)

+ "No. We’ve been here for a decade and even though we’re closed, we still have invoices to pay. We still have utilities on because we still have to be in the building. I work 70 hours a week at Siam Square and don’t have time to liquidate a restaurant, much less two. Nor can we afford to pay someone to come in and do it. I’ve got to figure out how to close down 10 years of accumulated paperwork, chairs, tables, kitchen equipment, and tons of small wares and plates. It would take me weeks to do just a third of all of this. Where do we even start? We’re not just bleeding, we’re hemorrhaging badly. The only way to stop it was to lock the doors. At least then we can try to figure out how to make the bleeding stop."

Small business recovery playbook (Protocol)

+ "A pandemic has forced shops, restaurants and thousands of other small businesses to rethink everything about the way they work. This is your guide to the new normal."

Are airline loyalty programs worth more than the actual airlines? (The Hustle)

+ "According to a Financial Times analysis, loyalty programs are worth ~$26B to Delta — more than the airline’s current market value of $20B. The same holds for America Airlines ($24B vs $6.6B) and United ($20B vs $10.5B). Without their loyalty program, tech writer Byrne Hobart notes, Delta’s physical airline operation (planes, landing slots, brand) is worth less than zero — in this case, negative $6B."

The restaurant industry in New York City: tracking the recovery (Office of the New York Comptroller)

+ "After a decade of job growth that was more than double the rate for local jobs overall, the restaurant industry reached its highest number of establishments and jobs ever in 2019. Despite relatively lower average wages, restaurants provide a steady source of jobs for many residents, particularly Hispanic and Asian minority populations and immigrants. Since March 2020, the restaurant industry has been hit very hard by the COVID-19 pandemic. Mandatory closures, stay-at-home and socialdistancing orders, the onset of a severe economic recession, and travel restrictions have resulted in unprecedented upheaval for the industry."

Digital 2020 - July global statshot report (HootSuite)
+ "The latest insights into how people around the world use the internet, social media, mobile devices, and ecommerce."

How Yelp pivoted to helping small businesses during the pandemic (Protocol)
+ "In late March, Yelp unveiled a banner for the top of businesses' profile pages that allowed them to quickly notify customers to COVID-related changes. Soon after, it built a section into the page that allowed businesses to post updates on their COVID-19 safety practices and changes to operations. Those updates are marked with a timestamp, so customers can see whether that information is out of date. Pages now include a nine-part checklist where businesses can indicate safety measures they're following, like whether staff wears gloves and masks, if there's contactless payment or hand sanitizer in the store, and if social distancing is enforced."

Drive growth by picking the right lane — a customer acquisition playbook for consumer startups (First Round Review)

+ "In our experience, founders are often surprised to learn that there are very few routes to scalable new customer acquisition. For consumer companies, there are only three growth “lanes” that comprise the majority of new customer acquisition: 
1. Performance marketing (e.g. Facebook and Google ads)
2. Virality (e.g. word-of-mouth, referrals, invites)
3. Content (e.g. SEO, YouTube)"

Long before Nikola trucks, Trevor Milton sold investors on startups that faded (Wall Street Journal)

+ "Mr. Milton, 38, resigned last month as executive chairman of his latest startup, electric-truck maker Nikola Corp. NKLA -2.80% , after a short seller’s report said he made misleading claims about the company’s technology. He had previously persuaded well-known auto-industry figures to back Phoenix-based Nikola, which at its peak was valued at more than Ford Motor Co., making him a billionaire. It was among the most talked-about entrants among a host of companies trying to build a future for electric vehicles. Nikola is by far Mr. Milton’s highest-profile blowup. But combined with the decade-old Swift deal and a number of other ventures in between, a pattern emerges for the self-described serial entrepreneur."

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