Reciprocity

This week, we wanted to share a wonderful example (h/t Michael Arrieta) of how one thoughtful SMB owner is making a positive impact on all stakeholders of his business from his employees to his community at large. Jeff Rice is the CEO of Jackson Whole Grocer and wrote a heart-warming piece describing his efforts to ensure his employees are paid well, fed well, and treated with dignity. All of these efforts represent clear costs to his bottom line, but will certainly result in a more stable and productive organization over the long-term. His op-ed is a great reminder that SMB's impact on local economies can be tremendous and that the law of reciprocity is alive and well.

The law of reciprocity is universal in its application to business and negotiations. It is the fundamental principle that the more you give, the more likely a responding party is to reciprocate your action. Of course, balancing the amount given with the amount reasonably expected in return is where business is more art than science. For example, short-term thinking focuses on how raising employee's pay negatively impacts your bottom line today. But long-term thinking acknowledges how higher wages can create a better work culture, lower turnover, and happier, more productive associates. The effects of reciprocity are also clear in customer service, pricing, and employee interactions.

There's a reason "My Pleasure" has such a long-lasting effect on Chick-Fil-A customers.

There's a reason that passing lower costs to customers has created a flywheel effect for Amazon's business.

There's a reason that paying employees higher wages with full benefits has resulted in record low turnover among Costco employees.

And there's a reason why winning an argument with an employee today with a scorched-earth approach may damage your ability to lead your employees tomorrow.

In principle:
- what you allow, you encourage.
- what you do, you ask for in return.

Practically:
- how you treat employees is how they will treat your customers.
- how you treat suppliers is how they will treat you as a customer.
- how you treat your community is how your reputatation is established.

Reciprocity works in both virtuous and vicious cycles. The framework of reciprocity explains why certain situations lead to either win-win outcomes or tit-for-tat escalations. It isn't always easy for SMB owners to go out on a limb to raise wages, give more to their community, or pass savings on to customers because in small business, every dollar counts. Not all stakeholders are apt to respond in kind, but oftentimes, generosity has a funny way of coming back around in due time.

Can America make EV batteries at home? (The Hustle)
+ "Per the WSJ, China pretty much owns the industry from start to finish. The country controls:

• Chemical processing: lithium (57% share of total worldwide production) and graphite (100%)

• Anode/cathode production: anode (86%) and cathode (70%)

• Manufacturing: battery cells (75%)

Industry execs say if the US wants its tech to keep up and costs to stay down, it’ll have to produce more batteries stateside."

How Amazon's complex shipping system works (Wendover Productions)
+ "About 13 million times per day someone clicks the order button on Amazon.com... but what happens in between?"

Yale survey on SMB owner challenges (Yale)
+ If you are an SMB owner and willing to contribute 3-5 minutes of your time to this Yale survey, we would greatly appreciate your input.

2020 migration trends: U-Haul ranks 50 states by migration growth (U-Haul)
+ "U-Haul customers made Texas and Florida their top two destinations from 2016-19. Texas had the largest net gain of one-way U-Haul trucks for three consecutive years before Florida flipped the order and became No. 1 last year. Texas is second for growth, and Florida third, for 2020. Ohio, Arizona, Colorado, Missouri, Nevada, North Carolina and Georgia round out the top 10 states for 2020 growth as self-movers continue to migrate to the Southeast, as well as markets in the Southwest, Midwest and Rocky Mountain regions."

DATA: Post-Pandemic Silicon Valley Isn’t A Place (Initialized)
+ "The meme right now is that the pandemic has finally kicked the Bay Area off its pedestal. Rents are down 24 percent year-over-year, according to Zumper. Local sales tax collections are also down by more than 40 percent. But the reality for us and our portfolio is that the Bay Area’s share of companies in our portfolio has been declining for seven years. The percentage of companies in our portfolio based in the Bay Area topped out in the 2014 fund at a little more than three-quarters. Following the 2008 financial crash, the region was both substantially cheaper and had a strong corps of technical talent. But by the mid-2010s, the stresses and pressures of the rising cost of living became widely known, it became much harder to compete against Big Tech companies on recruiting and so this trend began reversing as companies began spreading out. By 2018, fewer than half of our companies in the fund beginning that year were based in Northern California."

How the most hyped U.S. oil merger in a decade went bust (Texas Monthly)
+ "Forgiveness has long been the wildcatter’s elixir. As one retired oilman dryly noted of Hollub’s on-the-job training, “It’s tough to do big deals when your first big deal is as CEO.” Despite Oxy’s execrable stock price and Moody’s downgrade of Oxy’s debt rating to near-junk status, Hollub was a keynote speaker at a prestigious international oil conference last November, and in the same month she aced a fluffy interview with energy guru Daniel Yergin. In 2020 she was in position number 50 on Forbes’s list of the World’s Most Powerful Women, just slightly behind her 2019 ranking of 47—maybe because she’s proved that a woman can fail as spectacularly as a man, then move on. And, going forward, she can still lean on the advice of her childhood spirit guide. “If you never lose, you won’t know how to act,” Bear Bryant once said. “If you lose with humility, you can come back.”"

How Jackson Whole Grocery built a winning team (Jeff Rice, CEO of Jackson Whole Grocery)
+ "Beyond a love for food—my wife and I are passionate natural foodies—I knew nothing about the grocery industry when I learned the business was for sale. But I saw the opportunity to dig into something that had enough size and scale to be interesting, with close ties to the community we loved. Ten years later, the number of employees and revenue have doubled, and the business has become a community hub. As we grow, we keep the focus on People First front and center. We are committed to impacting our employees and our community members in a positive way."

How to build a culture of ownership, and other engineering leadership tips from Plaid & Dropbox (First Round Review)
+ "The easiest way to get clarity on impact is to have a KPI where it’s easy for people to understand how their work lines up to the KPI."

GameStop mania reveals power shift on Wall Street—and the pros are reeling (Wall Street Journal)
+ "Long-held strategies such as evaluating company fundamentals have gone out the window in favor of momentum. War has broken out between professionals losing billions and the individual investors jeering at them on social media. Meanwhile, the frenzy of activity is stirring regulatory and legal concerns, as well as the attention of the Biden administration. The White House press secretary said on Wednesday that its economic team, including Treasury Secretary Janet Yellen, is monitoring the situation. The newbie investors are gathering on platforms such as Reddit, Discord, Facebook and Twitter . They are encouraging each other to pile into stocks, bragging about their gains and, at times, intentionally banding together to intensify losses among professional traders, who protest that social-media hordes are conspiring to move stock prices."

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