Should HR Advocate for the Business or the Employee?

Introduction:

This week, Karen Clark Cole, Jay Goltz, and Sarah Segal talk about hiring an HR person. First, how do you handle HR issues before you can afford HR people? Is software the answer? At what size does a business need a full-time person? Do you hire someone who has experience but who might not be used to getting his or her hands dirty? Or do you hire someone you can mold to fit the culture of your business? Jay, who likes to say the entrepreneur is often the worst person to interview candidates, is currently interviewing candidates to be his head of HR, and he’s a little surprised at how few resumes he’s been getting. Plus: Sarah’s looking for office space and not finding much that would be acceptable. And how are Karen and Sarah doing now that, technically, they have been employees in their own businesses for a year?

— Loren Feldman

Guests:

Sarah Segal is CEO of Segal Communications.

Karen Clark Cole is co-founder and CEO of Blink.

Jay Goltz is CEO of The Goltz Group.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Karen, Jay, and Sarah. It’s great to have you all here. Jay, I want to start with you today. I gather you’re looking for a new head of HR. That opens up a lot of interesting questions. Let me start with this: Did your previous person leave?

Jay Goltz:
She’s leaving tomorrow. She was here six years, and she is basically my second full-time HR person I’ve had over the years. So I finally feel good that I understand the position enough that, interviewing for the next one, I’ll have better questions. And I have a better understanding of what they need for the job.

Loren Feldman:
With her leaving, who’s running the search for her replacement?

Jay Goltz:
Well, my CFO and I, and now my CFO is having knee surgery today, so it’s kind of back on me, which is okay. We’re watching the resumes come in. And some people are extremely overqualified, meaning they’re not going to want to get their hands dirty doing the actual work. They’re used to having a staff. I’ve got 130 people, they’ve got to know what they’re doing. So I’m trying to find the person that’s just got enough experience, but not too much.

Karen Clark Cole:
Jay, is she leaving on good terms? Can’t she find her own replacement?

Jay Goltz:
You know what, she gave two and a half weeks. She did put the ad out there. It’s tough out there. We’re not getting a ton of resumes. Back in the old days, I probably would have gotten 100 resumes. I’ve gotten 20. And it’s okay. I’d just as soon have my hands on it. I’m not that busy. Like I said, I have a much better handle now on what the job is than I did the last couple of times.

Sarah Segal:
How many folks are you getting resumes from who are asking whether it can be a remote position?

Jay Goltz:
Not being here? That’s not possible. They need to be here. They need to interview people here. Oh, here’s the other part that’s a little frustrating. So we did send out emails to about 10 people, and three end up calling you back. Which I understand with a lower level position, but why would you bother to apply for a job like this, and then someone reaches out to you, and you just blow them off? I really don’t have an explanation for that.

Loren Feldman:
Jay, did you make clear in the ad that the person has to work in the office?

Jay Goltz:
Sure. Well, um… I don’t know that. It doesn’t say anything.

Loren Feldman:
That sounds like a no.

Jay Goltz:
No, I didn’t make it clear. But I think if you read it, it doesn’t say, “Remote’s okay.” This is a job. You’ve got to counsel employees. You’ve gotta go to the factory once a week and sit down with people, go over their benefits—it’s not something that would be good on the phone. And then interview people. I don’t think anybody applied who thought it would be okay to be remote.

Sarah Segal:
What’s the toughest question that you’re asking your candidates? What is the question that really matters to you when you’re going through these?

Jay Goltz:
Okay, that’s an excellent question. And I have it. Here’s the answer. It’s a trick question: I ask them, “So, do you feel that you’re an advocate for the employees or for the company?”

Karen Clark Cole:
Jay!

Jay Goltz:
The answer should be both. That’s the answer. It should be both. I mean, one person we interviewed said, “I always fight for the employee.” Well, yeah, that’s concerning. How about making a profit? We have to balance those two things.

So that’s my question. Because the problem with this job is I need someone right in the middle who will be concerned for employees and look out for their best interests, but also recognizes that the company needs to be profitable. And they need to payp market rates and try to keep things competitive, and the right person should understand that.

Loren Feldman:
Karen, you seemed to react when Jay said what his key question was. Did you think it was a good question, or no?

Karen Clark Cole:
Yes, it’s good. And it’s a no-brainer. Just kind of what Jay was saying. It obviously should be both. If you don’t take care of the company, then you have no employees, because you go out of business. So yeah, it should be both.

Jay Goltz:
This one woman, like I said, she said, “I always fight for the employee.” And I thought, “Wow.” So they come in and they say, “Listen, I need a $30,000 raise because I can’t pay my bills.” “Okay, go for it.” No, I think it’s a very telling answer. And you can also tell just the way they respond. So I’ve only interviewed a couple people, because like I said, we sent 10 emails out, and only like three responded. Does anyone have an explanation for that?

Sarah Segal:
We’re seeing the same thing on our agency side where we put out an ad, and we got way too many people that were overqualified. And then, of the people that were qualified, we were like, “Okay, well, what range are you looking for?” And it was literally double what we normally pay somebody for that position. I don’t know where all the employees have gone. But yeah, it’s a very tough market.

Jay Goltz:
We use ZipRecruiter, and it says, “What are your salary expectations?” How do you feel if they just put “negotiable”? I mean, this job, just to be clear, if I get a junior person whom I will groom… I built this whole company on finding diamonds in the rough. I’ve got people who dropped out of college, didn’t go to college, started at 23 years old and are now 47, and they’re running the company. So I’ve been really good with that. I don’t know if I can afford to do that in this position. I would say the range in this job is going to be somewhere between $55,000 and $100,000, depending on: Are they going to just take this whole thing over? Or am I going to have to mentor them over the years? When they say “negotiable,” I don’t know who I’m talking to? I mean, it’s a problem.

Karen Clark Cole:
What about giving them the range in the phone interview when you first talk to them? That’s what we do. Just tell them, “This is the range.”

Jay Goltz:
Well, we can certainly do that. If they call you back. That’s kind of a joke. I mean, if they call you back.

Karen Clark Cole:
But I wouldn’t pay much attention to what they enter into the form. Just get on the phone and say, “This is the range. Does it work?”

Loren Feldman:
Yeah, but that’s a big range, though.

Karen Clark Cole:
Yeah, but whatever it is, I wouldn’t put a number down on a form because then you’re just shooting in the dark. You don’t know what the world of opportunity is.

Jay Goltz:
Yeah, I’m not eliminating them because of that. I am eliminating them if they came from a company where they had three staff members, because I know better than that. They’re not going to want to do the grunt work of calling people, interviewing $17-an-hour employees for the factory. They’re not going to want to get their hands dirty. So I know that that person is not going to work out. The question is: Does the green person who’s 24, who’s worked hard, who has a nice history—can I afford to put them in this job and get supervision-slash-mentorship from the CFO? From me? Maybe, maybe. I’m leaving that open.

Loren Feldman:
24 seems very young.

Jay Goltz:
Yeah, believe me, 28 would be much better. But that’s all I’ve got so far.

Karen Clark Cole:
What about going to—they’d still be young—some of the colleges and universities that hire or train people, where you could hire right out of school, and then they’ll be cheap and diamond in the rough?

Jay Goltz:
Well, that almost describes the one I just talked to. She just graduated but she had a good job in a restaurant where she worked her way up, and that kind of describes her. The problem I’ve learned is—well, for instance, this is kind of appalling to me. We asked her if she’s a member of SHRM, which is the association for whatever it stands for. She’s never heard of it. And I just think, “How does someone graduate with a degree in human resources, and how does the school not have someone, a representative there, come in and talk to them?

Karen Clark Cole:
Jay, have you posted with SHRM? That seems like a great resource.

Jay Goltz:
You know what, that’s a good question. I think they did, but I’ll follow up on that. That’s a good question.

Sarah Segal:
I know that when I speak to people about potential positions, we’re not allowed to ask them any more about what they made previously.

Jay Goltz:
It’s the same in Illinois.

Sarah Segal:
Is that national or is that state?

Jay Goltz:
No, it’s per state, but that’s the same thing in Illinois. You can’t ask. They’re trying to take care of the women-and-equity thing, which, okay, I understand. I mean, it’s a good intent. It makes it a little harder, no question.

Sarah Segal:
When I was going through this a while ago, what I did was—and it’s a little bit more painful—but I put down on a spreadsheet, I reviewed industry standards: What everybody else is paying, and then kind of how we pay our folks competitively for our area, versus the industry standard. And literally, that was the number that I had. And it does result in us missing out on people.

We offered a job to a person, and they got offered a job somewhere else for $30,000 more. Quite honestly, I think we were a more interesting position than the one that they took, but if money was what spoke to them most, honestly, it’s not a person I would want on my team. Because I was looking for people who cared about the projects and were interested in growing with the business, as opposed to working for some big tech giant where they would have like two tasks and that would be the responsibility.

Jay Goltz:
Yeah, when I said $55,000 to $100,000, I’m very confident that’s the right range. If someone’s 23, 24, 25, and he’s been doing a good job with parts of this, but needs to learn the rest of it, that’s not $100,000. But if somebody comes in ready to go, knows what they’re doing, yeah, it would be worth it. Now, I’ve had people asking for $150,000. I don’t need a $150,000-a-year HR person. That’s a whole other animal.

Sarah Segal:
What about like a part-time HR person? Could you do that, or no?

Jay Goltz:
No, my person’s busy. I’ve got 130 people. She’s got a lot of work. There’s a lot of interviewing. I wouldn’t have said this five years ago: It’s absolutely a full-time job now.

Karen Clark Cole:
Why did she leave?

Jay Goltz:
She said it’s been a rough six months. It has been a rough six months. She got a job that is more administrative, doing a couple of parts. It sounds like it’s better-suited for what she wants to do. It’s all pleasant. I wish her well.

Loren Feldman:
I was surprised, Jay, I think I heard you say that this is only the second head of HR whom you’ve had in all your years in business. Did I hear you right?

Jay Goltz:
Yeah, this one was here six years. The other one was here—I don’t know—five or six years.

Loren Feldman:
So you went a long time without an HR person.

Jay Goltz:
Yeah, and that’s a problem.

Loren Feldman:
What’s the right size of a business to have a full-time HR person?

Jay Goltz:
I’ve been told it’s 100 people. And in my experience, that’s about right. That doesn’t mean that you don’t have a problem when you’ve got 60 people, though, because, who’s doing it? The boss. And like, who’s taking care of the administration? Who’s taking care of it, the office manager? It’s a problem. So I’ve only had a full-time person for—maybe she was here a little more than five years. I don’t know, for 15 years.

Loren Feldman:
Karen, how big was your company when you hired your first head of HR?

Karen Clark Cole:
I’m just trying to think about that. But it’s been a long time. We have a whole HR team now. We’ve got in-house recruiters, we’ve got a head of HR, we’ve got HR generalists, we’ve got someone who does benefits, and then we have a chief culture officer who does a lot more than just HR. But we have a pretty big team now. And we’re kind of like, Jay. We probably stretch up to 200 people with contractors. But it’s been 10 years anyway. So it’s kinda like Jay, but we have a bigger team now.

Jay Goltz:
Well, on top of that, you’re doing recruiting. We don’t do recruiting. We put ads out, and we don’t go hunting for people and pulling them out of other jobs, which is different.

Sarah Segal:
That begs the question: So I know that you’re focused on hiring one person. So the one thing that we do consciously on our team is, we make sure that every kind of division has a partner in crime. Would you ever consider hiring two people at 50,000 dollars? That way you have somebody who is very good at x and then—

Jay Goltz:
I have a person who’s been with me for 30 years since she was 17 years old. She knows this company. If I hired someone for the 50-some thousand dollars, I will take her—and she’s happy to do it—and she will work with the person. And that is how we would do that, that she would take part of the job. And so yes, that’s absolutely a possibility.

This is just like accounting. The problem is, if you don’t get someone big enough in that job, they don’t understand or can’t do it. If you get someone too big, they don’t want to do the grunt work. They want their assistants to do it. And so if that person exists, I have to get somebody who’s got enough experience but doesn’t mind doing all the day-to-day stuff. So that is a possibility, that we split it into two jobs: administrative, and maybe the interviewing is a separate person.

Loren Feldman:
Let’s take a quick break to hear from our sponsor.

[Message from our sponsor, Work Better Now]

Loren Feldman:
And we’re back. Sarah, how do you handle HR?

Sarah Segal:
[Laughter] That’s a laughable question. We’re not big enough to have a full-time HR person. It is something that is discussed on a regular basis, but I don’t feel that we’ve hit that threshold. So we have divided up certain responsibilities into people who have roles as operations managers in lieu of HR. We do have general counsel, which is a priority for us. So that person oversees any employee-related issues or questions, but we don’t have an official HR-HR person who’s walking through your benefits. The head of our accounting actually is the person who currently deals with that very capably.

Karen Clark Cole:
How many employees do you have? How big are you guys?

Sarah Segal:
I am a business unit of a larger company. The larger company is about 40-50 people. Don’t hold me to that number. But yeah, so we share all of those resources quite nicely. And we just haven’t gotten to the point where we’re like, “We need an HR person.” Right now, it’s being dealt with so seamlessly across teams that it’s not going to be, it’s not our priority hire. I think we have other priority hires before we do that.

Jay Goltz:
I’m in a business group with someone who was like, “I don’t want to get an HR person. It’s just adding overhead.” And like, you know what? HR people do something. They’re not just overhead. Not having an HR person is an exposure. And the fact that you have 40 people? Yeah, you’re in that in between. I get it. I didn’t have one either. But there are some critical functions that if you—

Loren Feldman:
What’s the most important one, Jay? What’s the most important function that you’re concerned about?

Jay Goltz:
How about, they don’t understand the legalities of hiring, and they say the wrong thing to somebody on an interview, and they get sued? I mean, how about just the benefits, 401k plan administering? How about just the skill-set of how to interview people? Just because you’re a good manager doesn’t mean you know how to interview people.

So there are a lot of things that could be a hole in one’s system. And I always say, “The entrepreneur is frequently the worst person to be doing the interviewing.” Because one,, they love their company and they talk about it too much. Two, they’re probably nice. They like people. And three, they’ve got 14 other things to do that day, or 21 hats on. And they want to get through this process as fast as possible. That is a recipe for disaster—because I did it.

Loren Feldman:
And you’re doing it right now.

Jay Goltz:
Well, I’m smarter now. And I know what I’m doing, and I’m not anywhere near as busy as I used to be. I’m not wearing 21 Hats anymore. I’m doing a few things. I have the time to put into this now. 25 years ago, I was taking care of customers and meeting with vendors, dealing with them. I’m not doing any of that.

Sarah Segal:
What do you think the number is? Like in my mind, it’s between 50 and 75 people—that’s when you need to start thinking about bringing on an HR specialist.

Jay Goltz:
It probably depends on the business. But that makes sense. You’re in the people business. You’re not buying material. You’re in the people business. I would think that that person should easily be able to pay for themselves. What if they were just better at hiring? Just imagine the effect it would have on your business if they were really, really good at hiring and finding the best people for your company. It would certainly cover their salary.

Sarah Segal:
Yeah, we don’t have a lot of turnover, thankfully.

Jay Goltz:
Well, that’s a factor then.

Sarah Segal:
Yeah, people tend to stay with us because we have a pretty nice setup. And we don’t have very many interpersonal problems—knock on wood. We’ve built a nice, very collaborative community where everybody seems to cheerlead each other on in a very positive way. But yeah, I think that it’s something in the, I don’t know, the product pipeline.

Jay Goltz:
No, what you said makes sense. I don’t have a big turnover either. But when you have 130 people, even with a small turnover, you’re still hiring one or two people a month. So that’s pretty much where we’re at.

Loren Feldman:
I talked to an entrepreneur yesterday, who has a business with about 100 employees, and he eliminated his HR staff—I think he had two people—and switched to a software suite called Rippling, which I know is growing.

Sarah Segal:
We use Rippling.

Loren Feldman:
That was my question. And has it worked?

Sarah Segal:
Oh, yeah. We love it. Actually, we talked about doing the PR for Rippling many, many, many years ago. And I believe they ended up going in-house with their team, but we ended up using it. And it’s so fantastic. Every onboarding thing you can think of is handled by them. They deal with sending out new laptops to all of our employees, making sure that those laptops come back if they end up leaving. They’ve figured it out in a really nice way. And their platform is super easy to use. So I’m a big fan of Rippling.

Jay Goltz:
What is the lowest-level employee in your whole organization? What’s the least amount of money that anyone’s making?

Sarah Segal:
Is that a question for me or Karen?

Jay Goltz:
Yes, well, Karen, I know it’s pretty high. But in yours, do you have people who are making $40,000?

Sarah Segal:
Yes, we do. Because we get recent grads who have only ever gone to college, maybe had an internship, who are interested in moving into public relations. And our salary range for those people is anywhere between $40,000 and $50,000 a year.

Jay Goltz:
But you probably don’t hire anyone without a college degree, right?

Sarah Segal:
I would say yes, if we had people applying. The big challenge with what we do is, you have to be a really good writer to be in PR. And if you don’t have that formal education, it’s pretty rare to find somebody who just naturally understands grammar and AP style.

Jay Goltz:
I’m just trying to illustrate, I’ve got a factory where they’re putting frames together. And some people barely speak English. So I’ve got a very different crowd than what you’re dealing with. And they need different things than somebody who graduated college and can get on a computer and do all that stuff. So I fully appreciate and respect—I’m sure that software is great, but there are plenty of my employees who would not be able to deal with that.

Loren Feldman:
That’s a great point.

Sarah Segal:
Yeah, that’s a great point.

Loren Feldman:
Karen, do you use a software platform like that?

Karen Clark Cole:
Yeah, we have a big system, but I can’t even tell you what it is. [Laughter] I’m not very involved in it. But yeah, we use a couple of different systems.

Loren Feldman:
Jay, how do you assess whether an HR person who you want to hire is going to be good at hiring? How do you get at that?

Jay Goltz:
I ask them questions about, “Tell me about your hiring process. What are you looking for in a candidate? What are some of the questions you ask?” And I think I can tell whether they’ve figured out how it works. And they should be able to come up with a quick answer: “Oh, I’ve really learned that my best question is, blah, blah, blah.” And then I tell them about the company enough that they should be able to reflect on it, and go, “Oh, that sounds like what I do,” and see whether we’re on the same page. Because I am very much a collaborative company. I don’t have jerks working here. I tell them, “No one is screaming at each other here.” And you can tell by their response as to whether they get it or not.

Because the fact of the matter is, most companies are not collaborative. And they’ve got to understand what the mission here is, which in my case, all of my employees get why they’re here, and they understand that we’ve got to take care of customers, and they’re together on it. And I have to be careful to hire people who buy into that concept. It can be groomed into the role. And like I said, I’ve got lots of people who’ve been here for over 20 years. I’ve got 30 employees who have been here for over 20 years. And that’s a different mentality than a lot of companies. So listen, I’ve only interviewed two people in the last week.

Loren Feldman:
We will definitely want to hear more and keep track of this as you proceed. I think it does get at a lot of interesting issues for smaller businesses. Let’s move to our next topic for today, which is, Sarah, I gather you’re thinking about looking for new office space, given the way the world is changing. What’s going on?

Sarah Segal:
Yeah, when we were acquired last year, we inherited office space that was used by one of the other business units, but all of their folks dispersed from the San Francisco Bay area when COVID happened. And they were able to continue without having people on location, based on the focus of their work, which are fun things like crypto and crisis. Our team, we need to be there and touch and feel and hug and laugh and collaborate and brainstorm together in person. And the young group of people I have on my team, they like coming into an office.

So the office that we inherited has never been something that I’ve loved. It doesn’t reflect the brand at all. It’s a little bit too big. We pay way too much money for it. So we’ve been able to sublease it. So that’s off the books. Talk about people who do windows and floors, I went and packed up boxes and met the movers last Friday to put everything in storage until we found a new place. But now I’m in this weird in between space where all the current offices that are available in San Francisco are like godawful. And then I’ve been told about a couple of collaborative spaces, so I’m thinking about looking at those. I’ve also talked about shared spaces with a couple people, so we’re just kind of exploring different options.

Karen Clark Cole:
Wait, Sarah, how much space do you need?

Sarah Segal:
We need two offices with doors that can close, and then an open space for the rest of the team. And that’s all we need. We intend to keep growing and having more needs for it, but literally, if you were to ask my team what everybody wants for their space, the answer is uniform: It’s bright and happy.

Karen Clark Cole:
Boy, do I have the deal for you.

Loren Feldman:
Karen, you have office space in San Francisco, right?

Karen Clark Cole:
And it’s bright and beautiful.

Sarah Segal:
This is how we got our first office space. When we were first starting out, we couldn’t afford to have a footprint, but it was nice to be able to get all together. So one of our first clients was the co-founder of Serena and Lily, which is a big furniture company. It’s textiles, it’s beautiful.

And so Lily Kanter, who is still a mentor to me, was starting a new business.It was a startup, and she said, “Well, we have this great space that’s too big for us, and we need PR. We’ll give you space in exchange for PR.” So that was our first space. We never paid for office space. It was just a beautiful building. I believe that was the starting place for Williams-Sonoma, or some of those other brands. And so we were really spoiled. So I literally reached out to a couple of people, and I said, “We’ll do free PR for you if you give us a footprint, somewhere we can go.”

Karen Clark Cole:
So we are absolutely in that boat. PR is the only engine we don’t have going right now, so we should definitely talk. I call it “the white angel space.” It’s so beautiful and bright and basically new. We’ve redone the whole thing. And it has a giant workspace that has a bunch of close meeting rooms. It’s beautiful.

Loren Feldman:
Is anybody using it, Karen? Are you using it?

Karen Clark Cole:
No, and that’s what I’m about to say, is that it’s so depressing to me that it sits there empty. We have an occasional couple of employees who go in, but for the most part, it sits there empty.

Sarah Segal:
We love to go in, and it’s sad to me. Like, we get excited when we go in. But also, I buy everybody lunch when they come in. We like each other, so it’s also a social occasion as well.

Karen Clark Cole:
Oh, well, make no mistake. We like each other too. It’s just that during COVID, all of our San Francisco people moved out of the city. And so the cost of living is too high. And so they’ve all just split, and now the idea of doing a two-hour commute to go into the office is: Why would you do that? It doesn’t make any sense.

Sarah Segal:
Yeah, we have a couple of people who are north of the city in the Petaluma area. And you know, they wouldn’t come in every single day, but we do have people who live in the city and have stayed there and are really eager just to be there on a regular basis—as well as myself, because honestly, my office at home is fine. But my dogs are very distracting.

Loren Feldman:
Sarah, I’m surprised that you’ve had trouble finding space. I had the impression that…

Sarah Segal:
Oh, it’s awful.

Loren Feldman:
Isn’t Karen’s example fairly common—people who have leases that they would love to get out of?

Karen Clark Cole:
That’s what I thought.

Loren Feldman:
Why aren’t there a lot of options for you?

Sarah Segal:
Because people aren’t really sharing this. I forget what it’s called, but it’s a commercial real estate website. Ages ago, there used to be this blog that would make fun of real estate listings that were just really challenged houses that were like, “beautiful backyard!” And the image of the backyard would be like a mud pit.

Jay Goltz:
“Charming” is the word they use a lot.

Sarah Segal:
Charming, exactly. And so, you look at these things, and one of the pictures—I should send it to you all—it almost looks like the people that have this office were hoarders. And they’re trying to sublet the space, and rule number one of any property is that you want to make it kind of agnostic so that people can see their business in there.

Jay Goltz:
The number one rule is: Don’t look like a hoarder, I would say. That would be a good rule.

Karen Clark Cole:
Sarah, let’s make a plan. Come and see our space. It’s beautiful. And we can share it even. We’d love to figure out some creative way for you to get cheap rent.

Jay Goltz:
All I want to know is, is it near Boudin’s, the sourdough bakery?

Karen Clark Cole:
Oh, I don’t know the area well enough. We’re right by the Embarcadero. It’s beautiful.

Sarah Segal:
Oh, okay. It’s a great area. It’s convenient, especially for people like me who occasionally will take the ferry into the city.

Loren Feldman:
I just want to know if I get a broker’s fee if you guys actually do a deal.

Karen Clark Cole:
Yeah, totally.

Jay Goltz:
I was going to coach you on that, actually.

Karen Clark Cole:
Let’s have a podcast party in Sarah’s new office.

Jay Goltz:
I have something very interesting that I learned years ago about why office cubicles got so popular all of a sudden. And believe it or not, part of it was the tax code, that if you built out office space, the depreciation was over like 27 years. And if you built out office cubicles, it was like over seven. So there was a huge tax advantage to putting cubicles up, instead of building out office space. And that’s what really set the cubicle thing on fire whenever that was—30, 40 years ago. And there are probably still some people who are thinking about that. Cubicles are depreciable.

Karen Clark Cole:
Well, it’s kind of coming back, actually, Jay. Because now people are going into the office, but they’re on Zoom meetings all day long. And so where we have all these open collaboration spaces with desks—and it was awesome when everyone was there—now people are there, but they’re on Zoom half the time, and it’s really kind of a bummer.

Jay Goltz:
Yeah, cubicles aren’t bad in some cases. I mean, they get a bad rap.

Loren Feldman:
You’ve never sat in one, obviously.

Jay Goltz:
All right. Well, that’s true. [Laughter] Okay, fair enough.

Loren Feldman:
All right, we only have a little bit of time left. While I’ve got both of you, Karen and Sarah, you guys are the two people on this show who have started and built a business and then sold it and continued to run it. And I’m really curious to ask you both about that. Karen, I think it’s coming up on about a year since you actually did your deal. Is that right?

Karen Clark Cole:
A year minus six days? Yeah.

Loren Feldman:
Wow. Very close. So how has the first year being an employee again been for you?

Karen Clark Cole:
Great. I mean, I never think about the employee thing. Actually, it’s not a thing for me. It’s effectively no different. I know that’s hard to believe. But we run as an independent subsidiary. I’m still the CEO. Very little has changed. And for most employees, we could have not told them, and they wouldn’t know the difference. It’s that the same. Where it’s changed, where there’s a lot of energy spent, and where I spend a lot of my time, is trying to unify the sales forces—the sales teams—so that we can have combined engagements.

So that was the whole premise of why a big engineering firm bought us as a design firm, so that we could work together for clients to do end-to-end work. And so doing that is easier than it sounds, because we have entirely different companies, we work in different ways, we sell to different clients. And so in these big organizations, it seems like, “Oh, you work for Microsoft? Great. You can just introduce us, and we’ll do engineering.”

But our clients are totally different in these big organizations. So it’s taken a long time for us to get it sorted—like the whole year, basically—to get to the point where we’re finally getting a little bit of traction working together. And I think that’s normal. And there’s a lot of smart people working on it. But that’s the only difference, honestly. So it’s been great.

Loren Feldman:
I’ve gotta ask: Jay, do you remember, on the podcast episode when Karen told us about the sale, she told us, I asked her a similar question about how she was thinking about what it would be like to have a boss, and have somebody telling her what to do, and her response was that she couldn’t wait to have someone tell her what to do. Do you remember what you said?

Jay Goltz:
Yeah, I’ll ask you in a year.

Karen Clark Cole:
Yeah.

Jay Goltz:
I have to tell you, what she describes, I absolutely believe her. I think in this case, it was a smart thing. And it works. I just know for a fact that lots of times it doesn’t work. But in her case …

Karen Clark Cole:
Oh, yeah, I think you’re right, Jay. I think it’s extremely rare. And I consider myself to be extremely fortunate.

Jay Goltz:
Don’t call it fortunate. You were smart. You did a smart thing. You figured it out. No, really, there’s no luck involved here. You figured it out, and it made perfect sense. There are other people who just want to get out of the business, and they hang around and they pull their hair out for the next three years. And that’s a different story.

Loren Feldman:
Are there any keys to that success, Karen, that you would share? If somebody else is contemplating doing something similar, is there anything you would stress that leads to a healthy situation like the one you have?

Karen Clark Cole:
You absolutely have to like them. The CEO of our parent company now I really like. And you can’t underestimate how important that is. But that’s just my philosophy in life, right? I need to get up every day and enjoy living. And so you want to be around people who you like. It’s just, it’s very, very, very simple. And it applies to everything. That’s how I run the whole company.

Jay Goltz:
I would say, in her case, it’s about synergy. She realized that, “Look at what you have. Look what I have. Those two things work really well together.” And in a lot of cases, when companies get bought, there is no particular synergy. They’re just rolling them up, and there’s some anti-synergy there. And that’s what I’ve seen.

Karen Clark Cole:
Well, you’re right, Jay. We talked to a lot of companies in the process, and some were just doing that. And we’re like, “Yeah, that’s not going to work for us, because we care about the company. We want it to grow and thrive.” And yeah, Loren, the answer to your question is long and complicated. And the good news is, I’m writing a book. So I’ll tell you, you’ll get every gory detail.

Jay Goltz:
I think you get a commission on that, too, Loren. Just put that on your list. [Laughter]

Loren Feldman:
Sarah, how about you? Do you feel like an employee or an entrepreneur?

Sarah Segal:
Well, I want to address Karen’s comment about trying to find that synergy, in terms of sales. That’s something that we are also kind of working through as well. We finally have a number of clients that are cross-business. We’re not an independent subsidiary. We talked about the different ways of setting it up, and we decided that we would be a business unit within the company, so we’re really one big company. We’re just a business unit of it, and it just, for various reasons, works for everybody. It has been amazing.

I really like the people who bought me. They basically kind of let me run my own ship. But they are there as my backboard, where I’m like hitting my head against the wall about something. And I have people who are my peers on any other divisions where I can say, “How are you handling this?” And they’re an amazing resource for me, but we’re also one big happy family where we do these incredible offsites twice a year with the entire company where everybody’s getting to know each other, and so we’re still in that kind of beginning phase where we’re figuring out the resources that we can A) offer our clients or B) tap into and provide services for their clients. So I think that will take another couple of years for us to really be in sync with what everybody does.

Karen Clark Cole:
Sarah, how long has it been for you?

Sarah Segal:
So on paper, we were purchased in January of last year, but we didn’t make the announcement until… I think it was June of last year. And the reason was that we were just redesigning all of our website and our collateral and stuff to make sure that it looked unified. But it’s been about a year and a half on paper, and I can’t say enough nice things about the people that I work with now. And it’s because everybody’s invested in the outcome. We don’t have HR, but we do have people who do hire people really well, and then they stay, because they like it. Again, I’m still trying to navigate, “What exactly do you do?” with a couple of people. But we’re gonna get there.

Karen Clark Cole:
We have a similar arrangement where it’s, I feel like I have a peer group now, which I never had before. It’s really, it’s similar. We have offsites together, but it’s the leadership. It’s not the entire company, because they are much, much, much bigger than us.

Sarah Segal:
Yeah, well, ours is not that big. So this year, we went to Bozeman, Montana, which is where the founder of TMG has a house. And I didn’t realize that you can get altitude sickness in Bozeman, but you can, and I did get it. But it was an amazing trip. We went whitewater rafting. It was a great bonding moment for everybody.

I should say that, I think the reason why I’m left to my own choices is that I’m probably the hardest person on myself of anybody. I’m always looking at my P&L. I’m looking at my client list. I’m looking at our deliverables. I’m looking at everything. And I beat myself up probably every day about, “What can we do better? How can we improve?” And they know that.

Loren Feldman:
Jay, you’ve always wanted to be your own boss. Does hearing any of this—

Jay Goltz:
I fully appreciate and respect what they’re saying. And I don’t at all think, “Oh, I’ll ask you in another year.” No, it sounds like that was a smart move on both of their parts. But there’s no part of it that I think, “Oh, I could do that.”

I mean, I’m the biggest framing place in the country. It’s not like going in with someone else is going to give me some new—I don’t see any synergy in any of the businesses I’m in that would make sense. So it just doesn’t fit what I’m doing. But I totally can appreciate that, from what they’re talking about, it makes perfect sense that they’ve combined efforts with another company that brings a better product to the marketplace. So it makes perfect sense. And I’m sure it will continue to be good for them.

Sarah Segal:
So if one of these larger print-on-demand places said, “Oh, we really want to add you to our…” would you sell?

Jay Goltz:
No, not a chance. I get emails probably once a month saying, “Oh, we’ve got a strategic buyer, which is usually baloney.” No desire whatsoever to go rock my world. I’m just in a happy place. It’s nice customers, happy customers, happy employees, everything is good. Don’t have any problems to solve. I have absolutely no reason that I would want to open up some can of worms and go in with somebody else and find out that, “Wow, they’re not doing things the way I do it.” No, there’s no part of this that makes me think, “Wow, I wonder if I could do something.”

No, I’m just happy it worked out for the two of you. And I’m also not just happy, I give you both credit. Those weren’t accidents. You know, Karen said she talked a lot to companies. There wasn’t any luck in this. This was a well thought out plan that’s working good for both of you.

Sarah Segal:
What’s your golden parachute?

Jay Goltz:
Um, I’ve got two kids here, and I’ve got managers who have been with me for 20-some years who are in their 40s, and I plan on the company being around.

Loren Feldman:
He doesn’t want a golden parachute, Sarah.

Jay Goltz:
Right.

Loren Feldman:
He wants to stay there till the bitter end.

Jay Goltz:
Yeah, and if you say, “What if you get run over by the bus?” Like, I think the company will be okay. No one’s starving. I own all the real estate. Everything is fine. I really don’t have any compelling reason to entertain selling the business in any way, shape, or form.

Sarah Segal:
Good for you.

Loren Feldman:
All right, on that note, my thanks to Karen Clark Cole, Jay Goltz, and Sarah Segal—and to our sponsor, Work Better Now. See you all next week.