And Some Days the Bear Eats You

Introduction:

This week, Liz Picarazzi tells Jay Goltz and Sarah Segal that her trip to a bear sanctuary in Montana to get her trash enclosures certified as bear-resistant did not go precisely as planned. Because of a logistical snafu, she has not yet obtained either the certification or her real goal: a marketing video of the grizzlies attempting to crack open her baited enclosure. Fortunately, things went better for Liz in a more traditional marketing venue, a trade show in Chicago where she promoted her rat-resistant enclosures. Meanwhile, Sarah follows up on how things are going since losing two big clients and having to lay off three employees, and Jay explains his new catch phrase, “Let me not sleep on it.” Plus: we discuss the owner of a two-year-old construction business who wonders how long he should keep going if he doesn’t start to make a profit. He also asks why no one ever talks about how hard it is to run a business. While we can’t know for sure what’s happening inside his company, we can be pretty confident that he’s not listening to the right podcast.

— Loren Feldman

Guests:

Liz Picarazzi is CEO of Citibin.

Jay Goltz is CEO of The Goltz Group.

Sarah Segal is CEO of Segal Communications.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome, Jay, Liz, and Sarah. It’s great to have you here. Liz, contrary to some of the advice you’ve received on this podcast, you’ve been putting energy into the bear-proof-enclosure idea that you want to sell out west. You took your team out to Montana recently to see if your enclosures can stand up to grizzlies. How did it go?

Liz Picarazzi:
So I have to report it was, unfortunately, a disappointment. We spent a lot of money and a lot of time, both in preparation and traveling to the testing. It’s done at a test facility for grizzly bears. And due to a couple of technical issues, most importantly, being the leveling of the bins, the testing facility determined that they were not going to be tested with the grizzly bears. And instead, they’re going to have a technical test, which is just basically a ground test without bears. It was very disappointing because of all of the expense, but also, we felt really, I would say, pretty disempowered to fix the situation with the leveling.

It really had to do with a misunderstanding with the center about who was going to assemble the bin on-site. It was our understanding that we were going to ship it there, and we were doing the assembly. But it turned out that they did the assembly. And the leveling was not done correctly, which was the reason that it was not put into the test. So, very disappointing. We have a very, very strong reputation for being rat-proof. Basically, our westward expansion is going to be through being bear-resistant. And we do not have that designation at this time. We didn’t fail the test. It still will have this technical test. But for me, I really want—

Loren Feldman:
What’s a technical test? What does that mean?

Liz Picarazzi:
So basically, they’re looking at kind of how it operates, the measurements of the doors, the gaps between a frame and door, what they know about the ability of bear claws to be able to open up. This facility primarily tests trash cans and coolers. So although they have tested trash enclosures, mine is a 750-pound enclosure of steel, which, whether or not it’s leveled, I at least don’t think the bears would have penetrated. But we didn’t have that chance to test it.

Jay Goltz:
Okay, wait, I want to understand this. You’re telling us, there’s a business that all they do is test coolers and garbage cans to see if bears can get into them. It would seem to me that you’d run out of customers pretty quickly. I mean, how many coolers are there in the United States, and how many garbage cans that they could keep a facility open for a whole year? How does that work?

Liz Picarazzi:
Well, it’s a nonprofit. And it’s actually like a sanctuary for grizzly bears that have been taken out of the wild.

Jay Goltz:
Okay, this is just an extra.

Liz Picarazzi:
Yes, this is an extra. They have wolves. They have otters. They have many other animals there. And the grizzly bears are probably the biggest attraction, but it’s a sanctuary, and it’s a really big tourist attraction in West Yellowstone, Montana.

Sarah Segal:
So, is your product still out there? Or is it shipping back? What are you doing?

Liz Picarazzi:
So I guess I skipped the lead here. It’s still out there, and it is going to be tested with the bears tomorrow, apparently.

Loren Feldman:
The center is the bear refuge?

Liz Picarazzi:
Yes, it’s part of the Interagency Grizzly Bear Committee, and they are the one—

Loren Feldman:
It’s called the Grizzly Bear Committee?

Liz Picarazzi:
It is.

Jay Goltz:
Were the people grizzly? Were they hungry? What’s going on there? Did you not feed them before you went there?

Liz Picarazzi:
You know what, maybe I should have bribed them with some food, but the only food that should have been involved was baiting the bins for the bears. So that’s what they do, is they get the most delicious food that the grizzly bears want. They bait it. And it’s in this area where there would have been five bears over the course of the day that tried to penetrate the bin.

Sarah Segal:
How long do they leave the bin out there for?

Liz Picarazzi:
They leave them out for shifts of one hour, so each bear gets one hour. And so there were supposed to be five hours of testing. One of the things that is a little bit tricky, though, is that it requires 60 minutes of bear hands-on time, where the bear’s actually trying to get in. So if the bear wanders off and does something else, that is not counted as part of the 60 minutes. So over the five hours, cumulatively, you need to get the 60 minutes. What unfortunately often happens is that the bears get tired or they give up. And that’s why they have a technical test to fall back on.

Loren Feldman:
So you’re saying, if the product is too successful and discourages the bears and the bears give up, you don’t get certification, because they haven’t tried hard enough, long enough?

Liz Picarazzi:
No, you can get the certification, but it’s through this backup of the technical test.

Jay Goltz:
You know, this feels like when I listen to NPR, and they have these three outrageous things, like which one do you think this is: A, B, or C? And they tell this bizarre story, and you have to guess which one of them is true. Because this is a bizarre story that—

Sarah Segal:
“Wait, Wait … Don’t Tell Me.”

Jay Goltz:
Yeah, “Wait, Wait … Don’t Tell Me.” This is what this feels like. So do we really believe you went out to Montana and went to a bear sanctuary?

Loren Feldman:
Where there was a committee of grizzly bears.

Jay Goltz:
Of grizzly people who didn’t give you enough time. Hmmm. What’s the next choice?

Sarah Segal:
Wait, how do you find a place like this? Are they advertising online? “We’re a sanctuary. We test things.”

Liz Picarazzi:
No, I mean, this is for big brands like Yeti, or Brute, Rubbermaid, any sort of trash cans, Coleman. They all get their products tested here. So for me, that was something that was also discouraging, because a lot of these brands that probably have tested dozens of times over the years with dozens of products, if they don’t pass, or if it doesn’t work out, yes, it’s disappointing. But it’s not like me. I’ve got my house mortgaged against the business. And if something like this doesn’t work out, it’s a pretty big deal. If I’m just an employee at Yeti and the cooler fails, like, yeah, I’ll go back, and I’ll improve it, and I’ll go again. But it’s not going to affect my paycheck.

Loren Feldman:
Was this gonna be videotaped?

Liz Picarazzi:
Yes. So I had a videographer lined up. I even have my marketing campaign, which was to launch in January, all lined up where the video was the primary content for that. So I still have tomorrow. I have the videographer who’s going to be there. And who knows? I mean, maybe the next time I’m on here, I’ll talk about how wonderful it went. But I’m just feeling a little tempered.

Sarah Segal:
I work with an animal—it’s not a sanctuary, but it’s an animal facility in Montana, probably not very far from where you are. I’m just curious how much you’re paying them for this thing.

Jay Goltz:
Ooh. Let me guess, let me guess: $3,500?

Liz Picarazzi:
Less.

Jay Goltz:
Oh, that’s a bargain.

Liz Picarazzi:
Really. It was only $1,000.

Sarah Segal:
Okay, it was $1,000, but then on top of that, I’m assuming your flights, your hotel stay, videographer, the shipping of the product. This is probably, all in, seven or eight grand, right?

Liz Picarazzi:
Easily. Yes. Plus, our time. Time taken away from sales. I took one of my technicians, who also happens to be our top salesperson. He was out of circulation for about a week for this.

Loren Feldman:
Are you confident that the trash enclosure is now properly leveled and set up?

Liz Picarazzi:
No.

Jay Goltz:
I would say this episode should be called, “If you thought you had problems, you really don’t. You need to hear Liz’s problems.” [Laughter]

Loren Feldman:
Do you have your marketing plan all set? What are you going to do with that video if the grizzly bears do, in fact, fail to breach your enclosure?

Liz Picarazzi:
So I mean, the videos that come out of this center do tend to go viral, because the bears, like on coolers and on trash cans, they get on top of them. And it’s like they’re giving them CPR. They’re pushing down over and over and over. It’s really interesting to watch.

I don’t think that would have happened with my 750-pound steel container. For our rat video, which we did about five years ago, we hired an actor who played the role of a rat scientist, who talked about the experiment, how it went, what was baited. And it was really funny. It was very popular, and it actually became a pretty big part of our brand. When we advertised as being rat-proof, we put that in the signature line of almost all of our emails, and that’s really part of what we’re known for.

In terms of who we are going to be targeting, it would be a lot of resort towns in the Mountain States, resorts themselves, homeowners associations. We do have a pretty strong presence in Aspen. We have about 10 or 12 units there. And really kind of through word of mouth, those bear enclosures have sold well there.

I don’t need to have a certification to say that we are bear-resistant, because they are bear-resistant in practice. They’ve been in the field. So that’s the thing: Okay, am I going to be hurt that much if I don’t have the certification? I actually think I might be hurt more by not having the bear video, quite frankly. That was what I really wanted, I hate to say it, even more than the certification. I wanted that bear video.

Sarah Segal:
I think there’s a way to get that bear video after the fact. But I love this, because I think it’s a great case study for other businesses. Like, Jay, could you put a couch somewhere and put a whole bunch of dogs around it, and see which dog likes that couch the best?

Jay Goltz:
Yeah, you got me thinking now. [Laughter]

Sarah Segal:
It’s a very specific thing for your industry. We had a client for a long time called Relay that makes basically nice walkie-talkies for hospitality. And they had a video of that where they took the walkie-talkie, and they drove a car over it a couple times to show that it continued to work and was never damaged. And it did well. I mean, it showed that it would withstand abuse, which I think is really important for a lot of businesses that want to invest in products or enclosures or what have you, where they’re going to be manhandled. Or bear-handled.

Jay Goltz:
See, I would have liked to have seen a video of you sitting in an airplane next to some stranger, and the person turns to you: “Oh, where are you going?” And you explain, “Oh, I’m going to a bear sanctuary.” And watch their expression, waiting to see if they’re like on Candid Camera or something.

Sarah Segal:
You should send a picture to Loren, so at least if you have a photograph of you and the bears, he can put it in the newsletter. Because I think everybody would love to see that.

Jay Goltz:
With a 21 Hats hat on the bear.

Loren Feldman:
We want to see you appearing before the Grizzly Bear Committee and making your case for their approval.

Jay Goltz:
Okay, well, I have nothing going on this week compared to that. [Laughter]

Liz Picarazzi:
But actually, Loren, I do want to say one more thing, in terms of the marketing. So this would have allowed me to have two to three different products for different populations. So we’ve got the rat version. We’ve got the bear version, which has different handles. It has the same opening handles as you see in national parks with those trash enclosures. So we outfitted it with that, and we made it in steel instead of aluminum.

So there was a lot of product differentiation, that also, in terms of our marketing, it would have been two different target populations. And like I said, it really would have helped, and will help with our westward expansion. It’s just going to take longer than I anticipated.

Loren Feldman:
So you also had a more traditional marketing opportunity. You also recently attended a trade show in Chicago. How’d that go?

Liz Picarazzi:
So that went wonderfully. That was the week after my disappointing bear trip to Montana, in Chicago. And this was with my main kind of target customer, which is downtown districts, commercial districts. They’re sometimes called S.S.A.s, sometimes called business improvement districts. And it’s a yearly convention where all of those executive directors from all over the country come to the city to hear various speakers.

But we were an exhibitor, so we were able to interface with a lot of existing clients, who we’re already installed with, to kind of get their opinion. They’re very happy. Some of them even provided live testimonials to other people coming into the booth. But we also got to meet prospects who we may have connected with through some sort of cold emails.

So that was incredible. There was great interest, great connection, and that felt really good afterwards. Then there’s also a lot of more volume selling that comes from that. You know, if we sell, usually in New York, for rat-proof, oftentimes, it’s single-family or small multifamily. This would be for large cities. Like we have in New York City, Citibin is installed in 22 different business improvement districts, 60 different locations. We’re also in Philadelphia, in Boston and Newark, in Hoboken, and growing. So that’s our biggest growth area for the business. And that is like the biggest concentration you could possibly have of that population. All three of us who were there, we felt like we got incredible leads, great face time with clients.

Loren Feldman:
I guess those clients are, you just explained to us, business districts. I imagine, it’s kind of a long sales cycle with them. So maybe it’s too early to know whether you actually made any sales. Is that right?

Liz Picarazzi:
Yes, too early, but setting up estimate visits. So for those who we connected with who are from New York, we’re out this week doing visits in their districts. And then the other thing we heard is that the city is going to be mandating—not just suggesting—that business improvement districts containerize their trash. So right now, we’re in 22 of the 76 business improvement districts in New York City, and this just makes the opportunity that much greater to install in the rest.

Jay Goltz:
I assume not in Chicago, right? We have S.S.A.s. Because we have alleys. We don’t have garbage sitting on the sidewalk. So I can’t imagine…

Liz Picarazzi:
We did! We have a big proposal out to one of your S.S.A.s, Jay, that we reached out to ahead of time. And then when we were there, we met with them again, we took measurements, and so I have a feeling that one is probably going to move ahead.

Jay Goltz:
For where, though? Where is this unit going to be? Because we don’t put garbage on the sidewalks. In the alley?

Liz Picarazzi:
This is for public use. So this is for public trash that normally would be in a trash can, like in a corner basket.

Jay Goltz:
No, that’s a problem, because they’re overflowing all the time, and they don’t get picked up enough. Okay.

Liz Picarazzi:
Right. So those corner baskets—

Loren Feldman:
But Liz has a solution for that.

Liz Picarazzi:
Right. Well, and so these corner baskets in cities that often overflow, we now have a product that handles the overflow that’s called the Basket Plus. So that’s something that is really like a before-and-after visual of what we can make happen in cities on a corner. We can take hundreds of corners and get the trash lifted off of the sidewalk and into the bin. So that was also really validating that there was specific interest for that product in Chicago.

Loren Feldman:
You’ve explained this to us before. I think the idea is you have the trash can that’s available for public use, but then you have a bin with it, so that before it overflows, the trash can be thrown in the bin. And you don’t have to wait for a truck to come and empty the trash receptacle. Is that right?

Liz Picarazzi:
Exactly.

Loren Feldman:
Did you stop by and see Jay while you were in Chicago?

Liz Picarazzi:
Well, I did. I stopped by his warehouse. But I didn’t see Jay, and it’s a good thing, because I had COVID at the time, and I didn’t know it. So he actually was really instrumental in helping us get our exhibit, our booth, in and out of the trade show. As most small businesses know that do trade shows, there’s somewhat of a racket around getting your things in and out of the hotel. You know, using the elevators, even if all they do is help you put something in the elevator and they push a button. I’ve gotten bills for $4,000 just for that one action. So we were able to avoid that by shipping to Jay, borrowed Jay’s minivan, took our stuff, basically snuck it into the hotel, and did the same on the way out. So we definitely have a lot to owe to Jay for that. That was great.

Loren Feldman:
That’s really interesting that you were able to avoid that. We’re gonna have to raise this with our trade-show expert, Jennifer Kerhin, next time she’s on, and see what she thinks of you sneaking into the hotel.

Jay Goltz:
Well, here was an interesting part. They were going to rent a van, and they won’t allow rental vans or trucks to go to the facility. And you could say they’re being jerks. But I’ve gotta tell you, my guess is people back them into stuff all the time, because people are not used to driving trucks and vans. So they might have a legitimate reason for not allowing rental vans there.

Sarah Segal:
That makes sense.

Liz Picarazzi:
But that’s pretty universal. I mean, we sneak in in New York occasionally, too, at some of the trade shows we do here. But you know, it’s one thing if the union people really help you move things. But I’ve found that they actually don’t. You know, there was one situation in New York a few years ago, like I said, with the elevator and the button. I knew I was about to be extorted. So while I was in the elevator with this guy, I pulled out my camera, and I took a video. The action he took was to push the button, and I still got a bill for $4,000.

Sarah Segal:
Being somebody who has had to work with union organizations, there are good ones, and there are bad ones. There are ones where the employees do the bare minimum, and there are ones where they go above and beyond. So I think that it really depends on what organization.

Jay Goltz:
Well, also, the city figures out that they’re scaring away trade show business. So they are sensitive to this, because a lot of people are just not having trade shows there, because they don’t want to get extorted. So there is a price to pay for them. And I think Chicago, years ago, had a little problem with that. I think it might be better now, but that certainly is a regular topic.

Liz Picarazzi:
Well, and then the other factor is, what is the product you’re displaying? So I’m not just taking some tables and a little booth and some brochures. I’m taking incredibly heavy aluminum and steel cabinets, and there’s a different rate for bulk and heavy things. So that actually spikes it even more.

Jay Goltz:
Yeah, that’s why—not that that’s a good price. But I was thinking: Why would they possibly charge $4,000? Well, it must have been… That’s still way too much money, but I’ve never gotten a bill like that from anywhere.

Loren Feldman:
Well, it’s too much money if all they do is press a button.

Jay Goltz:
Yeah, maybe it was a really big button. Can you send us the pictures of that button so we can analyze it? [Laughter]

Loren Feldman:
So, Sarah, last time you were on, you described having to go through the painful process of laying off several employees. How have things been going since then?

Sarah Segal:
Well, fine, actually. The people who remain all stepped up to the plate and actually found the opportunity to kind of take on responsibilities that they hadn’t done before. And so things are great. My P&L is fantastic. I’m feeling a lot less financial stress. I have been working my tail off to try to find employment or opportunities for the three people who I did let go. But it was really heart-wrenching, and it took me a long time to be able to… I probably should have pulled the plug earlier, because I didn’t want to do it. But I’m feeling a lot less stress now.

That said, we’re a smaller team, and our days are very full of work. I am not working on the business. I’m working in the business currently. Part of the reason is that we have two major projects that we’re working on that will be done at the end of November. One is the APEC conference, which is an international conference that comes to San Francisco. 21 economies, the president will be here. We’re doing all the media relations for that. And then the other one is this thing called Fan Expo, which is like a Comic Con-style conference, and those both end at the end of November. And then so in December, we’re going to look up and be like, “What are we doing?”

But what’s interesting about the current climate is that I have probably about 15 prospective clients that are like, “We want to hire you. We’re just waiting for a couple boxes to be checked internally.” So I’m cautiously optimistic that we’ll have a quieter December, which I think we all kind of are hoping for. And we do take some time off in December. And then in January, we’ll have a lot of new business starting up, as well as the continuation of our long-term clients. So things are good. I’m busy as all heck. But it’s a better situation, for sure.

Loren Feldman:
Have you made any changes? Are you doing anything differently that resulted in you getting those potential clients lined up?

Sarah Segal:
Um, no. I do a lot of this, where I make acquaintances, and I talk to people. And I’m building my referral network, where we make an agreement where I say, “Okay, you refer us, we land the business, I’m gonna give you a nice little kickback, or something.” And so I have a couple people who get a lot of business because either they used to run their own agency and no longer do it but still get inbounds, or marketing agencies that don’t have a PR and social media component, or what have you. And so, why not, instead of just saying no to those potential clients, say, “Hey, we know an agency that will be great for you.”

And they send them our way. The one thing that we are doing that I have to say about this APEC conference: We’ve applied in the past for these government RFPs, which I’m sure Liz knows all about. And our biggest hurdle with that is that we had never had a .gov as one of our clients. And when you don’t have a .gov as a past client or current client, nobody’s going to look twice at you. Now, we’ll be able to check that box, so next year, I’m hoping to be able to do a little bit more of these long-term.

Loren Feldman:
How did you get the first one?

Sarah Segal:
We got the first one because I had become acquainted with the anchor of the PBS news interview show here in San Francisco, and she was appointed to be the press ambassador, and the city was like, “Here’s the really long list of all the things that you need to do.” And so she called me up and said, “Hey, I know your work. We’ve worked together in the past. Would you be interested in being my team for this?” And so it’s been a great experience.

I mean, the interesting people who we’re meeting are just worth the price of entry. We’re putting together this whole video series, where we’re interviewing and doing kind of preview welcomes for these countries with notable people in the Bay Area. So myself and my team got to go down and interview Tyler Florence. And there are a lot of really cool experiences that we’re getting out of this, in addition to having the checkmark of a .gov. And we’re not being paid enough for it.

Jay Goltz:
Yeah, not only paid enough. I wonder how long it will take to get paid. That’s the other issue.

Sarah Segal:
No, but here’s the thing, is that sometimes these things work out in a really positive way. We worked for an organization called AGU, the American Geological Union, which is a huge nonprofit in D.C. that basically funds smaller research projects across the country. So, studies into a local area’s aquifer; why is this area flooding?

And we did this great project for them, and it was a lot of work. And it came to an end, and we wrapped that up, put a case study together, and we submitted it, and we won the award for it last week. So sometimes these projects that you end up doing more work for than you should have a residual impact where you get a nice trophy, you get accolades, and then more people find out about you.

Liz Picarazzi:
Absolutely.

Sarah Segal:
Plus, the team likes awards. It’s fun.

Jay Goltz:
I’m just curious, did you ask them how long it takes to get paid?

Sarah Segal:
Who? The government? Yeah, I don’t care about that, because they are paying the media ambassador, and then she is paying us. And we haven’t had any issues. So if she hasn’t been paid, that’s her issue, not ours. But yes, I know that government is notorious, but it’s not just government. My husband works for a private brand, and their pay period is like, I want to say, 90 days. Who can run a business like that? That’s painful.

Liz Picarazzi:
Well, anytime they have a corporate payment system, even though you would think it’s very efficient, it often means you’re going to get paid later, where you have to log into their system and put all your forms in. What they’ll say is, “It’s just 30 to 60 days for everybody. And there’s nothing you can do about it.”

Jay Goltz:
That’s not horrendous, 30 to 60. It’s when it’s 90 to 120. You’re talking about trying to fund a business. How many startups, or how many smaller businesses, can afford to not get paid for three months? Not a lot.

Sarah Segal:
No, I know. But how do you circumvent that? Like, that’s how we pay! Ta da!

Jay Goltz:
I have an answer. No, the answer is, you need to make sure you’ve got some lines of credit somewhere. And maybe charge a little bit more, because you’re gonna pay some interest on the money. You know, the interest is no longer 3 percent. So you say to yourself, “Well, I was gonna charge $3,000. Maybe I’m gonna charge $3,200, because I’m gonna have to pay juice on the money that I’m going to have to borrow.” So everybody needs to always be working on having credit lines.

Sarah Segal:
I just paid off my credit line. It was very satisfying, last week.

Jay Goltz:
Okay, well, that’s good. You have one, though.

Sarah Segal:
It’s small. I’m gonna need to ask for more just to have for that rainy day, but I’m really trying to work on that rainy day. You know, the three months of costs, to be able to have that set aside, so when there are lulls in business—which, generally for PR and marketing, January is usually it. We spend a lot of time at the end of the year trying to set things up to start in January, because you can’t really do new business in January, because they’re all trying to figure out their budgets.

Loren Feldman:
All right, I want to run kind of a case study by you guys. This comes from a post I saw on the small business subreddit, and I’m eager to hear what you guys think. So I’m gonna read this to you:

“After finishing my bachelor’s in engineering, I worked for a small construction company my dad worked for. After I got a couple of years’ experience, my dad and I decided to venture out and open our own company. We have been very blessed to always have steady workflow. However, with constant unforeseen expenses, the last two and a half years have been a constant fight, where I very often will go without a paycheck. And the amount of times I’ve wanted to quit have been countless.

“I finally feel now like I’m keeping my head above water and starting to see a steady profit. A part of me is scared this is only temporary. My question is, how long were you in business before you saw a steady profit, rather than just a continuous investment?” And he goes on to say, “I feel like no one ever talks about how hard it is to own your own business.”

Clearly, this person has not found the 21 Hats Podcast. Hopefully, someone who’s listening will send it to him. But the main question there is: How long do you go, especially in the beginning, without a steady profit? Any thoughts?

Sarah Segal:
I want Jay’s answer first on this, since he’s been doing it longer.

Jay Goltz:
Well, the first thing I have to question if I was talking to him is: What does that mean, constant unforeseen expenses? What? What does that mean? What does that mean? What kind of unforeseen expenses do you have in business? So that’s odd in itself. Should they have been foreseen, perhaps? Did they not know the rent was going to be due every month? I don’t know what that means.

I would say, if you haven’t pulled out of the hole after a couple of years, I think you might have a problem. I was making money from day one, but I had a little momentum, because I was selling frames in college to artists. And when I opened up, I just expanded it. I actually made 20 grand my first year, which back in 1978, was what somebody who graduated college went out and made as an accountant. So I didn’t have that, but I have certainly started businesses that take two or three years to turn. But I question whether he looked at his quote-unquote business model and knew what he was getting into, given that phrase “unforeseen expenses.”

Loren Feldman:
It didn’t strike me quite that way. You must have unforeseen expenses that pop up from time to time, don’t you, Jay?

Jay Goltz:
Not many. I mean, you know, the air conditioner breaks. Okay, well, you should have figured the air conditioner’s going to break, eventually. I mean, no, I can’t say I do have a lot of unforeseen expenses. Get the context. He started an engineering firm. How many moving parts are there to that? You’ve got a computer and maybe a printer? I don’t know. I’d be curious. Give me six unforeseen expenses. I don’t understand.

Loren Feldman:
He says it was a small construction company. So he’s building things.

Jay Goltz:
Oh. Okay, that certainly opens it up to he got some fines, a machine broke that he didn’t plan on breaking. Okay, that makes more sense. I thought it was an engineering firm. I would think, after a few years, you should be making money.

Liz Picarazzi:
For my first business, my handyman business, it was probably two and a half to three years before I made any money. And the money that I made, I actually invested in creating Citibin and ultimately spinning it off. So with that business, I never felt like I made money. But what I got out of it was the business I’m now in, which I love. The business I was in before I hated. So I was able to get out of it. And Citibin, in terms of profitability, it probably did take me another two to two and a half years to be profitable. But I just kept doing it.

Loren Feldman:
How stressful was that at the time?

Liz Picarazzi:
So at the time, Frank still had a corporate job. And we really were like, “As long as we’re covering expenses, and we’re saving some money, we’re fine. Because we’re investing in this business,” which now, we’re both working for. So yeah, I wouldn’t say it was crazy expensive.

Also, we only have one child. And that was one of the decisions we made, because we knew we would be making some decisions with my business or with Frank’s music career that would make having any more than one child in New York City impossible. Not that that directly answers it, but that always has been a factor in our family: finances. That decision just to have one child made it easier to take risks, like starting a business.

Jay Goltz:
If I look back at my business history, the reason my business grew so much is: I don’t lose a lot of customers. I have a very, very high customer-retention rate. And I see lots of businesses that open, they lose business. It’s flow-through marketing, I call it. They get people to come in the front door, and they go walking right out the back door.

A business cannot afford to only have half their customers happy. They just can’t. And if you look at it, this is kind of a weird thing, but think about it. If you’re just 5 percent better than somebody else, that’s the world. If both businesses started and did $200,000 a year, and one grew 5 percent more than the other? After 40 years, one could be a $10 million business and the other one could be a $300,000 business. It’s about customer retention.

Sarah Segal:
You have to treat everybody like they are the most important person who ever walked through the doors. We have a wide range of retainer clients, but the person who pays us a couple thousand a month gets the same level of attention and hand-holding and work out of us as a person who pays us, you know, $10,000 or $20,000 a month. Because we want them to stay. And the smaller clients, you know, maybe they’re not huge, but they’re interesting. Some of them are a lot of fun. And a lot of them turn into bigger clients, eventually.

Jay Goltz:
And they can refer business. That’s a huge thing. So Loren, let’s go back two weeks ago. You had in the report the bagel place that had gourmet bagels. Everybody loved them. And he’s closing, because he’s not making money. And if you recall, I said, “Loren, there’s more to the story.”

And I looked into it. How about this part of the story? I went to his website. He’s only open four days a week. You know, pretty hard to stay in business if you’re selling bagels. And it doesn’t open till eight in the morning. My bagel place over here opens at six in the morning. Pretty hard to stay in business if you’re only open four days a week, and you’re selling something like bagels.

Sarah Segal:
Yeah, that’s somebody who doesn’t want to work. They want a business, but they don’t actually want to work.

Jay Goltz:
But they wouldn’t tell you that. They would tell you—I don’t know. I’ve never heard anybody who’s gone broke who actually understood why they went broke. They usually blame it on the bank. That’s the first one. I mean, going out of business? And he doesn’t need to work, either. He could have hired someone else to work the other three days, but he doesn’t have the mentality to be able to deal with that, probably.

Loren Feldman:
Well, he did have employees, but I suspect you’re 100 percent right that there’s a lot about that situation that we don’t know.

Sarah Segal:
Loren, to go back to your question: So my industry is a lot different because I’m a service-based industry. I made money from day one because: Have laptop, will work. Because our overhead is a bunch of software programs that are expensive, but can be scaled up and down, based on the size of your team.

Loren Feldman:
Well, you have a lease now, too.

Sarah Segal:
I do, but it’s so cheap. No, it’s so cheap. I mean, maybe it’s not cheap for everybody, but for San Francisco, it’s cheap. We pay $2,500 a month. We are on the corner of a very great area. We’re on the edge of the Financial District, Chinatown, and the retail district. So we’re near everything. And it’s not fancy. We don’t have an elevator. You have to walk up two flights of stairs to get to it.

Jay Goltz:
Oh my God.

Sarah Segal:
It’s a perfect space for what we need. And we don’t have the burden of an expensive office, where I’m like, “Everybody has to come in every single day.” It’s more, “Come in. Let’s incentivize you to come in a little bit more.” We’re mostly here three days a week. And it’s a casual, easy environment.

Jay Goltz:
I have to ask the opposite question. What made him think that going into business was going to be easy? Really? Where did he get that impression that he was gonna go into business, and it was gonna be easy?

Sarah Segal:
Anybody who runs a business lays awake at night, going through the list of all the things that they need to do to make their business better. If you’re running a business, you should be constantly trying to improve yourself, improve your process, improve your employee retention, improve the product that you’re doing. And that’s not easy, because you’re always kind of pushing yourself to do more.

Jay Goltz:
I have a new phrase I just thought of this morning when I woke up at three in the morning. The phrase is, “Let me not sleep on that.”

Sarah Segal:
That’s a good one. I like that.

Jay Goltz:
Yeah, because, as you know, you can be as calm as could be. Like, I can’t control my sleep patterns, and I’ve got some things I’ve got to deal with. And it woke me up at three in the morning. And it doesn’t happen to me a lot, but it sure did this time, and there was no getting back to bed. So I can tell you, if you want to avoid traffic in Chicago during construction season: 4:30 in the morning. Good to go. There wasn’t any traffic. So I finally found a time there wasn’t traffic.

Sarah Segal:
Yeah, I mean, I wake up in the middle of the night on a regular basis, but I try to keep a notebook next to my bed so I can write it down. Because otherwise, I will just think about it all. I lay there thinking about whatever it is for hours.

Liz Picarazzi:
Oh my God. I could have used that notebook when I was thinking about the bears in the middle of the night for the last week.

Jay Goltz:
We’ve got problems in Chicago with the Bears. They haven’t won a game. So you’re not the only one who’s staying up.

Loren Feldman:
All right, my thanks to Jay Goltz, to Sarah Segal, and to Liz Picarazzi—and to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at greatgame.com. Thanks, everybody.