Where Can I Save Some Cash?
Guests:
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Laura Zander is co-founder and CEO of Jimmy Beans Wool.
Karen Clark Cole is co-founder and CEO of Blink.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Jay Goltz: “If someone goes out to a bar and is completely irresponsible, and then comes to work the next day and might infect my employees, I think I have every right to say, ‘You know what? Go home—maybe permanently.’”
Laura Zander: “Our suppliers are going to have a lot of excess inventory because nobody’s buying, so there are going to be opportunities to buy things at a great price and get some extra margin that could last us for a little while.”
Karen Clark Cole: “Our IT guy set up a channel. It’s connected with Slack, but it’s a live Zoom, basically, and it’s called The Water Cooler. Anyone can log into this Zoom address at any time and just see who’s there.”
Full Episode Transcript:
Loren Feldman:
Let’s get started. Let’s go around the room. I’d like to get a quick update. Obviously, your health is the first concern. But we also want to hear, assuming your health is okay, how your businesses are doing. Karen, how are things with you? Last week when we spoke, it sounded like your business was holding up pretty well. Is that still the case?
Karen Clark Cole:
Yeah, we are in a really fortunate place in that we can largely work remotely. Out of probably 40 projects, we’ve just had one that’s been cancelled, and that’s because it was in-person in-home research that couldn’t be changed to remote. A couple of other studies, we’ve changed to be remote sessions, and then we’ve had a lot of studies on hold waiting until we can put a new date out there. That will have a delayed impact on the revenue.
But we are incredibly fortunate. All of our employees feel that way as well. There have been a lot of adjustments, dealing with working from home, and for us, I’m sure most people are feeling the personal confusion around being confined. That’s sort of the harder part, I think.
Loren Feldman:
Karen, you guys obviously had experience previously with working remotely. Now that it’s enforced across the board, have you learned anything? Have you figured anything out that’s made it easier, better?
Karen Clark Cole:
Yeah, for sure. We’re actually publishing an article with all kinds of tips and the user experience around being remote. So, how to not only do it, but try to do it in a way that’s better for yourself and the people that you’re interacting with. Lots of fine tunings, and then lots of really creative ways that our employees are figuring this out and how to have a connection.
Loren Feldman:
Can you give us a couple examples of what’s helping with working remotely, what’s helping your employees?
Karen Clark Cole:
We use Slack and we use Zoom. Slack is how we communicate off of email. Our IT guy set up a channel. It’s connected with Slack, but it’s a live Zoom, basically, and it’s called The Water Cooler. Anyone can log into this Zoom address at any time and just see who’s there. I thought that was brilliant. If you’re feeling like you want to see some of your colleagues, you just open up this ID number and you might see somebody. Or you might not, just like if you were going out to get a drink.
Jay Goltz:
What if they’re naked?
Karen Clark Cole:
Well, then they won’t join. Or maybe they will. [Laughter]
Jay Goltz:
I’m just thinking out loud here.
Laura Zander:
Jay… Do you have an HR person?
Jay Goltz:
No, I just think they’re at home. God knows what they’re doing. I don’t know if I want to see.
Karen Clark Cole:
They have to decide to join. That’s the idea.
The other thing is we’re doing a lunch competition every day. People are posting pictures of their lunches, which are really amazing. And all of a sudden, they’re making me feel like I should pay more attention to my lunch.
Then we’re doing things like a happy hour. We’re doing a company happy hour this afternoon, so everyone’s gonna log on with their drink. Then we’re gonna go around the room and say what room we’re in and what we’re drinking and we’ll see how that goes.
Laura Zander:
God bless technology companies.
Karen Clark Cole:
Yeah, but now I’m concerned because I hear the internet’s going down.
Laura Zander:
We’re having so much trouble.
Karen Clark Cole:
We’re worried about that because a lot of companies are asking employees to turn off their video because they’re having bandwidth issues. A lot of it’s related to VPN bandwidth for sure, but it’s still gonna be an issue.
Laura Zander:
Got it.
Loren Feldman:
Jay, how about you? I spoke to you earlier in the week. At that point, I think you were kind of surprised. People were still coming in to get pictures framed and business wasn’t too bad. Is that still the case?
Jay Goltz:
The last week has been a year. It’s kind of surreal. Monday, people are still coming in. Apparently the hierarchy of man is: toilet paper’s one, and getting your pictures framed might be up there at number two, because people are still coming in. Not a lot, but some people.
Monday, we have a meeting. We talk about, “We need to take immediate action.” So Tuesday, I sent out an email to everyone saying we’re cutting hours. And then we made a list of people. I’ve got 115 people. I’ve gotta make a cut, so we cut about eight people. My manager made the announcement and it’s turning into Lord of the Flies. “Oh my god, how can you do that to so-and-so? I would have cut my own salary to save them.”
But the interesting part is, by Wednesday, he went and talked to each manager—there’s five of them—and talked about why the person was let go—who was a very nice guy, been with me for 19 years. Everybody loves him. I love him. But for the last couple of years, he hasn’t been doing it. Slowly but surely, every one of them said, “Yeah, now that you mention it, he really didn’t do this or that. Yeah, that was a good decision.” So we went from, “Oh my god, how could you fire him?” to “Good call” all within 48 hours.
The customer side, there are still customers coming in. My wholesale business from around the country—we sell to other frame shops—they’re ordering frames. I feel like if they’re doing business, I want to support them. So for the moment, the factory’s running, the showroom’s open. I was disappointed last night. Everybody kept saying, “Oh, the mayor is going to go on TV. She’s shutting business down.” Didn’t even mention it. Like at least say, “We’re still reviewing whether we’re gonna be asking for businesses to close. We’re monitoring it.”
Karen Clark Cole:
Don’t you think it’s coming though?
Jay Goltz:
Probably? I’m not sure. I just don’t know. Maybe. Just before we got on here, I heard that New York’s been shut down. It hasn’t been that bad here yet. I certainly won’t be surprised if that happens, but it makes you feel bad that the mayor doesn’t think there are 20,000 business owners watching every word she’s saying and doesn’t think maybe she should mention what’s going on with it.
So yeah, I’m prepared. That could happen. I’m getting to the point though, “Am I better off being open or closed?” because if I’m closed, all of a sudden the payroll stops because I can’t afford to pay everybody. I’m gonna let them use their vacation pay and such. It’s a balancing act, but I’m watching it day to day. This isn’t like September 11. This isn’t like ‘08. It’s worse in some ways. I think in the long run, it will bounce back faster, but it’s a whole new experience, that’s for sure.
Loren Feldman:
Jay, you also have a home furnishing store, along with selling picture frames. Are people coming in to buy home furnishings?
Jay Goltz:
Not a lot, but we did $10,000 yesterday. I mean, not a lot.
Laura Zander:
What?!
Jay Goltz:
Yeah, I’ve got two or three people working there. Everybody’s staying away from each other. We’re cleaning everything. But you know, it’s America. People want to go out.
My manager this morning said she got a call in framing from a guy in Rockford, which is about 90 miles from Chicago. And he’s coming in for some framing. She says, “I don’t understand.” I go, “Oh, well, I got that one figured out. He’s married.” [Laughter] There you go, I see. I figured it out. She laughed.
There are people who are locked in there with their husbands and wives now for three, four, or five days. At some point, not only do they want to get their framing done, but they want to drive as far away from home to get it done so it takes a little longer.
Loren Feldman:
Don’t you think there are also people who have these projects sitting around that they haven’t gotten around to and all of a sudden they have the time to do it, right?
Laura Zander:
Totally.
Jay Goltz:
And they’re home. I’d like to stay open as long as I can without endangering people. So everybody who’s over 60 except for me is staying home. I’ve got lots of people staying home who can, but many people can’t. I don’t know. I’m just playing it day by day. I absolutely accept we could be shut down tomorrow. I mean, who knows?
Loren Feldman:
Laura, we haven’t spoken to you in a few weeks. You have a kind of a far flung empire these days. You’ve got your main operation in Nevada, but you recently bought a company in Texas. You made acquisitions in Vietnam and China even. What’s going on with you?
Laura Zander:
On one side of things, we’re in the same boat as Jay and Karen and things are going actually better than we expected. Like Jay and his business, we have a lot of people who are staying at home right now and they all want to knit.
Loren Feldman:
That makes sense.
Laura Zander:
Yeah, our numbers online are really good. We closed our store earlier this week. We have an Economic Development Authority that sends us recaps of everything. And they actually sent a note out two days ago and said, “Look, all non-essential businesses are asked to be closed.” And the first two businesses that they listed—because we’re in Nevada—number one, strip clubs, number two, brothels. Apparently those are non-essential.
Jay Goltz:
To some people.
Laura Zander:
The strip clubs, the brothels, and the casinos—that was number three—those all need to be closed. But they said if you are doing business online, and if you are In a business like ours, that we ask that you stay open, and you continue to do fulfillment. Because we’re in a very heavy fulfillment area. That’s the primary business around here.
Karen Clark Cole:
What about for both of you—you and Jay—the people [who are in] close proximity in the warehouses?
Laura Zander:
That’s a great question. It’s optional. If you want to come to work, of course. Everybody who’s in the office, they’re all working from home, with the exception of one or two, but everybody has individual offices. There’s very little cross-contamination. Obviously, we’re cleaning things down. We closed the retail store to the public. We’re just doing pick-ups. It’s like a drug deal. We just leave the stuff outside for people and there’s no human contact.
Then for the fulfillment side, everybody has their own computer that’s marked, their own mouse, their own keyboard, so there’s no touching somebody else’s computer. Then it’s a 20,000-square-foot spot with only four people right now. We’ve got a really, really skeleton crew. They’re like, “You’re gonna pull from these two rows, you’ll pull from these two rows, you’ll pull from these two rows.”
Karen Clark Cole:
How did you figure out how to do all that?
Laura Zander:
That’s kind of how we’ve done stuff the whole time. It’s more efficient. That’s how Amazon does it too. If you get to know the rows that you pull from and the brands that you pull from. We’ve done that in the past, if we’ve needed to do high volume and we’ve had low staffing.
On that side of things, we have a couple of people who have self-quarantined, a couple of older people. Some of them we’ve put on leave of absence. Some of them have asked to be let go so they can file for unemployment, and then they’ll just come back when they are more comfortable. We’re just taking it [on a] case by case basis. We’re really, really lucky and it’s taken us years and years to get here. But we have a great staff.
Loren Feldman:
Lucky in what sense, Laura?
Laura Zander:
Our staff is unbelievable. We want to make sure that every single person is taken care of. We have the flexibility right now to be able to take it on a case by case basis, and cater to each person’s needs, whether it’s to work from home, even though they normally don’t have a work-from-home job, we’re trying to find some stuff for them to do.
Jay Goltz:
I have to interrupt you and say, that’s not lucky. Kudos to you for running a good business and having good people there and hiring and keeping the right people and treating them properly. Because I’ve gotta tell you, I’ve had some that will bring tears to your eyes. I’ve had people walk up to me, “Jay, we’re gonna get through this one okay, tell me whatever you need me to do.”
I have wonderful, wonderful, dedicated people around me who are totally with me. And then you’ve got the one-off. I hate to pick on the millennials, and I really don’t usually, but this one kid says—he’s the delivery guy—and they said to him, “Listen, would you like to learn how to do UPS so you can do some more things?” He goes, “Well, if I’m properly compensated for it.”
Laura Zander:
Totally. 100%.
Jay Goltz:
Oh, that went over really big with them. My guy who has been with me for 40 years, it’s his future son-in-law, and he says, “You know what, I really want to fire him.”
I’ve had everything from that to most of the people, I’m telling you, it’s just a beautiful thing. It’s a testimony to, when things get bad like this, it’s a stress test on your business, and you find out who you really are.
Loren Feldman:
On that note, I have to ask you one thing. You described the person who’d been with you for 19 years who you had to let go. He sounds exactly like the kind of person you’ve been telling us on this podcast for weeks who you can’t afford to keep around, somebody who may have been really good, who people like, who’s really loyal—exactly the kind of person you have suggested shouldn’t be kept on. Why was he still there?
Jay Goltz:
First of all, you met him. You know who it is. This guy was my buddy during ‘08. He walked up behind me after I bought my big warehouse, and I can remember it like yesterday. I’m standing in this 85,000-square-foot building I bought in the middle of the crunch because I knew I had to get my overhead down. He put his hand on my shoulder and said, “It’s okay. It’ll be okay.”
This is a guy I was tight with. He was a nine out of 10 employee for 17 years. For the last two years, he’s just been… not good. He was making 60 grand a year, and I just can’t carry it. Like I said, after the other employees digested it, every single one of them had a story to tell, “Oh, yeah, now that you mention it, he really didn’t get this done last week.”
It was probably getting near the end anyway. He actually walked into my manager’s office a few weeks ago and says, “Are you firing me today?” My manager said, “Well, no, not yet.” He knew there were problems. I will absolutely help him get another job. I gave him severance pay, it’ll all be okay. But I’ve gotta tell you, when it gets down to the crunch time now. I’ve got to worry about the other people, and I’ve got to worry about keeping every other single person in business and eating.
I can tell you, the key to this whole thing is we’re in the cockpit. We’re the pilots. You’ve got to look at the controls. You’ve got to see where you’re going. The people who are behind you shrieking, “Oh, we’re gonna die!” You turn around.
Laura Zander:
You go, “Shut the fuck up!” [Laughter]
Jay Goltz:
There you go. I knew this would be like throwing catnip in front of you, Laura. I knew you’d figure that out.
Loren Feldman:
Let’s go back to you, Laura. When we last saw you, I think it was when we were in Seattle. None of us saw where this was going exactly. But I think you were already seeing the problems in China. Where do things stand in China for you now?
Laura Zander:
Whether it’s luck or premonition or whatever, we knew this was going to happen, so we pushed really hard and got all of our stuff from China in early January before China got shut down. We actually bought like a six to nine month supply of everything that we needed. We’re super stocked. We’re doing really well.
My friend Lin Lee, my partner over there, they’re just starting to dig out. Now they’re looking for work. Orders are not coming into the factories there. I’ve told you that most of the people who we work with there, they’re all small family-run businesses, and so they’re suffering. Now, we’re just starting to try to think through, “Okay, is there more stuff that we can start to put into production?” but we’re good from a supply standpoint.
Loren Feldman:
Good for you.
Laura Zander:
I’ve talked to Lin Lee very, very frequently every other day or so. I’ve been acutely aware of the fact that her 10-year-old son has been homeschooled and been at home for two months so far. And that everything’s been locked down.
Karen Clark Cole:
Can you tell us, how does she feel? Does she feel like they’re coming out on the other side of it?
Laura Zander:
Oh, absolutely. If this trajectory is anything like what they’ve experienced in China, it’s about a two-month shutdown, is what I’m expecting. I’m assuming that Huck is not going to go back to school this year—my son.
But she said it’s leveling off there. There are no new cases. The virus is dying. It’s attacked all the hosts that it can attack and it sounds like it’s starting to just kind of peter out. The weather probably has something to do with that as well.
Jay Goltz:
Chicago is keeping the schools closed until April 20th at the moment. That’s what she said.
Laura Zander:
Again, just based on what I’ve experienced through Lin Lee and watching what she’s been watching, she just sent us masks. She’s sending us toilet paper now.
Loren Feldman:
Wow.
Laura Zander:
She’s shipping me everything that we need. Oh, so tangent, sidelight: I’ve wanted to do a Jimmy Beans toilet paper line for a really long time.
Karen Clark Cole:
That’s right. You told us!
Laura Zander:
Yes, I told you I wanted to do a “shit-along” instead of a knit-along where you’ve got toilet paper that has knitting instructions on it. My team has got their tails between their legs right now because they’re just like, “We should have listened to you. Then we would have had tons of toilet paper.” I’m like, “I told you guys. I knew we were gonna need knitting toilet paper.”
Jay Goltz:
You are a visionary. You’d go right up there with Steve Jobs. Really. [Laughter]
Loren Feldman:
So are you working on it now?
Laura Zander:
Nah, it’s too late now. We missed the boat.
Jay Goltz:
Meanwhile, I had an interesting thing. My cleaning lady comes today. She’s been my cleaning lady for 25 years, speaks broken English. She says to me, “How are you?” I said, “I’m okay.” And she looks at me and just smiles. She goes, “I’m okay this time.” And I knew exactly what she was talking about.
It means that in ‘08, she had bought a condo, she lost it. She was freaked out [about] where she was going to live. And she came to me and she said—and it’s not like I’m close friends, I see her once a week for two minutes when I’m walking out the door—she said, “Jay, can you loan me $2,000? I’m really in a bad [place]. And I said, “Absolutely.” And I gave her the money and she cried. I mean, she was so thankful. And I understood what she meant. The last nightmare was a nightmare. This time, she’s okay. I felt good. She’s still got jobs and things are okay.
Laura Zander:
Yeah, there’s a parallel here. Dana and I were talking about this on the phone yesterday in terms of how apparently entrepreneurs do well in chaos, because I was like, “I’m not scared and I know I should be, and that actually scares me—the fact that I’m not freaking out.”
Loren Feldman:
You’re freaking out because you’re not freaking out?
Laura Zander:
Yeah, exactly. I know I should be a lot more scared, but—
Jay Goltz:
No, you shouldn’t be.
Laura Zander:
We’ve got this. We’ve totally got this.
Jay Goltz:
You’re a superhero. This just brings it out, these times. There are people who haven’t been in business that long, who have never been through one of these crises, and they don’t get it.
I talked to a PR person yesterday, she said at nine o’clock in the morning on Monday, she had 16 clients. And by noon, she had two. She spent the whole day crying. I said, “Dig in and find some more business.” The part that’s a little bothersome to me is she lives in a beautiful house in the suburbs with her lawyer husband, and part of me wants to say, again, “Shut the—”
It’s like, really? There are people who are worried about whether they’re going to have dinner on the table tonight and it’s a little hard for me to feel sorry for someone who’s living really nice and they’ll be okay for a few months. It’ll be just fine. There are people who truly are in almost life and death situations with taking care of themselves. Now’s not the time. There are no pity parties in entrepreneurship, sorry.
Loren Feldman:
Laura, you told us about your situation in China. What’s going on in Texas?
Laura Zander:
Well, so Texas is a different story. As you know, what I inherited or adopted or purchased, whatever word you want to use—
Loren Feldman:
This was a big supplier of yours that you bought a few months ago.
Laura Zander:
Yes, a big supplier of ours. It’s a manufacturer. We hand dye yarn down there. Their sales have been going down for about four years very steadily, five years. The business had just not been shepherded, I suppose. We’ve been dealing with all kinds of crazy stuff over there in general.
Now what we’re dealing with, long story short, in the knitting industry—as I’m sure you all know—it’s very seasonal. The busiest months are really January, February, March. That’s the knitting season.
Loren Feldman:
It could be different this year.
Laura Zander:
Yeah, there’s a light knitting season in October, November, December. But all of our shops, all of the wholesale accounts, they do their buying in September and October, and the previous owners had cut off all of the supply chain to the shops in September and said, “We can’t supply you anymore.” When we came into the business, we didn’t have very many orders. And all of these shops ended up going elsewhere and finding other products to fill their shelves, which they should have. It absolutely makes sense. So we’re getting hit with low sales as a result of that, and then we throw this pandemic in, and most of our shops are having to close, so they’re canceling their orders.
Loren Feldman:
By most of your shops, you mean the people who buy yarn from you, your clients.
Laura Zander:
Yes, they have a retail shop. Our wholesale customers are pausing their orders. We have a bunch of people and we don’t have enough work for everybody. So this morning, we had to do a layoff of about 25% of the staff and 25% of the production crew.
Jay Goltz:
Layoff or fire them? I mean, are you bringing them back? Or did you just get rid of the people who were barely holding on to begin with?
Laura Zander:
Jay!
Jay Goltz:
I’m just asking.
Laura Zander:
We did a permanent layoff.
Jay Goltz:
Okay.
Laura Zander:
We had to burn the forest down. So we burn the forest down and the sturdy trees are still there. And then we are hoping as we grow the business again to bring in some new talent as it grows. How’s that for cryptic?
Jay Goltz:
That’s how the sausage is made. That is reality, sorry.
Laura Zander:
It is, yeah.
Jay Goltz:
The best employees are the ones that are held onto, and sorry, but that’s the way it goes.
Laura Zander:
We kept the eights, nines, and the 10’s. We felt like it was the right thing to do for a couple reasons. One, this right-sizes the business to what we have right now so that everybody can work full-time and get a full-time paycheck. Two, we wanted to get out in front of the unemployment line before things are too bad. Because in the next month or two, I’m assuming things are going to get a little worse in terms of layoffs and unemployment. I wanted these people to be able to go out and get something, get ahead of the curve, get unemployment as quickly as they possibly can, or find something else, because there are some people hiring right now.
Jay Goltz:
It’s not fun. It’s horrible. But welcome to running a business. It’s not always pretty. That’s what our job is, and those who think that they can run it like a not-for-profit…
Laura Zander:
I said that at Jimmy Beans, we’re in a great spot or a lucky spot or whatever, but it took 17 years of running it like a not-for-profit and not making these hard decisions to get to the point. I had to make these hard decisions over and over and over to get comfortable with them after avoiding them for the first few years, so now we’re in a better spot.
Now it’s a little bit easier. Like your housekeeper said, “This time, it’s not as bad,” because I know that I’m going to come out of this okay, and I know that intellectually we’re doing the right thing for the other people—for all the eights, nines, and 10’s who really give their heart and soul and are on the bus. This is what needs to happen. I want to take care of the people who really, really give it their all.
Loren Feldman:
I’m curious. Are you still doing much marketing right now to sell online?
Laura Zander:
Yeah, we’re about to really pump it up. In fact, everybody who’s at Jimmy Beans who is working from home, like Jay said, it’s amazing to see what they’re doing. They’re working 12, 14 hours a day right now just pushing and pushing and pushing.
Loren Feldman:
Karen, Jay, are you guys marketing right now?
Karen Clark Cole:
Yeah, absolutely. We need to stay in business and keep going as best we can.
Loren Feldman:
Any change from what you normally do, Karen? Doing more, doing less, different?
Karen Clark Cole:
No, probably the same. It’s not marketing, but something that we’re promoting is trying to help our clients figure out the remote working thing, because we’ve been doing it for a long time. We’ve got great tools, we’ve got great process, we’ve got great methods. And so we’re really trying to help our clients so that they can continue to work and that we can work with them, just sort of offer ways to help them figure all of this out. That’s something that we are promoting so that our clients can keep going. We’re leading the way with a big meeting. We’ll get it all set up. We’ll tell them, “Here’s how we’re going to do it, here’s how it’s going to go,” and they’ve been really appreciative. It’s been great.
Loren Feldman:
Jay, I think I heard you sigh you after I asked the marketing question.
Jay Goltz:
Oh, I have absolutely shut off. If this were an airplane cockpit, I’m looking at the control. Cash drain. That’s all I’m focusing on right now. I cut off all marketing efforts at the moment.
I have an outsourced marketing woman I’ve been using for a few years. I haven’t cut her off. All of her other clients are hotels, so she’s literally been completely shut down. They’ve all suspended paying her, so I’m her only source of revenue. She’s been very good for me and I like her, and I’m not cutting her off. I’m gonna keep her on.
But as far as everything else, I’m not gonna make Google any richer this week because I cut that stuff off, the pay-per-click. I’m watching cash. I can shut it off for a month, it’ll be fine.
I’ve gotta tell you, it sounds odd, but they’re still lending money. I’ve got a building that has no mortgage on it. I’m getting a mortgage on the building. I think I’m going to pull this off. And if I pull this off, I’m good to go. That’s all I’m spending my time on now. I’m working on all cash flow items. I suspended the marketing until I get the cash back.
Laura Zander:
I know that you’re not as much retail as we are, but to me, I feel like I’m in a race car right now. I need to switch gears and I’m about to press on the gas, because there’s this lull, and I can feel it.
From a cash standpoint, we’ve been having a meeting for the last two or three days about, “Okay, we have X number of dollars in inventory. Can we pull a couple hundred thousand dollars out of inventory in case we end up being cash flow negative for the next two months?” And I’m talking about my Reno, Nevada business—the e-commerce and the retail store.
We have money, it’s in inventory. Can we pull that money out of inventory? And then we need to put our foot on the gas in terms of marketing. A lot of our marketing is actually salaried marketing. It’s more creative marketing and less spending. But the last thing in the world I want to do is cut our advertising and marketing budget right now. In fact, I think that this is the time to press on the gas. Unfortunately, and this is gonna sound really cold-hearted, but the opportunities that are about to open up, like, holy shit!
Loren Feldman:
What are you referring to, Laura?
Jay Goltz:
She’s referring to people going out of business. That’s what she’s talking about.
Laura Zander:
Oh, hey, easy! No, no, no, no, no, no, no, no, I’m thinking about—
Jay Goltz:
Oh, no, of course not!
Loren Feldman:
Let her answer, Jay!
Jay Goltz:
I’m getting ahead of this one. Capitalism 101.
Laura Zander:
If there were no shutdown, I’d be on a flight right now to kick your ass. [Laughter] The opportunities in terms of our suppliers are going to have a lot of excess inventory because nobody’s buying, so there are going to be opportunities to buy things at a great price and get some extra margin that could last us for a little while. And yes, there are going to be opportunities, in that the bottom 10% of our competition, if you will, are going to drop out, whether it’s because they’re not running a great business or it’s just too stressful, is part of what I think. We’re just going to out-grid them.
Jay Goltz:
Hmm… so you just said in a nice way, “Yeah, it’s capitalism. Those of us who run good companies and have wonderful lives and give great service, we’re gonna get a little payback for the years and years and years we’ve been investing in that, and the companies that have people who work for them who don’t like them, who don’t run a good business—it’s going to cull the herd out here.
Laura Zander:
It is, it’s going to cull the herd.
Karen Clark Cole:
You are being totally insensitive. There are a whole lot of companies that just can’t keep people staffed right now—the restaurants. It goes on and on and on. It’s awful the amount of people who are great who don’t have jobs.
Jay Goltz:
I’m not talking about the restaurants. I’m talking about knitting and picture framing. The restaurant thing is horrendous. Laura, I also have millions of dollars worth of inventory, but you’ve got to sell it to get cash out of it. I don’t have any advertising that I do that is that effective at all that I can know that if I spent X dollars, it’s gonna make a difference.
Laura Zander:
Got it. And we do. We’ve got the digital advertising and the digital marketing. I feel like we do a relatively good job. If we can amp that up, we can pull some cash out of inventory.
Loren Feldman:
I have a question. Laura and Jay, you’re both continuing operations at a time when a lot of the country is starting to go into complete lockdown. We talked a little bit about spacing and warehouses and being careful and all of that, but one thing you’ve never really had to think about before that maybe you do now is what your employees do when they’re not at work.
I’m curious if you’ve given any thought to, is it possible you have anybody who’s being irresponsible? We’ve all seen these pictures of kids who are on the beaches in Florida or whatever. Are you guys paying attention to that, thinking about that?
Jay Goltz:
We had a management meeting on Monday talking about how we can control that. Somebody said, “Well, we have no right to tell anybody what to do on their personal time.” I said, “You know what, that might have been true a month ago, but I’ve gotta tell you, if you know that one of your employees is out at the bars…”
The big thing in Chicago was St. Patrick’s Day. The mayor was pissed. Everybody was pissed. The bars were loaded, loaded! St. Patrick’s Day. I make the argument, “I think I have a right to do whatever I want. They’re endangering the rest of my employees. They have a right to go out. That doesn’t mean I have to employ them, though.”
If someone goes out to a bar and is completely irresponsible, and then comes to work the next day and might infect my employees, I think I have every right to say, “You know what? Go home, maybe permanently.” This has gone beyond business. We’re getting into, like I said, Lord of the Flies. We’re getting into life and death issues here. I don’t need to expose the rest of my employees to that.
Loren Feldman:
Laura, how are you thinking about it?
Laura Zander:
Similar, but different. In Nevada, well, in both of them, we’re talking about 24-hour shifts. We’re just working on minimizing and making sure that there’s incredible distance between each person. So even today is paycheck day. We had the whole staff off this week down in Texas. So for paycheck day, we had everybody come down and they scheduled a time so that no two people are in there getting their paycheck at the same time. The woman who’s giving the paychecks out, she’s got gloves on, it’s across the desk. We’re trying to be very, very deliberate.
Even in our factory, it’s going to be skeleton crew going forward, where there’s only one person per kitchen, there’s no cross-contamination, they have their own bathroom. Because I’m very, very aware that we have a group of people where we don’t know what they’re doing at home. We don’t know if they’re carrying things or crossing things. All we can do is try to maintain a very, very lean skeleton crew that, again, reduces or eliminates contact with other people.
Jay Goltz:
This is where it gets tricky, though. So the non-business owner or the government official can sit on their thrones and look at us and say, “You are irresponsible! No one needs knitting and no one needs picture framing, and you people are irresponsible. Everybody should be hunkered down.” And that’s great when you don’t own the business and you’ve got your paycheck from the government every month or you work for a university or whatever little ivory tower they’re in.
But when you have to make payroll every week and give people money, there’s a little balancing of shutting down is a pretty drastic thing and it’s going to affect people. We’re doing everything possible to keep people away from each other and doing the same things, but it’s just not black and white that, “Oh, everybody should just shut down and sit home for a couple of months—
Loren Feldman:
There is another side to that, Jay.
Laura Zander:
Amazon’s hiring 100,000 people. So what about all those people?
Jay Goltz:
Right.
Laura Zander:
They’re not doing the social distancing that we’re doing in both of our facilities. If you walked into our spot right now, it’s a ghost town. You wouldn’t even know. They are so separated. It’s like a hospital. It’s very clinical. People are driving to work. They’ve got their one little area that they’re doing work in.
Karen Clark Cole:
I’d be surprised if they weren’t doing some sort of social distancing. I mean, they’re taking that really seriously. They were one of the first companies that we work with to have everyone start working from home and just cancel everything.
Laura Zander:
Yeah, but I mean, in a fulfillment center, have you been in one of their warehouses?
Karen Clark Cole:
No, but I’m guessing they have to be different now.
Laura Zander:
Well, but how are you gonna flip that overnight? Even if they knew two months ago… Yes, I’m sure that they’re doing everything that they can do, but the sheer volume and the sheer number of people who they have, I really doubt that they’re doing a better job than we are, just from a volume standpoint. We’re talking about two people. I’ve got two people, or four people, in 20,000 square feet. That’s more space than people have at their house.
Loren Feldman:
The other piece of this conversation is when you look at what’s happened in Italy, what happened in China, you talked about how your subsidiary in China is starting to come back, come out on the other side. Well, that happened because they took drastic measures to shut everything down. I would like to think that there are authorities here who are looking at this and assessing the risks, especially considering that we got a late start, and we didn’t have the testing ready when we should have. So at some point, when hospitals start to fill up, or preferably before that happens, somebody should probably be looking at the question, “Do we do it across the board?” Maybe even Amazon should have to shut down.
Jay Goltz:
I think the part you missed is her suppliers coming out. There are another four that are not coming out, that will never come out. It’s just not black and white. In theory, yeah, sounds great. Everyone should shut down, lock themselves in their house—
Loren Feldman:
Well, it doesn’t sound that great, Jay.
Jay Goltz:
No, that’s a good theory. But for people who are trying to keep their businesses alive, you don’t have the luxury of—
Loren Feldman:
If we’re talking about a pandemic that is filling up hospitals across the country, then you need the government to step in. And yes, there absolutely should be protection for businesses like yours and there should be something done to help all kinds of businesses, including those restaurants you were talking about, so that they can come out on the other side. But we also have to do what we can do to keep those hospitals from filling up.
Jay Goltz:
Clearly, clearly.
Loren Feldman:
But I am curious what you guys think the government should be doing. There’s a lot of talk right now about bailouts. There’s talk about injecting cash into the economy through various systems. The first things that were talked about were bailing out the airlines, bailing out the cruise industry, both of which kind of amazed me. I’m curious what you guys think.
Karen Clark Cole:
People need cash to pay rent and buy groceries.
Laura Zander:
Yeah, I don’t really understand… I’m with Karen 100%.
Jay Goltz:
And we’re not supposed to be the ones to front the cash.
Loren Feldman:
Jay, how would you feel if the government bails out the cruise industry?
Jay Goltz:
Let’s talk about the airline industry, that when they bailed them out, they’ve made billions of dollars. They did stock buybacks, and the airline industry made billions and billions of dollars. Now all of a sudden, no, they’re not on the top of my list. All those poor CEOs who made $800 million last year. We need to help them out.
Laura Zander:
Our landlords at both of our locations—I just got an email—just cut our rent by half for the next couple of months.
Karen Clark Cole:
No kidding.
Laura Zander:
I’ve been talking with our employees as well about, “Okay, reach out to Waste Management. Reach out to these guys, reach out to these guys, talk to your landlord.” There are either publicly funded companies or there are people who have done really well and are willing to cut expenses if they can.
Ideologically, yes, there’s the government side of it, but then there’s also the responsible side of the people who have done well, and who aren’t going to be quite as affected. As Jay had said, from a business owner’s standpoint, I feel like my job is even, to lose money over the next couple of months to make sure that our employees get paid, and that they still have a full-time job. But maybe the responsibility of some of the landlords is to cut rent. I’ve heard that they were going to delay evictions and delay all of this kind of stuff.
Loren Feldman:
Laura, that’s a great point that a lot of employees may not realize that they have more room to maneuver there. Karen, I’m curious, is that something you’re addressing with your employees: reaching out to them to encourage them to think about things that they can do?
Karen Clark Cole:
Not specifically around rent, but that’s a good idea. But I just sent a big long email out yesterday talking about health and wellbeing and making sure that people are taking care of themselves and their mental health, when it can be really challenging. For some people, you think about working from home all of a sudden, your kids are at home all of a sudden, everybody’s here. For some people, it might be good, but for others, it might be overstimulation, because all of a sudden, there are kids all around them, and they’re trying to work and you’ve still got to get your job done. And then for other people, the social isolation is really, really difficult. It goes on and on and on.
We’ve been sort of guiding and helping people. My head of HR is an expert in this kind of brain development and how people react differently to different stresses and what they do under pressure. So we’re trying to help them on that side, but we haven’t talked about—partly for us, it’s less of a concern about paying rent because our employees are all getting paid. It’s less of a concern there.
Jay Goltz:
Here’s a small thing people can do. Some people pay their charge bill every single month with automatic pay. Now’s the time to maybe go on there—I just did it myself—flick it off, like maybe don’t pay your charge bill this month. Just pay the minimum and just leave yourself a little wiggle room there so that you’ve got some cash left just in case things don’t come back fast enough, you get laid off, whatever.
Laura Zander:
That’s a great point. Where could the government step in? Can we defer interest charges for a little while? Can you call your credit card company and say, “Look, it’s a little tough. Can you defer my interest and/or can you wipe my interest out? Can you give me 90 days terms basically on my credit card?”
Jay Goltz:
Here’s a tip. This is real life. I just did it yesterday. I have a Bank of America credit card. I barely use it. It’s got a very high limit on it. If I take a cash advance, check this out. They will give you, for a 3% transaction fee, you could get money—like tens of thousands of dollars—a 3% transaction fee, and you don’t have to pay it back until September of 2021. Which means that the effective interest rate, if you count the fee as an interest rate, is like 2.25%. So I could cover my living expenses by just using the one credit card and I stop pulling salary out of the company. It gives me a little more breathing room. Like I said, I’m spending all of my time now looking at, “Where can I save some cash?” There’s some money, poof: 2.25% interest.
Loren Feldman:
That’s a good tip. We need to wrap this up. I think we hit on some really useful information here. Going back to the beginning, one of the things I want to highlight is what you said, Karen, about the Zoom channel that you can turn on, that it’s just there if employees want to stop by and see who’s there and connect with someone. Anything else come to mind? Any takeaways for each of you from this conversation?
Jay Goltz:
You know what I’m going to do when I hang up here, I’m going to call my guy who runs the wholesale part and tell him to give me 20 names of frame store owners who are still ordering. I’m just going to call him. I’ve never talked to him. And just say, “Hey, how are you doing? Thanks for the order. I just want you to know we’re going to be here,” and give him a little encouragement, because I understand that these frame store owners might in fact be one-person businesses or two-people businesses, and I think they’d appreciate getting a phone call. That’s what I’m gonna do.
Karen Clark Cole:
That’s a nice idea, Jay.
Jay Goltz:
I got that from Laura talking about the knitting stores. I thought about, they’re in a similar situation.
Laura Zander:
Well, you know Jay, one thing that we’re going to do—over the years, in our Texas facility where we do have the retail stores as customers, we would dye a color or create a color and then we would donate a percentage back to a fund for malaria, or when Australia had the fires, we would donate 25%. So, what we’ve decided to do is we’re going to donate to our customers, instead of donating to something else, so we’ve created a special set of products. We’re giving them a big discount on it, we’re going to give them terms if they need it. Basically, we’re going to send you a bunch of yarn. And then we’ll help you sell it online. We’re going to try to raise money for our shops. Doing stuff like that, and we want to send care packages out to the shops that are struggling and just let them know that we’re thinking about them.
Jay Goltz:
Great.
Loren Feldman:
That’s a great note to end on. That’s gonna have to do it. We are out of time.
Jay Goltz:
Give me five seconds. Five seconds.
Loren Feldman:
Go ahead, Jay.
Jay Goltz:
To all the business owners out there: your employees are looking to you for strength. You cannot afford the luxury of going out there looking like your dog just died. You need to go out there and tell people, “We’re okay. We’re forging on here,” because they’re looking at you.
Loren Feldman:
Even if it’s not true?
Jay Goltz:
Yeah, absolutely. You don’t know what’s true or what’s [not] true. There’s just no point in saying, “I don’t know if we’re going to make it or not.” There just is no point in saying that. I’m not saying lie to anybody. Say, “Look, we’re digging in here. We’re going to get through this.”
It’s called being a fearless leader. Sorry, there’s no room for—they don’t need any more grief. They need to at least look at their boss and feel like someone’s on the helm. That’s what they need. That’s what the boss does. Am I wrong, Laura? Am I wrong, Karen? Am I wrong?
Laura Zander:
I don’t know…
Karen Clark Cole:
I think it’s okay to be human. But yeah, we’ve got to hold up, for sure.
Jay Goltz:
Yeah, I’m not saying look oblivious. I’m saying, give them some hope. That’s the point. Hope versus despair.
Laura Zander:
Yeah, I mean, the reality is, we are going to be okay, and it is gonna be great.
Jay Goltz:
See what I’m talking about? I would just give you—no, I wouldn’t give you a hug. [Laughter]
Loren Feldman:
No more hugs.
Jay Goltz:
I’d give you a high five across the room. There you go.
Karen Clark Cole:
I think it’s interesting. We are gonna get through it and how is it going to be different on the other side? That’s what I’m really fascinated with, particularly as everyone gets comfortable or not comfortable working remotely. Is it all of a sudden, one day, we start going back to restaurants, or is it going to be gradual for the brave?
Loren Feldman:
I can’t wait ‘til we can start talking about what it’s like on the other side, but I have a feeling that’s a little ways away for now.
Jay Goltz:
Let’s not assume the worst. That’s the point.
Loren Feldman:
I want to thank all of you: Karen Clark Cole, Jay Goltz, and Laura Zander. We will be doing this again and again. We will follow you guys as we all try to do our best to get through this in one piece. Thank you, and be careful out there, everybody.
Karen Clark Cole:
Thank you.
Jay Goltz:
Thank you.
