Are You a Good Negotiator?

Introduction:

This week, Paul Downs and Sarah Segal talk about their experiences negotiating, what they’ve learned and where they’ve struggled. One key factor, of course, is defining what constitutes a successful negotiation. As Paul points out, one definition is squeezing every last penny out of the other side. That is not Paul’s definition, especially when negotiating salary with a new employee. Sarah, meanwhile, discusses the tactics she uses to try to guide potential clients to the price and options she hopes they will accept. Plus: Sarah explains how she picked her new office space, and Paul explains why his experience with a Vistage peer group has been life-changing.

— Loren Feldman

Guests:

Paul Downs is CEO of Paul Downs Cabinetmakers.

Sarah Segal is CEO of Segal Communications.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Paul and Sarah. It’s great to have you here. You know, over the last couple of years doing this podcast, the issue of negotiating has come up kind of indirectly a bunch of times. I’m curious what your experiences with it have been. I guess I would start with: How important a skill do you think it is? And do you think you’re good at it? Maybe, Paul, start with you.

Paul Downs:
Well, it’s an important skill. I can think of a couple of situations that happen over and over again in the life of a business owner. The first one being, of course, hiring people, figuring out what you’re going to pay them, or responding when someone asks for a raise. And that’s a particular kind of negotiation. Then there’s also dealing with landlords. In our business, our product doesn’t really have a set price. So we more or less end up negotiating a price with every single customer. And then there’s purchasing.

Yeah, it’s really important. I wouldn’t say I’m particularly good at it. But I think that it would be useful to have a definition of what “good” means. And the classic definition means you squeezed every penny out of the other party that you possibly could, or got them to submit somehow.

Loren Feldman:
Is that the classic definition? It’s certainly one definition.

Paul Downs:
Okay, it’s not the classic. It’s the ass-ic definition. [Laughter]

Loren Feldman:
Fair enough.

Paul Downs:
It’s for people who are asses. I don’t tend to look at negotiations that way. I tend to consider whatever the offer is compared to what my next best alternative is, and that’s how I think about it. I do tend to play by the rule that the first person to actually put out a number is in the weaker position. So I’ll avoid doing that if I can.

Loren Feldman:
What happens when the other person is playing by that rule as well?

Paul Downs:
You have some hemming and hawing and long silences. And it really depends on how comfortable they are with being pushed into that position. And more often than not, when it happens to me, it’s usually in the context of hiring someone and just asking a question, “Okay, how much are you getting paid now?” Now, woodworkers aren’t known in general for their negotiating prowess. So usually people just tell me, and if I say, “How about this?” they may come back asking for a little more. But a lot of times, there’s just acceptance of what I’m proposing, because I’m not trying to screw anybody. But sure, at the beginning of a relationship with someone that’s gonna go on for a long time, you’re anticipating that you’ll have to give out raises or bonuses or whatever. So you do want to try to keep the initial pay reasonable.

Loren Feldman:
How about you, Sarah? How important do you think it is as a skill to what you do? And how good at it do you think you are?

Sarah Segal:
I grew up in Boston, and part of my childhood growing up was going to the Brimfield antique fair. So I learned the art of bartering and negotiation very early. And my mother and her best friend Libby would always tell me, “If you want something, you can’t let them know that you really want it. It’s like playing poker. You’ve got to keep your poker face. And you have to be willing to walk away from it.”

And so I take those into account in any negotiation I go into, where I have to be able to walk away. I was reading the news this week about New York employment and how employers are now required to put ranges—pay ranges—on every job opportunity that they put out. That’s something that I have already set. When I hire people, I hire for the position, and I have arranged for that position. And I don’t deviate outside of that. So I have to be willing to lose a candidate, and I have lost candidates because of that. But I also need to stick with what’s best for my business. So I don’t consider myself a hard negotiator, but I spend a lot of time knowing what it is worth for me to invest. Does that answer your question?

Loren Feldman:
It does. And it sounds like you’re pretty confident in your negotiating ability.

Sarah Segal:
It’s just that I have to be able to walk away, and know, “Okay, maybe this isn’t going to happen because it wasn’t meant to be,” and be okay with that. Because if I go in feeling like I got the short end of the stick, it’s not going to give me a good feeling about the relationship at the get-go. So walking away is the most important part.

Paul Downs:
Do you have a kick-ass antique collection?

Sarah Segal:
Well, I unfortunately married a person who doesn’t love antiques. It’s modern with a light flare of antiques.

Paul Downs:
I’m just curious about the idea that you, at some young age, formed some notion of what a negotiation is, and that colors everything that you do. And I think that being able to always define the negotiation as being able to walk away is… I’ve been in situations where I couldn’t walk away, when I lost a lease on very short notice and I needed to move somewhere. You can’t necessarily walk away. What do you do when you can’t walk away?

Sarah Segal:
That’s a tough question to answer. I don’t know that I’ve been in that position recently. So I don’t have anything to kind of reference. I don’t know.

Loren Feldman:
Did it come up at all, Sarah, during the Great Resignation, where maybe you wanted to stick with your salary ranges for positions, but the market was moving higher, and you wound up having to adjust and not walk away?

Sarah Segal:
You know what it is, it actually happens sometimes with clients. We have some long-term clients that are VC-backed. And as you know, VC funding has dried up significantly. And so those clients have said, “Hey, we need to reduce our retainer.” And it’s below our baseline retainer, but these folks have been working with us for five years. We have a deep relationship with them. And so we’re willing to do that, because we know that there is a future of better retainers on the horizon. So yeah, there are those situations.

Loren Feldman:
When discussing salaries—and Sarah, you were an employee journalist like me for a long time—the topic often comes up that one of the reasons women don’t get paid as much as men on average is that they don’t negotiate as hard as men do. Do you think that’s a factor? And was that something that you were conscious of throughout your career as an employee, and perhaps even now?

Sarah Segal:
That’s a really good question, Loren. That’s a deep question. When I was working my way up in the broadcast journalism industry and becoming a TV reporter, I just wanted the job.

Loren Feldman:
You weren’t willing to walk away. That’s the mistake we all make.

Sarah Segal:
No, I wasn’t. But I was young. I wanted the job. I wanted to be in that next market. So they could literally have handed me a peanut butter and jelly sandwich, and I’d have been like, “That’s fine.” My first job in broadcast news was 1996. It was when Fox News Channel was just getting going, and I convinced my way into an internship there. And it was in New York City for a 24-hour news station that was competing against CNN. And they paid me $50 a week.

Paul Downs:
Well, you guys were both in industries where the help is treated as disposable, because there are always people clawing their way up and ready to replace you.

Loren Feldman:
That’s true.

Paul Downs:
And I’ve had a very, very different approach to negotiating salaries, particularly lately, which is, the workers I need are very hard to find and have options. So usually after I ask someone what they’re making and what they want to make—and presuming this is someone I want to hire—I’ll actually offer them more than that—usually a buck an hour more than they asked for, just to say, “Listen, I want to hire you. I want you to work for me, and I’m going to give you more than you asked. And if you don’t work out, I’m going to fire you. But if you do, we’re going to have a great relationship.”

And I think that people hate negotiating, who aren’t forced to do it. And having the opportunity right at the beginning of a relationship between boss and employee to demonstrate that you value them even more than they value themselves, I think it really helps to set people off on the right foot when you get them into the company.

Now, you’ve gotta want these people in your company, and you’ve got to feel like you can’t get other ones at the drop of a hat. So different industries are going to be different. But this is the approach I’ve used, and I think it really helps with employee satisfaction and retention. We didn’t have any quiet quitting going on in my place, and we didn’t have any Great Resignation either. I did have a couple of people who asked for more money when gas prices went up. But other than that, no discontent at all.

Sarah Segal:
Obviously, I’ve increased the understanding of my value since working in the news industry, and going from Fox to NBC to CBS and all of those stations and beyond. I learned my value. I learned my value as a business owner. But also, this is something my old partner taught me: To be super transparent with my staff about our budgets and our P&L and give them an understanding of, “This is where the money goes. And this is what I can afford.” And so they have an understanding of what I’m able to do and that I don’t have this huge bucket of money that I’m just not distributing to them.

So my salaries are super fair, and I do a lot of homework to make sure that I’m competitive within the industry. I have a lot of young people on my team. Their expenses are pretty low, because they’re not married and they don’t have kids. But the benefits that we provide are really good. And more importantly—at least when I was that age, and in that case—what was more important to me was the opportunity and the title growth. So even if I can’t give somebody a big raise, because it’s not within my budget, if I look at them and say, “Hey, I would like to change your title. And then once my P&L lets me, I want to give you a raise. How does that sound?” Usually, that’s a great thing for them in general, because I’ve been so clear about what I’m able to do.

Loren Feldman:
Let me ask you this: As Paul said at the beginning, it’s not just salaries. There are lots of things that you have to negotiate as an owner, including your office space and deals with vendors and even pricing—as in Paul’s case, and I think perhaps in yours, too, Sarah. That can be a negotiation with many or most of your clients. I’m curious, most entrepreneurs tend to learn things the hard way. Are there negotiations that you look back on and think, “Boy, I learned a lesson there. I could have done so much better.” I’m still annoyed that I spent too much on a car 20 years ago. I’m curious if you’ve learned lessons that way, either of you?

Paul Downs:
Oh, I had an experience that probably will not be replicated anytime soon. But this was 2009. I got an email that, in retrospect, looked extremely sketchy. And it turned out to be from the Afghanistan mission to the United Nations, and they wanted a table. And so I went up there, met with the guys, and then they came down to see me, and then we negotiated the price. And you have not negotiated unless you’ve negotiated against Afghans.

Because those guys—there were three of them in my office. And I desperately needed work. And they just kept beating me down, nickel by nickel, until I finally said, “I’m sorry, you guys gotta leave. I can’t do any more. This is not even worth doing.” And then they’re all smiles. And they’re like, “Yeah, now you just learned how to negotiate like an Afghan.” And we made the deal at their price, because I desperately needed the work. But that was one where just someone on the other side, being relentless, and willing to go for half an hour to get an extra penny. That was a hard lesson.

And the lesson really is: Don’t do business with people if that’s their only concern. I try not to get in those situations now. And we present what we do as valuable. And I try to always be ready to walk away at the very end. If someone presents themselves that way, they have other characteristics that are gonna make them difficult as clients. That’s been my experience.

Loren Feldman:
Was that the case in that instance?

Paul Downs:
It kind of was. The flip side to those guys was that the whole experience was pretty interesting. So it kept me engaged. Just going into their offices and dealing with a team of people, there was still a very big divide between the Afghans who had been employees of the mission prior to the Taliban takeover and subsequent. And so when I was dealing with these guys, one of them would leave the room and the other ones would be like, “He’s Taliban.” Or if the old guy left the room, the other two would be like, “He’s an infidel.” You know, it’s not a normal situation. So that was interesting. But at the end of the day, we satisfied them, and it was worth doing. But it was hard. It was a very big difference in mindset than I’m used to.

Sarah Segal:
My biggest headache comes every year. So we use news-monitoring services and other software. Some software, they have their rate, and that is it. And some, it’s a negotiation. It’s very used-car dealership, where they’re like, “Well, let me go back to my manager and see what I can do.” And I have learned over the years to stick to my guns, and you say, “Well, you know what, maybe there’s an onboarding fee, but I think that you need to waive that onboarding fee for me.”

And 99 percent of the time, they will, because they want to sign you up, because the onboarding fee is not the ongoing revenue for them. So they’re more interested in maintaining your subscription that you pay every month. So I’m like, “I’m not gonna give you a downpayment.” We’re actually doing that right now for our health care and benefits, and it’s a great company. We love them, and we think what they do is fantastic. They want a $2,000 set-up fee.

Loren Feldman:
Wait, even though you’ve used them in the past, they want a set-up fee?

Sarah Segal:
Well, we’re setting up a new system. And so we have to sign a new contract, and we’re adding a new health care element to it. And so there’s a $2,000 set-up fee for that health care element. And they told me that yesterday on a call. And after that call, I thought to myself, “I have no intention of paying that set-up fee. I’m going to say, ‘Okay, well, we’ll sign on the dotted line, but you have to get rid of that set-up fee.’”

Paul Downs:
Well, also their marginal cost of servicing another customer is zero. I mean, you’re in a particular situation with software. We’ve run into situations where we have clients who just don’t want to pay any deposit, and sometimes those are substantial jobs. And then my sales guy comes to me and says, “Hey, we can get this job if we do it on a net 30 basis. Can we do that?” And I usually say yes, as long as it’s someone who is reputable. But you have to have some financial strength in order to offer those terms. But we frequently get jobs in the face of competition at not the lowest price, because we’re willing to do that. So I think that knowing what you can afford to do—or Sarah, in your case, were you willing to walk away from that software?

Sarah Segal:
I’m not, actually, because I love this software. But that’s part of what I’m saying. No, but I have to pretend I am. And also, you have to let them know that you’re looking at competitors. Because they’re gonna be like, “Oh, well, she might use this other competitor.” And if you have time to do that, see what those rates are, and then come back armed with the offer that their competitors are going to give you—hopefully, it’s less than the one that you want to actually work with—and say, “Hey, listen, I’ll work with you if you can beat or match this offer.” But you have to have that homework done before that negotiation so you know what your other options are.

Like diamond rings, right? You’re getting engaged, you’ve gotta go to three separate stores, look at the same diamond size and shape and grade that you want. And then if you really liked that particular jewelry store, go back to them and say, “Hey, listen, I saw this same diamond, same shape, same whatever, at your competitor. Can you match it?” They’re going to say, “Yes.”

Paul Downs:
Well, sure. But I think the most frustrating thing is when people present you with information and say, “Okay, this is the start of a negotiation,” when it actually isn’t. And the best example is every year the health insurance renewals. So Loren, you and Gene Marks were talking about your ability to negotiate with the health insurers, which in my experience has been absolutely zero, and they give you options that aren’t really options. It’s all designed so that you can’t actually compare it easily with any other company’s offerings. And the whole thing is designed to just make you surrender, as a business owner. And it works, because nobody really wants to dig in and try to figure out what’s going on, because they’ve really made a huge effort to make it difficult to get a real analysis going.

So that is something that grinds my gears on a continual basis when some huge organization is all friendly, like, “Oh, you’re shopping.” You’re not shopping! You’re either surrendering or not surrendering. But if you don’t surrender, then you don’t have what you need. That drives me crazy.

Loren Feldman:
Sarah, you actually sold your business. And I’m curious if you learned anything about negotiating in that process. But let’s take a quick break to hear from our sponsor.

[Message from our sponsor, Work Better Now]

And we’re back. Sarah, that’s as big of a negotiation as you can have. Did you learn anything from selling your business?

Sarah Segal:
Did I learn anything from selling my business…?

Loren Feldman:
About negotiating.

Sarah Segal:
Well, see, I never sold a business before. So I didn’t have a frame of reference. And I think I was very lucky in the sale of my business because I ended up being acquired by a company I respect and a team of people—

Loren Feldman:
You don’t have to say that, Sarah. They’re not listening.

Sarah Segal:
But they’re awesome people. And so I actually think I lucked out because they acquired me and basically left me alone, and let me make the best decisions for my business. And yeah, I’ve made some mistakes along the way. But negotiating that sale? Yeah, I felt really uncomfortable with it—just to be totally transparent—because I had never done that.

I was talking to a serial entrepreneur the other day who literally sold four or five companies. And that’s just new territory for me. So any advice on that I’m happy to hear, because I don’t know where to go for homework for that—like, what a PR agency should be asking for when they’re acquired. There are no forums for that. There are no support groups for that.

Paul Downs:
In my Vistage group, there have been a number of companies that got sold. And that’s been very interesting, to be able to peek over the shoulder of those owners as they go through negotiations. Some are negotiating with private equity groups, some are negotiating with angel investors. And it’s really different, depending on who you’re negotiating with. I mean, that’s the main takeaway. If it’s someone like private equity, who does it all day, every day, it can be a pretty rough ride.

And in our group, this thing happens over and over again with private equity, which is a deal is kind of carved out. And everybody gets all excited about it, and lawyers write this stuff. And you get to the night before the closing, and the buyer just comes back and says, “Oh, everything we said, bullshit. We’re just going to give you 20 percent less,” just to see what would happen.

And clearly, that’s a practiced technique by buyers to get people really bought into the deal, to the point where they’ve been talking about it with their family and talking about it with their bankers and friends. And they find it very hard to walk away and very humiliating to admit that they’re in a position where they’ve got to take a shot like that. If you’re dealing with professionals, “Watch out!” would be my takeaway. But also the value of a business group that I haven’t sold my business, but I’m much more educated in what it could look like from having been around people who are doing it.

Sarah Segal:
This is kind of a side note to that. I’m really fascinated by the—I don’t know how to describe it, but—the human nature of negotiating and price setting. I’ve listened to a lot of different podcasts—sorry, Loren. [Laughter]

Loren Feldman:
Geez.

Sarah Segal:
I know, I’m sorry. And I don’t know where I can reference this from, but someone was saying that when you put together a proposal for somebody, when you get to the pricing slide, people tend to go with the first option they see and the last option they hear. So if you have three pricing sections—tier one, tier two, and tier three—and you really want them to do two tier because you think it’s the best, you want to put that tier two as the first option on your slide. The second option should be the next best version. And the third option should be the baseline version. But you should speak to it where you end with the one that you want first, because that’s what they’re gonna go with. But visually, they’re seeing that one first in line. Does that make sense? Am I being clear?

Paul Downs:
I think I know what you’re saying. And that makes a certain amount of sense because the number one is more appealing than the number three. It’s stupid, but it’s true. I had never heard the thing about the talking and the reading, but presumably there was some testing done in order to come up with this theory—although in business, that’s not always true. So it makes a certain amount of sense. Does it work for you?

Sarah Segal:
Yeah, I’m always trying to improve my skills at that. But on this podcast, it was recommended that we go back to doing in-person proposals. And we have two clients, one is in contract and the other one is hopefully going to be signing a contract for January 1st. We did both of those in person. I like trying to use—they’re not tricks, but they’re just things that humans tend to choose.

Like if you talk about retail, if you talk to anybody who does brick-and-mortar store management, people naturally, when they walk into a store, go right. 75 percent of the time, people will walk into a store and take a right. So you want to make sure that whatever you’re promoting, and whatever you really want people to buy, is to the right.

And there are theories about the way people move through a space. So why not do that with your proposals and how you negotiate with somebody? It’s like, if you put your slide in red versus blue, is that going to make a difference? Like McDonald’s, for example, they figured out that the colors red and yellow make people salivate, and that’s why they use those colors. So I think all of those things should be thought about as you’re putting together your negotiation.

I will start with the, “Hey, you can do the baseline version, and this is a great place to start. Or you can move on, and you can do this kind of extra version that’s going to incorporate all these things that you want to do, plus some. But it may not be within your budget. But here’s the one I really think you should do.” And they’re seeing it’s the first one all the way to the left of the slide, but I’m talking about it last. And I’m saying, “Hey, this is the one I really recommend.” And that’s kind of how I always go through it.

Paul Downs:
Is that always the most expensive option?

Sarah Segal:
No, it’s not.

Paul Downs:
And have you ever tried labeling the first one you present as option three?

Sarah Segal:
Usually, we label them based on the client. So for example, if we’re pitching a beer client, option one will be pale ale, option two will be microbrew, and the third option will be some other type of beer. And that’s how we usually do it. I don’t do one, two, and three, because I think that that tiers them.

Paul Downs:
We do the exact opposite, which is we very explicitly tier people, but try to have that discussion before we present our final idea. So we have what we call standard, premium, and ultra. Because, basically, a table—the function is the same. It’s almost like cars. A Yugo will get you there. It might break down, but you can drive it from here to there.

And so we have standard, which is simple, and premium, which is sort of the Toyota best value. And then ultra could be anything. And we try to get people to tell us where they want to be before we start getting too specific about what we’re going to propose for them. And so it’s just a different way to think about presenting all this stuff.

Sarah Segal:
But usually, I also tell people that not all these three options are going to be what they want. And we’re happy to go back and create a menu item for them. But I know what it takes my team to put together a social media strategy and post three to five times a week for a client and all that. And so I do have a baseline for that. And it makes it much easier for me to figure out that pricing.

Loren Feldman:
Do you ever deviate from it? If there’s a client that you would like to work with, and they say, “We like your baseline proposal, but we want to pay you half what you’re requesting,” what do you do?

Sarah Segal:
Well, we have a client right now that runs a wildlife organization, and we run their social media for them. And it’s fantastic: It’s cute bears and lions and big cats and all that kind of good stuff. So it’s really fun content for my team to post. Right now, they’re only on Facebook, and they’re a family-owned business. They need to be careful about their bottom line. We understand that. They know that in order to gain visibility for what they do, they need to dip into Instagram and Facebook. But they’re not sure they want to do it.

They want to kind of test the waters, but they don’t really want to throw a budget at it until they’re ready. And so we really like them. We think they’re lovely people, and so I was like, “All right, what we’ll do is for a month, we will just charge you the administration fee of adding you to our social media platform. And we’ll just redistribute the Facebook content on those channels, so then you can make a decision at the end.” So yes, I do deviate. But usually, it’s for like a limited period of time with, “Hey, we’ll try it out. But at the end of it, if it works, and we’re all happy, you’re gonna have to pay the check.”

Paul Downs:
There’s one other thing that we do in price negotiations that may or may not be relevant to anybody else. But we find that whatever the cost of the table is, it’s pretty much a number that nobody has any notion of. So let’s say it’s a $25,000 table. They’re like, “Okay, $25,000 table.” What happens, though, if you present them the freight charge as the actual freight charge, they go bananas. So we will often take money out of the freight and install and just put it into the table price. We’re not pressing their hot button of, “Oh my God, it costs this to get something across the country?”

And when you think about it, why wouldn’t it cost a lot of money to get something across the country in three days? But that’s just a way to present a number that doesn’t chase people away. They pay the same amount in the end no matter what. They’re just looking at it a different way. And I don’t know whether that actually falls under the guise of negotiation or not. But it’s something that we end up doing.

Sarah Segal:
Paul, I’m gonna need a new table soon. [Laughter] No, I’m serious. We’re about to sign a lease for an office.

Paul Downs:
All right. Happy to help you with that. Maybe that could be one of the shows where we do some video.

Loren Feldman:
We could have a real live negotiation. That might be fun.

Paul Downs:
The table will be $8, and the freight is $42,560. Actually, Jay probably has a perspective on that too—taking costs that people are going to need to pay but don’t want to pay, and putting them into something that they’re just not so sensitive to.

Loren Feldman:
Well, in a way it’s being entirely fair to them. You’re giving them a better sense of the overall cost right from the get-go by doing that, right?

Paul Downs:
Yes, and we have to retain the ability to price freight separately because it varies so enormously, depending on where you are relative to where we are. And then there are certain non-intuitive things, like freight to North Dakota is triple what it costs to go to Chicago—not because it’s so much farther, but because they can’t get people to unload the trucks, or it’s out of the way of the main truck routes, or something. Going to Florida and going to Long Island are kind of the same thing. So yeah, they’re gonna end up paying it. But if we show them what it really is, they often just head for the hills or they’re very upset.

Loren Feldman:
Sarah, I was going to ask you about your search for office space anyway. Did you negotiate a good deal?

Sarah Segal:
Yeah, so we were looking at two different options. Do we get an office along with our parent company, or do we get our own little office? Because most of our parent company’s people are not in the Bay Area, so it’s not really important for them. And so we looked at different options. And honestly, even though there’s a massive amount of commercial real estate out there and available in San Francisco, some of the bigger places are holding on to their prices. But the inventory is so big right now.

And I didn’t want to get an office that I was beholden to be there every day of the week. I wanted to find something that was going to be a place where we could hang our hats and feel free to come in two days a week, three days a week, and not be burdened by a rent check and feeling like we weren’t using it enough.

So I put in an offer for a space. I lowballed them like crazy. And they came back with a little bit of an increase. And I went back with what was a little less of an increase, and we’re literally $250 above what I originally wanted, which was perfect. And it’s a little space, but it’s a cool building that we are possibly going to be able to put a cool mural on the side of the building. I’ve actually been chatting with a mural company on the East Coast, which we might invite to do it for us.

Loren Feldman:
What kind of mural would it be? Would it be branding for your business?

Sarah Segal:
No. I don’t know if you’ve ever seen the pink wall on the side of the Paul Smith store on Melrose Street in Los Angeles. But it’s a pink wall. That’s literally all it is, is pink. And any day of the week, you drive down that street, and you will see a line of influencers standing there to pose in front of a pink wall. And it’s a landmark, and so we want to do something that is a landmark. It’s a beautiful corner property. So you have a wall that extends on both sides. It’s a great brick building. It’s on a main, high traffic street, on the edge of Chinatown and the financial district. So it’s near everything. And we just want to eventually be like, “Oh, your offices are in that building?” Like, “You’re in the pink-wall building?” That kind of thing. We want to do something that’s fun and happy and—

Loren Feldman:
Usable by influencers? Is that something you’re thinking about, too?

Sarah Segal:
Yeah, I mean, it’s not anything that’s going to bring us revenue. But it’s something that’s going to make our space a curiosity and fun. And I’d like to be associated with promoting art and culture and using available space in the Bay Area. So that’s why we liked the space. It wasn’t one of these just traditional office buildings. It’s a little bit more on the funky side. And I see a lot of ways we can make that funkiness really fun and happy. I want a happy place.

Paul Downs:
How long is your lease for?

Sarah Segal:
Two years.

Loren Feldman:
Is there a possibility that you’d be able to grow there?

Sarah Segal:
I did in the contract ask—they have an office upstairs from us—for first right of refusal on that space, if those people move out.

Paul Downs:
Well, good luck. I can think of a lot of reasons to not do it. But if you’re excited about it, go for it.

Sarah Segal:
There are a lot of reasons not to do it, I’m sure. It’s limited in terms of the size. But I don’t know. I think it’s still gonna take a while for people to be in an office every day of the week. I was talking to this agency that we’re working with on a project. And they are based in Chicago, and their offices are in an old retail space. And I was like, “Oh, that’s really cool.” And they’re like, “Yeah, and our second office is across the street.” So that’s how they grew. So they didn’t leave their office and find a whole new space.

Loren Feldman:
Sarah, on a previous episode with Karen Clark Cole, you guys had a conversation where Karen said she had space that she might be interested in subletting to you. Did you ever check that out?

Sarah Segal:
I did, and it’s a really beautiful space. I mean, it’s wonderful. But my reservations with doing that was that I would still be in somebody else’s space. We have inventory from our clients. I’m sitting here looking at 15 boxes of shoes from our Australian shoe client, Woolloomooloo. I’m looking at a freezer filled with sample products from our U.K. client, Pots & Co., which is a dessert company. I need somewhere I can put all that stuff, because we send out samples. That’s a lot to ask somebody, to be like, “Hey, can we put all of our inventory in your offices?” So I just wanted somewhere I could put all that and not have to worry about it. And so that’s kind of where we ended up doing our own thing.

Loren Feldman:
Got it. Paul, you mentioned Vistage. I wanted to follow up with you. As you know, we recently did a show—Sarah was part of it—where we talked about the value of business groups, peer groups [“Should You Be in a Business Group?”]. There was some discussion about what makes a good group. You’ve had, I know—you’ve referred to it numerous times on the show, including just now—a really great experience with your Vistage group. Did you just luck into it? How did you find the right group? And how did you know it was the right group?

Paul Downs:
I think luck is involved, absolutely. Because my big takeaway is that, in Vistage anyway, the groups are assembled and run by a chairperson. And the capabilities and personality and recruiting ability of that chairperson is critical. It’s going to make or break the group. Now, I haven’t been in six business groups like Jay, but it sounds like his experience has had a lot more neutral or bad hours than I’ve had in Vistage. And I was lucky that my chair was someone who has extremely wide experience in life and business. He’s worked for big businesses, small businesses, and had an accounting background. He’s been in manufacturing, been in finance, a combat veteran. You name it, he’s been around the block.

So that’s good, because you spend a lot of time with the chair in Vistage. And that person’s point of view should be one that supports the members where they are. He put together a group that included several other manufacturers, but then also people who are in businesses that were very different. And I’ve derived enormous benefit from just seeing how different industries work, what challenges are unique to this industry or that industry, and what challenges does every industry face? And what challenges do all companies face, say, if there are 10 employees as opposed to 30 employees as opposed to 100 employees?

The perspective it gave me literally changed my life for the better. I was invited to come to an introductory meeting. And this was shortly after Jay wrote that column for you back in 2011 or 2012, about his business group experience. And I had gotten invitations to various things over the years and just thrown them away. But after reading him talking about it, I was like, “You know what, I’ve been sitting in my office by myself for 20-something years. I don’t know anything. I’m an idiot. Why don’t I just go find out what other people think and start networking?” And it has been of enormous benefit to me. Some of the members of the group who were there at the first meeting I went to, we’re still in the same group. So I’ve been at it 10 years now. And there have been some members who came and went.

Some of the members have grown their businesses enormously. I’ve seen a couple of acquisitions. A lot of it had to do with where I started from. Like Jay, I started my company when I was very young, at a time when entrepreneurship was kind of like nobody talked about it. There wasn’t even a way to talk about it. And so I spent a lot of time on my own, in terms of thinking about how to be a boss, how to own a company, what to do. I did not have many ideas coming at me about how to do that. And that all changed after I joined Vistage. And I thought Jay didn’t do a great job of presenting the potential upside.

Loren Feldman:
Well, he acknowledged it could be life-changing.

Paul Downs:
Yeah, but he was kind of like, “Yeah, it can be life-changing,” in Jay’s style.

Loren Feldman:
One of the concerns he raised is that, in the groups that he’s been in, he’s felt that there are members who really don’t contribute positively. And he felt that you need a facilitator who’s willing to fire members, essentially. Has that ever been an issue for you?

Paul Downs:
It’s not like I complained to my chair and said, “Hey, you’ve gotta get rid of that guy.” It really hasn’t come up. And that’s what I was talking about chair quality. And I think that, to a certain extent, you’re more likely to get what you pay for in these situations. So when Jay tried to do it by himself, or he was doing some of the lower-cost organizations, I would guess that the bad experiences clustered more there. My chair is very focused on delivering value. And the other members of the group that I’m in are all very impressive. Like, I’m the worst one there. And my business has grown the slowest. And I can go into the reasons for that, but…

Loren Feldman:
I’m not sure what you mean by “worst,” Paul.

Paul Downs:
I’m the poorest. I’m the dumbest. I have the smallest company. And it’s going to be hardest for me to make some $20 million dollar deal to get out.

Loren Feldman:
I’ve spoken to your chair, and I know you’re not the dumbest.

Paul Downs:
Okay, but it’s like when you’re playing sports, if you’re trying to get better at sports, you don’t always want to play with people who are worse than you. You want to play with people who are better than you. And so that’s what I get out of the group.

Loren Feldman:
I think Jay would agree with you on that. We’re out of time. But quickly, Sarah, have you had any further thoughts about it? Are you still interested in a group?

Sarah Segal:
I got an email from my region’s person, which I need to respond to. Thank you for reminding me about that.

Loren Feldman:
Is this Vistage?

Sarah Segal:
Yeah, Vistage. I plan on just checking it out. I was told that I can probably go and sit in on a couple of meetings and see whether or not it’s a vibe that I connect with, and then make some more decisions as I go. But I don’t think I’m going to jump into that until January, just because my next couple weeks are crazy.

Loren Feldman:
Well, we’ll be eager to hear what happens, but we’re out of time. My thanks to Paul Downs and Sarah Segal and to our sponsor Work Better Now. Thanks for sharing, guys, as always.