Can We All Be Purple Cows?
Introduction:
This week, Shawn Busse, Jaci Russo, and Jay Goltz discuss what it takes to stand out these days, especially if your business—like most businesses—isn’t exactly the Next Big Thing. What about trash collection? What if your business is selling scrap metal? What if you happen to be one of 69 picture framers in Chicago? What’s an owner to do to stand out then? Is it enough to execute really well? Can any business make itself remarkable? Shawn, Jay, and Jaci all believe it’s possible, and they offer examples from their own businesses as well as those they’ve observed. Plus: As Google waffles about whether it’s going to kill cookies on Chrome, will business owners still be able to target customers digitally? And Jay’s not happy about a very big bill he got from his accounting firm. Should he just go ahead and pay it?
— Loren Feldman
Guests:
Shawn Busse is CEO of Kinesis.
Jaci Russo is CEO of BrandRusso.
Jay Goltz is CEO of The Goltz Group.
Producer:
Jess Thoubboron is founder of Blank Word.
Full Episode Transcript:
Loren Feldman:
Welcome Shawn, Jay, and Jaci. It’s great to have you here. I want to talk today about something I’ve wondered about for a while. We often hear the advice that it’s a bad idea to try to sell a product or service that is viewed as a commodity. You need to find a niche or to distinguish yourself in some way. But here’s my question: Aren’t some businesses just commodity businesses? And if so, what can a small business do to succeed if it’s pretty much a commodity business? Jaci, have you thought about this at all?
Jaci Russo:
We’ve worked with a number of clients in that space with that predicament. So I guess I would start with: Name a commodity business. Because I would say there aren’t really any of those anymore. Even if you look at water and toilet paper, there are some differentiators there. There’s some place where they put themselves—whether it’s through packaging, or through pricing, or through promotion—to try to separate themselves from the herd. You know, humans are a pack animal. And so we want to blend in. It’s our nature. But if we don’t find a way to stand out, you’re not going to be a very successful business for long.
Jay Goltz:
Garbage collection. That’s not commodity? The people that pick up your garbage—that’s not a commodity business?
Jaci Russo:
I would tell you that in Lafayette, Louisiana, where I live, we’ve just been through two different rounds of contracts with different garbage pickup services. They are vastly different in their offerings, in their pricing, in the performance of their service. And we as homeowners don’t get to choose, but the council did. And we very much miss the one we used to have. There was a difference.
Loren Feldman:
So you think, Jaci, if somebody comes to you, and looks like a commodity business, pretty much any business, you can turn them around and make them not a commodity business?
Jaci Russo:
We did it for a milk company. Dairy is probably one of the biggest commodities—and I just used air quotes—out there. And we were able to work with this regional dairy and help them go from zero market share—they’re entering new markets for the first time—and within about six months had 18 percent of the market share against organics, heritage, and store brands, even though they were not as healthy as organic. They were more expensive than the store brand. And heritage means people have just been buying it for generations and generations and buy the same thing that everybody bought. But we were able to carve out a niche for them.
Loren Feldman:
Shawn, let me ask you kind of the same question, but in a slightly different way. As I’m sure you’re well aware, Seth Godin wrote a book called Purple Cow: Transform Your Business by Being Remarkable. It’s a very readable book, and I think it’s obviously good advice. If you can distinguish yourself, you should probably distinguish yourself. But can we all be Purple Cows? Can any business be remarkable? What do you think?
Shawn Busse:
You know, we’re not in the consumer space, like Jaci is. We’re almost entirely B2B. And there are definitely some strong commodity businesses in B2B. I remember meeting a guy who, basically, his business was buying scrap steel. That’s it. He’s buying scrap steel from manufacturers, who have offcuts and waste and so forth. And, boy, that is a tough business, because the buyer in that space is some sort of procurement type of person. And so they’re buying largely on price, and it’s hard to defeat that. I ultimately walked away from the engagement, even though he wanted to put money on the table, because I don’t think he was willing to do what would have needed to be done to be a Purple Cow.
And I think that for companies that are closer to being a pure commodity, you have to be a lot more bold. And usually that boldness comes in either the form of culture, where you’re creating a place where employees are really engaged and doing amazing work, because then the customer feels that and then you’re differentiated on that. Or the offering, the process, the way you do things is significantly different in the way you deliver that commodity. And both of those things require a lot of vision from the leader. And a lot of times, what I have found, at least in my experience, is that in a lot of commodity-based businesses, the leaders are really fixated on winning by price—by being cheaper than the other guy, as opposed to service, delivery, process, or culture.
Jay Goltz:
Well, you left a whole piece out, though. There’s a whole piece of that, which is: What if the company figured out how to do it cheaper? I mean, I’ve sold scrap. When I cut aluminum frames, we used to say barrels of scrap. What if they figured out, “Oh, they’ve got a good location that’s closer to the customers? Therefore, I’m paying my truck driver a lot less to go pick up every day.” And they figured out how to get it to the scrap recycler cheaper. That is another angle that somebody figured out. Walmart: Someone figured out how to do things cheaper and pass the savings along. So that’s the commodity, but you can still win by getting your costs down.
Shawn Busse:
Yeah, I think that’s a really good point. You might layer into that like, say, technology. So you could put a piece of technology in place that made you far more efficient than your competition. I tend to think that those kinds of moves can be copied more easily than the moves that I’m suggesting. So that’s why I go to those places first.
Culture is really hard. It’s really hard to do in a commodity space. So if you can do it, it’s much harder for your competition to catch up to you. It’s much more of a moat strategy. I think the way you deliver your service to your customer, something that we’ve called the proprietary way—which is a combination of people, service, process—that amalgam is a sort of secret sauce. It’s really hard to copy, versus a technology play. Once your competitors figure out that technology, if they can buy it off the shelf or build it themselves, it’s a little easier to copy. So I’d say, “Yes, and,” to what you’re saying, Jay.
Jaci Russo:
And I’ll just jump again. You know, Shawn, we’re about 90 percent B2B, too. And so, sure, we’ve dealt with companies that make widgets and small intricate details inside their industries. But I think there’s always a way to separate. If you didn’t start your business knowing you were gonna do something different and better than the rest of the competition, why did you start?
Shawn Busse:
Well, I mean, this will get Jay riled up—
Jay Goltz:
Great!
Shawn Busse:
A lot of times these commodity businesses, they’re owned by the second or third generation. And so you also often have that factor layered in, in that it was their father, their mother, their grandfather, their grandmother who actually was the innovator. And they are sort of keeping the thing going. And so sometimes that can be really challenging to be the innovator when you’re the second or third generation.
Loren Feldman:
Jay, let me ask a question. I think we have someone here who might be able to answer Jaci’s question, and that’s you, Jay. I hope you don’t take offense at this, but isn’t picture framing something of a commodity business? How many picture framers were there in Chicago?
Shawn Busse:
No way, Loren!
Loren Feldman:
How many were there in Chicago when you opened up?
Jay Goltz:
Back in the day of the Yellow Pages, I remember counting the number of frame shops. This was probably 20 years ago. There were 69 frame shops.
Loren Feldman:
Wait, you opened 40 years ago, right?
Jay Goltz:
So I’m just saying, its peak, which was probably in 2000, 20 or 25 years ago, there were 69. And you’ve gotta remember, the framing industry was in a boom for many years, because of the Baby Boomers. They’re framing pictures, and the framing industry really—I’ve been there from the beginning. When I started, it was just starting to pick up steam, and it grew tremendously for the next 45 years. And then it got mature. So then what happened? The chain stores started to pick it up. And now the independent frame shops have shrunk.
So there used to be 69 frame shops in Chicago, and now there’s about 22. And nationally, there were 25,000 frame shops, and now it’s 6,000. So it’s a commodity, in that a lot of people do it, but it’s certainly not a commodity if you do it right. There’s a huge difference between a well-run framing business and someone who just showed up and is doing mediocre framing. There’s no question, which is why my business grew so much.
I didn’t know this. And I certainly couldn’t put the words on it back when—I didn’t start out and go, “Oh, I’m gonna differentiate myself and brand myself better.” I just did a better job. I was more committed to taking care of customers and having better frames, and having better people working there, and having a better turnaround, and having better quality. I just wanted to run a better business, which you can now use a bunch of words to describe, which is differentiation, but that is why I’m bigger than everyone else.
Shawn Busse:
I mean, what we’re talking about here—and I think all three of us will agree on this—is brand experience. And so, that is how you can elevate yourself out of a commodity space. So what Jay is describing is the customer experience. It’s the framer’s knowledge of the product, their ability to add the right value and solution to the customer’s experience. Those are all decommodification strategies that involve culture, customer differentiation, on and on and on.
And so I think that when you are in a space that’s heavily commoditized, those are your ways. I mean, we’ve done this with clients that are in commodity spaces. I think Jaci has done this with clients. It’s about going for brand—and I mean that not from a pretty logo and a pretty website, but actually the customer experience and the employee experience. And if you get those two things right, you’ve kind of beat about 90 percent of your competition at that point.
Jay Goltz:
You know, I’ve learned it’s about being 10 percent better. That’s what we’re talking about. We’re talking about all the stuff you’re describing: brand, which is everything you do; the way your employees dress; the way they talk; where your office is; what your sign looks like; does your chair in your waiting room have a rip in it? All of those things added together, maybe add up to 5-10 percent of your business. You do that for 30 years, and one company does $10 million and the other company’s doing a million. It’s about being a little bit better.
So yes, it’s about running a better business with good branding and good messaging. And I believe, I think our point is, any business can benefit from being non-commodity by attempting to make your business a little bit better, whether it’s the way you are branded, your ads, maybe the person who comes and picks up the scrap is just friendlier than the other guy. I mean, stuff like that makes a difference.
Loren Feldman:
Jay, you’re talking about execution. My question is, is execution—executing well, running the business well—is that enough to take you from a commodity business to a non-commodity business?
Jay Goltz:
Yes. Absolutely.
Jaci Russo:
Yes, because execution comes from process, process comes from intention, and intention comes from planning. And that’s how businesses separate themselves. It is shocking to me how few companies—and I’m sure Shawn will agree—in the B2B and B2C space actually spend the time to plan out their strategic marketing approach. Instead, they are reactive. “Shiny thing! I’m going to do it. Sales pitch from a cute girl. I’m going to do it.” And now all of a sudden, they say, “Why is half my budget wasted?” Well, because you didn’t plan it.
Jay Goltz:
Here, I’ll give you an example. I just went to a doctor’s office out in the middle of nowhere, and the office was all nice-looking and stuff. And the woman behind the counter is wearing a hoodie with blue something on it. And you know what? It’s a doctor’s office. Like, don’t wear a hoodie sweatshirt with printing on it. It doesn’t look good. And I stopped recommending them anymore, because they don’t listen. They will say, this is the line: They always say when you tell them something, “Oh, no one cares about that.” [Laughter]
And the answer is: You know what, you’re 95 percent right. I’m probably only one of the 20 people to think, “Gee, I’d feel a little better if the person behind the counter looked like a professional.” It may be only one out of 20 people, but that’s 5 percent. That’s the difference between being a little bit better.
Shawn Busse:
Yeah, see, I’ve gotta take issue with your simplification, Loren. I think saying that it’s execution is too simplified. And yes, absolutely, we all know, most businesses—especially at the corporate level—are terrible at execution. They’re just awful. But that’s just a piece of it. I think there’s a seductive aspect of execution, which is that, “Wow, I can create lists. I can check things off lists. I can have a process for everything.” And that is wonderful stuff. It’s also highly copyable.
There are pieces of what Jay is telling, in terms of his story, that are not execution. They are pieces of affinity within employees. They are pieces of feeling appreciated. They are pieces of recruiting and retention. These are not really execution things. So when you say execution, you start to get into this world of operations, which is really important. I don’t want to downplay the significance of that. But improving execution has generally kind of a linear output to it, whereas things like culture, process, differentiation, remarkability—those are exponential things. And I really want to caution us about simplifying it to, “Oh, you just need to execute better,” because that’s not what Jay has actually done.
Jay Goltz:
Well, it’s interesting that you say that, but I’m wondering whether it’s a word. What I just heard you say is different than what you said. [Laughter] What I’m hearing you saying is: You can say execution, but it’s really what’s behind the execution that makes the difference. And I totally agree with that. You’re right, it’s, “Oh, get delivery better.” The issue isn’t better deliverables. It’s: Learn how to hire better and keep your employees around. So I absolutely hear your point with: It is execution, but it’s really about, how do you pull that off? And that’s what the issue is.
Shawn Busse:
And then the problem is, the internet has driven us to follow this whole listicle idea, right? “Ten ways you can become better at hiring.” It’s like, okay, that’s fine. But underpinning all of that stuff is: What is your mission? What are your values? What do you care about? How do you treat customers? These are things that I think, Jaci, you and I would agree, these are strategic and really powerful and meaningful aspects of the business that then should drive the execution. And so I just really caution when we start talking about execution, execution, you could run down this path of best practices and copying other people. And those things are good. But the underpinning of that is way more important. Like, 1,000%.
Jaci Russo:
Always.
Jay Goltz:
All you’re saying, which makes sense, is: Corporate culture drives execution. So instead of banging on, “Oh, execute better, execute better.” It’s really about: Your corporate culture includes how you take care of customers, which is execution. So I would agree with you. A better word to tell somebody if you really want to succeed in business and grow, instead of saying, “Execute better,” work on your corporate culture. Because that’s going to enable you to execute better. And I fully agree with that. Are we on the same page with that?
Shawn Busse:
Yes. Yes, and. Like, culture? Huge, huge, huge, huge, and I think not to be undervalued in the conversation about execution. And then also, I think, to your other point, Jay: There’s business, the strategy. Like, how are you going to market? What is the offering? How is it remarkably different? We talked about all these picture framers that existed, and I think you’ve outlasted and outlived a lot of them, because they were sort of business as usual. Right?
Jay Goltz:
Well, the business was growing so much, they just had to show up, and you could do okay.
Shawn Busse:
Yeah, right. And in a good, rising tide, it’s like, “Oh, we’re all so talented here.” And you did something different. And I think that’s the other side of the coin. So you have culture, and then differentiation and remarkability.
Loren Feldman:
Jay, the question that Jaci asked was: If you’re not going to do something different, why would you even start the business? What were you thinking when you started your business? Did you think that you were going to be different than all those others?
Jay Goltz:
Absolutely. No, that’s why I got into the business. First of all, I loved picture framing. I loved the whole process of finding the right frame for the right picture and making a picture look great. And I mean, I loved framing, but I also knew enough about frame shops to know that you’d bring a picture, and you’d say, “When will it be done?” “Uhhh, four or five weeks, give me a call. We’ll see.” [Laughter]
Loren Feldman:
Did you really know that that was standard?
Jay Goltz:
Absolutely. I went with my mother one time. This is a one-time experience. My mother framed one picture, and my mother didn’t drive, so I probably drove her to the frame shop. I was probably 17 or 16 years old. I drove her to the frame shop. And it was a dusty, old frame shop. And I thought to myself, “Why would it take five weeks to frame a picture? It’s not like they’re growing the tree and then they’ve gotta cut it down.” So yes, that was typical in the framing business at the time, “We’ll get it done when we get it done.”
And what I didn’t realize till I was in my late 20s, and business was growing like crazy, was that my attitude toward customers was very different than many frame shop owners. I grew up in my father’s dime store taking care of customers. I enjoyed customers. I liked customers. I support customers. And I found out that a lot of people who were in the frame business viewed themselves as some kind of artist, which is the opposite of customer-driven, when you think about it. Customer-driven is: “What do they need? Give it to them.” Artist-driven is: “Look what I made. Oh, you don’t like it? You’re an idiot. Get out.” [Laughter]
Shawn Busse:
Hey, as an artist, I resent that characterization!
Jay Goltz:
Okay, but you have to admit that artists do things to make themselves happy. They don’t ask a customer, “What color do you think I should make this picture?”
Shawn Busse:
That is true. That is true.
Jay Goltz:
That’s what I’m saying.
Jaci Russo:
That’s absolute fact. I’m married to an artist. Shawn, you cannot even begin to argue that point. That is fact. [Laughter]
Shawn Busse:
No, the first part of his point I agree with. The second part I take issue with.
Jay Goltz:
With a little hyperbole just to get your attention.
Shawn Busse:
A lot of hyperbole.
Jay Goltz:
You are a complete freak. You are. You are a freak that you went from being an artist to being a marketing—I mean, that’s like watching a dog talk. I mean, that’s not a normal thing. [Laughter]
Loren Feldman:
You guys are all freaks. Let’s be honest.
Jay Goltz:
For sure. But he’s an even bigger freak, because he actually is an artist who became a successful business communicator and marketing person. Those two things usually are not in the same—is that right, Shawn?
Shawn Busse:
Yeah, I know some other talking dogs.
Jay Goltz:
Do you know some other artists who went into marketing, who are actually—
Jaci Russo:
I would give my husband an example. He was a fine artist who’s gone into marketing. So it happens. But it’s very rare that, like Shawn, they can also run successful businesses without a business partner. That is a hard thing for them to do. Two different sides of the brain.
Jay Goltz:
Yeah.
Loren Feldman:
So just to tie this up, I think what I’m hearing from you is that, yeah, any business can be remarkable. And, you know, in preparation for this and thinking about it and thinking about the Purple Cow, it occurred to me, I think I would argue that the advice Seth Godin offers in Purple Cow is kind of generic advice. It’s not like before he wrote that book, the conventional wisdom in marketing was that the way to sell more stuff is to be exactly like all of your competitors. I guess I’m saying, I think the advice Godin is offering is kind of commodity advice. He just executed it really well with a compelling image of a purple cow. Am I wrong, Shawn?
Shawn Busse:
No, no, no, you’re wrong. I mean, what he did is he used metaphor, which is the powerful thing. And that’s not just an execution. He found a way to tell his story in a way that was new and different and unique. And I would also argue, you’re simplifying his position a little bit, in that he’s not saying, “Oh, differentiation is important.” That’s been said forever. He’s saying, “You have to be radically different.” He’s saying, “You have to really turn it up to 11.” And that idea, I think, was a bit new, in terms of his book. So I don’t think it’s just the execution. It’s more than that.
Jay Goltz:
I read the book written by somebody who worked at Nordstrom years ago. And she said something in it that was very smart. She said, “It’s not that Nordstrom is so good. It’s that everyone else is so bad.” And there’s truth to that. And my argument is: Being remarkable today means being really good.
Jaci Russo:
I think that in a capitalist society, the businesses that do their job better will typically rise to the top. And I think you’re seeing that. If you just want an example, we’ll look at what’s happening with fast food. All of these fast food restaurants raised their prices, raised their prices, raised their prices, and saw their sales drop. They all went back to $5 menus, and they’re starting to see that they’re gaining business back. So the market will dictate. Same thing with customer service. The companies that are saying, “I’ll get back to you in 48 hours,” they will be upped by a company that says 24 hours. And they will be upended by a company that says same day. So I think that consumers drive what we expect the businesses to do.
Shawn Busse:
I mean, the giant asterisk you’re not recognizing, Jaci, is monopoly and customer capture.
Jaci Russo:
Fair.
Shawn Busse:
I just put a post up about how QuickBooks just raised their prices again, and somebody pointed out it was the third time in a year and a half. And I tell you, the engagement on that post and the frustration and the anger was palpable. You know, why don’t people change? Change is really hard. And the alternatives are very difficult, and so there’s a lot more capture—I’d say, customer capture—than there’s ever been. So, try to do business and not use Google or try to buy something and not be Amazon. But I think that’s the tension that underlies a lot of this. And maybe why the service has gotten worse, Jay, is that there are more and more businesses that they don’t really give a damn, because they don’t have to give a damn.
Loren Feldman:
I want to move on to a couple of other topics. I want to see if I can oversimplify a couple of other things before we run out of time. First, you mentioned Google. For several years, Google said it was going to get rid of cookies in Chrome. Now, it says it’s keeping them. But it’s going to let individual users decide whether they want to allow them on their own browser or their own computer, which I would expect means most people are probably going to not allow them. So maybe this is a backdoor way to eliminate cookies. My question is, what does this mean for business owners or somebody who is trying to figure out how to do some digital marketing? Shawn, Jaci? Either of you?
Jay Goltz:
Thank you for not asking me, because I’ve got nothing to say. I’ve got nothing to say on this subject. Good call. [Laughter]
Shawn Busse:
I think Jaci should field this one.
Jaci Russo:
I’ll jump in on this one, and Shawn, please share your thoughts as well. I think that it starts with the pushback from advertisers definitely influenced Google’s decision. As much as no one wants to have their data mined, everybody wants to use the mined data. I think that the U.S., apparently at this point, is never going to really step up and put into place the protections that the E.U. have done. And so we are going to continue to see this individual choice.
And for the most part, I think the majority of people don’t care. They’re not paying attention. They’re annoyed by the popups. They just want to get to whatever the page is. And I think there’s a prevailing sense of, “They’ve already got all my info anyway.” Everything that I use, from the credit card to the bank to the place where I buy tickets to the place where I store this piece of data or that piece of data has sent me a letter telling me they’ve been hacked. And so here we are.
Jay Goltz:
I can tell you, as a user, whenever that thing pops up, I always have to think: “Do I really want to?” And I usually say no, because I don’t even know what it means and what they’re going to do, what they’re going to take, and it isn’t a great thing, as a buyer.
Loren Feldman:
Shawn, what do you do when that pops up on your screen? Do you allow the cookies or not allow the cookies?
Shawn Busse:
I mean, if I’m given the chance to reject it, I usually will. But a lot of businesses are sneaky, and kind of make it difficult or the functionality doesn’t work as well. And then I’m kind of in the Jaci camp on this one. It’s just like, really? You think there’s some secrets out there that you’re maintaining? Like, no, they have all your information. It’s everywhere. I think there was a brief moment in time when they passed the CAN-SPAM law, where I saw kind of a shift towards regulation and some recognition of privacy. And then it just was promptly ignored. And I just think consumers have no power in this realm.
Loren Feldman:
And the upshot of that is, Shawn, that businesses will continue to be able to target audiences?
Shawn Busse:
Yeah, yeah. I mean, they want customers. I think it’ll get more expensive. I think it’ll get more expensive and worse. I think Cory Doctorow, who does work around the enshittification of everything, is a must read for any business owner because, essentially, the things that have been good and have been successful in the past are getting worse and worse. And so continually relying on the same thing is a risky bet.
So I think, Jaci, I’d be curious to hear what you think about this. But I think the challenge to owners now is to diversify the ways that they get customers and they make connections. And we’ve been on a bit of a journey for the last 10 years of everything was digital and it was great, to it’s getting a lot harder.
Jay Goltz:
You know what, I’d use a different—not just diversify. I would say maximize, which simply means: Everything matters. It’s like I said, it’s not just your digital advertising. It may be that your office should look different, if people come to your office. Maybe your people should dress differently. Maybe your logo should be looked at. Maybe your—
Loren Feldman:
I thought you had nothing to say on this topic, Jay.
Jay Goltz:
No, no, that was about cookies. Now, we’re talking about—
Loren Feldman:
We’re still talking about cookies.
Jay Goltz:
All right, then I’ll just sit here and wait for your next compelling topic to come up that I can jump in on!
Loren Feldman:
That’ll be in just a moment, but first, Jaci, I think Shawn sort of asked you a question. Did you want to respond?
Jaci Russo:
I missed it. Jay occupied my space, my brain.
Shawn Busse:
It’s hard once Jay gets going. The oxygen goes out of the room.
Loren Feldman:
Well, I’m gonna give him another chance to get going, then. Jay, you’ve been going back and forth with your accountant over a bill for a while. Last time I spoke with you, you hadn’t really decided whether you should just pay the bill or not. We’re here to help. Tell us what’s been going on.
Jay Goltz:
Been my accountant for 25 years. I pay tens of thousands of dollars a year for accounting services. Had him come out. Never comes out. When I say never, I mean pretty much never. He hasn’t been here in years. My staff never met him. Came out, had a meeting. We were changing staff, and had a meeting about where we were at. Spent an hour here. Went back, typed up an overview of what happened at the meeting—which, okay, I didn’t really need it, but all right. And then sent me a $2,500 bill for that.
And then I was using their recruiting services to find an accounting person, and they couldn’t find one. And I got a bill for—this is the part I’m struggling with—I went along with it. They told me it was three and a quarter an hour, and I went along with it. And I shouldn’t have. And so they sent me a bill. One’s for seven grand. Now another one’s for eight grand. And I let him know how—
Shawn Busse:
For recruiting?
Jay Goltz:
Yeah, that didn’t work. And I told him how unhappy I was in December: “All right. All right. All right. I’ll adjust the bill.” Okay, I haven’t heard a word. Now all of a sudden—hasn’t changed anything—they’re calling to see why we haven’t paid the bill. So I emailed him and said, “Hey, you were going to look at this bill.” “Yeah, yeah. Yes, I will. What amount—what are you thinking?” [Laughter]
I’m glad you’re laughing, because that’s appropriate. You know what, if I screw something up in business, which I certainly have, I don’t leave it on the customer. I say, “You know what, Mrs. Jones? I’ll tell you what. I’d like to give you half off on this. It didn’t go right. I know you were inconvenienced. Does that sound good?” And I make the offer. I don’t say to the customer, “What would you like to pay for this?” I just don’t think it’s her problem and her responsibility. So I’ve been struggling with whether to tell him, “No, you tell me what you’re going to do with the bill. And whatever it is, I’ll pay it.” Or whether I should tell him, “I think you should take X off.” Or, I don’t know. So, you tell me.
Loren Feldman:
Well, first, what was the purpose of that meeting? Did he accomplish anything in that hour?
Jay Goltz:
I made a major change in my accounting department, and he or I or both of us thought it’d be a good idea to come in and review the accounting department and what we do here. And he came out to go through that. So then his argument will probably be, “Well, I had to put drive time in there.” And I think, right, you mean the drive time that you were on the phone the entire time billing another client? That was the time I’m paying for?
Loren Feldman:
Did he accomplish anything? Did his hour—
Jay Goltz:
No, he went through them, and went, “Here’s how the accounting department works.” Which gets me back to: many accountants have never actually worked in an accounting department in a company and really don’t necessarily understand how it all works, or how it should work. And you’d think they would all know, but all I can tell you is, there wasn’t any great “Aha!” from this whole meeting. And maybe you can throw it back on me. Okay, I’m not listening, whatever. Okay, fair enough. I just think it was kind of an egregious bill for coming out for an hour.
Loren Feldman:
So you haven’t paid any of this yet?
Jay Goltz:
No. Part of me thinks, “Just pay the bill.” And then part of me thinks, send him an email and say, “You know what? Here, take 25 percent off. I’ll be happy.” And then part of me says: Send them a thing and just go, “No, you know what? You decide. Just send me a bill—you’ve heard my argument as to why I’m not happy about the bill. You decide what you think is appropriate. Send me the bill. I’ll pay it.” So those are the three choices.
Loren Feldman:
Jaci, Shawn, what do you think?
Shawn Busse:
How much do you value the relationship?
Jaci Russo:
Are they doing a good job for you in other places?
Jay Goltz:
That’s a very tricky question, because it depends on what you expect out of your accounting firm. Are they doing the taxes properly? Yes. Have they helped me procedurally with giving me some insight into: “I don’t think you need a controller?” “I don’t think you need a CFO, you need a controller?” “No, I don’t think you need a controller. I think you need a ____.” Do I think that there’s some great accounting firm out there that’s going to come in and do what I think? No, I don’t. I lowered my expectations over the years.
I believe that most, many—whatever word you want to use—accounting firms do your tax returns, period. And the ones that say they’re advisors and stuff, my experience over the years—and this isn’t just with one accounting firm; this is with three different accounting firms—my experience over the years with three different accounting firms is they couldn’t advise themselves out of a paper bag.
Jaci Russo:
And so you hired them to do a campaign to recruit new employees?
Jay Goltz:
They have a department of their accounting firm that does recruiting. And they charge three and a quarter an hour, and they couldn’t find a good candidate. All right, I’ll give you the crux of the problem. They couldn’t find a good candidate. So then she says, “You know, I hate to say it. I think we might have to use a contingency-based recruiter, and I know one that I use.” “Okay, if that’s what it’s gonna take, do it.” They hire the recruiter. They send me a resume. The resume has a person on there who’s had five jobs over six years. [Laughter] Right? Exactly.
I say to the person at the accounting firm, I go, “What the hell? This person’s had five jobs in six years.” She goes, “You know, they shouldn’t send them to you. They should send them to me, and I’ll review them.” I said, “Oh, let me get this straight then. I should pay a contingency accounting firm to send you bad resumes. And then I should pay three and a quarter an hour for you to go through the resumes to decide they’re bad. Yeah, this isn’t working.” And that was the last conversation I had with her. So that’s why I was upset.
Jaci Russo:
Do they do a good job with your accounting and taxes?
[Pause]
Okay, your silence speaks volumes.
Jay Goltz:
No, I told you I lowered my expectations over the years.
Jaci Russo:
You shouldn’t have to.
Jay Goltz:
What I need, I don’t think that’s what accounting firms generally do. I don’t think they come in and help you set up your accounting department. And it’s just, I don’t know, I’ve only had my own company.
Shawn Busse:
Jay, Jay, Jay, that’s not the question she asked you. She asked you: Are you happy with the basic stuff that they’re doing?
Jay Goltz:
Yeah, sure. And listen, I’m not looking to blame. I’m a big boy. I would just fire him. So it’s just a matter of, I just want to do, quote-unquote, the right thing. And I am struggling. I am guilty as charged that, when she said three and a quarter an hour, I should have said to myself, “Well, that’s a lot of money for a non CPA-person,” who is probably making, you tell me, 100 and a quarter a year. So they’re making $60-75 an hour, and they’re billing him out at three and a quarter. And I signed off on it. I said, “Okay.”
Shawn Busse:
This is just endemic of two major problems. One is the recruiting industry in general, which is largely broken. And the second, which is the accounting industry, which has tried really hard to pivot to an advisory-based model, but really is having a hard time doing it. And I would say a tiny fraction of success, at that. And in my experience, I think your hunch is accurate that these folks can do taxes just fine, because that’s a rules-and-compliance-based universe. And then if you need somebody who’s actually dynamic and can think differently and creatively, that’s a different company.
Jay Goltz:
It isn’t even just that. It’s about personnel. It’s about interviewing my accounting manager and figuring out should this person be left at—that kind of stuff. It’s business. It’s straight business, HR business. And that’s not what accountants usually do. HR and accountants are kind of two different animals.
Loren Feldman:
You knew that, though, when you hired them to try to do these things, right? Does that factor into your decision about whether to pay them or not?
Jay Goltz:
I’m just struggling with—I signed off on the three and a quarter an hour, and I shouldn’t have—and here, let’s just get the big perspective here. Because this is important as a business owner. If you hire a recruiting firm, they’re going to charge—you tell me—30 percent, right? Shawn?
Shawn Busse:
If they’re contingent. There’s also retained-search.
Jay Goltz:
Okay, but let’s just say you do that. For just a blank number, you’re gonna pay someone 120 grand, okay? So you’re gonna pay $36,000 In contingency. So the fact that I’ve spent 12 with the idea that maybe by buying the 12, I have the risk of not finding somebody, but if I pull it off, I saved a lot of money. Okay, that’s part of the balancing act of why you do contingency versus not. It’s not a sure thing. If you pay him per hour, you’re gambling that, “Well, I think I’ll be able to find somebody when I spend the 15, instead of spending the 36.” So, I knew what I was getting into with that.
On the other hand, I think whatever time was put in dealing with this recruiter, that’s where they owe me something. So maybe I’m helping myself here by talking to myself. Maybe that’s the answer. Say, “You know what? Take 20 percent off, and I’ll pay the bill.” I think they owe me that. Because I think that was absolute bullshit, that they sent me a resume and her answer. Instead of her saying, “That’s ridiculous. You know what? Don’t use this guy,” she tells me she should review them first. Really?
Shawn Busse:
I mean, it just feels like you’ve stumbled into a really bad fit. Like I said, the recruiting industry is a mess. It’s not usually advantageous for employers. I mean, most of the clients I have, they go a totally different route, in terms of getting talented help, because A) it’s expensive to use recruiters, and B) the incentives are all wrong. For the recruiter, if there’s a lot of churn and turnover, it’s to their advantage. And that’s the broken part of the model.
Jay Goltz:
Okay, before we get the hate mail, let’s just all agree. There are some wonderful recruiters out there that do an excellent job and care about their clients. I’m sure of that.
Loren Feldman:
Are you going to say the same for accountants, Jay?
Jay Goltz:
Yes, absolutely.
Shawn Busse:
I just want to say, I do know of good firms. But they’re not contingent. They’re retained search, generally. And really, if you shop hard and you look at their process and their guarantees, it’s a really good way to understand: Have they set their model up in a way that is built for success for both groups?
Jay Goltz:
Well, you tell me. Do you think three and a quarter an hour is a reasonable number?
Shawn Busse:
That’s not the right question. That’s not the right question. You’re buying on their parameter, which is a broken parameter. I think, actually, you’ve just found a poor vendor. I mean, that’s just fundamental. So two and a quarter would be too much. One hundred an hour would be too much. Any amount of money is too much, because their system isn’t very good. So you need to find a different vendor that has a process and a methodology that works well. If they’re valuable to you from a tax perspective and from getting this stuff done, then pay some portion of it, pay all of it, I don’t know, just to protect the relationship, if that’s valuable to you.
Jay Goltz:
No, I’m certainly not going to not pay it. It’s just a matter of—
Shawn Busse:
Then just move on, just move on. But hire somebody whose process is remarkable. Back to Purple Cow. You found a very unremarkable vendor. I’m sorry.
Loren Feldman:
All right, my thanks to Shawn Busse, Jay Goltz, and Jaci Russo—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/21hats. Thanks, everybody.
