Episode 23: That’s a Stupid Question
Guests:
Karen Clark Cole is co-founder and CEO of Blink.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Laura Zander is co-founder and CEO of Jimmy Beans Wool.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Laura Zander: “Every time somebody doesn’t work out, I go in this kind of a deep depression of, ‘I suck. And if I was a better manager, this would have worked out.’”
Laura Zander: “I don’t think I’m running that business. I think that the business is running me.”
Jay Goltz: “We had the strongest economy we’ve ever had. Unemployment was at a record low. Why in the world will we not get back to normal in six months?”
Full Episode Transcript:
Loren Feldman:
All right, let’s get right to it. Unfortunately, it seems we’re not quite done with this coronavirus. In fact, cases are exploding across the country. Some states are pausing their reopenings, retailers like Apple are closing stores they just reopened. The possibility of another shutdown seems increasingly likely.
Laura, let’s start with you. You have operations in both Nevada and Texas, two states that have paused their reopenings. Where do things stand with Jimmy Beans Wool? What does it look like to you?
Laura Zander:
Yesterday in Nevada, we sent everybody home who could work from home. They had come back into the office for a couple of weeks, and then the governor just issued mandatory masks. He issued a couple of other things, so just to be on the safe side, we’re back to what we were doing during lockdown.
Most people are working from home, and people who can’t work from home are working in the warehouse. They’re wearing masks. Our retail store is still closed. We had a tentative open date of August 1st, and we actually have an event scheduled for mid-August. We’re kind of just watching and waiting to see.
Loren Feldman:
You’re still hoping.
Laura Zander:
Sure. Hope is a strong word because we don’t have any control over it. I don’t know that we’re even hoping. We’re just kind of watching and waiting. For the event that we’re having, it’s a retreat, and it’s small. Smallish, 30 to 50 people. But quite a few people have just reached out, because a lot of people come from around the country, and they want to buy their plane tickets, and they want to come, and they want to attend.
We were just having a conversation the other day—before face masks were required in Nevada—do we require face masks at the event? Of course, we think it’s the right thing to do. But we realize, as you guys have probably dealt with, that some people are going to be really upset if you require them. That doesn’t necessarily change our decision-making, but it is an interesting thing that we have to be aware of, and that we need to talk about.
Loren Feldman:
How are things in Texas?
Laura Zander:
Things in Texas, they’re actually going really, really, really well. As far as shutdown, we’re in Fort Worth, which is outside of Dallas. If you look at the map, Texas is getting a lot of press right now for the cases rising so drastically.
Loren Feldman:
Houston in particular, I think.
Laura Zander:
Houston in particular. You know, it’s funny. My dad lives in Corpus Christi, and if you looked at the map yesterday, Corpus is in one of these red zones where the cases are rising dramatically, but they’ve risen from .4 cases a day to four cases a day. There’s a lot of buyer beware when you interpret statistics and make sure that you’re comparing apples to apples. So yes, it is a 10-time increase, but their rate was so low to begin with.
Loren Feldman:
You’re talking about Corpus Christi, right? Not Houston, because in Houston, they’re running out of beds.
Laura Zander:
Yeah, they have the numbers for sure. But the entire state, if you look at a lot of the different areas in the state that are marked as red because they have drastically increased, they’re very rural areas that have gone from basically having no cases to having a couple cases.
Loren Feldman:
So this recent surge hasn’t had an impact on what you’re doing at the company you bought in Fort Worth?
Laura Zander:
Not a significant impact, no. We’re still operating the way that we were during lockdown. We haven’t really changed anything. People who can work from home are working from home. We are very spread out. We work in a very, very open air environment, so it’s basically like we’re outside.
Loren Feldman:
And I should point out it’s not a retail situation. You’re making yarn.
Laura Zander:
Yep. People work in different areas of the building, and then we have 25,000 square feet. It’s very plausible that one person has 3,000 square feet to themselves. There’s not a lot of cross-contamination.
The people who are a little bit closer together, they’re over stoves, there’s the heat, there are big fans. People are wearing masks and gloves, and we’ve got hand sanitizer. We had a whole conversation yesterday about everything. “What do you guys need? If anybody is sick—anybody in your family—don’t come to work. We’ll still take care of you.”
Loren Feldman:
Have you had people get sick?
Laura Zander:
We have had a couple of people get sick. They didn’t end up having Covid, but they’ve been sick, and so they go home for 14 days, or until they take a test and find out. We had one of our employees, her husband was exposed at work to a guy who did test positive, and they had just gotten out of a meeting, so she stayed home, and then she got tested. Then once her test came back, she came back.
Loren Feldman:
Karen, tell us about Seattle. In past podcast [episodes], you’ve praised the governors of Washington, Oregon, and California for being early and aggressive and coordinated in what they did, but California is one of the states showing an outbreak now. What does all that mean for Blink?
Karen Clark Cole:
For us, the bigger deal is in San Diego and in Seattle, where we have our research labs. In all the other offices, we’re encouraging everyone to just stay home as long as you can into the fall. That’s really fine. Nobody likes it, but that’s fine. But in Seattle and in San Diego, we actually have to run physical studies. We have some clients where what we’re testing for them is an actual physical thing, and so we can’t do that remotely like we’re doing [with] most other stuff. We’re waiting until it’s safe, until the governors are allowing those offices to be open, and then we’re doing it very carefully.
We’ve got all kinds of massive amounts of protocols in place, including all the things that the governors are mandating in order to open. We’ve got to have the plexiglass shields when you come in to check in. We do a temperature check. They have to wear a mask. So all those things are in place.
Loren Feldman:
Have you personally been into the office in Seattle?
Karen Clark Cole:
I have. Not very much. We’re gearing up for both of these facilities to open beginning of July. What we’re doing is the leadership team is on a rotating schedule. One of us will be in the office every day of the week, so my day is going to be Wednesday, which I’m actually really looking forward to.
But again, it’s minimal people in the office. There are some people who are already back in the office, because their home working environments aren’t very conducive to actually getting any work done when it’s a one-bedroom apartment sharing with kids and spouses all on meetings.
Loren Feldman:
Are you at all concerned that there might be a pause in your area that would prevent you from doing that by the first?
Karen Clark Cole:
Oh, yeah, I’m expecting it. Probably not by the first, because that’s only a week away, but I’m sure in August, something’s gonna happen, and we’re gonna dial it back again. So if we can be open and run a few studies, get some of our clients further along, even for a month…
Loren Feldman:
Jay, Illinois and specifically Chicago are doing much better than some of the other states we’ve been talking about. In past podcast [episodes], you’ve talked about being kind of excited about some of the opportunities that you saw coming as a result of the crisis. Other times when I’ve talked to you, you seem more stressed than excited. Where are you today?
Jay Goltz:
I have an opportunity. I have a store that was a well-known store that’s closing, and I made a deal with him. We’re going to take over his mailing list and work together to try to get some of those customers. Just as I figured would happen, the market has been disrupted. I don’t care what business you’re in, the market has been disrupted.
What does that mean? It means there’s going to be customers looking for new suppliers and vendors. There are a bunch of employees who you would have never been able to hire six months ago who are now thinking, “Yeah, maybe I should leave here.”
Loren Feldman:
Tell me about the store, though. It sounds like this is a situation where somebody had kind of decided to pack it in. I’m assuming you’re getting a good price. Is there any concern on your part about doing this at a time when things are flaring up around the country?
Jay Goltz:
I’ve got this zero-risk deal. I decided not to take over another lease. I don’t want to take it. I’m simply working with him to transfer his customers over to us and giving him a percentage. It’s a zero-risk deal for me.
Loren Feldman:
Oh, so you’re not actually buying his store.
Jay Goltz:
No, no. I thought about it, and the more I thought about it… It’s the framing industry in general. Suburban stores are difficult. I decided I’m working out a deal with him to just get some of that business to my existing locations. It’s funneling money to him, taking care of his customers. Everyone’s happy.
There are going to be opportunities everywhere, and I’m sure there’s going to be some employees out there who, like I said, are looking for jobs now. Now’s the time to go from defense to offense and start looking for some opportunities.
Loren Feldman:
Well, that’s a really interesting point. Is now the time to go to offense? Would you say that if you knew that another shutdown was looming?
Jay Goltz:
When I say “offense,” it means, if you need people, now’s the time to start looking for them. Listen, I’ve told you this story before. The big crash, I bought a gigantic building for super cheap, right?
Loren Feldman:
This is kind of a different environment and we don’t really know how this plays out.
Jay Goltz:
Obviously, there are 50 different variables. I’m not saying take your last dime and go. I’m saying if you have some money, it’s all about calculated risk. When this is all done, the companies that got out and looked for opportunities—Karen just talked about she’s still trying to do some things for clients. She’s not hiding under the table. She’s trying to do what she can. Laura is out there. We’re all out there doing business, and we’re flying the plane through the storm. We’re not hiding in the back.
There are a lot of companies right now who are hiding in the back. Lots of companies are going to go broke, and they’re going to blame it on the coronavirus. They’re gonna blame it on the government. They’re gonna blame it on their competitors, taxes, whatever. I’m watching them put themselves out of business right now.
Perfect example: pet store in the northern suburbs of Chicago. Someone goes in there to get something, and none of the employees are wearing masks. Now first of all, it’s state law at this point. You’re supposed to be wearing masks. My friend’s daughter works there. She goes, “Herd immunity is going to kick in.” How many customers are going to walk in there and walk out and say, “I’m never coming here again”? What do you think? Fifty percent? Forty percent? Thirty percent? She’s gonna put herself out of business as sure as I’m sitting here. She’s done. Why? Because of the coronavirus? No, because she’s an idiot.
Loren Feldman:
That’s what’s going on where you are. Laura. I’m curious, with the cases rising in Texas and Nevada, where you are, I would put the same question to you. Would you be doing anything differently right now, if you knew a shutdown was coming?
Laura Zander:
No, because we’re just kind of pretending that a shutdown has happened.
Jay Goltz:
Laura, just say it: that’s a false question. If she knew? She doesn’t know. You can’t ask that question. We don’t know if a shutdown is coming.
Loren Feldman:
What do you mean I can’t ask that question?
Jay Goltz:
You can’t say, “if you knew.” She can’t know.
Loren Feldman:
You’ve never heard of a hypothetical question, Jay?
Jay Goltz:
No, it’s a stupid question. Sorry. “If you knew.” if you knew a helicopter was gonna fall on your head, would you go outside? No, I wouldn’t. Okay.
Loren Feldman:
Jay, you’re replaying a conversation we had back in March where you took a similar tone when Karen said that she knew this was going to get bad, and you weren’t ready to hear that.
Jay Goltz:
No, no, she said, “guaranteed.” That’s what she said: guaranteed.
Loren Feldman:
Well, she was right.
Jay Goltz:
Okay, that’s different then… you said guaranteed.
Loren Feldman:
Well, I’m not saying “guaranteed.” I’m just asking a hypothetical.
Jay Goltz:
And Karen, to your credit, when you told me how bad it was, I really didn’t get it. I’m the first to admit, I didn’t get it. I didn’t say you were wrong. If you would have said, “I’m pretty sure”… It was the guarantee. But you were absolutely right. I could have never imagined things were going this way. I recognize in hindsight, you were living it, so you saw it. It’s hard to imagine until you see it.
Loren Feldman:
So Jay, why are you so sure that couldn’t happen again?
Jay Goltz:
No no, I’m not at all saying that… it might happen again.
Loren Feldman:
You said it was stupid of me to ask the question.
Jay Goltz:
No, you said, “if you knew it was gonna happen.” That’s what you said, “If you knew…” She can’t know!
Laura Zander:
All right, all right.
Loren Feldman:
Go ahead and answer the question anyway.
Laura Zander:
We’re operating as if there is a shutdown. So like I said, we still have people working from home. Only the essential people here. So yeah, we’re operating the same way we were two months ago.
Loren Feldman:
Are you putting money into marketing or hiring or anything like that where you’re not sure whether this is a good time to do that?
Laura Zander:
No, but I think we’re in a unique position because we had just acquired this business, and there’s still so much foundational work to be done. This is a good time for us to be very quiet and slow and for us to work on systems and processes and getting inventory. We’re not focused on growth. We’re just focused on survival—on survival and improvement. The guys in the warehouse had never had computers before. Now they have computers and we’re working on computer training. We’re doing a lot of training stuff.
Loren Feldman:
Karen, your business, Blink, is the one business in this group that has been strong throughout. Is that still the case?
Karen Clark Cole:
Yeah, we are still profitable, which is good. Our revenues are down by probably 10 percent, which is obviously not bad at all. But we’re making adjustments. We’ve furloughed some people, but not many. We were running lean before, so we have been really careful to manage the bottom line to make sure that we’re not taking big dips. Overall, we’re doing great. I’ve talked about this before, but we had a rough year last year, and so we have all kinds of systems in place to keep watching like a hawk everything that’s going on. And so we have been able to react very quickly.
I just saw in the news this morning that Microsoft has officially shut all of their retail stores, which is totally amazing. I can hardly believe it. They’re just focused on digital sales now, so they’re going to beef up their digital storefronts, all that kind of stuff. So my feeling is that we’re going to be really busy. We’re bracing ourselves for that, thinking that there’s going to be a massive upsurge for us, as soon as we can get our labs open.
Loren Feldman:
When you talk about that massive volume that could be coming in, is that something you would have to gear up for? Would that require an investment?
Karen Clark Cole:
No, not money-wise, but it would be hiring, so we just need bodies to do the work. We’re actively recruiting in our contractor pool, which is what we do when we’re not sure that it’s a new normal. Iit might be just a spike.
Loren Feldman:
Jay, you still there?
Jay Goltz:
You’re asking the wrong question. What you really mean to ask everyone is, given the risk involved with not knowing whether a pandemic is coming again, or it’s going to get worse, are you comfortable investing some money now? Are you taking some calculated risks? That’s a good question, and I think we’ve all answered it to a degree. I believe the answer is, you have to take some risks. That’s what we do.
The question I’d like to ask the other two is: stress causes people to make bad decisions—have you seen your competitors doing anything stupid lately? Do you see any opportunity because your competitors have dropped the ball?
Laura Zander:
Yeah, one of our main competitors went out of business.
Jay Goltz:
There you go. Okay.
Laura Zander:
The other main competitor didn’t address Black Lives Matter. They just left it sitting there.
Loren Feldman:
Has that been a big problem for them? Are they paying a price for that?
Laura Zander:
That’s a good question. I don’t know. I don’t know what their volume is. I don’t know what’s going on in the inner circle.
Jay Goltz:
You saw what I did when we had to close down. I put a big sign in my window: “We miss you.” Drove all around Chicago. How many companies, retailers, put a sign in their window other than an 8.5-by-11 sheet of paper in the front door? How many? They’re paying $5,000 a month for rent, cars are still driving by, and no one thought, “Maybe we should put a sign in the window”? That’s just not smart retailing. It just isn’t. There’s going to be some fallout from this, but it’s not going to be a direct effect of Covid. It’s going to be the direct effect of stress and making bad decisions.
Loren Feldman:
Well, some of them may be the direct effect of Covid.
Jay Goltz:
For sure, for sure. I’m just saying some of them aren’t gonna be.
Laura Zander:
Oh, Jay. God, if we were just all as smart as you are…
Jay Goltz:
There you go. I’ll just sound dumb, so no one will be offended. Okay?
Loren Feldman:
Laura, I wanted to follow up with you. One of the last times you were on, you talked a little bit about your situation in Texas. That’s where you are today, right?
Laura Zander:
Yes.
Loren Feldman:
Your plan, I think you told us, was to go down there, spend two weeks, and then go back to Nevada. Is that what you’re doing?
Laura Zander:
Yep, I go home tonight.
Loren Feldman:
And has that worked out well for you?
Laura Zander:
Yeah. It’s been great.
Loren Feldman:
The travel, the flight has been okay?
Laura Zander:
Well, it was one flight.
Loren Feldman:
This is your first time down there, and you’ve been there for two weeks?
Laura Zander:
Yeah, I mean, the flight was full. What was interesting was going to the airport and seeing half of the people not wearing masks in the airport, going on the plane, and everybody’s supposed to be wearing one, but people take theirs off when the flight attendant walks away. Observing that was very sobering, and all I can do is, I’ve got my N95 on. I don’t touch a single thing. I didn’t get up. I don’t move. I don’t touch my face. Wash my hands as soon as I get off the plane.
It has been a really interesting study in human behavior to watch who goes along with this and who doesn’t. I went to Austin this weekend, and all I kept hearing was Austin has mandated masks, they’ve mandated this, they’ve mandated that. I check into my hotel, and it’s a top chain hotel, and there are five guys sitting in the lobby, just chat chat chatting. You would never know that this is happening. The two women who are at the front desk, they don’t have masks on. They’re chatting with the guys, talking about what bar they’re gonna go to that night.
Karen Clark Cole:
It’s the same in Seattle. You see people driving in their cars with their masks on and other people having a barbecue at the beach as if nothing ever happened.
Laura Zander:
Yes, exactly.
Loren Feldman:
Laura, did you go to Austin for business or for pleasure?
Laura Zander:
I went to visit a shop. One of our customers, who’s been a friend of mine forever, I went down to her shop. Her retail store is open. They’re all wearing masks obviously. They’ve got their cleaning stuff down, and they’re just doing it by appointment, so one person in at a time to go in and touch the yarn. Then we went and had coffee and we sat outside, kind of far away from each other, and dropped the masks.
Loren Feldman:
Have you been comfortable staying in hotels?
Laura Zander:
No, I rented an Airbnb because I didn’t want to stay in a hotel, and I wanted to reduce the number of people I come into contact with. I’m renting. I’m staying in somebody’s garage, so I haven’t seen anybody. I stayed in a hotel one night. Other than those guys, I didn’t see a single person the whole time I was there. You touch the elevator button. I touch it with my elbow. I open the door with my elbow. Wash my hands constantly, every time I touch anything. So given the fact that there weren’t very many people there, I felt okay. I was more comfortable than I thought I would be.
Loren Feldman:
The last time we talked about your operation down there, you were talking about figuring out who should be leading it. Have you solved that situation?
Laura Zander:
Yeah, we did. The HR manager, who had been here for about two and a half years, she stepped up and she has really stepped up for the last few weeks once the other general manager had left. When I got here, we talked about it, and she is officially the general manager here now, and has done a fantastic job.
Jay Goltz:
Good for both of you that she stepped up, you recognized it, you supported it. Good for both of you.
Laura Zander:
The whole team, here, it is a magical difference. Just the last two weeks, the whole team here has really stepped up in so many different ways.
Jay Goltz:
So have you figured out what the lesson from that is? The lesson is: if you have one wrong person in your company in a management role, it screws up the entire dynamic.
Laura Zander:
You’re totally right.
Jay Goltz:
It shuts people down. You figured it out, and you fixed it. Hats off to you.
Loren Feldman:
Well, great. We’re out of time. Big thanks to Karen Clark Cole and Laura Zander. Some thanks to Jay Goltz.
Jay Goltz:
Loren, you don’t need to thank me.
Loren Feldman:
No, I always thank you, Jay. You make it fun. Thank you, everybody. Be careful out there.
