Episode 33: When’s This Gonna Be Over?
Guests:
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.
Paul Downs is founder of Paul Downs Cabinetmakers.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
William Vanderbloemen: “I don’t want to sound pollyannaish, but in some ways, we needed a jolt and this gave it to us.”
Paul Downs: “If I was unconscious for a month, that would be pretty bad for the business. I don’t even have a plan for that.”
Jay Goltz: “When a kid gets hung around the neck with a business they never wanted to be in, it is a horrible thing to do to your children or your wife. I don’t want to do that.”
Full Episode Transcript:
Loren Feldman:
William, I’d like to start with you. Last time we spoke, I think you were about to launch a new business. Did that happen? How’d it go?
William Vanderbloemen:
It did, and it’s gone better than we expected. We do executive search, which—whether it’s a church or a school or a relief organization—it’s essentially the C suite of an organization we help them find. But when you get to middle management, the process and what we do really is not worth the money. But we have lots of clients who need middle management stuff fixed and solved and staffed.
So we’ve kicked it around a number of different ways over the years, and COVID finally accelerated our process. What we’ve been working on for a long time got sped up in March and April, so that we could open as churches and schools and businesses started to reopen in the fall. We went into it with realistic expectations, and we’re only not quite a month in, and we’ve beaten everything we thought we’d do this quarter. So it’s good.
Loren Feldman:
Did you have to invest a significant amount of money to launch this business?
William Vanderbloemen:
Not as much as you’d think. If you’re talking about money, like writing checks out of your account, not a whole lot. I mean, there was some. We don’t have a supply chain. Now, in human capital and in wages paid to people to set it up in central office services, yeah, we paid for that. But that was where COVID sped things up. Rather than fire people who didn’t have a whole lot to do in March or April, we put them to work, serving churches, and then starting this new company. Well, while we’re waiting on things to get going again, let’s go ahead and build the framework we hadn’t had time to build. The costs were hidden costs or soft costs. So they were there, but in terms of, did I have to go invest a bunch of my capital back into the business to get it going? It was not as large as you might think.
Jay Goltz:
So you’re talking about some reallocation of resources to some degree.
William Vanderbloemen:
I guess so. But you’ve started businesses, so you know, nobody knows the saying “a penny saved is a penny earned” more than an entrepreneur. Nobody. I very easily could have laid off five or six people in March who I didn’t need, had we not started this company. I kept them. I paid their wages so that they could do something that didn’t generate any revenue, just got an infrastructure built for a new company that may or may not work. The gamble was in those costs that could have been a penny saved, or a lot of pennies saved, or a lot of pennies earned. So that may sound like a spinster way of dealing with it, but the costs were there. They were just soft and not as prevalent as if I had to go take out a loan to buy a building, or a new warehouse, or some of the things that you might encounter, Jay.
Jay Goltz:
I think the lesson from that, and from what I’m dealing with, is I believe that, at some point, you’ve got to get off of defense and get back on offense because you can’t stay on defense forever. I see businesses all around Chicago that I believe are slowly but surely putting themselves out of business because they’re still in panic mode. They stop spending money, stupid stuff like the ice cream shop on a major street that has an awning outside that’s just ripped to shreds. That looks horrible. And you say to yourself, “Really? For 800 bucks, you can look like you’re back in business, and instead you’re sending out the impression that, ‘Yeah, we’re circling the drain.’” It’s not good.
William Vanderbloemen:
That’s very much the attitude we took, Jay. In our industry, or our little micro niche of the search industry, there are very few people who try and do what we do, and they don’t use the same approach. They’re nice people, but I don’t think they do it very well. We determined the industry will probably survive, but it’s going to be who’s gonna be the last man standing at the end of this. So we were like, “You know what? Rather than go into hide-in-our-cave mode, we’re gonna come out swinging. And if we die, we die with our boots on.”
Loren Feldman:
William, when you say it’s doing better than you anticipated, are you referring to revenue?
William Vanderbloemen:
Yes, real dollars in the bank are already better than we projected through the end of the year.
Loren Feldman:
And what are your ambitions for the business? Do you think this could be as big of a business as your executive search? Or what are you thinking?
William Vanderbloemen:
You know, that is a great question, Loren. Exec search, it’s like I’ve owned a Lexus dealership for 12 years. It’s not a Bentley, but it’s a Lexus, and we’ve got a lot of people who are very happy with that. And now I own a Toyota dealership as well. You and I were together a couple years ago at the Ford factory where the Model T was invented, and that’s when Ford started making his money. It was when he got a car everybody could afford. Maybe that’ll be what happens.
It would have to be a whole lot of volume to surpass what we’re doing with exec search, and it’s two different value propositions. If you name the leader of an organization, you can’t impact an organization deeper than that. But if he doesn’t have the rank-and-file, middle-management support staff to get a team put together, then they can’t execute the vision they have. So it’s just two different value propositions.
Loren Feldman:
Do any of you feel as though you’ve been changed as a leader by the crisis we’ve gone through?
Paul Downs:
I feel that I was a much better leader going into the crisis. The crisis has been changed by my leadership ability.
Loren Feldman:
I’m not sure I follow.
Paul Downs:
In other words, in 2008 when my world fell apart, I was barely equipped to handle it. In 2020, when this thing arrives, I feel so much better equipped to handle a crisis that the crisis itself doesn’t feel the same, if that makes sense.
Jay Goltz:
Absolutely. There’s that old phrase, “a smooth sea makes a poor sailor,” and the fact is, when you’ve been through stuff like this—‘08 was horrendous, as you said—I feel the exact same way. I’ve been handling this whole thing a whole lot better than I would have handled it 20 years ago.
William Vanderbloemen:
I may kick myself for saying this, Loren, but I think one day I will look back at this and say, “That’s the best thing that could have happened to me,” because it got me out of managing-a-company role and got me back to, “Hey, we need to act like a startup and we need to rethink everything.” Our agility’s better than it was. It’s not without pain. I don’t want to sound pollyannaish, but in some ways, we needed a jolt and this gave it to us.
Loren Feldman:
Were you aware that you needed a jolt?
William Vanderbloemen:
Maybe. Not as aware. How’s that? I mean, I knew we weren’t in startup mode anymore, but I’d forgotten how nice it is to have the agility of startup mode. It’s not sustainable forever. That doesn’t work, and I want a sustainable business, and we weren’t shrinking. But to have that sort of forced acceleration has really gotten us… it’s like we’ve hit rewind on our agility to a place when we were much leaner and faster.
Jay Goltz:
There’s another good saying: “The sight of the guillotine helps sharpen a man’s mind.” So when things get really bad like this, we start paying attention to stuff that we should have been paying attention to before. So I agree.
Loren Feldman:
William, I think you told us months ago that you were rethinking how you use commercial space, that you had moved into your offices fairly recently but you had a subtenant, and you were thinking you might give up the space. Is that part of the agility that you’re referring to?
William Vanderbloemen:
We certainly explored that, and just to quickly reframe that, we had enough space for our whole staff to be here. Then we decided we were going to decentralize our offices, all pre-COVID, and we were going to open regional offices in major metro areas where we have a lot of business. All set to do that, framed up, we’d already put in the offer for Orange County and hired the guy, and this was the week before COVID. We were scaling down the headcount here in Houston at the central office, so when COVID hit, and we all had to go remote for quite a while, obviously, you revisit the question: “Well, do we need any space at all? Or can we do this all remotely?”
I wish the answer were, “Yes, we can do it all remotely.” I’d rather have that rent money in my pocket. But I think that the conclusion is even further reinforced that people work better together for our type of business. Not true for everybody. But for our type of business, our central office is going to do better together. Do we need A-plus rated space, and do we need as much? No. And if our subtenants, which are growing quickly, because they’re in energy-efficiency, if they end up saying, “We want the whole space. You all move out,” we’ll move out and figure out something else. But I don’t think it will be a 100 percent virtual office.
Jay Goltz:
I’ll make a prediction. You’re going to read articles—I already saw one, I think it was Jamie Dimon from Chase—this panacea of, “Oh, no one’s gonna go to work. We’re all gonna be working from our house. It’s all gonna be lovely.” You’re gonna see lots and lots of stories about they figured out that their occupancy costs were running about 6-8 percent and that their efficiencies went down 20 percent.
I’m sure there are some businesses that are going to work just fine from home—I’m not saying for everyone—but I’m sure there are gonna be lots of businesses, they’re gonna figure out, “Yeah, we did save X dollars.” But when you look at your big number, it’s not rent, it’s labor. So if your labor just slips 5 percent because they’re home with the dog, or the kid, or the mother-in-law, or the neighbor who wants to show them the new car or whatever distracts people at home, it’s not gonna take much to all of a sudden find out, “You know what? Maybe not a bad thing to pay rent and have everybody in the same room.”
Paul Downs:
Don’t you think there’s gonna be quite a bit of pushback for people who don’t care for the commute? Because that doesn’t show up on the business owner’s books—the cost of the commute.
William Vanderbloemen:
I think it’ll be there, Paul. I was gonna say—it’s the perfect springboard—our clients, particularly our church clients, everybody’s like, “What’s the church going to look like after all of this is back to normal,” whatever that means? And it’s not going to be, “Will it be virtual church or will it be in person?” The answer is going to be: Yes. Before the pandemic, 10 percent of all Protestant churches in the United States live-streamed their worship, okay? Now, 10 percent don’t.
Well, that’s part of the reason we started the new company. How many new AV tech middle management people are needed all of a sudden? We surveyed people who have started online—particularly the ones who received PPP money—and overwhelmingly they’re like, “No, this is here to stay. We’re now both-and,” and I think it’s going to be the same with office space.
Where we used to hold maybe 10 percent of our workforce could be virtual because of extenuating circumstances, it might grow a little, and we might have a more flexible work week, like you can work one day a week from home. I think it’ll be a both-and, and I do agree there are some businesses that’ll be fine going virtual. Ours will not, and I don’t think many will, when it’s all said and done. I think it’ll be a both-and, and as my kids reminded me the other day, they said, “Dad, you know the bad part about Zoom?” I said, “No.” They said, “There is never gonna be another snow day for school.” If we have to shut down for hurricanes or whatever, we know how to flip the switch and get some productivity at home if we have to.
Loren Feldman:
It’s interesting, you do see a lot of people going in different directions. Facebook took a huge commitment of office space in New York City. At the same time, just this week, I saw a story about Stripe, which is paying a bonus to employees who move away from cities where they will take a cut in pay, but they get an initial bonus to do that. Obviously they’re betting that the work from home thing is here to stay.
Jay Goltz:
You can even look at real estate. In Chicago, my kid’s trying to sell his one-bedroom condo in the city, and the market is dead. And in the suburbs, the houses are flying off the market because, between COVID and the social unrest, which I have to tell everyone, it’s over here, it’s fine. There’s not picketing every day. There’s not windows breaking. There was certainly a couple of bad weeks there, but it’s all calmed down. These people flew out to the suburbs, and what’s going to happen is, when the traffic gets back to quote-unquote normal, they’re going to wake up and go, “Oh my god. What did I do?” some of them. Because driving into the city everyday is a pain in the ass, and that’s not going to change.
I believe many things, most things, are going to go back to just like they were. And there will certainly be some things—like what you just said, William, with the churches—I’m sure there will be a profound difference with the online stuff, but some stuff is just going to go back to the way it was. I’m confident of that.
Loren Feldman:
Have any of you changed your thinking about your long-term ambitions for your business? Has this had an impact on what you see as the potential for the business? Either do you see more or less potential?
Paul Downs:
I think it remains to be seen. In my case, it could easily swing either way. One of my guiding principles so far in this thing has just been, “Don’t try to outguess what happens.” Because the reality is arriving at the rate it is, which is different from what I would have predicted. And so if I’m trying to see two or three years out, it just seems to me to be a lot of scaring myself over things that may not happen. Either it’s Jay’s right, we’re all gonna go back to normal, and then people are gonna buy conference tables again. Or they won’t. One or the other. But it just remains to be seen which one it is, and I’ll make the decision when I feel like I’m there.
Jay Goltz:
I think conference tables are very important, just so you know.
Paul Downs:
Well, thank you.
Jay Goltz:
They are. I want you to think about this when you do the off-site stuff and people are at home. Think of those conversations, just one, throughout the entire year that you were sitting around with three or four people talking about something, and all of a sudden the magic of the collaboration comes together and you all figure it out.
“Hey, wait a second.” “We should do…” “Yeah, I love…” “No, we should do it this way.” And all of a sudden, you came up with a great idea, or you saw something that was wrong with the business. Those things aren’t happening. Everybody’s at home. And don’t tell me it’s gonna happen on a phone with four people on the phone. It’s not the same thing. I do believe you can’t replace collaborative thinking in a room around a beautiful conference table.
Loren Feldman:
It can happen over Zoom. I hear what you’re saying, but—
Jay Goltz:
Not as much.
Loren Feldman:
Anybody else? William, do you think it can happen over Zoom?
William Vanderbloemen:
Well, I mean, Loren, you’re asking the wrong guy. My entire faith is built on the idea that Jesus decided he needed to be here in flesh to make a difference. So. Zoom doesn’t work. Otherwise he would have just Zoomed it in.
Loren Feldman:
I didn’t see that one coming.
Jay Goltz:
Wow.
Paul Downs:
I guess he was the only guy who had Zoom.
William Vanderbloemen:
Yeah, he could have waited, right?
Loren Feldman:
Well, there’s no arguing with that, William. I think you put that discussion to rest. Let me ask you about this. Has this affected your relationship with your employees at all? For one thing, has this made any of you more sensitive to anxiety in your employees? I mean, it’s always been there. There’s been more of it of late for all of us, I suspect. Is that an issue you’re dealing with more? Do you look at it any differently?
Jay Goltz:
I definitely have people who are having anxiety, and I’m extremely appreciative of the fact whether they’re doing it for me, for the company, for themselves, or for anyone else, that everybody’s showing up to work. I know some of them, they’re dealing with customers, they’re on the frontline, and I’m totally appreciative of the fact that everybody’s toughing it out and doing what they can do. But it’s absolutely an issue, because I have plenty of employees who are having anxiety, and we’re doing everything we can, but it’s a problem.
Loren Feldman:
When you say it’s a problem, or how does that manifest itself?
Jay Goltz:
I’ve got one person who’s worked for me for many years who has been not showing up to work some days because she’s got such bad anxiety. Since I’ve got over 50 employees, I follow—which I would have anyway—the FMLA laws. So it was suggested, “You should go on FMLA,” months ago, and the person didn’t want to, and now…
Loren Feldman:
Family and medical leave, and if someone goes on that, that means—
Jay Goltz:
You make accommodations for them, and you work with them.
Loren Feldman:
You don’t have to pay them while they’re on leave, right?
Jay Goltz:
No.
Paul Downs:
It’s more a guarantee that they can come back, is my understanding.
Jay Goltz:
Right, yes. So here’s something you wouldn’t know if you weren’t on the front lines. You’d say, “Oh, well, just go to the doctor and get a note.” Going to a doctor, some doctors are getting very sensitive about writing notes like that, so the doctor then says to a person, “You really need to go see a specialist.” Okay. Oops, the specialist is booked up for two months. This is what’s going on. Some of these specialists are just overwhelmed, and the system can’t take all this.
So then you say, “Well, then why don’t you just accommodate them?” Well, then you’ve got a problem with the rest of the employees and violating your company policies of: you’re either on FMLA or you’re not on FMLA. And if you’re not on FMLA, what do you do, throw out your employee handbook about you can’t miss X amount of days? It’s a little bit of a challenge for the HR department. It’s not black and white, and it’s not simple.
It’s stuff you wouldn’t have seen coming, and for people who don’t have 50 employees, it’s not as big an issue. But even if you just want to be a responsible boss and want to follow FMLA if you don’t have 50 people, it’s still an issue. Like, how much room can you give people? You’ve got to take care of the customers at some point. So what if that person’s only showing up two days a week? I mean, it’s not simple.
Loren Feldman:
Has this been an issue for either of you, William or Paul, as well?
Paul Downs:
I have one employee who has expressed not so much general anxiety, although I think she has some, but it’s mostly around her personal situation.
Jay Goltz:
Absolutely. I’ve got that also, where there are people who just have horrendous situations because of this that have nothing to do with my company, with their husband, their wife, their family. That’s a whole ‘nother subject. They’re just in a bad spot because of this whole thing. I forgot about that. I’m glad you brought that up.
Paul Downs:
Yeah, I mean, I’ve certainly experienced that myself when my family situation became overwhelming. I think that, just off the bat, anybody who’s got kids who are schooling from home, and you’re ostensibly being the helper and teacher, that’s a big stress.
Jay Goltz:
I got that too. My daughter-in-law’s got—my grandchildren are eight and five—and she’s a labor attorney, and she’s trying to do her job and trying to [take care of] the kids. It’s a problem all the way around. And the only reason my wife is sane is because my other kid has a baby. She goes over there and babysits four days a week so she’s got something to do, because it’s keeping her out of the house. Because this is stressful for everybody, or most people. Unfortunately, the disappointing part is, it’s September and like, we ain’t at the end of it. When’s this gonna be over? Who knows?
Paul Downs:
Yeah, as a boss, you end up having to think about all these situations for your people. I think that part of it is, then it gets down to the individual employee. Are they the type to lay that on you or not? I have a company full of woodworkers. It’s heavily male. They’re not drama people, so they don’t tend to bring stress to me. The one worker I know about who’s been more upfront about it is female, so that may just be part of her personality or just the difference between a very male and very female workplace.
Loren Feldman:
I often wonder about this question: Can you guys be friends with your employees? And has this situation had an impact on your thinking about that? William, how about you?
William Vanderbloemen:
I think that answer has changed as the years have gone by and we’ve grown. We work with a lot of startup organizations, whether it’s a new school or church or relief organization or what have you. It seems like they all start with, “Me and my four buddies started this company, or this church or this school.” And there comes a point in their growth, where I’ve said to them many times, I’ve looked at the founder and said, “Hey, you know what? It’s time to move out of the frat house and move into a real house.” We’ve had to do some of that. I started with some relatives. I started with some friends. It’s grown, and now we’re at a different spot. So I think just by our growth and evolution, my relationship with them is different.
I think that the pandemic has put in strong relief for me some real dilemmas. As one leader told me, he said, “I don’t get paid for all the things in my job description. I get paid to make about four decisions a year that no one else wants to make.” Right? That is what I felt like this year, and some have been really painful for people. You ask if I feel more aware of fear or anxiety around our office? I think I feel more aware that I’m not feeling that fear and anxiety and other people are—that I’m like, “Look, guys, we’re not under persecution. We’re not living in a place where we’re in prison.”
Jay Goltz:
How about World War II? My parents lived through World War II.
William Vanderbloemen:
I know. Well, take church, for example. A lot of pastors who have decided to start meeting again. They’re like, “We’re not living in a place where it’s illegal. We’re not living in a place where you’re going to get crucified. Like, let’s get on with it.” And as the leader of the organization, I have felt a little insensitive. I don’t know whether that insensitivity is, I’m out of touch with reality, or if the insensitivity is the thing inside me as a leader/founder who’s called to make the hard decision.
Like, we are going to reopen our office. I’ve faced enormous resistance to that and I can still feel it. But it was the right thing to do, and we did it carefully, and it’s working out. But it’s one of those, “get paid to make four or five decisions no one else wants to make.” That’s a big rabbit trail, Loren, but it does lead back to, “Can you be friends?” To some extent, yes. But the nature of that relationship, I think, has changed as I have had to make decisions that not everybody else wants to make. Does that make sense? I’m figuring it out as I go.
Jay Goltz:
I’ve been through that whole transition from being by myself to having 110 people, and I can tell you, I think you can. But I think it’s just like being a parent. You can be friends with your kids, but you have to be the parent first. I think you need to be the boss first. I’ve got key people with me over 20 years. I never have to make that call. They know it, I know it. I never have to pull the boss card out, and if you’ve got the right kind of people working for you, they don’t make you, because they’re all with you together. I can honestly tell you, I can’t think of one situation in 20 years with any of these four people where I ever said to myself, “Boy, they shouldn’t have done that,” or whatever. They’re totally with me.
But yeah, it’s a tricky balance and there are some people you absolutely can’t be friends with at all. That’s for sure. There’s work-withs, and there’s work-fors. The people work-with you are with you, and there’s people who are work-fors who are valuable, but they need to be managed. I would like to shift the conversation, becauseI feel like we’re in a little bit of a CEO—
Paul Downs:
Wait a minute. I want to answer the question.
Jay Goltz:
Oh, go ahead.
Paul Downs:
No. [Laughter] I don’t think you can be friends with your employees.
Loren Feldman:
Why not?
Paul Downs:
Because it’s a different relationship. First of all, it’s got direction to it. You’re the boss. You sign the paychecks. You have the ability to say, “You know what, I don’t ever want to see you in this building again,” for any reason, and there’s nothing they can do about it. I wish we actually had a better word for the employees who have been with us for whatever length of time that you have a great feeling for and that, in a different context, you might be friends with, and that you enjoy seeing every day. I mean, I’ve got a lot of employees like that, but I wouldn’t call them friends. We just need a better word. Because it’s a different relationship.
Jay Goltz:
I think you have to define what a friend is—that you care about them, they care for you, you look out for each other, you help each other when you need it. I think in most categories, other than, “Well, I can fire you any day,” I think [if] it walks like a duck, [if] it sounds like a duck…
Paul Downs:
I’m not responsible for paying my friends. There’s too much that’s unique to an employee relationship. You can call it friends if you feel like that, but it’s just a bad word for it.
Loren Feldman:
But there’s another aspect to it that I’m curious about. I know you well enough to know that you don’t live an extravagant life, but I’m wondering, is part of this that you think about what your employees see of your life? Would you be hesitant to show up at work in a flashy new car?
Paul Downs:
I don’t really care what my employees see about my life. There’s nothing very shameful in it.
Jay Goltz:
Wait, wait, wait. Is that to suggest that it’s shameful if you did have a nice house and a big car? That would be shameful? Because I’m always sensitive to this.
Paul Downs:
Jay, do you have a nice house and a big car?
Jay Goltz:
Yes, I do, and I’m not shameful about it. It’s okay. No, I absolutely hear what you’re saying.
Paul Downs:
No, I’m kidding.
Jay Goltz:
I absolutely hear what you’re saying. Maybe you’re right that you can’t call it a friend, simply because, at the end of the day, you’re responsible for paying them. There’s some truth to that. There’s a piece of it that is not the same as being a friend, and I can’t argue with that.
Paul Downs:
Yeah, I mean, there’s another sense of responsibility for my employees too, which is that I owe them some kind of future. I don’t manage that with my friends. Like my friends have to take care of their own career, their own future, their own opportunities, their own decisions about this and that, what resources they devote to this. Employees, I’m choosing their health insurance. I’m choosing where they go to work every day.
Jay Goltz:
What’s your longest-term employee? How long?
Paul Downs:
Twenty-three years.
Jay Goltz:
Okay, I want to throw out there, just as an example. I hire a 17-year-old kid, my third employee, and here it is 42 years later, and he’s 57 years old. He’s like my little brother, and if anything happened to him, I would be devastated. There was a time one time his wife called me at night, he didn’t come home one night. I thought, “Oh my god, he might be dead somewhere.” And I was putting my pants on, and I was teary-eyed thinking about it. He’s as close a friend… so yeah, I hear what you’re saying, but this isn’t just an employee, either.
Paul Downs:
I think we just need a better word for it. Because that’s still not a friendship. It’s more like a vassal or something. You have this liege-lord responsibility for the serfs you own.
Jay Goltz:
No, there’s something to what you’re saying.
Paul Downs:
I’m just saying that it’s not what we call a friendship. It’s different, and we just need better words for it.
Jay Goltz:
Here’s a question mark. So the person retires. Am I gonna see him? Am I gonna call him every six months? No, so I’m not arguing with you.
Loren Feldman:
William, I think you suggested that your thinking on this has evolved. Is that because you’ve lost friends—people who were friends, who were working at the company, and for one reason or another stopped being friends?
William Vanderbloemen:
Oh sure. I had to part ways with my brother-in-law, who was our first employee.
Jay Goltz:
Everybody’s first employee is their brother-in-law. Didn’t you know that?
William Vanderbloemen:
Yeah, right. Exactly. And we still do family dinner every week. Loren, I think I had a kind of utopian view of being the cool owner and buddies with everyone, and it just doesn’t work. I’m not on the place on the spectrum where it’s like officers don’t eat with enlisted men. That’s not me. But the idea that we can all just be cool and get along and have fun? No, not really.
Jay Goltz:
If I had to pick one—there’s no question—if I had to pick a side, I’d say no. There’s no question. I would not want to mislead anybody, because I’ve lived exactly what you’ve lived through—all of us have. I by no means would want to give the impression of what you’re talking about, the utopian role. Yeah, you’re absolutely right. If I had to pick, “Can you be friends with your employees?” I’d have to say no, for sure.
William Vanderbloemen:
I think where I am now, Jay, is rather than being buddies with my employees, I’d love it if they like me, but I really want them to respect me.
Loren Feldman:
I spoke to a pretty good friend of mine this week, who’s an entrepreneur, and I hadn’t been in touch with him in a couple of months. Turns out, he got COVID. He spent a couple of weeks in an ICU and had it pretty bad, and it was an interesting experience for him, in terms of running a business from an ICU. I’m curious if any of the three of you have thought about that. Do you know what would happen if you were incapacitated for a period of time?
William Vanderbloemen:
Yes.
Loren Feldman:
Tell us.
William Vanderbloemen:
It’s written down in a drawer here. It’s our emergency succession plan. We insist that everyone in our company have a plan for what happens if they can’t be here for a while. When you write the book on succession, you kind of have to have a plan yourself.
Jay Goltz:
Can you copy that and send it to me so I can use it?
William Vanderbloemen:
Well, wouldn’t that be great if there were a cookie cutter for succession? There is no cookie cutter.
Paul Downs:
Yeah, I’ve gotta say, it would depend on what the nature of it was. But if I was unconscious for a month, that would be pretty bad for the business. I don’t even have a plan for that. Because there’s so much—
William Vanderbloemen:
Well, then you need one, Paul. We have one if the president becomes incapacitated. I mean, you need one.
Paul Downs:
It’s mostly about check-signing authority.
Jay Goltz:
Do you not think some of your employees already think there’s times when you’re unconscious for a month? You don’t think that? I’m sure mine do. [Laughter]
Paul Downs:
I don’t think that in my case, because I’m here sniffing around every day.
Loren Feldman:
William, what’s the first step? How does someone like Paul go about putting a plan like that in place?
William Vanderbloemen:
Well, I think it’s actually the easiest first step toward a real succession plan, which all of us are just interim owners or interim leaders, right?
Jay Goltz:
Nope, not necessarily right. Some of us think if we drop dead, maybe the business will be over, and maybe that’s okay.
William Vanderbloemen:
No, that still makes you an interim. Either it ends, or the world ends, or someone’s going to follow you, whether you sell to another company or another leader comes in or you let your kid run it or whatever.
Jay Goltz:
People shut businesses down, 70 percent.
William Vanderbloemen:
That’s right. Fair point, fair point. So if you want to end by closing, then that’s one way. Otherwise, there needs to be a plan for the future, and the easiest task to get that going is to say, “Well, what would happen if I couldn’t be here for six months, or three months?” And so we tell people, “Identify the key deliverables that you are doing that no one else can do right now.” Check-signing authority is a great example of one of a long list. Where would you then delegate that out, if you had to? And you say, “Well, I can’t delegate that.” Then I guess the option is, close the business.
Jay Goltz:
You know, that’s funny. You bring up check-signing, because I didn’t sign checks for years, and now I’m signing them every single week. You know what, I screwed up. I should have stayed signing the checks.
William Vanderbloemen:
Totally agree. Made the same mistake.
Loren Feldman:
Why, Jay? Why was it a mistake to stop?
Jay Goltz:
Because I probably have a thousand checks a month going out. I’ve got all these little vendors, and because once in a while, you see a check and you think, “Wow, we’re spending a lot of money for blankety blank.”
Loren Feldman:
Paul, is this giving you pause? Is there a way that you could divide up your duties and make a plan?
Paul Downs:
I could. The financial things are probably the trickiest because there are a number of duties. We’re only a 20-person company, so there are a number of things like insurance renewals and various licensing and state interaction issues and buying health insurance, and there’s stuff that I just do. I could make a plan. It would be almost like, my wife and I talk about paying the bills. I pay the bills every month, and the plan is, she should pay the bills. But to let her pay the bills while I watch for six months would drive me insane. I’m sort of trying to figure out how I would do that similar thing in the business. William, do you actually let someone take the wheel for a while and do it and execute the plan?
William Vanderbloemen:
I do. In many iterations of our business, I would not have been able to say that. One time I thought I was doing that, and the competency that I thought was there was not, so I had to take things back over. But yeah, they actually execute the plan. My job right now—and it’ll probably change over the years—is kind of like, if we’re an old sailboat, an old three-masted explorer ship, I’m in the crow’s nest looking for the next horizon. Then I look down to the guy at the wheel and say, “I see where we need to go.” And he says, “I know how to get there.” That’s the most pedestrian way to describe how it’s set up right now.
Jay Goltz:
I will tell you an answer and I’m not being flip when I say this at all. For people who own businesses who have a spouse who’s not involved, and they’re worried, “What happens if I drop dead? What’s going to happen to the business?” I’m a big proponent of, “Have a good life insurance policy,” because at the end of the day, I don’t care what your plan is and who you think is taking over. We’ve all seen it. I think we’ve all seen it. I certainly have seen it. It might not work, and I don’t want to leave my wife hanging out there. Life insurance is still pretty cheap. It is cheap.
Just to give an example. I’m 64 years old. I’m about to take out a million-dollar mortgage on something. I can buy a 10-year policy for 3,900 bucks for a million dollars, so it’s still not expensive even at my age. People are probably under-insured who own businesses, because at the end of the day, it would sure be nice to know that if all your plans didn’t work out, nobody’s going to starve.
Paul Downs:
Well, I’ve got life insurance, and if I died, that would actually not be nearly as big a problem as if I was in a coma.
Jay Goltz:
Right.
Paul Downs:
Maybe the plan would be if I’m in a coma, just put the pillow over my face.
Jay Goltz:
That’s a given. Don’t you have that deal with somebody? That’s a given.
Paul Downs:
Then you’ve got a couple of million bucks to play with to shut the business down and then retire. I just don’t have anybody who I believe is capable of doing all the things that I do.
William Vanderbloemen:
Then that’s your problem.
Jay Goltz:
No, I’m saying he doesn’t have a problem. He’s at the size business that the owner is running the business. No, I don’t think that is a problem. It’s not worth having that person. It would cost him too much.
Loren Feldman:
Is Jay right about that, Paul?
Paul Downs:
Yeah, I think he is. The cost of having and training someone would probably be… there’s probably some form of insurance policy I could buy. I’m gonna think about it, because at least leaving a playbook, like here’s what I actually have to do during the course of the year: in January, you better do this, and in February, you better do that.
William Vanderbloemen:
There you go.
Paul Downs:
That would be a start.
William Vanderbloemen:
Yes.
Jay Goltz:
At the end of the day, if you got run over by a bus, the only way that probably would be working is if your wife could sell the business for decent money, because I don’t think one of your employees is going to step up and take over the business unless you think your wife can, which certainly happens.
Paul Downs:
My wife has many virtues, but I don’t think she’s gonna be running this business.
Jay Goltz:
Which means this instruction plan should be how to sell the business.
Paul Downs:
Well, I would be very curious if William, you are willing to share it, to see what yours looks like. Is it more about day-to-day operations? Or more about some grand airline thing? You pull it, and you see how the slides go out the airplane, like, how do we get out?
William Vanderbloemen:
It’s a little bit of both, and it’s evolved every year. I used to have one in place where this person would take over everything external, like sales and marketing, and this person would take over operations and execution of work. Now it goes much more to the COO, and then there’s a, “What if he isn’t around?” For a while, it was Adrian would run everything. But then, what if we’re in the same airplane, and we both go down? So I could share it, but it’s not helpful. The worst thing you can do is copy someone else’s succession plan. It just doesn’t work. Especially if you’re the founder.
Paul Downs:
How about this? If my father dies, he designated my brother as executor. Does anybody know of a situation where you have a person who’s actually not in the company day-to-day, but is just willing to step in as a leader? And you say, “Okay, call this guy.” I mean, is that a thing? Do you pay people for that?
William Vanderbloemen:
Yes. Well, for me, it is a thing. But it’s like, if you remember when Reagan got shot, and Al Haig said, “I’m in charge.” Right? So it’s about fifth down the food chain of things that happen. If this and this and this are not in place, then you actually call my brother who’s executor of our estate, and he then takes over.
Jay Goltz:
I think it is naive—and the math would back me up on this—to think that if any of us dropped dead, we can leave an instruction sheet and then someone’s just going to run our businesses for us. I think the math says it: 66 percent of businesses don’t get to the second generation. I think what we do is a little more complicated than that, and my guess is our spouses would sell the business.
William Vanderbloemen:
Well, I agree with your statistics. I disagree with your diagnosis for my business. My annual review is a one-question, pass-fail, review: This year, did you make yourself less necessary to the growth and running of this business? And there’s only one right answer. Every single year, I remove my essential presence a little bit more.
Jay Goltz:
Me too, and I do very little day-to-day stuff. My question is, so if you disappear tomorrow, that business is still around in 10 years doing fine?
William Vanderbloemen:
I don’t know if the business is around 10 years from now one way or the other.
Jay Goltz:
Yeah, well, that’s kind of my point.
William Vanderbloemen:
I think it has as good a chance as it does with me.
Jay Goltz:
Well, I think you underestimate yourself tremendously. I think you’re being humble. You’re being extremely humble, and I don’t believe that for a second because I’ve been on this thing with you many times. You’re very smart and you’re very intuitive, and you’ve made really great decisions. I suggest to you that thinking one of the people who works for you is just going to step in and all of a sudden, do what you do—you just said it yourself: You make four decisions a year that no one else wants to make.
Paul Downs:
But Jay, so what? He has the plan. Are you suggesting he take the plan and throw it away?
Jay Goltz:
No, not at all. Give it a good shot, but I’m suggesting, as important a plan would be to your wife, if something happens to me, here’s the thinking. And I’ve done this, I do have a sheet. I’ve told my three kids—I have three adult sons—I made it clear to all of them: “Here are some ideas as to what to do. But when I’m gone, do what you’ve got to do. And if you decide the business is shot, and it’s done, don’t torture yourself with, ‘Oh my God, Dad’s turning in his grave.’ It’ll be fine. Do what you got to do.”
If they decide that they don’t want to run it, and they can’t sell it, closing the business would not be the end of the world. Torturing my kids, which I’ve seen—I’ve been in business groups for years with these people who took over the family business—I wouldn’t wish that on my worst enemy where the kid gets hung around the neck with a business they never wanted to be in. It is a horrible thing to do to your children or your wife. I don’t want to do that. I think a succession plan is great. I just think the other plan should be: “Here’s some other options. Here’s how you should sell the business. Here’s who I would talk to to sell the business.” I think that’s smart.
Loren Feldman:
We’re out of time here today. This was a really interesting conversation. As always, thank you Paul Downs, Jay Goltz, and William Vanderbloemen.
