Episode 51: Chicago, New York, or Atlanta?
Guests:
Dana White is founder and CEO of Paralee Boyd hair salons.
Stephanie Stuckey is CEO of Stuckey’s Corporation.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Stephanie Stuckey: “There are 20,000-square-feet Buc-ee’s. They’re huge. You need a GPS to find the bathroom. We can’t compete with that.”
Dana White: “We’ve been open eight years, done little to no marketing, and sold little to no product. And we still make money.”
Dana White: “I want to be one of the first national hair salon chains for women of color. It’s like Henry Ford trying to get market research on drivability.”
Jay Goltz: “You just described the picture framing industry. You could ask someone, ‘How much did your frame store gross last year?’ They don’t even know.”
Full Episode Transcript:
Loren Feldman:
Welcome Dana, Jay, and Stephanie. Thanks for joining me today. How are you guys doing? Jay?
Jay Goltz:
I’m good. Still fighting the good fight.
Loren Feldman:
Anything going on the loan front that you’ve been telling us about?
Jay Goltz:
I have a proposal, but they’re trying to sell this as a business loan versus real estate, so there are all kinds of caveats in there.
Loren Feldman:
So no news?
Jay Goltz:
No, I do have news. A banker actually called me who used to be a banker who was with one of the previous banks and is looking for business, so I’m still extremely confident that I will find a bank that will be happy to have us.
Loren Feldman:
Stephanie, how are you doing?
Stephanie Stuckey:
We’re doing great. We’ve acquired the candy plant manufacturing facility.
Loren Feldman:
Which we talked about last week.
Stephanie Stuckey:
We’re knee deep in “strategery.” We’re doing strategic planning. We’re getting our teams aligned. And there’s a lot that you have to do with a merger and acquisition well beyond just the legal paperwork.
Loren Feldman:
Give us an example. What kind of things are you referring to?
Stephanie Stuckey:
We have three different accounting softwares.
Jay Goltz:
Ouch.
Stephanie Stuckey:
So which accounting software are we going to use? How do we integrate all of that? Today, we had a very in-depth conversation about integrating all of our websites into one website. Packaging—we’re redoing all of the packaging and Stuckey’s will be the lead brand. But then we had a conversation about one of the subsidiary brands. Is it Front Porch Pecans? Stuckey’s Front Porch Pecans? Or is it just Stuckey’s because Front Porch Pecans has a certain following? We agreed we were going to do Stuckey’s Front Porch Pecans, but that was a lengthy discussion.
And then, just making sure everyone’s aligned on what the brand is. We had a three-hour discussion about whether Stuckey’s is about the road trip or about the pecan. And the road trip won out, but it was a three-hour discussion. So, a lot: branding, marketing, accounting.
Loren Feldman:
Can I take you back to the websites? People struggle so much with one website. How are you approaching the decision on how to handle three.
Stephanie Stuckey:
We have got outside consultants who did a model today. They did a demo, and they showed us how we could integrate. The exciting thing is, as we’re integrating, we’re upgrading, hopefully. Because we’re putting everything into one, we’re going to be saving money ultimately. Even though the new system is slightly more expensive than what we’re paying right now, it’s less than three separate systems, and it’s going to enable us to do so much more.
Right now, we are very clunky about how we manage our wholesale accounts. They literally email us, and then we follow up with an email, and then I will send them a form to complete that’s a Word doc. We’re going to have everything integrated on the website where they can just order straight from our website, and it can be immediately processed. Our sales reps will be able to go on the site, and when they’re at a store, instead of doing a hand order, they can order via the website.
Loren Feldman:
How did you choose the consultants who are helping you with this?
Stephanie Stuckey:
My business partner was in charge of that. It was a contact who I brought to him. It’s someone I’ve known for about 20 years. He’s an investor in this company, and they provide the software. It’s called Gift Key. Another key factor for us is that one of the companies we acquired has a robust fundraising business, and Gift Key has a lot of software related to fundraising. It makes it really easy to have hundreds of users log into the system and place orders for fundraising, so they’re uniquely in our space. And it’s a Georgia-based company, which we like.
Jay Goltz:
Can I ask a question—just to push back a little bit on your conclusion after your three-hour meeting, you said it’s about the road trip. How many Stuckey’s were there at their peak? And how many are there now?
Stephanie Stuckey:
368 at our peak, 67 today.
Jay Goltz:
So I would challenge or question: those days are gone. There aren’t 368 any more. Just because someone has warm, wonderful memories of the 1970’s, 80s’, 90’s, there are not as many restaurants out there, so can you really recreate the road-trip thing when you’re 20 percent of the size you used to be? Is that a smart strategy to go back to something that was 30 years ago?
Stephanie Stuckey:
Absolutely. It’s all about storytelling. When you look at my LinkedIn post, I had one LinkedIn post that talked about how much I loved to go road-tripping and the one-year anniversary of me taking over Stuckey’s. I checked that post yesterday. It had reached over a million engagements.
Jay Goltz:
Wow.
Stephanie Stuckey:
Those people engaging with my post on LinkedIn, they’re not stopping at Stuckey’s, necessarily, on the side of the road. But they’re connecting with the story. I can weave a story around the wonderful experience you have of getting in the car and exploring, whether you actually road trip or not. You can go ride the cyber highway, get on the internet, and buy our product. The product supports that. The product is part of the story. But what is leading with the brand is how we tell the brand story, how I’m able to communicate to people what makes Stuckey’s different.
When you’re a small business, which we all are, you can’t be just like everyone else. I can’t compete with Pilot or Love’s or Truckstop of America. There’s no way. There are thousands of them. There are 20,000-square-feet Buc-ee’s. They’re huge. You need a GPS to find the bathroom. We can’t compete with that. What we can compete with is, we were the O.G. of the road trip. We were founded in 1937. We were founded before there was even an interstate highway system. We can own the road trip. That is our differentiator. That’s what makes us unique and special, and I can weave that story all day long. That’s our brand.
Loren Feldman:
What’s the connection to the sales, though, Stephanie? Do you think somebody is going to buy your product online and then take it with them when they take a road trip? Or is it just the nostalgia about the road trip that makes them want to buy that pecan log?
Stephanie Stuckey:
All of the above. I’m telling you, I will do a post on social media, and I’ll talk about road trips, and I’ll mention, “By the way, you should buy our pecan log roll.” When we do those posts, when we send out an e-blast, we tell these stories. Sales skyrocket. Our sales are up. Our online sales this month are up 550 percent. I sold over 500 bags of our Southern Sweets line in the past week with a handful of posts and almost no marketing budget. I boosted one post on Facebook and I did three e-blasts and a bunch of posts on LinkedIn.
Jay Goltz:
Okay, I think that’s a good answer. I think you’re talking about branding. You’ve got a unique branding thing that resonates with people. I think that makes sense. Good answer.
Stephanie Stuckey:
And it’s backed by data. It’s not just anecdotal. I’ll just leave it with that, that we look at Google Analytics, and you can trace what the origins of your sales are, the actual conversions, what’s the source? And the posts that talk about the road trip get the most conversions to actual sales. It’s backed up by evidence, and this was a lengthy discussion. Trust me, we really did weigh heavily that, “Well, we should be selling the pecan.” But the pecan is a product. The road trip is a brand. The road trip is a story.
Jay Goltz:
How many people were in the room for this three-hour discussion?
Stephanie Stuckey:
10.
Jay Goltz:
And at the end, everybody signed off on it?
Stephanie Stuckey:
Every single person. And the interesting thing—it was like 12 Angry Men. We started out—and you can tell which side I was on from the get-go—me and one other person, the person on our board who is a marketing professional, we were the two who wanted to do the road trip. Everyone else wanted the pecan, and by the end, everyone was not only for the road trip, they were convinced.
Loren Feldman:
Dana, how are you doing?
Dana White:
I’m doing good, Loren. I’m hanging in there. Glad to be open. You know, pandemic life. Hanging in there.
Loren Feldman:
Has business picked up?
Dana White:
No, we’re in the middle of our slow season. January and February are slower months here in Michigan. The weather has been in the high teens to 20’s. I think yesterday was the first day we started coming out of that. Valentine’s Day we saw a little bit of pickup, but this is our slow season, our quiet time right before the spring—Mother’s Day, Easter, holiday stuff.
Loren Feldman:
I gather you’re using some of that quiet time to think about expansion.
Dana White:
Yes. When we’d spoken before on the show with my Demo Day money, I was looking at VC dollars. The Demo Day money kind of puts you on the platform saying, “Okay, she is the grand prize winner, so she has $200,000.” You attract venture capitalists. And I was considering it—and I’m still considering it.
Loren Feldman:
We should repeat for people who maybe didn’t hear the previous episodes. You were the big winner at Detroit Demo Day back in the fall. You won the $200,000 grand prize, and you’re talking about venture capital because… how is that connected to the award?
Dana White:
Because once you get that money, VCs look at it as first money in.
Loren Feldman:
I see. You become more attractive at that point.
Dana White:
Exactly. So they say, “Hey, let’s look at your business.” And a lot of them said, “Love your business model. Love what you’re trying to do.” And they sell you: rapid growth, rapid expansion. “This is our network, this is our fund, this is how much capital we have access to.” And you’re like, “Oh, okay.” But then, there are a lot of things that aren’t communicated—where they are in acquiring or taking on new businesses, where they are in their timeline. So they may not be as ready as we thought they were or they communicated they were. We still have work to do. So, it’s about growing Paralee Boyd.
Although I’ve spoken with several entrepreneurs here in Detroit, and we’ve all said, “Detroit is a great place to start a business, but because we don’t have the population density, it’s not the best city to test the legs of your business.” To see, “Okay, what can this really do?” So I’m seriously looking, and have been working toward expansion to other cities that have population density. I have this feeling that right now is a good time: One, because I’m sitting on this cash. And two, because there were a lot of businesses that unfortunately had to close. 40 percent of African American businesses around the country have closed, which is sad. Okay, but how could you make that something that works to your advantage by looking at good real estate, negotiating good real estate prices by strategically picking cities that have bounced back from COVID, or have gotten through COVID a little bit stronger than other ones and have the population density that I’m looking for?
Loren Feldman:
We’ve talked in the past, you used to live in New York, and you thought that would be a good location. Are you thinking about New York now?
Dana White:
I’m still considering New York. My concern is that the MTA is still… I don’t say “struggling,” but they’re not back to where they were. My other concern is that roughly 400,000 people left New York City. That’s huge. And even though those people may not be my customers, it still speaks to the density issues.
So, I am looking at the MTA because that is one of the heartbeats of New York City, and as the MTA goes, as the city goes. So if the MTA is not up and running, if they’re seeing their ridership down, that means people are staying hyper local. They’re not getting on the subway and going into Manhattan to get their hair done. They’re walking to where they need to go get their hair done. So that would mean, if I’m in Manhattan, my customers need to be within walking distance of me, or in Brooklyn. That’s what I’m looking for, but I’m looking at pretty much every major city. Chicago, Atlanta, and New York are my top ones right now.
Loren Feldman:
Have you been looking at real estate prices?
Dana White:
I have.
Loren Feldman:
What are you finding?
Dana White:
There are some really good options for sale. The issue with buying a salon is, when you buy a salon, the owner wants you to buy their business, and they don’t want you to change their business. It can, but you’re buying all of their employees, all of their stock. You’re buying their database, and again, my business is unique. A 16-chair blowout bar with 16 stylists, hair color, that’s not anything I need. Their database is likely not anything I need, so it’s hard to find the right salon to purchase because I’ll be buying stuff I don’t need.
Loren Feldman:
Given what you just said, why would you buy a salon? Why wouldn’t you just lease or buy empty space where you could create your own thing in?
Dana White:
Well, buying is not ideal; leasing for my business model is ideal. But there’s everything that comes with leasing. I can’t tell you how many small business owners I know—I’m one of them—where my first location, my Southfield location, one of the reasons why I closed it was because of the landlord. When you’re dealing with a landlord, you have a silent partner that can make or break your business. If they’re not remediating the mold in your space, then you can’t live there. You can’t work there long. You have to find someplace else.
Jay Goltz:
I could make the argument in small retail that you should try to buy your space because eventually, if you’re younger and you started a new business, your landlord is going to die or retire, and their kids are going to take over and sell it to somebody or something. And you just don’t have stability. And I will also tell you from personal experience, I opened up a store downtown, right by the Merchandise Mart, a small condo. It’s a condo store. So there is an opportunity, for some of these condos, to buy them at a good price and save money and have control over your destiny. And I don’t think a lot of retailers think about it. It’s a good thing to own your space. That’s all I can tell you. It’s a good thing.
Loren Feldman:
Jay, should Dana come to Chicago?
Jay Goltz:
Absolutely. I think we’re a bigger market, and I think we’ve got the density. I think we’ve got the income level and I think the rents work better than maybe in New York. I mean, you’re talking to someone, if you recall, I opened up my pop-up in Soho a couple years ago and trying to make money paying the kind of rent you’ve got to pay down there is extremely difficult. I think that Chicago is a friendlier space for a small retailer.
Loren Feldman:
Does it make a big difference which neighborhood?
Jay Goltz:
Absolutely. Some people don’t think about this, especially in Chicago. You need one of two things in a market, if you have a retail store. You either need lots of high rises, where there are just a lot of people that are living right by you, or you need parking. But if you’ve got neither, you’ve got a problem. If you go through Chicago right now, there are blocks in Chicago that have literally half the stores empty. And my argument is: They don’t have parking, they don’t have high rises, and there’s not enough density there. That’s why there are some neighborhoods in Chicago that are doing extremely well, and there are some neighborhoods that are doing extremely poorly. I think you can find a location in Chicago that has either high-rises, parking, or there’s an L stop. That’s one of the critical pieces of owning a retail store.
Loren Feldman:
How about Atlanta, Stephanie?
Stephanie Stuckey:
Atlanta is a great place, especially for a business that caters to an African American clientele. We really are a black Mecca. A lot of reasons for that, but most notably that we have a rich density of higher education [institutions] that are historically black colleges and universities, Spelman and Morehouse chief among them. Many students go to college in Atlanta, and then they stay for their professional careers, and there’s a lot of wealth here in the city—a lot of African American wealth—and entrepreneurship.
We’ve got great locations. There are neighborhoods that I think would be a really good fit for you. West Side of Atlanta, prices are starting to boom. I’m not an expert on the real estate market, but I do know that there are some areas of town that are more affordable than others. We do have a good MARTA subway system, so places can be accessible via subway. Or we do have parking in some areas of town more so than others.
Loren Feldman:
I’ve heard there’s some traffic there too.
Stephanie Stuckey:
We do have traffic if you’re commuting from the suburbs. I live in the city, and of course, COVID has changed everything. So I’m not going to be looking through the COVID lens when I make the statement, but I ride my bike almost everywhere. I don’t get in my car. It’s totally walkable. Taking MARTA and taking your bike, you can really get around the city quite easily.
The other thing about Atlanta that I think would be relevant if you’re in a beauty or haircare industry is that we have an entertainment hub here because of our film tax credit. We are among the best destinations in the world to make movies, and so you’ve got all of this entertainment here, and those people need to have their hair and makeup done to be ready for the set. There’s a market there. Just depends on what market Dana’s looking for, but I think this is a wonderfully inviting city. And if you come here, Dana, I will personally show you around.
Dana White:
That’s great.
Jay Goltz:
Plus, Dana needs to be in the movies.
Stephanie Stuckey:
Dana, I have a question about your industry, and it stems from a conversation I had today, actually, with a private equity firm, where they referenced the barbershop model, which I had never heard of. It was in reference to [how] Stuckey’s makes most of our money—a lot of people would think it’s from our franchise fees, but it’s really from the sale of our product. And this man said, “Oh, you’re using the barbershop model,” meaning most barbershops make their profit from the sale of haircare products. So I’m curious how much of your profit is dependent upon your revenue, if you’re willing to share actual percentages? How much is dependent upon the sale product versus your services—the haircare services?
Dana White:
Zero percent.
Stephanie Stuckey:
Wow.
Dana White:
Yeah, and I think that’s why I’m proud, maybe naively so, but I’m proud of my business. We’ve been open eight years, done little to no marketing, and sold little to no product. And we still make money.
Stephanie Stuckey:
But should you be selling product? Maybe not. You’re doing well without it.
Dana White:
No, we started selling products. COVID kind of made me add to this, and I’m glad I did, but the products that we sell at our salon are styling products, not maintenance products. We’re not going to sell a lot of shampoos and conditioners, because that’s why people come to the salon. They come to Paralee Boyd for us to shampoo their hair. We did sell shampoo years ago, and it just sat on the shelves and we’d wind up moving it to our back bar, because they’re like, “No, I want the styling product. I come to you to wash my hair.” So we go, “Okay, we do that.”
Now we’ve added three products. We’re about to add two more to our line to sell, but it’s not a factor at all. We make a little bit of money, because we just got started, but it’s not contributing to our bottom line. I’m excited about what a Paralee Boyd could do in a larger city, because if I’m in a city that’s not that dense, and I could survive for eight years with word-of-mouth alone, without using retail, imagine what I could do in a New York, Atlanta or Chicago.
Stephanie Stuckey:
And what type of marketing data do you look at when you’re trying to figure out which city would be the best fit for you?
Dana White:
That’s a great question. So for me, I’m strictly looking at population density and how the people in that market wear their hair. Take, for instance, Atlanta. There are a lot of African American women there, and some people go, “O,h Dana, there you go.” Well, I have pause because there are a lot of African American women there who wear weaves, so I’ll be able to service them in-between their weaves, but I won’t be able to put it in or take it out. So therein lies my challenge. Is that the right market for me? For Paralee Boyd, we are hair care, hair health, hair maintenance, so I have to look at population density and how they’re wearing their hair.
You’re not going to be able to go to a market research firm and see how much African American women are spending on hair care services, because the industry is so mom-and-pop that they’re not reporting this data. The companies or the hair-care service companies that are reporting this data are not geared toward African American women hair care, i.e. Supercuts, Great Clips, BoRic’s, and the like. Or DryBar. Those are geared toward white women. They have African American women clientele, but that’s not their bread and butter.
That kind of gives you an idea of how innovative Paralee Boyd is because I want to be one of the first national hair salon chains for women of color. It’s like Henry Ford trying to get market research on drivability. It’s like, how do you know when you’re just introducing the car to the market? You kind of have to see where he went, where the people with money who would have the leisure money to buy a horseless carriage.
Loren Feldman:
So how will you make your decision of where to go? Without that market research, how will you be able to pick the right city, the right neighborhood?
Dana White:
I’m looking at density and I’m looking to see, based on the people I know, where do they go to get their hair done? So in Chicago, a lot of people go to the Egyptians, and I’ve seen those salons. Again, they’re not uniform.
Loren Feldman:
Is that the name of the salon?
Dana White:
No, they’re a demographic of people. Like Dominican salons, in Chicago, they’re Egyptian salons. So they’re mom and pop, they’re very small. How do you manage your money? You look at your Venmo. Not a lot of them have a consistent brand. So you go there, you get your hair done a couple of times. You find out where not where their density is, but for me, I need to find the address that my market will feel good going to. So when they see the address, they go, “Oh, okay, it’s there.” But they have to be able to park. Walkability for Paralee Boy is not ideal. I’m a destination. So they’re not, “Oh, let’s go grab lunch, and we’ll go get our hair done.” No. They go get their hair done so they can go do everything else.
Jay Goltz:
You just brought up a key element of retail that’s changed dramatically. It used to be, it was all about your location. Now, it’s half your location, and it’s half your website. So to your point, they see an address, it’s part of the branding. “Oh, that’s in the South Loop. I’m going there.” Whereas if you put the store in the wrong place, it’s just not going to be appealing to people. That wasn’t the case 20 years ago. How you look on your website is critical. So you’re right, it’s about the address—the right address.
Loren Feldman:
What did you think of what Stephanie had to say about Atlanta? Did that sound intriguing to you?
Dana White:
I mean, yeah. It’s not news, right? Morehouse, Spelman, Clark, all the HBCUs that are there…
Loren Feldman:
And a thriving entrepreneurial community as well.
Dana White:
It is, yes. Atlanta is the last chocolate city. The black community has had chocolate cities since the Great Migration. At one time, it was Chicago. At one point, it was Detroit. At one point, it was even New York. And so because we haven’t really done a lot of migration, the last one was Atlanta. I think the next one to come up is going to be Houston, and that’s great. I just want to make sure that the places I go to look for that population density, those women are getting their hair done the way that would make Paralee Boyd a viable option. If they’re getting weaves and braids and wigs and stuff, that’s not where I want to go.
Jay Goltz:
You could argue, if this is a test case for a national expansion, maybe Atlanta is too heavily African American to where someone could argue, “Oh, well, it worked there because everyone knows it’s a majority.” Whereas maybe Chicago is more of a medium-sized demographic that would fit better rolling it out to the country. I’ve got to believe, for someone looking at rollout nationally, that’s a consideration.
Stephanie Stuckey:
But you want to go where your customer base is. You fish where the fish are, right? You go where there are customers are who are going to be using this product. And as you become more and more profitable, you can afford to get in markets that may not be as dense. But getting back to the data, I’m really fascinated with this lack of access to data. And honestly, I’m embarrassed to say I hadn’t thought of the nuances—not only for small businesses, but small minority businesses, and the challenges with accessing that critical data. I would love to see some enterprising entrepreneur, hopefully someone listening… Data is becoming democratized now, and with apps and people constantly inputting different aspects of their lives online, it just seems like, very soon, this type of data should be more readily available.
If they’re all using the Venmo app, it’s a click away from starting to keep track of what type of customers you have, what their demographic is. I just think, in a matter of years, we’re gonna see a lot of this data more available. It can also be scary. There are some Big Brother components to this for sure. But more and more data is becoming available, and even a company like Stuckey’s—what we’re able to mine with our limited resources, getting on Google Analytics—it’s really interesting to me how you can capture data even on a shoestring budget.
Dana White:
Where it’s frustrating for me—where it has been a challenge—is there’s no data on African American women and services.
Stephanie Stuckey:
Wow.
Dana White:
And how much money they give to services. There is on products because they get the data from your big box stores. Your Targets, your Sally’s, they get that information from there. But when you’re going to African American women getting their hair done, everything is so micro. I’ve been hopping salons for weeks, looking and trying to talk to different stylists, and when you ask them a question, “How much money did you make in 2019? Forget 2020. How much money did you make in 2019?” everybody goes to their phone and picks up their Cash app or their Venmo. You ask them, “Do you have QuickBooks?” And they’re like, “For what?” “How much money did you spend on product?” They don’t really know.
Jay Goltz:
You just described the picture framing industry. You could ask someone, “How much did your frame store gross last year?” They don’t even know. So this isn’t just what market you’re in. It’s a typical mom-and-pop small industry.
Dana White:
Yep, so I have to wing it. Unfortunately, I have to wing it. I came back to Detroit because I used to live here. I’m comfortable going to New York—outside of what the MTA is doing—because I used to live there. But now if you’re looking to expand to Chicago, which is top of my list, or in Atlanta, which is third on my list, then you have to wing it and lean on the people who you know—lean on the black women who I know that know people, the other business owners who I know—and just ask questions.
And then, next, you’ve got to go. You’ve got to spend time there and watch where people go get their hair done, and go get your hair done there to make sure that you’re offering something different.
Stephanie Stuckey:
And how much of a hurdle is that, if you’re pitching, say, to a VC firm, trying to get capital? Because so often, they want data-driven metrics when they’re deciding which companies they’re going to invest in.
Dana White:
It’s a challenge. Because the mindset—I hate to say this—but the mindset in that world is, “Here are the things that you can show us that show that you’re a viable business.”
Stephanie Stuckey:
That’s right.
Dana White:
But if you look at that, where would Coca Cola be? Where would Ford Motor Company be? What’s frustrating to me about the VC world and that whole equity world is, “How much innovation are you looking for?”
Stephanie Stuckey:
They’re really not. None of them would have invested in Coca Cola or Ford. Those firms would never have gotten a dime.
Jay Goltz:
There’s a famous story about the Xerox machine. They invented the Xerox machine. They did research and the research came back and said, “Yeah, nobody really wants it.”
Dana White:
I didn’t invent the hair salon, but I invented a new way to do that process.
Loren Feldman:
Tell us what that is Dana, especially for people who may not have been listening to previous podcast [episodes].
Dana White:
Sure. It’s Lean manufacturing. It’s walk-in only, seven days a week, so we don’t take appointments, no matter how much volume we do. In our prime before COVID, it was nothing for us to open up and have 15 women lined up outside of our salon on a Sunday. All of them walk-in only, all of them getting in and out in under a certain amount of time, because I’ve “Leaned out” the processes. Now, my guests don’t feel that. The customers don’t feel that, but my hair traffic controller and my staff are managing that flow and processes. So for me, when you’re looking to attract a VC, they’re like, “Well, I need to see this, this, this, and this,” which is fine. But there are certain things you’re not going to see because the data is not there. Also, the African American dollar is not what people are looking at anywhere. Big mistake!
Stephanie Stuckey:
Yes, big mistake.
Dana White:
Like, what are you doing? African Americans period? You’re looking at, “Oh, will this app go viral?” Yeah, if enough Black people will download it. And so then, they’re not even looking at the buying power of the African American woman outside of products. African American women will go get their hair done two to four times a month, and they spend $65 minimum to get it done. Do that math!
Stephanie Stuckey:
Wow.
Loren Feldman:
Have you looked into doing this kind of market research yourself? Could you pay for this?
Dana White:
It’s costly, no.
Stephanie Stuckey:
Too costly! And for what? Because there’s no guarantee a VC firm is even going to invest in you if you do have the data. And then usually they’re going to want a significant amount of equity, so there’s a trade off.
Dana White:
The only way the data is going to come is when I grow, and then I’ll be able to report the data for the next person coming behind me. But if I really wanted to invest my time, or the time of a team, to walk into these salons in these cities: One, you’re not going to get accurate data. They’re not going to tell you how much money they made. Are you kidding me?
Jay Goltz:
If they even know.
Dana White:
Well, a lot of them know, because it’s electronic. But guess what—a lot of them aren’t paying taxes on it.
Jay Goltz:
Absolutely.
Dana White:
They’re not gonna tell you. So the only way this data gets organized, is if Dana expands. And the only way Dana expands is if she finds a VC or finds someone in the equity world who realizes the buying power of the African American woman and understands that Dana is solving a problem that hasn’t been solved before. The hair care and the giving women back their time. The walk-in only hair care solution.
Stephanie Stuckey:
It’s not just solving a problem and offering a very different niche of service. But it’s also, you have a tribe. I refer to Seth Godin’s marketing principles a lot when I talk about branding, and he refers to “tribes.” Know who your tribe is. Who is your customer? You have a very strong sense of who your customer is, and when you know that, you can brand to the right audience. You can make sure your dollars are most strategic, and that’s who’s gonna come in and spend money. I mean, you’ve got it all. It’s just getting that extra capital.
Dana White:
Yep, and so moving to a city where the density shows that this is a viable business, that you can make the money… Yes, I’ve been open for eight years in metro Detroit, but I haven’t hit the dollar amount that would make somebody go, “Oh, maybe we should invest in her.” I had a VC tell me, “I think your business is amazing. I don’t want you to take on venture capital at all.” And this was a VC. He said, “I’m going to tell you something that my colleagues would scream at me for: Do not give away a percentage of Paralee Boyd, because the value of Paralee Boyd today is going to be crazy in 10 years. Build it yourself. Don’t tell anybody I told you that.” I said, “Ooookay.” I got excited after Demo Day. Okay. Now, we’re back to, “Here’s $150,000. Let’s look at the cities where you can launch, and let’s roll it, and just laugh in five years when you all are trying to become equity partners with me, and I’m like, ‘But didn’t I tell you five years ago that this was a great idea?’”
Stephanie Stuckey:
A hundred thousand dollar investment? That is so reasonable an ask.
Dana White:
When I opened Southfield, I opened with $30,000 and grew it to $300,000 in a year.
Stephanie Stuckey:
Wow.
Dana White:
Without marketing. Without retail. Word of mouth.
Jay Goltz:
The other side of this is that raising money and building a successful business are two completely different things. I’ve seen examples of someone who is expert at spinning a tale and telling this fantasy story—with all wrong numbers, I might add—raising tens of millions of dollars and doing nothing but burning through the money, because the business won’t work. They’re two different animals. Just because you’ve got a good story doesn’t mean the business will work, and just because your business will work doesn’t mean that you’re gonna be able to raise money.
Loren Feldman:
We’re running short of time. But before we leave this, Dana, do you have a timeline in mind? Do you know when you’d like to make a decision by?
Dana White:
I’d like to make a decision by the end of March, and I’d like to be opening or in the process of opening by this fall. I’m waiting to see how the vaccine does. I’m waiting to see if there are any new strains that can’t be fought. I’m still keeping my eye on COVID, and just waiting to see what I learn about the different markets I’m looking to go to.
Loren Feldman:
We will certainly be coming back to this. I want to ask all three of you: Today in the 21 Hats Morning Report, I highlighted a guide that ran in Inc. Magazine. It’s an entrepreneur’s guide to using Clubhouse, and I know Dana is there. I’m curious: Stephanie, Jay, do you know what Clubhouse is? Have you experimented with it?
Jay Goltz:
Is it a porno site?
Stephanie Stuckey:
I am on Clubhouse, too. I just got on, Dana. I’ll be sure to follow you. I just joined.
Loren Feldman:
Okay, so Dana, I want to hear you explain to Jay what Clubhouse is.
Dana White:
Jay, Clubhouse is hyper-networking. It’s a social media app similar to Facebook, but better. How is it better? You join a room of a topic that they are discussing that you’re interested in. So for example, I’m interested in writing. I have been in rooms where you’re online with writers, you’re online with agents, you’re online with publishers, and you can ask questions. And then if you have more questions, or if there’s synergy, you can follow them on Instagram and you can message them.
A lot of wonderful things have happened. I’m interested in podcasting. That has opened up doors. I dabble in the Michigan cannabis/medical marijuana area. That, through Clubhouse, has opened up doors and allowed me to talk to people I would not have had the opportunity to talk to. Google or finding it online is not going to put you in front of those people in California, Oregon, Oklahoma. So if there’s something you’re looking for for your business, “How do I merchandise this?” Or, “How do I market this?” You could go into a marketing room.
There are also famous people on it because it’s still kind of small and limited to only iPhone users. A couple nights ago, 100 people were in a room with Matthew Knowles, Beyonce Knowles’ father, and they were taking questions. I had the privilege of talking to Ted Gibson, a very well-known hair stylist in a room. You ask a question. They’re like, “Oh, why don’t you message me and we’ll connect?” And next thing you know, two days later, you’re on the phone with this person.
Stephanie Stuckey:
I would add it’s invitation-only.
Loren Feldman:
But we can arrange that.
Stephanie Stuckey:
We’ll invite you, Jay. You have to have a member invite you, but you’re limited—
Jay Goltz:
How long have you been doing this—Clubhouse?
Dana White:
I think January or December.
Jay Goltz:
So it’s been a couple of months. No one’s invited me over to the Clubhouse. I’m just finding out accidentally because Loren brought it up. Very interesting.
Loren Feldman:
That’s why we’re talking about it, Jay. I want to get everybody on this podcast into Clubhouse. And we’re gonna get a room.
Stephanie Stuckey:
I just want to add two quick points. One is that it’s more intimate, and it’s a lot more curated than anything you might see on LinkedIn or some of these other forums. And then, it’s also more in depth. So tonight, I’m doing my first room, and it’s the future of retail. I’m also signed up for entrepreneurship. And I was super excited when I went on this morning and I saw someone who I really admire—who’s in my space, who’s head of retail for a major chain—followed me. So I’m now going to try to get in a room with him and, like Dana, “Can I DM you and talk to you about getting in your stores?” That kind of thing. It’s a lot more than just a LinkedIn connection. It’s having real conversations.
Dana White:
Real conversations.
Loren Feldman:
Dana, can you imagine something tangible that Jay would get out of it? What would be the allure for him?
Dana White:
If Jay’s talking about succession planning, if there’s another growth opportunity that he has, he could be in a room with manufacturers of home furnishings and talk to them about what they’re doing during COVID. And if he wanted to ship internationally, or if he wanted a different client base, all of these people are in these rooms, and they’re all talking, and they’re connecting with each other.
I’ve been in a lot of beauty rooms. Again, it’s very stylist-driven. The business owners are landlords, technically. They’re booth renters. So when I get up to speak, I’m sharing my ideas. “Well, Dana, maybe you can show me how to set my business up like yours, because I’m 60 and I’m tired of doing hair.” I’ve become a resource for them.
Loren Feldman:
I should say, I’ve been on Clubhouse for a week or two, and Dana’s kind of been my unofficial welcomer. She’s dragged me into several rooms and introduced me around a little bit, which I’ve appreciated. The best story I’ve heard about Clubhouse, Dana, is the one you told about what happened when you went into the podcast room. You introduced yourself, and you said that you have interest in starting your own podcast. Tell us the reaction of the people who were on the stage in that room.
Dana White:
It was amazing. A lot of it is how you present yourself. If you sound like you really don’t want to talk, your reaction’s going to be different. You know me, I’m high energy. So I introduced myself, and the moderators all had anywhere between 50 to 60,000 downloads of their podcast per month, hundreds of thousands of followers. And the guy said, “Okay, right now, everybody who’s interested in helping me launch Dana’s podcast, raise your hand, and we’ll invite you to the stage. Dana, I want you to take a screenshot of this stage, and then follow each of us on Instagram. When you launch, tag all of us, and not only will you tag us, but we will share your podcast with everybody who follows us.” He said, “Who’s gonna join me?” Twenty people came up to the stage. And then when they thought some of these people had questions, a lot of them said, “Oh, no, no, no, I was just here for Dana’s launch and so she could get my picture.” So that’s the type of networking.
Loren Feldman:
Jay, have we sold you? Are you gonna join Clubhouse?
Jay Goltz:
My head is spinning. I don’t even have a reaction because I always wonder where people have time.
Loren Feldman:
That’s a legitimate question.
Jay Goltz:
I’m really interested that you invited Loren to go and that Loren didn’t pick up the old phone: “Hey, Jay, I’m going over here. You want to go with me?”
Loren
I’m doing it right now, Jay.
Dana White:
I’m gonna answer that. Like you’ve heard me, you’ve heard Stephanie, you’ve heard Loren. What podcaster doesn’t want to grow their podcast? So that’s why I’m in podcast stuff. I always think of Loren, but if I knew, “Hey, Dana, I want to do this for my business,” I’d be pinging you. Sometimes I ping Loren at 10 o’clock at night. “Loren, get in here!” And he’s like, “I can’t right now, Dana.” But if I knew what you were interested in, Jay, I’d ping you.
I listen when I have time to listen to stuff. So when I have downtime and I’m not on a call, or I’m not on a Zoom, or I’m not needing to focus on something on my computer, I’m listening to Clubhouse. And that means, I’m going to tell you right now, I’m constantly working. Because I’m always listening in-between. My downtime is now listening. At night before I go to bed, I’m in bed listening.
Loren Feldman:
Stephanie, have you found it difficult to make good use of your time on Clubhouse? I know I’ve wasted a good bit of time in rooms where I shouldn’t have been. How have you done?
Stephanie Stuckey:
I just joined. Tonight is my first on The Retail Experience, but I’ve also signed up for Entrepreneurs Giving Your Pitch, Finding Funding for Your Business. So we’ll see how it develops. There’s one called Hustle, which is really interesting to me. There are a bunch of marketing ones. Ask me in a week or two. And Dana, I’m following you now.
Dana White:
Oh, great. Thank you.
Loren Feldman:
Jay, we’re gonna get you there, and we’re gonna do a 21 Hats Room on Clubhouse.
Dana White:
Jay, you have 51 friends on Clubhouse, and I’m inviting you now.
Jay Goltz:
Wow.
Stephanie Stuckey:
There you go. People who are listening, follow us on Clubhouse. I’m on there as @Stuckeystop.
Dana White:
I’m @Danaalexis.
Loren Feldman:
All right, guys, my thanks to Dana White, Jay Goltz, and Stephanie Stuckey. As always, appreciate you guys sharing.
