Episode 55: My Name Is Jay Goltz, and I’m an Entrepreneuraholic
Guests:
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Dana White is founder and CEO of Paralee Boyd hair salons.
Laura Zander is co-founder and CEO of Jimmy Beans Wool.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Jay Goltz: “You see guys who spend their entire years after 60 chasing their golf score. And if that’s what makes someone happy, it makes them happy. It makes me happy starting businesses.”
Jay Goltz: “All I know is you can’t get an ice cream soda in Chicago anymore. So I thought, ‘I gotta open up an ice cream place.’”
Jay Goltz: “When things are scary, as they were a year ago, you think, ‘That’s it. I’m not doing anything more.’ And then when things are good, you think, ‘Oh, I can do this again.’”
Laura Zander: “The brat in me gets really frustrated that we’ve had two major venture-backed companies come into this yarn industry space.”
Full Episode Transcript:
Loren Feldman:
Welcome, Jay, Dana, Laura. Great to have you here. Hope you’re all doing well. Jay, let’s start with you. Are you feeling manic today?
Jay Goltz:
Well, I’m always on a manic high, so it depends.
Loren Feldman:
Well, especially the last couple of times I’ve spoken to you in the past week…
Jay Goltz:
Well, let’s say this. I didn’t have my new wonder drug—which I just discovered—coffee. I’m already caffeined up without it, so I’d say, I’m kind of in the zone.
Loren Feldman:
The only person in America who started drinking coffee after the age of 60.
Jay Goltz:
Yeah, it’s a miracle. I didn’t know what it did. But I don’t need it today. Generally, it’s a supplement. So today, I’m on my natural caffeination.
Loren Feldman:
Well, you’ve been naturally caffeinated the last couple of times I’ve spoken to you, I think, because, as you’ve told me, you’re starting a new business.
Jay Goltz:
Well, yeah, kind of. Here’s the thing, because I’ve given this a lot of thought, obviously. I’m not going to expand any more, because I don’t need a bunch of new employees. I certainly don’t need new leases, new buildings. But that doesn’t mean I’m not going to look for incremental revenue. Because incremental revenue, if you don’t increase your overhead, is extremely profitable. So yes, I’m starting another extension to my existing business that will provide incremental revenue that I think will prove to be very good.
Loren Feldman:
It seems like a whole new business to me. I understand why it’s related. But tell us what it is.
Jay Goltz:
I have a gallery and I have a big frame place. The gallery is mostly corporate, and I have a retail gallery. Never have done a lot online with it, and I realized I have a very good friend of literally 35 years who is extremely well-known and competent and professional, being an art publisher, a leader in the field, clearly. We’ve been talking, and I’ve realized—and he’s not disagreeing with me—there certainly are some people who are selling art online, but what I’ve recognized is they really don’t have domain expertise there. They might have art history degrees, and they have computer expertise, but I think we can do a better job with selling art online in recreating the gallery experience.
I’ve seen it in other industries, where these people show up and they proclaim they’re going to disrupt the industry, and they don’t, because they don’t really understand the industry, but they’ve got some money, and they’ve got some technology. I think there’s an opportunity here without me having to spend a ton of money. We’d have to build a new website, but I’m splitting it with him, so it shouldn’t be that expensive.
Loren Feldman:
What’s the name of the business?
Jay Goltz:
Don’t know yet. That’s the one part I’m trying to navigate. I have to figure out whether we just use his existing name or whether we come up with a new name. I’m in the thinking stages of it. But the reality is, this is what I’ve come to realize: When things are scary, as they were a year ago, you think, “That’s it. I’m not doing anything more. I’m not going to expose myself anymore.” And then when things are good, you think, “Oh, I can do this again.” So I …
Loren Feldman:
I’ve had 100 conversations with you where you told me, “Never again. Never again. Never again.”
Jay Goltz:
Here’s the qualifier: I’ve looked into buying 10 different frame shops over the years that I knew were winding down, or I thought wanted to sell. Some didn’t, some did. And I realized taking over another frame shop just has limited upside, and then I’m stuck with a lease or with a building, and there’s no out. Whereas this is all incremental revenue without adding to my overhead. The point is, if I bought a frame shop and could do—I don’t know—$600,000, $700,000, it would make a little money. Whereas if I do $600,000, $700,000 in incremental revenue without increasing my overhead by much, it’s very profitable, so it’s about incremental revenue.
Laura Zander:
It’s kind of not starting a new business. It’s more starting a new project, right? You’re using the same infrastructure. You’re using the same staff. Are you going to get a new corporation?
Jay Goltz:
I don’t know yet. But all I know is you can’t get an ice cream soda in Chicago anymore. So I thought, “I gotta open up an ice cream place.” And I thought about it for a couple days, but I’m off of that. I’m not going to open up an ice cream place. So that would be an example of a business. I have a whole list of businesses I’m not starting. I was gonna open a dog kennel because dog kennels are hot now.
Loren Feldman:
You bought a firehouse!
Jay Goltz:
I bought the firehouse, and I realized that’d be perfect for a dog kennel because it’s on the way to the airport. I really did some homework on it, I thought about it, I had a good time. And then I realized I really don’t need to run a dog kennel.
I have been consistent with… I think about it. I have a good time for a few days. I have had to tell my kid—because only your kid would say this to you. Ten years ago—he’s been here for whatever, 12 years now—I would come up with an idea, and he would immediately squash it. And I said to him at one point. I go, “Could you let my idea just break its little beak through the shell a little bit, get a couple of breaths of air, before you stomp on it with your foot?” Because only your kid would say, “That’s a dumb idea. It’s not gonna work.” But he wasn’t wrong. I’ve just realized, though: I enjoy doing it. I give it a few days, and then I come to my senses. This one is in my wheelhouse.
Loren Feldman:
All right, I want to come back to you in a second. But Dana, you’re starting a new business, too.
Dana White:
I have started a new business. Yes, sir.
Loren Feldman:
Tell us about it.
Dana White:
So a couple years ago, Michigan legalized cannabis, and my partner and I have decided to put our—
Loren Feldman:
Your business partner or your fiancé?
Dana White:
My fiancé. So he and I, during the pandemic, decided: “Why don’t we try this?” Our parents have pain. My mom has back pain. His father has some pain and trouble sleeping. I have my Michigan medical marijuana license, so I’m a licensed caregiver, and signed them up as patients. We know people in this space who are processors and people who own dispensaries, and so we decided to share our tea—our actual liquid tea—that you just drink out of a two ounce bottle that helps.
We’re getting so much great feedback from people who say, “I had an ounce of your tea, and I finally slept throughout the night. I hadn’t slept in years. “My back pain—I was able to wait 20 minutes, and man, I wasn’t limited. I could get up, carry groceries in the house, go to the store, and all of that.” We’ve decided to launch The Lit Leaf, is what we’re calling it. It’s a two-ounce tea. We have 18-ounce bottles. Right now, we’re only in Michigan because cannabis is not a federally legal substance.
Jay Goltz:
Do you think it could help me stop opening businesses?
Dana White:
No, no, there’s really nothing for that, Jay.
Loren Feldman:
You need a stronger drug for that, Jay.
Laura Zander:
And did you watch that movie I Care a Lot?
Dana White:
Oh, yeah. I saw that. I did. Oh my God, I did see that movie.
Laura Zander:
I’m so glad you’re a caregiver. I can’t wait to see how this turns out.
Dana White:
I mean, it’s not a caregiver in the sense of a nurse or a doctor. It’s just when pills are starting to take an adverse effect on people’s bodies, they turn to more holistic methods. I know my mother has a whole cabinet full of pills. She’s like, “I can’t.” It’s just one pill for this and another pill for this and then another pill for this. Now she just takes a shot of tea, and she’s good to go.
Loren Feldman:
How are you selling it? Are you opening stores?
Dana White:
Oh, no, we aren’t selling it. What we’re doing is we’re looking to license our brand to a processor. We’ve been meeting with processors to talk about what that process would look like. And then they get a percentage off of the bottom end, based on the purchase order. We don’t pay them up front. We get a purchase order for so many dispensaries, and then they take a percentage off of that purchase order. They’re bottling it.
Laura Zander:
Can I ask a more personal question?
Dana White:
Sure.
Laura Zander:
So your partner—your fiancé—was a cop, right?
Dana White:
Yes, absolutely.
Laura Zander:
So how do you reconcile—I mean, I think this might have business application—the world changes, the laws change. And so at some point, this was criminalized. And I’m assuming he’s written some tickets—
Dana White:
Not at all. We totally had this conversation.
Laura Zander:
So tell me about it.
Dana White:
Yeah, he’s a retired police officer, and we had this conversation. His thing was, “First, it’s legal.” And he said, “As a cop, I wasn’t the cop who wrote you a ticket for it. I took it from you, and I disposed of it.” But he goes, “In all of my years of being a police officer, I had more issues from people with drunk driving and abusing alcohol. I’ve never had to pull someone over for erratically driving or being disruptive from being on cannabis. And after a couple of years on the force, I noticed that and said, ‘You know what?’” He said, “As a personal choice, if I pulled someone over, and I smelled it, I would ask them about it. As long as they were upfront with me, they would give me whatever they had, and I would take it, and that was it. I let them go, because it wasn’t as deadly as I saw that adverse effects of alcohol and other hardcore substances.
Laura Zander:
So that stuff that he took—is that what you guys are starting your business from? You know, like a little cash? [Laughter]
Dana White:
Absolutely not.
Laura Zander:
Just kidding.
Dana White:
Because I have my medical marijuana license, we have dabbled with growing here, but we have partnered with people who can supply the THC needed for our tea, because you can’t grind up a flower and put it in. You have to turn that into another form, and so that’s what we had done and we made the tea.
I was having serious issues with anxiety. I’m not a cannabis smoker. I don’t like it. I think it hurts, and I just don’t like it. But my fiancé would bake a cake for me, or he would give me a gummy right before bed, and I would sleep through the night. Versus waking up at three o’clock in the morning, pacing through the pandemic, wondering what I was going to do. So we made this tea, and here it is.
Jay Goltz:
God, I’m feeling a little stupid that I just discovered coffee, and that’s my new drug. You’re like way ahead of me.
Laura Zander:
And that you’re gonna sell art online.
Jay Goltz:
Yeah.
Dana White:
We don’t know how we’re gonna sell it. It might be a beverage that is in dispensaries all around the country, or it may not be, but it doesn’t hurt to try.
Laura Zander:
Can you serve it at Paralee Boyd?
Dana White:
Absolutely not, and I wouldn’t even if I could.
Loren Feldman:
Because?
Dana White:
It’s just not the brand.
Jay Goltz:
Channel conflict. Not good.
Dana White:
First of all, we have no information on the people who come in. So if you’re 21, we don’t know. Second of all, I don’t want to offer an elevated haircare experience. I just want to do your hair and have you go partake on your own if you choose.
Loren Feldman:
Have you thought about how much time, energy, and money you want to sink into this?
Dana White:
Absolutely. I’ve sunk in a bit of our own money. Because of the patients I have, they have paid me for some of the cakes and stuff that we have. That was how we were able to get our bottles and our labels and design our logo. What we’ve done is, it’s been small, and we’ve just taken it and developed a few bottles here, and given those away, and developed a few more bottles here, and given those away. We partnered with a cannabis lounge here in Detroit, and that was our first order where he ordered more than just a few, and he gave us a donation. We were like, “Okay, great, here you go,” just so we can kind of test the market.
As far as the time portion of it, had this happened eight years ago, it would have been different. I’m just a savvier business owner now, and some of the things just come easily to me: Having conversations and understanding what we want to do to grow the business. I spend less time figuring it out. I do spend some time doing it, because it’s cannabis. It’s a new industry. But the business processes are the same.
My partner, he’s very strong in the actual cultivation. He’s strong in the actual recipe making. He’s strong with that. It’s not just all, Dana. When it comes to networking and making relationships, I’ve been the one on Clubhouse speaking to people in cannabis rooms, introducing myself, talking about the tea, and making connections that way. That’s it.
Laura Zander:
Have you trademarked and patented or whatever you’ve got to do that way?
Dana White:
No, because it’s not a legal substance federally, so if you’re going to patent and trademark anything in cannabis, you can only do it in the state. People have done it federally, but we’re finding that the U.S government is finding out that it’s a cannabis company and they’re revoking their trademark.
Loren Feldman:
The theme here that I wanted to focus on is the question of: When is enough enough? You all have your hands full. Laura, I don’t want to leave you out of this. You kind of took your leap more than a year ago when you bought another business—a related business, but another business in Texas—and we’ve spent a lot of the last year talking about all the things you’ve been through, trying to turn that business around. Do you ever stop and wonder what would have happened if you’d put that time, energy, and money into Jimmy Beans Wool instead of buying another business?
Laura Zander:
Sure. I wonder it for a second, but I am 100 percent—well, maybe I’m 99 percent—sure that this was the right decision. Because we had been putting our time and our energy into Jimmy Beans. I think this was the best way to expand, 100 percent, no doubt. I think that there’s a limit, unless we decided we wanted to go the discounting route or do some other things. I think this is the best way for us to actually grow Jimmy Beans, and it’s working.
Jay Goltz:
You know the key is what Dana said. When you become competent—which takes years—when you get good at this, it’s just right in your wheelhouse. It’s like I said, it’s not like I would open an ice cream shop, though I could open an ice cream shop. I doubt the return would be there that would make me happy with it. But the point is—
Loren Feldman:
We’ll be talking about Jay’s ice cream shop in a year.
Jay Goltz:
Well, no. Jayson Cafe is what it was gonna be called. Do you want to see the logo?
Laura Zander:
No.
Jay Goltz:
So the point is, once you’re good at it, and then you mitigate your risk, because there’s a limit to what any of us would put into something. I’m not gonna bet the ranch. I’m not even gonna come close to betting the ranch on anything, but…
Loren Feldman:
Can you tell us what you’re prepared to invest?
Jay Goltz:
Prepared is a good word. I haven’t thought about it that much. I don’t know, I’d probably put $100,000 into it. It’s not going to make or break me, and frankly, this is entrepreneurial thinking. If it doesn’t work, okay, you take a tax deduction for the money you spent on it, so now it’s really gonna cost $65,000. I’ve got to tell you, the idea of this is where my head’s changed a little bit. I like doing this. You see guys who spend their entire years after 60 chasing their golf score. And if that’s what makes someone happy, it makes them happy. It makes me happy starting businesses.
Loren Feldman:
Well, let me ask you this. I think you might be underestimating how much effort it will take to get this off the ground.
Jay Goltz:
Well, there’s no question. That’s my story.
Loren Feldman:
Building a website? Tell us about that.
Jay Goltz:
First of all, guilty as charged. I always underestimate. There’s no question about it. But we’ve just built a new Jayson Home website. I’ve gone through all the trials and tribulations of hiring developers and being disappointed with what they come up with.
Loren Feldman:
You didn’t have a lot of fun doing that.
Jay Goltz:
No, it was horrible. But I learned from it, and I haven’t, in fact, run this past my son who’s in charge of it yet so he can squash me, but he’s gotten really good at figuring out how to do it. I also have to tell you, I’m not 100 percent sure I’m doing it, but I’m moving towards it.
Loren Feldman:
If you put up a website to sell fine art—expensive art—it’s got to be a very nice website.
Jay Goltz:
Sure, but—
Laura Zander:
I don’t know. I think, Loren, I’m gonna disagree with you. I think that that’s gonna be one of the easier parts of it. This is so aligned with what you already do.
Jay Goltz:
Right, and I’ve got so many assets to leverage. Keep in mind. My friend’s got a gallery. I have a gallery. My friend makes the art already. He already makes the art. I already have frames.
Laura Zander:
It’s just another channel.
Jay Goltz:
Right. It’s another channel. This is like, he’s got the car, and I got the gas. I mean, we’re the perfect fit together. He’s my brother. I’ve been tight with him literally since I met him at a trade show. I was a kid at a trade show: I was 22 years old, 23 years old going to trade shows. He’s a year younger than me. I’ve been tight with him for 35 years, and we finally both realized the world has changed a lot, and a lot of the galleries have gone out. And the fact is, there’s still people that want to buy “real art”—whatever that is to them. We think there’s an opportunity. I don’t know. Here’s the key: I’m having a really good time planning this out. Whether I do it or not, we’ll see. I think I’m gonna do it, though.
Laura Zander:
You probably have employees who would really love something new to work on.
Jay Goltz:
Not just love it, but I’ve got my key person who runs my art business. I would like her to be able to make some money.
Loren Feldman:
You get the website built, how are you going to market it? How are you going to tell the world?
Laura Zander:
You already have 50,000 people.
Jay Goltz:
I can’t give away all my trade secrets right now, Loren.
Laura Zander:
Yeah. To me, you could easily spend 100 grand going to two trade shows. So which has the benefit? Which has the biggest reward?
Jay Goltz:
Right. He used to go to the New York Art Expo and was the busiest booth there, and that whole model has blown up. The art business—most of you wouldn’t know this—the whole art world’s been blown up for 20 years. The world’s changed dramatically, but I believe that we have the core competencies and expertise to go ahead and pull this off. Do I think it’s gonna turn into a $50 million business? No, I don’t need it to turn into a $50 million business. That’s the beauty of this. If it’s a million dollars a year, and it’s incremental business, everybody’s happy. So I’m in the beginning stages.
Loren Feldman:
Do you have a set of questions you ask yourself before you decide to take a leap like this?
Jay Goltz:
Thank you for asking. Here they are: five things. I’ll ask Laura and Dana to think about this in your businesses. First question: what kind of upside does this have? You know what, opening an ice cream shop? There’s just no big upside, and so that’s why that finishes that one. But this has enough upside. I don’t know, I could do some serious business with it. But it’s got good upside.
Number two, what’s it going to cost to launch it? I’m not going to put half a million dollars into anything at this point. This is not going to cost that kind of money. Okay, number three: What if things go bad? Can I get out of it? Signing a lease, buying a building? Problem. Here? Okay, done. Finished. I can literally pull the plug on it anytime. Number four: Is this going to be a pain in the ass business? Is this going to require a ton of employees? No, I’ve already got the infrastructure in place, so there are not going to be a lot of extra employees.
Lastly, and this is really the killer piece, that when I hear professors talking about, “Oh, the odds of succeeding in business are X percent,” that’s crazy. The odds of getting to the NBA are much better if you’re 7-feet tall and you’re extremely athletic. Well, the odds of succeeding if you’ve got some assets to leverage… So the fifth question is: Do you have some special expertise or things to leverage to give you an advantage in the marketplace? And in that case, absolutely. I’m the leader in the framing industry for 40-some years. He’s a leader in the art business for 40-some years. We know what we’re doing. We’ve got warehouses. We’ve got showrooms. We’ve got some computer expertise. There’s something to leverage. Whereas if I went into the ice cream business, what do I got? I mean, I’ll run a nicer store, but it’s not like I’m making the ice cream in the back. So that’s the criteria, and this hits all five of them.
Dana White:
But, in your other criteria, do you have time?
Jay Goltz:
Absolutely.
Dana White:
You may have everything, but do you have the time to dedicate? How much of a time suck is this going to be? But because you have so many things in place—you don’t have to go out and look for a gallery. You don’t have to go out and try to find the employees. Everything is already lined up, so it narrows down your time. Same thing with the business that we’re doing. We were already making it. It’s easy to make. It was already in line with what we’re doing.
Jay Goltz:
And your fiancé is retired. He’s got time.
Dana White:
He’s retired, yeah!
Loren Feldman:
Put Dana through your five-point test.
Jay Goltz:
Okay, number one: What kind of upside? Sounds like—who knows—there could be some good upside to this if she gets it out there and brands it and a lot of people buy it, right?
Dana White:
Yeah. They’ve already started talking to me about the first African-American cannabis beverage maker, so that’s …
Jay Goltz:
Great. Number two, she’s not buying a factory. You’re not putting $300,000 into this.
Dana White:
Not at all.
Jay Goltz:
Okay, number three, you’re not going to have to hire 20 people to do this.
Dana White:
Not at all.
Jay Goltz:
It’s not going to be a big pain. If you decide, “Oh, this isn’t as easy as I thought.” Boom. You pull the plug on it. You don’t have any commitments. And lastly: Do you have any expertise that other people don’t have? Well, the fun part of that, in her case, is no one really does at this stage. It’s a new industry. So she’s got as good a shot as anybody. She also has a good story to tell.and she’s got some good business skills she’s picked up doing the other business. It’s not completely out of left field. I would say it fits all my five things, and my argument is, if it doesn’t hit one of the five, probably not good. If it didn’t hit one of my five, any one of those five things would take it out of the mix for me. And look at Laura with buying the company that makes yarn. I would say it fit all five things on that.
Loren Feldman:
Laura, do you agree?
Laura Zander:
Yeah, I totally agree.
Jay Goltz:
Yours has the pain-in-the-ass piece a little bit. You do have a lot of new employees.
Laura Zander:
Absolutely.
Jay Goltz:
But it’s worth it because this fits your business really well. This really supports your business, so it’s worth the pain, because it supports your core business.
Laura Zander:
20 percent of our core business came from this company, and then 20 percent of this company’s business came from the other one. So there’s a lot of synergies.
Jay Goltz:
Right. Synergy, leverage, symbiotic relationship. All those good words in there.
Laura Zander:
Yep, and we already have, as you said, the expertise. It’s funny that you say that, but where we are excelling is in the areas that we have expertise and experience, which is the marketing, the sales, the communication, the customer service. And where we’re struggling is the area that’s brand new to us, which is manufacturing and operations.
Jay Goltz:
But you’re figuring it out.
Laura Zander:
We’re figuring it out.
Dana White:
I’ve noticed that business owners will start a business and then start another business that’s unrelated and justify it by calling it “multiple streams of income.” And those are the business owners that I really question why they’re doing it. Because they’ve [seen] some GIF or read some quote on Facebook or social media that says, “A true business person has multiple streams of income.”
If I was starting another business like Paralee Boyd that I couldn’t do from my home, I needed to lease a space, I’ve got to hire employees, they all have to be licensed—all of that—then that, to me, isn’t smart. And if it takes just as much time, I need 48 hours in a day, versus 24, because of all the time I give to Paralee Boyd. Having multiple streams of income, in my humble opinion, only works when that other stream of income complements what you’re already doing, or it’s so easy to do, based on what you’ve learned, you’re not losing any sleep on it. Like doing the tea thing, it’s a couple conversations, sending a couple emails, it’s maybe two, maybe three hours, if that. You’ve got to be careful, because this podcast [episode] sounds like, “Oh, yeah, do other stuff.”
Jay Goltz:
No, I’m not telling anyone they should do that. I’ve gotta tell you, a banker once told me—and he was dead serious when he told me this—he said most entrepreneurs that they deal with eventually think they need to open a restaurant, and then they lose a lot of money on it. And I laughed out loud, and I go, “I’m glad I didn’t tell him about my cafe idea that I had.” I’ve gone through that in my head, and I’ve talked myself out of it because I know it’s gonna be a pain. And so it’s not a matter of needing to do it. It’s a matter of wanting to do it.
Laura Zander:
Well, that’s a whole different thing too.
Jay Goltz:
It’s my hobby.
Laura Zander:
Yeah.
Jay Goltz:
Yeah, it’s not all about money.
Laura Zander:
Right. So Loren, you may remember that like five or six or seven or eight years ago, we decided to expand by going into selling fabric. I had read all these books, and I had these friends. He ran a company that sold and produced both yarn and fabric by the yard for quilters and sellers. I had read everything about how you find your customer and then figure out what else you can sell to that customer.
Jay Goltz:
It’s called horizontal integration.
Laura Zander:
Yes, and the statistic out there was that 50 percent or 46 percent of knitters are also sewists. They also quilt, or they sew dresses, or whatever. So I’m like, “Oh, slam dunk, right?” So we invested—it was probably $100,000 or more—and we learned a really, really hard lesson, that the way people shop, they either shop with knitting in mind, or they go shop with sewing in mind and they want a sewing shop… for the most part. If you are in a really small town, or you’re going to Jo-Ann’s, =maybe you’re kind of crafting across the board.
But anyway, it didn’t work, and part of why it didn’t work goes to what Dana was saying, or I guess what Loren was asking, which was: We should have been spending that time and that money developing and strengthening our core business of knitting, as opposed to trying to expand out into something else. We were spread way too thin, so the knitting business took a hit.
Loren Feldman:
What was the main reason it didn’t work?
Laura Zander:
That’s a good question.
Jay Goltz:
Let me guess: One was the branding got a little confusing. You just said it. They’re no longer the knitting place. And two is: There are other people in that industry who probably knew what they were doing better than you did.
Laura Zander:
One hundred percent, and that they were 100 percent dedicated to it.
Jay Goltz:
My businesses are all—think about it—they’re all related. They’re all in the home design field. They’ve all got an artistic side to it. They are connected by design.
Loren Feldman:
Well, let me ask you this. That makes perfect sense. I think you’re absolutely right. The thing I stumble on a little bit is that I think selling online is tricky. It’s not something that necessarily comes naturally to you personally. On the other hand, I have to acknowledge you’ve done very well selling Jayson Home online.
Jay Goltz:
Well, I’ve learned lessons from that. First of all, I’m not suggesting I’m an online expert by any way, shape, or form. But I’m suggesting that that business is not just like selling t-shirts online, and I believe that our expertise of having two showrooms and having expertise of finding artists and developing artists and framing the pictures and shipping is a large part of the equation. So while the people out there clearly have more expertise and on the web than we do, they’ve got venture capital, most of them. They’ve got 40 people working there, probably, who are doing the web stuff. They don’t have the other pieces necessarily. It could end up being that, “Oh, gee, I overestimated how easy it was gonna be to break into that.”
Laura Zander:
I don’t think so.
Jay Goltz:
Right, I don’t have a lot of overhead. Like I said, I’ve got all the pieces in place to run the business part of it. I just gotta get the website done.
Laura Zander:
Yeah, and Loren, I would have agreed with you 10 years ago, but I really think the barrier to entry and building a site—it’s just so easy now.
Jay Goltz:
Well, I don’t know if it’s easy. It’s easier.
Laura Zander:
It’s so much easier, and you already have a customer base that you can start to pull from.
Loren Feldman:
The basic decision, first, I think, is: Are you building a site from scratch? Are you going to Shopify? Do you know the answer to that?
Jay Goltz:
I got this from you from one of your expert people that said Shopify is the way to go. And yeah, we’ll probably do it on Shopify, and I literally have not talked to my kid about this yet, so I assume—I don’t want it to get stomped on yet. I’m giving it a few days of fun before I tell him. But no, it probably will be Shopify, but that’s not the only piece. You have to remember: I have no other expenses. I’m already here. I’ve got all the infrastructure in place. All I’ve got to do is fund the website.
Dana White:
See, that’s not my experience. I struggle a little bit with selling online right now. I have products, and our numbers are very bleak, so for me, it’s selling online and then marketing.
Jay Goltz:
No, you have to spend the money.
Dana White:
That’s what we’re doing right now.
Jay Goltz:
I wasn’t on that episode when you talked about marketing—you were gonna spend $50,000. That’s not a lot of money, spending $50,000 for marketing. I would put more money into it. I’m not saying I won’t put some money into it. I’ll have to put some money into the “marketing” of it, no question. That would be part of the formula. I’m not suggesting I’m going to do this and all I’ve got to do is fund the website. No, I got to get the website built, and I have to do some marketing.
But you’ve got to remember, I’m splitting it in two now. It is not going to cost either of us that much, and we believe that there’s an opportunity in the marketplace right now. Think of your hometown. Half the galleries around are going out of business. I mean, there’s not a lot of places to buy art these days.
Loren Feldman:
Laura, Jay mentioned possibly having to compete with businesses that are venture-backed. That’s something you’ve been doing. I’m curious, what’s your thinking about that these days? How is that affecting you?
Laura Zander:
You’re talking about original art, right? So you’re not gonna have 10 different people who are selling the same piece?
Jay Goltz:
Right. It’s gonna be proprietary. We’re gonna have our own artists and our own art, yes.
Laura Zander:
So that’s… I mean, sure, the venture-backed guys are gonna end up having more marketing power and can drive more traffic, but you can’t compare…
Jay Goltz:
No, there’s some beautiful sites out there for art right now. Beautiful sites.
Laura Zander:
For us, it’s the VC money. I don’t know. I mean, part of me is just like, it is what it is, and we just have to live with it and let it kind of pass through. But the brat in me gets really frustrated that we’ve had two major venture-backed companies come into this yarn industry space. And they’ve brought in—God, I don’t know—between the two of them, $150 million probably in funding. If you think about it this way, they’ve been able to funnel $150 million, or let’s say $100 million, into our suppliers’ pockets, which has been great.
It’s been really good for all the yarn manufacturers, because they’ve been able to fulfill these big orders. But then they go out, and they’re putting all this stuff on their websites and selling it for not much over cost. They’re making zero profit between the two of them. They’ve done hundreds of millions of dollars, I’m sure, in sales and not profitable sales. So now all of a sudden, if you think about how the average yarn store is doing a couple hundred thousand in sales, that money has to come from somewhere. And so it’s really destroyed the landscape and the number of small independent yarn shops, which for our industry, where that causes a problem is that now you don’t have a bunch of shops that cater to customers and that teach people how to knit and help elevate their skills and create community. Then that means that the industry itself is kind of dying out in some ways. It will be fine. It is what it is. We’re adapting.
Jay Goltz:
Let’s not say dying out. It’s suffering, as frame shops have suffered, but it will be back. But once the landscape—
Laura Zander:
It’ll be different.
Jay Goltz:
Right. Because the people who are going in with the big money are not going to be successful enough to keep putting money into it. They’ll eventually go away.
Laura Zander:
And one of them has already gone away. And then, the other one—
Jay Goltz:
It’s happened in the frame business. I’ve watched some big people get in the frame business, and it ain’t working.
Laura Zander:
Running stores and guitar stores—Doug plays the guitar, and I run. So you see the same thing kind of happening there with Guitar Center, and then you’ve got the other running shops, and you lose that community.
Loren Feldman:
When they decide to go away, they decide it’s not working, what’s not working?
Laura Zander:
There’s no money.
Jay Goltz:
They’re not getting the return on investment. The industry is smaller than they thought it was.
Laura Zander:
It’s just not worth it. The industry is just not that big.
Loren Feldman:
And that’s the mistake they made?
Jay Goltz:
The framing industry is a very similar size, and we’ve seen the same thing in it. The big, big, big money came into it, and it’s not working because the industry wasn’t big enough.
Laura Zander:
And it’s the same pattern that we’ve seen for years and years and years. You look on Wired magazine, or you look at Fast Company or Inc. magazine, and everybody that’s on the cover—it’s these shiny-object businesses. They bring all this money in, they’ve got this great platform, they sell all this crap, they’re not making a profit, and they’re creating this pattern and this kind of business model that all these other people who don’t have the money try to emulate, but they don’t realize that they’re not profitable models.
Jay Goltz:
Absolutely. It’s happening all over the place.
Laura Zander:
Dana, what is it: Drybar? Who knows? Maybe they’re super, super profitable and everything is really great with Drybar.
Loren Feldman:
Do you know, Dana?
Dana White:
No, go ahead. Yeah, I do. But go ahead, Laura. I want to hear what you have to say.
Laura Zander:
Then you see all of these kinds of copycats. Like in Reno, we’re not big enough to have a Drybar, but we have a Blow Dry Bar, and we have all these other copycat ones. And you never see anybody in them. It’s like the cupcake places. That’s really popular for a little while, and everybody’s doing cupcakes.
Jay Goltz:
Sex and the City had that famous cupcake place in New York. So everybody thought, “Oh, we’re gonna do one of those.”
Laura Zander:
Yeah.
Dana White:
So this is the thing: It’s such a great topic about the VC dollars because I just think the VC dollars are misguided as to what the bright new shiny thing is. It’s not that bright. It’s not that shiny. What frustrates me is that they’re not looking at businesses like mine, that I believe are revolutionizing or innovating in an industry that’s already there.
For example, to me as a VC, I would be interested in investing in a business like mine. Why? Because I already see how much money women with thick and curly hair are spending on products. But there is no data about how much women are spending on getting their hair done. Why not? Because the industry is not tapped, and the people who have the money don’t really care about the spending habits of black women getting their hair done. It is a multi-billion dollar business that nobody is paying attention to. And Dana is the only walk-in-only, seven-day-a-week hair salon. But they’re gonna go to the low-hanging fruit.
Jay Goltz:
But these venture guys don’t go out of business because they hit the home run one out of whatever—four or five or six times—and it makes up for all the other losses. If they were so stupid, they wouldn’t be in business. These guys have gotten rich from it. I’m not criticizing them. It’s just the nature of the beast. that they’re wrong a lot of times, but they make it up when they hit the big one.
Dana White:
But they would be wrong less if they got out of their box and stopped only investing in what they know and start looking at what they didn’t know.
Laura Zander:
I don’t know how to reconcile this in my brain, because it’s capitalism. It is what it is. At the same time, the damage that it does to the ecosystem, in terms of not trying to make a profit, but instead just trying to build a customer list so that then you can sell this customer list and just focusing on revenue, is really, really damaging. That is a real problem.
And there are some great benefits to it. It’s a lot of money that has been injected into our industry. Like I said, the suppliers have gotten paid really well. But what’s going to happen is, they’re going to go away. And then we’ve got all this shit we’re gonna have to clean up, because now we don’t have these shops. They’ve put so many people out of business through this lower-priced model. It’s the Amazon thing. I don’t know what to do about it.
I was driving. I was in Fort Worth the other day, and I realized that I was in this little, cute, trendy kind of area with these cute pizza shops and nice cafes and blah, blah, blah. And I’m like, “Oh, this is the new strip mall.” Because now I could be in any city in the country, and they have one of these cute little areas that has the trendy yoga shop, and the trendy coffee shop, and blah, blah, blah. So it’s this generation’s response to the strip malls. I feel like we’re really trying to turn back and find this balance between mom and pop and convenient shopping online. But it doesn’t have to be discount shopping. I don’t know.
Jay Goltz:
No, they’re going to have to have margins to stay in business. It’s happened in the frame industry, and there’s plenty of healthy, successful picture frame shops in America. A lot less than there used to be, but the fact is, it was culled out. There were 25,000 frame shops. Now there’s eight. Well, the 8,000 left are the people who are being better business people. I feel very strongly [that] the framing industry—it’s certainly not a big growth industry—but it’s solid. And it’s gonna stay in business. And I’m sure the same thing is true with the yarn industry because people want to go into the local yarn shop. Enough people do.
Loren Feldman:
Jay, you were saying a moment ago that there are a number of beautiful websites selling beautiful art that you presumably will have to compete with. Why isn’t that a concern to you?
Jay Goltz:
Because it’s a big enough market that I believe I can give a better value proposition to the customer. They will get a piece of it. You’ll never hear me use the phrase, “Oh, we’re going to disrupt the market.” Oh, please. Most people who use that phrase, they disrupt the bank accounts of their investors, and that’s about the only disruption that goes on. I’m not suggesting I’m disrupting the market. I’m suggesting that, given our overheads, given our exposure, given our expertise, I don’t think it’s crazy to think we could do $1 million, $2 million, $3 million, $4 million a year out of a market, and that’s not a lot.
Loren Feldman:
My thanks to Jay Goltz, Dana White, and Laura Zander. As always, thanks for sharing guys. I really appreciate it.
