Episode 71: I Had Two Great Candidates. They Both Blew Up.

Episode 71: I Had Two Great Candidates. They Both Blew Up.

Introduction:

This week, we delve into some specific hiring situations, including Jay Goltz telling Diana Lee and Dana White that he thought he had two terrific candidates to replace his retiring chief financial officer. And then, after conversations with each of them, Jay had no candidates, which led us to some interesting questions: Has there been a more challenging time to hire for cultural fit? How risky is it for a smaller business to hire a candidate accustomed to working at larger businesses? And what does hiring intentionally for diversity mean when your staff is almost entirely African American. Plus: Dana gives us an update on her potential deal with the military and Diana explains how she markets her marketing agency.

— Loren Feldman

Guests:

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Diana Lee is co-founder and CEO of Constellation Agency.

Dana White is founder and CEO of Paralee Boyd hair salons.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome, Jay, Diana, and Dana. Great to have you all here. Jay, I want to start with you this week. You’ve been talking about your ongoing search for a CFO. Last time we spoke, I think you were narrowing the field. Where do things stand?

Jay Goltz:
This is complicated. I haven’t looked for a CFO in 22 years. The company’s much bigger. It’s kind of exhausting. And I did have it down to two people, but they both blew up for different reasons.

Loren Feldman:
Tell us about that. Why did they blow up?

Jay Goltz:
First of all, just to give you some perspective, we put it out there on LinkedIn and ZipRecruiter, and I got, I don’t know, 150 resumes. But lots of them were experts in international mergers and acquisition—I mean, way, way, way bigger than what I need—people who are working for $300 million companies. So out of that, you end up with maybe six that you do phone interviews on. And for one reason or another, three of them end up not thinking they’re the right people. So we had it down to two, and I had a very qualified woman with a great resume and a great history and smart and personable.

My CFO and my HR person did the first interview. I did the second one, met her at the factory warehouse. And I just felt the need to get something out there that I think might be a problem long-term. She’s coming from a good job, and I don’t want to mess her up. So I just said, “I have to tell you, I have a very diverse work group here, coming from all different kinds of backgrounds, and it’s been a difficult last few, three, four years.

Loren Feldman:
What do you mean, it’s been a difficult last few years? Are you talking about at the company?

Jay Goltz:
No, no, that being a diverse group, for many people, it’s been a very difficult time for the last three or four years, just what’s going on in the world. And she immediately said, “Oh, I don’t talk about politics at work.” And I just said, “Well, I don’t consider it politics. I’m just talking about human decency.” And that’s all I said. And I knew that that might blow it up, and in fact, it did. And I said, “Listen, I want to be upfront with you. I don’t want to take you out of a job, and you get a surprise here. And I hope I didn’t offend you.” And I have to tell you, my biggest nightmare is hiring somebody who doesn’t say to my face what’s on their mind. “Oh, no, it was okay.” So she in fact called the HR person the next day, “You know, I don’t think that’s an environment. I’m just tired of this politics stuff.”

Loren Feldman:
Do you think she thought you wanted to talk about politics in the office?

Jay Goltz:
No, no, no. I called her just to close the loop, and I had a friendly, nice conversation. I go, “I just want you to know that I just want to provide a safe environment for my employees that they feel comfortable and supported.” [And she said] “I’m just tired of this politics stuff.” And I said, “Okay, I understand. That’s why I brought it up.” So I thanked her. And I said, “Think about it some more. I’m happy to talk some more about it.”

I don’t blame her. She’s a nice, smart person. I’m sure she’ll find a good job somewhere. I just think that I can’t pretend like this doesn’t—and this is a personal thing. I’m not preaching to anybody here. Everybody has to decide what they want to do in their company. And I want to make sure that the people who work here feel safe and supported and conscious of what’s going on in the world. And no, we’re not having political discussions, but to pretend like, “Oh, no, you can keep that out of the workplace,” I don’t think is practical.

Dana White:
I think you did a great job. I can tell you—as an African American woman who’s been in the workplace, who has worked for people who think that there’s no difference between a human rights issue and a political issue—you’re hiring people who don’t really realize how much their subconscious affects what they do and how they interact with minorities in the workplace, Black people in the workplace. And so, again, I as an owner, applaud you. It was very risky, and you put it out there.

Jay Goltz:
Well, it isn’t risky because I got what I wanted. She got what she wanted. I have to tell you, I would have never done that if it wasn’t for you. I can’t emphasize how you have given me a whole new sensitivity and appreciation of the fact that just because your employees show up every day and seem okay and happy doesn’t mean they’re not afraid and don’t feel supported. I never thought about it. Because let’s be realistic: I’m the white old guy, and I’ve never had to deal with that. You got in my head, and just thank you, because I feel like I did the right thing.

This woman is a very nice person and smart, and I’m not saying I’m right or she’s wrong. All I wanted as an answer from someone is, “Hey, I hear what you’re saying.” That’s all. That’s all I needed. I don’t need to hear any politics. We don’t discuss politics here. Believe me, I wasn’t comfortable with the whole thing. I didn’t sleep well, frankly. But I know it was the right thing. And I’m not sorry I did it.

Loren Feldman:
Have you ever had a conversation with a potential employee like that before?

Jay Goltz:
Absolutely not. That’s why I’m telling you, I’m 100 percent confident that if I wasn’t on this podcast, I would have never thought to say something like that. I am 100 percent confident that Dana has profoundly changed the way I think about the world, and I now understand that no one’s going to come to the boss and tell them, “What you said last week really bothered me,” or, “What so and so said to me,” or just the whole environment. I am committed to having a safe and inclusive workforce where people enjoy coming to work, and I needed to do that for that reason. I get tremendous satisfaction out of knowing I have lots of people who work at this company who came here and have stayed here, because they feel comfortable and respected and appreciated. And it goes way beyond how much money you make. So I don’t see it as a burden. I don’t see it as a responsibility. I feel like it is a privilege and an honor to own a company where you can make your world a nice place. So that’s my pitch for the day. I’m not telling anyone else they should do that. This is my own personal thing.

Loren Feldman:
Diana, have you ever been in a situation where you felt compelled to seek out that kind of information from a job candidate?

Diana Lee:
I mean, I think being a woman of color working in what I’ve been doing, which is that a lot of our clients are automotive and in technology, where I differentiate myself—and maybe Dana does the same thing, I’m not really sure—is that every decision that I make for the company, in terms of employees, it’s an intentional decision. And I really say this because, to me, in order to have change in your organization and you want to have diversity, it’s intentional. It doesn’t happen with a coward CEO that pretty much sits there and says, “I don’t really want to get involved. I don’t really want to talk about, Oh, I don’t really want to actually address this. No, I don’t really want it.” That is a cowardly way of leading. Every decision you make for your employees and the decision to have diversity in your staff has to be an intentional one.

And then the only other part of this that I would add is that right now, my biggest fear—and the biggest issue right now—is that there are articles upon articles that are talking about the great resignation of 2021. And what I mean by that is right now, on Monster.com, the recent reports basically say that 95 percent of employees are considering changing jobs at this point. 95 percent! I am seeing it first-hand—not just from me trying to recruit and then realizing that when I’m recruiting, I talk to these people, and they’re like, “I don’t know what’s happening. There’s a mass exodus that’s happening in our organization.” And I’m hearing it over and over again, whether I speak to recruiters or I speak to people who I’m actually interviewing right now. But there are lots of people that are looking for change at this point. And more than ever, I think you have to be courageous to be able to talk about what you believe in, what your company believes in, the environment you want for all of your employees. And I’d rather have that conversation during an interview to make sure it’s a match, versus finding out way later on and not realizing all those things.

Dana White:
Mine’s the opposite.

Diana Lee:
Okay.

Dana White:
My hiring intentionally is almost inverted. My staff is like 98 percent African Americans, 95 percent women. And so if I’m going to bring somebody who is not Black into my salon, it raises eyebrows amongst the staff. For example, my operations manager is White. And so I have to make sure that, in hiring her, what I thought about was, “Is this person able to leave this group of women understanding that she does not look like them, understanding that they’re looking at her just on the surface and saying, ‘What do you know about Black hair? What do you know about me? What do you know?’”

So I had to be very mindful of that. And in interviewing her, I found out that she has a very heightened sense of culture, towards African American culture. I’ve had several Caucasian candidates apply, and I have to make sure that they can either work with or lead the people in my organization, because my culture is very exclusive when it comes to hair. And we’ll get an attitude with you. “Why are you here? Like, you have the world and we have this. Why are you here?”

Jay Goltz:
I think it’s the same thing. It’s having an honest conversation. “Here’s where we are. This is where we’re at.”

Loren Feldman:
So Jay, you told us you had two candidates, and they both blew up. How did the other one blow up?

Jay Goltz:
I like this guy. He’s smart, he’s personable, he got everything. I called him the second time, and I said, “Wait, I gotta be clear on what you’re looking for in a bonus.” And he’s looking for a percentage of whatever he saves the company, which literally could end up being hundreds of thousands of dollars. I go, “Yeah, that’s not happening here.” I go, “Do you think you’d be the only one here responsible if we got our bottom line up?” And then he said, “Well, I’m just negotiating.”

I like this guy. He’s very nice. He’s very smart. Almost every other company [he came from] was a $200, $300, $400 million company. I don’t think I’m going to be able to keep up with what he wants to make. And then I talked to the woman at an accounting firm who does this for a living and she thought what we were paying is perfectly reasonable.

Loren Feldman:
Wait, you talked to who?

Jay Goltz:
My accountant said he’s got a woman—they’ve got a department at the accounting firm—where you just pay them per hour. And they put the ad out there, and they help you write the ad. And then they interview them, and then they send you the candidates. It’s not contingency-based.

Loren Feldman:
This is an accounting firm that helps you hire CFOs?

Jay Goltz:
Yeah. I think most of them have someone like this. Honestly, I mean, they’ve got hundreds of clients, so they’re always having clients with this issue. So it’s another revenue stream for them. He said, “They don’t get rich on it.” He says it’ll probably end up costing me 3,500 bucks or something. But I talked to this woman and loved her. She gets it. She said to me, “Jay, I’m going to tell you what your problem is: You shouldn’t be hiring a CFO. You should call it a senior controller.” She said, “You’ll get rid of all those people coming from the multi-hundred-million-dollar companies.” She does this for a living. She goes, “Trust me, you’re going to get the right-sized candidate for this.” So we might try that. I didn’t even know there was such a phrase as senior controller. So she’s confident that’s the way to do it.

Dana White:
I have a question for you, Jay: Why are you averse to somebody coming from a big $400 or $500 million company?

Jay Goltz:
Because in my experience—and the experience of others—they’re used to having 35 staff people, and they’re not going to roll up their [sleeves]. I’ve got four people in my accounting department. I mean, this person is going to be doing the actual work. Somebody who’s working in a $300 million company is dealing with… well, I can tell you off the resumes: mergers, acquisitions, compliance, stock stuff.

Dana White:
But that’s the thing. My operations manager was the director of operations for Lady Jane’s. She was over the country, and I’m one salon. Right?

Jay Goltz:
But she was still doing the same work. The work she’s doing for you is very similar to what she was doing in her last job, just a smaller scale.

Dana White:
Yes and no. So there were things that she was doing that she’s not doing anymore. It interchanges, but I just think I would give people from bigger organizations a chance because you don’t know why they want to leave.

Jay Goltz:
Well, the problem with that philosophy is I would literally be interviewing 165 people then. I mean—

Dana White:
I think you would have found somebody by now.

Jay Goltz:
No, no, no, no, no. I’ll tell you what else I found. The woman who does this, she uses a lot of social media. She’s got contacts. We didn’t do any of that. I think I’m getting a different crowd.

Dana White:
Yeah, I just think I wouldn’t be against you saying, “Hey, I know you’re from a big company…” But maybe their reason for leaving is that it was too much. Maybe they weren’t in it. Maybe your situation is perfect for somebody who went to a Fortune 500 company and said, “This isn’t for me.”

Diana Lee:
I don’t know. I agree with Jay, actually. When you’re talking about a CFO or controller, it’s two totally different roles. One—actually what Jay said—which is a controller, I see them rolling up their sleeves and doing the work themselves. I guess everybody has their own needs, but the CFOs that I’m looking for, if you are planning to go public, you need a public-facing CFO. There’s no doubt about it. If you basically are also growing a company pretty big, you need a CFO who could potentially meet with investors and does all the telling of the story through the numbers. But it’s completely different from a CFO who is actually physically doing a teamwork kind of situation.

Jay Goltz:
You’re in the opposite situation. For me, I’m looking to grow 6-7 percent a year, maintain things, get the bottom line up. I don’t have any bank issues whatsoever. I’m done borrowing. So in your case, you’re growing fast, you need someone to help navigate that whole thing. The point is, the bandwidth for someone with the title CFO is tremendous. That’s like a captain of a boat: Everything from a 10-foot ski boat to an ocean liner. I mean, it’s gigantic bandwidth. And this person who works at the accounting firm says, “This is going to be easy. I’ve got a whole database.” She’s going to find somebody, but it’s just exhausting pouring out your heart and soul to a complete stranger for two hours and—

Loren Feldman:
Wait, why are you pouring out your heart and soul?

Jay Goltz:
This is a key position in the company and you need someone who understands what the company is about and what your goals are. This isn’t hiring a payroll clerk. It’s hiring someone who’s going to have a key position in your company, and you have to get someone to understand what you’re all about and what you need, and then find out what they’re doing. It’s complicated. It’s not a simple job to hire for.

Loren Feldman:
And you were okay with the guy until the bonus issue came up? Who blew it up at that point? Did he walk away or did you…?

Jay Goltz:
No, no, I have to send him an email as soon as we’re done here. He said, “Well, I’m just negotiating.” He says, “20 percent,” like, “If I save you a million dollars at 20 percent…” I go, “That’s a $200,000 bonus. Yeah, that’s not happening.” I said, “I’ve got lots of other people who work here.” And then he said, “I’m just negotiating.” I didn’t take offense or anything. I said, “I don’t have a problem negotiating buying a house or a car. I never see them again. I like to do a good faith offer to a person though and feel like we found the right number.” And I’m not going to come in low, he comes in high, and we negotiate.

It wasn’t his approach that bothered me. He clearly is looking for a huge, huge bonus meaning $50,000 or $100,000, and this job just isn’t worth it. And I’m not blaming him. Maybe he can go find that. Maybe that’s what he had at his last jobs. More power to him. I’m just confident that, for what this job is, I don’t need to give that kind of bonus out. And the person from the accounting firm totally agreed. I think a $20,000 bonus for this kind of job is fine. I think I’ll have plenty of candidates. I just think I hit the wrong candidate pool.

Loren Feldman:
It sounded from the way you phrased his reaction that he was saying he expected to be able to “save you a ton of money,” presumably by cutting expenses. Is that what your business needs?

Jay Goltz:
Well, I was very open and honest, saying, “I’m sure there’s lots of places we could be saving some money, and we’ve got to work on pricing things. There’s plenty of stuff that we could be working on.” So I told him all that. He sent me an email the next day, telling me he was surprised that our bottom line isn’t bigger. Well, I just told you that. You didn’t find something I didn’t know about. And he’s confident he can find some cost savings. He didn’t say “we.” It was him, like he’s gonna come in and save the day and like, that’s just not the way it works. I need someone who’s going to be able to go in there and work with everyone. I’m confident there are lots of places to save money.

And then he—again, I don’t take offense to this—but he used the phrase, “Well, I’ll have skin in the game.” Um, send me a check for a million dollars, and then you’ve got skin in the game. He thinks because he’s not getting a $400,000 base salary or something, he’s putting skin in the game. I can see he really wants to make a ton of money. And like I said, if he can go do that somewhere, he should go do that somewhere. I just shouldn’t have to pay that kind of money out. I have some computer issues. I’ve gotta change over my computer systems. It’s not an easy job. If it was, frankly, I would just go hire a controller who could probably handle it.

Diana Lee:
It’s kind of funny, Jay, because I agree with you on a lot of things that you just said. The part that I would be very different in is I love doing interviews where people really think out of the box and creatively come up with concepts for their own payroll. And I mean to me—and I’m not saying one way is right or another—I actually like the proactive advocating that you can do for yourself and trying to make the most amount of money for yourself, because I think those types of people also create environments where they can innovate. And so that, to me, would have probably had a different reaction. I would have actually been pretty interested.

Jay Goltz:
I totally understand, for you, that might be perfect for the kind of business you’re in. I’m framing pictures here. I’m framing pictures. I’m selling furniture. I’m selling wholesale to other frame shops. It’s just not the same thing. And I totally understand what you’re saying. It makes sense for you. But for me, I need someone who will be able to take over where we are and improve things. And like I said, I like this guy. He’s smart. I just think that I’ll never be able to keep him happy with what he wants to get paid.

Loren Feldman:
All right. Speaking of finance, Dana, last week, we talked about your big new opportunity with the military. You and Diana had a really interesting conversation about potential ways to finance your growth, if that contract were to come through. What’s happened since last week?

Dana White:
I was on the phone with both Ernst & Young and the people from the Goldman Sachs foundation, and they have set up meetings for me over the next week with their investment banker teams, with people who have invested in businesses like mine, in that personal care services space. I’m going to talk to those people over the next couple of weeks and just see what’s out there, what the landscape is. They did say, like Diana said last week, that there’s a lot of money out there right now. And so they’re hoping that there is a connection made, and we’ll see. I have a conversation next week with somebody I met a couple of weeks ago. Again, Ernst & Young facilitated that introduction, so he’s been keeping in contact with me. He has a private equity firm out of Atlanta.

And let me be clear, it’s not the DoD. It’s the Exchange. This company is an 8-billion-dollar company that runs all of the commercial retail space on their mall, which is called the Exchange. And so if you want to do business on a military base, and you have a Starbucks or a Boston Market, you’re doing it in the Exchange. A lot of people heard what I said and thought it was a military contract, and responded, “Oh, here’s the process.” And I’m like, “No, that is very separate than what is working out with the Exchange.”

I had a call with Fort Bragg yesterday, and that went very well. And in addition to going to Texas in a couple weeks, I’ll also be paying a visit to North Carolina, Fort Bragg, where I will be the only salon on base. So just trying to get the numbers together. But the word is spreading. She and I had an update call. She said, “I wanted to let you know the word is spreading. Fort Bragg is interested and another base is interested.” It’s just interesting how fast the word is spreading, how much the interest is picking up, and I don’t think that’s going to stop. I think we’re looking at five locations to start, and then they want to roll it out after that.

Loren Feldman:
Does this have an impact on your franchising plans? Would this slow that down?

Dana White:
No, it just adds to my to-do list because that’s moving at a steady clip. So I’m still going through the franchise process. I believe that having these on military bases will validate my franchise even further if the U.S. military or the Exchange says, “Hey, we’ve got her on our bases, and they’re going great.” Then that’s great. And also, these are going to be Paralee Boyd locations. These are company-owned.

Loren Feldman:
Have you figured out how much money you would need to open those five stores to get started?

Dana White:
So it was a great conversation yesterday, and I’m excited because I’m thinking I’m going to need money like I did to build out a commercial space in the private sector. No! Their contractors are on base, and it makes sense because they don’t want Joe’s Home Improvement coming on base for weeks at a time. Their tenant improvements that they’re talking about with me are significant, because they have their own facilities management.

Loren Feldman:
They supply the people who do it? Or do they actually pay for it?

Dana White:
I believe they supply the people that do it. Their white-boxing, from our conversation yesterday, is significantly more than what a standard white box for a regular off-base location would be, because they don’t necessarily want all of these contractors—painters and flooring and all these people—coming on and off base for weeks at a time. So their facilities do more than just repair a light bulb. They can move plumbing for me. They can do drywall for me.

Jay Goltz:
Plumbing is the big issue in your case.

Dana White:
Exactly.

Jay Goltz:
You’re getting a white box with some significant plumbing, but once you get the significant plumbing done, that’s the biggest expense probably, so it’s not going to cost you that much more.

Dana White:
And I’m going into the space where the old salon was. The plumbing and the things for the salon are already there. I just have to come in and make it my own. So my feeling at this juncture is that it’s going to be significantly cheaper, even the month-to-month expenses. I’m not paying for utilities. That’s huge. And I’m paying a percentage of my rent from the previous month’s revenue. And they said, “Let’s get you down here to North Carolina so we can talk in detail about those things and see what a contract looks like.” But they are interested in having me at Fort Bragg in less than a year, because they do not have a salon on base right now.

Jay Goltz:
Wait. You said “in the old salon.” What old salon?

Dana White:
There was a salon on base that closed. I asked them, “Why did they close?” And they said, “Because it just wasn’t kept up. It was dated.” The person who was in charge of the Exchange was leaving. It needed a new face and a new brand.

Jay Goltz:
I assume most of their business is women, because—correct me if I’m wrong—on military bases, I assume somebody’s still giving them their buzz cuts, right?

Dana White:
So that’s Great Clips. Great Clips is on base, and they have great business on base.

Jay Goltz:
Okay, so this is for women who don’t want to get a buzz cut.

Dana White:
Yes.

Jay Goltz:
Okay, and they’ve got other options. Obviously, they didn’t like the old salon. It was worn down. They’ve been going off base for it, so they think if they upgrade that, they’ll stay on base, which makes sense.

Dana White:
Exactly, and then I’ll be the only one. And Fort Bragg is a very large base, very large.

Jay Goltz:
Are they expecting you to expand your services, though/ Because you’re not really a salon. I mean, you’re not cutting hair.

Dana White:
Nope. We went and had that whole conversation yesterday. They are not expecting me to start cutting and coloring. They are expecting me to add their military standards to my offering, meaning, “Make sure that the hair looks like this,” or “Make sure that you’re able to do this.” But the beauty about Paralee Boyd is that a lot of our magic happens while your hair is wet. We could do anything with your hair once it’s dry, once we style it and it’s dried. Our thing is just the treatments and stuff that we do. We’re going to do braiding, and we’re going to start doing the round-brushing.

Jay Goltz:
What makes no sense to me though is: What are they going to do about the women who are on the base who’ve got to get their hair cut. Where are they going?

Dana White:
Great Clips offers services to men and women.

Jay Goltz:
Ahhh, okay.

Dana White:
You can still go to Great Clips and go from hair to the middle of your back to the top of your neck. You could still go there to get it cut, but we maintain it for you. You can come in and get a quick round brush. You can get a quick blowout. That’s what they’re interested in, the quick stuff.

Diana Lee:
I’m just surprised that there’s not more competitive environments versus this. I could see that Great Clips might actually offer it for all people, not just people of color. But I just find it super odd that there’s not a lot more competition.

Dana White:
I’m not surprised at all. This is a very segregated hair market, number one. Number two, when you have a hair business model, it’s very tight, unless they’re doing ancillary services like nails or spa stuff. When you’re strictly hair, it is straight down the line. So Great Clips, they can do certain cuts, but their training is for a certain type of cut. That’s why I don’t go to Great Clips. It’s why a lot of women who look like me don’t go to Great Clips. A lot of women don’t go to Great Clips, and some do. But I’m not surprised at all that [in] this market, there’s not more competition in it.

Jay Goltz:
Diana, you haven’t been on here that long. I’ve got some history with this. That question really goes to the bigger question: Why does Dana exist at all? How come no one did what she did 30 years ago? So this is just reflective of the whole market. No one’s done this in the history of hair. It didn’t get to the military base, but it also didn’t get to the regular population either.

Diana Lee:
Yeah, no, I don’t think so. I disagree with that. Dana’s concept is obviously amazing, especially for people of color. But if you look at Dry Bar, it’s the same concept. It’s basically out there, and I mean, I had this discussion with my husband, which he just cannot understand. He’s like, “I’d never invest in a company that basically came to me and said, ‘Women are going to spend anywhere from $30 to $60 just getting their hair as a blowout.’” And I would spend it all day long when I have events or places I have to go, and I think many, many women do. So it’s kind of interesting, because I don’t think a lot of men understand these types of things.

Jay Goltz:
Dana, help me understand: Does Dry Bar do blowouts for African American women?

Dana White:
No.

Jay Goltz:
Okay, so that was my point.

Dana White:
And in our community, we don’t go to Dry Bar. Now, they may have a stylist that can do ethnic hair. And they’ve sprinkled some minorities in there, or they speak with some African American women and stylists in their marketing, but it is very clear to my market that that salon is not for us.

Jay Goltz:
So that’s my point. It wasn’t just the blowout. It was the blowout for African Americans hasn’t been done. So the fact that it didn’t get on the military base isn’t a big surprise to me.

Dana White:
Dry Bar and the concept has only been around for like 12-13 years. But again, she did something that was being done by individual stylists because she was one. And she was like, “Why don’t I just make a business out of this? Because I’m going from home to home to home to home and doing this, and each individual stylist is doing this. So why don’t I just make a business around doing it?” And then Dry Bar is born. But for my market, no, we’re still looking for the individual stylist. I’m creating a brand where you don’t have to look for the stylist per se, who might have a chair at Dry Bar who you can find a Paralee Boyd, and there’s a whole business model to service you.

Diana Lee:
I think it’s a really brilliant idea, Dana. Hats off to you for coming up with the concept.

Loren Feldman:
Dana, you told us that the expenses of building these out would be lower than you initially anticipated. Do you think there’s a chance you could finance this without selling equity in Paralee Boyd?

Dana White:
I hope so. I believe so. I’ve had some preliminary talks. But yeah, I hope so. I think with their plan to have five locations, once we look at that final number, I’m going to look at that and say, “Okay, Dana, for this final number, this is how much it’s going to cost per location. This is what your expected revenue is.” I mean, they’ve pretty much given me the demographics. I’ve worked the numbers, and for North Carolina, we’re looking at anywhere from $50,000 to $70,000 a month. And in hair care, that’s huge, especially when your breakeven is significantly lower. And again, I’m not a tech company. So it’s like, some people might hear that and go, “Oh, that’s nothing.” Well in hair, some of these franchises are only making $20,000 to $25,000 a month. So if you’re talking about $60,000 to 70,000 a month, that’s a huge difference.

Jay Goltz:
Here’s some quick math. So if you had to put $100,000 in, and you amortize it over seven years, it’s like $14,000. $14,000 on $600,000 gross sales is only two-point-something percent. So that works, unless you think it’s going to cost $200,000. But that’s on the cost side. On the cash flow side, on the other hand, that’s a lot of money to come up with. It’s not like you’re gonna be throwing off a zillion dollars every month. Putting out five of them, you’re going to have to put some money in. It’s not going to fund itself.

Dana White:
Right, and so what I’m looking to do, [is] I’m just going to look at that number and say, “Is this worth giving up equity?” Some of the preliminary conversations with investment bankers, they’re not gonna want 10 percent, 20 percent, 25 percent. They want more. And that’s a lot.

Jay Goltz:
I think the first question, which you skipped, is: Can you get it from the bank? That’s the question. And if you’ve got a military contract, I would like to believe that some bank’s gonna look at this and say, “Okay, we’re in.” And maybe you can finance your way through this.

Dana White:
I’m thinking the SBA might be the way to go. The SBA might say, “You know, here it is.” But it’s a very lengthy process with the SBA, and so I’m going to have that call this afternoon to find out where this will lie.

Loren Feldman:
Who’s the call with?

Dana White:
It’s with a former executive at the SBA, a former friend of my dad’s, so I’m going to talk to him later. He said, “Let’s have that conversation so I can give you the color of the landscape,” and then kind of help me proceed from there.

Diana Lee:
I would look into an EIDL loan from the SBA.

Dana White:
And I’m in line. I’m sorry to interrupt you. I’m in line for that. But that’s taking so long. Oh my gosh.

Loren Feldman:
Something’s going on with that. Lots of people who have been approved have not gotten their checks. I haven’t heard anything about that recently. We don’t have that much time left. In the time we do have Diana, I wanted to follow up with you. The first time you were on, you told us about your marketing platform, and how you got started with car dealers and how the platform makes it easy for people to cut their own commercials, their own advertising. I’m curious, how do you do your own marketing? How have you marketed Constellation Agency?

Diana Lee:
One thing that’s been tremendous about our company is I don’t really have a lot of salespeople. I only have three salespeople right now. We have about 1,400 customers and they all find us through the website. I think that one of the strengths that we’ve been really good at is PR and getting the message out through PR. I know that there are different opinions, in terms of contests, but I love contests.

Loren Feldman:
How do you use them?

Diana Lee:
I apply to a lot of the ones that are very significant. And then when you win, you get a lot of press that way, but this is how clients also find you.

Loren Feldman:
What kind of contests are you talking about? Can you give us an example?

Diana Lee:
Yeah, I mean, I won the Ernst & Young Winning Women award back in 2019, and that was 11 female winners across the country. When I won that, it’s funny because my husband was like, “I don’t think you should go.” I was like, “Why? I won the award, and they’re gonna take me to Palm Springs, and everything’s free.” And he’s like, “Diana, people want things from you from the contest. If you really think about it, you are a breeding ground for any investment banking teams, or people, or accounting firms, or whatever to basically say, ‘You won,’ so that as you grow, you can use their services.” So it’s like, “Oh, that’s a weird way of looking at it. But I’m still gonna go,” and so I did. And it ended up being one of the best experiences I’ve ever had.

There were 11 female founders. I ended up doing business with half of them. They flew us to Palm Springs. There were over 1,000 entrepreneurs who showed up. Lenny Kravitz showed up. Nicole Kidman showed up. I mean, the stars as well as founders all around the world with the biggest companies that blew up, and you had the opportunity to talk with them, network with them, learn more, get their business, as well as all the PR events that came from it.

Jay Goltz:
You know, your husband wasn’t wrong. They’re all looking for something. But that doesn’t mean you don’t go, because it’s not like you were trapped in a dungeon with a life insurance salesman or something—nothing against life insurance salesmen. But that is the reality to those things. But it still works. It works for everybody, and you made it work for you. So I certainly would have gone.

Diana Lee:
Yeah, so I do now enter myself in a lot of those. So it’s very helpful.

Loren Feldman:
Is that the primary form of public relations that you’re talking about?

Diana Lee:
It was more of a learning for me, but you know, your PR team is only as good as what you are. And what that basically means is they can bring opportunities to the table, but it’s your job as the CEO to continue to groom those opportunities to bigger opportunities and PR. And what I mean by that is the introduction might have actually just come from the PR person or the team, and then what you need to do is, in many ways, contact that editor, give them information that would help them in the journey of the stories that they’re writing. And in some aspects, you make friends with them. I’ve had female founders who threw events for editors to come and actually experience their products. One of my female founder friends, she ended up renting out a yacht, and basically having her products in the yacht, having food and drinks, and asking a lot of the different writers to come on the yacht to experience her product. And I was like, “Wow, how smart is that?”

Loren Feldman:
We journalists will go anywhere for free food.

Jay Goltz:
Good to know.

Diana Lee:
It’s a great way of getting a lot of people in one area experiencing your brand and making an experiential event for the press, and it doesn’t cost a lot of money to do it. But that’s what I always believe—always think out of the box for innovative ideas for you to actually talk about your company.

Loren Feldman:
So have you literally done no paid advertising?

Diana Lee:
Oh, no, I actually do spend money on paid advertising as well. That was one of the biggest mistakes I ever made, because I was able to grow the business so quickly without actually doing paid advertising in the very beginning. Why do I need to do it if they’re all coming to the websites? And also because I have an infrastructure that’s already built with a lot of the brands that give me all the franchises any which way. But that was a mistake. Because after the first couple years I started to do paid ads, I was exponentially able to get so much more business.

So I think it’s a combo where you basically invest in PR, you invest in getting to know the writers, the editors, throwing these events, and getting your brand out there from a press perspective. And then again, also doing content development, not organically, but doing it paid where you can hyper-target audiences based on exactly the product that you’re selling. So if it’s hair products, then obviously I want to hyper target people who would use those hair products, whether it be people of color or not. Or you can also hyper-segment them based on the number and prices that they actually spend for hair products as well. And so there are many ways to approach those audiences and make sure that marketing dollars are being spent effectively.

Loren Feldman:
When you were doing paid advertising, or when you started doing it, did you try to hyper-target business owners and entrepreneurs?

Diana Lee:
I always do that. Because to me, you can’t just throw out broad advertising and an awareness of your product. You’ve got to find who would use your products. And in the beginning you don’t know who they are. You think you know, but you don’t know until you test the market. So you know, a framing business like Jay’s could be very different. I would definitely target languages. I would do multicultural. I would try it in different languages, but I’d also do different age groups. If the product is $300 versus the product that’s $60, I would hyper-target it based on your income status, because somebody who buys a $300 frame is different from somebody who buys a $20 frame. So all of those audiences need to be tested to see who actually buys the most.

Loren Feldman:
What did you find was the most effective way to target business owners and entrepreneurs? I’m asking for a friend.

Diana Lee:
Oh, yeah, I would definitely do paid social, paid search, paid display, and paid connected TV. Those are just fundamentals. And then, from my perspective, obviously I told you guys that I have a lot of the auto industries. But right now, when there’s a chip shortage, there’s not enough inventory on the ground, why are you hyper-targeting dealerships or the automakers? Because they don’t actually have to advertise right now. They don’t have enough products. So then you have to pivot your marketing strategy and say, “Who am I going after?” Is it D-to-C, direct to consumer brands? Because right now, that’s one of the hottest things, selling direct-to-consumer through the internet. And so for me, I think all businesses should have a direct-to-consumer strategy to go digital and sell your products outside of wholesale or brick and mortar.

Loren Feldman:
Jay, did you get any thoughts?

Jay Goltz:
I knew you were going to bait me with that. I would be careful using the word “all.” That’s all I would say. I think there are probably some businesses that that doesn’t work for. I certainly won’t argue with the word “most” or “many.” But I don’t know that all companies should be doing that. Because I think you’d have to know the ins and outs of every business industry to say that, and I don’t know if that’s true. But I certainly agree with you generally.

Diana Lee:
Well, I think that when you don’t try things out, you don’t innovate anymore. So I look at the retail industry. You have the Bloomingdale’s, the Macy’s, and the old, traditional. Guess what? They’re not doing well. That’s why all these malls are closing across the country. What is actually selling are a lot of DTC brands in clothing all approaching paid media and doing direct-to-consumer sales. I have brands that I know, they never actually even have a rooftop. They’re doing it all direct-to-consumer sales. And to me, you never know what that market can be unless you actually test it.

Jay Goltz:
I’m not arguing that at all. You’re right. Everybody should test everything. But I can assure you that the reason why Macy’s and some of those stores are doing badly, that’s not their only problem. One of their problems is, you walk in the store, and there’s so few people working there, you can’t even get helped anymore. So that is a very complicated formula as to why these big retailers are failing. And a lot of it is, I’ll give you one you’ll never hear of: try health insurance. Ever since health insurance got super expensive, the geniuses in the offices decided, “Let’s just hire part-timers. Now we won’t pay health insurance.” So you go into the store, the person who works there has been working there for three weeks and works 20 hours a week. There are 20 reasons why the big department stores are doing poorly. One of them is what you’re saying for sure. But there’s plenty of other reasons, and it’s complicated.

Diana Lee:
But I think that also has to do with you going out there to innovate the brand strategy of what you look like digitally.

Jay Goltz:
Sure, absolutely. No, I’m not arguing that at all.

Loren Feldman:
We’re gonna have to leave it there. I have no doubt we’ll be coming back to these topics again and again. My thanks to Jay Goltz, Diana Lee, and Dana White. Thanks for sharing, guys, as always.

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