I Want to Double Sales Again Next Year

Introduction:

This week, Shawn Busse, Paul Downs, and Liz Picarazzi talk about their plans and goals for 2023. Shawn, whose marketing efforts still haven’t recovered from the pandemic, is hoping to build on the success of a recent event. Paul, coming off his best year ever, is investing $150,000 in a marketing campaign, including a new website targeting a different set of customers. And Liz, too, is attempting to shift her customer base, in her case from residential to municipal work. More immediately, however, Liz, who does not relish dealing with legal issues, has to decide how to confront a copycat competitor.

— Loren Feldman

Guests:

Liz Picarazzi is CEO of Citibin.

Shawn Busse is CEO of Kinesis.

Paul Downs is CEO of Paul Downs Cabinetmakers.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Shawn, Paul, and Liz. It’s great to have you here. It’s now officially December, and there’s no denying that 2022 is just about in the books. So I want to talk to you about your plans and goals for 2023. I’m curious to what extent macro conditions are a factor in your thinking. I’m wondering if you’re investing in growth, how much risk you see yourself taking, whether you’re facing any tough budgeting decisions. Liz, can we start with you?

Liz Picarazzi:
Sure, absolutely. It’s good that you asked the question about planning for 2023, because I’m not a very good planner. It’s not something that I really enjoy doing. And I immediately thought of two major areas that I see as goals. The first one is actual revenue, which is kind of the easiest to measure. I want to double revenue again next year. I think we could do more than that based on our current growth, but that’s kind of officially what the goal is.

And then the second area is to flesh out or to define and flesh out our municipal line. So this year with all of the government work, we basically transformed our residential trash enclosure to be for municipal use and university use. We made a lot of really great changes. And therefore, it’s a whole new product, really, that could be marketed and definitely priced a different way. And so I haven’t really sat down and worked on the messaging and the marketing, and even the architecture of the website, with this big change in our customer base that needs to be thought through.

So for me, the second goal for 2023 is to really define this customer segment, and really develop marketing and different sales channels around it. In some ways, it feels a little bit like a new business. The target customer is different, their needs are different, and the functions on the product are different. For me, I’m a very creative person, and I’m excited to do that. But up until now, it’s really been just kind of flying by the seat of our pants with this product and product line, and I’m excited to formalize it.

Loren Feldman:
You said that you really don’t like planning? How important do you think it is? If you don’t like it, do you think you can just not do it?

Liz Picarazzi:
So I always do it, and I often do it with my EO group. We kind of force ourselves to sit in a room for an entire day and write it out. We sometimes do exercises to help bring out the answers to the planning. So I actually do enjoy doing that when it’s a group. But when it’s just on my own, I don’t really like it. I’m in a different EO group now, and I don’t think that they do that planning. I need to check on it.

But when I do planning, I am not as focused on the numbers as I am about general areas that I want to be developed that sometimes don’t have metrics. So moving, consolidating all of our operations into one space, was a goal for 2022, and we are going to achieve it. That’s very binary: Did we do it or not?

So, I say that I don’t like it. I think it’s just that, like a lot of entrepreneurs, I feel like I need to be inspired to sit down and do something like that. And that moment doesn’t often come that way, at least not in like an eight-hour time block. And you know, even back when I was a student, I would always think: To write this paper for this class, I needed a six-hour block of time. And then that makes it really scary to start the task because you think it’s six hours when it really could just be two. So I don’t know if that makes sense, but I do approach planning in the same way I kind of did schoolwork, in that it’s kind of all or nothing. I either have the time to do it or I don’t.

Loren Feldman:
Shawn or Paul, how important do either of you think planning is, and how seriously do you take it?

Paul Downs:
I guess you would not call me a planner either, in that I don’t try to predict what will happen. But I always am monitoring it as the events occur and comparing them to past situations. So I don’t do a budgeting process and then tell every person in my company, “Oh, you’ve got this much to spend,” or anything like that. I just don’t think it really makes much of a difference in a company my size.

We’re going to probably get close to $5 million in revenue this year, 27 employees. So it’s not a tiny company. But we’re subject to what clients show up, and what they want, and whether it’s big orders or small orders. And so there’s a lot of planning that it’s not really feasible to do. Now, I am doing some marketing planning. And I think that when it gets to be my turn to talk about next year, I can go into that, but I’m not huge on planning, as if I can really map out a future. I just don’t believe it.

Loren Feldman:
How about you, Shawn?

Shawn Busse:
I’ve kind of come full circle on this. We, for a long time, would do annual planning. We would build a one-page plan with dates throughout the year of achieving certain goals. And I think from a correlation standpoint, it seemed like that was effective for us, when we were trying to go from a business that was hundreds of thousands of dollars to a business that was over a million.

I think more recently, especially through the pandemic, the truth of a statement that I heard before the pandemic just keeps ringing over and over and over again, which is that we live in volatile and uncertain times, and that the moment you plan is really kind of your dumbest moment. So that’s the time you have the least amount of insight and information, and you’re trying to sort of control the future, which I think feels really good in lots of ways. But at the same time…

Loren Feldman:
You’re giving Liz another excuse not to plan, Shawn.

Liz Picarazzi:
I was just thinking the same thing!

Paul Downs:
I think one of the things that has to be brought into the discussion is what resources are available to spend time on planning? I think that there are a lot of organizations that would listen to us and be like, “Well, that’s why you’re small. You don’t plan.”

Loren Feldman:
Well, there’s a very large school of thought out there that says, “You’re not going to get where you want to go if you don’t figure out where you’re going. And you need to set goals for yourself. and focus your energy in a certain direction.”

Paul Downs:
I’d say goals and planning are a little different.

Shawn Busse:
To finish this narrative here, the switch we have made is more toward initiatives and more of a sprint- or agile-based way of working. So in the coming year, we know we want to achieve certain things or certain priorities that we think are important. So we’ll set goals and objectives in the near-term as to what we’re going to do. Then we’ll work on those, see the results, bring in the understanding and learning that came from that, and then adjust. And I think that’s really different than a sort of slavish plan, which is very common. It’s like, lots of people had plans that they developed in January 2020. And I promise you, none of those were relevant anymore. So that’s an extreme example.

Loren Feldman:
Yeah, I’m not sure that’s really an argument against planning, although you’re certainly right.

Shawn Busse:
No, I’m not arguing against planning. I’m arguing towards a different way of planning. And actually, I think, a way of planning Liz would like a lot better, which is more based in real time and more frequency of iteration and updates than are typical, and that are common in the corporate world because the corporate world is trying to create a veil of certainty for their shareholders.

Paul Downs:
Yeah, I think that the way I plan is not necessarily like, “Here’s what I expect to happen next June,” but more being ready for situations. I’ve got two finishers. What happens if one of them is sick and can’t show up? What happens if the truck breaks? What happens if this person disappears? What happens if we can’t hire? Those things I have plans for, and for very common scenarios like: What happens if I need to hire another person? I have a very strict plan, which is just a set of procedures to implement, and then you end up with a new employee.

So I think that for small businesses, turning situations into systems is actually the most effective way to plan. Hiring is a good example. If you’re growing your company, you’re going to hire people. However often you do it, it’s a good idea to sort of have an understanding of what you’re going to do when you need to do it. Do you have ads pre-written? Do you know which platform you want to use? Do you have some way of keeping track of all the applicants? Do you have a way of scoring the applicants to decide who you want to talk to more? Those are things that I spent a lot of time doing, which is building out little systemic solutions for common problems.

And I don’t know whether that’s exactly planning or some other word to call it. But that’s what I think of as planning, which is: Build capability that’s ready for the most-likely scenarios. And then also build internal communications with the company and culture, so that when something really comes out of left field, like a pandemic or whatever, you have a culture that can respond to it. People are ready to respond, to hear direction, to provide input. That’s, I think, the most effective planning for a small business. It’s really difficult to say, “Oh, we’re gonna grow 10 percent next year, and that means 2.5 percent each quarter. And here are the numbers.” Like, that stuff just doesn’t really make much sense to me. But the other kind of planning, I think, is pretty critical.

Loren Feldman:
Liz just said that she hopes to double next year.

Paul Downs:
But she didn’t tell us from what to what.

Loren Feldman:
Liz?

Liz Picarazzi:
Well, I’m not gonna share that exactly. But maybe I will.

Paul Downs:
I mean, if it’s from $1 to $2, it shouldn’t be a trick.

Liz Picarazzi:
Well, I will share. I will be transparent.

Paul Downs:
Yeah, why wouldn’t you tell?

Liz Picarazzi:
We will be going from 2 to 4 million.

Paul Downs:
I mean, that’s not going to be super simple—except your manufacturing happens somewhere else. So at least you don’t have to build it all. That’s your source’s problem. You’ve got to finance it. That’s probably the biggest problem.

Shawn Busse:
This is such a good illustration of, most people conflate planning and strategy. And most people actually miss the strategy entirely. So what Liz is talking about is actually strategy. She’s saying, “I’m going to augment my strategy. I’m going to add to my strategy. I’m going to a new playing field.” That’s a strategic move of which there is great uncertainty. And you know, it could fail, right? That’s a good illustration of strategy. There’s a lack of certainty. There’s a lack of clarity of where we need to go and what we need to do. But there’s a theory of the case.

And what a lot of organizations do is, they do planning—which is kind of what Paul was describing—which is like contingencies, or improvements to ecosystems or capital investments. And that’s fine. That’s legit and real and should be done. But then they combine the word strategy with that, and they say, “We’re going to do strategic planning.” And actually, what they’re doing is just more operational changes, and it’s just planning. And most organizations actually don’t even do strategy.

Whereas both of the other folks on this call, either today, like Liz described, or as Paul has said in the past, kind of shifting a lot of his way of working and moving into more of a B2B or B2G space—some of the things he’s described have been strategy-oriented. And so I think, when you ask the question, Loren, “What are you doing for planning?” I think it’s really important that the listeners here get the difference between the two.

Paul Downs:
It may be more important to do strategy at any given moment, or it may be more important to button up your operations at any given moment. There’s a lot of variation in smaller businesses as to what the owner is best at and capable of. And my observation over the years has been that I got a lot more value out of addressing things I was bad at than continuing to do more of what I was good at. And so I think it’s a question of: What are you leaving undone? If you’re like me, you’re great at sort of operationalizing, but it’s harder to get strategic. And it sounds like for Liz, it’s easier to be strategic and harder to be operational.

Liz Picarazzi:
Yeah.

Paul Downs:
Yeah. Who are you? Where are you?

Liz Picarazzi:
Right, well, it also involves choices. So you’ve heard me talking here about bears and the bear-proof trash enclosure, expansion to the West Coast. That was an incredibly exciting project for me, but I had to make the decision to put down the bear and focus on the rats. I really had to embrace those rats, and now I don’t have time for the bears. And I hate that, because last February when we were doing our installations in Aspen, and it looked like the sky was the limit for that need in Aspen, Colorado, I just don’t have time for it.

And I know that it’s in our future. We probably are 75 percent of the way there. But part of the strategy is saying, “What am I going to stop doing?” I’m going to be focusing less on package lockers also, which bums me out. But we’ve got this growth with trash enclosures. We’ve got a lot of high-profile jobs. There’s going to be more press. My focus has to be on New York City, trash, and rats.

Shawn Busse:
Yeah, that’s another great illustration of: A strategy involves tradeoffs. It involves doing something and not something else. And it’s really a great illustration, Liz, of a tension of, “Gosh, I’ve gotta put this thing down, because this other thing is really the thing.” And that’s another good illustration of why I think iterative working is a superior way. If you had started the year out and said, “We’re gonna make this the year of bear enclosures,” and you just worked at that and worked at that and worked at that and worked at that, and didn’t pay attention to the inputs that you were getting from New York City and the press, you would have been on kind of a fool’s errand out in Denver instead of the kind of growth you’ve experienced. I think it’s such a good illustration of the difference between planning and strategy and iteration.

Loren Feldman:
But you have set the goal of doubling your revenue, Liz. What does have to happen for you to do that, in terms of marketing, manufacturing, financing? What are you concerned about there?

Liz Picarazzi:
We just need to get more cities. So we got Philly this week. We are talking to Boston. We recently got Hoboken [N.J.]. And these are pilots. It’s not like a rollout. But if I look at all the municipalities that have issues with trash on the sidewalk, it’s virtually every city. So I have a very big market, and I just need to find—

Loren Feldman:
The sky is still the limit.

Liz Picarazzi:
It is still the limit with the trash enclosures. To grow production, too, I do have a very good relationship with my factory. I have been with them for five years. They give me very good trade terms. If we had a P.O. from a city, I think that I would be able to finance it that way. I definitely need to look into it, but they welcome the growth. They’ve been very accommodating of the growth. And I guess I also should think about diversifying. We had thought a bit about Mexico, did a little bit of poking around—

Loren Feldman:
Diversifying your manufacturing?

Liz Picarazzi:
Manufacturing, yeah. That’s definitely on the backburner because I spent so much time trying to reshore production last year. I put that to the side and said, “Let’s just focus on the factory that’s working well for us.” So we’ll see if they can handle production. That’s where I would want it to be.

Loren Feldman:
Paul, how about you? You mentioned your marketing plans for next year.

Paul Downs:
This is a project that’s really been going on for about nine months now. And it is producing materials and messaging aimed at a very particular target market for me, which is architects and interior designers—as opposed to, the way we get most of our business now is mostly through people doing Google searches, which is just a grab bag of everybody you can imagine. The architects and interior designers have a particular set of concerns and a particular set of likes and dislikes about the product and how the transactions go. It’s a subset of the kind of work that we do now.

But I think that there’s huge potential for growth, so I’ve been putting together what we need to go talk to them. And we’re about two-thirds of the way through putting together a branding film, and we’ve done market research, and now we’re just starting to put up a new website that’s aimed only at these buyers. And I hope to have all that done by, let’s say, the end of February and up and running. And then we’re gonna roll out the advertising and see how it goes.

So that’s a strategic shift in trying to get to buyers who are buying our product, but doing it in a way that’s different than what we normally do. And it’s gonna cost me 150 grand over the next year, and it’s a roll of the dice. So the planning part is just the execution of what I can control, and the unplanned part is what will happen. So that’s why I hesitate to say, “Oh, yeah, I know what my ROI is going to be on that.” I just don’t. I have hopes. But I don’t know.

Shawn Busse:
Hey, Paul, I’m kind of curious, did this meet, exceed, or disappoint you, in terms of your expectations about the timeline of building up this new ecosystem and really being ready to go? It sounds like it’s going to take about a year, all in, before you’re really kind of ready to go. Is that reasonable?

Paul Downs:
Yeah, that doesn’t surprise me.

Shawn Busse:
Okay. So that was sort of your expectation.

Paul Downs:
That’s about as fast as I could have moved anyway, given that I like to be involved in a lot of the content that we put out. I have my standards as a writer and for photography, and so it’s never gonna be a situation where I just write a check and hand it off to somebody. I’m always very involved in these things. And I’m not sure on the actual constraint, but it’s moving at a speed that I’m comfortable with: not too fast, not too slow.

Shawn Busse:
Can I just replay that little piece of conversation for every client I ever meet? Because, universally, everybody wants it done in six months. And I’m like, “You need a year to really shift markets, to go after new customers, to do it all right.” So I appreciate you sharing that. Did you learn anything along the way?

Paul Downs:
Yeah, absolutely. The first thing we did with this marketing company we engaged was to have them go out and do some market research, talk to people who are the target, and ask them a bunch of questions that we didn’t know the answer to. And that took a while for them to round up people who were willing to sit down for an hour.

Loren Feldman:
What kinds of questions?

Paul Downs:
What do you worry about? We sell a custom product, and we’re very familiar with what that means. But we weren’t sure how the target market thinks about that purchase. What do they default to? What are they afraid of if they go custom? Who do they like to work with? What’s the advantage of being local, as opposed to non-local? And there were a bunch of things like that that we had suspicions about, but I didn’t actually know that by talking to people. I just had suspicions. So doing the market research, interviewing people, reading the transcripts, listening to the interviews.

In one case, I did follow-ups with one of the people. It was just very informative. It really clarified, in our minds, the difference between this buying audience and our average customer, which is just a different situation. Most of our current marketing and procedures, all kinds of things that we do, are a great fit for someone who’s just searching for a table, but a bad fit for someone who’s a professional who does this over and over again. Because we turned up a concern that the custom maker doesn’t really pay any attention to what the architect wants to accomplish in the entire project.

In other words, architects have a design vision for how things look and work. And we’ve developed our business to do all the designing for people who don’t have any help available. And architects, as it turns out, are extremely sensitive to the idea that someone’s going to come in and be like, “Yeah, yeah, I got it. You get out of the room now, and I’m going to build whatever I feel like with this customer.” So we’ve got to dial back a lot of what we say and how we say it, and so in the course of that, we came to the conclusion that the website that we currently have—which is aimed at an untutored buyer—is just offensive to an architect and designer. There’s a lot on it that’s just absolutely wrong, that calls forth a cringe factor from architects, and we just can’t make that work for two audiences.

So you’ve just got to come up with a second website. That was something that turned up in the middle of the summer, and now I’ve finally engaged a firm and bup, bup, bup, bup. But I’m very methodical about these things, and I’m always willing to believe there’s more that I don’t know than I do know. And so I’m just feeling my way through it.

Shawn Busse:
Paul, how many folks did you guys talk to to start to see a pattern? Was it 3, 12, 100?

Paul Downs:
We talked to, I think, 14 people. That was a budgetary constraint. The initial proposal from the marketing company was to do a small amount of this. = I can’t remember the exact number. And I looked at that, and I said, “Hey, triple that.”

Shawn Busse:
You wanted more. Oh, interesting.

Paul Downs:
I want more input at the very beginning, because what I was worried about is if you only talk to one person, and you’re trying to choose them out of the phonebook, more or less, so it’s not someone we know—like, if you run into a nutcase, you’re gonna be operating on bad information. And that’s one thing I do know from my experience receiving Google searches, is that there’s enormous variation in who is on the other end of a phone on any given day in any given situation. So I wanted more there. I paid more for it, and it took more time, but I’m glad I did that.

Shawn Busse:
You didn’t do any kind of large-scale market research, like total size of market, or anything?

Paul Downs:
I don’t care much about that. Because the total size of the market—first of all, all the market research on office furniture is now worthless, because of COVID. Nobody really knows how this is gonna play out. I have my suspicions that the large companies are going to suffer a lot, because they built their capabilities, their capacity, their factories, number of employees, all around a certain level of purchasing that was pre-pandemic. And the post-pandemic office furniture world is clearly not going to be as big as the pre-pandemic. The total size of the market compared to what I’m capable of doing is thousands of times bigger than what we could do.

So I don’t really care what the overall size is. I’m thinking more about, “Okay, what’s more likely: If they’re going to be spending money on this thing, are they going to want just a catalog piece? Or they’re gonna want something special?” And I see a big opportunity for us, but that’s my fantasy planning. You know, it could play out any way. I don’t really know exactly what will happen.

Loren Feldman:
Do you have any concerns about being able to meet the demand if this campaign is successful, and you do have a whole bunch of new clients?

Paul Downs:
That’s, like, my favorite concern.

Shawn Busse:
Are you planning for it?

Paul Downs:
Yeah, I mean, we actually experienced 25-percent growth this year. And so I’ve now rented new space, bought new equipment, hired new people, and I’m ready to maintain this new level or even to go farther. But that’s the goal. So, yeah, I’ve been sort of getting ready to do that.

Loren Feldman:
How about you, Shawn? You had told us that you had an event scheduled for November that you call Catalyst, and that you were hoping would kind of get your marketing back on track. Was that helpful? And is that influencing your thoughts about what might be possible next year?

Shawn Busse:
Yeah, I mean, for anybody who has ever held an event, they know that the returns on events don’t happen right away. You’re talking goodwill, reputation, brand. These are the kinds of things where there’s probably a dozen people in that room who probably can’t even buy services from us, but are in a position to recommend us to other people. And those kinds of conversations, you can’t predict when they’re going to happen.

So our strategy there is to have a room full of influencers, some potential clients, some actual clients, and then just great people. Put them all together, have a really fantastic event, don’t sell to them—we were really cognizant of not selling to people—and position Kinesis as a hub of the owner-operated business, as the hub of businesses that care about culture and people, as a company that’s connected to really great, great businesses and organizations and leaders. And it was awesome. I mean, well, I’ll let Liz talk about it, because she was a speaker and a participant, so she can be the kind of: What was it like to be there not having expectations?

Loren Feldman:
Tell us the real story, Liz. [Laughter]

Liz Picarazzi:
Well, one thing I can say is that at no point did I detect any selling. In fact, only through talking about it now did I realize that that may have been part of your intent. It was definitely really focused more on the program and the content. That was definitely very understated. I was really noticing that Shawn has a lot of clients that have been with him for a long time, and has definitely very great references. And there’s just a certain vibe or culture around the people who were at that event. And I really liked it. It definitely did not feel New York. And I don’t mean that in a bad way for either New York or Portland. But there was definitely a different feel to it.

I guess I’ve said it before here: I think that any time entrepreneurs can be in a room together is valuable. So I really like to be able to feel that on the other side of the country. And I also think that those events are great for content, too. So Shawn, like you say, sometimes the dividends from those events don’t happen until later. And it could be once you slice and dice the content that you got, then you push that out, and then that’s going to bring people in. So the event itself is a very good strategy, and I thought it was really well-executed. And I met a lot of really great people—also a lot of family-owned businesses, which I relate to.

Shawn Busse:
Yeah, there were a lot of couples there. Liz was one of our speakers. We had this kind of rapid fire, almost like a mini-TED Talk where—how much time did you have, Liz? We only give you, like, five minutes or eight minutes? It was really short. And so we had this series of entrepreneurs talking about an idea. There were folks who talked about the idea of really transforming your culture. There were folks who talked about upside thinking, so the idea of taking big risks, and what’s the strategy for taking a big risk that won’t destroy your company? The idea is: How do we create a learning environment? How do you create a space where owners and entrepreneurs can really learn and grow from each other, have breakout groups, and make it highly participatory—as opposed to the typical conference where people kind of talk at you? We wanted less of the talking at you.

Loren Feldman:
Was COVID a factor at all? I mean, I hear people saying, “It’s over. And if you throw something, people will come.” Flights are full. Was that a concern at all?

Shawn Busse:
You know, COVID was a problem in a way you wouldn’t think of, which was when you do an event, you need to plan it almost even a year out. And the problem is, if you think back to a year ago or so, when we were planning, it was right after Omicron. And everybody was having this moment of like, “Oh, shit.” And so we were like, “Wait. How are we going to have an event? Are we going to have the next version of Omicron? Are we going to have a Delta that was actually deadly?” So planning an event with the uncertainty of COVID was really difficult. And the problem with that became, we kept having to put off key decisions until way too late in the game.

And so that’s where COVID became a real problem, is the uncertainty of what it would be doing in the fall. So that was problem one, and so to mitigate that to some degree, we had to choose spaces that were really large and had things like large garage doors, really good ventilation, big, open spaces, where people can be apart from each other if they wanted to be. So that meant, you spend more money: A bigger space, more money. Nicer spaces, in some ways, have great ventilation. We had dinner the night before, so we had to have that at a space that was very open—and not a sit-down dinner, a stand up dinner, so that people could distance if they wanted to, or wear masks if they wanted to.

So it just totally changed a lot of decision-making. But at the end of the day, we felt pretty good about it, because there were people there that had family members that were immunocompromised, and so they were masked the whole time. But the vast majority didn’t. And so we wanted to make it comfortable if you were cautious. And yeah, that worked out okay. But it made the planning way harder.

Loren Feldman:
So where does this leave you, in terms of thinking about next year?

Shawn Busse:
Oh, we’re gonna do it again, for sure. Today, we’re trying to finalize the date. It’ll be in September next year. And that’s the other thing, is we had it in November, which is risky with weather in Oregon. We got really lucky it didn’t rain or snow. But next year, we’ll do it in September.

Loren Feldman:
All right, last topic today: Liz, I gather you’ve discovered you have a new competitor. Can you tell us about that?

Liz Picarazzi:
Well, I wouldn’t call it a competitor. I would call it a copycat. So I have been kind of on a roller coaster with this. I’m feeling better about it. But I’ll tell you what happened: A couple of weeks ago. I saw on Instagram, in a Story of someone who’s kind of a distant sort of business colleague, a logo that was for a company that I knew he was starting that was for garbage enclosures. And I thought, “Okay, I knew he was coming up with this. Let me see what it is.”

So I go onto the website, and I see that the design of the product is identical to Citibin, in terms of, first off, its modularity. We do modules that can be put together, so if you have six trash cans, you get six modules. The actual shape of it, the individual parts of that bin, are exactly identical to Citibin. The color is the same. And as if that wasn’t already bad enough, when I went to their website, I saw that some of the copy was the same as ours. The imagery was derived from ours, like when we talk about functionality. And as if that wasn’t bad enough, then I went to their Instagram, and I saw that they were following most of Citibin’s followers, including my 16-year-old daughter and distant cousins of some of my Venezuelan employees in Venezuela. There’s zero reason for this company to follow those people if they weren’t going after Citibin’s followers. So this definitely was very confronting. When it first came up, it was actually right before I went to Portland, so I probably talked Shawn’s ear off about it.

Shawn Busse:
She was fired up!

Liz Picarazzi:
I was very fired up. I had just found out. And so I needed to shop again for intellectual property attorneys. I had done it around a year ago and just sort of dropped it, partly because of my very irrational dislike of legal work. But this time, I really needed to find one that was going to help move me ahead on this, because this screams cease and desist. I’m actually really looking forward to that letter to be drafted. I did hire one of the firms. It’s an IP lawyer that’s helped one of my good business friends, and I really trust her judgment. And she also knows me really well, so she knows stylistically who I would want to work with.

So I’m kind of up and down with it. The reason I’ve been up lately is that, upon inspecting their website further, it really does look like they’re priced only 5 percent below us. And they have far less functionality. They haven’t been in market for 10 years, like us. They don’t have hundreds of customer testimonials. So if I were a consumer trying to decide between that company and a Citibin, I would say, “Why in the world would I pay 5 percent less to get so much less than Citibin offers?”

And then the second part I’ve been thinking a lot about—and it may be kind of arrogant, but I can be that way sometimes—is this guy is a total idiot for not coming up with a product that was in its own part of the market. So if I were him, I would have made a trash enclosure that was in between a Rubbermaid shed and a Citibin, with Citibin being the luxury one. So as a businessperson, I’m actually a little disappointed in him.

Loren Feldman:
Are you giving him advice here, Liz?

Liz Picarazzi:
Yeah.

Shawn Busse:
His strategy is terrible!

Liz Picarazzi:
It’s a horrible strategy! And because it’s a horrible strategy, it can play out for us in ways that, two weeks ago, when I was complaining to Shawn, I didn’t anticipate. And just one illustration is we had a potential customer this week, with a “price objection,” as we call it. And so we always send a follow-up that says, “These are some of the other options you might consider. We really just want you to have a trash enclosure, even if it isn’t ours.” And so Frank, instead of putting the usual things in there like the links, he put this company. And it was, “You might want to check them out.” Because we know that it only costs 5 percent less, and they’ll realize, “Well, why would we get this if we could get the real thing?”

And secondly, we don’t think that company is going to be able to fulfill. So if that customer ordered $10,000 worth of product, this guy does not have a warehouse full of Citibins like we do. What he has is a prototype in front of his house that he took some pictures with, with his daughter, which is another thing in my marketing. I use my family in marketing a lot. So he had his daughter doing a demo.

So that’s really what happened. I know I’m kind of going on and on, but a few years ago in 2017, we had another copycat, and we were able to get, through a cease and desist, a licensing fee from it. And so that’s good for the patent attorney, because there is a record of Citibin licensing its product to another company. And that’s a precedent I don’t think I understood at the time was as important as it is. I do have a patent. I do have a trademark. We’ll see how well they protect me.

But the other thing I’ve got some concern about is that I don’t like spending my time on this. I don’t like spending my time or my money on legal stuff. So there’s this kind of resentment that comes up that is hard for me to shed. I feel like I’m kind of grumpy, like this guy that did this is robbing me of the things I want to be working on. And that’s just dumb. We’re human beings. These things happen. But I have this resentment against him. It’s because he’s taking my attention away from things that I want to be focused on.

Loren Feldman:
Liz, do you have a sense, at this point, if or where he has crossed the legal line? I mean, copycat products have existed since there have been products. There are certain things that clearly one can do. Do you know what lines he may have crossed?

Liz Picarazzi:
I don’t yet. I think that there’s a lot of evidence of intent, which my lawyer said. Even though that legally can’t necessarily be used, in a cease and desist, it can be mentioned. So the copying of the website, that’s a copyright infringement. The trade dress is something where, if you’re driving by, and you see something that looks like a Citibin, but then upon closer inspection it’s not, that is a trade-dress violation because you’re making something that may have very poor craftsmanship that people will think is a Citibin.

And that’s what happened a few years ago, is that a condo owner made these trash enclosures using the exact same materials as ours—the exact same materials. But when you looked at the aluminum edges, you could see it was all jagged. So if someone got scratched on it, for example, that could be viewed as someone could think, “Oh, that’s a Citibin.” So we’ll see. I mean, I could see it coming back as, “You don’t have a leg to stand on.” And I don’t know what I’m going to do about that.

Paul Downs:
I think that if you’re still married, you should stop Frank from sending people to this company. Because that seems to me like an enormous mistake.

Liz Picarazzi:
Why?

Paul Downs:
Well, first of all, we’ve run into versions of this, because I make something that a lot of people can make. I personally just try to ignore the opposition or the competitor. But if you said, “Hey, here’s a company that we recommend you take a look at,” it kind of undercuts any legal argument you might make that these people are infringing. Why in the world, if they’re infringing, would you send your customer to them? And I don’t know whether the lawyer heard about this yet, but I can’t imagine they wouldn’t say, “Don’t do that again.” That strikes me as just being really counterproductive.

Shawn Busse:
Liz has the momentum, the marketing acumen. She is the story right now, and the last thing you want is the story to switch from, “Our champion against rats, the person who’s in Times Square,” to, “Legal battle.” And when I look at me-too competitors coming in, it almost always is determined by how good of marketers they are. Oftentimes, the me-too wins, because they’re better marketers than the original innovator.

If you think about Steve Jobs and Apple, much of their ideas and technology they copied off of other people. They were just way better marketers. And I think you have the inverse situation where you have probably somebody who’s a shitty marketer, who’s trying to mimic and copy you, but they’re actually not very good at marketing. I don’t know that you want to give them fuel.

Loren Feldman:
To some extent, you can give them fuel by suing them. That becomes their marketing.

Paul Downs:
No, I think that at this point, right now, before this guy’s got any traction at all, firing a shot across his bough is probably worth doing. You got a lawyer, lawyer writes a letter. The lawyer will tell you whether you have a leg to stand on. And if you do, go ahead, take one shot, and then ignore them. Just strengthen your own game.

We know that all of our clients have other choices in the market. They can always find something cheaper. They can always get something faster. And I’m like, “Yeah, I don’t care. Here’s what I’m going to do for you. I’m going to make every minute of interacting with me so wonderful, you’re not even tempted to look anywhere else. And if you do, you’re going to be comparing the experience you’re getting from Paul Downs with whatever you’re getting from somebody else. And I guarantee you it won’t be as good an experience.” So I let the other people worry about them. I worry about me—and making sure that my game is strong.

Shawn Busse:
Yeah, the other thing, too, is if you think about your price strategy, you’re playing the premium game, Liz, right?

Liz Picarazzi:
Yes.

Shawn Busse:
So the premium game, it gives you the most important thing in the world, which is margin. And margin then gives you the opportunity to do better marketing, to do more promotion, to do all the things that get your product in an upward spiral of awareness. If he does what you say, first of all, he’s playing the failed game of slightly cheaper. But if he goes to that middle point, now you know what his margin is going to be on this thing, right? It’s not going to be awesome. And so he’s not going to have resources to do the kind of stuff you’re doing. So he’s always going to lose. I mean, he’s sort of behind already, in terms of playing the me-too game. I don’t see you spending a lot of energy on this being very helpful, past what Paul’s saying. You know, threaten him, see if the threat does something, but then don’t take it further than that, because you get it into the public sphere. Now you’re the story. And like, that’s not a good story.

Liz Picarazzi:7
No, not at all.

Paul Downs:
I mean, you could keep an eye on his Google reviews to see how it’s going. If he’s starting to rack up hundreds of great reviews, then you’ve got a competitor. If there’s no reviews or they’re bad reviews, don’t even worry about it. There are people who can make tables. I don’t give a damn. They’re not me. I can’t control what they do. But I can make what I do excellent, and that’s my strategy.

Loren Feldman:
Liz, do you have a sense that he’s gotten any traction at all?

Liz Picarazzi:
No, I don’t. I think it’s a prototype. He had one of them made, and he took some photos of it. So on their Instagram, it’s all renderings. There aren’t any real photos.

Shawn Busse:
Yeah, that’s what struck me. As a potential buyer, I was looking at their account. I’m like, “These aren’t even real. This is total vaporware.”

Paul Downs:
Your problem isn’t as big as you think. You’re gonna spend five grand on a lawyer. They’re gonna do what they do, and then forget about it. Play your own game.

Loren Feldman:
Is that what the lawyer said to you, Liz?

Shawn Busse:
Well, they want their fees.

Liz Picarazzi:
No, I mean, I interviewed four before I decided on the one. And one of them that I didn’t hire—and this wasn’t the reason—said that I wouldn’t have, basically, a leg to stand on. And the two people who are working together on it think that the letter is a very good start, but said that, in terms of my IP security, I should be focusing on new patents rather than enforcing past ones. And I think that is because some of the municipal work that we’re doing is going to be patentable. I would like to focus my budget more on that than on the residential product that this guy obviously has been looking at closely over the years, and is now trying to copycat.

Loren Feldman:
The difference between the two products being that the municipal work has to be stronger and tougher?

Liz Picarazzi:
Yep, better hardware, better locks, latches.

Shawn Busse:
I think you also are leaving out an important point: The guy who’s copying you, what’s his background?

Liz Picarazzi:
So he’s actually a property manager, a fairly large one, in Brooklyn, and he also renovates and flips home. My biggest target is property managers. They’re probably close to 50 percent of our business. So I do have a little bit of a fear that he’s going to have connections in that property management world. But I also know that everybody in the property management world in New York knows who Citibin is, because we’ve been marketing to them. So hopefully, they’ll look at him and be like, “What is this shoddy copy of the Citibin?”

Shawn Busse:
Yeah, and people who flip houses, in my experience, tend to be corner cutters. I just don’t see somebody with that background being a phenomenal marketing and branding person.

Liz Picarazzi:
Right, well, he doesn’t. He has three other companies, and if you look at their websites or their Instagrams, they’re not very good. So that’s definitely not his strong suit.

Loren Feldman:
Well, he’s also not a manufacturer. Do you know how he plans to make the things?

Liz Picarazzi:
That I don’t know either. We are definitely on the lookout—really, everybody on the team. We’re all pretty furious about this, or maybe a little bit amused, at this point.

Loren Feldman:
It’s a compliment.

Liz Picarazzi:
Yeah, it could be a compliment. And I’m not gonna say the fellow’s name, but he looks like the actor Bob Balaban. So we refer to him as Bob.

Loren Feldman:
Maybe it is Bob Balaban. All right, well, we will certainly be eager to hear more about that as the situation evolves, Liz. My thanks to Shawn Busse, Paul Downs, and Liz Picarazzi. It’s been great talking to you all year, and I’m excited to see what you guys do in 2023.