I Want to Double Sales This Year

Introduction:

This week, we introduce another new member of the 21 Hats Podcast team, Liz Picarazzi, who talks Shawn Busse and Paul Downs through a series of challenges she’s faced at her business, Citibin. Among those challenges: why she outsourced her manufacturing to China, why she’s trying to bring it back, why she’s struggling to find an American fabricator that wants her business, why she thinks she wasted all of the money she spent last year on digital marketing, how she managed to double sales anyway, and where she found the right person to handle the aspects of running Citibin that she doesn’t think she’s good at.

— Loren Feldman

Guests:

Liz Picarazzi is founder and CEO of Citibin.

Shawn Busse is co-founder and CEO of Kinesis.

Paul Downs is founder of Paul Downs Cabinetmakers.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Full Episode Transcript:

Loren Feldman:
Welcome Shawn, Paul, and especially our newest 21 Hats Podcast regular, Liz Picarazzi. It’s great to have you all here. Liz, you’re the new kid this week. Let’s start with you. Tell us about your business, Citibin. What do you guys do?

Liz Picarazzi:
Loren, it’s so great to be here. Citibin makes modern trash enclosures that hide trash and keep out rats. We also make package-delivery lockers. As we all know and probably have experienced, package theft is on the rise, so we adapted our trash enclosure to become a package locker. And now we sell those two products, along with some other outdoor storage products, as part of a portfolio of Citibin premium outdoor products.

Loren Feldman:
And how do you sell? Do you sell to stores? Direct to customers?

Liz Picarazzi:
We sell direct. About 80 percent of our business is direct selling to property managers and residential homeowners in the New York area, and about 20 percent of our business is online. Our bins are prefabricated and ready to assemble so they can be shipped nationwide.

Loren Feldman:
Do you make them yourselves?

Liz Picarazzi:
No, we do not. These are all prefabricated. They’re made out of sheet aluminum. So the cabinet is made out of sheet aluminum that doesn’t rust, and the boards are a bamboo composite that’s typically found in decking, so it’s really good for outdoor use. We manufactured in the U.S. for several years. And we moved it over to China about three and a half years ago.

Loren Feldman:
And how did that work out?

Liz Picarazzi:
So I’m a little bit in limbo right now, due to all of the supply chain issues.

Loren Feldman:
Was it working well before the supply chain issues and COVID?

Liz Picarazzi:
Yes, so that’s a good question, Loren, and I don’t love answering this question directly when I’m asked, but it actually was going very well before the pandemic—manufacturing in China.

Loren Feldman:
You were happy with the manufacturer and with the price you were paying and the service?

Liz Picarazzi:
Yeah, I was happy with the quality, which a lot of people don’t think about with China. I was very happy with the price and also with the timing. I’m sometimes able to get product from China faster than I could get it from Connecticut—prior to the pandemic.

Loren Feldman:
All right, so what happened with the pandemic?

Liz Picarazzi:
So with the pandemic, really all of the raw materials that we use from aluminum to bamboo, those all get shut down in China, all of those factories. The raw materials that go into our product were really backlogged. And then once the factories opened up, and they were manufacturing again, we were in line yet again. And we’re a smaller company, so we’re not usually at the front of the line. We’re usually in the back and probably continually pushed back.

But then the biggest issue was getting containers to come over and the sale date and the price. We used to pay about $7,000 to $9000 for a 45-foot container, and we’ve paid between $23,000 and $25,000 at different points during the pandemic. So our freight costs have increased a lot. But I say that I’m in limbo, because we have found a couple of factories in the U.S., including one in New Jersey, that we’re going to start working with because we want to really diversify the risk that we experienced and continue to experience in the supply chain.

Loren Feldman:
Have you got a deal with somebody to make your stuff in the U.S.?

Liz Picarazzi:
We have a proposal, and it is to do a small run of our trash enclosures. And we’re going to be doing that probably starting in February.

Loren Feldman:
Kind of as a test?

Liz Picarazzi:
As a test, yeah. And I mean, the way that I view this is, I’m not choosing China or New Jersey. I’m diversifying, so I’m going to produce in both. We’ll see when it comes along. We have certain business that I think it would be very good to have a U.S. manufacturer, especially if you want to do government contracting.

Paul Downs:
Is there a huge price difference?

Liz Picarazzi:
There is. It’s significant. So it’s still about a 30 percent difference, even when you consider the increased freight and the tariffs.

Loren Feldman:
We highlighted a story in the Morning Report this week about what it’s looking like in China because of omicron. They’re expecting it to sweep through the country and expecting a lot of factory shutdowns and ports having to close. Are you worried about that?

Liz Picarazzi:
I’m actually not so worried about it because we just made a gigantic order a few months ago that is arriving in a couple of weeks. And we ordered three times the inventory that we normally do because of the pain of the supply chain, and we just had to suck it up. Even though the freight is so expensive, we still knew that the higher need was to get the product over here.

Loren Feldman:
That’s looking like a pretty good decision.

Liz Picarazzi:
Yeah, I think that we’re gonna get through and not need to worry about closures with any of our suppliers.

Loren Feldman:
Did you ever think about buying or building a factory and making your stuff yourself?

Liz Picarazzi:
Maybe for about three minutes. [Laughter]

Shawn Busse:
Ask Paul about that.

Paul Downs:
Yeah.

Loren Feldman:
Paul, what would you have said, had she asked you?

Paul Downs:
I’d say owning a small factory is the easiest way to make a gigantic pile of money anybody’s ever figured out.

Loren Feldman:
For those who don’t know you, Paul, I think that might have been sarcasm.

Paul Downs:
It might have been sarcasm. Yeah, I think that if you can avoid it, don’t build your product. I mean, there’s a ton of things that, okay, we make stuff, but I don’t dream of making my own nuts and bolts and screws and what have you. And there’s not a whole lot of difference. You just decide where you want to draw the line, and what you control, and why you want to control it.

Shawn Busse:
Liz, just a question about your manufacturing process. So sheet metal, I’m guessing they’re using CNC breaks and folding things and doing that. Are you doing the final assembly with your team so it’s shipping over flat, and then you’re building the boxes there?

Liz Picarazzi:
Yes, yes. They all come over as components. The whole line is modular. So if someone has three trash cans, they’ll get a three module. If they have seven, they get a seven module. And they all come in boxes with the boards already riveted on, all of the cabinets and panels completely made.

And then kind of like IKEA, we have a very good instruction book where people on the other end can put it together. But in the New York City area, probably over 90 percent of our customers do our installation service, and our guys can put these together so fast. I mean, it’s been freezing here in New York, and the other day, they did like three installations in one day that a layman would take a lot longer.

Shawn Busse:
Right, so I’m imagining—tell me if I’m wrong or right on this—I’ve seen a lot of CNC machining move back from China because the parts are relatively small, and they’re being fed through really expensive machinery that you can either buy in China or you can buy here in the States. But sheet metal is kind of a different jam, in terms of the equipment that’s used for it and sort of the human capital that’s necessary to move it around and put it in crates. Is that accurate?

Liz Picarazzi:
I think that is true. I mean, really, the human capital factor is the labor cost.

Shawn Busse:
Yeah, the machine shops in the States have optimized around automation and machinery, and so they’ve reduced their human capital costs. But the sheet-metal stuff is still super human-intensive. So bringing it back to the States is a really hard proposition, I imagine, for somebody like yourself.

Liz Picarazzi:
Yeah, well, the gulf between our current price and the U.S. price is really deep. We haven’t made any sort of severe moves because we are waiting for everything to level. But I just know the pain—

Loren Feldman:
When’s that going to be, Liz?

Liz Picarazzi:
Well, we’re going to do this small production run in February. And we’re just going to make a bunch of samples that we’re going to sell to the customers at a discount as a test run, and really see not only the quality and the price, but also the relationship. So we need to trust all of our suppliers and feel like they’re going to prioritize us, and they’re going to be excited about the product. And in my prior attempts in the U.S. to manufacture, I didn’t always find that.

Loren Feldman:
You talked to a number of different possible fabricators. Is that right?

Liz Picarazzi:
I did.

Loren Feldman:
And did you have a lot of options? Or was it tough to find a place that met your needs?

Liz Picarazzi:
So I did a pretty extensive search, and a lot of places just didn’t reply at all to the inquiry. And then those that did, you go through a process of getting your proposal and getting them all the drawings. Okay, I’ll just say it… I didn’t really experience the level of enthusiasm for what we do that I would have liked. But I’m always sensitive to that, especially when I’m thinking about a relationship with a new vendor.

Loren Feldman:
Do you think that’s because of the size of the business?

Liz Picarazzi:
Yeah, I do. And I think—this is so weird, it almost sounds like a romantic relationship—they know that I still have China as an option, so they’re almost insecure about putting too much into it. Because I always have that as the option. Again, that’s just me projecting what they could be thinking, but I do that a lot in my life.

Loren Feldman:
Well, they have to know that it would be attractive to you to bring it back.

Shawn Busse:
Yeah, well, you’ve got to put yourself in the shoes of these guys and gals who own these shops. They have been kicked in the shins for the last 30 years with partnership-based relationships moving overseas. That’s been their life, and so I can appreciate their skepticism. It’s sort of like, “Oh, yeah, you need us now, but as soon as things normalize, you’re going to take the stuff back overseas. So why should we invest all this time, money, and energy in something that’s going to be a fly-by-night?”

Liz Picarazzi:
That thought crosses my mind a lot. And the best I can do is try. We’ll see. I don’t have a lot to lose by doing this test run. And there are certain government contracts that I wouldn’t even be eligible for, if I didn’t manufacture in the U.S., so this diversification needs to happen in any case.

Paul Downs:
I think there’s another factor at work, too, which is that we’ve seen an arrangement of the entire world of economy that developed over the last 25 years or more suddenly upended by COVID. And it’s not that easy to shift a factory from doing one kind of stuff to another kind of stuff. And American machinists were all encouraged to go much higher tech, much more precision. I happen to know two guys who own a machining company, and they’ve concentrated on aerospace and medical. And that requires a level of precision and investment and training and a certain kind of workforce that’s—no offense, Liz—way beyond what your product requires.

And so asking them to take a guy who could be making him 1,000 bucks an hour making medical devices and make them 100 bucks an hour—I mean, this is the all-in price, not just the labor price, making a Citibin—they just don’t want to do it. It’s not that simple for them, because one of the hardest things to do on any factory floor is to maintain two different quality levels. So we run into this all the time. We try to offer products that come in at a different range of prices, and we do that by managing the complexity of what we build. But what we can’t do is have the tyro crew over in one corner and the expert crew in the other corner. It’s really hard to manage that, because it causes a ton of internal problems.

Shawn Busse:
Oh my gosh, Paul, that’s so insightful. We’ve tried to do that on a service level, where we try to go down market to smaller businesses. It just doesn’t work. We can’t have a factory that services both of those at the same time.

Paul Downs:
I’m not gonna say that every old-line American manufacturer is really fantastic at customer relations, either, because we’ve run into this same issue of you’re trying to find a vendor to do something, and it seems like they don’t even answer the phone. They don’t read their emails. If they do, they put the guy who hates everybody on customer relations. And it’s like,”What are you people thinking?” I don’t know, if you let people own their own companies and run them their own way, you get a certain amount of that.

Loren Feldman:
Let’s take a step back for a moment. You were not always an entrepreneur. In fact, you had a corporate career not too long ago. Tell us about that, and how did you make the leap?

Liz Picarazzi:
Sure, so when I first moved to New York, in 2002, I had a fresh MBA and a lot of MBA debt, and a lot of motivation to get a corporate job to pay off that debt, and to move on with getting married and having a baby and a house. So I was very motivated to get a corporate job, and I did. I worked at American Express for seven years. I worked with small businesses in the small business division. I was a marketing executive, and we did a lot of customer research, focus groups. I did a lot of those.

They had a lot of events where they brought in entrepreneurs to speak in a big auditorium. And whenever I was in that auditorium, I wanted to be on the stage. Not performing, but I knew I was an entrepreneur, and I shouldn’t be in the auditorium in the seats. I knew I should have been up there being an entrepreneur. I was in this environment where I wanted to be what my customer was.

But I did tell myself, “I am not going to start a business until I feel that there is a true need.” Because working in corporate, you often work on things for which there really isn’t a customer need. After having worked on many projects that were multiple months and didn’t end up going anywhere, I was kind of left with a feeling of, “In my next incarnation, I want to do something that I can start and finish in a day, and I’m going to have tangible results.” So I thought, “I’m gonna wait till I have a customer need that I feel myself.”

And that came along when I bought a house and was doing some renovations and experienced what most of us experience with home contractors, and that’s that they’re very unreliable and untrustworthy, and it can be very discouraging. So I had the idea to have a handyman business, which became Checklist Handyman Services, and it was New York’s largest woman-owned, licensed, insured, five-star handyman company in the city. And what happened with that business is a story for another day.

Loren Feldman:
Well, tell us first, how hard was it for you to make the leap from a secure well-paid executive role at American Express to starting a business?

Liz Picarazzi:
So I think my transition—both in terms of finances and planning—was in a pretty good place because I had been working there for seven years. I had a little bit of savings. But then most importantly, I created a business plan. I wrote a business plan for the handyman business, so that when I was laid off, which was in August of 2011, I had this business plan in my back pocket, and I had already been working on it. I already had rented a desk in a shared office space to make myself start this company because I was paying rent somewhere.

In terms of what the transition was, it was a little bit rough culturally, because I was used to a lot of MBA types and a lot of strategy and marketing executives. I never felt entirely comfortable in that world, but I functioned pretty well in it. But then when I brought that approach to my group of handymen, they kind of were like, “Who is this woman who has a few tools thinking she can start a handyman business?”

And that cultural shift was a little difficult, but I actually really liked the cultural change, in some ways, because in this team, we really worked together and got stuff done. It wasn’t like meetings, meetings about meetings, and meetings about meetings about meetings. And that’s what can happen in corporate. I loved American Express, and I feel so blessed that, of all the departments, I was working in the small business department, because I learned a lot about small businesses and also really had the appetite for becoming a small business owner myself.

Loren Feldman:
What led to the leap from your first business to Citibin?

Liz Picarazzi:
That was another case of me having my own need that turned into a business. I live in New York City, and like most people, I have an attached home without a driveway or garage. So we keep our trash cans right in front of our homes. At the handyman company, we had customers who were asking for custom trash enclosures, and so we started building them. And then I’m a marketer, so I started marketing them, and we got more business and more business. And then I realized I want to create this and spin it off and make it prefab and make it into a whole brand—and ended up selling the handyman company and focusing entirely on Citibin.

Loren Feldman:
What’s been your most effective marketing?

Liz Picarazzi:
The product itself.

Loren Feldman:
Referrals?

Liz Reisch
The product itself. In New York, if people are walking around, my product is not a light fixture inside of someone’s home. It’s a trash enclosure right in front of someone’s home that has a big branding plate on it that says Citibin.

Loren Feldman:
How about paid marketing?

Liz Picarazzi:
This is a bad subject for me, but I have some resolution on it. I dabbled with paid ads in 2021, as I always have in previous years. And finally, in looking at my 2021 results on different things I spent on marketing, I made the decision that I’m never gonna do a Google ad, Facebook ad, or Instagram ad again. The only way I would do it—and I’m actually open to this, and maybe even some 21 Hats listeners can convince me of this—is that I would need someone to tell me, “How do you do this right?” Because I’ve paid people to do it. I’ve tried to do it myself. There are definitely a lot of snake oil salesmen out there. So I made this decision, and I felt like it kind of took a lot of spending in order to come to that decision, which I don’t like. But it was a firm decision, and I declared it to the team last week.

Loren Feldman:
Were you putting most of your money in pay-per-click or some other type of ad?

Liz Picarazzi:
We were doing remarketing, otherwise known as display ads, so anyone who hits the Citibin website is cookied, and then we serve them ads in other places.

Paul Downs:
Well, in my experience, a huge percentage of my business comes from Google. And a lot of people have asked me, “Okay, how do you manage that?” And I’ve come to the conclusion that the way we succeeded was to have started back in 2003, and that Google just simply chose us one day to get a top organic result, and that’s been the best thing. Like spending more money or less money, the question is, “Who’s in the top organic position for your product?” And if there’s somebody who’s doing a reasonably good job there already, you can give Google all the money you want, and it still won’t move the needle, because somebody is there. I think it’s not really discussed much how the whole system of online advertising favors the incumbents. But that’s a critical part of anybody who’s on a journey from being utterly obscure to trying to be known. You just have to take that into account.

Liz Picarazzi:
Yeah. On organic search for trash enclosure, we actually come up number three behind Amazon and Home Depot, which isn’t a surprise, so I’m feeling pretty good about that. Actually, yeah, we’re doing really, really well in that. We’re able to track who finds out about us, both on the website, because there’s a lot of reporting, but we always ask people. And I don’t remember anyone ever saying that they found out about us through some sort of Instagram ad.

Loren Feldman:
Shawn, any thoughts?

Shawn Busse:
I guess the top thoughts that come to my mind are that very few service providers will ever tell you that they can’t succeed with what you want to do. So it could be that there are not enough people searching for terms, or that the market is super expensive, or all of those. There can be these huge barriers, and to your snake oil comment, it’s rare that you’ll find somebody who will walk away and say, “I’m not going to take your money, because it’s not going to produce anything.” It’s just a tough space, and I empathize and sympathize with you.

The kind of thought that goes through my mind is, “It’s not what you make, it’s what you keep.” And I’m kind of curious, is your product the same as these other products that are out there? Is it so radically different that the price point can be also radically different—that you could charge more and afford to do things like produce it in the U.S? And then I’m also super curious about your package delivery pivot and how that’s going. I have more questions than answers.

Liz Picarazzi:
So we’re premium. If someone wants a Rubbermaid trash shed, they’re not gonna want mine. Our customers know that they want something that’s going to last, that’s going to look good, add curb appeal. And for people in New York City, keeping out rats. We’re launching an enclosure in the spring to keep out bears as well, so we’re really different.

Loren Feldman:
New York City bears?

Liz Picarazzi:
Montana. Well, that’ll be fun. I’ll have to share that on the podcast, because we’re getting certified as a bear-proof product. And we’re going out to Montana with our bins, and having grizzly bears attack them—they’re baited with food.

Loren Feldman:
Can we do a live podcast episode from that test?

Shawn Busse:
That needs to be video. That has to be video.

Liz Picarazzi:
It’s going to be. Trust me. I’ve done a lot of rat marketing, and this is the bear marketing, and there’s eventually going to be, probably, squirrels, others.

Paul Downs:
Racoons.

Liz Picarazzi:
Racoons, exactly, yeah.

Paul Downs:
I do have an observation, which is that you’re born and bred in New York City, and if you wanted to take the message of American-made to market, that I would be looking at a different geographic area. Because we do a lot of business with people who specifically are interested in American-made. I mean, you could map it. It’s not necessarily the Northeast liberal enclaves. And so that if you can make sure your product can be shipped and assembled easily, then you can hit the entire country as a market and start talking about the reasons why you’re American made and sort of ride that. But you’ll have to stop manufacturing in China.

Shawn Busse:
It’s an interesting idea, Paul. Liz, to really pivot your strategy to a kind of video- and storytelling-centric one of, “Hey, here’s the guy or gal who makes your thing in this factory. And here it is being tested in Montana with grizzly bears.” Really compelling connection to the product, and then you charge more for it. I’m sure you charge a premium already, but just even more of a premium. I don’t know. You’re a marketer, so I’m sure these thoughts have crossed your mind.

Liz Picarazzi:
Well, they definitely have. We have probably 60 percent B2B and 40 percent B2C. We work with a lot of property managers, architects, developers, and really want to build out that business. And we need to look at their price-sensitivity, too, because they’re already paying for premium product. They know that too. They’re paying a lot more than any of the alternatives, so shifting that price up a bit in order to get the American-made feels a little risky to me.

Loren Feldman:
Have you set sales goals for this year, Liz?

Liz Picarazzi:
So I want to double sales this year, as we did last year. And that would put us at 2.6 million.

Shawn Busse:
That’s great. You doubled sales last year. What was the driver to that? Was it the package thing or something else?

Liz Picarazzi:
No, I wish it was the package thing, because I’m so passionate about that package locker, but it just doesn’t sell as well as our trash enclosures. I would say there are two reasons for the growth. One of them is that people invested a lot in their homes, outdoor living in particular. It just was something where there were people who really wanted to spruce up their outdoor space. The second reason is actually that my husband joined the company as COO, and he’s really good at the things that I’m awful at.

Loren Feldman:
For example?

Liz Picarazzi:
Anything having to do with logistics, operations, inventory planning. He comes from a background of logistics and inventory planning, and I don’t like that. I’m not good at it. And he was able to take that off my plate, but then additionally, everybody reports to him now. I only have one direct report, and it’s my husband. He’s really also talented in sales. At first when he joined, he was very reluctant, like, “I’m not that sort of a person in sales. I’ve never done it before.”

And then I think as he saw the business coming in, and realizing that we pay a commission to anyone else who sells for us, that makes him want to pick up the phone before anybody else. Which he does, and he really likes sales now. So he does sales and then he also manages the sales. So one thing I never did in the past, which I’m almost a little ashamed of, is I never really had a list of opportunities that we were working, like even though we have HubSpot and other CRMs over the years, I’ve never been one to manage sales. And he actively does that.

Loren Feldman:
We’re running a little short on time, and there are a couple other things I wanted to hit today. One, Shawn, I wanted to go back to something you mentioned last week, which intrigued me. You mentioned that the real turning point for your business was your experience in EO, the Entrepreneurs’ Organization. Could you just tell us a little bit about what EO did for you?

Shawn Busse:
Yeah, sure. And I should probably express a lot of gratitude for the organization because it was a really affordable mentorship and learning program that puts structure to running a small business. So they had a curriculum, they went through different units on finance, strategy, marketing, all the kind of core elements of a business. I’d never had that framework before, and so as kind of a recovering academic, once I was like, “Oh, here’s how I can organize the business,” that was I think 50 percent of it. And recognizing what are my areas of strength and weakness was huge. For example, I’m probably a lot like Liz. I didn’t thrive in finance. I didn’t thrive in operations. I thrived in areas of marketing, communications, strategy, sales.

Actually, I kind of grew to love sales, once I understood that it was actually helping people find answers. And so that, combined with the other element, which was mentorship and peer learning, really accelerated my development as a leader, and my thinking, from a strategic standpoint. It helped me shift from being an artisanal craftsman—for lack of a better word—to thinking about entrepreneurship in a structured way, and that was really transformative. And then they helped me by handing me a lot of great books that accelerated my learning as well. The concept of Blue Ocean strategy, which I’ve mentioned before, getting out of highly competitive marketplaces, and being remarkable in a space where there’s a lot less competition.

Loren Feldman:
I hear such mixed things from people about peer groups.

Shawn Busse:
Yeah, and actually, despite the really great experience I had in the accelerator program, I had a not-awesome experience in the EO core program. I graduated up into the main EO group, and that, in retrospect, was a function of the group that I was assigned to. They didn’t have a really wonderful way of matching people to groups. It was kind of a free-for-all, and so I ended up in a group that was kind of in chaos and disarray, so I didn’t have a great experience there. But others in the same chapter have had wonderful experiences. And I’ve come to learn it’s really all about the folks who are in the group and how they structure the group.

I did a Vistage stint for a while that was okay. But I learned pretty quickly that it’s so important to get the right values alignment. And I was in a group that largely was older business owners who were kvetching about how their employees weren’t working hard enough. I was like, “Well, this is really not my people.” And then the leader of that group was trying actively to change the mindset of the group, but like any culture, it’s kind of like turning the Queen Mary. I don’t think he was willing to get rid of members who were really not going to change their attitude about employees being the problem, but trying to bring in new folks like myself, who are like, “No, no, no, it’s the employees who are everything.” So I think that’s my message: You really have to vet groups carefully.

Liz Picarazzi:
I also have been a member of EO, and I’m not an active member right now, partly because I was in the Brooklyn EO chapter and they closed when I was deciding whether to join the New York EO chapter. And that was during the pandemic, and I thought, “Why pay all this money if they’re not meeting?’ But I’m thinking of joining it, and what I can say about it is that any hour I can spend with another business owner is worthwhile, like whether we go to lunch, or we sit together in an EO forum, or we talk through 21 Hats. The relatedness that you can feel with other business owners is different than that you feel with other people in your life. And that’s part of the reason why entrepreneurs get so lonely is that they lack that relatedness.

So for me, EO has done that, but also I have some really big decisions, business decisions that I made through consultation with my EO mates—everything from selling my first business to manufacturing in China. My China connection came through EO as well. So I feel like it’s been worthwhile, but you do need to be careful. I have had a couple of groups where I go, and I’m really excited about the topic or the content, and then I get there and it’s 20 new business owners. Like I’ve been in business for 11 years now. That course is going to be very different for someone who hasn’t launched their business yet.

Loren Feldman:
Paul, does that match up with your experience with Vistage?

Paul Downs:
No. I think that I was extraordinarily fortunate to get into a great group with a great group leader. And it’s been interesting, because we were all of a piece when it started, and several of the members have gone on a growth path that’s way, way more impressive than anything I’ve been able to accomplish. But I’ve been able to observe that and have good relationships within the group. And so it’s really hard for me to comment on the broad… You could end up with anything, has been my experience, talking to other people who’ve been in groups. Shawn, you’re talking about a bunch of crusty old guys, and that didn’t feel like a fit for you. Although I would challenge you. You think in 40 years, you’re not going to be a little crustier?

Shawn Busse:
Oh, I’m already crusty, Paul. [Laughter]

Paul Downs:
I haven’t felt the need to go looking at other groups, so I don’t want to make any pronouncements about the value of all business groups, because I just don’t have a wide experience. Mine has been good. And it’s similar in my mind to, I’ve only been married once, because it was the best possible choice I could have made. I don’t need to look for another wife. So that’s how I feel about my Vistage group.

Shawn Busse:
Yeah, and I’d also add, as much as I had some frustrating experiences, we have some clients who are in Vistage groups and other EO groups have had amazing experiences. It’s sort of like asking, “How is marriage?” It’s like, “Well, it depends.”

Paul Downs:
I want to just jump on what Liz said, that an hour spent with another business owner in any context is almost always well spent. I totally agree with that, and one of the things that I’ve done since I started working with Loren and writing for The New York Times was just completely change my attitude towards looking outside the business for help and advice. And now I will talk to anybody, anytime, about anything. Because there’s such a wide range of people and businesses in this country and all over the world that it’s just interesting. What people do for a living is an amazing range of things, and there’s almost nothing lost by spending some limited amount of time anyway with business owners, because the shift in perspective is what informs me on my own decisions.

And getting back to your cadre of crusty people, I’ve heard a lot of people complain about employees. And I’ve had a lot of employees, and some of them definitely inspired complaints. But just hearing that, like, “Well, why do those guys think that their employees are terrible?” And you came to a conclusion, I’m sure, Shawn, that some of it was them. But it’s worthwhile to know why people end up in that state of mind. What were they thinking? Where did they come from? What did their parents teach them? How did their business journey go? What was their market? Was it an easy way to make money or were they being ground into dust?

Shawn Busse:
All those are great points, Paul. The thing that I struggle with is, I gave that Vistage group quite a bit of time and a lot of listening and over time, recognized my time is finite. So that’s the other challenge. Where do you spend that time? Because it’s an investment. The Vistage day, they’re like whole days or half days. They’re big investments of time, and so, the challenge I’m faced with is finding where to go and who to listen to where I can get a lot of insight. And I think that’s the advice I would give, is being thoughtful about that, as opposed to just jumping into a space. That was my mistake, honestly.

Loren Feldman:
So before we go, the last thing I want to cover is, as we’re taping this, we keep reading stories where we’re all being hit by a wave of omicron and a wave of inflation. And I’m wondering if either or both of those things have affected any of you. How about you, Paul?

Paul Downs:
Well, we had it hit the week between Christmas and New Year’s. I had seven employees walk into my office and say, “Oh, someone in my family is sick, or I’m sick, or I’m going to get sick.” So we had to do a little bit of a reset, in terms of thinking about going back to masks and encouraging boosters and all that. But I fairly quickly came to the conclusion that we can’t actually treat omicron the same way we dealt with delta and the previous incarnations of COVID. We just can’t. I can’t lose someone for five or 10 days just because they were in a room with someone else who might have been sick.

My employees are all vaccinated, and I’m not worried about any of them dying from this disease. So we actually changed our policy for COVID, as far as Paul Downs Cabinetmakers is concerned: It’s just another illness. We had policies prior to COVID that said, basically, “If you’re too sick, if you feel like you want to stay home, stay home. We have personal days for that. If you’re feeling a little under the weather, and you want to work, work.” And I’m going back to that. There’s no more special exemption, because we simply can’t afford to lose our workforce, and we’re not a kind of business that you can perform from home. So if the company is going to stay healthy, that’s what we’ve got to do, and that may not be the most woke of all COVID positions, but that’s where I’m at.

Loren Feldman:
Liz, how about you? Has either inflation or COVID hit you guys?

Liz Picarazzi:
COVID with our team, we’ve been fine. Most people have had it in the office. The place where it has affected us is at the warehouse, because a lot of warehouse workers and truckers have been hit with COVID. And so we normally go to the warehouse once or twice a week, and we would show up there and our stuff wouldn’t be ready. So that has had an impact.

Paul Downs:
Yesterday, we had a major carrier, XPO Logistics, that simply didn’t pick up our stuff after several days. Didn’t answer the phone at the terminal. Apparently, the whole Philadelphia operation got COVID and just shut down. And so the biggest effect of COVID on us has been just trying to get our product out of here, and it’s really causing problems.

Loren Feldman:
Shawn, I asked you about this last week, and I think you said, working remotely, you’ve been able to handle it pretty well, with everybody remote. That’s still the case?

Shawn Busse:
Yeah, I think we’re all right. The consequence for a service business like myself, I think, is cultural. So, like, we had no holiday party. Like, we’ve not had many face-to-face meetings that I would prefer to have face-to-face. And I just think there’s a long-term degrading impact on companies that can work remote. I know of a business owner who had a holiday party, and all members who attended it, 20-something people, got COVID at the exact same time. Your business cannot function when everybody’s sick at the same time, so we’re trying to be careful to not have everybody get sick, because we think it’ll probably hit everyone at some point or another, but it’s about not having it happen all all at once.

Loren Feldman:
Well, my thanks to Shawn Busse, Paul Downs, and especially Liz Picarazzi. Thanks for joining us this week, Liz. I look forward to continuing these conversations.