I’m Not a Real CEO

Introduction:

This week, Jay Goltz, Liz Picarazzi, and Sarah Segal talk about the inherent conflicts between being an entrepreneur and being a CEO—and the different skill-sets each role requires. Does it make sense for the same person to do both jobs? Is being CEO even a full-time job? And when does it make sense to replace yourself as CEO? Liz says she’s thought about it. Jay, not so much: “Could I have found somebody 10, 15, 20 years ago who was a better manager? Sure. But it just wasn’t worth it.” Why not? “It’s gonna cost you $250,000 a year,” Jay says. “Is it worth paying that?” Plus: Liz and Sarah talk about positioning a company to be acquired. And Sarah proposes a PR campaign for Liz’s package bins right on the spot.

— Loren Feldman

Guests:

Liz Picarazzi is CEO of Citibin.

Sarah Segal is CEO of Segal Communications.

Jay Goltz is CEO of The Goltz Group.

Producer:

Jess Thoubboron is founder of Blank Word.

Full Episode Transcript:

Loren Feldman:
Welcome Jay, Liz, and Sarah. I appreciate your taking the time to be here. I want to start today with a blog post that Jason Fried, the founder and CEO of 37signals—also known as Basecamp—recently published. In it, Jason, who’s been a guest on this podcast, made some interesting assertions. One is that you really can’t be both a CEO and a founder.

Why not? These are his words: “Because the founder’s job is injecting risk into the business. It’s flooding it with new ideas, stuff that seems hard to do, ideas that no one else would dare try, placing the kinds of bets that only someone who started the damn thing would be willing to wager. … A CEO’s job, just about the opposite. It’s reducing risk, executing diligently to achieve obvious goals, staying in business at all costs.”

You guys are all CEOs and founders. So I’m kind of wondering what you think about this. How about you, Liz?

Liz Picarazzi:
So I found this article incredibly relatable. I definitely am more of a founder—even though I’m also the CEO. For me, the distinction between founder and CEO has only become really apparent in the last couple of years as we’ve grown, because I really like being the founder. I like to be the innovator, the creator, the one who’s injecting risk, the one who’s making bets, the one who’s cycling ideas. That’s my sweet spot. That’s what I enjoy. That’s why I am an entrepreneur.

So the more I’m called upon to be a CEO—and I’ll admit, like Jason, it’s not a full-time job for me to be the CEO. I already know that I prefer the former. And reading articles like this is actually very helpful, because I sometimes feel bad that I’m not a better CEO. And it makes me understand why the skills and what you bring to it are very different. The roles are very different. Having a real CEO—because I’ll call myself not a real CEO—is probably in our near future. But I understand myself better by reading that article. I guess I’ll just put it that way.

Loren Feldman:
Sarah, how about you? How did you react?

Sarah Segal:
Well, first of all, if you’re a big enough company, to have the luxury of having a founder and a CEO, like, have at it. Do a division of labor. But most small companies—as the name of your podcast—you’re wearing 21 hats. You’re CEO, you’re CFO, you’re founder, you’re the person who takes the garbage out at the end of the week. You do it all.

I also think of it as like saying that somebody is only left brain or right brain. I ask that question a lot when I interview people for jobs. I’m like, “Well do you consider yourself a creative or somebody who’s more of an analytical thinker, more scientific, etc.?” And most everybody sees themselves as kind of a mesh between the two. But I think you can be founder and CEO. I think that if you’re a founder, and you don’t have some CEO abilities, you’re gonna fail before you start. Because you can’t just always throw caution to the wind.

If you have a staff, you have to make payroll. You can’t buy that fancy new office that you want to buy, just because you think it would be better optics for your clients. You have to have some of those qualities, even if you are a reckless, enthusiastic founder. You still have to have that. But as a CEO, you also have to take an amount of risk. Like, “Do I want to get a small business loan so I can invest in my company? Where am I gonna spend that money?” There’s a risk of taking out a loan, especially as a small business owner, because usually it’s not just based on your business. It’s based on your personal credit.

Loren Feldman:
And the collateral that you put up.

Sarah Segal:
Exactly. So it’s like, I agree with the statement, but I don’t think it’s applicable to every business because of their size, essentially.

Loren Feldman:
Jay, I just sense that you’ve got something to say about this.

Jay Goltz:
I would say this: Jason Fried’s a very smart guy, and he’s been very successful, and that’s his opinion, but I think it’s a false choice. I understand, I fully agree with both Liz and Sarah. It can be a struggle—and I really would replace the word “founder” with “entrepreneur.” I think that’s more accurate.

Loren Feldman:
I think you both mean very much the same thing.

Jay Goltz:
Yes, yes. I’ve said many times, “I’m 80 percent entrepreneur and 20 percent manager,” and can it be a struggle? Yes. But to suggest that the two of them are complete polar opposites? I’ll just say, from my perspective, it’s just ridiculous to suggest that, “Oh, you’ve got to be conservative and your number one thing should be not going out of business.” Yeah, I do think that should be your number one thing. So that means that entrepreneurs shouldn’t worry about putting themselves out of business?

There’s somewhere between just being that reckless, do-whatever-you-want, and bet-the-farm thing, and not taking any chances. I think that’s a false choice. You can be a CEO and still take chances. Do I not take chances that could put me out of business? Yeah, I’m crazy like that. I don’t really want to put myself out of the business. When I opened up the store in New York, I did a pop-up. I did it for seven months, knowing if it didn’t work out, I wasn’t going to be stuck with a $500,000-a-year lease or something. So I believe it’s a false choice. I believe you can do both.

The tone of his comments are like: The founder/entrepreneurs just go and do crazy stuff, and it might put them out of business, and then the CEO can’t do anything that’s not conservative. It’s just a ridiculous summary of it. I live in that world. I take chances all the time. But yes, I am cognizant that I shouldn’t go bet the ranch, because why would I do that, at this point? I’ve got 130 people who make their living here. Why in the world would I want to bet the ranch to go ahead and grow it any more?

So I don’t even know if “struggle” is the right word. Is it something you have to get a handle on? Is it something where maybe somebody would be better off being the CEO? Sure. So I fully agree with everything both Sarah and Liz said, but I don’t think it’s one or the other. And I absolutely do not agree that, “Oh, you can’t both be the founder entrepreneur and the CEO at the same time.” That’s just…

Sarah Segal:
It’s about taking calculated risks.

Jay Goltz:
Right, right.

Sarah Segal:
That’s the meshing of the two. You can take a risk, but it has to be thoughtful, and you have to know what the consequences are, and you have to have an out. Doing a pop-up is a great example for a retail company. You test the market before you dive in head-first. I think even a founder or an entrepreneur would do that.

Jay Goltz:
I mean, he’s suggesting that if you don’t stay wild and crazy and take wild risks that you’re not going to be successful. That’s just ridiculous. I mean, maybe in his world, it is. Maybe in his world what he said is accurate. But there are millions of companies out there that have managed to transition from being a startup entrepreneur to running the company.

And is it maybe hard for some people? Sure, I get it. It’s a different skill-set. But I absolutely don’t think that it’s one or the other. And I’m living proof of: I’m still very entrepreneurial. Have I toned it down over the years? Yeah, because I got the business big enough now. I just need more money less than I need more risk. So have I gotten more conservative? Yeah, absolutely. But I certainly haven’t become conservative to where I just don’t take any risks. Me and everyone else out there, it’s not just me. Every other business that’s out there is in this similar situation.

Loren Feldman:
What are you thinking of, when you say that you still take risks?

Jay Goltz:
At this point, here’s my new word: It’s not about balance, it’s about alignment. I don’t need to grow the business a lot more. I want to grow organically. I’m not opening more stores. Why would I open another store? It’s more people, more exposure. I don’t need to.

Loren Feldman:
Right. But you said you’re still taking risks.

Jay Goltz:
I take risks with advertising. I certainly still borrow money. I take risks with trying new product lines and doing stuff. So it’s not like I’m petrified of taking any risks. I just don’t need to take the risks anymore because I got the business big enough that I’m making a really good living and everybody’s happy. And this is where I say: “It’s not the income. It’s the outcome.”

I got out of the fast lane. Now I’m in the medium lane. I don’t need to do it anymore. I got it big enough. My company—and I’m not exaggerating—is 50 times bigger than I ever thought it would be. I never had any grand plan for what it turned into. I’m surprised myself as to how big it got. It’s big enough. There is such a thing. It’s big enough. I’m happy.

Sarah Segal:
That’s really interesting. I went to an event with a staffer who we had, and she looked at me afterwards—we were having drinks—and she’s like, “What is your grand plan for your business? Where do you see the company in 5, 10 years, or whatever?” And I’m curious, Jay, it sounds like you’d never had that grand plan.

Jay Goltz:
No.

Sarah Segal:
Liz, do you have that grand plan?

Liz Picarazzi:
No.

Sarah Segal:
So I don’t either.

Jay Goltz:
So I’m saying to you, Sarah, let’s say you get the business up to—and I assume in PR world, a $6 million business would be a nice-sized PR firm?

Sarah Segal:
Yeah, that’d be a nice size.

Jay Goltz:
Okay, so you wake up one day, and you’ve got a $6 million PR firm. You’ve got happy people. You’ve got happy customers. You’ve got happy employees who are making a lot of money. There’s nothing you can’t buy, within reason. You might say, “Yeah, I don’t think I need to push it like I used to, because what’s the point?”

Sarah Segal:
Well, I do live in San Francisco. Things are expensive here.

Jay Goltz:
So then say $10 million. But at some point, you have to wake up one day and go, “Why am I doing this? And like, why would I want more exposure? It’s all fine.” What I just said to you, I wouldn’t have said 10 years ago. No way.

Sarah Segal:
Yeah, it’s not about the money. It’s more about the legacy. I would like the company to live on beyond me. That’s kind of my goal. I feel like I’ve created a company with a good vibe, a good purpose, a place where people like to work, where people stay, that promotes education and does great work for its clients. And I would like someone to want to continue that purpose. It’s not about another paycheck, another paycheck. So I’d rather reinvest that money into building something that can live on in perpetuity.

Jay Goltz:
Which I think is great. And I certainly want to do that. The only line I would draw is, in my case, I’m going to try to do that. But I am not going to hook my happiness wagon to that. Because if I can’t pull it off, for whatever reason, I gave it a shot. I am not going to make myself crazy trying to figure it out. I’m doing everything I can to do that. But I think we have enough responsibility when we’re alive to do it than worrying about when we’re dead, what’s going to happen. I just don’t want to hang that on anybody. And I know companies do, but I’m not buying into that.

Loren Feldman:
I’d like to go back to something Liz said before. Liz, I’m curious, having heard what Jay just said about how one person can embody both roles, does that affect your thinking at all, in terms of what you said about not being a real CEO and thinking that your business might need one?

Liz Picarazzi:
Well, I would say that, because I am still a good CEO, maybe not a great one, it does temper my more impulsive tendencies as a founder.

Sarah Segal:
Why do you say you’re a good one, and not a great one, just to clarify that?

Liz Picarazzi:
I think that the structure of being a CEO, and the focus more on execution, is just not my strength. I’m much more creative. I like working in the area of new ideas. I’ll implement them for a while, but then I’ll be really eager to pass it off and move on to the next.

Sarah Segal:
Do you think somebody else could do a better job than you? For real?

Liz Picarazzi:
Honestly, I have to say that thought crosses my mind quite a bit.

Jay Goltz:
I have an answer to that. How about this—because this is what I’ve lived in—yes, you could absolutely find someone better. It wouldn’t be worth the money. It would suck the profit out of the company. Could you go hire someone who’s super smart to be a great [CEO]? Yeah, sure. It’s gonna cost you $250,000 a year. Is it worth paying that? No, because you’re doing it good enough.

I mean, could I have found somebody 10, 15, 20 years ago who was a better manager? Sure, but it just wasn’t worth it. And I would say, in your case, you’re still very young. You haven’t been doing it that long. The reason you’re not a, quote-unquote, great CEO is you’re still in training. I mean, it takes years to figure it out. Most CEOs—if they’re not in the computer industry—are 50, 60 years old, because it takes 20, 30 years to get all the skill-sets you need to do it properly.

Loren Feldman:
And there’s one other factor, which is, you did bring in someone who kind of complements your skills. That someone happens to be your husband.

Liz Picarazzi:
Yeah, absolutely. So I have been able to spend more time as founder since he came in as COO. And I mean, that has been helpful in not only filling gaps, but in just strategically being able to talk to him about literally everything in the business, and being able to get input that is based on his knowledge and what he’s doing hands on. But also that he’s going to have the right motivation on decisions, because we own the company together.

So that really was a big relief. I do sometimes worry about what would have happened had he not come in, and we grew as we did. Because just everything with operations, before he came in, was not very good.

Jay Goltz:
I can tell you, you would have found somebody who would have worked out fine. And just because they’re not your husband doesn’t mean… I’ve got 20 people who care what we do every day. They don’t need to be my relative to care a lot. So you would have found somebody—maybe not as good, but you would have found somebody. That’s the answer. I mean, you didn’t need to because he was there. And that’s good.

Liz Picarazzi:
Yeah.

Loren Feldman:
Jay, I want to go back to you on one point. You have made that point here before about being 80 percent entrepreneur and 20 percent manager. I’ve never really bought that. I think anybody who listens to this podcast has heard that you’re very thoughtful about management issues.

Jay Goltz:
Okay, I can clarify that. No, no, I’ll tell you what it is, because there is something there. You’re right. I think I have good management skills. I think my weak spot that I have to continually work on is paying attention to looking at reports. I have to discipline myself to sit down and play manager and look at the reports and follow up and have meetings. And that’s not my skill-set.

So yes, you’re right. I’ve got some good skills in it. But my head is usually thinking about—lookit, I’m doing the podcast today. Should I be doing the podcast today? Or should I be going through my inventory and figuring out what we need to get rid of? I mean, I get distracted easily. And I like—this is really the issue—the entrepreneurship side. I like figuring stuff out. I like building new things. And I have to discipline myself to go, “Okay, you built enough new stuff. Pay attention to your inventory problem.” It’s a constant struggle. It is. That’s where the 80/20 comes in. So maybe it’s 50/50. Yeah, you’re right, it’s not 80/20. It’s probably 50/50.

Loren Feldman:
Do you worry about finding your job less rewarding as you go on, as the need for you to focus more on management and less on entrepreneurship continues?

Jay Goltz:
No, I gotta tell you, what’s interesting lately. I just turned 67. My friends are between 65 and 72, and the ones who are quote-unquote professionals—doctors, lawyers, stockbrokers—they’ve got some real issues. Dentists. You know, dentistry is physically demanding.

I am thrilled that I own a business, because there’s nothing about my job, quote-unquote, that’s a problem. Those guys are retiring because they don’t want to deal with it anymore. And I respect and understand it. The pressure of having the client calling you, the pressure of being a dentist, the pressure of being a doctor, dealing with hospitals. They at some point go, “Yeah, I don’t want to deal with this anymore.” I don’t have anything in my life going to work that I think, “Oh my god, I’ve had enough of that.” I come to work. No one’s looking for me. My life is 180 degrees from where it was 30 years ago. There’s no post-it notes. There’s no phone messages. There’s no, “Oh, Jay, I’ve gotta talk to you.” If I didn’t show up for two days, most people wouldn’t even notice it. So I’ve managed to pull that off.

Loren Feldman:
Without getting bored?

Jay Goltz:
Yeah, lookit, I’m doing the podcast. Why do you think I do the podcast? I like doing the podcast. I do what I want to do.

Loren Feldman:
I’m glad. I appreciate that.

Jay Goltz:
No, I do. I like doing it. I like talking business. That’s my hobby. Yeah, I’ve got nothing that’s going to make me think, “Oh, no, you can’t do this much longer.”

Loren Feldman:
The last thing on this blog post that I want to mention is, Jason Fried also says that being a CEO really is a part-time job. Let me quote him: “There simply aren’t that many big picture things or decisions to execute day in and day out, or even week in and week out, to make it a true full-time job. A role? Yes. A hat to wear? Yes. A full-time job at a smallish company? No, it’s part-time at best, quarter time even better.” Any thoughts on that?

Jay Goltz:
Okay, maybe, maybe. You know what, if you said, “Jay, you can only work 20 hours a week.” Yeah, sure. I might agree with him on that part. If you’ve got the right people in place, you’re overseeing. You’re not managing. I could go with that part. Maybe it isn’t a full-time job.

Loren Feldman:
Sarah?

Sarah Segal:
Yeah, if you’re already set up. If you’re set up, and you have the wheels turning and the gears are clicking into place in the right place, yeah, it should just be on autopilot. And your decision-making should be relatively minimal. And you should be spending your time selling and being a representative of the company, for sure.

Jay Goltz:
Or doing a podcast.

Sarah Segal:
Or doing a podcast. [Laughter]

Loren Feldman:
Liz, how about you? Does that part-time job thing make sense to you?

Liz Picarazzi:
It does. I sometimes think if we—as I sometimes want to—double, triple, quadruple as we grow, that’s when I think I’m really not going to be a good CEO. And I probably wouldn’t enjoy that job. I’d like to be alongside of it. But growing a fast-growing company as that CEO, I don’t know. I don’t think I would like that.

Jay Goltz:
What I’ve been telling you is, if you have the right key people in place, it’s not a problem. You know, I always say: They don’t take a bullet for me, but they take the bullshit for me. Like, they’re doing everything. Here’s part of the key, though: You’ve got to be big enough to pay enough. If your business gets big enough where you can start to pay some six-figure salaries, you’re gonna get some very responsible, smart people. They can take that off your responsibilities. So you’re not big enough to be at that point yet. If you had a few other more senior people there, I’m telling you that your life would be much easier. But you’re not there yet. You’re growing into it.

Loren Feldman:
All right. I wanted to talk about something, Liz, that you’ve brought up previously on the show, which is your thoughts about developing strategic partnerships with other companies. Have you made any progress with that?

Liz Picarazzi:
Yeah, there are a couple of areas for the business that are really interesting, and I’m really engaged with, where talking to a potential vendor starts to sound not like I’m buying, let’s say, a piece of hardware from them, but rather there could be some sort of a partnership, which then in my mind goes to potential acquisition, like 10 years down the line. And so I’m noticing in various places—you know, one of them is having to do with components for our bins. But another one is, we’ve had a lot of requests to put advertising on the bins. So I’m starting to learn about advertising on public fixtures, so I’m looking at how bus stops have ads on them, or benches, or other types of trash receptacles.

And so for that, too, it’s like, “Okay, I’m talking to a couple of companies on this.” And I feel like, is this a sort of a transaction where I’m enabling my customers to purchase their bins via advertising? And is that something where it’s kind of transactional or partnership? But the exciting thing is that I do see that some of the companies that I’m talking to could take us into a place that we wouldn’t have even thought we were in a couple of years ago. Like, I wouldn’t have anticipated putting ads on the bins, working suddenly with media companies and with brands.

That sort of partnership I’m really excited about. But also, I guess I’d say I’m in a place of learning a lot now and I really like being in that place. But I feel like, how much can I learn and figure this out before I actually make a move? So it’s almost like I’m sniffing, and me and these other companies are kind of sniffing each other out. And I do get attached to: What could that partnership look like? And I need to remind myself it can proceed more organically.

Jay Goltz:
My only comment with that is: That all sounds great. Whatever you do, I can’t emphasize enough, I’d make sure that there’s an out, because you just don’t know what’s going to happen. Whatever deal you cut, I would make sure there’s some honeymoon period that if you wake up and go, “Yikes, this isn’t going like I thought,” you can get out of it. Because who needs to screw their business up?

One of the goals of the CEO should be to never get in a lawsuit. Trust me. I mean, there’s no winning in it. And I don’t think that should be a problem. I think you should be able to put together some kind of deal that you have an out after, whatever, 12 months, or something. Because who needs to get locked into something that’s not working.

Liz Picarazzi:
Yeah.

Loren Feldman:
Sarah, how did you end up being acquired?

Sarah Segal:
Oh, have I not told that story?

Loren Feldman:
I think you have. But I’m curious, did the relationship start the way Liz is describing, with you looking to work together with someone and then it advanced to an actual acquisition? Or was it an acquisition right from the beginning of the discussion?

Sarah Segal:
I’m gonna answer that question, but I’m just gonna tell Liz that I was in New York last week. And I’m looking all over the city for her bins. So delighted when I saw one. And then what was interesting to me is when I took the Metro this time, the Metrocards—which used to be bright yellow—now have advertising all over them. So that made me think of that when you were describing your opportunity.

Liz Picarazzi:
Absolutely.

Sarah Segal:
It’s the old park bench. Put an ad on it. I think every relationship starts in a different way. My relationship with the person that coordinated the acquisition was more of a mentor. He and his business partner had started a crisis-communications agency two years prior to me starting mine. So I went to an event and heard him speak about his experience, having worked for a larger company, doing crisis. And I literally cornered him and was like, “Hey, you just started your agency two years ago, can you tell me everything so I don’t make the mistakes that you made?”

And so that’s how that relationship started. And every once in a while, I’d ping him for advice. And he would very generously give us advice. And then when my business partner decided to go in-house with a growing company for an awesome opportunity that she’s still with and loves, he looked at us and said, “Okay, well, you’re a little less expensive, because you only have one member of your leadership. We’ve always wanted to expand our general PR stuff. Let’s start talking.” So the relationship was really organic.

Loren Feldman:
To Jay’s point, there did come a time when you found an out. Is that something you thought about while you were developing the relationship?

Sarah Segal:
No.

Loren Feldman:
Did you discuss at all ways that you could reverse it? It sounds like no.

Sarah Segal:
No, If you’re going in with an out, it means that you’re not convinced that it’s going to work. And I was convinced that this was going to work, and it was going to be great. And so if I had that, “Okay, I gotta have an out,” I probably wouldn’t have done it in the first place.

Jay Goltz:
Wait, this is a false choice. I’m not saying you needed an out. But the fact of the matter is, you didn’t sign a 40-page contract that said they own you for 10 years. And I don’t know that you would have signed that. That’s my point. It’s not that you had to look for an out, but there was no commitment you had to make that made you think, “Oh wait a second. What am I getting into?” There was no big legal paperwork.

Sarah Segal:
Well, I had to dissolve my LLC.

Jay Goltz:
Right, but that’s no big deal. You start a new one. I mean, that’s a no-brainer. There was nothing you did that you had to wake up and go, “Oh, wait a second. I can never get out of this.”

Sarah Segal:
You can say it’s no big deal. But basically this year, in January, when we became unacquired, I literally had to start the whole business from scratch. And that was a big deal.

Loren Feldman:
So you were able to do it, but it wasn’t easy.

Sarah Segal:
Yeah, but the decision to part ways was amicable and easy and really supportive, to be perfectly honest. It just didn’t result in what we wanted it to result in. I wasn’t able to set up health care for my employees in time to start January 1st. So my old acquired company covered insurance for us. I’m paying them back, of course, for us through January, until ours kicked into place. They did a lot of stuff. I was super lucky on our departure, because it was like, “Yeah, let’s call it a day.” It didn’t work out how we hoped it would work out. And I think that was a universal thought across the board.

Jay Goltz:
And I assume, looking back, there was no way you could have predicted what happened. You needed to try it out, right? I mean, in hindsight, do you feel like, “Oh, I should have known better?”

Sarah Segal:
So I coach a sport. I never go into the game going, “Oh, there’s a possibility we can lose.” I go into the game saying, “We’re gonna win this. We’re going to bring home the trophy. We’re going to do awesome.” And that’s how I need to go into what I do in business. I go into working with clients, like, “We’re going to do really good work.” That’s just how I am. I see things in a positive way. I have to. Otherwise, I know, in my gut, it’s not the right fit.

Jay Goltz:
Listen, I think the same way, the difference was when I signed the lease in New York 20 years ago, I might have been dumb enough to go sign a five-year lease, and it could have put me out of business. So I fully agree. I thought it was gonna work. I didn’t figure, “Well, if it doesn’t work…” I plan on it always working. But I’m just suggesting that you might want to make sure, whatever you do, that there is no down the road, if anything goes wrong, that you have just basically put a time bomb in your business that blows up, like, “Oh, no, you can’t leave.”

Sarah Segal:
That’s what lawyers are for, which are really expensive. I got our first bill from our contract lawyer for reviewing this lengthy contract, and literally almost fell off my chair.

Loren Feldman:
But Jay, is that really what lawyers are for? Do you really expect that kind of advice from a lawyer?

Jay Goltz:
No, lawyers make a living going to court. And I’m suggesting that counting on lawyers to get you out of trouble is a very dangerous thing. Because the whole thing, “Well, we’ll sue them,” if you’ve ever been in any way, shape, or form in a lawsuit, you realize… I was just in one little thing years ago, and I was suing them. And when I saw what you can do in a lawsuit, I realized, and the guy paid me real quick to get out of it. But thinking the legal process is going to solve your problem is extremely naive.

Loren Feldman:
I don’t think Sarah’s saying that she’s planning on going to court over it. She’s saying that she expects help from her lawyers in setting up a contract and an arrangement that gives her the protection she needs. Am I right about that, Sarah?

Sarah Segal:
Yeah, like make sure that you have expectations that are outlined, in that if we go into a relationship, these 10 things are going to be delivered as part of the relationship from the partnership. And if those don’t happen, then we can call it quits.

Jay Goltz:
That’s what you want.

Loren Feldman:
I would worry that you’re hoping that your lawyers think like business owners and go beyond just looking at the legal language and think about other ways to protect you. And I’m wondering if you can count on that.

Sarah Segal:
I think it depends on the attorney. I think it depends on your relationship with the attorney and how you as a business owner—and that’s on you as a business owner to say, “Hey, listen, I’m going into this possible deal with this, and I just want protections if it goes awry,” whether or not it’s an ability to cancel things or get reimbursed for it.

Like, even our regular client contracts, they can’t just on a Tuesday whim say, “I’m not going to work with you anymore.” They have to give us a certain number of days out. And the reason we do that is because we staff up for clients, depending on how sizable their work is. And if they, on a Tuesday, decide, “Oh, we don’t want to work with you anymore,” or my favorite lately is, “We ran out of money.” Yeah, what am I doing? Because I still have to pay my employees, and I don’t hire and fire people.

Jay Goltz:
There’s a good example of what I’m talking about, though. So they run out of money, and they don’t pay you, and you say, “Well, you have to pay me.” Well, then you’ve got to take them to court to get paid. And it’s extremely expensive to do that. And if they don’t have any money, you’re probably not getting any money. So I’m suggesting, just because one has good legal protection, quote-unquote, doesn’t mean that you’re not going to still have a big problem, because going to court is extremely expensive.

I just had someone rip off some stuff on my website, and I hired the lawyer, and he went after him, and he took it down. But if I wanted to go and actually fight the couple of pieces left about, “Oh, you copied…” it would be tens of thousands of dollars. It’s not worth it.

Liz Picarazzi:
Well, I’ve got to point out that we started talking about partnerships, and we’ve been now talking about legal and lawyers for about 10 minutes, which is part of the reason why I’ve always been a little bit hesitant about partnerships. And I’ve got a few really good conversations going on right now, and through talking with you guys, I want to have some sort of project with each of these potential partners—one of them is related to design, one of them is related to advertising, one of them is related to hardware—where there’s no big lawyers involved.

It’s just, “Look, we’re going to install these bins in X city, and you’re gonna provide X, Y, Z. Let’s see how this works. And if it works, well, we can do it in another city. ” Instead of, if you had asked me a couple days ago, the way I was thinking about this, it really would have been like some sort of huge strategic partnership, and we’re going to be working together on all of these big initiatives. And I thought: You know what, you’re just getting ahead of yourself. Let’s see if we even like working together. Let’s see if they want to work with us. Because the reason I see them as potential partners is that I actually think we would match really well working together on some of these things.

Jay Goltz:
There are clearly synergies out there, that they’ve got the car, you’ve got the gas, and it’s a beautiful thing. And it works. You can’t always see what’s coming down the road, and you want to make sure you don’t wake up one day and go, “Oh my god.” Because I’m telling you the answer to, “Oh, I’ve got a good contract. I’ll sue them.” Yeah, that’s probably not an easy thing to pull off.

Sarah Segal:
Well, that’s the entrepreneur in you. And I mean, I assume that if you’re doing this test drive with these folks, that your investment is product, right?

Liz Picarazzi:
Yes.

Sarah Segal:
So how much product are you willing to invest in this?

Liz Picarazzi:
Well, this is with actual clients—already paying clients. And this would be augmenting the product with these add ons?

Loren Feldman:
What do you mean by clients? These are people who are vendors or clients?

Liz Picarazzi:
No. So let’s say I have a particular city that’s bought bins, and I decide I want to enhance a lot of the hardware on it, and I want to put ads on them. I already have the client paying. And we’re going to be enhancing them with these additional things. So it’s not like I’m putting something in, and I’m somehow losing something on it. I’m just enhancing an existing deal by bringing in value-added elements, at no additional charge to the client.

Sarah Segal:
Okay, can you break this down a little bit? So you have a bin. You have it with the city. You say, “Hey, city”—and tell me if I skipped over something—”we’re gonna put ads on the bins.” Do you say, “Now, city, you don’t have to pay us as much for the bins because we’re getting revenue from somebody else”?

Liz Picarazzi:
So that potentially is what it would be. But it is very much testing. Because we know that most cities are not going to want this. We know that some will. But we want to make sure that when we lay out, “City, here’s your option for getting Citibins. Either you buy them, and it’s X outright, or you have advertising on it, and it will pay for itself over time. This is an option that we can bring in from Y media company if you are interested.” So it’s almost like, at the point of sale, we’re giving them an option to pay that’s different than what they may have thought, which is probably going to be more expensive than they have budget for. So the partner, by adding this ad, is enabling a purchase that might not otherwise happen.

Sarah Segal:
Would you do it up front in the conversation, or would you say, “Here’s option one, which is where you just get full paid out?” Or if they come back to you and say, “Hey, we only have this much to spend,” then you bring in the ad? Or do you put it on the table to begin with?

Liz Picarazzi:
I like the idea of giving them options.

Sarah Segal:
Okay.

Jay Goltz:
I like calling it a strategic alliance, because the second I hear the word “partner,” I cringe. Like, they’re not investing in your company. It’s a strategic alliance. Like, it works, it doesn’t work. Okay.

Loren Feldman:
To start?

Jay Goltz:
Yeah, right. I mean, just the word partner has a lot of tentacles to it. You know, I think it’s a strategic alliance. Great. Try it out. See what happens.

Loren Feldman:
So the last thing I want to address today: Liz, I think I might have a customer for you for one of your package lockers. Before I tell you who it is, bring us up to date on that, because you’ve talked a little bit about how they haven’t sold as well. And you’ve been leaning toward focusing more on the trash enclosures. What’s happening with the package lockers?

Liz Picarazzi:
So I would say the package lockers are still probably slightly profitable. They have not grown in sales in the last year. And the way that we’re primarily selling our package lockers, which is kind of how it’s been from the start, is with a trash enclosure. So it’s a combo unit where people have their trash, recycling, package, and mail in a modular system. That’s been a better way to be able to sell them because people are already making the investment in the trash enclosure, and they work really well together.

We do sell standalones. We have two different types of package lockers. We have not decommissioned them, or discontinued, as we potentially thought of and as Frank has threatened several times. But right now, it’s like, we’re not losing any money on it. And it works really well. People really like them. We get great reviews. But they’re not like in some really great sales channel right now. We’re just selling them direct.

Loren Feldman:
So Jay, I think you’ve been thinking about—

Jay Goltz:
A new opportunity! Check this out.

Liz Picarazzi:
Oh my god, you guys have been conspiring!

Jay Goltz:
Yes.

Liz Picarazzi:
In a good way.

Jay Goltz:
Yes, we’ve been brainstorming, because here’s what happened to me last week. I always buy the same soap. I like it. Yardley soap. It’s nice, it’s lavender. It doesn’t get mushy.

Loren Feldman:
Too much information, Jay. [Laughter]

Jay Goltz:
I’m just telling you it doesn’t get mushy. There’s a reason for this. So the store I buy it in doesn’t carry it anymore. So I figured, “I’ll just buy it online.” I order a dozen bars of soap. Amazon drops it on the sidewalk, on a city sidewalk.

Liz Picarazzi:
Your soap?!

Jay Goltz:
In a bag.

Loren Feldman:
Wait, you had it sent to your business? Not to your home?

Jay Goltz:
Yeah, I always do. I always do. I don’t know, I’m here. I guess I could have had it sent to my home, but just go with the story. That’s not really relevant. Okay, so I come to work. The bag was just sitting on the sidewalk, but someone cut it open with a razor blade. Like, the thief looked at it and particularly didn’t like the soap, because we’re very discerning in Lincoln Park, and even the thieves are very discerning. So I’m thinking: Maybe there’s an opportunity to come up with boxes with plexi in there, and you can show them what’s in there—if they want it, if they don’t want it. Maybe review so that the thieves don’t have to spend that much time figuring out whether they should take your stuff or not. I just found it fascinating that someone would bother to bend down, cut it open, look at it, and go, “I don’t want this.” And I’m a little insulted, because it’s good soap. [Laughter]

Liz Picarazzi:
But that means that if it is something really valuable, people will see that, and they’re gonna target it.

Jay Goltz:
Yeah, I’m just in the brainstorming stage. I don’t have all of the answers. [Laughter]

Liz Picarazzi:
Maybe you think that your soap is more valuable than it really is.

Jay Goltz:
Perhaps. I’m just surprised that the thief would bend over, open it, and then instead of just walking away with it… so I’m just thinking there might be a germ of an idea here somewhere. I’m leaving it for you to figure out, because it’s your space.

Liz Picarazzi:
We can brainstorm more in Chicago.

Sarah Segal:
My employee had to race out of the office yesterday because—I don’t think it was Amazon—some delivery service left her, you know like those meal kit packages, sitting on the sidewalk in front of her building. San Francisco buildings usually have a gate before you get into your entryway, so like outside the gate, just sitting there.

Jay Goltz:
Yeah, like they did to me. They just drop it on the sidewalk and go on.

Sarah Segal:
But they sent her a picture of it! Like thinking, “Maybe this is not a good idea.”

Jay Goltz:
I had the same thing! No, they sent a picture. They hung it on a doorknob, except it’s not my doorknob. I had no idea where. It’s like becoming a regular thing. Now they’re just like, “Whatever!” They just throw it out the window, and they keep driving. And maybe you’ll get it, maybe you won’t. It’s really remarkable.

Loren Feldman:
Gee, Liz, is there anything you can do to help these people?

Liz Picarazzi:
You know what, you guys just proved why I’m in the package-locker business. And that’s very validating, because people are ordering more and more online. There’s a huge amount of theft. I think it’s around 70 percent have had things stolen, and then the inconvenience of having to either race home or, in some cases, you may have to even go to a gas station or 7-Eleven to pick up your packages if you don’t want them delivered to your house for fear of being stolen. So I think it’s a great product. It’s a good market. I wish I sold a lot more of them. But now with this idea, maybe I will.

Sarah Segal:
So, Liz, this is my PR idea for you. You need to commission a survey. Surveys can cost anywhere between $5,000 and $10,000, depending on the size of your survey. Most media outlets need at least a thousand people responding to the survey to ensure that it’s quantifiable and legitimate data. So you put out a survey to Americans between a certain age range, perhaps, or a specific region. You just do like the tri-state area. And you say, “Well, how many times in the last year have you had a package stolen? How many times in the past year have you had a package left in a place that compromised its being delivered to you?” Those kinds of questions.

You do a whole survey about that. You’re gonna get back meaty, awesome numbers. You put out a press release together, detailing out all of that data. You push it out to media. You get awesome coverage about your survey: “Oh, by the way, yeah, we also provide package lockers, so you don’t have to be one of these victims.” And then your business grows. So there you go. That’s my donation for you today.

Liz Picarazzi:
I love it! I have a question for you, though. So there are a couple of competitors that have commissioned such studies. And I actually usually reference their stats.

Sarah Segal:
No! Don’t do that.

Liz Picarazzi:
No, I credit them. I credit the study in like a footnote. I wouldn’t link to them. But I do think that that can be a really good thing to do. I don’t know if I would put my money into it, though, since some of the competitors have already done it.

Sarah Segal:
But you can have fun with it, too. A lot of people don’t have fun with their surveys. My old business partner, she was very good at this. Like, “Would you rather deal with the delivery of a package on time or go to the dentist?” One of those kinds of weird questions where you get these weird answers. And people were like, “Well, apparently people would rather go get root canal than deal with having to get a package delivered on time,” whatever it is. But you can have fun with it.

Loren Feldman:
And there’s an insatiable need. Just because it’s been done before doesn’t mean it can’t be done again.

Sarah Segal:
And you can look at their surveys, you can see if it’s a national survey. If it’s a national survey, and you’re really just trying to drive business in the tri-state area right now, you just do the tri-state area. And then you do this thing where you can say, “Okay, let’s do Connecticut, New Jersey, New York, just those three states,” right? And then you’re gonna compare them, and you’re gonna say, “People in Connecticut say they’re three times less likely than a New Yorker to get a package,” and the media loves that stuff. Or even towns, if you can get that specific.

Liz Picarazzi:
It can be sliced in different ways.

Loren Feldman:
My thanks to Jay Goltz, Liz Picarazzi, and Sarah Segal, and of course to our sponsor, the Great Game of Business, which helps businesses use an open-book management system to build healthier companies. You can learn more at Greatgame.com. Thank you, everyone.