Jay Goltz’s 12-Step Business Check-Up
Introduction:
This week, Shawn Busse, Jay Goltz, and Sarah Segal talk about what they hope to accomplish in 2023. Sarah’s moving into new offices, aiming for 20-percent growth, and hoping to land a chocolate company as a client. Shawn’s looking for new space, too, and attempting to reposition his business to shake the corrosive effects of the pandemic. And Jay’s employing a methodical 12-step process to assess how his business is performing: Hiring? Check. Pricing? Needs work. Inventory levels? Way out of line. Office technology? Major problems. And then there are his ongoing efforts to mentor his two sons in the business and prepare for the inevitable. These days, Jay tells us, he’s especially careful when getting in front of buses. If you’ve been listening to this podcast, you know our business owners discuss their journeys with unusual candor. But in some episodes we go especially deep. This is one of those episodes.
— Loren Feldman
Guests:
Shawn Busse is CEO of Kinesis.
Jay Goltz is CEO of The Goltz Group.
Sarah Segal is CEO of Segal Communications.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Full Episode Transcript:
Loren Feldman:
Welcome Shawn, Jay, and Sarah. It’s great to have you here. Last week, we had a really good conversation about plans and goals for next year. In fact, I thought it was so interesting, so I decided to do it again this week with a mostly different group. The best part of doing this is that it means for the rest of the coming year, I’ll be able to say, “Jay, I thought you said you were going to do X, Y, and Z in 2023. How come you’re not doing it?”
Jay Goltz:
And you’ve never been able to say that so far. [Laughter]
Loren Feldman:
I just want to make sure… So let’s start with you, Jay. What are you planning for 2023?
Jay Goltz:
I am very much into—and I have been for years—I work on the business, not in the business. So the bigger-picture stuff, especially since the looming whatever the economy is going to be like, my new phrase is, “Let’s turn all the dials.” So I’m just looking at everything I’m doing. And I’m gonna sit down with all my managers and say, “Okay, let’s see where we’re at on these 12 items.” And very quickly: How’s our hiring process? Very good. Real good. I’m feeling great about that. Two: Our employee retention. Great.
Loren Feldman:
How many of these are there?
Jay Goltz:
Twelve. But they all take 5-10 seconds each. Do you have time?
Loren Feldman:
Yes.
Jay Goltz:
Three. This one’s tricky: Employee performance. Do I only have eight, nines, and tens working here, out of 10? Yeah, pretty close. I have to say, we’re good there. Four: Are we buying the right products? Are we going to enough tradeshows? Yeah, we’re doing really well with that. Five: Inventory levels. Way out of line at the moment because of the whole stuff-didn’t-come-in-for-months, and then all of a sudden it all came in at once. My inventory is way out of control. I’ve gotta work that back down. Six: Cash availability. I’ve changed banks. I’ve got a new credit line, so I’m good there. Pricing, markdown protocols: I’m working on that. That is an issue these days where different shipping costs have gone up.
Loren Feldman:
Mark-down protocols, meaning?
Jay Goltz:
Meaning, when do you start having things on sale if you’ve had it on the floor for three months, and it hasn’t sold? I mean, when you’re in retail or any business, I would say you need to make sure that you keep inventory going out if it’s not selling. So somebody needs to pay attention to that. Eight: Budget creation. We do that every year, monitoring it. Is it accurate? This year, I’m putting extra attention into how real estate taxes have gotten crazy in Chicago. They’ve gone up 20 percent, in some cases. I’ve got to make sure that I’m charging myself enough rent, even though I own the building. That’s how people get themselves in trouble over a long period. They start to subsidize their business with the fact that they’re not charging themselves what the building’s worth. So you look like you’re really profitable. In reality, you’re taking advantage of the fact you own the building, but you should be able to make money on both ends.
Marketing: Looking at everything—direct mail, radio ads, the website, social media, PR, events. Is there anything we can be doing with that? Ten: Risk Management. In this case, the big one is cybersecurity. I need to pay more attention to safety protocols. I’ve realized I could do everything right in this business and be a genius, and none of it will matter if somebody took a space heater and plugged it into an extension cord and plugged into another extension cord and the place burns down. I mean, it’s a problem. I’ve got a bunch of space heaters on around here, and I’ve got to pay more attention to that. Eleven: Technology. Got major problems. I’ve been on a legacy thing for years. I’m going to have to spend a lot more money.
Loren Feldman:
A legacy thing, meaning your…?
Jay Goltz:
Software. I’m terribly out of date.
Loren Feldman:
Customer relations management?
Jay Goltz:
Everything. Everything I have. The hardware, some of it is six years old. And I’m told, “You shouldn’t have six-year-old servers, because they won’t match the new stuff.” I wasn’t paying any attention to it. And I’m bringing in a computer consulting firm to look at everything we’re doing, and I’m going to spend a lot of money to do it. And I wasn’t prepared to do that before. And now, I realize I have to. So that’s my major one, of all of them.
And finally 12 is just facility management, which I feel good about, and taking care of the building. Of all of them, yeah, I’ve got a couple of major issues: The technology issue and I’ve got to work my inventories down and and then continue to work on any marketing I can think of. So I’ve just learned when you do everything right—as much as you can—stop talking about recessions. Do everything you can, and the business will get through the next whatever-it-is and be okay.
Loren Feldman:
Jay, let me ask you. That was really interesting, but it doesn’t sound like a plan to me. It’s not setting goals. It’s more of an annual physical. Do you make a distinction between those things?
Jay Goltz:
Well, I certainly have goals for what we want to hit for performance. But there are two things in business. There’s turning the dial, and then there’s looking at the gauge. So yeah, I want the gauge to say “X million,” but to get there, I’ve got to play around with the gas combination and everything else, so there are the two ends.
Loren Feldman:
Aren’t you looking at those gauges throughout the year?
Jay Goltz:
Yeah, absolutely. I recognize we’re in some questionable times. And given the circumstances, I’m certainly not coming up with anything too aggressive with spending money that I don’t need to. Because I don’t know, 2023 could turn out to be a little soft, so I’m playing it conservatively. But I’m trying to fix everything I can fix. The technology piece I have not paid attention to for years.
Loren Feldman:
So that’s where you could set a goal. What’s your goal?
Jay Goltz:
My goal is to have it all fixed.
Loren Feldman:
By?
Jay Goltz:
Four months? I have a completely different head than I had a year ago, when the consulting firm would come in and go, “Oh, it’s gonna be $140,000.” “Oh, I’m not doing that!” Well, now I recognize this is going to be a six-figure, for sure, expenditure, and I know I need to do it. My servers are just going to go down one day. So I recognize that there’s some stuff that you just can’t kick down the road. And that’s not my expertise. That’s not where I pay attention. But I recognize now, if I have a big problem, that’s what it’s going to be.
And I also know I’m wasting a ton of labor on stuff that’s extremely inefficient, because our technology—it’s just old. When I hire young people now, they look at this and they go, “What is this? What’s DOS?” [Laughter] Yeah, that’s what I’m talking about. I’ve got screens that look—they don’t look like it. They’re from 30 years ago. So I need to upgrade all that. And the problem is, I’m the biggest one in the industry. So it’s like I’m too big to go take canned software, but I’m too small to write it myself. So it’s a problem. I guess the point of the story is: You can’t pay attention to 11 out of the 12 things. That’s my point of the day.
Sarah Segal:
Jay, can I ask a question?
Jay Goltz:
Yes, ma’am.
Sarah Segal:
Do you have any personal goals that are associated with the business, things that you’re like, “I really want to get this client”?
Jay Goltz:
My personal goal is that the business gets more profitable. And I’ve certainly got my two children who are here who I’m trying to mentor to take over more responsibility. So my personal goal is to mentor my two children better, and to make the business more profitable, and to continue my goal of having this business be able to run without me. Because one of these days, I’m not going to be here.
Sarah Segal:
How do you mentor your kids? What does that look like?
Jay Goltz:
Well, as the parent—this is very different than mentoring an employee—you need to calm down and not… What would be a good word? I just have to calmly explain to them. It’s very difficult to take a kid who did not grow up working in this business—my kids did not grow up working the counter in my business framing pictures. They were out in the suburbs, and I was in the city. So my kids did not grow up working in this business. And it’s very difficult to have a 33-year-old plop into a 130-person company and really understand the nuances of the people part, the customers. So I’m having to be patient.
There’s a good word: I have to be patient with explaining how the whole thing works. And there are times where it’s frustrating, because you’d hope everybody would just get it right away, but it takes some patience. So I’m getting more structured. I’m thinking about, “All right, we’re going to just work on pricing for this week.” And it’s good. I’m explaining where they come from. And I just have to have some patience, because I’m trying to cram 43 years…
Loren Feldman:
You’ve mentioned that a couple of times. Are you struggling with that—the patience?
Jay Goltz:
I don’t know if I’m struggling. I’m conscious of it. Yeah, I don’t think I’d say struggling. I think I’d say, I’ve got it under control. It certainly took some energy, though. It certainly took some awareness on my part. It certainly took one bad meeting where I went home sick to my stomach, which you know, because I called you, because I always call you. I was really sick to my stomach. Like, “God, I shouldn’t have said that.” And I think I had to hit rock bottom before I realized, “I need to take a different approach. And I will never do that again.”
Sarah Segal:
Are you writing this down? Are you creating kind of like a…
Jay Goltz:
A diary of my madness? [Laughter]
Sarah Segal:
No, no, for your kids. Like your institutional knowledge.
Jay Goltz:
Oh, absolutely, absolutely. I actually typed a very thorough document of, “Here’s where we’re at. Here’s where we’re going.” Because what I realized is: We’re on the same page. We all agree I don’t need to open more stores. So I wrote down everything where we’re at. The part that has become the challenge, for lack of another word, is this looming—and I am not used to this, because this is not the way I think. I am an optimist. Okay now, that doesn’t mean I see everything through rose-colored glasses and I’m just this optimistic fool who’s going to go broke because I don’t realize what’s going on around me.
I’ve had to say to my kid, one of them, “You know what, I somehow managed to make it 43 years, and you don’t have any school debt, and you’re living real nice. Maybe I should get a little credit.” Because sometimes what you hear is, “We’re gonna go broke next year.” Like really? Really? I mean, there’s a fear element there I’m just not used to, because I’ve never been afraid. If anything went wrong, I dug in, and I fixed it, and I moved on. And I’m not used to the way normal people think, maybe. And I’ve had to recognize, I need to be more patient with that and explain, “No, we’re not, we’re not going broke next year.”
Shawn Busse:
Can you clarify, is this the voice in your head saying this now that’s never been there before? Or is this your son saying this?
Jay Goltz:
No, no, this is my son saying this.
Shawn Busse:
So he’s concerned.
Jay Goltz:
He’s like, “What if we don’t hit the numbers?” I go, “So here’s the budget.” “What if we don’t hit the numbers? You haven’t hit the numbers the last few years.” Okay. Yeah, we didn’t hit the numbers. It’s been a difficult last few years. I don’t know what to say to that. Like, “Trust me”? That’s the point. I never had the voice in my head. Now I have it on the outside, and I’m not used to that, because I’ve always just dug in and fixed whatever I had to fix. And I know this might sound odd to some people: I certainly have had major stress and concern and couldn’t pay the bills and was figuring out how to pay everything. I don’t think I’ve ever thought, “Oh my god, I’m going broke.” I don’t think that ever crossed my mind in 43 years. It just hasn’t. And I’m not used to having to…
Loren Feldman:
But did your son actually say that: “We might go broke”? Or is that what you’re hearing because he’s asking you about the numbers?
Jay Goltz:
He’ll say, “We need to put money into this over here.” Yes, I got it. He’s right. We’re gonna put more money into blah blah blah blah blah, and we’re gonna have to raise prices, and eventually people aren’t gonna want to pay the prices. “Okay, so what are you saying? We’re going to be broke in five years?” “Yeah, kinda.” So no, I’m not making this up.
There’s this anxiety of, “What if? What if? What if?” And I don’t know what to say to that. Here’s a perfect example: “Here’s the budget for next year.” “Well, how do we know we’re gonna hit these numbers?” “Yeah, I don’t. It’s a budget. I think we’ll hit these numbers.” “Well, we haven’t hit them the last couple years.” Okay. So what should we do? Should we just shut down the business? Tell me what we should do. Should we just shut the business down?” I don’t know what to do with that.
Shawn Busse:
Have you asked him where the fear is coming from?
Jay Goltz:
I don’t know. Can you ask somebody where anxiety comes from?
Shawn Busse:
Some of the conflicts I have with my parents, if I really dig into it, the fear that I have is that their health will fail them. They don’t have very good financial resources. And so, I worry that I won’t be able to care for them, that I won’t have enough resources to care for them. So I start to have these weird fears about their decision-making, but at its root, I’m really concerned for them and their well being. It would be interesting to maybe figure that out a little bit deeper.
Jay Goltz:
I can just tell you in this case—which is why it’s frustrating—there really isn’t a problem. Like, we’re good. I mean, really. I would tell you. Trust me, we’re good. Like, no one’s losing their house. No one’s going broke. We’re good. Now, did we hit the numbers we wanted? No, absolutely we didn’t. But this is where I say it’s unfair of me to take somebody, plug him into this thing, and expect they’re gonna get it.
Shawn Busse:
He’s never seen the hard times.
Jay Goltz:
No, well, he’s lived through it. He certainly knows I’ve been short of cash over the years. And I certainly recognize that my wife has got PTSD from being married to me. It took me a long time to figure that out. Like, there have been lots of times in the last 42 years where we were really short of cash and business was off, and I owed money, and we didn’t have any money. I get it. Now, did my kids pick that up, too? Probably. But at this stage, he’s old enough. I share all the numbers. We’re good. I don’t know what to say. We’re good.
Shawn Busse:
But I’m betting that he’s never felt the kind of anxiety you felt earlier in your career when you’re not sure if we’re going to be able to get through this thing, and etc., etc. And so you have a lifetime of overcoming adversity. And now he’s starting to see the full picture of the business.
Jay Goltz:
Yes.
Shawn Busse:
And I’m feeling this a little bit, too, with my team. We had a month where we lost money, and we haven’t lost money in forever. And the looks on all their faces were kind of like dread, because we do open-book management. And yet, I’m like, “We’ll be fine. We’ve had bad times before. We’ve gotten through it.” But you can’t just transfer that overnight.
Jay Goltz:
No, I get it, which is why I say: It takes some patience. And I get it. People need to know, yes, sometimes you lose money for a month or two, or maybe for a year. It happens. The worst thing / best thing that happened was one bad meeting, I’ve gotta tell you, it was a wake-up call to me. Because I was just sick to my stomach, and I fixed it. I met the next day, I went through everything, I typed up this whole thing.
Look, we’re on the same page. I think I got it under control now. And I’m having much better meetings now. And I’m going through it, but there certainly have been some frustrating moments where I’ll just go—not screaming—”So tell me what we should do. Should we just shut the business down? Should I fire all the employees? Tell me what we should do.” Because what’s the point?
Sarah Segal:
You’re defensive and protective of the business that you’ve built, and that’s totally reasonable. I’m sure that your kids have a different perspective on some stuff and want to make some changes. And it’s finding that place where it’s like, you could make changes. You’re a little bit more open to letting fresh eyes come in. And I think that that can be challenging for anybody who, you know, it’s the blood, sweat, and tears building a business. Do you have a timeline, a plan for the timeline?
Jay Goltz:
No, I actually don’t have one.
Shawn Busse:
He’s working on it.
Jay Goltz:
Assuming I’m alive, I plan on going to work every day. I have absolutely no aspirations. I see these people who…
Loren Feldman:
No aspirations to sell the business, or?
Jay Goltz:
A) None, zero. B) Go to Florida, go to Arizona, sit around, golf, sit around, lunch, play poker or something? Shoot me. I respect people who want to do that. That’s just not who I am. I don’t want to do that.
Shawn Busse:
I had a client where the son took over the business from the father, and it’s just really interesting to see the difference of mindset. And I think you put your finger on it, Jay, which is the son is worried about losing. And the father was obsessed with what could be achieved. Anytime the business hit a bumpy spot, the son would do kind of the worst behavior from a leader, which is to totally change course, kind of freak out the team, cancel key initiatives. And these are just like blips, and I think that that is a big difference between founding a business and taking over a business. And I think that’s a really not-discussed thing, very often.
Jay Goltz:
Frequently, it’s the opposite. I was in Young Presidents’ Organization, where I see this all the time. They’ve never seen a problem. So the kid takes over, and is gonna go, “Oh, we’re going to open up 10 more.” And I said, “You know what? You’ve never…” Now, in this case, the part that’s frustrated me is, we’re on the same page. I’m not trying to grow it like crazy. We’re totally on the same page. So could we just be happy for a day or two? Can we just say, “Okay, that’s great. That looks good.” I mean, could we just do that? Would that be a terrible thing to just actually think maybe doomsday’s not coming?
Shawn Busse:
Yeah, but put yourself in his shoes, Jay. You’ve accomplished a pretty remarkable thing. And I’m sure part of him feels a serious obligation and fear around harming the thing his dad has created. I’m gonna assume you love each other, right?
Jay Goltz:
Yeah, we have a very good relationship.
Shawn Busse:
So, I mean, I think it would be worth your while to just really try to explore where he’s coming from with his fear.
Loren Feldman:
It can’t be easy to step into a situation like that, not having worked in the business.
Jay Goltz:
Absolutely, and I get all of that.
Shawn Busse:
You have big shoes to fill, Jay.
Jay Goltz:
So I certainly could say, “Could you just explain to me why you think…?” I certainly can do that. And I will also say, my kids give me some great ideas there. I’m not always right, for sure. There are times where I am too optimistic, and I go, “Okay, I see that.” So both of my kids have absolutely caught things that I wasn’t paying attention to. And so if you ask me, t’s great, I love having my kids here. They’ve absolutely given me some perspective on stuff I wasn’t paying attention to, because I don’t pay attention to everything.
I said a bunch of things in this one thorough document I gave them. I go, “One: Be respectful to the employees who paid for your college, who paid for your lifestyle. And two: Don’t insinuate that I’m some optimistic buffoon who doesn’t realize what’s going on.” And like I said, I’ve taken all of my triggers out of it. I’m telling you, I don’t get upset anymore. I’m very patient.
Shawn Busse:
I know, but, dude. Just that last sentence, what you said about the employees, the amount of fear that that could put into somebody? I mean, you basically told your children, “You have a massive debt to these employees. Don’t fuck it up.”
Jay Goltz:
Okay, fair. Yes. Yes. Yes.
Shawn Busse:
I mean, I think it’s wonderful. Honestly, I would suspect you’ve raised great children, and your child is really worried about letting you down. I would bet you 100 bucks that’s what it’s about.
Jay Goltz:
No, I’m sure. For sure.
Shawn Busse:
And then, because you have such compassion and empathy for your team, it’s not like he’s worried about just letting Dad down. He’s worried about letting down all these families who he’s grown up with, who are kind of part of the family, too. That’s a big obligation. Like, that’s a lot to carry.
Sarah Segal:
If you got hit by a bus tomorrow, do you think your son would do a good job?
Jay Goltz:
Let me just change the question: Do I think either of them could just take over the company? No. Clearly not. Are they doing some important good things? Absolutely. But could they just step in? No. At 32 and 37? No.
Sarah Segal:
I don’t think age has anything to do with it.
Jay Goltz:
Well, it has something to do with it. The older you get, the more experience you get. But do I think they have the temperament? What I believe, as an entrepreneur, you have to have the three things. You have to have the head for it, you have to have the heart for it, and you have to have the stomach for it. And the fact is, most people don’t have all three, which is why everyone doesn’t own their own business. I mean, that’s just reality. You can’t have two out of the three. Do my kids have all three of those things to run this business on their own? I don’t know. We’ll see. It’s certainly early in the game, and I’m being careful getting in front of buses. That’s for sure. [Laughter]
Sarah Segal:
If you don’t have confidence in them, they probably sense that as well.
Jay Goltz:
I don’t think they could possibly think I think they could step into this role. They don’t have the experience. I have confidence in some of the things they’re doing that are all valuable, but I don’t think they would think they’re ready to take over the business. I don’t think they would expect me to go, “Oh, yeah, my kid’s all set. He’s been here for—” Keep in mind, my youngest one’s been here for a year and a half.
Sarah Segal:
That’s your plan then. You’re figuring out: Okay, what are the 10 things that need to be checked off so you could literally get hit by a bus at the end of the year and be fine?
Jay Goltz:
No, forget about “could.” I am going to die at some point. There’s no question about that. So it’s not a could; it’s when I leave the business, I need to try to do everything I can to make sure that the business will continue on. I don’t have to. I want to. I don’t want to sell the business. I’m doing everything I can to prepare my children for taking over at least the oversight of the business, because I do have key people here.
Sarah Segal:
And that’s planned out? You have it on a piece of paper?
Jay Goltz:
Absolutely. Is it fully formed? No, but I put down at the moment—back to the getting hit by the bus thing—I definitely have a thing going, “Okay, I didn’t expect to die early, but it is what it is. Here are my thoughts.” And I have in there, “At the end of the day, do what you need to do.” I put it in there that my biggest nightmare would be that my kids end up getting hung with this business and they don’t want to be here. Do whatever you need to do. Don’t ever use the phrase, “Dad’s turning in his grave.” Once I’m gone, I’m gone.
I’ve seen this—I do not want this business to be hung around my kids’ neck as a weight. If they say, “I don’t want to deal with this, I want to shut it down.” Do whatever you need to do. I’m not putting that on my kids. I don’t want my kids being miserable. So if I’m gone, and business gets harder and something goes wrong, if they end up saying, “You know what, we’ve just got to—” Okay, do what you’ve got to do. I am not hanging that on them.
Loren Feldman:
So Sarah, what are your plans and goals for next year?
Sarah Segal:
So honestly, like, planning is one of those things that I’m not very good at because I don’t usually have a lot of time to sit down and focus on it. Just because I’m trying to get myself out of the weeds. But I do have check-box plans that I’d like to accomplish over the year. I basically put them together as goals. What’s important to me, in terms of my business is, first of all, looking at the year and kind of doing an audit and talking to the team and being like, “Well, what did we do well? And what did we not do well?” Kind of assessing that.
And then my question, generally, when I do annual reviews is, “What are you liking doing? What are you finding exciting about your job? What would you like to do more of?” Because my philosophy is that most people who work for me aren’t going to be with me forever. I have no expectation of that. But I want them to look back at their experience with me as a learning and growing experience. And then, I always have some personal professional goals. Like, some are just silly. This year, I had a personal or professional goal of landing a chocolate company. I really want to do PR for a chocolate company.
Loren Feldman:
Did you?
Sarah Segal:
No!
Jay Goltz:
I have a great chocolate company in Colorado I buy from, Chocolove. I’m gonna hook you up.
Sarah Segal:
You know, I’m good at chocolate. I understand it. My family, we’ve done this on vacation before where I bought like 25 different kinds of bar chocolate, and we did blind taste testings. And it was just fun to see what you like outside of the packaging and the marketing. And I was like, “Gosh, I would love to do a chocolate company.” I failed at that. I did get a couple people saying, “Hey, you should do this chocolate company. You should do this one.” But yeah, I failed on that one.
But yeah, I just try to put together attainable goals. And then, my goal for the company is to continue to grow, but at a pace that makes people continue to want to work for me. I don’t want to get a client that’s going to push us into working crazy hours. I like to have a good work-life balance for my team, and I respect their personal time. So, no big epiphanies on my side just yet.
Jay Goltz:
So when you say you want to grow, what’s the number? You want to grow 20 percent? Do you want to grow at 10 percent or 50? What’s the number?
Sarah Segal:
This year, I put 100-percent growth as my goal. I didn’t grow that much. I grew probably about 20 percent this year. I think 20 percent growth is healthy.
Loren Feldman:
It’s nothing to sneeze at.
Sarah Segal:
No, but also PR is a weird thing, because you’re not necessarily growing all parts of the business, right? Because we have consumer technology, and we have B2B technology. We have consumer goods. We have social media management that we provide. And then we have thought leadership, right? And so, that’s part of the question: What are we doing well? And maybe we double down on some of those things. Maybe we’re like, “All right, we are nailing this content creation,” which we are. We’re doing a lot of videos now. Because half of my team is from a broadcast background, it makes sense. And I know that they’re all enjoying it. It’s fun to create that video content. And we know that all of the social media algorithms prioritize video, so we’re probably going to double down on doing more content for our clients.
Jay Goltz:
So how many employees do you have now?
Sarah Segal:
I have five full-time and four contractors.
Jay Goltz:
Okay, so that means if you grow 20 percent, and you do lose someone along the way, that’s not a lot of hiring. You probably have to bring on another two or three people. So that doesn’t seem too burdensome.
Sarah Segal:
Yeah, I plan on hiring somebody in the New Year, because we just landed a winery and a brewery, which we’re so excited about working on. We have a couple of other clients that are strong possibilities, so I might have to hire somebody, another person by the end of Q1.
Loren Feldman:
You’re also moving into a new location, right?
Sarah Segal:
Yes, we have a new office space in San Francisco. We literally just got the keys like 10 days ago. And it’s a mess. It needs paint. I have an electrician coming on Saturday. I h ave a painter coming on Saturday. But yeah, we’ll be in a new space. It’s a great location, and I had the team go there. We had an end of year kind of dinner, and we went there. And we had a glass of champagne, for all of our hard work.
My question to them is: “I know we’re still gonna have this kind of hybrid work, where people come in two to three days a week. What would make this a place for you that you would want to spend more time at?” And the consensus was that they want to make it feel like home: “I want to wear anything.” I’m like, “You can wear anything you want. You can wear slippers for all I care. I don’t care what you wear.” Someone else was like, “I want really great carpeting so when I’m just tired of sitting at my desk, I can lay flat on the ground.” I said, “Okay, we can do that.” They want it to be cozy and welcoming. And so I’m doing that. I’m making it a kind of a home away from home.
Shawn Busse:
Sarah, was this the space that you lowballed the offer on?
Sarah Segal:
Yeah.
Shawn Busse:
What did you end up paying per square foot? I assume it’s triple net, but maybe it’s full-service?
Sarah Segal:
Oh my God, it’s not. It’s a quirky place.
Shawn Busse:
Okay. That’s fine.
Sarah Segal:
I’ll tell you exactly how much we’re paying. It’s 800 square feet, so it’s not very big. And we’re paying $2,500 a month.
Jay Goltz:
So that’s 30,000 divided by eight. You said it was 800 feet?
Sarah Segal:
Yes.
Jay Goltz:
So you’re paying about 30-whatever, $38-$37 a foot?
Sarah Segal:
It’s not a full-service building. It’s a two-flight walk up. It’s literally, like, two or three blocks from Union Square.
Jay Goltz:
So it’s near Boudin’s?
Sarah Segal:
There are Boudins everywhere in San Francisco.
Jay Goltz:
Okay.
Sarah Segal:
You know where it’s near? The entrance to Chinatown. If you’ve ever seen—it’s called the Dragon’s Gate or Lions Gate, I can’t remember which animal it is. It’s about a block from there. So it’s on the edge of the financial district. And the people who own the building is a nice couple. They own the jewelry business downstairs. It’s very family-oriented. The people who are upstairs from us are in alternative energy, and they’re nice. It’s a low-stress piece of real estate.
Shawn Busse:
I love that. One of the lessons that I took away from the pandemic that I really failed to appreciate is: It matters who you rent from. And I looked at it in price and amenities before the pandemic, and now as we’re looking at new offices, I’m like, “Who owns the building?” Because it really matters.
Jay Goltz:
And I would say to you: Go buy a building with an SBA loan for 10 percent down. [Laughter] No, I mean it. Having no landlord’s a beautiful thing. Ten percent down, SBA loan.
Sarah Segal:
Yeah, I’d like to do that maybe someday. But you know, buying a building in San Francisco? You’re talking millions—even just for like a floor.
Loren Feldman:
This would be a good time to buy, though, I suspect.
Sarah Segal:
No. The Bay Area does not do what the rest of the country does. If I were to say, “Oh, I have $2,500 a month to pay,” and I would go to Chicago, I’d probably have a much sweeter space than I do.
Jay Goltz:
Well, no, I can tell you exactly what you’d have. $37 dollars a foot is what you pay for first-floor retail space here. So what you’ve described here—which is my building—I can tell you exactly. I would say you could rent a third-floor walk-up property for half of what you’re paying. That’s about right: 18 bucks a foot, not anymore.
Shawn Busse:
Here in Portland, I bet that would probably be 20 bucks a foot, maybe something in that range.
Jay Goltz:
So are the customers ever going to come by this office?
Sarah Segal:
That’s a good question. People aren’t going anywhere right now, still.
Jay Goltz:
Well, because I’m just suggesting that, I’ve got this picture of the woman walking around in a bathrobe and house slippers and another one lying on the floor. [Laughter] I’m not sure it’s the place I want to take customers to walk through.
Sarah Segal:
Well, what’s interesting is, I was reading an article about—I posted it on my LinkedIn—whether or not you should let people wear tank tops to work. And I have never had that stress of people dressing inappropriately, even when I worked for another agency and I managed people. People knew what to do. It’d be appropriate. Like, they’re grown-ups, you know?
Jay Goltz:
I’ve had that problem.
Shawn Busse:
I have, too.
Jay Goltz:
I’ve had some very difficult conversations. I decided, I’m not having that one. I had someone else do it, because it was a woman-to-woman thing that you shouldn’t have to tell somebody. But you have to sometimes.
Sarah Segal:
Yeah, but here’s the thing: if someone doesn’t hire us because somebody’s wearing flip flops in the meeting, I don’t really want that client.
Loren Feldman:
Are you sure?
Sarah Segal:
I’m sure. Because you’re not hiring us because of the way that we express ourselves, in terms of what we wear. You’re hiring us because we’re good at our jobs, and we’ll deliver for you. Like, if you’re that superficial, you’re not gonna be a client that I want to work with. I’m sorry.
Jay Goltz:
Okay, can I speak as the client?
Sarah Segal:
Go for it.
Jay Goltz:
You have no idea how competent the person you’re talking to is. You’re taking their word for it. Everybody is going to say, “We do a great job.” And when you look at them, and they look like they’re on their way to the beach, it makes you think, “God, how professional are they? Are they really going to take care of business?” And I’m just saying—
Sarah Segal:
Then you wouldn’t be a good client.
Jay Goltz:
I got it.
Sarah Segal:
People would be like, way back when, if you had tattoos, people were like, “Oh, that’s awful.” Right? I respect people’s creative expression through whatever they want to wear. And I’m not going to be the person who says, “Yeah, don’t lie on the ground in the middle of a client meeting.” But like if we’re all working in the office, and you just need to stretch out and get a different perspective and look up at the ceiling, go for it.
Jay Goltz:
I agree with that. I’m just talking about when a client walks through, I’d like to give an image that we’re professionals and we’re taking care of business.
Sarah Segal:
Well, they should know that because of our metrics and what we’re delivering for them anyhow. That superficial stuff shouldn’t matter. It shouldn’t. I mean, I know for some clients, it does. But again, those are not the clients for me.
Loren Feldman:
Shawn, you were part of our conversation last week, and we ran out of time. We talked about the event you had but we didn’t get to your plans and goals for next year. What are you thinking?
Shawn Busse:
So a thing I’ve used in the past for planning is to create a theme for the year that helps kind of guide our decision making. And really, I’m still kind of working on this. But right now, I see ‘23 as kind of a corner-turn year, in that a lot of the things that have been hard for us in the last couple of years, because of the pandemic, are now available to us again. So like, I met with clients in the real world yesterday, and it was a sales meeting, and it was awesome. I was like, “Oh, this is what I’ve been missing.” And this is why our business has been so hard for the last couple of years.
You can just do so much more in person than you can over a Zoom call when it comes to—and I think Sarah, you’ve talked about this a little bit. For us, it’s that corner turn. It’s getting back to the things that were good before the pandemic, and then also changing things that maybe need to be changed. To use Jay’s format of a list, the big one this year is a transition in the leadership team and really evolving that to a much higher level of sophistication so that they’re looking at financials in the way I’ve looked at financials over the years. Also, our marketing and sales, we’re putting full force to that in every single way we can. Big repositioning, we’re going to launch a new website. We’ve already launched some productized services that are pretty exciting.
Loren Feldman:
Shawn, are you doing the website yourself?
Shawn Busse:
Yeah, yeah. Which is always a risk, but we’re gonna give it a shot.
Jay Goltz:
Wait, let’s get granular for a second. What are you using to do your website?
Shawn Busse:
WordPress is pretty much our go-to. We’ve used WordPress for many, many years, and it’s solid, really great. IT, to your pain, Jay, our IT provider was awesome, went into the pandemic, sold to private equity, and is now total garbage. So we are absolutely switching on that. But that’s a hard move. It’s really a tough move to do, because they’re just woven into your business, and picking a new one takes a lot of due diligence.
I will say this: We hired a company earlier this year, and their value prop is to really take all the operational stuff and evaluate it and then help you select new vendors. That has been so awesome. They’ve helped us with insurance. They’ve helped us with IT. They’re helping us with tax and finance, because a lot of our vendors have become terrible.
Jay Goltz:
What are they called?
Shawn Busse:
Yeah, the company is called Zuna. And they have pretty extensive skills in these arenas, like our 401k plan. We had a good provider, but as they’ve evaluated it, they’re like, “You’re ready for the next level. And the provider you’re with is just kind of set it and forget it at this point.” And they’re right. And it’s so helpful to have a third-party evaluate it with a neutral disposition.
And then also, when vendors come to you, and they try to sell you shit, you be like, “You know what, we use this group. You’re welcome to go talk to them. Good luck,” and it just takes a lot of pressure off you as an owner. So IT changed, but also we’re changing our tax provider. This is embarrassing: I still have not had my personal returns filed for last year.
Jay Goltz:
Wow.
Shawn Busse:
I’ve missed extensions, and I missed the extension deadline. And my provider was like, “Mea culpa. We’ll pay any fees and stuff you owe.” And for years, they were great. They sold to a large national tax company, and total garbage. So I’ve gotta switch them now.
Jay Goltz:
And I can tell you, the reason is: They just don’t care about the little clients.
Shawn Busse:
They don’t care. No, they don’t care.
Jay Goltz:
About the little clients. I can assure you the big clients got taken care of.
Shawn Busse:
Yeah, totally. And then last—I know we’re running out of time here—we’re going to have a new office. We just toured them the other day. It was invigorating to just think about getting back into an office space. And I know some people think I’m a dinosaur, but I’m telling you, it’s gonna make a difference.
Loren Feldman:
Have you picked one?
Shawn Busse:
No, but I’m excited about the market, because it’s pretty rough. And I think the vacancy level will play to our advantage.
Sarah Segal:
What size space are you looking for?
Shawn Busse:
I think it’s somewhere between 2,000 and 3,000 square feet. This is an interesting idea that was floated at dinner the other night, which is: I’ve leased space before with a roommate, which is an awesome strategy to get more space than you need. And then one of you outgrows it, and then the other one takes it over. The new idea, which was discussed, was, “Well, what if one company had it Monday, Wednesday, and the other was Tuesday, Thursday, and Friday was a free for all?”
Jay Goltz:
Sounds like a divorce settlement. [Laughter]
Sarah Segal:
We looked at shared space before we ended up getting a smaller space that just suited us. And you’re always going to feel like it’s not yours. And your team is going to put their nice desk items out and then not feel comfortable with somebody else.
Shawn Busse:
I’ve done it. I’ve done it before, Sarah, twice. And I’ve managed to make it work. And this was before the pandemic, and we were in their nine to five, five days a week. So it was workable under that model. And so I’m like, “I think I can make it work.” It requires, I think, some delineation of space. So, like, “This is a Kinesis area. This is the other company’s area.” I’m not talking hot-desking between two companies. It’s not that idea. And we tried the WeWork thing, and blech!
Jay Goltz:
WeWork didn’t work.
Shawn Busse:
No. For the reasons Sarah said. You can’t personalize it. You don’t feel any level of ownership, and so folks just weren’t excited to go in. So I think that’s a non-starter for us.
Loren Feldman:
Shawn, most of your plans and goals that you’ve discussed here involve operations. What are you thinking, in terms of performance of the business?
Shawn Busse:
Oh, man. ‘22 is the first year, I was saying, that our revenues declined in like 10 years. Even though our profits were better than last year, our revenues were not as good. And I want to reverse that trend in the coming year.
Jay Goltz:
Wait a second. Are you sure? You make more profit with less revenue. Is that broken? I’m not sure that’s broken.
Shawn Busse:
But it’s not enough. Sure, more profit than ‘21—I lose track of time because of COVID. But not compared to pre-pandemic. And some of that is artificial, because we don’t have an office. So we have a lot of expenses that went away. And so it’s like short-term, sure, we were more profitable, etc. But it’s harmed the business long-term, the pandemic. I’m starting to see now the corrosiveness of the pandemic. For a lot of folks, it was a shock. And for us, it’s been a slow corrosive effect.
Jay Goltz:
Yeah, that makes sense.
Shawn Busse:
Here’s the thing, dude, we were on a tear before the pandemic of how to prepare for a recession. We were doing all these workshops, and we were talking to folks about how to do it. Well, surviving a recession is usually a 6- to 12-month thing. And so we were really well-prepared for a six- to 12-month shock. But the pandemic just kept going. We were fine in year one, and even in year two. But this most recent year, it’s been really hard. I mean, we’ve really struggled on lots of fronts. And I really believe that we were prepared for a recession. We just weren’t prepared for this long, steady slog. That’s a good lesson.
Sarah Segal:
Hey, you survived it. There are a lot of businesses that didn’t. I remember in the beginning of the recession, there was a great PR agency in San Francisco. Their whole business is built on a focus of hospitality and food businesses, like restaurants.
Shawn Busse:
Oh, man.
Sarah Segal:
They had to lay off everybody. They’re coming back. I mean, the leadership there was fantastic, but they were just decimated. Everybody told me, “Oh, when you start your agency, you really need to have a focus. Like, you’re only gonna do tech, or you’re only gonna do consumer.” And I’m interested in too many things. But the pandemic made me go, “Oh, thank God, I didn’t do that.”
Loren Feldman:
Shawn, do you see a way out of the slog?
Shawn Busse:
Yeah, I mean, I’m really encouraged because the best sign you can get as an employer is when your employees look at the problem and have energy to work on it. And folks are like, “Hey, I want to get out there. I want to meet with people. I want to connect. I want to be part of our marketing engine.” And that’s awesome. Because the opposite of that is like, “Well, that’s not part of my job description.” I think that’s been a hallmark of starting to hire an older population. We went from, “We’re a company of 20- and 30-year-olds,” to now, “We’re a company of 30- and 40-year-olds, and some even older.”
Jay Goltz:
Whoa. Older than that? [Laughter]
Shawn Busse:
But like, they’ve had kids, they’ve had tough marriages, they’ve gone through divorce. They’ve had these life experiences that have challenged them. And so when we face a challenge in the business, they’re like, “You know what, I’ve gotten through hard things before. I’ll help you get through this hard thing.”
Jay Goltz:
So you’re just reinforcing, whatever doesn’t kill you will make you stronger.
Shawn Busse:
Fuck yeah.
Loren Feldman:
All right, on that note, my thanks to Shawn Busse, Jay Goltz, and Sarah Segal. We will meet again next year. Thanks, guys.
