Paying the Volcano God
Introduction:
This week, Paul Downs tells Jay Goltz and Laura Zander why he’s come to view Google as the Volcano God. He’s not sure what it will take to keep the Volcano God happy, but he’s obsessed with doing everything he can, because the consequences of failing would be so great. We also talk about Paul’s content marketing strategy, the pricing lessons that emerged from our recent attempt to monetize 21 Hats, and why Laura—even in the midst of the labor shortage—now has a waiting list of people hoping to work at her yarn manufacturer in Texas.
— Loren Feldman
Guests:
Paul Downs is founder of Paul Downs Cabinetmakers.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Laura Zander is co-founder and CEO of Jimmy Beans Wool.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Full Episode Transcript:
Loren Feldman:
Welcome, Paul, Jay, and Laura. It’s great to have you here. I want to start by talking about marketing a little bit. Paul, you dropped something last week. You mentioned that you’ve got some marketing people working in-house. We haven’t talked about that kind of thing with you in a while. What’s your current marketing strategy?
Paul Downs:
Well, we have relied on Google leads for quite a long time. And I came to the understanding—possibly flawed—a couple of years ago that that means that Google is actually my biggest customer. And the most important relationship I have with anybody is to try to keep Google happy, because if their algorithm decides that we’re not the best choice for conference tables at some point in the future, then we’re screwed. And I don’t think that there would be much in the way of appeals we could make to get our former position back.
So thinking about, “Well, what does Google want from me?” The first thing: Do they want money? So, yes. We just keep an AdWords campaign going with a budget of about 2,500 bucks a month, for no reason other than to make sure that Google is getting some money from me. We track that—
Loren Feldman:
You don’t think it’s having an impact on the business?
Paul Downs:
I can prove it.
Jay Goltz:
It’s like tipping the maître d’. You don’t know why you do it, but you think it’s helping.
Paul Downs:
It’s like tipping the local mobster, is how I see it. Okay, it costs money, but the alternative could be way worse. So we do that. But the other thing that Google appears to want is for the website to have engaging fresh content. And so I decided that I wanted to have an in-house content person so that we will be constantly able to update the site with fresh stuff. And we’re expanding into trying to do more videos and newsletters and anything that might be digital content going out that indicates that we are a busy and progressive company.
And so I have on staff right now a graphic designer-slash-content person who works four days out of five. In order to coordinate efforts between her and the rest of my sales team, I have a consultant who’s sort of a 10-to-15 hours-a-week kind of person who oversees my overall sales efforts, and then also the marketing as well. The graphic design person costs me in the range of $40-some-thousand a year, and the consultant costs me maybe about $35,000.
Paul Downs:
I’ve also in past years spent much more than that just straight to Google. I mean, we used to have a $12,000 a month AdWords budget for many years.
Loren Feldman:
Paul, I think at one point, you told us that you stopped paying Google at all and went completely organic. Why did you decide to go back to paying them?
Jay Goltz:
Google guilt.
Paul Downs:
Google is like the Volcano God, as far as I can tell. The volcano is outside the village, and you know that at any given moment, it could erupt and destroy you.
Loren Feldman:
Did something happen that triggered that? Or did you just get worried about the volcano?
Paul Downs:
I just was thinking about it from Google’s standpoint, which is: If I’m handing out number one organic rankings, what do I want in return for that? And I know that they tell you that this has nothing to do with it, but I don’t believe it.
Jay Goltz:
I can tell you, as someone doing it, that I totally cut it off, and I’m ranking right up there. I think you’re trying to think like them, which is like… you can’t think like them. I think I believe them. And now in your case, compared to mine, I would think that it might help to pay for some Google AdWords because it’s national, and it’s a unique product, and blah, blah, blah. Locally, for me, I cut it off completely, and I think we’re good.
Paul Downs:
Well, that’s great, Jay. Glad to hear it. Because, you know, it may be that I’m entirely wasting my money. But when the volcano erupts, then you look back, and you say, “Well, what could I have done?”
Laura Zander:
Do you have these guys who are working for you make sure that there are lots of inbound links from other websites? And maybe everybody that you’ve done something for, they mentioned you somewhere and link back to your site? Like, do you guys go into that kind of SEO?
Paul Downs:
We don’t do backlinks. I don’t think that that’s all that important for us, and a lot of my clients won’t do it. But what we do try to do is gather reviews. We’ve placed a huge emphasis on making sure that clients give us a Google review. That’s another thing that I think Google is looking at to see whether a business is legit. We push people toward giving us reviews through Google ad we post those on the website, as well as whatever Google does internally.
Jay Goltz:
Now that is an interesting subject, because I went to a trade show and there was a company pitching a thing where you pay them money, and they can go send an email to your customer, saying, “Give us a review.” Everybody who works for me, including me, was just really turned off by that.
Now, I think in your case, you’re selling an expensive product. I think it’s perfectly reasonable, and I wouldn’t mind getting it. But I’m selling a frame job for $300. I just don’t know that I want to start hassling customers, because I don’t like it when they do it to me.
Paul Downs:
Well, we do it a slightly different way. We send a link to our clients that says, “Here, leave a review,” and the link actually goes to an intermediate—this service I’ve hired—which will screen the reviews. And if there’s something that’s not five stars, it gives us a chance to respond to it before it hits Google. So it’s just a little bit of a, “Watch out for the wackos out there.” Because we did have one one-star review up from someone who apparently thought we were a local restaurant. And once it’s up, you can’t get rid of it.
Jay Goltz:
Would you reach out to the customer and say, “Hey, we noticed you gave us a two-star review. Can we talk about it?”
Paul Downs:
I would do that if we got two-star reviews. I mean, we haven’t had one, other than that mistaken one. And then in that case, it was like, “Well, what are you gonna do?” We actually got a review last week, which was a four-star review, which in these days may as well be a big middle finger in your face. But if you read the review, the client was absolutely delighted with everything, so they said. It was just that that person didn’t believe in giving five stars.
So then we’re like, “Okay, what are we gonna do about that?” And I thought about it. And then I thought, “You know what? Nothing. I’m gonna have to trust that people who read reviews are actually savvy at this point to what these reviews consist of.” And aside from the number of stars, there is nothing wrong with the review.
Loren Feldman:
I want to ask you about your content creation. You know, content marketing is such a hot topic, has been for some time. I’ve talked to people like William Vanderbloemen, for example, who kind of built their company on it. And I’ve also talked to people who think it’s a total crock. What’s your strategy? And how has it worked for you?
Paul Downs:
I don’t think it’s a total crock, because I’ve seen… well, William’s a good example. I’ve seen a couple of other companies who are really good at content creation who have benefited from it. And so I’m trying to do that without really throwing resources at it. The companies that I’ve seen most successful with it, like William, put a lot of people on it, so that there’s a significant team producing content every day. He has everybody in his company do it, is my understanding.
The other companies that I’ve seen that have been successful, one has about 100-and-some employees right now, and they have a team of five who are full-time content creators doing nothing but making video content and Twitch streaming and doing a bunch of things. But that’s a pretty significant budget and operation. I’m trying to do it a little bit cheaper by just having one person. And the goal that we’re trying to do is just explain to people what’s happening in our workshop, because we do really cool stuff that’s hard to do and I want to be able to show it better.
Loren Feldman:
Give us an example. What type of content? What do you show?
Laura Zander:
Can I just interrupt for a second? I’m confused. I’m looking on Google right now, and I look at “custom conference tables,” and you’re number one. Like organically, you’re number one. From an ad standpoint, I think your ads make a lot of sense from a user standpoint, because now I’m seeing you twice.
It looks like it’s you, Chagrin, Valley, and then Poppin. But I see you twice. From a branding standpoint, I’m seeing your website address once in the ad and then once organically. So from my perspective, whatever you’re doing, you’re doing really well. And you’re doing it right.
Paul Downs:
Well, great. [Laughter]
Jay Goltz:
You just cost someone a job now. He’s gonna go fire this person.
Paul Downs:
No, she’s succeeding. That’s the whole point.
Laura Zander:
Exactly. I don’t know about you, but spending 70 grand a year on the resources to do what you’re doing, that doesn’t seem cheap to me.
Paul Downs:
Well, thank you. It’s not. It’s in line. My overall marketing expenses tend to run 3 percent of revenues over the course of the year.
Laura Zander:
And that’s relatively low, right? Like, we shoot for about 5 percent. So it sounds like we should all be taking a lesson from you.
Paul Downs:
And that’s for just the marketing, not the sales effort. My sales team costs me more, because they’re on commission. And they’re doing a kind of selling, which is not simple. So what we’re trying to do with content is to explain to people why the stuff we do costs so much money, basically. And that’s by showing, “Hey, when you come to us, we are actually listening to you and then building this thing, which is not easy.” And so it’s not a Chinese factory. We’re not just a boatload of stuff in cardboard boxes. We want to show people what’s going on so that they understand the complexity of our process and why it might cost something.
Laura Zander:
And you’re obviously using the words “custom conference table” in every page you create, and you’re using “American-made” in every page multiple times, right?
Paul Downs:
Yes and no. I have this battle going on all the time with my content creation team about whether we write copy that’s aimed at having a robot read it or have a human being read it. Now, I’m a pretty experienced writer, and I like to write a lot of the content on the site and make it be something that’s enjoyable. But that does not really go along with making it SEO-friendly, because as you said, you’ve got to pack in a bunch of awkward phrases.
Laura Zander:
Yep, we’ve always kind of said, “We’re serving two masters: Ee serve Google and we serve the customer.” And the science and the art is: How do you serve both? And how do you write copy that makes both people happy that’s authentic?
Paul Downs:
I don’t think you can, so you pick your poison. And so what we do is, we have certain parts of the site that don’t actually get a ton of traffic, but are really loaded with the keywords. Then we try to make the site itself useful. Because one of the things I strongly believe is that Google is looking very carefully at how much time people spend on sites and their user experience and where they travel and whether it looks like they’re enjoying the content.
So you’ve got to aim it at the people. But just the straight robots, they need something to feast on, too. So we’ve tried to design a site that has pockets of robot words and pockets of human words, and put the proper pocket in front of the proper person.
Loren Feldman:
Paul, I’m on your website right now. I don’t see where the content is. I see marketing copy about your beautiful tables. But I don’t see a blog to click on.
Paul Downs:
There is, but we don’t have it up top. And it depends, are you looking on a phone or on a desktop?
Loren Feldman:
I’m on a laptop.
Paul Downs:
Okay, we have all the blog posts, and some of our blog posts are very… a lot of people read them. But we’re not putting that up top on the page, because the theory of the site is that someone is looking for a conference table. They’re not looking for Paul Downs. They’re looking for a table. So we want to put all the tables up top, and just show them a million tables and get them to call us.
And all the other kinds of content where you have long descriptions, it’s on there. We’ve experimented with making things like the blog more or less prominent, and we’ve just settled on what we’ve got at the moment. But I’m willing to listen to that feedback and think, “Okay, maybe we should make it more of the content content up top.”
Laura Zander:
I don’t know, it seems like it’s working.
Paul Downs:
Well, that’s another thing. You get what you get, and so you know that you’re working with who calls you. But what you don’t really know is who just turned around and went away for whatever reason. It’s hard to pick that out.
Jay Goltz:
Well, you’re looking at the metrics, right? How many people come to your site, and what your close rate is?
Paul Downs:
Yeah.
Jay Goltz:
Do you know what that number is?
Paul Downs:
The close rate on people who contact us? About 30 percent.
Jay Goltz:
That sounds like a lot. I think you’re suffering a little bit from Google anxiety. You should join a group and try to—
Paul Downs:
It’s 30 percent on qualified customers. It’s about 10 percent on all contacts.
Loren Feldman:
How do people find the blog?
Paul Downs:
We actually are aiming most of our blog posts at a general woodworking audience and hoping to lure them in. I mean, I’ve gotta open up this site. I think that the blog link is down at the bottom somewhere.
Loren Feldman:
You scroll all the way down, and in very tiny type on the far left, you can see the word “Blog.”
Laura Zander:
Yeah, it is. I found it.
Paul Downs:
Yeah, so we have at other times had that right up next to the phone number at the top, and it didn’t really change much. People would look at it up there, but not many people would click through from that spot.
Loren Feldman:
But you have the impression that people are going from the blog to buying tables?
Paul Downs:
No. What they’re doing is, there are a couple of posts on the blog that got a lot of traffic. One in particular about buying slab tables—or live-edge tables, which are sort of the stylish thing—and I wrote a series of blog posts about how you buy those slabs and what you should look for. And those have been really durable popular content on general searches for live-edge tables.
But the number of people who want that, and the number of people who want a boardroom table, the overlap is very small. But what we’re doing is just putting some content on the site that people like. And again, this is a Google-aimed strategy, trying to come up with something that’s useful information, put it on our site, and hope that Google sees that people keep clicking on this.
Jay Goltz:
See, I’ve got people who Google—believe it or not—”framing wedding dresses,” which was to everyone’s surprise. And we do very, very few of them, but people like going to that site. So there is something to be said for having something that maybe people are interested in. It doesn’t mean it’s going to result in… It gets back to playing to Google versus to the people, I guess.
Paul Downs:
Yeah, and I also had some strong opinions about certain aspects of woodworking, and I put them in the blog and then let people get all excited about what I said or didn’t say.
Laura Zander:
This reminds me of an article that we probably all read a couple years ago about a guy who builds pools and all of the articles he would write and the videos he would do. It’s probably a relatively similar price point. I don’t know, $20,000 to $50,000 bucks, or something.
Jay Goltz:
Well, he was so good at it, he ended up [getting] rid of the pool business. And now he’s a consultant, apparently.
Laura Zander:
Oh, seriously?
Jay Goltz:
Yeah. Loren, you know about it.
Loren Feldman:
You’re talking about a guy named Marcus Sheridan, and it’s a story that I edited for The New York Times. He was in the pool business, and he learned some interesting things. We published this 10 years ago. He realized that nobody talked about the price of pools, and he decided he was going to do it.
And he wrote a blog post, just put it on a site. He didn’t tweet it out. He didn’t put it on LinkedIn. He didn’t do any of that. He just put it on his site, and it shot to the top of Google’s rankings, because nobody else was talking about price. And he didn’t say exactly what they cost, but he gave enough information. He gave some round figures.
And then he did something where he ranked all the best pool builders in his area in Richmond, Virginia, and he left his name off the list. He just put the top five and left his name off, and he figured that anybody who clicked on that would give him some credit for objectivity and check him out as well. And that did really well on the rankings.
Paul Downs:
We’ve run that same strategy for years of putting pricing up, and I used to have very explicit prices for every single table you saw on the website. That did become kind of unwieldy, because invariably, someone would go to the site and click on the coolest table, and then they would see a number that was more than their house. And they would be like, “Oh, this isn’t for me.” So we just have general pricing information now. But none of my competitors put pricing up in a way that makes any sense, and that’s a furniture industry thing.
Jay Goltz:
No, I think there’s an opportunity there, because nothing gets me more aggravated than when I call a vendor for something, whatever, and you say, “Well, how much is it gonna cost to do sprinklers?” “Well, it depends.” I go, “Well, you do this for a living, I don’t. So I don’t know whether this is $2,000 or $200,000.” I have to believe you do know. So could you give me a range—a big range—like $50 to $100? Because, “It depends,” is not a great answer.
Paul Downs:
We’ve got that conversation on our site right now, and we’re the only people who put up any information, as far as I can know about the big complicated tables. So, Laura, you mentioned a couple of other competitors who showed up when you Googled for “custom tables,” and I’m familiar with those companies, and they’re doing a different product. The things they do are considerably simpler than the things we do. So we do have to say, “It depends.” But then we give you enough information without making the call to come up with some concept, where you really do need to talk to the client to give them a real estimate.
Jay Goltz:
We do it for framing. We say, “Oh, a medium size picture? Yeah, it’s probably going to be anywhere between $100 and $500, depending on how extensive you get with it.” Because some people think that a framed picture is going to cost $40, and it’s just not.
Loren Feldman:
We’re gonna take a break, and then we’re gonna come back and talk about pricing some more in the context of my efforts to turn 21 Hats into a sustainable business. We’ll be right back.
[Message from our sponsor, Work Better Now]
Loren Feldman:
And we’re back. So as all three of you know, I finally managed to introduce a plan for monetizing 21 Hats. I’m asking people to pay to be part of the community and I offered two choices. For $140 a year you can be a Paid Subscriber and get all of our content, including this podcast and the Morning Report. Or for $480 a year, you can be a Founding Member and get all the content plus an invite to a monthly mastermind session where you can connect with other smart owners, talk about common issues, advise me on building 21 Hats, and hear guest speakers. Actually, there was a third option. You could also do nothing. And so far, that has proved to be quite a popular option. Which is why I want to try to get some free advice from you guys.
I’m a little bit surprised. I got more than I expected who signed up at the higher level and fewer than I expected at the Paid Subscriber lower level. And I’m wondering two things: One, did I price too high at that level? Or, two: Do I need to put up a paywall? Because I asked people to pay voluntarily. I said, “This is a test.” I said, “I’m asking you to pay. I’m testing this. If it doesn’t work, I’ll probably have to put up a paywall.” Do you guys think I have to do that and compel people to pay, if they’re going to read it?
Jay Goltz:
Well, the other option, is maybe the $140 needs to be a little lower.
Laura Zander:
What I’m curious about is, of all the people who signed up, what percentage signed up at the $480, and what percentage signed up with the $140?
Loren Feldman:
It’s actually about an equal number. A little bit more signed up at the lower level, but I was expecting a lot more to sign up at the lower level.
Jay Goltz:
Keep in mind, at the higher level, they had to pay to get what you were offering.
Loren Feldman:
I think that might be the key point. There was some urgency there. I told people, number one, that I was going to limit the number of people who could be part of the Founding Member group. And if they wanted to do it, as you just said, they had to pay. There was no choice, so there was urgency. With the Paid Subscribers at the lower level, it was kind of the opposite of urgency. I said, “You can pay me if you want, but you could also just keep reading it, and you don’t have to pay me.”
Paul Downs:
I think that it sounds to me as though the lower level offering, it’s allowing you to figure out, of the total basket of things you’re offering, which ones are most attractive. So maybe the newsletter is not the thing that moves the needle, and the chance to get real help from people at a higher level is what moves the needle.
Laura Zander:
I keep thinking of it as a Kickstarter, the transparency of, “Can you please just contribute whatever? And here are the different levels.” And making it super transparent: “This is how many people have signed up. This is what my goal is,” and kind of tapping into the competitive nature of all of us, that we want to hit a goal. We want to help you hit a goal.
Paul Downs:
Laura, I think it’s interesting that you brought up Kickstarter, because I’ve been watching another company I do business with that’s extremely adept at Kickstarters. And that whole aspect, where everybody who’s thinking about joining can see how many other people have joined, is, I think, extremely powerful. And what they do is, they have their Kickstarter, which is, “Hey, we’re offering a thing. But if we get to a certain number of people who join to get that thing, then we’re going to offer more options.” They call them “unlocks.”
And as more people go on, the total choice of things that they could possibly buy gets bigger. And then at the end of the Kickstarter campaign, then they figure out which choices have been unlocked. And they go back and they offer those choices to everybody. And there’s a significant increase from the pledged revenue in the first round to the actual realized revenue in the second round.
Laura Zander:
How much would people pay for—again, if you made it kind of transparent, and there are the different levels, and one of the levels is an advertising level—the sponsor level? And you make that very clear that for $5,000 a year, not only do you get to be a member, but you also get, this, this, and this. But you could also… if you auctioned off a dinner with Jay, so this level includes dinner with Jay, or this level…
Loren Feldman:
That’s an interesting thought. I will say this: One of the nice aspects of this–by being open about it and talking about it–I have had a number of people reach out to me with interest in sponsoring both the newsletter and the podcast. So it has created some interest there. But I like your idea of maybe creating some other way to reward someone.
Jay Goltz:
Well, you kind of did, though. The $480 is rewarding them. That’s the point.
Loren Feldman:
But Laura’s suggesting finding more ways to do that, which I think is a good thought.
Laura Zander:
Yep, figure out what works, and keep going. And make it kind of a co-op, like we’re all in this together. And how do we all support each other together?
Loren Feldman:
Let me ask you about the paywall. It’s scary because you wonder: Are people going to be willing to pay, or are they just going to go away? Will you be able to keep growing? Will you be able to attract new subscribers if there’s a paywall up? All of that concerns me. One suggestion I got that I’m kind of intrigued by is that I put up the paywall, but I create a mechanism for referrals. So if there’s a paywall up, if we create this referral mechanism, somebody can introduce me to someone—another CEO or business owner—someone they think should be getting the Morning Report or listening to the podcast—and I could give them three months free as a way to try it. Do you think people would do that kind of referral?
Jay Goltz:
For someone who’s making a good living, I just have a hard time believing someone’s going to go out of their way to go, “To save $30, I’m going to go send this to my friend.”
Laura Zander:
I think it overcomplicates it.
Paul Downs:
Can I throw out a different thought, which is that I think that one of the issues with the paywall for you—and this is just a problem that I don’t know how you’re going to address—is that a lot of the things you link to in the newsletter are behind a paywall themselves. So that when The Times was instituting a paywall, if you paid the money, you got to see everything on The Times, whereas with the Morning Report, if you click to a Wall Street Journal article, well, it doesn’t do me any good, because I don’t have the subscription.
Let me make the larger point, which is that we’ve struggled with the idea of a low-cost offering for years. And while I constantly tell my sales team, who are like, “Can’t we just have some simple thing we could just sell in two minutes?” And I was like, “No, because then you’re just competing with huge well-funded operations that are always going to beat our brains out on that product.”
And I’m thinking that, for you, the newsletter may be that, which is that you can’t actually compete with The New York Times, The Wall Street Journal. You’re aggregating that stuff, and that’s fine, but your clients are starting to tell you with the subscription sign-ups that your actual value proposition is in a much higher-priced, higher-touch offering than just firing out a newsletter. And I think you just need to hear that and think about that. And you may come to whatever conclusion you want about that, but that’s something that I see happening here that hasn’t been addressed.
Loren Feldman:
Let me address that quickly. First of all, as far as your larger point, I think you’re right on target with that. One of my goals with this was to test things and figure out what the business model should be. And I think you’re absolutely right—the responses I got are pointing me in a slightly different direction than I expected. So I agree with you on that.
Paul Downs:
Exactly.
Laura Zander:
Yeah.
Loren Feldman:
No, I think that’s a good thing. As far as the links in the Morning Report, that’s a little bit complicated. I’m glad you brought it up, because a lot of people have questions about that. It does frustrate a lot of people. It frustrates me, but here’s the way I look at it. I think it works for some; it doesn’t work for everybody.
First of all, The Wall Street Journal is not a good example, because The Wall Street Journal is actually very kind about this. They’ve created something called a “share link,” which I always am careful to include when I link to them. And a share link means that they’re making it possible for someone to share one of their stories with someone else. I include the share link, and that means if you click on a story that comes from The Wall Street Journal, you do get to go through. So that’s one of the reasons I link to The Wall Street Journal a lot, because even though they have a very solid paywall, they have created this one exception, and people can get through there.
Paul Downs:
Can I just make a comment on that, which is, a lot of people will check a link just by hovering on it before clicking it, because that’s basic cybersecurity protocol. And if it says The Wall Street Journal on it, I don’t even bother, because I assume I won’t be able to see it. So if you’re linking into something that superficially looks like it would be behind a paywall, you’d be doing yourself and everybody else a favor if you said, “This is not behind a paywall” right in front of the link.
Loren Feldman:
You know, I hadn’t thought about people hovering and looking to see and then choosing not to.
Paul Downs:
We’re training every single one of my employees to always hover and check it, because of the prevalence of phishing attempts and cybersecurity threats.
Loren Feldman:
I’ve shied away from saying there’s a paywall, or there’s not a paywall, because it’s not always black and white. For example, there are a lot of publications that have a paywall, but will let you have a certain number of clicks per month. And that means it becomes an individual situation where you might be able to click through, but someone who’s already hit their limit wouldn’t be able to click through.
Let me just finish. One larger overall point here is: You’re right. With The New York Times, if you pay, you get everything. But it’s not tailored for a business owner. I’m providing all these stories in one place that are tailored for a business owner, and it saves people who are primarily interested in that kind of content.
They don’t have to go looking for it. I do it for them, and if they find that they’re clicking on a link for a particular publication often and can’t get through, maybe then they do decide to subscribe there. But I’m hoping my service is still valuable, because I’m pointing them in the right direction.
Jay Goltz:
I would just like to say—better I say it than you—you are a unique individual, and your background, your interest, your engagement in small business is so far, far, far above the typical person who’s working in any of these other publications, that they can be assured that the stuff that’s in the Morning Report that a lot of it’s going to resonate. And that’s why you’re doing this. Because you’re not just somebody who came out of journalism school and is doing this on the side. It’s good stuff, and I would ask everyone listening right now: If you didn’t pay, give Loren the courtesy of, send him a quick email and just tell him whatever’s on your mind. Just tell him. I don’t think it’s worth telling him, “If you put a paywall up, I will pay.” Help him out here. Let’s be nice.
Loren Feldman:
Before this turns into an NPR pledge drive—
Jay Goltz:
I think we’ve already crossed that line.
Loren Feldman:
Yeah, I think we have crossed that line, haven’t we? Thank all of you. I really appreciate it. This was really helpful. A lot for me to think about here. I want to hit a couple more things before we run out of time.
Laura, you told us last week about your SBA loan approval. Is everything going okay with that for buying your building in Reno?
Laura Zander:
Yeah, it’s crazy. It’s all coming together.
Loren Feldman:
When do you move?
Laura Zander:
Next week.
Loren Feldman:
Wow. That’s quick.
Laura Zander:
Yeah, we’re shooting for one down day. That’s the goal.
Jay Goltz:
I’m gonna say for the hundredth time: SBA loans are the greatest thing the government has ever done to help small businesses.
Laura Zander:
I mean, this whole thing is fantastic. I used that wedding analogy last time: In the beginning, it’s the honeymoon, it’s really exciting. We’re looking for the building, and it’s really exciting, and you’re kind of dreaming about it. And then all of a sudden, it hits that, “Oh, shit, like, maybe this is going to be real.” And it’s a little disconcerting. So now we’re past that, and now we’re starting to get really excited. So yeah, it’s gonna be great.
Loren Feldman:
I know in your original location—your retail location—you used to do things to try to encourage people to come from around the country. And I know on your social media, you would post pictures of people who were visiting and making a point to come to Jimmy Beans Wool in person. Are you going to try to do something to encourage that?
Laura Zander:
Absolutely, and this actually lights a fire under us. And I don’t know why. Maybe it’s really silly, but just the pride of owning the building and having this be ours makes us all want to double down on our advertising budget locally, really pushing the local and the travel and getting people into the store.
And like Jay said, I mean, if we can increase our sales in the retail store and that could pay for our rent each month, or our mortgage, like, how cool is that? It just seems really rewarding that that money would be going into the building, as opposed to going to our landlord.
Jay Goltz:
Here’s something that a lot of people don’t understand. There’s only one reason that buying real estate works. One word: inflation. That’s why buying real estate works. Inflation keeps going along. Your rent would have kept going up. Whereas when you buy the building, it’s frozen. So it’s pretty difficult to lose money on real estate if you’re the tenant. If you lose a tenant, that’s a whole ‘nother story. But if you are the tenant, it’s just extremely hard to lose money on this deal, so she’s gonna be good.
Laura Zander:
Well, and I’ll throw out the other word from an emotional standpoint is pride. Our staff is so excited and so proud to be able to say, “We own this building. This is our building. We can decorate it the way we want. We can plant flowers outside if we want.” So it’s really creating a sense of ownership.
Jay Goltz:
And you don’t have to worry about your lease coming up, what’s going to happen because the owner died and their kids took over. This is what happens every day in business. Eventually, the owner dies, and the kids end up with the building, and now you’ve got a whole ‘nother dynamic there. Or even if the owner doesn’t die, they just decide that they’re not charging enough rent, so they jack it up 20 percent. It happens every day.
Loren Feldman:
It’s funny to think back on the conversations we’ve had. We’ve talked about your trying to buy a building at your Texas location and the heartbreak that went into that. You’ve told us at various points how much trouble you’ve had during the labor shortage keeping your operation in Texas staffed. Anything new with that?
Laura Zander:
Yeah, so we hired a factory manager—production manager—about three months ago. And he, as it turns out, is a hiring god. We now are not only fully staffed, but we have a waiting list of people who want to come work for us down there.
Loren Feldman:
What’s he doing? What’s the secret?
Laura Zander:
God, maybe I don’t want to know. Part of it is we have improved the conditions there so significantly. We’ve improved pay, and we’re getting a fair number of people who used to work here years and years ago who had left, and so they’re coming back. So that’s one big part of it.
And then the other chunk is, he’s using a staffing service that he has used for years and years and has a great relationship with them and just knows how to navigate that. And the service—we’ve obviously done the math—it pays off. It works out for people who want to stay. After three months, they can come on full-time. And that’s been working out really well. And he’s got the experience and knows which kinds of people to talk to, which kinds of people are going to work.
Jay Goltz:
Did he change the ads at all? Are you putting ads out, or not?
Laura Zander:
We’re not even doing ads anymore.
Jay Goltz:
Okay. So really, the crux of it is, he’s working with the staffing agency.
Laura Zander:
It’s the staffing agency, and then it’s the referrals. 99 percent of our staff is Hispanic, and it’s a small community in Fort Worth. We’re getting a lot more referrals, because the energy is really good, because the pay is good. So it’s a combination of those two things.
Jay Goltz:
Does he speak Spanish?
Laura Zander:
He does. Yeah, he’s Hispanic as well.
Jay Goltz:
That’s a critical piece.
Laura Zander:
Yeah, and he’s a really great people person.
Loren Feldman:
Paul, how are you doing with staffing?
Paul Downs:
No problems. I mean, we haven’t lost anybody. I actually had one employee who moved across the country because his marriage fell apart. That was the only quit we’ve had. And we’ve hired a couple people. It’s not easy. It’s never easy for me to find people, because we’re looking for a very particular skill-set that’s just not that common. But we’ve got some, and I’m not really sweating it at the moment.
Loren Feldman:
You told us a while back that you had developed the strategy of: If you found somebody you wanted to hire, if they came into the office, you asked them how much they wanted to be paid and then you offered them more to try to get them to sign on the spot.
Paul Downs:
Yeah. Well, I haven’t even tried to hire anybody since spring. But I would do that. To me, the interview process is mostly about me trying to sell the company to an employee, as opposed to vice versa. We have a set of tests that we give right at the beginning, and I kind of score every applicant before I make a phone call to them to have an interview. So I have an idea of who I want to go after. And if I’m going after somebody, yeah, I want to take them off the job market right there in my office, and then have the leisure of having hired them if I think they have potential to see how it turns out.
I haven’t found any other way to do it in my industry, because we need to hire people who have a certain amount of experience, but mostly potential. Because what we do is so particular, and we will be training them, so we’ve got to get them in to take a look at them. I think that a lot of applicants are very surprised to hear someone say, “Hey, I’ll offer you more if you’ll say yes right now,” and I’ve had pretty good success with that tactic.
Loren Feldman:
Interesting commentary on how the leverage has shifted to the point where you’re selling the employee more than the employee is trying to sell you. Jay, do you feel the same way?
Jay Goltz:
It’s been difficult. We’re doing okay. My question at the moment, since it’s almost November: Has anybody been going through budgets for next year? What are you doing about pay increases for next year? Because the Chicago Tribune yesterday, or the day before, said that the average company, from what they’ve seen, is doing 3 percent increases. And I’m just wondering whether you’re dealing with that.
Paul Downs:
I am not contemplating any automatic increases.
Laura Zander:
Pay increases? We’re actually doing another round of them next week.
Jay Goltz:
Let’s just be specific: cost of living increases. Someone’s been there for years.
Laura Zander:
Absolutely. Of course.
Jay Goltz:
I think people are giving bigger raises than they did just because inflation is higher.
Laura Zander:
Yes. 100 percent. And then we’re trying to figure out bonus stuff as well.
Jay Goltz:
That’s an entire show I would like to devote to bonuses. It’s just a very, very interesting, complicated, not simple conversation.
Loren Feldman:
That’s a great idea. We’re gonna do that. But I think we’re out of time today. My thanks, especially for the free advice, to Paul Downs, Jay Goltz, and Laura Zander. Really appreciate it.
