Episode 24: Doomsday Fatigue

In last week’s episode, we asked our panel of business owners this question: Would you be doing anything differently with your business if you knew for sure that a second shutdown order was coming? It seemed like a pretty straightforward question, but it triggered one of our guests, Jay Goltz, who called it a “stupid” question and encouraged the other panelists not to answer it. So this week, we decided to try again to see if we could better understand how Jay is processing these stressful times. And to some extent, we succeeded, and we did get a little further beneath the surface—although there’s still a part of Jay that seems to be in denial. But maybe that’s just what it takes to be a successful entrepreneur. As Jay likes to say, “There's a thin line between visionary and delusional, and I've certainly been on both sides of that.”

Guests:

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Jay Goltz: “I realized that at this stage of my career, I need to make more money less than I need to [not] lose money.”

Jay Goltz: “You don’t go broke because you have bank debt. You go broke because you run out of cash. I’d rather have the cash., I can always pay it back.”

Jay Goltz: “I’ve said that there’s a thin line between visionary and delusional, and I’ve certainly been on both sides of that.”

Full Episode Transcript:

Loren Feldman:
First of all, I just want to point out that you and I have known each other for a long time, definitely more than 10 years, maybe 14. We met at Inc Magazine, and when I went to The New York Times, you came along and you were my lead blogger. We must have worked together on hundreds of blog posts, so I feel like I’ve had a pretty good window into the way you think, the way you run your business. And yet, you took me by surprise when we taped last week’s episode. I asked you a question that seemed to trigger you a little bit.

The question was: If you knew that we were going to go into another shutdown, would you be doing anything differently right now? We’ve had a chance to think about it over the past week, we’ve talked about it a little bit. Can you tell me now what was it about that question that got to you?

Jay Goltz:
So in hindsight, yeah, it took me a few minutes talking to you to go, “Okay, fair enough.” But I do know myself well enough to know what happened. My nerves were a little shot. It’s been 15 weeks. After that, I did consult a doctor. I talked to Dr. Nick Riviera. And he says—

Loren Feldman:
Wait. Where do I know that name from?

Jay Goltz:
He does a lot of TV work on The Simpsons. He diagnosed it as “doomsday fatigue” that I have.

Loren Feldman:
Is that a real phrase from The Simpsons?

Jay Goltz:
No, I just made that one up. But I have doomsday fatigue. I’ve gotta tell you…

Loren Feldman:
What is that?

Jay Goltz:
I’m just a little worn out. You watch TV, and like all they want to do is get the headlines. Here’s an example. They go, “This is the highest unemployment since the Depression.” You shut the businesses down! How could it not be the highest? I mean, one thing has nothing to do with the other.

Loren Feldman:
We’re gonna talk about this. I don’t know if we want to dive into it right now.

Jay Goltz:
Okay, but the point is, everything is doomsday. “Oh my God, this isn’t gonna recover for five years.” And I think, just hearing about “if it comes back,” it’s like, we don’t know that it’s gonna come back. It was a fair question, I guess. But every day I’ve gotta deal with it. And then on top of that—and I hate whining, I’m not whining, I’m just saying it the way it is. We went from the pandemic, to the riots in Chicago. It’s been a challenging time to say the least.

I wouldn’t say I’m burned out, I wouldn’t say I’m stressed out. The whole thing’s disorienting. Every day, I’m dealing with new stuff like, “Who would have ever imagined?” Oh, your business is going to be shut down for 12 weeks, and you’re gonna have to figure out how to reopen and then your employees are going to be freaked out because they’re all afraid of getting sick. And then some of you are making more money sitting at home on unemployment. It’s just been a whole new game, and I’m dealing with it, and I’m navigating it, and I’m happy to say things are going nicely. We opened. Business is back but yeah, you caught me at an odd moment, and yes, I was trigger happy.

Loren Feldman:
Let’s go back to the question that triggered you. I think another way of asking it would have been—and maybe this would have been a better way—are you doing anything now that you would regret if we had to shut down again?

Jay Goltz:
Absolutely. No, no, you know what? In a calm state a week later, if you asked me that question …

Loren Feldman:
Well, I’m asking you now. Are you?

Jay Goltz:
Okay. I had an opportunity to take over another store. I thought that it was a great opportunity and I thought long and hard about it. And I said—

Loren Feldman:
We talked a little bit about it. You mentioned it on the podcast, it seemed like a tempting opportunity.

Jay Goltz:
It was, and I realized that at this stage of my career—if what I do is called a career—I need to make more money less than I need to lose money. I just decided I don’t know what’s coming in a few months.

Like I said, I’m doing nicely now. Business is back. I’m getting more headroom in my credit line. My entire career of 42 years, I’m always one step out there. I’m always just chasing the next opportunity. I made a deal with the guy: I’ll work with you to get some of your business to me, but I don’t need another store. I don’t need five more employees.

Loren Feldman:
Meaning you’re gonna pay him for access to his clients?

Jay Goltz:
Yes, and I’ll tell you the other thing I’m doing now that, frankly, your question made me think about this. I am continuing to try to get another bank line. I’ve kind of worked my way out of the cash bind. I’m okay, I really don’t need it. But I realized I’d just as soon have it, because if things get bad again, I’m going to need it.

I’ve only made one major mistake in the last couple years. I kept thinking about the phrase “dry powder,” meaning you’ve got some cash on the side. I have a building with no mortgage on it, so I always thought, “Oh, I’ve got dry powder, no problem.” Well, good luck trying to get a loan on a building when the world’s falling apart and all the banks look at you if you’re a retailer like you’re going out of business. I have been trying for three months to get a mortgage on the building, and I can’t get one. So now that things are getting better, I think I’ll be able to get a loan, and I’m going to take the loan because I’d rather have a loan and have the cash. I can always pay it back.

Loren Feldman:
That’s interesting. You know, there are a lot of people who reflexively think that taking on debt like that is the riskiest thing you can do, and you’re saying—

Jay Goltz:
This isn’t even my opinion. This is the way business works. Cash is why you go broke. You don’t go broke because you have bank debt, you go broke because you run out of cash. I’d rather have the cash, I can always pay it back. They say cash is king. Cash is king. I’d rather have another mortgage, and have the cash sitting somewhere, than need the cash and not be able to get the cash.

Loren Feldman:
So going back to that question, again, coming at it from a slightly different angle. Do you have—

Jay Goltz:
Take a different angle. Keep trying different angles until you piss me off. Go ahead.

Loren Feldman:
That’s what I’m here for.

Jay Goltz:
Go ahead. Give me your best shot.

Loren Feldman:
I know the numbers in Chicago are pretty good right now.

Jay Goltz:
Very good.

Loren Feldman:
But it’s exploding around the country. I think cases are rising in 45 states. There’s no guarantee that any place is safe from a continuation of the first wave or a second wave. So let me ask you this: Is there any question in your mind about whether you should have opened up when you did? I mean, just to put this in perspective, I don’t think this is the case for you, but with a restaurant, for example, that would be a very real concern. To reopen a restaurant, you’ve got to buy a lot of food. You’ve got to clean the place. You’ve got to rehire people. You’ve got to do all kinds of things to get ready, and then if you shut down again two weeks later—

Jay Goltz:
And people aren’t wearing masks. That’s the difference. In a restaurant, you can’t eat and have a mask on. There is more exposure there.

Loren Feldman:
Is there any question in your mind about whether it was the right thing to do to reopen, or if you have to close down again, you just have to close down again?

Jay Goltz:
A) All of my employees are wearing masks. All the customers are wearing masks. We have plastic shields everywhere and I have a person who’s cleaning up constantly. I think we’re in good shape. Something could happen, but I feel like—

Loren Feldman:
But that’s not responsive to my question. You’re talking about what you’re doing in your operation—and I’m sure you’re being as careful as you can be—but despite that, you could get a second wave in Chicago, and it could be out of your hands. You could be forced to shut down.

Jay Goltz:
I wouldn’t regret opening because there’s no downside to being open.

Loren Feldman:
You didn’t have to spend a lot of money to reopen.

Jay Goltz:
No, I’ve got the inventory. It’s not like a restaurant, where you’ve bought food and stuff. I hope that it doesn’t happen, and I will tell you, even back three or four months ago, when Karen said, “I guarantee it’s coming there,” and I kind of flipped out on that, because it’s like, “What do you mean, you ‘guarantee it’?”

Now that I’ve seen this play out, I understand where she was coming from. Until you’ve seen it, it’s truly hard to get your head around this. So, no, I’m taking it one day at a time, and I think it won’t get shut down again, but I can’t be sure of it. I’ll tell you what’s helped my head a lot. I stopped watching the news. It just makes you crazy.

Loren Feldman:
I’m so glad you said that. That’s another interesting point that I want to get at. You’ve said often, “You just can’t worry about every eventuality, every possible thing that could go wrong. You’d never be able to get out of bed in the morning, let alone build a business,” and I understand that. And yet, there’s a line somewhere, because you do need to know the facts. You need to know what’s going on.

Jay Goltz:
Okay, I lied. I watch it when I work out in the morning for a little bit. I watch half an hour, that’s it. But more than that? Just seeing the same thing, and then seeing the nonsense of people getting in large crowds without masks on.

Loren Feldman:
That’s why we’re having this problem.

Jay Goltz:
I’ll tell you what else is wearing me a little bit. I read articles from business owners, and they say things like, “Well, I couldn’t get my employees to come back to work. They’re making more money on unemployment.” This is exactly what a guy said. And: “I don’t feel like it’s my right to take money away from them.” And then later in the article, he says, “I might be closing the business.” And I just want to scream, “For God’s sake, business owners out there, your No. 1 responsibility is staying in business so you and your employees have somewhere to go to work every day.” To suggest that it’s not right to call your employees back to work because they’re making more on unemployment? How is that gonna help anybody when they’re all out of work, and you’re out of business?

Loren Feldman:
Or even when the end of July comes and they stop getting the extra $600 a week.

Jay Goltz:
And this wasn’t one person. I read an article, it was like three or four of them all lamenting about how they can’t do it. Then one says, “I don’t think it’s right to get them to come back for my own enrichment.” What is being the boss? That’s what your job is. You’re supposed to have people work for you so you can make money in your business. That’s the definition of owning a business. I hate to see people go out of business, and I hate to see people put themselves out of business. I see people doing stuff all over the place that I say to myself, “Okay, you just cast your fate. You’re going out of business.”

Loren Feldman:
I’d like to go back to something else you said several times on the podcast that kind of stopped me in my tracks. And that is, when we first started talking about reopening, when I asked you about the warnings that I was hearing from the epidemiologists, from the medical experts, your answer several times was, “Oh, those medical experts, they get a paycheck every week. They don’t understand.” Explain that to me.

Jay Goltz:
First of all, it’s an extremely difficult decision to open because nobody wants anybody to get sick, and I certainly don’t want to do anything irresponsible for them or for me or for the customers. But it’s easy to be a doctor. Here, I’ll give you an example. If you ask a lawyer about making a decision on anything, they’ll say, “Oh, don’t do it. You can get sued for that.” If you ask somebody in the emergency room, “Maybe you shouldn’t drive a car, because look at all the car accidents in here.” So you ask a doctor, “Should we open?” “Oh, no, somebody could get sick.” I meant they get a paycheck every Friday. They don’t have to worry about paying their bills every week, so it’s easy for them to just say, “Oh, no—”

Loren Feldman:
But do you really think that’s what they’re thinking?

Jay Goltz:
No, no, I want to know where the line is, though. I mean, we obviously can’t wait until the very last person has it.

Loren Feldman:
Couldn’t the line be on the other side of following the guidelines?

Jay Goltz:
Sure. Absolutely. I’m not at all suggesting we should be open too early. I’m just saying—

Loren Feldman:
You were sort of suggesting it at the time.

Jay Goltz:
No, no I was just suggesting that the doctors keep saying, “Oh, we shouldn’t open,” but I’ve never heard—

Loren Feldman:
They weren’t saying “never.” They were saying, “Let’s follow these guidelines.”

Jay Goltz:
I’m following the guidelines. I believe in the guidelines. I support the guidelines.

Loren Feldman:
You might be, but it makes a big difference if around the country, entire states are not.

Jay Goltz:
Yeah . Dr. Nick said I didn’t have to talk to you too long about this because it’s hurting my health. He says I need to get some support and nurturing from you a little bit.

Loren Feldman:
You always do, Jay. I’m looking out for your business. I want to understand how you think, because I know there are a lot of people who approached this the same way.

Jay Goltz:
At this point, it’s half about what you think, and it’s half emotions, because this has been an extremely trying time. I’ll just give you a snapshot of a day. We open up my home store. We sell plants and flowers, so I was able to open, because we do sell to landscapers. We got busy. As soon as we open, customers want to get out of the house. They’re all wearing masks. They’re all very polite. Everybody’s waiting in line. It was a pleasure. One guy comes in without a mask, he doesn’t want to wear a mask, and they tell him he’s got to wear a mask. He goes back to Yelp and fries us. He’s a doctor. He’s a surgeon. The masks are baloney, and the whole thing’s overblown, the hospitals aren’t failing. He goes into this whole tirade. To be fair, it was one guy.

Loren Feldman:
Yeah, I was gonna say, you’ve dealt with bad reviews before.

Jay Goltz:
No, not like this though. We’re in a difficult time now for God’s sake.

Loren Feldman:
Let’s go back to how you’re thinking about the economy. You mentioned the thing about unemployment and how you hate to see how that’s reported. They’re just statistics.

Jay Goltz:
No no, I don’t mind the statistics. What I mind is taking that statistics and saying, “This is as bad as the Depression.”

Loren Feldman:
Well, in terms of the numbers—

Jay Goltz:
It is, but [during] the Depression, the world was falling apart. Here, they made stores close for a while. They made businesses close.

Loren Feldman:
Right, but here’s the thing. I think this gets to an important point, because you said this a couple of times. You have said on the podcast, “We had as good an economy as we’ve ever had in January and February. Why in the world wouldn’t it just come back to that?” And I haven’t been able to break through your saying that. I think there are a lot of good reasons not to expect that to happen right away.

Jay Goltz:
Okay, I’m not saying for sure that’s gonna happen. I’m just saying that there’s reason to be optimistic, that it could be okay.

Loren Feldman:
But you asked, “Why in the world wouldn’t it happen?” Well, there are some obvious good reasons why it might not happen.

Jay Goltz:
How about “couldn’t it happen”? How about the guy who I was watching? He says, “This is gonna take five years to recover from.” It’s like, “Oh, give me a break.”

Loren Feldman:
Again, that’s one person.

Jay Goltz:
I know. It gets back to: Could we be a little optimistic? It’s back to the doomsday fatigue. Could we just try to not make everything the worst possible thing that it could possibly be? Could we just say, “The economy was really good before things went bad. They might come back quickly. There’s a lot of pent-up demand from people being closed”? Could we just not make it out to be the worst possible thing in the world? Could we? That’s all I’m saying. Loren, could we just be a little optimistic?

Loren Feldman:
That’s a great question. I feel like my job as the host of this podcast is—

Jay Goltz:
To be a buzzkill?

Loren Feldman:
No. To deal with reality, to talk about the situation as I perceive it, and to think through contingencies. So when I ask you what your thinking is if you were to have to shut down again, I’m not predicting it. I’m not hoping for it. I’m not expecting it. But I’m saying, as a business owner, you need to be prepared for contingencies.

Jay Goltz:
Yes I absolutely am, and I’m telling you I learned very quickly from just this last one. I just talked to my kid about it yesterday. “Dad, what do we need to get the mortgage for?” I go, “Because it doesn’t hurt any. I’ll have the money. We can pay off a line with it, and then just give it back if we don’t want it.” I’ve learned from this last one.

Loren Feldman:
You’ve referred to yourself frequently as a “recovering entrepreneuraholic.” You’ve given examples where you’ve reached too far. You thought you’d completely recovered, but in the last couple years, you bought a firehouse that you had big ideas for, and then you decided to just sell it. You’ve joked at times that you’re somewhat delusional—

Jay Goltz:
No, I’ve said that there’s a thin line between visionary and delusional, and I’ve certainly been on both sides of that. So yes, I have been delusional.

Loren Feldman:
Is that something that an entrepreneur has to be?

Jay Goltz:
I don’t know about “has to be.” I won’t speak for everyone. I’ll only tell you that one of my friends said, after one of my deals didn’t work, he goes, “Jay, that’s how you got where you’re at.” In my own personal thing, if I didn’t have that personality trait, I’d own a frame shop with three employees. That’s where I would be. I have 110 employees and four businesses.

I think this is an accurate statement: I don’t think you’re going to ever talk to a successful entrepreneur who didn’t have some things they did along the way that didn’t work. They don’t always work. There’s a great book called The Hypomanic Edge that I read 10 years ago. It’s written by a psychiatrist or psychologist and he said, “Hypomania is, by definition, you think you can do anything and you’ve got self-confidence.” He went through the whole list of hypomania, and then he went through the whole list of entrepreneurship characteristics, and they’re the same list. I have to tell you, it gave me a window into my soul, and I called the guy and I thanked him. And he said, “You’re not the first person to call me.” So, yeah, I recognize now I’m hypomanic. I think I can do anything. Now, I think things through a little bit more than usual before I go jumping.

Loren Feldman:
Well, that’s what I wanted to ask you, Do you think this experience—the last three and a half months or whatever it’s been with this crisis—has it changed you?

Jay Goltz:
Not really because I already figured it out before. I already knew that I didn’t need to keep on the fast track. The only thing that I learned from it is that I should have gotten the mortgage on the building and kept the money somewhere. Other than that, I was already off the trying-to-take-over-the-world thing. My business—I never thought I’d use this phrase—never, never, never thought I’d use this phrase. My business is “big enough.” I don’t need to own a $50 million company. It’s fine. Not only fine, I’m happy. It’s not about balance at my stage. It’s about alignment. I would say this at any stage: you figure out what you want. I don’t want any more stress because I’ve got it under control really well. Things had really just gotten easy. That’s why, for example, I’m not buying that guy’s store. I don’t need five more—

Loren Feldman:
You’ve talked a lot on the podcast about [how] you can find opportunities in a moment like this. You talked about how during the Great Recession, you bought that big warehouse that changed the dynamic of your business. You’re certainly open to opportunities, and this one, you have somebody who was closing down anyway. Initially it looked to you like it could be a really good opportunity. What changed?

Jay Goltz:
Okay, this is what changed, to be fair. I figured out the volume he was doing, and I realized to get the volume to where I needed it to be, I’d have to open Sundays. It’s in the suburbs. It’s harder to find help on Sundays. I realized, this isn’t going to be as easy as it looks, and frankly, the amount of money I’d make on the store, it just isn’t worth it. That’s why I had to think about it. If something else fell into my lap that was fairly simple, I’m not saying I wouldn’t do it. But in this case, there were two issues: one is, could I do enough volume to make the money to be worth the trouble? And two, this would put a stress on a lot of different things. He’s got four older people working there. Using my computer system over there is not going to be an easy transition. I did an assessment to figure it out. It just isn’t worth it. For me, there’s no question. 10 years ago, I would have already been there. That’s quite the change. I am still recovering, is the point.

Loren Feldman:
It sounds like I haven’t really pissed you off yet.

Jay Goltz:
No, you really lost your your best pitch.

Loren Feldman:
Did I miss anything?

Jay Goltz:
Oh, I had something just yesterday! Guy goes home from Jayson Home and he writes a Yelp thing with, “Oh, they’re snobby in there.” And it’s like, “What are you talking about?” It’s frustrating. He called and asked for me yesterday to apologize. He said, “I came in your store, and I realized I was in a really bad mood when I came in there.”

Loren Feldman:
Did you do anything that prompted that apology?

Jay Goltz:
Yes, actually, we put a response on the Yelp thing. But he actually—

Loren Feldman:
That’s smart. What did you say in that response? Because there’s an art to that.

Jay Goltz:
I don’t remember exactly. Our typical response.

Loren Feldman:
Did you argue with him?

Jay Goltz:
No, no, no. I never argue with anybody.

Loren Feldman:
Except me.

Jay Goltz:
No, except you. Well, that’s why you’re here. I said, “I’m horrified you feel that way, and here’s who we are and how we got here. I teach my employees how to SAVE a customer. “S,” sympathize. You know, I understand.

Loren Feldman:
You should explain. When you say how to SAVE a customer, you’re talking about an acronym: S-A-V-E.

Jay Goltz:
Yes. S-A-V-E. “S” sympathize, like, “I can understand why you’re upset.” I mean, wouldn’t that make you feel good if you had a problem in a store that they actually understand? And then “A” is act. If there’s something wrong, we say, “As soon as you leave, I’m going to call the manager. I’ll call the vendor.” You do something about it. “V” is, in our case, vindication of simply saying, “We usually catch stuff like this.” And then, and this is true, “We’re really embarrassed this happened.” All true. We are embarrassed it happened. And then lastly is eat something, if appropriate. Eat free delivery. What I find is, when companies mess up, even if you go just pick up dinner and it’s messed up, “All right, we’ll give you a credit, we’ll put it in the register.” Okay, the credit in the register doesn’t make up for the fact that we didn’t get French fries with our dinner. It just doesn’t do it. If I owned that company, I swear to God, I would sit somebody in the car, and I’d drive the food to their house. That’s what I would do.

So we gave a nice message, we never argue. And he called me, and I said, “You know what, I really appreciate the call. Any good news you get these days is good. The only thing that’s gone right lately is I got plenty of toilet paper.”

Loren Feldman:
All right. So Jay, much earlier in this whole crisis, we talked about which businesses are going to make it and which aren’t. You came up with a five-part stress test that you suggested that any business could use to assess where they stand, their likelihood of making it through. And even early on, when things were looking bad, you felt pretty good. You felt like you were in pretty good shape. I’m curious. Has anything changed? Do you still pass your own stress test?

Jay Goltz:
I feel better actually because we’re open, we’re busy, and I’m paying down—

Loren Feldman:
Take us through the stress test.

Jay Goltz:
Okay, so the first question is: How was business before this all happened? I’m suggesting if you were struggling before this, unless something’s changed, that’s a problem. My business was going really nicely before this, so that’s number one.

Number two: What kind of legal obligations do you have to people? Do you have a partner who lives in Boca Raton, who’s 73, who’s calling you screaming, “I want my money back. Close the business down”? I don’t have any partners. I’ve got almost no landlords. Or vendors you owe a lot of money to. I don’t have any of that. If you’ve got someone putting the screws to you like that, that’s a huge problem.

Number three: Where’s your head at? Maybe you’re tired. Maybe you’ve had enough. Maybe you’ve got enough money and you don’t need to work anymore. Maybe you were already thinking of closing your business, so there’s nothing wrong with any of that. It’s just in my case, I’m not going anywhere. I like going to work every day. I liked supporting my employees. I like the whole thing. I’m as energetic today as I was 20 years ago.

Four: Do you have any key employees who left during this whole thing? If you have a smaller business especially, and you’ve got a key architect or a key salesperson or a key designer, that could hurt a lot. I don’t have any of that. Everybody who works for me came back.

Lastly is: What kind of financial resources do you have? Do you have cash in the bank? Do you have credit lines? I know this is weird to the average person, but having cash or having a credit line—same thing—access to capital. Is there any property you could mortgage? I’m in better shape now than I was six months ago because business is picking up. I will be the first to admit that the PPP thing was a lifesaver.

I just want to tell you, it’s not a bailout. Disaster relief is what it was. Good for the government for doing that, and good to everybody who was able to take advantage of it.

Loren Feldman:
Jay Goltz, thank you for taking this time. Thank you for letting me rake you over the coals and think this all through again.

Episode 23: That’s a Stupid Question

As the numbers of new coronavirus cases explode across the country, Karen Clark Cole, Jay Goltz, and Laura Zander talk about how they are trying to make plans for their businesses. The conversation heats up a bit as it becomes clear that one of our owners (Hi, Jay!) isn’t quite ready to confront the possibility that he might have to deal with another shutdown. By contrast, Laura tells us, “We're operating as if there is a shutdown. So, yeah, we're operating the same way we were two months ago.”

Guests:

Karen Clark Cole is co-founder and CEO of Blink.

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.

Episode Highlights:

Laura Zander: “Every time somebody doesn’t work out, I go in this kind of a deep depression of, ‘I suck. And if I was a better manager, this would have worked out.’”

Laura Zander: “I don’t think I’m running that business. I think that the business is running me.”

Jay Goltz: “We had the strongest economy we’ve ever had. Unemployment was at a record low. Why in the world will we not get back to normal in six months?”

Full Episode Transcript:

Loren Feldman:
All right, let’s get right to it. Unfortunately, it seems we’re not quite done with this coronavirus. In fact, cases are exploding across the country. Some states are pausing their reopenings, retailers like Apple are closing stores they just reopened. The possibility of another shutdown seems increasingly likely.

Laura, let’s start with you. You have operations in both Nevada and Texas, two states that have paused their reopenings. Where do things stand with Jimmy Beans Wool? What does it look like to you?

Laura Zander:
Yesterday in Nevada, we sent everybody home who could work from home. They had come back into the office for a couple of weeks, and then the governor just issued mandatory masks. He issued a couple of other things, so just to be on the safe side, we’re back to what we were doing during lockdown.

Most people are working from home, and people who can’t work from home are working in the warehouse. They’re wearing masks. Our retail store is still closed. We had a tentative open date of August 1st, and we actually have an event scheduled for mid-August. We’re kind of just watching and waiting to see.

Loren Feldman:
You’re still hoping.

Laura Zander:
Sure. Hope is a strong word because we don’t have any control over it. I don’t know that we’re even hoping. We’re just kind of watching and waiting. For the event that we’re having, it’s a retreat, and it’s small. Smallish, 30 to 50 people. But quite a few people have just reached out, because a lot of people come from around the country, and they want to buy their plane tickets, and they want to come, and they want to attend.

We were just having a conversation the other day—before face masks were required in Nevada—do we require face masks at the event? Of course, we think it’s the right thing to do. But we realize, as you guys have probably dealt with, that some people are going to be really upset if you require them. That doesn’t necessarily change our decision-making, but it is an interesting thing that we have to be aware of, and that we need to talk about.

Loren Feldman:
How are things in Texas?

Laura Zander:
Things in Texas, they’re actually going really, really, really well. As far as shutdown, we’re in Fort Worth, which is outside of Dallas. If you look at the map, Texas is getting a lot of press right now for the cases rising so drastically.

Loren Feldman:
Houston in particular, I think.

Laura Zander:
Houston in particular. You know, it’s funny. My dad lives in Corpus Christi, and if you looked at the map yesterday, Corpus is in one of these red zones where the cases are rising dramatically, but they’ve risen from .4 cases a day to four cases a day. There’s a lot of buyer beware when you interpret statistics and make sure that you’re comparing apples to apples. So yes, it is a 10-time increase, but their rate was so low to begin with.

Loren Feldman:
You’re talking about Corpus Christi, right? Not Houston, because in Houston, they’re running out of beds.

Laura Zander:
Yeah, they have the numbers for sure. But the entire state, if you look at a lot of the different areas in the state that are marked as red because they have drastically increased, they’re very rural areas that have gone from basically having no cases to having a couple cases.

Loren Feldman:
So this recent surge hasn’t had an impact on what you’re doing at the company you bought in Fort Worth?

Laura Zander:
Not a significant impact, no. We’re still operating the way that we were during lockdown. We haven’t really changed anything. People who can work from home are working from home. We are very spread out. We work in a very, very open air environment, so it’s basically like we’re outside.

Loren Feldman:
And I should point out it’s not a retail situation. You’re making yarn.

Laura Zander:
Yep. People work in different areas of the building, and then we have 25,000 square feet. It’s very plausible that one person has 3,000 square feet to themselves. There’s not a lot of cross-contamination.

The people who are a little bit closer together, they’re over stoves, there’s the heat, there are big fans. People are wearing masks and gloves, and we’ve got hand sanitizer. We had a whole conversation yesterday about everything. “What do you guys need? If anybody is sick—anybody in your family—don’t come to work. We’ll still take care of you.”

Loren Feldman:
Have you had people get sick?

Laura Zander:
We have had a couple of people get sick. They didn’t end up having Covid, but they’ve been sick, and so they go home for 14 days, or until they take a test and find out. We had one of our employees, her husband was exposed at work to a guy who did test positive, and they had just gotten out of a meeting, so she stayed home, and then she got tested. Then once her test came back, she came back.

Loren Feldman:
Karen, tell us about Seattle. In past podcast [episodes], you’ve praised the governors of Washington, Oregon, and California for being early and aggressive and coordinated in what they did, but California is one of the states showing an outbreak now. What does all that mean for Blink?

Karen Clark Cole:
For us, the bigger deal is in San Diego and in Seattle, where we have our research labs. In all the other offices, we’re encouraging everyone to just stay home as long as you can into the fall. That’s really fine. Nobody likes it, but that’s fine. But in Seattle and in San Diego, we actually have to run physical studies. We have some clients where what we’re testing for them is an actual physical thing, and so we can’t do that remotely like we’re doing [with] most other stuff. We’re waiting until it’s safe, until the governors are allowing those offices to be open, and then we’re doing it very carefully.

We’ve got all kinds of massive amounts of protocols in place, including all the things that the governors are mandating in order to open. We’ve got to have the plexiglass shields when you come in to check in. We do a temperature check. They have to wear a mask. So all those things are in place.

Loren Feldman:
Have you personally been into the office in Seattle?

Karen Clark Cole:
I have. Not very much. We’re gearing up for both of these facilities to open beginning of July. What we’re doing is the leadership team is on a rotating schedule. One of us will be in the office every day of the week, so my day is going to be Wednesday, which I’m actually really looking forward to.

But again, it’s minimal people in the office. There are some people who are already back in the office, because their home working environments aren’t very conducive to actually getting any work done when it’s a one-bedroom apartment sharing with kids and spouses all on meetings.

Loren Feldman:
Are you at all concerned that there might be a pause in your area that would prevent you from doing that by the first?

Karen Clark Cole:
Oh, yeah, I’m expecting it. Probably not by the first, because that’s only a week away, but I’m sure in August, something’s gonna happen, and we’re gonna dial it back again. So if we can be open and run a few studies, get some of our clients further along, even for a month…

Loren Feldman:
Jay, Illinois and specifically Chicago are doing much better than some of the other states we’ve been talking about. In past podcast [episodes], you’ve talked about being kind of excited about some of the opportunities that you saw coming as a result of the crisis. Other times when I’ve talked to you, you seem more stressed than excited. Where are you today?

Jay Goltz:
I have an opportunity. I have a store that was a well-known store that’s closing, and I made a deal with him. We’re going to take over his mailing list and work together to try to get some of those customers. Just as I figured would happen, the market has been disrupted. I don’t care what business you’re in, the market has been disrupted.

What does that mean? It means there’s going to be customers looking for new suppliers and vendors. There are a bunch of employees who you would have never been able to hire six months ago who are now thinking, “Yeah, maybe I should leave here.”

Loren Feldman:
Tell me about the store, though. It sounds like this is a situation where somebody had kind of decided to pack it in. I’m assuming you’re getting a good price. Is there any concern on your part about doing this at a time when things are flaring up around the country?

Jay Goltz:
I’ve got this zero-risk deal. I decided not to take over another lease. I don’t want to take it. I’m simply working with him to transfer his customers over to us and giving him a percentage. It’s a zero-risk deal for me.

Loren Feldman:
Oh, so you’re not actually buying his store.

Jay Goltz:
No, no. I thought about it, and the more I thought about it… It’s the framing industry in general. Suburban stores are difficult. I decided I’m working out a deal with him to just get some of that business to my existing locations. It’s funneling money to him, taking care of his customers. Everyone’s happy.

There are going to be opportunities everywhere, and I’m sure there’s going to be some employees out there who, like I said, are looking for jobs now. Now’s the time to go from defense to offense and start looking for some opportunities.

Loren Feldman:
Well, that’s a really interesting point. Is now the time to go to offense? Would you say that if you knew that another shutdown was looming?

Jay Goltz:
When I say “offense,” it means, if you need people, now’s the time to start looking for them. Listen, I’ve told you this story before. The big crash, I bought a gigantic building for super cheap, right?

Loren Feldman:
This is kind of a different environment and we don’t really know how this plays out.

Jay Goltz:
Obviously, there are 50 different variables. I’m not saying take your last dime and go. I’m saying if you have some money, it’s all about calculated risk. When this is all done, the companies that got out and looked for opportunities—Karen just talked about she’s still trying to do some things for clients. She’s not hiding under the table. She’s trying to do what she can. Laura is out there. We’re all out there doing business, and we’re flying the plane through the storm. We’re not hiding in the back.

There are a lot of companies right now who are hiding in the back. Lots of companies are going to go broke, and they’re going to blame it on the coronavirus. They’re gonna blame it on the government. They’re gonna blame it on their competitors, taxes, whatever. I’m watching them put themselves out of business right now.

Perfect example: pet store in the northern suburbs of Chicago. Someone goes in there to get something, and none of the employees are wearing masks. Now first of all, it’s state law at this point. You’re supposed to be wearing masks. My friend’s daughter works there. She goes, “Herd immunity is going to kick in.” How many customers are going to walk in there and walk out and say, “I’m never coming here again”? What do you think? Fifty percent? Forty percent? Thirty percent? She’s gonna put herself out of business as sure as I’m sitting here. She’s done. Why? Because of the coronavirus? No, because she’s an idiot.

Loren Feldman:
That’s what’s going on where you are. Laura. I’m curious, with the cases rising in Texas and Nevada, where you are, I would put the same question to you. Would you be doing anything differently right now, if you knew a shutdown was coming?

Laura Zander:
No, because we’re just kind of pretending that a shutdown has happened.

Jay Goltz:
Laura, just say it: that’s a false question. If she knew? She doesn’t know. You can’t ask that question. We don’t know if a shutdown is coming.

Loren Feldman:
What do you mean I can’t ask that question?

Jay Goltz:
You can’t say, “if you knew.” She can’t know.

Loren Feldman:
You’ve never heard of a hypothetical question, Jay?

Jay Goltz:
No, it’s a stupid question. Sorry. “If you knew.” if you knew a helicopter was gonna fall on your head, would you go outside? No, I wouldn’t. Okay.

Loren Feldman:
Jay, you’re replaying a conversation we had back in March where you took a similar tone when Karen said that she knew this was going to get bad, and you weren’t ready to hear that.

Jay Goltz:
No, no, she said, “guaranteed.” That’s what she said: guaranteed.

Loren Feldman:
Well, she was right.

Jay Goltz:
Okay, that’s different then… you said guaranteed.

Loren Feldman:
Well, I’m not saying “guaranteed.” I’m just asking a hypothetical.

Jay Goltz:
And Karen, to your credit, when you told me how bad it was, I really didn’t get it. I’m the first to admit, I didn’t get it. I didn’t say you were wrong. If you would have said, “I’m pretty sure”… It was the guarantee. But you were absolutely right. I could have never imagined things were going this way. I recognize in hindsight, you were living it, so you saw it. It’s hard to imagine until you see it.

Loren Feldman:
So Jay, why are you so sure that couldn’t happen again?

Jay Goltz:
No no, I’m not at all saying that… it might happen again.

Loren Feldman:
You said it was stupid of me to ask the question.

Jay Goltz:
No, you said, “if you knew it was gonna happen.” That’s what you said, “If you knew…” She can’t know!

Laura Zander:
All right, all right.

Loren Feldman:
Go ahead and answer the question anyway.

Laura Zander:
We’re operating as if there is a shutdown. So like I said, we still have people working from home. Only the essential people here. So yeah, we’re operating the same way we were two months ago.

Loren Feldman:
Are you putting money into marketing or hiring or anything like that where you’re not sure whether this is a good time to do that?

Laura Zander:
No, but I think we’re in a unique position because we had just acquired this business, and there’s still so much foundational work to be done. This is a good time for us to be very quiet and slow and for us to work on systems and processes and getting inventory. We’re not focused on growth. We’re just focused on survival—on survival and improvement. The guys in the warehouse had never had computers before. Now they have computers and we’re working on computer training. We’re doing a lot of training stuff.

Loren Feldman:
Karen, your business, Blink, is the one business in this group that has been strong throughout. Is that still the case?

Karen Clark Cole:
Yeah, we are still profitable, which is good. Our revenues are down by probably 10 percent, which is obviously not bad at all. But we’re making adjustments. We’ve furloughed some people, but not many. We were running lean before, so we have been really careful to manage the bottom line to make sure that we’re not taking big dips. Overall, we’re doing great. I’ve talked about this before, but we had a rough year last year, and so we have all kinds of systems in place to keep watching like a hawk everything that’s going on. And so we have been able to react very quickly.

I just saw in the news this morning that Microsoft has officially shut all of their retail stores, which is totally amazing. I can hardly believe it. They’re just focused on digital sales now, so they’re going to beef up their digital storefronts, all that kind of stuff. So my feeling is that we’re going to be really busy. We’re bracing ourselves for that, thinking that there’s going to be a massive upsurge for us, as soon as we can get our labs open.

Loren Feldman:
When you talk about that massive volume that could be coming in, is that something you would have to gear up for? Would that require an investment?

Karen Clark Cole:
No, not money-wise, but it would be hiring, so we just need bodies to do the work. We’re actively recruiting in our contractor pool, which is what we do when we’re not sure that it’s a new normal. Iit might be just a spike.

Loren Feldman:
Jay, you still there?

Jay Goltz:
You’re asking the wrong question. What you really mean to ask everyone is, given the risk involved with not knowing whether a pandemic is coming again, or it’s going to get worse, are you comfortable investing some money now? Are you taking some calculated risks? That’s a good question, and I think we’ve all answered it to a degree. I believe the answer is, you have to take some risks. That’s what we do.

The question I’d like to ask the other two is: stress causes people to make bad decisions—have you seen your competitors doing anything stupid lately? Do you see any opportunity because your competitors have dropped the ball?

Laura Zander:
Yeah, one of our main competitors went out of business.

Jay Goltz:
There you go. Okay.

Laura Zander:
The other main competitor didn’t address Black Lives Matter. They just left it sitting there.

Loren Feldman:
Has that been a big problem for them? Are they paying a price for that?

Laura Zander:
That’s a good question. I don’t know. I don’t know what their volume is. I don’t know what’s going on in the inner circle.

Jay Goltz:
You saw what I did when we had to close down. I put a big sign in my window: “We miss you.” Drove all around Chicago. How many companies, retailers, put a sign in their window other than an 8.5-by-11 sheet of paper in the front door? How many? They’re paying $5,000 a month for rent, cars are still driving by, and no one thought, “Maybe we should put a sign in the window”? That’s just not smart retailing. It just isn’t. There’s going to be some fallout from this, but it’s not going to be a direct effect of Covid. It’s going to be the direct effect of stress and making bad decisions.

Loren Feldman:
Well, some of them may be the direct effect of Covid.

Jay Goltz:
For sure, for sure. I’m just saying some of them aren’t gonna be.

Laura Zander:
Oh, Jay. God, if we were just all as smart as you are…

Jay Goltz:
There you go. I’ll just sound dumb, so no one will be offended. Okay?

Loren Feldman:
Laura, I wanted to follow up with you. One of the last times you were on, you talked a little bit about your situation in Texas. That’s where you are today, right?

Laura Zander:
Yes.

Loren Feldman:
Your plan, I think you told us, was to go down there, spend two weeks, and then go back to Nevada. Is that what you’re doing?

Laura Zander:
Yep, I go home tonight.

Loren Feldman:
And has that worked out well for you?

Laura Zander:
Yeah. It’s been great.

Loren Feldman:
The travel, the flight has been okay?

Laura Zander:
Well, it was one flight.

Loren Feldman:
This is your first time down there, and you’ve been there for two weeks?

Laura Zander:
Yeah, I mean, the flight was full. What was interesting was going to the airport and seeing half of the people not wearing masks in the airport, going on the plane, and everybody’s supposed to be wearing one, but people take theirs off when the flight attendant walks away. Observing that was very sobering, and all I can do is, I’ve got my N95 on. I don’t touch a single thing. I didn’t get up. I don’t move. I don’t touch my face. Wash my hands as soon as I get off the plane.

It has been a really interesting study in human behavior to watch who goes along with this and who doesn’t. I went to Austin this weekend, and all I kept hearing was Austin has mandated masks, they’ve mandated this, they’ve mandated that. I check into my hotel, and it’s a top chain hotel, and there are five guys sitting in the lobby, just chat chat chatting. You would never know that this is happening. The two women who are at the front desk, they don’t have masks on. They’re chatting with the guys, talking about what bar they’re gonna go to that night.

Karen Clark Cole:
It’s the same in Seattle. You see people driving in their cars with their masks on and other people having a barbecue at the beach as if nothing ever happened.

Laura Zander:
Yes, exactly.

Loren Feldman:
Laura, did you go to Austin for business or for pleasure?

Laura Zander:
I went to visit a shop. One of our customers, who’s been a friend of mine forever, I went down to her shop. Her retail store is open. They’re all wearing masks obviously. They’ve got their cleaning stuff down, and they’re just doing it by appointment, so one person in at a time to go in and touch the yarn. Then we went and had coffee and we sat outside, kind of far away from each other, and dropped the masks.

Loren Feldman:
Have you been comfortable staying in hotels?

Laura Zander:
No, I rented an Airbnb because I didn’t want to stay in a hotel, and I wanted to reduce the number of people I come into contact with. I’m renting. I’m staying in somebody’s garage, so I haven’t seen anybody. I stayed in a hotel one night. Other than those guys, I didn’t see a single person the whole time I was there. You touch the elevator button. I touch it with my elbow. I open the door with my elbow. Wash my hands constantly, every time I touch anything. So given the fact that there weren’t very many people there, I felt okay. I was more comfortable than I thought I would be.

Loren Feldman:
The last time we talked about your operation down there, you were talking about figuring out who should be leading it. Have you solved that situation?

Laura Zander:
Yeah, we did. The HR manager, who had been here for about two and a half years, she stepped up and she has really stepped up for the last few weeks once the other general manager had left. When I got here, we talked about it, and she is officially the general manager here now, and has done a fantastic job.

Jay Goltz:
Good for both of you that she stepped up, you recognized it, you supported it. Good for both of you.

Laura Zander:
The whole team, here, it is a magical difference. Just the last two weeks, the whole team here has really stepped up in so many different ways.

Jay Goltz:
So have you figured out what the lesson from that is? The lesson is: if you have one wrong person in your company in a management role, it screws up the entire dynamic.

Laura Zander:
You’re totally right.

Jay Goltz:
It shuts people down. You figured it out, and you fixed it. Hats off to you.

Loren Feldman:
Well, great. We’re out of time. Big thanks to Karen Clark Cole and Laura Zander. Some thanks to Jay Goltz.

Jay Goltz:
Loren, you don’t need to thank me.

Loren Feldman:
No, I always thank you, Jay. You make it fun. Thank you, everybody. Be careful out there.

Episode 22: Do You Feel Shame Taking Money From the Government?

Jay Goltz, William Vanderbloemen, and Dana White—all of whom took Paycheck Protection Program loans—respond to an opinion piece that says “competent” business owners shouldn’t have had to go begging “shamelessly” for a government bailout, which got a particularly strong response from Jay: “I'm thinking of all of those entrepreneurs who are trying to run a business, trying to make happy customers—restaurants, hair salons trying to survive this whole thing, trying to take care of the emotional, the financial, and the physical needs… They're fighting a good fight, trying to stay in business so they can continue paying taxes, and he comes along and has to call us ‘shameless’ for taking money from the government.... Oh, we’re incompetent, because these people didn't have six months of savings stowed away?"

Guests:

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Dana White is founder and CEO of Paralee Boyd hair salons.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

William Vanderbloemen: “What I found out this week about William Vanderbloemen is he does better work when he’s at his office.”
Dana White: “If you have employees who are saying, ‘We’d rather stay at home,’ find out why. There’s something there.”
Jay Goltz: “I’m thankful the government gave me the money. It helped. But to use the phrase, ‘We shamelessly begged’?’ For God’s sake. ‘Shamelessly’?”

Full Episode Transcript:

Loren Feldman:
Let’s start with a quick update on where all of your businesses stand. How about you, Dana? Tell us what’s going on with Paralee Boyd.

Dana White:
Paralee Boyd is doing okay. We’ve had some last-minute outbreaks with coronavirus with family so we’ve got some people on the beginning and some on the end of their two-week quarantines.

Loren Feldman:
Employees?

Dana White:
Yes, not me. Employees.

Loren Feldman:
But you’re not open yet, right?

Dana White:
No, we can be, but I’ve decided to wait, and we just figured out what that opening date was today. Now that we know that everybody’s tests are in, we know who’s sick and who’s not. And so now that we know who’s sick, we know how much time we need in order to open. I’ll be sending that email out probably tomorrow, letting all of our guests know when we will be back open.

Loren Feldman:
When did it become okay for you to open?

Dana White:
June 15th.

Loren Feldman:
What date are you thinking?

Dana White:
July 6th.

Loren Feldman:
What are you going to do about the employees who are sick? Are you going to have to test your employees?

Dana White:
Yeah, my staff are being tested anyway before they come back. None of my employees are sick, but either their children or the parents they live with are sick.

Loren Feldman:
So it’s in the house.

Dana White:
In the house, right, and they’re helping with care. They’re all quarantining in the home. So what we’re going to do is: one, everybody’s being tested anyway to come back, and then we’re just going to have them test to make sure that they’re negative. I’m going to see how many tests we’re allowed to do, because I want to do it every two weeks, and then getting that team in place to come and sanitize the salon after we start, probably once a week.

There are a lot of moving parts to opening a salon that a lot of salons aren’t doing. They think, “Oh, I’ll put on gloves and a face mask and we’ll be okay.” No, Sweetie. There’s more to it than that now that Michigan is having a spike.

Loren Feldman:
When you say you want to see how often you’re allowed to do the tests—allowed by whom? What are you referring to?

Dana White:
Oakland County and Wayne County—the city of Detroit—have been really great about helping businesses reopen. They’re allowing us and our staff to get free testing at the sites in the counties. I don’t know if you’re only allowed to do one. I don’t know if you’re allowed to do two. I’ll find out. And if you are only allowed to do one, what is the cost of a second one, especially when we have people coming back on the tail end of a quarantine?

Loren Feldman:
I didn’t realize Michigan was spiking again. How bad is it?

Dana White:
Not bad. It’s not Texas or Arizona or Florida. But you’re seeing some of the Memorial Day cases start to come to fruition—it’s what happened with my employee’s son. He said, “Oh, the ban is lifted,” in early June, so he and some friends hopped in a car and drove to Miami and just spread it on their way back up. And by the time he came back, he was sick.

Loren Feldman:
William, I think Dana just gave you a call-out there. She mentioned Texas, and I believe you guys have been setting a record every day the last few days.

William Vanderbloemen:
We set records every day all the time, Loren. That’s what Texans do. I mean, our airport is not even an international airport. It’s an “intercontinental airport.” I don’t know what that even means, but yeah, we’re setting records.

Loren Feldman:
And what does that mean for you?

William Vanderbloemen:
Nothing. Nothing at all, actually. Even the most conservative churches in town are opening up with some really creative things. What I’m seeing in my little corner of the world is, yes, a rise in cases, but our numbers in the ICU are actually dropping rather significantly and the hospital intake that’s happening is on general floors and not ICU. It’s not as dire as some would say. Now, I think out in the western part of the state where there are a lot of meatpacking plants, it’s different. I think for inmates in prisons, it’s very, very different and unfair. But for the business world that we’re working in, I’m not seeing a lot of change.

Loren Feldman:
Are you going back into the office? What percentage of capacity would you say you’re operating at?

William Vanderbloemen:
Great question. I’m in my office now. It’s funny—you guys saw it—I set up my little bunker in my house and loved it and really kind of mourned packing it up and bringing stuff back up here. I told Adrienne—this week was my first week back in the office—I kind of bemoaned having to come up here. Then I got home, and last night over dinner, I said, “You know Adrienne, I got more done when I was at work than when I was at home.” She said, “Yeah, well, that’s not surprising, William. That’s what I’ve been saying.” She likes me. [Laughter] We have an A team and a B team so that if we have a positive test, we can just quarantine the B team and tell them not to come back.

Loren Feldman:
But you haven’t had any positives so far?

William Vanderbloemen:
Not yet. We’re at about 25 percent capacity. We could be higher if we wanted. We decided to wait until after the Fourth [of July]. Most of our work can be done fairly well remotely. We don’t have the issues that Jay and Dana face of having to have a real storefront quite as much. So on July 6th—we were just going over this with staff—we’ll go back to everyone in the office. We’re still limiting travel for our consultants. That’ll start in August.

Loren Feldman:
Are you getting any pushback? Everybody happy to come back into the office, or are people—

William Vanderbloemen:
Not at all. People are complaining quite a bit.

Loren Feldman:
Based on concerns about health?

William Vanderbloemen:
Yes. It’s not, “I don’t want to come back to an office.” We have a great team, and “complaint” is probably too strong a word, so don’t put that in the little blurb to get people to read the Morning Report. [Laughter] But I am actually running into this with several small business owners who do in-person who have great cultures and a high quotient of millennials, and they’re very concerned about health.

Then somewhere underneath that—and I don’t think this is true for our team, but the other small business owners I’ve talked to—somewhere underneath the health concern is, “I really like working from home and I think I can still get my stuff done, so do I have to come back in?” No one’s saying that out loud, but it’s an undercurrent in other businesses that I’m hearing. My people, what I’m hearing is, “We just want to be really careful.” I’ve got new mothers on staff who are worried about babies, and so I don’t think it’s a lack of desire to want to work.

Loren Feldman:
Jay, do you have both of your companies open again?

Jay Goltz:
Artists Frame Service is now open. People are coming in. We’ve got plexiglass shields hanging, and I’ve gotta tell you, people are coming in and are happy to be in. My home store has been open. We’re selling lots of plants. My wholesale business, Bella, selling to other frame shops, is getting orders now. Everybody’s back to work. I’m going through the last week of shifting the factory, doing staggered shifts because we’re doing enough business that we need everyone there.

Now I have my CFO coming in—I have to give you the picture—I’m wearing a mask, he’s wearing a mask, and he goes, “Yeah, listen, no one in accounting wants to come back to work. They want to work from home.” I have to say to him, “Jim, my mouth is hanging open under my mask. Really?” So we’re gonna have to rethink that whole thing, and it’s not that simple. There’s lots of—

Loren Feldman:
Why don’t they want to come in?

Jay Goltz:
Because they like staying home. It’s like I keep thinking, “Okay, all right, we’re almost back to normal now.” I actually went out to lunch in an outdoor thing and felt like, “Oh my god. Look, I’m eating lunch outside.” I thought, “Back to normal.” So now I come back to this, and I can’t wait to see what Monday brings me.

Yeah, they want to work out of home. Nice. Good for them. Keep in mind now, I’m not downtown, they don’t have to pay for parking. Many of them live seven minutes away, so it’s not like, “Oh my God, I don’t have to sit in traffic for an hour and a half.” We’re looking at it all, but what do you do about new employees who need to be trained?

Here I am, almost by myself in the office with my payable person, and no one else is here. I have to call the CFO every couple… it’s not ideal. With that being said, I recognize that, with the internet, with computers, the world has changed. Some of this we can do from home, so I’m keeping an open mind to it, but—

Loren Feldman:
I’ve been reading a lot about people discovering how productive everybody can be working from home. There’s been a lot of happy talk about how eyes have been opened, and there’s a whole new world here, and people are not going to be going back into their offices and businesses are going to save money because they aren’t going to need all of that commercial [space]. And what I’m hearing here today is a little bit different.

William Vanderbloemen:
What I found out this week about William Vanderbloemen is he does better work when he’s at his office.

Dana White:
My friend works for a major company here in Detroit and they have found that their staff is a lot more productive from home. Projects are moving along faster. They have been told they don’t have to come back into the office until January because that’s just how well things are going and they can save money on the space.

Loren Feldman:
That story has been written a lot. I’ve seen a lot of that.

Jay Goltz:
I will guarantee you some professor at Harvard or somebody from somewhere is going to write this big article in six months or a year that says, “Oh my! Wait, we thought we were going to save 7 percent In occupancy costs with our offices, but gee, it turns out that our output’s down by 20 percent,” because there’s a little bit of la-la land going on here. The fact of the matter is, what about when you’ve got employee turnover, and they’re not the same people who have been with you for eight years? The brand new employee gets hired. Who’s training them?

William Vanderbloemen:
You’re getting me fired up, Jay. You need to come down here and sing it. We have not added a staff person under these circumstances. I want to see what onboarding looks like, and I think that we are in sort of a utopian la-la land, as you say.

Dana White:
Well, I just hired three people virtually.

Loren Feldman:
How’d that go?

Dana White:
It’s going great. They’re doing their training courses where we can see how far along they’ve gone in their training, we can see where they stumble.

Loren Feldman:
These are stylists?

Dana White:
Well, we’ve done stylists virtually, as far as they do their model via Zoom, and we’re watching for things. But we’re not going to stay with that because there’s things we want to see up close. But I’m seeing that there are things I need to get done at Paralee Boyd before we open, and I’m not going to wait until we can all get together to do it. I find that the hiring is going great.

Loren Feldman:
Dana, you expressed months ago on the podcast, I believe, that you had some concern about whether employees were going to want to come back or not. Are you hiring now because employees did not want to come back?

Dana White:
No, I’m hiring now because there are employees that we didn’t want to come back. I am happy to say that over 90 percent of my staff are leaving their current job and are coming back because they loved working there.

Loren Feldman:
Their “current job” meaning that they found other employment during this period?

Dana White:
Yeah, but some of them didn’t have the hours to get the full-time unemployment benefit that was making everybody not want to come back. That ends in July. Everybody is ready to go July 6th.

Jay Goltz:
I want to be very, very clear. I am sure in some cases—people who do computer programming, maybe graphic design, people who work in cities where the traffic’s horrendous, people who pay $30 a day for parking—I am sure there are a lot of situations where this will work out great.

Loren Feldman:
How about accounting?

Jay Goltz:
I doubt it, in my case.

William Vanderbloemen:
How about people with small children in their house? Because I’m not seeing that work.

Jay Goltz:
Right. Well, I’ll give you the other one, which is, I can’t think of all of the great ideas that we’ve come up here with people sitting around talking. We’ve come up with these great advertising things, great ideas, collaborative thinking, collaborative talking, collaborative people working together. And then there’s bringing in the new employees.

A while ago, a couple years ago, I had a new graphic designer, very talented, and I found out that half the day, she sat in her office crying—literally. My other employees would go, “Do you know, every time I go in there, she’s crying?” This person, unfortunately, was a complete mess. How would I know that if she was sitting at home?

Dana White:
No, there’s definitely a benefit to interpersonal communication and whatever. But I think the biggest thing I would challenge you guys with is: if you have employees who are saying, “We’d rather stay at home,” find out why. What is the culture in that department that makes them not prefer to come in? And it’s not that they want to necessarily stay home with their kids when we’re just coming on the heels of a pandemic. Everybody’s itching to get out. But if it’s not something that you’re offering, and they’re coming to ask you for it, I would wonder, “Hmm, what is it about this department, this work environment, that is making people more comfortable staying at home than coming in at the end of a pandemic?”

Nobody asked me that. When I wanted to stay at home, there was a reason I didn’t want to come into the office every day. Nobody cared. We like everybody talking to each other, eating lunch in the break room, stopping by each other’s office and saying, “Hi”, having that interpersonal connection. There’s a reason why I wanted to forego that, and there may be a reason why your accounting department wants to forego that.

Jay Goltz:
That’s a fair question. I would just tell people, after everything that’s been going on for the last 12 weeks, I would suggest the best approach isn’t to plop into your boss’ office and go, “Hey, I want to keep working from home.” I might suggest it’d be better to say, “Hey, how has it been working with me home? I think I’ve actually been more productive in areas. I’d like to talk to you about maybe making some adjustments.” Do a little soft sell, don’t just go dumping. Because I’ve gotta tell you, it’s like, really? A soft sell would be better.

Dana White:
Are you asking the question, though?

Jay Goltz:
I haven’t gotten that far yet.

Dana White:
Get that far. There’s something there. There’s a reason why they feel better working at home at the end of a pandemic than coming into the office.

Jay Goltz:
Well, listen, part of it is the pandemic. No question. I respect that. There are some people who are afraid of getting it. Okay, fair enough. That’s part of this. I’m just telling you …

Loren Feldman:
Jay, have those accountants been working straight through, during the pandemic, from home?

Jay Goltz:
My controller’s been working straight through. The payable person comes in every couple days. My CFO has been home every day, yeah.

Loren Feldman:
And has it been okay?

Jay Goltz:
I have to decide whether they’ll be listening to this podcast or not. [Laughter]

Loren Feldman:
They’re not. They’re definitely not. They told me.

Jay Goltz:
Okay, you call someone—I won’t mention names—and all of a sudden, you’re engaged in a conversation with their spouse that you really didn’t necessarily want to have. And all of a sudden, you find out that their spouse knows all about your business, and they’re giving you their input on it. Now all of a sudden, I don’t have the person working for me. I’ve got them and their spouse working for me.

Dana White:
That’s professionalism, though. I think if you set up a work-at-home kind of dynamic, that’s a conversation. That’s what they’re doing at my friend’s company. They’re saying, “Okay, now that you’re going to be working at home until January, here are the rules.”

Jay Goltz:
Fair enough. If someone calls you and the caller ID says it’s the company, please don’t have anyone else answer the phone. Just let it go to messages. Fair enough.

Dana White:
It’s like going to an office party and then somebody’s spouse walks up to you and says, “Hey Jay, about that new accounting software. My husband thinks it’s awful.” You know, that’s just unprofessional.

Jay Goltz:
Here’s my favorite one: a holiday party. For those of us who’ve been married a long time, think about how this one comes off. A young woman walks up to the wife of the guy who’s in charge and goes, “Oh my God, I love your husband. He’s so easy to talk to.” How do you think that goes over on the way home? “Oh, you can’t talk to me at home, but…”

Dana White:
I mean, I got it, but that’s just… wow.

Jay Goltz:
If you’re married for 30 years, trust me, you’d say to yourself, “Oh, that’s not gonna end well.” And as expected, it didn’t. He got the earful on the way home.

Loren Feldman:
Are you speaking about a friend, Jay?

Jay Goltz:
No, no, this was an employee who’s no longer here. The key is, this might be great for the employee, but you know what? How’s it working for the company? Sometimes it isn’t just what’s great for the employee. Sometimes it’s like, “Okay, I get it’s good for you. You can work in pajamas and you don’t have to drive. Okay, great for you. How’s that helping the company now that I can’t walk by an office and make a quick comment or ask a question?”

Loren Feldman:
Well, as you acknowledged before, there is still a medical issue. There is still a reason to be careful for the moment. And there is an advantage to the company having fewer people in the office.

Jay Goltz:
Wait, wait, wait. Let me stop you on that. Not really. I own this building. If they’re in their offices or not, I’m not paying for more office space. That’s a fallacy, that it’s always saving money.

Loren Feldman:
No, from a medical standpoint, I’m talking about.

Jay Goltz:
Absolutely. For sure, the medical thing. Let’s assume that the pandemic is going to go away at some point. Once we’re back to some kind of normal without a pandemic, there’s no great advantage to me to have to pick up the phone and call my employee every time I want to go, “Oh by the way, did you pay the invoice for blah blah?” There’s no big advantage for me in this whole thing.

Loren Feldman:
Could be a while though. William, I wanted to go back to you. You talked about the capacity you’re up to now. I forget the exact number that you used, but what’s limiting that? Is that self-imposed, or are your clients not back in gear yet? Why are you at that point?

William Vanderbloemen:
A little bit of both, but self-imposed would be the main reason. As we discussed on the podcast back in mid-March when this started to get clear, our business hinges on churches and schools and nonprofits. And so, two thirds of that, which is more than two thirds of our business—churches and schools—aren’t meeting. We had to recalibrate, and we recalibrated and set new second quarter ambitious but attainable goals, and we’ve hit all those. It’s not that the clients aren’t open. We’ve got plenty to do, and we’ve done all these service projects on the side, like the PPP program and such. It’s more us.

If I’m really honest, I’d rather see someone else pay the stupid tax of opening too soon. I want to learn from somebody who goes a little quicker than us, because we can take our time a little. Little things like, we’re only on the fifth floor, but it does require an elevator. How are we going to do that in a way that provides safety and peace of mind for our people? Or break rooms or the coffee pot—all that kind of stuff. I think we’ll get there, but I am horrible at inventing wheels. I’m really good at improving other people’s wheels, so I’m gonna let some of the rest of the building open up first and then bring our people back when I can learn from what they’ve done and improve.

Jay Goltz:
I will tell you, at the moment with the pandemic, stay home. Whatever problems I’m talking about are minimal compared to somebody getting sick. So until the pandemic’s done, stay home. Not a problem, if they can. I’m not pushing it. Long-term though, I don’t know that I want to change the way the whole business works because somebody found out, “Oh, I like not driving seven minutes to work. I want to stay home.”

Dana White:
But I just think you should stay open to the fact that there’s a reason why they may—

Jay Goltz:
There might be another reason.

Dana White:
Outside of the pandemic, there may be another reason why they don’t see it through your eyes.

Jay Goltz:
Well, if Laura was on here, she’d say, “It’s because they hate me.” [Laughter] So that could be the case. But Dana, you’re way too nice to say that.

Dana White:
No, I don’t think it’s because they hate you. But I do think you’re saying, “Hey, this is what I want. I’m the leader. So if I think we work better like this, then we do.” I’m saying there might be a red flag in that accounting department where—

Jay Goltz:
You know what? In this case, I have to tell you, there could be. Because there is some tension in there. You might be onto something with that.

Loren Feldman:
Dana, I have to ask you now that you have an open date, we’ve spent a good bit of time talking about the pricing of your services. Have you made a decision about whether or not you’re going to raise your prices when you reopen?

Dana White:
Absolutely. Day one, raising prices. Done.

Loren Feldman:
Whoa.

Jay Goltz:
Woo, graduation day!

Dana White:
I know.

Loren Feldman:
You’re gonna go from $40 to…?

Dana White:
Fifty.

Loren Feldman:
Good for you.

Dana White:
I’ve talked to other stylists. I’ve talked to other business owners. Their advice to me is, “Dana, you haven’t raised your prices in seven years. What are you doing?”

Jay Goltz:
It’s basic math: X amount of heads at $40. If you lost 20 percent of the people but got $50, your gross sales haven’t gone down and you’re working less. It’s not brain surgery. It’s just math.

Loren Feldman:
You’ve told your stylists and you didn’t get any pushback from them?

Dana White:
No, they clapped.

Loren Feldman:
That’s when you know it’s time to raise prices. You did tell us that you were concerned about how you would let your customers know about this, and you wanted to let them know in advance and give them some time to let it sink in. Are you doing that? Are you still concerned about that?

Dana White:
Yes. The communication has not been my strongest point when it comes to my guests, so that’ll be done through the weekend and over the weeks leading up to opening. I want to do a video and email that out to my customers saying, “This is what we’re going to do to pick up where we left off, going forward,” and some of the changes that they can expect to see going forward, keeping them safe and our guests safe. But I am going to talk about the price increase. I think, like Jay said, it’s about not being afraid.

I think a lot of business owners, as I was, are nervous and afraid to do what you have to do to keep your business afloat. And it’s not that, “Oh, I needed to do it or my business was going to fail.” Well in time, it was. But I have to remember I’m a businesswoman. Of the 21 hats we wear, that can be the one hat that we forget. We become the employer first. We become the social worker sometimes. But the businesswoman, in regards to making and earning money, that hat can be put away. I had to dust it off and say, “How could Paralee Boyd better fit?” and Paralee Boyd, after seven years, needs to raise her prices $10 so she can make money, because I’m a businesswoman and that’s what I’m here to do. It’s not my sole purpose, but it is the purpose. I am not a nonprofit.

Jay Goltz:
Sometimes we are a nonprofit. That’s the problem.

Dana White:
Sometimes we are, but we’re not supposed to be.

Jay Goltz:
No, and the other thing is, people need to get over guilt, like you’re not killing anybody. You’re charging a reasonable amount that it takes you to make a profit.

Loren Feldman:
I was expecting Jay to jump in with that. You sounded a little bit apologetic about wanting to make a profit, and I figured I’d let Jay do the dirty work here.

Dana White:
I used to be apologetic. I was before, but now I’m like, “Let’s do what I need to do.”

Jay Goltz:
I have years of experience talking to picture frame store owners, many of which, probably half of which, barely make a living. This is the line you hear from them, “Well, I don’t want to rip anyone off.” Oh, for God’s sake, we’re not ripping anyone off. Here’s the other one. “Well, I want to be fair.” There’s no such thing as fair. Here’s the word: “appropriate.” You want to charge the appropriate price. What does that mean? The appropriate price is the price [where] you can make a living and that your customers will pay. That’s the appropriate price. There’s no fair in this. There’s no ripping people off.

If you asked me, “Jay, what is the biggest mistake you’ve made in business?” I will tell you in one second: I’ve always been hesitant to raise prices. It’s cost me a zillion dollars over the years, so I’ve been there myself. You gotta do what you gotta do.

Dana White:
You can’t be afraid to do what’s right for your business. You just can’t.

Loren Feldman:
All right, so we only have a few minutes left, and I want to get to the conversation that Jay has been dying to have for about three days. In the Morning Report this week, we ran an opinion piece from an entrepreneur who I know well named Gene Marks. He wrote, in respect to business owners who have been getting PPP money—and all three of you have—he wrote:

“Many of us complain about government interference. We resist regulations. We avoid paying taxes. We don’t want the government in our lives. Why should we? We can make it happen without anyone’s help. It’s a free market. ‘For goodness sake, just leave us alone and let us do our thing. Thank you very much.’ That’s what I heard. That’s what I’ve even said.

“Now, let’s flash forward. You know what I’m hearing a lot from those very same entrepreneurs, fiercely independent entrepreneurs, myself included? What I’m hearing now is, ‘Where’s my government bailout check?’ We had our hands out for paycheck protection money as soon as it was available. We shamelessly begged for disaster loans and other aid. And when the money didn’t come fast enough, we complained. We make up these fairy tales about our courageous entrepreneurism and we tell everyone that we’re brave business owners, but we’re not. We are not without the need for our own government safety net when the you-know-what hits the fan.”

Loren Feldman:
Thoughts anybody?

Dana White:
Jay?

Jay Goltz:
Um, you left out one paragraph.

Loren Feldman:
I left out several.

Jay Goltz:
I know Gene. I like Gene. Gene’s a nice guy. I am horrified he wrote this. If I was his editor, I could have fixed it by just taking out a couple of sentences. Here’s the sentence you left out:

“Not all business owners I know needed a government bailout. Why? Because they know how to competently run a business. They stored away reserves for a rainy day, even a month-long monsoon like this one. They have low-maintenance lifestyles and flexible overheads.”

How dare he? That is the most smug, condescending, insulting, ignorant, disrespectful and just plain mean comment. And I understand where he’s coming from. Gene has fashioned his business by working out of his condo—his house—and he has a lot of contract employees, and it works for him. More power to him. But to suggest that the rest of us should figure out how to have flexible overheads and be competent to run a business, to suggest that, “Oh Dana, if you were competent, you would have known to put a few hundred grand in the bank in case things went bad. And William, if you were competent, you wouldn’t have had any real employees. You would have had all contract labor and you’d be working out of your house.”

How dare he say that to the restaurant owners, to the hair salons, to the people who have signed leases, to the people who can’t be flexible, to the people who have grown their businesses? And then to add insult to injury, he finishes it with, “We make up these fairy tales about our courageous entrepreneurism. We tell everyone we’re brave business owners.” Yes, we are. Yes, we provide jobs. Yes, we pay taxes. How about this one? I have paid probably 100 million dollars in sales tax, real estate taxes, payroll taxes.

I’m saying I’m thankful the government gave me the money. It helped. I don’t think I would have gone out of business, but it would have been extremely difficult. But to use the phrase, “We shamelessly begged”? For God’s sake. “Shamelessly”?

So yeah, I like Gene. I’m sorry that Gene didn’t have an editor to catch this. I would hope he would get that perspective. I have to finish with, he wrapped himself in 24 “we’s” in this article. “We, we, we.” He’s not really talking about “we.” He’s talking about “us.” Because my guess is, he didn’t take the PPP, and he’s sitting there on his smug ass now thinking, “Look how smart I am. I’ve got only contract employees, or mostly. I didn’t have to take the PPP.”

Loren Feldman:
Jay, I’ve gotta stop you there. I think you’re wrong about that. Actually, I know you’re wrong about that. He wrote, “You know what I’m hearing a lot from those very same fiercely independent entrepreneurs, myself included? Where’s my government bailout check?” He asked for it too. He got it too.

Jay Goltz:
Okay, well, then I get the point of his article: “Don’t complain about the government and then want their money.” Okay, fair enough. Like I said, this whole thing would have been fine without those couple of sentences. I really have a problem with the “competently” run the business and “shamelessly begged.” I have a real problem with those two—

Loren Feldman:
William, do you think Gene had a point?

William Vanderbloemen:
Oh, I don’t know how to figure out what’s right for Gene. I’m just trying to figure out what’s right for me. We’ve got clients that are churches that could have really benefited from PPP, but were filled with members who were small business owners, and early in the PPP, “Is there enough money? Is there enough money? Is there enough money?” I had pastors who felt guilty about applying for it because they might be depriving their members of money that might help their business. I think it’s a complex thing. I think Gene’s piece… I mean, categorical imperatives sell, right? “It must be this way. We all did this.” It’s just not that easy.

Loren Feldman:
Generalizations are dangerous.

William Vanderbloemen:
They are, and I think Loren, and not to go all religious on people, but there’s a line in the Old Testament scriptures or the Jewish scriptures, however you want to read them, about these men called the sons of Issachar, and what were they known for? They were known for being able to read and understand their time. I think that’s the key for me, is, “What’s right for our company in this time? How do I read it? How do I understand it?” I guess maybe I’m just getting dumber, but I think if there’s something I would disagree with Gene’s article [about], it’s the categorical imperatives, because I just don’t think they apply.

Jay Goltz:
What about the phrase “shamelessly begged”? How do you feel about that? Do you feel like you shamelessly begged for the money from the government?

William Vanderbloemen:
I didn’t beg. I filled out a form.

Jay Goltz:
Yeah, did you feel shame in it? I sure didn’t.

William Vanderbloemen:
No, not a bit.

Jay Goltz:
Dana, did you feel shame? Did you feel shame getting money from the government?

Dana White:
No.

Jay Goltz:
Okay. That’s all I wanted to say.

Loren Feldman:
I don’t think any business owner should feel shame for taking money from the government. That said, and I think we all know this, there are a lot of business owners who have spent a lot of time disparaging the government for everything, for regulation, for—

Jay Goltz:
You’re right. He’s right. No question.

Loren Feldman:
Jay, you and I once did an event in Atlanta where I had to debate another business owner. We were talking about what the minimum wage should be, and his answer was, “There shouldn’t be any minimum wage. This is America. People should make it on their own. That’s the way we do things here.” I know, Jay, that you do not agree with that, but I don’t think it set you off as much as what Gene said.

Jay Goltz:
No, no, I told you, I would have been perfectly fine with this whole thing without those two phrases. They know how to “competently” run a business and they “shamelessly”—without that? Fair enough. Stop complaining about the government. I don’t complain about the minimum wage thing. I think the government does some good stuff. I’ve said the SBA loans are a wonderful thing. So I totally get his point with all that. With that being said, I’m a little worn out—I have to tell you, this got me really upset. How dare he say that?

Loren Feldman:
Why did it get you so upset?

Jay Goltz:
Because I’m fighting a three-front war here. And I don’t even take this personally. I’m thinking of all of those entrepreneurs who are trying to run a business, trying to make happy customers—restaurants, hair salons trying to survive this whole thing, trying to take care of the emotional, the financial, and the physical needs… They’re fighting a good fight, trying to stay in business so they can continue paying taxes, and he comes along and has to call us “shameless” for taking money from the government? Or this is the one that was even worse: “competently” run a business. Oh, we’re incompetent because these people didn’t have six months of savings stowed away?

Dana White:
That’s how I felt. When we first closed in March, and we were on the podcast, and we were all talking, and I said, “I just don’t know what I’m going to do.” Part of me not knowing what to do was me sitting there, reflecting over the fact of all that I hadn’t done. And part of the reason why I thought about closing is because if I didn’t have three to six month’s reserve in the bank, what type of business owner am I if I need the help?

I spoke with my mentor, who owns several companies, whose revenues are in hundreds of millions of dollars, and he said, “So I guess I’m a failure. I’ve been in business over 30 years.” And I said, “Oh gosh, no.” He goes, “Well, I need the PPP and I’m going to take that EIDL, too.” I said, “Why?” He said, “Because anybody who has hundreds of thousands of dollars saved up and is a competent business owner is reinvesting that money in the business.” That’s it.

Jay Goltz:
And he’s not a journalist. If he was a journalist, maybe I’d cut him some slack and go he doesn’t understand. Just remember the world I’m living in, the world we’re all living in. These entrepreneurs are drowning, are afraid they’re gonna lose their businesses, and he’s got to finish it up with, “We tell everyone that we’re brave business pioneers, but we’re not” No we are.

Loren Feldman:
And on that note, we are out of time. My thanks to Dana White, to William Vanderbloemen, and to Jay Goltz. Be careful out there.

Episode 21: I’ve Never Raised My Prices

Karen Clark Cole, Jay Goltz, and Dana White discuss their pricing strategies and why raising prices can be such a challenge: Dana tells us she has often wondered, “If I raise my prices, is this the decision that's going to make me close my doors?” And Jay recalls a customer who came into his picture framing shop and told a sales consultant, “Wow, that's a lot more than the other place I've gone to.” “Really, why don't you go there?” “Well, they're out of business.” And that, Jay tells us, helps explain why there are far fewer frame shops than there used to be.

Guests:

Dana White is founder and CEO of Paralee Boyd hair salons.

Karen Clark Cole is co-founder and CEO of Blink.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Jay Goltz: “I am confident there are far more people who have priced themselves out of business by not charging enough, than those who raised them too much and became uncompetitive.”

Dana White: “If I raise my prices, is this the decision that’s going to make me close my doors?”

Karen Clark Cole: “I’m totally fine not being the cheapest one in the room. In fact, if we are, then we need to raise our rates.”

Full Episode Transcript:

Loren Feldman:
I want to start today by talking about pricing. I really think this is a topic that gets short shrift. It’s so important, yet it’s rarely discussed, and I think there’s a lot of confusion about the right way to approach it. First of all, what I’d like to do is to start by asking each of you: when was the last time you raised your prices? Dana, why don’t you go first?

Dana White:
I’ve never raised my prices.

Loren Feldman:
Have you been in business since?

Dana White:
Seven years, since 2012. In 2020 of November, this will be my eighth year, and that is going to change in the eighth year of being in business. It’s time for me to raise my prices absolutely.

Loren Feldman:
Karen, how about you? When was the last time you raised your prices?

Karen Clark Cole:
We evaluate it every year, so probably last year officially. The thing with us is we work on fixed bid, and so in a lot of cases—

Loren Feldman:
What does that mean, “fixed bid”?

Karen Clark Cole:
It means that we give you a price and that’s what it will cost. On a project basis, there’s a period of time where the project starts and then it ends. Time and materials would be that we just bill you by the hour and however long it takes is what it’s going to cost, but we give an estimate upfront and then actually turn it into a fixed fee price. That gives us some wiggle room on pricing within that. Some clients need a break and others don’t. What we call “value billing” is what we do in a lot of cases based on the kind of work that we’re doing within that project, so it’s a vague answer, but our rates are a bit fluid.

Loren Feldman:
If you make the decision to raise your rates, how do you do it? Does that mean that your hourly rate increases? What changes?

Karen Clark Cole:
Yeah, all of our fixed fees are based on an hourly rate to start with.

Loren Feldman:
Got it. How about you, Jay?

Jay Goltz:
I do it regularly, and I’ve learned over the years that pricing is like emotional eating. There’s emotional pricing, and it’s bad. “Oh my god, I don’t want to charge any more, the competition’s out there.” And at the end of the day, there’s a price that you have to charge to make money. It’s very difficult to raise prices, but it’s necessary, and what happens is—and I’ve been through this numerous times—you get into a recession, you’re losing customers, you’re freaked out, the last thing you want to do is make it worse and raise prices, and then the economy comes back a little bit and you’re slow to adjust the pricing and it kills you.

People talk about competition, they talk about it’s hard to hire people, they talk about banks. Pricing is a critical piece to making money.

Loren Feldman:
Where are you in your cycle? When was the last time you raised and what’s your thinking at the moment?

Jay Goltz:
I adjust them regularly because the material costs keep going up. I’ve done speeches to the salon industry, and one of the problems in the salon industry is you don’t have a cost of goods sold to speak of, other than the people working there, so it’s not as easy.

With me, if the molding price goes up, the glass price goes up, we mark it up, and it automatically raises the price. Minimum wage has gone up $1 an hour every year for the last four years. We’re paying sick days now that we didn’t use to pay, health insurance is out of control, the labor market is so tight. Our labor costs are just going up like crazy and I’ve got to change my formulas. My real estate taxes have just gone up dramatically. Those weren’t in the quote unquote formula. If the molding goes up, you raise the price, but nowhere in my pricing formula is, “We need to charge X percent for the real estate taxes.”

It’s an extremely challenging problem, and it’s very emotional. You’re afraid of, “Well, I don’t want to price myself out of the market.” Unfortunately, what happens is people price themselves out of business because they just don’t charge enough. It’s a huge thing for me because I’m manufacturing custom picture framing. It’s a manufacturing business. It’s also a retail business. It’s also a direct sales online business. I have to come up with pricing that works in all these different arenas.

Loren Feldman:
Let’s go back to you, Dana. How did you think originally about pricing? What were you considering when you made the decision what you wanted to charge?

Dana White:
I considered what my competition was charging and then I looked at what would make me different and what my guests would be getting in the salon. Then I also thought about, how much do I need to make a week to cover the bills? Or a day? Once I did that, I had a sweet spot of boom: $40 per head.

Loren Feldman:
When you looked at the competition, were you looking to price to compete with that competition? Or were you thinking, “We provide a better service so we can charge more than the competition”?

Dana White:
Both. I was looking to compete. What I didn’t want a guest to say is, “Although it’s nice, I don’t want to go there because it’s too expensive.” I thought, let’s price competitively. I didn’t want price to be an issue for them as a deciding factor of whether to come to my salons or to the competition or to their personal hairstylist.

Loren Feldman:
How can you both not price yourself above the competition, but also try to charge for a superior service?

Dana White:
That’s a great question. I think it’s because there’s not really any direct competition. There aren’t any other walk-in only hair salons in the area. The one that’s similar is very different, if that makes any sense. They’re not very deliberate about some of the things that we’re deliberate about.

I think when I first opened, instead of saying, “You’re going to pay for all that,” we’re going to price slightly higher, but not so high that you’re like, “You know what, I’d rather go over here because it’s cheaper and they may not be in the best area, and they may not be very deliberate about customer service or anything else for that matter, but the price is so different, that I’m just going to stick over here in this area.” I said, “No, just raise it slightly above, but also make sure you can pay your bills every week or day,” and then yeah, that was pretty much it.

Jay Goltz:
Here’s the issue that is a rookie mistake. It’s called “price elasticity.” The fact of the matter is, there will always be someone who isn’t going to come to your business because your price is too high, even if it isn’t too high. The question is, if you raise your prices 10%, are you going to lose 10% of your business? Are you going to lose 30% of your business?

The answer is, the definition of price elasticity is, whether you lose more business when you raise your price 10%. If you lose more than 10%, then it isn’t elastic, versus you lose less than 10%. The answer is, in most businesses, you’re not going to lose as much as you raise the price, which means you’re gonna make more money, because even if you raise prices 10% and you lose 10% of your business, you’re going to make more money now because you’ve got less labor and materials.

Dana White:
You know it’s time to raise your prices when your customers say it’s time to raise your prices.

Loren Feldman:
That seems like a really good sign.

Dana White:
Yeah, when they say pretty overwhelmingly, “Dana, you know, it’s time.” We’re going to be doing that this year.

Loren Feldman:
Why not this week, if your customers are asking you to do it?

Dana White:
Because I want to do it correctly, and in my opinion with my customers, you have to tell them and give them time. You can’t change it tomorrow and send out an email, and then when they come in Saturday, they say—

Loren Feldman:
But they’re asking you to raise your prices!

Dana White:
I mean, not 100% of them, but enough of them are to where [I’m like], “Okay, we’ll do it.” We’re going to do it in a short email campaign, we’re going to give them enough time. Because there are some people who are going to need a heads up, especially people who have memberships. They have to plan for it. I would prefer to give it a little bit of time to communicate, let it sink in.

There are people, like Jay said, regardless of how much you raise your prices, the fact that you’re raising them, it’s going to be too expensive. We’ve had people squabble with us over $5. Jay, I think you may understand this. The beauty business is very emotional. I think it’s more emotional than a cup of coffee. That’s another reason why I don’t want to do it quickly. I want to mitigate the drama, if you will.

Jay Goltz:
Well, it’s also more transparent. If I raise my prices 5%, every picture is different. No one’s going to necessarily go, “Oh my God!” They don’t know because the last one was an eight by 10 and the new one’s a 16 by 20. In your case, they know they paid 40 bucks last time and now it’s $42 or $50 or whatever it is, so you can’t hide from it. And number two is, you get the same customers every single month. I might not see a customer for five years.

Dana White:
Exactly.

Karen Clark Cole:
Yeah, that’s the same for us in that we have a lot of repeat customers, but every single project is different. Every time we’re pricing something, it’s a one-off, and so it’s very hard to compare.

Loren Feldman:
So you can raise your prices without anybody even realizing it.

Karen Clark Cole:
Yes, effectively.

Jay Goltz:
I am confident there are far more people who have priced themselves out of business by not charging enough, than those who raised them too much and became uncompetitive. I’m extremely confident of that because I’ve watched it happen so many times.

Dana White:
I agree.

Loren Feldman:
Jay, what do you do when you raise your prices? Do you tell anybody anything?

Jay Goltz:
No, every time, it’s a custom quote. Look, there are 20 different reasons why they come to your store. Some of them are more important than others: location, parking, does your person know what they’re doing? But the only one you ever hear about is, “Boy, that’s a lot of money.” So get over it, they’re going to complain about the price no matter what you charge.

I had a customer come in—it was $320—and she says to my sales consultant, “Wow, that’s a lot more than the other place I’ve gone to.” “Really, why don’t you go there?” “Well, they’re out of business.” That’s the story of the picture frame business. They get beat up by the customers, and they’re afraid to charge what they need to charge, and they go out of business. There were 25,000 frame shops in America 10 years ago. Now there are 8,000.

Loren Feldman:
Karen, what’s your formula? How do you think about what you charge? Are you looking at the competition or are you just focused on what you need to do to make a profit?

Karen Clark Cole:
It’s both. We have a number that we have to hit in order to be profitable. It’s an hourly rate. It’s a target hourly rate that we have across all of our work and that’s based on our salaries. Our number one highest expense in the company is employee salaries. Because they’re knowledge workers, these are really highly trained professionals, they’re really expensive, and they are asking for raises every week. We have to raise our rates in order to stay in business. It’s very simple.

We’re looking at that, we’re looking at what is that bottom number that we have to hit in order to be profitable on a project or in order to break even? There are many projects where we’ll give a discount for all kinds of different reasons. But we have to hit that break-even number.

Then we’re looking at, what will the market bear? We like to describe ourselves as the Tiffany’s of what we’re doing and I’m totally fine not being the cheapest one in the room. In fact, if we are, then we need to raise our rates. We go in high and we give a lot, and we have a lot of repeat clients because of that. They know that they’re going to get a lot. “You get what you pay for” is sort of the age-old truism.

Loren Feldman:
Have you learned any lessons through the years, Karen? Have you made mistakes on pricing, either by losing a job that you think you should have gotten because you asked too much, or by not asking enough?

Karen Clark Cole:
Yeah, that’s happened loads of times, but I don’t consider that a mistake. We do a really careful job of pricing our projects and so I don’t ever feel like it’s random or it’s willy nilly in any case. We have incredibly complex spreadsheets that we use to come up with pricing. We’ll walk some clients through it if they really want to see it. But in the end, it comes down to trust and our reputation. As we’ve been around longer and have more and more bigger clients and repeat clients, they know that you get what you pay for.

Jay Goltz:
I can tell you on the buying side, here’s an example of my home store, Jayson Home, we have a website. We went to Magento, which is a platform. You shop around and you hear one place is $300,000, another place is $210,000, another place is $140,000, and unlike buying a car or a picture frame or anything, there are no tires to kick. They all made proposals. They all have offices, maybe one has the ping pong table, maybe one doesn’t. How are you supposed to judge this? So what do you do? “Well, $300,000, that’s a lot of money. We’ve got to go with the cheaper one.” I’ve cycled through three of those companies now, because there’s always something wrong there.

Loren Feldman:
How does that apply to your thinking about your pricing?

Jay Goltz:
My pricing is simple. I believe in today’s market, you either need to be great or cheap, and the company that’s in between is going out of business. I think If you look at all the retailers that are going out of business… Sears: are they great? No. Are they cheap? No. The only way to be cheap is if you figured out like Walmart some way of getting your costs down. Well, most companies can’t do that.

I’m taking the approach in all of my businesses, I want to continue to give great customer service and great products, and I need to charge what I need to charge. I don’t even look at what the competition is doing anymore because it just doesn’t matter. What if I go out in the market and I find out that people are 15% cheaper? If I drop my prices 10 or 15%, I’d be out of business. I’m not going to start—

Loren Feldman:
Well, it would matter if you found out that your competition was charging more than you are, right?

Jay Goltz:
Yeah, absolutely. Very insightful. But I’ve got good, solid people who work here and I don’t want to run a sweatshop, by definition, no health insurance, everybody’s at minimum wage.

Loren Feldman:
You’re saying you don’t do that.

Jay Goltz:
I don’t subscribe to that. I don’t chase hotel jobs anymore because the art that hangs on the wall, it’s not really important to them. They find somebody who’s going to frame a picture for them for $23, which is why when you go into a lot of hotels, the stuff on the wall is falling apart, literally. I don’t want to be in that business. I want to do quality stuff with people who know what they’re doing and give great service, and there’s a price to pay for that. Luckily, I’m in an industry where the customers appreciate that.

I’m literally 20 times the size of my competition. I’m not cheaper. The reason is because the kind of customers who frame pictures—it’s only 3 or 4% of the population—the kind of person who does custom picture framing wants something done well. That’s why they’re framing it. And then you get the people out there with the chain stores with the 50% off nonsense, complete nonsense. There’s no such thing as a list price. I position myself as the value proposition of, for what we’re doing, we’re giving them a tremendous value, which is why I’m doing the volume I’m doing.

Even with all that being said, it’s absolutely emotionally difficult to raise prices. Even today, after 41 years, it’s still an extremely gut wrenching—you’re always afraid—”Oh my god, am I gonna get too pricey?”

Loren Feldman:
Are you feeling that right now, Dana?

Dana White:
Yeah, for me, I love what Jay said about, “I don’t have time to look at my competitors right now and I don’t have time to decide.” I need to look at what the bottom line is for Paralee Boyd and decide the pricing therein. As far as the cost, I just changed my pricing structure, or how I pay my staff, because again, Jay is right. Minimum wage just went up again here in Michigan on January 1st. You have to raise your prices in order to be able to pay your people.

I don’t offer benefits and that’s not unusual in the salon industry. I think most companies that are big in the hair business do, but smaller people like myself, we don’t offer benefits. My reasons behind my pricing increase are similar to Jay’s, but different.

I think the other point that he made about being great, I think that’s another thing that needs to be communicated. “We’re getting better, so here are the changes that you’re going to be seeing, or that you’ve already seen, and it’s time to raise the price.” That’s it. I’ve been cheap for too long, and I think that has harmed my business.

Loren Feldman:
I want to do one more segment here. Almost every day in our 21 Hats Morning Report, we’re writing about technology that business owners use: a new CRM, some change on Facebook for marketing, or something like that. I’d love to just take a moment with each of you and ask each of you: tell me some kind of technology that you just couldn’t live without right now, what are you enjoying, and some piece of technology that you just can’t wait to replace—something that you can’t stand using? Whether it’s technology that you use personally as the person running your business or something that the business uses. Karen, you’re in the tech business. I’ll start with you.

Karen Clark Cole:
Oh God, you’re gonna have to go to the next one. I don’t have a good answer. I have to think about it. Because it’s so in my face all the time that it’s hard for me to decipher. Let me think for a minute.

Loren Feldman:
Okay. I can’t go to Jay, Dana. [Laughter]

Jay Goltz:
Go to me. Please ask me.

Loren Feldman:
Okay, Jay, how about you?

Jay Goltz:
I really, really enjoy and love my electric garage door opener. It would be very hard to do without it. What am I looking to replace? I’m just trying to keep up enough. As you know, I blogged for you for years at The New York Times and I’m good at doing some of the stuff on my Apple and I brought a guy in to help teach me how to use more of it. But the reality is, he’ll show me how to do it, but I don’t use it enough. I can’t use an Excel spreadsheet, for instance. Simple, right? And it would probably be good for me to know how to do that. I just don’t use it enough that even if you show me how to do it, I’ll do it for a day or so, but I’m not going to use it for six months. I’ve just learned to accept, it’s okay, at the end of the day. I’ve got 115 employees. I don’t need to know how to use an Excel spreadsheet.

Loren Feldman:
Jay, it might be like the week you spent studying insurance. As someone with an accounting background, you might actually enjoy it if you—

Jay Goltz:
I’ll tell you why I love the insurance thing. I found a website, moneychimp.com, that’s got all of these calculators in there, so you can say, “Oh, if I put that same insurance payment into a bank account at X percent…”—I love that stuff. So okay, I’ll use that as my technology: moneychimp.com.

Loren Feldman:
Dana?

Dana White:
Ours is mindbody.com. It answers both of your questions. It’s the technology we use to run my business. Can’t live without it, can’t live with it, can’t wait to either make something or find something to replace it, because I do need something more detailed. There’s nothing like being able to log into an app or log into your computer and see how many people we’ve had today, how long they’ve been in the salon.

Loren Feldman:
This is the software where it’s basically the operating system for your business, right?

Dana White:
Yes, that’s it.

Loren Feldman:
It helps you manage your employees. It tells your employees what they need to know about return customers.

Dana White:
Yep, everything. It tells us how many people we can expect on Tuesdays in the month of February between 9am and 9:15am. It helps us manage our business in 15 minute increments, but it can be more detailed, and sometimes it shuts down and there’s a lot of service outages. Can’t live with it, can’t live without it, looking forward to the day where we say, “Hey, it was great for the years that we were in business with you, but now we’ve made our own platform.”

Loren Feldman:
Do you think that’s what you’re going to do? Are you going to make your own?

Dana White:
Absolutely. As we expand, I need something more detailed. If I choose to franchise or even if I just expand with company stores, that technology would be the center for how all of the salons will run. Check-in features through an app, being able to manage to the second how our guests are in the salon, that would be ideal.

Jay Goltz:
Dana, are you telling us there’s no software in the market to run a salon that’s close to what you need?

Dana White:
Nope, we’ve been looking. We’ve even looked in health care. The closest we found are for restaurants, but even restaurants, we’ve tried to see if we could go in on the back-end and change some things, and no, it’s pretty much reservations, appointment-based. Everything is appointment based.

Jay Goltz:
If I can share a little of my experience—keep in mind, this is the problem I have. My framing business is so much bigger than everyone else’s that I can’t find the software to run it properly. I’m still using something from 30 years ago that used to run a wholesale business. I can just tell you from my experience and a lot of other people’s, I already blew my $100,000 or $200,000. I don’t know that you understand what it really is going to take to build a software—

Dana White:
It’s expensive, yeah.

Jay Goltz:
Whatever number you think’s in your head…

Dana White:
Triple it.

Jay Goltz:
Maybe 10 times it. I’ll tell you, I now understand, even in my size, it would be hundreds and hundreds of thousands of dollars. I was told years ago, “Don’t try to write your own software.” So unless you’re sincerely thinking you’re going to get some venture capital and do it, I’m not so sure that’s going to be viable.

Dana White:
It’s really expensive. I’ve had friends say, “Just do a prototype, get somebody out of India to do it for you.” The cost is going to be really hard. That’s why we’ve looked at a lot of these other industries to see what we can find. A friend of mine, he’s still looking for me. It’s one of those things when you’re looking at other places for technology: what is it that you can do without? So it may not have everything you need, but it has some of the things you need.

Loren Feldman:
Karen, this is your area. Do you have any thoughts?

Karen Clark Cole:
Don’t build software unless you really have to. It’s actually more expensive than Jay said, because you’ve got to factor in $500,000 of design work before you build it. But you’ll get what you want. I mean, it’ll be great, and then you can sell it.

Dana White:
That was the idea. The idea was because it was a walk-in only type of situation, we’ve had a grocery store approach me, say, “We’d be interested for example, for days like today, when the weather is about to change, how do we need to staff?” We had a ballpark, a small one here in Michigan, come to us and say, “Hey, if you develop it, we’d love to buy it from you,” and other salons.

Karen Clark Cole:
Yeah, I think it’s a good idea. The trick is then all of a sudden, you’re in a completely different business. Then you’re a product company, which is fine, or you spin it out into a separate thing.

Dana White:
Exactly, and that’s just not where my focus is. My focus is really on growing Paralee Boyd.

Loren Feldman:
It’s hard enough to build one business at a time, I’ve heard.

Jay Goltz:
Dana, I think we just saved you $2 million.

Dana White:
That felt good.

Loren Feldman:
Karen, I know you think you’re off the hook, but you’re not.

Karen Clark Cole:
The thing I like the least is texting. I have to tell you, if it could go away, that would be great.

Loren Feldman:
Why is that? Too intrusive?

Karen Clark Cole:
No, it never goes how you think it should go. Miscommunication is rampant. It just gets overused. Text is great for a yes or a no. Anything else, it should be only allowed to have two words, like 20 characters should be the limit in a text, and then we’d be safe.

Anyway, the thing I love personally, is OneNote. That’s what I’ve been writing in. It’s a Microsoft product. It’s a book essentially, and you organize it by you can have books of subjects, and you can have chapters, and then pages within. It helps me have train of thought all over the place and then be able to organize it. I use that a lot.

Then in our business, the thing that honestly has changed our whole company is Slack. A lot of companies use it now, but it really is fantastic.

Loren Feldman:
A lot of people hate it. What do you like about it?

Karen Clark Cole:
I haven’t heard anybody who hates it. I love it. It’s highly productive. It’s got a great user experience. It’s functional. And it’s simple, and it’s easy to use. It’s got all the right ingredients. It replaces email in a lot of cases.

You create groups. Like for us, we have project teams, and so a project team has a Slack channel, and just the people on that project are connected in that channel. And so instead of a whole series of emails that you have to sort through, you just go to the channel and you know you’re in that project, and so it’s that kind of content, and then it disappears. You don’t have to get rid of it, you don’t have to delete any email, you don’t have to put it into a folder or whatever you’re doing. It’s just a conversation and the history of the conversation stays in that channel. It’s a different way of thinking, in terms of communicating within a company, but when we have multiple offices and hundreds of people, it’s really the best, most efficient way to do it.

Dana White:
We use Mondays.com. I love it.

Loren Feldman:
I used Slack at Forbes and I did hate it, primarily because we didn’t thoroughly adopt it. I was a member of four or five groups, but a lot of people didn’t use Slack. They stayed on email. So it just felt like it compounded the places I needed to go check every day and it drove me crazy.

Karen Clark Cole:
I felt like that when we first started using it and then we pushed hard on adoption.

Loren Feldman:
Do you outlaw email?

Karen Clark Cole:
Most people don’t use email internally. We do kind of, I mean, I don’t reply to email. So that’s one way to do it.

Loren Feldman:
Wow, interesting.

Karen Clark Cole:
Most people prefer to not do email. It’s too laborious. You have to look at it. You have to open it. You have to read it. You have to reply. Slack is way faster. Most people in our company—particularly millennials—they want to move quickly. This allows them to do that.

Jay Goltz:
Loren, you haven’t asked me if I use it. I’m a little offended.

Loren Feldman:
[Laughter] Jay, are you on Slack?

Jay Goltz:
I got rid of some slackers over the years. Yeah, no, I’m like the dog when it hears a weird sound and it turns its head to the side, like, “What are you talking about?” That’s where I’m at right now. No, I’m not going to be adopting that soon, I don’t think.

Loren Feldman:
I guarantee there are people in your business who know what it is, and if you asked around, you could probably find someone who would say, “Yeah, that’s a great idea. We should do it.”

Jay Goltz:
As soon as we’re done here, I’m going to go looking for that person, and then I’ll probably fire him.

Dana White:
Karen, I wanted to ask, have you heard of Scrivener?

Karen Clark Cole:
No.

Dana White:
For writing. When I write, I use OneNote and I also use Scrivener. I think you’ll like it.

Karen Clark Cole:
I’ll check it out.

Loren Feldman:
All right, we are out of time here. My thanks to Karen Clark Cole, Jay Goltz, and Dana White. Appreciate your joining us today.

Episode 20: I’m Stressed

Karen Clark Cole, William Vanderbloemen, and especially Dana White have a painful, impassioned, uncomfortable conversation about trying to position their businesses and lead people in the aftermath of George Floyd’s murder and the ensuring protests. What do we tell customers? What do we tell employees? What do we tell black employees? Dana challenges us to take a stand—even if it’s uncomfortable—especially if it’s uncomfortable: “This is not about being comfortable. As business owners, you're either over there or you're over here.”

Guests:

Dana White is founder and CEO of Paralee Boyd hair salons.

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Karen Clark Cole is co-founder and CEO of Blink.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Dana White: “This is not about being comfortable. As business owners, you’re either over there or you’re over here.”

Dana White: “Have I feared for my life when I’ve been pulled over? Yes. Has a gun been drawn on me because I left my blinker on too long? Yes. Have I been followed around the store more times than I care to admit? Do I have to tolerate the ignorance of people who are well meaning? Absolutely.”

Dana White: “For those of you that have black employees, please know that they are in their car taking a minute before they come to work today. And it is your responsibility to do all that you can to create a safe space.”

Full Episode Transcript:

Loren Feldman:
I want to talk about where each of your businesses stand, what’s going on with each of them, but we’ve been through a couple of weeks unlike anything, I think, any of us have ever experienced. It’s kind of almost been forgotten, but I think we’re still experiencing a pandemic. And then, of course, that has been compounded by the murder of George Floyd and the protests that followed.

As we’re recording this on Friday, June 5th, I think we’ve had 11 days of protests that have followed and obviously that’s had an impact on all of us. I guess I’d like to start by just asking each of you how you’re processing these events. Karen, maybe I’ll start with you. Seattle, where Blink is based, has been in the news every night. There have been protests there. What has this been like for you and for Blink?

Karen Clark Cole:
It’s been hard. It’s been a long week for sure. I don’t have all the words. And that’s…

Loren Feldman:
That’s understandable.

Karen Clark Cole:
That’s been part of the problem. I can tell you one thing that has struck me, as an individual and the leader of a company that has been most surprising and difficult, is that many of our employees—and if you include our contractors, we’re about 140 altogether of people who do work for us in five offices, so we’re not just in Seattle, we’re around the country—a lot of them are expecting me personally, as the representative of Blink, to be their voice. And I tell you, that’s not something that I expected. I wasn’t quite ready for that.

I spend a lot of time in my life, personally, having a voice and using it and having a platform, certainly with my nonprofit. For me, it’s more of an angle of encouraging girls. But the idea that now I’m representing how to stop racism and how to have a fair and just society. I just don’t feel qualified to be fighting for justice on behalf of many people. But at the same time, I’m seeing it as my responsibility, like it or not, and so I’m doing my best to rise to the occasion and to really listen carefully as to what people’s struggles are in our company and, of course, in the whole country and the whole world.

We have a company forum once a month, and we used it on Thursday to talk about issues of race and justice, equality. I tried to explain to people that it’s incredibly difficult and the responsibility is enormous for me to get it right. I was just open and honest with him about how I need their help to get it right, and we’re not going to get it right the first time. Then I asked them to remember that they all have their own voices, and they don’t need to rely on the company to do that for them. I think a lot of them haven’t seen that yet. They’re young, and they don’t realize it—at least this is all I can imagine—they don’t realize yet that they have their own voice.

Yes, you want to work for a company who believes in equality and mirrors their values, and that’s really important, because that’s the only way we’re going to get companies to change, and therefore, parts of society. But I’m encouraging them: Get out there and use your voice. They all have incredible power that they don’t even know that they have. I sort of switched my message to be less about, “Let’s figure out how the company can do it right,” and more about, “How do we empower our 150 people?” because that’s a lot. That’s a big voice when you put them all together.

Loren Feldman:
One of the things that I do want to ask all of you about is the notion that you addressed, Karen, of speaking out as a company. I have to admit, I personally have mixed feelings about that. I certainly get why it’s important for companies to especially let their employees know where they stand. But also, I got an email from Uber, and you know what? I don’t really want to hear from Uber about this.

Karen Clark Cole:
Yeah, Loren, I felt the same way on Monday when it hit me hard that that was expected, and it better be good. But I’m all for making a statement, because of the resounding response I got from our employees was, “This is helping me. Keep on. Keep on.”

I think about my own self. I want to be in a place that I know values my beliefs, at least at the macro level, and so we didn’t send out an email, but there’s a place where someone can come and find it. I think that’s the appropriate place. We posted on our usual social channels, but I agree, I don’t think we should be pushing it into people’s faces, in terms of a company statement.

Loren Feldman:
How about you, William? You happen to be in Houston, which is George Floyd’s hometown. What has this been like for you and your business?

William Vanderbloemen:
Well, Loren, I think the way you phrase that question is exactly how I have, for right or wrong, tried to think through this. What’s this like for me, and then my business? For me personally, the whole convergence of a death in Georgia, a death in Minnesota, a death… it feels different this time to me. It has been a personal wake-up call to me and made me drop back and realize… I’ve had some really great black friends, and a lot of African-American clients. Most of the large, historic African-American churches are our clients. But even with all that, I think I’m realizing this week, I thought, “I get it,” and I don’t at all. I got no clue.

So that’s me, and then you get to my business. Our business serves—whether it’s a Christian school, or a Christian nonprofit, or a church, which is kind of the backbone of the business—the church, when it’s getting things right, has always been at the center of saying, “No, you reach out to the other.”

I saw a friend of mine post, “We can agree to disagree on almost everything except racism.” Our client base, if you want to move past me to the business side, really does expect to hear from us. You mentioned Uber. Adrian, my wife, said, “Why is Lululemon emailing me about race? It seems contrived.” For us, it’s not. It’s a summons. If I don’t say something, then that is saying something.

So for us, in our very unusual circumstance, I wanted to wait. I didn’t want to be presumptuous. I didn’t want to say, “Look at all the great things we’ve done, and all the wonderful African-American churches or black gospel churches…” We didn’t do any of that.

I put a statement out yesterday that was just, “Here’s where I am.” Now I have an advantage. My last name is the name of the company. So if I send it out, it is the statement, right? It’s early, but I spent all day yesterday, responding to people asking if they had permission to reprint, asking if they could send it to their staff, thanking me for admitting that I don’t know what I’m doing and that I want to learn.

Loren Feldman:
William, how did you articulate that? What did you say in the statement, if you can summarize?

William Vanderbloemen:
I said, for starters, I haven’t been a real Christian or a faithful person my whole life. So there’s a chapter in my life where I got pulled over by the police very regularly, and for good reason. But I never ever once feared for my safety. I’ve moved into new neighborhoods, and I’ve had people say welcome to the neighborhood, but I’ve never ever ever had someone come up to me and say, “Do you really belong at this pool?” I go to a restaurant. I ask for a table. Usually I get a decent table, sometimes the one I want. But I’ve never had the recurring issue of, “Why are they putting me back here?”

One of my closest friends is an African American whose dad converted to a Muslim during the Cat Stevens era. He has a horrible last name, and he’s black, and when we go to the airport together, I just budget extra time, because it’s gonna take a while. That’s sad. But those are all things that he’s really dealt with, and I guess I just realized, I don’t get it. I don’t get it. That’s where I started with the piece. I moved into [how] Mr. Floyd’s death happened right at Pentecost in the church, which has Jewish and Christian roots. I talked a little bit about that. And then, at the end, I just told a story. I tried to share places where I don’t get it.

At the risk of spending two or three minutes, I lucked out and got to go to the Smithsonian Museum of African American History some time back on the fly at the end of the day, I went by myself. I’ve never been in a museum where they don’t have to tell people to be quiet except this one. If you’ve been there, you go down the elevator to the basement. You start about six floors below the ground, and you’re on kind of a mocked up slave ship. It’s crowded, and it’s dark, and the sounds are weird. You make your way up, and it’s not overdone. It’s not political. It’s just real. I remember getting past the Civil War and past slavery and thinking, “Okay, finally things are gonna get better.”

I got to the segregation floor where you walk through a train car, and right in front of me was this biracial couple, a young couple with a little daughter who couldn’t have been more than three, four years old, maybe five. We were walking through the train car, and she looked at her mother, and she said, “Mama, where would you have sat?” And the mother said, “Well, I would have sat up here in front with all the white people.” And she said, “Well, where would Daddy have sat?” And she said, “Well, Daddy would have sat back there with all the black people.” I’m listening to this in the back, and I’m like, “Oh my God. Am I really hearing this?”

As only a kid could say, she said, “So where would I sit?” which is a great question. And the mother said, “You know, it would have been illegal for Daddy and me to get married back then, so I don’t think you’d be here at all.” And I was just like, “Ah, I don’t get it.” And I shared stories like that.

I just tried to share where I am and be transparent and let the chips fall where they will. Not because it’s right. My PR company said, “We need to start some listening sessions,” and I was like, “No, no, that is not the point.” I know I’ve dominated the time with this answer, so I’ll be quiet, but I’m just trying to share what’s going on in my heart and hope that spills out into how the company reacts.

Loren Feldman:
So, Dana, obviously, this is different for you than for the rest of us. I suspect you’re not learning things the way we are. You’re not realizing things that you didn’t know. This is something you’ve known all too much about. How has this been for you?

Dana White:
I’m stressed.

Loren Feldman:
That’s certainly understandable.

Dana White:
I’m stressed. I’m stressed. Even on this call, I’m stressed.

Loren Feldman:
Are we making you more stressed?

Dana White:
No, please don’t. I’m on this call as I am in life: the only one. That’s not Loren’s fault, or it’s not that you designed it that way. I wanted to be on this call because I don’t have a choice, meaning I can’t not be Dana on this call and in this life. Nor would I want to be.

As a company, Paralee Boyd is Waterford Crystal clear. You walk into my salon, as you have, and you’re Waterford Crystal clear. I have gotten backlash for my statement. I’ve had advice, “Maybe you shouldn’t do that with the pictures on the wall.” I have stood my ground and said, “No, I have created a place for women who look like me to come in and see themselves reflected in every part of that salon.” And I’m unapologetic for it, and will remain so, and all of my locations will do so. So if that tells you you’re not welcome, that’s on you.

We are devastated by what happened to George Floyd, but we are not surprised. George Floyd has gotten more attention than everybody else because this is what America is. We don’t have the luxury of not dealing with it. We deal with it every day. We don’t have the luxury of, “Well, you know, this isn’t the time or the place.” It’s always time.

Have I feared for my life when I’ve been pulled over? Yes. Has a gun been drawn on me because I left my blinker on too long? Yes. Have I been followed around the store more times than I care to admit? Do I have to tolerate the ignorance of people who are well meaning? Absolutely. I’m stressed.

You’re right, William. George Floyd is different. You’re absolutely right. Silence is compliance, as well as convenience is compliance. This is not about being comfortable. This is about you’re either over there, or you’re over here. As business owners, you’re either over there or you’re over here. I’m sorry, Loren, that Uber sent you something in your inbox that you didn’t feel was appropriate space. I’m sorry it’s in your face. Don’t defend yourself. You make a stand. You take a stand.

I’ve gotten emails too and I’m going to read you a snippet of one from somebody who is a business owner who drew a line in the sand. A snippet says, “It is gut-wrenching that these things still need to be said, but now was the time to speak up and make it unquestionably clear: Black Lives Matter. We stand for love, equality and change, and we reject all forms of social injustice, systematic violence, and murder. We stand in solidarity with all those working to rid our country of racism.” And that is just one line. He took a stand for his staff, for his customers, and he’s not worried about his revenue. That is a stand.

It’s so hard for people to say, “Black Lives Matter.” They do. You’re either over there, or you’re over here. And if you’re uncomfortable over here, ask yourself why. I’m stressed. I can’t tell you how many groups on Facebook that I’m a part of, how many people find this so hard to take a stand. I’m stressed on this call because I face this call like I face the world, knowing that I am on here alone. It’s no time to be comfortable. Was George Floyd comfortable? He wasn’t comfortable. No. Why? I’m very passionate about it. And if I’m making you uncomfortable, so be it. This is my truth, and I matter.

As a business owner, I say what I say because I have over 19 young black women looking at me, and black men. As a business owner, you have customers, you have staff who are looking at you. It’s okay that you don’t know, that you let them know you’re figuring it out. It is your responsibility as a leader, and yes, it’s heavy. Yes, it’s supposed to be, but you carry [on] the best way you can. You empower their voices. But as the leader of that company, yours is the loudest. Heavy is your crown. You stand for your customers and for their staff, because we’re all looking right now. We’re looking to see.

I’m getting tons of text messages and emails: “Did you see they said nothing? Did you see what they said?” We are making decisions. That’s how it’s different for us. We are deciding who we deal with and how we deal with them. Because when faced with it, what did they do? How did they do it? There is no judgment. You all have done what you feel best, as I have done, and I’m saying what I feel best. The answer to your question again, Loren: I’m stressed because I face this call as I do the world—as a black woman. I’m done.

Loren Feldman:
Well, let me just say, I checked with you beforehand to make sure that you knew I was going to raise this and that you were okay with my doing that.

Dana White:
Absolutely.

Loren Feldman:
And I did that knowing that you would be you, that you would tell us what you really thought.

Dana White:
I’m smiling at you right now. I’m smiling at you. You can’t see me, but I’m smiling at you.

Karen Clark Cole:
Dana, I want to thank you.

Loren Feldman:
Well, that’s where I was going, too. I was just going to finish the thought that I think Karen wants to express as well, which is, I think you’ve shown us a certain amount of respect actually by saying what you really believe, and we wouldn’t want anything else.

William Vanderbloemen:
Agreed.

Dana White:
I said, “Yes” when you called me. I thought of not being on this call because I’m tired and I’m stressed. But I thought about it, and I control how I am on this call. What would have stressed me out is to make you all comfortable. People ask me, “Dana, what should I do?” And I’ve told my friends, “Go figure it out.”

And even as business owners, even in business, whether you’re making a decision as to how to deal with race, if you’re making a decision on how to grow your company, or making a decision on what paper to put in your printer, you might make a mistake. But you pivot, and you move on. Don’t be afraid to make a mistake in this, just as in every other aspect of your business. Is this big? Yes. Should you get some counsel? If you can. But don’t be afraid to make a mistake and be honest about who you are. You know what, I’ve talked to a business owner who was like, “Honestly, I just don’t care enough about black lives to do or say anything.” Okay, I don’t agree, but that’s his stance. He’s wrong.

Loren Feldman:
Let me ask you, Dana, with regard to the messages that have been sent out by corporations, my concern has been that some have just seemed insincere. Are you saying that it’s better to send—to address it in any way that you can—than not to address it at all? Is that the point that you’re making?

Dana White:
Kinda, and it’s hard, because for some people, it’s enough. For others, it’s not. But I agree with you. Some of it is, “Let’s just get something out,” this pacified, placating thing that is done. George Floyd’s murderer didn’t get arrested because they thought he was wrong. They did it to pacify us. That’s the same thing. Some of these companies aren’t putting things up because they think it’s wrong. They’re doing it because, “Well, we don’t want to be seen as…” How many of these businesses are actually looking at who they are as companies, who we are as people, as leaders?

So, you’re right. Some of them I read, and I was like, “Okay.” I mean, they put up something, I guess, and for some people who read it, it’s enough. But I haven’t seen anything as powerful as what I’ve seen in the snippet that I read to you, that is like, “Oh, he’s Waterford Crystal clear.” It’s amazing.

Loren Feldman:
How are your employees doing, Dana?

Dana White:
From what I understand, they’re saying, “Same thing, different day.” But will they get convicted? Probably not. Lesser charge, get a slap on the wrist. That’s what we’re waiting for, what we know. We’re waiting for what we know.

They’re hurt. They’re upset. They’re tired. But this is America. We know where we live. We know where we are. And we know what this country thinks of us and people who look like us. I think what made the George Floyd murder different for us was the officer’s look in the camera. Every time I talk to somebody, it’s how he looked in the camera as if he knew he could do it. So my employees are shrug shoulders, hurt, upset, tears, but we’ll see. This is America.

Loren Feldman:
Dana, I listened to Al Sharpton’s eulogy yesterday and I found it very moving. I think he, in some ways, made some points that you’ve made to us. He also said that he thinks this time is different, that he’s more hopeful this time, that he sees signs that there might be change now. Did you hear that? Do you feel that?

Dana White:
I didn’t hear the eulogy. I don’t know why I missed the eulogy yesterday. But the thing that makes this time different… I love seeing the diversity in the protests.

Loren Feldman:
That’s exactly what he mentioned.

Dana White:
Okay. Yeah, I didn’t see it. But I love seeing the diversity in the protests. I think it makes it different going forward. I think we are years and years and years away from it not being okay, that it’s never done again. Newsflash: there will be somebody else. There will be another George Floyd. George Floyd was not the last black man to die unnecessarily at the hands of white cops. This is not the last one. The change I see is the seed for the change to come. Not the change that is needed now. No, no, and I’m hopeful. But it’s not, it’s not. This is the seed planted, and this is the seed that’ll take root. But it still needs to grow, still needs to blossom, still needs to bloom. It still needs to be fertilized and watered.

But George Floyd unfortunately—and I pray I’m wrong… oh, that’d be beautiful if I was wrong—I would love it if George Floyd was the last one. But I don’t. This is America. I’m watching the protesters. I’m watching the police. He won’t be the last one. Racism is who we are. It’s in our fabric, built on it. And unfortunately, in my humble opinion, in my regretful opinion, he will not be the last. Unfortunately. I pray he is. God knows I do. I’m in love with a black man. I have a black brother. I pray George Floyd is the last.

Loren Feldman:
I think you could tell from what Karen said at the beginning, what William said, and I would add myself to them as well, that we’re trying to figure out how to process this. And I suspect a lot of the people who listen to this podcast are going through that as well. If you don’t feel like you want this weight on your shoulders, I respect that completely and you don’t have to respond. But if you do have some guidance for us, some suggestions, especially in terms of what we as business leaders say to the public, what we as business leaders say to our employees, what we as business leaders say to our black employees, I would welcome that. But again, this should not be on your shoulders.

Dana White:
No, I trust you. I’ve always told you, I trust you. And so I’ll say this: Don’t be afraid to be uncomfortable. It is uncomfortable. Growth and change is uncomfortable. And keep going and don’t be afraid. When you are standing on the side of right, and it’s uncomfortable, don’t be afraid. And then if you get upset when you’re uncomfortable, if you are uncomfortable because of what I said, or of what you’ve heard, or of protesters, find the opportunity to grow and ask yourself why.

It’s okay to be uncomfortable. Therein lies the change, right? It’s also okay not to know. I want you guys to be gentle with yourselves, but keep going. Be gentle. I say that to everybody I’ve talked to who’s like, “Dana, I’m just not where you are.” Well, you wouldn’t be, right? You wouldn’t be where I am. It’s a lot to ask, but stop trying or don’t try to initiate change or growth on your end comfortably, especially when it comes to race in America. And keep going.

For those of you who have black employees, for those of you who have black clients, especially for those of you who have black employees, please know that we’re tired. Please know that if you—like I have been several times—the one or two or three black employees in an office full of people who don’t look like me, know that they are in their car taking a minute before they come to work today. And it is your responsibility to do all that you can to create a safe space. We are tired, and they are nervous because they don’t know what they’re gonna get. But you make it better for them when you make a public statement that says, “Not here,” when you say to your clients, “Not here. We are on the side of human rights and black lives matter in this place. Your lives matter. We see you. I love you. And you are enough.”

People don’t say that. Nobody said it to me. I was so mad at Barack Obama for running for president. I was so mad at him because of the position he put me in at work. I was very proud of him. But there was a side of me that was like, “Come on, Barack.”

Loren Feldman:
What do you mean by the position he put you in? Meaning that you had to defend him at every turn?

Dana White:
I had to answer for him. I had to become a deputy of the colored in my workplace. Everything he said that made them uncomfortable, I had to say, “No, no, no. He didn’t mean that. No, no, no, he’ll be your president, too. No, no, no.” Because the alternative was to let them leave the break room thinking wrong. And I felt I owed it to that man to tell the truth, or to bat away ignorance. So as business owners, for those of you who have clients and for those of you who have people who work for you—not people of color, black people. People of color are not under the knee of the Minneapolis police department. Black people.

Be very clear as to that line in the sand: “Black lives matter. Human rights. This is where we are on the side of human rights. I love you, I support you, and you are safe here. I may not have all the answers. I may not be eloquent. I may not know the right words to say, but I’ll tell you what, not here. Be very clear. And it should go out. Should it be private? No. This is where we stand on this issue. That’s why this instance with George Floyd is different, because it gives you an opportunity to take a stand. That’s what you say to your staff. Please know that your staff is struggling, please know. They’ll never show you because they’re not sure if it’s safe, and even if it is, you are still their boss. You are not their friend. But they will note and remember what you did to make them safe. Your customers will remember what you did and how you stood. They will remember. They may not stop working with you, but they’ll file it away. They’ll know. That’s it. Nobody’s asking you to be eloquent. Nobody’s asking you to be Reverend Al Sharpton. Nobody’s asking you to be Jane Elliott. Just be clear, crystal clear.

Loren Feldman:
So I unfairly put Dana on the spot. I guess I’ll do it to William and Karen, too. After what we’ve heard, and we only have a few moments left, William, any thoughts?

William Vanderbloemen:
Just that I… don’t know what I’m doing. And for all the work we’ve done to say that we’re working toward diversity, we’re hiring toward diversity, we’re working with churches, that I don’t understand. I mean, that’s the big learning for me. We’re trying to learn how to understand and hopefully some good dialogue and intentional listening will help me and help our company.

Because it’s different as a white guy. It’s different this time. It’s just different. I don’t know why. Maybe God’s doing something in my heart. And I know I’m getting spiritual on a business podcast when I say that, but maybe it’s just something going on in me… I hope to understand better and to take actions that reflect it.

Loren Feldman:
Karen, any thoughts?

Karen Clark Cole:
Um, I’m listening. I’m just listening. You know, I’m listening to our employees. And I think what Dana said about creating a safe space is really critical. That’s the one thing that I feel like I can do and so I’m working hard at doing that. Then we’ll see what we have to do next, or what we should do or need to do or are empowered to do. But I’m listening.

Loren Feldman:
As I said, it had been my intention to go around and talk to each of you about how each of your businesses are doing. Somehow that doesn’t seem appropriate at this point.

Karen Clark Cole:
I think we just summarized it, Loren. Our businesses are suffering. Our businesses are made up of people, and so it’s not like the business lives on its own. I think Dana’s words are exactly describing how certainly everyone I come in contact with is feeling. It’s… it’s hard. It’s hard for me. And so I think that’s exactly how our businesses are doing.

Dana White:
I guess I have a question. I’ve heard, “It’s hard. It’s hard. It’s hard.” I don’t understand how it’s hard. It’s not, “I don’t understand why it’s hard.” That’s not a judgment question. It is literally a… I don’t know why it’s hard. I’m like, “I don’t know. Let me ask somebody so I can get an answer.” I’m not, “I can’t believe it’s hard.” No, that’s not how I feel. I feel like, “Huh, I wonder why it’s hard.” It’s hard. Like I think both of you guys said, “It’s hard.” Tell me how it’s hard.

Karen Clark Cole:
I’m not sure how to answer it, honestly, except it’s the opposite of easy. I mean, knowing how to represent 140 people for me—and making sure I don’t screw it up—feels hard. It’s the weight of the responsibility. You know, I’m really sad and disheartened by the whole thing, and that is hard. It’s just… maybe it’s the word that I use and it could be a different word.

Loren Feldman:
I think maybe the question Dana is asking, Karen, is, “Is it hard for you to know where you stand?” Is that what’s hard about it? Or is it hard to articulate where you stand?

Karen Clark Cole:
No, it’s hard to believe, honestly. There aren’t words for it. I just think it’s hard. I don’t understand why… You know, it’s too big of a… I don’t want to… anything I say is gonna sound like it’s not big enough.

Dana White:
It’s not.

Karen Clark Cole:
But I just can’t believe that this is how the world is. I think it’s hard for me to get my head around it. Because it’s just not anything that I have any close… I don’t understand it. It makes no sense to me. It’s not right. It’s awful. And again, these aren’t the right words, but I’m just, all of it is just… the weight of it is hard.

Loren Feldman:
William, were you going to say something?

William Vanderbloemen:
I guess what’s hard for me is to get my mind around what you’ve lived through. I think that’s what I’m understanding. It’s not hard for me to understand what’s going on. Our statement that I wrote, I thought, “Boy, William, if you really are realizing that you don’t get it, then you better ask some opinions.” I sent it to several black pastors who I’m good friends with. I sent it to my workout buddy, who’s a black guy and said, “What do you see when you read this? Where are the blind spots?” Because I’ve got them. I’m realizing it’s a blind spot.

Karen Clark Cole:
I think that was a great question, William.

William Vanderbloemen:
Well, it’s interesting. The one thing that several of them said to take out of the statement—I’d said somewhere, “We have got to start reflecting behavior that will prevent things like this senseless lynching that happened.” And all of them said, “Don’t use that word.” And I said, “Why not?” “When you say the word ‘lynching,’ it’s going to raise opinions and you’re going to argue over this.” I said, “I’m sorry, I’m using it.” Because that’s what it was.

Dana White:
I think it’s great, I think it’s great.

William Vanderbloemen:
And honestly, I get to use that word, and maybe my friend who’s black doesn’t because it makes him sound victimized or whatever. But I get to say it, and it is what it was. So understanding where I am is really easy. Understanding how I learn what I don’t know is the hard part for me. So I’m just trying to listen, and I know that sounds lame. I hope it doesn’t sound evasive, but that is where I am.

Dana White:
I think, Karen, you did it. I think you did it. I think when you make a company statement, when you’re trying to find the words, what to say to all hundred and some-odd people, you say… It’s like being the pilot of the ship. You don’t run back and say, “Oh my god, this plane is about to crash and I’m really nervous and I don’t know…” No, no, no. You go back, and you say, “I can’t believe this is happening. I am sad.” Everything that you said, I’m like, “She just said it.” You did. I’m nodding with you. I’m sitting here smiling. I’m like, “Yeah, okay.” You said it! And I think if you don’t know what to say to your staff, you are your company. Start there and make the statement as the leader of your company: “I am sad. This hurts me.”

I think when you tell them, when you share with them your struggle with it, you’re giving them part of your struggle and saying, “Help me with this.” I think that’s something you should do behind the scenes with people you trust. My leadership style is I want my staff to see that I am in the ground. I’m right there. Not so much strong, but I’m not changing. You can lean on me, you can rely on me. I don’t really waver. I’m not saying you are. For me, it’s as simple as, “This is it.” And you said it. I was listening to you, and that’s why I asked you, “What is hard?” and you said, “What’s hard is the fact that we’re here. The fact that this is reality, that this even exists.” I’m like, “Okay, write that down. Write that down. Write that down.”

Karen Clark Cole:
Well, I can tell you, it’s not really behind the scenes. In our company forum yesterday, I spent the first five minutes in tears, and I couldn’t even talk while everyone watched me. So, it’s out there.

Dana White:
I’ll ask any business owner that’s listening, if it’s hard for you to make a statement, this is not hard. This is easy. It’s easy. That’s why I said, “You’re either here or you’re there.” And you are here, Karen. And nobody’s asking you to be eloquent. Nobody’s asking you to be an orator. We’re asking you to say, “I’m here.”

Karen Clark Cole:
Right.

Dana White:
Same thing with you, William. Boom. You said, “When I watched George Floyd’s video, they lynched this man on TV, on video. It’s a lynching.” That’s it. It’s a lynching. I don’t necessarily agree, “Well, take that out of there.” Well, why? It’s what happened. It’s not your opinion. It literally is what happened. They killed this man. I mean, they murdered him. You can say murder, you can say lynch, you can say strangled. That’s what they did.

So if it’s hard, look within yourselves and figure out why it’s hard, figure out where do you stand? Watch the video. How does this make me feel? There’s your statement. If you watch the video, and your statement is, “Well, he didn’t really die from that. He had some other health issues.” What? What? Cause that’s how some people feel. If that’s what you think, then that’s where you stand. That’s it.

I think for some people, it’s hard because, like you said, “I’ve never had to deal with this.” I’ve never had to deal with being a migrant worker. I’ve never had to deal with the issues they face. I’ve always been a citizen. But if I had migrant workers working for me, and they were being mistreated, I wouldn’t know what to say because it’s who I am. And so that’s what my question is. My challenging question for you, whether it makes you comfortable or not—to the listeners and to the people on the phone—is, “Who are you?” And if it’s hard, evaluate that. I have no problem saying to migrant workers, “You are safe here. And I dare somebody to come to Paralee Boyd looking for you.” We don’t have any illegal citizens or whatever working with us. But if we did, I would say, “This is where Paralee Boyd stands with that. You’re safe here.” It’s that simple.

But I do love the fact that nobody on the call is like, “You know, I’m just so worried about my money. I’m just afraid that clients won’t do business with me anymore.” To me, it’s clear. “We may not be the UX company for you, if this offends you.” “We may not be the service for you at Vanderbloemen, if this is how you feel.” I think I heard that in both of your statements, and I think that’s a great start. That’s great. I’ve heard so many people, “Well, I don’t really know, I don’t want to offend.” Okay. There’s your stance. It’s so quiet.

Loren Feldman:
It’s uncomfortable, but…

Karen Clark Cole:
I think the important thing is that hard doesn’t mean shy away from it. That means lean into it and acknowledge that it’s hard. I mean, that’s how I feel. It’s like, “Wow, this is hard, and let’s push into it and uncover that.”

Dana White:
And who am I? Like, why is this hard? I know what the right thing is. I know I saw that video, and I know that that was wrong. Then put yourself in your clients’ shoes, put yourself in your staff’s shoes, put yourself in the shoes of anybody who can relate to that video. And then once you feel that, what do you say? And like I said, you don’t have to be an orator. You don’t have to be Jane Elliott, Al Sharpton. You don’t have to be me. You said it, Karen. That’s why I was like, “Oh my gosh, she said it.”

Loren Feldman:
I think it’s important to acknowledge that there are different levels of being hard. Some things are really hard. Some things are incredibly hard. It can be hard to find the right words, but that’s not the same thing as having somebody’s knee on your neck.

Dana White:
It can be hard to breathe.

Loren Feldman:
Right. This was, in many ways, hard, but not hard like that, and uncomfortable, but I think important. I think we all knew this would be uncomfortable going into it, but that was why it was important to do it. I appreciate all of you being willing to engage in this conversation and deal with the discomfort and the hardness. Especially you, Dana. Again, thank you for being willing to tell us what you really think.

Dana White:
Absolutely.

Karen Clark Cole:
Amen.

Dana White:
I need a drink.

Episode 19: How Do You Handle the Fact That a Lot of People Don’t Like You?

This week we focused on Laura’s struggle to get control of a Texas-based yarn supplier that she acquired late last year. She’s had issues with inventory, personnel, quality control, and then the general manager walked out, which has Laura feeling deflated knowing that some employees are talking about her and some just don’t like her: “I really struggle with that. Am I the only one who struggles with stuff like that?” Plus: Laura and Jay talk about seizing the opportunity when a competitor goes out of business.

Guests:

Laura Zander is co-founder and CEO of Jimmy Beans Wool.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Laura Zander: “Every time somebody doesn’t work out, I go in this kind of a deep depression of, ‘I suck. And if I was a better manager, this would have worked out.’”

Laura Zander: “I don’t think I’m running that business. I think that the business is running me.”

Jay Goltz: “We had the strongest economy we’ve ever had. Unemployment was at a record low. Why in the world will we not get back to normal in six months?”

Full Episode Transcript:

Loren Feldman:
Let’s do a quick update. Laura, the last time we talked to you, you told us you were about to get on an airplane and fly to Texas. Did that happen?

Laura Zander:
No, it did not. I am actually going to go this Monday, so I delayed it.

Loren Feldman:
Why?

Laura Zander:
Well, I was going to go because we were going to be hiring a new person and onboarding her and there was some drama around that. I wanted to be there for that. But then we ended up not hiring that person and we decided that, without any super significant urgent reason for me to be there, it wasn’t worth the risk, and that we’d let things play out for a couple more weeks.

What I have decided is I’m going to go on Monday and then I’m just going to stay for two weeks there. Instead of going there Monday, coming back Friday, going there Monday, coming back Friday, I’m going to go there Monday, come back the following Friday, and then I’ll stay here in Reno for a couple weeks and quarantine in Reno, and then I’ll go back to Texas for two weeks. Maybe I’ll just keep doing it that way for a little while.

Loren Feldman:
Are you comfortable about the travel? Was that part of the reason you put it off?

Laura Zander:
I feel comfortable. I don’t have a problem. But Doug was a little nervous about it. It was more for him. He thought it would be better if I didn’t go, and that’s what you do.

Jay Goltz:
Oh, isn’t that sweet?

Laura Zander:
Yeah, we’ll have a whole other discussion about being married to your business partner.

Jay Goltz:
That’s a different show altogether.

Laura Zander:
Yeah, it is. It wasn’t necessary quite yet, and it actually worked out really well. The woman whom we hired in January to be our GM, she ended up walking out last week. It worked out better that I was gone, because that kind of forced the issue, and it forced us to have conversations over Zoom and phone and Slack, and that forced our communication issues to a head. It meant that the separation happened much faster than it would have if I had been there in person. It made things a little cleaner.

Jay Goltz:
Could you put some color on the “walked out”? Does that mean she called you in the morning and said, “Listen, I appreciate the opportunity, but this is not for me, I’m quitting”?

Laura Zander:
No.

Jay Goltz:
Did she not call you at all and you found out through the grapevine?

Laura Zander:
Yes.

Jay Goltz:
Did she go ahead and scream at some people, “You’re a bunch of losers and I’m out of here”? Did she just not show up one day?

Loren Feldman:
I think you already got a yes, Jay?

Jay Goltz:
No, no, I didn’t get the whole picture.

Laura Zander:
I got a Slack message from our HR manager there that, when the HR manager got there that day, the general manager had already been in there that morning, cleaned her desk out, came over, and just said, “Will you please terminate me? I would like to just go on unemployment and leave.” I have not heard from her. We had a conversation on Slack the day before she left, and I don’t think she was happy with that conversation. Again, our communication styles collided. Anyway…

Loren Feldman:
Laura, let’s back up for a second. Let’s just make clear, this is the company in Texas that you bought, I think around December. They supply yarn. They were one of your biggest—if not your biggest supplier, and now you’re running that business. They’ve been struggling, as you’ve told us, because they supply yarn to brick-and-mortar yarn shops around the country, most of which were shut down, obviously.

Laura Zander:
Yeah, I mean, I would disagree. I don’t think I’m running that business. I think that the business is running me. But, yes.

Jay Goltz:
Did you accommodate her in terminating her?

Laura Zander:
Yeah.

Jay Goltz:
And did you have any qualms about that?

Laura Zander:
No.

Jay Goltz:
Because you felt like you owed it to her to let her go on unemployment?

Laura Zander:
It just seemed easier, yeah.

Jay Goltz:
Okay.

Laura Zander:
I don’t know that I necessarily owed it to her. But yeah, I’ve been in a funk for the last week because I feel like I’ve failed. There are a thousand things that I could have done better.

Jay Goltz:
Wait, let me help you with that. The fact that she quit that way tells you it was okay because if she was the grown-up who you wanted to run that business [while] you’re not there, she would have called you like a grown-up and said, “Listen, I’ve been thinking about our conversation. This doesn’t seem like the right fit for me, and I appreciate the opportunity. I don’t think this is going to work for either of us. I’m gonna, by the end of the day…” That’s what grownup professionals do. And the fact that she didn’t do that tells you she really wasn’t up to the task. For the amount of money you were paying her, that’s what grown-ups do.

Laura Zander:
I know, and the bottom line is the job was too big for her. It just was. She had run or managed the business years ago, but it was a much different business. It was a reactive business, as opposed to a proactive business. It sounds like she had done a fantastic job before. But we’re running things differently. I’d had that conversation with her multiple times. I’d given her the opportunity to go out with grace and just say, “Look, if this doesn’t work, it’s okay. We can totally talk about this. I’ll help you find something else.”

Jay Goltz:
Okay, good for you. Then you were professional and you did try to do it in the most civilized, nice manner. Good for you. You’ll be more deliberate the next time you hire for that position—

Loren Feldman:
You didn’t hire this person, did you Laura? You inherited her, right?

Laura Zander:
No, I hired her.

Jay Goltz:
Back. She hired her back. She used to work there.

Laura Zander:
She had worked there and then was gone for a couple of years and then I brought her back.

Jay Goltz:
When I was your age or a couple years younger perhaps, I literally—not exaggerating—went through 10 production managers in my production facility framing pictures. And every time I hired a person, I would dig in. “The last one was wrong, but this guy, he’s the guy!” And then would I dig in for a month or two or three, and then it would crap out, whether I fired them or they quit. And then I brought a consultant guy in who sent me the most poignant letter, and all that matters is one sentence. He said, “Jay, I figured out the problem.” Maybe two sentences… “You keep hiring production managers, and you think you’re hiring CEOs.” I got it.

What that meant was, I was 30 some years old, and I thought that when you hired somebody who was older than you and put them in a production thing that you’ve never done, that they’ll just be able to run the business. What I realized was, he was saying to me, “You needed to manage them more.” Now in hindsight, I realized something he didn’t even know, which is I was hiring burnouts. I was hiring people who, for the kind of money I was paying, made no sense. So the next guy I hired 24 years ago, was 27 years old, and the amount of money I was paying was a great opportunity for him. That guy is still working for me. It was all about the hiring. I didn’t know what I was doing with the hiring.

Laura Zander:
Tell me, as you’re letting these people go, you’re going through the 10, what’s the ripple effect on your other employees? Are they scared all the time?

Jay Goltz:
No, not at all. This is the way it worked. I had, I don’t know, 20 people working in production, and it was just like with the substitute teacher in school. This is exactly what would happen every time. I’d hire this new person, introduce them, and I almost walked away. I’m telling you, I had enough going on. I figured, “Oh, this guy knows more than I do. I’ll just leave him alone.”

Laura Zander:
Right.

Jay Goltz:
“Okay, Bob, you need to get 87 pictures framed every day.” Okay, so the first day he’d get 87. “Oh my God, I got the right guy.” The next day, 88. The third day, 84. The fourth or fifth day, 51. “Hey, what happened?” “Well, it was just a bad day… there were some problems with the…” It was just like at school. They would get a feel for the guy, and then as soon as they figured it out, boom! They slammed him like kids in high school. “Oh, he’s really nice. Okay.”

It kept happening, time and time again. And what I realized in hindsight, like I said, I was hiring burnouts who were never good at what they did. I’m embarrassed to say this at this point, but looking back, I had a framing factory on a third-floor walk-up loft with no air conditioning. What kind of winner who’s 53 years old is going to take that job? I had a guy who was working at Coca Cola, honest to God. What kind of manager who worked at Coca Cola is going to leave Coca Cola to work for Jay Goltz framing pictures? So, what happened with him? He just went to lunch and didn’t come back.

Loren Feldman:
Laura, tell us about your situation. Do you know who you want to hire? Do you know what you want to do?

Laura Zander:
No. Here’s the sad part. So, she left, and as it turns out, nothing has slipped through the cracks yet. It’s not been a tremendous increase in work for anybody else. I went to everybody, and I’m like, “Okay, how is this gonna affect you?” And they’re like, “Well, it’s not really.” Where I thought it would affect us most is that now I don’t have a point person, but I actually do have a point person, because I was actually talking to a couple of the other people there, a couple of the other managers, more than her anyway because it was just easier to have conversations and get straight answers. That’s part of me going there next week and spending the next two weeks is I would like to learn the production side of it. I’d like to learn what’s happening.

Loren Feldman:
Are you thinking you might not have to replace her?

Laura Zander:
I don’t know if I’m going to.

Jay Goltz:
You need to replace her. You need a manager there. You’re not there, which means either you need to bring someone in, or maybe one of your existing managers can be promoted to that. But this is like Animal Farm. This is not just going to run itself and everyone’s going to be happy. You’re going to have issues. You’re going to have people who need to be managed. You’re going to have people not coming in on time. There needs to be a manager.

Loren Feldman:
Jay, I want to go back to something. You asked Laura about terminating this person versus having her quit, in which case she wouldn’t have been able to collect unemployment. What were you thinking?

Jay Goltz:
I would want to know more. I’d want to know more things like: did you take her out of another job? Was she working hard the whole time? Was it your fault that this didn’t work out? Now, at this point, are you even going to get charged for the unemployment? Because now I’m not even sure it’s going to cost you anything because some of the states aren’t charging back. I’m not being vindictive against somebody.

Loren Feldman:
Explain how that works, Jay. In normal times, how does a business get charged?

Jay Goltz:
The quick version is: this is in Illinois, my guess is it’s the same everywhere. Whatever they end up getting for unemployment, you end up paying for plus about 30 percent, except you don’t get a bill from the state of Illinois going: “Hey, that guy who you fired? Here’s your $14,000 bill.” No, what happens is it goes into your rate and your rate goes from 4.2 to 4.4.

Loren Feldman:
That rate meaning you pay that percentage of payroll to cover unemployment?

Jay Goltz:
Yes, on every employee up to like $13,000. You are paying for it. It’s just split up, and then it’s over three years, so instead of getting a bill for 14 grand, you end up paying another thousand dollars a quarter for the next three years. You are paying for it, though, so you do want to control your unemployment expense.

Loren Feldman:
Laura, does this change your thinking about what you should do in this situation?

Laura Zander:
No, not at all, because I’m aware of this and knew that’s exactly what was happening. But I’m also kind of hoping that with Covid and everything else that the unemployment laws are a little more lax right now.

Jay Goltz:
It sounds like it was the right decision. It sounds like she shouldn’t have been put in that job, and that’s fine. She didn’t just not show up one day. She at least showed up and asked. I had someone who—this just happened—the receptionist, she just stopped showing up.

Loren Feldman:
That is what just happened here.

Jay Goltz:
No, no, no, this woman came into the HR person and said, “Will, you terminate me?” My receptionist just didn’t show up to work. So my HR person sends her an email saying, “Are you resigning?” Doesn’t respond to her. She goes for unemployment. Unemployment sends a thing to us and says she’s looking for unemployment, and the woman said in the letter that she wanted to torture us, so she wasn’t going to just quit. So I said back to her to the receptionist who came to me, “Maybe this isn’t the right job for you if you can’t come to work on time, which I know has been a problem. I’d be happy to work with you. Just tell the manager that you’re going to be looking for a job, and we’ll work with you.” As soon as I told unemployment that, she goes, “Thank you. Perfect.” She denied the unemployment.

Laura Zander:
How do you handle the fact, Jay, that a lot of people don’t like you? That this woman probably goes home at night and is like, “Jay this,” “Jay that,” and “He’s so unfair,” and “Blah, blah, blah,” and, “If he was smarter, they would be doing this, and they would be doing that”? I really struggle with that. Am I the only one who struggles with stuff like that?

Jay Goltz:
I would say that everyone struggles with it until they finally realize, “Hey, you’re the boss. It goes with the territory.” And I’ve got to tell you, whatever…

Loren Feldman:
Laura, tell us a little bit more about that. What are you hearing? What are you feeling?

Laura Zander:
Well, every time somebody doesn’t work out, especially if it’s somebody who I’ve worked directly with—and I’m exaggerating a little bit, and I am much better at it than I was five years ago, and maybe that’s the growth of my outer shell—but I go into this kind of a deep depression of, “I suck. And if I was a better manager, this would have worked out. And if I had been more clear, and if I had done a better job at this,” and I can visualize all the things that they’re saying when they go home at night about how I failed at this and…

Loren Feldman:
Wait, are you imagining these conversations? Or are you actually hearing them?

Jay Goltz:
It doesn’t really matter. Either way.

Laura Zander:
I’m imagining, but I know they’re happening as well. They’re absolutely happening. When they’re not true, they’re fine, but I know that I’m not perfect, and I know that I make mistakes, and I know that there are areas that I need to be better in. So those are the things that haunt me.

In this example, with this manager, we had a conversation last week or the week before where I was just like, “I’m sorry. I know I need to do better in this, and I really appreciate you giving me the feedback that you’re having a hard time talking to me about X, Y, and Z. I’m going to work on that, I really am.” I’m usually really open about my weaknesses, but then to know that your weaknesses are being used against you, and that you’re not getting that back… I don’t know. When somebody leaves, and I recognize that I’m complicit in that… If I was Jay, it may not have turned out this way.

Jay Goltz:
Except Jay’s 20 years older than you, and when I was your age, I was having the exact same issue. What I’m telling you is, you’ve got a God complex—

Laura Zander:
I know.

Jay Goltz:
—and you think that you’re supposed to be perfect and do everything right. And the fact of the matter is, you didn’t kill her. You didn’t have her sent to prison. You know what? You gave her an opportunity, it didn’t work out, she’ll go find another job. You’re just going to have to learn you’re on a good and noble cause. You think about all those wonderful employees who are with you on this mission to do nothing more than take care of customers and provide for their families and provide for a return on your investment. And you’ve got to give the rest of this up because it doesn’t matter. You’ve got 30 other people, 40 other people who you are a wonderful boss with, they thank you, and they feel good. And you’ve got hundreds or thousands of customers, and you need to live in that world and give up this other stuff. Because that’s like a baseball player going home thinking, “Oh my God, I struck out today right when they needed me. What am I? Oh my God.” Leave it on the field.

Laura Zander:
All right, okay.

Jay Goltz:
You don’t sound enthusiastic. [Laughter]

Loren Feldman:
Laura, are you feeling some battle fatigue? This has been a lot lately.

Laura Zander:
Yeah, for sure. I was okay like two days ago, but then yesterday there was an issue down in Texas. I’m trying to figure out how to hold people accountable from three states away during a pandemic where we just found out somebody might have been exposed, and the quality’s not there.

Loren Feldman:
The quality of the yarn that they’re producing?

Laura Zander:
Yes, we’re having some quality issues.

Jay Goltz:
You just answered my thing, which is, you need a manager there. That’s a problem.

Laura Zander:
Yeah, you’re totally right. Way to bring it back.

Jay Goltz:
Yeah, that’s the point. It’s not a matter of holding accountable. It’s just called Management 101. When you say, “hold them accountable,” did they do it on purpose?

Laura Zander:
No.

Jay Goltz:
They need some management. It is what it is.

Laura Zander:
Exactly. Okay, great. I need a manager, but I can’t get a manager today.

Jay Goltz:
Why?

Laura Zander:
I have to deal with these problems today.

Jay Goltz:
Why?

Laura Zander:
Well, logistically because it is 9:27am. I’m on the West Coast, so it’s 11:27am there. Even if I were to go through LinkedIn or whatever, I don’t know if I’ll even be able to schedule an interview until this afternoon. I don’t know if I can get them to show up by five.

Jay Goltz:
I’ll ask you the question I know the answer to: Did you write a really good ad and put it out?

Laura Zander:
No.

Jay Goltz:
Of course not. That’s what I’m talking about. As soon as we’re done here, go write a really good, compelling ad talking about… it’s going to be like, “Running your own business. Report directly to the boss who’s three states away. I need someone to build a corporate culture, to get the job done.” And write something that, someone who’s working somewhere else is going to go, “Oh my God. This is that dream job I’ve been looking for my whole life!” And then they send you this golden resume, and you look at it and you weep, and while you’re weeping, you’re dialing the phone, and you hire them and you hug and life is grand.

Loren Feldman:
Jay, it sounds like you’re trying to get that person from Coca Cola to apply for the job.

Laura Zander:
Yeah, exactly.

Jay Goltz:
No, I’m talking about the 27-year-old guy I hired who was working at a crappy company that didn’t care about quality, that didn’t care about their employees, who saw this as a great opportunity. I love this guy. I’m telling you, he’s my corporate soul to the company. He understands our whole thing. He treats the employees right. He knows when he’s got to take the hard line, he knows when they need a hug. I have that guy. There are people like that out there in the world. They are one out of a hundred.

Laura Zander:
Does he want to move to Texas?

Jay Goltz:
No. One out of a hundred.

Loren Feldman:
Do you need somebody who’s in the industry?

Laura Zander:
No, I don’t think so.

Jay Goltz:
Absolutely not.

Laura Zander:
No, I just need Dana. That’s all I need.

Jay Goltz:
The answer is, when you put the ZipRecruiter ad out, you’re gonna get 150 resumes, and you’re going to look through them and think, “Oh my God, this guy is a truck driver. Why is he applying? And this woman is a manicurist.” Yes, you’re gonna get 150 resumes, and in there, there are going to be three really interesting ones. And then there’s gonna be one of them who’s your person, but you’ve gotta buy a ticket to win the lottery.

Laura Zander:
Okay, all right. I was just kind of on the fence, because if the team there feels like they can do it themselves, do we need a manager?

Jay Goltz:
You answered your question.

Jay Goltz:
You need to put someone in charge. Maybe there’s someone there who’s your person. I’m not saying that’s not possible. Maybe there’s someone who works there who has the competency, the ambition, the nerves, and the ability to all of a sudden go from being their coworker to being their manager. You can find that out in a conversation.

Laura Zander:
Yeah, I think I might. So maybe offline, we’ll chat about that. Because I may have somebody who I think that could be a good fit for.

Jay Goltz:
I can think of half a dozen people who we’ve taken from working on the line, who had no self confidence, who we turned into managers, and there is no greater satisfaction, reward to life. Dale—one of my managers—one of them left, she moved down south for some reason. She goes, “Dale, I have to thank you. When I came here, I was just doing stuff, and you made me a manager.” When she moved down south, she got a job as a manager. Nothing is a greater success than taking someone who doesn’t have confidence but has ability and giving them confidence and training and turning them into the manager that they have latent in there. There’s a good chance that person works at the company.

Laura Zander:
Well, it’s funny that you say that, because that’s what the issue is. I feel like there’s so much talent in this organization, and there’s so much potential, but it’s never been developed. It’s never been a culture of trying to develop and pull out talent from the people who are there.

Jay Goltz:
And do you know why? I know why. You told me enough about it. I’ll tell you why. Wasn’t a husband and wife running it?

Laura Zander:
Yeah.

Jay Goltz:
Well, when a husband and wife run it—nothing against you—they can kind of run the whole place and never have to really delegate, because one of them will cover everything. The organization never gets developed properly, because one of the two of them is going to run the place. Whereas in my case, I was by myself. I had no choice.

Loren Feldman:
Wait a second, we’ve got to let Laura respond to that. Laura, your main operation, you built your business with your husband. Is Jay right about that?

Laura Zander:
Yeah. It’s very observant. Absolutely. And it wasn’t until—

Loren Feldman:
Have you figured it out?

Laura Zander:
Yeah, I mean, yes, I think so.

Jay Goltz:
Well, here’s the key. She got it bigger. That’s how I know she figured it out. And I’m not saying husbands and wives are bad. I’m saying, some of them never grow past a certain point because they can just run the thing by themselves and keep it down to that. There’s a number, it actually works. Yeah, you can do a few million bucks, but you can’t get to $10, $15, $20 million running it like that, and they didn’t. Whereas Laura has been successful at it.

Laura Zander:
No, they went big and then ended up dropping in half kind of thing. But it’s because they didn’t develop anybody. There were a few people who moved up in the ranks, but for the most part, no. They didn’t figure out how to scale it. We didn’t for quite a while. I mean, it took me a long time to figure out how to let things go and how to have other people do things and me not having to know every single zero and one and every single sentence that was written.

Jay Goltz:
You and 80 percent of entrepreneurs. That’s why most companies don’t get past a certain point. They just can’t let it go.

Loren Feldman:
Jay, let’s talk a little bit about your business. You keep talking about trying to find opportunities in this crisis. Have you seen any of late?

Jay Goltz:
I’ve just been sitting back waiting, and boom! There it blossomed. I got a call from my sales manager that goes, “Did you hear so and so is closing?” Really? A large frame shop that’s been around for many years.

Laura Zander:
Oh my God, our biggest competitor just closed too, last week.

Jay Goltz:
Yeah, so I go online. I see there’s a whole page he wrote on his website talking about it. And then, first thing this morning—this is all part of the story—It’s 7:30. I got a text from a rep who I’m tight with, she was servicing him, and she knew this was coming. And she said, “Did you see it?” She goes, “I said you should call Jay.” “Well, I don’t know if I want to.” So I said, “Have him call me.” So he immediately called me. We had a lovely conversation. And I think I’m going to be able to put together something to take the thing over, buy the building from him, and everybody wins. But he needed the push to do it. I think this is gonna work out for all parties.

Loren Feldman:
Laura, you said you had a competitor that just closed too. Do you see an opportunity in that?

Laura Zander:
Oh, it’s huge. Yes, I actually have an interview with the right-hand man of the CEO this afternoon. So not only does this open up a bunch of staffing opportunities for people who are now out of a job—

Loren Feldman:
A manager maybe?

Laura Zander:
No, not a manager, but the volume that they’re doing is going to trickle down. A big part of it will trickle down to us, I’m sure. It’s interesting, this company was one that was founded by a guy who had worked for eBay and it was VC-funded. They had raised, I don’t know, $100 million or something ridiculous. They were operating at a loss for years and years and really took a chunk out of our business—a big chunk. Then they got bought out by NBC Universal. Of course, this is the trajectory that you watch, then NBC just shut it down last week.

It’s just coming full circle, so now we’ll get back some of the market share that we lost to them. I’m assuming we will, I mean, we’re firing much better than we were five years ago, and eight years ago when they started. We’re in much better shape and much more solid. It gives us a huge opportunity, like on a couple different levels.

Loren Feldman:
Jay, let me ask you: you’re talking about possibly buying a building. I don’t know if that means buying the business as well.

Jay Goltz:
Yeah, that comes with it.

Loren Feldman:
Obviously it’s an investment. Are you at all concerned about making that kind of investment at an uncertain time like this? We still have a pandemic underway. Nothing’s back up to normal, the economy is obviously going through some difficulties. How are you processing that?

Jay Goltz:
I pull out my old playbook. I did this eight years ago. I bought a big building…

Loren Feldman:
You’ve told us about that.

Jay Goltz:
Same story now. I’ll simply tell the guy—he’s got no mortgage on it—I’ll go, “Look, we’ll put together a sales contract. I’ll buy it in two years.” It’s a solid real estate buy. If I can’t get the mortgage now, he’ll get rent for the next two years. Everybody wins. No, I’m not worried about it. I can’t say this enough. Listening to all the news reports, this is not the Great Depression. I’m so tired of hearing that. We had a pandemic. It shut things down. Yeah, it’s been brutal for a lot of people. Got it. The world will get back on its axis. Really, we will be okay. Will it be next month? Maybe not. But I’m so tired of these reports, “Unemployment is higher than during the Great Depression.” Did anyone mention that we’ve been shut down, so we laid some people off?

Loren Feldman:
Where do you draw the line between trying to maintain optimism and burying your head in the sand?

Jay Goltz:
Easy. This isn’t being optimistic and this isn’t burying my head in the sand. It’s looking at reality. We had the strongest economy we’ve ever had. Unemployment was at a record low. Why in the world will we not get back to normal in six months? That’s not being optimistic.

Loren Feldman:
You were just talking about businesses that are closing and not opening back up. There are a lot of those.

Laura Zander:
It’s not going to get back to normal, but it doesn’t mean that the new normal won’t be healthy. How about that? No, I don’t think it’s gonna be back to normal.

Jay Goltz:
Right, exact same page. There will be some businesses that won’t open. So my question to you is: Will those be the best businesses? Or will they be the ones that—like my friend’s daughter who works in a pet shop—they’re not wearing masks. She put herself out of business. Done! Over and out. Do I think there will be some businesses closing? Absolutely?

Loren Feldman:
They already have.

Jay Goltz:
Yeah. Will it be me? No. So now the market reopens and there’s less competition out there. How is that going to be bad for me? Why should I not be—forget the word optimistic—why shouldn’t I presume that these customers who were going to these other businesses that no longer exist, why shouldn’t some of them come to me? This isn’t about optimism. This is about simple math.

Loren Feldman:
Despite my challenge, you guys have just shown why you’re both successful entrepreneurs.

Jay Goltz:
And will continue to be.

Laura Zander:
It’ll be fine. It’s gonna be fine.

Jay Goltz:
Let me give you a practical answer to that though, because it’s a fair question if you phrase it a little bit differently: “Jay, are you concerned that this is gonna last longer?” So here’s the key. I’m gonna cut a deal with this guy probably. Let’s assume that I forge ahead. This isn’t gonna be in a week, it’s going to be over months. If things are going down the toilet in three months, I’ll probably get out of it, and he’ll have to go sell his building to someone else.

Loren Feldman:
That’s the answer I was looking for. You are assessing the risks, you’re aware that there are a range of possibilities, and you’re protecting yourself.

Jay Goltz:
No, I’m not betting the ranch on it. I’m buying some real estate, and I’ll put it in a contract. But by the time that deal goes through, it’s going to be two, three months from now. I’ll have a better feel for things.

Loren Feldman:
Okay, so we’re gonna try something different this week. I have a surprise quiz for the two of you. I’ve got four questions, all taken from this week’s 21 Hats Morning Report. And we’re gonna see how you guys do.

Laura Zander:
Is there a prize? Is there a prize?

Loren Feldman:
Yeah, you get to come back next week.

Laura Zander:
Oh God, I want something tangible.

Loren Feldman:
Hey, what’s more tangible than hanging out with us, Laura?

Laura Zander:
Awww, that’s a good point.

Jay Goltz:
Yeah, he’s got you there.

Loren Feldman:
Okay. Question number one. An employee-owned company in Vermont first realized something was up in early March when it saw its grocery store orders increase 600 percent. What does this company sell?

Laura Zander:
Flour. King Arthur Flour.

Loren Feldman:
Wait, wait. Let me give you the options, Laura. A) recycled toilet paper. Remember, this is a Vermont company. B) A new flavor of ice cream called stay-at-home strawberry. C) Baking flour. Or D) Hydroxychloroquine made from hemp. And your answer is…

Laura Zander:
Baking flour.

Loren Feldman:
Jay?

Jay Goltz:
That’s a good answer, yeah.

Loren Feldman:
And you’re right, that is the right company.

Laura Zander:
And the CEO said, “Are those numbers a mistake? Can you run those again?” And then she was in shock when she saw that they had increased 600 percent, because they had really been struggling with getting the millennials who were pro-gluten-free, and now they’re all baking.

Loren Feldman:
You’re warming my heart, Laura. All right, question number two. And this relates to you, Laura, as well. During the first two months of the year, the average domestic flight in the U.S. was carrying between 85 and 100 passengers. How many are flights carrying today?

Laura Zander:
I thought it was 34.

Loren Feldman:
Jay?

Jay Goltz:
I’m gonna go with whatever Laura thinks. She’s obviously paying more attention.

Loren Feldman:
It’s 39. There have been a lot of pictures on social media of full flights. Those are the exceptions still.

All right, this week, small business lending expert—this is your third question—Ami Kassar noted that the application for PPP loan forgiveness is quite complicated. And if you can manage to complete it—you’ll probably need some help completing it—your lender then has two months to review it before submitting it to the SBA. And then the SBA has three months to review it before approving or disapproving forgiveness. So that’s a total of five months in review, after you’ve managed to get the thing submitted. When is your first payment due? After how many months?

Laura Zander:
Four months?

Loren Feldman:
Jay?

Jay Goltz:
Whatever Laura says.

Loren Feldman:
That would be less than the time it takes to get it approved, so you would have to start paying before you know whether the loan’s been forgiven or not.

Laura Zander:
Exactly.

Loren Feldman:
Fortunately, that’s not the case, Laura. It’s actually seven months. But if you don’t get your act together and get that application filed, you could wind up in a situation where, even if you qualify for forgiveness, you’ve got to start paying back the loan.

Laura Zander:
Got it.

Loren Feldman:
You don’t want that to happen. Last question. You may remember an entrepreneur named Parker Conrad who started an automated HR business called Zenefits. Its customers were small businesses, and it quickly became a Silicon Valley tech darling valued at billions of dollars. Then it all fell apart and Conrad had to resign in disgrace, in part because they were breaking compliance rules about selling health insurance.

So what did Conrad do? He almost immediately started another HR startup called Rippling that does exactly the same stuff Zenefits did. In fact, he hired the engineer who built Zenefits for him to build Rippling. Forbes recently predicted that Rippling will be valued at billions of dollars as well.

My question for you guys is: When Conrad, who got lots of venture capital to build Zenefits, went back to the venture capitalists in Silicon Valley to raise money for his new startup after Zenefits had fallen apart, how much money was he able to raise? A) Are you kidding me? Zero, nothing, nada. B) $10 million. C) $100 million. Or D) $1 billion. Laura?

Laura Zander:
Oh, I didn’t read this one but I would guess $100 million.

Jay Goltz:
I would have guessed that, too, but it’s probably a billion because you want to finish the show making us both want to vomit.

Laura Zander:
Exactly.

Loren Feldman:
One hundred million doesn’t make you want to vomit?

Jay Goltz:
That does, too. It makes me kind of sick. The other one I want to vomit while I’m jumping out the window.

Loren Feldman:
Okay, you can just feel sick. It was $100 million to do the same thing over again.

Jay Goltz:
Okay, I’ve accepted the fact that none of that stuff makes any sense to the Laura world, to the Jay world. I’ve accepted that, and I don’t pay much attention to it, because it is what it is.

Loren Feldman:
Guys, we are out of time. My thanks to Jay Goltz and Laura Zander, as always. Thank you for sharing here in such a transparent way. Thank you for putting up with my questions where I try to get under your skin—especially you, Jay.

Jay Goltz:
Did you think it worked?

Loren Feldman:
Occasionally it works. On that note, thank you both.

Episode 18: Everything I Learn, I Have to Learn the Hard Way

Before the crisis hit, Jay, Dana, and William talked about what they thought the next recession might mean for their business and the benefits of starting a business during a recession: “What I've learned is, when things go bad and I lose $300,000 and I take out a second mortgage on my house, no one comes into my office and says, ‘Hey, boss, can I give you some money?’” Plus: Some making tough decisions on employee compensation.

Guests:

Dana White is founder and CEO of Paralee Boyd hair salons.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

William Vanderbloemen: “I think if we were not in that recession when we started, we would have oversold what we could deliver and would have just imploded.”

Jay Goltz: “Taking on debt could be the safest thing you could do because when things go bad, you can’t borrow money.”

Dana White: “If the economy isn’t doing good, we have a lot of factors that bode well for us. That’s why the experience is very important. That’s why the price point is very important. Your higher-end salons, they do see a downturn, because women aren’t paying $200 to go get their hair done.”

Full Episode Transcript:

Loren Feldman:
Heading into 2020, I want to talk about how you guys are thinking about the new year, what you’re expecting out of it. Are you concerned about the economy? Are you planning to grow? Are you expecting to hire? What has to happen in the coming year for it to be a successful year for you?

William Vanderbloemen:
We started our firm in the fall of 2008. I quit a secure job to start a business, which is a brilliant move, right?

Loren Feldman:
Well, it seems to have worked out for you.

William Vanderbloemen:
We started in the greatest recession and had good growth. I was hopeful we would be able to do well. Somebody told me one time—I don’t know if it’s true or not—they’re like, “Man, I like your business.” “Why is that?” “Well, if the economy’s doing well, people are hiring. And if the economy’s doing badly, everybody needs religion. So how do you lose?”

Loren Feldman:
I’ve actually spoken to a lot of people who think starting in a recession is a great thing.

William Vanderbloemen:
It was great for us.

Loren Feldman:
It’s harder. But if you survive, it gets easier when the economy gets better.

William Vanderbloemen:
Oh, that’s a good lesson. I’d add one that I think is true. We tapped into a felt need, but very few people had the money to try this new thing in 2008. I think if we were not in that recession when we started, we would have oversold what we could deliver and would have just imploded, because everybody would have said, “Sign me up, sign me up,” and, being the sales sort of guy, I would have said, “Yes, yes, yes, yes, yes” and then would not have been able to deliver. It’s almost like, I don’t know if you guys have watched the old Karate Kid movie, but 2008, 2009, and 2010 were wax on, wax off, learn the craft.

Loren Feldman:
Are you expecting a recession going into 2020?

William Vanderbloemen:
I’m just a preacher, Loren, who’s trying to learn how to run a business. I really don’t know. I think that whatever the economy does, for us, we’ve said the future in our business—and I think it probably translates to other sectors—belongs to the agile. So if opportunities for growth pop up, we need to have cash in reserve and systems ready to go, ready to move. If the bottom falls out, we don’t need to be tethered to long-term overhead costs that we can’t shed quickly. We’ve been focusing over the last year on increasing our agility, rather than worrying about what the economy is going to do, so that if we surge forward, we’re ready. If it shrinks back, then we can make those contractions and not be caught in some long-term mess.

Loren Feldman:
What does that mean to you? How do you increase your agility?

William Vanderbloemen:
For us, agility means that we’re trying to be financially agile. For us, and this isn’t true for everybody, that means we just don’t take on debt. That way, we don’t have a note we have to pay. And we also don’t take on investors so we don’t have to answer to the “Why?” and the return here, here, and here. If we choose to take a down year because we want to try and expand while the economy is contracting, that’s our call.

Now, smart friends of mine have very different approaches on this, but for us, agility is cash agility, and then it’s also space agility. We’ve done this recently. We made a move over the last year. We’ve tried for a number of different reasons to have our systems and our process to be much more of a thing that’s taught than caught. I’m a horrible manager. I’m terrible. “How do you learn search?” Well, the answer used to be, “Hang out with William for a few months.” That was the onboarding process. That that doesn’t scale. Now, we have systems that can be taught well enough that we can say, “Well, you don’t have to be in Houston.” We could have regional offices where we’re closer to our customers, not all virtual, but regional. That means we have less central office space, which means we have a lower lease that we’re responsible for. If for some reason we need to expand, we could open more regional offices, and if we need to contract, we can just close them down. I’d use the word “WeWork,” but I think “WeWork” has become a four letter word.

Jay Goltz:
That would be six, but who’s counting?

William Vanderbloemen:
Something like we can start small with our model, with the no debt, no investors. We can get a shared office space in Atlanta and start with two or three people and build it up, and then when it’s shown enough legs that we’re ready to buy a building that we own, rather than leasing, we can do that, and we have agility. We’ve done a few things. We’ve tightened up our systems so we can make them more portable. We’ve tightened our office space here to lower our commitment to a lease, which I don’t think I’ll ever do again. And then we have made sure that we’re cash positive so that we have the agility to expand or contract as as circumstances dictate. I think the future belongs to the agile.

Loren Feldman:
Dana, how about you? What are your expectations heading into 2020?

Dana White:
I have this pie in the sky, “Oh my goodness, this will be a great year if we do this.” But over the past couple weeks, after spending time with my mentor, talking to business owners whom I really truly value their feedback, the pie in the sky may come, but this year for me and for Paralee Boyd, it’s just about buckling down and getting even more into the weeds of the business. I am a very process-driven person.

Paralee Boyd runs on process. We have an onboarding process that we track. We have so many processes that we track. I think processes aside, I really want to focus on the culture. I’ve done that a little bit, but I want to start kicking it up to the point where the processes and the culture run hand-in-hand, because it’s the culture that makes the processes applicable, if that makes any sense, because of the people. It’s really about getting my hands deeper into every aspect of Paralee Boyd. William said, “Hey, I’m a horrible manager.” I am not a great manager because I’m a former labor organizer, so for me, “Does this feel good? Even if it might hurt the business, as long as it feels good…” That can’t be my managing style anymore. I have help with that, but I’ve also grown as a manager in the past year.

My goal for 2020, as far as management, is just being able to put my hands deeper into every aspect of my business and managing the finances. I think when we talk about getting your hands dirty in the business, I have a very good sense of my numbers, but having a better handle, touching my numbers every day, three or four times a week, just to manage that better. And then lastly, just growing the business.

My challenge has always been getting the word out: marketing, marketing, marketing, marketing. I’ve already begun putting the team together, giving me low-cost options to do the social media and digital marketing that I can do before I pay to hand it off, and by the time I’m ready to pay to hand it off, I will hopefully yield results with butts in seats from what I’ve done already.

William Vanderbloemen:
I love your self-awareness that if it felt good, that was good management. I think for me at a younger age—and maybe some other entrepreneurs can relate—it was: if it’s shiny, it must be good. It was like a garden hose nobody was holding with water spewing everywhere.

Dana White:
Yeah, our analogy wasn’t shiny. For us, we use food. So oh my gosh, it’s this beautiful ganache, chocolate layered cake, but we can’t live off of that. We need protein, right? We need carbs and vegetables and fruit. And so even though green beans aren’t sexy, it’s what you need to live.

Loren Feldman:
You’re in the hair salon business, right?

Dana White:
Yes.

Loren Feldman:
Yeah, you’re not opening your restaurant on the side, are you?

Dana White:
No, I’m a diner. I love to dine. That’s like my hobby. But that’s how we say, “Marshmallows are great, but you can’t sustain off of marshmallows.” For 2020, it’s really about getting those meat, potatoes, vegetables, and fruits and setting up our buffet. And then, towards the end of the buffet, oh my goodness, we have this artisanal cheese. Woo! The pie in the sky for me is potentially franchising or opening up another location. I’m still kind of back and forth on the franchise bit because it’s a huge commitment. But yeah, that’s my 2020. What about you, Jay?

Jay Goltz:
I’ve been through… I don’t know, I’ve lost count. I’ve probably lived through seven recessions and I’ve learned that you just can’t predict anything, and we’re living in such volatile times that you need to stay flexible. My main thing is, given that my business is fairly mature, I have to continually keep my eye on evolution and keep changing it, because the market’s changing dramatically. I’m working on that and I’m working on making sure I have cash.

I just want to defend something that’s got a terrible reputation: debt. Most people who are rich anywhere have used debt to get rich and most people who go broke have used debt to go broke. Debt is not good or bad. William, in your case, you don’t have inventory, right? I don’t think you have inventory.

William Vanderbloemen:
Not that I’m aware of.

Jay Goltz:
You don’t have equipment. You’re not buying hundred thousand dollar printing presses or something. For someone like you, it probably makes sense not to take on debt because it begs the question: why would you need to? You don’t have to.

William Vanderbloemen:
Spot on.

Jay Goltz:
Someone like me? I have to tell you, taking on debt could be the safest thing you could do because when things go bad, you can’t borrow money. For someone like me, it might make great sense to go take out a mortgage on a property that there’s no mortgage on, get a pile of cash, stick it into an account, and have it there if you need it, because if the economy goes bad, the banks go hide under the table. Having debt actually gives you cash, in some cases.

Loren Feldman:
What are you thinking heading into 2020, Jay? Are you concerned about the economy? How dependent on the economy do you think your businesses are?

Jay Goltz:
I’m concerned about the country. I can’t turn on the TV. For the first time ever, I work out every morning on the elliptical and I always put on one of the news stations, I’ve had to stop doing it because I can’t deal with it anymore.

Dana White:
Yeah, it’s a lot.

Jay Goltz:
On the car drive in, I thank God for Sirius radio, because I can listen to the Frank Sinatra station and pretend like everything’s okay. Because if I turn the news on, by the time I get to work, I’m already anxious and depressed. So yeah, I am concerned about where things are going. Yes, I’m watching cash, for sure. I’m absolutely watching long-term commitments. I’m staying flexible. I do agree with William, and this is a general comment, the no-partner thing, I think that’s a good plan.

Loren Feldman:
No partner, no investor?

Jay Goltz:
I think that’s always a good plan. Now I recognize that some people need to do that, and I’m not criticizing it, but I think it’s a true statement to say: If you can avoid having investors or partners, that’s a good idea.

William Vanderbloemen:
I just remember when we first started out and it was just me, staff meetings were awesome. Everybody got along and all the votes flew through and everything got done right on time and nobody felt like it went too long. Now it’s like my investor meetings are awesome.

Jay Goltz:
Someone gave me some good advice. The guy was in his 60’s or 70’s by the time he told me this. He said something very poignant. He said, “Long-term, you have three potential enemies in business: your landlord (true, I own most of my properties, it makes my life much easier), two: partners (don’t have any), three: the bank (I’m not painting the banks as bad guys, but they’re your partners on some degree). They look at your books and they can control you. I am very close to getting rid of the bank because I just had the revelation of: there’s two sides of the bank: there’s the real estate side and there’s the business side. When you do business loans, credit lines, they crawl into your…

Loren Feldman:
They crawl into your what?

Jay Goltz:
They’re in your business, they’re looking at everything, and you basically have to answer to the bank. You know what, I don’t want to answer to anybody. I just figured out lately, I’ve had this revelation. All I need to do is go take a mortgage on a property that I have no mortgage on, take that cash, and use that as my credit line, quote, unquote.

The bank, the real estate side, all they care about is, “What’s your debt to equity on the building?” They’re not coming in and asking about your sales projections. I encourage people to think about, if you can buy the property that you’re in, not a bad thing, because most of the risk to real estate is having a tenant who pays rent every month. If you’re your own tenant, it’s a no-brainer.

If you talk to attorneys and accountants, they’ll tell you there are plenty of people who end up retiring off of their building they sold when they were done because the business was worth so little. One of the greatest things that the government does are the SBA loans. You can buy a building for 10% down, which is what I did. Those are all long-term strategies that can be extremely powerful. As far as the moment, what am I looking to for next year?

Loren Feldman:
Yeah, that’s the question I asked!

Jay Goltz:
Possible volatility, election coming, making sure that I have enough cash to withstand whatever comes along, and at the same time, keeping an eye open for new opportunities, because the internet is still wreaking havoc with the business world, and there are opportunities to be had from it. The world’s changing very quickly, and you need to keep your eye on it. 40 years ago, I watched my father’s dime store—if anyone still knows what that is—slowly die over 20 years. My father-in-law had a clothes store slowly die. I’m very aware of the fact that you can’t just put your head in the sand and say, “Ahhh, computers, schmooters. They’re gonna be gone in a few years.”

Loren Feldman:
Dana, how about you? Do you think your business is sensitive to the ups and downs of the economy?

Dana White:
Yes and no. It depends on where you are financially. I think my business is priced at a point that I’ve been told is somewhat recession-proof. I do believe we will see a downturn if the economy tanks. However, I’m providing a service that is needed. We provide a basic service.

We might start losing people because they do it at home, but also it helps in a recession, similar to alcohol, you can pour a drink at home, but it just feels better when you’re at a bar for some people with other people. It’s the same thing with a hair salon, like it’s just done better. You might save some money, but it’s a whole experience. I think for Paralee Boyd, if the economy were to tank, we would see a little back beat, if you will. But I do think that we’re one of those businesses that wouldn’t tank completely because of the economy.

Jay Goltz:
I think your business is recession-resistant to a degree, clearly, but I read an article years ago that was really insightful. It talked about guys who go to country clubs to play golf and looking for the ball. They found out that when the economy got bad, people would spend more time looking for their ball than when the economy’s good, because they can’t do anything about their car lease, they can’t do anything about their mortgage payment, they can’t do anything with their health insurance, but they can spend five more minutes looking for their ball.

I think that haircuts are similar. I think there are some people who will think, “You know what, instead of getting my hair cut every four weeks, I think I’ll stretch to 6.” There will be some of that for sure, sure.

Dana White:
Absolutely.

William Vanderbloemen:
I’d have to look on the interwebs to find it, but I read a study not too long ago, Dana, that Revlon’s biggest boost was in an economic downturn. Women wanted something to make them look good when everything else was bad.

Dana White:
They wanted to feel good. That’s exactly it. If the economy isn’t doing good, we have a lot of factors that bode well for us. That’s why the experience is very important. That’s why the price point is very important. Your higher-end salons, they do see a downturn, because women aren’t paying $200 to go get their hair done. I’ve only been open for seven years—there were some “Eh, jobs aren’t as great right now”—but we saw women who had appointments based at higher-end salons, they started coming and we gained new customers because, “Hey, you do my hair just as well. Why am I spending $100 more?” A lot of it was a social status thing. Sometimes women go because they want to be known to go to that salon. I’m not really seeing where the economy is affecting this too badly.

Loren Feldman:
Okay, next topic. Also, relevant for this end of one year, beginning of a new year time period. I’m curious how all of you handle performance reviews and also bonuses and compensation. Do you tie them together? Is it a once-a-year thing? William, why don’t we start with you?

William Vanderbloemen:
This is a new thing for us. As a startup, I was and still am to some extent, highly allergic to overhead. It causes rashes and things. We would pay people a fair wage as a base salary, but hey, trust in us and when we grow, we’ll share the growth. We had to learn to not call it “profit sharing” because then you’ve got to issue K1s and all kinds of things. Okay, so bad preacher joke, but we named it “prophet sharing.”

Dana White:
That’s funny!

William Vanderbloemen:
It was basically, if we grow, we all grow together. We didn’t know until the end of the year. We’re an S Corp. The books close on December 31st. There’s all this, “Get all the cash in that you can by December 31st so we can share all we can.” We had big fun and the most fun meetings of the year were at the end of December. Go have a beer with William and get your bonus check. It was awesome.

Now, we’re paying better base salaries, we have benefits. We’re like a real business. We still want to share the growth, and we do, but we’re moving toward a different model where it’s not so much of the compensation tied to bonuses. You don’t have people running around at year end wondering what’s going to happen. We’re actually moving toward intermittent bonuses and rewards tied to particular performances throughout the year. If there is an annual bonus, it will no longer happen in December. It’s like, who wants to be the Grinch at Christmas?

When we first started out, we were on meteoric growth. It’s like, “Well, that’s fun.” But when you have a year of 8%, 9%, 10% growth, and it’s not 50%, and the check’s not as fat as it was, then you’re talking to Clark Griswold in Christmas Vacation and he’s like, “Where’s my bonus? I need to build the pool,” or whatever it was that he wanted. We’ve tried to remove it from the holiday season, just so we don’t run the risk of messing up holidays or mixing the message.

Then we’ve also moved to lower percentage bonuses to a healthier, more predictable workplace. Then we’ve also said, “Let’s not make it all one annual bonus, but let’s do some that are intermittent.” I jokingly said, “We probably ought to study how slot machines get people coming back. How often do you pay out so that people come back?” And I don’t mean that crudely because I love our people and I want to reward them, but we think that a combination of an annual reward that’s not tied to Christmas, and some seemingly random but tied to performance rewards throughout the year, will actually create a happier, more fulfilling experience for the employees.

Loren Feldman:
What do you see as the real goal with these bonuses? Are you trying to motivate people?

Jay Goltz:
Is it an incentive, or is it a thank you?

William Vanderbloemen:
For me, we’re still small enough. We’re a micro niche business, and we have 45 full-time employees. I would love to have the upside of people feeling some ownership stake in the company. Now, we’ve not done an ESOP kind of program, and I don’t know that we’ll ever do that. But I think the value proposition in an ESOP is everyone feels like an owner and they pick up a piece of trash in the hall when they see it. Or they take care of something that’s not in the job description. There’s more of an all-in mentality. The best days for us are when we’re all working together, irrespective of whether it’s not what my team does or what my job description says. I may be living some utopian dream thinking that can keep happening. Maybe as you grow as a business, that gets harder, but we’re going to try and maintain it. One of the ways we’re trying to maintain it is through basically saying, “If the company grows, we all grow.”

Loren Feldman:
How about you, Dana?

Dana White:
In our last podcast, I shared about me hiring a new operations manager, and that’s working out very well. Now that we have more structure in regards to performance reviews with this new operations coordinator, we gave everybody a raise, and we’ve been very deliberate about incentivizing people financially through performance. For us, no bonuses. We have a younger group, and this is not a salary-based position, so definitely not profit sharing. But what we do do is, based on your performance, here is $100 gift card, or based on your review—we don’t really incentivize for their review—we are starting to say thank you.

Next Friday is the gift exchange. We do these little things that go a long way with the staff. We’re going to start doing PB bucks—Paralee Boyd bucks—and the managers will start giving those out to staff members during shifts, as well as reading the kudos. We have a kudos box and they leave notes to each other. We read those out loud and give them to them. Then when somebody performs well, we give you a Paralee Boyd buck, and then you add those up. If you get up to $100, or whatever denomination you want to get to, you can redeem those for a gift card of your choice for that amount.

We don’t really base it on performance, as far as incentives. We don’t say, “Hey, good review. Here’s, 500 bucks.” But through our key performance indicators, you’ve been performing well, so we incentivize you with a reward of some sort.”

Loren Feldman:
Do you do annual performance reviews?

Dana White:
We do quarterly.

Loren Feldman:
Is that working for you?

Dana White:
Yeah, it is because we measure your consistency and speed. We understand that there’s a person behind that flat iron. We want to check in when we notice, “Hey, the timing is going down” or any variants. We bring it up at that next quarterly review, and then they’re not punitive at all. That’s just not our culture. It’s a check in with you so you can let us know how we’re doing. We check in with you to praise you, and recommend any areas of improvement.

If we see areas of improvement, it’s based on the connection we have with you as your employer. “How are you doing? Because we’re noticing in your work that…” It’s talking about what’s going on with them, and how we can help, not so much in your personal life, but how can we refocus you to come back and perform? A lot of times, that conversation is all that’s needed. No added training needed.

Because we’re watching that, we connect with them and say, “Hey, what’s going on? How are you doing?” And then they turn it around because they know they’re being watched. Because you work for an employer that cares, and we want to help get you to perform at your best. We’ve also had reviews where they’ve outgrown the position, so now we’re looking to transition you out. But it’s all above board. It’s never nasty. Some people would like to make it nasty, but I have a really strong management team that keeps it even-keeled.

Loren Feldman:
Do you tie compensation discussions to the performance reviews?

Dana White:
Annually we do. When we get to that fourth performance review, we for the most part give you a raise for your time in—a raise or a promotion, or both.

Loren Feldman:
People have an expectation that, at the end of the year, they’re likely to get a raise?

Dana White:
Based on their performance, and they’ve known over the year, this is how you’ve been doing. We also give them time to correct whatever’s going on. For the most part, they do. We have not not given somebody a raise. With training, it’s about communicating clearly to your staff what they need to do in order to perform well at this position. Either they want to do it or they don’t. For those who don’t want to do it, we have a way of transitioning them out. For those who do want to do it, we have a way of working with them to get them to where they need to be.

They’re not hard tasks, they’re not, “Hey, we need you to stand on your feet for 18 hours a day.” No, they’re just, “Hey, it’s taking you 40 minutes to curl one head. We need that done between 15 and 25. Why don’t we set you up to go to these following trainings to get you there?” And there’s all the encouragement that we give them along the way. We really clap for them along the way. Then when their review comes up, you’re not surprised because you’ve been performing like a rockstar.

Loren Feldman:
Do you worry about creating an expectation for an annual raise that you may not be able to meet in coming years?

Dana White:
I would if we didn’t communicate clearly. Our raises aren’t huge. They’re incremental. They’re like 25 cents, 50 cents. A lot of times, the raises come when we promote them. If we take you from stylist to lead stylist, your commission goes up. They’re still based on the amount of heads that you do, and your hourly salary. Your hourly salary may go up 25 cents, but you’re actually up for a promotion for the lead stylist where more money comes in. That’s where you want to make your money. But we are very clear that if you’re not performing, I don’t care if you’ve been here for five years, you’re not going to get a raise. But we’re going to do everything that we can to help get you there.

Loren Feldman:
How about you, Jay?

Jay Goltz:
I’ve been all over on this thing. I used to give everyone bonuses, and then what I’ve learned the hard way is—because everything I learn, I have to learn the hard way—when things are great, everybody’s happy. But as I said, I’ve been through several recessions. The last one in ‘08 was brutal, and you can explain it all you want. At the end of the day, people are really unhappy that they didn’t get their bonus, and I’ve come to the conclusion: they’re not my partners. What I’ve learned is, when things go bad and I lose $300,000 and I take out a second mortgage on my house, no one comes into my office and says, “Hey, boss, can I give you some money? You gave it to me on the upside, so I want to be there for you on the downside.” I’ve recognized they’re not my partners, A. B, a lot of them are making $30,000, $40,000, $50,000—they really need the money. This is just my opinion at this point, but it’s a well-educated opinion, because I’ve got everyone from salespeople to production workers to guys working on the dock—I would not want a big percentage of their income to be based upon this, because they just can’t afford that.

This is what happened to me. I was giving out bonuses every year. ‘08 happened. I’m lucky to be in business still. I’m in the home furnishing sector between the home starts. Picture framing is absolutely a luxury item unlike haircuts. You could stop picture framing for a year and nothing’s going to happen to you. Your life will be a little less happy, but you can just stop. My business literally took a 30% hit overnight, and I was in no position to be giving out bonuses. Every year, I thought, “Okay, this is going to be the year. I’m going to start again.” And then every holiday season, I have to stand there in front of everybody with this albatross and say, “Listen, guys, sorry, but we’re still not where we need to be. I can’t give it.”

Every year, I would dread this thing. I finally figured out—I went back to my old thing. For production people in particular, I’ve got like 50 people, and we give out like 25 bucks a year. It’s just something to say, “Thanks for hanging around.” The new employee gets lunch, but the person who’s been with me for 20 years gets $500. Now, I did that right before I came here to get on this podcast. I just had the handout. My top guy’s been there 33 years. He got a nice big check. I’ve got lots of people who have been with me for 20 years.

And you know what? The five or ten grand that I ended up giving out is never going to make that big a difference in the scale or the size of my company. I got rid of this huge albatross around me now, and I can’t tell you how much happier I am.

Loren Feldman:
What’s the difference? Jay, why is the albatross gone? You’re still giving out—

Jay Goltz:
The albatross is gone because I don’t have to worry about, “How much money did I make? How much am I going to split it up?” No matter how much money I make, there are years where I make a good amount of money, and there are years that I lose money, and there are years that I make $50,000. The albatross is off because the five or ten grand that I’m giving out of bonuses is just not going to make a big difference.

Loren Feldman:
You’re always going to give that amount.

Jay Goltz:
Yeah, unless it’s really bad. And if it’s really bad, everybody’s going to be happy to have a job. I would never say, “I’ll always give it out.” But if the economy really goes bad, everyone will understand that we can’t do it. I can’t tell you how much better I feel that I don’t have to worry about it every year.

I know this sounds preposterous to people who aren’t in businesses like mine—I have such a huge inventory and so many costs, I really don’t know how much money I make until I take inventory. I’m not selling televisions where they’re all in a SKU, we can barcode them. I’m using framing material. I’m selling things at different prices. There are sales. There could be a huge swing, depending on what the inventory is. I don’t even know how much money I made in December.

I just feel so much more relieved now that it’s just clean and simple. People are happy. The first time I went to it, I had a woman working for me who had only been there for a year, and I gave her the check. I go, “Sorry, it’s not much.” She goes, “Oh no, that’s okay.” She appreciated the fact that they’ve been there for that long, and they were getting their $200, $300, $400, or $500. There was no resentment whatsoever. It’s just clean, simple, one hundred percent fair. Everyone knows what the formula is. Versus you start giving it out based on, “Oh, he really worked hard this year,” and all of a sudden, the raise review and the bonus are mushed together. I think that’s a huge mistake.

It also helps when I give the raise reviews now. How long you’ve been here is out of the formula, because I will tell you what I’ve seen companies do. They give their 3%, 4%, 5% raises every year, because you can’t give the guy a quarter. And the next thing you know, 20 years later, one person is making $20 an hour standing next to someone who’s doing the exact same job making $15 an hour. That’s how you go broke slowly. It’s really helped me to keep that out of the formula. We do once a year raise reviews, but we do reviews every day. If somebody is doing something, well, hopefully we notice and say something if there’s a problem so that we don’t store it up and have one dumping on them once a year, once a quarter.

I feel very comfortable. It took me 41 years to get to this place. Dana, I’m glad you said, “I’ve only been in business for seven years.” You’re right. Seven years isn’t a long time. It really isn’t. People need to understand, in business, this takes years to figure out. I’m very comfortable with what we’re doing now. I know this open book management thing, a lot of people swear by it. I’m not criticizing it.

I just know that you’ve got three choices: no bonuses (I wouldn’t argue, in some places that works), a badly done bonus program (where people feel like they didn’t get their fair share, which is worse than no bonus), and then there’s my approach, which is just a yearly thing—no harm, no foul, clean, simple. I’m sure not as good as a well-tuned performance bonus thing, but better than nothing. I’m comfortable with where I’ve landed. I continually try to figure out, “Is there some way I can do more of this whole participative thing?” But it’s very, very tricky. I’ve got all different kinds of positions and jobs, and it’s just not worth the brain damage to me at this point.

Loren Feldman:
William, I’m curious, do you think your employees compare notes on how much they make or what they get in a bonus? And do you worry about that?

William Vanderbloemen:
Is there a company where people don’t compare notes on what they make?

Jay Goltz:
They do it in the bathroom, by the way. I used to have parties. They go in the bathroom and open up the envelopes. They don’t do it in front of you. But they’re doing it.

William Vanderbloemen:
There’s this word that’s used throughout the New Testament, “and there was murmuring,” and I think in describing most businesses, there’s murmuring.

Loren Feldman:
Do you try to manage the murmuring?

William Vanderbloemen:
No, there’s nothing punitive. I don’t even know if we have anything prescriptive: “Do not talk to each other about what you make.” I think it’s going to happen. We certainly don’t post it. I don’t think that’s helpful. But I just don’t know how you govern that, and maybe I’ll be back on this podcast in a year or two talking about, “Oh man, did I learn the hard way.” But for now, it’s just not something that we publish, nor try and protect.

What happens with the bonuses, that used to be a bigger conversation than it is now. We did finally put our salespeople on a form of commission mainly because they came to me and said, “Even if you paid us all the very same amount of money, we are all going to perform better if we have a number on our head,” which was really interesting. So we did finally say, “Okay, we all are no longer part of bonus. Let’s just put you on straight. Here’s what happens if you sell this, and if you sell that.” I guess people know sales numbers.

Jay Goltz:
There’s just nothing to argue with. They know how much they sold. They know the percentage. That’s clean.

William Vanderbloemen:
It’s your annual review. I think we all have a mutual acquaintance in Cliff Oxford. Cliff wrote an article, I think for you, Loren, years ago: “What Do You Do With the Brilliant Jerk?” I guess the idea, or at least what I took away from it, was: what do you do with the sales guy who’s hitting all the numbers but is a total rear-end around the office and ruins your culture?

In our annual review, for years, we’ve codified what our nine cultural values are, what it means to live those out, and the employee gives their version of how they review themselves. The manager or direct report says, “Here’s how I view you,” and your compensation is directly tied to how well you’re living out the cultural values. It’s not all of your merit pay, but it’s certainly part of it. The sales guy could make all the sales, but if he’s a rear-end, he’s not going to get all of his commission.

Jay Goltz:
That’s an ongoing problem with outside salespeople. It’s common that the person who brings in all the big business comes in and dumps stuff on the desk and says, “Here, I need this by Thursday,” and the rest of the people are aggravated at him, and they know they make way more money. It is an ongoing regular problem for many businesses.

Loren Feldman:
Which is why some people don’t pay sales commissions and even put salespeople on straight salary. But that’s a conversation for a different day—in the time we have left, the biggest story in entrepreneurial compensation I think over the last five or six years, is this guy Dan Price, from a company in Seattle called Gravity Payments, who got a ton of publicity when he decided a few years ago to give all of his employees raises so that everybody was making a minimum of $70,000 a year. It was in the news again recently. We had it in the Morning Report because he has bought a subsidiary and he did the same thing there. All along, this has created all kinds of publicity for him. I think there’s been a Harvard Business School case study about him. He’s become kind of a brand name. I’m really curious what other business owners think of him.

There was another side to this story. He had some employees who had made more than $70,000 who quit when this happened. He had some vendors, business owners, who felt that this sent a very bad message and stopped doing business with him. There was a story in Bloomberg that he had some litigation with his brother, who was a partner, and they raised the question of whether he cut his own salary because he didn’t want to be liable for a larger payment to his brother if he lost the litigation. I’m curious what you guys think. How about you, William?

William Vanderbloemen:
Well, I’m all for innovative ideas, and I love giving away things. I love being generous. Then with all those things I love, let me just put a caveat in, I don’t have an MBA. I don’t know all the cool business rules, whether this is right or not, but something in me feels like this is a little bit of an idealistic chasing of a windmill, and it’ll come back to Earth.

Loren Feldman:
Bloomberg called it a “capitalist fairy tale.”

William Vanderbloemen:
That’s kind of what I’d call it. I just don’t see this as a universally applicable rule. Maybe it’s cost of living, and Seattle’s going through the roof. I mean, real estate values are up 15% year-over-year, ever since Amazon and a lot of tech have moved in. Maybe to keep good people up there, you have to do unusual things. Maybe there’s a contextualization, and maybe there are all these other things, the fight with the brother. But for universal application, I can’t see it. I’m just a struggling preacher trying to build a business.

Loren Feldman:
Dana, any thoughts?

Dana White:
I think it served his purpose. In part, I think he got the publicity he needed. I think it was a very… not a PR stunt, but I think that was more to it than just making sure that his employees were all compensated at $70,000. It’s just not a model that would work for my business. I want to caution business owners who want to pay a salary. You want to make sure that the output, the work that they’re doing—I’ve had conversations with people about salary raises, and they’re like, “Well, this is what’s going on in my life, so this company should compensate me for that.” My thing has been, “The company had no choice, no hand in the decisions that you made in your life. If I’m in a certain situation or if I have a gambling issue or whatever… “I owe $500,000. I have a job. I’m working here. You should help me with that.”

Loren Feldman:
Have you actually had somebody come in and say that to you?

Dana White:
I’ve had people in my company who have felt that, “I have made these choices and I’m here at this point in my life. I need a job that will help me compensate for that.” And then I said, “This is not this job. This is what you do, and this is what I believe is a fair compensation.” Based on my research in this industry, and based on how I feel comfortable putting my head down at night when I see your check. I’m like, “Okay, that’s fair.”

I just think we’re getting into this period, Loren, where the business owner is the bad guy, where back in the day, when you look at old movies, like It’s A Wonderful Life, the business owner had the opportunity to be the hero. It wasn’t, “Oh, you’re making money. Oh, you’re awful.” When I read that article, I said, “Hmm.” He got me to read the article, but it’s just not something that I would do at Paralee Boyd, is pay everybody $20 an hour to make the statement of equitable wages. At Paralee Boyd, everybody knows what everybody makes.

Loren Feldman:
Interesting.

Dana White:
Yeah. Everybody knows where they fall in the commission. They know what the lead starting commission is.

Loren Feldman:
They know what they have to do if they want to make more.

Dana White:
Absolutely, yeah, everybody knows. It’s already the beauty business, it already can be very competitive.

William Vanderbloemen:
Maybe a little drama. Is there drama in the beauty business?

Dana White:
Yeah, so let’s just remove all that. You know, she just started, and this is where she’s starting at. Yes, she has 20 years of experience, but she doesn’t have 20 years of experience at Paralee Boyd, and Paralee Boyd is different. I just thought it was, I don’t want to say a “PR stunt,” but I just…

Jay Goltz:
It could be though. You could call it a PR stunt. That wouldn’t be unfair.

Dana White:
Thank you, Jay.

Jay Goltz:
Now Dana, you said something that I think you’re right about with paying market wages. But you said, “They made choices.” They might not have made choices. Maybe they’ve got a sick kid at home. It might be no choice, just bad luck. Does that mean if someone has horrible bad luck in life, that the business owner, it’s now their responsibility? I mean, that’s a slippery slope.

Dana White:
Very slippery.

Jay Goltz:
The problem with this guy’s story, and Loren, I believe you left the most important part out of the original story. He cashed in all of his money. He funded this business as though it was a not-for-profit. He decided that it wasn’t important that he made money. He’s giving it all away. The problem with that—

Loren Feldman:
Wait, wait, wait.

Jay Goltz:
Yeah, read the original story. He went ahead and he was cashing out all this stuff so he could fund this. That’s what the story was.

Loren Feldman:
I don’t think that’s right. His original salary was more than a million dollars. He cut his own salary to $70,000. But I think the company remained a for-profit business.

Jay Goltz:
For sure. But I’m saying, cutting your salary from a million dollars to $70,000 is basically saying, “I don’t have any rights or expectations or needs as a business owner to make money. I’m just going to give it all away.”

Loren Feldman:
Wait, he still owns a company.

Jay Goltz:
He kind of does, but to what benefit? He just gave away the profits of the company to the employees.

Loren Feldman:
Sure. He retained equity in the business.

Jay Goltz:
What good is equity if you don’t have profits? He’s giving the profits away.

Loren Feldman:
I don’t think we know that.

Jay Goltz:
Aha! There’s the point. We don’t know anything. We have no idea how much money he’s making. We have no idea whether he’s actually paying all these people. The newest article I read about that ratio people use with how much does the CEO make compared to the average employee—that is preposterous in a privately-owned subchapter company, because what that means is, if you own a $50 million company and you’re making 2%—which would not be anything to brag about—and you made a million dollars, and you say, “Oh, that’s terrible. This guy’s making a million dollars and his average employee’s only making $40,000.”

They are dangerously close to going out of business, because all that would have to happen is a hiccup and now the company doesn’t make money at all. That whole ratio should not apply to people who own the business. There’s supposed to be a return on investment and you need a return on investment for the longevity of the company to stay healthy in business.

Loren Feldman:
You know what’s interesting, Jay? What you were just talking about now is one of the strongest arguments, I think, for doing open-book management, which you raised before. The people who do it tend to make the argument that they decided to open their books because they knew that their employees just assumed that the owners were making even more money than they really were, or way more money than they really were.

Jay Goltz:
Or losing money.

Loren Feldman:
By opening the books, they changed that. They allowed employees to see how the business really does.

William Vanderbloemen:
Loren, I’m going to push back on you here. We’re in an industry where we have a very clear margin—I don’t want to go into those margins—we need to clear a certain EBITDA to be a healthy business. If we ever wanted to take on investors, they’d look at our books and say, “You’re healthy, you’re clearing the right amounts.” So if I had 100 stock owners, and I were distributing our profits among 100 stock owners, nobody would have a problem with that, but because there’s one stock owner, they’ll look at the number and say, “Oh, that’s too much” I don’t know how to get around that. And I think it’s a Pandora’s box to open that. You want to talk about water cooler talk and murmuring?

Dana White:
Oh my goodness.

William Vanderbloemen:
I don’t see the value and I’ll push way hard against you, Loren, as a guy who’s the sole owner of his business.

Loren Feldman:
For the record, I don’t mean to be selling open-book management. I just think it’s a really interesting debate.

Jay Goltz:
No, it shouldn’t be a debate. Some people it works for, and they’re happy, and other people aren’t. The most misused word lately is the word “transparency.” That’s good for government. It doesn’t apply to a privately-owned business. Since when is it, “Oh, William, you need to tell everybody how much money you’re making. We need to be transparent.” Where did that come from? Who says it’s our responsibility to show transparency to everybody? It’s really not right. It’s not capitalism. It’s not even healthy for the business.

Loren Feldman:
I don’t know about it’s not capitalism. I don’t want to be in the position of selling open-book management, but one of the things that does happen at companies where this works, is if employees know that the company’s not doing well, they often come up with ideas that wouldn’t even occur to the owners.

Jay Goltz:
No argument. Capitalism does not mean that you have to be transparent with everything you do in your internal business. That’s all I’m saying. We don’t owe it to the population or to our employees.

Loren Feldman:
I’m just objecting to it’s not capitalism. I think there are different ways to be a capitalist.

William Vanderbloemen:
I do think it’s a one-way street. I don’t know how you open the books and then ever close them again.

Loren Feldman:
Okay.

Dana White:
Yeah.

Jay Goltz:
Just to be clear, I’m saying government should include transparency. That’s what government is supposed to be. It’s our government. Included in capitalism should not be the notion that as business owners, we have a responsibility to be transparent. That’s a crock. It’s just not true. It’s nobody’s business if we’re losing money, except the bank.

Loren Feldman:
Well it’s an employee’s business, isn’t it?

Jay Goltz:
Did they sign the lease? Are they the one who’s going to lose their house if things go bad? How is that the employee’s business? Explain that to me. They have a job.

Loren Feldman:
But people change jobs too. That’s certainly something that they might consider, if they have a job offer somewhere else.

Jay Goltz:
Is that our responsibility to tell every applicant, “Oh, by the way, before you take the job, I just want you to know I could be out of business in two years”?

Dana White:
It was brought up during the Small Giants Forum, and I looked around like, “Okay, am I the only one here who thinks this is a little much?” I would not do open-book management at Paralee Boyd. Oh, no!

Loren Feldman:
We are out of time! My thanks to Jay Goltz, William Vanderbloemen, and Dana White for another lively conversation on the 21 Hats Podcast. Thank you all.

Dana White:
Thanks for having us!

Episode 17: You’re Not Human Anymore. You’re the Boss. Deal With It

In this week’s report from the front lines of the crisis, we talked about overcoming the fear of raising prices (during a pandemic!), deciding when is the time to tell employees they have to come back if they want their jobs, and finding opportunities amid the crisis disruption. But the focal point of the conversation was Dana White discussing her realization that she’s been more productive during the crisis, even with her hair salons shut down, than at any other time since she started her business seven years ago. “I have been emotionally drained for years,” she told us. “And because I've been emotionally drained, I have not grown my business.”

Guests:

Dana White is founder and CEO of Paralee Boyd hair salons.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Dana White: “I have a confession. I am afraid to raise my prices because I’m focusing on the naysayer customers.”

Jay Goltz: “What would be the point of having happy customers when you’re going broke?”

Full Episode Transcript:

Loren Feldman:
Let’s get started. Dana, we haven’t spoken with you in a couple of weeks. What’s going on with Paralee Boyd?

Dana White:
I’ve gotten the plans together for when we reopen. I had a conversation with my manager and my operations manager about what that will look like and what that means for the staff. I will keep both our staff and guests safe. I’ve been working on growing Paralee Boyd, which is updating the website, doing marketing as far as meeting my customers where they are, developing a product line of CBD hair growth products, because there aren’t really that many that are geared toward—

Loren Feldman:
I’m sorry, using what?

Dana White:
CBD, which is cannabis.

Loren Feldman:
Oh, it just didn’t make sense to me in the context of hair. What’s the purpose of using it in a hair product?

Dana White:
Cannabis has a lot of great uses, and so I have been doing my online research and understanding what my market needs. They want their hair to be thick and they want it to grow and there are things out there—castor oils and such for growth and thickening—but I wanted to kick it up a notch. So I started doing my research and talking to people who know about the hemp plant and they said, “Dana, cannabis is the way to go.” Or CBD, which has no THC, so you can’t get lifted from CBD.

What I’ve been doing [is] I’ve been spending time on the phone with CBD suppliers, as well as sources of where I can get the other ingredients in bulk for my haircare products that I’m going to use and then developing a treatment in the salon for hair growth and thickening based on some of the things we already do. I’ve also been putting together kits for branding, so that’s speaking with vendors overseas to determine what their prices are for paddle brushes, bobby pins, hair clips, everything to make the Paralee Boyd brand so you can get a nighttime hair-care kit that includes a satin pillowcase or hair bonnet shipped to you at home.

We have not gone into the product/retail space. My brand is trusted. Women trust Paralee Boyd to come in and get their hair done, and I’m hoping that when we launch these products, that they will still put their trust in that brand knowing that we can take care of them at home.

Loren Feldman:
Dana, would these kits that you’re talking about be a one-time purchase or a subscription?

Dana White:
A little bit of both. You can buy a satin pillowcase or a headscarf, but you may need another one. And of course, the products will run out, so the hair growth oil, if you still want to keep using it, and the shampoo and conditioners are going to run out, so you can purchase those again. You may buy a blow dryer one time until the blow dryer dies and you can buy another one.

This subscription idea was brought to me, and I’m thinking about it. But I’m really just focused on what our retail is going to do. If I’m seeing guests are repeatedly buying products, I will probably turn it into a subscription for those that are interested.

Loren Feldman:
Have you thought about the pricing for these kits?

Dana White:
I have, and it was funny, I was on the phone with another small business owner last week, and she told me that I was pricing way too low. So right now—

Loren Feldman:
That sounds familiar, Dana.

Dana White:
Yeah, sounds familiar. Yeah, it’s a symptom. What I’m putting together is the cost of the CBD—the cost of everything—the cost to bottle, and then once I have that price, just kind of running it past some other business owners who have retail and deciding what my markup should be—which is a hefty balance between what my people will pay and the cost to produce it. I want to not do it too low, which is something I do, and just do it at the right price.

Loren Feldman:
Well, since you’re referring to it, let’s talk about that. We have spoken in the past about your pricing of your basic service at your hair salons. As you start to think about reopening, have you given any more thought to how and when you might raise your prices for your salon service?

Dana White:
Yes, I have, and the balance right now is not to do it too soon, but don’t leave money on the table when it comes to opening. So I think that’s a matter of communication with my guests. First, it’s a matter, as an owner, of picking a date. And if I’ve learned anything during Covid-19, it’s picking a date by putting Paralee Boyd first, but not putting Paralee Boyd first to the point where your guests think that you only care about Paralee Boyd and you don’t care about them.

It’s a matter of picking a date and communicating with my customers—not that we’re raising our prices as a reaction to COVID-19, but we’re raising our prices because it’s not something we’ve done in the past seven years and it’s time. Giving them enough headway. It’s not a matter of months. It may not even be a matter of weeks, but communicating to them that these are our plans, and we’re going to go forward with these plans on this date.

Loren Feldman:
Jay, what do you think of that? I can certainly understand why this could seem like an awkward time to raise prices in the middle of a pandemic and an economic crisis. On the other hand, this might be the time when people would understand it best. What do you think?

Jay Goltz:
I don’t think they need to understand it. They just need to pay it. And the fact of the matter is, telling them, “We haven’t raised our prices in seven years” kind of says it all. At 2 percent inflation for seven years compounded, that’s about 15 percent or so. That means that $40 seven years ago is now $46. So to raise your price, I think I would take it to $46, and then in a year from now, raise it to $50 or $48 or something.

But I’m telling you this: If you said to me, Jay, I’m gonna give you 10 seconds to blurt out something to the Jay from 30 years ago, what would you blurt out? The first thing I would blurt out is, “Raise your prices.” Because it’s emotionally difficult. I have been underpriced my whole career, and I was growing like crazy. We’re not talking about 20 percent. We’re talking about 3, 4, or 5 percent. It’s the value proposition. I give a tremendous value, and you’re giving a tremendous value. And frankly, it was a mistake not to raise prices $1 every year for the last seven years. You’re making up for it.

This is a common entrepreneur mistake: “Oh my God, if I raise my prices, I’ll lose all my customers,” and that’s just not how it works. I don’t think there’s any apology needed. “I haven’t raised them in seven years. We need to raise our prices.” Period. End of story.

And, important: train your staff. Somebody is going to complain. Count on it. “Oh my god, Dana! See, Mrs. Smith yesterday, she really laid me out.” Yeah, we figured that into the formula. Someone’s gonna complain. Deal with it. They’re gonna complain, sorry. Everything else has gone up, our costs are going up, it’s the way it is. They don’t have to all be happy. Here’s the point: if 3 percent of the people leave and never come back, you’re still way better off. Count on it. Figure it in. Tell your employees, “We’re going to lose 3 percent of our customers.”

Loren Feldman:
Okay, it’s easy for Jay and me to tell you to raise your prices, but it’s your business and you know your customers better than anyone. Was that convincing, Dana?

Dana White:
It was. But again, it’s still a matter of timing. The other component to raising our prices is we have been functioning, but we haven’t been operating. I just believe that we need to communicate the growth and the changes that we’ve made before telling the guests that we’re going to raise the prices, even though it’s just to raise the prices. What I don’t want my guests to feel is, “I’m getting the same old thing.” No, there have been a lot of changes. Again, it’s communication. It could go out in an email, and then the prices could go up a week later. I just don’t want to open, and now prices are $50. I also don’t want to open, and then one month later, prices are $50.

Either way, I think it’s important that I communicate with my guests, because I’ve kept my prices the same for seven years, and give them time, not a lot of time, but enough time to let it sink in. It may not take a lot of time. They may get the email and go, “Great, there it is. Done.”

Jay Goltz:
Why would you go from seven years of not having the stomach to raise prices to all of a sudden flicking the switch, and you’re raising them 25 percent? If I were you, I would take it to $46. I don’t know that I’d take a 25 percent increase. That’s more than inflation. You’ve just lost your inflation argument. On top of which, you still have this guilt thing. You’ve got to give them more. No, it’s called inflation. You don’t have to give them any more. Everything else went up 2 percent a year for the last seven years. They’re making 7 percent more, everybody. How many people in this world would say, “I haven’t had a raise in seven years”? I don’t think many.

Loren Feldman:
What does someone in your market have to pay to get a comparable service? I’m not sure there is a comparable service.

Dana White:
There is, and it’s a lot more expensive than what I’m offering, even if I inflated prices. Like I talk to people all the time—

Loren Feldman:
What are people paying elsewhere then?

Dana White:
Sixty, seventy dollars. So that’s why I was gonna take it to $50, and I was about to ask Jay, “Do you think I should not take the price to 50?”

Jay Goltz:
Well if you’re that under market… I don’t know, maybe. That is part of the formula. I didn’t know that when I said that. If you’re that under market, maybe that’s appropriate. Frankly, most people aren’t going to do the math. They don’t know what inflation is, and they can’t do the math. So they’re not going to go, “Wait a second, 2 percent inflation for the last seven years…” Maybe it does make sense then.

Loren Feldman:
The assumption we’ve made throughout this entire crisis is that Dana is the one business in this group of business owners who can expect lines out the door. People are going to be desperate. Isn’t this the right time to raise prices?

Dana White:
I think it’s the right time, but I don’t think it’s the right time immediately. Again, I want to be transparent with my guests, and I want them to know that this was something that we had planned on before. I don’t want my guests to walk in and feel that they’re being expected to pay more because we need to make up for COVID-19. I want them to know that we are raising our prices because it’s time. Oh, and by the way, it just so happened to be at the tail end of a pandemic. That’s the difference.

I feel if I opened tomorrow, “Oh, and by the way, you guys, it’s now $50.” Now, they still may pay it, but the branding is important and the message to my guests is very important.

Jay Goltz:
I wouldn’t argue with you that waiting a month, just so that’s behind you, and say, “Okay, we haven’t raised our prices in seven years.” I wouldn’t argue, “Why do it the day you open? Why not wait a month to do it?” But I’ll tell you something else, which is critical to this. I know the picture-framing business. I don’t know the hair salon business. Your margin, like in framing, I’ve had to explain to people, “If you raised your prices 10 percent, you’d have to lose 30 percent of your customers to lose any money.” And their eyes open up wide, and I show it on a whiteboard, and they finally get it. “Oh my God, that’s crazy!” So my question to you is, what’s your breakeven analysis on that? If you raise your price to $50, you know how much you pay your people. How much business would you have to lose before you’d lose a dime on that?

Dana White:
A lot.

Jay Goltz:
A lot, because right off the bat, that’s 25 percent more money coming in. So if you lost 20 percent of your customers, you’d be back at even. You’d have to lose well more than 20 percent of your customers. I mean, if that doesn’t say it, I don’t know what does.

Dana White:
Yeah, in our slow season, we only see about 400 to 600 guests a month. We’d have to lose a significant amount of guests in order for that to happen. But here’s the thing, I don’t think the pricing is what’s going to turn people away. I think if we’re not doing our service standard, if we’re not taking care of our guests, and then asking them to pay, then it’s an issue. For me, I want to let guests know that, because of this pandemic, we’re operating differently. Now that you know how we’re operating—you have to have a face mask, we’re only letting so many people in the salon at a time—now that we’re operating differently, this is what is next, shortly thereafter.

Again, the picture was painted for me, because initially I was like, “Oh, we’re not going to raise our prices till the fall.” But then the picture was painted to me by Loren: “Dana, you know, you’re leaving a lot of money on the table if you don’t, in some way, take advantage of the volume that you’re going to see.”

Jay Goltz:
I’m not even sure that the phrase “leaving money on the table” is appropriate. You’re losing money. That’s different. This isn’t like, “Oh, you could make more.” No, you’re gonna lose money is the reality. It’s a matter of, you’re going to dig yourself a deeper hole so you can have happy customers. Well, what would be the point of having happy customers when you’re going broke? And let me ask you this question, because I hear this all the time: How did the customer turn into a guest? That’s what I want to know. I want to ask Target, who I think started that nonsense. Guess what? When I’m a guest somewhere, I get everything for free. When I’m a guest in someone’s house, I don’t pay for anything. What is wrong with calling someone a “customer”? Is that a dirty word now? That’s what I want to ask you.

Dana White:
No.

Jay Goltz:
Clients?

Dana White:
No, I use the word “guest” because Paralee Boyd is the cultural icon in the salon. It was the way she treated people. The guest comes from how you will be treated when you come in here. It’s a business, but in this business, we will treat you as a guest. Sometimes when it’s like, “You’re a client,” I think it makes it very individualized, meaning for the stylist, “Oh, this is my client.” But when you are a guest of Paralee Boyd, you are a part of this club, and there’s a way you will be treated. Your coat will be put on for you when you leave. There’s a call you will expect. So I say “guest” because we treat them like we would in our home.

Jay Goltz:
Okay, do you think that the person who goes into Target and buys the tube of toothpaste, do you think they’re a guest or do you think they’re a customer?

Dana White:
I think they’re a customer.

Jay Goltz:
Thank you. That’s all I wanted to hear.

Dana White:
Right, you will go into Target and not be seen.

Loren Feldman:
All of that suggests to me that you should send out an email tomorrow saying you’re going to raise your prices to $50, and then you should do it from day one. Because your customers are used to being treated like guests. They obviously trust you. This is a time of a health crisis, and they’re going to be willing to come into your store and trust that you’re doing everything right. They’re going to be so happy to have your service back after not being able to come for several months that that $10… I think they’re going to be very happy to pay it.

Dana White:
I have a confession. I am afraid to raise my prices because I’m focusing on the naysayer customers. I’m focusing on a very integral conversation I had with the head of an organization that is slated to help business owners, and it was a very tough conversation. It included gossip, it hurt me, and it took the wind out of my sail. I’ve been reluctant to raise my prices because of that conversation with her and the conversations with other—not a lot of guests. But I haven’t focused enough on the guests who love us, especially the ones who have told me, “Girl, yeah, raise your prices! I used to get my hair done for $40 when I was back in college.”

Jay Goltz:
Wait, the person who’s complaining, do they work at a not-for-profit? Are they business people?

Dana White:
They work at the federal government.

Jay Goltz:
Okay, same thing. How nice for people who either work for not-for-profits or the federal government to start telling business people how they should operate. How nice! Like, they’ve ever had to make payroll on Friday. I would say, this is your Achilles’ heel.

Dana White:
Yeah, my Achilles’ heel, totally.

Jay Goltz:
And I’m telling you, after 20 years of speaking to frame shop owners, I see people who have no money, who are broke, who have let the customer—that one out of 10 customer who just rips on them about the price—I have watched them ruin their entire life’s savings, putting kids through college, retirement. I’ve seen people be slaves to that for 20 years, because they’ve got in their head Mrs. Smith who said, “Oh my God, that’s too much money.” When I show them the math of it, it’s like, they get released. I swear to God, they come back to me a year later and say, “Oh my god, I want to thank you. A year ago, I owed $10,000 in debt. Now I paid everything off, and I doubled my income. Thank you.” It happens all the time because someone needs to tell them, “Stop listening to that one out of 10.

Dana White:
This is it. We’ve been speaking about COVI-19 on the podcast, and the growth of business owners, and the growth of me for weeks. But my one hurdle to get over is, I have been emotionally drained for years. Because I’ve been emotionally drained, I have not grown my business. I’ve done more during this time to grow Paralee Boyd than I have in the years that I’ve been working, that I was officially “open” open.

Loren Feldman:
Dana, when you say that you’ve done more, you’re talking about during the crisis, while your shop’s been shut down, you’ve done more? And you’re referring to your thinking about how the salon’s going to operate when you reopen, and the kits and the products? Is that what you’re—

Dana White:
Absolutely, and I’m like, “Dana, what happened? Why have you done more work now than before?”

Loren Feldman:
You’ve got a chance to breathe.

Dana White:
I’ve had a chance to breathe, and I’m no longer tied to the call or the text message you get saying, “I know my job is to help minority businesses grow, but I stopped coming to your salon for months, and there are people around me who asked me, ‘You don’t still go there, do you?’” That’s a text and a phone call. From her, that really hurt, because they had no problem showcasing me in front of government officials. They had no problem showcasing me at the Congressional Black Caucus. But to hear that… We’ve done so much work to be better after all we’ve been through. And then when I said, “Hey, we’ve made changes since… you haven’t seen us since September. We made changes in August that you started to see in the business in October.” “Well, what efforts are you making to communicate that to your guests?” And then you’re getting it from your staff: “Well, Dana’s a business owner. She should be able to pay me through this crisis. Well, Dana doesn’t care.” My flaw has been I have not communicated with my customers. I have not communicated with my staff as well as I could, because I have been emotionally protecting myself.

Jay Goltz:
I feel your pain. I would imagine that that text, that email, that conversation was extremely upsetting. I’m sure you are accepting responsibility for at least part of it, the communication piece. When you get to the end, and you’ve done everything right with a noble cause, it’s like, you know what? There are gonna be some people who want to rag on you.

But here’s the best thing that happened to me in all the years of me doing speeches at the picture frame show. I went on an online thing, one of the chat rooms, and this guy says, “I went to Jay Goltz’s seminar, and I’ll admit, he’s a successful guy, and he’s built a successful business. But he is so arrogant and condescending, I stormed out of the class!” And my first reaction was, “Wow, I didn’t think I was coming off like that.” And I thought more about it. I had that one comment and another 40 comments, because I get the things afterward of the responses: “This was the best thing I ever went to. Thank you so much, blah, blah, blah.” And I realized I probably reminded him of his father or something, and like, sorry. I said to myself, “What could I have said that was so offensive?” and I figured it out eventually. This is equivalent to saying you have an ugly baby. When you tell a frame store owner that “You don’t need 2,000 corner samples in your store, it’s a waste of space,” that’s like saying you’ve got an ugly baby. Now what’s the surprise ending to the story? He’s out of business.

Loren Feldman:
Sum it up. What’s the message in that for Dana?

Jay Goltz:
The message in that is you can’t let the one or two or three people get in your headspace. Listen, it certainly made me think about it, and I did. And I am a little more careful now of don’t sound arrogant, like, “You must not know what you’re doing.” And it helped a little bit, but in general? What the hell was that, he stormed out mad? But in your case, the person who complained—is that a fellow business owner? No, she works for the federal government. Oh, what a surprise.

Dana White:
But that’s the thing. I’ve had several fellow business owners, and that makes it worse when they’ll say, “I’m not impressed with your receptionist,” as if impressing you is a KPI.

Jay Goltz:
There, I’ve gotta take a line though. There’s probably something wrong with your receptionist. They’re trying to be kind to you. The receptionist probably has an attitude or something. Why would someone say that to you?

Dana White:
But that’s what I’m saying. Come to me with a specific instance. Don’t come to me like, “I’m not impressed.” Well, tell me what happened.

Jay Goltz:
Did you ask them what happened?

Dana White:
Yes, and then it was also the end of the text message: “Oh, and by the way, how’s that expansion going.” And it wasn’t a question, she ended it with a period. And I was just like, you know what?

Jay Goltz:
Wow.

Dana White:
In short, I’m saying negativity can be very negative. I’m focusing on the people who have been negative, which I know to have been hurtful and not productive.

Jay Goltz:
I would get rid of the word “negativity” and put it into two buckets. Are they being critical, giving you something you’re doing wrong that you could do better? Or are they attacking you? Those are two different things. But in some cases, it sounds like they’re attacking you. I get that.

Dana White:
I don’t think it’s attacking. It’s nasty. It’s, “I want to help you, but I want to express my anger.” When I’m trying to help someone, it’s not about how it made me feel. It’s about speaking with that business owner about things that may need to be improved, and here is how I can help you. Can I help? I’ve been focusing on the people who are, maybe not even angry with me, but just angry in some way. They’ve laid it at my feet, and Dana has said, “Okay, I’ll take it on.”

During this time of COVID-19, I haven’t been in a space where I’ve had to take it on. I’ve been so productive. My Achilles’ heel and my flaw and my confession is, I have not communicated with my staff because the messages I’ve been getting back are, “Why aren’t you doing more to help me in my situation? Why aren’t you paying for me through this time?” That’s the one thing. And the second thing is, I have not communicated with my guests because it was, “Well, I didn’t get the email.” “Well, why aren’t you doing this?” And here’s the thing: No, I haven’t been sick, thank God, but when you’re a business owner, COVID-19, nothing affects you. So to the people who have been critical: Did it ever occur to you that something might have happened? Did it ever occur to you that she might have been dealing with things?

Jay Goltz:
Wait, wait, I have to give you the greatest advice ever. I put this in the top five. She’s retired. She was my controller—not a kid, not a $5, $10, $15-dollar-an-hour person, like my first professional person. She’s working here for six months or a year. I’m younger than you are at this point. I’m probably 32 or something. And something happened, I don’t remember specifically. And I said to her, “Boy, did anyone ever think about how I feel about that? Bah, blah, blah.” And she turned to me, and she said the most poignant thing ever. She goes, “Jay, everybody knows that the boss isn’t a human.” And that was the most poignant… I’ve never forgotten that. I’m telling you, get over it. They’re not going to treat you better. You’re not human anymore. You’re the boss. Deal with it.

Dana White:
Yeah, I’m the owner.

Jay Goltz:
You’re the owner. It’s okay.

Dana White:
You are not human.

Jay Goltz:
Yes, and it’s okay. I’m not mad about it or bitter whatsoever. I’ve accepted it. Okay, I get it now. You’re the boss. That’s part of figuring out you’re the boss. It’s okay.

Dana White:
But knowing that I am human, I have to find a better way. I can’t do what I’ve been doing. I cannot not communicate and I have to find a way to the middle ground between taking too much on myself and not communicating. But then also listening to the positive critiques or the critiques that are helpful versus the critiques that are just meant to dump on you. I’m trying to find that middle ground. I have great ideas to communicate with everybody, and we’ll be doing so because I have to.

Jay Goltz:
Instead of looking for the middle ground, this is simply a case of, you need to stop taking things personally. You just need to. Whatever they say, there’s probably something to it. I believe the customer’s usually right. If the customer made a comment about your receptionist, there’s probably a problem with your receptionist. And the other thing that has saved my head, and I’ve helped lots of employees, you know the employees in the back crying because somebody just dumped on them? I’ve had it, certainly. I always tell them, “Why don’t we take this approach? Whoever just dumped on you? Why don’t you just assume they just found out their mother’s dying. Let’s give them all the benefit of the doubt. They’re having a really bad day, and they took it out on you, so let’s not take it personally.” Let’s not get mad. Let’s listen to the criticism and say, “Really? Can you tell me specifically what my receptionist did so I can understand and do something about it?” Because there’s probably something to it.

And then to your other point, there are some people who are having a bad day, and they just read about you, and they’re jealous or they’re pissed or whatever. Yeah, whatever. I have the benefit of doing this for many years, and I finally have come to terms with all this stuff. And it’s okay. It doesn’t have to make you crazy.

Dana White:
Okay.

Loren Feldman:
Jay, let’s give Dana a little bit of a break here. What’s going on with Jayson Home these days?

Jay Goltz:
Well, I opened because the state of Illinois says if you sell plants, and landscapers buy the plants, you can open. I have a legitimate 5,000-6,000 feet of plants outside in my outdoor lot. We sell to landscapers, so we opened. Customers are extremely happy that we’re open, and they’re all wearing masks. I’ve had two episodes since I opened.

Loren Feldman:
You told us about one, I think. The Yelp review.

Jay Goltz:
I have a new one. This one’s better. My manager is sitting there on the phone. I happen to walk in. “Yeah, we’re open.” I can see the tone of the conversation, someone’s complaining. “You know what? The owner’s standing right here. Let me give him to you.” So, no problem. He hands me the phone. She tells me her name. I give her credit. The woman says, “This is so and so. I have to tell you, I just can’t believe you opened up your furniture store.” “Well, I sell plants.” “I know. But it’s a loophole. That’s just not right. I’m not the only one who feels that way.” Dana, does this sound familiar? “I’m not the only one who feels this way. And I can’t believe you’re opening up. You’re the only furniture store in the city of Chicago that’s open.” And then finally, she revealed, which I also respect, she owns a small gift shop two blocks away, and she’s closed. “And it’s not fair!” And I said, “Wait, how long have you been open? How long have you been in business?” She said, “Nine years.” I said, “Okay, let me give you the 42-year perspective of things. Do you still think the world is fair, really? I know someone who died of cancer last year, the nicest person I knew. You think the world is fair?” And then you could hear, “Well, yeah.” I go, “I should worry about the multibillion dollar competitor I have that’s owned by a German company. I’m trying to keep in business, take care of my employees. I’ve gotta tell you, I’m following the law.” And so meanwhile, this is the really important entrepreneur part. I go, “Let me ask you a question. Did you get PPP money?” “Well, my husband applied for it. I’m waiting, but it’s just a loan.” I said, “No, no, it’s not just a loan. If you use it properly, it will turn into a grant. You don’t have to pay it back. Did you go for unemployment?” “Well, no. They said…” “Well, you’ve been paying unemployment for years. Why wouldn’t you go for unemployment?”

So by the end of the conversation, I was her adviser, and she wants to come by and have lunch. But this shows you how people go broke. Instead of taking care of business, instead of going for the PPP thing and going for unemployment, she’s using her time to call me up and whine that I’m open and she isn’t. I’m not making any apologies. Yeah, I’m open, and we’re wearing masks, and we’re cleaning everything.

Loren Feldman:
How’s business?

Jay Goltz:
It’s been okay. We’re bringing in decent business. The customers are thrilled to be here.

Loren Feldman:
Have you brought back all your employees who normally work in the home store?

Jay Goltz:
Yes. They’re all working. Some were hesitant. Everybody came back, but I had to make a line to say, “Look, if they don’t want to come back, it’s a free country. They don’t need to come back to work. They can go work somewhere else. They can not work.” I certainly am not suggesting everybody should be having parties and not wearing masks and taking guns and going down to the city hall. I’m not saying that. There’s a point where, if somebody is petrified to leave their house, I’m really sorry. That’s a personal choice of theirs. I can’t keep this job open forever for them. I can’t. That hasn’t turned into a case. But I was prepared if it did. At some point, people need to come back to work.

Loren Feldman:
Are you at that point?

Jay Goltz:
I think we decided [is] we’ll give it till the end of the month when the whole state is officially open. But if somebody on June 1st says they’re not coming back to work, I’d have to say, “Thank you for your years of service, but we’re going to have to replace you.” I actually have an obligation to customers to have a human being working here to take care of them. I can’t accommodate them.

Loren Feldman:
Would you do that with an employee that you had for 10 years and really liked?

Jay Goltz:
Well, what are my choices? Not have anyone work here? Let me make it a better question for you: “Jay, if they were over 60…” Okay, I do have a guy who’s my oldest employee after me. If he wants another couple weeks, I’ll absolutely work with him on it. He’s been with me since 1986. It’s not a black and white thing. If he has a legitimate thing, or if they’ve got a heart condition, I certainly will… It’s not black and white. But if I got someone who’s 32 years old, who’s afraid to leave the house, who doesn’t have a medical condition, who doesn’t live with an old person… What am I going to do? “Okay, everybody, you just stay home. I’ll take care of customers all by myself.” I mean, there’s a point where you’ve got to take care of business. So luckily I haven’t had to deal with that.

Dana White:
Does that mean taking them off unemployment?

Jay Goltz:
I took everybody off unemployment. I got the PPP money. Everybody’s off unemployment now, and I will tell you, I have lots of employees [where] this was the lottery for them. If you make 40 grand a year, and if you got your unemployment insurance, and then you have the extra hit from the government, this little thing has just made them about 4,000 bucks. They got another 600 bucks. They come out just fine. I don’t begrudge them. Like, whatever.

Loren Feldman:
That’s all true. But it can put an employee in a difficult position—the employee you just described who’s deciding whether to come back or not. There might be extenuating circumstances: kids at home, older parents, people to care for, having to travel on public transportation—whatever it might be, that person is going to lose that unemployment if you offer the job and they turn it down.

Jay Goltz:
Well, that doesn’t mean that I would go ahead and contest the unemployment. If that was the case, I wouldn’t contest the unemployment. It hasn’t happened, but if I had somebody working here for 10 years, and said, “Listen, I just can’t.” I would say, “Stay on unemployment.” But that doesn’t mean I don’t have to replace them. I need employees. I can’t run the place on good wishes.

Just so you know, I’ve had the opposite experience. I’ve had lovely notes and people extremely happy that—I didn’t have to, but It’s the least I can do for them—we’ve paid people who, for whatever reason, didn’t get unemployment, filed too late. We’ve tried to make everybody whole, and we’ve succeeded. At some point, I told my key management staff, “Look, here’s the reality. If everybody got unemployment plus some extra money, I don’t need to give them more money.” I’m going to lose hundreds of thousands of dollars. At the end of the day, I’m the only one losing in this whole deal. I’m not complaining about it, but it just is what it is.

My employees have come out just fine, thanks to the PPP and thank you government. It was a lifesaver. I’ve got 110 people. I haven’t had one bad experience, one disappointing conversation with an employee—not one. I’m here to tell you, part of that is, I have good employees. I’ve worked really hard at it for 40 years. I’m more careful who I hire now. If they’re the wrong people, if they don’t fit here, they’re not here anymore. I’ve gotten nothing but positive things from all of them. I haven’t had one ugly anything with anybody who works for me. And the only thing from the customers is the jerk doctor who needed to go to Yelp about how we asked him to wear a mask. Even the lady that called me, she’s my best friend now.

Loren Feldman:
Are you gonna have lunch with her?

Jay Goltz:
Sure. Not until lunch is okay. But I felt bad for her. I understood where she was coming from. I think I convinced her by the end, “Look, it is what it is.” To go ahead and throw on me that I’m a bad person, I’m working the system, and I should stay closed because everyone else is? That’s just preposterous.

Loren Feldman:
Well, it is a loophole, but I agree with you…

Jay Goltz:
It’s a pretty big loophole. If you sell plants, how about Home Depot? How about Costco? They’re all selling furniture all because Home Depot sells stuff, what, to fix your heater? Any of these big businesses, they’re selling other stuff than the stuff that is essential.

Loren Feldman:
I’m just saying, if you didn’t sell plants, you wouldn’t be able to open the home store.

Jay Goltz:
But I do sell plants. That’s the point.

Loren Feldman:
You’re kind of arguing, if she sold plants, she’d open her store too, and I think that’s a pretty good argument.

Jay Goltz:
That’s what I said to her. And I go, “You know what, you want me to send over some plants? You can open.” And she goes, “Oh, well, that would be hypocritical,” but she was thinking about it. And then I thought, “Wait, that won’t work because you need to sell to landscapers, I forgot.” But oh, she was thinking about it. I actually said it to her, “I can assure you, if you were selling plants, my guess is you’d be open.” It wasn’t an adversarial conversation. It was a business owner to business owner conversation, and I totally respected and appreciated she admitted who she was and gave me her name. I’m used to dealing with customers. It was a very pleasant conversation.

Dana White:
It’s a lot of judgment. That’s what I have to do better at shielding myself from. I see it on Facebook: business owners judging PetSmart because they’re grooming dogs, because their business is considered essential. And that service is not, but because they’re open, they can do it. There’s just a lot of judgment going around, and it’s tough.

Loren Feldman:
We’re gonna have to wrap up. But Jay, let me ask you this, I was really intrigued by what Dana said about how this crisis has finally given her a chance to breathe a little bit and to think about her business and to work on it in a way that she hasn’t been able to previously. I think there’s such an important lesson in that. I’m just curious, for you, you’ve had downtime as well. Obviously, you’re in a very different position. You’ve been in business much longer. Your businesses are much more mature. But have you gotten anything out of this period?

Jay Goltz:
Absolutely. This has disrupted the market, and now’s the time to try to make something positive out of it. Three things. Number one, competitors are going to go out of business. There are going to be competitors that stop giving service because they’re on defense and they didn’t bring people back or they don’t want to put enough inventory in. Their service is going to deteriorate. I’m suggesting, take this time, fix up your website some more, put some more energy into your website. People are going to be looking for a new vendor. That’s one.

Number two, there are going to be some key employees out there who got laid off or who aren’t happy with the way their boss treated them. This might be an opportunity to pick up an employee you might not have even thought of working for you before, and maybe it’s time to put an ad out there and look for them, or call someone who you’ve had conversations with. There’s absolutely an opportunity to pick up some people.

And three, what a great opportunity to buy real estate right now. The interest rates are mind-bogglingly cheap, and there are building owners who want to go hide under the table and get rid of their property. That’s what I did in 2008. I bought a huge building for a cheap price. I’ve gotta tell you, I did the guy a favor. I got him off the hook. It worked for everybody. If you’re thinking about buying real estate, I know this is counterintuitive, now might be the time to do it because it’s on sale, and the interest rates are dirt cheap. SBA loans are the greatest thing the government has ever done.

Loren Feldman:
SBA real estate loans, in particular, you’re referring to?

Jay Goltz:
Yeah, 504 loans, where the bank takes part of it, the SBA takes part of it. It’s a tremendous thing. Now’s the time. I’m suggesting there’s a point to where you’ve got to get off defense and get on offense, if you can.

Loren Feldman:
The “if you can” is important. There are a lot of people who are just trying to make it to tomorrow.

Jay Goltz:
I understand that. I’m just saying, if you can. But in some cases, you could go fix your website up. I mean, just change the copy, change what’s on there, that doesn’t cost any money. I think everybody can at least work on their website. Most people don’t think they have a “ten” website. They’d say, “Well, it’s not bad, but I’m working on it.” Well, now’s the time to really work on it, put some real energy into it.

Dana White:
That’s what I’m doing right now. I’m working on my website. But I will say that I have to push back on you a little bit, Jay, because working on a website is free if you know what you’re doing. For me, working on my website isn’t going to be free.

Jay Goltz:
Part of it is free, though. Writing the copy is free.

Dana White:
Yeah, the content is free.

Jay Goltz:
Are you suggesting that I’m coming off arrogant and condescending?

Dana White:
No, not at all.

Jay Goltz:
Certainly, you’re right. If you want to redo your whole website, that’s a whole other animal. But I’m talking about just changing some of the copy on it and doing the light stuff. But you’re right, if you want to really redo it, that’s gonna cost some money.

I go on some websites and I see their blog post is from 2017. It doesn’t look good. If nothing else, take the date off. Seriously, if nothing else, just take the date off. I read websites all the time. I think to myself, “Wow, you put that on your website?” I mean, stuff that just doesn’t have any relevance about why I’d want to do business with you.

Loren Feldman:
Dana, last question. Did this conversation make you feel better or worse?

Dana White:
Much better. I just have been focusing on the wrong thing. I had the opportunity to speak with a business consultant here in Detroit, and he said the same thing. “You’re focusing on the wrong thing.” I think even though I know I’m focusing on it, I’ve been hurt. I don’t mean to sound like a wuss, but I’ve been hurt, and I’ve been productive by not being as exposed to that hurt. I need to put my big girl [pants] on and be probably pleasantly surprised that people will respond to me better once I put myself out there. But I’ve been [taking] baby steps to putting myself out there because I’ve been hurt, and this conversation has again reiterated to me, “Hey, you’ve got to do what you’ve got to do. You’re a business owner.”

Jay Goltz:
And since I’m not arrogant and condescending, I absolutely can appreciate how painful that must have been to have women who you respected who had been helpful rip into you. Because I’ve never had that. I can’t ever think of a situation where I’ve been in that situation, and you’re getting a lot more PR than I got when I was at that stage. So yeah, you have absolutely been vulnerable. But I’m telling you, it’s about just saying to yourself, “I’m just trying to do a good job and take care of my clients—or your guests, excuse me—and just say, “It’s part of the program and I’m dealing with it.” I know you’re coming to that, so good for you.

Dana White:
Yeah, and the pricing will go up, and the pricing will go up…

Loren Feldman:
All right, that’s what we wanted to hear. My thanks to Dana White and Jay Goltz. Once again, you guys have kept it real and shared things that you very rarely hear business owners share. I really appreciate it. Thank you for taking the time.

Episode 16: Dude, You’re Gonna Get on an Airplane?

Karen, Jay, and Laura talk about dealing with questions they’ve never faced before: Is it safe to fly again? What do you do if you run out of inventory and can’t get more? How do you entice employees back into the office who’ve either been happy working from home or happy collecting enhanced unemployment? Do you offer hazard pay? And if so, how and when will you stop? “We're trying to stay in business, for God's sake,” says Jay Goltz. “We will have been shut down for two and a half months. And there's a point where I'm the only one who's gonna be losing money in this deal. At the end of the day, [my employees] are getting extra money from the government for unemployment. They're getting hazard pay. Everybody at the end of the year is going to have a banner year for income. And I'm going to lose hundreds and hundreds of thousands of dollars.”

Guests:

Laura Zander is co-founder and CEO of Jimmy Beans Wool.

Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.

Karen Clark Cole is co-founder and CEO of Blink.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Laura Zander: “We had a huge bump in business those couple days that the stimulus checks all hit. Huge, record-breaking days.”

Karen Clark Cole: “There are some people, they’ve got a lot of distractions at home, they don’t have a good office setup. It is more difficult for them to work. And other people are just lonely. They’re in an apartment by themselves, and they can’t take it anymore.”

Jay Goltz: “At the end of the day, [my employees] are getting extra money from the government for unemployment. They’re getting hazard pay. Everybody at the end of the year is going to have a banner year for income. And I’m going to lose hundreds and hundreds of thousands of dollars.”

Full Episode Transcript:

Loren Feldman:
Let’s start with a quick update. Karen, we haven’t spoken with you in a couple of weeks. Is Blink still doing reasonably well?

Karen Clark Cole:
Yeah, things are going well. We’re starting to work on a back-to-work plan, a phased approach over the summer.

Loren Feldman:
Let me clarify. You’ve been working all through this. By back to work, I assume you mean back into the office?

Karen Clark Cole:
Correct. Back-into-the-office plan. Everyone has been very busy, and in fact, we are slightly above 20 percent growth for the year, consistently, even over the COVID times.

Loren Feldman:
Wow.

Laura Zander:
Hey, so I want to interrupt, sorry. Your back-to-the-office plan… how are you gonna do this? I’ve got quite a few people who are really getting comfortable working from home. I’m not so sure that they’re gonna want to come back, and you know, part of me doesn’t blame them. So I’ve been thinking maybe we let them work from home two days a week for a while.

Karen Clark Cole:
Laura, I’m one of those people. I’m quite comfortable sitting here at home with my cat and my birds and my dog.

Laura Zander:
Oh my God, you’re like the old cat lady?

Karen Clark Cole:
Oh, yeah, totally.

Loren Feldman:
Hope you keep the cat away from the birds.

Karen Clark Cole:
The cat’s watching the birds out the window. It’s great. It’s a little show. Anyway, you’re right. Most importantly, though, we’re asking people to continue working at home if they can, throughout the summer, at least—until further notice is what we’re saying. So we’re saying, if you can, the best advice is still to continue working from home as long as you can. That’s the safest for our employees and for their families. Also, we’re trying to allow space in the community and in our offices for those who need to go back. So if you don’t need to go back, we’re asking people, please don’t. And things that that inquiring sort of in the need world are,

There are some people, they’ve got a lot of distractions at home, they don’t have a good office setup. It is more difficult for them to work. And other people are just lonely. They’re in an apartment by themselves, and they can’t take it anymore. Whatever the reason is, we’re letting everyone decide. You may have a space reason, all kinds of different reasons. We’re not going to judge any of that. So if anybody wants or needs to come back to work, we have a few people who, once we open up—like hosts—will actually need to be in the office.

Then we’re doing a poll. Actually, I just sent the notice out today. On Monday, we’re going to call people and find out who actually wants to come back. Then we’ll create an office plan for the number of people who will be in the office, in terms of spacing desks apart. This is all starting in June. Phase Two is slated to be starting early June. And of course, that could change. But right now, we’re saying we’re going to open our offices beginning of June and we’ll create the proper safety structures in the offices for people to come back safely. That’s meetings of no more than five people. We’ll keep the desks apart. We’ll still use all the sanitizing and those kinds of protocols will be in place.

Laura Zander:
And are you picking up any resentment from the people who have to be in the office and who don’t have a choice?

Karen Clark Cole:
There are very few of them. There’s like two people who actually need to be there. So, no.

Laura Zander:
What about you, Jay?

Jay Goltz:
I’ve got a big problem with it. I’ve got half of my businesses shut down completely because it’s the framing business and there’s no accommodation out there for being open, and my home store—I have about a 7,000-foot lot outside—selling plants now. I’ve got a full load of plants so I can be open. The city already came in last night to audit us because someone complained and they admitted it was probably a competitor.

Loren Feldman:
Jay, let’s clarify there. Chicago has not allowed all retail to open. You’re kind of using a little bit of a loophole—

Jay Goltz:
No, no. It’s not a loophole. Black and white, it says if you sell live nursery products, and you’re selling to landscapers, you can be open. So I’m open.

Loren Feldman:
But you’re not only selling the plants. You’re opening your whole home store, which if you didn’t sell plants, you wouldn’t be able to open.

Jay Goltz:
Yes, exactly. But Home Depot is open, and it’s selling all kinds of stuff that’s not allowed. So it’s not a loophole, it’s just…

Loren Feldman:
But that explains [how] you have competitors who probably are not open, and that’s why…

Jay Goltz:
Not probably. None of them are open because they don’t sell plants. They’re trying to poke me in the eye, and it’s like, tough luck. And they said, “You’re doing everything right. Everyone’s wearing a mask. Everyone’s six feet away.” We’re cleaning everything.

Of course, there’s someone who comes in who was just waiting for an opportunity, and my guy says to him, “You need to wear a mask.” So what does this guy do? He’s got to go back home, get on Yelp, and roast us: “I’m a doctor. I’m a surgeon. And this is baloney. No one’s gonna tell me to wear a mask!” He goes [on] a whole tirade about, “This whole thing is overblown, and Northwestern hospital is half empty, and blah, blah, blah, blah, blah.” And it’s like, really? Are you really a doctor? And what an embarrassing thing for doctors everywhere. We’re just following the law. Then he went and did it also to Whole Foods. He’s going around because he’s got nothing to do but go after people who are trying to follow the law and stay safe.

Loren Feldman:
Jay, when you started this, you said that you have a big problem. Is that the problem that you were referring to?

Jay Goltz:
No, no, the problem is, people are coming into work in the home store, dealing with customers, not thrilled. And I’ve got people sitting at home getting paid, doing nothing. So, of course, they think “Well, wait a second, I like that program better. I’d like to be home doing nothing and getting paid.”

Laura Zander:
What do you do about it?

Jay Goltz:
What we’re going to do is, we’re going to pay hazard pay to the people who are coming into work. And then of course—and I’m very, very appreciative of the PPP—but the SBA—and I’ve read a lot about this—has refused up till now to give any guidance on this. So when you say, “You can pay hazard pay.” What does that mean? Can I pay 30 percent more? 50 percent more? 10 percent more? You’ve got a bunch of law firms and accountants out there trying to read the tea leaves, all admitting they don’t know, but going, “Well, our impression is, our opinion is, our guidance is…”

Karen Clark Cole:
Isn’t that an optional thing that you can just pay what you want?

Jay Goltz:
No. Yes. Yes and no. I can. But the question is, is the PPP police going to come in and say, “Oh, no, you can’t pay hazard pay at 50 percent.”

Loren Feldman:
Well, you can do it. The question is whether the loan will be forgivable, right?

Jay Goltz:
Right.

Laura Zander:
But they don’t care. They’re not looking at each individual. It’s the sum total, isn’t it?

Jay Goltz:
You don’t know. Who knows?

Karen Clark Cole:
That’s my impression, Laura. That’s my understanding.

Jay Goltz:
But you’re using the same words. It’s your understanding, it’s your impression. Me, too. I agree with all of you, but who knows?

Loren Feldman:
This doesn’t answer the question, but they have said that they will automatically audit any loan in the amount of more than $2 million, and they will spot check loans of less than $2 million.

Jay Goltz:
I’m less than $2 million. There is some good stuff. This is what I’ve been doing for a week. I’ll give you the black and white, and I’ll give you the gray. The black and white is, you can absolutely hire people to replace people who left, no problem. That’s about the only black and white one I have. The gray ones are: can you wait a week or two? I’m gonna guess, probably not. So I already started it. I immediately put everyone on it. The gray ones: how much hazard pay can you pay? No clue, no guidance whatsoever. And can you pay vacation pay? I’m not going to do that anyway, but some people are asking that. Again, no guidance.

I’m gonna pay some hazard pay, and then if the employee is still not happy about it, there’s a point at which, you know what? We’re trying to stay in business so you all have jobs. I’m sorry. I don’t let anyone use the word “fair,” because I don’t believe that word fits in business. Is it the right thing to do? Yeah, we’re gonna give a little more money to people who are working. But if they want to go, “Well, that’s not fair. [The other employees] aren’t working.” Okay, life isn’t fair. I don’t know what to tell you.

Loren Feldman:
Karen, has anything come up for you? Do you have any concerns about meeting the requirements for forgivability with your PPP loan?

Karen Clark Cole:
No, we’re being pretty careful. But again, it’s like Jay said, it’s a little bit hard to understand.

Loren Feldman:
Oh, it’s very murky. There’s no question about that.

Karen Clark Cole:
Yeah, it seems the rules are changing. But, in any event, it will still be the cheapest loan we could ever get. We’re looking at it like that.

Loren Feldman:
Laura, what’s going on with Jimmy Beans Wool?

Laura Zander:
Kind of a hybrid of what Karen’s talking about and what Jay is talking about with the different businesses. We just got notice yesterday that all retail can be open, restaurants can be open starting Friday, I believe…

Jay Goltz:
Wow.

Laura Zander:
…in the state of Nevada.

Loren Feldman:
Friday, meaning a week from today when we’re taping this? Or meaning today?

Laura Zander:
Oh wait, today is Friday. Ah, what’s the date?

Loren Feldman:
It’s easy to forget what day it is. Today is Friday, May 8th.

Jay Goltz:
God, she’s gotta go now.

Laura Zander:
Okay, yeah, tomorrow. I guess tomorrow, I think, is the day.

Jay Goltz:
Tomorrow is Saturday.

Laura Zander:
Yeah, okay. Well, then I meant Saturday. Jesus, it ends in “day.”

Karen Clark Cole:
So technical!

Jay Goltz:
I’m in the Midwest. It’s still Friday here. I don’t know what it is out there.

Laura Zander:
I guess, as of tomorrow. Retail stores are only supposed to have 50 percent capacity and blah, blah, blah. From the Jimmy Beans standpoint, what we’re starting to talk about is, “What does reopening look like for us?” We’re not going to open tomorrow. We don’t really have any plans, for multiple reasons. Our retail store manager is an older guy. He’s in his 60’s…

Jay Goltz:
Ouch!

Laura Zander:
He’s very uncomfortable working with the public. He self-furloughed a long time ago. We don’t really have the staff to man the retail store right now. What we’re talking about doing is, do we do two hours a day or two hours three days a week? Our clientele typically skews on the older side as well.

Loren Feldman:
But it’s not a big issue for you, right Laura? You don’t really need to open your retail store.

Laura Zander:
And that’s the other part of it. Yes, we don’t really need to. We may just start with curbside pickup. It becomes more of a community service, because the knitters are gonna go crazy. They’re going crazy at home. They need their yarn.

Jay Goltz:
Can I tell you about my curbside pickup? They’re ripping up the street in front of my business right now to put in some new cable things. So my curbside pickup now has a 50-foot-long truck out in front. The entire street has now got construction guys ripping up the sidewalk.

Loren Feldman:
It is a good time to be doing street work, Jay.

Jay Goltz:
I said that, really. Better now than in a month.

Karen Clark Cole:
I have a question about that, though. The curbside pickup is a totally different set of logistics, and so are you guys just suddenly learning how to do curbside pickup? How are you dealing with that?

Jay Goltz:
We walk it out, they drive up, and they open their trunk. In our case, we left the product out in the yard—I have a parking lot adjacent to the building—and they put it in their car, and they leave. And I’ve gotta tell you, other than this doctor guy, if he is a doctor, everybody’s extremely appreciative and happy to be out and happy to support us, and it’s really been… it’s one extreme or the other. It’s a love-fest on one side, where they’re thrilled to be able to come in, or they’ve got a problem, but I’ve only had one guy who’s given us any issues.

Loren Feldman:
Jay, you basically opened that store last week during our taping of this podcast. How’s the past week been? Has business come back at all?

Jay Goltz:
Yeah, absolutely. People are coming in, and I will tell you, my friend in Arizona—Hall of Frames, he’s got eight stores—they just opened up for appointments. He said he’s crazy busy. I keep telling everybody—

Loren Feldman:
He’s requiring people to make an appointment before coming in?

Jay Goltz:
Yes. But I keep telling everyone, anyone who thinks they can predict what’s going to happen, they’re guessing. Because it depends what business you’re in. There’s plenty of people who have been sitting at home, not spending money. They’re going crazy. They can’t wait to go out and spend money. And then there’s other people who have used up their money. There’s no one-size-fits-all to this thing. Some people are going to be just great and some people are going to be devastated and there’ll be some people in between.

Laura Zander:
We had a huge bump in business those couple days that the stimulus checks all hit.

Jay Goltz:
Wow.

Laura Zander:
Huge, record-breaking days. Which is almost a little disturbing to me, as a saver. I’m like, “Oh my god, all these people got their stimulus checks and they went out—”

Loren Feldman:
And they’re blowing it on yarn!

Laura Zander:
They’re blowing it on yarn!

Jay Goltz:
Better than drugs. Probably, I guess. [Laughter]

Laura Zander:
We may go the appointment route as well. We’re just kind of trying to figure it out. The Texas side of things, again, we’re a wholesale business, and it’s just dead. Our sales have dropped so much. We’re taking this time right now—that’s why I was a little late on this call—to talk through QC procedures, really cleaning up all the things that have been neglected in this business for the last few years, retraining everybody. We’re bringing in somebody who was a master dyer years ago, and she’s gonna start retraining. I just bought a ticket to head down to Texas next week.

Karen Clark Cole:
Dude, you’re gonna get on an airplane?

Laura Zander:
I am.

Loren Feldman:
Wow.

Jay Goltz:
You are such a brave soldier. Wow, fearless.

Laura Zander:
No, it is what it is.

Loren Feldman:
I did just see a report—actually, we had it in the 21 Hats Morning Report—that for some people, they’re saying it’s actually a relatively nice time to fly. You kind of get the plane to yourself. There are no lines anywhere. There are some advantages to it.

Laura Zander:
You probably don’t have to smell anybody’s bad breath because they’ve all got masks on.

Loren Feldman:
The food choices at the airports are somewhat lacking at the moment, I think.

Karen Clark Cole:
Keep in mind, in Washington State anyway, we’re still under shelter-at-home orders, so we’re not allowed to unless it’s really necessary.

Jay Goltz:
Well, if you get on the plane, and there’s other people near you, all you have to do is give out one little [cough], and that’ll be it. You can clear the whole half of the plane for yourself.

Laura Zander:
I also just had a conversation yesterday with the owner of a trade show that I had gone to in January in New York. I had had dinner with him, and we had gone to a Broadway show, and we hugged. We hugged, we sat at the same table together right across from each other, blah, blah, blah. And he confirmed yesterday that he has not gotten the antibody test, but he’s like, “After we had dinner, a couple days later, I had 103 temperature.” He had every one of the symptoms. He’s like, “I am 99 positive.” And I think I’ve told you guys that my people got sick. really sick. Thousands of people from the show got sick.

Loren Feldman:
That’s how it spreads.

Laura Zander:
Yeah, I’m pretty confident that I’ve already been exposed.

Karen Clark Cole:
They haven’t proven yet that if you have had it, you won’t get it again.

Laura Zander:
Yeah, but I mean, I don’t know. I, maybe naively, feel like all of my travels through Asia and India for the last four years, and then going multiple times a year—and I have gotten wicked sick, like wicked sick, over the last few years—there’s part of me that kind of hopefully, naively thinks that perhaps I’ve built up a bit of an immunity.

Jay Goltz:
I think that’s quite possible.

Laura Zander:
And I’m not a hand washer.

Jay Goltz:
Well, that’s good to know. Next time I see you, I’ll keep that in mind. [Laughter]

Loren Feldman:
Laura, last week you expressed concern about the supply of yarn. You were a little nervous that you would run out of product, I think you said maybe in six weeks. Anything changed with that?

Laura Zander:
Um, no, we just might run out a little faster. So one of our mills opened this week, and they’re at 25 percent capacity. So I …

Loren Feldman:
When you say one of your “mills,” that’s one of the mills that’s a supplier? I think that you said they were overseas. Maybe Peru, Brazil?

Laura Zander:
Yeah, there’s a mill that we buy from in South Africa, and then there’s one that we buy from in Peru. So the South African one opened at 25 percent capacity this week, and the Peruvian one has not quite opened yet. We’ve put our orders in, and I actually prepaid. I sent them a note last week and said, “Can I pre-pay you a big, huge chunk?” Because we haven’t bought inventory in a while. We’ve had a little bit of sales, so I’ve been able to take that and hope that maybe we’ll get to the front of the queue.

Jay Goltz:
I’ve gotta tell you, I’d be careful with that, because I prepaid a supplier in Italy for some frame molding and he went bust and I never got paid. I lost like 100 grand.

Laura Zander:
Yeah, well…

Jay Goltz:
I’m just saying, I’m not arguing with you. You gave him 10, 20 grand, but I would just be careful because some people will just go broke and take the money.

Laura Zander:
Fair point. I mean, this business has been around for like 200 years, and it’s family-owned. And we’ve been—

Loren Feldman:
Also, there are only a couple of suppliers in the whole world, right?

Laura Zander:
Yeah, fair point.

Jay Goltz:
Calculated risk. I’m not saying you were wrong. I’m just saying, calculated risk.

Laura Zander:
Can you just say that I was right? Can we just get that on tape?

Jay Goltz:
Yeah, I did. I said you’re right. I’m not saying you’re wrong. I’m just saying, I’d limit it. That’s all. Just in case, because you never know.

Loren Feldman:
Any other contingency plans? Are there other ways to get yarn?

Laura Zander:
We still have some older inventory on-site that’s not current inventory, so not current types of yarn. We can do something with that. We have what we call “replacement yarns.” We have a hodgepodge of inventory that is just kind of random shit. Jay, you’ve probably got some random stuff at your place.

Jay Goltz:
I have hundreds of thousands of dollars of that that I’m working on getting rid of because I should have gotten rid of it before now. But for sure now, I’m going to get rid of it. Let me ask you a question. There are going to be some knitting shops [closing], I assume?

Laura Zander:
I’m sure there are.

Jay Goltz:
Have you considered sending out an email to everyone, saying, “Listen, if you’re thinking of closing and you need to get rid of inventory, please call me. I’m in a position to buy inventory.” And then you’d be throwing them a life preserver, because it’s not like they can go sell it out at cost.

Laura Zander:
Mmmmm. Yeah, we maybe could.

Karen Clark Cole:
I think it’s funny that what’s gonna happen is, a year from now, we’ll see everyone walking around with hodgepodge sweaters that they had to knit based on the available yarn.

Laura Zander:
It’s not that desperate quite yet. But yeah, that’s an interesting thought.

Jay Goltz:
Could you just say, “Yeah, that’s a great idea, Jay.” Can I play that back to you since you seem a little testy about being right?

Laura Zander:
Mmmm.

Loren Feldman:
Jay, let me ask you. When we first started taping these episodes, you were kind of bemoaning the fact that you had excess inventory. It sounds like now, it turns out that might actually be a good thing.

Jay Goltz:
Let me tell you what’s interesting, and I won’t mention names. There’s some suppliers in this industry, and I’m talking about big suppliers, that the word on the street is they might be going down because one of them in particular is owned by a big company, and they might be done with them. And if that happens, it is going to create a huge hole in the marketplace, and then connect these dots. I buy from Italy and Spain. They’ve been shut down now. I might end up being the only guy in the United States with a lot of inventory. So I went from, “Oh, my God, I’ve got too much inventory, and I’ve sent too many corner samples out for free to these frame shops,” to, “Oh my God, I’ve got a lot of inventory. What a great thing.” So it’s a possibility that in a month or two, this thing could be an opportunity for me. I don’t mind having a warehouse full of inventory right now.

Laura Zander:
Same page, same page. Depending on the two different businesses that we have, but, the Jimmy Beans side of it, we had way too much inventory six weeks ago. And now it’s just going down and down and down to a really healthy spot.

On the wholesale side, on our manufacturing side, we didn’t have enough inventory to begin with, because we bought the business with zero inventory. That’s where we’re really suffering. But it’s the same thing—our inventory is healthier than it’s ever been as a result of this and of so many of our suppliers being closed and we couldn’t get stuff.

Loren Feldman:
Laura, I keep thinking, I’m intrigued by the thought of you getting on a plane. I’m wondering, have you started to do any other things that you hadn’t been doing? Have you been out and about in a way that you hadn’t been?

Laura Zander:
No, not a ton, and I don’t really want to go down there [to Texas]. I mean, I do, because I love the people down there, but I’m going down there because I really kind of have to. It’s falling apart a little bit.

Jay Goltz:
I don’t think you’re taking any huge risk getting on an airplane at all. I do think there’s an element of this—and I get it, I’m not downplaying it at all. It’s extremely serious and tons of people are dying and it’s horrible, but I do think that something like getting on a plane where there’s not a lot of people, wearing a mask, I’m no doctor, but I can’t imagine that’s a major risky thing at this point.

I’m going to stores as little as I have to, but I will tell you, my head’s changed. A month ago, six weeks ago, when I went in a store and someone’s wearing a mask, I’m thinking, “You idiot.” And now I go in there, and they’re not wearing a mask, I’m going, “You idiot.” I don’t think anybody should be going into stores without masks on at this point. And like I said, with the customer thing, they’re getting it. We’re trying to be respectful to the situation.

I will tell you though, this is not black and white. I’m absolutely not subscribing to the, “Oh, everyone should open up, and if people die, they die.” But we can’t wait until this thing’s completely gone either. I mean, trying to find a reasonable middle to that… I don’t have an easy answer. I don’t think there is one. We can’t wait until there’s a vaccine made. We’ll be all out of business.

Laura Zander:
Yeah, what I was gonna ask you guys about and ask for your advice on, was you had talked about hazard pay. We’re doing the same thing with the people who are coming into the warehouse here in Reno and paying them a percentage. I’m really considering, I’m really worried that once everything opens back up, at what point do you stop giving them hazard pay? And then, what about all those people who came to work even though they didn’t have to? They probably could have quit, filed for unemployment—

Jay Goltz:
No, they wouldn’t have gotten unemployment if they quit.

Karen Clark Cole:
Why did you decide to give hazard pay?

Laura Zander:
Because they were scared. A fair number of them were scared in the beginning.

Karen Clark Cole:
And if they get paid more, they’re less scared?

Laura Zander:
Yeah.

Jay Goltz:
No, they’re getting compensated for taking risk, and we need to use up the PPP money. That’s a legitimate way. For me, it is.

Laura Zander:
For me, it was more an acknowledgment of, “I acknowledge that you could stay home, or that you could call in sick, or that you could use your PTO, but we need you right now. I appreciate the fact that you’re coming to work and getting in your car and that there is a risk.” Especially in the beginning, when everything was just so terrifying. The media made it so terrifying.

But what I’m a little bit worried about is, at what point do you stop this hazard pay, and then where does motivation go? All of a sudden, they’ve been getting paid an extra amount, and then things go back to normal, and I’m wondering if I keep it for some of them—the ones who have been really reliable and really dependable and have shown up every day.

Jay Goltz:
I can tell you, I’m not grappling with that at all. I’m gonna pay the hazard pay for eight weeks until the PPP thing is done. And then if people aren’t happy about it… Whenever I do business speeches, people say, “Jay, how do you motivate people?” I believe the secret—in my world, I’ll just say for me—it’s not about motivating people, it’s about not demotivating them. I have people who come to work—my average person has been here 10 years. No problem. If they need to be motivated by getting paid an extra 30 percent, and they know the company can’t afford it? Sorry, that’s the way it is.

And if they’re not happy with that, they should go work somewhere else then, because there’s a certain point where enough’s enough already. We’re trying to stay in business, for God’s sake. We will have been shut down for two and a half months. And there’s a point where I’m the only one who’s gonna be losing money in this deal. At the end of the day, they’re getting extra money from the government for unemployment, they’re getting hazard pay. Everybody at the end of the year is going to have a banner year for income. And I’m going to lose hundreds and hundreds of thousands of dollars.

There’s a point where I have no guilt. I’ve treated everyone well, I’ve compensated them, I’ve done the best I can. But if, after two months of getting extra pay, they come and say, “Gee, I really would like…” You know, that’s unfortunate you feel that way, but you know what? I don’t know what to tell you. There’s a point where enough is enough already.

Laura Zander:
No, that’s a great point. Remember, I’m coming from the last two or three years losing hundreds of thousands and not being able to give raises and not being able to give bonuses.

Jay Goltz:
Okay.

Laura Zander:
And so for two or three years, I asked them all to give me everything that they have and not get paid for it.

Jay Goltz:
Okay, so that’s different.

Laura Zander:
They’re getting paid under-market right now.

Jay Goltz:
Wait, so then the answer is you go from hazard pay to just giving them raises of whatever, 10 percent, and like, that’s reasonable. That’s fair. That’s the right thing to do.

Laura Zander:
Yeah, I mean, I’m just so impressed that, after years and years of us all pushing so hard and pushing so hard and losing money and forgoing raises and not having Christmas parties and not doing this, not doing that, and not having any money in the bank, and being frickin’ terrified constantly, that they’re all still showing up every day.

Jay Goltz:
Here’s the problem I’m having. I’ve got one person in particular. This is the exact situation I’m in. What do you do when you explain to them, “Look, we have to do business. We need to stay in business. We’re going to give you extra money, happy to do it.” And then there’s one person who goes, “Hey, I don’t want to come back to work yet.” I don’t have an easy solution. Tell them everyone else came back? I’ve gotta tell you, I need you back here. I won’t even do it this month. I’ll wait until June 1st when the whole state’s opened up. On June 1st, if you don’t want to come back to work, then I’m gonna have to replace your job. I mean, I don’t know what choice I have. At some point…

Laura Zander:
Yeah, we’re in the same spot. We have a couple people like that, and I don’t know what we’re gonna do.

Loren Feldman:
Karen, I’d like to ask you about what Jay was saying before about trying to find the happy medium, opening back up at the right speed. Not too fast, not too slow. Are you at all concerned that people are jumping the gun around the country?

Karen Clark Cole:
Yeah, the governors in California, Washington, Oregon, and maybe a few more are all working together with a reentry plan. I’m super impressed with not only our governor, but California and a bunch of other states. They’re really taking charge and taking it seriously and making sure that everybody’s safety and well-being is paramount over the economy. Obviously, they’re closely related, and it’s very difficult to make a call to affect someone’s livelihood by not allowing them to open their business versus looking at overall public health, but I think a lot of what they’re encouraging, there’s a lot of curbside pickup going on. There’s a lot of deliveries. And it’s really fun for me to watch how businesses in the Seattle area are pivoting and being creative.

Even for us, we have really state-of-the-art research labs in our Seattle and San Diego offices. How are we going to run research studies in there? Because that’s one of our researchers who’s acting as the interviewer, essentially, in close quarters with the participant, who’s somebody off the street. So now we’re doing everything remote, and there are some studies that we just can’t do because it requires physical VR equipment in some cases. We’re busy trying to figure out, “Okay, so what would allow us to do that?”

We’re looking at ozone treatments to sanitize the hardware. You put it in a little case, you shut the door, it gets sanitized, and then the new participant can take it out and put it on. And then our moderator is in another room using a robot to communicate with a participant. We’re doing all kinds of crazy things like that to try to pivot and be creative so that we can get back to serving our clients. They’re trying to run their businesses, and they need to study to get their business going.

Jay Goltz:
I’m going to tell you what I find extremely disturbing when you watch TV. You see some of these states where these people are going down to city hall or wherever with guns and signs without masks on, with the constitutional thing. I get it that, sometimes, you’ve got to open the business, but to suggest this isn’t a real problem and they should all go down there congregating without masks on? It’s really just unfortunate. And there’s no question people are going to die from this unnecessarily. With that being said, they’re gonna have to open up the businesses at some point. But they can be more respectful to each other is my point.

Loren Feldman:
Let me ask you this, Jay. The government can say, it’s okay to open up, but consumers actually have to come back. Whether you can just flip a switch and turn the economy back on is an open question. Is there something that you guys, as business owners, should be thinking about in case this reopening doesn’t go well and you have to go through the process again?

Jay Goltz:
Your fear mongering isn’t working again. And no, I can’t predict three months from now.

Loren Feldman:
I’m not asking you to predict. I’m asking you if you’re prepared—

Jay Goltz:
No, I don’t have an answer. No, there’s nothing to prepare. All I can do is try to get rid of some inventory, try to keep some cash around, and here’s where it gets interesting. There is going to come a moment in time where you do have to say, at some point, these are grown people. If a business owner chooses that they want to open their business, and another human being who lives in the United States wants to come in and do business with them, where’s the line where we say, “Okay, it’s their call,” versus a person in the statehouse who’s never run a business in their life and is getting a check every Friday.

Loren Feldman:
That’s a great question, but it would be different if it only affected the two people who are doing business with each other.

Jay Goltz:
I got it. But what about if you’re gonna lose your livelihood and everything you’ve worked for your entire life? I’m saying it’s not black and white. I’m saying there is a point where there’s risk out there. And like I said, there will never come a day where everyone’s gonna go, “Okay, completely done.” Like World War II, done, done. It was over. There’s not going to come a day where anybody’s gonna be able to say, “This thing is completely done. Open for business, no one’s gonna die.”

Loren Feldman:
We shut down so that we could put ourselves in a position to use that time wisely and ramp up testing, our ability to trace, and we’re not doing those things.

Jay Goltz:
No, no. I’m not arguing with that. I don’t think it’s time yet. I think we’ve got to get the testing thing done, but no, there’s no question. But like I said, there could come a point where we could say, “Okay, all that stuff’s done.” I mean, I can’t stay closed for a year.

Laura Zander:
Well, it seems to me, after what I’ve been hearing, that we can’t decide as a community if we’re China or if we’re Sweden. Do we want to be completely locked down and squash it out? Or do we want to just open it up and let natural selection take its course?

Loren Feldman:
That’s a good way to put it, Laura.

Jay Goltz:
I want to know, do you think I’m gonna survive natural selection? Give me your best guess.

Laura Zander:
No. Are you kidding?

Jay Goltz:
‘Cause I’m elderly?

Laura Zander:
No, cause you’re assholey.

Jay Goltz:
No, those are the people who survive. Haven’t you figured that out yet? You’re so young and naive. You think the nice people survive?!

Laura Zander:
You’re too stubborn. Of course you’re gonna survive.

Loren Feldman:
On that note, we are out of time. My thanks to Karen Clark Cole, Jay Goltz, and Laura Zander. Really appreciate it guys. Thank you for taking the time and for sharing what you’re going through with this. Be careful out there.

Episode 15: My Employees Are Not Thrilled to Be Back at Work

Jay, Dana, and Laura talk about the process of reopening—the precautions, the risks, the consumers who might not show up, the dilemma of asking employees to accept less in pay than they were getting in unemployment, and the possibility of a second coronavirus wave that could bring a second shutdown: “I don't have the luxury of just saying, ‘Oh, I'll tell you what. Maybe we'll open in six weeks, eight weeks.’ I mean, there's some point where I'll be out of business.” Plus: Dana got her PPP and an EIDL.

Dana White is founder and CEO of Paralee Boyd hair salons.

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.

Episode Highlights:

Jay Goltz: “I don’t have the luxury of just saying, ‘Oh, I’ll tell you what. Maybe we’ll open in six weeks, eight weeks.’ I mean, there’s some point where I’ll be out of business.”

Dana White: “Okay, you guys go ahead and play with this. I am not. I’m getting ready for fall 2020 when we will most likely have to shut down again.”

Laura Zander: “I live in a city of 250,000 people, and you walk around, and you would almost never even know that this is happening. I mean, we’ve had, I don’t know, 100 cases in the whole county, 200 cases in the whole county.”

Full Episode Transcript:

Loren Feldman:
As usual, let’s start with quick updates. Dana, what’s the status of Paralee Boyd? What’s going on with you?

Dana White:
Paralee Boyd has received the PPP.

Loren Feldman:
Wow!

Dana White:
Yeah, I know. Kind of major. It was not through my bank. It was through Goldman Sachs.

Laura Zander:
Interesting.

Loren Feldman:
You got it through Goldman Sachs because you participated in the Goldman Sachs…

Dana White:
10,000 Small Businesses, yep. They sent an email out to us a couple of weeks ago saying, “Hey listen you guys, we actually have partnered with someone who can move this along quite well.” The difference with the Goldman Sachs money is they looked at all of 2019. Whereas in my bank and another entity, they looked at from April 2019 to April 2020. The Goldman Sachs money is less by $6,000. I also applied through BlueVine, and my application was accepted through BlueV ine as well.

Loren Feldman:
I’m not familiar with BlueVine. What is that?

Dana White:
BlueVine is a lender similar to Lendio. A girlfriend of mine said, “Dana, BlueVine is approving and getting PPP funds out right away,” and their application process was very simple. Their responsiveness was amazing. And so I went ahead and applied through them too. I was torn about applying through multiple places, but I was just looking at the level of contact from my bank.

Loren Feldman:
Why were you torn?

Dana White:
Because people were like, “You know, you should apply once and wait.” My bank kept saying, “We need you to sign the document, we need you to sign the document.” So I would fill out the document, sign it as per their instructions, and then I get another email, “You need to sign the document.” And I said, “I can’t keep signing this document.” And my application just wasn’t moving. I took the reins in my own hands and applied through the Goldman Sachs program. I also applied through BlueVine.

Loren Feldman:
Anybody else?

Dana White:
Nope, just those three. BlueVine has said, “You’ve been approved, we’re just waiting on your loan number.” And Goldman Sachs has a loan number and an amount.

Laura Zander:
What happened with PNC? Have they gotten back to you?

Dana White:
I wish we could put a cricket sound effect right here.

Jay Goltz:
I’ve said this before, I need to say it again. The big banks just don’t need little accounts, period. They don’t.

Dana White:
Well, Chase just sent out an email to tons of small businesses that I know. Today, they all got their money.

Jay Goltz:
Well, three weeks, two weeks later, a week later, I’m just saying.

Dana White:
Yeah, they sent it out 3 a.m. this morning, and then on my Goldman Sachs web feed, on my newsfeed on Facebook, everybody’s like, “Oh, I got awarded, I got awarded, I got awarded.” But the anxiety and the nerves that everybody was going through, not knowing what to do. “Should I apply?”

Loren Feldman:
One thing I would add is, all the advice I’ve heard is that there’s nothing wrong—in fact, there’s a lot good—about applying in multiple places. The only thing you can’t do is, you can’t take more than one loan. That would be a problem. But you definitely did the right thing by applying in multiple places.

Dana White:
I hadn’t heard that. I had heard, “Apply one place and sit tight.” Even the Goldman Sachs loan said, “Do not apply if you’ve applied already.” And I ignored it!

Loren Feldman:
Good for you.

Dana White:
As did several other people in our Goldman Sachs class, and they were approved within 24 hours. It was the Goldman Sachs people who actually picked up the phone and called me and asked questions.

Jay Goltz:
So the entrepreneur’s lesson from this is, you can’t always follow the rules, and that is the reality. You were doing the right thing listening to all the quote-unquote professionals. You were doing what you were supposed to do with your big bank, and they didn’t come through for you. To use the phrase, you took it into your own hands, and you got the job done.

Laura Zander:
I think the other lesson that I’m hearing is, apply and try to become part of these programs. The Ernst & Young program, the Goldman Sachs program, if there’s a local program. Because that becomes your quote-unquote networking, and that’s their goal. That’s what I’m hearing.

Dana White:
Yeah, those organizations are invaluable. Likely, I wouldn’t have had it had I not been an alum. And the other thing is, when it comes to entrepreneurship, don’t ask. When you’re asking, you’re waiting. Because you’re waiting on somebody to decide to help you or not. I chose not to ask PNC and wait for PNC to decide that they were going to get to my application.

Jay Goltz:
You know the phrase, “Better to beg for forgiveness than ask for permission.” That’s another example of it.

Loren Feldman:
Do you know, Dana, is there any reason to think the loans will be different, and that you have a material choice to make here? Or do you think it doesn’t really matter which one you pick?

Dana White:
I think it matters just in the amount of funding. Like I said, with the Goldman Sachs loan, they did January of 19 to January 2020, so that means it’s going to be a $39,000 loan, whereas the BlueVine loan is April to April, which is going to be a bigger loan. I may go with BlueVine. And I don’t know if this is legal or not, but the governor of Michigan just extended the stay-at-home order to May 28. So if I get closing docs next week, Dana may not be signing closing docs next week. I know a lot of small business owners that I’m talking to are rescheduling their closings.

Loren Feldman:
So you’re saying you might not take the loan?

Dana White:
I’ll take it. I just may not schedule my closing.

Jay Goltz:
No, she’s delaying it because she’s gonna be closed, which is smart. Better to add a week at the back end when you’re open then get it now when you’re closed. Again, smart.

Dana White:
You have to spend it within eight weeks. So if I went to get my closing documents, let’s say Monday the fourth, they’re processing and that money hits my account Tuesday the fifth. Well, then the clock starts ticking Tuesday. I have eight weeks from Tuesday the fifth to use it. Well, I’m saying, “No, let’s schedule that closing for as far out as I can go and then go from there.”

Loren Feldman:
Do you have any reason to believe that they’ll accommodate you? Will they let you wait as long as you want to wait?

Dana White:
I mean, scheduling a closing… it’s your schedule. If I’m unavailable…

Loren Feldman:
Nobody’s unavailable.

Dana White:
I could be caring for a sick loved one. I could be walking my dog.

Loren Feldman:
Have you thought about how you’re going to start spending it, and when you’re going to start spending it? You close on the loan, but your shop is still closed. Are you going to pay people before your shop reopens?

Dana White:
Probably two people to get us reopened. I’ve already done the set-up work so that when I do bring them back, I can just give them their marching orders and pay them, not to help me get set up but, “Here are your marching orders and go” and pay them. And then when [the governor] does give the green light to open, I will, based on who we have, put all my staff back on, and if there’s anybody who has any questions, “I’m not feeling comfortable.” Then I have to let you go, because in Michigan, they’re very clear: You will go to jail if you have a job, and you tell somebody, “No, you can stay at home and stay on unemployment.”

No, I’m not doing that. They’ll come back, and then we’ll have training. We’ll have some cultural engagement, some rah rah meetings. I’ll give everybody their face mask, train them on how we’re going to keep ourselves safe, how we’re going to be different. Again, do more training to get their skills honed, and then we will have an opening date. Then we will open on that date. But it may not be the day that she says we can open. I’m not opening up gangbusters. No, I’m not doing that.

Loren Feldman:
Jay, you have told us previously that you got a PPP loan. You’re in a similar position, in that your business has been closed, but your state is handling it differently. You’re in Illinois, you’re able to start opening, I believe, today? Is that correct?

Jay Goltz:
No, no, no, no. It was pushed till the end of the month. But I sell plants in my home store. I have a whole big lot next to my store that, in the summer, we sell plants. Three, four thousand feet. We have a big lot out there. So because I sell plants, I’m called a “plant store,” and I service some landscapers. Therefore, I am allowed to open that store.

Loren Feldman:
The whole store or just the lot with the plants.

Jay Goltz:
You know, you go to Home Depot because they sell some building supplies. There are no stores that are part open. If you sell something that somebody needs, the whole store is open. So I am confident it’s okay for us to carefully open the store and control how many people are in there, masks and the whole thing.

Laura Zander:
Do you have predictions or projections on how busy it’s going to be? I mean, I drove by Lowe’s. The parking lot is completely full.

Jay Goltz:
Well, that’s funny you ask because I’m an hour behind Loren. It’s 11:25 a.m. here. I’ve been open for an hour and 25 minutes, and before we’re done here, I will find out whether anyone showed up or not. But from what I heard, we were getting lots of emails that people were anxious for us to reopen. So there I’m good.

My wholesale business—I sell frames to a thousand frame shops around the country—I believe that falls under the category of distribution and quote-unquote managing my inventory. Now, most of the stores are still closed, so I’m not doing anything there yet. And my retail picture frame store, there’s no way I can open that. There’s no wiggle room there, whatsoever. So my framing business is closed. My home store was open for all of an hour and a half now.

Loren Feldman:
And you opened the whole store today, and not just the plants?

Jay Goltz:
An hour and a half ago. I don’t know, frankly, I didn’t go outside yet. I’ll leave this thing for 60 seconds and tell you whether there’s any business here. We made up signage, we made it very clear, everybody’s wearing masks, customers and employees are wearing masks. We’re putting tables in front of the checkout, so they can’t get too close. We’re cleaning the place. We’re watching how many people are in there.

And then there was one other directive I gave to everybody, which is we’re suspending the cardinal rule of this company for 42 years: “The customer is not always right.” They all know when they start here, “Don’t go fighting with customers.” We won’t fight with a customer. They want to come in and be a jerk and say, “I’m not wearing a mask.” We’re going to tell them they gotta leave, and that’s the way it is. I’m not going to get intimidated by a customer who thinks it’s okay to come in without a mask. That’s a huge change for my employees, and I wanted to make sure they know, “I’ll back you up.” They’re not going to come in here and throw their weight around and go, “I’m not wearing a mask. This is overreacting.” That’s fine. Go somewhere else. I’ve got no use for that.

Loren Feldman:
Are you limiting the number of people who can come in at any one time?

Jay Goltz:
Yes, we’re starting with eight. The store is about seven, eight thousand feet. We think that we’re going to start with eight people.

Laura Zander:
How did you come up with that number?

Jay Goltz:
The size of the store, and we figured out what we could handle. We’re only keeping one door open instead of two. I’ve gotta tell you, my employees are not thrilled to be at work. They would have just soon stayed at home.

Loren Feldman:
Is that because they’re concerned about their safety, or because they were collecting the unemployment with the extra $600 a week?

Jay Goltz:
That falls under the category of, who knows? I do think, though, that they sincerely are worried about it. And all we can do is, everybody’s wearing masks, staying away. But I just don’t have the luxury of saying, “Oh, I’ll tell you what. Maybe we’ll open in six weeks, eight weeks.” I mean, there’s some point where I’ll be out of business. Whatever the day is that any business opens in this country, there is still going to be some risk out there. So it’s a question of: When’s the time to jump in? We’re being extremely careful with how we do it and extremely respectful to the employees—they don’t have to get near the customers.

Laura Zander:
Are you paying them hazard pay?

Jay Goltz:
I’m thinking about it. I haven’t done anything yet. Because unlike Michigan, apparently, that made it crystal clear about the unemployment, I’m still grappling with the people who are home. Should we put everyone back on the payroll and bring them back or leave money on employment? The whole thing is just a big murky mess. I’m trying to do the right thing, quote-unquote, but it’s not clear what the right thing is.

The question is going to become, this is just scene two of a 10 scene play. The next question is, what about the employee who doesn’t want to come back in two weeks, three weeks? Where do you finally say, “Sorry, but I’ve got to replace your job.” And then, are they going to be eligible for unemployment if you’ve offered them the job back and they didn’t come?

Dana White:
They’re not.

Jay Goltz:
Well, no, you’re in Michigan. Maybe in Michigan… Who knows? I’m not sure which way it’s going.

Loren Feldman:
How comfortable are you with the idea of opening your store now? Most medical experts would prefer that we were not opening back up the way we are.

Jay Goltz:
Customers are wearing masks. We’re wearing masks. We’re putting tape, no one’s going to get anywhere near six feet. We’re cleaning everything. I would say this: All of the experts get a paycheck every single Friday, I’ll guarantee you.

Loren Feldman:
But, Jay, it’s not as simple as that.

Jay Goltz:
There’s a point in time where, I’m not gonna do anything that’s perilous to anybody. I think we’re being extremely careful.

Loren Feldman:
Are you worried about potential liability? Suppose one of your employees gets sick.

Jay Goltz:
This is becoming a regular theme with this show. If I was to worry about everything that I could worry about, I would be in a mental institution somewhere. So I’m not going to say worry. We’re taking all the precautions we can take, and I think it’ll be okay. If I didn’t think it would be okay, I wouldn’t be doing it. So is it possible that someone’s going to get sick and then blame it on that they came into work? I’m following the law. I’m doing everything I’m supposed to be doing. It’s a difficult situation.

Laura Zander:
Is anybody doing waivers, like a liability release? Like when you come in the store, you can shop at your own risk?

Jay Goltz:
The government is trying to make it illegal to sue a company. If somebody gets sick, they can sue their employer. There won’t be any companies left.

You didn’t ask this question, which is a fair question: Jay, has anybody been sick? No, I don’t have one sick employee that I know of. I think we’ve been quarantined nicely. I think we’re being prudent. I think we’re being careful. I had plants ordered for six months. These plants are showing up here. I’ve got a lot of money invested in plants. I’ve got customers who are clamoring to come in to get their plants.

Laura Zander:
Gardening is huge. The retail numbers… it’s just going through the roof.

Jay Goltz:
Right. So there’s people who want this stuff. They’re being careful. We’re being careful. At what point do I—

Laura Zander:
I think you’re doing a great job.

Jay Goltz:
Thank you!

Laura Zander:
I’ve been in your shop. It’s reasonable. It’s not overboard. It’s not going to look like Walmart looks. Again, I go by Lowe’s, and I’ve never seen the parking lot so full. It’s more full than it’s ever been. So to have a private store that already has kind of a niche audience be open with eight people at a time… I just don’t see an issue with it. People are running a business. We’re running a business, and we have more than eight people at our location, and they’re humans, and they’re there by choice.

Loren Feldman:
Okay, so let me see if I can annoy all three of you.

Jay Goltz:
You already have, Loren. Done.

Loren Feldman:
I know I got you, Jay. The big picture here, though, is this: By opening back up now, when the experts are saying it’s too soon, they’re saying we are running the risk of triggering a second wave. I think the worst thing for all of us—for the country and for your businesses too—would be for us to have wasted this time that we spent shut down and to have to do it again. That’s what I really worry about. Do you not worry about that, Jay?

Jay Goltz:
You left a piece of the puzzle out. Some of these people—I saw in the paper this morning in the Wall Street Journal—[in] Michigan, a bunch of people showed up at the Capitol with guns, saying, “We want to be open,” and they don’t have masks on.

Loren Feldman:
What is the piece I left out?

Jay Goltz:
I’m talking about, customers all have masks. We have masks. They’re not getting anywhere near each other—more than six feet apart. We’re following all of these things to keep everyone away from each other. It’s not like I’m minimizing the problem and going, “Oh, it’s been overblown. We don’t need to wear masks.” We’re not letting anybody in without a mask. We’re going to send them away.

I think if you take all of these precautions, I believe it will be okay. I’m not one of these people that you see, these people with their protests who are out there in crowds with no masks. I think that’s crazy. That’s not what we’re doing. We’re taking all the precautions.

Laura Zander:
I agree, you’re being responsible. People are far apart. You’re not opening a movie theater.

Dana White:
Well, I don’t know. I’m getting ready for the second wave. I’m here in Michigan. I’m looking at people. I’m getting ready for the second wave. That’s what I’m doing.

Loren Feldman:
And you’re saying that because you see people who are not being responsible?

Dana White:
Absolutely, and we don’t have enough tests. If you’re watching what’s happening in the homeland, in Iowa and Nebraska, people have not been hit hard enough yet. Not enough people—for them—have died for them to take this seriously enough to shut it down. So okay, you guys go ahead and play with this. I am not. I’m getting ready for fall 2020 when we will most likely have to shut down again because Cletus and Bubba and Jeff want to hang out in the backyard. “Because the governor said I can’t hang out with my friends,” they’re mad. So you be mad and be sick, while Dana is getting ready to have a much more distanced online interaction with her customers, getting ready for what’s going to happen in the fall.

Maybe, since I’m not opening till May 28th, that might be something I can do in the time it takes to put products and kits together, but I’m getting ready for the second wave right now. And then, if we can open, that’s great. We’ll open, generate revenue, use PPP, have some cushion. But when and if we have to shut down again, I will be ready. That’s what I’m doing.

Jay Goltz:
I’m not in a vacuum. Home Depot’s open. There’s hundreds of people there. Lowe’s is open. Everybody’s doing business. I should decide, “Oh no, I’m gonna take it to a newer level and I’m gonna let tens of thousands of dollars of plants die, and I’m just going to shut it down because…” And the customers are calling us. They want to come in and buy their stuff. There is a point to where the customers want to come in, we want to sell them things, we’re all wearing all the right stuff. There is a point to where you’ve got to make a value judgment, and I don’t know that I can go another month without doing any business.

Loren Feldman:
Why do you say that, Jay?

Jay Goltz:
Because I have been shut down. It will be 10 weeks of next-to-no business coming in. I don’t have $3 million sitting in a bank account somewhere. I have no business coming in.

Loren Feldman:
You did get a PPP loan. Does that make a difference?

Jay Goltz:
I paid the people with it. I used it for payroll. It doesn’t change the fact that—

Loren Feldman:
Well, 25 percent of it you can use for other things, right?

Dana White:
Utilities and rent.

Jay Goltz:
Yeah, except this isn’t going to be a light switch going back on. I am sure I’m going to lose a ton of money this year. As soon as the lift is over, it’s not like business back to usual. I mean, I’ve still got the same overheads. I’ve still got the employees. It wouldn’t be surprising if my business is off by 30, 40 percent the day we open.

Dana White:
Jay, I have a question. Can you do pick-up framing and delivery framing? Can you do delivery of furniture?

Jay Goltz:
Yes, we already have a website: Jaysonhome.com—with a “Y”—Jaysonhome.com. We absolutely sell stuff on the internet, and people can pick out furniture, and we can deliver it. Framing, we’re hanging plastic shields over the sales counters and people are protected there. If they want to digitally send in photographs, we can certainly frame those.

Loren Feldman:
You told us you haven’t opened the frame store.

Jay Goltz:
I can’t. It isn’t an option at this point.

Loren Feldman:
When you said you’re hanging plastic, you’re talking about that’s your plan. That’s what you’re going to do when you can open.

Jay Goltz:
We’re gonna do it for sure when we open again. And then on top of which, I am putting in some software where you can frame online and come pick it up. I don’t think that my customers mostly are going to decide after all these years that they’re going to want to start framing pictures online.

Laura Zander:
Agreed.

Jay Goltz:
I believe that most people are going to get back to quote-unquote some kind of normal. I don’t think that the world is going to stop doing picture framing. That’s what I’m counting on. And just so you have some perspective, I’m dealing with a very small niche market, people who are into their interiors, people who want to frame their own photographs. Most people have never been into a frame shop and never will. I’m dealing with a very small niche. With that being said, they’re into it because they realize that the secret to a happy life is having beautiful picture framing, and they know that.

Laura Zander:
I thought it was meditation and enlightenment!

Jay Goltz:
It’s a little known fact that it’s picture framing first, and then meditation, and then…

Laura Zander:
God, I’ve been way off track.

Jay Goltz:
Well, that’s why I’m here. I’m here to help.

Loren Feldman:
Jay, could you open the frame shop by-appointment only?

Jay Goltz:
Technically, no. I mean, could I get away with it and lock the door? Probably. But then I’ve got the problem now that I’ve got to bring people into production to go do the framing. And believe me, I thought about it, but I don’t know that it’s worth all the trouble because—unlike a restaurant, if you lose a meal in the restaurant, it’s gone. Here’s a case of, if they have a picture to frame, they’ll wait for me to open. So there’ll be some pent-up demand. I don’t know that it’s gonna be worth all the trouble to try to do that.

Dana White:
But I’m wondering, with the amount of time that people are spending at home, they may need to do things around the house like picture framing.

Jay Goltz:
Yeah.

Dana White:
We’re getting a new roof put on our garage, so there are things that we’re now doing around the house because we’re here all the time. I think that’s a marketing push, if you want to invest the dollars in saying, “Are you tired of looking at that old dah dah dah? Have it framed.”

Jay Goltz:
Here’s the problem, though. The question is: How many of my customers have been financially affected by this, whether psychologically because their stock portfolio’s down, or because they were laid off? I don’t know, I mean that’s the problem.

Dana White:
But I think your niche market… you are a niche market. You’re not a hamburger. You’re a Costco, you’re not a Sam’s—no offense to those two big major businesses. I think your niche market is spending money. Lowe’s is jammed for a reason. People are at home getting paid, and I think if you market it to people who are working from home, still making their salary, because business is still coming in, I think, “Hey, this wall doesn’t have to be drab anymore, and this is how we can help you make your home beautiful while you’re in it.”

Laura Zander:
Why don’t you just market to all of Karen’s employees?

Dana White:
Right, I was going to say, market to all of Karen’s employees! And I’m wondering if you could expand your market. I see you shipping across the country. I know there are women who are cross-stitching right now.

Jay Goltz:
There’s a company that went into doing online framing. They’ve gone through $90 million and still don’t make any money. Custom picture framing is still one of those things that you’re better off doing in person—to see the texture, to see the stuff. And then on top, shipping glass is not a great thing. If you’ve got any artwork that’s of any value, and the art is hinged properly, meaning it’s suspended in the frame, by definition, it can’t be shipped upside down. It’ll break the hinges. It’s the worst possible thing to try to ship. It’s flat, and the UPS charges more because it’s flat, and it’s bigger.

What I’ve learned about business is, I can’t stay six steps ahead. I’m taking one step at a time, and we’ll see what comes, because I see people on the news now with their predictions of, “This is going to be a depression with World War Two,” and it’s like, shut up. You just don’t know anything. You don’t know that.

Loren Feldman:
Jay, you’ve been saying that week after week here, and it’s gotten pretty bad. You know that, right?

Jay Goltz:
Oh, it is bad. It’s horrible. How about CNN saying unemployment numbers. People have lost their jobs where it’s the same jobless as the Depression. Did they remember the fact that people can’t go to work right now, and then as soon as their businesses open up, they’re going back to work? To use the unemployment number, and to say they lost their jobs—they didn’t lose their jobs. They were furloughed for a month or two, but they never make that distinction.

Loren Feldman:
Jay, they don’t have their jobs.

Jay Goltz:
They’ve been furloughed. They didn’t lose those jobs.

Loren Feldman:
There’s no guarantee that those jobs will be there for them two months from now.

Jay Goltz:
For most of them it will.

Loren Feldman:
Maybe, you don’t know that.

Jay Goltz:
To make a parallel between this point in time…

Loren Feldman:
All right, let’s not argue economics. I can find another way to annoy you.

Jay Goltz:
You’re very good at it. You’re actually gifted.

Loren Feldman:
Thank you. I appreciate that. [Laughter] I want to go back to what you said about the concerns among your employees. I think it’s an important point, and let me stress here, you’ve been kind enough to share your journey on this podcast. I do appreciate that, and I’m asking you these questions because you’re representative of—all three of you—people who are trying to make the best of a really awful situation.

I want to stress that when I asked about what the experts are saying and the risks, it’s not because I think that whether or not there’s a second wave hinges upon whether Jayson Home is open or not. But you’re representative of a lot of businesses that have to make really difficult decisions, and I want to try to think those through.

Part of it involves your employees. You mentioned that your employees aren’t terribly happy about this. I think that brings up an important point because you can be incredibly responsible in the store, and I’m sure you are, but your employees have to get there, and some may be taking public transportation, some may be pumping gas. There are things they have to do that increases the risk. And it changes the risk factor for all of us. So, I’m asking, how are you dealing with the concerns among your employees?

Jay Goltz:
If somebody said, “I don’t want to take the L, blah, blah, blah,” I would get someone to pick them up. My HR person’s calling every single employee to make sure they’re okay, and it turns out one guy who didn’t speak great English did not file for unemployment soon enough. He literally put his wife on the phone because his English wasn’t great. He’s been with me for four years. She said, “We have no money. We need medication for our kid.” I went over there and gave him some cash to get him through it. They’ll eventually get unemployment, so we are doing what we can. And for the employees, I wouldn’t tell someone to go take the L at this point if that’s a problem. It’s just not black and white.

Loren Feldman:
What about somebody who has been caring for somebody or has kids at home who can’t go to school?

Jay Goltz:
Yeah, they should stay home. What am I going to do? They should stay home.

Loren Feldman:
But does that create a problem in terms of unemployment if you ask them to come back?

Jay Goltz:
I’m gonna guess not. Not my call. It’s unemployment’s call. I’m gonna guess not, but I’m not going to tell everybody, “Lock your kids in the closet. Come to work. I need you here.” Some of them would be happy to do that at this point, I can assure you. I have one person who comes to work every day. She’s got a nanny at home, and she doesn’t want to be at home, and she hasn’t missed a day, and she’s happy to be at work. There are people who want to go to work every day. Will there be some collateral damage on this at the end? Maybe. There is going to come a point where people need to go back to work, and we’re going to have to say to them—it’s not going to be this month, it’ll probably gonna be after the whole stay is lifted, and things are supposed to be getting back to work—at some point, we would have to tell the person, “Listen, we need someone to take care of the customers when they come in. And if you don’t want to come in, we’re going to have to replace your job.”

What am I gonna do? What if they say, “Oh, I really would like to wait till the end of the year when winter comes in.” There’s some point where you’ve got to take care of business. And believe me, these people who are out there protesting, I’m not supporting that at all. But there is a line somewhere. You will never be risk-free in this situation. Not for a year or two. There is going to be a point that some people are still going to have it, and somebody’s gonna have to say, “Okay, it’s safe enough.”

Laura Zander:
I live in a city of 250,000 people, and you walk around, and you would almost never even know that this is happening. I mean, we’ve had, I don’t know… 100 cases in the whole county, 200 cases in the whole county. I think we’ve all had different experiences based on either geography or what kind of business we’re in, and I just don’t think the rules are going to apply the same to everybody.

Jay Goltz:
No, I can tell you, if you walk out front here—people jogging, walking the dog—most people have masks on. It’s all over the place. I went to Home Depot a week ago, and some of the employees didn’t have masks on. And I had a mask on. I walked up to one of the people and I go, “Is there a store manager?” “Yeah, Al.” “Is he here?” “No, he’s off today.” I go, “Why aren’t you wearing a mask?” “Well, I had it on before.” I go, “You should have it on all the time.” I went in there this morning. There wasn’t a person in the store without a mask, and they did make it a law, as of today.

Laura Zander:
I go to the grocery store. I’m one of three people in the grocery store, never even cross somebody in the aisle. One person the whole time. There’s Plexiglas in between me and the lady who checks us out. All I’m saying is that—and we all know this and we’ve heard this—based on where we live and the population density and probably other factors, we’re having completely different experiences. Very, very different experiences. So, Loren, when it comes to, can you open business? Is that the responsible thing to do? Overall? No, it is not the right thing to do. But I think that in some cases, if we use good judgment, that it’s not necessarily a bad thing.

Loren Feldman:
I want to follow up on that. But Jay, this would be a good time for you to go find out what your traffic has been like…

Jay Goltz:
If you talk about me while I’m gone…

Loren Feldman:
Trust us. We will.

Jay Goltz:
I’ll be gone for 40 seconds. Hold on…

Loren Feldman:
Laura, let me ask you: you shut down your brick and mortar store, I believe. Where do things stand with that? Is there any prospect of it reopening?

Laura Zander:
No, no, we don’t have any plans to reopen it. Not for quite a while.

Loren Feldman:
Is that because the restrictions remain in place or because you don’t feel the need to reopen it.

Laura Zander:
I think a little bit of both. Part of it is our customer base is, not elderly, but some of our customer base is a high-risk base. I don’t feel any urgency, given that we have other sources of income and that’s not the primary part of our business. It’s not the primary driver.

Loren Feldman:
And you’ve been telling us that you’ve been selling well online, and that’s still true?

Laura Zander:
The retail store has always been 5 percent or less of our business. So no, I don’t feel any urgency. Our store manager is an older man in his 60’s, and he’s taken off. He’s on unemployment right now, and he left a long time ago. He’s like, “It’s not worth it. It’s not worth the risk.” So once we hit the 14 days or maybe 21 days of no more cases in town, we’ll consider it, but I’m not in a rush.

Loren Feldman:
The company you bought in Texas is a wholesaler that sells to retail yarn shops around the country, and you’ve told us that that’s struggled for obvious reasons throughout this. Is there any indication that some of those stores are starting to open? How’s that looking?

Laura Zander:
It’s consistent. We’re losing money every day. I told you we’re paying people, even if they’re not coming to work, because we don’t have enough work for them. But at least we’re losing money consistently, so we’re able to kind of predict it, and we don’t see that changing significantly, for probably three months.

Our suppliers—we have a mill in Peru and a mill in South Africa—they’ve been shut down. They’re the primary suppliers of yarn, of wool, in the world. Even the other yarn suppliers in the country, none of us can get our yarn. We’re all going to run out of product here in just a little bit.

Loren Feldman:
How soon?

Laura Zander:
We have about six weeks of supply left at the current demand, given that our demand is about half of what it normally would be.

Loren Feldman:
Is there anything you can do? Do you have a plan?

Laura Zander:
Yes. We have some older inventory that has been sitting around that we inherited, or I guess we purchased. We’ll just get creative with old inventory. We’re going to get creative. We have a lot of mistakes, some second quality or some items that people had canceled, so stuff that’s in the returns pile.

Jay Goltz:
How big an industry is the yarn business in the United States?

Laura Zander:
At one point it was about $1.1 billion.

Jay Goltz:
That’s interesting, because framing’s about two and a half. I would argue, probably only 1 percent of the population is knitting stuff. It couldn’t be much more to only do a billion dollars in the United States. You’re also dealing with a tiny little niche.

Laura Zander:
Oh, it’s tiny. Very, very tiny.

Jay Goltz:
Okay, so I’m back: 10 customers, which, you know, not bad.

Laura Zander:
How much did they spend?

Jay Goltz:
I don’t know, I didn’t stay there long enough to find out.

Loren Feldman:
10 customers just for plants?

Jay Goltz:
There’s not that many plants. I’ve gotta tell you, I got here at eight this morning, there wasn’t a plant in the lot. The truck just came. It’s probably only a quarter filled. We’re waiting for more shipments to come in throughout the day and then through Monday. It’s not that hot out. When the temperature goes up, people get activated to go out to plant their gardens. Right now, it’s probably in the 50’s, so it’s still a little chilly. But I would think by tomorrow, we’ll probably be doing okay out there.

Laura Zander:
I’m curious—and I know this is a tangent—but why would somebody buy a plant from you as opposed to Home Depot or Lowe’s?

Jay Goltz:
I got into the business by accident. I have no idea about that stuff. I’m a picture frame guy, but the building came up for sale, and I was trying to tie up the real estate for something. I wasn’t ready to move framing, so as a placeholder, I opened a garden store, and what we’ve learned over the first couple years, we’re in an upscale urban environment. We’re not Home Depot. They don’t come in with dirty blue jeans and a laundry list of what they want. They want cool, interesting stuff. So just like in my frame business, just like in the home store, it’s a boutique thing.

We carry the fullest, nicest, best plants we can find. We don’t have everything. I can’t even give you the names because I don’t know it. We carry whatever the best in the market is at the moment, and people appreciate that, and they come here because Home Depot’s literally one mile away, if not maybe even less.

Loren Feldman:
Laura how much is Jay paying you to ask questions like that?

Laura Zander:
Oh, no. I think it’s a really good one for us to think about.

Loren Feldman:
I agree.

Laura Zander:
It’s like, why would you go there? It’s the same thing in the yarn industry. Why would you come to Jimmy Beans and buy yarn when you could go to Jo-Ann’s or Michaels? There’s a quality thing, there’s the service…

Jay Goltz:
Laura, he doesn’t understand the higher level stuff like that. [Laughter]

Laura Zander:
Yes he does! He’s really close to Princeton.

Jay Goltz:
No, that’s a smart question. Believe me, I asked myself that. The other thing is, Home Depot, they buy stuff from vendors, they don’t actually pay for it till it gets bought by the customer. The stuff’s not taken care of that well. We have people who are paying more attention to the plants.

Laura Zander:
Do you play them music at night?

Jay Goltz:
Yeah, it’s a whole lifestyle business thing.

Laura Zander:
Okay, great. I just want to make sure those plants are taken care of.

Jay Goltz:
They’re nurtured. Everything we do is nurtured.

Laura Zander:
Aww…

Loren Feldman:
All right, before I offend all three of you…

Jay Goltz:
It’s too late for that, Loren.

Loren Feldman:
We’re going to have to wrap this up. Thank you all for doing this. I appreciate, again, as always, the fact that you’re willing to come here and be so transparent about what you’re going through. I think it means a lot to a lot of people.

Jay Goltz:
I would just say to people who don’t own businesses, it’s really easy to sit back and take shots at business owners. Like, “Oh, I would never open.” Have you ever had to pay the rent on Friday? I don’t think so. I mean, it’s a little frustrating to see the politicians who have never run a lemonade stand deciding the way businesses should be running.

Dana White:
What I’m learning through this whole process is, you do have to do what you have to do. I’ve applied for over 14 grants, two loans. I got my EIDL today, which is wonderful. I’ve got the PPP.

Loren Feldman:
Wait. Whoa, whoa, whoa. We buried the lede. I should have asked you about that at the beginning. I don’t know anybody who’s got an EIDL.

Laura Zander:
Me neither.

Jay Goltz:
I don’t even know what that is.

Dana White:
It’s the emergency disaster loan.

Loren Feldman:
It’s the SBA’s disaster loan, and it’s been all messed up.

Dana White:
That’s why I’m getting ready for the second wave and using grant money to keep the lights on, keep the phones on, keep the internet going, getting ready for when we hit go—ordering new capes, because when we get the new capes, it’s a matter of that cape is done for the day. No more disinfecting it and using it again in this climate. My market has been disproportionately affected. African Americans are being disproportionately affected. Since that’s the majority of my business, I have to do what I have to do as a business owner to keep the guests of Paralee Boyd safe. Towels are always thrown out, but tripling up on towels, tripling up on capes, and just getting ready to go, and using the money that I’ve been fortunate enough to get through grants and EIDL and PPP to hold the ship together.

Jay Goltz:
For those who have listened to this podcast from the beginning, you’ve gotten to watch how Dana has gone from a worrier to a warrior. You have your own Superwoman cape and I couldn’t be prouder and happier to be associated with you because you are Entrepreneur of the Year.

Dana White:
Thank you!

Loren Feldman:
On that note, my thanks to Jay Goltz, Dana White, and Laura Zander. Really appreciate it guys. Be careful out there.