Episode 6: We’re at the Edge Right Now

Karen, William, and Laura discuss taking investment capital, dealing with stress, and why Karen’s going on sabbatical: “I just thought, ‘Okay, okay, I'll go.’ Then of course, I'm worried, like, ‘What if everything goes better without me?’” Plus: how are you managing health insurance costs?

Episode 6: We’re at the Edge Right Now

Guests:

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

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

William Vanderbloemen is founder and CEO of Vanderbloemen Search Group.

Producer:

Jess Thoubboron is founder of Blank Word Productions.

Episode Highlights:

Karen Clark Cole: “The last 12 months have been pretty stressful for me—the most stressful in the 20 years of the company, for sure.”

Karen Clark Cole: “We would get regular phone calls from some of these companies trying to buy us, and my attitude was always, ‘Well, forget that. We’re going to do the buying. We’re going to be the world’s leading UX firm.’”

Karen Clark Cole: “In one case, we bought a company with everybody knowing what the situation was, including the seller of that company. The money was coming on Friday. It never came.”

Karen Clark Cole: “We had a lot of people… while we love them, we didn’t need them to run the company anymore, because we weren’t doing this massive growth. I had to figure all that out.”

Karen Clark Cole: “I’m a single mom. That’s important, right? I come home at the end of the day, and I’m focused on my 11-year-old. I think that actually saves me in a lot of ways, because I can’t stew on it all night long. I turn off my phone, and I’m with her.”

Laura Zander: “We’re at the edge right now. My husband is not sleeping. With the acquisition that we just made, we have invested way more… We are right at that line of about to have a nervous breakdown. I guess you figure out how strong you are.”

Laura Zander: “It’s hard for me to be that brand ambassador and go to an event and just be like, ‘Yeah, we’re great. We would love to work with you!’ When all I want to do is just crawl in a hole and sleep and I don’t want to talk to anybody.”

Laura Zander: “We don’t have any friends. We have no social life. We exercise. It just is what it is.”

William Vanderbloemen: “When we started, we’d do a search, and I just did it all. All of it lived in my brain. Well, that’s great if you want to be a company of one person.”

William Vanderbloemen: “He said, ‘William, have you never heard the old line: The first day you’re the CEO is the last day you hear the truth’?”

Full Episode Transcript:

Loren Feldman:
Let’s meet this week’s 21 Hats podcast lineup. With us today are Laura Zander, CEO of Jimmy Beans Wool, a digital version of a neighborhood yarn shop that is based in Reno, Nevada; William Vanderbloemen, who is CEO of Vanderbloemen Search Group, a recruiting firm in Houston that specializes in working with churches and other faith-based organizations; and Karen Clark Cole, who is CEO of Blink UX, a digital research and design firm based in Seattle.

Karen, we’ll start with you. As I found out when you and I taped the podcast in Palm Springs at EY’s Strategic Growth Forum, you’ve decided to take a sabbatical from running Blink. Tell us what’s going on.

Karen Clark Cole:
Sure. It wasn’t really me who decided. It was sort of decided for me by some of the members of the leadership team who I work most closely with, largely my chief cultural officer who runs all of our HR, and she’s a psychologist, trained for many years. We should back up a little bit. We’ve had a pretty rough 16 months in total. The last 12 months have been pretty stressful for me—the most stressful in the 20 years of the company, for sure.

Loren Feldman:
Tell us why.

Karen Clark Cole:
We decided to take on some outside investment for the first time in order so that we could grow more quickly. The U.S. market is pretty hot right now. There are a lot of companies trying to consolidate, so a lot of acquisitions going on. We would get regular phone calls from some of these companies trying to buy us, and my attitude was always, “Well, forget that. We’re going to do the buying. We’re going to be the world’s leading UX firm.” I got busy fulfilling that.

Our strategy before we had acquired some companies was to buy, using a line of credit, and then gradually pay that off, and then do it again and do it again. The trouble is the market’s moving too quickly for that and we needed to get some outside money so we could get some jet fuel and go on a buying spree, basically with similar kinds of companies. It’s essentially finding great talent, because when you acquire a company, they come with revenue, so the people are billing. So we don’t have to worry about hiring a whole bunch of people, having them sit on the bench while we get the work, and then the sort of cat and mouse game. The acquisition strategy avoids that. It’s expensive, obviously, and you have to integrate the people and really pay close attention to the culture, but it’s a fast way to try to dominate the market.

The problem is, though, that it was a long and sordid path of trying to find the right investor. Because we’re not a .com company, we’re not a hockey stick profile—we’re a services company and we don’t have a bunch of assets, besides our people. It takes a special kind of investor to want to put money into our business. We were focused on family office type of money.

Loren Feldman:
You put a lot of time into searching for the right investor?

Karen Clark Cole:
Yeah, we had hired a company to help us do it. But they require a lot of my time and a lot of my CFO’s time, so between the two of us, we were completely absorbed in this, getting all the due diligence materials ready. That is an inordinate amount of time for not only me and my CFO, but for a lot of our senior leadership, our sales team, different folks in the organization at various points having to provide a lot of data, which is interesting to do. It’s a good exercise in understanding everything about the company. We also had to do an external audit of the company, which is just good to have anyway. It’s expensive and consuming for everybody in terms of time, for sure, but it’s great to get some validation that things are looking really good.

Then we’ve got to find the right match, in terms of somebody who you like, who you want to go to dinner with, who you want to have on your board potentially, and who you want to be in partnership with, because that’s the reality of what happens. It took a long time to find that person and those people, that group, and we finally did, but then it got complicated, because the way they like to invest, there’s some debt involved with their bank. Then we had to basically go through the whole thing again with their bank. Long, long, long story short, in the end, it didn’t work out for a variety of reasons, but we were very close to closing, like as in, for a couple of months, we were closing on Friday.

Loren Feldman:
Wow.

Karen Clark Cole:
We had all kinds of things in motion based on that, including my job was to go out and find these companies that we could buy right away. I had been searching the country, meeting with lots of people, getting all of the terms together, negotiating, getting in some cases letters of intent in place.

Loren Feldman:
You were so close, you thought this was almost a done deal, and you were out looking for ways to spend the money buying the companies you wanted to acquire.

Karen Clark Cole:
Yes, that was the deal, is that they wanted to invest in us and have the money go out immediately to these other companies. That was part of the plan. I had to have these companies lined up, because it takes a really long time to do this. It’s like dating, it takes forever. I spent the whole year doing that and found some really great companies that we were really excited about. Then you get to know these people and you have a real relationship with them.

Loren Feldman:
Did you start the transactions with them? Were you close to closing with them?

Karen Clark Cole:
Well, getting the letter of intent in place is the beginning of that. So yes, for sure. In one case, we bought a company with everybody knowing what the situation was, including the seller of that company. The money was coming on Friday. It never came.

Loren Feldman:
You bought a company, thinking you had the money from the investor coming in on Friday, and it didn’t come.

Karen Clark Cole:
Yeah, and everyone’s looking at me going, “Well, no kidding.” It’s never over ‘til the fat lady sings. But at the time, everybody had their routing numbers and everything. It was going through on Friday. In particular, this final Friday, there was no question. In retrospect, of course, I would never do that again. But at the time, it wasn’t just me, there were many of us who were certain it was happening.

Loren Feldman:
So why didn’t it happen?

Karen Clark Cole:
It was complicated on their end with the bank relationship. Their bank pulled out and then they went to a different bank, and that’s why it took so long originally, and then that bank had questions. They had a complicated structure on the back-end of how they did other investments and other deals. We weren’t the only one. It became too complicated and too far away from the original plan, so in the end, it wasn’t working for them, and it wasn’t working for us. We amicably walked away and agreed that we should not do this, but that wasn’t until April of the following year. We continued on after the new year, eight months later.

Going through all of that, the problems, the stress for me is the waiting and the not knowing and the expecting something that’s not happening, and trying to run the company based on that every week for months and months and months. We made decisions internally about our operations and people to hire to make sure that we’re ready for this influx of people coming, in terms of systems, processes, as well as culture—a lot of things we were doing internally to prepare for this to make sure it was going to go well, because that was really important.

Laura Zander:
I am so grateful to hear that you have just gone through a similar experience to us and that I’m not the only one. That’s the ambiguity. I’m trying to predict three different paths. If it goes this way, this is what we’re going to do in six months. If it goes this way, this is what we’ll do. It fried my brain. I’m glad I’m not the only one.

Loren Feldman:
Laura, you’re talking about the lead up to your acquisition in Texas?

Laura Zander:
Exactly, yep. Every Friday, we thought it was going to close. “Oh, it’s going to be this Friday. Well, it’s going to be this Friday. It’s going to be this Friday. Now we’re at a 20% chance that it’s going to happen. Now we’re at 30%.” Trying to plan for all of that was exhausting.

Karen Clark Cole:
While you’re running the company at the same time.

Loren Feldman:
William, are you sitting there thinking, “Boy, am I glad I’m not doing any of this”?

William Vanderbloemen:
Oh my gosh, yeah. I’m a little different though, Loren. To me, the whole point of the exercise of earning is so I have some measure of peace, insofar as you can ever get it financially. That makes me feel very unsettled. I don’t know that I’m made for that kind of risk. Kudos to you for trying it and doing what you’re doing, but it’s not my schtick.

Karen Clark Cole:
I have a pretty high risk tolerance, but I tell you, I saw the edge of it.

Laura Zander:
We’re at the edge right now. My husband is not sleeping. With the acquisition that we just made, we have invested way more. We haven’t brought anything in. We’re just finding out more and more of these expenses that are coming up. We are right at that line of about to have a nervous breakdown. I guess you figure out how strong you are. We’ll see. Check back in a month.

Loren Feldman:
Karen, it sounds like you actually made an acquisition thinking that the investor was going to come through and then it didn’t. Did that acquisition go away? Or did you keep it?

Karen Clark Cole:
Nope, sitting in San Francisco right now. I was in the office yesterday. We’ve got them, and they’re great, and we love them. There’s a reason why we wanted to buy them.

Loren Feldman:
Did you have money to buy them without the investor?

Karen Clark Cole:
No, we did not have a lot of money on hand. Laura’s describing all of these things cost a lot of money. The legal fees, accounting fees, doing the QA. We didn’t have any money, and so we’ve spent the better part of the next year… It’s hard for me to say this out loud actually, because we still haven’t finalized the deal with that owner. I was at a holiday party with him last night. We’re good friends, we respect each other. We’re confident we’re going to work it out. But it’s a very different deal than what we started with. We’re working on a long-term payment plan with him right now.

Laura Zander:
It’s funny, Karen, on the hard costs of the acquisition, like you said—the lawyers, accountants, and all that kind of stuff—in my case, I’m so involved in sales and marketing, or have been, that the opportunity cost and the distraction cost has almost been more than the financial part of it.

Karen Clark Cole:
I totally agree. That’s exactly the case, particularly for my CFO. He’s running the day-to-day finances of the company and he absolutely could not provide reports for people, because he was being hounded by the bank all day long.

William Vanderbloemen:
Just to try and add something to the conversation, we are pretty close to acquiring a smaller company and they’re not in a great place financially. It’s not a lot of cost to us. It’s really, really affordable would be the nice way to say it. But I talked to our COO about it and he said, “I don’t want to fool with it.” “Why?” “Because it’s going to take your time, it’s going to take your energy.” Nobody ever thinks about the opportunity cost of you’re not going to be focused on being the brand ambassador and spreading the company. Because my job is to wake up every day and think about how to spread our brand. Taking the eye off the ball to acquire—even if it didn’t cost anything—costs us, and I wouldn’t naturally think about that. I don’t know if that’s something that you guys were born with, or if it came through experience, but it’s a lesson I’m having to learn.

Laura Zander:
For me, it has not just been the time, as well, in terms of opportunity cost, but the emotional energy. It’s hard for me to be that brand ambassador and go to an event and just be like, “Yeah, we’re great. We would love to work with you!” When all I want to do is just crawl in a hole and sleep and I don’t want to talk to anybody.

Karen Clark Cole:
Which is actually what you need to do in order to survive.

Laura Zander:
Nice segue into this sabbatical.

Loren Feldman:
Karen, what was your reaction when you realized the deal—finally, this is it, no more Fridays? It’s just not going to happen.

Karen Clark Cole:
Honestly, I was so relieved. I just couldn’t take it anymore. It’s exactly what Laura described. It’s the uncertainty, which is so incredibly stressful. I’m used to running a business. I’m driving it, I know where we’re going. I’m in charge, good or bad. In this case, it was completely out of my hands. And yet, I still had to drive the ship.

Loren Feldman:
So what happened to your business over those 16 months?

Karen Clark Cole:
We had a rough year.

Loren Feldman:
Without you driving.

Karen Clark Cole:
Well, that’s not true. We had a good year. We’re profitable. We’ve got lots of great clients, lots of great work, and lots of great employees. On the outside, nothing. But there were many meetings, and not just for me, but for the entire leadership team, where we were all under so much pressure that you’re just not your best self. We’re acting in ways that aren’t helpful for everyone else around us. Particularly me, and that’s hard on everybody for the year. We lost some really good people because all of a sudden, they’re uncertain about what’s happening with the company. They think, “Oh, we were doing this thing with complete certainty.”

Loren Feldman:
Everybody knew.

Karen Clark Cole:
Oh, yeah. We’re very transparent about this in the company. Everybody knew exactly what we were doing. Then, it’s not happening. It’s not happening. What’s happening? Everyone’s in limbo. I have to be careful about how much I’m communicating or not communicating because I don’t want to cause any alarm. Besides, I thought we were moving forward, nothing to worry about. Then all of a sudden, I make an announcement that we’re not doing that, and that we’re totally changing course, and that we have to lay off a bunch of people who we had in place to support all these acquisitions on the operations side. That looks like trouble to most people.

Loren Feldman:
That must have been painful.

Karen Clark Cole:
I felt good about that, actually. That was finally a decision that I knew had to be made and I knew how to do it. But everybody else, it was absolute pandemonium. That was, to me, the tail end of the whole thing. I thought I had survived because I had survived this year of stress behind the scenes, and then when it becomes, “It’s great. We’re moving forward. Now we know what we’re doing,” that’s when the pandemonium hit in the company and it was really, really traumatic for a lot of people when we laid off a bunch of people, because we’ve never done that before. In 20 years, all of a sudden, they think, “Oh, God, I don’t know if this is stable.” We’ve had some people leave because they want to work for a stable company, even though we are, and the future is bright. It’s just different than how it was for that year.

It’s tricky as a leader to be communicating the right amount of information because we are a transparent company. I’m very open about what we’re doing because I want people to be behind it and to be excited about it because I am. It’s easy for me to get people excited about it, but as a result, people see when I’m not excited. So I have to be careful. That in itself is really stressful. It’s like, I can’t even be myself because I have to be a strong leader for people to see that and feel confident about the company.

Loren Feldman:
What did you do when it became final and this investor was not going to buy in and you knew it for sure? Did you sit down with your team and reassess all the options? Did you think, “All right, we’re going to find another investor”? Did you think, “We’re going to go into a completely different path”? What happened then?

Karen Clark Cole:
Yeah, we engaged the original company that was helping us find investors and we were going to look for another one. Quickly, it just became clear to me that we were done, we had to stop, we had to get focused back on the company. Just look internally, pay attention to what we’ve got right here, and take care of it. Quickly, we stopped that as well. Then I made the announcement that we weren’t doing any and so we haven’t since. That was in June of this year.

Loren Feldman:
Quite a bit of time has passed. Half a year since that point. You’re taking the sabbatical now.

Karen Clark Cole:
After that, we had to do all the layoffs and the cleanup of, “Okay, what do we have to do internally now to become profitable, or to get back to being profitable?” Because we had a couple of losses, which is actually pretty normal for us in the slow season in summer. But we had to make sure that we were going to end the year strong and we had a lot of overhead people who we were paying for that aren’t billable, and for us, that’s very expensive, and we didn’t need them. While we love them, we didn’t need them to run the company anymore, because we weren’t doing this massive growth. I had to figure all that out.

Laura Zander:
Can I ask you a personal question—a personal-professional question?

Karen Clark Cole:
Yeah.

Laura Zander:
Who do you vent to? Like, do you talk to your husband about this at the end of the day, or do you have a number two who you work with? How are you offloaded? Do you have a therapist who you talk to three times a week?

Karen Clark Cole:
Yeah, if I had a husband, I would talk to him, but I don’t. I’m single.

Laura Zander:
Got it.

Karen Clark Cole:
I’m a single mom. That’s important, right? I come home at the end of the day, and I’m focused on my 11-year-old. I think that actually saves me in a lot of ways, because I can’t stew on it all night long. I turn off my phone, and I’m with her. That is such a relief for me in so many ways. It has been my whole career. It teaches me to be focused on what’s in front of me. I’m really good at that, at being able to parse things out. There’s a lot of that going on, but that doesn’t help digest and process.

Laura Zander:
No, that’s just a distraction.

Karen Clark Cole:
My chief culture officer, Linda, who I mentioned at the very beginning, she’s the primary person who has helped me through this. But truthfully, there are not a lot of people. I have a couple of friends who are very close to me who I talk to, but it’s certainly not five times a day like I need.

Loren Feldman:
That was a great question, Laura, and it’s really interesting in that both you and William work with your spouses. I’m wondering how you deal with that, because I’m sure there are pluses, but I’m sure there are also some minuses. You are bringing it home with you, I’m guessing.

Laura Zander:
Yeah, I am. I would say for us, all of the pluses outweigh any of the minuses. There are a few minuses during peacetime. I don’t know if you guys have read Ben Horowitz’s The Hard Thing About Hard Things, but he’s talking about peacetime CEO versus wartime CEO and how it’s hard to find somebody who’s an effective leader in both times. That’s the transition that we’ve gone through, is being in peacetime, and now we’re in wartime. Doug and I actually perform much better together in wartime than we do in peacetime.

Loren Feldman:
We should clarify by wartime, because you’re going through acquisitions, not because you’re at war with your spouse. Am I right?

Laura Zander:
Correct, yes. Great clarification. Because the last couple years, we’ve had market transitions and retail in our industry, and we’re fighting. We’re fighting competition. We’re fighting profitability on multiple different levels. For us, it’s great, because we have that and we have a 10-year-old son together. Those are our things. We don’t have any friends. We have no social life. We exercise. It just is what it is.

Loren Feldman:
I hear that from so many entrepreneurs. The friends thing. It’s really interesting. People don’t realize what people give up when they choose this path.

Laura Zander:
We have no family. It’s just us. Doug has parents six states away, he talks to him once every few months. I have a father who I didn’t grow up with. In some ways, it’s nice, because there aren’t a lot of phone calls to make. We can really focus on the business. There’s not a lot of Christmas shopping to do. For Thanksgiving, we had grilled cheese sandwiches. But on the flip side of it, there aren’t a lot of people to vent to.

For me as an emotional person, there aren’t a lot of people who I can talk to who know the truth, who know me better than I know myself, if that makes sense, and can be really honest with me, and if I make a mistake, they can forgive me. There’s not a lot of unconditional love, through either friendships or family. That’s a kind of a scary place to be sometimes. So anyway, that’s why I was kind of asking: who do you have who unconditionally loves you who you can say, “God, I really screwed up at work today” who isn’t gonna say, “Yeah, you really did, you suck”?

Karen Clark Cole:
How has it worked for you, William?

William Vanderbloemen:
I think we’re learning as we go, Loren. The conversation we continue to come back to and we hear from others is that we seem to try and be aware of boundaries. What I mean by that is boundaries for: when are we doing the work thing and when are we not? We don’t get it right all the time. But we have seven children and we have extended family around. In fact, we host family dinner for 25 or 30 people every Sunday night and had several of them working for us at one point, which is a whole different podcast.

Loren Feldman:
We may have to get back to that.

William Vanderbloemen:
Yeah. I think it’s the boundary thing. Laura, the two biggest pluses, you hit on one of them. Adrian knows me better than anybody. I mean, there’s just no hiding from her. All the crap or facade I want to put on, she’ll see straight through that. If it’s going well, great. If it’s not going well, she knows and she knows if I’m doing something on the fly rather than prepared. She has a strong gut towards some parts of our business that I will never question. Hers is more operational, risk management, keeping things in order, should we hire that person or not? Which is kind of ironic. I’m not the better one at that, she is. But on the sales front or the expansion front, if I say, “No, I feel it in my gut,” we have very clear boundaries. Like “Okay, well you’re usually not wrong about that.” So knowing each other and trying to keep boundaries helps us. Knowing each other really, really, really well is the single biggest plus to the business. Frankly, the staff appreciates that.

We started the company together. Actually, I said, “I’m going to start this company,” and she said, “Well, if you ever get a client, I’ll send them an invoice.” A giant cheering squad. The decisions we’ve made together have been the best ones. But as we grew, and we didn’t need somebody to send the invoices—we actually had staff people to do that—she backed out of the business and then she came back in about three years ago. We were in the middle of this part where I needed to no longer do any searches. The staff had been trying to tell me that.

When we started, we’d do a search, and I just did it all. All of it lived in my brain. Well, that’s great if you want to be a company of one person. But once we start putting systems in place, if I got involved in the search, it just created more messes than solutions. The staff had been trying to say, “Well, maybe we can take that off your hands.” Adrian’s back for one meeting, and she said, “William, I don’t think you need do searches anymore.” I was like, “Okay, that sounds good.” And the staff, you could hear their jaws drop, like, “We’ve been trying for three years to tell him and it took one meeting.” So the staff I think sees the plus of, if they really need to get a message to me, they’ll go to her. And in the same way, if they need to get a message to her, they’ll come to me. The minuses, there’s just the messiness of if things are not good at the business, you can’t run away from it by going home. I don’t know how you get around that, but I’ll take the pluses with the minuses over not having it all day long.

Laura Zander:
That’s really funny on how your staff will go to Adrian if they need to get something to you and vice versa, because that’s exactly the way it is here. They’ll text me and be like, “So, could you talk to Doug about blah, blah, blah?” I can filter it, I can soften it.

William Vanderbloemen:
Back in a previous life when I was a pastor, I had a guy come to me. He was being considered for a CEO position at another company and he wanted my advice. Here I am, a 31-year-old pastor, like, “Why are you coming to me?” He’s like, “I just want your advice.” I said, “Why would you not take the CEO?” He said, “William, have you never heard the old line: ‘The first day you’re the CEO is the last day you hear the truth.’”

Laura Zander:
Oh, gosh.

William Vanderbloemen:
I was like, “Oh, that’s not true. My staff tells me everything.” But now with Adrian in the office regularly, I do hear the truth. It’s made a world of difference around here.

Loren Feldman:
Karen, let’s get back to your sabbatical. You told us initially that it wasn’t really your decision. What did you mean by that?

Karen Clark Cole:
Well, it certainly wasn’t my idea. Linda would say to me, “We have a sabbatical program in the company, that if you’ve been with the company for five years, you can take three months off.” And she said to me, “When this is all done, you should go on sabbatical,” and I just sort of thought, “Haha, wouldn’t that be great?” Yet she kept saying it until eventually it sunk and I’m like, “You’re serious about this, aren’t you?” She said, “Yes, you may not recover if you don’t take this seriously, the amount of stress that you’ve been under.”

Then she went into explaining the brain science behind it, and all of a sudden, I was listening. Then it took a while to plan for. I kind of was planning for it but not really thinking. It got very close, it got to like two days before it was supposed to happen, and I was still not really telling anybody. But meanwhile, I was shopping the idea around with the leadership team that I worked most closely with. What was most surprising to me is not one single person thought that was a bad idea.

Laura Zander:
How do you not take that personally?

Karen Clark Cole:
I know! I’m like, “Really?” I just thought, “Okay, okay, I’ll go.” Then of course, I’m worried, like what if everything goes better without me and they don’t really need me and then I don’t have a job? That was my first natural reaction, but it turns out that they do need me and they like me.

Loren Feldman:
Serious question. What happened? How do you know that?

Karen Clark Cole:
Because they’ve told me, for one. Truth be told, I can’t really check out entirely, but I am not in the day-to-day. I’m not going to the office. Those two things are a massive difference for me, in terms of my ability just to stay out of the weeds and out of the stress of the weeds. I meet with my COO, I probably talk to him once a week for a couple of hours just to check in and help guide him. He’s new on the job doing a great job. It’s actually better for him to sink in without me there so I can let him work through things in a timely way, instead of with me always breathing down his back. That’s good timing for that, which is partly why I did it.

People will check in. I’ve said to people, “Please, it will be way better if you need me to just call me and I’ll give you a quick answer, I’ll help you with the direction to go in, than for me to come back in two months and have to unravel something or change the course of the ship. I’ve put the autopilot on. If we need to change that for any reason, you need to call me. But otherwise you don’t need to call.” People get that right away. They’re like, “Okay, I get it.”

The time of year is important. We don’t want to make any major changes, in terms of process, systems, how we’re doing things, right now in this time of year anyway. We’re just busting it, burning hot. Everyone’s very busy until the end of the year. It’s kind of a good time for me to get out of the way. Because I’m constantly trying to refine our process, look at new opportunities externally, like how can we grow? Right now, everyone doesn’t really need that. They just need a break. They want to work hard for our clients for the rest of the year, so it’s actually a good time for me to get out of the way.

Loren Feldman:
Did you have a goal when you went off? Was it just the idea of clearing your head for two months, or is there something you want to accomplish?

Karen Clark Cole:
Linda has put me on marching orders of rest, reflection, and rejuvenation. Part of it is I’m writing. She said what’s really important is that I actually process the year that’s gone by. I’m very much a forward-thinking person. My job is to figure out the future of the company. That’s where I live. I’m very much in tomorrow. I don’t even know what happened today. I’m already in tomorrow.

As a result, the downside of that is I do a terrible job of looking at our accomplishments and seeing what has gone well, and what I’m grateful for. I try to be more aware of that. I think about the grateful side more, but I don’t think about “Hey, I need to process the things that didn’t go well and understand why, and know why I’ve gotten into this state of stress.” Because I’ve kind of forgotten truthfully. How I’m doing it is I’m going back and I’m looking at my calendar. I’m saying, “Oh god, this time last year, I was in this kind of meeting with this investor and this bank and I was flying across the country meeting with banks.” I’m like, “Oh my god, I forgot about that.” I really have a terrible short-term memory and I have forgotten most of it, yet I’ve got the residual effects of it still very much. What I’m doing is I’m going through my calendar and I’m writing about it. This is therapy for me right now. I’m talking about it.

Loren Feldman:
Happy to help.

Karen Clark Cole:
That’s a big part of it. Sleep is really, really the most critical piece of it. I’m getting a lot of sleep, doing things that are right brain, left brain, trying to balance them. I’m gardening and I’m trying to do things that are using a different part of the brain to try to balance it back out. It would be better if I could completely check out, but the reality is, I can’t. It’s a lot. She may tell me that I need to take longer. We’ll see about that, when the time comes.

William Vanderbloemen:
Something’s lost with technology speeding up our lives. It’s the forced rest. Not to go too deep here, but in my morning studies right now, I’m studying the life of the apostle Paul, who wrote two thirds of the New Testament. Beyond that, he was an incredible entrepreneur. He planted churches all over. The Romans finished those roads, and he took advantage of it to build a network. It’s an amazing entrepreneurial story.

I was thinking the other day as I was reading a letter that he wrote one of the churches, looking at the map of where he traveled, there was a lot of time that he just spent sitting in a cart or on a horse and he wasn’t able to do anything. That’s just not our life anymore. We’ve got our whole world in our pocket or purse on these smartphones and there is no forced downtime anymore. I’m just wondering how much creativity I’m losing by being “on” all the time.

Laura Zander:
One hundred percent. I tell my staff, “My only downtime is taking the dogs for a walk.” We actually bought a house that’s right on the trail, so that I can just go out the back door, I go in the woods, and if I’m lucky, I’ll go for an hour or two hours. Sometimes I’ll go for five miles and I’m on my phone the whole time doing emails.

Karen Clark Cole:
Oh, Laura, no!

Laura Zander:
But at least I’m outside. When things are going well, and day-to-day is going really well, then everybody knows I don’t come to the office ‘til 11 or 12 because I’ll spend the first two hours—sometimes I listen to a book on tape, or I play it by ear—that’s my creative time. It’s by mile three or four, my brain starts to let go, and I can start to problem-solve. I can start to forward-think and I can really tell when I haven’t had enough of that. 30 minutes at the gym is not enough. Walking around the block is not enough. It has to be an hour. It’s got to be two hours.

Loren Feldman:
Can you imagine taking a sabbatical, Laura?

Laura Zander:
Oh, absolutely. That’s what I’m working towards. I’m working my ass off right now as hard as I can with that in sight. How do I get two months off? How do I get this back? I’m trying not to stress about the fact that I’m not working out a ton. I’m not eating super well, but it’s okay. Because it’s a temporary thing and I’m doing what I need to do.

William Vanderbloemen:
So spot on, so good. The whole work-life balance thing is such a myth, and I just don’t believe it. If you own a business, if you’re running a business, there are times where you have no life, and that’s just the way it is. You buckle your seatbelt and go. The trick for me is then, after that’s over, okay, now I gotta let go for a little bit. Because I’ll lose my creativity, I’ll lose my ability to be energized, I’ll lose my ability to make hard decisions.

Laura Zander:
I’ll lose my edge. To Karen’s point, the only thing that is non-negotiable—even when I’ve got my seatbelt on and I’m just going and I’m working as hard as I can—the only thing that doesn’t suffer is sleep. I still get nine hours of sleep.

Karen Clark Cole:
That’s amazing.

Laura Zander:
That is my rest time. I like to have a slow morning, so I’ll lay in bed for 30 minutes and just let my brain process. That’s kind of my meditation, is just sitting there. I kind of see it as all this sand in a jar and it’s got to work its way through and settle.

William Vanderbloemen:
I know this doesn’t apply to everybody, and I don’t want to sound like CEO problems, but there is something about the role—particularly if you’re a founder, like I think all three of us are founders—you get stuck with stuff that nobody else wants, and you better be recharged for it.

I was meeting with a founder-pastor the other day of a very, very large church, and we were doing our podcast with him. He said, “William, I think I preach for free now.” I said, “What do you mean, Mark?” And he said, “Well, I mean, I like doing it, and it’s fine, and I know I’m supposed to be doing it, and I’m pretty good at it, and people like it. But the reason they pay me is to make about four or five really hard decisions every year that no one else wants to make. And if I’m not ready for those, I have not earned my salary.” I thought, “Wow, that’s not just pastoral. That’s like CEO gold right there.” I don’t know if that’s the case for you guys. But I get stuck with four or five things no one else wants to decide. If I’m depleted, it’s not going to be good.

Karen Clark Cole:
Yeah, I talk about how my job every day is to make decisions, and preferably good ones. You can’t do that if your brain isn’t functioning.

Loren Feldman:
I want to move on to some other stuff. But before we go, Karen, obviously, we will come back to this in future podcasts and check in with you and how it’s going.

Karen Clark Cole:
Loren, what I would love to do is, can I read you what I sent out to all the employees about why I’m doing this and why it’s so important?

Loren Feldman:
Go!

Karen Clark Cole:
It’s important to me that everyone understood that I’m not just going off to hang out in Mexico, and that I’m not going on vacation. I’m going to be at home. This is through the teachings of Linda, of understanding what’s happening with my brain. I said this to everyone.

“When the brain is under elevated stress for prolonged periods of time, the executive functioning of the brain, the prefrontal cortex, starts to shut down, and the brain goes into survival mode, dominated by the sympathetic nervous system, especially the amygdala. The job of the amygdala is to constantly scan our environment looking for potential threat. In our modern work world, this is everything from deadlines to disgruntled employees to poor financials. In the meantime, our attention and memory, creativity, innovation, and problem solving, which are under the control of the prefrontal cortex, are diminished.” It’s exactly what William was just talking about.

“This causes tunnel thinking and the inability to see a big picture or put things in proper context or perspective. It also causes heightened sensitivity and overreacting. Moods become more dramatic and small things can seem big,” which is really what was happening to me. “Regular stress reduction methods, which also build resilience, such as eight hours of sleep, regular exercise, and taking breaks are not enough when the brain is under elevated stress for prolonged periods of time. If this goes on for months or years, the neurons of the prefrontal cortex actually become damaged by the constant exposure to the stress hormone, while the neurons of the amygdala actually thrive and grow. The amygdala becomes more dominant, and it’s harder and harder to shut the stress response off. It becomes very difficult for the brain to recover to its normal state, for those neurons to recover from their damage, unless there’s a real break from the stress hormone over a longer period of time. Exercise, sleep, and social support are all essential for the neuron recovery.”

“And in my case, it’s my job to define the corporate strategy, set the big vision for the company, and move us towards it. If my thinking is impaired, and I can only see narrowly what’s in front of me, this is a dangerous place for the company, as I’m not able to do my most important work. This became my greatest fear, as I realized with the help of others, that I had to take the recovery of my resilience seriously with the hope that after two to four months of reduced stress, rest, and reflection, I could be renewed and get back to my big picture, calm self and return to being the leader that everyone in the company wants and needs for our company to thrive.”

Loren Feldman:
Well, that was a little scary—the science of it.

Karen Clark Cole:
I actually read this to myself regularly because I’m like, “What am I doing? I should go to the office.” And then I’m like, “Oh, I shouldn’t go to the office.”

Laura Zander:
Can you send that to me?

Karen Clark Cole:
Sure.

Loren Feldman:
Karen, when the sabbatical’s up, how will you know if it was successful?

Karen Clark Cole:
Great question. I don’t know. I guess I’ll feel more relaxed.

Laura Zander:
I suspect you will just know. You’ll know it when you see it. I think it’s going to be very obvious.

Loren Feldman:
All right, so I want to move on to the point in the podcast where I ask William and Laura, in this case, what they’ve learned lately, what’s working, what’s not working. But if you’ll forgive me, I’d like to go first this time because I think I’ve learned something surprising. Maybe I’m the only one who didn’t know it, but I’m curious.

At 21 Hats, were going through a web development project. We bid it out to a bunch of developers. We picked the low bidder and then went through this process of thinking through what exactly we wanted our website, 21 Hats, to be, and coming up with the designs, and going through wireframes, and then we’re going to build this thing. It just occurs to me at some point, we did it all wrong. There was no reason to bid the whole project out to everybody. We should have talked to firms just about doing the design, think through what this website was really supposed to be, what it was supposed to accomplish, take it through maybe the wireframe stage, get that all down, and then take those designs to developers and have them bid on the actual project.

Instead, as I know happens all the time to other people, the project has evolved. What we bid out six months ago is not exactly what we’re getting. That’s good in a lot of ways, and I think we’re going to end up in a happy place, but I think it could have gone a lot better. You guys have a lot more experience with this than I do. Am I the only one who didn’t know how to do this?

Karen Clark Cole:
Loren, can I just ask you why you went with the lowest bidder?

William Vanderbloemen:
I was gonna I was gonna ask the same thing.

Loren Feldman:
Well, we didn’t go with the lowest bidder just because he was the lowest bidder. It was somebody who had worked with my parent company, Advantage Forbes Books previously, and they had a really good relationship, and he was the lowest bidder. It was a good combination. We were confident that he could do what needed to be done and we were happy to spend less money.

William Vanderbloemen:
Our sales team, Loren, has learned and now instructs new members, that if a lead contacts us and their first question about us is, “How cheap can we do this?” We just almost immediately say, “We’re probably not right for you.”

Karen Clark Cole:
We do the same thing. You get what you pay for.

Loren Feldman:
We didn’t determine initially that we were going to go with the lowest bidder. We just looked at the options we had and decided, “You know what, we’re comfortable with these people and they’re the lowest bidder. We’re going to do it.” But how about the idea of splitting the project up into parts and thinking it through, getting designs, and then going back to web developers? Karen, obviously, this is your business. Is that the right way to do a project?

Karen Clark Cole:
Yeah, didn’t I tell you to do that?

Loren Feldman:
No, you didn’t.

Karen Clark Cole:
I should have. Yeah, absolutely. Remember though, you’re not just looking at the design of your website. You’re talking about user experience: who are your customers and what do they want from it? Why would they come to it and what do they need?

Loren Feldman:
Right, and having that conversation obviously changed the parameters of the project. We wound up in a different place.

Karen Clark Cole:
Well, what’s stopping you from stopping it and getting it right?

Loren Feldman:
Nothing. I think we will get it right. I think we wasted time. It’ll end up being a little bit more expensive than we thought, because we’re going to make them do things that we didn’t talk about initially. Hopefully, he’s not listening to this conversation right now.

Laura Zander:
My experience has always been that that’s very normal. I mean, that’s just the way it goes. That’s like getting married and expecting you to still be married to your girlfriend 10 years later when you both change and everything’s different.

Karen Clark Cole:
Yeah, it’s pretty common for things to evolve and change as you go, Loren. That’s that’s sort of par for the course. Your web services partner should know that and be expecting that.

Loren Feldman:
We talked to a lot of people. Nobody said to us, “Why don’t you do the designs first and then bid out the build?”

Laura Zander:
I don’t know. I think about, when we built a house…

Loren Feldman:
Yeah, you get an architect first, right?

Laura Zander:
No, we did not.

Loren Feldman:
Somebody designed it.

Laura Zander:
Yeah, we did. But it was somebody who the builder worked really well with, because when it came time to building it, sometimes things aren’t going to turn out the way that you thought they were going to be in the original design. It was really nice to have that relationship.

When we’ve built other stuff, the guy who designs it is also the guy who codes it. We like that. We’re a smaller company. But we liked the flexibility of being able to make those small changes as we go, and having a programmer, it’s really nice to have somebody who can code but who also understands the UX part of it, so that they can make some tweaks as they go. They’re like, “Oh, this doesn’t really turn out the way I thought it was going to, so let me adapt the design as I go.”

Loren Feldman:
William, how about you? What have you learned lately? What’s working?

William Vanderbloemen:
One thing that we’re working through right now, we’re opening four regional offices over the next 18 months. We’ve got one open, and this is a big move for us. I’m learning tons and tons of things. But we’re in a fortunate position of having a whole lot of people who want to be considered to be regional directors, basically start an office and build it up from the ground up. I’m reminding myself of a painful lesson I learned when I really messed up a search early on.

As a client, the church was a couple thousand people, which is big church. They needed a second in charge, a number two who can do right. There was a person at a much, much, much larger church that was one rung below the number two who can do, and that was a very fast growing church. I thought, “This is perfect.” And we went through the interviews, and the client thought it was perfect, and every box was checked. Then the person really didn’t do very well at all and didn’t make it. The lesson for me was, just because someone’s been a part of a growing company means nothing about their ability to be a catalyst for growth in another company. We get these people who want to be regional directors, and a lot of them have impeccable resumes, but I’m having to ask myself, “How do I measure whether the growth they’ve been a part of is something they were the author of, or were they just riding the coattails of growth that was already there?” I don’t know how to answer that. I’d love for you guys to solve that for me before we close the show. That would be great.

Loren Feldman:
Have you gotten close?

William Vanderbloemen:
It’s questions like, “Tell me about an initiative you led.” You can walk through the mechanics of what kind of interview to run, but it is one of the harder things to discern. I’m a recovering golfer, and Ben Hogan used to say, “The secret’s in the dirt.” You’ve got to get down in the dirt to learn how to hit the ball. Can they get down in the dirt and go build out an office for me and a regional presence? I’m still figuring it out. I don’t know if it’s under the heading of what’s working or what’s not working.

Loren Feldman:
Karen and Laura, either of you have any suggestions?

Karen Clark Cole:
We do this thing in our company, it’s a personality profile called the Big Five. It’s the most modern psychology of Myers-Briggs, but it’s a different algorithm and it gets at people’s hardwiring, so what they’re born with and what they’re naturally good at. It doesn’t mean you can’t do something else. But it means there are certain things that you gain energy from. It’s your sweet spot. If you’re doing this all day long, you won’t burn out, because it’s in alignment with how your brain functions. How we use this is for the exact kinds of things that you’re describing, William.

There’s somebody who you think is a real shining star in the company, they could do anything, you give them this job, and they fail. Then it turns out, it’s because it’s actually not in their wiring. They’re really good at this other thing, but they’re really not good at that thing. It just helps us get people in the right places in the company so they can do their best work. For themselves, as well as for the company. It sounds a little bit like you may have somebody who’s a great employee, but not quite in the right position. I think it’s not safe to assume that everyone can do the same things.

Loren Feldman:
Laura, what’s up with you? What’s working, what’s not working?

Laura Zander:
What’s working? What’s working is that I have now two companies that are states apart from each other, and they are supporting each other like they are family—like they’ve been working together for 10 years. It’s phenomenal. I guess the cultures that we’ve built are just strong enough and open enough that we have the mentality that you chip in when you can.

Loren Feldman:
Do you have advice for William as he thinks about an acquisition? How did you make that happen?

Laura Zander:
Don’t do it? What’s not working right now, and maybe this will kind of answer it, is that I am completely overwhelmed. I’m just way in over my head and have so many people asking me so many different questions, and I’m recognizing how many systems I don’t have in place. I’ve gone through this, through the growth of the business, and so we’re in this growth period again by acquiring a new company, where I really every day I’m at a breaking point where I have to figure out, “What can I hand off, what can I hand off?” And then I have to take the time to figure out, “Who do I hand it off to? How do I train them?” It’s all piling on, and I don’t have the time to train them. I’ve got to try to figure out how to make the time. It’s just a really uncomfortable, freaking miserable place to be. But I can see the light at the end of the tunnel. I know it’s all going to be great, blah, blah, blah…

Karen Clark Cole:
But do you have a strategy for at the end of the tunnel that you’re moving towards?

Laura Zander:
I can see it, yeah. It’s just a matter of walking into a new company that does not have existing management. I’m playing manager, CEO. I am playing all of the higher-level roles in this new business with 40 people, that is manufacturing, that I know nothing about. The challenge is figuring out how it works as quickly as I possibly can, figuring out where the holes are as quickly as I possibly can, and then figuring out how to plug those holes. You know, it’s just a process.

Loren Feldman:
Before I let you guys go, as we usually do, I like to bring up one news item—the kind of thing that we often write about or highlight everyday in the 21 Hats Morning Report. I just saw a report that the increase this year in employer costs for health insurance is the highest it’s been since the Bush years. I’m curious: it’s that time of year. What are you guys seeing? Is this affecting your companies?

William Vanderbloemen:
First year ever, ours finally went down this year.

Loren Feldman:
Wow. Do you have an explanation for that?

William Vanderbloemen:
I have an awesome benefits guy, a company here in Houston. You can’t get into the whys of premiums, because confidentiality, but we haven’t had many incidents this year.

Laura Zander:
I need your benefits guy, William. I’m going to email you.

William Vanderbloemen:
He’s awesome.

Laura Zander:
For us, this will be the first year that we’ve ever offered benefits, because now we have 80 employees. We’ve only ever had 39 full-timers max. This is all new territory for us.

Loren Feldman:
So you have just picked your first health insurer?

Laura Zander:
We’re working on it right now.

Loren Feldman:
How’s it going? Do you have a sense?

Laura Zander:
It’s not going well, no. The guys who we’ve talked to so far are not as responsive. It’ll be okay. It’s a big shock because we’re talking about six figures plus. Again, bringing on a new company that was in a close to bankrupt spot, there’s no revenue being generated, so it’s just another added expense right now that we’re needing to figure out how to budget for and how to find, not knowing anything about the health care industry, what are the good plans? What are the not-good plans? And finding a good benefits guy who can help walk us through that and make life easier for us as opposed to make life harder is the challenge. But it’s like finding a good accountant or finding a good lawyer, or finding a good husband. I guess sometimes you have to go through two or three until you get the right one.

Loren Feldman:
This is probably more expensive.

Laura Zander:
I don’t know. I’ve heard about some pretty expensive divorces.

Loren Feldman:
Just to be clear, you have been under the 50 employee threshold, so you haven’t been required. Now, with these acquisitions, you’ve gone over that. You have to do this now. Suddenly, you’re going to have a big new expense line to deal with, plus you’re figuring out what you can offer your employees. Are they aware of what’s going on?

Laura Zander:
Yeah, and we knew, obviously, that it was coming. We knew that would be an expense, a side of it. We thought that we were going to have a little more time to get back into a cash flow positive state before we needed to incur some of those expenses, but we’re going to need to do it a little sooner rather than later. But yeah, the employees are excited about it. Out of the 40 people in our Texas company, only eight people take advantage of it. We’re kind of expecting the same thing in Reno. It’s not going to be a huge number.

Karen Clark Cole:
Is that just because they have coverage with a spouse?

Laura Zander:
Yeah, exactly.

Karen Clark Cole:
For us, it’s probably the third biggest expense in the company: health care. We’ve got salaries, rent, and then health care. It’s wildly expensive.

Loren Feldman:
Has your rate been going up recently?

Karen Clark Cole:
Oh, every year it goes up astronomically. It’s mind blowing to me.

Loren Feldman:
Thank you all once again, I so appreciate your being willing to share like this. You guys are so open. I have no doubt a lot of people are going to appreciate hearing they’re not the only ones going through these kinds of experiences. So thank you very much for another great episode.

Laura Zander:
Thanks, Loren.