Special Episode, Part 1: All You Have to Do Is Be Better
Guests:
Karen Clark Cole is co-founder and CEO of Blink.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Dana White is founder and CEO of Paralee Boyd hair salons.
Laura Zander is co-founder and CEO of Jimmy Beans Wool.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Laura Zander: “These guys got $60 million in funding. Last year, they did $20 million in sales, but they lost $11 million. You take somebody who pulls $20 million out of the market, they can price everything at 40% off or 60% off because they just don’t give a shit.”
Laura Zander: “I’m all of a sudden surrounded for a couple years with all these people who are just kicking ass and taking names, and they’re pushing, ‘Grow, grow, grow, fast growth, grow as big as you can. You should be able to have a $100 million dollar company.’”
Laura Zander: “I was so focused on growing that I kind of blew it up. I blew the whole business up by hiring people who we weren’t ready to hire for. We were probably doing $5, $6, $7 million dollars in sales. I didn’t need a $90,000 a year social media person 10 years ago. I just didn’t, but I listened to what other people were telling me. I started to wear dresses. I started to wear heels. I started to try to fit the part, to fit in with what all of these people were telling me I should be, and really lost my way.”
Laura Zander: “One of the things that kept getting pounded into me was, ‘You’ve got to be afraid. Somebody else is going to come in, and they’re going to do this.’ I’m sick of it. I’m sick of living in fear. “
Laura: “It’s the Etsy lady. She sells $1,000 worth of stuff per year. You take 100 of those, and that’s one yarn shop that just went out of business.”
Dana White: “People come to you and say, ‘Oh, I want you to meet this investor.’ And I’ve said on the podcast, I’m not willing to give up the firstborn that I don’t have yet to that investor, so that’s not going to happen.”
Dana White: “The other risk I took was, I could either spend the money and pay rent, or I could have spent the money and have done a series of radio commercials, and everybody around me—not being entrepreneurs—said, ‘Pay your bill, pay your bill, pay your bill.’ But I thought if I bought the marketing, I’d be able to pay my bills for the rest of the year. And that’s what happened.”
Jay Goltz: “I figured out for myself that entrepreneurship is about, for me, having control over my destiny. […] I’m trying to put the message out to the world that, no, you don’t have to become the biggest place ever. I grow at 5% a year, and I’m perfectly happy.”
Jay: Goltz “There were 25,000 frame shops 15 years ago. Now there are 8,000. Industry’s dropped by about 30%. If I don’t figure out how to be better and make sure I continue to get more market share, then my business won’t be there.”
Jay Goltz: “I meet lots of people who are talking about starting a business, and I call them ‘entremanures’ because they just talk about it, and talk about it, and talk about it for years.”
Karen Clark Cole: “All you have to do is be better.”
Karen Clark Cole: “We tried [to attract an investor] and it was difficult because we’re a services company. We’re not a product company, we’re not going to do big hockey stick [growth], and we’re not a startup. It’s hard to fit into the right place to actually get money from a person or a group who we like. Again, there has to be synergy there. After a year and a half, we put it to rest. Now we’re focusing on fueling our own growth.”
Full Episode Transcript:
Loren Feldman:
I am Loren Feldman, host of the 21 Hats Podcast. We pride ourselves on having conversations that you don’t often hear in public. We try to get beneath the surface, not just talk about the spin, the PR. We talk about what it really takes to run a business. Our five regulars have been amazingly candid, willing to share, talk about what actually works, and what actually doesn’t work. We’re going to put them on the spot tonight and have them prove to you just how candid they can be.
Karen, just tell us very quickly what the business does and give us some sense of the size: employees, range of revenues?
Karen Clark Cole:
Sure. Hi, everybody. We’re a user experience consulting firm. We’ve been around for 20 years. We started in 2000 with just Kelly and I. In the first year, we doubled in size and we were four people, and those two people are actually still with the company, which is pretty awesome. And now we’re about 130. We’re 20 years in, about 30 million in revenue. We’ve got five offices. Seattle’s the headquarters. We are in Austin, Boston, San Diego, and San Francisco as well.
The kind of work we consult with our clients is complex—largely digital products. Anything where there’s not an obvious interaction, so a lot of back-end big enterprise systems we work on. We’ll design everything from the workflow, the design, the interface, all the way through, in some cases, the actual implementation. Everything we do is based on research. We call ourselves a “research and design firm.”
Loren Feldman:
Laura?
Laura Zander:
Loren? [Laughter]
Loren Feldman:
Tell us about your company.
Laura Zander:
Hi, my name is Laura and I’m an alcoholic.
Audience:
[Laughter] Hi, Laura.
Laura Zander
Well, it’s true. What? Oh shit, sorry.
Laura Zander:
My name is Laura. I started a yarn shop about 18 years ago. I was actually a software engineer in San Francisco during the whole dotcom boom in ‘97, ‘98, ‘99 and then moved to Lake Tahoe to ski and mountain bike and play and decided that I could make a living through a yarn shop and then building a website. My husband was also a software engineer. Anyway, we started this little yarn shop, started a website, and it just grew and has grown for now 18 years.
We have made a couple of acquisitions. That sounds really fancy, but we’ve taken over a couple of brands to expand from just retail. How many of you guys have read Retail’s Seismic Shift that came out last year? Seriously? It’s a page turner, like really good. You should totally read it. Anyway, in August of 2016, retail took a really big dip for multiple reasons: defragmentation, all these kinds of things. I wrote myself a little research paper that I can share with you if you’d like. We have had to transition and so have picked up a couple of our suppliers, so now we have about 85 people. 45 of our people are in Reno. Now we have a manufacturing facility in Texas. Then we are doing business in Vietnam and in China as well. I make these bags, which are available on jimmybeanswool.com, and sell lots of yarn.
Loren Feldman:
You have a brick-and-mortar store.
Laura Zander:
We do have a brick-and-mortar.
Loren Feldman:
But the bulk of your sales are online.
Laura Zander:
Correct. We started the online shop in 2002 to supplement the sales Monday through Thursday because we lived in a second-home community in Lake Tahoe.
Loren Feldman:
Rough range of revenues?
Laura Zander:
I don’t know, probably, hopefully 13 to 14 million. A little small compared to… fancy pants over here. [Laughter] But the nice part is I can wear whatever I want. You guys have to impress people.
Loren Feldman:
Dana White?
Dana White:
Hello. I’m Dana White, and I am the owner and founder of a chain of walk-in only, seven-day-a-week hair salons called Paralee Boyd. I have used Lean manufacturing to solve the problems of no appointments and long waits at hair salons. Growing up, I would spend my Saturdays in a hair salon. I was working overseas and I couldn’t do it, I couldn’t stay in the salon all day. In New York, there are places you can walk in and walk out, but they just didn’t pay attention to customer service. They weren’t really deliberate about their processes.
So what I did is I decided to become deliberate about it, talked to two engineering friends of mine and said, “I need to make a customer’s experience in here as quick, efficient, and as quality as possible.” The long and short of it is I’ve been open for seven years. I have two locations in metropolitan Detroit with a vision to go national to solve this problem nationally. That’s it. I’m the small one.
Loren Feldman:
How many employees?
Dana White:
I have 20.
Loren Feldman:
Rough range revenue? Less than…
Dana White:
A million. Less than a million.
Loren Feldman:
Jay Goltz?
Jay Goltz:
I started my business right out of college. I’ve never had a job. This was 1978, no computers, imagine that. I got an accounting degree and I had the wisdom and vision of, “No, accounting is no good. I’m gonna go into the picture frame business.” I can assure you nobody thought that was a good idea, but I just wanted to make a living. I liked picture framing and I hated accounting.
I opened up on a third-floor walk-up loft in Chicago in what is now a very bustling street. My rent was $200 a month. I figured if that didn’t work, I’d go get a job and business took off like crazy. I did $120,000 the first year, then I did $240, then I did $480, then I did $710, then I did a million dollars. The average picture frame shop in the United States today does $200,000 a year, so it was quite the phenomenon, and it continued to grow. I eventually after 10 years opened a furniture store and then I started an art business and now I sell wholesale to frame shops around the country.
To summarize the last 41 years, I’ve got 115 employees, my frame business is about 20 times the size of the average in the United States. It’s by far the biggest.
Loren Feldman:
I’m not going to let you get away without telling us how big your business is. Employees?
Jay Goltz:
I’ve got 115 employees.
Loren Feldman:
Rough range revenue?
Jay Goltz:
$20 million.
Loren Feldman:
But that’s not all in the frame shop. You also have a—
Jay Goltz:
I have a very hot furniture store. We do online business. I’ve got like four different businesses and it has its challenges with running four different businesses. The whole technology thing, it’s not easy being a retailer today.
Loren Feldman:
Okay, so here’s where it gets real. You’ve heard the basics about what they do. Karen, why don’t you go first. Is your business operating the way you would like it to? Are you satisfied with its performance?
Karen Clark Cole:
Yes…
Loren Feldman:
And don’t pay attention to the fact that there are employees of yours in the audience. They’re not really paying attention. They have other things to think about. [Laughter]
Karen Clark Cole:
Well, the truth is, that’s all we’ve got. We are a consulting firm, and we are employees, and so paying very careful and special attention to our employees is the only thing that’s worth worrying about, truthfully. Our employees are interfacing with our clients every day all day long.
Loren Feldman:
You’ve talked very openly on the podcast about your attitudes toward growth and your notion that there are a lot of people buying up companies that do the kind of work that you do, and it occurred to you at a certain point, if somebody is going to buy up all those companies, why not you? You spent a lot of time working to try to bring in the capital that would help you purchase other companies. In the end, that didn’t work out the way you expected it to. You also took a sabbatical away from here for a couple of months.
Karen Clark Cole:
In two hours, I’m going to answer that one. [Laughter]
Loren Feldman:
How has that affected your attitude toward the growth of this business, having been through that experience, sitting here today? What are you thinking are your goals for Blink?
Karen Clark Cole:
There’s a lot that Loren just packed in there, but we are in a very fast-paced industry that is growing like crazy. If you think about user experience, if you know anything about it, it’s on fire. It’s important that we are relevant in that fire, so we need to be a certain size, we need to continue to grow so that we remain the best UX firm out there, so that when the big clients come, there’s no question they’re going to hire us. That needs to remain true, and that means we have to continually grow with the times and we have to be up on the latest technology.
My cofounder, Kelly, is focused on innovation so that we know what’s the new tech that’s coming? How do we bring it into our own practice? How do we advise our clients? How do we make sure that we’re using technology and know everything about it? So there’s that side of it, that we have to continue to be growing and evolving, but in terms of running the actual company, it’s hard not to grow, period, for anybody.
Loren Feldman:
There are a lot of businesses that manage to do it.
Karen Clark Cole:
I think it’s harder to not grow, actually. The world doesn’t stay still around you, so how could you stay still in a world that’s constantly changing? I mean, everything’s moving.
Loren Feldman:
Maybe that’s more true in your industry than some others.
Jay Goltz:
You think?
Loren Feldman:
Jay, have you had trouble not growing?
Laura Zander:
I grow out as I get older, but I’m not growing up.
Karen Clark Cole:
You’ve grown. You’re not not growing, and none of us are not growing. I can tell you, my CFO tells me all the time, “It’s quite difficult to not grow.”
Jay Goltz:
You are living in your own Seattle high-tech bubble that you think that everybody’s growing and you can’t stop it. That isn’t even close to true. There are lots of companies where their markets are deteriorating, or changing, or feeling influences from other countries. Read the paper every day. Retailers are shrinking. There are lots of companies that are struggling. Not only are they not growing, but they’re struggling to just stay in business. I’m in retail, it’s not easy. You see all these people with the free shipping and the companies like…
Laura Zander:
It’s called Amazon I think. [Laughter]
Jay Goltz:
Well them too, but Wayfair. They’re doing billions of dollars and losing hundreds of millions of dollars doing it.
Loren Feldman:
Does Jayson Home compete with Wayfair?
Jay Goltz:
Not much, but enough. There are plenty of these companies just throwing public money at stuff and they’re losing money doing it, and it’s putting a squeeze on everybody else.
Laura Zander:
Yep, we have even that in the yarn industry. Like these guys got 60 million in funding. Last year, they did 20 million in sales, but they lost 11 million. Most yarn shops are really small, and if you’re lucky, maybe you might take home $30,000, so it’s obviously a lifestyle business. But you take somebody who pulls $20 million out of the market, they can price everything at 40% off or 60% off because they just don’t give a shit. They’re just trying to get customer names and build that customer list so that they can sell it and ride off on their yacht. It really damages things. It changes the whole ecosystem.
Loren Feldman:
Tell us about your attitude toward growth. You were ahead of your time when you went online—don’t make a face at me like that. You know it’s true! [Laughter]
Laura Zander:
Yeah, but it wasn’t on purpose. I mean, we just got really lucky. The timing was really lucky. It was magic.
Loren Feldman:
You figured out how to use YouTube as a learning and marketing tool.
Laura Zander:
Before Bezos did, I’ll say. Yes.
Loren Feldman:
You built a neighborhood yarn shop on the internet. You didn’t have any competition back then. You were growing very quickly. You thought you were going to take over the world at one point. What happened?
Laura Zander:
Well, I still kind of think I’m gonna take over the world… Growth-wise, to your point, we started in 2002. I’m the only employee. I have a little 500-square-foot shop. I’ve got an espresso cart because I built a website for an espresso manufacturer and he traded me for an espresso cart. Built a website for a yarn manufacturer. They traded me for yarn. I have yarn and espresso and let’s just roll the dice. I’ve got a 50/50 chance.
Loren Feldman:
Jimmy Beans Wool?
Laura Zander:
Yeah, Jimmy Beans Wool. Wool was for the yarn. We carry other fibers, just in case you ask. But then the online stuff started to take off and I opened a second location and none of it was strategic. Maybe there was a little bit of strategic intuition that I didn’t realize I had, but the internet business and the world of e-commerce really started—some of you guys probably weren’t born yet, but in the year 2005 before Facebook, people started to get more comfortable buying things online. Then we couldn’t help but grow. We really couldn’t. We didn’t have to worry about inventory, I didn’t have to worry about cash flow, I didn’t have to worry about anything. Because, damn, the money was just coming faster than I could count it.
But then I start to swim into the growth. If you’ve ever been rafting or you ski, first, you just let yourself go into it, and then you start to really power into it, to see if I can get a little more speed and a little more momentum going. So I started to really push, got myself in some magazines—because not many business magazines were writing about knitting at the time, so I would pitch myself, and I’m like, “Look, yarn!”
Laura Zander:
How many people here know somebody who knits or crochets? It’s like almost everybody, right? Holy shit, if you can get an article in a magazine, it doesn’t matter what genre the magazine’s in. I always wanted to be in Car and Driver because I’m like, “The dude has a wife, or he’s got a mom, or at least had a mom at some point biologically.”
I was really pushing, getting in magazines, getting in Forbes, ended up meeting Loren, being a writer for The New York Times with Jay, and trying to go for—does anybody here want to have their own business? Okay, I don’t blame the rest of you, because it sucks… most of the time.
Jay Goltz:
You don’t mean that. She’s mixing up the AA meeting again with this one. [Laughter] This is a business thing, we’re happy being business owners.
Laura Zander:
Jay, it’s all a 12-step program. Life is a 12-step program. So I realized that if I started to apply for awards, that I would get some press and get some notice and maybe I could convince people that I was actually legitimate, even though I didn’t feel like it inside. If enough people thought that we had a legitimate business, maybe people would start to like buy from us and they would think we were legitimate. It was like The Emperor’s New Clothes.
I applied for a bunch of awards and I got one through Ernst and Young and became part of their Winning Women program with a bunch of really successful women. The woman who started Swell, the woman who started Spanx, people like her. All these super successful women, I’m all of a sudden surrounded for a couple years with all these people who are just kicking ass and taking names, and they’re pushing, “Grow, grow, grow, fast growth, grow as big as you can. Keep focusing on having a $100 million dollar company, you should be able to have a $100 million dollar company.” I’m relatively competitive, I’ve been told.
Loren Feldman:
You’re an athlete.
Laura Zander:
I have been an athlete before. Right now, I’m more of an athlete eater. But yes, I always want to go faster, like how can I go faster? How can I grow bigger? How can I get to $100 million? I can open 50 shops, we can do this, we can do that. I was so focused on growing that I kind of blew it up. I blew the whole business up.
Loren Feldman:
By…?
Laura Zander:
By hiring people who we weren’t ready to hire for. We were probably doing $5, 6, 7 million dollars in sales. I didn’t need a $90,000 a year social media person 10 years ago. I just didn’t, but I listened to what other people were telling me. I started to wear dresses. I started to wear heels. I started to try to fit the part, to fit in with what all of these people were telling me I should be, and really lost my way. It sounds so cliche, but—
Karen Clark Cole:
How long ago was that?
Laura Zander:
About seven years ago, six years ago. The growth kind of stopped, and I think a big part of it was I quit doing what came naturally to me and I started doing what I thought I should be doing. It’s that nasty should word.
Loren Feldman:
So the growth stopped as soon as you decided you were going to focus on growth.
Laura Zander:
Totally, it absolutely did. And then the shit hits the fan and it all falls apart. My dog dies, my mom dies, blah, blah, blah. The truck broke down, all these things happened. It took us a couple years and we finally, just now in the last 18 to 24 months, have gotten our shit back together.
Loren Feldman:
And now it’s more difficult because of the retail apocalypse. You’ve got competition. What’s your attitude toward growth today?
Laura Zander:
My attitude towards growth is that I just want to have fun. I would really like to be able to ski again. I’d really like to be able to get on the trails again. I’d like to be creative again. I would like to grow again, if I can do it because it’s fun, but not for the sake of growth.
What has also changed for us in the last 10 years—and Jay probably has experience with this that he can talk about when I’m done talking—
Jay Goltz:
Tomorrow, or the next day? [Laughter]
Laura Zander:
Yes. 10 years ago, most of our employees were passionate knitters, retired people, college students. Now, for almost all of our people, this is their career, it’s their full-time job. Part of the growth—and you and I have talked about this before, you’ve made some moves this way—part of the growth has been to keep the people who we love and who are part of our team, to keep them interested, and for them to be able to grow and for them to find things that they can learn to develop new skills, so that’s a part of it. Okay, I’m done. Goodbye. [Laughter]
Loren Feldman:
Dana, you said something before about your aspirations. You do have the smallest business of the four businesses here. But in some ways, the biggest aspirations. You would like to go national. Tell us, what’s your plan? How do you do that? Do you know?
Dana White:
I don’t, because the plan has changed. We’ve talked about the plan changing. People come to you and say, “Oh, I want you to meet this investor.” And I’ve said on the podcast, I’m not willing to give up the firstborn that I don’t have yet to that investor, so that’s not going to happen. Franchising has been an option.
I think for me right now, I’m with Laura. I want to have fun. I want to grow slow. I think slow and steady is gonna win the race because when we’re talking about the growth of a company, my direct competition is the individual hair stylist, and she cannot see 15 women on Sunday morning standing outside of her salon waiting for her. That’s a typical Sunday morning in my salon. Then the salons that are big or that are national—your Great Clips, your Supercuts, your BoRics—they’re definitely not catering to my market. I believe the field for me is wide open.
Loren Feldman:
Tell us exactly, who’s the market you cater to?
Dana White:
Right now, it’s African American women between the ages of 17 and 70 because I felt the pain. A lot of people just don’t know what it has taken for us to get our hair done. I think products and tools have evolved, but the business model around the hair salon for this market hasn’t. I went ahead, added some math, did some science, and then tried to evolve it. We cannot not grow because there isn’t a walk-in only, seven days a week, Lean-manufactured hair salon. The growth and the speed in which it’s done is up to me.
Karen Clark Cole:
Are you worried that someone else might come and do it and beat you to it?
Dana White:
I was until my mentor sat me down and said, “You have seven years on them. They have to start from zero.”
Loren Feldman:
It’s also a big country.
Dana White:
It’s a huge country and there’s plenty of space. McDonald’s and Burger King are not suffering. There’s room for Five Guys and BurgerFi. But he said, “Even Burger King needed ramp-up time. By then, McDonald’s was McDonald’s. So consider yourself in your ramp-up phase.”
Laura Zander:
Well, one of the things that kept getting pounded into me was, “You’ve got to be afraid. You’ve got to be afraid. Somebody else is going to come in and they’re going to do this.” I’m sick of it. I’m sick of living in fear.
Dana White:
What’s for me is for me. It’s already done. What I do, you may be able to do better, or maybe not. But you’ll never be able to do what I do the way I do it because I’m me. Maybe national isn’t for me. Maybe it’s regional. I’ll learn that as I grow and get older. But for now, I am extremely passionate about our time and how it’s being taken for granted.
The kind of anecdote we talked about is, what touched me was, a mom came into the salon. She said, “My daughter just got a partial scholarship to Purdue on the swim team.” And I said, “Wow, that’s amazing!” And she said, “Because we were able to walk in after practice on Tuesdays and after meets on Saturdays and be in and out in time to go home to have dinner.” That is something that is just not something that we do en masse. The fact that Paralee Boyd is there, and she got a partial scholarship to Purdue, that’s why I said it’s a national solution.
It’s about hair health. It’s not just get you in and out. But is it growing and is it getting thicker, and are you able to be versatile with it? Can you go super curly and then decide to go super straight? Growth for me, it’s what you want to do until you decide you don’t want to do [it].
Loren Feldman:
Jay, did you ever go through a stage where you thought you were going to take over the world?
Jay Goltz:
In my 20’s, I was surprised just because I had a successful business that was doing millions of dollars, which, that wasn’t the plan. I don’t need no stinking plan. You know what that is. Then 30’s, I figured, “Oh, I’m gonna take over the world now.” Then I hit 40 and I realized, “Gee, what did you do wrong? You’re not worth $200 million.” Because I’m not in the computer business, because everything you read about in Forbes is always the computer business or real estate. Then I hit my 40’s, I figured out by the end, by the time I hit 50, I’ve done just fine. I’m actually happy now. I don’t have this albatross on me, “You’re not doing enough, you’re not growing fast enough.”
I realized that success is not about the income, it’s about the outcome. My outcome is way better than most of the people I read about in Forbes. Almost all of them, their lives are messes. If you read the stories closely, you’ll see these aren’t happy people. So I figured out for myself that entrepreneurship is about, for me, having control over my destiny. I don’t have anybody to answer to. I have happy employees. My average person’s been with me 10 and a half years. I have three good kids who are married with nice daughters-in-law and life is good and I’m trying to put the message out to the world that, no, you don’t have to become the biggest place ever. I grow at 5% a year and I’m perfectly happy.
I’m afraid that entrepreneurship now, when people hear the word, they think entrepreneurship means raising money. No, raising money is raising money and entrepreneurship is starting a business.
Loren Feldman:
Were you ever tempted to take investment money?
Jay Goltz:
No, I told you the story when I was written up in Small Giants, I went to the book signing, and there was a guy who you know who was doing a speech about his business, and he was in the boutique hotel business, and it was going well, and he started taking in money. Now he’s doing like five hotels a year, and I’m sitting in the back thinking, “Boy, that guy really thinks big. I just don’t think that big.” And then by the end of the speech, he’s telling us how there was the crash, and I’ll never forget this. He said, “I had a wife call me from one of the investors going, ‘You son of a bitch. You’d better figure out how to fix this. My husband was up all night crying because of you.’” I thought, “Yeah, I don’t need to think big like him. I think medium.”
I make a really good living and buy what I want. I’ve realized that’s not a bad place to be, but you don’t hear about this stuff. You just hear about the ones who are going crazy and growing and lots of them disappear one day.
I’m trying to get people to understand that entrepreneurship is about being happy at the end of the day. There are a lot of unhappy entrepreneurs out there and that is the ultimate irony. They went into business for themselves to control their destiny, and they controlled it to where they’re miserable because someone else is more successful or someone’s bigger. God forbid someone’s bigger than you are, or they got written up in the magazine or something, and it’s a little out of whack at the moment.
Loren Feldman:
Karen, has your thinking about taking investment capital evolved over time?
Karen Clark Cole:
Yeah. We tried and it was difficult because we’re a services company. We’re not a product company, we’re not going to do big hockey stick [growth], and we’re not a startup. It’s hard to fit into the right place to actually get money from a person or a group who we like. Again, there has to be synergy there. After a year and a half, we put it to rest. Now we’re focusing on fueling our own growth, which is where we were before. In 20 years, we’ve never taken any investment, so it’s not like we can’t do it. There was just a big opportunity all around us to consolidate the UX market, and rather than having somebody else do it, I wanted us to do it. But, as a lot of people know around here, it’s not that easy to pull all that off, and so it became not worth it, because it was causing too much hardship for too many people.
I listened to all you guys, and I’m thinking, “Wow, you can serve a lot of people in this country, and you can have a lot of happy employees, and you should grow so that you can do that.” That’s kind of how I feel. I mean, not only can we serve more clients if we’re bigger, but we can have more happy employees. I think if we can have a great place for people to come to work in more cities with more client work to do, then wow, that’s a pretty good reason to do it.
For me, it’s not a greedy thing. I made way more money when we were four people, and I’ve never worked so hard in all my life, and I don’t want to do it again. I always say, “Get bigger, it’s easier.” Because you can hire really smart people to help you, which you can’t afford to do when you’re small.
Loren Feldman:
We’re going to open this up to questions in a second. But before we do, Laura, could you tell us a little bit about what’s working for you, in terms of marketing and generating growth? You were ahead of your time on YouTube. That was a while ago. You did really well on Facebook for a while. I know you’re focusing on Instagram now. What have you learned? What’s working right now?
Laura Zander:
I’ve learned that the rules are constantly changing. We’re whitewater rafting and the river’s just never the same and you never know how long the rapid’s going to be.
We won a Facebook global marketing award. I got Hugh Jackman to do a knitting video for us. [Laughter]
Loren Feldman:
When was this?
Laura Zander:
Two years, three years ago. He had a movie that we helped him promote. We just rode it and rode it until the wave crested, if anybody surfs. You just ride it out and then you’ve got to figure out what the next wave is. I feel like the Facebook stuff has kind of died. Instagram is obviously very popular. I think we’re kind of at the tail end of that. We’re keeping our eyes open.
I believe now that we wholesale, which means that we sell to a lot of yarn shops, I think that that’s our sales force and that we’re really spending the next year or two years dedicated to—you had mentioned that [with] growth, you want to create lots of happy employees. I want to Superman the knitting industry and the yarn industry and I want to create a stronger industry. I want to do whatever I can, and I know it’s a little arrogant and narcissistic to think that I have that power, but whatever I can do to get as many people knitting, and to get as many people buying yarn and walking into yarn shops, I think that really gives me a high and a buzz.
I’m trying to do everything that I can from financial education to marketing education to make stronger yarn shops so that our ecosystem is stronger, and that it feeds itself. As one of the main retailers, even if we maintain the same market share, I don’t want to grow my market share, because I don’t want to take away from other people. But if I can grow the whole pond, and we maintain the same percentage, then everybody wins.
Loren Feldman:
You know, they’re trying to take away from you, don’t you?
Laura Zander:
I know, but I don’t care. It doesn’t matter. I live in my own little world, and I like to pretend that everybody likes me, for me.
Jay Goltz:
Who buys any of this? Do you buy that she doesn’t want to take any more market share?
Laura Zander:
I really don’t, I really don’t. There’s so much room and it’s not a zero sum game. It’s just not.
Loren Feldman:
Judging from this room, though, you’re already hitting a lot of people.
Laura Zander:
But how many people have ever heard of Jimmy Beans?
Loren Feldman:
But they’ve heard of yarn.
Laura Zander:
All right. Yeah, I mean, I want to grow the market share of yarn and of hobby and DIY, but I don’t want Jimmy Beans or our personal thing—I don’t want to take business away from somebody else. I want you guys to spend more on all of us.
Jay Goltz:
Do not try that at home. Do not try to grow a business without trying to take some business from your competition. That’s all I can tell you. You with me on that, Karen?
Karen Clark Cole:
No, I actually am not. Similar to Laura, we’re in an industry where there’s plenty of room.
Jay Goltz:
Well, if you’re in a growing industry like that…
Karen Clark Cole:
My feeling about competition is the more, the better, because it raises awareness. It floats all the boats.
Jay Goltz:
If you’re in a growing industry like that, you can do that. If you’re not, you have to take business from other people.
Loren Feldman:
The percentage of people who get custom frames is…?
Jay Goltz:
There were 25,000 frame shops 15 years ago. Now there are 8,000. Industry’s dropped by about 30%. So in my business, if I don’t figure out how to be better and make sure I continue to get more market share, then my business won’t be there.
Laura Zander:
Yeah, but if you look at it from a math perspective, you actually just did gain market share, just your natural attrition. I’m a big fan of natural selection. All of those other shops just disappeared.
Karen Clark Cole:
All you have to do is be better.
Jay Goltz:
But they disappeared because the market shrunk. It used to be a $3 billion industry, now it’s probably a $2.2 billion [industry]. Part of it is just because baby boomers are not framing pictures like they used to.
Loren Feldman:
Do we have any questions?
Audience Member #1:
Just in the sake of keeping this thing going. If you’ve got an expanding business, you don’t care about share. But if you’ve got a declining or stagnant business, the only way to grow or even stay the same is getting more share, right?
Laura Zander:
Yes and no. That’s exactly where we are. Our industry is going through the exact same thing, or a very similar thing. Our industry is shrinking and shrinking and shrinking.
Loren Feldman:
Explain that, though. Are people knitting less and buying less yarn as a whole?
Laura Zander:
People are just dying. [Laughter]
Karen Clark Cole:
The knitters.
Loren Feldman:
Knitters tend to be older.
Laura Zander:
They’re humans, yeah. [Laughter]
Loren Feldman:
There are more humans today than there were a week ago.
Laura Zander:
Yeah, but they’re aging out.
Jay Goltz:
It’s a baby boomer thing.
Laura Zander:
The baby boomers have just, in August of 2016, passed their prime spending years. They’re spending less, they’re dying off—I mean literally dying off, they’re not being replaced. The Millennials, or whatever this youngest generation is, are minimalists, and they are very niche focused. There’s a ton of fragmentation, and so the buying habits are not the same. Then there’s a glut of available products. Now any of us can go on Alibaba, any of us can go on Etsy. You can buy anything that you want from anybody basically in the world.
Traditional retailers, we are losing market share to everyone. It’s not just Churchmouse on Bainbridge Island (which if you’ve not visited, please tell Kit and John I said, “Hi.” They’re really great and it’s a beautiful spot). But it’s not them that we’re losing market share to. It’s the Etsy lady. She sells $1,000 worth of stuff per year. You take 100 of those, and that’s one yarn shop that just went out of business. I’m sure that framing is very similar. There’s lots of DIY framing.
Jay Goltz:
Not anymore. The baby boomers’ kids are not framing pictures like the baby boomers did.
Laura Zander:
But to be more specific and answer your question, what we have done is we have actually taken a step back, in terms of the primary things that we were selling—the yarn, if you will, and needles and stuff—and have been inventing. I have a knitter’s watch coming out. I’ve been patenting things. I made some knitting needles that mark every one inch and patented that. I’ve always taken an additive approach, like we don’t discount things. Instead, we charge more, but we give you things that make you feel like you should pay more.
Laura Zander:
We’ve started inventing, like we’re going to have toilet paper that says—Tosh is the new brand—”Tosh is the shit.” Then we’re going to go to trade shows and we will put our branded toilet paper and we’ll get toilet paper with little sheep on it or like a little knitting pattern.
Loren Feldman:
You heard it here first, breaking some news.
Laura Zander:
Then instead of doing a knit-along, we’re gonna do a shit-along, and people can all knit the same pattern together on the toilet. We think it’s gonna be great, but we do stuff like that. There is no competition. Nobody’s ever done that before. I don’t know why.
Loren Feldman:
You’re not taking that business away from anybody.
Laura Zander:
Exactly! I’ve got to get creative. I don’t go in other yarn shops because I don’t want to see what other people are doing because I don’t want to compete.
Dana White:
I think that’s the key, right? I think if you’re going to not take market share, you have to evolve. At Paralee Boyd, it’s not a matter of, “Don’t go to your stylist.” It’s a matter of, “Go to her to get your cuts and colors, come to us for your maintenance.”
Jay Goltz:
You might not want to take it from your competition, but you are, and if you are successful growing your business, it’s coming from you. So you might not like that idea, but that is what’s going to happen.
Dana White:
She’s offering more and she’s offering different stuff.
Loren Feldman:
We have another question, and if you do, we need you to go to the microphone because we want the people who listen to the podcast to hear it.
Audience Member #2:
As a young entrepreneur, it’s so nice to have this energy here. Can you guys talk to me a little bit about your own personal experiences? Both in each of your businesses, but personally: one, a time where it benefitted you the most when the universe was teaching you patience, and secondly, a risk that you took that paid off beyond when your soul had that, “Okay, I was just going to take this risk.” It could be personally, like I just wrote a book myself about my journey leaving law school and going to Mexico and Guatemala on a one-way ticket with $200.
Karen Clark Cole:
That’s the same as starting a business. You have a one-way ticket and you’ve got $200. [Laughter] I think, for me, I didn’t even know I was taking it. It was really one foot in front of the other. It’s not like I was taking a risk to say, “Hey, I’m going to open a $30 million company with all these people and have five offices.” It’s not like that, right? It’s just, “I’m going to do one job by myself,” and then gradually it comes on. I think the risk is tempered by that, for me, anyway.
Dana White:
I think opening Paralee Boyd was a huge risk.
Loren Feldman:
You had had a successful career before that in corporate America.
Dana White:
I did, and I was doing well. Man, wow. But I said, “I think I can do it.” And there were no associations where I could go to, there were no conferences where there were people taking people walk-in only, collecting data, using engineering notes, using Kaizen to work in their salon. For me, it was that risk taking $30,000 of my own money, finding a salon where a lady was leaving her current location, taking that $30,000, turning it into my first location, seeing what happens next, handing out flyers, telling people about it.
The other risk I took was, shortly thereafter, I could either spend the money and pay rent, or I could have spent the money and have done a series of radio commercials, and everybody around me—not being entrepreneurs—said, “Pay your bill, pay your bill, pay your bill.” But I thought if I bought the marketing, I’d be able to pay my bills for the rest of the year. And that’s what happened. I took the risk.
The risk question is all of us opening a business when you’re in a society that says, “Get up, go to work, go home, have kids,” when there’s a science to it. But for any business owner, the risk is opening and the patience comes in with how you interact with people and managing the expectations of people around you.
Loren Feldman:
Quickly, Jay.
Jay Goltz:
I don’t think you have to be nuts to start a business, but it does help. I will tell you that I’m not sure I ever did anything and thought about the risk involved. I just thought it was going to work. I know that sounds crazy, but that’s who I am. I’ve done some stuff that didn’t work, and it cost me a lot of money. I realized that optimism is the gift of the entrepreneur, and it’s also the occupational hazard. I’ve been on both sides of that, so I’m not sure that you pick entrepreneurship. I think it might pick you. I meet lots of people who are talking about starting a business, and I call them “entremanures” because they just talk about it, and talk about it, and talk about it for years.
Loren Feldman:
“Entremanure”?
Jay Goltz:
Bullshit, basically. They’re bullshitting themselves.
Laura Zander:
You need some knitting toilet paper!
Jay Goltz:
They like the idea of it. They want to tell all their friends about it. But at the end of the day, it’s about signing a lease. It’s about quitting your job. It means you have to go and do something about it.
Laura Zander:
Nobody to blame but you if it doesn’t work.
Jay Goltz:
I don’t believe that opportunity knocks, I think it lurks. I think that it’s out there, and I’m sure you did it, you thought there was a market there, and you jumped into it. There was a market there and you made it work. I think we’re all in the same boat. This idea of, “Follow your passion and the money will follow.” Oh my god, I know lots of people who have gone broke. Passion is not enough. It’s a critical part, but the math needs to work.
