The Toughest Conversation

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Podcast Transcript

Loren Feldman:
Welcome, Paul, Jay, Laura. It’s great to have you here. Let me start with you, Laura. Welcome back. I gather you’ve been on vacation in Alaska.

Laura Zander:
Yeah, we went to Alaska last week and went to a little remote island, just with us and a couple other people. Did a little bit of fishing, really got away, no cell service. It was amazing, super amazing. But coming back from vacation: not so amazing. It’s brutal, just super brutal.

Loren Feldman:
How so?

Laura Zander:
I mean, you leave for six days, and that’s just six days’ worth of work that piles up that you still have to figure out how to get through. So it’s not like the work goes away. You’re just postponing it. So you come back and you’ve got 600 emails in your inbox that you’ve got to go through, and billions of Slacks and all the messages that, “Well, I waited until you were here to talk to you about this urgent matter, and blah, blah, blah.” So you go from being relaxed and not having any responsibility to showing up and just having everything in front of you. So it’s just a culture shock. It’s always a little tough. I don’t know how you guys feel.

Jay Goltz:
Are you delegating enough? Because I’ve gotta tell you, I’m going away next week. But there’s no way I’m coming back to [that]. Okay, I’ll get a bunch of junk emails, but it’s not like people are asking me a lot of stuff. I’ve got other people doing it. So the question is: Are you delegating enough to other people? Why is it all going to you?

Laura Zander:
Because we’re in the middle of a transition, and we’re basically starting two new businesses within our business. So, that’s why. I’m working more now, probably over the last two months or three months, than I’ve worked in a long time. And so I worked nonstop for about four or five months. And then I was able to take four or five months and kind of work part-time. And now I’m back. We’re at another inflection point, and so I’m back to working nonstop for a little while. It won’t be forever.

Paul Downs:
I’m wondering whether a vacation without internet is a vacation. Because I travel, but I can just see my emails and see like, “Okay, is there anything really critical?” And that’s actually more relaxing, to feel like I can just keep tabs on things and know that I could act on it. I don’t think I’ve ever tried it—a vacation without internet.

Jay Goltz:
I have to tell you, I totally agree. I know that I can just clean up the stuff and it can take, whatever, half an hour, and I’m done. And it’s not that I’ve gotta do a lot on them, but you’ve still got the emails you gotta go through. And I do find it very relaxing to just put a little time in, clear the deck, and then go and pretend like you’re a normal person and do nothing.

Paul Downs:
Yeah, I’m actually about to take the first weekend ever without internet, and I’m a little worried about it. Because I just like to know what’s going on. I don’t need to do anything. It just makes me feel much happier if I have a sense of what’s happening in the company.

Laura Zander:
I don’t know. The first two days of the vacation, I’m still like 100 percent in it, and I’m still checking emails and everything. And then it’s like, I kind of totally check out for a few days. And that’s just kind of how it’s always been. I don’t know. I mean, that’s just my personality.

Jay Goltz:
She’s in a different situation, in that you’re traveling with your husband who also runs the business. So that’s different than someone like me who leaves. It’s just me gone. In your case, you’re both gone. So that does add a different level of absenteeism.

Laura Zander:
Yeah, and my personality, for better or worse, is I’m either all in or I’m all out. And when I’m all in, I’m all in. I don’t do moderation very well. So it’s hard for me, and it can be very stressful. I don’t know.

I mean, there are some times when I go on a trip, and I do check in every single day. And I do. I mean, I check in just a little bit to make sure there’s nothing that’s like a fire there that’s going on. But the little stuff that’s not super urgent, I don’t want to deal with. Sometimes I like to just check out.

Loren Feldman:
Laura, how did the business do while you were away?

Laura Zander:
Oh, it’s fine. I mean, these businesses run themselves. [Laughter] I mean, I’m not in the day-to-day. Like I said, we just launched our own brand. So we basically are creating a new business. And we launched that while I was gone.

Loren Feldman:
Have you told us about that? What is the new business?

Laura Zander:
We’re doing our own private label yarn brand, so working now with the mills that we work with to get our product for Texas. We’ve decided to just work on margin. I mean, at Jimmy Beans and our Reno location, our sales of other people’s products have continued to just slowly decline and decline and decline. So we decided to create another one of our own kinds of products. And so that’s what we just launched a couple of weeks ago. And sales are down.

Jay Goltz:
But why is that? Why have sales of other people’s products gone down? Do you know?

Laura Zander:
It’s a great question—a variety of reasons, as far as we can tell. So one is that a lot of other people’s products have gone out of business. Seven years ago, we probably did $2 million a year worth of brands that now don’t exist anymore.

Jay Goltz:
All right, that’s interesting.

Laura Zander:
Yeah, so they just go out. People age out. I mean, they tend to stick around for about seven to 10 years. And then they just get tired of it. And part of that probably is the nature of our industry. It’s a craft-based industry. A lot of people start their businesses and start their brands because they love the craft. And they think they want to be surrounded by the things that they love. And then, after five to 10 years, it gets exhausting. That’s when the honeymoon wears off.

Jay Goltz:
Wait, add to that: It’s exhausting. And they’re not making as much money as they thought they were going to.

Laura Zander:
Exactly, exactly. Yes.

Jay Goltz:
It’s where passion hits bad math.

Laura Zander:
Exactly.

Paul Downs:
Have you ever thought of putting together a business support group for your own vendors?

Laura Zander:
Totally. Absolutely.

Paul Downs:
Do you do that? Or have you just thought about it?

Laura Zander:
No, we’ve done it in various forms over the years. It’s funny you ask. So the business that we bought last October, we are distributing a yarn out of the Shetland Islands, in Scotland. And we’re going to do a retreat next July. And we’ve decided that the retreat is just going to be for business owners. It’s going to be for store owners. So we can all go to Scotland—there’ll be about 15 of us—and share best practices, share stories. I’ll talk about the financial side of things. So, yeah, we’ve had book groups for store owners, all kinds of stuff.

Paul Downs:
That’s a good idea.

Loren Feldman:
Laura, tell us about the brand that you’ve started. What are you calling it? And is it a high-end brand?

Laura Zander:
So the brand is called Yarn Citizen. And it’s a brand that’s based on us all being good citizens of the world, of the environment, of the yarn community, and remembering that we’re all part of this passion together.

The first wave of products that we have launched came from us being in Peru last year and the mill that we work with. It’s a Fairtrade mill. Their supply chain is just impeccable. They pay a lot of attention to making sure that everything, every step of the way, is sustainable and ethical. They process all of the sheep tops, all the wool tops, all the alpaca, all these different fibers from around the world, but a lot of it comes from Peru and South America.

They have all of these leftovers of these different fibers. So we had them upcycle all of these leftovers into a new product. Obviously, because it’s upcycled, we’ll never be able to recreate it exactly the way it is. I mean, we created a big batch of a few thousand kilos of some particular yarns, and we dyed them in particular colors, and blah, blah, blah. So we just launched an alpaca wool blend yarn, and then we launched a full wool blend yarn. And these yarns are sustainable—or at least, they’re environmentally conscious. It was stuff that would have been waste that had been processed into something.

And then we have really put a heavy focus on being price conscious. I just went to this event, right before we went to Alaska, in Colorado, and kind of did a little focus group and was showing people the yarn. And I’m like, “Look at the fiber. Look at the quality. What’s the hand?” In other words, how soft is it? And, “How much would you pay for it?” And everybody’s like, “Well, probably about $25 for one of these hanks of yarn.” It’s 100 grams, and we’re pricing it at $14. So we’re trying to make sure that people know that sustainable doesn’t need to mean that it’s ridiculously priced.

Jay Goltz:
Except you don’t know that. It’s a nice concept. But the fact of the matter is, maybe the $14 isn’t going to pay the bills, and you don’t know that yet. Correct me if I’m wrong. I mean, just the phrase “conscious”—what did you say, “consciously pricing”? I find that to be a funny term. It’s like, either you do it consciously, or you screw everybody.

Laura Zander:
Well, I’m just saying that in casual conversation.

Jay Goltz:
We’re on a podcast. This isn’t casual conversation.

Laura Zander:
Well, no, but we are being conscious.

Jay Goltz:
What does that mean, “conscious”? No one’s gonna pay too much? But what if that doesn’t pay the bills? I mean, that’s how the world works. There’s a lot of people who are—

Laura Zander:
It does pay the bills, because I’m pricing it.

Jay Goltz:
But you haven’t done it for long enough to know whether—

Laura Zander:
What do you mean?

Jay Goltz:
I’m saying, have you done this long enough?

Laura Zander:
Yes, I did a P&L.

Jay Goltz:
You did a P&L forecasting forward?

Laura Zander:
Yeah, I’ve been making handbags forever. Yeah, absolutely.

Jay Goltz:
Okay, so the reason you charge $14 is because you’re using scraps, so the cost of goods, the cost of materials, is minimal?

Laura Zander:
Yeah, I mean, we’re making great margin. In fact, we’ve priced this so that we can wholesale it so that shops can sell it as well. And so we’ve actually just put it in five different stores. And I’ve got tons of history through the handbag line that we’ve done, so I know what our manufacturing costs are. I know what duties are. I know what customs are. We’re sea shipping it, so, blah, blah, blah. So I know what the bottom line cost is per unit. I know what we can charge. I know if we’re going to pay sales reps. I know if there’s outbound shipping.

Jay Goltz:
Okay. So my whole point is, rather than “consciously” pricing, you’re value pricing it because you’ve got the cost down. So you’ve been able to give a good value for it. Okay, it’s value pricing.

Laura Zander:
It is value pricing, but when you say value pricing, that makes me think of Walmart.

Jay Goltz:
No, I know. But when you say consciously pricing—

Laura Zander:
So I’m not going to use that term.

Jay Goltz:
Those two words don’t go together. They just don’t.

Laura Zander:
Well, maybe not for you.

Paul Downs:
What about haze pricing, where you’re just kind of aware of what’s going on, but not really? [Laughter]

Laura Zander:
Yeah, exactly.

Jay Goltz:
Anyway, I buy the concept. Sounds good. You’re trying to be good to the environment, to the employees—all that all that works.

Laura Zander:
Can I say “sustainably priced”?

Jay Goltz:
Sure. Great. There, we’ve got a good compromise. Done.

Paul Downs:
Why not just say “fair price”?

Jay Goltz:
No, you can’t say fair. Because, again, there’s either fair or unfair pricing.

Paul Downs:
Yeah, fair enough.

Jay Goltz:
Wow. You’ve done it again, Paul.

Loren Feldman:
Laura, you’ve talked a lot about emphasizing your margins. It sounds like you could have gone for a higher margin here. Did you debate that? And if so, why did you decide against it?

Laura Zander:
Because this is a hole in the market. Because there’s an opportunity there, and there’s nobody who’s doing this. I mean, if we wanted a higher price, then we would just be right next to all these other different brands.

Jay Goltz:
I’ve gotta tell you, I don’t have a problem with the phrase “opportunity pricing.” I don’t have a problem with that. You found an opportunity. You got the stuff cheaper. You figured out how to get your cost out. I think that’s a lovely phrase, “opportunity pricing.”

Paul Downs:
Why don’t you just call it “pricing”? I mean, really, everybody who is pricing is just figuring out some scheme to do it. It’s all pricing. It doesn’t need an adjective. You’re just pricing. And you decided this is how you’re gonna think about it.

Loren Feldman:
So Laura, did you say there are two businesses that you’re introducing?

Laura Zander:
Yes, and then I’m building another team to work on our subscriptions. Long story short, we hired somebody a couple of months ago who has a ton of experience—30 years of experience—in the industry. It was an opportunity. We reached out to her. She had been thinking about… We found somebody, right? We got her from her other job. We weren’t looking for somebody, specifically. We didn’t have a job opening, but the opportunity presented itself.

Jay Goltz:
So opportunity hiring.

Laura Zander:
Yes.

Jay Goltz:
So we’ve got opportunity pricing and now we’ve got opportunity hiring.

Laura Zander:
Yes. So we brought her in, and we weren’t really sure exactly what we were going to bring her in to do. I mean, we knew kind of at some level. But over the last two months, we knew that it would just kind of shake out. She was okay with that, and we were okay with that. And, you know, she has a skill-set that nobody else has.

And it has caused some issues. You know, there’s some resentments. There are people who are feeling threatened. Our sales are really far down. I mean, we’re down almost half a million in sales. And some of our team is just kind of collapsing under the weight of that pressure and that stress, and so we bring somebody in to help.

Jay Goltz:
Wait, are you sure those things are related? You’ve made it sound like it’s because of this hire that all of this happened. Is that a clear cut direct line?

Laura Zander:
No, it’s actually the other way around. Our sales were down, so we found somebody who we thought might be able to help us. And we brought her on to help us increase sales through different mechanisms. And yeah, she’s remote, and everybody else is here in Reno, for the most part. And there’s some resistance to having somebody who’s remote and who has this experience.

So long story short, we’re going to build a team around her, and we’re gonna launch a couple of products around her and basically create a small business within a business. So I just hired somebody else two days ago. I’ve got another interview tomorrow for somebody who I think we’re gonna hire. Basically, we’re taking this team from a business that went out of business last year, and we’re pulling the best people from their team and hiring them. And we’re going to recreate the winning parts of the business that went out of business within our business, if that makes any sense.

Paul Downs:
Do you know why they went out of business?

Laura Zander:
I do. Because we thought about buying them. Yeah, I know. Great question, Paul.

Jay Goltz:
Okay, so, for people that don’t have a scorecard, let’s just review. You said you hired someone. Okay, the reality is: One, your sales are down. Two: You hired this person with great expectations. She was going to help fix this because of all her experience. Three: She’s remote. It didn’t gel well. There’s some problems there. Four: You’re going back to re-integrate this thing, because you still believe that’s going to be the way to fix all of this. Is that true?

Laura Zander:
Yes. Great job.

Jay Goltz:
Thank you. Okay, I’m with you.

Loren Feldman:
Laura, what sales exactly are you talking about? You have a number of different businesses that you’ve been describing. Are you talking about sales to yarn stores around the country?

Laura Zander:
Those sales are down, yes.

Loren Feldman:
Those are the sales that are down?

Laura Zander:
No, all of the sales are down—almost all of the sales are down.

Loren Feldman:
So that includes your ecommerce business that you sell yourself through your website.

Laura Zander:
Yes. But for this particular conversation, what I was talking about was the ecommerce sales.

Jay Goltz:
But here’s a major question that we’re all dealing with, or many of us: Is it down compared to a year that was artificially high because of the pandemic and people being home? Is this just the hangover from the fact that we all got more business? Not all of us—some of us got more business because people were home and spending more money. Or do you think this is actually down from where it should have been, not factoring in that last year was just a flukey year because of the pandemic? Can you tell?

Laura Zander:
Yes, excellent question. And actually, I’m gonna look at something real quick while we’re talking—but really excellent question. And I should rephrase it. It’s not necessarily that our sales are down. It’s that we are not hitting the goals that we set at the beginning together as a team at the beginning of the year. We are missing the goals significantly.

Jay Goltz:
Me too. I thought I was being fairly conservative, but I’m not hitting the numbers I want. And when you’re ready, I’m just going to share: I have five things I’m looking at to fix this. And I think they apply to most businesses. So when you’re ready, I will unveil that.

Laura Zander:
Yeah. Go for it.

Paul Downs:
Let’s hear it. One of these Jay bullet-point lists? Awesome.

Jay Goltz:
You’re the perfect people to be on this with me because we all have similar kinds of businesses. We’re selling to consumers, and we’re selling products. We’re not selling services.

Paul Downs:
Wait a minute. What about me?

Jay Goltz:
You. I say you, too. We’re all the same.

Loren Feldman:
He’s not selling to consumers.

Jay Goltz:
No, but you’re selling products. You’re making products. We’re all in the product business. That’s the point. Okay, number one—and I’m doing this all myself—we should all be looking at our websites, because everyone you talk to, most people go: “Oh, I’m working on it.” Okay, well, maybe it’s time to fix it. I went to my own website and realized we were still using a phrase from the pandemic. In my new store that’s downtown for framing, it said, “We encourage you to make appointments. Walk-ins welcome.” And when I read that, it’s telling me, “Gee, we kind of can’t handle the business.” And I said, we should just say, “Feel free to make an appointment. Walk-ins welcome.” Just a little tweak like that. I don’t know how many people went to our website and were thinking, “Oh, they can’t handle the business.” Okay, so I’m looking at my website, for sure. That’s one.

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