‘America Sucks at Small Business’

[Music] Hello everyone. Welcome to the 21 Hats podcast. I'm your host, Lauren Feldman. This week we meet Dan Cardy who has gained an unusual perspective on what it takes to build a business in the United States. Dan has started and built his own businesses. He's run community development organizations that have worked to support the growth of other local businesses. And until January, he was CEO of the Eastern Market in Detroit, which is one of the last great public markets in the country. and has seen a remarkable number of businesses start, thrive, and even go national. On top of that, he's also traveled to other countries to see how they support small enterprises. His conclusion, we're doing it wrong. This may seem jarring given the story we like to tell ourselves about the American dream, but as Dan explains, there are some things we could learn from other countries. Even at good times, owning and running a business can be a lonely pursuit. Our hope is that these weekly conversations will let owners know they are not alone in facing challenges. In fact, that's the whole idea behind the 21 Hats community, engaging with other owners to get the kinds of insights only another owner can offer. If you're interested in learning more, step one is to sign up for a free trial of the morning report, which helps you navigate this interesting world in which we live. Every day, the newsletter highlights the most important news for business owners and also tells them how other owners are coping with that news. Step two is to get on our Slack channel where you can ask questions, get vendor recommendations, and tap the wisdom of a very impressive crowd. Just search the 21 Hats Morning Report to subscribe. Joining me this week on the podcast is Dan Cardy, the former CEO of Detroit's Eastern Market. The episode is titled America Sucks at Small Business. Before we get started, Jackie Russo and I have another announcement to make about another special workshop. What do you have in mind this time, Jackie? Lauren, we are going to talk about the other bane of everyone's existence. Not just AI, but people are really caught up on social media still. Some of them do it really well. Some of them are frustrated and so they stop using it. We're going to talk about some really great easy tips and tools on how to use social media better for your business. It can't be advertising. It's got to be social. So, we're going to talk about how to do it the right way. Be proactive, some things to save time, measure what's working and not working, and create better content that will be more connective to your audience. Is this across all platforms? Well, it's really predominantly going to be LinkedIn, Facebook, and Instagram because those are still the big three when it comes to the business world. But I will teach the strategies and structure and processes to guarantee the best outcomes of effort to value no matter what platform you're on. We're going to spend a little bit of time talking about how to choose the right platforms. Give us a hint. Well, I will tell you that I was talking to a professional services company the other day. I was doing some consulting work for so imagine, you know, engineer and they were telling me about their Pinterest board and they were serious like they said it with a straight face. So, we spent some time talking about how to better choose platforms. So, we'll be matching your best platform with where your target audience is spending the most time and how you're going to look the best. So, if you happen to be an engineer and you have a Pinterest board that's doing really well, Jackie wants to hear from you. Oh, I do. I do. And if you are a business bank and you try to talk me into letting you have a Snapchat, we're going to have a conversation about that, too. This workshop will be Friday, June 20th at 12 Eastern time, 11 central, 9 Pacific. It'll last an hour. And if anybody wants to sign up for it, and I'm hoping you all do, you should just reply to your morning report, all you have to do is hit reply, give me your email address, or contact me by email. I'm at lauren l o rn21hats.com. That's the number two, the number one hats.com. Just give me your email address and you will be signed up. Yeah. And best part is there's no sales pitch here. I don't sell social media services. This is truly about teaching and educating the 21 Hats community to use these tools better to help their businesses. Us entrepreneurs have to stick together. So, let me teach you the stuff I know so it can help you get even further along. Well, I know I'm looking for it. Thank you, Jackie. And now we will get back to the podcast. Welcome, Dan, our special guest today. It's great to have you here. I've really been looking forward to this conversation because you've had the opportunity to see what it takes to build a business from a whole slew of perspectives. I think the first of those perspectives, if I'm correct, uh came when you opened the bar not long after leaving school. Uh if I'm right, can you tell us uh how that came to happen? Yeah. Um, I graduated from the University of Illinois with a degree in city planning in 1977. And after a couple years of writing federal grants and uh doing zoning administration, I didn't think that there was a longtime future for me in local planning offices. I didn't find it particularly compelling and corresponded with coming into $18,000 when a neighbor lady died and left me half of her estate who's someone for whom I mowed the grass and shoveled the the sidewalks in the winter time. And uh I was among the other things they gave me to do in Rock Island, Illinois was I was sort of made point person of downtown revitalization which kind of matched at that time the value that they put on downtown uh because I was the lowest staff member available. You know, when you think about downtown development, you know, the last 40 years, it's, you know, most cities are very consumed by that topic. But things were huming in 1977 in Rock Island. There's the home of International Harvester. They made all the red tractors at the Farmall plant that employed about, I believe, 10,000 UAW workers at its peak. Pretty big for a town of 40,000. So, downtown was desolate. Real estate values were low. and my brother and I uh took half of the 18,000 and put down a half on a building and uh I bought it on contract and set about renovating it. First we were going to be real estate developers, but two people backed out. So we decided we'd become bar owners and it was a great success. Uh we ended up building six bars in in about a 8-year period. Uh five of the six did quite well. The last one didn't. I think the lesson learned is when you think you got it all figured out, you maybe there's always new lessons that can be learned. Did you have any experience working in a restaurant or a bar or dealing with food? I did. I I worked at a liquor store that had a bar for 6 months where I learned everything not to do, including u some very uh shady uh practices with regard to how they treated uh customers of color. So uh but that was the only experience. I brought on a partner who I'd gone to college with that was experienced in the kitchens of pubs and taverns and we needed that experience in the food side. What did you take from it uh as a lesson? Why did it work to the extent that it did work? Um, you know, I I kind of did enough research as uh someone who, you know, one of the pivotal moments in my life was uh being an exchange student in Manchester, England in my junior college. And it's there where I learned that u beer it was a much broader category than it was in America in 1977. We had a number of innovations that resonated with people. I think it was just a clever and creative approach to entertain people and be, you know, the art of hospitality. I think we were really good at it. Um, you know, the six bars we built, they're all in different towns. We always had the largest selection of imported or specialty beers. We also loved music and we didn't have a jukebox cuz we actually did, our first bar had a jukebox, but after two weeks, one customer came in and got pretty drunk up and played the same song 10 times over. So, we called the the jukebox company the next day and said, "Um, please remove your jukebox." And we spun discs, spun vinyl behind a bar just like the hip joints do these days. The building was actually on a pedestrian mall, which was all the rage in downtown revitalization the 70s. And uh the construction of it took 3 years and that killed most of the retail that was remaining at that time. And so there was very quiet and we actually saw a use of it as a special event space and started doing outdoor concerts that proved to be very very successful. Uh and I think you know we were early um social media proponents. We for a couple years had a very robust Friday happy hour business and I would get my Multa camera that I got as a graduation present from college out and I'd take pictures of people and then race to the store and have those slides developed and the next week we'd put them in a carousel the Kodak carousel projector and show people those images from the last week and people come back to see just how beautiful and they were from the previous week. So that's the social media you're referring to. Yeah. So an early Instagram. That's right. And so a little not quite as broad a distribution, but uh it it worked. So you know, we learned a lot. The six places differed slightly. They were five of them were in tired rust belts towns along the Mississippi River, three in Iowa, two in Illinois, and then the sixth one was in College Town, Iowa City, Iowa. And uh we were a little bit older by that point. And I think we kind of were it was the wrong bar at the wrong time. didn't quite master the quarter beer night and we had a very large place and it was at a time when live music in particular was uh being uh just killed by a disco and so it just didn't work. So that forced a retrenchment. Um we sold off a couple of bars paid down. We were also guys that my brother and I were were two guys when we get $50,000 in the bank we'd start thinking about our next bar. We love building them as much as we did running them. So you were stretched thin all the time. All the time. So, you know, we didn't know that um if you had bad experience with unemployment insurance and if you cross a threshold with 50 full-time equivalents in the state of Illinois at that time, your rate went from 1.8 to 5.4 in one quarter. That was a a rude awakening. But we ended up we had a we had a bar that was our biggest grossing bar. Uh I could have kept it. We had an inquiry to sell it from a guy who had been product development for a guy named Norman Brinker, who is the gentleman who started both Chili's and Pizza Hut. Uh, and he had had a heart attack in his mid30s or 40s and wanted to return to his hometown and kind of slow down a little bit. And so after thinking about whether I wanted to be his partner or his banker, I decided that with three small children under the age of five at home, if I wanted to preserve my marriage that it might be a good idea to think about a different line of work and uh we sold him the bar on contract and it ended up very good for him and very good for us. But he didn't turn it into the next chili, I guess. No, but we were doing remarkable business in this town and he was able to take our remarkable business and double its sales uh in three years. So, I didn't I didn't think that was possible, but he's a good great operator, better operator than we were actually. Of those six bars, one burned to the ground u when the building next door caught fire, the one in Iowa City, Iowa was mercifully put out of it had it had been a bar that failed four times. was it was a big old laundry that was turned into student housing. Uh so that was like a mercy killing for anybody else trying to make an investment. And then uh the other four still exist pretty much as we built them. You know, obviously different owners over time. Wow. But I think we we built some nice places that people appreciated. So what did you do after that? So that IH plan I talked about earlier had closed, leaving uh Rock Island, Illinois with about a 40% drop in assessed values of its real estate and just uh devastating to the community. And so the local forces uh had started an economic development nonprofit uh to help rebuild the town and uh it wasn't very effective and the larger private sector guys kind of had a business association. they they decided to merge their efforts and they looked for a new executive director and I thought given my planning background and giving um a small business background that I might that might be a good fit and uh so for last uh really for the last uh let's see 17 plus 17 plus 2 is 36 years uh I have run uh nonprofit uh community development organizations of one type or another. Tell me about uh what you did with the one in Rock Island. How did you address that situation after the IH plant closed? So in Rock Island, uh I learned a little bit about everything. Uh we got into some industrial development. We got into general commercial development. Um we had a major expansion when local foundation gave us money to do housing in older neighborhoods. Uh and all the while my my main focus was really on downtown revitalization. and so uh wrote an award-winning strategic plan honored by the international downtown association pioneered uh really downtown housing in the Quad Cities Rock is part of a metropolitan area along with Molen Illinois and Bondorf Iowa and Davenport Iowa. It's about total population about 4 to 500,000. Um we created an arts and entertainment district. We attracted riverboat casino number three in the United States and we were able to leverage that and had about 10 additional nightclubs and restaurants located in our downtown building off the base that I had helped establish with our first car and we became known as the district. And for a long time it wasn't in the Quad Cities where you going, it's what time you're leaving because everybody was going to Rock Island. And so uh enjoyed a lot of success, developed, uh my own professional, uh reputation. I I I've had a consulting firm working on small main street communities since u 1996. And then I also uh became a participant in something called the International Downtown Association that became a board member there and got to go to England to the first global city center uh conference where it was ironic Americans were mostly the theorists because we had screwed up our downtowns more than any other country in the world. And so we had to dig deeper to figure out what to do next. And so things like business improvement districts, tools of how communities can move their city centers forward were the result of how bad they got in the 70s and 80s. Were you aware at that time that uh in the words you just used, Americans had screwed up their downtowns more than uh pretty much anyone else? Well, pretty much uh I had spent time in Manchester. I hadn't yet quite had the privilege of traveling internationally as much as I did, but I I I sat at this conference in Coventry, England, and and I couldn't help but understand why is it that we're leading the conversations when the their downtowns are so much better than ours just because they hadn't sunk quite as low. And you know, that gets into how our cities are built, our reliance on the automobile for transportation, a whole number of issues. But you know um we built a system that favors large enterprise over small and medium enterprise and there was a lot more vitality because there are a lot more successful small and medium businesses in those European communities. I do want to get to more of that. Uh what did that experience teach you about helping other owners build their businesses? I mean it's one thing to do it yourself. It's another thing to coach or cajol or do whatever it takes to encourage that kind of economic development. I'm curious what you took from that experience in Rock Island. Yeah, I you know, first of all, I think having done it myself and and having a bittersweet ending, you know, somewhat successful, but a little bit of a a what if uh at the end gave me great um empathy for the issues that small businesses face. Um I I must say one of my most enjoyable moments in looking back almost a bit of ecstasy is there is a business in downtown Rock Island called Circuit 21 Dinner Theater that predated the opening of our bar by about 5 years. It opened in the early 70s. It was a former vaudeville house turned into a porn theater then resurrected as a dinner theater. And when the IH plant closed they lost 20% of their business overnight. Anyway, what I want to say is that the fact that they're still open today, uh, the original owner is still alive. He's fairly old, but his son is doing a really good job doing the day-to-day stuff. They should be in the small business hall of fame to keep a dinner theater going in a town like Rock Island, Illinois, just because of its size. One of my first things I had to do was help that dinner theater refinance uh itself. Um because they' done major renovations to the building, paid down like a $400,000 mortgage to $125,000. And and the board chair happened to be the president of the bank that uh held the mortgage. And so I went to see him, you know, early on. And I said, "Um, gee, it really be great to be able to refinance uh Circuit 21. It's an important part of downtown." And he looked at me dead eye and said, "That's not going to happen. At least not with this bank. It's not going to happen." And I said, "Well, what's the issue?" And this guy stammered a little bit and he looked at me and said, "Do you know what they do with the season ticket sales?" And I I I thought for a minute and from my bar days, I remembered that when you're at a loss for words, sometimes it's just best to mirror the manner of the person that's asked you the question. So I stammered back at him. I said, "No, what?" And he said, "He pays bills with it." And then I realized uh the divide here. And I and I looked and went straight up and said, "Do you mean to tell me he doesn't put it in escrow?" And uh he said, "No." [Laughter] So I I left that meeting knowing sure when I took the job, I thought more of my time would be explaining to local government officials what it took to succeed as a small business. But I realized that large corporate folk often times have no idea what it takes to survive as small businesses too. And so we got it refinanced with a different bank and he's still there to this day. And all those bankers that he worked with in 1980 were all eventually put out of business by the the great merger wave of 80s and 90s. Who would have thought that he'd still be there and they wouldn't in in 1986 or 88? Tell us uh about the Eastern Market. What makes it special? Well, the Eastern Market is is a bit of an outlier in America. It goes back to 1891. And even in its worst days, which I think we're in the '90s, I think it actually started to come back a little bit. Uh it was still on a Saturday morning one of the coolest places to be in America. It is a hybrid. It's has wholesale function for Michigan farmers. It's a retail public market that until we got there was all about plants and flowers and fruits and vegetables and uh it is truly one of the most wonderful urban neighborhoods in the city. The the Saturday market I call it's uh it's one of the highest expressions of joyful urban chaos I've ever seen in this country. And it's a food district as well as a public market. Uh the market itself has five major buildings that comprise about 155,000 square foot. This is all popup market. So when you think about public markets United States, a lot of people might think of Pike Place, Reading Terminal Market, Cleveland's Westside Market, which are some great market halls that have permanent vendors. Our markets are all transient. And we've always had a wholesale market that operates midnight to 5:00 a.m. during the Michigan growing season. were back in the 1890s, we were monopolists in the wholesale distribution of fruits and vegetables. But by the 1950s, every national ger and most regional grocerers uh had opened up their own regional distribution centers. The wholesale market was a fraction of its former self, but we still had 3540 farmers that would come midnight to 5:00 a.m. sell their product without benefit of modern innovations like docks and refrigeration. And then uh the Saturday market was a year-round market for Detroit residents and and those uh from the area that wanted the the freshest available fruits and vegetables. And so uh that's where we started from in 2007. There had been some heroic work before I got there. The city of Detroit, which still owns the market, administered and ran the market up until 2007. And it's no knock on the Department of Recreation. It was the agency overseeing the market. It's just that they had 150 parks, six golf courses, and two marinas in addition to a public market and a budget that was dwindling quickly. And so the market just wasn't getting the attention it needed for 10 years. There were about five different studies uh looking at the benefit of put under the management of a dedicated nonprofit. The city had previously done that with its zoo and with its u Detroit Institute of Art, one of America's most serious art art museums. So it just took a long time. My predecessor didn't want to run the thing. She was really interested in leading the effort to privatize and finding someone who was more qualified to run a public market than she was. She did exemplary work. Over my 17-year stewardship, I would say we repositioned all of the the major market buildings except for one. So something like $20 million went into shed renovations. Many of these sheds hadn't had capital improvements in decades of any significance. We expanded the market to include um seasonal markets on Tuesday and Sunday. We broadened the market's um products, not just fruits and vegetables, plants and flowers, but prepared food and value added food products. We built uh a s a very intense ecosystem to support small makers of food. The market is surrounded by about 125 mostly small businesses. There are a couple that have grown significantly, but uh those are mostly food businesses, small distributors, uh small value added food makers, and small processors. When you say surrounded by, you're saying that they're not officially on the land of the eastern market, but they're there because they're part of the ecosystem. Yeah. They're they're they're in the ne they're in the district or the neighborhood. They're they're they're independent of the city's public market. Got it. Um, and so, um, that's a a legacy that every older American city had, but nearly all of those food districts have been decimated by success of urban real estate as those areas have gentrified. Food couldn't afford to stay. And so, there's a huge advantage to small businesses being clustered together. the peer mentoring that happens, the borrowing of equipment when something breaks down, the the list of benefits from clustering are significant. Uh and so when those local food districts around the country, you know, starting with probably the the meat packing district in New York, those businesses didn't relocate in one place, they scattered to the wind and they they lost that benefit of clustering. In my time in Detroit, um, when I started, Chicago's Fulton Market area and Washington DC's Union Market neighborhood were very much like Eastern Market, but today those two areas are very unlike Eastern Market. Union Market still has some two and threetory food warehouse and processing businesses, but they're rapidly being replaced by 10tory um, mixeduse mostly residential buildings. And the West Loop where Fulton Market area is in Chicago has become the tech hub of the loop in the in the city of Chicago. It's where McDonald's moved its na international headquarters to be able to attract more youthful talent than it could at its suburban Chicago site. It's the place where Google and uh Microsoft and others have their regional tech centers. Uh, and so, you know, Detroit Eastern Market, we're still here largely because of failure in commercial real estate from about the 1960s on to about 2015 is when the tide shifted. And so, one of the things I'm proud is that we Detroit has a lot of vacant land. So, we don't need necessarily we can afford to keep one area for uh food production and processing because we have enough vacant space for all those tech businesses or autoreated. There's about 25 acres of vacant land near East Market that we work very closely with the city to get that reszoned, creating a special uh district called MKT, short for market district zoning. Uh and then set about trying to acquire land, which is it's a long-term project. Uh we bought 108 parcels. The city owns uh hundreds of parcels and there's still about 60 parcels to go to have site control. But what we want to do is make sure we have room to keep about a million square feet of new food business over time. Some of the 85 businesses have gotten quite large. We have one company, Wolverine Packing Company, that employs about 700 people, and they would have moved out of the city, but we found them the last available site towards this expansionary, which is east and northeast of the historic market core and neighborhood. and they were able to build a second uh fresh burger processing line. They have the capability each week to produce up to 16 million fresh hamburger patties for national distribution to people like Five Guys and Outback Steak Notes. Another company, EW Global, they've been making corn beef in Detroit, by the way, since 1870s. They have a contract to supply all of Sam's Club and Walmart's corn beef for the St. Patrick's Day season and actually put a second shift on that works from the 1st of September to about the 1st of March and put into cold storage 350 last year semi- loads of corn beef that are distributed between basically the 15th of February and the 1st of March for the St. Patrick's Day surge of corn beef consumption in the United States. That demonstrated something that's really important to Detroit and that when it comes to food distribution to a national footprint. Chicago is usually the default people default to Chicago because it's perceived as being in the center of the country. But Walmart uh did a logistics analysis for Global and found that Global is just fine because when you adjust for population, Detroit can uh get to the whole country about as effectively as Chicago. So again, it also shows that when you have a specialty product, you can produce in a 40 or 60,000 square foot building enough product to supply a very large market. And so in an urban setting, you're not going to find meat packing plants like you used to. You're not going to find the large facilities that need, you know, 500,000 square ft. It just doesn't fit in in at least in the core of a city. And so our sweet spot is trying to find those companies that have a specialy product for sale to a regional audience or those that have a particular niche product that could be available to a national. The historic district has a number of old buildings and with food safety modernization standards, those staying as food uh is not likely. So we needed to figure out a way to incubate and accelerate small businesses in costc controlled space that we develop and own as a public market authority while creating an opportunity for them to stay in the neighborhood and when they get to significant employment. The city of Detroit was keen to learn that the food sector has the highest percentage of entrylevel living wage jobs that doesn't require a high school diploma. So if you've got workforce with limited skills, a healthy food sector is a great on-ramp where people can then get to work and then develop as they go. What kind of relationship did you have with those companies? Were you kind of sitting back and waiting to see what would bloom or were you actively looking for companies to service particular needs and then nurturing them? How did you approach that? Twofold. One is with the bigger established companies because we have such a shortage of sites we did no outward recruiting. We actually have missed on one opportunity to expand one of our companies uh because we couldn't find a suitable site in the time that they needed. So, you know, with the burger maker, I worked closely with them as they expressed this desire to double. They have a 40,000 foot production facility. They needed to add a second one and uh have a very deep relationship with them and they came to me and together we went to the city and we worked with the city to get a site for them. But with regard to small businesses, what we began to see as we operated the public markets is public markets are really a wonderful institution for incubating small business. And I would say that one of the best things about Eastern Market going back to 1891 is that wave after wave of immigrants and refugees have used that market as a way to gain entry into the American economic uh system. It's a low bar to entry, you know, a $50, $100 uh daily uh rental fee uh where you can sell your product. And we our Saturday market attracts upwards of 40,000 people at our busiest times. So people are are getting exposure. They're getting real time feedback from customers about whether they like their product or not so they can tweak their recipe. They're also learning from people on either side of them. you know, the peer mentoring that I talked about with clustering businesses is even more acute in public market. But we also learned early on that um providing the selling space wasn't enough. that Michigan has a pretty generous cottage food law where people could make food in their home kitchens, but realistically the the limits to that in terms of the dollar sales specified in that legislation, those people really shouldn't be selling at our market because to make the amount of product you should make to pay our fees, um you would be beyond the the limits imposed by the state. So, a neighborhood farmers market would be a place for those people to start. And so we began looking for ways to help address the issue of lowcost production space. 2015 we opened our first shared use kitchen. People can rent that kitchen uh for between$25 and $35 an hour. They don't have to build their own kitchen. That kitchen has a steady flow of 18 to 20 businesses that work out of it. And you know, we saw people grow and outgrow that kitchen and go off and build their own um buy their own space or expand. Uh we've had a couple of wonderful success stories. A lady that uh Eastern European descent uh Michigan is a significant beet production. Um mostly sugar beats, but some beets you can eat. And she does pickled beets and does about $8 million a year in sales. And half of that is in Eastern European countries. Um, and so we began to try to expand our outreach, trying to provide, you know, consulting for those thinking about a food idea, whether they should get into it. So that we had waste a lot of staff time on a one-on-one basis. Uh, as people learn that, whoa, that's way more work than I thought. Maybe I shouldn't do this. uh we we've tried to build an ecosystem that can kind of weed out people and to give them a flavor early on about what kind of commitments required to succeed in a food business. And so the programming as well as the shared use lowcost kitchen space is really important. But we also didn't stop there. Um we actually have built so far two and have plans to build two more um what we would call accelerators. And that's where someone's off and going. they've got, you know, $100,000 and $200,000 a year in sales. How do you grow to a million dollar? And as as the the neighborhood um is being gentrified, the those small chunky buildings that people used to be able to buy for $75,000 where someone in that position might have been able to swing that, they're now $750 or $800,000. And so we started building cost controlled space for acceleration of businesses and building suites 3 to 5,000 square ft in size. And uh the market rate for rental rates in the neighborhood is somewhere between $18 to $20. Right now we start people out at $8 and on a five they go up a dollar a year. So we get people up to about $15. So they're hardened a little bit for the real world when they're done in the accelerator space. But we've kept uh five of those suites very busy. And we have funding uh to build two additional accelerators. One for farmers who want to mill organically grown grain crops in Michigan, wheat, rye, barley, and spelt. And one for dedicated to meat entrepreneurs who can then share the cost of having on-site USDA inspection with having four or five under one roof rather than just one. How often did you have your heart broken by a business that you thought was going to make it and didn't? Uh, I'd say two to three times a year on average. And were there common themes in those? Sometimes um we had a a wonderful pie maker that um moved into our accelerator and she did really well. She was kind of not unlike my situation. She had two kids and then she had three kids and then a large corporate entity offered her a job as a small business development person in one of their neighborhoods right there and it was a six figure salary with less hours. Uh so her business went from growing to it didn't go out of business but she just does mostly just for holidays now. Uh we had another specialty sausage company that made some of the best sausages, specialty, you know, niche sausages. Um it just wasn't enough to support the two owners and so they they sold that sausage company to a larger food company and and took jobs with that larger food company. U you know, so those are sometimes defeats, but they conceivably are victories for the people in their in the lives they're leading. you know, we've had obviously some businesses just go out um with a bit of disaster, but mostly it's aging and not having a successor is a big issue in the market. We have probably lost half a dozen businesses to people that just decided to take advantage of the real estate boom, sold their building. They were able to have a retirement opportunity that they might not have had otherwise. So I I think the word is bittersweet more than bitter about most of those businesses that we've lost over the years. But the total number of businesses has increased gradually over over the realm of a nonprofit paying more attention to the neighborhood. Um and that's I think as good as you can get cuz small businesses are going to open and some of them aren't going to make it. I had the good fortune to uh be with a group that you gave a tour of the eastern market to some I don't know eight or 10 years ago. You might remember the date because you had just gotten back from taking a sabbatical in Greece. And that's one of the other perspectives that I wanted to talk about which is you have an unusual view of small businesses around the world. Correct me if I've got this wrong, but if I recall correctly, you told us uh on that tour that America sucks at small business um based on what you'd seen elsewhere. I think that's generally still true. Tell me what you're referring to. I just, you know, we talk a lot about the, you know, small business is the job engine. Um but it the numbers just don't stack up. So the the first data point I tripped over in Greece was visiting their public market in the heart of Athens and Athens metropolitan area population is about 4 and a.5 million people which is almost identical to the metropolitan population of Detroit. Now our farmers market would probably constitute kind of a large produce house by Greek standards but if you took all the produce houses in Detroit you might get to 30. That's 300 versus 30 in terms of distributing fruits and vegetables to grocery stores and other commercial establishments. So you know why is that? Well, first of all, I think uh antirust issues. Uh there are two companies, US Foods and Sedexo that together have 80% market share what's called broadline distribution distribution to bars, restaurants, hotels, motel, prisons, schools. I I am proud to say that antitrust regulators declined to permit the merger of US foods and Sedexo when they proposed that a few years ago. So having two companies with 80% market share is slightly better than having one company with 80%. So that was my first data point. I I saw another set of data points around the number of small and medium enterprise per 10,000 people. And um in the Mediterranean countries, particularly Spain, Italy, and Greece, they're all pretty good. They're they're roughly in the 60 to 70 range. Uh we're 19th in the world at just under 20 per thousand. And then I I tried to think about what you know what is it that drives that when we still kind of have uh what I would call this story we tell ourselves that you know small businesses are really important to the American dream. I think um I've identified four factors. I think this antirust uh is something that we've gotten away from. There's a fascinating story in Atlantic called um The Great Grocery Squeeze by Stacy Mitchell. under Reagan, the US federal government didn't um eliminate, it just failed to enforce something called the Robinson BATAM Act, which was adopted in the 30s uh in response to A and P groceries getting price differential based simply on a larger order. And between 1952 and 1964, mostly Republican years, 81 formal complaints uh were filed that kept big grocerers from getting favorable deals over smaller grocerers. This became an issue in the in the fall, if I recall, uh when Biden administration was still in place. And this is about whether big stores can get a uh a discount for buying in bulk. Correct. Right. Correct. And so the the law was still on the book. So I didn't see that story. Perhaps the Biden administration was now trying to uh enforce that some had been done since the 1980s. But um in 1980, half Americans bought their groceries at independent groceries. Uh there were still a lot of small grocerers being successful in urban neighborhoods in rural places, places today we call it food deserts because large grocerers don't have to set up shop in those places. They they can require the customers come to them. So anyway, that's just one example of I think um the antitrust issues. I think you know compared to Greece uh the availability of venture capital for for medium-sized companies to become large companies and for large companies to be giant companies and for giant companies to be behemoths u I think that's generally more available in the United States and you're saying that as a negative in terms of business development no not negative but it just allows scaling that other that eliminates small businesses right and I think that plays into what we value as a country and that's price and convenience over rel relationships or perhaps sometimes even fla local flavor. So I mean you know you can in Greece every if there's 300 food distributors it's because every fifth person has a restaurant and they would get killed by their uncle or nephew or cousin that had a food distribution business if they made book with a large national distributor. Americans buy in bulk at the at the household level compared to places around the world where people buy for the next day. And so there when you can create a a bulk item that's way more inexpensive um you're going to perhaps favor that over a loaf of bread versus a a case of bread. So, you know, um I also think that um one of the telling signs to me as I experience market associations in North America and Europe and the rest of the world is that there's just a lot more healthy public markets in Europe and Asia and South America than there is in the United States and Canada. And what markets do, as we talked about a little bit earlier, you know, it's a low barrier to entry. people can get in the food economy with a public market that they can if there isn't one. They get that immediate benefit of getting customer feedback. They get that immediate support from the mentors around them. I just think that that has a side effect of reducing the number of viable small businesses. But also once people get big then they try to write the rules of the road through Congress to help them ensure their continued success at at sometimes at the expense of new small businesses you know making the barrier to entry more difficult. So I think you said you uh retired from the market on January 1st. Yes sir. You took some time to relax uh and recharge perhaps. What are you planning to do next? Well, that hasn't emerged yet. I do like the idea of there's this essay I read called the first the four phases of retirement and the first phase is vac the vacation phase. So I that's a good phase. I can't remember what the other three phases are but but um in in this sense um and this is my this is the most wisdom I've had about something in a long time. To me, the term vacation is to vacate your mind. And so, all of those everyday things I had to worry about as administrator of Eastern Market are gone. And I want to create the space for something to fill my brain. I'm not sure what it is yet, but first you have to create the space. So, I've been doing, I think, a pretty good job of that. I took a vacation from social media, from doom scrolling in the middle of the night and doing more uh reading of of bigger things and uh doing things like fasting and and trying to really pay attention to the spiritual side as I fill that the void that I've had. I will be spending a month in Europe. I will be visiting 14 markets. I will be continuing my consulting work to help other markets around uh the globe uh mostly United States. Dan, I knew I would get some fresh perspectives on things that I haven't heard from others. Thank you so much for taking the time. I hope it was uh enjoyable. I had a good time. Absolutely. Uh I really appreciate it. My thanks to Dan Cardy. Uh Dan, uh good luck with your vacation, your vacating uh your mind and otherwise. and I'd love to keep in touch and hear what you do end up doing. Yeah, let's have a follow-up conversation in the fall. That sounds great. Thank you very much. [Music] One thing before you go, everything we do at 21 Hats is created by entrepreneurs for entrepreneurs to help us all learn together. If you get something out of listening to these podcast episodes, consider joining the conversation. You can do that by joining the 21 Hats sounding board, a Slack channel where you can tap the wisdom of a very smart crowd or by becoming a founding member and joining our monthly Zoom forum where you can be part of conversations much like the ones we have on the podcast. You can sign up for both by subscribing to the Morning Report. If you have any questions, you can email me at lauren21hats.com. And if you get something out of this podcast or out of the morning report, please tell a friend, tell an enemy, tell every business owner you know. Your word of mouth owner to owner will always be the most effective way to build this community for all of us. Thank you. It means a lot. This episode was produced by another entrepreneur, Jess Stubberon, founder of Blank Word Productions. Thanks for listening, everyone. [Music]