God, Loren, You Are Such a Jerk

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week our talk leaps from one plague to another floods power outages cyber crime employee churn supplier price hikes vanished shipping containers not to mention the actual plague for Laura Xander whose wholesale yarn business keeps falling further behind on its orders these events have necessitated a series of difficult conversations with customers they can't get mad about the pandemic she tells us and they're not going to get mad about the fact that we're moving and they're not going to get mad about the fact that there's a deep freeze but at some point they're going to get tired whether it's consciously or subconsciously it's exhausting to which he adds but if the locus hit I don't know how much more of this people can take plus we also have a friendly discussion about whether raising your prices makes you a jerk spoiler alert it does not even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will if nothing else let owners know they are not alone in facing challenges same thing with our daily newsletter the 21 hats Morning Report which highlights the most important news of the day for business owners and which you can subscribe to at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining us this week are regulars Paul DS who is founder and CEO of Paul Downs cabinet makers which is based outside of Philadelphia and makes custom conference tables William Vander blumen who is CEO of Vander bloomen Search Group a recruiting firm based in Houston that works with churches and other faith-based organizations and Laura Xander who is CEO of Jimmy Bean wool a digital yarn store that is based in Reno Nevada and meline TSH a wholesale yarn supplier in Fortworth Texas the episode is titled God Lauren you are such a jerk before we get started one of the recurring themes of this podcast is that marketing is it's hard for smaller businesses one reason it's hard is that we are all besieged by self-appointed digital marketing gurus who overwhelm us with outlandish promises on the other hand there's Steve crawl co-founder of be found online a loyal listener to the 21 hats podcast Steve understands the business owners who listen to this podcast because he is one he knows his stuff but he's also a real person who you can have a real conversation with and if you tell them I sent you you can get a free consultation with Steve himself just shoot him an email at Steve at befound online.com to schedule your talk that's Steve at befound online.com now on to the show Welcome Paul William and Laura hope you guys are all doing well uh we've got some catching up to do uh especially with you will William it's been a while um has anything interesting happened in Texas since the last time we spoke it's been more than a little interesting but uh you know the big the big thing that we have been experiencing in my little sector of executive Search where we're helping people with their finding the right Talent right about November or December I started shouting from every Mountaintop I could find and through every megaphone including this one including this one that there would be a a job turn and man alive have we seen that we've been busier than ever uh for all the different reasons that I had listed so I don't I don't know how long that will last but it doesn't appear to be something that is a flash in the pan are you seeing that at all the different levels or is there a regional pattern or is it just like the dam just opened uh well it's all the things I I don't want to retread old ground but some of it is hires that were being put off some of it is people would have left their job in 2020 but they stayed uh some of it is new jobs that are lower down the or chart and highly technical uh because everybody's live streaming now and everybody's you know got video channels running through their schools or their nonprofits or their churches so um some of it is succession has sped up people are like this has changed um and and and my team needs a new leader so it's it's just all those things all at once and I think there's some measure of um optimism that from from our clients that yeah we're not out of the woods yet and we got to be careful but boy it looks a lot better than it did six months ago well that's probably going to lead into Lauren's um next Topic at some point about Texas and optimism and not having any mandates anymore right Lauren thank you Laura let's let's go there right now um William one of the reasons we haven't spoken to you in a while is because for a couple of weeks there uh as I understand it there was uh there was no electrical power in the in the state of Texas um how did that affect you we got out probably better than we should have we were without power for 72 hours I guess but we have uh natural gas fireplaces and even as cold as it got the inside of our house didn't didn't dip below 50 so we B we bundled up and taught the kids card games and you know we had that horrible um Harvey the storm uh in 2017 so Adrian had we probably had a dozen LED lanterns around the house as a result of that and we had plenty of light and plenty of heat and I I made all kinds of new things on my charcoal grill I have one of those big green eggs I made I made cornbread I made breakfast I made so so we we kind of made the best lemonade we could we didn't have any water damage our pipes are fairly new so the materials held a little better but there there was some real damage and uh it was such a train wreck of Errors there's just I think everybody on every part of the political Spectrum has legitimately said yeah part of this is our fault like the finger pointing is kind of pointless cuz it it just it was a mess all over it was calcified nasty old Antiquated system compounded by a once in a 100e you know blizzard storm so every county in the state of Texas got winter weather that's like Texas is bigger than France so it it was pretty pretty amazing it may have been a once in a 100e storm but uh one of the things that kind of perplexed those of us who don't live in Texas is that it isn't the first time this has happened that apparently I had forgotten this but something similar happened about 10 years ago and there was a lot of talk but not a lot of action afterwards do I have that right well that's easy to say from a distance Lauren yes it is 10 years ago was nothing like this I I I was here 10 years ago and yeah okay we lost power for a little while but it wasn't like this this was a different uh I don't know if you any of you guys have seen the movie The Perfect Storm where all three things happen at once and it's just too bad for for George Clooney and his crew it was kind of that and you know there's some who want to point the finger at well if y'all were not deregulated then but I think the cooler heads of all ends of the political Spectrum are like yeah we need to refresh the system we need this needs to be upgraded and uh um I I don't know that there's one easy answer of if we were regulated or deregulated or this and such but this was far worse now what's interesting is in the last since 2017 we've had three 500-year flood events in Houston and now a one 100-year winter event in Houston so I don't know when the locusts and frogs and other forms of pestilence show up we just had Passover yeah exactly yeah a Laura you have an operation in Texas as well as we've discussed frequently uh how hard were you hit by this we were hit super hard I mean we were basically out of business for a week and a half I guess so lost all that Revenue um in fact I just what exactly happened did you lose power were you flooded we were flooded we were flooded and then a number of our employees couldn't get to work or you know quite a few of them lost power for 10 days um 7 to 10 days uh so yeah but then we got flooded so right at the beginning of that that first week um um and then it just took you know forever and my team is so good that they spent the time you know they didn't want to wait for somebody to come clean it all up so they just cleaned it up themselves you know so that we could get back to work sooner rather than later but yeah no it was we are just now finally like just finally starting to get back into the flow um and having a new normal but yeah I mean insurance claims I just got yesterday talked to the insurance guy and um you know hopefully we'll be we'll be kind of our insurance is going to kick in you know and will help cover some of the loss that we had so that's helpful I mean I think that's the first time I mean it's the first claim in 19 years that we've ever made um so that was a new experience for us and we had just moved in right we had just moved in like two weeks prior two or three weeks prior I mean it was something crazy was there a lot of damage from the flooding um there was a fair amount of damage yeah I mean all the baseboards it was probably a couple inches high so all the baseboards will have to be replaced um the ceiling it came from the sprinkler system and the ceiling so the ceiling tiles had to be replaced um we had boxes and boxes of yarn both undyed and dyed yarn that all got damaged and then we had um tons of bookshelves and then it you know it went to the offices and so steam cleaning all the offices and so it could have been much worse but it wasn't great William did it have an impact on you uh from a business standpoint not really we had uh you know a few people without power uh you know what was interesting is once the power went out through most of the state your ability to text was almost nothing I don't know if you experienced that Laura but I think every teenager in Houston was streaming Netflix over their cell signal and it swallowed up oh right that was the biggest pain was we couldn't send or receive email in any form or fashion or texts and so you know we had this ridiculous responsiveness as you guys have heard me say before is one of our values so it was pretty hard to live that out but that that passed after a few days and people across the country were incredibly gracious about the oh no worries I saw on the news you guys so uh it was it was a hiccup but nothing like the interruption that last March was yeah I think for us it's like you said um the ridiculous responsiveness we have been trying you know for the last 15 months to build this brand back up and kind of um build back up trust and delivery has always been one of the issues that we just can't dye the yarn and dry it and label it and do everything that we need to do to send it out fast enough so we've been trying to you know get better and better and better and better at that and you know you throw the pandemic in there and so we're not being as responsive as we could be or as we want to be and then then we move which of course if you can imagine moving a factory um and having to to build it all up and blah blah blah so we're losing time there and then to get hit with this I mean it's just how much more patient can customers be and you know they can't get mad about the pandemic and they're not going to get mad about the fact that we're moving and they're not going to get mad about the fact that there's a deep freeze but at some point they're going to get tired you know whether it's like consciously or subconsciously so that's kind of I don't know it's exhausting it's really exhausting are you communicating with them absolutely and that's the big difference I mean you know when this hit we sent an email out to everybody immediately and we're like look guys this is the deal we got flooded we're doing you know we're fixing it as fast as we possibly can but it's going to put us two weeks behind you know and we were already kind of behind I mean we're already booked up through the end of this year and so we had to put a stop to taking new orders and taking new accounts and because we've just got to be able to catch up and train these new people that we've been and we' hired 10 new people in the last 3 weeks you know since this happened wow to try to catch back up but then there's you know there's a training period And there's a learning curve and um so and the feedback we're getting is you know like like Williams said customers are understanding and they are appreciative of the communication um you know but we just if the Locust hit I don't know like how much more of this can people take Laura how did that uh hiring go that's a lot of people to hire quickly it is um it went really well I mean one of the reasons that we move to the location that we're in now is because it's more centrally located to um you know the labor pool if you will and we've been treating people really well so we've got people coming in all the time you know looking for jobs just all the time so it actually has worked out pretty well that's nice what's the skill level required uh to to make someone into a useful employee for you um just reliable you know we're pretty reliable relatively smart um but not a tremendous amount of skill because we have so many different positions to fill you know you could do something as simple as putting labels you know it's very Factory um and then there's more complicated stuff so my Approach which has always been you just if somebody seems like they're a good person um and if they're reliable and they're not going to cause a lot of drama then we can find a place you know if they fit with the culture we'll find something for people to do and then we kind of you know we bring them in and and after a month or so we really figure out where the best fit is for them before we move on William I want to go back to the uh deregulation issue a little bit one of the things that I think those of us not in Texas um were surprised to learn was that studies show that since deregulation the price of electricity had gone up dramatically in Texas uh even before the storm leaving aside what just happened is that your understanding as well I think it depends on how hard you work at it Lauren um I've got a good friend who's with a a fairly new company is maybe five six years old called the energy ogre and uh basically it's a a that built an algorithm that shops electricity rates for you on a daily basis and then it calculates you know what's the cancellation fee for getting out of whatever contract you're in and does it save you money to switch or not and so last year we probably switched providers eight times all because the algorithm did it for us and our power bill is as good as it's ever been o one of the things we heard about was that there was a variable rate and people with the variable rate were going to get socked with huge bills is this a variable rate situation you're describing or something different well you don't have to do variable rate here but but we choose variable rate and then we don't do it because we sit and watch the rates every day we do it because we hired a software company that watches the rates every day and makes the adjustments so I think they had one or two hiccups like one or two providers in particular that uh you know took advantage of the situation but for the most part it worked now if you're just your I don't want to pay attention to rates I don't want to have to think about it you can always choose a fixed rate for the year and and go with it but uh I personally I like having the choices and the flexibility and I love the the the algorithm that's been developed and um I got lower bills than I used to but that's just me and you didn't get hit with a big bill for the the period uh around the storm no it was larger than normal but you know I think that's true for everybody in the state I don't know that regulation or deregulation would have solved that how about you Laura did you get hit with a big Bill last I checked in um it didn't seem that huge I think ours was like 800 bucks um so but I'm on the energy ogre website right now so I'm going to check that out thank you it's pretty cool it's very well done and the they're super smart people so it's I think they're in most of the deregulated States now oh okay all right great yeah no that'll be great cuz that's one one of the things when we moved into this Factory is we built a um a air conditioned kitchen and before it wasn't air conditioned it was just open air so we're kind of trying to figure out and see what this is going to look like you know in terms of energy usage because of course it's going to be a lot more expensive those of us not in Texas saw this all happening and I think um we're we're tempted to think you know maybe those folks in Texas are going to realize that not all regulation is terrible and this is going to change things I think I'm hearing from you it's not really going to change anything uh at all what you hearing from me is my experience I'm not your prototypical uh person you just described you know I watched the Ken Burns documentary on the Roosevelts which if if anyone listening hasn't watched that it is just magnificent and if you're a nothing needs to be regulated kind of person go watch that you'll change your mind but but my experience for this particular instance is that the deregulation been good for my family I would like to go back to what you started with William with uh your prediction coming true the the year of covid churn has it affected your company uh itself have you had turnover at at your business well I think part of the reason I was able to have some level of of Clairvoyance on this was because we already dealt with it two of my five lead team people left in 2020 um one at the front end of the pandemic and one after we were through our particular hardest part but they both had very good reasons and uh were needed elsewhere frankly so losing 40% of your lead team during a pandemic will make you say huh I wonder if this is going to happen elsewhere since then um we've seen a little bit of it not a not a lot we structured early we we bet back in March of last year our gamble was this is an 18-month problem not a third two we problem or whatever it was to flatten the curve uh so we made pretty radical adjustments and um the people that have come through that with us it's almost like we we went through something big together and right now they're staying now that could all change who knows 12 months ago you guys did did a phenomenal job of digging in and educating yourselves um on the PPP and on all the government assistance and basically what was going on and then you graciously shared all that information and did all these webinars and you know um emails and how useful was that to the business you know looking back are you really glad you did it yeah well I'm glad we did it because it was the right thing to do if you're a business owner and you didn't have a moment or two last year where you sat and wondered I wonder if we're going to make it or not then I don't know what you eat for breakfast but I'd like to sign up for that menu cuz I you know we we were like I don't know if this is going to work or not and kind of made the conscious decision well if we go down we go down serving you know Martin Luther one of the My Heroes of protestantism said you know I'm always at the same time a sinner and a saint so the saintly part of me is we're doing good right the the cner part of me or the self-center to Part of Me would say you know if you help people find free money during a pandemic they're going to remember you on the back end and uh that has certainly proven true William I know you guys are really good at uh tracking things and you told us that you're busier than ever now uh because of the the churn are you able to track to what extent the additional business you're getting is coming uh from existing clients or or new people that you uh that you help through the PPP yeah well it's a little harder equation than it used to be we uh but yes the answer is yes and when the summer comes which is usually a time when our world slows down a little we'll take a more forensic look at it but what what you know we're big Believers in uh kind of Seth Goen marketing I'd rather have a thousand people who are just a tribe that will follow you anywhere down 100,000 people that read your newsletter and I think whether they were existing clients that we did some work for or someone that never heard from us um our service was well received and has led to like I'm not getting questions for competitive bids this year I can tell you that from a just feel not statistical but like people aren't saying well we need to go get two more bids and like there's just like okay send the contract so have you raised your prices God Lauren you are such a jerk you know the people that call and say so how how cheap can we do this almost always don't end up being a client it's just it doesn't work so for for what we do but um yeah I I I have to say my gut would tell me we're already seeing return on investment if you will and the statistics will bear that out in the summer in a lot of different ways we we got a lot more clients uh we were breaking into uh making concerted efforts to break into schools and nonprofits and uh those are all up and to the right so it's it's it's uh interesting it's going to be interesting forensics every Monday morning probably more than just Mondays I do the how was this week against the same week last year in about you know 20 different categories and I had to have and we had software tool that shows me that in a nice red Amber green sort of thing and uh I I asked our tech people can you build one that shows me how we did against two years ago because it's really not helpful to me right now to see how did we do against this week last year it makes me feel good because we're 1, 1400% more busy than we were 12 months ago but it's not helpful I have a question for you the our churches in general and the organizations you deal with are they not as strapped as they expected to be and the the context of the question is the federal government released this flood of cash that is now slashing around the economy and I'm curious whether it ended up being donated to churches you know like where I could see it's going into the stock market into housing prices but where else is it ending up I don't know the answer to the money the government's releasing but I think on average for our clients which may or may not be a fair random sampling of all churches right but for our clients they they all finished with about 95% of the giving that they had the year before um now the the other little secret is their operating expenses were much much much lower they had no heating and air conditioning from March through December buildings were shut down uh you know even down to like custodial services so um when you when you do 95% of your revenue and then your operating expenses are lower it was a much better year than they had thought when this whole thing kicked off I think the the thing they're holding their breath on more than uh than I had expected is what does this look like long term so Laura I got to go back to you you think I'm a jerk because I suggested raising prices I think you're taking Jay's place today maybe you need to look at your prices when was the last time you raised your prices uh years ago we're looking at raising them this year wow what a jerk Laura um no but you can't build a bunch of trust and do all that and then but I know you were just joking um we had a price increase on the table um last January and then we actually or maybe it was last March and then of course when Co hit we're like okay forget it you know we won't do this um this is on the manufacturing side on the wholesale side um so we are going to raise the prices in 2022 so we'll just go ahead and um release that plan and give people plenty of time to kind of adjust to it yeah but I'm seeing I mean our suppliers I just got an email today from one of our major suppliers that says we're increasing prices 5% you know I mean people are going to start doing it across the board so many people got hit so hard you know that you'll see these little teeny price increases I'm starting to hear from a lot of people um that the prices are already going up across the board yeah totally well I was just going to say I mean the freight oh my God just shipping and I mean we're missing an entire season we missed an entire season for one of our brands on the Jimmy Bean side you know we make handbags because we simply couldn't get it you know I mean we still have a container that is sitting in the Suez Canal we have a container that we still do not know if it's at the bottom of the ocean or if it is on this ship I think the ship maybe now is in like Alaska or something it was supposed to have landed in December and then you know 40% of the containers fell off the ship wow you know out of however many 20,000 containers you know they haven't gone through all of them so we don't know if we just lost everything we don't know when it's going to get here but you know that's a ton of stuff that we can't sell so we you know we basically missed a whole season my friends that are in construction are just amazed at price increases Lumber is like 3x what it was 12 months ago um you can't find the you know the the cans that ceiling lights go in like the little circles like you just can't get those they're stuck on freighter so it's it's I'm hearing the same sort of thing all all right we're running short of time there are a couple of things I want to make sure we catch up on one is with you Paul you were on the show last week and you told us uh about the the cyber crime that you had experienced where uh payments from a client had been diverted never reached you went to to an elderly woman in Texas can you give us an update has anything been resolved with that I had what I would call a very unsatisfactory response with the owner of the company who got stolen from at the very beginning of the episode this is your client tried to make payments and those payments were diverted without ever reaching you something happened in her accounting department that allowed these things to get diverted and when I told her about it I don't know whether I was the first one or not but she basically said oh this must have been you and then uh we we were cooperating with the bank that had received the payments in Texas and so the fraud officer there was keeping me informed as everything happened and it was clearly not us the money never got into our accounts and we did a review with my cyber Security Consultants to make sure that nothing no emails have been sent to that client that we could identify that directed any change in the banking information so after all that I I hired a lawyer and uh wrote a letter to her had the lawyer write a letter said basically here's all the facts and this is your responsibility and then heard nothing for another week and uh uh then I shot her an email on Monday just saying can you please give me an update where you are with this you owe me 140,000 bucks and she said we will send you one check tomorrow you know overnight and she did a handwritten check for one of the payments the smaller one 25,000 bucks and uh basically saying that she had to be quiet because I had engaged a lawyer so uh I'm still into her for $118,000 she wants me to continue producing the work that that she had sent posos for and she's blaming me for getting a lawyer and I'm pretty disgusted with her I would say but I'm not in a situation where I can just terminate the relationship although in my Angry mode that's what I feel like doing because uh life is too short to to deal with to do business with people that that uh aren't good partners that's my feeling what do you see happening next I think I'm going to wait a good long while before I see the other payment the 118 which is money she owes me for work that was completed and uh I am going to have to make a decision about how I deal with the work that that we are under contract to do and I believe what I'm going to do is grit my teeth and complete it and hope for the best and uh and if I don't see any of the 18,000 uh for another month or so I'm going to be pretty disgusted because I happen to know from the Texas bank that at least half of that was already returned and the the situation as far as I can tell is it's most likely that my payments weren't the only ones and that this person got a pretty big shock when uh a bunch of her money disappeared and I would guess she's scrambling for cash and just trying to juggle um her her all the people she owes money to and all the other people who got ripped off and that's not a good place to be but I think she could have dealt with it in a way that made me uh more sympathetic to her rather than less Paul do you know the value of the work you have uh in process for her and do you know when it's due to her yeah it's about it's about $60,000 worth of stuff and there's a small piece of it that's due at the end of April and there's a larger piece which is due at the end of June and she said I want an update on when you're going to deliver all that stuff I don't want it be delayed blah blah blah blah blah she was just it was it was terrible it was a terrible inter action and just by email too she's like well my lawyer is has said since you engage Council I can't I can't communicate with you anymore it was pretty bad so are you debating whether you actually send those goods to her I'm going to do it because I'm going to do the right thing she issued a PO she paid me the deposit on that and uh I am not going to get into a Tit for Tat yet [Laughter] I feel like once I once I enter full combat with this woman it's going to be very ugly for everybody involved and I'm going to give her some time to hopefully get an insurance claim or whatever she's working on and see if she can clear her books with me um there is a scorched Earth strategy available to me which is to go around her to the ultimate client and say hey did you know this happened to someone you're trusting and uh um that would be bad for everybody but it would certainly sink her boat and I don't really want to do that yet okay the other thing I wanted to follow up on is with you Laura uh I think the last time William was on we spent a lot of time talking about your situation with your husband Doug and uh a co-founder who's interested in stepping away from the business and one of the issues that came up is how you replace him who you hire how you find a a really good um engineer to to take over especially given that he's built the platform that you operate uh your company on and is really the only person who knows how to make it work um can you give us an update what what what's happened in the week since sure um in the week since or months since actually yeah in the month sense um I we are going to try and just look around um ourselves and see kind of what's out there given all of the churn that's happening right now and given the number of people that are moving to Reno from the bay area so I have my actual my head of social media and marketing um she used to work in the Bay Area and she worked for a startup and then our head of H of HR they are working together and working with Doug and they're just going to cast a net out for different levels of Engineers so not necessarily you know executive level definitely not executive level um and we're just going to see what's out there for just a little while um so that's kind of where we're at right now they're kind of interviewing Doug I gave them a whole list of questions and you know job positions and um we want to be really flexible and see what's available and then we'll kind of gather that information and see where to go from there so you haven't made a decision as to whether you want to hire someone who's who walks in capable of taking on Doug's role or someone that he would have to train over a period of time yes yeah um we real even if we were to do that you know we'd still need a couple of experienced Engineers so we're going to try and fill in from the bottom up a little bit like I said we've got two people that work that are on his team right now and they're very beginner um like Doug is teaching them how to code so we're going to see who's out there that's maybe one level above that and who's out there that's maybe two levels above that and have you made a decision on whether you will stick with the homebuilt platform that Doug created over I think 18 years um yes we did and actually well the conversation that I've had with William and with Karen as well really sparked you know a lot of conversation with with me with Doug and I and one of the things that realized or decided on is Doug is spending the next six months or so working on an API so that we can start we do believe our system is a really great system for what we do um and it's very customizable but obviously the issue is maintenance and adding new features is a problem so what he's going to do is he's building an API so that we can start to kind of Outsource new features and have somebody else maintain new things that come out and maybe start to kind of part out the whole thing and slowly replace the whole thing instead of trying to do it all at once tell us what an API is for those of us who haven't gone down that road oh um an application programming interface so it's you know how like with Shopify um or I'm trying to think what it was in the beginning you know like the App Store so the point is that you could bolt something on that you wouldn't continue to build um from scratch yep and then people could bolt stuff on in their language of choice um and they would just have access to our backend you know so to the database structure um into the logic and where Doug really really excels is in the logic part of things so is he okay hanging in there for a while yes he doesn't have a choice is that what you're gonna say yeah he doesn't have a choice all right guys I think that about does it for today my thanks to Paul DS William Vander blumen and Laura Xander as always thanks for sharing guys wait wait don't leave yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's l r n at21 hats.com do it now before you forget and don't be afraid to tell Jay what you really think you can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcasts follow us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by Jess Theron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]