“I Didn’t Look Like Them, But I Could Act Like Them”

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week we introduce a new regular on the 21 hats podcast team her name is Diana Lee and she's the founder of a digital marketing agency in a conversation with Jay goldz and Stephanie Stucky Diana explains how she got her business off the ground by helping car dealers Target diverse communities within their markets how she bootstrapped her business by convincing those car dealers to prepay 50 % upfront and how her first attempt at building a software platform ended with her spending $1 million on a platform that no one wanted to use even in 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 same thing with our daily newsletter the 21 hats Morning Report which highlights the most important news of the day for business owners which you can subscribe to at 21h hats.com where you can also find trans cripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are regulars J goz whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home Stephanie Stucky who is CEO of stues the snack and roadstop business best known for its pcan log roles and our newest Regular Diana Lee who is founder of constellation agency a new york-based digital marketing firm the episode is title I didn't look like them but I could act like them welcome Jay Stephanie and especially our newest 21 hats podcast regular Diana Lee thanks for joining us Diana thank you so much for having me some of our loyal listeners will remember that you were actually a guest on a very early episode of this podcast when uh Karen and I interviewed you at ey strategics Forum that was back in November of 2019 lot's happened since then remind us Diana uh tell us what constellation agency does sure we are a SAS adte platform and we also have what's called software enabled Services wait you're going to have to translate that for Jay what's a sass adtech platform insulting and true it's a platform that has lots of sassy attitude right yeah I like it well you know how consolation was actually born is we were actually a digital marketing agency when we first started but we just did not have the capabilities to scale so we built a SAS technology which is software as a service technology that allows us to run marketing right from our platform and allows us to scale so um we do search social display advertising connected TV um digital advertising as software enabled where means that we are running the media or we also license the Technologies to holding companies and to other brands that have infrastructure of a marketing team in housee you got this business off the ground as you told us in our first conversation uh by going after car dealers uh why car dealers and uh how did you get your start I started back in 1989 so I'm 52 years old but I started when I was 18 and I was going to college at the time and I needed a summer job so I went to a local car dealership to um start um and I ended up staying in retail for 15 years and then did Automotive Consulting for another 15 years before I launched constellation agency so at the age of 47 I launched constellation agency and by then I had over 30 years of Automotive experience so I went to car dealerships in order to start because obviously I could speak the language I didn't look like them but I could act like them and I knew that if I could pitch them I could also sell them and so when constellation was first born in order to scale the business right away I would drive um 9 to 15 hours a day in my car going from dealership to dealership to pitch the idea of digital marketing and then try to get customers that way so that was the birth uh of consolation which was five years ago um and it really did scale you've told me that card dealers represent about 70% of your business but you do uh other businesses as well could you kind of walk us through suppose Jay or Stephanie came to you and wanted your services uh how would that conversation go and what could you do for them yeah so Lauren usually I ask the customer in terms of do you have a infrastructure where you have marketers inhouse launching the advertising and so that would be one of the questions because I'm never looking to actually um fire anybody or get rid of actually teams of people so I ask that question because if they do then I'm going to quickly say here's the technology that your team can use in order to scale creative and launch hundreds of AD units to Alexia I would also ask Jay and Stephanie if they use a digital marketing company already and do they like that company so again if their answer is yes I'm very happy with that company then all I'm going to do is try to license them the technology for their teams to be able to scale what they're currently doing now and by doing that it drives the efficiencies higher and the costs lower so what I mean by this is typically all of these brands are looking to a creative Department to make every single ad and by all of these teams working on the advertising of doing it by hand it takes too long that's one issue the second issue is it costs too much what Alexia does is it's an automation of creative that's dynamically generated in real time without ever going to a creative department so it allows you to scale the marketing on the creative side through Automation and a feeding system that automatically makes creative in real time so if they didn't have an agency of record or an inhouse marketing team or it was very small I would ask Stephanie and Jay let me show you what Alexia can do and how it would work for social search display connected TV advertising which is the same thing which is it's software enabled where we could make hundreds of assets within seconds time to do what's called hyper localization what's asset oh assets are um create creative assets so they're ads that you would make creatively so they're banners they displays so they're actually just creative so assets are creative Diana I have a question for you and this is fascinating thank you for that really thorough explanation sure what's interesting to me is how you've targeted a certain sector for about 70% of your business the car dealerships the question I have is is I mean it makes sense in one respect to me because you really understand that business so you can speak their language but how do you deal with potential conflicts of interest like you may be representing competitors is that a concern of some of your clients yeah so that's a great question Stephanie we do pretty much so the auto market that we represent is like BMW Porsche Infinity Jaguar Land Rover Volkswagen uh we have 13 Oe that we have certifications with we also actually work with agencies of record Omnicom wpp ipg and they all represent different types of Manufacturers as well which is Nissan Ford motor company as well as uh Acura and people have always said to me well how are you able to get all of them but the technology that we invented is so rare that it's the choice that I give everybody is uh I'm the only one that does it so if you don't want to do it with me then that's fine but another platform like this doesn't exist and what it's able to do Stephanie that's so rare about it and this is why I'm able to scale outside of Auto is anything with price so I believe that customers don't buy anything unless they know how much is it I'm able to answer that by putting in a feeding system that does hundreds of iterations based on price and then the second thing is dynamic inventory do you have it in stock and can I get it now so during covid when nobody wanted to leave their house and go to a store and even now people want it immediately but there's warehouses all over the place and you don't know if you can ship it that far or if the supply is going to be there this dynamically generates the inventory of what you currently have in stock and makes it readily available for that customer so if I'm a customer that lives in Boston I can attach the inventory of what they're looking for in Boston with the price and the location Boston Massachusetts and the fourth thing Stephanie it does is customer segmentation which means it knows that I speak different languages it knows that I'm a Chinese consumer that likes to speak Chinese and it's going to make the ad in Chinese as well and so it does a customer segmentation of Who You Are does the price location as well as inventory within your local market area and that's what it's it did for auto because there was 175 17,500 us franchises in this country dealerships and that's what it's able to do so there's a lot of dtoc brands that work the same way so fast food you have McDonald's you have Burger King you have Starbucks you also have U industries that actually have rooftop all over the place pelaton Tesla and go on and on they have the same exact issues as Auto and that's why were're able to scale it in and outside of Auto so my question now that I understand you're largely a software company did you end up did you do you have had to take investors in to fund all this development or I mean is that possible to bootstrap something this significant yeah I bootstrapped the entire thing all the way to you know we're going to hit close to 45 million 50 million in sales this year in five years is that net to you or is that including your your people are paying you for advertising and you're paying the bill and you're taking a percentage of it is that gross or net the 45 million so if you're asking me if it actually involves cogs or not I mean are are you guys familiar with cogs no I'm talking about pay I'm talking about are you paying for their advertising and then they're paying you back and you're taking a percentage of it like an ad agency there's gross Billings and there's net Billings yes yes yes I understand understand what you're saying Jay um so it depends on the customer so we have customers that it's net and we have customers that actually pay gross and then I pay for the media so it's depends on the setup of the customer that basically says I'm going to pay the media because it's my ad account and I want to keep the ad account and then I've got customers out there that I don't want the ad account to be mine I want you to start the ad account and then Bill me 30 days afterwards so depends on how they want to set it up so is that uh for some of those customers where you are uh handling the advertising dollars is that included in that Revenue figure exactly so I have gross and net uh but the 45 is inclusive of everything yes and do you have exposure to running up I mean I know this has been a problem in ad agencies for years where they somebody runs up a Big Bill and then the customer goes bankrupt on them and they're the ones that owe the media I mean do you have any exposure to having bad receivables on them yeah so Jay these are great questions so I did not have the money to be able to float all this in the beginning and people always ask how the hell did you boot bootstrap this if you had to pay for the media in advance so what I did with the car dealerships is I went there and I said the only way I could take your account is I need you to prepay the media in advance one month in advance good for you yeah and so still to this day 50% of my clients will still prepay and then obviously I have giant clients now at the stage that um I post you know after the the whole thing is done that's terrific I wish I could get my clients and customers to prepay you do it's called selling retail I won a few Awards in the last few years and U one of the female Founders that won the award um she said you know I'm going to get funding right now and I was like why and she said um you know I really need it to make this Supply and I said do me a favor go back back and I want you to ask the retailer if they're willing to pay 50% of it up front and she's like you think they'll do that and I said what do you have to lose she went back and they paid 50% UPF front and these are huge retailers she didn't have to get funded at that stage cuz she was at 4 million at the time and she grew it up to 20 million without any funding you know you raised a really good point I think too often entrepreneurs especially you're lulled by what you see on TV with the profit and Shark Tank and you want to get funding VC funding private Equity dollars and there's a lot of money out there right now so it's very tempting but you can bootstrap this just like what you did which is so impressive you can grow more slowly but deliberately and thoughtfully in a way that you can manage the growth and I love the idea that you've gone out there and said okay this is a partnership and I'm growing and I'm going to help you grow and pay 50% down and I'll deliver most importantly you stay in control of your business it's a small Giants model like you could be times bigger but you can get a pH call at 9:00 night from some Screaming investor the concept of Silent investor is kind of an oxymoron there's no such thing and unfortunately what's happened in the word world of Entrepreneurship over the last 20 years people equate entrepreneurship with raising money and they're not it's just not the same thing different entrepreneurship is starting a business period it's not about raising money and it's crazy I I get pitched by private equity and I always take this calls because I see it as a learning experience of nothing else and you never know there might be some amazing fit but in general the private Equity that has approached duckies they're asking to invest 10 million 20 million and we don't need that kind of money I honestly if somebody offered it to us we wouldn't want to take it because we have a growth plan that we can manage right now and these these this concept of you have to $20 million for your company I think is unrealistic in some cases it certainly doesn't fit for us and we'd rather just either take out loans or manage our growth in a way that we can keep investing in the company Diana what is your attitude toward growth um do you feel as though you sacrificed growth by not uh taking investment dollars hell no I mean I I have to say I Grew From 4 million to 10 million to 20 million to close to 50 million this year without taking any funding right and um I think you know exactly what Jay and Stephanie said I maintain control which is fantastic um because you have to stay Nimble if you're going to grow that fast right so deals come through my desk and the decision is how am I going to put this deal together and how am I going to be nimble enough to be put this deal together so if an Omnicom comes to the table and I'm using this as an example and they're like look Diana I don't like your fee structure and I want it the fee structure to be based on CPM or I want it to be based on percentages I can change the fee structure without having to go to board of directors getting an approval getting other people to do it I just change it based on whatever works for the client and at the end of the day that's a huge competitive advantage and so for me also being a woman of color it's super important for me to break the glass ceiling for everybody else and what that basically means is if somebody's going to come in for a partnership I want the company to get an evaluation of hundreds of millions of dollars if I have 5% stake or 10% stake on this then I'm not going to give that kind of level of support that I need to from my staff members to be able to get that kind of evaluation that's what I'm going for if I'm in this I'm going to go for as you know high in evaluation for everybody that's involved and I can't get there if I gave up 50% of my company right up front I'm not going to be able to do that but to say that there isn't no fast growth by doing it the way I did there is huge fast growth and and then on top of it I don't have debt because I'm 52 I don't believe in debt and so a lot of it was maneuvering deals and figuring things out but it is doable for you it's doable without debt for you for your business model there are some companies that need to take that to grow I mean that's the reality of some businesses you don't have inventory I mean I think that I have media by right that's my inventory at the end of the day but all I'm trying to basically say out there is don't look at the model as the traditional way of everybody doing it the same way look at it from the perspective of how you want to do it so for example I never owned a digital media agency before I never even worked at one before and what's interesting to me is when other people come to our organization and they look at it and they go from a creative perspective so different so I've Had Creative agencies come in here and they say I want a partnership and they look around they're like it's Tana you've never worked at a creative agency before have you and I said no and they said that's why it looks like this it's not the traditional model and it's because I don't have the boundaries or the blockers that told me that it should look like this I didn't have that which is a huge Advantage cuz if you know what it's supposed to look like you end up duplicating that but if you don't know what it looks like you build something completely Innovative and different and so that's what I believe in is like almost like starting from a place where you don't have to know everything but then you make it the way you envision it so I've got a question Di and this is a little off topic but you referen being a woman of color and this is something I've been researching is getting certification as a women-owned business and I'm interested if you have gone that route and if you have any Lessons Learned I've talked to several women H who have gotten that certification and it does enable you to get priority uh ranking I guess in some procurement contracts especially if you're dealing with the government but also a lot of large corporations will give you benefits like as a retailer or as a wholesaler that provides to retail businesses if you have that certification they'll wave slotting fees for example um so just curious if you've gone that route I also met a female founder that b built her business to a billion dollar valuation and she went that out route so prior to meeting her the first couple years I didn't have any certifications um after meeting her realizing what she had done I did get certified by we Bank wbnc yeah what was that process like I've heard it's arduous it's arduous and then I also got certified with a national minority supplier so NM uh DSC um and it's they're both very very similar so it's you have to answer a ton of questions online and then also certify the fact that your at least 51% uh vested interest is stock um in the company and then you also have to certify sometimes that you have more more than that percentage of employees that's actually working for your organization as well so um they're not going to certify you if you don't if you you could be a minority owner but if you don't have minority employees or if you're a female-owned owner but you don't have as many female employees that certification will also be very difficult to get and then they also come to your office to make sure you're telling the truth so you yes they do a site visit yes so you go through a full interview process and I ask them why and they said well Dana there are people out there that they actually use a front person but when you arrive they realize that they don't actually run the business and so that's when I guess they fail the certifications well that certification really carries a lot of weight and it does get you Financial benefits so I definitely respect that process we actually decided not to go that route uh because I don't think I would pass I have a male partner and we own the company 50/50 so I wouldn't pass it right at that point and we even discussed giving me that 1% or giving a female another female owner that 1% but we thought for the very reasons you just outlined Diana that they would come to the site visit and see frankly the majority of our leadership with the exception of our CFO are white males our CFO is African-American woman but of our leadership team it's majority white males so I didn't I didn't think we get it but uh I do think it's got tremendous benefits and kudos for you to carrying that you know for getting that can we go back to the bootstrapping it's kind of from the outside hearing your unbelievable growth and now that I understand you're a software company and I know just from the peripheral of it takes a ton of money to write software so if you didn't take Bank financing I mean did you just have some personal savings to I mean you had to hire these expensive these expensive Engineers to write this developers I mean how does that happen yeah so these are great questions I originally told you that I started as a digital marketing agency and I flipped it to a software enabled digital marketing agency too so what does that mean is in the very beginning because I started as a digital media agency it was a business first before it went into software so um the first year remember told you I I had all our customers prepaid I put in $22,000 to start the company $222,000 and so I didn't have a float I didn't have investors I didn't even have family money in it in it yet because my majority thinking is um I needed to make sure that before I even put in family money that this was actually a business that could actually grow and become something so started with $22,000 for the first year and a half didn't put a penny more made my clients prepay and then our first uh OEM client that came in happened to be Volkswagen and so at that point that's when I actually had to start having receivables where you know I didn't have a prepaid situation and when the bigger clients came in it became harder and harder for those receivables to go on but what ended up happening J is because I started it as a business Foundation First not a software Foundation first I used the profitability of the business to start funding the software side that's what happened and that part allowed my me to fail several times cuz when I first started development I wasted a million dollars a million dollars on what on making a product that nobody wanted and you don't know that until you launch it and you try to the damn thing and you realize you come up with so many issues when it's software ready first which is like you believe in it everybody tells you you're G to they're going to buy it they tell you it's a great idea you meet with all these people and there like collaboration they're telling you if you did it this way if you put in these features if you did this if you tweaked that if you made this you build it based on these people that basically lie to you not because they want to but because this is what they really believe but they're wrong and then you build it and then you realize no one comes so then you start dropping the price of it and you drop it drop it drop it and then you get to a point where I was like it's $750 it's I'm breaking my back doing this and I don't have the infrastructure to scale this thing and so this is what's super important if you build a business model first that makes money then you can supply it to the software side at little to no risk and you don't have the investors doing it therefore they don't shut you down and say nobody wants it you get no more funding that's the difference Diana can you tell us what what were those early conversations like with car dealers I mean when you showed up you said you didn't exactly look like them uh but you could talk the language but you're asking them to prepay for something that they probably never heard of before and possibly didn't fully understand how did you get them to buy in yeah so you have to make it about the customer you never go in and you say ah I've got a amazing product I'm going to show you these these people have been pitched 30 40 50 times in a week right so you've got to not talk about yourself so the first thing I would do is I would do a demo study of their area and I would go in and I'd say look you got 46% Hispanic population here you got about 12% Asian population here they happen to speak Chinese or Korean and how are you marketing these people because if you look at the reality of it everybody's Marketing in English but they're not marketing it in different languages so I knew that was my way in because think about most of the people that I deal with in Auto most of the general managers and the owners are non- diverse right and so I know that because there's little to no diversity in the auto side of things and I'm not saying the employees I'm saying the people on top you have to go in and talk like a business owner so you're like hey notice that your demographic data is really high in Spanish in fact I ran the household income around here and in this area you've got you know 50% of them make over $100,000 so they can afford your product but I noticed that all your advertising is in English so look I think I could change this for you and because I look different and this is the part that's shocking to you I don't speak Korean I immigrated here when I was 5 years old I speak very little Korean in fact I can't even write in Korean and so just cuz I looked the way I looked they looked at me and they said huh she could do it in Multicultural it was a shot in the dark I I didn't know it but I looked the part so they gave me a shot and I I carried through with what I delivered because I was able to hire people that could actually deliver that experience and I was able to do it multiculturally first and then it was so good that I took over all the English ads as well that's so smart I really love the way you hunkered down on what makes you unique what's your differentiator and you led with that where it really made sense so kudos to you for doing this thank you so much what was 2020 like for you yeah it was a beast March of 2020 it was the first month I saw declining revenues um every month year-over-year I've doubled and so when I didn't double and I started to have declining revenues March and April I didn't know what I was going to do and I remember I got a phone call from my bank and they gave me an hourong conversation and they said Diana it's time for you to lay off people and do it quick fire 50% of your staff wait wait wait if you have no debt why is the bank uh getting into a conversation like that with you because I had called them and I said what do you think is the economy going to turn around is this going to how are we going to come out of this so these are like you know my Bankers have become my friends you know and so they called me and they said look Diana the reality is this we've seen businesses go under because the CEO was too attached to their employees and at the end of the day they could not float the note long enough and they ended up losing all their um cash flow and then they ended up going under even when they had to cut the employees in half it was too late so do it now while you have the cash flow to do it and that was an hour-long conversation that I had with them um and I got out of the conversation and I said no I'm not doing it and I say that to them cuz they didn't really care cuz I didn't have any debt um but and I of course I had a credit line with them that was unutilized at the time but you know Banks only give you money when you don't need them right wait wait wait wait you do have a credit line at the bank now I do and do you use it you know I use it every once in a while when I need to I'm confused then you just said you don't believe in Bank debt you're not taking Bank debt now you're telling us you have a credit line that you've got Bank debt so I I take it J but I pay it off at the end of the month I hate interest that's my thing so I have it when I need it and that was just actually in the last year and a half so prior to that I never had a a a um credit line but I pay it off no which makes sense that you would have it I'm not criticized I just I think I don't want anyone to think out there oh look there's somebody that has a business that has absolutely no Bank De that's a really difficult thing to pull off so the fact that you have a credit line that's bank that let's call it what it is it's bank that even though if you pay it off at the the end of month I was thinking the same thing Jay but I do think it is different than Bank debt and that you're you're servicing it regularly we have a line of credit and it is treated differently than your more traditional loan okay it is Bank debt you can call it whatever you want yeah so let me make sure that I'm super clear on this I couldn't get the credit line for the first two years nobody gave me anything I'm sure I I can understand that so I didn't have it until very recently in the last I would say two years is when I actually got a credit line finally because you know they don't like to give you uh credit line when there's any risk whatsoever and so it took me a couple years to prove the fact that I had a stable business um but at the time the bank called me because not that I had any loans at the time but because they didn't want me to go under and so they gave me this long talk about you don't cut the staff and and I didn't do it and the reason I didn't do it was because I just am pretty pigheaded and I knew that if I could close this big software deal uh that I had in the pipeline for so long that that would carry me through and so there's two things that I did during that time I ended up getting that um account which was about $1.9 million uh of all fee because there was no media attached and um I ended up actually being able to float all the employees with that in May starting May the other thing I did was um at the time because I had so many employees that also weren't really doing much and I didn't want to just float them for the sake of just giving them money because it doesn't make any sense I started a 501c3 called the do good Auto Coalition and the reason I started it was because I had gotten calls from nonprofits in the area because I worked with so many dealerships in the Auto industry um they called me and they said look Diana we've never needed cars in order to to move the food around in Manhattan but now because all the restaurants are closed and the schools are all closed these restaurants have all this food that's going bad and the Food Supplies broke and you have warehouses worth of food and they're all going bad every minute that goes by but there's the homeless shelters and their food pantries all across right now that basically have lines and hundreds and hundreds of people right now waiting for the food so I was like okay this is something that I can do so I started to contact all these car dealerships and I had a cause now I'm like look you have cars they have food I'm not asking for any money I needed to show up to these sites and I needed to help me move the damn food to the areas that actually needed it and it ended up becoming a big thing and by the end of the year by November we had delivered over 700 ,000 pounds of food what did it mean for your business though if your employees weren't didn't have actual work to do did you still have Revenue coming in at all we did Lauren we were about 25% up higher because I think by the end of the year we realized that you know people still needed vehicles and still needed to advertise we are we're running short on time and Diana I'm going to let you slip out of the hot seat for a moment and check in on Stephanie and Jay and and Diana you get to ask some questions too terrific Stephanie I think you're back home last time we talked you you were visiting the factory you'd bought and figuring out what exactly you had bought what did you learn well I learned a lot about production and our different lines so I just really got an in-depth understanding of the operations which is critical for me to be able to make some of the high level decisions uh most importantly since we've last talked I went to the sweet and snack Expo which is the trade show if you are in the candy or the snack business so everyone from Hershey's and fredet and Doritos and &ms and Pez candy down to stues and a lot of small Brands where people are working out of ghost kitchens so just everyone was represented and it was the launch of our new product line so it's the same product that we've been making or been selling since the beginning since the 1940s but my grandfather sold the candy plant the stucky's original candy plant in 1964 so we had been Outsourcing our product ever since then so this is the first time in over 50 years that we're making our product again and it's really delicious and so I didn't know what kind of reaction we'd have at the trade show and it was overwhelming we literally for the three and a half of the show it was nonstop people coming by the booth and the couple weeks since then my business partner and I have really done nothing but respond to orders so our biggest challenge right now is we're backlogged on our large retail chains we're getting quite a few large chains and by that I mean 200 units and up and right now we're backlogged four to six months on filling some of those orders so we're trying to level set expectations the good thing is a lot of those large chains usually buy that far in advance or plan their category product line that far in advance so it's it's not devastating if we tell them what our time frame is and then we are able to fill the smaller mom and pop small retail customers almost immediately what are you struggling with is it uh a labor issue that's keeping you from filling those orders faster everything labor Supply supply chain getting new packaging we're running through packaging like crazy so we've re-upped our packaging orders we need actually new display boxes because we're getting into new channels we're getting into more grocery channels and uh more chain sea store channels and they want uh chipboard packaging which is a light lighter weight box than the thicker corrugated point of sale display box that we've been using so we have to come out with some display options I have a question to um Stephanie and J how much of your business is D Toc direct to Consumer I probably need a more recent breakdown but I would say it's about 40% we have 65 franchised licensed branded retail locations and so from those locations we are selling direct at stores that are branded as Stuy locations and then we also have online sales so those are direct to Consumer and then we operate a distribution facility so we Source product and distribute got it and then out of the DC that you're doing how much is it direct through digital instead of it actually being through a rooftop it was about 3 to 5% but lately it's getting up to 10% ever since covid and we've been revamping our website we're actually about to switch to the Shopify platform we've been just on WordPress so it's a little clunky so we're upgrading a lot of our our software and uh this we'll have that in place by Q4 I converted over to Shopify and it's worked out extremely well we're very happy I think you guys should share that experience and and mainly I say because there's a lot of business owners I think that are out there that say you know I don't have the capital in order to actually start the business but they don't realize that they could do it digitally without having a rooftop right well the difference between us and everyone else is she has a legendary name people know Stucky candy and I have a store that's very popular so it's it's driving business to the website if I had to do it from Just scratch only a website I I don't know that I could have pulled that off or I certainly don't have the skill set to pull it off it's much harder so the two of us do have a some momentum coming from you know conventional means well we have challenges with order fulfillment in a timely fashion because the Amazon effect which we've discussed in previous episodes of this podcast there's an expectation from the consumer of getting their product within 48 Hours within you know two to three business days now Amazon's had some backlog so fortunately that has pumped the brakes a little bit on those expectations but customers still want their product pretty quickly and when you have a smaller operation that does not run on weekend we have one person on staff at our distribution facility who is tasked with doing order fulfillment but we just have that one person and if she's sick then we have to have the office manager fill the online orders well that begs the question why don't you have two people then or why don't you have three people do that we don't have the volume just yet but I think for Q4 we may have to ramp it up and now that we've acquired the manufacturing facility they also have online order f filment people on staff so we're figuring out those integration of our businesses issues the other challenge is of course shipping costs which are just killing us if you're in a small town rural area where in Eastman Georgia and ren Georgia are two facilities FedEx doesn't deliver as regularly UPS comes by once a day the post office we have to drive over there they don't come pick up uh our big packages last time we talked to you you uh were starting looking for a CFO how's that going you know what it's gone exactly is what I predicted we put out the ad we wrote a really good ad laid out the whole story of the company and I said we'll probably get 100 applications 100 resumés and there will probably be five that'll be that'll be suitable and so far we're up to about 80 something and I have what I thought I have four or five people that are uh that look like they might be the right people the interesting part that I didn't predict is they're almost all in their 50s 50s to even 604 are you allowed to know that and talk about that well you can go I'm talking about it I'm just saying it's a it's a fact I mean you can look at when they graduated college just you would I would have thought there'd be more people that were more midcareer now maybe this is not maybe this is a great opportunity for somebody that wants to finish out their career for the last 10 or 15 years and work at a smaller company and maybe maybe younger people are still shooting to go work for bigger company I don't know what the explanation is but it it's kind of a stunning it it's it's accurate or maybe the job's so complicated that a 44 year old most of them don't have that experience I don't know but um um I'm I'm confident we're going to find somebody out of this group is the issue of working remotely coming up it's going to I mean we did my HR person did some phone interviews and one guy said he wants to work from home and um good luck with that um all I can say um I just why in the world would I want to bring a CFO into a comp a company with four different divisions and five six different people they've got to deal with why would I want to sign off on that on the front end I won't even question why someone would do that I have no interest in that I also am not going to take a black and white thing of no you can't work from home ever but but there's there's a big ramp up stage here they have to understand the business and they got to understand the what goes on here and um um I'm that that is absolutely an issue that certainly wouldn't have been on the the list 10 years five years three years ago it wouldn't have been on the list you know now it's definitely on the list I I agree with Jay as well is your staff back in the office Diana um you know it we actually uh back in July I opened the office because I was having mental health issues with some of the employees and I don't know if you guys experienced the same thing absolutely yeah so I opened it and made it work from home optional cuz I felt like they needed to be people that just had to walk around and go someplace and so that was one of the best decisions I think I made was for the employees where they could come here if they wanted to and just remain distant from each other and it's big enough space that they could but it allowed them to still leave their homes let's talk about my hourly search for someone to work in my wood Department to cut picture frames please my product manager just told me yesterday he had 24 conversations on the phone um scheduled appointments four people showed up out of 24 four and of the four he's had three are just train wrecks so um I don't know that I can totally diagnose this I think it's partially the unemployment what what kind of job is this for cutting frames and the you know cut working in to make picture frames cutting you know cutting on the saw joining the frames which I never used to have a problem finding people for that and I I actually have another aspect I just thought of this morning listening to the radio I think part of it is some of them are getting Unemployment uh and it's not worth going to work some of them have child care issues no question I get that and here's another piece the people at this level most of them rent apartments and many of them probably aren't paying rent because they legally the the they've been protected from that so we'll find out in September whether there's more people out there I I can't explain why 24 people would say I'll come for an appointment and then not show up it makes no sense what doesn't make sense it's not like the economy is okay we're doing well but but why is there all of a sudden a labor shortage that's this severe it's a mismatch you know a lot CH we hit the pandemic things happen people got sick people died people moved people decided they wanted to do something different with their lives uh some of it's Geographic I accept it for Hospitality I accept that some people don't want to work in the restaurants anymore because of a lot of issues that that happen with that but working in a factory I don't know that that person that was working in the factory is going to all of a sudden say oh I'm not going to work in a factory anymore you know I don't know exactly what you're paying Jay but you know that may be a factor well the minimum wage in Chicago has officially gone to $15 so it's it's kind of queued everyone up to the same I don't think most people are paying here's the other question then why did they agree to making an appointment why didn't they just say listen that's not enough thanks anyway I'm not going to explain that yeah that's what really surprises me is that the the the the absolute the no shows well good riddens you don't want those people working for you I think one of the mix is and I'm the last person to do this and I don't want to pick on Millennials because I've got lots of wonderful Millennials here there's been a mentality change a little bit in the marketplace there is it's not the same I'm not complaining about them they think a little differently and and i' like I said I've got wonderful wonderful Millennials working for me but there's just lots of that's going on all at once and I'm I'm going to argue September let's see what happens I I'm going to guess it's going to get easier in September we're just about out of time uh last question Diana are are you having uh issues do you have openings yeah I mean I I have about 40 openings right now and it's because we're growing so quickly right and so my issues are very similar to you guys but the bigger issue for me is everybody wants to do digital marketing right now because they want to go direct to Consumer through digital so they are getting job offers left and right that they've never gotten before I I've left I've lost employees now to pelaton I've lost them to Amazon I've lost them to Door Dash they're going after my people like I've ever I've never seen all right my thanks to Jay goz Diana Lee and Stephanie Stucky 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 ren21 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 thubron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]