Maybe This Isn’t the Right Job for You

[Music] hello everyone welcome to the 21 hats podcast I'm Lauren Feldman your host every week I sit down with three business owners to talk about the challenges they're facing it's the kind of conversation you don't often hear in public our panelists address difficult topics like why their business isn't making as much money as they think it should why their digital marketing isn't working or why exactly they hired their brother-in-law owning a business can be a lonely and isolating Pursuit but at least you'll know that you're not the only one facing these issues got a question you'd like us to address send it to us and follow us on Twitter at21 hats or on our website 21h hats.com let's meet this week's 21 hats podcast lineup back with us today are Karen Clark Cole who is CEO of blink a user experienced research and design firm based in Seattle Jay goz who has several businesses in Chicago including a picture frame shop artist frame service and a home furnishing store Jason home and Dana White who's founder of Boyd a chain of hair salons based in Detroit as far as I know nobody goes into business because they think they're going to be really good at firing people and when you read books or magazine profiles of Business Leaders you rarely hear anyone say you know the one thing I've really mastered is knowing when and how to fire people and yet it's something that uh every entrepreneur has to think about has to deal with it's an important skill even at the most successful businesses not every employee is going to make it so let's talk about this um I'd like to start uh first with asking each of you roughly how many people have have you had to fire or or lay off Karen how about you yeah in the history of the company in the 20 years um I don't have a count and that' be interesting to find that I was actually thinking the other day it would be fun to find out how many people we've hired over the course of 20 years because people come and go naturally sure but we you know we've certainly gotten better at it over the years I mean is it more than you know 20 more than 50 yes probably um 50ish probably okay um and and I'm combining firing and laying off although they're very different right so firing is for in our case people not being able to perform the work at the Quality that's expected and and the expectation is very clear which makes firing much easier if it was unclear and vague and nobody really knew what the standard was or what was expected of them firing is much more difficult but for us it's very clear what's expected we talk about it all the time and so it's no surprise and it makes it much easier um if somebody's not cutting it uh and and it's usually not a surprise to them because they've been on a performance plan we work very hard we want them to succeed so we do everything possible to try to help them and get them there um and if it becomes where it's too much too much um stress and work for all the people around lifting the load trying to help them then then it just they have to go Dana how about you do you know how many people you fired eight people you know exactly exactly y eight people in seven years has it gotten any easier over that time uh yes it has um I know now especially with the last termination um I have to choose peral Boyd over people who are making it abundantly clear that they don't want to be at paral Boy so when I look at from that perspective it has become easier not comfortable but easier to do how about you Jay you've been in business over 40 years I believe how many people have you fired personally probably I don't know 200 I mean mostly in the first 20 years I haven't personally fired anybody and I can't even think of the last person but for those years where I was the main manager and things were growing you know I have to give you perspective though I have 115 employees so over 42 years I've been through I don't know uh a thousand employees maybe um but in the beginning I had I've never had a job I had no idea how to hire people and if they showed up and had a pulse you know I'd hire them because I needed somebody and I thought everyone just works hard and you tell them what to do so because of my extremely undisciplined and ignorant hiring practices as a 22-year-old I hired a lot of people that couldn't do the job or didn't want to do the job or we just not planning on doing the job so now that we've gotten better at hiring we don't fire a lot of people have you gotten better at firing are there aspects to how you manage this that you've learned through the years and through all those firings yes the first thing I've learned is better that they quit for you and for them so the first thing is we sit down with them and and if they're not doing things properly or whatever we say we tell them and then after the second time perhaps we can say listen I'm getting concerned this might not be the right job for you because I'm telling you the same thing for the third time now and and sometimes they figure it out on their own and they leave which is good for everybody I've yet to meet an entrepreneur that's been in business for years that doesn't say yeah I've waited too long plenty of times I I Karen you with me on that did you ever wait too long well yeah yeah so that's a common thing how long is changed right but it's always a relief you know it's generally always a relief and that makes it easier to do it so my thinking is when all hope has left so should they and you know I don't I don't just hope they get better and the test I use which I figured out years ago it's just a visceral question you ask yourself if this person showed up tomorrow and said you know what I've got some bad news I'm moving to Denver would you want to jump up in your chair and give yourself a high five uh it you shouldn't be relieved when people quit and I actually in my head think would I be relieved it's and if I if I would be relieved I know it's time if I wouldn't be relieved I know I got to work on it some more so I also want to have what I would call Righteous firings which means I got clean hands like when they say to you I can't believe you're firing me I want to be able to say I can't believe you're surprised I told you three weeks ago that if you did this again you were going to get fired what part of this would be a surprise so um I don't think people should be surprised usually when they get fired unless they did something that's just you know egregious that you couldn't have seen coming you're kind of talking about situations where it's to some extent black and white where somebody you know makes clear that they're not really into the job they perhaps don't even really want to be there uh it can be a lot more difficult than that the the obvious situation is when someone just doesn't grow with the business they might have been just fine early on but uh things changed the business evolves they don't something has to be done have any of you had a really tough firing that you struggled with maybe couldn't even sleep the night before that was me in with my termination in August and it wasn't you're right it's not so black and white this was this is somebody I care about this is somebody that was great when we first started I mean I slept really good knowing that in the beginning that this person was on my team but um towards the end when I started walking into my businesses and and seeing things not being done and seeing um you know just not what I wanted and being told well it's okay it's okay it's okay it's okay or there's nothing we can do or you know well this is just how it is um I decided to hire someone that could help me execute what I needed to be done because at that point and this is three years in um with this person at that point there wasn't really much I could do to get them to do what I needed them to do I knew that they were going to do what they wanted to do regardless um and then if you know you terminated that person and you're left holding the bag for everything meaning you now got to work triple times as hard so I knew I would need help if that if it came to that and when I hired this operations person I had actually hoped that this person would step up but they didn't it got worse um and so it was really hard um and not so much because you know their life and their family and you like I said you care about them um it was hard because I had hope um and it got even harder when you realize that that hope was misplaced that they're at not only they're not stepping up they're getting worse because you've put structure in place did you have that kind of conversation that Jay described of just laying it out to them you have to change the way you're doing this yeah so it was in in the beginning it was okay Dana's not happy so let's talk to Dana to make Dana happy and then but the per performance wasn't changing so then I I said in a conference call with both of my managers at the time these are the things that need to change this person is coming in to put in more structure and this will help you one manager was excited the other manager was skeptical and so needless to say the manager that was skeptical acted out when this person was hired continue to act out once this person got their bearings and we wound up having to terminate them um and that was tough because again this was somebody had been such an amazing support to me in the beginning in order for per Le boy to grow I had to choose either this employee or perly boy it's up to you and then after the person left there was a saddened relief but it was relief because they weren't there anymore and then the cat comes out of the bag you're hearing from customers all the things and and staff members all the things that were going on behind your back so to speak all the things that were allowed and then you start to see the change now we don't have people calling off every week people are coming to work and if somebody can't come to work they're taking the shifts of somebody else or holding ha no I'll take her shift no I'll take her shift before we were having a hard time covering shifts all of this calling off and people not being accountable leadership had to change and once leadership changed it it it started to turn and we started to see that turn in October November so the harsh reality is businesses outgrow people and when you start a company by yourself with three employees it is unlikely that with those three employees when you've got 73 employees are going to still fit in what you used to be some will grow with you and some won't it'll be resentful that wait it used to be you and me and now it's all these other people and I it's just unlikely that you're going to keep all the people from the beginning as you owe a company I'm curious about what you tell the other employees in in these some of these situations uh I think it's important to share why because it one two things one is it shows people oh that's not me and they can relax uh and two it sets the standard this is what we tolerate this is what we don't tolerate and that's how you have a culture that's not toxic because if you're tolerating one bad attitude or low quality where other people have to pick up the pieces and deal with this person's bad attitude you're you're you're enforcing that culture and then people you would be surprised they're they're generally sad that the person's left I'm sure if they have a personal relationship but Rel to know that this is a company that really puts their money where their mouth is they really they really value this high quality environment which is why I've come here I want to work in a high quality place I want to be with people who are really cream of the crop beside me and as soon as we let that standard down they all of a sudden lose confidence in US Karen I'm curious is there a legal aspect to that have you discussed that with your lawyers whether it's okay to to tell other employees why someone's been fired I have not we don't share why they've been fired because we do keep that privacy a lot of times people already know yeah and we don't get into the nitty-gritty details but it it would be quality of the work is not there and you know that's that's everybody understands what that means I think the important part is that you explain and we certainly had conversations about this with them just so I 100% agree with Karen there's some anxiety there let them know I just want you to know discussing some issues that were a problem and it it wasn't going right and unfortunately they're gone because I I don't know otherwise people make up their own stories and then oh I heard it's because he wanted to bring his brother-in-law in and they make up their own and then the person that left make tells a story and I think it's critical that everyone knows I play fair we play fair we tried it didn't work and I've never had a problem with that and as far as asking lawyers if you want to call a lawyer about all this stuff they'll tell you don't talk to anybody don't look at anybody don't fire anybody don't hire anybody don't assign a lease you know I I just I've learned that trust me get a labor attorney on the on the phone and they'll tell you no you should never say anything and then see how they run their own business they don't so we have a culture called cut the cancer and so all of our people work closely together because we're not that big in each Salon once we're at at the point where we terminate you've already spread so to speak and so we you know remove you normally when people are let go at peral Boyd they people have already seen it coming and unfortunately the cancer is already spread and people have already started to underperform because we've allowed it with this person so we don't really have to say much they kind of already know and they say oh my God what happened to such and such they're normally doing it because they're still speaking to that person and they want to hear what we have to say so we answer it as if were speaking to the person that was terminated by saying well you know they were underperforming and you know we trained them and they didn't quite make the mark for training as far as their timeliness or getting to work on time or their performance and so in order to keep our standards up we had to to let them go and we leave it alone Dana you're very process oriented you operate your hair salons uh on the principles of lean manufacturing As you move your customers through the salon do you have a an actual process for letting somebody go right down to prescribing you know how it happens and where it happens and who's in the room yep depending on who it is if it's a manager we never terminate within the salon um and it's something that's done before we actually let them know um we start you know taking down permissions and access to stuff probably the night or the day before and then when they come in we have a conversation um but the process starts with my operations manager and I understanding the relationships that this person has within the salon and trying to manage that and preparing for the Fallout for of this person being terminated so if it's a stylist and we say hey how far has the cancer spread and it was like well if we terminate this stylus we know two these two are probably going to follow so then we say okay let's hire for their let's hire their Replacements um and then let them go but we also have reviews we've let you know and we've asked you how can we help you succeed in this position we have a stylist now who struggling with her timing it's taking her 30 minutes to style a person per head so now it's on Dana and my management to supply her with everything she needs to cut that time down and give her time to flourish but also schedule her so it's not affecting the business and so then over time if we see she's just not perfor improving then that's a conversation for her maybe she's moved to another position or maybe we just keep her on days that are slow where she can perform at that weight but we'll let her know it won't be for long because these days aren't going to be slow so we let them know hey this is coming down the pipeline here's what we're going to give you to help you improve and we'll check back in with you on this day to see if you've improved with our data like we're watching them to see whether they know it or not sometimes they know it sometimes they don't we're timing them and then when we get back with them we say okay hear the days that you know we time them but hear the days that we know that you weren't and this is your this is how much you've improved and we also encourage their colleagues to help them as well so we'll have them staffed on a day where they're working next to somebody who's at the speed that we want them at and kind of through osmosis they kind of pick up we have had people who' decided no I'm not doing it that fast you're rushing me and we've said this is not the place for you you should probably be in a suite where you have 1 hour and 50 minutes to spend on one person and you can do that and so how do we transition you from here to there you don't have to transition me I'll leave right now that's your choice that's not what weird that's not what we want but if you'd like to leave right now then then that's on you maybe that is what you want Dan you know I love you so I'm just trying to help I would stop using the word spreading the cancer because some of those people are not cancer they just have a different view than you have or they're slow or they're whatever and but I understand what you're saying I use the phrase that they take hostages sometimes but the can't they're not always you know some people just can't what do you mean by that Jay what do you mean by taking hostages they go and they'll start you know colluding in the back oh I can't believe she's doing this or she's doing that and they take Hotes but I just the phrase spreading the cancer is suggesting they're bad they're not maybe not bad they just can't do the job I don't think I don't think that's the case in my situation I think the I when I refer to people spreading the cancer with my operations manager and I sit down and we talk about this these are people who are obviously messy who don't have the Professional Standards of business Acumen to not be nasty and I'm saying it's not well they're just talking no they're ordering 50 pizzas and having them delivered to the salon wow yeah we're talking nasty that's what I and that's why I probably won't change and it's not something we say to them but we're talking about people who are calling the State Board every week to get them to come and do an inspection on our Salon because they're mad wow so and then and so that's what we mean by the cancer and then they have people who work in the salon who may not be in line with what they're doing but who provideed audience for them Dana I want to ask you uh about the the anger you're describing um you know I wasn't sure if I was going to ask about this but I feel like I need to given the times that we live in do do you or or you Karen or or Jay as well do you worry about somebody being so angry that they come back to the shop um or the office with a gun or something they okay so they come back with a gun no but I mean in my worlden happened happened two days ago days ago yeah so they haven't come back with a gun but they've come up with family members wanting to get into an altercation and that's not and that's just not who we are or what we do we lock the door and call the police and you can stand outside and act a fool you can stand outside and cut up but I'm not entertaining you I am working with some people who haven't worked outside of hair salon and in some salons this level of behavior and drama is acceptable so they feel that because they're in a salon they could come in here and do it and and we just don't tolerate it you're asked to leave and we call the police and it's as simple as that they want to some some have wanted to get into an altercation with me that's why right now we have removed me from the termination process because it's about getting at Dana right and it's like no so we've had to have Google contact people because they've gone on Google and started acting up on Facebook and started acting up so um yeah it's I I don't I can't speak for the for the other two people on the call but I know at pely Boyd it has gotten quite contentious and we've had to involve authorities and I'm and I've crossed my arms and Okay police reports have been filed um this the last termination I have been strongly recommended that they I get a uh personal protection order because after this person was terminated they were driving by the front of Sal sitting in front of the salon for hours they were so angry wondering you know getting threatening text messages to my to my cell phone better watch your back I'm around the corner so what did you do um you know there's a side to me Lauren with her that's I'm do your worst come on I mean and I'm not and I'm not saying with ego or hubris but like I said when we were on stage at blink what's for me is for me if you coming come on let's go I can't go through life afraid that's just I can't oh they're texting me let me tell the my whole thing I really believe that if any of us wanted to we can make a list of 50 things to be afraid of we could be afraid of someone leaving a hot plate plugged in at the building and it burns your building down you be afraid of your bank canceling your credit line there's 50 things going to happen and I really believe that if you're in business for yourself that fear is the Kryptonite of business and you can't be afraid and you just have to deal with things they come along and uh could that happen yeah sure but I can't be thinking about it too much because uh you go crazy so it's a nature of being in business for yourself which is the heart of the word entrepreneur it's taking risk my faith is also another part of it like I said what's for me is for me hey you and I'm not saying be stupid and you know call this person out and say hey come meet me here no you know I take precaution but I I won't run peral boy and operate peral boy and feared of what somebody who wasn't in line with what needed to be done in the first place is going to do Dana you've said this a couple times and I have to admit I don't understand what you mean when you say that what's for me is for me what do you mean by that what I mean is that it's already written the blessings that are due to me and the and the adversity and the trials and tribulations and the lessons of life that's already done right in my in my belief in my faith God has put me here on Earth to do this thing only he knows what that he or she knows what that is and so my job is to be guided by my faith walk in my faith and do what I'm supposed to do come what may my faith will get me through it and I'm equipped to deal with anything as long as I keep the faith what's for me is for me good and bad but Dana you're also a very thoughtful and strategic person um what you just said kind of implies that you're prepared to accept whatever may come and I and I don't think that's fair to you no you do the work right you do the work you you plan and you you know you plan and you do the work I think what you're saying is you will deal with whatever comes along come with me and I will be fine that is The Credo of Entrepreneurship I will deal with whatever happens because that is what entrepreneurship is all about at its core and I will be fine I will be okay that's it people say the same thing with competition Dana aren't you worried about competition no if it's meant for me to be an international brand I will be an international brand regardless of who is out there if it's not meant for me to be I won't be and I will be fine one other thing on you kind of managing this this process especially in a situation where you think there may be uh real anger uh on the other side uh one way to possibly manage that is through the payment of severance which can give somebody a reason to to behave well uh I'm curious about your your each of your attitudes towards uh paying Severance H how about you Karen how do how do you approach that we pay sants definitely and um it's adjusted you know our our goal is to make sure that there is not an undue financial hardship uh so we you know we don't we're not obligated to pay any but we certainly always do and it you know we look at the tenure of the employee um and you know if there's any unusual circumstances that we know about in their lives we may try to do more uh certainly around extending their health care benefits how about you Jay if someone's been there less than a year I I don't know that I'd be paying any but I I've always paid out Severance and I think if if someone would if you expect someone would would have giving you two weeks notice I think it's right to some give someone two week severance pay if they've been there let's say more than a year and I've had people that were here for five or 10 years not a lot very seldom but over the years I've paid out you know a week or two per year while they were here and it can take the edge off and I also have learned when you're firing someone you don't have to win the argument you're not this isn't this isn't an argument you just tell them this isn't the right fit we've talked about it they tell you you're wrong say you maybe you're right I I'm not arguing with you you might be right it's just obviously the wrong place for you and you don't the mistake a rookie entrepreneur makes is they argue with the person there's nothing to argue about the shorter the better everything you say Canon will be used against you and and I I I have to tell you in all of these years I've only had one person that that really went off but not like swinging or anything but like you know yelling at me it's all my fault but I've never had anybody who you know got that violent or or got violent at all I you know I think you have to get good at trying to look lower the the the volume of the thing and and do it in private for sure you don't go screaming someone on the on the floor that's it you're fired I mean it looks good in the movies but it's really bad practice um I think if you do it in a respectful Manner and you offer some Severance it will be better I'm not going to say many people are going to thank you though I have had a couple people thank me um wait wait wait wait they thanked you for for being fired yeah I hired a guy to run the factory and he was so over his head and finally I just said you know what this isn't work and you know today's your he goes thank you so it does happen and there are people that know that it's over and it's fine it's just it's it I've just found it's usually not as bad as you think it's going to be and if you do it in a respectful Manner and and I and I have talked to entrepreneurs say oh I don't pay severance pay I think that's a huge mistake I just think it speaks Bly of the company I don't pay severance pay why not um one I I can't afford it um and and even I believe now that I'm thinking listening to you guys I don't know if I would because of the process we have in place to get you to succeed right and so if you're working and work and you're just not going to do the job you've made a decision and i' hopefully you've made preparations behind your decision to not work here anymore because you know what's coming but that's probably in the first year I would assume right no I mean when uh we had a manager that we terminated in August had been with me three years I didn't offer Severance and thank God when she left we found out all the things that they were doing I'm not I'm not I don't want to pay somebody to prevent crazy I don't disagree with that if it's a situation like that I'm just going you also have for 20 years but if you've been in business for 20 years you're going to eventually have someone who's who's got a little arthritis in their hand and they're getting older right I'm saying and they can't do the job and you will eventually realiz you'll you'll probably get to a point where you'll say it's it's a reasonable thing to give them some Severance or find something you know like we've repositioned people within the company right so you're not quite making it as a shampoo I mean a stylist maybe we could do a shampoo assistant you're not quite making it as a shampoo assistant have you thought about reception right and so we'll move you before we terminate you I'm telling you a new problem is if you're in business for 40 years you will end up with people that are 70 years old that should retire and it's illegal to fire somebody for age it's it's it's a problem and you it's a problem and in that situation s smart smart I would if we had a young lady you'd work with me and she's you know grown old with this company I would I would not want to just say okay goodbye you're gone oh no we would have probably talked way before then about as long as they're getting something out of it um and as long as the company is getting something out of it and if we're starting to notice hey they're not really keeping up anymore then they're trying to find something else for them to do but if it's just not something that's working out let's let's phase you out and with a with a parachute I would do that for somebody who'd been with me for a long time sure sure all right next topic I do want to talk about competition and and I would like to start with you Dana uh because we just had an item uh that we ran in the morning report and and that I sent to you uh about a uh a venture back hair salon based I believe in San Francisco U that's kind of going after the the same Market you're going after and I'm curious you know what's your response to that when I got the email I was like oh no I was like oh man but you know then you know because I'm humanid and then you think about it and go wow this is a validator um if I ever did want to take on venture capitalist funds it would be you know hey this is this is working in this the in this market right there's somebody that is doing it and and it's working so by by the way I should point out this is this is a fairly high-profile thing we're talking about Venture uh Capital coming from Alex Ohanian who is a tech entrepreneur uh and who happens to be married to Serena Williams uh so there's some there's some star power there exactly your initial thought was was fear but um but you came to terms with it yes and you also said to me in your email that it was it's validator it's saying hey this is a this is a business model that you should look at investing in um and so and then you know you do your homework you do your research and you look at the differences between the businesses and you see that there's room for everybody because it is a different model um just catering to the same market so um you just keep going and I think for some of the entrepreneurs IAL to about this I think what scares us is our Network and the fact that we don't have the network to put us on a national platform like that right so it it is like gosh I've been doing this for seven years or like another girlfriend of mine I've been doing this for five years and I have this line or I have this business but because I'm not in the Silicone Valley venture capitalist world I will stay at four salons or four businesses because I'm not connected am I realizing my potential or my falling short of my potential because I don't have the network that was the takeaway from from that Karen how do you think about competition obviously there uh there are other firms who do similar work to yours yeah there's not a lot on the with the experience and the scale that we have that are really um specialized like us um but anyone working in the user experience industry in general I think it's good because it helps raise awareness for the industry because it is still fairly new so I look at it as more marketing power that we can piggyback on um the more companies that know about this kind of service that you can hire and then because we have a really long um track record and really high quality work and a great reputation uh it doesn't concern me that others are going to come in and replace us you know that being said though I have tried to um you know get some funding so that we can buy some of the smaller companies that are around because there is a consolidation going on with some of the big companies to try to snatch everybody up and be the sort of highest volume um so you know that is something that that concerns me is I want to be able to play in the big leagues you make an interesting point uh about the the industry you're in I'm guessing you probably still have to explain to People You Meet sometimes what user experience is yeah that's the biggest thing right now is the more people that understand it uh the bigger the industry becomes because it it is a really important uh function so um you know yes I out in the general public yes our clients though generally they're coming to us we're not uh trying to educate them so they've already figured that out elsewhere before they come to us how do they find you is that word of mouth or particular marketing it's a lot of lot of web searching and so somebody would have heard and this is why any companies that are helping to Market what it is and what it means is good for us because that's that would you know put an idea into a potential client's head they might do a web search and they're going to likely come to us at some point if it's not through referral which is a big part of our business how about you Jay uh I suspect that the nature of the competition that you face uh in both your frame shop and in your uh home furnishing store has changed a lot Through The Years well you know every time you say the word frame shop I cringe a little bit just because people think of a frame shop that usually means two employees my frame business has 50 people working here it's literally 20 time my one my one main location is 20 times the size of the average frame shop so I started at 22 years old and it grew like crazy and I didn't understand why and I finally realized that I brought a business approach to an artsy business and I got the two to work together and and that's unusual so I never have really looked at what everyone else is doing because I don't care and I view it more like you know I'm playing golf versus playing basketball I mean you you pay attention to what you're doing you do what better than everyone else everything kind of takes care of itself so in my industry though there's been franchises they pretty much have failed and um and that's why I have told Dana you know what having four successful salons that make money might just be a great situation because I see these guys that have raised money and I'm on the panel with them on you know you Lauren you were with me in Chicago we did a panel thing there and the guy next to me both of them said yeah I wish I didn't have to raise money I don't have to answer to anybody so I always say to everyone what's better not having to answer to everybody and making plenty of money that you can buy the nice car the nice house and blah blah blah or maybe be worth five times 10 times more money but have to take a call from some Joker in wherever that's telling you he doesn't like this number or that number so it's it's uh looking at the competition and looking at what everyone else is doing can be very dangerous because uh it might rob you of your happiness I take your point but don't you have to pay attention to what others are doing I mean you have well competitors I mean there is a frame service on the internet now that that people can use yes have burned through 7080 million and I doubt that it's working out like they thought so well how about home furnishing if you know there's there's Restoration Hardware I just read today Wayfair lost it was just today's news they they lost another $300 million and they're just this free shipping everybody's giving is when you give free shipping it's pretty much giving away your profits so yeah it's a challenging environment IR with that my home store is well known in Chicago and I do internet but I I don't have any desire ambition or ability to go and raise I don't I just don't want to do it so I I'm not paying that much attention to the competition and uh I I think that could it's not like I ignore them but I'm just not learning anything from them other than here's how you lose a lot of money and as you know they frequently one day poof gone well I'm certainly not trying to talk you into uh raising money I'm just curious about to what extent you can get away with you know really not paying attention to what others in the industry are doing uh it's got to you know when everybody else is giving away free shipping it's got to have an impact on you uh you have to be aware of it and and look for ways to deal with it I think you should be conscious of your competition but you shouldn't be focused you should be focused on your customers and I don't think you should be focused in your competition and I I see people to do that and it's like then you're basically saying they're smarter I am I'll just copy what they do which in some cases I guess might be smart I don't there has got to be a middle ground there somewhere Jay I mean I I don't know this business this industry the way you do but I've read some stories about how Restoration Hardware has turned itself around and figured some things out and trying some I think you know they're doing some subscription stuff they've put a restaurant in some of their locations um is isn't that worth paying attention to I am to a degree I mean they put rest there's a big one in Chicago they you know they're a public company they got nothing but money to burn and and I have thought about maybe I should put a food element in my store and I am thinking about it so it's not that I'm ignoring it it's just that I'm just not following what everyone else does though because in these days the world has changed dramatically 30 years ago if you saw a company that was doing well they actually were making a profit now you see these companies getting getting all this publicity and they're worth2 billion dollar and then you find look at we work for guys sakes explain how you can lose that much money how many of these companies you read about regularly are doing nothing but losing hundreds of millions of dollars a year so you can't assume well if they're doing it I should do it well I don't have hundreds of millions of dollars to lose so um it's different but that's not the only choice doing what they're doing uh the other uh possibility is that you just need to pay attention because it's going to have an impact on you what lesson is there from that what what lesson is there to learn from companies to give free shipping and never make any money what should I learn from that that I should give free shipping and not make money it's one thing to say you don't want to do what they're doing and I don't think anybody's going to argue with you I think it's another thing to say that you can just ignore it and that that's where I'm pressing you a little bit I think you have to know what they're doing I would say be conscious of it but I I I'm arguing the point of versus focusing on it I I'm certainly aware of what they're doing going back to Dana situation uh I mean you know we're talking about a venture back company that I think has one location right now in San Francisco I don't think Dana should be giving up the ghost be because of this possible competition that may or may not ever come but they may do some interesting things and it probably makes sense for her to pay attention to what they're doing does that make sense to you Dana yeah I mean what I what I started paying attention to is the price point um you know it's higher than mine um they're at $75 for what I do even when I go up to 50 that's good to know it's a higher price point they are again like most salons appointment based um and so you can't just walk in they accept them of like most salons do but it's not their model and then um lastly they're doing more protective styles meaning they're doing more braiding um sewing in of hair um and so it's not again it's it's it's it helps that you know hey this is somebody that is you know getting you know money to expand a business for my market however it's not completely different it's not something new um it's just uh the same model Focus to this market doing it this way how would you feel if they opened a store in Detroit tomorrow I would welcome it because we would be her alternative to Karen's point they might increase awareness but you're providing different services at a a lower price point The Stylist at that at at this Salon had to cancel something happened you don't want to wear braids to an event you don't want to wear a sew and you want to wear your you know you want to blow and go or a straighter style but I can't get in anywhere I just need this done I could walk into par boids for $40 and walk out um yeah it's pretty cool can Lauren can you just verify because you know this as well as anyone what percentage or Karen you might know this also what percentage of venture cap Venture Capital funded businesses fail out of 10 isn't it like eight that's kind of the the model I I don't know the exact number but it's certainly I wouldn't be surprised if it's seven out of 10 it's not as simple as first get a bunch of money and then we'll just make everything work it doesn't always work that way and there's a lot of things that only experience can attest to right as much preparation as I did to open paral boy there's nothing that could have prepared me for all the knowledge that I have now outside of the seven years that it took for me to get that knowledge and so there's a lot that this owner and these Venture capitalists who are completely unfamiliar with this world is something that is a lot that you're going to have to learn um I don't believe that I believe that hair care products are this Founders background I don't know if um the actual Salon is in this Founders background so if it's not there's a lot to learn versus making a product um the whole culture and dynamics of that that that system and and of itself is just a lot to learn maybe you should call them and offer them some advice no actually I'm just going to grow perly void and were you serious about that cared yeah in a way collaborate what's in it for for Dana to do that oh I don't know they might pay her a lot of money oh I see I you know I feel like you know missile or in the color purple I'm just going to sit over here and see what color the wall is going to turn next right like I just I'm like Jay let's see how they do right look at what just said with blue apron I mean that was the hottest thing you ever read and next thing you know they're in the toilet I mean are they in the toilet I because I get them every other week well no I'm going to give you the core to many of these ideas that don't work many of them it's not coste effective to ship something to one person in a UPS box the it's just not that cheap and and they always think they're going to scale out of this because a lot of them came from the computer industry which the the first copy or whatever you'd call of a of a program cost a zillion dollars but then your margins are phenomenal not on food the margins aren't phenomenal so as you grow you can't necessarily scale out your costs and it you see in a lot of things that it the math doesn't work ultimately and on that note we are out of time my thanks to Karen Clark Cole Jay goz and Dana White thank you Lauren thanks for listening everybody this episode was produced by Jess thubron founder of blank word Productions remember if you liked what you heard tell your friends tell your enemies subscribe like us and best of all connect with us follow us on Twitter at 21 hats and visit us at 21h hats.com let us know what questions or issues you'd like to hear our panel of fearless business owners address see you next time [Music]