Why I Sold 21 Hats

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week the tables are turned as I announce that I have sold 21 hats and then take questions from Shan busy Karen Clark Cole and J goz the buyer is Toby scamell founder of wample which provides software services to small businesses and helped more than a million of them obtain paycheck Protection Program loans I will continue as editor-in chief but much of what the sale will mean for 21 hats has yet to be determined including for example and as we discuss here whether we will keep the 21 Hat's name meanwhile Sean Karen and Jay also talk about how Karen solves problems for her big Tech clients and what smaller businesses can learn from her process and Jay explains a change he's making to his 401k plan that he believes will make it fairer for all of his employees even in Good Times owning or 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 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 me this week on the podcast are regulars Sean busy CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy Karen Clark Cole who is CEO of blink a seattle-based user experience research and design firm and J goz whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home the episode is titled why I sold 21 [Music] hats welcome Sean Karen and Jay we're going to start today with something a little bit different today we're going to talk about me as the three of you know and a few others du to I have sold 21 hats and I just want to start by noting that this is the second business associated with the 21 hats podcast to be sold in the past year Karen you sold blink last September for $94 million which means the average sale price of a 21 hats podcast business let me finish is now ever so slightly more than $47 million and I think that's pretty darn impressive don't you oh my God it is wow Lauren you should be in marketing thank you thank you thank you everybody while I did get paid something for the business this is this is really more about being paid a salary and being given a budget to build 21 hats the way I've always wanted to and even more importantly I've been bought by somebody who runs a business that Services small businesses and has literally more than a million clients customers who will be introduced to uh to what I've been doing and and what I'm building and for me that's what makes this very exciting any questions you left out one of the best parts and all of us are getting our salaries doubled with no tax consequences that's true I was saving that big surprise yes that's great congratulations Lauren well thank you I know that that's been a multi-year I don't know want to say struggle but it's difficult right it's always strugg struggle appropriate it's been an adventure yeah it has and I've been consistently confident that there's a market for what we've been trying to do and that when we connect with people uh I get really favorable responses I just haven't found enough people and it was a little hard for me to see how doing this by myself I was eventually going to be able to bridge that Chasm and get to the point where I could start hiring employees and you know really try to do this right and this does solve that problem does part of that budget allow you to hire a PR and marketing company to help you become famous well I don't know about the famous part but no no like I mean that in the best way like you want people to know about you that's the whole point you don't want to be the best kept secret absolutely and I mean it's it starts with the fact that there are all these customers in house that I will be exposed to at you know very little cost but yes uh absolutely PR and marketing uh is is part of the deal have you had a chance to Envision what the team looks like that you want to build I have I'm going to start by hiring some editors the last couple of years I've actually really enjoyed what I've done I mean it's been great getting up every morning knowing that I can do whatever I think I should do and and now I'm going back to being an employee and that won't quite be the same but on the other hand I have missed working with other people and I mean you guys have been great I it's not like I haven't had people to talk to and I it's not like I haven't had a sounding board uh I have and I've taken it full advantage of that but it's not the same thing as having a team and I'm really looking forward to hiring some editors to work with me and bring fresh thinking to to what I've been trying to do so is the new owner handson hands off what what does that look like well that's a great question Karen um I don't think we're really going to know for sure for a while um I have to tell you though he's been great through this whole process I mean I feel as though he's been very generous with me I feel like he has made clear that he's looking out for my interests and has wanted this to be something that I would be excited uh about doing and he has you know he has voluntarily brought up what others might consider to be difficult topics like you know my Independence and he has assured me that he is not a Content guy and that I will be in charge now you know there there we'll find out where that line is actually drawn and there's some things that I mean for example here's a good one I'd love to know what you guys think about this he's not sure that we should keep the name 21 hats his perspective on that is is look it's I like what you've done it's great you've got 5,000 people uh reading the newsletter or subscribe to the newsletter but we want this to get much bigger and scale uh significantly so we should pick the right name um and let's let's sit down and have that conversation and it you know I think it's it's hard to argue with that although I have to admit that I'm kind of attached to the name what were we GNA say Karen well but don't the two of you sit down and figure out a name make sure you do research make sure you get help make sure you get feedback from all of your listeners etc etc well I'll start with you guys and I would argue why can't that name scale it's fabulous and you can make up any name right it's just what you put behind it that matters I still think it works because I think it describes what entrepreneurs do they got 21 hats to wear and I think you can go hire some branding agency and spend $100,000 and come up with something with a z in it or ends in an o or something and I so you're asking the wrong one I think it's a great name this is your area Sean any thoughts yeah I mean we've re we've renamed a number of companies and we've also not renamed a number of companies and I think car Karen's instinct is spot on in that um you really want to assess what kind of equity is in it already you know and if there's if there's strong affinity and there's Equity even in 5,000 people I'll take 5,000 passionate fans who believe in the brand and know the brand over a million people who have no idea what it is any day I think your customers are a great place to start in terms of an assessment of the brand um versus kind of getting in a closet and deciding it's great or terrible and it's important to to my mind it's important there's a story behind it and you have a great story behind it I mean how many times do people say what does that mean I get that with blink still like what's the story behind it I like that aspect of it I'm curious what you guys think to to me most people get it uh pretty quickly and the moment they do it's it's almost like they feel like they're part of the club you know it's like oh you know that's cool they understand me I understand them do you think that's meaningful oh my gosh that's like the most important thing having a story behind the brand that that that people could connect to and resonate with and have an emotional response to quickly man that's gold I also think it's just plain insightful that in fact and Lauren loves to argue with me about this that number wasn't pulled out of thin air I truly believe there are 20 we had this I know I'm going to say it again there's 21 hats to wear in business I could give you the list and that's there's not 50 there's not 10 there's 21 hats maybe there's 23 maybe there's 19 but 21's a good number there's 21 hats it works why waste time so let me ask you a question you said you had difficult conversation with so let me ask you this you've put your heart and soul into this as I have and everyone else that's on here so let me ask you something goes different than he thinks uh maybe his business changes maybe he sells his business bus maybe this just doesn't get the diretion anything think where does that leave you at that point uh that's a great question and that's another example of something that that he brought up and he said you know you never know things things go Ary and uh he promised me that if things didn't work out he would just give me back uh all of the assets that I contribute I'm so excited we're having this conversation because now you'll have a documented uh you know kind a piece of information where you can refer back to it I mean so many times business owners get together and form a partnership of some sort and there's unspoken agreements there's confusion but everybody's all happy happy in the beginning and then when things get hard or things change or desires change these sort of early on agreements get forgotten and this is a great opportunity to memorialize that so what else have you agreed on you mentioned uh editorial control um right you know and from my understanding one of the reasons you got out of like some really high-profile Publications is that you know you felt like they were you know really curtailing to larger businesses versus smaller businesses is that is that right I was bought by uh Toby scll who is the founder of a business called wample uh which is a venture back business but has been around about 10 years and um and really did something big during the pandemic where they figured out how to get PPP loans to very small businesses and uh it was at a time when those businesses were really struggling Banks weren't interested in doing those loans uh wample figured out a way to package those loans and make it very easy for the small businesses to apply and for the banks to approve and got you know literally more than a million small businesses loans many of them are Solo entrepreneurs but but most of them quite small and and you know as a result the issues that I had with previous employers will will not be an issue this time help us and the listeners understand kind of the financial incentive in that ecosystem and then what's the financial incentive that you're going to be stepping into well you know the unfortunate thing what happens uh with those Publications is they traditionally have ended up chasing clicks so you know this is true wherever I've worked the the focus has been on trying to drive large digital audiences and the way that that often is done is by you know with clickbait stories that kind of appeal to the lowest common denominator you get a lot of stories along the lines with headlines like uh 10 businesses you can start in your pajamas you know those those stories bring in a lot of clicks the problem that I believe I figured out a long time ago not that I'm the only one is if you appeal to the wannabes you're never going to get actual business owners like you guys whereas the reverse might be true if you appeal to actual business owners and provide something of value to them the wannabes may follow and you may still get the traffic that you're hoping for but you you can't aim for the wnab bees and and that's the dangerous thing that happens at a lot of Publications in my opinion that's a really interesting Insight um how how do you you know going forward now that you've got a boss and you know money at the table and folks how do you escape that clickbait trap well for one thing as I said my boss Toby is not envisioning what I'm doing as the main source of profit within his business far from it and uh at this point I have a uh substantial budget and no pressure whatsoever in the first year to mon ize Lauren what is his main reason for buying you you know he saw what happened with pppp and I mean this is a an audience that he'd been targeting for some time but it really crystallized for him that these are people who do not get the attention and support that they deserve and he believes that this is a valuable thing to do and that if we do it well it will also perhaps indirectly help the business that he's building but that's not the primary uh goal although I'm I'm sure he uh hopes and expects that whatever success I have will rub off on whatever he does what's the offering he's bringing because PPP is no more you know no longer there so that's not a business model let's hope we don't do have to do any more of those it sounds like what he's hoping for is that you're a marketing channel and an awareness channel so um what is it that you're creating awareness of you know that's that's a little bit out of my baileywick and he's in the process of introducing that and I don't want to overstep the bounds there but there it involves uh an app that will make it very easy for uh smaller businesses to run their financials and get paid and do all that good stuff I would say that if you look at today's Morning Report there's two examples that are ill that ill illustrate what's what's out there in the the media and if you read it this morning one of the Articles talked about I'm taking the exact words out of IT company raised prices on their t-shirts by about $20 then sales fell and the company rolled back the price increases then there was a Revolt the brand off the chief brand officer said there are so many holes in that like did he raise the t-shirts from $20 to $60 or from 120 to 140 and how much did sales drop there's so much information missing there and then it wasn't written by the CEO or the CFO it's the brand officer so sales dropped okay no no it wasn't written by the brand officer but the point he was quoted the point is this is feeding into the hysteria of business owners that we all face with oh my God if I raise my prices it's going to screw my business and there's just no information there we don't it's just it's just not good information and it's just going to feed into people's paranoia about so then if you did raise your price and you roll the back what do you do about the fact that your stuff's cost 30% more just live with it and go broke I mean it's it's just it's crazy and then the second one at the end there's a story about this Academy that had an extremely good Mission very Noble they were started a uh schools for underprivileged kids and it says quote unquote where it was hard was cash flow this was a major disadvantage huh they didn't have a cash flow problem if you're they have a profit problem there's a huge difference between a cash flow problem and a profit problem so once again the story feeds into this narrative that everyone who has cash flow problems you know that's the problem in business and a cash flow problem is usually you've got too much inventory too much receivable maybe you bought equipment you paid cash it it's not a profit problem so again it's just bad information that's being put out there and I believe if you had your own people working for you writing these articles they could have asked the right questions and actually given something that was helpful to entrepreneurs and I think this is extremely typical of what I read every day all over the place they never ask the right questions and I think you will that that is an example I think to some extent people do not tend to stay on this beat long enough to get comfortable with it and it is challenging covering privately owned businesses you can't go to Yahoo finance and just you know get all the numbers for a company the way you can with a public company you can't get the opinions of you know a dozen analysts and see what they're picking apart it's you you have to rely on who you talk to and it's it's an acquired skill and unfortunately people to the extent they acquire it then tend to move on and do something else all right let's just take a quick break to hear from our [Music] sponsor I'm here with Rob Levan co-founder of work better now which provides businesses with highly talented virtual assistance Rob I've noticed that owners tend to have certain questions about virtual assistants for example what exactly can they do yeah Lauren we get this question all the time uh because people really know deep down that they need an assistant but they're not exactly sure how it works and what they can do for them I would say that our clients use our assistance in one of two ways they will either use them much like I've been using my assistant for the past eight years as an executive assistant handling my calendar which takes up so much time email management database file management personal tasks creating documents for me and then a lot of our clients basically operationalize our assistance so we have assistance with titles like project manager marketing associate operations manager and customer service representative I think some owners worry they'll spend more time managing their assistant than it would have taken them just to do the test themselves how do you respond to that right right right this is a deadly trap not only with assistants but really with any employees which is oh I can do it faster myself and the reality is you might be able to do it faster yourself of course it's impossible to grow your business if you're doing everything yourself I was very much uh of a similar mindset and what I did with my assistant is I basically told told him what needs to be done and had them document it I hate documenting tasks but I know the processes are so important now we have a manual full of my uh tasks I only had to tell him once that he can follow time and time again and if he's out somebody else can follow and also think about it this way if you're a business owner making something like let's say $200,000 a year which is about $100 an hour you're basically paying somebody to do administrative work at $100 an hour if you're doing these tasks yourself that makes a lot of sense what does it cost it cost is $1,900 a month and as you know Lauren we are offering 21 hats readers and listeners $150 off per month for 3 months just by mentioning the word Lauren there are no contracts also very important for people to know can you promise a return on that investment if you're not getting a return something's not going right all of our clients are not only getting a return with the first assistant they've hired but many of our clients are now on their second third and fourth assistant where can we learn more work better now.com and again when you sign up for a 15minute consult just mention the word Lauren we'll make sure to give that $150 off for each of the first 3 months thanks Rob and we're back all right enough about me Karen let's talk about you so much has changed in the last couple of years and I'm I'm wondering you you work with some amazing big Brands great big companies I'm curious what they know that smaller businesses could learn from can you tell us what you're doing for them and are there lessons in it that others could take advantage of um I don't I don't really honestly I don't really know how to answer that so what we do for a lot of the big tech companies is really around the Innovation like product Innovation space so it's solving problems in new ways that haven't been done done before so it's really you know thinking out of the box and so you know it I don't really have a good answer I have a website we sell through Jason home we do millions of dollars of of we sell nationally home accessories and Home Furnishings do you believe you do something that if I hung out in your offices long enough I would be able to go oh how interesting I need to do some of that no totally not totally not wow no it's not no it's not like that at all everything is very very very specific and we don't just um randomly make stuff up for everyone just to go use what we're doing is a client will come to us typically with a problem and we solve it through research and design and strategy and so so it's usually addressing something very specific and it's usually big and complex Jay you might come and say like I can't access people people are now not going into stores they're doing all their shopping at home how do I you know I I can't figure out how to access them and so we would you know solve that problem and then we all know what the answer is like have an online store what she's saying is I don't have big enough problems for her which is comforting to hear no I'm not I'm saying that you wouldn't I'm saying that you would just have to come in and we would talk about your what problem you're trying to solve and then we would solve it for you you won't your problem is different than anyone else's and everyone else's is different than yours and so it's not like there's like a magic formula that we're working on that would help everybody um and if there were we couldn't tell you because that would be top no no that's interesting I thought you did have somewhat of a formula of you would I I always assume you and everyone else that does things like you that you have some oh we come in and we look at your this we look at that and we figure out how to find tune it and we I that's interesting that people have to come to you with an issue and you figure out how to fix it that's very different than thought we're not fixing it we're we're we're invting stuff we're creating yeah wow yeah she's part of the creation economy as opposed to the problem solving econom I mean even though the the expression might start out as a problem but my guess Karen is is you're creating something new that may not have ever existed before most of the time that's the case yeah most of the time I mean you look at what Amazon's doing on a look annually sort of what new stuff does Amazon come up with that we never thought we needed or it's a totally different way to solve something that that that's going that we didn't even know was a problem and so it's that kind of stuff that that we're working on like did you know that you needed not only your groceries delivered but you need it delivered by a a robot and um you know when it's all automated and you know etc etc etc it's like that those are the things that we're working on it's like did you know that you that it would be way better if you got your groceries and there was no checkout person like a lot of our clients are looking at how we're doing things today and saying is there a better way and so our job is to to come up with through research strategy evidence-- driven design a better way and in partnership with the client who's thinking about it you know in in collaboration with us so we're coming at it from different angles and so if is there a better way like do you really need to pick up your stuff and then go to a teller and check it all out like why don't you just do it all at once and then just walk out like that we have enough technology nowadays that we everyone has a smartphone why not just scan the item put it in your cart and then walk out the store and so and that's what's happening now that's the Amazon go store but what we found in our research you know that's a slow path to get there people aren't quite ready for that because they feel like they're stealing for example and so you know the world has to catch up to this new way of shopping but I tell you it's there I mean you go into any Apple Store and there's no checkout place that all the people the salespeople in the in the whole room have the ability to check you out where you're standing and that was like whoo that's crazy but it's like that makes total sense that's a lot easier there's no lineup so it's things like that that we work on is how to sort of reshape our daily lives in a way that hopefully is better and easier and more efficient and a better user experience that's our goal are there things we can learn from the process that you go through to address yes I say it every day Lauren what do I always say Come on talk to your customers never make it up yourself s always talk to your customers get their ideas get their input I'm in a fog talk to the customer what you if you're going to design something that you want your customers or your future customers to use you better understand them and you better understand how they think you need to understand their motivations what's their context of use like are they using your thing while they're driving while they're walking their dog like what world are they in when they're experiencing you or your product and you know really know like why why do they come to you and what makes them T and how can you connect better with them through knowing their world and how they think that's what you want to do okay that was very helpful oh good okay great before you said that I was in a just of cloud thinking I just frame pictures or I sell Furniture I don't really get what you're talking about but now that you you pointed that out that was very helpful I I I that was good I'm going to go talk to some customers now how about the testing process you you come up with a good idea something like what you just described with Amazon go where there's some reluctance to accept it h h how do you handle the testing of a product that you believe in but that customers may not be quite ready for well that you're asking about adoption which is different so that all comes through exposure marketing you know making the pitch to people why this is good and why they should try it and then once they try it they become early adopters and then they become regular adopters and then before you know the whole world is doing it and in Amazon world that's hypers speed of how quickly they can get people to adopt crazy new ideas like imagine like in the days when we didn't have you couldn't walk into a room and ask Alexa to turn on the music like that like my daughter's like well how else would you do it and so you know that's not a very long moment time since that came about unless your wife's name was Alexa in that case I think would problematic well you can change it though you can change it in the app to be something else but in any event um the that testing we do a ton of testing learn so we have prototypes like we we did research where we followed that robot along and then we watched the person receive the robot take the groceries out of the robot and then we would we would interview them it's very deep qualitative you know one-on-one research and so we say you know what was that like what was your experience like like how did you feel and you know what what did you love what did you hate did it meet your needs you know what what's your what are your hopes and wishes for it it's we're looking at like maso's order of needs and we want to make sure that it the basic requirements and then what what what Delights you about this thing what's going to make you love this product CU When people love your product they're going to remember it they're going to keep using it they're going to refer it all those things and that's what our research does is it fine-tunes that so they would say okay I loved everything about it but this thing was weird and so then we're like okay that's good feedback and if we get that from you know more than a handful of people then we know it's a real thing because you start seeing patterns and behavior after about six people actually and so so then we go and we find we find refine it so then when they you know blow it out to the market we've got all kinds of refinement rounds in there of getting really deep qualitative research from people on this new crazy product and does it work so if I had a cut to the chase basically you're The Wizard of Oz well funny that you say that because that is a research method called The Wizard of Oz technique which is where you fake the functionality cuz it's actually not built yet so there's actually someone sort of behind the curtain like we did a whole study for on a digital faucet for them and so we had to have water coming out of the tap when the person gave a voice command which wasn't built yet and so we had like literally someone on the other side of the wall listening for when they said water and then we would put on the tap and have the water go they be like it's a miracle but you know so you can do a lot of things pay no attention to that man behind the curtain okay see I got it that's pretty great hey uh Karen I imagine a lot of the listeners on this show are not going to be able to afford or the right typee of business for you but if they're curious about this methodology you're talking about which is kind of I think rooted in empathy and listening um what do you recommend that they explore you know outside of your business you know is that design thinking books yeah it's well I mean what what we do is it's it's well known we didn't make it up it's it's uh user Center design or originally is human factors um design it's sort of from that school but it's um there's loads of books on it there's loads of Great Courses like even just quick little courses you can take but but but you don't even need to do any of that all you need to do is something very simple which is what Jay's going to do is just call up a few customers and say you know what's your experience like in our store is there anything you know anything you would like to see that you're not seeing like don't put too much pressure on them to have a big answer but you just ask sort of like small leading questions which is you know is there anything that you wish was in the store or there anything that you wish was in the store is there anything you know what did you love or what did you not love about your recent experience you know and how can we serve you better like just sort of little things like that if everybody just did that it it would be a miracle because most company imagine big clients come to us and they have spent zero dollars actually just chatting with their customers I've learned that I have never got a questioner from a great company whenever I keep getting questioners how was our service was our bathroom clean everyone know I've I believe was not a great company cuz I keep thinking to myself if you have to ask the customer if their bathroom was clean you're doing something wrong why don't you go to the bathroom and see what it looks like yourself and and the great companies that I deal with I can't ever remember getting a questionnaire from them so I think part of this is the great companies are paying attention and listening to customers and the ones that think they're going to fix their business by sending out a questionnaire but then do nothing about it it's not going to work well and and also when you're sending out a survey you're you're leading them right you're asking them certain questions when you watch them interact and this is part of our research is we actually watch people like when they receive their robot grocery delivery we watch them and we watch their faces and we watch their eyes bug out of their heads and they they may tell you later like oh yeah that was cool like that was like regular day but you can see that they're totally freaked out and they you know their heart rates they're breathing heavy like we so we watch for all kinds of Behavioral clues that help us understand because often if somebody loves a brand for example like let's say Starbucks and they had a bad experience ordering their online mobile order was terrible for some reason they might still tell you that was a really good experience because they love that brand so much they have such loyalty that they take it upon themselves it was my fault I didn't press the right button or I didn't do this or that and in fact of course it's not their fault because it should be so dead easy that there's no possibility for error but instead they'll tell you like oh no it was fine it was great it was all me and so we watch a lot of these Clues just to see okay their body language is not you know congruent with what they're saying and what's so let's try to get out that I do that every day with customers that come in to pick up their framing as an example you can stand there and watch them and you can get a good feel for we doing a good job of they going oh my God that's I mean I'm doing it in a very no Tech way no but low Tech is the way to do it I agree so you talked about talking to customers versus surveys can you can you help us understand you know why you do that methodology why you why you go there first versus is Survey Monkey which I see this a lot you don't want to assume that you know what the problem is and so what we'll do is we do the qualitative research first to really try to uncover where are the specific pain points in a process for example or in a picking up your frame it's a perfect example if you were to say like ask send out a survey and ask like three really specific questions you already are sort of leading the witness by assuming you know what the problems are but if you're like Jay and you just stand there and you just you look at their body language you look at are they smiling when they're looking at those pictures like pay attention those things matter and then you go in and you casually say like I notice that you you looked you didn't look super happy when you were looking at those pictures could you tell me more about what how you're feeling and then they start saying well I was really hoping for and you would never know that unless you ask them so you have to do it in a really you know this is psychology and this is um you know it's real research in that you don't want to put in their mouth you want to just listen just like ask a few questions ask them how they're feeling and then listen and then once you start Gathering that kind of data where you have a sense like okay we think it's really in the tape that we're using to package the frame it looks like it's really cheap and it's not put on very well let's say that you start lots of people are saying that same thing then after that you could send out a survey saying you know what is your experience with the tape on our packaging and they would say oh my God but you don't want to get specific until you you've got a broad you know view of the whole thing that's really helpful I I think that a lot of small businesses go to the silver bullet and the Silver Bullet is sending out a survey and it injects all these biases in it right it's like you you end up surveying the people that you want to get that that give you the answer you want to hear you're validating something that you think is true and you don't really know in my own low Tech way it's very interesting to me because I totally get what she does now yeah Jay and you you are absolutely dead on you when standing there and you're watching people that's the real deal like what you're doing is exactly what you should be doing because what you want is for someone to have a great you know user experience with your business every aspect of it so like when you brought in your pictures did they handle them with the love and care that you feel for those pictures because I know that in your business it's very emotional right like these are these are Memories the way people want to be treated is is very specific and important in your business I'm sure and it's different for how they want to be treated when they go to Target and so you know you need to understand what that what that looks like and what that feels like for them so Karen I would just note that I asked you what we could learn what smaller businesses could learn from what you guys do and you weren't sure how to answer the question you ended up giving us a fabulous answer oh good that's the magic of 21 hits all right we only have a little bit of time left um Jay I wanted to talk to you about a couple of things first of all the last few times I've asked you about your interest in doing an ESOP plan Employee Stock ownership you've given me one of two answers either you say why wouldn't I do that or you say why would I do that I'm wondering where you are on that today you know my whole thing is I need to understand things and sometimes it takes a while to process it I feel very good that after a year of thinking about it going to I don't know I've been to three four seminars talk to lots of people I am very comfortable that I'm sure esops work wonderfully in many situations but it's not for me at this situation I'm not leaving the business I don't need cash out and part of it is the amount of federal tax you would say by esing half of that's going to get eaten up by the fees between the accounting and the legal fees so I am very comfortable that for me at the moment it doesn't make any sense and I absolutely went back and forth on it but um I did a lot of talking to a lot of people and I really do believe that I'm sure there's cases where it's incred thing and but not for me at this point but you're now focusing on a slightly different strategy ah yes so here's what I it did help because that made me think about my employees about the retirement about them leaving with some money you know my CFO left after 22 years he retired I brought a new person in so we're looking at everything with a new set of eyes and we looked at our 401k plan and I realized I think I can do better with my 401k plan the the matching thing I believe is inherently unfair to if you have a diverse Workforce that goes everywhere from people making six figures down to 30 if you're doing matching you're basically helping the people that have a lot of money get more money and the people at the bottom who can't save as much they're not getting much so I'm looking into restructuring my 401k plant and getting a safe harbor it's called so that people don't have limits how much they can put into it Jay isn't the key in know if you go the Safe Harbor route that you commit to paying 3% for all of your employees that's one way but this is what I had to figure out which I had to explain to them so I take my whole payroll and I just basically multiply it by 3% but if you've got a lot of highly paid people to work for you you could cut a deal with them and say look instead of giving you the bigger raise I'm going to give you this 3% which is better for you because you can totally put it all into the 401K plan it's a win-win so it's not really 3% of your whole payroll for the highly paid people you could you could probably work out a deal with them to you know not take it out of the raise and then maybe you give a little less raise I think there's some ways of mitigating that but at the end of the day it certainly would be a good and I listen I've been in business 43 years I'm in a different place in a lot of people I couldn't have done this 20 years ago but if you can do it and you're profitable it would really be a great thing if you knew that when your people retired they were leaving with hundreds of thousands of dollars in their for that would be an ideal thing and I think there's ways of of maneuvering that I think we should just explain isn't the Safe Harbor aspect of this is that you it gives you Safe Harbor from the government com coming after you and saying that your plan is discrimin discriminatory right it's not that they come after you what the government doesn't want is 401K plans just to be for the top people they want to make sure it's spread around so they go through discrimination tests and they figure out how many people are in it how much they putting into it so by safe harboring the government goes okay you can do whatever you like you're you're covering everyone because you're in that instance you're paying everybody 3% right or there's other ways of doing it talk to your provider it's worth having that conversation and what I like about it is I'm taking a little piece from the ESOP thing and putting it into this and I think the end result will be similar that I'll be able to make sure my employees are taken care of that my average person's been here 11 years I got lots of people that have been here 20 some years I would like to know when my people retire they're leaving with a nice Nest Egg Sean I feel bad we haven't really gotten to you the clock is ticking I got to harass Jay so he got his yeah he had his shot there no and and hey look you know I actually really love that dialogue because it it went from like the high the high level of Karen talking about a methodology which I think a lot of people listening to this show could really benefit from in terms of thinking through the customer perspective and talking to customers and then it went to like Jay's experience and how he does it which is is like a really solid way of doing it and and what I was trying to argue against which I see so much of is folks sending out surveys it's I just think it's like the worst place to start from it's lame I mean how this is what I would no this is what I would start with which is what I do I make sure every one of my employees every single one of them knows if a customer ever says something to you that they're bothered by something or that you think we please make sure you tell us we want to know about it and it works they they tell us and we know about it and we and some we called a customer it's like let your employee because I'm telling you is a is a customer here I went to to a big department store I bought some light bulbs of the six I bought four were broken because they were packaged badly I took it to the return Department I told her and you could just read her she couldn't care less she does she put it right back on the Shelf someone else is going to buy the broken bulb tomorrow she didn't say oh thanks for telling me no comment whatsoever and that's the way big business not all of it but that's the way some big businesses are running like make sure your employees know hey you're on the front line please tell me if you hear anything that's valuable or go one step further with those employees and and instead of just saying tell me if you hear something ask them to ask their customers you know how they're doing or how they what how they feel or what they think yeah well all I mean basically Jay you're highlighting the Vicious Cycle of corporate America right which is they don't treat their employees well so their employees don't really care about the customer experience so then the customers have a bad experience so then broken light bulbs end up on the on the thing and so then they have these additional costs that are hidden within the organization and so you know small businesses have a really a really amazing opportunity because they can create a culture where their employees feel valued and you know what we call that instead of vicious cycle we call it the virtuous cycle yeah exactly and it goes the other way your employees feel good about taking care of customers the customers feel good and it just and now they feel good because we're taking care of customers how great is that all right my thanks to Sean busy Karen Clark Cole and Jay goz uh as always thanks for sharing and uh and thanks for helping me get to this point where I think we have some exciting things ahead for uh for 21 hats don't change the name thank you Karen 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]