Can Jimmy Beans Wool Sell Yarn on LinkedIn?

This content was produced by 21 Hats.

See Full Show Notes By 21 Hats

Podcast Transcript

Loren Feldman:
Welcome, Shawn and Laura, it’s great to have you here. You were both part of the first episode we taped this year, along with Paul Downs, who told us that his New Year’s resolution for 2024 was to make some damn money. I think you both echoed his comments that the previous year, 2023, had been pretty tough, and that you were hoping for better in 2024. We’re already about two months into 2024. I’m curious how it’s looking. How about you, Shawn? How’s it going so far for you?

Shawn Busse:
You know, it’s going really well. We’re having a really good first quarter. The projections, at least three months out, look really good. And then if I go six months out, they still look pretty good, too. So the funnel has finally got good opportunities in it. Yeah, it’s a 180 from especially the third quarter last year, which was really, really dark.

Laura Zander:
Ooh, interesting. Interesting on the third quarter being hard. Ours was the first and the second quarter. So I guess that probably trickles down to B2B being third quarter maybe? Were you expecting the third quarter to be bad?

Shawn Busse:
You know, we started to turn on the red lights of freak out around the end of the second quarter. We were like, “Uh-oh, this isn’t looking good.” But the problem is that, historically, the summer is always a slow time for us. So it’s hard to know: Is this seasonality or?

Laura Zander:
Same page.

Shawn Busse:
Turns out it wasn’t seasonality. It was just bad.

Loren Feldman:
Do you attribute your turnaround, so far this year, to the campaign that you’ve told us about, of getting your whole team to reach out to more people? I think you spent 100 days trying to make new contacts. Is that what this turnaround is about?

Shawn Busse:
In big part, yeah. We took it really seriously, and we took action. And that’s really encouraging that you can change the trajectory of your business in a pretty short period of time if you take the right action. So that was good.

The other thing we changed was shifting the responsibility for business development from mostly just me—and maybe with one other person in the past—to kind of a team sport. So we kind of made it, “Hey, this is the expectation of the job if you’re within these roles.” And that made a big difference. We also changed our offerings a bit. So we brought some new products, product services, to market that were a little easier for people to buy, a little smaller price tag. And that was, I’m finding, just a lot easier to sell.

Laura Zander:
Can I hijack this just a little?

Loren Feldman:
Sure.

Laura Zander:
I’m so curious, because last year for us was one of the hardest years that we’ve ever had. And for us, it turned into an emotionally difficult year. And so, post mortem, I’m looking back and the first quarter doesn’t really go as well. And we’re trying to dig in, and we’re trying to identify: What is it? Is it us? Is it the market? Is it you? Is it you? Is it somebody in particular? And we actually did find a couple of instances of things that people were supposed to be doing that they weren’t doing. So that, in some ways, was actually validating, and that was something we could fix. We’re like, “Okay, great. Problem solved. We know what’s going on. You were supposed to reach out to these customers, and you didn’t.” And then, second quarter, the yellow light was on, and now we’re in the red light. And we’re like, “Holy crap! What are we gonna do? It’s not getting better.”

So do you start to think about laying off people? Do you just ride it out? What happens when cash flow is starting to burn up and how do you not—I’m asking you because you seem so much more level-headed than I am—how do you not kind of emotionally freak out? I mean, it’s not that we go into panic mode, but what are you guys doing? What is the marketing team doing? How come you’re not doing that? And then you start to nitpick. And you’re like, “Why aren’t you sending the newsletters out three times a week instead of two times a week? And why aren’t you doing this? And why aren’t you doing that?”

And I don’t go at it quite that obtusely, I guess. But that’s what’s in my head, as you start to try to figure out, one: What’s going on with the market? But two: Is this team doing what the team is supposed to be doing? Do you kind of go through that? And then, of course, the team starts to spin and we’re all kind of struggling.

Shawn Busse:
I think it’s important to note, you know, you have a bigger organization than I do. I’m sure the dynamics there are different. You know, we’re in that, like, 11-, 13-, 14-person size company.

Laura Zander:
So you can all talk about it together.

Shawn Busse:
Everybody feels it. We can talk about it. We can really recruit everybody to the effort. And the team I have is pretty high-level.

Laura Zander:
I was gonna say, you’re all professionals, right?

Shawn Busse:
They’re all professionals. Salaries are ungodly high, but it means you can talk a profit-and-loss statement with the team, and they get it. And we do. And we look at profit and loss together and go, “Holy shit!” And also, by the way, our first quarter was terrible, too. We just had a terrible year. It was so, so, so, so bad. I haven’t had as bad a year since the Great Recession.

Laura Zander:
Okay, and did your team step up and like work more? I mean, are they kind of motivated to fix it?

Shawn Busse:
Very motivated. Yes.

Laura Zander:
Okay, I’ve got people who don’t want to work more than 39 and a half hours a week, you know?

Shawn Busse:
Is it working more? Or is it working on the right things?

Laura Zander:
A little bit of both. Yeah, and one of the problems is, our leadership in certain areas maybe isn’t, as we discovered, as strong as we had thought.

Shawn Busse:
You know, Laura, that theme you just shared there, I’ve heard that more than I have in a long time. Like, “Oh, we thought our leaders had things, and that they didn’t.” Like, kind of that middle management layer.

Laura Zander:
Exactly, that layer. It just fell apart.

Shawn Busse:
Why? What’s your what’s your thought on what’s going on?

Laura Zander:
You know, we have a Texas business, and we have a Nevada business. And they’re very different. And the drop in sales affected both of the teams extremely differently. The team in Texas really dug into expenses. Our sales were lower, but our expenses were lower than our sales were lower. So we actually had a better financial year than we had before, because we dug in under the line. But on the Nevada side, which is primarily ecommerce, I think we got this false sense of security and confidence from the bump that the pandemic gave us as an ecommerce business.

And so I think that the team probably felt like we were Superman, and could really do anything. And all we have to do is put new products up and talk about them in a newsletter, and, bam! Because we got this huge bump in customers during that time. So then, I think that, what my general manager and I talked about a bunch was, we’ve been working for 20-30 years. And so, we’ve seen ups and we’ve seen downs, and we know there are just down years. And when there’s a down year, you’ve got to dig in. Our team is so young that they haven’t experienced that. And not to stereotype, but there’s a little bit of a 20-something work-life balance. You know: don’t want to work past five o’clock. This is a for-profit company, and I don’t know.

Loren Feldman:
Laura, I’d like to throw another, kind of a related possibility at you, which is this: Both today and in your last time here, I’ve heard you talk about not being aware of things going on in the business in a way that I haven’t heard you suggest in the past. And I’m kind of wondering how much this is related to you not being as involved in the day-to-day as you have in the past, because you’ve been involved in doing other things, including—

Laura Zander:
In Texas.

Loren Feldman:
—buying other businesses.

Laura Zander:
Yeah, I think you’re spot on. And I hate to even say that. I mean, I have been for the last four years on a path to semi-retirement, when it comes to the Nevada business, and had been working with our general manager for her to just take on the business. I can handle the financial side of it and do kind of the CFO role, but she would manage everything else: managing growth, managing the marketing, managing blah, blah, blah.

And the discovery this year was, she doesn’t have a strong enough team underneath her. And I didn’t realize this. I don’t think either one of us really realized how much she was doing, that her team was supposed to be doing. So when they couldn’t do something, she would step in and take it on herself. So she was working probably, I’m sure, 80 hours a week all year to kind of compensate for the work that wasn’t getting done.

So, back to your question: For whatever reason, I don’t really think that I add a ton of value on the Nevada side, on the Jimmy Beans side. But maybe I do, because I’ve been way more involved in the last three, four, five, six months. I mean, as Shawn said, once the red light really was flashing, I jumped in as a tornado. And I’m like, “All right, this is what we’re going to do, and this is how we’re going to fix it.” And I know I’m going to create some issues, and I’m going to cause some problems, but this is our business. And so, I should say, I’ve been way more involved in the last six months in the day-to-day. And I like to think it’s making a difference. You know, we’re up again. And we did some major course-correcting.

Loren Feldman:
This year is looking up?

Laura Zander:
Yeah. Yep. On the ecommerce side. Absolutely. Yep. It’s looking way better. Way better.

Shawn Busse:
Laura, last year, I promoted Anja Taylor to the president role in Kinesis. It’s part of my transition plan, one of the best decisions I’ve made in my business. I’m really, really delighted. Before she worked at Kinesis, she worked at—you know whenever you go into a store, and you see like the Nike section of the store, and they have all these displays and all this stuff? They were the company that built all the displays. I don’t know what the industry is called.

Laura Zander:
Merchandising.

Shawn Busse:
Yeah. So really, she supervised people who are running table saws and maybe occasionally drawing things and drafting programs. So really kind of blue-collar, manual-labor stuff. She oversaw maybe a dozen or more people. What’s interesting is now she’s overseeing people with six-figure salaries, sometimes two degrees, graduate degrees, etc, really a very different type of employee. And she kicks ass with both. Like, she was so good at being a leader. She’s one of these people who has “wow,” you know, the ability to just cultivate people around her.

Laura Zander:
Yep, that’s my general manager.

Shawn Busse:
And I’m just like: Man, that is such a valuable trait. And I think folks underestimate how important that is in an organization, where she empowers other people to be successful.

Laura Zander:
And that’s exactly who our general manager was. It’s funny. She came from merchandising, furniture, home decor—20 years of experience in that, mostly working with people who get paid by the hour. It’s been six or seven years now, and what she’s done to our business is phenomenal. But where I think—I don’t want to say we made a mistake, but—maybe we made a mistake is the marketing. And it’s customer acquisition. For me, that’s what it really boils down to: It’s the sales funnel. And I’ve been told that I’m a marketer and that I’m good at that. And I don’t know, I have a hard time thinking that other people can’t do it as well, or do it a lot better than I have.

So I’ve let go of that for the last few years, and I just thought she could take that on with the leader that she has. And I just don’t think their skills are there. They don’t have that same intuition. They don’t think that same way. They don’t think huge. They don’t think about getting Hugh Jackman to do a video for them. We haven’t had that for a number of years. And I think it’s just catching up to us. So that’s where I’m kind of stepping back in and going, like, “Okay, we’ve got to think big.” You know, going back to Marketing 101: It’s not just about marketing to our existing customers, which our team is really good at. It’s about: We have to grow. Literally, our customers are dying off every year. We have an older customer base, and we need to get new customers in. And we need to do it in a systematic way. And our team doesn’t think that way.

Shawn Busse:
And that’s the hardest marketing. New customer acquisition is 100 percent the hardest marketing you can do.

Laura Zander:
Oh, it is? I love that.

Shawn Busse:
One hundred percent.

Laura Zander:
Oh, I think it’s so fun!

Shawn Busse:
See, this is your unique gift. Anytime there’s something where you think it’s easy, and everybody else thinks it’s hard? It’s like, that’s the special thing. That’s your unique gift.

Laura Zander:
Yeah, it’s just door-to-door. I love going door to door.

Loren Feldman:
Along those lines, when you described it before as your team kind of lost sight of Marketing 101—

Laura Zander:
Yes.

Loren Feldman:
—I think, along the lines of what Shawn is saying, it really isn’t Marketing 101.

Shawn Busse:
No, it’s not.

Loren Feldman:
You brought a unique brand of creativity to it, and just the example you gave of bringing in Hugh Jackman to be part of a campaign. That’s not Marketing 101.

Laura Zander:
Yeah, it is. It’s easy. No, this is actually very enlightening, because that is the mistake. The oversight that we made is that I assumed that that stuff is just Marketing 101. Like, it’s not that fucking complicated. It’s not that hard. And so I let go of that. And my expectations, then, obviously, are set at the wrong level. And I’m expecting other people to just be able to do that. And it doesn’t come as naturally for them. And so we’re having to reset and reorganize, and then you figure out: Do I find somebody who that is Marketing 101 for? Which is expensive. I mean, this goes back to Cliff Oxford.

Loren Feldman:
But I don’t think that’s what you’re looking for.

Laura Zander:
Well, that’s what Cliff would always say. He’s just like, “You’re never gonna find somebody to replace you.”

Shawn Busse:
Who’s Cliff Oxford? Sorry, I don’t know, Cliff.

Laura Zander:
Oh, Cliff was a blogger for The New York Times. He’s been friends with Loren forever, and he was a good mentor to me, in a lot of ways. And he was a marketing genius, if you will. But yeah, he was always like, “You’re not going to find somebody else. Like, you are marketing. You are the marketing person.” And I’ve resisted and resisted and resisted. I’m like, “I don’t want to do it. It’s too easy. It’s boring. I’m gonna do other stuff.”

But anyway, maybe the takeaway here—and I love what you said, Shawn—is that if I think something’s easy, and other people say it’s hard, then maybe that is my unique gift. And that’s something I need to lean into, as opposed to trying to outsource or farm off. And then I get frustrated, because I’m just like, “Dude, it’s not that freakin’ hard.”

Loren Feldman:
Tell us about the two acquisitions, Laura.

Laura Zander:
Yeah, well, you know, red light’s flashing. Ship’s going down, ship’s going down. And we had a couple of opportunities to basically buy some sales, to buy some growth.

Loren Feldman:
You said the red light’s flashing and the ship’s going down. Tell us, is that really what you mean? Were you afraid that the business was failing?

Laura Zander:
No, but at a certain size, you have to have a certain amount of revenue to get above breakeven. And so, last year was tough. We were barely breakeven, and that’s not a healthy place to be. And it was fine for last year, but for me, there are signs there of things that aren’t going well, that if I project those two years out or three years out… We just can’t have that kind of year every year. So I’m looking around the corner trying to figure out: Okay, it’s June of 2023. What do we need to do now to set us up in 2024 so we don’t have a repeat of this year, knowing that it’s going to take us three to six months for some things to pay off? So we launched a new line of yarn, and then we did these two acquisitions on the Texas side of things.

And I did these two acquisitions for a couple of reasons. One was a brand that had gone out of business the year prior. And so I have been talking to the woman who had owned this brand for about a year. You know, “Hey, can we take it on? Can we take it on?” But we wanted her products, not her brand. And so it took her a year to acquiesce, and we launched her products in December. So when she finally said yes, which was in November, I’m like, “We gotta move on this. Let’s nail this. Let’s get it in the books, so that she can’t change her mind, and we can move forward with this.”

So it was something that we as a team had talked about a little bit every three or four months. But it came kind of suddenly. So it was a little bit of a shock to the system, and my team in Texas, they’re frickin’ heroes. They jumped on it. We were able to pre-launch these new products, and pre-sell these new products within about two weeks of us buying this. And we just got the products from the factory in Japan last week. We’re shipping them out. It’s going really, really, really well.

What happened at the same time is, before this opportunity came up, another hand-dyed yarn business came to me and asked if we wanted to take that on. And we needed the work. Our facility in Texas, our fixed costs, could absorb almost twice the amount of work that we were producing. So very little increase in fixed costs, but an increase in revenue. And so I’m like, “Let’s do it. Let’s take this on.” Their customer list would double our customer list, so we would get in front of a bunch of customers that we don’t already have. From a financial standpoint, we worked it out. It would pay for itself in a couple years. It seemed just like a smart thing to do.

Well, we didn’t realize we were going to buy the second company. And so when that second company, the one that took us three or four days to close on, when that happened, we were too far down the line with this other hand-dyed company to turn back. And really, I want to say from an ethical or a moral standpoint, the founders of this other business, this hand-dyed business, they were all in. I mean, they had already given me their passwords. It was just a small independently-run business, and I just didn’t feel right pulling the plug on it and really screwing them. So we took the hit, and went ahead and took this on, even though we probably shouldn’t have, in some ways.

And then the founders of the hand-dyed business, we were supposed to close on January 1st. And we were like, “Look, we need a couple of months. We can’t transition this over to Texas right away. We just don’t have the bandwidth. It’s the busiest time of the year.” And they were like, “Yeah, of course.” We put a service agreement in place where they were going to operate out of Arizona for a couple of months. Well, January 1st rolls around, and they’re like, “We can’t do it anymore. We need to transition it faster.” So they ended up only producing for us for a week. So we had to transition it to Texas the second week of January. And they made the mistake of telling all their employees a few weeks before we closed, and so half of them left. And so we were in a really bad spot. I don’t know, I mean, I guess we could have said, ‘“Sorry, you promised us that you would take this on for the next month or two months.” But I don’t know what that’s going to gain. We just decided to suck it up and work 80 hours a week and make it happen and do the transition.

So the month of January was unbelievably, ridiculously crazy stressful as we were trying to take on this new business in Texas during the busiest time of the year, training new people in new techniques, new facility, new equipment, new products, blah, blah, blah, blah, blah. But we made it through. And it was about six weeks of utter hell, and literally crying, shaking. I would literally, in the middle of the day, have to lie down in bed for like 45 minutes because my brain, I thought, was going to explode from the stress. But now, it’s all good. Now I’m looking for our next acquisition. [Laughter] I’m just kidding. I’m just kidding.

Shawn Busse:
You’re not totally kidding, though.

Laura Zander:
I am kidding. I’m not. There is one brand that I want to bid on, but not for a year. [Laughter]

Shawn Busse:
See?! I think this is the challenge. Okay, so here’s what’s going on, I think: You have a network business, meaning large numbers of buyers, potentially large numbers of sellers, and your instinct is to keep adding brands, which is actually really a good instinct. It’s like you add more and more and more that you can sell to that customer base, and you keep expanding that customer base. That increases the value and power of your network.

I mean, Amazon’s a network, right? Large numbers of sellers, large numbers of buyers. And so your instinct is to keep growing the network, which makes it more powerful and more profitable. That’s a huge lift. And so when you’re doing that, you’re taking your eye off of the marketing ball or the leadership ball. That’s the fundamental tension is your instinct is telling you, “Grow the network,” which is a good instinct, but then this other stuff isn’t happening when you’re doing that. Because that’s your other unique genius. Oof. And you love growing the network. That’s your passion, right?

Laura Zander:
It is. It’s fun. It’s new. It’s different. And right now, the other pivot that we made is, in Texas, we went from Madelinetosh being the brand in Texas that we had bought five or four years ago. Now, as of last month, we have formed the Maditosh Group, which is a distribution group. And so now we have five brands underneath it, to your point, so that we can have a presence in every independent yarn shop in the country through one of our brands. And nobody in our industry right now is doing that. Nobody is growing on the wholesale and distribution side of things.

And I’ve got people coming to us—and it’s mind blowing—who have worked for some of the most prominent brands in the industry—they want to jump ship. And they want to come to us, because they see us as the future. They see our growth, they see our passion. And so I think the other illuminating part of this year is that I always thought this Texas business and this Nevada business—when we first bought it, we envisioned sharing a marketing team. We envisioned sharing a leadership team. And things really blew up this summer, like a lot of crying, a lot of dysfunction. And it really made us understand that we have two separate businesses. It just is what it is. They’re just two completely separate businesses with separate teams and separate goals. And to your point, I need to figure out how to spend time in each business—good material time in each business—and what my role is in each of the two businesses, and quit thinking about them as one. Because they’re just not.

Shawn Busse:
You can’t hire the M&A work. You can’t hire somebody who can figure out the strategic acquisition and to manage through that. What if you threw $200,000 at a CMO? Like a true high-level marketer? I know The New York Times guy is, like, “No, no, nobody can do it.”

...

Read Full Podcast Transcript Here