What Are Your Goals for 2024?

This content was produced by 21 Hats.

See Full Show Notes By 21 Hats

Podcast Transcript

Loren Feldman:
Welcome Shawn, Liz, and Jaci, it’s great to have you here. Before we get going today, I just wanted to note, in case you missed it in your 21 Hats Morning Report, we’ve got another 21 Hats Live event coming up. It’s going to be in Fort Worth at Laura Zander’s Madelinetosh factory. It’s going to run from Wednesday, March 6th to Friday, March 8th. And it’s gonna be your chance to meet Jaci, Shawn, Liz, and pretty much all of the 21 Hats podcast crew. If you want more info, you can just shoot me an email at loren@21hats.com.

All right, now that 2023 is just about in the books, I want to ask you, what was this year like for you? Did it go as well as you hoped? Did you learn anything? Jaci, suppose we start with you?

Jaci Russo:
I feel like it’s always a learning experience. And one of the big lessons that I learned this year: We had some huge-project, new clients lined up at the beginning of the year. It was going to require staffing up, and we started a remodel to make room for the new people. While we are completing the remodel tomorrow—we move our current team into that new space, and it’s gorgeous and exciting—the two huge global clients still haven’t signed, 10 months later.

And so I’ve learned a lesson about moving faster than my circumstances allow. And so that’s been a valuable lesson. It’s a good year for us. In our 23 year history, it’s going to be our third biggest. So I have no complaints there. But I’ve got big plans for ‘24.

Loren Feldman:
Well, we’ll get to those. Are you sorry you’re moving into the new space?

Jaci Russo:
No, not at all. We bought the whole building in ‘05, and we only occupied two thirds of it. And it was inevitable that we would take over the final third eventually. The tenant had moved out. We use part of it as a workshop rental space, but the other part of it was going unused. And so I am excited.

I think for the most part, our philosophy, which has held true for 23 years, it’s always cheaper to do it today than to do it tomorrow. And we got a great rate, so I can’t complain about that. I’m glad we have room to grow. And the new offices are so nice, and my creative team is so happy. It makes them want to come into the office—another reason that we have provided to create more internal collaboration and actually being in the same room together. So it’s good. I might have jumped the gun a little bit. But you know, I’m all gas. That’s sort of my speed.

Shawn Busse:
Hey, Jaci, tell us a little bit about the financing side of things. So you bought in ‘05 when rates were not particularly amazing, but I’m sure you refinanced since then. Where are things now?

Jaci Russo:
We did refinance. I want to say the building is at 2.6. And this remodel is a little bit more than that, but still sub-four. So that feels like free money.

Shawn Busse:
Yeah, especially today. How long does the term of that note last?

Jaci Russo:
Fifteen years.

Shawn Busse:
Oh, that’s fantastic.

Jaci Russo:
Yeah, so we’ll have the building and this remodel well paid off before I think about retiring.

Liz Picarazzi:
Wow.

Loren Feldman:
So Jaci, it was your third biggest year, but you had expected to do more when the year started. Is that correct?

Jaci Russo:
Correct. We expected it to be the biggest year. And I acted accordingly. So I’m very pleased that we have had the growth we’ve had. We have improved so many processes this year. We are doing so many things smarter. We’ve upped our game, from a technology perspective, even more. So I feel really good about it. I’m just, you know, never satisfied.

Loren Feldman:
Did going ahead with the remodel, while not getting those two big clients, have an impact on your profitability for the year?

Jaci Russo:
Oh, it did. It very much did. Those two clients single-handedly kept us from being the biggest year we’ve ever had, because that’s how big they are. And I think the lesson in that is, we’ve never tried to have any one client be that much bigger than the others. We’ve had that once, years ago. And when, after our four or five years together, it came to a natural conclusion, it was a huge impact on us.

And so I think, in a lot of ways, I’m spared from having my business be lopsided. And this has given us a chance to add on some regular-sized clients so that when the big ones do say “yes” next year—because it still looks like it’s happening—we will be more balanced.

Shawn Busse:
Just a quick question, Jaci. What’s a big client, say in terms of annual billings or revenue, to your firm?

Jaci Russo:
Our average size is about 250-300. And this would have been about 750-800.

Shawn Busse:
Wow. So a big, big difference.

Jaci Russo:
Yeah.

Loren Feldman:
Shawn, how are you thinking about this year? Was it what you hoped it would be?

Shawn Busse:
Looking backwards? I mean, I was very, very realistic at the start of the year. I knew it was going to be a really hard year for us. Our market sector—we work with owner-operated businesses. That’s it. We don’t work with large corporations or even mid-market corporations.

Within our market sector, there’s just a lot of uncertainty. The constant drumbeat of like, “Oh, are we in a recession yet? Are we in a recession yet?” That really gets to folks, and what it causes them to do is to tend to play defense and to not take action. You know, kind of like Jaci’s example, even at a larger firm size.

So growth for us this year, this has probably been our first year, where we’ve actually not had positive growth—in 13 years. So it’s been a real challenge. I feel very grateful that all the things we’ve done up until this moment have really positioned us to handle these kinds of situations. So we have a really great line of credit. We have really long tenure with our employees, with our customers. A lot of it’s been rebuilding our marketing. So that’s taken a lot of effort.

Loren Feldman:
You also are moving into remodeled space, a new office, having given up your previous one early in COVID. How’s that going?

Shawn Busse:
That’s been a real bright spot for two reasons. One is that the commercial office market right now is just in a lot of pain. So our ability to negotiate a really fantastic deal was unbelievable. It’s like nothing I’ve ever seen in 20 years. The willingness of the landlord to accept the terms that we had was just kind of amazing. So that’s great. And then, I think the more important part is just the opportunities that are being created by coming in and working in shared space.

You cannot replace that. I really believe that, both from a sense of camaraderie and collaboration and the ideation and creativity that are happening versus remote. And then also from a client perspective, just having prospects and clients into your space. It has a different impact than when you meet with them on Zoom. And I should have done this sooner, probably a year earlier. But I’m glad I did it, and it’s really been transformative for us.

Loren Feldman:
Did you get any pushback from employees who had gotten used to not commuting, not coming in?

Shawn Busse:
None at all. No. If anything, I’ve got a lot of folks expressing how grateful they were, especially folks who have kids at home. I think that the home office environment with kids in it, especially during the summer… We just had a teacher strike recently. Oh my God, the parents were miserable, because their kids weren’t in school. And they’re just really excited to be coming into the office.

I will say this, we’re not heavy-handing it. We’re not telling folks, “Hey, you’ve got to come in this many days a week.” There’s much more of an organic approach to when we work in the office. And I think that creative flexibility and freedom is really well received. I don’t know. Jaci, what’s kind of been your approach to that? I’m curious, because you run a creative shop, too.

Jaci Russo:
I do. We’re kind of half creative, half strategy. And so I run the strategic team, which includes the research team, and what I think of as the doers—PR, social media, account management—that’s all my group. And then Michael runs the creative team, which are the graphic designers, the copywriters, videographers—

Loren Feldman:
That’s your husband.

Jaci Russo:
Yeah, also known as husband and father of our four children. [Laughter] So that’s a whole podcast episode to itself, Loren. Like, that’s some marriage counseling we probably don’t want to get into on the air.

Loren Feldman:
We’ve hit on that a little bit in the past. But we’re gonna come back to it.

Jaci Russo:
Any time you want. Yeah, it’s one of my favorite topics. At our two-hour professional development that we do every month, we bring in a therapist who is a coach, who guides us through different exercises. And today’s session was on effective communication. And it did probably turn into the Russos marriage counseling session at one point. [Laughter] We managed to turn it around and make it very positive and professional.

But to answer Shawn’s question, eventually, over the 23 years we’ve been in business—we started the company when I was eight months pregnant with kid number two, number three was the next year, number four was the next year—we’ve always had a very flexible when-you-work and where-you work-approach.

We hire adults. It’s not about their age, it’s about their ability to self-manage. And we just expect the work to get done. And if it’s not working the way you need it to, or we need it to, let’s have a conversation and find a way to make it work better. But if you need to not work in the morning, because you’re going to your kid’s thing at school, then my expectation is you’re going to work faster, or smarter, or a little bit more at the end of the day to get it done. And as long as everybody gets it done, we’re fine.

And that’s worked pretty well for us. There are a couple of occasions where that’s fallen off. So in 2020, when everybody went home, we were like, “Okay, we’re already set up.” Everybody had server access from their houses. Everybody has high-speed internet at their houses. So that didn’t throw us for a loop. As we’ve come back to work, in the past two years, we’ve just done a better job of explaining we need to have some connection. So we have these professional developments. Everybody was responsible for an open or a close at some point during the week. So they at least touch base. They come into the building, we see their faces, we get to know they’re okay. But then otherwise, we work on Zoom.

Loren Feldman:
Shawn, are you trying to get people to come in on specific days? Or is it completely open?

Shawn Busse:
One of our team members did something really interesting, just spontaneously. He started doing a poll at the end of the week on Slack saying, “Okay, here’s Monday, Tuesday, Wednesday, Thursday, Friday of next week. Raise your hand: Who is going to be in on what days?” And so people would just start to put their little emoji next to the day of the week or multiple days of the week. And it was kind of interesting to sort of see that manifest, how certain folks would come in on certain days, and some folks would come in together at the same time. And that’s been pretty cool.

I think a really powerful lesson I’ve learned over the years, in terms of leadership, is that the best kind of engagement and buy-in is when folks kind of create their own path forward instead of it being imposed on them. And so watching this happen has been pretty exciting to see. We talked as a leadership team about, “Hey, should we have a dedicated day or certain times?” and then this kind of popped up. And then to also see things like we have a prospective client coming in next week. And the team raised their hand and said, “Hey, let’s make sure as many of us are in the office as possible, so they can get a sense of who we are and that we have heft and horsepower.” And I didn’t say that. That came from a graphic designer.

So you read these articles about corporations forcing their people in or not, or whatever. I think a lot of these problems are due to the fact that they don’t have very high employee engagement. The employees actually don’t really care that much about the businesses they work for. So you get a lot of that friction. So I don’t know. I didn’t expect it, but I’m really delighted by it, because I have a tendency to want to be like a benevolent dictator. [Laughter] I’m letting go of those impulses as I get older. And it’s pretty exciting to see what’s happening.

Loren Feldman:
Liz, how are you thinking about 2023?

Liz Picarazzi:
I feel really good about it—not as great as I would like to. But I think most people feel that way. So this was our biggest year yet, revenue-wise. Growth-wise, it was not. We didn’t grow as much as we wanted. And it’s interesting that Jaci says that part of her year was that she didn’t retain a couple of important clients. We really had that concentration as well with some of our municipal clients in particularly New York City. So while we were able to recover the revenue that we had in government contracts last year, it still was something that we were a little bit surprised by.

And I think really, the climate in New York City with trash is rapidly changing. If you look in The New York Times any other week, you’re going to see something about trash or rats. But the sanitation department is experimenting with a lot of different things, and Citibin was just one of them.

So we still are all over New York City. We’re in five boroughs. We continue to get business from Business Improvement Districts that have their own budgets. But in terms of getting a big city contract, it’s actually not even something I’m pursuing anymore. In terms of the finances from 2023, I’m feeling good, but not great about it. I am a grandiose entrepreneur. [Laughter] So every year, I’m gonna say, “I want to double. I’m gonna do it.”

Shawn Busse:
I remember that at the beginning of the year. And I’m like, “Wait a minute.”

Liz Picarazzi:
Yeah, well, you know.

Loren Feldman:
You have done it, right?

Liz Picarazzi:
Yeah, but last year, not this year. But that is about the concentration of clients in municipal. In terms of 2023 and our mission, we have kept thousands of trash bags out of sight and contained in New York City and many other cities, many other public spaces. Our work just looks incredible. When I look at photos of my own work, I have to say I’m very proud of the bins and how well they beautify a lot of neighborhoods, commercial corridors. So that’s been really gratifying. Also feeling good about some of the new products that we’ve developed, some of which we haven’t even rolled out yet. We just did the photography for some of the new products that we’re pushing out, and that’s in January. That’s going to be really exciting.

Loren Feldman:
Can you give us a hint of what’s to come?

Liz Picarazzi:
Sure, so we have a couple of different sizes, where we can either go vertically or horizontally with the bins. And we’re going to be marketing—a double-depth, is what we call it—a double-depth bin that will fit twice as many bins in it. And we’ve been using that a lot in New York City, of course, where there’s such a space constraint where especially many large buildings, they’re not using their space efficiently, unless they have this sort of a double-depth configuration. Because they don’t have the width to have enough trash cans in the area. We’ve done a couple of these over the years, but they’ve always been custom projects. And it’s actually something that we’re going to be fabricating on a mass production level.

And then the other big one is composting. So we have modified a bin that we’re going to be using for composting. We haven’t started marketing it, but we are piloting it in Boston now. And that’s gone really well. So those will be a really big focus next year. I think that we’re poised for a really great 2024.

Shawn Busse:
So from a composting perspective, are you seeing that growing in other cities? Because here in Portland, we’ve been doing it a long time. And it’s actually pretty cool, but there’s no good answers for… Like our new building. They have this composting situation. It’s not pretty. So I’m just very curious, you feel like that’s a growth area?

Liz Picarazzi:
I do. Not for residential, but for public or community composting. I mean, the bins that we have in Boston are for community composting, and I think it’s probably not a huge group. In New York, at least for residential, we do have our own composting bins. I just restarted composting a couple of months ago because the city restarted in Brooklyn. And I can attest to how gnarly the cans can get, even after a couple of weeks. If you don’t line them up, if you let rain get into them, the maggots—I’ll say the gross word—there are maggots. But you know, if you look in a lot of trash cans, you’re gonna see them, too. But it’s so important, and it’s really hard to get people to change their behavior.

Loren Feldman:
Liz, has your business moved more in the direction of municipal than residential in the past year or two?

Liz Picarazzi:
Definitely in the last two years. In the last year, I would say we’ve moved more to like 50/50, whereas before, it maybe was like 10 to 15 percent. So it definitely has shifted, and a lot of my priorities for next year are in the municipal realm.

Loren Feldman:
How does that change things for you?

Liz Picarazzi:
We really want to replicate the success that we’ve had in New York and other cities, and we’ve already done a good amount of that. But it is going to take kind of perpetual marketing to continue to be that the brand that we are known for is municipal containerization. So I want to keep that going.

We do have a couple of competitors in the space, and I know that I’ve beat them into some of these cities, but they’re probably better funded than me. And so for me, especially in the early part of the year, to be really hardcore on the marketing and the reach-outs to cities is going to be important.

Loren Feldman:
I assume that marketing is very different if you’re aiming for business districts, as opposed to residential.

Liz Picarazzi:
It very much is, and Loren, with you as a writer, you’ll probably appreciate that I wear many hats when I write copy for different audiences.

Loren Feldman:
I love it when people say that, Liz. Thank you.

Liz Picarazzi:
Yeah, well, I mean, sometimes I’m writing for the bear audience. Sometimes I’m writing for the city audience, sometimes for property managers of multifamily buildings, sometimes for single-family homes. And I do have a writer who’s helping with a lot of that, but I still do write a lot of the copy. And I’m happy I’ve gotten a lot better at it, but when I first started having new segments, I did struggle with it and would drag my feet. But now it’s pretty easy to sit down and know, “Okay, I’m sending this postcard to Aspen. What should it say?”

Shawn Busse:
Liz, we’ve got three marketers on this. This is kind of funny. So we have three folks who have marketing or marketing adjacency. So how much energy, time, money, do you think you put into marketing? Express it maybe as a percentage of revenue. Have you ever quantified your time and your cost?

Liz Picarazzi:
I’m not going to speak on the financials of it, because I am not close enough to know if it’s like 10 percent or 25 percent. It wouldn’t be that much. But I would like to be more accurate. In terms of my time on it, I would say if you bundle lead generation, business development, and marketing, that it’s probably over half of my time.

Shawn Busse:
Yeah, and then what other resources do you have to support you in it?

Liz Picarazzi:
So I have kind of an internal person and a half. And then I also have three external contractors. They’re not full time. Like, I have one person that literally just does renderings for our proposals. She’s amazing. We can take a picture of any corner of New York City, anywhere that has trash bags on the corner, and we superimpose the bins on them. And those go into our proposals that have been requested, but I’ve also been known to send unsolicited proposals to people. And that’s been a really great resource. You know, anytime we have a brochure—

Loren Feldman:
Has that worked?

Liz Picarazzi:
I think so. I can’t say for absolute sure, because with some of those business improvement districts, we had several touch points. But I think they do appreciate that we’ve taken the time to do that. And it’s really a super-effective way for us to show the difference. Because if you’re in charge of a commercial corridor, and there are trash bags on every corner, that’s actually a pretty big burden on you to solve a problem that can be solved with Citibin. So, yes.

...

Read Full Podcast Transcript Here