Boss Life Page 4
Most of the time, the salesmen can steer a client to decisions about table size and shape that are within our targets. But would I decline a job if it looks like it will be difficult to build, or ship? Or just suck it up and do it anyway? It depends on the amount of money involved. It’s always tempting to close a large deal. But what if the client has a lot of money, wants something tricky to build, and we are not sure whether the budget is sufficient to cover the cost?
There’s a job like this on our shop floor now: a big U-shaped table. Each arm is thirteen feet long, and the base is twelve feet wide. We’re building it for Company S, a food giant with headquarters in the Midwest. The job took a long time to develop. They first called in the spring of 2011, but didn’t give the go-ahead to submit a proposal until November. Nick did the initial design, working from a very simple sketch provided by the architect. The only detail on the drawing, other than the size and shape of the table, was that the top was in three pieces, with a top depth (the dimension from the outer edge to the inside of the U) of five feet. Big problem, as the two pieces forming the arms of the table would be thirteen feet long, and the piece forming the base of the table would be twelve feet long and five feet wide. None of these would fit in our sanders, and they would be hard to move around the shop. Company S also wanted a very traditional look, with lots of intricate detailing on the base of the table.
Nick submitted a first design in November 2011. They thought it was promising but wanted some changes. Nick made some changes. It was better, but they wanted a few more tweaks. Nick made a few more tweaks. Now they liked the design but were nervous about hiring us, since we are far away from their headquarters.
I offered to jump on a plane and make our final presentation in person. In early December 2011, I spent several hours working with the chairman and his team. Face time did the trick. I was able to tease out their biggest concerns: that the table would be late and over budget, and that it would be flimsy. I closed the deal by agreeing that the tabletop would be made in three pieces as originally specified and that the mid-March delivery date was inviolable. And we’d absolutely stick to the original budget of forty-five thousand dollars. The timing was difficult, but not impossible. The budget would be a crapshoot.
We price our tables using a very complex Excel spreadsheet that takes into account the size, shape, materials, number of pieces in the top, power/data configuration, and other factors. It spits out two important numbers: the overall price and time estimates for the number of man-hours needed to complete the job, broken down by design, construction, finishing, and shipping. Our spreadsheet is reasonably accurate for most tables, but for very large and/or very complicated jobs, its algorithms become questionable. When we can’t predict how some jobs will go, we guess and hope for the best. We’ve estimated 314 man-hours to do the Company S table.
Steve Maturin, Ron Dedrick, and Sean Slovinski are building it. All three guys have superb hands. This project requires them to dust off old skills and complete some very difficult tasks without help from our new machines. We’re using our CNC as much as possible. The U-shaped top is made of subsections, each small enough to fit on the CNC, that will be glued together to make the three large panels. The entire perimeter of the U is composed of a band four inches wide, made of solid cherry. This outlines a six-inch-wide band of mahogany. The mahogany band surrounds the center panels of the table. These are thirty inches wide and veneered with pommelle sapele, a highly figured African wood. Each of these bands, composed of multiple pieces, will be cut by the CNC machine, then glued together so that the top surfaces are perfectly aligned. Those assembled top pieces will then be hand-sanded to perfect flatness, a task we’d normally do with machines.
If you watched Steve and Ron build this top, which took two weeks, you wouldn’t see anything spectacular. No shouts of triumph or end-zone dances. They started with the glue-ups. All those pieces, almost three hundred feet of perimeter, are held together with clumsy iron clamps. Each inch of that length needs to be tapped into perfect alignment, while the clamps are being tightened and before the glue dries. Glue-up takes the first week. Then they do nothing but sand, for hours and hours without pause. They have to move a hand-held sander at the perfect speed or it will burn through the paper-thin veneer and the top will be ruined. They repeat a single physical motion: starting with hips tight to the edge of the table, bending at the waist until their backs are nearly horizontal, arms fully extended, then returning the sander to the start position. Every pass has to be perfect, or the sanding will be uneven and the finish will not look right. Bend. Extend. Straighten. Bend. Extend. Straighten. All day long, holding a hot, noisy sander. This is hard, sweaty work that requires the delicate touch of a concert pianist.
It’s a pleasure to watch. Unfortunately, as a businessman, I am not so excited. Highly paid workers using traditional skills to build a complex design is something I never want to see in my shop again. Three of my best workers are bogged down in a single project, and simpler jobs are not getting any attention. We could complete the easier work ahead of their time estimates and meet my monthly build and delivery targets. Instead, the Company S table is sucking up labor hours and leaving my guys too tired to do overtime. We are losing money.
Company S is just one of five orders on the shop floor in February. Their values total $187,639. This is short of my $200,000 build target, but we built $216,614 in January, so I am not too worried. There’s other activity out there as well. The tables we built last month are being packed and shipped. And in the office we’re processing the usual stream of incoming inquiries, trying to convert them into sales.
Customers contact us in two ways: phone calls and e-mails. The vast majority of these are initiated by someone who visits our Web site. We make a very specialized product that lots of people want to buy but cannot find in local stores. So they head to Google. Within a second, the connection is made: interested shoppers meet Paul Downs Cabinetmakers.
Before the Internet, matching a buyer and a seller was far more complicated and expensive. The more specialized the product, and the greater the distance between client and maker, the harder it was to do a deal. Buying ads in media with national or international reach was extraordinarily expensive. Only a business of substantial size, selling a product that everyone needed, could afford to do this. A tiny company like mine was forced to serve a local market. Direct-mail campaigns and local print advertising were not cheap, but within the realm of possibility. That is exactly how my business developed in its first fourteen years. I spent my marketing budget on print ads in a local magazine.
My first ads appeared in 1993. These fledgling efforts required the services of a professional photographer, writer, and graphic designer, who cost me about ten thousand dollars. (Now it’s almost free, using digital photography and cheap software.) Monthly ad charges exceeded two thousand dollars, for an eighth of a page in black and white. I raised the money to start this effort by selling some of my company to my father and brother—a pity investment on their part.
The magazine had a monthly circulation of a hundred thousand. How many of those people were looking for custom dining sets at any moment? Not many. A very small number of potential buyers saw my ad, and a subset of them made a trip to my shop to see the designs I offered. Who has time for that kind of shopping? Wealthy women with large houses to fill.
These face-to-face meetings were nerve-racking experiences. We would go through my portfolio of photographs to see if anything was of interest. There was no guarantee that the client would see anything she liked, nor any guarantee that she could afford it if she did. It is amazing that I sold anything at all. As a feedback loop between Design and Sales, though, these meetings were hard to beat. Clients asked me for all kinds of items: dressers, beds, built-in cabinets, closets, porches, you name it. I made anything, but dining room furniture was the best fit for my capabilities. As a product, it had advantages. First, clients will spend goo
d money on it, in particular to get a dining table made to fit their room. Second, making sets of chairs offers the shop floor an opportunity for repetitive work, which is considerably more efficient. Third, there are lots of ways to improve on traditional designs.
I had hundreds of meetings with clients and developed table, chair, and server designs that addressed their needs. The more clients I worked for, the more designs I developed. The more designs I had, the better the chance that the next buyers would see something they liked. Feedback loop in action.
My shop grew throughout the 1990s. By the end of that decade, I had six employees and six hundred thousand dollars in annual sales. My salary would fluctuate between thirty and forty thousand dollars annually. I was getting very tired of face-to-face sales, though. Selling custom furniture to affluent couples was a multi-step endeavor, and at some point the husband got involved. Most of those guys had day jobs, so I ended up doing a lot of evening and weekend meetings. At the same time, I was trying to be a helpful husband and father. My wife, Nancy, and I had been blessed with twins in 1994, and had another boy in 1996. One of the twins was born with severe autism and my wife needed a lot of help. So I would work a long day in the shop, rush home to a house full of little kids, and then go out again in the evenings to clients. I worked most Saturdays as well. Then I heard about this wonderful thing called a “Web site.” I could display my entire portfolio along with the prices. Anyone could view it anytime and decide for themselves whether they could afford my work. And I could introduce new designs as fast as I thought of them.
I started work on my first site in 1999. By the end of that year, I posted more than a hundred and fifty pieces, each with pricing. I started showing my Web address in my magazine ads. It worked—easier shopping inspired more calls, and I spent a lot less time on tire kickers.
In 1999, an architect who had bought a dining table from me was renovating the offices of a local company. They wanted a flagship boardroom table with the latest power and data connections, so he asked me if I was interested. The table was twenty-four feet long, and five feet wide at the center, with contrasting panels of cherry, bird’s-eye maple, and curly anegre. It was a spectacular design.
The biggest table we had made, to that point, was less than half the size of this monster. But it wasn’t beyond our capabilities. I fine-tuned the design a bit and gave it to Steve Maturin to build. This was before we had any CNC machinery. In an astonishing feat of craftsmanship, Steve built the entire table by himself and beat the time estimate. We installed it and I photographed it with my first digital camera. I put the photo and specifications onto our Web site in 2000, labeled “Lippincott Boardroom Table.”
Fast-forward three years. My ads are still running in the local magazine and sales continue to grow. And the Lippincott Table is going viral. Google started showing it as a top result when people searched for “boardroom table.” Suddenly, people all over the world had found my Web site. And in 2003, we started getting the first calls from people who wanted a conference table, along with those who wanted dining tables. The online channel was far more effective, and cheaper, than the print ads. In 2003, less than 5 percent of our business was initiated by a visit to the Web site. By 2005, that percentage had risen to 95 percent, and I abandoned print forever.
Being the top search result for “boardroom table” gave us the opportunity to make money at no cost to us. Apparently we weren’t the only ones getting this free lunch, so Google monetized its traffic with the introduction of AdWords. This program reserved the best positions on a search results page for paid advertisements. Here’s how it works: a potential advertiser (such as Paul Downs Cabinetmakers) identifies search terms that potential customers might be using (like “boardroom table”) and offers to pay Google a certain amount to show an ad whenever someone searches those terms. If we offer more than anyone else, our ad is shown at the top of the search results. If we offer second highest, then our ad appears below the top bidder, and so on. We started using AdWords in 2004—we were very early adopters. I started buying a range of search strings, concentrating my budget on dining tables. But the boardroom table inquiry stream was growing fast, and those buyers were much easier to deal with than residential buyers. I needed to decide between dining tables and conference tables. Eventually I realized that if we were really going to sell conference tables, I would have to rethink the way we designed the product, our sales methods, how we built them, and how we safely shipped them to the customer. Design, Marketing, Production, Logistics, Warranty Administration Service: every function of the business would need to be reinvented for the new world we had entered. That effort consumed me for the next years, right up to the crash in 2008.
This condensed history makes the opportunity presented by the Internet look obvious. Am I a farsighted business visionary? No. I was lucky. Google, itself growing at chaotic speed, used an algorithm to read the whole Internet, and it chose a page on my little Web site as the best depiction of a particular thing. And Google also provided an efficient channel between a world of strangers and me. I had nothing to do with that. At the turn of the century, my day was taken up with ordinary tasks. I was doing all the selling, which took up most of my day. I was also doing the marketing, engineering, scheduling, project management, material ordering, bookkeeping and payroll, banking, hirings and firings, and also driving the truck and making all our deliveries. That was ten to twelve hours of work each day, and then home to a house full of little kids. There is no broad vantage point in that existence. No retreat from the daily grind, no view of the big picture, no time to figure out what it all means and what to do next. Big decisions get made for picayune reasons. I created a Web site so that I could stop working on the weekends. Watching couples bicker over which chair they liked best drove me to create new designs. I took a partner because I was lonely and wanted a mentor to teach me the business skills I lacked. I started thinking about conference tables because people suddenly started asking for them. I made lots of uninformed choices. The good ones turned out a little bit better than the bad ones turned out badly, so the company survived.
My experience with a partner is a very long, complicated story. The extremely short version is that I sold some of my ownership stake to one of my clients in 2002. I was warned that this was a bad idea, but I felt trapped. The company needed to expand so that I could hire some people to help me with my workload, but I couldn’t make it bigger without increasing my hours, and I was already tapped out. The partnership seemed like a solution. The Partner, as I will call him, had a good reputation for honesty and fair dealing. He brought an infusion of capital to the business, which we used to move to larger quarters, upgrade our information infrastructure, and introduce CNC machines to the shop floor. We also hired shop workers, willy-nilly, to keep up with our growing sales. All this was expensive and disruptive. During those years, the company made no profits. In fact, it lost substantial amounts of money.
Everything might have turned out differently except for one piece of extraordinarily bad luck. Prior to teaming up with me, The Partner had owned several manufacturing businesses that had done well. I was looking forward to working with someone who could mentor me and help me learn new business skills. I was very good at design and sales but very bad at running the factory, figuring out our costs, dealing with my employees, and many other things that a boss must do.
After our partnership was formed, The Partner said that we absolutely had to clean up our books and properly keep track of our financials. And he had an experienced CPA to recommend: his wife, Jenny, who had been the money manager for all his previous businesses. I liked Jenny. She was extremely intelligent and diligent, very easy to work with. I was delighted to have her take over what had been a classic receipts-in-the-shoe-box operation. She got right to work and set us up with a chart of accounts with the data from my two previous years of operations. This took four months.
And then she died in her sleep, at
age fifty-four. The Partner was devastated. And, although nobody realized it at the time, it was going to be a big problem for the business as well. In all their previous companies, The Partner and Jenny had been an effective team: he was the Great Leader and Chief Visionary, she was the Minute-by-Minute Navigator, keeping operations on track.
Jenny passed in April 2003. The Partner rallied, and over the next five years, he and I did our best to expand production and to respond to the changes in our marketing and customer base. We got along well. But without Jenny’s guidance, we lost money every year. We did accomplish a lot. His investment (most of which he lost) helped me to get unstuck and take the business to the next level.
Returning to 2012: we can now build and deliver sophisticated tables anywhere in the United States and Canada. Those two countries are huge markets. Using Google, we cast a wide net to find customers over that large area.
Big nets capture some strange fish. We occasionally get inquiries from around the world. On February 13, an e-mail arrives from a furniture dealer in Kuwait looking for pricing for five tables. He’s putting together a bid to furnish a new government facility in Kuwait City. He hasn’t given us enough information about the design for us to generate real numbers, but I could send him a ballpark estimate.
If I can be bothered, that is. Does it make sense for me to spend any time on this? Does this job have potential? A couple of years ago, the answer would have been a resounding “No!” The difficulty of vetting a foreign partner, the problems of shipping and installation, and the risk of not getting paid: all would have been too much for me. But this time, by chance, I see the opportunity with new eyes.