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You’re the Boss: The (Pipe) Dream of Opening our Own Retail Stores

August 4, 2011 by Leave a Comment

TerraCycle's now-closed retail outlet in the Port Authority building.Courtesy of TerraCycle.TerraCycle’s now-closed retail outlet in the Port Authority building.

Sustainable Profits

The challenges of a waste-recycling business.

Since the inception of TerraCycle, I have dreamed of having our own chain of retail stores. Instead, we have always relied on stores like Wal-Mart and Whole Foods to sell our products. In the last decade, even as we shifted from selling home-and-garden products to selling a wide range of consumer products, and even as we shifted from manufacturing all our products to licensing them to assorted manufacturers, we’ve continued to sell most of our stuff through big-box retailers.

But throughout this time, I have continued to believe that we could create a profitable model of a TerraCycle retail store that would be unique and highly scalable. Ideally, consumers could bring their waste to the store (as if it were a recycling center), get paid for it with cash or store credit, and buy products made from waste. We now have more than 1,000 recycled and upcycled products: fertilizer, fire logs, backpacks, kites. No other retailer out there does anything like this. If we could create a successful model, I’m confident we could franchise it and develop it quickly.

So far, however, we have made three attempts at retail, and we have failed three times. The first attempt came from a friend of mine, who runs a chain of restaurants in New York called Rice. He took a lease on a shop in the Red Hook neighborhood in Brooklyn and dedicated the space exclusively to TerraCycle merchandise. Unfortunately, the sales failed to cover his costs, and the store folded after a little more than six months.

Our second attempt was a pop-up store that the Port Authority of New York and New Jersey gave us for three months in 2010. It was in the Port Authority building on Eighth Avenue. Even though the store was large and in a well-trafficked location, and even though the rent was free, we barely made a profit.

The third attempt was our most successful. We were allowed rent-free access to a storefront in Princeton, N.J., which had a high-end retail environment with furniture boutiques, jewelry stores and restaurants. Once again, even though the rent was free, we produced only a modest profit. The store was open for almost a year and a half but we recently closed it.

In none of the three cases were we able to create a business unit that could stand on it’s own. Perhaps the locations were not ideal. Maybe this was a time when we should have tried advertising or approached retail consultants to develop a strategy in line with our larger business model — two steps I have long been disinclined to take. Red Hook is hip, but it doesn’t have a lot of foot traffic yet. Port Authority has plenty of foot traffic, but its clientele may be more interested in getting on a bus than in looking to shop. And Princeton has people who are ready to shop, but perhaps they are looking for high-end items and not low-cost products made from waste. The other major problem, I suspect, is that our products don’t fit neatly into a retail niche. They just may be better suited for big box retail: high volume at low prices.

Given these experiences, my next idea for a retail play is to combine three models, encouraging people to bring in their waste (to generate foot traffic), giving them the opportunity to buy the random assortment of low price TerraCycle products, and also focusing more on bringing in an array of designers and vendors to sell products made from waste on consignment. Perhaps that third element will allow us to develop a model that works. All we need now is someone to give us free space to test this experiment.

What do you think? Any suggestions?

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Article source: http://feeds.nytimes.com/click.phdo?i=31b3cf401080e9437bc6741036363620

Filed Under: Small Business Tagged With: , ,

Preoccupations: Into the Bustle of China’s Boom

June 26, 2011 by Leave a Comment

I was excited about the idea. I’ve been with the company for more than 20 years. From 2005 to 2007, I worked on a project in Russia and made a number of trips there, but they never lasted more than 30 days. I have a feeling that NBBJ felt I could adapt easily in China because I’ve worked with some demanding clients. They probably also figured that if I could work in Russia, even for short periods, I could work anywhere.

I would rather have been offered the China project when my children were young and could have gone with me, because it would have been a great experience for them. On the other hand, I probably had more flexibility when the offer did come up, because they were already grown and on their own.

The biggest drawback was that my wife, Beverly, couldn’t join me. She’s a lawyer with the Washington State attorney general’s office, and her job can’t be done from afar. We decided that I’d go and that she’d visit when she could.

My predecessor in China tried to tell me about the job, but it’s hard to teach or learn everything by phone. And NBBJ didn’t have classes or training that larger corporations with hundreds of overseas employees might have.

Before I agreed to the assignment, however, the company sent my wife and me to Shanghai to give us a feel for what life might be like. We saw some housing options and met the people in the Shanghai office. NBBJ also paid for some economy-class airline tickets for family visits.

That amount of help was O.K. with me. I’ve traveled a fair amount, and am usually pretty good about preparing for a new region. I’m not necessarily looking for a lot of information; sometimes I enjoy being surprised and would rather find things out for myself.

I had three months to prepare. I picked up software for learning Chinese, but work was so busy that I didn’t have time to get to it before I left or after I arrived. Luckily, our Chinese employees spoke English.

Of everything I encountered, the biggest surprise was the street signs — they were in both English and Chinese, so it was easy to get around. The buses broadcast the stops in both languages as well. I was pleased to find that I could go wherever I wanted; I saw no restricted areas.

Since NBBJ is a United States company, Chinese law requires that we work with a local design institute in China. It could be stressful at times. The Chinese clients expected significantly more design options than a typical American client, and they wanted faster responses. Occasionally, they seemed intent on sticking with a design that had already been done, but on the other hand, they could be willing to take risks.

My work schedule was intense, so I didn’t have much free time, but I did become lonely for my family. It took a while, but I made friends in the compound where my apartment was. I also got to know some expats in our office, and my Chinese landlord and his wife were wonderful.

I enjoyed Shanghai more than I thought I would. Life moves onto the street in that city, especially when it’s warm. There’s always something happening, from card games to street-vendor sales to impromptu ballroom dancing. I was there for the 2008 Olympics in Beijing and Expo 2010 in Shanghai. The Chinese literally rebuilt both cities for these events, which, as an architect, I found fascinating. There is probably no better place for an architect to practice currently than China.

LIKE many other people who return from work in another country, I wish that I had traveled more while I was there. I also wish that I had learned the language before my arrival: then I could have enjoyed arguing with the taxi drivers about directions. But I did learn how to get around and knew the most direct routes. I also regret not being able to just talk with the drivers. Something told me they are like taxi drivers everywhere — they want to talk about the city and what’s happening.

I’d advise people who work overseas to try living outside the expat community. There were expats everywhere in Shanghai, but they seemed to congregate in certain areas. People with children might want to be close to the expat schools, but it pays to live with the locals if you can. You learn so much more about the culture.

I’ve been home a year now. I live on a houseboat on a lake in the middle of Seattle. In Shanghai, I rode a bike to work; here I walk to the office. I’m amazed by how quiet Seattle streets are. I miss the noise of Shanghai.

As told to Patricia R. Olsen. E-mail: preoccupations@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=d2a9a3a5d8b7676e27fa9bc1d775e44d

Filed Under: Business News Tagged With: , ,

Off the Charts: In a Survey of Bosses, Good News for Job Seekers

April 9, 2011 by Leave a Comment

In a quarterly survey of chief executives, the Business Roundtable found that 52 percent of companies planned to hire workers in the United States over the next six months, while just 11 percent said they expected to reduce employment.

Never before have so many chief executives said they planned to hire, or so few said they planned to cut payrolls. The survey has been taken every three months since late 2002.

The Business Roundtable includes chief executives of 200 major American companies. If most of them did add workers, that would almost certainly have a substantial effect on employment in the country. Two other broader surveys of companies are taken each month by the Institute for Supply Management. Its survey of manufacturers has been showing more companies planning to increase employment than reduce it since the fall of 2009, and indeed manufacturing employment rose in 2010 for the first full year since 1997, according to the Labor Department.

It took longer for service companies to begin hiring. But the I.S.M. survey of such companies has shown positive readings since last fall, and the latest government report indicates that employment in that sector has risen to the highest level in two years.

All the surveys are aimed at measuring the breadth of employment plans, as opposed to the magnitude of such plans. So a company planning to add a few workers would count just as much as one planning to add thousands.

Whatever the companies say, though, consumers remain far from certain that jobs will materialize. In the latest consumer confidence survey by the Conference Board, only 20 percent of respondents said they expected jobs to be added to the economy over the next six months, slightly fewer than the number who expected a decline. Still, consumers have a history of pessimism in that survey, as is shown in the chart, and the proportion expecting gains is higher than it was in the years before the recession.

The I.S.M. numbers are normally presented on a scale of zero to 100, with 50 indicating that as many companies are hiring as are firing; numbers above that level indicating more hiring. The higher the figure, the more prevalent hiring is. In the charts, the figures are rebased so that zero is the neutral number.

Both the service and manufacturing figures slipped a little in March, which could indicate that growth is slowing. But the manufacturing figures for each of the first three months of 2011 were higher than in any previous month since 1973.

The Business Roundtable survey was conducted from Feb. 28 through March 18, and received responses from 142 of the 200 chief executives, which the organization said was the largest response rate ever.

The survey includes three questions, each of which produced unusually optimistic responses. Asked about their own companies’ plans for capital spending in the United States, 62 percent said they planned increases, while 6 percent expected to reduce spending. That was the best response since the first quarter of 2005, when 60 percent planned increases and only 3 percent expected to spend less.

In response to another question, 92 percent of the chief executives said they expected increases in sales for their companies, while none said they expected a decline. It was the first time that none of the executives thought sales would decline.

Article source: http://feeds.nytimes.com/click.phdo?i=e5e55ed3c4541782f6eac0c9c0022e42

Filed Under: Economy News Tagged With: , ,

You’re the Boss: Why the Decision to Hire a High-Paid Sales Rep Failed

March 31, 2011 by Leave a Comment

Leon Rosenblit had to decide if he was still his company's best salesman.Wendy Carlson for The New York Times Leon Rozenblit: “It was a good experiment.”
Case Study

Last week, we published a case study reviewing Leon Rozenblit’s recent decision to hire a senior sales representative at Prometheus Research, a data-management company he founded in New Haven. Unfortunately for Prometheus, a strategy that seemed promising proved too pricey to sustain.

Dr. Rozenblit said that due diligence done by the sales rep, Peter Harker, led Prometheus to change the way it marketed its data-management software, HTSQL, to new clients. “Initially, we were trying to pitch it as a tool I.T. guys could use,” Dr. Rozenblit said. “We started with the geeky message, we have this Web-native query language, and it’s awesome! And people said, ‘What does that mean and why should I care?’ We thought customers should want to build Web applications with HTSQL to enable data sharing, but customers didn’t care about that. They cared about how fast they could get reports.”

It took months for Prometheus to describe HTSQL’s value and determine where it fit in the market, but even after the sales pitch was massaged, clients were reluctant to sign on. Mr. Harker had gotten meetings with senior executives at financial services, energy, automotive and e-learning companies, but his seemingly robust pipeline did not generate revenues quickly enough to justify his team’s expenses.

“Peter was working really hard, but the enterprise strategy was just too expensive for this product at this price point,” Dr. Rozenblit said. “We were charging $25,000. If it takes seven meetings over the course of a year to close a deal, you just can’t make enough profit to justify the sale. Clients who looked really good went on for one, two, three months. Just because you have all these juicy apples dangling right in front of you doesn’t mean they’re going to fall in your lap.”

After investing in the enterprise sales strategy for 18 months, Dr. Rozenblit decided to close the entire initiative. Mr. Harker was laid off in February, and Prometheus is no longer pursuing corporate clients. Instead, the company is concentrating on its core business of serving researchers. “We knew it was risky, but it was a good experiment,” Dr. Rozenblit said. “I wish the outcome were different, but once the decision was made, I had to switch into my constructive, forward-thinking mode. It’s all part of being an entrepreneur.” He discussed the decision in a brief interview.

Q: In hindsight, do you think you were right to hire an experienced salesman?

Dr. Rozenblit: Once we had committed to the enterprise sales strategy, I think we had to hire a senior sales guy. A junior sales guy would not have gotten the meetings. Our board and management team agreed with me.

It was a wrenching decision to abandon the strategy and let go of Peter, but I’m not sure I would have made a better decision earlier on. I was waiting for enough information. The last thing you want to do is pull the plug too early.

Now I’m confident that Peter gave it a great shot and did a good job under the circumstances. We took a measured risk that didn’t pan out, but no guts, no glory.

Q. What did you learn about the disparate roles of founders and salespeople?

Dr. Rozenblit: Because Peter and his direct manager were so committed to this enterprise strategy, they couldn’t see outside of it. I still think smart, experienced salespeople can do tactical pivots to help determine a product’s value, but they’re not going to pivot themselves out of a job. That’s the limitation of having someone other than the founder do the pivot. On strategic matters you really do need an owner making the hard decisions.

Q. Has Prometheus suffered financially as a result of this pivot?

Dr. Rozenblit: We had a cash reserve, enough to cover this first commercialization push, and unfortunately we’ve used it up. But the partners haven’t taken money out of the company. We’re okay, but we’re going to focus less on equity growth for a while. We won’t pursue another strategy that requires a major investment until we have demonstrated demand. In that case, we’ll look for outside funding.

Q. Any other lessons learned?

Dr. Rozenblit: For our team, it was our first major strategic setback. As painful as it’s been, I’ll be a much better manager now. I’ve learned to establish success metrics early on. You’ll always have a reason to continue one more month. It always feels like a little bit more effort will yield the results you want. Unless you’ve set deadlines upfront, it’s harder than quitting smoking. I’d heard that, but I didn’t know it in my bones. Now I’m sensitized to the need to execute in a very controlled fashion. You have to be ruthless with yourself.

Q. Can you tell us more about your revised strategy?

Dr. Rozenblit: All the new strategies we’re investigating are inexpensive. We’re focusing on bread-and-butter business that we know is profitable, and at the same time we’re doing small strategic exploratory projects to get evidence of strong demand in other areas.

Article source: http://feeds.nytimes.com/click.phdo?i=ff0b0f7cf3d7231eb3fa419a18dc59a0

Filed Under: Small Business Tagged With: , ,
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