Michael Jacobson wanted to help his uncle sell his flower shop, but now it is growing like a weed.

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick in business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients, so here’s one of those.

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Stephen Semple:

Hey, it’s Stephen Semple here and we are without Dave Young today because we have an opportunity for a really, really special interview. I have with me Michael Jacobson from French Florist and we had a conversation, it was probably about a month and a half ago, and I just thought some of the things that you shared was amazing and I was like, “I got to get Michael onto the podcast.” Now, the first question I asked Michael is, what’s your title? “We don’t believe in titles.” I said, “Are you the founder?” “Well, sort of.” That’s where we’ll start. That’s where we’ll start the story about French Florist in terms of how you came to be the owner and what’s happened in the time that the business has been with you.

Michael Jacabson:

Awesome. Thanks Stephen. This is a generous introduction. I appreciate that. Thank you. When I say we don’t believe in titles, we really don’t. As we get to be a bigger organization, we brought on a chief operating officer who’s a lot smarter in operations than I am. And that’s become my job is hire people that are smarter than you and give them the reins, so maybe, I don’t know what title that is, but whatever that job is, and she tells me we do need titles because it helps with accountability and that kind of important stuff. I thought it was a little boring, but she did convince me.

Stephen Semple:

Before we go on, what size are you at today? You’re large enough that you brought in a chief operating officer, so how many employees do you have now?

Michael Jacabson:

We’ve got just over 100 employees now.

Stephen Semple:

How many locations?

Michael Jacabson:

We have 10 locations now and we’ll have 17 open by the end of the year. We’ll have 60 open by the end of next, so a lot of our employees-

Stephen Semple:

Awesome.

Michael Jacabson:

… right now aren’t necessarily for the immediate now, but we’re building the infrastructure to support tomorrow.

Stephen Semple:

That’s cool. That’s cool. That’s amazing. That’s amazing growth, so 100 people now, but you’re really looking to go to that… You’re at 17, going to 60 locations. That’s awesome. Going back to the early days of how you found yourself owning French Florist.

Michael Jacabson:

Oh, gosh. Okay, so I don’t know if this will resonate with the audience. Hopefully it does. I’ve graduated college… You hear the statistics of how many startups fail, whatever it is, 90, 95% of startups. I did-

Stephen Semple:

Most.

Michael Jacabson:

Most. And I actually joined a few startups in college that I didn’t found but kind of joined their team. All of them, but one failed, so I saw firsthand too. And I took a job in super boring corporate consulting right out of college, paid super well, great opportunity. I could work alongside awesome executives at really awesome companies. That was the pitch. I didn’t make it even a year. I made it about one year and it just didn’t feed that fire in my belly. That was the wall that my ladder was leaned against and I could sit there and climb that ladder or if I’m not happy, do something about it.

And so I had my ear to the ground with different opportunities and I got a call from my uncle one day and he says, “Mike, I’ve been running my flower shop for 38 years. I’m working six days a week, 60 hours a week or more, and I’m losing money. I’m tired. I don’t want to run the business anymore.” I studied finance, so he said, “Can you help me sell the business?” I said, “Sure, happy to take a look at it.” That’s how I got in and it evolved. I originally joined French Florist to help my family out and sell the business.

Stephen Semple:

You’re initially there to help with the exit?

Michael Jacabson:

That’s right.

Stephen Semple:

Okay, cool.

Michael Jacabson:

From there I went around and did what any normal exit would look like, where you go and you look at comparables, what are other florists doing well, what are they not doing well? How much are they selling for? Looking inside the business, let’s clean it up a little bit. Let’s get some proper bookkeeping and accounting in place so we have some numbers that we can share with prospective buyers. You know what I realized really quickly though was there’s such an incredible systemic issue in the floral industry. It wasn’t just my uncle struggling, it was all florists are struggling with the same exact issues, if not the same exact, very, very similar issues. You have the dominant market player… And Stephen, I’ll ask you, this’ll be interesting, if I say french fries, what company do you think of?

Stephen Semple:

It’s McDonald’s. McDonald’s, Wendy’s.

Michael Jacabson:

And you’re in Canada too, so I’d be curious to get your answers here. If I say coffee, what company do you think of?

Stephen Semple:

Starbucks would be top of that list.

Michael Jacabson:

Probably the top one for me too.

Stephen Semple:

Well, for us it would be Starbucks and Tim Hortons, those are the two.

Michael Jacabson:

That’s what I was expecting. Every once in a while you’ll get Dunkin’ for somebody on the East Coast too, but generally there’s a clear player that comes to mind.

Stephen Semple:

Yes.

Michael Jacabson:

If I say flowers, do you have a company that comes to mind?

Stephen Semple:

For me, it’d be like FTD or Teleflora or one of those, but certainly not anybody local.

Michael Jacabson:

You’re right. The top three players in our market, 1-800-Flowers, FTD, Teleflora, those are the three players. All of them have the same exact model and what that model is, they take an order online and they syndicate it to a local florist, fine. The problem they take up to a 40% commission after all of their fees on that order, so you’re paying $100 for the order, the florist is getting 60 or $65 on that. They’re getting hit so hard and a lot of florists are super reliant on the order aggregators for their orders. And then obviously most importantly, more than anything, that bleeds into the client experience and the client experience, you order… That’s where you get the memes on the internet where it’s like what you ordered versus what you got. And it’s just this massive discrepancy, that’s how that happens. Go to your local florist, that’s my pitch. That’s one systemic issue, but also the lack of technology.

The downside of the supply chain, how we’re importing from the farm is unbelievably antiquated as well. And there are tens of thousands of flower shops in the Americas and 99% of them are single unit owner operator, mom and pop, so it’s terribly fragmented. Nobody has the economy of scales, nobody has a brand. Anyways, all of those amalgamation, lots of issues there. Where do you even start? But that was interesting to me because I was like, this is a very real problem where ultimately the consumer experience… People, they have such high expectations with Amazon and two-day delivery and now it’s two hour delivery. But when it comes to the floral industry, I don’t know how consumers have been so okay with how the flowers are getting delivered. They become complacent. And when I saw my uncle’s business and I saw what a good delivery could and should look like and that was not the norm for our industry, that’s a really cool opportunity to build a brand that’s creating very real value in the world. And we’ll get into why flowers as well.

Stephen Semple:

And you bring up something though very interesting, and this is ongoing theme from the podcast, it is amazing how we’re over 200 episodes in, and I’m going to say that the vast majority, probably 200, almost all, I can only think of one or two exceptions, these businesses and these ideas have been started by outsiders. And I think the reason why often it works with outsiders, an outsider comes along and looks at it and says, “This makes no sense.” But the industry goes, “But this is how we’ve always done it and there’s these long list of reasons why we need to do it this way.” Where an outsider says, “I know if we do this differently, consumers will love it and if consumers will love it, they will buy from me.” And I think that complacency not from the consumer, I actually think the complacency comes from the industry because the consumer’s not been given any other choice.

Michael Jacabson:

You’re right. You’re 100% right.

Stephen Semple:

And then when they’re given that choice, they’re like, “Oh, my God. This is amazing. Give me more.” And that comes from that outside perspective, so good for you.

Michael Jacabson:

Nice. And I’ll share one of the things that could be interesting too. The business’s name was French Florist, and I said, “Why are we called French Florist?” And my uncle didn’t have a good answer, but I was like, “We need to have some intentionality about the business. We’re in flowers too. We’re delivering emotions and really powerful emotions too.” It’s like we’re not necessarily saving people’s lives, but we are delivering love pretty much. That’s it. I’m yet to be convinced that there’s a more powerful emotion that exists than love, so we feel the weight of what we do and we value what we do and we don’t want to mess it up. When somebody is telling somebody that they love them and we’re the vehicle to help them do that, that’s an important task. We do carry that with weight. And so I said, “We need to have intentionality about what we do. We’re an American brand. We’re called French Florist. How does that make sense?”

I really sat down for a really long time and I said, “Why are we called French Florist? Do we need to change our name?” I started to fall in love with the name and I started to fall in love with flowers in the floral industry more and more as soon as I started asking that question. We are called French Florist because while we’re not French, it is a nod to the European and specifically the French way of living where flowers are not viewed in Europe as a nice to have, they’re viewed as a need to have because they’re a reminder that life can be beautiful. Flowers are love. As a matter of fact, I can’t think of a better gift than flowers to give somebody to express love to them. Diamonds? Pizza? Maybe pizza, but I think that was-

Stephen Semple:

Hold on a second. I got a lot of jewelers that sell diamonds, so diamonds are pretty good too. But to your point though, a diamond is also not an everyday gift.

Michael Jacabson:

Exactly.

Stephen Semple:

But I completely agree with you, flowers are very much, that’s the emotional underpinning to it. If somebody is sick in the hospital and you’re sending them flowers, you’re sending them flowers because you’re hoping it brightens their day, makes the room a little bit more special and that when they look at it, they know that you’re thinking about them. That’s what it is.

Michael Jacabson:

I’ll push that a little bit further because I think we saw an opportunity to fix issues within the industry. We also see an opportunity now to take the American mindset and push it a little bit because I think we’re… Especially in this age of technology and automation, which don’t get me wrong, our business is unbelievably tech enabled. We’ve developed a lot of tech. If I’m ever talking to an investor, we’re a tech company. We’re not a tech company, we’re a floral company but you get the point.

Stephen Semple:

You’re a floral company that’s using a lot of technology.

Michael Jacabson:

We are indeed. Why? Because it provides a better client experience. Ultimately everything we do is for that. It’s all about the client experience. And so if you take American culture for what it is today, people buy flowers if someone’s in the hospital, Happy Birthday, congratulations. It’s sympathy for something sad. It could be condolences, and there’s grief. Grief is the emotion. I might challenge that a little bit and say that is the American culture today. What the Europeans do that I really fell in love with is they might give flowers to somebody on a random Tuesday. Why? Just because, because they deserve it. And when we’re looking at the two biggest holidays, say for example in America, Mother’s Day and Valentine’s Day when it comes to flowers, I would say if you gave your mom flowers on any other day except for Mother’s Day, I think that that’s going to be a more powerful gifting experience than buying flowers for your mom on Mother’s Day.

Stephen Semple:

That’s really interesting. It’s funny, I learned this in the investment industry, so I used to work in the investment industry and somebody brought me that very idea. Now, it was a little bit different, so we stopped sending out Christmas cards and what we would do is we sent out Thanksgiving cards.

Michael Jacabson:

That’s amazing. Who does that?

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

[Empire Builders Ad]

Dave Young:

Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.

Stephen Semple:

It’s funny, I learned this in the investment industry. I used to work in the investment industry and somebody brought me that very idea. Now, it was a little bit different, so we stopped sending out Christmas cards and what we would do is we sent out Thanksgiving cards.

Michael Jacabson:

That’s amazing. Who does that?

Stephen Semple:

Well, and if you think about it, Thanksgiving has a similar emotion to Christmas from the standpoint you’re celebrating together with family and you’re doing all of those things. I’m in Canada and we would find these cards that would have these beautiful fall colors and that’s what we would send out. But you’re absolutely right. For years, and I would buy really high-end, beautiful, expensive Christmas cards, never got a comment on it. Started doing Thanksgiving Day cards, it was an amazing number of people I was like, “Thank you for the Thanksgiving…” Why?

Michael Jacabson:

Wow.

Stephen Semple:

Because I was the only one doing it.

Michael Jacabson:

Yeah. I think it’s the old [inaudible 00:14:26].

Stephen Semple:

To your point, higher impact, not expected. It’s a little bit of a surprise and delight. Cool.

Michael Jacabson:

I couldn’t agree with that more. Sending a card message is up there too and I think they’re so underrated. We actually send a handwritten card to every single first time client that orders with us. I think not to be understated, we started doing it when we couldn’t track the ROI on it, we did eventually start to track the ROI on it and the ROI always massive on it.

Stephen Semple:

What do you mean by that? What changed and what changed the ROI?

Michael Jacabson:

Literally the only variable that we changed when we did start to test it properly, it was like an 18 or 24 month proper A/B test to try to get statistically significant results, all that.

Stephen Semple:

Okay, great. You let enough time go to really make it… And this is important. This is really important. A lot of times I get people doing these A/B tests. I had this conversation with a client a few weeks ago and he was like, “Well, how long should we do it?” And I told him and he said, “Well, I was hoping that we could just do this for a week.” It’s like, “A week’s not going to tell you anything, dude. I’m sorry. You got to have some patience on this.” You did an A/B test. Is this around the handwritten note?

Michael Jacabson:

We measured customer lifetime value over the next 18 to 24 months on people who received the note versus who didn’t. And we just split our clients down the list. Half the people got it. Now we send it to everybody. But we started out not, it was one of those… I don’t want to follow intuition, but it’s like it’s just the right thing to do kind of a thing. It turns out it’s a pretty virtuous cycle when you do the right thing and the money follows. We learned that a few times. That’s one example of it.

Stephen Semple:

You did this test on the handwritten note and that’s made your lifetime value of your customers more valuable and made them more sticky. And the beauty of a better lifetime value is it means you can spend more in client acquisition and marketing. In terms of this growth you’ve gone through because you had… When your uncle, it was one store, you’ve already taken it to 17, so what’s the key that you did from taking it from that one? Are they all corporate stores or are they franchise?

Michael Jacabson:

Some of them are corporate owned and we are expanding our corporate footprint a little bit, but we’ve shifted into the franchise model type. And I’ll tell you why and when I hear the word franchising, I get a bad taste in my mouth even till this day. But when we were looking at how we wanted to expand, so we had… Can I share numbers, Stephen? Is that okay?

Stephen Semple:

Sure. If you’re comfortable sharing numbers, share numbers. That’s awesome.

Michael Jacabson:

Our first flower shop, I came into the business, we were doing about 600,000 in revenue, so it was not nothing, but a lot of the revenue was coming in from 1-800-Flowers and those types of models. And so it was not-

Stephen Semple:

Okay, so it was doing 600,000. Most of it was coming where you had no control over the customer. It was coming from that outside source where you pay 40%. Okay, great. All right.

Michael Jacabson:

Yeah.

Stephen Semple:

It was 600, but not even a quality 600 is what I’m hearing.

Michael Jacabson:

Yeah, that’s right. Yeah. We were losing money when I came into the business. There was a reason we wanted to sell, right?

Stephen Semple:

Yeah.

Michael Jacabson:

We cut all our relationships with all of those services pretty quickly, and so revenue dropped. We got to a place where we were breaking even relatively quickly. We started investing in operating technology that would help us in marketing and better brand, supply chain for better margin and higher quality product, other consumer experience related stuff. And we started to grow. We started to do well. Obviously it’s a very accelerated story, but long story short here, 600K to 1.2 million to 2.4 million to 3.6 million to I think it was 4.8 million. And then the next year was 9.6 million out of one flower shop, 9.6 million.

Stephen Semple:

I want to drive this home, $9.6 million out of one flower shop where you’re not using any consolidators. This is all your customers. Look, that’s a big number in any industry to be selling $10 million out of a single shop. I’m going to argue that that’s probably the most successful flower shop in America.

Michael Jacabson:

Yeah, it’s up there for sure. You could say we’re probably the largest floral shop in America now. We’re humble enough to recognize that it wasn’t that hard because we just put in some modern practices and focused on the consumer and the rest fell into place. As a matter of fact, I would go so far as to say we’re actually totally not in control of how successful we are, the marketplace is, so we’re happy that the marketplace has been receptive to our offering.

Stephen Semple:

But you’ve brought in an offer, so what is it that you’ve done different on the offer that is… Because look, you don’t go from $600,000 to $10 million in sales in the six or seven years just by automation, because then you’re the world’s best kept secret. There’s some things that you had to do to become known in the marketplace, so what is it that you did on that front?

Michael Jacabson:

It’s four major buckets. The first one is technology infrastructure. We’re millions of dollars deep into our custom proprietary software right now. The industry-leading tech at the time, a blue and white screen, you have to push F12 to get to the next page.

Stephen Semple:

Just looking, do I still have an F12 on my… Oh yeah, I do. I had to check to see whether they still had that on. That’s how much it gets used.

Michael Jacabson:

You never used it on a Mac. That was the first, there was no tech out there that… We didn’t want to build tech really. If there was something out there, we would’ve. But there was a real pain, a real problem, and we could solve it by building some custom tech that ended up being the heart of how our company operates, we’re incredibly tech enabled. Why do we do that? When the designers come in, they operate off an iPad, they get to spend more time designing, less time with administrative boring stuff, and they’re the soul, they’re the magic. And so we want them doing that. And that’s honestly where they get their most fulfillment too, so they become happier, they’re more productive and it allows us to pay them better as well.

Stephen Semple:

They’re actually working as florists like what they wanted to do?

Michael Jacabson:

Yeah, exactly.

Stephen Semple:

Because actually designing the stuff. Got it.

Michael Jacabson:

Crazy to think about, right? Like the florist is-

Stephen Semple:

Crazy. They got into it because that’s what they wanted to do and you’re allowing them to do it. But look-

Michael Jacabson:

That’s right.

Stephen Semple:

… that’s a big deal because in many industries what ends up happening is people come into it and the thing they wanted to do, they’re actually not allowed to do. We see this all the time. Okay, so awesome. You’ve done technology too, and one of the great outcomes of that is the people are loving what they’re doing. That’s awesome.

Michael Jacabson:

Yes, and that’s huge because if you’re not feeling a certain way on the inside or however you are feeling on the inside, that’s what’s going to reflect out on the world. And that comes down-

Stephen Semple:

Absolutely.

Michael Jacabson:

… to we’ve learned in our organizational health too. If our organizational health is not good, then that’s often reflected out in the client experience. If we have a customer service rep who’s feeling like they’re underpaid or they are mad at the company for something, it’s going to bleed into the client experience, right?

Stephen Semple:

It just does.

Michael Jacabson:

We’ve learned that. Okay, so tech is covered. The second one was supply chain. The floral industry is wild, where the flowers grow on a farm in all different sorts of countries, Columbia, Ecuador, Thailand, Canada, Mexico, some in the United States as well, all over. And we fly them in on either… They could do cargo freight on a boat, but we do airplane on cold storage because it’s faster. We want to try to make sure that by the time it gets to the consumer, the longest base life possible is there, so we fly them on a cold freight. It goes from farm, to consolidator, to a processor, to a logistics agency in the country of origin, flies to the country that is in our facility. Then typically, traditionally it would go to a wholesaler and then to the retailer, and then finally to end consumer. I don’t know how many… I think that was about seven or eight.

Stephen Semple:

I lost count.

Michael Jacabson:

That’s a lot. That’s a couple of days at least that every player is holding onto those flowers. Somebody could be holding onto a rose for 20 days before it makes it to your home, and that rose is not going to last that long, so if we could cut out a massive amount of that supply chain and virtually just order directly from the farm, we knew that not only were we going to get better pricing, because we’re cutting out intermediaries, but we’re also going to get better quality product that holds up way more. What a virtuous cycle there? And we can pass some of that discount onto the consumer. We don’t compete on price, but we have way higher quality product that is very price competitive in the marketplace, giving us higher margin, giving the client experience and enhancement, so we saw that as a massive opportunity. We put a lot of work into that, so supply chain was the second. The third is client retention and really looking at marketing from a quantitative lens.

Both client acquisition and client retention, there’s a lot of strategy there to unlock conversion rate optimization, SEO, email marketing, those handwritten notes that we talked about earlier was one of those initiatives. And there’s a lot of different initiatives that we do to develop a relationship with our client. The fourth bucket has actually been the biggest impact for us. And that is awesome. We have a good product, we have good customer service, we have good client experience. How do we go from good to great? A good company does all of those things. We deliver a good product to the marketplace. And that alone did take us really far, honestly. That actually took us to the 9.6 million, so it’s crazy. What’s propelled us far beyond that number is, I guess it’s still within the bucket of marketing, but it’s really the soft, irrational, creative piece of marketing that’s emotionally charged.

When somebody purchases from us… These are somebody else’s words, but they made a lot of sense to me, why does somebody buy a Porsche? To get them from point A to point B? Definitely not. They buy a Porsche because it makes them feel cool. Why do they buy a Rolex? It’s not to tell the time.

Stephen Semple:

In fact, I could actually argue the Rolex is not the best watch.

Michael Jacabson:

It’s not, a Timex does wonders, right?

Stephen Semple:

Yeah.

Michael Jacabson:

There’s an emotional, irrational piece that is actually very, very hard to measure the ROI. But I think when we started understanding how powerful flowers are, instead of saying things like, we have the best customer service, we have the best quality products like we do, but A, that’s super boring. B, that’s not even our place to say that. The marketplace decides that and we earn that reputation. We don’t say that reputation. Or C companies that say that usually aren’t that. This is ironic because I’m about to say it. I don’t say that I’m passionate, obviously, I’m just passionate. We don’t say we’re luxury, we’re a premium brand because of the way we act.

Stephen Semple:

I make fun of that all the time. It’s like if I’m the guy who says, hey, you can trust me-

Michael Jacabson:

Red flag.

Stephen Semple:

… right away you’re like, yeah. Or, hey, you should invite me to party because I’m a fun guy at parties. As soon as we have to say it, it’s actually no longer true. We need to have people feel it. Oh no, no, no, no.

Michael Jacabson:

What?

Stephen Semple:

I was enjoying this episode.

Michael Jacabson:

Don’t worry. Part two’s coming next week.

Stephen Semple:

It better. Hey Michael, the more I hear your story of what you guys have done and what you’ve built and your passion about all of this, I’m sure anybody who hears this story will want to, especially if it’s a Tuesday, will want to run out and order flowers for that special person in their life, so if they’re going to do that, what should they do? How do they reach out to you? What’s the best way to do this?

Michael Jacabson:

Absolutely. There’s a couple different ways. My favorite is actually just to go through the website and the reason I say that is there’s a lot of personalization that you can add that you can’t necessarily do by calling in. Go to the website frenchflorist.com. One example of it is you can, instead of leaving a handwritten card, you can actually leave a video card and it’s a free feature and it’s a really nice way that card comes up with a QR code to the recipient, they scan it and your video card message shows up, so you can do that through the website. Or you can call us, you can just Google French florist, our phone number will show up. And my favorite designs that come out of our store are what I like to call a designer choice.

We get clients that call in and say, look, we just want something beautiful, $100, 150, whatever it is, and maybe there’s a favorite color or a favorite theme, and you just tell the idea of what you’re looking for to our customer service team and they’ll translate that into how our designers will make that arrangement based on your description. And because you’re giving our designers that creative flexibility, they can really lean into it. And some of the most beautiful work comes out of it when you call our shop, so there are pros and I’ll say benefits to calling in as benefits to ordering online, no way is a bad way.

Stephen Semple:

All right, awesome. Because I’m sure people are going to want to do that. And look, tune in for the next episode because we’ve got some fun additional things to talk about.

Dave Young: Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute Empire Building session, you can do it at empirebuildingprogram.com.