Stephen Continues his discussion with Michael Jacobson about how he help save and ultimately revive his uncle’s business.

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 and 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.

[Travis Crawford Ad]

Rick:

Told you, Brian.

Brian:

Told me what?

Rick:

This is part two of last week’s episode.

Brian:

Oh yeah. And it was getting good.

Rick:

And if you missed it, you can always listen to the first one. Just back up to last week’s episode. Take it away fellas.

Stephen Semple:

In my TEDx Talk that I did, the very, very first slide, the very first slide is win the heart and the mind will follow.

Michael Jacobson:

That’s exactly right. We’re humans. We’re emotion lead. That’s exactly right.

Stephen Semple:

Even engineers make decisions emotionally. We are wired to make decisions emotionally and connect with things emotionally. So you’re 1,000% correct on this.

Michael Jacobson:

Thank you. Yeah, I mean, so far so good. So ultimately, the market will decide if that’s true or not, but I tend to believe that that is true.

Stephen Semple:

Well, it’s already voted that way with you so far.

Michael Jacobson:

Yeah, I mean, it’s coming that way. And so we really focus our brand on making the client feel like the hero because they are. Buying flowers from us should feel as good as receiving the flowers. It is a remarkable act to send flowers to somebody. You are literally creating a more loving world.

Stephen Semple:

Yes.

Michael Jacobson:

And I don’t know what the meaning of life is, Kay, but when I ask people, a lot of times the response is it’s human connection. Or if they want to go even deeper, the meaning of life is love. And so that’s the business we’re in. And if you’re leveraging flowers, the most meaningful gift you can give to tell somebody that you love them, you should be praised for that. And so we make our centers feel very good about that as they should be.

Stephen Semple:

Well, if you think about it, your business is very, very similar. Let’s just look at the emotional part. Your is very similar on the emotional level as engagement rings. The person who gives an engagement ring, yes, they want the person that they’re giving the ring to feel good, but it’s that I give this beautiful ring to this person. They feel good. I feel good in return.

So you’re absolutely right. The gift of giving when it’s done right both end up getting positive emotional feelings about it. The receiver feels great. And when it’s done right, the giver feels great as well. Here’s the other thing that people discount in gift giving, it now actually creates a shared narrative.

Michael Jacobson:

That’s right.

Stephen Semple:

Because we’ve actually shared in that gift, even if it’s thousands of miles away, even if I never talk to the person, even if the person’s in a coma and it goes to the hospital, I still have a shared experience now with that individual through emotionally taking that act. You’re absolutely 1,000% correct on these things.

Michael Jacobson:

Yeah, thanks. It bothers me because we would not be doing what we’re doing if somebody else was. We never had the ambition. So I want to answer your question on my franchise. We wouldn’t franchise, we wouldn’t even expand corporate locations if there was somebody in our industry that was doing it as well as we thought it should be done. But nobody is. Our market leader is 1-800-FLOWERS, and my job is not to bash the competitors. We shine our own lamp. But pragmatically speaking, we think somebody can do a better job than 1-800.

Stephen Semple:

For them, it’s a commodity that’s being moved. I want to share a thought with you, and you may have considered this thought, but you’re in an interesting situation because as soon as I hear somebody say, “Hey, we want to educate the consumer on doing this thing, and I want to change the consumer behavior,” I always look at that from a marketing perspective as being a really…

Michael Jacobson:

Very expensive.

Stephen Semple:

Well, it’s expensive and it’s a difficult challenge. However, you’ve got an interesting strategy that you can do. So if I was working with you based upon a 20-minute conversation, so this strategy is worth the amount of time and effort of money that’s been put towards it.

Michael Jacobson:

I know. You can do this for however many years to get to this answer.

Stephen Semple:

Right. But if you think about it, there is a bit of a thin edge of the wedge strategy here, especially where you’ve optimized and worked hard to make sure the customer becomes a repeat customer. So anytime I’m in a situation where I go, I’ve got a good long-term value of this customer, and I’ve got good stickiness, and I’ve got good return, and I’ve got to educate them on a behavior that they’re not doing today, I can do a kind of interesting thin edge of the wedge type approach.

So in other words, okay, my acquisition strategy is not give a gift you’ve never thought about giving. My acquisition strategy is lean into the gift you’re already giving, but then make it so amazing and make it so incredible, and now that I’ve got a relationship with you, I can start to talk to you about gifting in other ways. It’s almost like that I can use the one to acquire and then I can pivot that customer into a different relationship now that they’re a customer.

Michael Jacobson:

Totally.

Stephen Semple:

Is that kind of the strategy you’re employing?

Michael Jacobson:

It is. Yeah, no, I mean, I think that it’s… I’ll add onto that because I agree and to add an additional perspective there as well because I agree with you. On the surface, it looks like we’re trying to shift consumer behavior to purchase flowers more frequently and purchase for non-occasions. If our culture right now is to buy for happy birthday and we’re trying to say, “No, buy for a random Tuesday,” that is a difficult thing to do.

What we’re trying to do instead is a little bit more like inspire, educate, motivate the buyer into… It’s not educating them on something new. It’s something they already know very deep down. Giving flowers, it incredibly goes back to our ancestors. I mean, it’s been around for thousands of years that act of giving flowers. It’s in us.

Stephen Semple:

It’s not a new thing.

Michael Jacobson:

We view our job as reminding people of that. And so it’s not necessarily shifting. It’s resurfacing something that people already know very deep down, I think. And maybe not deep down, maybe people already really do know that.

Stephen Semple:

Yeah, it’s rekindling that, but the interesting place is the easiest place to rekindle that is with the customer who’s already had the great experience.

Michael Jacobson:

Yes, exactly.

Stephen Semple:

With you.

Michael Jacobson:

Yes.

Stephen Semple:

Because they’ve also now experienced how wonderful it is and how superior your product is and how great the experience was is that, okay, well, now I want to do that again. And you’re able to communicate them about, well, you don’t need an occasion to make somebody feel good.

Michael Jacobson:

Totally.

Stephen Semple:

Right?

Michael Jacobson:

Yeah.

Stephen Semple:

But the interesting thing with that is that type of messaging is a different type of aspirational messaging, and as you were saying, is expensive. Look, it doesn’t fit into where the traditional florist marketing is, which is web-based pay-per-click style advertising, because what you’re speaking to is doing something that a person isn’t searching for but kindling that idea.

Michael Jacobson:

That’s right. That’s exactly right.

Stephen Semple:

There’s lots of really cool ways that you can do it. Look, and this is also how a lot of lux… And I know you’re not a luxury good, but you are a luxury good, but it’s a lot of how those goods are sold because they’re sold around an aspirational emotional idea.

Michael Jacobson:

So I agree with you. I think the perception is that we’re a luxury company. Okay, I challenge the floral industry. I challenge the franchise industry. I think most franchises suck. Can I say that?

Stephen Semple:

Absolutely.

Michael Jacobson:

Most franchises suck.

Stephen Semple:

Sure.

Michael Jacobson:

There are a couple of good franchises. I think Chick-fil-A does it okay. I think Orangetheory does it okay. We’re following a model like when we say we’re franchising, we don’t have to get into it. Just know we’re trying to flip the franchise model on its head and actually run a great franchise system that puts the franchise on first. And even more than the franchise on first, puts the end consumer first.

Anyways, that’s one thing. So we flipped the floral industry on its head. We’ve flipped the franchise model on its head. And now from the consumer perspective, what does a luxury company mean? We need to design some apparel for our team members to wear. Apparel that’s high quality, make them feel really good, really special. I went Rodeo Drive to get some inspiration. Look at Louis Vuitton and Hermes and all these companies, right?

Stephen Semple:

Thank you.

Michael Jacobson:

Okay. This is what I found. Remarkable craftsmanship, I will say. An unbelievable amount of thought goes into those designs. Then you look at the price tag and it’s $4,000 for a cotton t-shirt.

Stephen Semple:

Yes.

Michael Jacobson:

My mind is like, is there a way, and this is a very difficult thing to do, but this is our current challenge where we continue to push the brand we have and we continue to, can we create an experience that feels like a $4,000 experience, but we can charge $40 for it?

If somebody can’t take their whole entire paycheck and buy flowers, they can only walk in and pay $20 for a bouquet, can we make them feel like they just had a $4,000 experience for $20? So we want to provide the luxury experience and we do. I don’t know if we want to call it approachable luxury. I don’t like that. I don’t like the word approach. I don’t like the word luxury.

Stephen Semple:

I would say don’t even put a name. You almost don’t even need to put a name to it.

Michael Jacobson:

It’s just a different category.

Stephen Semple:

Yeah.

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:

So there’s one thing I want to really commend you on. I want people to really lock in that I love. You went looking for a different way to do it and you didn’t go to flower stores. I want this to be luxurious, so I went to luxury stores. I’m always saying to people, if you want to learn how to do better window displays, go to Vegas and wander the stores in fricking Vegas. No one does it better.

Nowhere is it done better. Now, it’s not that you need the Vegas experience. But if you want to get ideas, you can get them all in two days just wandering through the casinos looking at the retail stores. They’re amazing. Now, somebody who’s taken the idea of applying the feeling of luxury to an everyday product who’s still now been able to do a premium price point, these folks right here, Florets Farm.

Michael Jacobson:

Amazing.

Stephen Semple:

Now look at that book, right? And the photography in this book is amazing, and their story is incredible. And look, you go to buy their… They sell seeds. They don’t even sell flowers. They sell seeds and you go to buy their seeds. If you don’t buy them early enough in the spring, by summer, they’re sold out. Again, they’re not selling seeds at thousands of dollars, but they’re still selling them at probably four to five times the price that you would get normal seeds at.

Michael Jacobson:

Wow.

Stephen Semple:

I can’t remember which streaming channel, but they’ve now even got a streaming series about her story and everything. But if you take a look at it, they have figured out how to take seeds and put a luxury feel to it. And again, for it to be luxury, it will never feel luxury to somebody if it’s not a premium price, but a premium price to other flowers. It doesn’t mean it needs to be $4,000, but it can’t be cheap.

It can’t be the price of the flowers that I get at the grocery store because then I won’t believe it’s luxury. There’s three types of pricing in economics. You’ve got elastic goods, which price affects volume. You’ve got inelastic goods, which price does not affect volume. And then you’ve got, oh, I always forget the name of the third one, but it is literally one that if you raise the price, you actually raise demand on it.

Michael Jacobson:

Right. Oh, I know that concept too. God, this is like econ.

Stephen Semple:

Oh, and it’s an economist who came up with the whole idea, and he’s the economist who invented the conspicuous consumption. I even did a podcast on it. I cannot…

Michael Jacobson:

Oh, that’s awesome. Somebody who’s listening is probably screaming the answer.

Stephen Semple:

Oh, my God, yeah. You know what? I’ll think of it. I’ll email it to you, and I’ll add at the end of this, “That’s the term for this,” but that’s the economic place that you’re playing in. And fantastic for you recognizing it. Here’s the other thing I’m going to say fantastic for you to do. Anytime in the early days, it’s really easy to succumb to these aggregators, Angie’s List and Teleflora. Oh, this is great. I don’t have to market any longer. This is fantastic. They take that over. They just bring me customers. Isn’t that wonderful? It is the road that is paved to hell. It is the road that is paved to hell.

Michael Jacobson:

It is.

Stephen Semple:

Because then what ends up happening is you stop marketing, your margins are low enough that you can’t market, and now you are beholden to them and they own your ass in that moment. So I am always have the relationship directly with that consumer and guard that relationship and nourish that relationship and you now control your destiny. So really, really well done. We’ve been talking for 40 minutes or so. If you’re wanting to give just a couple of messages to people who are entrepreneurs in terms of this journey you’ve been on, what additional insight would you like to share with us?

Michael Jacobson:

Yeah. The one thing that I’ll say is sometimes you got to go through things the hard way and you could listen to a bunch of advice. And I think it’s good. I mean, I listen to a ton of advice still to this day. I mean, I have two business coaches that I work with. The best athletes in the world have a coach. Why wouldn’t I? So I’m always trying to learn. And honestly, that’s where my fulfillment comes from. But I’ll give you advice, but take whatever resonates and leave the rest.

For me, my advice would be to surround yourself with really smart people and lean into them. The problem with that though is in the early days I didn’t have the privilege of doing that, except I could watch YouTube videos. And YouTube videos was my way of doing that actually. I couldn’t afford a business coach. I couldn’t afford even a good manager. I was the manager. So I had to build my way to that.

But I think that as soon as you can afford to do that, that’s been the highest leverage point for me and for our company, is to surround ourselves in the company with people who are extraordinarily talented at what they do and operate from the same vision or can buy into the vision, but operate by the same values and principles that the organization or that you want the organization to operate by.

And I think really smart people that share the same principles, you can get really far just with that. I do want to answer why franchise, and I’ll do it in one sentence more or less. The reason we want to franchise follows that advice where we own a bunch of corporate locations and we run them and we think we run them well, but now we are one owner in the ecosystem.

When we bring another franchise owner on, we vet our franchise owners like crazy. If we hire the wrong person, we could fire them. Pragmatically speaking, we can turn around that mistake. When we bring on a franchise owner, it’s a 10-year commitment, and often that commitment way more often than not gets renewed for another 10 years. And it’s longer than most marriages last. So you better believe we screen our franchise candidates.

That’s our number one job at this point. But we’re bringing on another owner into our ecosystem, and now we’re creating a community of floral shop owners that have the same standards for the consumer marketplace, that buy into our vision and what we think is possible, that operate by the same values and principles, and that we can put our collective minds together and create this meritocratic system, this governance structure even, where the best ideas bubble to the top.

And as an ecosystem of French Florist, we get to execute the best ideas. So while I wouldn’t describe ourselves as humble necessarily, but we’re humble enough to say we don’t always come up with the greatest ideas. They do come from very unsuspecting places sometimes, and I think other franchise owners will bring that to our ecosystem. We’re franchising for no other reason than we think that’s going to ultimately provide a better client experience because we’re going to get more ideas to the table with people who actually care.

We could pay a manager $150,000 to run our store, or we can have the owner run that store. And I think the owner, that maybe 1% difference of that additional commitment and additional dedication, they’re going to care about contributing ideas to the organization, that little amount more. And that 1%, it makes all the difference to us.

Stephen Semple:

Interesting.

Michael Jacobson:

That’s why franchise. And it follows the advice of surround yourself with smart people. Our franchise owners are very, very smart people. We’re really excited to be doing it the way that we are.

Stephen Semple:

And those things of slightly different perspectives and experience and all of those things is amazing. I have one last question for you. When you’ve gone about finding the experts that you wanted to surround yourself with, when all of a sudden you had the financial ability to do it, how did you do the selection? Because one of the things I find is it’s really easy to sit there and say, “Hire good people,” and it’s really easy to say, “Go find experts.” How did you determine it was the right expert for you to work with?

Michael Jacobson:

Whew, through a lot of mistakes. I wish I knew right away. [Inaudible 00:17:57] what you don’t like, right? That’s the reality of it.

Stephen Semple:

Yes.

Michael Jacobson:

I put my philosophy around it. My philosophy has evolved, but at the time we still have at the core of who we are, I think we are still this way. We like to move fast. We like to break things. Our philosophy is if it breaks, we can fix it pretty quickly. As opposed to if you plan and if you think about it too much, you could be thinking for a long time. And you probably could have done the thing, did it wrong, fixed it, did it right quicker than if you just thought about it for a very long time and maybe got it right the first time maybe.

I’d probably not even get the first time too. So when hiring people, we did make a lot of mistakes. We hired people too quickly. We had a rose-colored glasses on. But through time what I learned was, again, understand your values and principles. Our organizational values, a lot of the times I see organizational values, they’re just words on a wall and they don’t mean anything other than a check of the box type of exercise.

Our core values are not that. We live and breathe by them. We promote. We hire. We fire. We coach by those principles. We evaluate quarterly how well people are following those values. Our values spell out LOVE, L-O-V-E. L is love what you do. I love what I do. It gets me through the hard times. It’s a really important thing. O is own your impact no matter how big or small the job is.

As a matter of fact, the “small” jobs like a delivery driver, they’re the only person in the organization that our recipient interacts with. Two, that recipient, that one driver represents the entirety of the company. So they don’t represent the company. They are the company. So own that. So that’s O. V is a value connection. We’re in the business of human connection and we need to value connection inter-team and between our customers and clients.

Value the connection that our client has with their sender and the recipient. And then E is exceeding expectations, and that’s an important one for us too. If you’re going to deliver a piece of work, it needs to be a 10 out of 10. But hold on, before you deliver that work, stop and say, “What’s the one thing that I can add to this 10 out of 10 piece that pushes it over the edge to be an 11 out of 10?”

It’s leveraging the unreasonable hospitality framework where you almost deliver something to an unreasonable degree. So our expectations on our internal team are very high. We’ve had a lot of people that have decided to leave the company for it, and the one thing that I refuse to do is lower my standards, but we found people that, guess what? They align with that value and they only want to work with people that have very high expectations. And we’ve been able to recruit a great team for that.

Stephen Semple:

That’s awesome.

Michael Jacobson:

Understand the principles that you really value and just ruthlessly hire with those principles in mind.

Stephen Semple:

And then I would take it when you’re looking at experts to bring in that they meet those same things. And we have a term that we use around here around that exceeding expectations. You might like this framing, because again, everybody talks about exceeding expectations and people don’t necessarily get it.

We like to talk about it as being surprise and delight. What is the extra little thing that you can do that is unexpected, therefore it’s surprise, and will delight them even if it’s just a little tiny bit. A little bit of surprise and delight is always really nice. The moments it’s expected, it’s no longer surprise and delight.

Michael Jacobson:

That’s right.

Stephen Semple:

Try that out and see how that resonates with people, because exceeding expectations seems so big. A little surprise and delight is small and really, and what you’re saying is it can be a little tiny thing.

Michael Jacobson:

Yes, exactly.

Stephen Semple:

A little tiny unexpected that the person’s like, “Oh, that was so nice.”

Michael Jacobson:

You’re right. I have gotten the feedback too where it’s like, this is big, ambitious thing. They don’t want to deliver work because they don’t feel it’s an 11 out of 10, so it never gets delivered. Period. So you’re exactly right. And so a lot of the times that phrasing of it does make it seem like a huge challenge. It’s not a huge challenge. Look at it on a very micro level. As a matter of fact, more often than not, it’s just a tiny little thing that just makes the difference. Exactly.

Stephen Semple:

Try that out and let me know how that works because that’ll be interesting to see how that registers with people. It’s just like, look, we just want a little surprise and delight for the person, a little thing where they look and go, “Oh, that was nice.”

Michael Jacobson:

Awesome, Stephen. Good. Well, that was fun. Incredible.

Stephen Semple:

This has been a fantastic interview, and I’m really looking forward to getting it out there. The thing that I love about this is that these lessons that we talked about, they can be applied to really, really any business. And as we’ve all learned often, often the best ideas and the best inspirations come from businesses outside of your business.

You experience it yourself by going saying, “Hey, I want to do this luxury thing. I’m going to go to luxury stores and see how they do it. And yeah, I’m not going to do it exactly that way,” but that’s where you went to get the inspiration. This has been awesome, and thank you very much for spending this time with us.

Michael Jacobson:

It’s been a pleasure. Thank you. Goodbye.

Stephen Semple:

Because it’s Thursday.

Michael Jacobson:

Because it’s Thursday. Exactly,

Stephen Semple:

Exactly. Thank you.

Michael Jacobson:

Thanks, Stephen.

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.