What I like most about having real business people come talk to us is the reassurance that the good guys don’t have to lose. You can do good business without selling your soul. At the December intensive I got two great stories.
The first is from our Friday night speaker (you could have been there! Open to the public!) David Van Seters, founder of Small Potatoes Urban Delivery (SPUD). He talked about growing the company and how a grocery business has to operate on super thin profit margins. In their first, struggling phase, he worked with a number of business consultants and the one that really struck him was the one that said: “if you can’t tell me off the top of your head what the five key measurements are that you need to track, you don’t know what you’re doing.” He said identifying just those few was indeed key.
Because they define their primary business mission as spreading the practice of buying locally and building sustainable local food systems, their attitude about competitors was to be friendly. In that larger mission, they’re really co-conspiritors. At one point, a local competitor called them up and asked how they had added credit card processing to their website. David said he told them: who he had dealt with, what he thought they should look for in reasonable fees and what some challenges might be. Definately not out of the traditional business handbook. The payoff came a couple years later: in this tough business there was growing consolidation and when that particular competitor decided he was done he called SPUD first. They ultimately negotiated a merger/buyout. Score one for the good guys: in a new field with lots of little competitors, playing nice can position you well for the consolidation rounds.
I was also delighted this intensive to meet a long-time hero of mine: the developer of Crossroads Mall, Ron Sher. I’ve long admired Crossroads for being a creative community center: the food court is all small businesses, there’s an open-mike community stage, it’s very family friendly. Perhaps in part Ron has had to make lemonade out of lemons – he’s only 4 miles from Bellevue Square where developer Kemper Freeman makes everyone sign a non-compete clause in their lease that keeps them from opening another store within 5 miles. Still, it pays off for Crossroads which is a great place to be. So great that now that I live in downtown Seattle I won’t cross the bridge for Bellevue Square, but I will for Crossroads. Ron has continued that community focused ethic with Third Place Books in Lake Forest Park and Ravenna Third Place in Ravenna.
Ron’s story is about how it came to be that Crossroads has both a Michael’s Craft and Jo-Ann Fabrics, practically head-to-head. In my opinon, it’s great – it makes those two stores and Crossroads the go-to place when I need any kind of crafty bits. However, when Michaels first discussed signing a lease, a no-competitors clause was definately part of the bargain. Apparently that was only the beginning, because Michaels was so aggressive in their lease negotiation that Ron ended up walking away. I am beginning to believe that if you’re a win-win negotiator working with a win-lose negotiatior, that may be your best (and only) choice: walk away. Ron instead brought in a 2nd-tier craft store, I believe it was called Treasure Island. He offered them his lease, which he considered very fair, and they simply accepted it. Lo and behold, within a year, Michaels bought out Treasure Island and converted their stores. He ended up with both his Michaels store AND his lease terms. Not long after, Jo-Ann came calling and thus Crossroads became the ultimate craft destination.