When I posted last week about the aftermath of our Empathy Cards release, I mentioned some other major changes that had taken place this spring in our studio. To give you a little backstory: last summer, we outgrew our downtown LA space. Rather than renting an even bigger space, due to the insane cost of real estate here, we made the decision to stay in our studio, but transfer about 75% of our inventory and our wholesale shipping operation to a third party fulfillment house. We kept our retail (orders from our site) shipping in-house at our studio, and kept the rest of our inventory on hand to pack and fill those orders. We didn't transfer all our inventory storage and shipping duties to the fulfillment house, because it didn't make sense financially to use them to fill the kinds of small orders we get from customers online.
As it turned out, this wasn't a great system. We STILL haven't cracked the issue of inventory management software that meets all our needs and integrates with QuickBooks (do NOT use Fishbowl. That's all I'll say about that for now -- that's a post for a different day -- but it never worked for us), so having inventory split between two locations was pretty hard to manage. We spent a lot of money shipping stock back and forth, a lot of time trying to keep track of things, and a lot of energy talking to each other about how everything was a mess. We also ran out of things more than we should have, which nobody was happy about. This spring, our fulfillment house raised their prices.
At the same time, the retail arm of our business was continuing to grow, and we were looking at outgrowing our studio again, even with wholesale out of the picture. We also weren't loving our studio building; it was the kind of space that looked great in pictures, but had major issues in real life. KIND OF LIKE MOST OF MY INTERNET DATES. HEYO!
Goodbye, studio. You brought us Skrillex, termites, good times, a space to solve many problems, and possible respiratory disease. I think it's for the best that we're both moving on. We had to make a decision about what was best and most sustainable for our business in the long term. I was increasingly uncomfortable being in the position of not being in control of the cost of our shipping operation, and having split inventory was really tough. What I really wanted to do was bring it all back under one roof, but the only way to do that was for us to figure out a way to do it all ourselves.
After I spent about two days panicking and thinking about super radical ways to change our business model, we decided to do a thing that sounded very, very scary: build and staff our own warehouse in a location that made more financial sense than Los Angeles. I have to admit that this plan terrified me, and I thought about backing out of it a couple of times because I didn't think we were ready, but the rest of our staff was really excited about it and felt really strongly that it was the right thing to do. We also ended up hiring a consultant to help us with this huge undertaking, and it was some of the best money I've ever spent. Without him to guide us and cheer us on, I'm not sure it would have happened.
In terms of taxes and the cost of insurance, California is one of the least small-business-friendly states. Nevada, on the other hand, is great for small businesses. Las Vegas is a 4-hour drive from LA, has a big pool of qualified workers and inexpensive real estate, and we can stay in a hotel shaped like a giant pyramid for like $39 a night. Clearly, we had found a great warehouse location.
So, at the same time as we were going to NSS and handling the response to Empathy Cards, we were also working on leasing a warehouse space, planning and building it out, and hiring a Vegas-based staff to join our team. AND, because I clearly don't believe in doing anything halfway, I put in an offer on a house (my first house!) in the middle of all this, never thinking it would be accepted. I wasn't really looking for a house, but we wandered into the open house one weekend, and my partner* and I fell in love with it. The week we released Empathy Cards, I found out we got the house.
The house! Which we are now using as an office. My family and I will move into it eventually.
Our Nevada crew: John L, John G, Val, Brian, and Lee.
Honestly, you guys, building the right kind of infrastructure has been one of the 2 biggest challenges to growing this business. (Manufacturing gift products at an appropriate margin has been the other.) We re-did our org chart for the 47th time this spring, and if/when we really nail down the infrastructure stuff, EVERYONE'S JOB WILL BE SO MUCH EASIER. We'll keep you updated on how it goes in Vegas. In the meantime, we're looking for some PT assembly people, and we'll be hiring seasonal help for the holidays. If you live in the Las Vegas area and you're interested, or know anyone who might be, please reach out to Joe Rubacka, our head of operations, at email@example.com.
*There has to be a better word than "boyfriend" or "partner" for the guy you've been living with for 4 years, whose son considers you his stepmom, who you plan on being with forever but you also don't plan on marrying for many reasons that don't have anything to do with love or commitment. Right? "Partner" just sounds like lab partner to me, and "boyfriend" sounds like we're in high school. Arg. Stupid English language.