720 Michael Jacobson: CEO of French Florist

0:00Kara Goldin:I am unwilling to give up, but I will start over from scratch as many times as it takes to get where I want to be. You just want to make sure you will get knocked down, but just make sure you don't get knocked out. So your only choice should be, go focus on what you can control. Hi everyone and welcome to the Kara Goldin Show. Join me each week for inspiring conversations with some of the world's greatest leaders. We'll talk with founders, entrepreneurs, CEOs, and really some of the most interesting people of our time. Can't wait to get started. Let's go. Hi, everyone, and welcome back to the Kara Golden Show.

0:45Kara Goldin:Super excited for today's guest. We're going to dive into a story about transforming an overlooked traditional industry and turning it into something extraordinary. So I'm joined by Michael Jacobson, who is the CEO of French Florist, who took over his uncle's flower business, flower shop, and has scaled it into over$9 million business that's now poised for national franchise expansion. With a background in finance and software, Michael has disrupted the floral industry by bringing in all kinds of goodies from other industries, plus a relentless focus on customer experience and values-first brand ethos, obviously family too.

1:36Kara Goldin:So bringing all of that into the limelight and French Florist has really stood apart. So I can't wait to hear how he's turned this business into a category many wouldn't even dream of touching and what it really takes to build a modern, scalable brand in today's world. And I have to tell you, the arrangements, I got a gorgeous arrangement from Michael and his team. And French florist does not disappoint. It is so, so awesome. So highly, highly recommend it. So Michael, welcome to the show. Kara, thank you very much for having me. It's a pleasure to be here. Absolutely. So, okay, so let's get into the definition.

2:21Kara Goldin:So what is French florist and what makes it different in the floral industry today from maybe calling up that local 800 number or going to your local flower shop down the road? Yeah, a thousand percent. I think you're starting with the tough questions, the most important ones, right? Why are we consider ourselves special? You know, the way that I look at that question is we certainly think that we have good ideas. We certainly think that we offer the best quality products, the best client experience, the best customer service. The reality is we could say those things all day long, but it's actually not our place to say that.

2:57It's the marketplace that gets to decide that, right? And so what makes us special, it's, you know, we do have the best quality. We do have the best, we do have all of those things. But for any good company, they have to have those things. That's table stakes. And it's not even our place to say that. I think the companies that end up saying stuff like that aren't even the companies that... A luxury company doesn't call themselves luxury. I'm passionate, but I don't say that I'm passionate, except I just did there, right? But so where does that leave us? What makes us different if those things are table stakes for us?

3:29I think that we, as a company, understand more than any other company that exists out there how special flowers are. And I think that it's a very simplistic statement to say that, but I think there's a lot of truth to it. We feel very lucky to work in the industry that we do. The reason we feel lucky is when you're sending a flower arrangement to somebody, whether it's for a happy birthday, happy anniversary, it could be for something sad, like a funeral, and you're sending your condolences. No matter what the occasion is, you're telling that person that you love them. And love is the flowers.

4:11Flowers are love. And I'm yet to be convinced that there's a more powerful emotion that exists in our humanity than love. And that's the industry that we get to work in. That's pretty remarkable to us. So what makes us different, I think that it's a little bit of a softer concept, but I think it's an important one. We have an obsession over the client experience It's not, we're not just saying that. It's because we understand how special it is, the industry that we're in. And when somebody is sending flowers to somebody, we recognize what they're doing is they're creating a more loving world, right?

4:48And there's a halo effect with that as well. So I think that clients can sense that how deeply we care about the work that we put out into the world. And when they do order with us, we're going to hold that responsibility of delivering those flowers with a lot of weight because we know how special it is. And so it's from the highest level that we do have a heavy culture of innovation, doing things a little bit differently, going above and beyond 11 out of 10 surprise and delight. There's a lot of stuff that we do that helps differentiate us from a more tactical level. But that from the highest level, it's probably the level of passion that we have in the DNA of the company.

5:29Kara Goldin:So you took over your uncle's flower business when it was, it sounds like it was, you know, he was having a tough time. I mean, it's a, it's a incredibly competitive industry, I think owned by, you know, just a couple at most. Um, and what was the moment where you decided that you were all in, that this was the business that you wanted to get into? You know, I was the kid in middle school that was our middle school had just banned soda out of the vending machines and everybody was super upset. I kind of looked at that as an opportunity like, wow, I can maybe if I can get my hands on some soda, you know, convince my parents to take me to the supermarket, put them in my locker, sell them at lunch.

6:15people want soda, right? And I liked the soda too, right? It's not great for you, but as a middle school kid, I liked it. And so, you know, that's when I started to develop entrepreneurial spirit. I went through high school, went through college, studied business, didn't want to take, you hear about the statistics on how many startups fail, right? So I played it a little bit safe right out of college. I took a job in corporate consulting, whatever that even means, right? And, but it just didn't feed that fire in my belly. And I saw after a few months of working there, the wall that my ladder was up against.

6:51Wasn't super passionate about it. And so I told myself I would, you know, follow through with that commitment, work there for at least a year. They took a chance on me too. And, you know, and it was a great company, but again, just didn't feed that fire, the more entrepreneurial spirit, I think that a lot of folks have, especially the, you know, listening to this podcast, right? And so my ear was to the ground on opportunities that were maybe a little bit more entrepreneurial. I get a call from my uncle and he says, Mike, I am tired. I'm working six days a week, 60 hours, and not making any money.

7:23I've been running this flower shop for 38 years and I want to sell it. And I studied finance and it was tapping on me to help sell. I'm sure I wasn't his first call, but uh you know i think he talked to a business broker and the company wasn't worth that much and so he's like you know any advice and so i told him i'll you know i'll happily uh come in and that was the original intent was i came in and was going to help him sell the business what i learned the turning point the point of no return for me was i came into that industry and uh when i was looking at selling his shop i would go around to other florists what are they doing well what are they not doing well what multiples are the recent ones selling for like all the normal stuff.

8:03What I found, nobody had soda. And there were other issues. There were systemic issues where the florists, they were in pain. The students in middle school, they're in pain, right? Because they don't have soda. And if you could help them solve that pain, make their life a little bit easier. And these florists, I will tell you something, florists are incredible people. They're so creative. They're so passionate. My uncle is no exception to that. They're in the business for all of the right reasons. They understand how special flowers are usually. And they continue to do it decade after decade. Obviously not because of the paycheck, there's more to it than that.

8:39So it's really nice thing to see. But it was hard to see. Almost every single florist is struggling with the same exact issue. And I mean, you alluded to some of the dominant market players out there. We don't like to look at the competition that much. We're here to build our own company and shine our own lamp and create, you know, put 100 % of our energy on the client experience. One of the problems, though, with the leading competitors is they take your order from online, they syndicate it to a local florist. So they're like an internet broker. And problem is they take like a 40 % commission plus on those orders after all of their fees are considered.

9:14And so, you know, for more reasons than just that, but that being a huge one, these florists are getting crushed. There's no technology, the supply chain sex, the marketing, like everything. It's a very antiquated space. And so when I saw that pain in the market, my uncle looked at me a little bit of funny, but I told him, hey, I want to take over the shop and see if I can work on it for six or eight months and see if we can kind of turn it around. And we started to do really, really well. And so we opened a second shop, we opened a third shop, all of them started to do quite well. And we're like, okay, wow, what are we doing here?

9:47Ultimately, we made the very intentional choice to develop our franchise program that we have today to basically, A, most importantly, give the marketplace or clients that we serve a better customer experience when buying flowers. Because right now it's a shame that when you buy flowers online, in our opinion, it's a pretty hit or miss experience. It's not an experience in where it should be today. So that's the first pain that we're solving. But florists are the vehicle for us to go and deliver that client experience. And we can help florists in their journey as well. So a little bit of a past, present, and where we're going there.

10:18Kara Goldin:so you opened three of your own is that right and then that was when you made the decision to think about franchising were you mostly focused you live in la were you mostly focused on franchising outside of los angeles do you think that you'll continue to own some of your own stores uh how do you think about that yeah it's a it's a great question too we uh I have a negative stigma with franchising, even to this day. I'm sure a lot of folks do. There are mostly not great franchise systems out there, if I can speak bluntly. I think there are some very, very good ones out there. I think we're approaching franchising in a way that studies those models in a similar way that we've approached the floral industry, where we've been described as folks that like to kick up dust, right?

11:08We're going to go ahead and challenge the status quo. We're going to question if it makes sense or not to do things in the way that it's been done before. And if it does, great. And if it doesn't, we're going to invent a new even better way. We view the same thing about franchising is there are some great parts about franchising. And we lean really heavily into those great parts. I think the reason that we've chosen franchising as ultimately, again, everything that we do is to create the best client experience. So everything, every decision we make is a derivative based off of that. If we have a shop in Scottsdale, in Austin, in Boca Raton, wherever, right?

11:45I think that If we can open up two or three or 400 corporate locations across the states, it's one way to expand, sure. But we're going to have three or 400 different managers running those locations, even if we're paying them 80, 90, 100K salaries. There's what I think a lot of people view as a small difference, but I think it's huge, massive, like order of magnitude difference, where if you have a manager in that store versus an owner of that store, it's just a slightly different mentality. And if we can find the right owners in a franchise system that understand how powerful flowers are and are very creatively driven, we describe ourselves, we're really good at the boring stuff, the finance, the marketing, the technology, the operational support, like we do all of that stuff.

12:26We give all of that to the franchise owner. If we find somebody who's extremely passionate about serving the folks that we get to serve, I think that that owner is going to push it from even like an eight or nine out of 10 experience to like delivering a 10 or maybe even an 11 out of 10 experience. So it really is a small difference on why franchise versus corporate, but having that local owner mentality and that passion in the local community where we can just provide an incredible amount of support. We're really good at what we do. They're really good at what they do. And joining forces together, I think that's where we're going to get the best results ultimately for the clients.

13:02So small, subtle difference on corporate expansion versus franchise, but that's ultimately why we chose franchise.

13:08Kara Goldin:I love it. Well, I think that part of, we've had, you and I were chatting about this, we've had a number of franchises on this program. And I think what's fascinating is that no matter what the actual business or industry is, there's systems, right? There's branding, there's systems, all of the things that you were just talking about that are, it's almost like you're also coming in as a mentor to show like it's worked in these three places. Let's go and bring it into, you know, these and you can, you know, use these systems and all of that. So when you think about the, you know, boring, unsexy work you did behind the scenes that actually moved the needle when, you know, you came from a different industry and had, you know, a passion, had a love for your uncle, all of these things that you wanted to make it work.

14:06Kara Goldin:But what did you have to do to actually move the needle? Yeah, totally. So when I took over the business, a lot of it was for the first six, eight months was stopping the bleeding. It was a lot more tactical work. You know, the very first decision I ever made in the company, you know, we sat and listened to the six employees that we had at the time. And two of them were customer service folks that both of them were part time. And I said, you know, what would you improve? What would you change? What do you need? How can I support? They said, well, you know, we're using our phones. Customers call us to try and place an order.

14:45It's really hard for us to hear the customer on the phone. I think they have a hard time hearing us too. I think we need a better phone system. Like, okay, great. That's like really important. And so I looked at the phone bill. I'm like, okay, let's try to get a better phone system in. We're probably, you know, not paying that much for it. Let's see if we can get something a little better. Even if it costs a little more, it's probably worthwhile. It turns out we were paying$1 ,300 a month for our phone bill. I learned a lot about telephony that I did not expect to learn but like we were using the old school systems and when I say florists are great people it's a good example of it my uncle was like really good friends with the phone sales guy because my uncle just has like a bleeding heart he's incredibly generous and the phone sales guy he thought the phone sales guy was his like best friend and he clearly wasn't but so anyways we ended up moving to a better phone system that was like a hundred bucks a month.

15:35Uh, and, uh, you know, uh, super crisp audio quality, right? Uh, so saved$10 ,000 a year or more right there. Um, so that the first six, eight months were a lot of just tiny little decisions to get the business to at least to like a little bit of a better space. Um, as soon as we started to, that was to get it to break even and, and, uh, within the first couple of months and then started to generate, generate a little bit of profit after about, uh, six months or so. And then that's where the fun work really began where we got to innovate. So we took, I was coming out of, you know, my first job out of college.

16:08I was still living a pretty scrappy lifestyle. I was happy to live the raw and profitable life, right? I was living on next to nothing and just had a lot of joy running this business. I felt like it was a real life MBA where I was getting paid to run this company. I felt like I should be, you know, so I didn't have a problem kind of to an extreme degree reinvesting into the company as opposed to, you know, distributing that as a salary to myself or whatever. um so yeah we basically looked at uh no stone was unturned we looked at the supply chain we looked at the technology uh we looked at our marketing and branding efforts the website conversion rate optimization seo paid ads uh we looked at like just an incredible amount of stuff and the problem was we only had we were pulling a maybe 40 or 50k of profit in that first year so it's not not a whole ton to play with uh at the time we're like okay we can make five or ten like $5 ,000 bets or maybe like one or two$20 ,000 bets.

17:05Like, how do we want to do this? And so it was just a game of incredible, radical prioritization. But we were incredibly small companies, just myself primarily making these decisions. So the first thing was the operating technology. We're basically spending over$10 ,000 a year on printer ink because the tickets would print out, you'd flip it over, you'd have to copy and paste the image from the website onto the back of the paper. So the designers knew what arrangement they were designing and what that arrangement looked like. It was like just a crazy, wait, six packs machine. It was a ridiculously archaic process.

17:44We're like, why don't we just create a little iPad application that has all of this information on it? It's way more streamlined. You're not getting paper wet and the card message is wet and it's getting delivered, you know? So the technology was a big thing. The marketing was the other. On the marketing side of things, we knew that as much as we like business because it's black and white and logic based, like the reality is we're human. We are led by emotion. Our customers are no different than that. And so we knew that we had to invest into leading with emotion, especially given the industry that we're in.

18:15And so we took some inspiration from like, I like, there's, do you know Tiffany's, the jewelry company, Tiffany's?

18:24Kara Goldin:Of course, yeah. Okay. So Tiffany's is interesting because they're a little bit about love. They're in the diamond industry. The part I don't like about them, just to get this off my chest, they're about love, but they're a little bit exclusive with it, right? It's very expensive and it's only reserved for whatever folks can afford it. I think that I take a lot of, I give them a lot of credit for the wonderful branding work that they've done. I think the difference between our two companies is we don't view love as a luxury and therefore we don't view flowers as a luxury either. I think that our name is French florist.

18:56We're an American brand. We don't try to be French, but it's a nod to the European way where flowers are a way of life. They're not a luxury. They're a need to have. We view them as a nice to have. So that's something that we're working on, shifting folks to understand how powerful flowers are for creating a more loving world. And love is not a luxury. So with that off my chest, Tiffany's, what they do, you can go into Tiffany's and you can buy a$300 diamond necklace. It's going to be small, but you can buy it. Um, you can also go in and buy a$30 ,000 diamond necklace from Tiffany's. It's interesting because in both of those cases, uh, they're going to put that necklace in the turquoise box.

19:33And when you give the gift to somebody else, it's the turquoise box that is the reaction. Uh, and, and, and that, that's, that's really interesting. So, uh, we infused a lot of that way of thinking into our brand, uh, where it's like, how can we kind of put the flowers in the center because it's all about the flower. But how can we build a brand around that that helps signal that emotional experience that what it means to give and receive flowers in a way that is driven through maybe it's our brand colors or the messaging. And so we worked on that a lot. So then we had technology and we had brand and we started to do really well with that.

20:13And then the last piece was our supply chain. So just continuing to disintermediate. We left all of the partners of, you know, we used to work with all of that. We call them wire services, the like internet brokers that syndicate orders to local florists. Like we dropped all of our relationships with them. Even on the downside of the supply chain, we cut out the wholesalers. Now we import flowers directly from the farm from Ecuador, Colombia, Holland, Thailand, Mexico, Canada, a lot of local farms in the United States as well, where we're getting higher quality product, ultimately, again, for the better client experience, more base life, but also getting them at a lower price.

20:45So now that we don't really compete on price. But now we can start to offer more competitive pricing by happenstance because we can pass that discount along to the customer. So those were the three main buckets on where we decided to innovate. And that really hasn't changed today. We still kind of innovate in those three main buckets. But now we're focused a little bit more on really trying to understand the client experience from how do they discover our brand, then they have the need, they purchase, then they're waiting for the flowers to show up. And now we have two customers. We have the sender and the recipient typically.

21:20And then that post-purchase experience as well. I think a lot of folks will end their relationship with the client. You know, they do email marketing and some other kind of transactional stuff, but generally they end their relationship after they purchase. And so right now we're really focused on how can we make that post-purchase experience unbelievably special for the client as well? because once they purchase flowers from us, we want them to understand that like the impact that they really had by sending those flowers and we don't really care if they send flowers from us or not. I think that a lot of folks choose to send flowers through us because again, what we talked about in the beginning, like we really have a fundamental understanding of how important it is to get that right.

22:00When somebody sends flowers, we carry that with weight. But we like, it's all about the flowers. So it's a lot of like educating, inspiring, motivating. And then anytime we can surprise and delight some of our existing clients, like we love to show the love as well that we have for them, so.

22:12Kara Goldin:What's been the most surprising thing about this industry or just growing this business overall? In hindsight, it wasn't surprising. It probably sounds a little simple, but at the time, it was just a huge learning that I took. In the beginning, we didn't have the financial resources to hire managers or a CMO or a CFO. It was a small business that was struggling, especially in the beginning. As we grew, we started bringing on great people. And one plus one became greater than two. We put our heads together. And it was just a remarkable experience to build an amazing team. And then what's how that, and that stays and will stay very, very true.

23:08We put a lot of focus on bringing remarkable folks into our organization. The interesting part though is when we started franchising, I think that earlier you had mentioned that we're almost like a mentor or a teacher. I think you're right. I do. I really think you're right. I think that the opposite is kind of true as well. It's been surprising that our franchise owners are coming back to us and saying, hey, we love what you're doing. Have you ever thought about doing this as well? And we say, wow, that's very thoughtful. Totally in line with how we... They talk about client experience, right?

23:42And I think that it's been a joy to bring our franchise owners into our ecosystem and have them contribute ideas as much as we contribute ideas. And the best ideas get to bubbles to the top. So it's been a really pleasant surprise that our franchise owners are just incredibly active in the system and um equally as obsessive as you know creating an unbelievable client experience that um we're not trying to make a five or ten or fifteen percent improvement on the floral industry we're trying to create an order magnitude experience better and i think that's a tough challenge but our franchise owners are up to it they contribute to it so it's been nice but people people are everything right we can have all the systems we could have all the tech we could have a great location we could have great supply chain but But if you don't have the people running it, it's just an emotionless system.

24:27And flowers especially, they're not an emotionless thing.