Boss Life (12 page)

Jens and I spend our last hour in the production engineers' office. They receive plans from the sales office, check them, and then send them out to the shop floor. We have some difficulties doing this ourselves. Andy Stahl produces detailed drawings from our proposals, and Steve Maturin passes them to the guys working on the piece. These often have small errors that get caught only by chance, and I often see my workers taking the long walk back to Andy's office with a question. Is there a better way?

Jens sits me down with the only engineer on duty that day, an older gentleman named Martin who does not speak English. He's clearly uncomfortable, but I'm not sure whether he's shy or he dislikes the idea of a foreign stranger learning his company's operational secrets.

I start asking questions. Each results in a very long exchange between Jens and Martin, and then a very short English answer back to me. But I'm able to work out their process. Because they have only twelve standard designs, they send a single paper sheet listing the type of table, size, wood to be used, edge detail, and quantity desired. This would not work for us—our tables vary too much. We cannot avoid making a full set of drawings for each table, even though they are very expensive to produce.

I conclude the day with another long meal with the New York contingent, and a good night's sleep. I return to the factory the next morning and head to Jens's office to thank him for being so helpful. “I would not do this normally,” he says, “because I am the one to tell the outside partners what they must do. But I was told that you are special, and that I am to give you all the assistance that you require. And now you must excuse me, as I have spent more time with you than I can really afford.” How about that? I'm special! But what does that mean?

At lunchtime, Nigel introduces me to his friend Johann, whose job is to arrange financing for Eurofurn's operations. We make a short drive to a nearby restaurant: pizza again. Johann makes it clear that this is not in honor of an American guest, but just because he really likes pizza. While we eat and chat, I'm thinking: since I'm special, maybe the steady stream of orders is going to begin. If they plan to keep me busy, it would be worth buying some equipment to do their work. All that will cost money. I ask Johann whether there's any chance that Eurofurn would help, and he holds up his hand. “No, no, no. We are having enough trouble financing our own factory. We bought a lot of equipment before the recession and now we need to be very careful.”

After lunch, while we're driving back to Hildesheim, I ask Nigel straight out what Jens meant when he said I'm special. Is Eurofurn going to commit to me? Will there be any contract specifying levels of production and investments required? Are we engaged, or just dating?

Nigel is evasive. Eurofurn is excited to have found me. Eurofurn wants us to work closely together. Eurofurn needs the highest quality, and we can do that. Eurofurn needs the lowest prices, like it gets from its other foreign partners. Eurofurn would like me to show my commitment by assuming the costs of the next phase of our relationship by myself. Maybe Eurofurn will formalize the relationship at some point in the future. Eurofurn is also, as an organization, not sure that it wants to work with foreign partners at all. The Eurofurn management team is not entirely behind the decision to send work overseas.

The rest of the drive to my hotel passes in silence, and I eat dinner alone. My flight out is very early the next morning. I'm watching TV in my room when a text arrives from Nigel. Peter Baumann would like to take me out for a drink. Can I be ready at nine? Peter picks me up and we head to a non-descript bar in town. It's crowded. I'm introduced to a bunch of Peter's friends, local farmers. After a couple beers, I'm given a sinister-looking concoction: a wineglass half full of vodka. Perched on the rim, a slice of lemon is topped with a pile of dry instant coffee. “Luftwaffe Special!” exclaims the man. “My grandfather drank these in Russia! Keeps you happy, but not sleepy!” He demonstrates. You fold the lemon around the coffee, eat the whole thing in one bite, then chug the vodka. I master it on the first try, to applause from the guys. Then I have another—they're tasty.

Peter has been drinking, too, and we lean close to each other. “I love your factory,” I tell him. “Very clean. Very good machines. Nice people. Very impressive.” He drapes an arm across my shoulder, very friendly. I decide to ask him the question that has been bothering me all day. “What do you want from me? Why don't you do the work at your factory?”

He answers slowly. “It is not so good there. Business is very, very bad. Everyone is old. We cannot get young workers to move to the country. We have too many machines. We are losing money. We need to move the work to places where it is cheaper and where we can grow. And it takes too long to ship product. Many weeks on a boat does not work. We need to be close to our clients.” I can see the sense of this. My biggest doubt is whether I'm the right choice for them. We will never be as efficient as a factory. Can we create an assembly line and deliver work at a lower price? It would be a drastic change in our operation.

I'm home on Saturday after a hellish, hungover flight. Can't sleep. I go down to my kitchen and log in to Dan's and Nick's e-mails to see what they've been up to. They've been busy. We have a lot of potential work hanging out there. If even half of it comes in, we'll be swamped.

We each sold one order while I was away. Dan finally scored with a sixteen-footer worth $9,106. Nick sold a smaller table for $7,413. Emma sold some power/data units for $453. And a purchase order worth $24,111 came in from a local insurance company I've been working with. Sales for the month so far: $88,045. And for the year, just $631,048. There are two business days left in April. We need a miracle: $170,000 in three days to put us back on track for the year.

Our cash is melting away. I started the month with $136,261, and today I have $105,294. Cutting my pay has slowed down our weekly expenses, but we've averaged $34,440 a week for the past two weeks. That might be OK if we were making a book profit. I have explained at the weekly meeting that we need to keep production up, to collect cash from final payments as soon as we can, but the shop guys know that this speeds the day when we run out of work and I lay them off. They're slowing down production, maybe unconsciously, maybe deliberately. And we've been distracted with the Company S debacle. So far this month, we've shipped $145,236 and built just $125,036. Both of those are far below my target of $200,000 a month. And far below our cash outflow.

Inquiries are jumping all over the place. The first two weeks of April were slow, but the third week was higher than average: twenty-one people contacted us. The next week, when I was in Germany, was the worst I have seen in years: just seven incoming calls. The total for the month so far is just forty-nine, far below the totals in January (seventy-nine) and February (sixty-six). The missing inquiries give me a very bad feeling. As the number of possible buyers shrinks, we're less likely to hit our targets.

Well, there's one deal ready to go. I e-mail my friend who wants the bedroom set. If I can see him this weekend, I can review the final designs with him and hopefully get a deposit check. A $28,797 order will help. My friend is happy to meet me late in the afternoon. I go upstairs to tell my wife that I'm leaving. I need to go to the shop to pick up some checks and then go see my friend. “Well, be careful,” she says. “The van has been acting funny.”

I back the Odyssey out of the driveway and shift into drive. The engine revs up, but the car doesn't move. Shit. The transmission has finally given up. I let the van roll to the curb, then I try the Camry. The engine runs very ragged, and I see to my horror a huge cloud of white smoke behind the car. I turn it off. Peter normally drives the Camry. I go upstairs and shake him awake. “What happened to the Camry?” He shrugs. “I don't know. There's a lot of smoke coming out the back, but I got it home from school yesterday.” “When did that start?” “I'm not sure, I just noticed it yesterday on the way home.” We have an excellent auto mechanic a block away, and a car rental shop within a short walk, but both are closed on the weekend. I ride my bike out to the shop, and on the fifty-minute trip, I try to figure out what to do. The Camry is twenty years old, has 135,000 miles on it, and just two months ago, I spent $2,800 replacing the power steering. The mechanic told me then that I was most likely throwing money away. I've had the Odyssey for thirteen years, but it has even more miles. Neither car is worth more than the repair costs.

I bike out to my friend's house and show him the latest version of the designs. He takes the news that his new bedroom set will cost as much as a car without flinching and asks me what he can do to get onto our schedule. That's easy: hand over some money. He writes me a check for $12,500.

On Monday morning, I pull the Camry into the mechanic's lot. White smoke is billowing from under the hood. The diagnosis: “Head gasket, maybe a cracked block. Junk it.” And I'm not throwing more money at the Odyssey. I'm carless. I coast the Camry back home, park it in my driveway next to the van, then walk up to the rental place and pick up the cheapest car that will fit my family of five (tall) people, a purple PT Cruiser.

The last day of April brings a surprise: two more orders. The first is worth $29,835. The buyer is a woodworker in Maine who was asked to make a very large table for a local company, but realized that it was beyond his capabilities. It's an easy job for us. The next is smaller, $15,301, for a company that makes tools for auto mechanics. We've been dealing with their general contractor. We were initially asked to price five different tables, but the job has been whittled down to just the top of the largest table. The design calls for a mostly metal top, with some wood. I'm pretty sure that we'll lose money at the price I quoted. The metal work will be a challenge, but I'll take anything at this point to keep the guys busy.

Dan and Nick have a long list of jobs that they hope will come in. Dan is still waiting for the purchase order from the California engineering firm. Nick has sent off his formal submission for the Air Force base. And there are still other proposals out there. I feel discouraged at their report. They are so hopeful. And they are selling almost nothing.

I spend the rest of the day doing administrative work that should have been done the week before. I review the bills the bookkeeper paid, the payroll that Emma submitted, make a local tax submittal, and walk through the shop to review work in progress. Everyone asks about Germany. I took a lot of pictures and some movies of Eurofurn's factory. I should put some kind of presentation together so that they can see what I saw. No time, though.

As I walk through the shop, the contrast between us and Eurofurn is stark. We can do most of Eurofurn's work, and do it well. Our products are well made and appealing. But our shop is a mess. Not by American standards—it's one of the cleanest shops I've ever been in—but compared to Eurofurn, it's appalling. There's no particular order to our machinery. We just set it down here and there as we acquired it. A decade's accumulation of dust frosts unused horizontal surfaces, and there are heaps of scrap everywhere. The only bright spot is the finish room. Dust in there causes finish defects. Dave Violi keeps it spotless.

One other difference: my whole crew is working. Our backlog is shrinking, but it isn't gone. I think back to Eurofurn's unoccupied work stations, and Peter Baumann's gloomy prognosis for that factory. Is that our future? How long before I have to lay someone off? Is the recession in Europe spreading to America? Is it 2008 all over again?

D
ATE
: T
UESDAY
, M
AY 1
,
2012

B
ANK BALANCE
:
$105
,
203
.
90

C
ASH RELATIVE TO START OF YEAR
(“N
ET
C
ASH
”): -
$31
,
950
.
42

N
EW
-
CONTRACT VALUE
,
YEAR
-
TO
-
DATE
:
$704
,
981

May starts on a Tuesday. Cash reserves are down. Sales? My last-minute surge brought our April total to $161,978. Not what I wanted, but at least better than March.

The production numbers aren't so good, either. We built projects worth $125,036, with shipments totaling $145,236. I try not to be too discouraged. Considering these statistics on a monthly basis can be misleading. We add a job to the “Built” list on the day it enters the finishing room, and to the “Shipped” list when it goes out the door. A large job can skew the numbers if it's mostly completed in one month and tallied at the beginning of the next. It's more meaningful to look at the numbers across a three-month span. Our build for the first quarter, January through March, averaged $207,819 per month, which is better than my goal of $200,000 a month. Shipments averaged $194,418, just short of target. Costs during that period averaged $181,736 per month. We were making a profit, on an accrual basis, of about $12,400 a month, even though our cash position didn't reflect this. Uncollected balances and the deposits that never showed up in March made our cash balance decline.

As I look at the jobs in our database, it looks like our ship number for May should be much closer to our average. How much will we build? That depends on whether things go well in the shop. Whether workers are moving jobs out the door, or fixing mistakes, or drowning in misquoted, difficult projects. And whether we can keep the shop occupied by adding more work to our queue. I run the calculations for our backlog and it shows four and a half weeks. We'll be out of work in June. Better get back to selling.

How much time do I spend each day thinking about things? It depends on what else is happening. Aside from my primary job—making sales—on any given day I might have to: review incoming bills; sign outgoing checks; call a customer to find out when they will send us the money they owe us; check bank balances; monitor our credit card accounts; file taxes; photograph a completed table; edit a photo or write content for the Web site; write an ad; change the ads in our AdWords account; evaluate a change in shop operations; move a machine or a worker to a better location; buy new equipment; fix a broken machine; call the landlord about the plumbing, heating, or neighbors; negotiate a new lease; evaluate and purchase health and dental insurance, and general liability, workmen's compensation, and auto insurance; contest an unemployment compensation claim; do the payroll; decide whether to give a worker a raise; deal with a worker's request for emergency leave; perform annual reviews; respond to credit checks for my workers; verify employment for former workers; shoot a bird that has found its way into the shop; figure out why a printer stopped working; restart the server; add a user to our network; purchase a new software program; vacuum my office for visitors; get the truck inspected, on and on.

Some of these tasks are interesting. Tinkering with machines is fun. Marketing decisions, especially how to manage the Web site and AdWords, are an intellectual challenge. Some are unpleasant but lead to a satisfying conclusion, like nagging customers for past-due payments. (They've always paid me, eventually.) Some are frightening. I can change an employee's life with my decisions about pay rates and whether to hire and fire. And many are just aggravating: the taxes, insurance purchases, legal issues, and some of the employee interactions. Each layer of government, each enormous and indifferent private bureaucracy, requires its own special knowledge: the right form filled out the correct way and filed at the right time. Learning how to complete one type of tax filing tells you nothing whatsoever about how to fill out the next form. One health insurer presents a quote one way, another in an entirely different way, and both require extensive study to determine the best choice. It's like stepping back to an old, old world where every tree, every rock, every stream is inhabited by its own resident spirit, and each needs to be mollified in the correct manner. Or very bad things happen.

I didn't start my company to do any of this. I had no idea, when I decided that I would make furniture in exchange for money, that this was in my future. And the strange universe of administration expands as the company grows. I can push some tasks onto Emma and Pam, our bookkeeper, and we can outsource some payroll functions. The rest is still my responsibility. The company has fifteen employees now, and takes in more than two million dollars annually. If I spread out a year's worth of administrative tasks evenly, they take about three hours a day.

Please keep in mind, as I tell my story, that the narrative has been extracted from a year's worth of days that were actually a mix of selling and dealing with this other stuff. Not one single day presented itself neatly arranged, like a book or a movie.

—

WEDNESDAY
,
MAY 2
, brings a bonanza—three large checks, totaling $32,820. Big mood lifter! The first is the deposit for the Maine table, worth $14,918. The second is for $3,300, a preship for a single table that we sold in January. And the last is for $14,602—another preship, for a group of tables going to a local software developer. This cash injection offsets payments totaling $25,304 that I sent out yesterday.

The downer is seeing how much cash we could possibly collect in the future, if, and only if, we finish all jobs and collect all balances. It's down to just $53,008. Add that to the $127,601 I have, and there are about five and a half weeks before the money is gone. If our output is as low as it was in April, we will run out of cash before we can expect to collect the balances due.

At home that evening, dinner discussion focuses on Peter's job offer in San Francisco. He's decided that he wants to commit himself to a whole year of working before starting school. I ask him whether it will be difficult to get permission to defer from MIT, and he tells me that it's as simple as checking a box on their Web site.

Nancy is strongly opposed. She has a long list of worries that boil down to: young man on his own in a big city, with money. She thinks that he will be lonely. She thinks that he will hate working. Or that he will love working so much that he will skip college entirely. My reaction to all this is—so what? He's going to grow up one way or another. Take a chance! Go West, young man! If it doesn't work out, he can always come home.

I have a less noble reason to back his plan: it solves a financial problem for me. When I stopped my salary, I knew that my personal cash would cover Peter's tuition. Then the cars died. If he defers for a year, I'll have enough money to buy two decent cars without borrowing, enough to live frugally until the end of the year, and another fourteen months to round up more money. I won't have to actually write a check to MIT until fall 2013. I'll be able to reapply for financial aid in the winter of 2013 and show a more pitiful financial picture to the aid officers. I'll have very little cash on hand, and my income is likely to be much less than one hundred thousand dollars. So the cost of Peter's next year might come way, way down from the sticker sum of sixty-five thousand a year.

I don't mention this line of reasoning to my wife. Instead, I point out that my two sisters live in San Francisco, that Peter will always have someone to call if there is trouble, and that he can come home at any time. Her great-grandfather said goodbye to his parents in Minsk and left for America, without cell phone, e-mail, waiting family, or a job. He was brave and his parents let him do it. Are we too weak to let go of our children anymore? He's going to head out the door one way or another. Why not let him do what he wants? She agrees that he can give it a try for the summer.

—

THE NEXT DAY
, Thursday, I design the Eurofurn showroom table. The order arrived in March, but I didn't want to start until I had seen their factory. I'll be using a drafting program on my computer to make a drawing. This is how information about an object is normally conveyed from the designer to wherever it is manufactured. The drawing portrays an object, but it actually consists of a bunch of lines and text on screen or paper. It has its own existence, independent of the qualities of the item that is being drawn. If the drawing is unclear, or riddled with errors, production is difficult and inefficient. Drawings look nothing like completed pieces. It takes a great deal of skill and experience to look at them and visualize what the object will look like, and even more to tell how it will work.

In our shop, the sales team does the initial drawing of each table. We modify it as the design is worked out with the customer. When the job is finalized, we send the file to Andy Stahl, our engineer. He will transform our concept into two different formats: one detailed set of drawings for the workers in the shop, and one set of instructions for our CNC machine. His job requires a deep understanding of what happens in the shop, as well as the skills required to convey complex information clearly, both to people and to a machine.

If you studied the drawings that Andy makes for the shop floor guys, you might eventually notice what isn't there: no indications of what machines to use, no instructions as to how to build the table, or in what order the subassemblies should be built, and nothing at all about how it will be assembled, finished, and shipped. All that knowledge is elsewhere, much of it in the heads and hands of the craftsmen. Our drawings contain about 5 percent of the information required to produce the object they depict.

Andy determines the details of what will be built, but the big decisions have already been made. Dan, Nick, and I do what most of us think of as design—the creation, from nothing, of a new object. How do we do that?

The mental and physical parts of the task are done simultaneously. We think, and we draw. We try to identify what object will function per the customer's requirements, look good, can be built efficiently in our shop, can be assembled and disassembled with ease, will fit into a shipping container that we can handle, will be durable, and whose cost doesn't exceed the customer's budget. And just to make it trickier, the best solution for any single requirement usually means a suboptimal approach to another. Fortunately, we've been solving these problems for years and have identified effective strategies for each of them.

I have designed every kind of furniture for home and office and learned that there are many issues beyond durability, looks, and price. Designing a bedroom requires tactful questioning about how it will be used. Designing an individual's office should include some consideration of how the proposed design will look to colleagues and underlings. Chairs need a great deal of structural knowledge. In contrast, a conference table is pretty simple: a flat surface and something to hold it up. The top should be thirty inches from the floor, with at least twenty-seven inches underneath for legroom. We know that eighteen inches between the perimeter of the top and any vertical structure provides enough knee room, and that we should allocate at least thirty inches of perimeter for each chair, and that the table should be no closer than forty-two inches to the wall or other furniture.

We determine the size of a table by asking the client how much space they have and how many people they want to seat. If their answers contradict each other, we show the biggest table that will fit in the room. Since size is easy to determine, most of our design thinking is about how the table will look, how to build it, and how to integrate the audiovisual equipment.

Eurofurn is more sophisticated than our typical customer. They've told me what size, shape, woods, and special features that they want. The table will be a modified equilateral triangle, seventy-seven inches long and seventy inches wide, with gently curved sides that become much tighter radii at the corners. Any object based on a triangular geometry presents difficulties, because our materials and equipment are designed for a rectangular world. My machines default to 90-degree cuts. Our wood comes to us in rectangular chunks. And clamps, which we use to hold pieces together while glue dries, don't work on triangular shapes—as pressure is applied, they slide toward the vertex and then fall. Since clamps are heavy and bulky, this will usually ruin the work.

The top is also too large to cut out of one piece of plywood. It must be made in pieces. I could cut it into two sections, but a single seam running across the triangular top will look arbitrary and clunky. If I make it in three identical pieces, then the seams will reflect the triangular geometry better. Each piece will have its own power/data hatch. In the center, where the three pieces meet, I'll put a circular hole down into the base. This will allow a wire to be run from a telephone to the floor without going through the hatches, and it will also eliminate the awkward spot where three pointed pieces meet.

I spend some time working out the radii of the two curves on each top edge. We'll have to bend a piece of solid walnut around these curves without cracking it. We can steam the wood to make it flexible, or we can use several layers of very thin wood and gradually build up the required thickness with multiple glue-ups. I want to avoid either of these techniques, as they are both very slow and extra build hours mean extra cost. I came up with my selling price, $6,523, by estimating how much a production version of this table would cost to build if we have everything worked out. But we don't have everything worked out, and it will likely take more hours than my estimate suggests.