This the second time in as many months that I’ve hosted one of these events for Concentrate, and, if it’s anywhere near as interesting as the last one, I think you’ll find it well worth your time… and not just because they folks from Concentrate are known to buy the occasional beer for audience members.

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MARK: What is Small & Mighty?

HELEN: We’re still in the defining stages of Small & Mighty, but SAM… my new acronym, since we can’t really use S&M… attempts to provide a more formal support system for businesses in their beginning years. It was already in place to some extent. We found it around town, in bars, at our houses, in the neighborhoods, etc. We were already asking for advice, comparing notes, and just generally talking shop with one another. So far ,our SAM meetings have been somewhat structured in theme, but have also just served as a sounding board for questions, concerns, and issues that we face as very small business owners.

LISA: Just to add to what Helen said, and throw in a little snarkiness… I DESPISE NETWORKING. I love Small & Mighty because we don’t wear nametags, and we always have cheese at our get-togethers. They’re actually fun, and I don’t dread them. Getting together with other self-employed folks — no matter how different our services or products — to slog through the challenges, or share super helpful, positive ideas is… wait for it… awesome.

JEAN: I’m going to follow up on what Lisa said with more of what we are NOT. We are not a start-up incubator. We are not focussed on any one sector… Both of those areas are well covered by other groups in the community… I’m pretty sure even the term ‘small’ is a relative term. We’re a group of newer business owners… I’m the exception– maybe our first entrepreneur-emeritus… who are interested in learning from each other and finding collaborative opportunity. We are also generally in the progressive, creative class category. Many of us are involved in the service sector, but we’ve been reaching out to other types of entrepreneurs. I think they could enrich the social stew and the collaborative potential. We are in the process of defining our mission. There are no official membership criteria. Most small businesses have no choice but to grow incrementally, so it seems we are all comfortable waiting for our identity to emerge naturally. There is no hierarchy, and there are no ‘deliverables.’ No one is paid to run this. If someone thinks they can contribute, and they run an independent business, they are welcome to join.

MARK: Why is a group like Small & Mighty necessary?

HELEN: I’m not sure how necessary SAM is, but I do know it’s incredibly helpful. SAM creates a forum for super-small business owners to ask concrete questions like, “Who has a good accountant?” or “Does someone have a van I could borrow this weekend?” or “I’m looking for some funding sources – who’s successfully gone that route?” to more abstract ideas like work-life balance, running successful meetings, and managing staff.

LISA: Yes. I second all that. We want to pool our complaints and successes, and learn from them. I guess to put it simply, if I can share a ‘Challenge-Overcome’ story that prevents someone else from going through it the hard way, or at least expedites it, then the group is working.

JEAN: Yes! Within SAM, we can comfortably share our ignorance and failures as well as our successes. We talk ‘learning curve’ all the time. I’m not sure that happens at most ‘networking’ events. Someone at a SAM gathering brought up the term ‘co-opetition.’ That’s the other element I would emphasize. We are committed to each other’s success, even when we’re in the same field. I think this may, in the end, be our differential. We are focussed on positive relationships with each other, our co-workers, our customers, our community. Because it works. It makes our businesses better. My 2$ theory: I think small businesses can harness a kind of reverse economy of scale when they work together — relationships based on trust and goodwill are more efficient — and a lot less expensive. That, and being flexible, are the two big assets small businesses have going for them when they go up against the goliath of Big ‘C’ capitalism.

MARK: What were the circumstances that brought the three of you together? And, if, in the process of answering that question, you could each introduce yourself and tell us what you do for a living, that would be great.

HELEN: I’m one of the owners of eat. We’re a catering company, we have a food cart, and a carry-out space on Packard, here in Ann Arbor. Jean hired me when I was in high school at the old Jefferson Market, which was where I met my business partner, Blake Reetz. I think I also met Lisa at the old Jefferson Market, but we work together quite often on the same events. She hosted our food cart when we were first starting out, a couple years ago. We’ve also partnered with her and many other wedding vendors to organize The Wedding Party, which is a not-your-average wedding show… Lisa first approached me about this at last year’s Ann Arbor Film Festival. She said that she and Jean were talking about starting a sort of network-y — support-ish group for small business owners. I think they had that meeting and decided they needed a third organizer to round out their team, so they asked me to join.

LISA: I’m the owner and manager of pot & box. We are a full-service flower shop with daily deliveries and floral design services for weddings and events. We also provide horticultural decor for residences and businesses, with an emphasis on the extraordinary and unusual. We also offer container garden design services to facilitate folks planting up all those pots & boxes out there… Ha! I guess it really does all start back at the Jefferson Market. I lived around the corner, and ate there at least once a day. OK, sometimes three.

JEAN: I used to own Jefferson Market. Now I work for Zingerman’s Community of Businesses to improve our environmental impact. I started my business in order to make the kind of life I wanted for myself and my family. What I learned quite accidentally, as people in the community became very attached to the business, and we became a community center, was that people yearn for community. We were not a perfect family or a perfect business, but we offered something people really craved — and it had nothing really to do with the coffee or the food. I really believe in community. I think we all know we need it, and we all know that, when we build it in the right way, our lives improve. I also believe in ownership… especially for women. Legacy, I’ve learned, happens in unpredictable ways… see eat, Helen and Blake’s business. I guess I hope SAM might be a part of that too. I’m doing this to apply what I’ve learned, and also to spend time with people I really adore. Lisa and I always talked business nuts and bolts. Helen and I do that too. We just, as Helen said, thought we’d broaden and formalize the conversation.

MARK: Until recently, Small & Mighty had been called YEP, which stood for Young Entrepreneurial People… Why did you decide to change the name?

HELEN: We got some flack from people who were part of the YEP network but didn’t consider themselves young. We always thought of “young” as a loose term. I think that’s how it went anyway… Lisa was more in charge of that one.

LISA: We also got flack from people when we changed the name. As someone suggested in an offline comment, “I think you’ll find that the men in the group won’t like ‘Small & Mighty,’” to which I said, after I was done scoffing, “Well, individually, we are small and mighty, and collectively too. It’s perfect. I love it.” Ironically, I was the stubborn one that wanted to call us YEP. Then, after fielding many, many comments questioning the “Y is for Young,” I posted a call for a new name on the group’s Facebook page saying, “What should we call our small and mighty group?” The catalyst to change the name was hearing that we had won the Awesome Foundation grant, and, after a brief Facebook discussion, I renamed the group. SAM.

JEAN: We are not a brand or a marketing group. The name could change again. I am not young. I know ageism exists, so I’m happy we shed the “young.” I also never believe it’s too late to start a new chapter, or to take ownership. I hope we attract people across the age spectrum who are trying something new. I think intergenerational conversation has been lost because we always are dividing and compartmentalizing socially… More cheap philosophy points for me!

MARK: What will your $1,000 grant from the Ann Arbor Awesome Foundation be used for?

HELEN: $1,000! We are so excited and honored to be granted that money.

LISA: Yes! Huzzah! As I said in the application to the Awesome Foundation, we’d love to pay someone for the organizational tasks. (Because, as small business owners, we’re REALLY good at delegating, right ladies?) We’d like to build and cultivate an online presence. We’d like to host inspirational events. I’ve been looking at the monthly meet-up in Detroit called Open City for ideas. They have really terrific panel discussions, and always a great turn out.

JEAN: I see the Awesome Foundation grant as seed money to help us grow. I don’t want SAM ever to become a burden on small business owners who almost always have limited resources. Give us a year and we’ll parlay that $1000 into something, yep, Awesome. That’s what entrepreneurs do. As Lisa said, some will go to essential, but everyday, expenses that will allow the awesome to happen, and some will be held aside for magic-making opportunities. Not sure what form that will take, as the whole group needs to weigh in, but we’ll be happy to report back when we know.

MARK: What do you see as your geographic boundaries? I ask because, with Lisa moving to Detroit, and opening a second Pot & Box store there, I’m wondering if there might be opportunities to join forces with some of the people who are doing exciting work there.

HELEN: So far our geographic boundaries have been the Ann Arbor-Ypsi area, but I feel confident with this new Pot & Box space SAM will have some ties to Detroit.

LISA: Absolutely. I have always maintained that I am a sheepdog, herding like-minded people together. Last week, the staff of Sweet Heather Anne met me at Cliff Bell’s for Open City, and a few of our entrepreneurial friends from Detroit just attended our SAM visioning seminar with Paul Saginaw of Zingerman’s. Soooooo, it’s already happening!

JEAN: I don’t think we are interested in defining geographic boundaries or cultivating that sort of division particularly. I really love Detroit and think it holds the key to Michigan’s future. For many of our group members, the Detroit area would define their market more so than just Ann Arbor-Ypsi. I would never want us to hold ourselves apart from Detroit if any entrepreneur there thought they could have something to gain by partnering with us. It would be super cool if they would sit with us at our welcome table.

MARK: To play Devil’s advocate for a minute…. What would your response be to someone who said to you, “We don’t need Small & Mighty because we already have a Chamber of Commerce“?

HELEN: SAM and the Chamber of Commerce serve different purposes. It’s always felt that the Chamber of Commerce isn’t for super small businesses. SAM provides its network with person-to-person communication lines and support.

LISA: Exactly. And, I would go further to say that someone could ask why we need SAM if we have Think Local First. To which I would answer, that SAM is a hyper-local, user-based, small business support group. I appreciate Think Local First, and have been a member since the beginning. But I can’t be vulnerable about my struggles at the annual TLF meeting like I can sitting around a giant table, eating cheese, and drinking wine with the SAM peeps.

JEAN: Yes to all that Lisa said. I also have been a longtime supporter and past board member (twice!) of TLF. We are… at least on my part… intentionally something quite different. We have no standard ‘deliverables’ like the Chamber or TLF – no marketing function, no public campaigns, and, until now, no real presence. We are a collaborative, scrappy little nuts-and-bolts support group for entrepreneurs.

MARK: What’s the biggest problem facing local entrepreneurs such as yourselves today? Is it access to working capital?

HELEN: Working capital is certainly the biggest obstacle for both start-up and growth. Blake and I keep finding our business at a place where we could potentially expand, but with what money? We get to a spot where we can make it with the infrastructure that we have, but we can’t grow with that infrastructure. Then, in order to grow our business, we have to add more of everything – kitchen equipment, staff, vehicles, etc. How to get that capital to push us up again is always a huge question.

LISA: Working capital, gimme! Of course it’s a challenge. You have to be creative. Or throw it on the credit card and bust some ass to pay it off. But, then again, I am a huge advocate for challenges bringing out the most creative solutions. I think there can be a balance between sourcing funding in creative ways and making it work when you can’t.

JEAN: Access to capital provides the capacity to plan ahead. It’s a tool. The banking system for small and big business are separated, and funds for small, localized businesses are very constricted right now. New pathways are opening. People like Michael Shuman are working to open new channels. The majority of sustained job growth happens in small businesses- – even Romney campaigned on that – but we’re not supporting them sufficiently. Access to capital is also a limiting factor to pursuing environmental sustainability for small businesses. One has to look beyond upfront costs to savings on operating costs to see how it pays for itself – but banks don’t want to go there. Small businesses can’t easily get investors (few qualify legally) and everything from a bank is tied to equity now.

MARK: Who can join Small & Mighty? What kinds of entrepreneurs are you looking for? Are there certain sectors that you’re focused on?

HELEN: The SAM network has been pretty diverse so far. We have folks who, like Jean, are small business/community supporters and great resources. We have folks like Lisa and I who have been in business for a handful of years with an established base. It’s been really interesting to see who comes and what brings them. We aren’t really looking for any certain kind of entrepreneur. It’s great to get in a room with a bunch of people who own very different businesses and find that there some common issues that we all face.

LISA: Our only ‘you must be this high to ride’ stipulation is that we ask that people who attend are “happening,” as Jean says — People who are business-runners, self-employed, or non-profit organizers. This isn’t the place for people who are thinking about maybe this idea that might work for a business… We want reports from the field, and we want to talk about them over a cheese plate.

MARK: This is a big step. Why do you think now is the right time?

PHILLIS: A few reasons. First, after two seasons as a food cart, we felt we were ready. Our sales grew by 33% from year 1 to year 2 and we gained a devoted following. Second, we are ready to expand our culinary limits beyond what we can do in a food cart, with its small space and limited equipment. Vegan food also seems to be hitting its stride and entering the mainstream. When Bill Clinton goes vegan you know the chances for a vegan restaurant to succeed have never been better. We want to take the “vegan” concept and revolutionize it. No boring flavors, no pre-fab fake meats. We can take virtually any dish and make it vegan, from scratch, using fresh, wholesome, plant-based ingredients. And it will satisfy even meat-lovers.

MARK: I’m curious as to how many of your customers are vegans, and how many, like me, are just meant eaters who occasionally slip up. Do you have any sense as to the way your clientele breaks down on the omnivore-vegan continuum?

PHILLIS: I don’t have hard numbers, but from talking with people I’m guessing that most are omnivores, some are vegetarians, and just a handful are vegans. I’m basing this on how often I’ve heard from customers: “I’m not vegan, I’m not even vegetarian, I just really like your food.” We also get a lot of people who eat our food and afterwards are surprised to learn it’s vegan.

MARK: As for your comment about being able to “take any dish and make it vegan,” I’m wondering if that’s difficult to do when you’re not sampling the meat dishes your attempting to replicate and comparing them head-to-head.

PHILLIS: I haven’t been a vegan my whole life — only really for the past six years or so (though I’ve been vegetarian on and off since my teenage years). So I know what meat and dairy taste like. But we aren’t trying to make things that taste like meat or cheese. We’re attempting to get that same level of satisfaction from food that people associate with its meat or dairy counterpart. Take, for instance, our barbecue tofu sliders. You still get a messy sandwich with great barbecue sauce that has something chewy and a tangy slaw inside a bun. We aren’t attempting to replicate meat per se; we’re putting a vegan spin on a dish that people know and love.

MARK: Will the lunch cart be retired now, or will you still make use if it somehow?

PHILLIS: We haven’t decided that yet. It certainly won’t be in operation on a regular basis. We may explore using it for special events.

MARK: I like the idea of the carts recirculating in the community, and allowing new food entrepreneurs to try their hand at entrepreneurship, but, I think, if I were in your shoes, I’d be tempted to keep it, and explore other opportunities, given that you’re so known for the cart. If nothing else, it would be good advertising for the restaurant… Speaking of the cart, I’m curious as to how you came by it in the first place. Did you build it? Did you buy it? Did it have a life somewhere in the U.S. before Lunch Room.

PHILLIS: We thought about operating the cart as well, but Joel and I believe in focusing our energies on one thing and doing it well. Running a food cart itself can be a 70+ hour per week gig. There’s no way we could do that and run a restaurant… The cart itself is an interesting story. We responded to an ad on Craig’s List and purchased a trailer, formerly the base of a pop-up camper, with three partially built external walls, for $550. We drove to Kokomo, Indiana, and bought it from a man named Rev. Joseph (actually, Rev. Joseph was in the hospital, so we bought it from his agent, “Danny”), who had started, but given up on, building a “Gypsy wagon” that he could take across the country, doing fortune telling in. We brought it home and, with the help of friends, finished the interior and exterior construction, plumbing, electrical, and roof, and installed all of the equipment.

MARK: How, if at all, will the menu change now that you’re expanding?

PHILLIS: The menu will grow tremendously. We have new breakfast and brunch items, entrees, salads and sides, and desserts. We have been busy developing and testing new recipes steadily since the food cart closed. We have been experimenting with “cheeses” of various flavors and consistencies made from cashews, coconut milk, tapioca, and nutritional yeast. We have four different seitan recipes that can be used in burgers, jambalaya, stir fry, and with biscuits and gravy for breakfast. Among the offerings people will see at the restaurant will be Bahn Mi, BBQ tofu, Cuban black beans, curry seitan stirfy, jambalaya, mac & cheese, nachos, Pad Thai, paella, pizza, roasted root veggie pasties, sushi, tempeh reubens, French toast, ratatouille, risotto, tacos breakfast burritos, ice cream sundaes, strawberry kiwi tarts, and gingered poached fruits. This is a select list but it gives a pretty good idea of what we’ll have.

MARK: How, if at all, have you seen Ann Arbor’s food cart culture evolve since you first opened The Lunch Room?

PHILLIS: Not much, really. There hasn’t been much activity beyond Mark’s Carts, other than vendors at Farmer’s Market and (mainly hot dog) carts around the U-M Diag. As long as commercial kitchen space remains severely limited, it’ll be hard for new food carts to get started.

MARK: How about within the tiny universe of Mark’s Carts… are things evolving and changing? Are people trying new things? I’m curious to know what you’ve learned since starting out, and how you’re adapting as a result.

PHILLIS: I can only speak for our business, since each food cart is independently owned. We constantly sought to improve our food, our menu presentation, our marketing, our hours of operation, and our customer service. We were always trying to make it a better dining experience. That said, Mark’s Carts will change this year with the addition of at least one new cart in our former space.

MARK: I realize that all of Mark’s Carts are independently owned, but I’m curious about how small changes sweep through the pod. For instance, when you started, did you think that more people would buy their food and leave… and is the fact that they’re staying changing things? Is there more of an effort to produce things that can be eaten quickly, to open up space for other customers? Are price points changing over time, as you get a sense of what people are willing to pay for items they perceive as “street” food? Are you attempting more “combination” plates, which showcase a number of different items, or has your experience showed that more people would like to sample individual items from a number of different vendors? Anything you could share about the evolutionary process would be appreciated.

PHILLIS: We found that the more accommodating we made the space at Mark’s Carts, the more people came and the longer they stayed. So we kept putting out more tables and chairs. We expanded out onto the sidewalk on Washington St., since it was closed for construction to the west of us anyways. On Friday nights we put benches out in the plaza area closer to Downtown Home & Garden. It seemed like having a crowd was a good thing — it created a buzz and a party-like atmosphere and drew more customers. This past season lot of us started using re-usable plates, cups and flatware to cut down on the cost of disposables. So that created a different atmosphere and encouraged more people to stay. In terms of price, there was a pretty large range throughout the courtyard. Customers grumbled about dishes they felt were too expensive. At The Lunch Room we prided ourselves on value — large portions for reasonable prices. We started a combo plate this year, three half-portions of any item on our menu for $8. That was tremendously popular. Same with our brunch plate: 4 items for $8. But price point is a delicate balance between what people will pay and what you need to charge in order to make a profit in this low-margin business.

MARK: Tell us about the new space in Kerrytown. I hear you’ve got some interesting architectural ideas.

PHILLIS: The space is a blank slate right now. It will undergo more demolition before we start building again. We have wonderful young architects, Lisa Sauvé and Adam Smith of the firm Synecdoche, who see it as 1,128 square feet of possibility. They are opening up the space a lot since its last incarnation, taking advantage of the natural light from two huge banks of windows on the east and west walls. We will have an open kitchen. There will be seating at the counter facing the cooking station, stool and counter seating along one wall of windows, and banquettes with two-tops along another wall, plus tables and chairs in the central area. We are planning to preserve a little of the cart’s mystique in the design and will use repurposed materials wherever possible. There will be wood slats on the ceiling for both acoustics and aesthetics, chairs with bright accent colors, and we even have our own plant artist, Andy Sell (aka Foraging Florist). Overall, our architects Lisa and Adam have an impeccable sense of taste and are designing The Lunch Room to be not just a food destination, but an architectural one.

MARK: I’m curious as to how you came to be acquainted with Lisa and Adam. Are they Lunch Room customers?

PHILLIS: Yes, the two of them were regulars at the cart. They work just two blocks from Mark’s Carts. Adam became a BBQ tofu junkie. Joel and I really clicked with them. The cart was magical that way: we came to know so many wonderful people who have become part of our lives.

MARK: I’m curious as to how you’re bankrolling the expansion. Did you raise funds from private investors? Did you work with a bank? Did you use crowdfunding again? (Two years ago, Joel and Phillis raised over $10,000 through Kickstarter to buy their food cart.) Or did you capitalize this new venture some other way?

PHILLIS: We have a bank loan to cover most of the expenses, and for the rest we are using personal funds.

MARK: Given that you were so successful with Kickstarter last time, I’m curious as to why haven’t you made use of Kickstarter, is some way, to help fund this most recent venture? Is it more work than it’s worth?

PHILLIS: Kickstarter is a lot of work but it is worth it. But it wasn’t practical for our current situation, due to the timing. We couldn’t ask all those people for money when we hadn’t secured a space and didn’t know if or when we would secure a space. But you can’t sign a lease without proof of funds. So we went the bank-loan route.

MARK: How many seats will the new place have, and when are you planning to open?

PHILLIS: There will be 36 indoor seats and 20 or more outdoors. We are planning to open by June.

MARK: Any advice for other folks thinking about getting into the food cart business?

PHILLIS: If you’re interested in starting a restaurant, a food cart is a good place to begin. Start-up costs are much lower, and you can cut your teeth as a cook and business person. But be prepared for long, hard hours, and uncertainties, like weather. And definitely learn the health department requirements before buying a cart.

MARK: What do food cart people do over the winter in Ann Arbor? Do you cater? Do you vacation together in the tropics? Do you work on your business plans, and look for restaurant spaces?

PHILLIS: I can only speak for myself and my business partner. Last year in the off-season we ran a wholesale baking business and worked on individual freelance pursuits. We also had a few reservation-only dinner events. This year, since the cart closed, we have mainly been preparing for the restaurant — looking at real estate, negotiating a lease, learning about the trade. You’d be surprised how much all that stuff takes. It’s been a full-time job.

MARK: You mention that you’ve been studying up on the restaurant business. What specifically have you done to prepare for this new venture?

PHILLIS:We have been talking to people who currently run or have run restaurants. I am reading a book called “Restaurant Success by the Numbers,” which covers everything from negotiating a lease to music and lighting in the space. We are meeting with our consultant from the Michigan Small Business and Technology Development Center and with an accountant. We are budgeting and revising our projected revenue and expense sheets, costing out food ingredients, looking at projected sales meal by meal and day by day, and planning our menus. And, my favorite part, the endless recipe development and testing.

MARK: I’ve eaten your food, but I don’t know either of you personally. Where are you from, and what brought you to Ann Arbor?

PHILLIS: We are both native Michiganders: Joel from the west side of the state and I’m from the Detroit area. We both came to Ann Arbor for school, albeit 20 years apart. You have to guess who’s older. We became friends about 7 years ago at Michigan Peaceworks, where I was the director and Joel was the graphic designer. About 4 years ago, Joel bought the house next door to me, and we have a large adjoining backyard. After various camping and canoe trips together with our respective partners and friends, and many afternoons drinking beer in the garden, plus a memorable Tarot card reading, we decided to launch a food business.

MARK: I’ve talked to a lot of entrepreneurs, but I think you’re the first to mention consulting a Tarot deck. Can you tell us more about that? Would you not have done it, if the reading had been different?

PHILLIS: Hah, that’s funny because I’m totally not a Tarot cards kind of person. It was just a whim. Joel and I were relaxing on a hot summer afternoon with our friend Celibeth, and she pulled out a deck and said she would do a reading for each of us. Having never had one before and being an adventurous type, I said sure. I was really amazed by how the cards described what was going on in my life at that time. Ditto for Joel. It also indicated to us that our futures were intertwined. And yes, I think we still would have started a food business had the reading been different. I don’t put that much stock in cards.

MARK: Why Kerrytown?

PHILLIS: It’s a happening part of town, it’s next door to the Farmer’s Market, and it’s about 1 mile from our houses. Kerrytown is walking-distance for much of the lunchtime clientele we gained at Mark’s Carts. And Kerrytown has a wonderful collection of businesses… We look forward to adding to each others’ customer base and energy. Plus, the landlords are great to work with. During our restaurant search we learned how rare that is.

MARK: How collaborative is the local food cart community? Are you sharing information with one another, helping new people get launched, etc?

PHILLIS: There is a fair amount of collaboration that goes on within the food carts. Last year, The Lunch Room helped two new carts get launched, advising them on navigating Health Department regulations, budgeting, ingredient sourcing, and the like.

MARK: Since you brought up ingredient sourcing, I’m curious to know what involvement, if any, you’ve had with the Washtenaw Food Hub folks. My sense, having talked with a number of local food entrepreneurs, is that, right now, it’s difficult to cultivate relationships with local farmers and vendors, and my hope is that Food Hub might make it easier to do so. I’m curious to know your perspective, though.

PHILLIS: Actually, they were getting started just as we were winding down for the cart season, so we haven’t intersected much. But we have business relationships with a handful of local farmers. We would place orders each week during the cart season, and pick them up at Farmer’s Market.

MARK: Where do you see food carts in Ann Arbor in another five years?

PHILLIS: I don’t know. I see the lack of commercial kitchen space as the main obstacle. If you want to do something more elaborate than hot dogs or lemonade, you need a commissary to work from. They are almost impossible to find. The city permitting system for food carts is complicated too. At Mark’s Carts we didn’t have to worry about that because we were on private property. But if you’re going to be on the street, there are rules governing selling food from parking spaces (i.e. you can’t do it). And, if you want to get a permit for sidewalk space, you need the type of cart that’s small enough to pull up on the sidewalk. Any real advancement for food carts or food trucks in Ann Arbor would have to start with commercial kitchens and an overhaul of city regulations.

MARK: Is there any political momentum to see that accomplished? Given the success that other regions have had with food carts, like Portland, I’d think that there would be more of a movement here. But, as progressive as we claim to be, I think there’s a lot of fear here about change. And I’ve also heard that local restaurants aren’t too enthusiastic about the competition… Care to comment?

PHILLIS: If there is a movement to make Ann Arbor more food-cart friendly, I haven’t heard about it. I did hear that they just passed such regulations in Traverse City which is interesting. With the national trend toward food carts and trucks, I wouldn’t be surprised if people start organizing in Ann Arbor.

MARK: Speaking of Portland, I notice that you’ve spent some time there, studying their food cart culture. What were your major take-aways having studied the carts there, and how, if at all, have you implemented the ideas at The Lunch Room?

PHILLIS: Yes, last year before the start of the food cart season Joel and I spent five days in Portland. We were primarily studying vegan food. We ate at 20 vegan food carts, restaurants, and bars. Our major takeaways were in terms of food, for instance our Saturday brunch at the cart was inspired by our experience at Portobello, a wonderful vegan restaurant. And our Southern style collard greens were inspired by a trip to the Homegrown Smoker food cart. In terms of food carts, we were surprised to learn there are over 600 in the city. It sounds like it’s easy to get licensed and health regulations are a lot more lax than they are in Washtenaw County. We also spoke to restaurant owners and found a range of attitudes toward the food carts, from those who felt the carts were drawing away their customer base to those who didn’t think it affected their business at all. But the people of Portland love their food carts and food cart culture. The carts are everywhere: grouped together in blocks, singly in vacant lots, in front of colleges. There are upscale “pods” (clusters of carts with tables and/or a canopy in the middle) and grimier, trashier areas of carts. Something for everyone.

MARK: You mention that available kitchen space is constraining the growth of our local food cart ecosystem… As I understand it, the entrepreneurs working at Mark’s Carts have access to a shared kitchen space. Outside of that, however, there’s no infrastructure… I’m curious if any attempts have been made to work collaboratively with local restaurants. Have any of them attempted to work out kitchen-sharing arrangements during off-peak hours, for instance?

PHILLIS: I know a couple of people who have had arrangements with area restaurants to use their kitchens in the wee hours of the night, but it seems rare. There is no infrastructure for that sort of thing. A food cart owner would have to seek out and follow leads and try to find something that works and, probably, have to be willing to work overnight.

MARK: You mentioned above that you could make a delicious substitute for any meat dish. I was wondering if you could give me a few tips for vegan fried chicken?

PHILLIS: I should learn not to boast, since there are probably things I couldn’t veganize. Don’t ask for liver and onions or tripe. But if you insist on vegan fried chicken, my version would start with a seitan made with flavors you associate with chicken, like garlic, onion, rosemary, thyme, oregano, bay leaves and sage, simmered in a rich vegetable broth. Then I would slice the seitan and dredge it in a pecan-cornmeal mixture with a little fresh tarragon and pan fry it until golden brown. I would serve it with a nice side of Southern-style collard greens, made delicious with sundried tomatoes, lemon juice, red wine vinegar and liquid smoke. How does that sound?

MARK: That actually sounds super awesome…. One last question. Given your association with Michigan Peaceworks, I was wondering if you might want to bring politics into the conversation, and perhaps says something about why it is, in your opinion, that vegan restaurants are important right now.

PHILLIS: I’m not into proselytizing about veganism and am not trying to convert anyone. I personally believe that a vegan diet, incorporating lots of fresh produce, is the healthiest way to eat. It is also the most environmentally friendly. But at The Lunch Room we’re not expecting customers to line up for political principles; we’re expecting them to come for the delicious food.

MARK: So, the Pot & Box empire is expanding. The current plan, as I understand it, is to keep the location in Ann Arbor, and open one in Detroit, in what was an old gas station on Michigan Avenue. Is that right?

LISA: Heck yeah! I was initially apprehensive about talking about the plan publicly, but, if folks are interested in riding the rollercoaster with me, then step right up. I’ve been yammering on about opening a second location in Detroit for, oh, two years now? And, after a series of serendipitous events, it was time for a little less conversation and a little more action. Just like with all projects — gigantic and tiny, and everywhere in between — there’s never a tidy time to fold it in perfectly. You just pull the trigger.

MARK: I know, about a year or so ago, you were a finalist in the first annual Hatch Detroit retail competition, vying for a $50,000 grant to open a Pot & Box in the City. Unfortunately, you lost out to my friend Joe Posch, who has since used the prize money to reopen Hugh, the store from which he dispenses barware and vintage Playboys to time-traveling bachelors. When I had heard that you were in the running, I thought that it was something of a lark. I didn’t realize, as I’ve since come to find out, that you’ve wanted to open a place in Detroit for a long time. I’m curious… What’s the attraction to the City? Is it all the youthful energy in the entrepreneurial scene there, or is it something else?

LISA: Firstly, I just have to mention how catalyst-y the Hatch competition was for Pot & Box. Our brand awareness catapulted in the city, and I connected with Joe Posch through a clever alliance between two retailers who share the time-traveling bachelor demographic. Secondly, Detroit has been courting me for a while. It started with baseball games, new restaurants, and cool concerts, and then there was the befriending of small business owners, going to loft parties, recognizing people all over town. And, then, all of a sudden, I realized that I was driving over three or four times a week, and I couldn’t get anything done at coffee shops because I’d gotten to know the staff and my fellow regulars. So, yes, it’s totally the youthful energy and the entrepreneurial scene, but it’s more that that. It’s the sum of all the parts. I love driving around until i get lost, figuring out how to navigate the city. I love heated conversations with old friends (and brand-new ones) about the latest absurd or hopeful Detroit-centric plan. I love taking in old buildings, sometimes photographing them, sometimes hearing their stories, mostly making up my own. I love that my family hails from Detroit, and that I’ve made my way back, chasing ghosts.

MARK: The new shop is going to be a few blocks down Michigan Avenue from the economic development engine known as Slows. I’m curious as to why you decided to settle there… at Michigan Avenue and 17th. How extensive was your search, and what was it about this particular gas station that attracted you?

LISA: I guess it sounds odd to some people, but, as long as I’ve wanted to open a flower shop, I’ve wanted to open one in a former gas station. From the first time I pictured throwing open some rusty old doors to reveal a cooler-full of colorful flowers, I couldn’t shake it. I looked seriously at one in Ann Arbor before landing in our current digs in a former factory, but the dream and the drive never faded. I’d been scoping out old service stations in Detroit neighborhoods that I thought were cool and safe for quite a bit. I eyed 2520 Michigan Avenue a while back, but didn’t consider it viable until my friends Dave Landrum & Pete Bailey settled in across the street to open their distillery, Two James. After they landed there, it was appealing that I could help round out commerce to the west of Roosevelt Park.

MARK: Is this the place? After we ran into you the other day, we headed down the street to see if I could find what will be the home of the new Pot & Box, and this was the property that looked the most like what you described.

LISA: That’s her! Isn’t she glorious? Just LOOK at all that raw potential.

MARK: How’d you come to find out about the property, which, I believe you’ve mentioned to me, is owned by Andy Didorosi, the founder of the Detroit Bus Company?

LISA: Our common friend Liz Blondy, of Canine To Five connected me with the gas station owner shortly after the Hatch competition because she knew, though did not necessarily condone (ha!), my vision. (Canine To Five, by the way, is opening a second location this week. In addition to the location on Cass ,in Detroit, there’s now also going to be one in Ferndale. Huzzah!) The owner was indeed, Andy Didorosi, and he explained to me that he was seeking not merely a tenant, not just someone to pay the rent, but someone to fill an unknown need in the neighborhood. I thought that was a different way of going about being a landlord, and quite cool. But, being two busy entrepreneurs, we fell out of touch for a bit. It wasn’t until my dad sent me a Popular Mechanics article about Detroit that featured Andy that I revived our email thread. We met, toured the station, and started the conversation. A month later, we randomly crossed paths in San Francisco (I can’t make this stuff up, people). As it worked out, we both had a brief moment in time in our insanely busy lives, and had a chance to interview one another while enjoying another fabulous city. By the time we got back to Michigan, we had our first collaboration on the books — a Detroit Bus Company tour of Detroit for Ann Arborites that boarded at Pot & Box — and were in negotiations for Pot & Box: Detroit. So that’s how the plans for 2520 Michigan took root.

MARK: How will the new shop be different from the shop in Ann Arbor? Will your product offerings be the same, or do you think that Detroit is looking for something different?

LISA: My vision for the Detroit location is a revisitation of the original vision for the Ann Arbor shop: full-service flower shop with event floral design, garden supplies, including pots and boxes, and spectacular event space… The flower shop offerings will be the same — walk-in shopping, city-wide delivery, and event floral design — with the added bonus of drive-thru pick ups, in the true nature of a service station… After getting to know the particulars of the Ann Arbor shop, I had to choose to cut gardening supplies from our offerings due to space restrictions, and the fact that you can get everything you need up the street at Downtown Home and Garden. At the Detroit shop, we’ll be carrying a line of hand tools, small bags of soil and amendments, seasonal plants, and the like, but, again, nothing that overlaps with our lovely new neighbors at Detroit Farm and Garden. As far as the event space, this is the one thing that will get ultra-magnified. We’ll have just shy of 1,000 square feet inside, and, after three fabulous service bay doors get re-installed, we’ll have the ability to offer as much space outside as well. I’m picturing summer weddings with overflowing flower arrangements, and a billjillion candles on tables in the garden-enveloped parking lot, and it makes me really, really glow-y.

MARK: And your hope is to have something up at running by Valentine’s Day, if not inside the building itself, at least in the parking lot?

LISA: Ah, yes. The pipe dream of being functional by Valentine’s Day. Nope. I’m looking to the holiday season of 2013 as my goal to be open.

Growing up, my family built two houses from the ground-up, and remodeled constantly, which is certainly why I’m not only comfortable, but tend to thrive in sawdust-coated, half-painted transitional environments. I also know that everything takes eons longer and heaps more money than you want it to. Once I nest in the new space, it’ll be forever-ish, so I’ve dealt with this by purchasing an old ice cream truck, from which I’ll push petals out into the city. We’re taking flowers the way of the food truck — mobile!

Speaking of Valentine’s Day, the mobile flower truck, and the space… the new truck will be debuting at the pop-up Valentine’s Day market I’ve organized as a second collaboration with our landlord. Andy also owns Paper Street, a business incubator in Ferndale, which has two flash mobile trailers that will also be debuting at the market! So far, we’ve got 20+ vendors confirmed, a couple food trucks, and the buzz is building. The original idea was to merely activate the space at 2025 Michigan, and I think that will happen in spades.

MARK: I know you’ll likely push back a bit at what I’m about to say, and insist that you’ll still be an active part of Ann Arbor’s entrepreneurial scene, in spite of moving your base of operations to Detroit, but won’t this move of yours be something of a blow to the young entrepreneurial movement in Ann Arbor, which you’ve been such a force behind, not only through your own business, but through Small & Mighty, the networking group which you co-founded? (Until recently, Small & Mighty was called YEP.) I don’t mean to make you feel bad about leaving, as I think the Detroit project sounds incredible, but, at the same time, I can’t help but think that less Waud is an unfortunate side effect for Ann Arbor.

LISA: Despite my claims that I can maintain an omnipresence, I realize I will be less than 100% in both cities. But, just like my dream of a former-gas-station-turned-flowershop, I have always wanted to have an offshoot of my business that supports me personally and other entrepreneurs in a nurturing, non-networky way. Small & Mighty started just like its name, but has grown into a really important being. I’ve always been a sheepdog, herding people together, and I think the group is no exception. Between the Small & Mighty co-founders (Jean Henry, Helen Harding, and myself), I’m confident that we can host events that are meaningful enough to draw Detroiters to Ann Arbor, and vice versa.

And you never know, Mark… with the color-coded Google calendar I spoke of in our previous interview, maybe I can figure out how to be everywhere all at once.

MARK: What kind of research did you do before deciding to take this most recent leap? Or is the cost of doing business in Detroit just so low that you didn’t have to think about the risk? In other words, did you canvas the local restaurants, and wedding venues before making the decision to open a location in Detroit, in an attempt to determine whether there would be steady, recurring work, or did you just say to yourself, “I can get a place in Detroit for a few hundred bucks a month, and I’m sure that I can find a way to cover that and make a profit?”

LISA: My move into Detroit was gradual, then sudden. Like I said earlier, I just started hanging out, talking to people — mostly small business owners — about what it was like to live and work in the city. Then, one day, a bolt struck me, and I knew I actually really did want to live and work there. I remember the moment it happened: I saw Emily Linn from City Bird and she asked me if I was OK. I must have looked stunned. I told her, “I want to move to Detroit.” She stood up, hugged me, then asked what she could do to help. And, you know what? That’s pretty much how things work there.

MARK: I’m not super well acquainted with that stretch of Michigan Avenue, but, there seems to be a lot going on. In addition to Slows, and Sugar House, and Astro Coffee, there’s the Two James Distillery, and the Mercury Bar… What am I missing? What else is going on along those few blocks?

LISA: In addition to Two James Distillery, which is opening in a few months, there’s also Greening of Detroit, Xavier’s, and Izzy’s. Down on the bustling block, east of Rooselvelt Park, we can’t forget Honor & Folly, an apartment available for short-term rentals, curated by the lovely Meghan Mcewen. And on the coming-soon list: Gold Cash Gold, a second restaurant from the Slows family and something sure-to-be fabulous in the former Duncan’s Speedometer Shop — a space I also considered for Pot & Box: Detroit. Off the main stretch of Michigan, there’s also St. Cece’s, Mudgie’s Deli, Le Petite Zinc, Green Dot Stables, Detroit Farm & Garden, and Gallery 555. Go to all of them. Often.

MARK: How difficult is it to break into the Detroit entrepreneurial scene? I know you must have connections, having gone through the Hatch competition, but I’m curious as to how welcoming people are outside of that context, and how willing they are to share information, contacts, leads, tips, etc. Also, I’m curious to know if there’s any entrepreneurial infrastructure to speak of. Are there groups in Detroit like the one you started in Ann Arbor?

LISA: Like I said earlier, I’ve been hanging out in Detroit for a couple years now, just getting to know people and places. I think Hatch kicked off a heightened awareness of me, and of Pot & Box, but the due diligence of spending time in the city is what got me to feel comfortable enough to make the leap to living and working in the city. I joke that I will attend any presentation, lecture of event on any Detroit topic, no matter how distant from my profession and interests, but one notable group that was incredibly encouraging is Open City Detroit, a monthly forum for aspiring business that meets at Cliff Bell’s once a month. Founded in 2007, by Claire Nelson (formerly of Bureau of Urban Living, now publisher at Model D) and the aforementioned Liz Blondy, this group could not have been any more tailored to my entrepreneurial needs. I only hope that eventually Small & Mighty can come close to Open City’s attendance and helpfulness.

MARK: I’d be remiss if I didn’t ask how thing are going with Pot & Box Ann Arbor… And what are your plans for the future of that space? Will things continue on as usual, or should we expect to see signs of evolution?

LISA: Ah, my baby. I couldn’t be happier with the evolution thus far of Pot & Box: Ann Arbor. Our presence in the community has spread, and we’ve been busier every year, and we’re busier every day.

I don’t doubt for a second that it would have been possible without my right-hand woman, Katherine Yates, who has been with Pot & Box since before we moved into our space on Felch Street. She’s coming on full-time this spring to fill a management position as we begin our transition to becoming a two-location operation. Katherine’s hard work and enthusiasm, as well as that of Rachel Parke and all the other Pot & Box crew, that really runs the place. We’re feeling organized and inspired for 2013, and poised and ready to add Pot & Box: Detroit to our arsenal.

MARK: Damn. I’ve asked a lot of questions. Thanks for answering. Before we go, is there anything else that you’d like to say?

LISA: I am really thankful that Pot & Box has made it this far, and that we’re pushing forward to inspire and be inspired by a larger community. I never would have guessed that I would be as fulfilled discussing entrepreneurial endeavors as I am assembling an arrangement of seasonal blooms and textural foliage, but here I am… Onward!

[note: Those interested in Detroit entrepreneurship can find my past interviews with Joe Posh by clicking either here, or here.]

]]> http://markmaynard.com/2013/01/lisa-waud-on-her-plans-to-expand-ann-arbors-pot-box-into-detroit/feed/ 23 http://markmaynard.com/2012/11/grand-rapids-shows-us-how-economic-development-is-done-right-food-entrepreneurship-over-dollar-stores/?utm_source=rss&utm_medium=rss&utm_campaign=grand-rapids-shows-us-how-economic-development-is-done-right-food-entrepreneurship-over-dollar-stores http://markmaynard.com/2012/11/grand-rapids-shows-us-how-economic-development-is-done-right-food-entrepreneurship-over-dollar-stores/#comments Mon, 19 Nov 2012 04:29:53 +0000 Mark http://markmaynard.com/?p=21993 A few months ago, when I was in Grand Rapids, attending the annual BALLE (Business Alliance for Local Living Economies) conference, I had the occasion to hear a speech given by the city’s Mayor, George Heartwell. I can’t find my notes at the moment, but I seem to recall that, buried somewhere in the long list of impressive facts that he reeled off about the city, he noted that, of the 100+ restaurants they have downtown, fewer than 5 of them are national chains. Anyway, I was reminded of this yesterday, as I was working on my post about how I’d prefer not to have a third Family Dollar store erected in Ypsilanti. And, after I completed my post, I began thinking about why it is that some cities are able to fend off the creeping corporate homogeneity that’s so prevalent in modern America, while others aren’t. Or, to be more specific, I began to wonder why it is that the folks in Grand Rapids have a brand new, year-round market facility to look forward to, while those of us in Ypsilanti are stuck debating whether or not Family Dollar is the kind of anchor that we want for the 38-acre development project that we’ve been told would redefine our city and put us on a path toward prosperity.

Let me start by saying that I know that it’s not a fair comparison. I know that Grand Rapids has the good fortune of having a few extraordinarily wealthy patrons, thanks primarily to the success of the international network marketing firm Amway, that are dedicated to making sure that their city is well-positioned for the future, whereas our only fantastically wealthy potential benefactor, after losing a bitter fight to legally enshrine gay discrimination in Ypsilanti, chose to move to the swamps of Florida, and build a new, ultra-conservative city in accordance with his far right religious beliefs. And I know that things are possible in a city of 190,000 that just aren’t possible in a city of 20,000, especially when those 190,000 individuals are, on average, a lot better off financially than their Ypsilanti counterparts. Furthermore, I also seem to recall having heard Heartwell say that Grand Rapids was number two in the nation when it came to per-capita charitable giving, which certainly helps.

As someone who hasn’t spent much time there, I can’t say definitively, but I get the sense that folks in Grand Rapids, in spite of their religious conservatism, actually believe in the concept of the greater good. For instance, they’re not just talking about sustainability, but they’re actually addressing carbon emissions, rapidly expanding bike paths, and implementing ‘pay as you throw’ garbage collection. And, as I mentioned above, they’re presently building an incredible year-round market facility which will not only serve to support regional growers, but also provide the infrastructure necessary to nurture a generation of budding food entrepreneurs. The following comes by way of the New York Times.

Next year… Grand Rapids is scheduled to open the $30 million, 130,000-square-foot Downtown Market, a destination that is expected to attract 500,000 visitors a year. The three-story brick and glass building, under construction in a neighborhood of vacant turn-of-the-20th century warehouses, is intended by its developers to be a state-of-the art center of commerce for the culinary arts and fresh local foods.

It is also seen as having the potential to accomplish much more.

“This project fills a variety of needs,” said David Frey, chairman of the Frey Foundation and co-chairman of Grand Action, a nonprofit group of local business leaders that joined the city’s Downtown Development Authority to raise money for the market and to build it. “It creates a lot of synergy for the development that’s been happening in Grand Rapids for some time now.”

The Downtown Market, in effect, is the newest piece of civic equipment built here since the mid-1990s to leverage the same urban economic trends of the 21st century — higher education, hospitals and health care, housing, entertainment, transit, and cleaner air and water — that are reviving most large American cities….

The design plan for the Downtown Market includes space for food production and processing, a commercial kitchen to provide an incubator for new businesses and another to educate students in food preparation and healthful eating. A greenhouse will occupy the roof and two restaurants are planned. Enough space is available indoors and out for banquets, civic events and more than 60 vendors. The market was built with nontoxic materials, and has advanced systems for energy efficiency, natural lighting, waste management, recycling and water conservation.

A feasibility study, completed in March 2010 by Market Ventures of Portland, Me., found ample reason for Grand Rapids to pursue the project. Some 12,220 farms in the 11-county agricultural region that surrounds Grand Rapids bring in a total of $2 billion in annual revenue. Many of the growers produce fruits and vegetables, including specialty crops, for sale at a public market.

The study forecast that the Downtown Market, which occupies a 3.5-acre site close to highway exits and the Grand River, would achieve gross annual sales around $25 million, and generate more than 600 jobs. A small staff could manage the market, and its annual income is expected to total $2 million, with expenses reaching $1.5 million…

Is it impossible to think that something like this would work in Ypsilanti? Probably. I would argue, however, that there are a lot of possibilities along the continuum which has, at one end, a $30 million downtown market facility, and, at the other, a Family Dollar store.

And, yes, I know that we’re talking about apples and oranges, here. But I’m not trying to make the case that we should have an indoor market on Water Street. I’m only saying that, when assessing projects, we should keep in mind that some will move us in the direction of sustainability, growth, and self-sufficiency, while others will move us away from those shared objectives. And I’d put Family Dollar in the latter category.

I know that some of you believe that Family Dollar is “our only hope,” as someone expressed in the comments sections today. I would argue, however, that Family Dollar actually represents the ceding of hope.

And, here, now that I’ve got that off my chest, are some sketches showing what the Downtown Market will look like.

FIRST FLOOR:

SECOND FLOOR:

This is what the future looks like, folks.

]]> http://markmaynard.com/2012/11/grand-rapids-shows-us-how-economic-development-is-done-right-food-entrepreneurship-over-dollar-stores/feed/ 41 http://markmaynard.com/2012/10/author-amy-cortese-on-the-burgeoning-locavesting-movement/?utm_source=rss&utm_medium=rss&utm_campaign=author-amy-cortese-on-the-burgeoning-locavesting-movement http://markmaynard.com/2012/10/author-amy-cortese-on-the-burgeoning-locavesting-movement/#comments Fri, 26 Oct 2012 03:51:47 +0000 Mark http://markmaynard.com/?p=21437 Next Tuesday, October 30, Think Local First will be bringing author Amy Cortese to Ann Arbor to discuss her book Locavesting: The Revolution in Local Investing and How to Profit From It. Following is my interview with Amy, who, in addition to being a published author, has written for the likes of the New York Times Magazine, Wired, New York, Business Week, and the New York Times. Those of you wishing to hear what Amy has to say live, when she’s in Ann Arbor on the 30th, can register here. The event, which is to be held between 6:00 PM and 8:00 PM at the Performance Network, is free and open to the public. (The event, I think, will be of particular interest to those of you who were active in the conversation with Bee Roll some time ago, when we were kicking around the various models we might use to fund a new restaurant on Michigan Avenue.)

[note: If you find this interview interesting, you might also want to check out my coverage of the Accelerating Community Capital event which took place this summer in Grand Rapids, during the national BALLE meeting... Part I, Part II.]

MARK: A lot of the companies that we hold up as examples of localism, like Milk Thistle Farm, who you write about in the book, or Zingerman’s, here in Ann Arbor, are able to do what they do because they’ve found audiences that are willing to pay more for quality products that they believe in. These people are willing to pay a premium to obtain high-quality products, and support companies that they feel good about, or, perhaps, make them feel better about themselves. The problem is, though, a lot of communities in America just don’t have the local populations to pull that off. People may be well-informed, and have the best intentions in the world, but they just don’t have the financial wherewithal to pay $7 for a quart of super-tasty organic milk, for instance. I’m curious to know if you have any insight as to how we cross that barrier. Clearly, we can do more when it comes to educating people about the real costs associated with the things that they buy, but, at the end of the day, a huge percentage of people in America are still going to buy the $2 screwdriver at Wal-Mart instead of the far-superior $25 one made by the small artisanal tool company in Michigan that pays a living wage, insures its employees, utilizes green practices, invests in its community, etc.

AMY: Mark, this is a tough and multipart question. First off, not all local products are ridiculously expensive, like Milk Thistle’s $7 quart of milk. And you point out the real costs of things, so you know that the social and environmental costs are not factored into the price we pay for things. If we did include those “externalities” — of greenhouse gas emissions, the costs of state-sponsored healthcare for employees who cannot afford their employer’s plan or are not eligible, jobs lost to outsourcing, etc – local would be shown to be a better deal. But most people are more immediately concerned with their wallet, as you point out, and I understand that. A lot of times, people don’t stop to think about it until their favorite bookstore or bakery or bookstore closes, when it’s too late. (And by the way, there are studies that suggest that the ‘everyday low prices’ promised by Big Box retailers aren’t always that low and, in fact, tend to go up once the local competition has gone out of business – see Big-Box Swindle by Stacy Mitchell).

Given all that, I think that Buy Local programs have been very successful in showing that shifting just 10% of your purchasing to local merchants can have a big impact on the community. A small shift is a realistic goal that people can begin to tackle (as opposed to buying 100% local). In the same vein, shifting just a small percent of our investments to locally owned companies can also have a big impact. Americans have $300 trillion in long term investments – 401Ks, pensions funds, mutual funds, etc. If we moved just 1% of that to local investments, that would be $300 billion for the Main Street economy. To put it in perspective, that’s 10 times the amount of venture capital invested last year!

MARK: Speaking of Milk Thistle Farm, as I’m sure you know, in spite of all the attention they received, in your book and elsewhere, they went out of business earlier this year. I’m curious as to what you make of that. What can we learn from their failure? And what does their going out of business, after taking in $1 million by way of public offering, do to this burgeoning locavesting industry of which you write? Will small investors be less likely to invest? (By the way, do you know whether or not the Milk Thistle Farms investors received any of their money back after Dante Hesse made the decision to pull the plug?)

AMY: The reasons Milk Thistle went out of business had more to do with management than business model or viability, which I think underscores an important lesson: small businesses are risky investments and investors need to do their due diligence. Checking out the management team and their experience are important elements of that research. That said, I think the investors in this Milk Thistle deal were taken by surprise by the sudden turn of events. But they were all accredited investors – this was not a public offering, but a private placement. A more experienced (older) farmer has stepped in and has taken over the operation, from what I understand, so the investors are not necessarily out the money.

MARK: Speaking of unaccredited investors, or non-wealthy investors, there is, as I understand it, legislation in the works that would make it easier for them to invest in local business opportunities. (Right now, it’s quite easy to run afoul of the SEC and so-called “Blue Sky” laws put in place by the federal government in the 20s and 30s in order to protect unsophisticated investors.) Could you give us an idea as to what we might expect in the next five years? Also, I’m curious to know your thoughts on how, depending upon the outcome of the upcoming election, the scenario might change.

AMY: The Jumpstart Our Business Startups (JOBS) Act was passed with bipartisan support (yes, you read that correctly!) and signed into law by President Obama this past April. It’s actually a bunch of bills rolled into one package, all aimed at making it easier for small, private companies to raise capital. The bill aims to fill a yawning gap in the market for small companies that cannot obtain the capital they need to grow and thrive from traditional sources like banks, VCs or the public markets. The piece of the JOBS Act I’m most excited about is the crowdfunding provision, which will make it possible to have Kickstarter-like websites where, instead of donating money to a person or project in return for rewards, you can actually make an investment in a small business or startup and share in its financial success. This is groundbreaking legislation that updates our decades-old securities laws for the Internet age and democratizes investment opportunities. So, for the first time, unaccredited investors (the majority of Americans) will be able to invest in growth companies – perhaps the next Facebook – as well as the local companies they know and love. And it opens up a huge pool of capital for entrepreneurs. The SEC is still writing the rules that will govern crowdfunding, so much is still unknown. And while there are safeguards built into the law, you can lose money with crowdfunding as you can with any investment. But, done right, I think it can unleash a huge wave of innovation and entrepreneurship across the country while offering individual investors a new source of profits.

Oddly, the JOBS Act hasn’t been mentioned much in the presidential debates. But no matter who wins the election, I think we’ll see crowdfunding and the other provisions of the JOBS Act go forward. No one is threatening to overturn it. As the name suggests, it’s an issue of job creation.

MARK: The JOBS Act sounds good, but, as you point out in your book, it’s a bit of an aberration. Our elected representatives, while talking a good game concerning the importance of small business, rarely write legislation that pushes the agenda of those on Main Street, choosing instead focus on making Wall Street happy. And it’s not just our elected officials that are hypocritical in that regard. The Chamber of Commerce does the same thing. In a recent conversation with BALLE founder Judy Wicks I asked about advocacy, and why it is that the 22,000+ locally-owned, values-aligned businesses that come together under the BALLE umbrella don’t work together to push for things like single-payer health care. Her response, as I recall, was twofold. First, she said, the American Sustainable Business Council (ASBC) was already doing this work. And, second, she didn’t think that it would serve the localist movement to interject politics, thereby alienating potential allies on the right. My question to you is, how are we likely to ever see positive change when the powers-that-be in Washington are working against the Small Business Administration, when the lobbying entities working against us (pushing the agendas of the big box retailers and the multinational outsourcers) are so well-funded, and the response from Main Street is timid, fractured and unfocused?

AMY: I think we’re beginning to see some change and reason for hope. At the federal level, there is finally talk on both sides about closing corporate tax loopholes – although we’ll see how far that goes. And, as I mentioned, the Jumpstart Our Business Startups (JOBS Act), which was passed with near unanimous bipartisan support and signed into law this past April by the President, is probably the biggest boon for small businesses in decades. At the state and local level, economic developers are beginning to realize that, instead of trying to attract large corporations with big taxpayer-funded subsidies, it is more cost effective to focus on their own homegrown businesses. Finally, there is shift in public sentiment as well. I mentioned that Buy Local campaigns have done a great job of raising public awareness about the reasons to support local business. And a growing number of individual investors are wary of the stock market and are looking for ways to put their money to work close to home, where they can see and feel its impact. So things are beginning to change. The ASBC, by the way, pulls together many different organizations from BALLE to local chambers of commerce, and is doing great work. But in the end, it is up to We the People. Every purchase and every investment is a vote. I think Occupy Wall Street woke a lot of people out of their slumber and shifted the national conversation. We have to keep that conversation going. The good news is, it’s easier than ever to do that. The Internet, social media… These new tools are putting the power back in people’s hands. And I agree with Judy that the localist movement should be non-partisan, or post-partisan. One of the really wonderful things is that it appeals to both the left and the right and everyone in between. What could be more patriotic than supporting your hometown entrepreneurs?

MARK: What’s the response been to the book, and was it what you expected?

AMY: Well, being my first book, I wasn’t quite sure what to expect, but I think the way it has played out is probably the opposite of what I might have anticipated. I figured there would be an initial big burst of publicity, including in major media, and then it would drop off after a few months. Pretty much the opposite has been true. I got some very nice initial coverage by Reuters, Fast Company, WNYC (our local NPR station) and other media outlets, but not many mainstream reviews of the book. But a strange thing happened. Instead of dropping off, interest has continued to build to the point where, a year and a half after the book was published, I am busier than ever with interviews and book talks around the country. It’s been a very grassroots, organic kind of momentum, which I guess is only fitting. And its been very sustained. I’ve also been surprised by some of the overseas interest in the concept of locavesting, in places like South Korea, Turkey and Australia. I think it shows that communities everywhere are grappling with some of the same issues brought about by globalization and a hollowing out of our local economies.

MARK: You clearly had an idea fixed in your mind when you set out to write the book. I’m curious, however, if it changed shape at all once you went into the field and began your research. If so, how?

AMY: Your question is more on the mark than you think! I had an idea for a book, but when I began to dive into the research, I realized how much more was going on than I realized and how little, in fact, I actually knew. So the book was a big research project for me (conducted in one year, I should add!). For example, I didn’t know about community development loan funds or CDFIs before I began the book, and I had a crash course in SEC regulations. The book was really my own attempt to get my arms around this amorphous but fascinating slow money, local investing thing that I saw happening around the country and to put it into some sort of framework that made sense to me and, hopefully, to readers as well.

MARK: Have you ever thought of opening a business of your own? Would you be more inclined or less inclined now that you’ve written this book?

AMY: I do have an entrepreneurial streak – I left journalism to work for an Internet startup for a couple of years during the dot-com boom, and I’ve had more ideas than I know what to do with. But capital is always an issue – unfortunately, I don’t have the proverbial rich uncle to lean on! With the advent of crowdfunding and some of the other sources of community capital that are becoming more readily available, I would be much more likely to act on something. I’m actually in the process of transforming my web site, locavesting.com, from a standard book site into a more useful resource for local investors and entrepreneurs, so stay tuned!

MARK: When doing press for the book, what have people most wanted to talk about?

AMY: Whether it is press interviews or talks to community groups, I find that people are really interested in examples of successful local investing that they can learn from. People are looking for models that work that they can replicate in their own communities to revitalize their local economies. For example, there’s been a lot of interest in the Local Investing Opportunities Network (LION), a group of citizens in Port Townsend, WA, that makes loans and equity investments in local businesses. The Port Townsend LION has grown to about 60 members that have made a total of around $3 million in investments, and that’s had a big impact on the town. That’s a very easy model for any community to replicate, and in fact there are now at least a half a dozen LION-inspired groups around the country. And everyone loves the Cops & Doughnuts example from Clare, MI, which is a fun story but really demonstrates the economic value of locally-owned business.

Crowdfunding is also a very interesting topic right now, as investment crowdfunding will become legal sometime next year. So you’ll be able to make loans or take equity stakes in small, private companies – something that’s very difficult to do right now (at least for the average investor) under current securities laws. There are challenges, but I think crowdfunding will be a huge game changer for local investing and can help create local financial ecosystems that support local economies. That’s something that I talk about a lot.

MARK: Let’s say we’ve done a needs analysis and we’ve determined that we could support a local butchershop in my city of Ypsilanti, which has approximately 20,000 residents. What mechanisms are available to us to capitalize that operation, assuming, of course, that we’ve identified a promising entrepreneur who we’d like to back, and he/she has a business plan that makes sense?

AMY: There are a number of ways. You might have a Local Investing Opportunities Network (LION) group, which might be willing to make a loan or equity investment. A local butcher is also the sort of deal that a local Slow Money chapter would fund. The butcher could get funding from a community development loan fund or other type of CDFI, which are regionally-focused financial institutions that serve small businesses and individuals who cannot get bank loans. And then there is crowdfunding. Today, the butcher could use a rewards-based site like Kickstarter or Indiegogo or SmallKnot, where people donate money in return for, say, a t-shirt or a free steak. But, starting next year, the butcher would be able to reach out to the friends, family, neighbors and customers for investments, and allow them to share in its financial success. The butcher might also do some pre-selling, where people can pay money up front in return for products down the road – like community-supported agriculture, but this would be a community-supported butcher.

MARK: I’m not sure how to best pose this questions, but, when there’s money to be had, it’s my experience that Wall Street will find a way to insert its blood funnel. With that said, how serious of a risk do you think there is that the locavesting movement will be cooped by big banks? And, if you agree that banks, under the guise of faux-localism will get involved in this area, what do you think it will look like? How are they likely to make their move?

AMY: I don’t worry about that too much. Big companies, including banks, are already jumping on the local bandwagon. But for the most part, the big banks are simply not interesting in funding small businesses directly – it’s not profitable enough for them. I think they tend to dismiss this stuff as small potatoes. But in the end they could be caught off guard the same way that mainframe makers were caught off guard by the PC, and the way that PC makers are now threatened by the smartphone. It’s a classic example of disruptive innovation from the bottom up. That said, I think there are ways that banks, VCs, and traditional funders can participate in the local financial ecosystems that will be created, especially around crowdfunding. (This is something I will talk about on the 30th.)

MARK: It seems to me that a new profession, spawned by the work of Michael Shuman and others, is emerging. And I don’t even know if it even has a name yet. I guess you could call it, local investment consultant… a person who helps connect entrepreneurs and local investors, and determine the right investment vehicle for a given situation, whether it be something like the LION group set up in Port Townsend, Washington, or a CDFI, or something else. And I’m wondering if there are industry standards that are emerging. Are there, for instance, universities teaching this stuff? Are there people talking about putting systems in place to accredit the individuals putting these deals together? And is there emerging a consensus as to how these venture catalysts are compensated for their work?

AMY: I don’t believe there are yet any formal standards, training or certification, at least that I am aware of. But a budding cottage industry is developing, as you have observed!

MARK: Aside from the doughnut shop in downtown Clare, Michigan, that, upon its going out business, was purchased by members of the local police force, renamed Cops & Doughnuts, and successfully relaunched, I’m curious to know if, during the course of your research, you came across any other examples in Michigan where creative financing was being employed to launch and expand businesses.

AMY: There is a really great example from Ypsilanti – Arbor Brewing Company. These guys did crowdfunding before there was even a name for it! Back in 2006 — two years before the first crowdfunding platform was created – Rene and Matt Greff raised $35,000 to help open their brewery through a program they called the “groundbreakers club.” It offered a range of memberships: $100 would get you a one-year “mug club” membership, a $50 gift card and an invitation to the pre-opening party, $500 came with bigger perks, and those who put in $1,000 were entitled to perks including lifetime mug club membership, a $900 gift card and their name on a bar stool. It was a form of pre-selling. All told, the couple raised $35,000 this way. Since they already had a bank loan and some private investors, the memberships were more about building a loyal customer base. As Rene told me (from India, where they are opening a new brewery), the groundbreakers club allowed she and Matt “to open our doors with 100 regulars and spouses who brought in friends and family, so we had a nice brisk business right out of the gate – not to mention the loyalty that comes with feeling like you had a hand in making something happen.” By the way, they’re planning a groundbreakers club for the brewery in India, as well. Pretty cool!

MARK: I very much liked this quote of yours, and thought that I’d include it…. “Locavesting attempts to restore a sense of connection, intimacy even, to financial transactions, and to broaden the concept of ‘return.’ Rather than zero-sum finance, where my win requires your loss, local investing aims for mutual benefit. Instead of supporting monocrops, monocultures, and monopolies, localvesting helps build robust economies, competitive markets, and lively, self-sufficient neighborhoods. We’re not talking about an idealistic look backward, but a pragmatic look into the future and what it will take to recreate the regional diversity and prosperity that we’ve lost.” I guess it’s not really a question, but, if you have anything to add, I’d love to hear it.

AMY: Thank you. I think most people are pretty disillusioned with the way our winner-take-all financial system has evolved, and this sense that we are all “muppets,” to use the memorable phrase employed at Goldman Sachs. And the money we invest is often going to the very same corporations that are outsourcing jobs, making it hard for local businesses to compete and contributing to a host of other social and environmental ills. It wasn’t always this way. In fact, for much of the nation’s history, investing was primarily local by default. So in a way, this movement is about restoring some of those connections and a sense of shared prosperity, while embracing social networks and modern technology to do so. My feeling is that the best way to have a strong, resilient national economy is to have strong, resilient local economies.

MARK: At the outset of your book, you share a question that you first heard raised by Slow Money’s Woody Tasch. “What would the world be like if we invested 50% of our assets within 50 miles of where we live?” I’m curious, now that you’ve gone through the exercise of writing this book, what you think the answer to that question is?

AMY: I’ve thought abut that a lot. I don’t think we’d have the same level of unemployment, since it is small, local businesses that create the bulk of jobs in this country. I don’t think we’d have as many empty storefronts or as much urban blight and rural flight across the country. And I wonder if we might have a higher level of civic engagement and discourse. Because our downtowns and Main Streets and town halls and commons are the places where democracy thrives, where we come face to face with neighbors and citizens who might have differing views than our own, and learn how to get along. I think of this a lot, especially in this election year.

MARK: Lastly, what are five things that average folks can do to hasten this transition that you speak of? I’ll get you started by offering the first one… 1. Move your money to a local credit union.

AMY: 1A) Don’t forget to move your credit card and mortgage business over as well to that credit union or community bank! 2) Join or start a local investment club, like a LION (Local Investing Opportunities Network). The original, in Port Townsend, WA, has spawned several across the country. 3) Join or start a local chapter of Slow Money, an organization dedicated to funding local, sustainable food and agriculture. 4) Look for a local community development loan fund (CDFI) – these regionally-based micro-lenders make loans to local businesses and families and pay investors a modest interest rate. A list of Michigan-based loan funds can be found here. 5) Give crowdfunding a try. You can donate today to local companies raising money through crowdfunding, such as The Brinery in Ann Arbor. And by mid-next year, you’ll be able to invest in local companies. But remember, small businesses can be risky, so always do your research!

]]> http://markmaynard.com/2012/10/author-amy-cortese-on-the-burgeoning-locavesting-movement/feed/ 7 http://markmaynard.com/2012/10/amanda-edmonds-on-this-weekends-big-fundraiser-and-the-future-of-growing-hope/?utm_source=rss&utm_medium=rss&utm_campaign=amanda-edmonds-on-this-weekends-big-fundraiser-and-the-future-of-growing-hope http://markmaynard.com/2012/10/amanda-edmonds-on-this-weekends-big-fundraiser-and-the-future-of-growing-hope/#comments Fri, 12 Oct 2012 01:45:47 +0000 Mark http://markmaynard.com/?p=21205 As I’ve mentioned here before, one of my favorite local non-profits is the urban farming education and advocacy organization Growing Hope. And, as they still have a ticket or two available for the big fundraiser this weekend at their new Michigan Avenue facility, I thought that now might be a good time to check in with them and find out what they’re up to. Following, you’ll find my interview with Growing Hope’s Executive Director Amanda Edmonds. If you like what she has to say, I’d appreciate it if you’d consider buying a ticker or two for Sunday. If you’re lucky, you may even end up eating delicious food at the same table as Linette and me.

MARK: So, how are things going at Growing Hope?

AMANDA: It’s great now that we’re finally moved into the Growing Hope Center (as of April). We can finally begin to focus more intently on our work, and our impact, and less on managing construction, which has been my role for the last five years. Our new home — which we already feel cramped in, since our staff has continued to expand (including paid staff, Americorps volunteers, interns, youth employees, et al) — is great, and has exactly the home-y feel we were hoping for. People stop in all the time who don’t know us. People who live in the neighborhood just stop in to say hi. People driving by stop in, curious to learn more. People drop in just to ask a quick question. So, just that presence on Michigan Avenue alone has allowed us increase our reach and impact.

Now that we’re situated in the Growing Hope Center, it’s much easier to lend books from our library and tools to Growing GardensGrowing members. And we even lend canning equipment now! And having our own meeting/teaching space is awesome.

We’ve expanded our summer youth programs, and, this summer, we held garden and nutrition-based camps at the Boys & Girls Club, in West Willow, and at Parkridge, with our teen interns acting as peer educators. And those interns also started their bicycle-powered smoothie business.

The big exciting news (exciting to me, at least) is that we’ve just started a year-long strategic planning process to chart the next several years for Growing Hope. We’ve got a bunch of focus groups coming up, and we’ll will be inviting community members to give voice in those, as well as thought one-on-one interviews and surveys… Anyone interested in learning about any of those, or giving input, can write to us at rsvp@growinghope.net.

The other big exciting news is that we’re working to expand our social enterprises, and thus our ability to earn our own revenue, create more jobs, etc. I’ve been in a fellowship in Detroit called Enterprising Health since June, which is for social entrepreneurs who are working to alleviate health disparities, and we’ve been working on business planning (that also includes a component of community voice, planning for impact, etc). We’ve got a survey right now we welcome anyone near or far to take. You can find it here.

MARK: And can you tell us a bit about what you’ve got going on this Sunday?

AMANDA: This Sunday is the last of three Chefs in the Garden amazing dinners. We’ve got three chefs — the two wild women of Bona Sera, and Brandon Johns of Grange — cooking up deliciousness right on our urban farm. The first two dinners (featuring Chefs Emil Boch of From the Hearth Food & Kim Nichols of Harvest Kitchen in August, and Chefs Silvio Medoro of Silvio’s Organic Ristorante & Pizzeria and Benjamin Meyer of Iridescence) were amazing and sold out, and there are fewer then five tickets remaining for this Sunday’s event! Hopefully we’ll schedule more.

MARK: How did the Chefs in the Garden series come about?

AMANDA: Chefs in the Garden is an evolution of our annual fundraising dinner, previously called Hope’s Harvest. There, we had maybe 8 or 9 chefs, all on site, and the event was much larger — maybe 125 guests. We scaled it down, and now we’re having two chefs at once, with more like 50 guests each time. It’s a bit more intimate, and simpler for us to put on. We’ve thrifted enough that we have 50+ sets of dishes, tablecloths, napkins, etc (could still use more silverware!), and we have tables, etc. So, right now, all we need is a tent. By next spring, though, we’ll have another hoophouse up, which will serve as an education and event space, and then we can have dinners in there instead!

MARK: Any big things to note concerning this season at the Downtown Ypsi Farmers’ Market? Any trends that you’re seeing develop? Any lessons learned this year?

AMANDA: The Market has had another record-breaking year, in terms of numbers of vendors, customers, sales, and, most importantly to us, our SNAP (food stamp) sales have continued to break all previous records. There’s no disputing — people of all income levels want healthy food, and, when they have access to it, they’ll buy it! We’ve also been doing food sampling every week, and have finally got our portable four-bin sink, and other equipment in place, so that we can put on full fledged (and officially “food safe”) outdoor cooking demos!

MARK: What should we expect from Growing Hope over the winter?

AMANDA: The strategic planning is one — so folks should stay tuned to give input into that…

We’ve also been doing almost weekly classes, and there are still more of those planned in the next months. We’ll have classes on food preservation, season extension, and more. So folks should come on out for those. And, just tonight, we did an intro two-hour session to our Garden Leadership Training, which trains teams starting, expanding, or reviving community, school, and faith-based gardens. We’ve got another intro session next week. And, we’ve got our training dates set for February for the full course (and we’re offering a Saturday option this time!).

And, of course, we’ll have the winter farmers’ market inside the Corner Brewery. This winter, though, it will be every week instead of every other week. And it will run from Election Day (November 6) through December 18/

And, we’re going to do an online holiday auction again this fall — featuring local services & goods, which hopefully helps support those businesses. We hope that people who don’t win the auctions that they bid on will then go and purchase that item instead. And, we’re taking contributions now. It needs to be something that a gift certificate can be used for, which makes it easier for include in the format of an online auction. Email to sponsor@growinghope.net if you’d like to participate… Oh, and we’re still taking ads for our 2013 wall calendar. You can drop us a line using that same email address.

And we finally got the plant material installed to complete our green roof on our adobe oven structure! Thanks to an Ann Arbor Farm & Garden grant, not only do we have the green roof, but we have plans for a second hoophouse, a solar panel to power our cistern pump, some more accessible pathways through our gardens, and new signage. All of this will be getting in place in the next six months.

I’m spending a lot of time thinking and talking about broader economic and community development in Ypsi through healthy food. I think we (we in the broad sense, not necessarily Growing Hope) have a very real opportunity in the neighborhood immediately surrounding the GHC, and even on Water Street, and I’m working on getting some solid economic analysis in place to further “make the case”. I’m super inspired right now by how Cleveland is taking the lead on this — from some of the best zoning around urban agriculture, to public market revitalization, to pilot urban grazing projects on vacant land, to excellent marketing, to worker-owned co-ops… I was just there at the International Public Markets Conference put on by the Project for Public Spaces, an amazing organization that’s all about place making.

MARK: I imagine the Growing Hope Center is going to be a work in progress for the foreseeable future, so I won’t ask if it’s where you want it to be, but I’m curious to know if it’s coming along the way that you’d anticipated when you first took possession of the property?

AMANDA: I think in many ways it is exactly what we envisioned, and I think over the next year, as we are more and more settled in, get our commercial kitchen certified, get our LEED certification (looking for a volunteer or intern who wants to work on that (http://www.growinghope.net/get_involved/jobs), and are more set up to welcome school field trips, host events for others, etc., that it’ll continue to come to life. When I take the rare moment to step back and reflect, I’m overjoyed.

Our next big phase is going to be getting plans in place and funds raised for solar panels. We could actually be net zero energy, possibly, if we do this, because we already use geothermal for our heating and cooling system. I hope we can find a partner in the green building world who would like to market/use our space to educate around all of the sustainable redevelopment we did. We definitely talk about it during tours, but it’s not our main thing so we don’t do presentations and such about it. We rebuilt our old windows, installed geothermal, used tons of reclaimed materials, maximized insulation, have a 12,000 lb recycled glass plaza, have solar powered parking lot lights, a cistern system we designed, etc, etc…

MARK: How much produce have you generated in the hoop house so far this season?

AMANDA: Oy, I don’t have that number — someone else on my staff does… But we do grow over 1 ton each year on our 1/4 acre… And we’ve increased our wholesale sales this year. Have you had the Growing Hope frittata at the Wolverine? Kevin says it sells out a lot!

MARK: What’s going on in Ypsi schools? How active have you been so far this school year? Are kids coming out to the Center, working on the urban farm, learning about how food makes its was from the farm to table?

AMANDA: During the school year, we mostly do after-school programming. Speaking of which, our Seed 2 Plate club started today! Apparently they did a junk food makeover. They made kale chips and banana ice cream (which is literally frozen banana then put in a blender, and it’s apparently great), and it was a big hit. We do a lot of healthy cooking with these middle schoolers.

MARK: What kinds of new things are you working on for next spring? Any big plans afoot?

AMANDA: The launch of Growing Ventures — our social enterprise division — will be branding some things we already do that help people grow healthy food at home, but will also be offering new things. We’re exploring compost delivery and raised bed installation services, but nothing’s guaranteed yet. We’re working through the financials right now to see what is really feasible.

And there are some top secret things we’re not ready yet to talk about because we’re still working out the details.

MARK: How close are you to making your last fundraising goal?

AMANDA: For the Growing Hope Center, in the last five years we’ve raised just about $700,000 in cash, grants, pledges, and in-kind support… It’s kind of overwhelming to think that we’ve done that at the same time as raising our annual operating budget from scratch each year. (No wonder I feel so tired.) And as you know, this has been through very grassroots, one-gift-at-a-time contributions and amazing in-kind contributions. To pay off the entire debt on the building, finish up things like solar panels, accessible pathways, et al, and pay off other construction debt (not a giant amount, but some), we’ve still got about $250,000 to go.

So, by meeting the goal of the challenge grant we got last fall (which we just completed!!!), and getting our Certificate of Occupancy and moving in, we’ve successfully completed the first phases of our capital campaign! It’s very exciting– and while we’re gearing up to raise that last chunk of funds, we’re also turning our focus to our regular operating funds.

Our funding really is dependent on broad community support, so as much as we’re always trying to be more innovative in earning revenue, that charitable support from people is still really key.

Any gift of $100 or more designated to the GHC/capital campaign gets you a leaf on our tree of gratitude– which local artist Robb Todd did a breathtaking job of bringing to life on the side wall of the garage in the GHC back yard. (Any gifts by end of October will have leaves go up by the end of the year!)

]]> http://markmaynard.com/2012/10/amanda-edmonds-on-this-weekends-big-fundraiser-and-the-future-of-growing-hope/feed/ 9 http://markmaynard.com/2012/06/ann-arbor-entrepreneurs-dug-song-and-paul-saginaw-exchange-thoughts-on-employee-ownership-and-the-meaning-of-wealth/?utm_source=rss&utm_medium=rss&utm_campaign=ann-arbor-entrepreneurs-dug-song-and-paul-saginaw-exchange-thoughts-on-employee-ownership-and-the-meaning-of-wealth http://markmaynard.com/2012/06/ann-arbor-entrepreneurs-dug-song-and-paul-saginaw-exchange-thoughts-on-employee-ownership-and-the-meaning-of-wealth/#comments Thu, 07 Jun 2012 18:16:23 +0000 Mark http://markmaynard.com/?p=19578 A few days ago, I posted a video in which Zingerman’s co-founder, Paul Saginaw, said the following. “A business shouldn’t exist in order to create wealth. It should exist in order to give people better lives.” Well, that elicited a comment from Ann Arbor software entrepreneur Dug Song, who, among other things, had questions concerning the Zingerman’s business model. Here’s what Dug had to say.

I’m probably nitpicking, but Paul’s quote here is bizarre, and I worry, misleading – of course *businesses* exist to create wealth, hopefully for everyone involved. Great organizations are indeed mission-driven, but absolutely no business survives if it fails to create wealth (Zingerman’s open-book finances probably help align the company with this reality).

As Paul says, their business reached a point of stagnation *for the founders*, where their ambitions (and/or opportunity) outgrew the confines of their operation. They could have stayed small, excellent, and had “enough”, joie de vivre be damned (incidentally, I met Chip Conley, Joie de Vivre Hospitality founder last year, a remarkable entrepreneur in his own right!). Instead, they chose to invest / partner in other businesses, with what sounds like much more operational involvement (and fun! but maybe the same kind of screening) than arms-length investors.

That is to be seriously commended! Growth! Business and adventure! A pirate model of organization. Have fun storming the castle! Who has time for boring shit like golf, anyway?

I’m curious, though, about the distribution of Zingerman’s ownership and profits (cap tables, dividends / profit sharing), and the legal structure of its community of businesses (entities, partnerships, governance, etc.). Is it one holding company with Ari and Paul as king (through a manner of servant leadership) with lords tied to Zingerman’s estate, or are the operating companies (mostly) independent, with non-binding agreements for founders (how can they divest, if ever)? Do Zingerman’s/CoB *employees* (not just founders) generally have ownership stakes?

In tech startups, the cultural expectation is that *all* employees have ownership – but without liquidity, earlier employees (who may not actually have had as much impact as a later employee) get disproportionately rewarded for incurring more risk (maybe fair to the former, but probably not to the latter).

I first learned of an interesting model to deal with this from one of the investors in our oversubscribed Series B at Arbor: SAIC, one of the world’s largest military defense contractors ($10B+ annual revenue) – and a pioneering employee-owned company for over 40 years. Founder Bob Beyster, a major UM benefactor (see his namesake buildings on North Campus), wrote some interesting books on the subject of employee ownership, “ownership culture” and started the National Center for Employee Ownership and the Beyster Institute dedicated to the same, focusing on stock options and ESOPs as the concrete vehicle for employee ownership (not some hand-wavy anarcho-syndicalism of century prior, e.g. Leland Stanford). In a post-409a world, I’m guessing the transference of ownership in internal transactions is much more complicated/costly, but maybe that’s why SAIC is mostly a public company now, to achieve employee liquidity.

I remember having dinner one night with the head of their Casciano group (seriously, that’s what they called themselves, after the head of the business unit) and realizing that he was the progenitor of the Predator UAV program, among other less savory dinner topics. Regardless of ownership structure, founders have the responsibility to set the culture of an organization (and kudos to Paul and Ari for doing so) – or else you end up making baby-killing machines!

And, here’s Paul’s response, which was left in the comments thread, earlier today.

Dug, I was hoping that no one would notice that unfortunate statement. I cringed when I first saw the video. I misspoke when that quote was recorded. The interview went on for several hours over a couple of days – starting and stopping while I was at work. I meant to say that I believe the real purpose of business is not to create the “maximum profit” but rather to help improve people’s lives.

I also said in regards to “wealth” that business should work to create real “community wealth”. A wealth not measured in dollars alone but in diversity, clean air and water, safety, joy, the number young people who stay or return after college and open businesses, block parties, a thriving local economy, hours of volunteerism, the degree to which a community is self-reliant for its basic needs (food, energy, shelter, clothing, etc,), community celebrations, how well its most vulnerable members are cared for, etc.

I am happy to sit with you and go over how we are structured legally and spiritually. But it is a long conversation and it will generate many more questions. Here is a simple overview.

Ari and I have a holding company, Dancing Sandwich Enterprises, Inc., wherein resides all of our interest in the other businesses. All of those businesses (currently 8 with 2 more in the pipeline) are separate legal entities. The older ones ( Deli, Bakehouse and ZingTrain) are C Corps and the rest are LLC.’s.

Each business has at least one managing partner. There are currently 16 managing partners spread among those 8 businesses. The Zingerman’s Community of Businesses is not a legal entity, but we behave as a single company. All the partners meet every two weeks for 3 hours. We report out on all of our 3 bottom lines, great food, great service and great finance. We also make all decisions at this meeting that affect all the businesses. Because in the eyes of the IRS we are a single employer and in the eyes of the public we are one company there are certain areas where we need to all be on the same page – benefits, marketing, training standards, quality, look and feel, etc. All decisions are made by consensus.

We do not vote. You are in consensus if you are 80% ok with a proposal and its language and willing to support it 100%.

Ari and I own anywhere between 30 to 80% of each business. We also own the intellectual property, which we essentially license to the businesses. That is how we receive income. We do not take a salary out of any of the businesses. All of the managing partners run their respective businesses. Because Ari and I are partners, we participate in approving the annual plans, which are also a consensus decision. The annual plan for each business includes a salary and bonus plan for the managing partners and a gain-sharing plan for all of the employees. After all of that is paid out we then deal with Net Operating Profit. 10% of all profit is distributed to the non-profit sector with over 95% going to Washtenaw County. 5% goes into a relief fund for our employees where staff members who are experiencing a financial crisis can apply for funds. Another 10% goes to our support services company, Zingerman’s Service Network, and that money is used for bonuses and capital expenses. 20% can be distributed to the businesses’ partners according to % of ownership. The rest will be held as retained earnings to fund capital expenses, growth and tough times.

Buy-sell agreements, succession planning, transfer of ownership and employee ownership are all issues that we are sorting out. We have had an adhoc governance committee working on all of these for a couple of years and we feel that we are close to delivering a proposal to the Partners Group that will set the course for the foreseeable future.

I hope that answers a good deal of your questions. If you have an interest in knowing more about us, just let me know and we can get together.

As an aside, it makes me incredibly happy when my site can serve as a place for successful local entrepreneurs, like Paul and Dug, to come together, from wildly disparate industries, and kick around big, important ideas. As much as I enjoy the fame and fortunate that this site has brought me, I find stuff like this infinitely more gratifying.

]]> http://markmaynard.com/2012/06/ann-arbor-entrepreneurs-dug-song-and-paul-saginaw-exchange-thoughts-on-employee-ownership-and-the-meaning-of-wealth/feed/ 6 http://markmaynard.com/2012/06/the-emergence-of-local-economy-centers/?utm_source=rss&utm_medium=rss&utm_campaign=the-emergence-of-local-economy-centers http://markmaynard.com/2012/06/the-emergence-of-local-economy-centers/#comments Wed, 06 Jun 2012 22:22:22 +0000 Mark http://markmaynard.com/?p=19536 I didn’t have an opportunity to meet her at the recent BALLE conference in Grand Rapids, but, as luck would have it, I was able to dial in to a conference call during my lunch hour a couple of days ago, and ask a few questions of Kelley Rajala, the woman who runs the Sonoma Country Share Exchange in Santa Rosa, California. Rajala, along with Dave Feldman, a co-founder of Bethesda Green in Bethesda, Maryland, were talking about the emerging trend growing out of the Transition Town movement, of people creating Local Economy Centers in their communities. [note: Together, Rajala and Feldman run a consultancy called the Livability Project.] Ragala said that she started her center in 2010, when it became obvious to her that a physical location was needed if Santa Rosa was going to accelerate the pace of transition toward a more sustainable future. What they needed, she thought, was a community facility where all of the various initiatives that were taking place, in the areas of food, entrepreneurship, energy and health, could come together, under one roof. The hour-long conference call was set up by Transition US, and I’m told that a recording will be available available online in the near future. In the meantime, though, here are my rough notes, which focus primarily on the Santa Rosa case study, as I think that, of the two, it’s the one that’s most relevant to our situation in Ypsilanti. [note: My quotes may not be exact. I believe, however, they're pretty close.]

Ragula explains her decision to open a brick-and-mortar location as follows: “There comes a point (in a movement like this) where there needs to be a more outward-facing presence, that seeks to engage the wider community. We’re at that point. We need small epicenters of transition activity, where (the principles of) BALLE and the Transition movement, can come together (and be put into action).” She envisions a future in which such centers exist across the country, leveraging downtown storefronts left vacant in the wake of shopping malls and big box retailers. Each center, she says, would be independently run, and take on the flavor of the community in which it’s housed. The subject matter addressed within these centers, she says, could span from healthy food access to business incubation, with the common thread being the shared values of localism, social justice, permaculture, education, biomimicry, economic empowerment, etc.

Rajala’s Local Economy Center, the Share Exchange, is one block off the main drag in Santa Rosa, the second largest city in California’s Wine Country. (Their population is 167,815.) They chose not to pursue corporate sponsorships, as other centers have, but, instead, to focus on the grass roots. They are organized as a cooperative under California law. (They’ve yet to define their bylaws, but that is in process.) Their intention is to become both a consumer coop, and a worker coop. The space is 1,800 square feet, and they pay $1 per quare foot. (The space was relatively move-in ready when they took possession.)

Their rent, for the most part, is covered by the sales of the Made Local Marketplace, which takes up the first 400 square feet of their space. At present, according to Rajala, the goods available in the store, all of which are made in their county, are relatively “gifty.” She’s hoping, however, to transition, over the coming year, into more practical items. The vision, says Rajala, is to have it be like a general store. (I believe she said that, since opening, they’ve sold the work of close to 250 artists, makers, etc.) The entire space is open to the public from 9:00 AM to 6:00 PM… I asked about the revenue generated by the Marketplace, and she said that it covered half of their budget. (Their budget was $100,000 the first year, and $130,000 the second.) She also said that half of the Marketplace sales were recorded in the first three weeks of December. Last year, they hosted a street fair, hoping to generate non-December sales. (I didn’t ask how much they raised.)

Behind the store, there is a co-working space, which presently has 60 members. This area has a kitchen, video conferencing room, etc. And, over time, they will be adding entrepreneurial services, helping people to launch businesses that make the community more sustainable.

They also generate revenue by renting their space, after hours, to organizations that are “mission aligned.” (They rent the space approximately 200 evenings a year.) Craft groups, community organizations, and local businesses, among others, make use of their meeting rooms, which are outfitted with white boards, and other tools to facilitate the creative exchange of ideas.

Furthermore, they’ve started something called the Local Economy Institute, which they hope will evolve into something like the Evergreen Cooperative, in Cleveland, helping to create jobs by looking for opportunities to fill in the local supply chain. For example, she mentions that Amy’s Kitchen, a huge, vegetarian food processor in her area, imports most of their ingredients. So, she wants to start a worker-owned farm to supply them. The Local Economy Institute would not only identify such opportunities, and help launch companies to take advantage of them, but also hold courses for people on how to be responsible, successful worker/owners.

The secret to staying afloat, she says, is to diversify revenue streams, and thereby bring in enough money to support those activities that don’t make money. (They also do some contract work for nearby cities that are interested in sustainability, marketing work for local businesses, etc. Furthermore, a local bank has recently stepped up to be a sponsor.) The key, she says, is to stay flexible.

The organization has two staff members. And, there are five makers/artists who volunteer to run the store. In exchange for running the store, these five people pay a much lower commission rate on their pieces that sell in the store. (Occasionally the two employees of the organization need to run the store, as the volunteers can’t always make their shifts.)

When asked what she would have done differently, Rajala says that she would have done more outreach concerning co-working. As it was something new in the community, she said, people weren’t ready for it. And, as a result, those spaces aren’t fully utilized, and, as a result, the people who are using the co-working facility, are essentially being subsidized. She says that she doesn’t know if co-working is going to work in the long run. They may have to transition some of their co-working space into dedicated offices for startup companies, she says, which they can rent by the year.

They’re constantly trying new things. They looked into the possibility of a time bank, but decided to put it off for the time being. They’re working with the national Slow Money Network to roll out their Credibles program, which is a platform though which people can pre-pay for goods at their favorite food-related businesses, and, in so doing, help budding food entrepreneurs by advancing them working capital. They will also soon be rolling out a matchmaking service through which people with unused yard space in urban areas can be matched up with would-be farmers who are looking for plots to cultivate. And, they’re hoping to replicate the Port Townsend Local Investing Opportunities Network (LION) that I told you about not too long ago, in hopes of getting high-net-worth individuals investing in local startup enterprises that create jobs, improve the community’s resiliency, and contribute positively toward the local ecosystem. And, they want to explore all kinds of swapping and sharing, whether it be in the form of hosting local fabric swaps, or facilitating equipment lending networks. She also says that they’d like to do more to get the people who create things for their store into stores of their own. The main thing, she says, it to keep going… to keep finding new sources of revenue, so that you can continue to push the envelope. In order to do that, according to Rajala, you have to be creative, and you have to foster partnerships.

I had thought, since the first Shadow Art Fair, that Ypsilanti might be able to support a year-round store, managed by volunteers, that would sell the products of our food entrepreneurs, craftspeople, and makers. The idea that such a business could serve as a gateway to something bigger, though, is something that I hadn’t considered. And I like it. Unfortunately, what works in a city of 167,000, where you only pay $1 a square foot in rent, may not work in a considerably less affluent community that’s a fraction of that size. Still, though, it’s interesting to consider what a Local Economy Center would look like in Ypsilanti.

]]> http://markmaynard.com/2012/06/the-emergence-of-local-economy-centers/feed/ 6 http://markmaynard.com/2012/06/zingermans-this-is-ownership/?utm_source=rss&utm_medium=rss&utm_campaign=zingermans-this-is-ownership http://markmaynard.com/2012/06/zingermans-this-is-ownership/#comments Tue, 05 Jun 2012 03:21:54 +0000 Mark http://markmaynard.com/?p=19522 The following video, if I’m not mistaken, was produced to coincide with the recent BALLE conference in Grand Rapids, which, to a great degree, revolved around the subject of employee ownership. In this video, Paul Saginaw explains why, ten years after the launch of Zingerman’s Delicatessen, he and his co-founder, Ari Weinzweig, decided upon an unorthodox model for growth, which had at its core the novel idea that employees could, if they wanted to, launch collaborative businesses of their own, beneath the Zingerman’s umbrella. That philosophy, over the past several years, has given rise to over a half dozen new companies, including a creamery, a coffee roaster, a bakehouse, and an award-winning restaurant, that now collectively employee over 500 people. And, as Paul notes in the video, they’ve done it without franchising, or sprawling across the map, in hopes of a big liquidity event. Their intention, as Paul notes, has never been to cash out, and sell the brand, but to create an entity that empowers its people to have decent lives, and enrich the community in which they live. I know I’m biased, as Paul’s a friend, but I think it’s pretty awesome stuff.

Here, for those of you who won’t watch the four-minute video, is the quote that sets it in motion.

“Business shouldn’t exist in order to create wealth. It should exist in order to give people better lives.” – Paul Saginaw

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