ALEX: From Gimlet, I’m Alex Blumberg and this is Without Fail. The show where I interview entrepreneurs, artists, athletes, visionaries of all kinds about their successes and failures, and what they’ve learned from both.





<<theme music>>

ALEX: One storied path to success is being able to see a future that others don’t see, but that once it’s here, it feels inevitable. There are a lot of success stories like that. Visionaries taking bets that in the future, people will obsessively share photos online, or order groceries over the Internet, or hail a cab from their phone.





It’s tempting to think that’s the only path to success. But of course, it’s not. Today I’m talking to a woman who took a very different path. A path that involves looking to the past, not the future. A path that involves finding once popular brands that have gone largely forgotten. But if you pick them out of the cultural discard bin, dusted them, gave them a nice sprucing up, they can regain their former glory, and then some.





My guest’s name is Sharon Price John. And she’s a CEO now, involved in one of the biggest brand revivals of her life. And we’ll get to what brand that is later in the show, but just to set the stage..before she was a CEO, she spent her career preparing for this role, as an executive at some of the biggest toy companies in the world. And she got really good at this type of brand revival. And just as one example, in the early 2000’s she was a VP at Hasbro, makers of the Nerf line of products. Nerf, you remember those soft spongy sports products, like nerf footballs and baseballs. They’d been really popular in the 70’s and 80’s. But by the early 2000s, Sharon noticed that the Nerf line wasn’t doing so well.





SHARON PRICE JOHN: I wasn't even on the sports action business, I was on -- I was running the Tiger Electronics business, and I'm raising my hand going, "Hey, Nerf is awesome! It's the most awesome brand in the whole wide world. You know, how big is it?" And it was like, $20-million. I'm like, "That's ridiculous. Everybody in the whole world knows what Nerf is. How big used to be?" And they're like, "$90-million." I'm like, "Can I have it?" Right? "Can I -- just let me, please."





ALEX BLUMBERG: Out of the way, people!





SHARON PRICE JOHN: Right. No serious -- they gave me the whole division, which had Super Soaker and Nerf. And, you know, we reinvented the whole brand, and when I left the business it was $250-million dollars.





This was a trick Sharon Price John would turn over and over in her career. A career that spanned decades, and touched some of the most iconic children’s brands: Barbie … Transformers... My Little Pony and many more.





And a career which would eventually lead her to her current role, as the CEO of a company in need of one of the biggest brand revivals of Sharon’s career.





I learned so much in my conversation with Sharon, so much about finding hidden value in things others overlook, leading an organization in need of change, moving beyond a failure that can seem devastating. I am very excited to share our conversation with you today.





And we’re going to start at the very beginning of Sharon’s career, when she was working at Mattel, and had risen quickly through the ranks to become a VP. And unbeknownst to her, she was about to encounter an obstacle that could derail her career just as it was taking off. That obstacle: true love.





SHARON PRICE JOHN: Not to get too personal but I met my husband, and we got married and we both went to Europe. And, you know, if you're traveling around to Rome and Paris and London, you know, I -- we have a baby nine months later.





ALEX BLUMBERG: You were in love and in Europe and having a whirlwind romance.





[CROSSTALK]





SHARON PRICE JOHN: Yeah, you know, life happens. Life happens. And so -- right after I had my -- my first child, Rachel, my husband had a pretty unique opportunity at a smaller consulting firm out of Chicago, so we moved and I -- I left Mattel at that point.





ALEX BLUMBERG: Can I just ask, at that point when you -- so you're a V.P. at Mattel, you -- you and your husband are, like, you know, sort of like, both sort of going forward in your careers, and -- and then you're -- you're -- you're in love, you have your first child, and then you -- you moved to a city for your husband's career.





SHARON PRICE JOHN: Correct.





ALEX BLUMBERG: This is sort of the beginning of a story that feels very familiar and that usually plays out along certain gender roles. What were you thinking at that moment?





SHARON PRICE JOHN: I had some mixed feelings about whether I wanted to stay home. Of course, I'm from a generation where that's what my -- my mom had done. You know, I'm standing on the shoulders of extraordinary women who -- who paved a lot of road for the -- my generation. But -- but it wasn't just a given even what is now 20 years ago, that -- that I wouldn't have dropped out and come back later. And so I was like, yeah I've got -- this is just the way the timing happened. I can't imagine that I would have just naturally stepped away from Mattel after having my daughter, but because we had a move in there at the same time it was like, "Hey, I've never really taken any time off. This would be a great time to do that." So I took a little bit of time, and my husband came home one day and said, "You know, you need to go back to work." I'm like, "Why?" He's like, "Because you're driving me nuts."





[laughs]





SHARON PRICE JOHN: And I'm like, "Wow! That's terrible! That's an awful thing to say." He's like, "Well you know, you just -- I come home on --" because he's in management consulting, you know, you -- often you're leaving on a Monday and you're coming back on a Friday. He'd be on these big gigs, and -- and when he would come back I would have done something crazy like refinish the stairwell or something, or painted the dining room, or, you know, built a deck, you know? He's like, "I think you need to go back to work. And ..."





[laughs]





ALEX BLUMBERG: You've got more energy than -- than can be contained by -- by house-improvement projects.





SHARON PRICE JOHN: Right. So I'm like, "But I'm saving us so much money." No, I didn't do -- he's like -- he's like, "Seriously." And then we had a really good heart to heart about what do you want out of life. Together.





ALEX BLUMBERG: Describe that conversation. When did it happen?





SHARON PRICE JOHN: That was about eight or nine months in.





ALEX BLUMBERG: Where are you? At the kitchen table? Where -- where are you?





SHARON PRICE JOHN: No, he actually sat me up on the kitchen counter. And he's got -- right in my face. And he's like, "I want to be crystal clear. If you're staying home because you think that's something I think you're supposed to be doing, you are wrong. I would never expect that of me. Like, I -- why -- why are you expecting that of you?" "Do -- be -- this is -- if you've got something twisted up in there about, you know, your mom or what's -- you got to go. You've got to do your thing."





ALEX BLUMBERG: Was he right? That was what you were thinking, though. Were you thinking, like, "Oh, this is something I should do?"





SHARON PRICE JOHN: I don't know. You know, I -- I know -- I don't think I ever intended to not ever go back to work. But I don't know that I had planned out some specific date, you know? Get to this goal and do this or do this. But there was also something that happened to me that helped me move forward as well. The person that lived across the street from me was a -- a psychologist. So you go with that where you want to. And she came into my life at the right time. And -- and -- and she's like, "You know Sharon, you -- you sure you want to stay home?" I mean, I must have been exuding this. I don't know. I don't remember feeling bad about it, but perceptive people must have been picking up on something about it. And -- and she said -- I said, "I don't know. You know, I want to do the right thing for Rach, I want to -- I want to make sure I'm being a good mom. I -- I don't know if I can -- what the balance is going to be like." And -- and she said, "Hey. Do you want Rachel to sacrifice her dreams for your granddaughter? Just sit on that for a minute." I'm like, "Of course not!" She's like, "Well don't model it."





ALEX BLUMBERG: Whoa.





SHARON PRICE JOHN: Yeah. That was the great release for me right there.





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: Of you have to live your life if you want to -- your children to feel empowered to live their life. And that was just a huge lesson, and I will never forget it. We were sitting out on the front lawn, you know, having a picnic with her kids. And so it's not about staying home or not staying home or working moms against work -- it's not any of that. It's you've got to do what makes you who you are and follow your dreams, and with some balance and love and gusto and all those things and be there for your children. And -- and I do everything I can. But what I'm doing is I'm giving my children in the way that I work, the permission to do that themselves, which is what we're supposed to do.





ALEX: Mmm-hmm. Yeah, yeah.





SHARON: And you know sometimes when you make the decision, you just absorb that. And I did. And I said, "Okay, you're right. Let's do this thing." Almost the minute I released that into the universe, not to get too weird, I got a call from a -- from a executive recruiter.





And with that call, Sharon got back in the corporate world. Eventually landing at a company called VTech. She spent a year there working on toy and product development. But she soon decided she wanted to do something else, something on her own.





And there was this toy that Sharon had loved as a child. A toy that had been popular, but was now largely forgotten. Sharon thought she could start her own company to do the same thing she had done several times in her career already. Take this toy that was undervalued and forgotten, and breathe new life into it. And so, she started a company, Checkerboard Toys, to reintroduce this toy to the world. The toy was a doll, called the Dawn Doll.





SHARON PRICE JOHN: Dawn dolls were a six-and-a-half inch fashion doll that were launched in the 1970s.





ALEX BLUMBERG: Uh-huh.





SHARON PRICE JOHN: They're the only doll that has ever outsold Barbie in unit volume in any given year.





ALEX BLUMBERG: Oh, wow.





SHARON PRICE JOHN: And they were a huge hit in the early '70s.





ALEX BLUMBERG: And how do they compare to a Barbie doll?





SHARON PRICE JOHN: Well, they're six-and-a-half inches, and Barbie -- and I'm assuming you know how tall a Barbie is. So my apologies. Barbies are 11-and-a-half inches tall.





ALEX BLUMBERG: It's obvious.





SHARON PRICE JOHN: Good for you Alex, for not knowing that. They're clearly almost half the size of Barbie. Everybody knows that.





[LAUGHTER]





ALEX BLUMBERG: Uh-huh. And why did you like them so much? Why -- what was -- what was ...





SHARON PRICE JOHN: Because they were little. You can hold them like you can -- Barbies are big. When you're little. And these could fit right in your hand. You could go everywhere with your Dawn doll.





ALEX BLUMBERG: So it's just a little bit more kid-sized...





SHARON PRICE JOHN: Yeah, and I loved them so much. And it was coming up on their 30th anniversary which, anniversaries are often great ways and great excuses to, you know, to catalyze interest in, you know, old toys and things like that. And so I bought the brand because it was the 30th anniversary and, you know, that was fun. Bought the brand and launched the brand as an exclusive collector doll and -- for its 30th anniversary, and then created mass-market options and sold them into Toys R Us, and some big regional mass players in the retail space. And we did a test, and it's all exciting. The test results are awesome. I've got Toys R Us orders a whole container load. They're coming across the ocean.





ALEX BLUMBERG: Right. Before you get there, let me just set the stage. So this is, like, you've started the -- this is Checkerboard. This is your big launch. You're just gonna bring back this brand that's gonna be -- that -- that you love from a -- that you loved as a child, and you're gonna resuscitate it, like sort of update it and bring it to a new generation of children.





SHARON PRICE JOHN: Yeah, and I've already brought it -- brought it to the collector market successfully, and I've already had a good test in the mass market.





ALEX BLUMBERG: Okay. And so to go big, what do you need to do?





SHARON PRICE JOHN: Well, I put a -- and I put a TV commercial. I pay for a TV commercial on my credit card.





ALEX BLUMBERG: How much does a TV commercial cost?





SHARON PRICE JOHN: I'm not gonna say. I got it on the downlow though, I mean I've used -- I -- I -- I like, cashed in every favor in the commercial space possible. I -- like, everyone I know. Which is a lot of people after you, you know, work in the advertising industry.





ALEX BLUMBERG: Uh-huh.





SHARON PRICE JOHN: And people just did it for almost nothing, just really nice. But it's still, you know, almost -- it was almost six digits.





ALEX BLUMBERG: Okay.





SHARON PRICE JOHN: So not bad. But that's on my credit card.





ALEX BLUMBERG: Right. Right. Right.





SHARON PRICE JOHN: And -- and we have to pay for the product upfront too, right? So I'm floating that money.





ALEX BLUMBERG: Uh-huh.





SHARON PRICE JOHN: And yeah, so here we go. And I don't want to make this sound like some massive deal, because there are people that were so much more devastatingly impacted by this than -- than I was. But that was the year of -- of the 9/11 disaster, and so many retailers canceled every single order of every single thing in that September. And so my container load, it was the container load to nowhere.





ALEX BLUMBERG: Wow. And so ...





SHARON PRICE JOHN: Yeah.





ALEX BLUMBERG: I'm sure, like -- I'm sure like, processing that, like, there was all sorts of processing that was going on at that moment for every -- everybody in the country.





SHARON PRICE JOHN: Everybody in the world, really. And so, on the -- on the pecking order I'm pretty low.





ALEX BLUMBERG: But ...





SHARON PRICE JOHN: Seriously.





ALEX BLUMBERG: But -- but -- but in terms of the impact that it did have on that, what -- what was the immediate aftermath was it just, like, the ship was delayed a little bit, and then you brought them in and you were able to distribute them to the stores, or -- or what happened?





SHARON PRICE JOHN: No. That order was completely canceled. So it's on the water and they don't want them anymore.





ALEX BLUMBERG: Oh, got it.





SHARON PRICE JOHN: They still came. They came, they showed up.





ALEX BLUMBERG: They showed up.





SHARON PRICE JOHN: They showed up in October. I -- receipted them, you know? And then we put them in a warehouse that I'm now paying for. So I could then go try to sell them to somebody else for half price to just try to get some of the cost back, and not get any of the profit. Just to cover it. Just to cover it.





ALEX BLUMBERG: Wow.





SHARON PRICE JOHN: And we ended up selling them at a deep discount to what was another bankrupt toy company called KB Toys, which was a mall based company. And, you know, paying off my credit card. And, you know, but here's the other kicker. We had, you know, kind of borrowed against our home to buy those dolls, so that was tough.





ALEX BLUMBERG: Wow. So -- so what did that mean for -- for -- for Checkerboard Toys?





SHARON PRICE JOHN: Well, bye bye, Checkerboard Toys. That was the end of Dawn.





ALEX BLUMBERG: How'd you feel?





SHARON PRICE JOHN: Pretty rough. That's terrible. I've got two kids now. Two. So had a, you know, a little boy and a little girl. And you know … we had to make some lifestyle changes. We had to -- I had to find a job.





ALEX BLUMBERG: At that moment, this is one of these moments where you're sort of like, okay, you're, like, I'm going to do the dream, I'm going to start my own company. I've got it -- I have this idea which is great idea, right? Like that's one of the sad things about this story to me is that like ...





SHARON PRICE JOHN: Oh, it's terrible. I could go down that checklist and go look at everything we did over and over again. You -- and understand, I like, designed the fashions, designed the packaging, wrote the copy, created the advertising. I mean, and there's not a thing on that checklist that I can look at even today and say I did something wrong. But it failed.





ALEX BLUMBERG: And that's the thing. You never actually got to find out if you were right or not.





SHARON PRICE JOHN: That's right.





ALEX BLUMBERG: That's the bummer. Like, you had this great idea. It sounds like a great idea, and I bet you it would have worked. And you were certain it was going to work. But now you just don't -- you can't -- that's the thing that kills me about this, is, like, we don't know. You never got a chance to try.





SHARON PRICE JOHN: Right. And I had been interviewed on CNFN. We had Dawn -- was like -- had a little bit of a feature in Elle Magazine. We were in all the toy magazines. We, you know, the doll stuff. I mean, we had -- if there was a Dawn book that came out, I wrote the precurs -- I mean, it was, like, cool. And, yeah.





ALEX BLUMBERG: How long did it take you to get -- recover from that? Like, how long before you were actually ready to go and look for a job, or did you ...





SHARON PRICE JOHN: Oh, I went like boom. You know sometimes you just -- you can't think, you just have to do.





What Sharon ended up doing… and how she became the CEO in charge of one of the biggest brand revivals of her career... An adorable, fluffy, brand, that many of you might be familiar with. That’s after the break.





<< BREAK >>





Welcome back to Without Fail and my conversation with Sharon Price John.





After her company Checkerboard Toys went under, Sharon made some calls, got a few interviews. And essentially picked her career back up where she left off. She landed executive jobs at Hasbro, where she pulled off that Nerf revival, and Stride-Rite. And all along the way, she worked her magic. Reviving brands, boosting sales, turning things around.





And that’s when she heard from her biggest turnaround opportunity yet:

ALEX BLUMBERG: How do you, how did you first hear of the opportunity?





SHARON PRICE JOHN: It was a recruiter called me. I -- I know where I was. I picked it up, I was in Los Angeles in a car, you know, being driven around. Yeah. And I'm like, "Wow. That's actually interesting..





ALEX BLUMBERG: What did they say?





SHARON PRICE JOHN: They start with hey, Build-A-Bear, you know, is looking for a new CEO. The founder is ready to -- to move on, to retire."





ALEX BLUMBERG: And just for people who may not know what Build-A-Bear is, describe briefly the company. What happens at a Build-A-Bear store?





SHARON PRICE JOHN: Yeah. So Build-A-Bear is an experiential retailer, a specialty retailer that was started in 1997 by a iconic figure now, Maxine Clark. And she had an idea of allowing kids to sort of go through the process of creating their own teddy bear. And to the degree that you would come into a Build-A-Bear and you could choose among this wide variety of bears and bunnies and puppies, and then you get to stuff that bear with the aid of what we call a bear builder. You put the heart in a bear and you go through a heart ceremony. And you put a wish in the bear, and it really is emotional for anyone, not just children to go through this process. It's as if you're bringing this bear to life with certain pet -- personality attributes. Then you can dress it basically any way you want to. You have a hug test to make sure you've stuffed it just right, because it's going to be your furry friend for life. You can also put sounds and scents in your bear, a wide variety of music or you can record what you want on -- onto a little recordable chip and put it in the bear and he'll play it back for you. And then away you go, and you got a buddy.





ALEX BLUMBERG: It's the most adorable retail experience ever invented.





SHARON PRICE JOHN: I think. But umm, you think about all the skill sets that are required to actually make an impact on a company like that and they're -- they're kind of disparate. It's not that common that somebody would know how to import toys from China, understand the cut and stitch part of toys which is more rare, which we had on Barbie fashions, knows the younger kid and the older kid. And I did know, I've -- I've had so many brands that I've had experience on both of those -- those ends of the spectrum. And knows specialty retail.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: That's sort of a weird batch of skill sets. And then had a turnaround background on top of that.





ALEX BLUMBERG: So it sounded like a perfect fit is what you’re saying.





SHARON PRICE JOHN: Yeah. It seemed like it.





ALEX BLUMBERG: So did you -- so did you take it immediately? Did you think about it? What were the -- what were the pros and cons in your head as you ...





[CROSSTALK]





SHARON PRICE JOHN: Oh, any -- anything like this -- anything like this is a big decision.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: That was going to require a physical move. I now have three children. We've been in New England for 11 years. I, you know, been at my new company already for three years by then. And you know, I'm doing well so no reason to believe why I wouldn't be able to continue to be successful in that environment. And this is risky.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: You know, it's a -- this is -- this is a turnaround that is not in the safe hands of being surrounded by a much larger organization.





ALEX BLUMBERG: Right. So those are all the risks.





SHARON PRICE JOHN: Mm-hmm.





ALEX BLUMBERG: Sounds like an easy no.





SHARON PRICE JOHN: It's an easy no.





ALEX BLUMBERG: So why was it a yes?





SHARON PRICE JOHN: We weighed it and thought about it, and we did a lot of -- we're both MBAs so we did a lot of business assessment on, you know, is this possible? What's your, what's your runway? The couple of things that felt like -- that it gave me a lot of runway to get it turned around, because it might not be an immediate thing, was no debt and really good cash flow. So when you have no debt and good cash flow, which we still do today, you get -- you can -- you've got some space. It's not like we were just so overburdened with debt like a lot of companies, and particularly retail companies, if you see a lot of retail companies going bankrupt today it's mostly because they can't pay down their debt.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: And we -- we didn't have to worry about that. And then at the end of the day, I just felt like this brand is worth so much more than its actual value. You know, I've -- have the distinct privilege of seeing research data on a lot of big toy brands in my history, and the numbers on Build-A-Bear are as powerful or more powerful than a lot of those when you look at these key metrics of awareness and affinity and brand love and mom trust and, you know, those are all monetizable if you know how.





ALEX BLUMBERG: So you -- so you were looking at this and you're like, the tools are still there. The brand is still there.





SHARON PRICE JOHN: Brand's unscathed.





ALEX BLUMBERG: And I have enough time to turn it around, because there's not a lot of debt.





SHARON PRICE JOHN: Correct. I'm not going to run out of time, because I've got cash flow and no debt. Yeah, I've got a long runway to get it done. And that's how we decided to do it.





ALEX BLUMBERG: So you show up on day one. What are you -- what are the first things you're looking at? What does it take to actually turn around a brand?





SHARON PRICE JOHN: There's a difference between turning around a brand and turning around a business and turning around a company.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: And this is all three.





ALEX BLUMBERG: Okay.





SHARON PRICE JOHN: The brand being the least of which that needs to be turned around, right? And that's the hardest thing to turn around. We have a broken business. We don't have a broken brand.





ALEX BLUMBERG: And just set up how broken the business was.





SHARON PRICE JOHN: Well you know, we were losing money. A $49-million loss on a less than -- little less than $400-million topline the prior year, the year that I -- that I got there. So 2012. And $6-million loss at --when I came in in June of that year.





And the -- the thing about it on this particular turnaround I think, was somewhat unique, was the culture of Build-A-Bear is very, very, very strong. And -- and it's not a bad culture. It's a really beloved culture. But there was something about our culture that was also keeping us, or -- from being successful. And that had to be scalpeled out of all the good things about who we are.





ALEX BLUMBERG: Mm-hmm. So what was the culture -- what was -- if you had to sort of describe the culture at Build-A-Bear when you arrived, how would you have described it?





SHARON PRICE JOHN: It's a very positive, happy culture. People love what they do. They love that they work for this company that is a caring company. Our tenets are collaboration and giving and, you know, we're -- and it -- it shows up in every day. I mean, it's a -- it's a family. People really do care about each other. Lot of birthday celebrations. Lot of -- we have dogs in the office. I mean, it's -- there's bears everywhere as you might imagine. Stuffed -- stuffed animals. It's crazy. It's like, you know, it's crazy. In a good way. I like it. I'm a kid, I wanted to hold on to my child-like self.





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: And that's all good.





ALEX BLUMBERG: Yeah. So what was the -- what was the part that needed to get scalpeled out?





SHARON PRICE JOHN: You gotta make money. We're a publicly-traded company. I say that like it's easy. It's not.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: I actually, in one of the first what we call -- so our headquarters is called the Bearquarters, just so when I refer to that, that's what I'm talking about. We had a Bearquarter's meeting, and -- when I first got there, and I explained the situation of the difference between the brand and the business and how powerful this brand was, then laid out the strategy of, you know, there's -- look you know, "You guys, it's been eight years of contracting sales and negative comps." That's comparative sales. "And, you know, it's -- if you stay on this trajectory, it doesn't matter if you love this culture or not, it's not going to be here. So you can either choose to change certain aspects, and trust me that I'm not trying to rip out the heart of this company, or we can just all ride it down in the ground together. Either way, you know, you decide because I can't do it alone. And if you don't want to try to take this company into a place where I think this brand has built the right to be you, you -- all these people in this room, you have created the equity that has brought Build-A-Bear to this position to earn this right to be at this place, I don't know why you would now not choose to change that one portion about how we're running this business to be able to do that. But if you don't want to, that's okay. Get off the train. All good. No -- no hard feelings."





ALEX BLUMBERG: And this is -- are you -- you're literally saying this, like, at an all hands' -- at the -- bearquarters --





SHARON PRICE JOHN: Yeah. 200 -- 250 people. Yeah.





ALEX BLUMBERG: Wow. That must have been quite -- quite an all-staff.





SHARON PRICE JOHN: Ah, you know, it's the truth. I mean honesty is should be a more often used commodity.





ALEX BLUMBERG: After that initial meeting at -- at the Bearquarters and ahh you know the presentation, what was the feeling in the room? What -- what was the response?





SHARON PRICE JOHN: It's all over the place.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: Some people love it. Some people are excited. Some people are energized by change. Some people resist it to no end. The -- the challenging part are the people in the center that think they're ready but they're really not.





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: Like, "Kinda yeah, I know we need to do this, and" -- but they can't do it in action. Do it in spirit, can't get it done in action, not with consistency. And you know, you're going to hit a lot of that. You almost expect it after you've done this enough. The minute you kind of hit your first challenge, your first bumps in the road, your first whitewater. It's like, "Oh, my God! Everybody breathe. It's okay. Because you have to remember -- and this is a classic challenge with people and companies who have storied and very successful histories like Build-A-Bear did prior to 2007. Explosive growth. Couldn't keep up with the growth. Couldn't keep up with opening new locations. And when that happens, when you're growing that fast and expanding that fast, it's not possible to put in all the most efficient systems and do it the very best way every time. You're just trying to keep up with it all. That's what happens.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: When 2008 hit, just like with a lot of retailers, just everything was, like, hitting the wall, You know, a lot of retailers ended up just 10 percent, 20 percent, 30 percent of their business just fell off a cliff.





ALEX BLUMBERG: Mm-hmm.





SHARON PRICE JOHN: And then, you know, and Build-A-Bear hadn't had the luxury of going through a normal cycle of, "Oh, we've, you know, chase the growth, chase it, chase it, chase it, chase it." And then you kind of apex for a little while and then just kind of sit there for a minute, and then you focus on the bottom line and pull out cost, pull out cost, pull out cost. And that's where you get your next big load of value, after you've hit scale.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: They didn't get to do that. Right? They hit the wall before they had that chance to create that next big chunk of value..





ALEX BLUMBERG: And the wall they hit was the -- was the biggest, you know, sort of financial calamity since the Great Depression.





SHARON PRICE JOHN: Terrible. Heck, yeah.





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: You know, and that’s another thing about turnarounds too is be respectful of what came before. Be respectful of the people that were making the decisions at the time, because it's impossible for you to know what you would have done in those same circumstances.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: So -- but it was what it was. And one of my favorite sayings about inheriting businesses or companies or whatever is: just because it's not your fault doesn't mean it's not your problem. Not my fault, but it’s my problem.





ALEX BLUMBERG: Yeah, boy is that true.





SHARON PRICE JOHN: So if you're spending a whole lot of time going around saying it's not my fault. Well, grow up.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: It's yours to fix.





How Sharon and the bearquarters went about fixing it and what that fix had to do with lingerie for teddy bears... after the break.





<<break>>





Welcome back to Without Fail and my conversation with Build-a-Bear CEO Sharon Price John, who throughout her career had specialized in taking faded or forgotten brands and reviving them. And we’ve gotten to the point where we answer this question: wait.. how exactly did she do that? Like what did she actually do?





Sharon and I dove deep into the process she went through at Build-a-Bear. What were the actual steps she took to get Build-a-Bear back to making money...





SHARON PRICE JOHN: And what I say about turnarounds sometimes is, "You know what? If -- if there was a silver bullet, I wouldn't be here." You have to be disciplined enough to smash down to every link on the value chain and find the penny on every link. And there's a lot of money there if you know what you're looking for.





ALEX BLUMBERG: Can you give me one example of, like where you went to a factory or showed up a division or something like that and was like, "Oh, this is a penny that we can pick up, or a couple pennies."





SHARON PRICE JOHN: Um, the value engineering piece is something that I learned at Mattel on Barbie fashions.





ALEX BLUMBERG: And what's value engineering? What does that mean?





SHARON PRICE JOHN: Value engineering. It means that it's going through the specific details about how the product is made in a way that creates the same perceived value for a lot less money, whether that's through the -- let's take the design of a Build-A-Bear dress.





ALEX BLUMBERG: Okay.





SHARON PRICE JOHN: We're trying to accomplish something with this dress, right? Whether it's, "I need a pink colorway, I want it to be frilly, I'm trying to -- it's -- it's got to fit into the -- you know, we've got some theme go -- it's a valen" -- whatever it is, whatever you're trying to accomplish here. And your goal of course, is that with every single SKU there's some reason for it. It has to earn its spot on the wall.





ALEX BLUMBERG: And what's a SKU? SKU is like a piece of ...





[CROSSTALK]





SHARON PRICE JOHN: A SKU. A stop -- a stop-keeping unit. Yeah. It's -- it's retail chat for an item.





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: And then that's its number.





ALEX BLUMBERG: So to explain, each Build-A-Bear item, everything that can possibly be bought for a Build-A-Bear has its own SKU, and that's how you guys refer to them in in...





SHARON PRICE JOHN: Correct.





ALEX BLUMBERG: ... in retail yeah. Gotcha. Okay.





SHARON PRICE JOHN: Yes. And so when you're looking at that dress, you're like, "All right, what am I trying to accomplish here. Do I have a price point object?" Because you usually are trying to hit certain retail thresholds or bands. You know, that's when you walk into a retailer and this batch of stuff is $9.99 and this batch of stuff is $14.99. People are building into that knowing what kind of margin they need to make the business make sense, right?





ALEX BLUMBERG: Right.





SHARON PRICE JOHN: So you know, when you're value engineering, you are looking for the -- how do you construct this in a way that creates efficiencies. And just understanding what your cost drivers are from how many operations, how many times does somebody have to touch a seam? How are these materials put together? Do -- you know, do I -- how many places do I have to add an embellishment to get the objective made? That sounds really boring. I can't believe you find that fascinating, Alex.





ALEX BLUMBERG: Oh, I'm -- I'm completely fascinated by it.





<<LAUGHTER>>





So you're -- so you're literally going into, like, every single Build-A-Bear ...dress, and saying, like, "How is each one of these manufactured? How many seams are there? Do we need ..."





SHARON PRICE JOHN: I don't have to ask that question. I just have to touch the dress. So what we did was -- I'm like, "Bring me all next season's stuff." And it was a lesson in value engineering. And we -- they just piled them all up in the middle of a -- of a conference table.





ALEX BLUMBERG: So wait. Wait, wait, wait. You're in a room with all your exec -- who's -- who's there with you?





SHARON PRICE JOHN: No, no. With the design team.





ALEX BLUMBERG: Uh-huh. And -- and there's literally all the -- all the -- all the clothes are piled on a -- on a -- on a big ...conference table?





SHARON PRICE JOHN: Mm-hmm.





ALEX BLUMBERG: So you're actually literally taking each -- each item of clothing and being like, "What's this made of," right? You know what it's made of. And you know...





SHARON PRICE JOHN: I know what it’s made of. And what I want to do, and here's the thing about being a CEO. Look, you're gonna be really good at something. Or you're probably not gonna be a CEO. And everybody comes up, you know, one -- some -- some route up the ladder. You have to. I came up some mash-up between marketing and product development, so I'm really good at marketing and product development. That's how I kept getting promoted. But at some point when you become a CEO, you don't even want to do what you're good at anymore. You want to teach it. My goal was to never sit in that room again. Even though I love doing it. My job was to teach them how to do this.





ALEX BLUMBERG: Did it take just one time?





SHARON PRICE JOHN: No.





ALEX BLUMBERG: How long did it take?





SHARON PRICE JOHN: Um, we got a long way in that particular meeting, but what you do is continually reinforce it. So like, the next time you're in a line review everything's all lined up. It's exactly what it sounds like. All the product, everything maybe for a specific season. And along with that, you're gonna have, like, the list of all the SKUs, and all -- and what is -- what the -- the target price point is, and what the margin is, and da da da da da da da. And you're going to see things in there that, you know, you're -- they're usually in red, that didn't hit the margin goal. And you go down through there and you're like, "Why doesn't this hit the margin goal?" Right? And you ask the team. "Well, the whole -- the whole average did," right?





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: I'm like, "But let's look at that SKU. Is there something about that SKU that keeps it from hitting the margin goal?" Because there's always going to be something that doesn't sell and you have to mark it down. So you actually need to be pretty aggressive about hitting that going-in margin goal. And I'm like, "Let me look at this." And I say -- they're like, "But it's -- but it's the average. It's the average." I'm like, "You can't -- you can't do it. I get to manage the company on the averages. You can't." Right? You got to -- so we -- they brought it -- they brought out this particular one. It was a mermaid outfit for a bear, right? So cute. I'm like, "How far are you off?" And this is, you’re down in the itty-bitty details here. They're like, "We're like, two or three cents off." I'm like, "Why is there padding in the mermaid's bra? It's a bear, guys. I'm like, "Between your materials and these two operations, there's three cents. Take it out."





ALEX BLUMBERG: In the padding of the mermaid’s





SHARON PRICE JOHN: Uh-huh. Yeah.





ALEX BLUMBERG: Bra.





SHARON PRICE JOHN: I'm like, "It's a bear. It's a bear. She's a bear. She's good."





ALEX BLUMBERG: Oh, my God!





SHARON PRICE JOHN: But I mean it seems funny now, but I -- God, I love my designers. Look how -- I mean the care and the detail and the specificity and the thought. And it was still beautiful. You know, like we didn't take out anything that even the consumer could see, right? Just still, it all had to -- still it's, you know, it's sparkly and beautiful and mermaid-y. And -- but it was the -- the -- it was the process of -- of being serious down to the detail.





ALEX BLUMBERG: Yeah.





SHARON PRICE JOHN: And saying, you know, be -- be careful when you say there's nothing else there and you put it in front of me.





ALEX BLUMBERG: So you got the business sort of working. You had big conversations about the culture. Was there -- was there a moment you realized, "Oh look, we're going to turn things around."





SHARON PRICE JOHN: Returning to profitability is a really good sign.





ALEX BLUMBERG: Mm-hmm. When did that happen?





SHARON PRICE JOHN: That first year.





ALEX BLUMBERG: That first year.





SHARON PRICE JOHN: That was 2013. Yeah.





ALEX BLUMBERG: How'd that feel?





SHARON PRICE JOHN: And, you know -- it's great. I mean, the guys got a bonus. Great. It's a nice feeling. They worked really hard. They got on the train with me. You know, and you feel good about that, but you're also very beholding. It's very flattering that someone would -- when you say stop doing this and start doing this and they do it and it works, you know, because you can't do it by your -- it's not -- I'm not doing it. They're doing it. They're the ones doing it...





ALEX BLUMBERG: Uh-huh.





SHARON PRICE JOHN: So you know, then I think, you know, we started to pick up some momentum in that -- that next year, and that was good. But it's not all been just easy. It's not right now. We're -- we're in whitewater right now. You know, it's up and down all the time. It's very difficult in this environment.





Revenues are still down...and profits are shrinking again at Build a Bear. And the environment problem that Sharon referred to isn’t internal to the company any more… it’s external. Retail is changing, how people shop, what they shop for. And Sharon says Build-a-Bear needs to adapt to fit into to this new retail world. where people no longer just show up at malls to have a retail experience. Now they want to meet the brands they love in all different kinds of places, which has brought Sharon Price John into my line of work:





SHARON PRICE JOHN: We just launched Build-A-Bear Radio last October.





ALEX BLUMBERG: Build-A-Bear radio?





SHARON PRICE JOHN: So I'm in your business! Yeah! Yeah. It's awesome.





ALEX BLUMBERG: What happens on Build-A-Bear radio?





SHARON PRICE JOHN: It's stuffed with fun. That's what -- get it?





ALEX BLUMBERG: Broadcasting live from the Bearquarters.





SHARON PRICE JOHN: Yeah, where the fun's always on.





<<theme music>>





That wraps up my conversation with Sharon Price John, recorded live from the pod-quarters, which is also stuffed with fun. And also, thoughtful, meaningful content.





Without Fail is hosted by me and produced by Molly Messick and Sarah Platt. It is edited by me and Devon Taylor.





Peter Leonard mixed the episode. Music by Bobby Lord.

If you like Without Fail, leave us a review! Tell your friends about it.





Thanks for listening.





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